Housing Minister Clare O’Neil has strongly defended the government’s decision to extend capital gains tax (CGT) reforms across all investment classes, insisting the policy will correct decades-old tax distortions that have fuelled a property investment boom.
During an often fiery interview with ABC’s Insiders host David Speers, O’Neil insisted the changes were part of a broader strategy to level the playing field for investors and address the root causes of Australia’s housing affordability crisis.
The government unveiled a significant overhaul of capital gains tax (CGT) rules in the Federal Budget earlier this month.
Under the proposed changes, the current 50 per cent CGT discount will be scrapped and replaced with a system that adjusts gains for inflation.
In addition, a new minimum tax rate of 30 per cent will be introduced on capital gains.
The reforms are set to apply across most asset classes, including shares held by individuals and residential investment properties.
Importantly, the new rules will only apply to gains accrued from July 2027 onwards.
O’Neil rejected criticism that the government was unfairly targeting investors.
Clare O’Neil (pictured) defended the government’s decision to extend tax changes to all assets
‘The 1999 changes that John Howard and Peter Costello made were a huge mistake for the country,’ she said.
‘What they actually did unwittingly was make residential property the most lucrative, low-risk investment in this country.’
O’Neil argued the result had been a dramatic shift away from shares and into property, with far-reaching consequences.
‘What happened, investors flooded out of shares and went into property, and that’s brought us to where we are today,’ she said.
When grilled by Speers on why the new CGT rules should apply to all investment types, O’Neil said the focus was on removing artificial incentives, rather than picking winners.
‘The tax system should not create and drive investment decisions for people,’ she said.
‘We want a neutral platform for investors to make good decisions.’
When Speers challenged whether tax settings are always meant to shape behaviour, O’Neil stood firm.
David Speers (pictured) pressed O’Neil on whether the changes would scare away investors
‘We’re not scrapping the capital gains tax discount,’ she said.
‘We’re changing the way it’s calculated, so it’s neutral across asset classes.’
However, Speers pushed on whether slow progress on the final details might unsettle investors, especially small businesses and start-ups.
‘If this is going to spook investors, if they’re going to look elsewhere, because they don’t know what the tax rules are in Australia until later this year – is that a problem?’ he asked.
O’Neil acknowledged the concern but declined to set a deadline.
‘It’s important that this gets resolved speedily, and that’s what the government’s working towards,’ she said.
When pressed on whether ‘speedily’ was fast enough for business, O’Neil said the government would consult with industry and focus on policy, not politics.
Clare O’Neil (pictured) rejected claims that the tax changes were ‘spooking’ investors
‘This is not a political timeline. It is a policy timeline,’ she said.
Despite further questioning, O’Neil refused to describe the situation as risky.
‘I wouldn’t use that language,’ she said.
‘It’s really important for us to work through that really carefully with the sector – that was always the intention.’
She framed the tax overhaul as critical to broader economic reform, highlighting the mounting pressures on housing, productivity and the nation’s shifting demographics.
‘We’ve got some really big challenges that we’re facing here in Australia,’ she said.
‘We’re tackling those changes, and we’re doing it.’
Proposed changes to the capital gains tax regime were introduced to Parliament last week and are set to dominate debate when MPs return to Canberra on Tuesday.