Greens demand that government toughen budget measures

The Greens are pressing the government to toughen the property tax changes in last week’s budget, even as Prime Minister Anthony Albanese and Treasurer Jim Chalmers face growing external demands to create more exemptions, especially for small businesses.

The Australian Financial Review has learnt that preliminary negotiations have begun between the government and the Greens over the legislation to increase capital gains tax and curb the use of negative gearing by July 2, before the parliamentary winter break.

Greens leader Larissa Waters and treasury spokesman Nick McKim want to make changes to the budget measures. Alex Ellinghausen

Sources familiar with deliberations, speaking on condition of anonymity, say the Greens have yet to guarantee that they will pass the legislation by July 2, nor have they acceded to the government’s desire that there not be a Senate inquiry.

The Greens, who initiated the push to pare back the CGT discount by setting up a Senate inquiry late last year, have as their starting point that there be no CGT discount and no exemptions or grandfathering of existing assets.

Although they do not expect the government to go that far, they are pushing for further changes to grandfathering, especially regarding negative gearing, under which all existing assets will be exempted.

They also want the CGT deduction capped.

Under the budget measure, the 50 per cent CGT discount for assets held longer than 12 months will, from July 1 next year, revert to a version of the pre-1999 system in which the discount was indexed to inflation over the life of the asset, to ensure only above-inflation gains were taxed.

In some instances, this could provide a discount higher than 50 per cent, so the Greens want the maximum discount under the new scheme capped at 50 per cent. These changes were flagged by the minor party immediately after the budget and now form the basis of their negotiations.

Revenue boost

The Greens argue that if the government ramps up the measures, it will have sufficient revenue to provide a more substantial tax cut than the $250-a-year Working Australians Tax Offset, and build support for what has been a friendless budget.

But the negotiations come against a backdrop of growing anger from the SME sector and investors who feel they are collateral damage in a budget that was supposed to be about targeting the tax treatment of property to help first home buyers.

The teal independents are also variously calling for greater exemptions for business, with some saying the CGT changes should be confined to housing.

On Thursday, 10 entrepreneurial women comprising the Female Founders, all of whom had built businesses from the ground up, urged the government to reconsider its measures.

“These changes would not only affect founders today. They risk discouraging the next generation of women from starting businesses at all,” they said in a statement.

“It is already harder for women to access capital, secure loans, raise investment, and attract senior talent. Many female founders begin with fewer resources, smaller networks, and more family responsibilities than their male counterparts. The proposed CGT changes would make an already difficult path even harder.”

They took issue with a statement from former prime minister Paul Keating, who dismissed critics of the CGT change as John Howard’s “used car selling and dodgy accounting mates”.

“That characterisation is dismissive and out of touch with the reality of modern Australian business ownership,” they said.

“We are not political operatives. We are not tax avoiders. We are women who had an idea, took a risk, and worked incredibly hard to build businesses – often while raising families at the same time.”

Billionaire Ryan Stokes also weighed in.

“Cumulatively, this is not tax reform; this is a higher cost of deploying capital in Australia at a moment when the global capital pool is more mobile than ever,” he said.

“On top of that, you have the industrial relations direction, energy policy and planning settings that have been getting harder for a number of years. Our operating models can absorb that, but it means we now need to broaden how we think about employing capital from a geographic perspective.”