Safe passage through parliament was secured this week for tax reforms proposed in the Albanese government’s 2026 budget. Despite much debate over the reforms’ pros and cons, and negotiations within parliament, this is a demonstration of Australia’s democratic system working as it was designed to do.
It shows major reform is still possible in Australian politics, that parliament can still work in an orderly manner to turn contested reforms – with negotiated changes – into law, and that controversy is inevitably part of getting big things done.
The last round of major tax reform – establishment of the goods and services tax (GST) in the late 1990s – is so long ago that many people have forgotten the mechanics, atmospherics and amount of time required to achieve reform.
Liberal prime minister John Howard proposed a GST in an interview with Laurie Oakes on the Nine Network’s Sunday program in May 1997.
The Howard government was still spending an enormous amount of time tweaking the exact plan in cabinet meetings three years later to ensure its smooth implementation on July 1 2000. As late as June 5, just weeks out from the GST’s start, cabinet was debating details such as how nightclubs, hotels and supermarkets should handle their cash registers at the stroke of midnight on that date.
So the idea that reforms are born perfect, fully thought-through and bulletproof could not be further from the truth.
Opposition to the GST was long, loud and forceful. But the reform went ahead and is now an unremarkable fact of life, just like other hyper-controversial reforms including the creation of Medicare, and making sex discrimination illegal.
Clamorous protests from some quarters against specific elements of the tax changes announced in this year’s budget should not obscure it as an example of the political system working well.
Treasurer Jim Chalmers introduced major tax reforms to housing, capital gains and trusts in his budget speech on May 12.
Chalmers mentioned reform 28 times in his budget speech, including in its title.
He declared the government wanted to “help rebalance a system which is more generous to assets than it is to labour”.
It was predictable that Australians who derive their wealth from assets would complain about the favourable treatment of assets versus earned income being somewhat evened up.
It was expected the government would tweak some of its proposed measures in light of feedback once they were announced. This happens whenever a major reform proposal sees the light of day.
The government’s reform package substantively survived. There were minor changes after consultations with affected groups, and the Greens extracted modest concessions in exchange for supporting passage of the reforms through the Senate, where the government lacks a majority.
This was in line with the Howard government’s experience. Feedback on the proposed GST was taken into account, and concessions were made in exchange for the Australian Democrats supporting its passage through the Senate.
This is how reform has worked in the past, and it is encouraging to see it happening in this routine way again. Having reacquainted ourselves with reform norms, Australians should be able to put vested-interest complaints and media clamour in better perspective in the future.
This is not to underplay Labor’s challenge in building support for the reforms in the electorate overall.
The government is out to convince voters it’s on the side of workers and homebuyers.
It has some good lines, including Chalmers’ in Question Time this week that Labor wants “to make it easier for people to buy their first home, not their 20th home”.
The Coalition opposition is trying to make it personal by drawing attention to Prime Minister Anthony Albanese’s investment property sales in recent years, under the previous concessional capital gains tax regime.
Albanese’s counter – that he wanted young people today to have the same opportunity he had to buy property on the basis of earned income, rather than having to rely on inheriting it – was a flick at Opposition Leader Angus Taylor.
It was unpleasant personal turf for the reform debate to shift onto. But also reflects the actual shape of the government’s challenge on the ground to strengthen electoral support for the reforms.
The government does need to convince voters that the reforms are in the interests of Australia as a whole.
Labor may easily win the debate in the forum of parliament, but it seems less adept than players on the right wing of politics in winning the argument in the digital sphere, where it was slow off the mark after the budget.
On the substance of politicians and property, one can only be grateful that – despite substantial property holdings themselves, across all parties – gutsy moves to make the tax system fairer finally happened.
It gives hope there is more reforming zeal yet in the Albanese government for other big necessary changes ahead.
