Angus Taylor and about 60 per cent of Australians believe it, but do immigrants really increase house prices?

Opposition Leader Angus Taylor’s announcement of proposed migration cuts drew applause from colleagues after he delivered the budget reply speech. Alex Ellinghausen

Opposition Leader Angus Taylor thinks he is on to a winner: a two-birds-with-one-stone policy that tackles the hottest of hot-button political issues, housing and immigration, at the same time.

In his reply to Treasurer Jim Chalmers’ budget last week, Taylor said a Coalition government would link how many migrants it lets in to how many new homes are built.

As far as an Australian politician’s public policy checklist in 2026 goes, this policy looks like a dream. Migration? Check. Housing? Check.

Sitting opposite Taylor at the dispatch box was the man he wants to replace as prime minister, but on migration, Anthony Albanese was not the main audience. It was the millions of voters fleeing the Liberal Party to Pauline Hanson’s One Nation, which 40 per cent of all voters deem the best party to handle migration – more than the major parties combined.

Taylor’s plan is built on the idea that “mass migration” has contributed to busier auctions and longer queues at rental inspections, robbing young Australians of their right to affordable housing. Or as he put it: “With Labor having opened the migration floodgates, the dream of home ownership has become a nightmare for so many Australians.”

According to the Scanlon Foundation, the idea has resonance. Its polling found that 58 per cent of Australians agree that immigrants increase house prices. Among people who think migration is too high, that figure rises to 79 per cent.

Data on population from the Australian Bureau of Statistics and property prices from Cotality, analysed by The Australian Financial Review, shows that regions with higher recent population growth rates experienced higher jumps in the price of residential dwellings over the past four years.

As you can see in the chart below, Western Australia led the states on both population and property price growth. The coastal city of Mandurah, which is south of Perth, had the highest growth in both population and property prices in the whole country. It still has a population of just 122,000 and most of its growth has come from citizens moving interstate.

But economists also said the relationship between migration, population growth and property prices is not set in stone. It’s influenced by broader forces such as housing supply, internal migration by citizens, the types of migrants in your area and productivity in the construction sector.

“Having a dysfunctional housing policy is not a good argument for also stuffing up our immigration policy,” says Peter Tulip, chief economist at the centre-right think tank, The Centre for Independent Studies.

“Let’s fix housing policy first.”

In Victoria, which has built more houses than other states, areas with higher population growth did not experience higher property price growth at all.

Take the industrial area of West Melbourne, which spans from Footscray to the western outskirts of the city. It’s one of the most multicultural areas in Australia, with a large Indian and Vietnamese community. In the 2021 census, about 47 per cent of its population was born overseas.

Since 2021, its 2.7 per cent population growth rate has been the seventh highest in Australia. And yet, its annual property price growth was in the bottom 20 per cent of locations at a measly 1 per cent.

So there are clearly other factors at play – such as interest rates, investor psychology, supply and government policy – but there is nonetheless a link between migration and outcomes in the housing market. The effect was much stronger in each state’s capital cities than in more regional areas, and it was weaker across the board in Victoria, the ACT and Tasmania.

What hasn’t helped is how our federal system of government divides responsibilities: while Canberra controls immigration (which adds to economic growth figures and improves the budget bottom line), state planning rules determine whether infrastructure and housing keep up.

To fully understand how migrants impact housing, you first need to know the difference between temporary migration and permanent residency.

Temporary migrants have short-term visas that can last a few years, and include international students and temporary workers.

Permanent residents, such as those sponsored by their employer or the spouses of Australian citizens, can stay in the country indefinitely. Permanent visas are a stepping stone to citizenship and are capped at about 185,000 a year.

Wait, are migrants even allowed to buy homes in Australia? Strict rules and special taxes for the 3 million temporary migrants in Australia make buying a property nearly impossible.

Temporary migrants make up 10.7 per cent of the population, but over the past few years, they were responsible for 0.7 per cent of property purchases.

That’s before the Albanese government announced a two-year pause on temporary migrants buying properties altogether before the 2025 election, and extended it last week for another two years until April 2029.

It’s that low because, for decades, the Foreign Investment Review Board has imposed strict rules on temporary migrants buying property.

How it usually works (outside the ban) is that they can purchase one residential property, but they have to live in it. They can’t purchase investment properties to rent out unless the property is a new build.

On top of these regulatory hoops, it is also more expensive than for citizens. Temporary migrants pay all the normal property taxes that citizens pay – like council rates, stamp duty and land tax – plus some extra ones.

If a temporary migrant in Sydney buys a $1.1 million apartment, they have to pay a $91,900 fee to the review board just to have their application processed. They are then slugged by a special land tax surcharge for foreign buyers levied by the NSW government, which can cost tens of thousands every year (depending on the unimproved value of the land).

It’s not surprising, then, that only 40,500 (or 0.4 per cent) of the 11.4 million homes in Australia are owned by temporary migrants.

The restrictions mean that spikes in migration – which can only occur due to temporary migration – do not immediately increase property purchases.

In fact, when borders shut at the start of the COVID-19 pandemic and migration fell to record lows in 2021, home purchases increased off the back of near-zero interest rates. Then, as migration soared to record levels in 2023 after borders reopened, dwelling sales came down.

What are the rules for permanent residents? They can buy property just like citizens, and about 63 per cent own rather than rent the home they live in.

Since 2000, about 3.8 million people in Australia have been given permanent residence, 59 per cent of whom are now citizens.

But note it is not permanent residents that drove the recent jump in net overseas migration, or any jump for that matter. The government caps permanent visas at about 185,000 every year, with over half going to skilled migrants and the rest to family members of Australian citizens.

Those 3.8 million people aren’t necessarily occupying 3.8 million homes because that figure includes the children of migrants. A migrant who brings their spouse and two children counts as four migrants, but they still only take up one home; about 74 per cent live in houses with three or more people.

This is another wrinkle in Taylor’s plan: if he is intending a one-for-one link between migrants and housing, that assumes migrants are all living alone.

Migrants interact with the housing market in different ways. Some of the 640,000 international students live in on-campus colleges and others will live in share houses with other students. There are also 235,600 working holidaymakers who often live and work in regional areas or on farms where housing affordability issues are less acute.

If most temporary migrants don’t own property, do they drive up rents? Yes, migration is one factor driving rents, but it depends heavily on where you live.

Between July 2022 and March 2026, rents have grown at an annual rate of 6.4 per cent. But like with house prices, the relationship between population and rents is influenced by other factors, such as interest rates and supply.

Between 2008 and 2019, annual growth in rents declined without any significant change to migration levels.

Like with house prices, geographic areas with higher population growth had higher growth in rents. But not every location is affected equally. Migrants tend to rent close to other migrants, business districts and universities.

Some areas have proven that you can have high population growth while keeping rents under control by building high- to medium-density apartments or by having stronger rights for renters. The ACT – which has done both of these things – has an above-average population growth and the lowest rent growth of any location.

But higher rents also have an indirect impact on the housing market. When rents rise, so does the rental yield, which increases investor activity in the market. It also makes owning your home more cost-effective compared to renting, driving buyer demand from owner-occupiers as well.

What does the academic evidence say? If migration had tracked housing construction since the pandemic, the average home would be 2.2 per cent cheaper, according to one economist. Housing would still be expensive even with lower migration, which would come with other trade-offs.

Migrants influence housing demand directly (when permanent residents buy property themselves) and indirectly (as temporary migrants increase demand for rental properties, which also drives more home purchases).

But they can also influence housing supply, which improves affordability. Australia has a shortage of construction workers and tradies, so the building industry relies on imported workers to build the new homes we need.

While short-term swings in migration do not immediately impact property purchases, higher migration can over time, as temporary migrants become permanent residents and permanent residents become citizens.

