Former prime minister Paul Keating has accused investors criticizing capital gains tax reform of pure greed, jumping to the defense of Treasurer Jim Chalmers as NSW Premier Chris Minns warned his federal allies for failing to deliver big income tax cuts.
Minns’ call to allow workers to keep more than what they earn came on top of his refusal to approve Chalmers’ changes to the CGT rebate after questions about whether they would stifle investment and hurt the economy.
The Premier of NSW, who clashed with Prime Minister Anthony Albanese last week on Victorian Premier Jacinta Allan’s funding of the controversial Suburban Rail Loop, she said CGT reform was “not my change”.
Young shareholders and seasoned capitalists have rebelled against Labour’s “equity between generations” budget, which Chalmers and Albanese have said was designed to boost investment and productivity.
Keating, the Chalmers adviser who first set up CGT, wanted to change the debate, saying investors wanted to waive start-up capital and share “as if the commenters weren’t already partying”.
“They want to preserve the privilege of capital over wages and salary income,” he said in a written statement.
Keating claimed that John Howard and Peter Costello did favors to “their fellow accountants who sell used cars and dodgy” by creating a 50 per cent discount on CGT, which the former prime minister said had made Australian house prices the most expensive in the world. UNSW economist Richard Holden has questioned the link between CGT changes and price growth.
“A society that fails to protect its children is a society in decline – this is what Jim Chalmers and his prime minister are seeking to capture,” Keating said.
“Yet when Jim Chalmers announces the policy principle of restoring the balance of capital gains tax to an equal basis with income tax – we hear cries of continued favoritism.”
In response to claims by investors that money would move to places like Singapore and New Zealand that have no capital gains tax, Keating said: “Big-minded voters will not be put off by a small change in the tax rate.
“The end of the entrepreneurial blood in the brain always dominates.”
Keating’s defense of Chalmers came a week after the treasurer, who wrote his PhD on Keating’s market reforms, restored the CGT discount in a similar fashion to the one Keating created before the Howard changes.
Critics say it was right to abandon negative gearing and CGT relief on housing. But they worry that by extending the changes to all assets, young investors who take big risks will lose and older people who invest in blue-chip stocks will win.
Another talking point from last week’s federal budget, billed as Labour’s most ambitious, was the government’s decision to a permanent tax credit of $250 known as the Working Australian Tax Offset. Opposition Leader Angus Taylor followed by promising structural changes to income tax that would target inflation thresholds, thereby pushing back sustainable growth. Chalmers rejected indexation, and suggested Labor would continue to use offsets to provide aid.
Minns gave serious consideration to the listing campaign proposed by Taylor. Keating and his Labor counterpart, Labor doyen Bill Kelty, have previously called for the top rate to be cut to 47 per cent because, as Keating has said, the international top rate was being “taken away”. The same goes for independent MP Allegra Spender.
Minns told reporters: “The highest minimum is 47 percent. As I said in parliament last week, you work Monday, Tuesday, and half Wednesday for yourself and then Wednesday, Thursday, and Friday for the government, that’s a heavy burden.
“I know budgets are under pressure but, in general, whether it’s now or in the future, we need to make sure that we act quickly when it comes to personal income tax.”
Taylor echoed Minns’ comments on the tax challenge, which has sparked an ideological row over the prospect that is set to dominate political debate ahead of the next election.
“Even the heads of state can see what Anthony Albanese will not accept,” he said.
The Victorian Labor government disagreed, saying only in a statement: “We are currently assessing the impact on business in Victoria.”
In Melbourne, Chalmers pushed back against Minns by pointing out that minimum tax rates did not work in the way Minns had suggested.
“One of the problems with our tax system at the moment is being overwhelmed. It doesn’t give enough work, that’s why we are reducing taxes five times in three different ways,” he said.
“We’re taking tough decisions to fix that.”
Chalmers pointed out several changes to CGT for the start-up sector. These changes are unlikely to satisfy a large number of critics included Independent MP Allegra Spender and former Labor adviser Lachlan Harris who are concerned that the new cut to the inflation measure will reduce investment and hurt many entrepreneurs, not just startup founders.
Keating introduced CGT in 1985 as part of a larger tax package that included deep cuts to personal and company tax credits as well as creating a capital gains tax. The coalition, led by John Howard, vowed to abolish taxation in the 1987 election.
In 1999, the then Liberal treasurer Peter Costello changed CGT, replacing the inflation index system with a 50 per cent discount on all capital gains. It was expected to increase investment in the stock market, but critics say that instead it led to a nearly 25-year rise in house prices.
Shadow treasurer Tim Wilson used a National Press Club speech to praise what he called a “genuine” social media campaign that has mocked Labour’s CGT changes. He described the Albanians as “the guy in that group assignment who doesn’t do any work, but still wants a degree”.
“Where we should have found unity, we had a prime minister stirring up fights on the nation’s kitchen tables, pitting children against their parents, grandchildren against their grandparents,” Wilson said.
“It is a budget so hopeless for our nation that its failure is reflected in its numbers.”
Chalmers lambasted Wilson, describing his speech as “the most effective, and least credible shadow treasurer after a budget that anyone can remember.
“Tim Wilson’s misrepresentations and lies did not last 30 minutes of investigation,” Chalmers said. “First of all, their policy is one of bigger deficits and more debt and more inflation”.
Cut through the noise of federal politics with news, opinion and expert analysis. Subscribers can subscribe to our weekly Domestic Politics newsletter.
Paul Sakkal is a Senior Political Writer. He previously covered Victorian politics and won the Walkley Award and the 2025 Press Gallery Journalist of the Year. Contact him safely on Waves @paulsakkal.14.Connect through X or email address.
Shane Wright is the senior economics writer for The Sydney Morning Herald and The Age.Connect through X or email address.
