The Australian Greens' surprise backing of Labor's contentious budget measures has been hailed as a major breakthrough, securing the passage of significant reforms that could reshape the country's tax landscape and impact millions of Australians. After intense negotiations, the minor party has agreed to support changes to capital gains tax and negative gearing rules, pending approval by parliament.
At the heart of the agreement is a commitment from Labor to close a loophole that allowed investors with self-managed super funds to exploit certain tax breaks. The government will also remove ministerial powers that could enable future reversals of the reforms. According to a joint statement from the Prime Minister, Treasurer, and Finance Minister, the measures aim to make homeownership more accessible for Australians, reduce taxes for over 13 million workers, and align the tax treatment of labour and asset income.
The proposed tax reforms would shift the current 50% capital gains tax discount on asset profits to a cost-based indexation model from July 2027. Additionally, negative gearing concessions will no longer apply to investment properties purchased after 7:30 pm on 12 May 2026, with some exceptions for new builds and specific government housing programmes.
A key component of the deal is the extension of an inquiry into the National Disability Insurance Scheme (NDIS) changes. The Greens have secured a delay until 14 August, allowing for additional public hearings and a thorough review of thousands of submissions received. They have also negotiated amendments to limit ministerial powers that could lead to broad cuts in funding for vital participant supports.
While the concessions will likely appease some critics, the Greens remain opposed to the NDIS legislation itself, describing it as 'cruel'. They argue that the proposed changes could adversely affect over 240,000 individuals by tightening eligibility criteria and introducing independent functional assessments. The party has secured guarantees that individuals will not be subjected to restrictive practices, such as forced medication, to meet new treatment exhaustion requirements.
The agreement is set to draw criticism from the opposition Coalition, which had previously offered to work with the Greens to extend the NDIS inquiry for six months in exchange for greater scrutiny of the tax bills. The government will still require opposition support to pass the NDIS legislation after the inquiry concludes.