An influential study from 2016 by economists Morteza Moallemi and Daniel Melser found that a 1 per cent increase in population from net overseas migration increased house prices by about 0.9 per cent each year.

“The close link between population growth and prices reflects a housing system that hasn’t built fast enough to keep up,” Moallemi told the Financial Review. “If homes could be built more quickly and easily, the price impact of immigration would likely be smaller.”

If migration levels had tracked housing completions since the pandemic (ignoring that this would have been impossible), Moallemi estimates that property prices would be about 2.2 per cent cheaper.

It would have shaved $18,300 off the average property worth $1,074,000, which is about the same as estimates of the price impact from Labor’s changes to the capital gains tax discount and negative gearing.

But it would also mean 550,000 fewer people in Australia working, paying taxes and filling skills shortages in the workforce. So lower migration comes with cheaper housing, but also a number of other trade-offs.

“Cutting immigration could take pressure off housing in the short term, but over time it risks slowing economic growth; weakening jobs, incomes and, ultimately, the foundations that support housing demand,” Moallemi said.

The specifics of Taylor’s plan are unclear so far, but if he can get construction back to the pre-pandemic peak of 217,000 new homes a year, his target would be just 13,000 lower than the average migration level before the pandemic, but 78,000 below Treasury’s forecast for 2025-26.

Grattan Institute housing expert Matthew Bowes said Australia’s population growth had not changed significantly over the last 50 years (at about 1 to 2 per cent a year), but the composition of that growth has become increasingly skewed toward migration over new births.

“We used to be able to accommodate the kinds of population growth that we’ve seen over the last couple of decades in Australia, but because of changes in our housing system we’re no longer able to do so,” Bowes said.

“We haven’t built enough housing over a number of years and that means that any increase in demand – whether it’s driven by higher population growth from migration or from people becoming wealthier and wanting to buy more homes – pushes up prices.”

The ABS' calculation of migration has changed several times since 1900, so is not directly comparable over time. It would not affect the general trend of migration making up a larger portion of population growth. The year 1971 was excluded because it was when indigenous Australians were included in population figures.

Chart: Luke Kinsella•Source: Financial Review, ABS

That increase in demand is coming from a number of directions: migrants, first home buyers cashing in on special subsidies, investors taking advantage of pre-budget tax settings and citizens drunk on Australia’s most intoxicating form of financial FOMO (fear of missing out).

And unless you are Indigenous, we are all products of migration if you go back far enough. A record 32 per cent of Australians were born overseas, and a further 22.2 per cent have at least one parent born overseas. So it’s not just new immigrants that add to demand for housing, we all do.

One Nation would win as many as 59 seats if an election were held today, pushing Labor deep into minority government and wiping out the Coalition in all but three states and territories.

That’s the worst-case scenario for the major parties in a large-scale analysis of voter intentions conducted by Redbridge Group and Accent Research that underlines the seismic shift in Australian politics since the last election.

Pauline Hanson would be the undisputed Opposition leader if an election was held now. Alex Ellinghausen

The new seat-by-seat research, titled A Fragmented Electorate, found that the Coalition would not retain a single seat in its former strongholds of Queensland and Western Australia, and would have no seats in South Australia and Tasmania, if votes go to One Nation in the worst-case simulation.

It would be left with just seven seats nationally, spread across NSW, Victoria and the Northern Territory. All the Nationals would be wiped out. Opposition leader Angus Taylor and his putative rival Andrew Hastie would be among the casualties.

The probability of Hastie losing his WA seat of Canning to One Nation is 100 per cent and 98 per cent for Taylor similarly losing his NSW seat of Hume to Pauline Hanson’s surging party.

The scenarios are contained in a new AFR Weekend/Redbridge Group/Accent Research MRP poll, which sampled 6015 voters between April 29 and May 14. Most of the research was conducted before the May 12 budget. The poll is based on a large number of simulations, and produces a range of scenarios based on the margin of error. The worst-case scenario is considered possible but less likely than median scenario.

Unlike a standard opinion poll, MRP, or Multilevel Regression with Post-stratification research, presents a much more granular seat-by-seat snapshot. It does so by sharing information across electorates, with voters assumed to behave in a related way to other voters with shared characteristics in similar divisions.

However, while MRP polling is effective at identifying how macro trends might be expressed at the local level, it does not factor in the strengths or weaknesses of individual candidates.

Days before the last election, an MRP poll by YouGov came closest to predicting the outcome, with the most likely result being Labor winning 84 seats and the Coalition reduced to 47 seats.

According to the new Redbridge Group/Accent research, entitled A Fragmented Electorate, Labor’s primary vote nationwide was 31 per cent, followed by One Nation on 28 per cent, the Coalition on 21 per cent, the Greens 11 per cent and others on 9 per cent.

But the projections based on applying the MRP methodology say that if an election were held now, Labor, which won a record 94 seats at the election just over a year ago, would be reduced to between 70 seats and 82 seats, with the median of 76, giving it a one-seat majority.

House of Representatives composition

2025 ResultsActual election outcome

PredictedModel projection

150 seats

Party	2025	Predicted	Change
Labor	94	76	▼ -18
One Nation	0	53	▲ +53
Coalition	43	12	▼ -31
Independent	10	8	▼ -2
Katter's Australian Party	1	1	—
Greens	1	0	▼ -1
Centre Alliance	1	0	▼ -1

Source: Redbridge – Accent Research

Seat predictions by party

Party⇕	Median seat prediction⇕	Low estimate⇕	High estimate⇕
Labor	76	70	82
One Nation	53	46	59
Coalition	12	7	21
Independent	8	5	9
Katter's Australian Party	1	0	1
Greens	0	0	1
Centre Alliance	0	0	1

Source: Redbridge – Accent Research

One Nation, which currently has two seats, would win between 46 and 59 seats, with a median of 53, while the Coalition, currently on 41 seats, would be left with between seven seats and 21 seats, with a median of 12.

Under the seven-seat and 12-seat scenarios for the Coalition, there would be no Nationals MPs left.

In total, up to 62 seats would change hands. The Coalition would lose 37 seats to One Nation, while picking up five from Labor. These five seats include the two NT seats of Solomon and Lingiari, as well as Menzies, Deakin and Aston in Victoria.

Seats changing hands

2025 ResultsPredictedLabor94Labor76One Nation53Coalition12Coalition43Independent10IndependentKAPKAPCentre AllianceGreens

Note: Centre “ribbons” reveal where seats are going or staying. For example, Labor is predicted to retain 73 seats, with 16 Labor seats moving to One Nation and 5 to the Coalition.

Source: Redbridge – Accent Research

Labor would lose 16 seats to One Nation while picking up the South Australian seat of Mayo from independent Rebekha Sharkie and the Brisbane seat of Ryan from the Greens.

The biggest One Nation surge would be in Queensland, where it could win up to 21 seats, 18 of which have a probability of 90 per cent or higher.

The Queensland rout would include the Nationals seat of Capricornia, which Hanson and Nationals leader Matt Canavan, both Senators, might contest should they choose to move to the lower house at the next election, due by May 2028.

It would be one of up to 16 Queensland Coalition seats to fall while Forde, Leichhardt, Petrie and Dixon, all of which Labor took from the Coalition at the last election, could also fall to One Nation.

In NSW, One Nation would swoop on as many as 14 seats, comprising nine Coalition seats, including Taylor’s seat of Hume and those of five Labor MPs.

Labor would take the seat of Fowler from independent Dai Le and the Liberals would take back Bradfield from teal independent Nicolette Boele.

When One Nation started surging in the polls soon after last year’s election, the orthodox view was that Australia’s system of compulsory preferential voting would act as a handbrake because it kept politics centred. But high-profile recruit Barnaby Joyce said that would at best slow the march of One Nation because it was increasingly being regarded as mainstream.

