Capital gains tax under pressure as Kelty calls for bold reform

Published: 23 February 2026. The English Chronicle Desk. The English Chronicle Online.

Bill Kelty’s bold remarks on tax reform at a parliamentary inquiry have sparked renewed debate over Australia’s economic direction and fiscal fairness. In an emotionally charged session dominated by concerns about intergenerational inequality, Kelty urged lawmakers to rethink surface‑level changes and pursue a deeper overhaul of the nation’s tax framework. The veteran union leader and former Reserve Bank board member made his plea shortly after supporting moves to scale back the capital gains tax (CGT) discount — a policy under intense scrutiny as the government prepares for its next budget. His intervention, though supportive of some reform, laid bare frustrations over what many see as timid political ambition.

Kelty’s comments were delivered against the backdrop of a Greens‑led Senate inquiry examining whether the long‑standing 50 per cent CGT discount on investment properties should be reined in. That discount, introduced in 1999, allows investors to halve their capital gains tax liability on assets held for more than a year. Critics contend it disproportionately benefits affluent property investors while doing little to improve housing affordability for younger Australians. Union leaders and economists have lined up to argue that this tax break entrenches inequality and undermines intergenerational fairness.

Despite his own wealth — which he referenced freely as he addressed the committee — Kelty centred his argument on the struggles faced by younger generations. He told parliamentarians they needed to “unequivocally” demonstrate commitment to improving outcomes for young Australians, who he said have been left behind by existing tax and economic structures. Kelty’s frustration was clear; he argued that tinkering around the edges with capital gains tax without addressing systemic imbalances would yield little real benefit for ordinary workers.

At the heart of Kelty’s critique was a fundamental unease with the way Australia’s tax system currently operates. While he acknowledged that curbing the generous CGT discount could help level the playing field, he insisted such a change must be part of broader tax reform that addresses entrenched disparities. This would include aligning tax policies with the lived experiences of younger Australians facing rising living costs, stagnant wage growth and high housing prices that make homeownership a distant dream.

Labor Treasurer Jim Chalmers has previously hinted at possible adjustments to capital gains tax settings in the lead‑up to the May budget, but he has been careful not to commit to any specific reform. Reports suggest Treasury is modelling various scenarios, including reducing the CGT discount, though the government’s focus has largely remained on housing supply measures and broader tax fairness rather than sweeping systemic change. Prime Minister Anthony Albanese has echoed similar sentiments, emphasising housing supply rather than tax adjustments as the key to addressing affordability challenges.

Kelty’s call for bold tax reform resonates with a wider chorus of voices who argue that Australia’s fiscal structure has long favoured capital over labour. Prominent economist Alan Kohler, for example, has pointed out that the current tax system sends a message that capital income should be taxed more lightly than income from wages, exacerbating inequality. Kohler and others argue that trimming capital gains tax preferences is only a beginning, and that structural imbalances need far deeper remedies to genuinely improve fairness across generations.

The union movement has been particularly forceful in its critique of the existing tax regime. The Australian Council of Trade Unions (ACTU) recently told the Senate inquiry that the CGT discount privileges professional landlords and allows the richest one per cent of Australians to enjoy significant tax advantages. In its submission, the ACTU proposed reducing the discount to 25 per cent and suggested limiting other tax breaks, such as negative gearing, to make homeownership more attainable for working families.

These perspectives have not gone unchallenged. Critics outside the union and progressive circles warn that altering the CGT discount could have unintended consequences for the housing market. Some economists argue that a reduced tax incentive for investors might shrink the rental supply and drive up rents, a dynamic that could hurt, rather than help, those the reforms purport to assist. Others stress that supply constraints, not tax incentives, are the primary driver of housing unaffordability, and that any meaningful solution must address zoning, construction bottlenecks and infrastructure investment.

Within this broader debate, political lines are being drawn. Opposition figures have characterised potential changes to capital gains tax as revenue grabs, arguing that such measures risk undermining investor confidence and destabilising markets. Although some members of the Business Council of Australia have signalled support for tax reform in principle, they stress the need for a comprehensive approach that includes growth‑friendly measures and careful consideration of economic impacts.

Kelty’s intervention also underscored broader fears about political alienation and rising social division. He warned that if younger Australians continue to see the political system as stacked against them, their disillusionment could drive them toward fringe movements and divisive rhetoric. His plea was not merely economic but moral, rooted in the belief that equitable economic policy is essential for social cohesion and democratic stability.

Despite the cross‑bench scrutiny and public debate, the government has so far refrained from firm commitments on CGT reform. Sources close to policy discussions suggest that Chalmers views incremental changes as politically and economically more palatable, preferring “bite‑size” reforms that mitigate risks to investment activity. Yet critics argue that this cautious approach lacks the ambition needed to tackle systemic inequality and could leave the underlying issues unaddressed.

The Senate inquiry, which will continue hearings in Canberra and Sydney throughout the week, presents an opportunity to deepen public understanding of these complex tax issues. Witnesses from union bodies, economic think tanks and housing advocates are expected to provide testimony on the multifaceted impacts of tax concessions and the potential pathways to reform. As these discussions unfold, the debate over fairness, growth and generational equity will likely remain at the forefront of Australia’s economic policy discourse.

Kelty’s intervention has reignited a debate that cuts to the core of national values and economic priorities. Whether his appeal for broad tax reform will translate into meaningful policy change remains uncertain, but it has undoubtedly sharpened the focus on how Australia’s tax system distributes benefits and burdens across generations. As Canberra wrestles with these questions ahead of the budget, the voices calling for fairness and ambition are unlikely to fade.

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