Labor refuses to fast-track CGT carve-outs as business waits for details on Budget tax changes

Anthony Albanese has knocked over suggestions that the government is contemplating fast-tracking carve-outs for start-ups and other small businesses from its changes to capital gains tax discounts.

The Prime Minister is sticking by the deadline to legislate the tax changes in the next fortnight, as a senior cabinet minister revealed talks with the Greens are now well underway.

Sectors hoping for carve-outs from the capital gains tax discount changes, including tech start-ups and junior miners, are now waiting for Treasurer Jim Chalmers to release a discussion paper outlining options.

That’s expected within days, but its timing isn’t linked to a Senate inquiry into the tax package, this masthead understands.

The government wants to replace the 50 per cent discount on capital gains tax with one based on inflation, coupled with a minimum 30 per cent rate on the taxable amount, and limit negative gearing to newly built properties.

It has tied these changes with the $250 working Australian tax offset and the $1000 standard deduction.

Mr Albanese said on Tuesday he still wanted to legislate these in the next fortnight, along with a separate bill that paves the way to cut billions of dollars from the NDIS.

“We are very determined to give people the reform that is needed,” he told media at the house of two young new homeowners in Clifton Springs in Victoria’s Bellarine Peninsula.

A committee looking at the NDIS changes has been given a three-day extension on its inquiry. It will now report on Friday, the same day as a separate committee examining the tax bill.

The Coalition has been hoping to convince the Greens to agree to a months-long delay to the tax inquiry in exchange for one on the NDIS.

However, Finance Minister Katy Gallagher, who manages government business in the Senate, said Labor was “in pretty close contact with all parties” on how to get its legislation through.

“Look, we’re in active discussions, as you would expect, with parties in the Senate,” she said when asked whether the Greens were shifting in the government’s favour.

“We think there’s strong arguments to have both of those bills dealt with. There’s different views across the Senate, so we have to work out how we reach agreement on that, and we’re absolutely determined to do so.”

The government believes the Greens will ultimately back the tax changes and the Coalition will help it put the NDIS on a sustainable footing, but the final Senate sitting days before a big break are often unpredictable.

The CGT changes have alarmed start-ups, junior miners, investment managers and small businesses, who warn they’ll dampen investments across the board, not just in housing.

The government has been consulting some business groups about carve-outs, mainly aimed at low-capital high-growth operations.

Small business advocates have also asked for the annual turnover thresholds for existing CGT exemptions to be lifted from $2 million to $10 million.

But Mr Albanese said it wasn’t planning to detail any carve-outs this week despite reports it would seek to add them to the legislation that will be before the Senate next week.

He describes the bill currently before Parliament as the framework, and says there will be further legislation later in the year.

“What we’ve had is consultation up to this point. That (Treasury) discussion paper will go out, which will enable further input, which will be fed into the legislation later this year,” he said.

Tech Council boss Kate Cornick told the Senate inquiry that her sector was waiting on that discussion paper but had had no indication from the government about its timing.

Dr Chalmers insisted that consultation was “real and genuine and meaningful” and that some elements had proven more complex than others.

“People who oppose the sorts of changes that we are putting forward will always argue that there should be more time, but that’s because in lots of instances they don’t agree with the policy direction itself,” he said, singling out the Business Council of Australia, which hasn’t been asked to join the consultation.

“Economic reform, more broadly, is always contested. It’s always contentious. It always involves some kind of political cost, but that political cost is worth it if it means we can make life easier for first home buyers, cut taxes for workers, (and) better align the tax treatment of labour and asset income — and those are our motivations.”

Shadow housing minister Andrew Bragg said the rushed process debased a committee system that was usually one of the best things about how politics functioned.

Speaking at a rival forum organised by investment manager Geoff Wilson at the same venue as the committee hearing, Senator Bragg accused the government of having “no bloody idea about “the distributional impact and the damage these tax policies are going to do”.

“Labor’s $80 billion Budget tax grab is based on an undemocratic piece of legislation and being rammed through via an undemocratic process,” he said.

“Now they’ve f**** up this Senate committee system, and that is just another ridiculous position that we now have to live with in this country, where our democracy is getting worse and worse, and no wonder people want to smash the system up.”

He spoke in front of placards that revived the Abbott-era slogan “axe the tax”.

Earlier, his colleague, shadow treasurer Tim Wilson, got into a fight on breakfast television with cabinet minister Amanda Rishworth over the committee process, and leader Angus Taylor said it was “pathetic … ridiculous” to think that all the issues could be resolved over two days.

The committee held its second and final day of hearings on Tuesday, again with a mixture of opponents and supporters of the changes getting their say.

Australian Investment Council chief executive Navleen Prasad said domestic tech successes like Canva and Employment Hero wouldn’t exist without the current tax settings that had been “phenomenally successful” at growing venture capital, while Geoff Wilson declared the capital gains tax changes would be a disaster for small businesses.

“That’s the end of small companies. Effectively all the money will go to Rio, BHP, the big banks — the top 10 companies, that’s where all the money will go, and anyone below that … the cost of capital will go through the roof. It’s a disaster,” Mr Wilson told senators.

“It will change behaviour, it will discourage risk-taking, and it will reduce the capital available to the businesses that create jobs, innovation, and economic growth … If we make productive investments less attractive, we should not be surprised if we get less of it.”

However, he backs changing the tax arrangements for “unproductive assets” like housing.

While Mr Wilson spoke, cameras showed a man standing at the side of the hearing holding a yellow and blue sign reading “Scrap the CGT hike”, one of the placards that had been given to people at his rival event next door.

Ms Cornick, from the Tech Council, warned that cutting the after-tax reward for start-up founders, employees and investors would quickly compound to create much poorer outcomes for the country.

“Investors back away. Fewer founders get the capital they need to grow, or they move overseas to more attractive innovation ecosystems. They find it harder to attract skilled employees from safe jobs in stable firms,” she said.

“That’s a poor outcome for budding entrepreneurs. But it’s a poorer outcome for Australia — for our productivity, for jobs, and for our ability to build new industries that will ensure the success of our economy for future generations.”

Representatives from the property sector also warned that rents could go up significantly more than the $2-a-week Treasury forecasts, while financial advisers said unintended consequences could extend to the treatment of property owned by people who divorced after Budget night or who inherited it.