Hanson concurred: “They now have a licence to vote for One Nation, it’s not a wasted vote,” she told AFR Weekend.

How it works

Multilevel Regression with Poststratification (MRP) is a statistical technique that estimates local public opinion using a single national poll.

Instead of relying on respondents from every electorate, MRP analyses how traits such as age, gender and religion estimate opinions nationwide. It then takes those insights and combines them with census data to reconstruct a picture of the area.

This MRP data comes from a survey of 6015 Australian voters conducted between April 29 and May 14. It works by sharing information across electorates, with voters with similar traits assumed to behave in a related way to other voters with shared characteristics in other divisions.

It is broadly accurate but can miss idiosyncrasies. The first preference vote shares from the MRP are used to simulate instant run-off elimination estimating two-candidate preferred results, seat level win probabilities and national seat projections.

“A wide gap — like the Coalition’s 7 to 21 — means the result is genuinely uncertain and could swing a long way in either direction. A narrow gap — like Labor’s 70 to 82 — means we’re more confident about where the party will land,” said Dr Shaun Ratcliff, principal at Accent Research.

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Redbridge director Tony Barry said not only was One Nation taking most of the Coalition’s political real estate, it was also complicating Labor’s path to majority government at the next election.

“We still don’t know whether One Nation’s vote will run up against some form of a ceiling and where its floor is, but the mood sentiment holding up their vote is underpinned by economic anxiety and frustration with the current political model, which means it could be enduring,” he said.

Kevin Rudd’s supposedly great insult to Donald Trump was to call him “a traitor to the West”. An uncomfortable Rudd eventually apologised to Trump in front of the world’s TV cameras.

But he was, of course, exactly right. US presidents spent 75 years painstakingly building and maintaining the NATO alliance. It’s commonly described as the most successful alliance in history.

Illustration by Dionne Gain

It excelled in its purpose “to keep the Soviet Union out, the Americans in, and the Germans down”, in the immortal words of its first secretary-general, Britain’s Lord Ismay.

But while NATO defied the Soviet reds, it couldn’t withstand the tangerine titan. Attacked from within, its credibility today is in tatters. With the Americans on the way out, the Russians are testing its borders and the Germans are rearming.

“My absolute priority will be to strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the USA,” pledged German Chancellor Friedrich Merz. While alienating allies, Trump panders to the dictators of Russia and China.

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Now that Rudd has returned to life as a private citizen living in New York, he would be entitled to claim vindication. Offered the opportunity, Rudd replies: “Next question.” And then: “Life’s complex,” he told this masthead, his first Australian interview since leaving government service.

Rudd has learnt restraint, and learnt it the hard way. His brilliance is that he has been so right about many of the great matters of our time. His tragedy is that he alienated some of the very people he most needed in order to fulfil his reformist ambitions.

Most consequential was his prime ministerial alienation of Labor’s faction chiefs.

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The result was that the most consistently popular prime minister that Australia has had since the invention of the opinion poll was not only struck down in a lightning coup; he remained so potent in seeking vengeance that Labor systematically denounced him mercilessly in order to destroy him. No political party would defend him and the Murdoch media pursued him.

He told graduating students at the University of Southern California in a commencement address last week that resilience was of central importance in life.

“My most recent record of the last decade has been one not of systematic promotion, but of systematic demotion,” he said. “I’ve done it all in reverse: first prime minister, then foreign minister, then ambassador, now head of a think tank. Maybe my next job will be back in Beijing as first secretary in the embassy where I began 40 years ago.”

This Australian self-deprecation, so rare among alpha Americans, surprises and delights US audiences. It reveals a man fully self-aware and reconciled to his reality. “Life is never smooth,” he counselled.

After his political fall, he moved to New York as Australia’s most high-profile political refugee. Anthony Albanese and Penny Wong, by appointing him to the Washington role, rehabilitated him. Rudd fully grasped the opportunity. He was so effective that Scott Morrison praised him and not even Peter Dutton called for his removal.

Yet, at 68 years of age and after three intense years as Australia’s ambassador to Washington, Rudd’s ambition burns as brightly as ever. And he is, if anything, more ambitious than ever.

0:43

Trump confronts Rudd in awkward exchange

The White House meeting was briefly soured by an awkward moment when Donald Trump was asked about disparaging tweets Australia’s ambassador to the US, Kevin Rudd, had made about him in the past.

In the event, Rudd’s criticism of Trump did not harm his ability to work with the US political system. He navigated the enabling legislation for AUKUS through both houses of the Congress. He was relentless. One Republican congressman told me that Rudd had so conditioned him that, whenever he spotted the ambassador’s silver bouffant moving towards him in a Capitol corridor, he would go into a minor panic as he ran a mental checklist of whether he’d done everything Rudd had demanded for AUKUS.

Rudd managed to negotiate the release of Julian Assange. He was indispensable in setting up new arrangements for US capital to finance Australian rare earths and critical minerals projects. Likewise, he was instrumental in creating an agreement for Australian-US co-operation on tech, including AI.

He created a foundation for Australian superannuation funds to invest in the US with the support of Washington: “This is a big resource, and President Trump, it had a visual effect on him as I handed over to him a simple placemat which described the quantum of our funds relative to the British and Canadian funds and relative to the Saudi and the Emirates sovereign funds.”

The head of the US Studies Centre at Sydney University, Mike Green, formerly a senior Asia expert in the White House of George W. Bush, says that “it wasn’t clear what a former Australian PM would do as ambassador to Washington” – there had never been one.

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“It turned out that he was more like a tradie than a prime minister – he rolled up his sleeves, got his hands dirty and got things done, to great effect and to his great credit.” Green puts him in the very top rank of effective Washington ambassadors from any and all countries.

Trump only learnt of his “traitor to the West” remark when it was thrown out by an Australian reporter from Sky News. The reporter hoped that Trump would bristle. He obliged: “I don’t like you, and I probably never will,” he told Rudd at in their celebrated exchange.

But a few minutes later, when the cameras were out of view, Trump and Anthony Albanese had a brief exchange about Rudd. It began with the president asking the prime minister “who is this guy?” and ended with Trump turning to Rudd and saying “all is forgiven”.

And, as we well know, others said worse yet went on to become key members of Trump’s administration after recanting. Vice President JD Vance, no less, once called Trump “America’s Hitler”. Today he is one heartbeat away from replacing him. The only thing Trump likes more than a sycophant is a convert.

The “traitor to the West” line was important only because it allowed Rudd’s enemies and detractors to torment him. His criticisms of Trump, made years earlier, were endless fodder for speculation that his position was untenable.

In truth, it was never in doubt. Albanese was not going to be spooked by malicious whispering campaigns and reporters, some mischievous and others simply gullible, looking for a yarn. Yet they persist. The rumour that Albanese sacked Rudd is false; in truth, he approached Albanese to allow him to return to his post at the Asia Society in New York before the option expired.

And he rejects the speculation that he’s scheming to become the UN secretary-general. Under the geographic rules of rotation for the job, it won’t become available to the “Europe and others” category for decades, he points out.

So what is his burning ambition? “I’m seeking – to the extent that I can, I don’t overestimate this – to have an influence on US-China strategy, from both the US side and the Chinese side. Because what’s my galvanising interest here? I don’t want us to end up in a crisis, conflict and war over Taiwan. If you like, I’ve worked on this for decades.” Such a war would be “unbelievably catastrophic”.

But isn’t it delusional that an Australian running a think tank in New York – the Asia Society and its affiliated Asia Society Policy Institute – could change the course of history?

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Rudd has a couple of advantages. One is that he is, as Mike Green points out, “a world-class expert on Chinese ideology and policy”. His views on China are keenly sought in the US. Indeed, he probably commands more respect in the US than he does in his homeland.

