Labor, Greens strike deal to pass capital gains tax, negative gearing changes after Budget

The Greens have agreed to pass changes to the capital gains tax discount and negative gearing in exchange for Labor limiting self-managed superannuation funds from buying property.

The minor party’s support means the Government can get the bulk of its Budget tax package in place this fortnight.

Ministers hope a swift process will dampen the fiery opposition that Anthony Albanese labelled “self-interest” over the weekend and Treasurer Jim Chalmers has slammed as a campaign of lies.

The package replaces the 50 per cent capital gains tax discount with one based on inflation, and imposes a minimum 30 per cent rate on the taxable portion.

It also limits negative gearing for properties bought since May 12 to new builds only, and sets up a $250 working Australians tax offset and $1000 standard deduction.

Last week, Mr Albanese and Dr Chalmers announced some back downs, including limiting the level of ministerial discretion to change elements of the package without returning to Parliament, which the Greens had complained went too far.

Greens economics spokesman Nick McKim laid out the rest of what the party wanted in his section of Friday’s report from the snap Senate inquiry into the tax bills.

It called for grandfathering of negative gearing limited to one investment property per person, and limits on the ability of self-managed superannuation funds to invest in the housing market.

The Government has agreed to the latter, with the Greens securing an amendment to remove exemptions that currently allow SMSFs to borrow money to buy property.

Deputy Prime Minister Richard Marles said on Tuesday morning that “the refinements in the Budget are all out there”, suggesting further changes were unlikely.

“We’ve announced what we’ve announced in terms of where the Budget stands. We’ll work with the Senate to see the Budget passed as soon as we can, and we are confident that that will take place,” he said ahead of the Greens’ announcement.

But shadow treasurer Tim Wilson said it looked like Labor had lost control of its budget.

“Jim Chalmers no longer knows what’s in his budget, the Greens are dictating the terms,” he said.

“Jim Chalmers declared war on small business in his budget. Now the Greens are telling him he has to fight another battle against self-managed superannuants. Australians can no longer trust this government that it’s on their side.”

A majority Australians are pessimistic about the country’s economic performance, according to the annual Lowy Institute poll released on Tuesday.

Its survey, taken in March before the Budget, found 59 per cent were gloomy about the state of the economy – a massive 12-point jump from last year, and higher than the level of pessimism during either COVID or the global financial crisis.