His televised White House encounter with Trump was not their first meeting. In January last year, Rudd was lunching at Trump’s West Palm Beach golf club with Chris Ruddy, a longstanding Trump friend and the founder of the right-wing US media group NewsMax.

When the president-elect entered the grill, Ruddy (no relation) introduced Rudd as former prime minister of Australia and an expert on China. It was a brief exchange, maybe 15 minutes in duration, but Trump used the opportunity to pepper Rudd with questions about China and Xi Jinping. He evidently didn’t recognise the Australian when Rudd arrived with Albanese nine months later.

The point is that America’s thirst for China expertise is real, Rudd’s credentials are recognised, and he doesn’t intend to harm his potential future influence by claiming vindication of his criticism that Trump is a “traitor to the West”. Even if he was dead right.

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Rudd intends to live in Australia again some day. But, for now, he’s following the advice that his wife, Therese, likes to dispense. Rudd relayed it to the fresh-faced graduates in California last week: “Whatever gives you the most joy in life, that is what you are going to be best at. And we are all wired differently.”

Rudd doesn’t intend to fade into obscurity or go into political lobbying. He is turning his inexhaustible energy to the grandest ambition in the greatest of causes. It gives him joy. It’s not for everyone.

The moment the relationship between Minns and Albanese went from bad to worse.

Tense times: Prime Minister Anthony Albanese and NSW Premier Chris Minns give an update on the Bondi Beach shooting on December 16, moments after having a private disagreement.Sam Mooy

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When Prime Minister Anthony Albanese and NSW Premier Chris Minns fronted television cameras two days after the deadly antisemitic terror attack at Bondi Beach, the pair presented a united front to shocked and scared Australians.

Speaking on the 14th floor of the NSW Police executive offices in Elizabeth Street, Albanese and Minns assured the public that gun laws would be tightened, while a police and counter-terrorism investigation continued.

What viewers didn’t know was that only moments before, the leaders had clashed metres away from the assembled media. Some officials – including senior police officers – were asked to leave the room while the duo had it out.

The disagreement concerned details about Naveed and Sajid Akram’s travel to the Philippines, which had surfaced in the media that morning. Albanese suspected it had been leaked by NSW Police. Their blunt exchange was over in minutes – yet it reflected a deeper story.

Working together: Anthony Albanese and Chris Minns.Artwork: Michael Howard

Never allies in the tribal world of Labor politics, the pair had a relationship that would be stretched to near breaking point as an emotional political debate erupted over antisemitism and security. It caused their relationship, as one senior NSW Labor MP described, to go from “bad to worse” since late last year.

Those tensions flared again on Wednesday after Minns used a media conference to call for income tax cuts, while failing to defend the federal government’s contentious reforms of negative gearing and capital gains.

Friction between prime ministers and premiers of the same political stripe isn’t new. Often, enmity can be deeper among politicians on the same team, like that between former prime minister Scott Morrison and ex-NSW premier Gladys Berejiklian.

But Minns and Albanese’s discord stands in contrast to the prime minister’s relationship with other premiers. And with both sides at an impasse over a bailout package for the crucial Tomago smelter, some in Labor question whether a lack of goodwill is inhibiting the delivery of outcomes.

This masthead has spoken to a range of sources in Macquarie Street and Canberra who have intimate knowledge of how the duo get along – or don’t. The sources, including top MPs and consiglieres who have worked with or around the pair for years, were granted anonymity to speak openly.

While the tension is a badly kept secret within Labor, the two leaders have a respectful working relationship. They speak on the phone. Minns and his wife, Anna, have dined with Albanese and Jodie Haydon. Haydon and Minns’ wife caught up this month and are friendly.

Chris Minns and Anthony Albanese during a visit to Paddy’s Markets in Sydney during last year’s federal election campaign.Alex Ellinghausen

Asked about the specific elements of this story, Albanese said: “I work very closely with Premier Chris Minns and regard him as a friend. Premier Minns is a hardworking and effective premier focused on delivering for the people of NSW.”

Minns offered similarly soothing words.

“Prime Minister Anthony Albanese and I have known each other for a long time and have a good personal and working relationship over many years in public life. We’ve worked closely together through some incredibly difficult moments for NSW as well as on major reforms and investments that are making a real difference for people across the state.”

Their ability to remain on solid terms is critical to the nation’s future. They need to fix the mistrust between NSW and federal police that ASIO boss Dennis Richardson observed in his investigation into the Bondi response, and which was highlighted in the saga over a caravan bomb hoax in Dural.

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On energy policy, they don’t see eye to eye on the future of Tomago, a symbolic part of the national debate on industrial capacity and renewables. And on tax and economics, Minns is beginning to offer an ideological contrast with federal Labor.

At its heart, however, the rivalry comes down to who holds sway and status out of the two leaders: one governs the harbour city looking out from Macquarie Street; the other has a grip on the nation from his harbourside mansion at Kirribilli.

Two lone wolves

Albanese is a 63-year-old whose path to the Labor leadership was seen as unlikely, as a member of a Left faction perennially in the minority.

Minns, 46, ran for the leadership twice before succeeding in 2021. The Princeton-educated former firefighter always had his eye on the state’s top job.

The pair have similarities. Both are described as lone wolves. Albanese morphed from a solitary insurgent to a consensus builder with a knack for building up wide networks of trusted contacts.

Most of their adult lives have been inside the NSW Labor Party, albeit from differing generations and factions. Both delivered their parties into government after long stints in the wilderness. Each feels they have a special capacity, beyond their colleagues, to win and maintain power.

A national cabinet meeting in September 2024.Alex Ellinghausen

Albanese spent decades as a factional warrior in the Left, fighting the dominant NSW Right, which produced Paul Keating and Graham Richardson. Albanese has told colleagues about the feat of ascending to such high office from the NSW Left, always seen as inferior to the “whatever it takes” centre-unity right faction in NSW, from which Minns hails.

Of those who spoke to the Herald, there was no agreement about the genesis of tensions between the pair.

Some trace it back to before Minns entered parliament, generated by distrust after years of factional sparring. Others explained it by way of personality: either they’re too similar (both too stubborn); or, they see the world differently.

“They don’t have a good relationship. It goes back well before my time,” one MP says.

This contrasts with the prime minister’s rapport with other premiers, a senior Labor source says. Albanese lavishes South Australia’s Peter Malinauskas with praise. He has a long-term personal relationship with Roger Cook in WA. Even Jeremy Rockliff, the Liberal premier in Tasmania, maintains strong ties with Albanese, who has been loyal to Victoria’s Jacinta Allan even as she’s become toxic in her state.

United front: The two leaders at a Parramatta Building the Future rally in April 2025.Alex Ellinghausen

Other sources play down suggestions of a decades-long animus. Soon after he became opposition leader, they note, Albanese supported Minns in his unsuccessful leadership tilt against Jodi McKay in 2019. The night of the state election, Albanese left his beloved South Sydney Rabbitohs game against Manly to address Minns’ victory party. Minns supported Albanese when the latter considered switching from his seat of Grayndler to neighbouring Barton in 2015 after a redrawing of electoral boundaries shifted his house into a different division.

Frustration with Albanese has been percolating since before Minns took power. Albanese’s decision to hold media conferences with former Liberal premier Dominic Perrottet in the months preceding the March 2023 poll rankled some of Minns’ closest advisers, two sources said. With the NSW election then in the balance, some felt Albanese was hedging his bets.

One Labor insider sums it up like this. The prime minister and the premier have sought to stake out the centre ground and build broad coalitions. Albanese, the insider says, uses consensus to reduce opposition to his plans. Or at least he did until last week’s budget, which created a genuine class cleavage and will douse the suggestion that Albanese lacks progressive ambition.

“While Minns uses opposition to his political plans to build support,” the source says by contrast. Think radical plans to build dense housing in the inner city.

“In a normal political environment, both models can look very similar, even though they are profoundly different. In extreme events of the Bondi terror attacks, this subtle difference in political models became a profound difference.”

Another observer says: “Like all male politicians, they are conflict-averse. They spend a lot more time complaining about each other to others rather than to each other. That might give a sense that the relationship is worse than it is.”

Terror trouble

Within a week of the Bondi terror attack, an already shaky rapport between the Labor leaders had crumbled.

“Bondi accelerated what was already a deteriorating relationship,” one insider says.

On the morning of December 16, details of Naveed and Sajid Akram’s trip to the Philippines appeared on the front page of the nation’s tabloids.

During a meeting before the lunchtime media conference, Sydney’s police chiefs said details about the Philippines trip shouldn’t be disclosed. Albanese disagreed; Minns backed his top cops.

Australian Federal Police Commissioner Krissy Barrett, her NSW counterpart Mal Lanyon and other officials left the room so the prime minister and premier could have a conversation out of earshot.

One person familiar with what happened said raised voices could be heard. Another source was more tempered, saying Albanese was “firm” but no more. News of the argument made its way through both governments and the public service.

Three days later, the NSW premier announced a state-based royal commission. The decision blindsided Albanese and his colleagues who didn’t think NSW would go it alone. Ministers and federal police were still working on putting the pieces together and dealing with the immediate question of security.

It immediately ramped up pressure on Albanese to announce a federal probe, becoming the catalyst for arguably his greatest political crisis.

While sources in the NSW government are adamant that the prime minister’s office was given prior warning, the surprise demonstrated the disconnect between the offices. The two leaders appeared on completely different pages.

The growing chasm became clear at a memorial in Bondi the following Sunday. The prime minister’s office believed Albanese and Minns would enter and exit together. That did not occur.

Prime Minister Anthony Albanese has been heckled as he arrived at Bondi Beach for the candlelight vigil.

“There was an expectation Chris would walk in with Anthony before the Bondi vigil on the Sunday the week after the attack. That didn’t happen and Anthony was booed. Things were very tense after that,” a senior source says.

Those in Canberra and NSW interpreted Minns’ decision as a desire to create separation from an unpopular prime minister.

In the days and weeks following, the premier’s popularity soared. He was lauded for his leadership, despite serious questions about NSW authorities’ role in granting a gun licence and policing the Chanukah event.

Albanese appeared out of touch. He faced relentless criticism from the Coalition and media outlets, including this masthead, over his refusal to hold a national royal commission. Albanese outlined a range of reasons why a royal commission was not a good idea. Some were more credible than others, but Minns’ early call opened up a clear line of criticism of the prime minister.

The view in Canberra was that Minns was rash and had caved under pressure from conservative media without putting forward details on terms of reference or a leader for the inquiry. It proved the suspicion of some critics in federal Labor that Minns was focused on winning media wars.

Those close to the premier felt Bondi was yet another example of the prime minister’s inability to cauterise a crisis. The scale of the tragedy demanded decisiveness, and Minns would not bear the political damage of Albanese’s missteps.

For some in Minns’ orbit, Albanese’s clunky response to the attack was just another example that his rise to power was in part because of luck, benefiting from the Coalition’s ineptitude rather than his own conviction.

Those in Canberra believed Minns’ siding with police demonstrated his tight relationship with Sydney’s conservative institutions: police, News Corp tabloids and radio station 2GB. His closeness to these groups is a key feature of his premiership and one that others in the party, particularly on the left, view dimly.

The Daily Telegraph editor Ben English and Chris Minns together on a panel in 2024.Rhett Wyman

Some federal figures had warned Minns over the years that he would eventually be deserted by News Corp, as the Rupert Murdoch-owned outlet did to Kevin Rudd after initially supporting his rise.

On the other hand, Albanese fumed to colleagues in January about the media coverage Minns was receiving, which was reflected in opinion polling that hasn’t fully recovered to this day for Albanese. Minns sounded decisive but he did not need to contend with the difficulty of managing Australia’s foreign policy towards Israel. Benjamin Netanyahu’s belligerence and violence had made his government unpopular in many Western nations, leading to Australia and others recognising a Palestinian state.

Instead, Minns – who has an affinity with the Jewish cause – could grieve with that community with no baggage.

A contest over Israel-Palestine politics, and attitudes towards NSW police, emerged again during the visit by Israeli President Isaac Herzog to grieve with Australia’s devastated Jewish community. At a protest rally, police forced a group of Muslim men praying in a CBD street to stand and move on.

Chris Minns has claimed NSW was a loser from last night’s budget, complaining about an "unfair" share of the nation's infrastructure funding.

Muslim leaders demanded an apology and disciplinary action against officers. The incident sparked conversation about the contest between public order and a secular public square on one hand, and religious tolerance on the other.

Asked if he would apologise to the Muslim community, Minns said no.

The following day, Albanese spoke on this masthead’s Inside Politics podcast and took a different line.

“I’m concerned at the great deal of hurt which the Muslim community are feeling,” Albanese said. “I think that is something that needs a full explanation.

Ideology and policy

A few days before the December 16 press conference, a spotlight was shone on a fissure over energy and industry policy that reflects the ideological differences between the Albanese and Minns administrations.

Albanese travelled with Industry Minister Tim Ayres to the Hunter Valley on December 12 to announce a bailout package for Tomago, the nation’s largest aluminium smelter.

Ayres is one of Albanese’s most trusted left-wing allies. The pair lived near each other in Sydney’s inner west. The senator has a bold vision to re-industrialise Australia, turning around decades of industry policy. The plan is to keep manufacturing firms like fertiliser businesses and metals smelters alive over the next few years by subsidising them until energy prices one day come down through a gas reservation rollout and the later stages of the rocky transition to green energy.

Albanese declared that 1000 workers at Tomago could rest easy over Christmas “in the knowledge that … as a result of the decision that we have taken, we’ll be working on finalising these details to make sure that your future is secure”.

The catch was that NSW had not yet agreed to fund a deal to provide Tomago with energy from the Snowy Hydro facility. Albanese and Ayres said they were working constructively with Minns, but the premier struck a different tone.

The premier said in March: “They made a decision to save it. We were tangentially communicated with. We were told about it after; not after the announcement was made, but certainly after they made the decision to go up there and make the announcement.”

Sources in NSW Labor say the federal government expects NSW to take on “billions and billions” of spending on the state’s already struggling balance sheet. Unlike federal Treasurer Jim Chalmers, there is no off-budget option available for NSW Treasurer Daniel Mookhey.

There will be a provision for Tomago in the state’s budget in June, but it is unlikely to be anything near what Canberra has been demanding.

Federal sources dispute the lack of notice claim and point to a large volume of correspondence between the governments and communication two days beforehand.

“Tomago is both a cause and a consequence of the further deterioration in their relationship. It is harder to escalate it up the chain and fix it. The goodwill just isn’t there,” a source says.

Future uncertain: The Tomago aluminium smelter in the Hunter Valley.James Brickwood

Ayres is a unionist at heart. Some in Canberra felt Minns’ view of the union movement was not as full-throated as his federal colleagues’, pointing to his inaugural speech in parliament where he broke ranks with Labor orthodoxy and said the party must dilute union power.

A separate insider said: “If you talk to someone in Minns’ land, they will say Albo landed the first blow by announcing Tomago without telling them.”

Insiders in Canberra think that Minns has formed a view that power would be cheaper for households in NSW if Tomago didn’t suck up energy.

In a related policy move, the Minns government backed the Eraring coal mine to stay open for years longer than planned, challenging Labor’s already treacherous path to its renewable energy targets.

The policy contest runs deeper than energy and industry.

Minns drew the ire of federal ministers this week when he called for “urgent” action on lowering the tax burden on working Australians. His call echoed those of Labor icons Paul Keating and Bill Kelty. It also came during a week in which the opposition castigated Labor for not going further with personal income tax cuts.

“You work Monday, Tuesday and half Wednesday for yourself and then Wednesday, Thursday and Friday for the government, that’s a tough burden,” Minns told reporters.

Treasurer Jim Chalmers later sledged Minns, suggesting the premier didn’t understand a worker was taxed at 47 per cent only on income above the top threshold, not 47 per cent on average across their whole salary.

Friendly fire: Treasurer Jim Chalmers defended federal budget measures against criticism by Chris Minns. Alex Ellinghausen

“First of all, that’s not how marginal tax rates work. Second of all, this is a government which is cutting taxes for every Australian worker,” Chalmers said. It was the sort of response usually reserved for someone on the opposite side of politics.

Minns was also lukewarm on Labor’s decision to extend its CGT changes to assets outside housing. He said they were “not my changes” and he refused to back the plan, amid an outcry that changes will sap productivity.

“I bet Jim and Anthony appreciated Chris’ intervention,” Bill Shorten said sarcastically on this masthead’s Inside Politics podcast on Friday.

But both leaders play down any talk of tensions. Minns told this masthead: “I have a lot of respect for Anthony and I know we have a shared focus on delivering for people, who at the moment are doing it tougher than ever. I look forward to continuing to work closely with him.”

Albanese says: “Together we have delivered record public hospital funding, the full funding of NSW public schools and Australia’s world-leading social media age ban that will help to save kids’ lives. We have much more to do together, and I will be working hard towards seeing him re-elected next year along with the rest of the Labor movement in NSW.”

A senior source believes the differences are simply due to competing political priorities of the respective governments.

Minns’ senior ranks felt NSW, the nation’s largest economy, had been consistently shortchanged on GST, infrastructure spending and hospitals. That led to the premier and senior ministers publicly criticising the federal government.

“Anthony is a dealmaker. He doesn’t take well to reading about criticism in the media,” the senior source says.

Before the state election next year, attempts to create some distance from Canberra and pick a fight might just be good politics, another source claims.

The Greens are pressing the government to toughen the property tax changes in last week’s budget, even as Prime Minister Anthony Albanese and Treasurer Jim Chalmers face growing external demands to create more exemptions, especially for small businesses.

The Australian Financial Review has learnt that preliminary negotiations have begun between the government and the Greens over the legislation to increase capital gains tax and curb the use of negative gearing by July 2, before the parliamentary winter break.

Greens leader Larissa Waters and treasury spokesman Nick McKim want to make changes to the budget measures. Alex Ellinghausen

Sources familiar with deliberations, speaking on condition of anonymity, say the Greens have yet to guarantee that they will pass the legislation by July 2, nor have they acceded to the government’s desire that there not be a Senate inquiry.

The Greens, who initiated the push to pare back the CGT discount by setting up a Senate inquiry late last year, have as their starting point that there be no CGT discount and no exemptions or grandfathering of existing assets.

Although they do not expect the government to go that far, they are pushing for further changes to grandfathering, especially regarding negative gearing, under which all existing assets will be exempted.

They also want the CGT deduction capped.

Under the budget measure, the 50 per cent CGT discount for assets held longer than 12 months will, from July 1 next year, revert to a version of the pre-1999 system in which the discount was indexed to inflation over the life of the asset, to ensure only above-inflation gains were taxed.

In some instances, this could provide a discount higher than 50 per cent, so the Greens want the maximum discount under the new scheme capped at 50 per cent. These changes were flagged by the minor party immediately after the budget and now form the basis of their negotiations.

Revenue boost

The Greens argue that if the government ramps up the measures, it will have sufficient revenue to provide a more substantial tax cut than the $250-a-year Working Australians Tax Offset, and build support for what has been a friendless budget.

But the negotiations come against a backdrop of growing anger from the SME sector and investors who feel they are collateral damage in a budget that was supposed to be about targeting the tax treatment of property to help first home buyers.

The teal independents are also variously calling for greater exemptions for business, with some saying the CGT changes should be confined to housing.

>“Cumulatively, this is not tax reform; this is a higher cost of deploying capital in Australia.”
— Billionaire Ryan Stokes

On Thursday, 10 entrepreneurial women comprising the Female Founders, all of whom had built businesses from the ground up, urged the government to reconsider its measures.

“These changes would not only affect founders today. They risk discouraging the next generation of women from starting businesses at all,” they said in a statement.

“It is already harder for women to access capital, secure loans, raise investment, and attract senior talent. Many female founders begin with fewer resources, smaller networks, and more family responsibilities than their male counterparts. The proposed CGT changes would make an already difficult path even harder.”

They took issue with a statement from former prime minister Paul Keating, who dismissed critics of the CGT change as John Howard’s “used car selling and dodgy accounting mates”.

“That characterisation is dismissive and out of touch with the reality of modern Australian business ownership,” they said.

“We are not political operatives. We are not tax avoiders. We are women who had an idea, took a risk, and worked incredibly hard to build businesses – often while raising families at the same time.”

Billionaire Ryan Stokes also weighed in.

“Cumulatively, this is not tax reform; this is a higher cost of deploying capital in Australia at a moment when the global capital pool is more mobile than ever,” he said.

“On top of that, you have the industrial relations direction, energy policy and planning settings that have been getting harder for a number of years. Our operating models can absorb that, but it means we now need to broaden how we think about employing capital from a geographic perspective.”

Concerns are rising inside the ­Albanese government over how to carve out start-ups from new capital gains tax rules without undermining the changes, as Atlassian co-founder Scott Farquhar and teal MP Allegra Spender join forces to strike a CGT deal for Australia’s biggest tech successes.

Founders and representatives of major Australian tech companies such as Canva – which former prime minister Paul Keating singled out this week as not needing a CGT carve-out – attended a roundtable with Ms Spender this week, where there were discussions to define who should be covered by any ­protections in the upcoming tax legislation.

Anthony Albanese and Jim Chalmers are facing a race against time to finalise Labor’s negative gearing and CGT bills by the first week of June, which they hope to introduce to parliament amid a grassroots, viral backlash from young investors and the start-up sector.

“We were doing some private consultation before the budget and now publicly I’ve done a bit of that myself,” the Treasurer told the 7am podcast on Thursday.

“My department, the Treasury Department’s, been doing that in a more formal way to see if we can find a way through, which recognises, first of all, how important start-ups are to our economy – providing that dynamism in our economy which we really cherish and value – and making sure that we can recognise that start-ups can be a bit of a different case in the tax system.”

Jim Chalmers at the CME Business Lunch in Perth on Thursday. Picture: Colin Murty

The Prime Minister and Dr Chalmers’ struggling campaign to sell the budget continued to suffer blows on Thursday, as a group of women who founded start-ups ­accused the government of being out of touch and failing to understand the realities of business with their CGT push.

Queensland’s LNP Premier David Crisafulli joined his NSW Labor counterpart, Chris Minns, in demanding urgent action on bracket creep. And investment bank Morgan Stanley predicted house prices would fall by as much as 10 per cent on the back of the latest federal budget.

Senior Labor sources said several options for tech sector carve outs from the CGT changes could be considered, such as exempting any start-ups that had a zero cost base and were sold for more than $50m, but that could easily be circumvented.

Another option was to exempt founders who had equity in the business within the first five years of that business starting.

A third was restricting the start-up carve-out to technology only.

Treasury and government are understood to be concerned with how porous these definitions would be for the integrity of the tax changes.

Teal MP Allegra Spender and Atlassian co-founder Scott Farquhar. Picture: NewsWire / Martin Ollman

The Treasurer’s announcement in the budget last week that the 50 per cent CGT discount would be removed in favour of inflation indexation has left start-up founders and employees who took equity as salary facing the prospect of paying 47 per cent tax on the gains of a successful sale.

Inflation on a zero cost base leaves no discount under the ­inflation-indexation method.

As she spearheads the push in parliament to change the CGT rules for the tech sector, Ms Spender held a meeting this week with investors from technology companies including Canva, Blackbird, Safetyculture and others affiliated with the Tech Council of Australia and the Australian Investment Council. Some of those businesses’ founders have previously donated to Climate 200 – the main campaign finance vehicle that supported the election of Ms Spender and other teal MPs.

Ms Spender said she wanted to be confident that proposals such as the revised CGT discount would not undermine productive ­investment in start-ups and high-growth enterprise.

“I am speaking to the tech sector and many others who run small and medium businesses about the implications of the proposed tax changes,” Ms Spender told The Australian. “I think we need to rebalance our tax system to reduce taxation on wages and salaries, shifting some of the burden to assets, while ensuring our tax system encourages innovation and productivity, but there are real issues with the budget proposals at the moment.

“There are lots of thoughtful suggestions being put out but I am urging the government to slow the process down and get this right.”

The Tech Council, which is chaired by Mr Farquhar, held a series of discussions this week to gather feedback to attempt to influence a policy change.

On Wednesday, Mr Keating singled out Canva as a company where those who gained from it should not be exempt from the new CGT regime. “Wealthy people are out there now arguing against the government’s change,” the former prime minister wrote. “They want to split off start-up capital and shares as if the individuals commentating have not made a feast of it already. They nominate tech and start-ups. But if a tech start-up fires, like a Canva, the value ­acceleration and level of wealth makes any discussion of the tax rate absolutely secondary.”

Industry Minister Tim Ayres hinted on Thursday that a carve-out for start-ups could be part of the CGT reforms. “As Jim said on budget night himself, Jim Chalmers is leading those discussions with the start-up community to make sure these changes landed the right way,” he told Sky News.

“(Start-ups) are in a different situation. We’re working carefully with … that community, with the tech sector … Of course, Jim will keep working on those issues.”

Prime Minister Anthony Albanese is open to changes on a proposal to tax trusts that the Coalition has described as a “death tax”, according to government sources, though Labor will overlook a business outcry and push ahead with its remodelling of the capital gains tax.

The public furore is not persuading Labor to rethink its CGT plans, according to well-placed sources in the government who say that the silent majority of voters, particularly young people without assets, are either pleased or unaware of the changes.

Treasurer Jim Chalmers and Prime Minister Anthony Albanese at a post-budget TV interview last week.Dominic Lorrimer

The government is, however, open to a reversal or amendments on its contentious move to include discretionary testamentary trusts in its minimum 30 per cent tax on discretionary trusts, the sources said.

As analysts warn of a major property price drop after Treasurer Jim Chalmers announced sweeping tax changes in the budget, former Labor leader Bill Shorten told this masthead’s Inside Politics podcast that there was lots of “noise” from critics but said the party could win the long-term argument on the merits of its budget.

Shorten, who faced a Coalition “death tax” scare campaign in 2019, warned of the political attacks that could stem from any proposals around taxing testamentary trusts – a surprise inclusion in Labor’s budget last week.

Labor’s decision to replace the flat CGT discount with an inflation-adjusted model used last century has provoked anger from small and medium businesses and entrepreneurs, who say the new model will penalise risk-takers and benefit lower-growth investments at a time of poor productivity.

This masthead reported on Tuesday that Labor insiders were worried about the economic consequences of changing the CGT discount for investments beyond housing, and that Labor’s caucus was growing uneasy about the business backlash.

Chalmers moved on Thursday to counter criticism that the government’s budget was anti-aspirational, telling reporters in Perth that Labor was “not making a judgment on people who’ve done well – we want more people to do well.”

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A Labor MP who represents a more affluent seat said on background that the Liberal Party was too heavily swayed by a small segment of tech and crypto investors who were filling Coalition MPs’ social media algorithms, but not reflective of the rest of the broader community.

Separately, Housing Minister Clare O’Neil said on social media: “Does anyone find it weird that a whole bunch of internet finance bros are suddenly concerned about renters?”

Those CGT and negative gearing changes – the latter having received barely any criticism – will be pushed through parliament by July, almost certainly with Greens support in the Senate, though the minor party has previously indicated it wants Labor’s changes to go further. The new rules will take effect this year and expand in 2027.

The government is consulting the tech sector about potential carve-outs for a limited range of firms such as start-ups, as the government acknowledges they may be hard hit by the CGT changes.

The government may allow income averaging or allowances for firms whose employees are effectively paid in stock options. These changes are unlikely to satisfy a growing host of critics, including independent MP Allegra Spender and former Labor adviser Lachlan Harris, who worry the new inflation-measured discount will chill investment and hurt many business people, not just start-up founders.

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Albanese’s now in a class war he previously shunned

Unlike the CGT and negative gearing plans, which will be rushed through parliament next month, Labor is planning a months-long consultation on the trusts changes, which are designed to kick in from July 2028.

Trusts are politically contentious because hundreds of thousands of families and businesses use them; these include “bucket companies” used by many small firms and family businesses.

Discretionary testamentary trusts are used by families to protect assets when, for example, parents are worried about the reliability of their child’s partner who may claim half an inheritance, or when parents die before a child is old enough to manage an inheritance.

There are more than one million trusts, of which 840,000 are discretionary. About 10,500 Australians have testamentary trusts, though some are fixed rather than discretionary and therefore won’t be caught up in the tax changes.

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Keating defends Chalmers and Albanese amid CGT backlash, as Minns blasts feds on income tax

Trusts set up for farmers, or on behalf of minors and vulnerable people, are also exempt, although the final detail of how exemptions will work is yet to be settled.

The notion of a death tax has long been contentious in Australian politics. More than 20 countries in the OECD, a club of rich nations, have some type of inheritance or estate tax.

Many mainstream economists support inheritance taxes as a way of balancing the taxation of capital and labour and countering the growing trend of young people only being able to buy property if they have well-off parents.

The Coalition ran a campaign against Bill Shorten in 2019, suggesting his tax agenda, which included a change to franking credits, amounted to a “death tax”, which he was not actually proposing.

On the Inside Politics podcast, Shorten said: “There’s always an issue soon as you’re talking about testamentary arrangements that you are talking about inheritance, which then leads to the possibilities of a scare campaign.”

Earlier this week, Opposition Leader Angus Taylor labelled the changes “a death tax by stealth, there’s no doubt about it”.

Morgan Stanley analysts sent a note on Thursday saying the combination of CGT and negative gearing changes and a rate-hiking cycle could “fundamentally change the asset allocation decision for households”.

“We estimate that housing prices would need to fall 5 per cent to adjust to the tax changes (with a permanent reduction in investor demand share), but taking into account the soft starting point for housing with RBA rate hikes, we see a 5-10 per cent drop in national prices as likely, one of the largest price corrections over the past 40 years,” they said.

On Thursday, in a conversation about football on FM radio in Brisbane, Albanese was confronted by a host about what “feels like a lie” in relation to Labor’s broken pledges on tax concessions.

Albanese responded: “No, look, we changed our position. You’ve got to be upfront about that. And just like, you know, you’ve got to change your position sometimes in a, in a footy game if things aren’t working. And the truth is that the housing system isn’t working for young people.”

Pauline Hanson reveals policy talks with Gina Rinehart

Hanson said she had not been influenced by Rinehart on immigration matters.

"Just because we've got a plane doesn't mean to say my tune has changed as far as migration," Hanson said.

"I've been speaking about this for the last 30 years. I'm on the record of talking about this. I've been consistent with my policies, what I stand for."

But she said Rinehart did raise matters of policy with her, in line with other organisations and groups who meet with her in parliament.

"She (Rinehart) puts forward some policies like everyone else. I had the gas industry here today as well. I've had ... a lawyer about family law. So, I'm talking to all people, which I have done for years, about policy.

"Why shouldn't she talk to me about policy? No one changes my vision, what I have for Australia, what I want to do. I'm quite happy to listen to anyone. Why wouldn't I listen to Gina Rinehart? She's one of the highest — if not the highest — taxpayers in this nation, and what she does for this country as well."

"I'm sick of people saying, you know, who criticise her for the wealth, but she's one of the people in this country that does give back to the community, unlike some of the others in the mining industry."

Hi All

This is a new model Samsung and I cannot see Jellyfin in the Samsung Store but understood it was available for the newer models - any ideas?

Westpac has told mortgage brokers it will not honour pre-approved investor loans for customers, which would need to be reassessed after the federal government banned negative gearing for existing properties in the budget.

On Wednesday, Australia’s second-largest mortgage lender, emailed its broker network warning them to “set expectations early by clearly discussing [with customers] where the removal of the negative gearing benefit may create a serviceability shortfall in the future”.

Westpac has joined Macquarie in rewriting the rules for property investors. Louie Douvis

“Document the customer’s acknowledgement of potential impacts to future servicing capacity and how they intend to respond if their position changes.”

Mortgage customers seeking an investor loan are expected to have their borrowing capacity reduced because they can no longer factor in savings from negatively gearing a property.

Mortgage brokers expect some customers’ borrowing capacity could be slashed by as much as 20 per cent.

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Westpac cautioned brokers against making promises about future lending arrangements. “Do not provide assurances about future tax benefits,” it said. Westpac’s subsidiary St George also sent a similar note to its broker network.

Property investors with conditional investor loan pre-approvals have a three-month window to purchase a property up to an agreed amount, but Westpac said this would need to be reassessed.

“Conditional approvals will be assessed at unconditional approval using the latest applicable credit policy,” the lender said.

In the federal budget, the government abolished negative gearing for future purchases of established investment properties, arguing the tax concession had driven up property prices and needed to be reined in to give young people a chance of outbidding investors to buy their first home.

However, those who buy off-the-plan or new build homes can continue to use negative gearing.

Negative gearing allows a property investor to write off operating losses against their other income, such as their salary from working, to reduce their tax bill.

On Monday, Macquarie told its mortgage broker network to update their lending policies to apply the federal government’s ban on negative gearing for existing properties, even though it has not yet passed as legislation.

Under responsible lending rules, banks are required to alert brokers when they expect changes to policies.

Commonwealth Bank, National Australia Bank, ANZ and ING are reviewing their investor home loan policies.

The abolition of negative gearing comes after three consecutive interest rate hikes from the Reserve Bank of Australia.  Audrey Richardson

Westpac has not formally changed its lending policies for investor home loans as the legislation to enact the changes to negative gearing and also on capital gains tax have not passed parliament, but some banks are alerting customers as the government prepares to pass legislation before parliament takes a break in July.

In the federal budget, the government also axed the 50 per cent capital gains tax discount across all assets, including property, and replaced it with an inflation-adjusted calculation that is considered less generous for many investors. A minimum 30 per cent capital gains tax was also introduced.

The move to overhaul negative gearing marked a significant breach of an election commitment by Prime Minister Anthony Albanese, who repeatedly ruled out changes to investor concessions during the 2025 federal election campaign.

The Coalition has vowed to repeal the changes if they are elected and promised ambitious reform of its own, including indexing income tax brackets to inflation.

The investment changes come after three consecutive interest rate hikes from the Reserve Bank of Australia, taking the official cash rate to 4.35 per cent. The ongoing Iran war, and resulting oil price shock, has also unnerved property investors.

“Aside from Covid, we cannot recall a time in the past 25 years when
the operating conditions for banks have shifted so quickly,” Morgan Stanley banking analyst Richard Wiles said.

“In our view, the combination of RBA rate hikes and uncertainty created by the proposed changes to property-related tax concessions increases the risk of a further de-rating.”

Prime Minister Anthony Albanese is reassuring people that the government’s changes to capital gains tax simply return the rules to the pre-1999 model that Labor’s Paul Keating introduced.

“Our policies are very clear,” Albanese said on Tuesday. “What we are simply doing is returning the CGT system to what was there before 1999.”

But that’s not quite true.

Prime Minister Anthony Albanese’s proposed CGT model does not include an income averaging feature like Paul Keating’s did. Holly Thompson

Albanese is referring to dumping the 50 per cent discount on capital gains that former Liberal treasurer Peter Costello introduced in September 1999 and reverting to Keating’s 1985-1999 inflation indexation model.

Under inflation indexation, only real (inflation-adjusted) capital gains are taxable, not higher nominal gains.

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Former Keating adviser turned AustralianSuper chairman Don Russell said on Tuesday night that people were underestimating the importance of indexing gains to inflation, particularly when inflation could be more volatile and higher in the future than it was in the 1980s.

But Albanese’s inflation indexation model is different from Keating’s in two ways that mean investors will typically pay more tax.

First, Keating’s model allowed investors to smooth their capital gains over up to five years in recognition that one-off profits from asset sales could be lumpy and temporarily push taxpayers into higher tax brackets.

This is known as income averaging to take some of the sting out of CGT.

Labor’s budget proposal omits the income averaging feature, so investors making large gains in one financial year, such as from the sale of a property or shares, will be more easily pushed into higher income tax brackets.

Melbourne tax adviser Andrew Clements says the proposed new system is harsher than the pre-1999 regime.

“It does not address the tax rate distortion that arises when a long‑term gain is taxed in a single year,” Clements says.

A Labor MP, speaking on the condition of anonymity, said on Wednesday that the government’s proposed model “should be income averaged”.

Second, Albanese’s proposed CGT model includes a minimum 30 per cent tax rate on real gains that Keating did not impose.

The 30 per cent floor on the CGT rate is designed to stop older people paying less tax on the disposal of assets when they typically face lower marginal tax rates in retirement because they earn little other income.

“The minimum tax will complement these changes by reducing incentives to hold on to assets to realise a gain when it’s most tax advantageous,” Treasury says in the budget papers.

“The minimum tax will also support more consistent taxation of lifetime income by aligning the tax rate on real capital gains with the marginal tax rate faced by the average worker.”

Not well understood

The 30 per cent tax floor is not well understood. It is imposed on real gains, after discounting for inflation.

Hence, the headline tax rate paid would often be lower than the 30 per cent suggests, particularly when inflation is high.

A higher-income investor on the top 47 per cent marginal income tax rate earning a 3 per cent average return over a decade would pay zero CGT, assuming the annual inflation rate of about 3 per cent over the past 10 years, according to Treasury.

An investor earning the S&P/ASX 200 average capital growth of 5.1 per cent a year – excluding dividends – would pay an effective capital gains tax rate of 21.4 per cent.

An investor earning the ASX midcap average of 7.3 per cent would pay 30.7 per cent.

A 10 per cent annual return would face an effective CGT rate of 36.6 per cent for the decade-long investments.

Those tax rates compare with the current maximum 23.5 per cent rate on nominal gains under the 50 per cent discount for assets held longer than 12 months that has operated for the past quarter of a century.

“We are living in a world where inflation has become much more variable; it’s got a potential to be higher,” says Russell.

“People will find that it is actually quite beneficial to own assets, where the inflation risk has been washed out through taxing capital gains on a real basis.

“So I’d be less discouraged than the commentators have been about moving away from the 50 per cent discount.”

Assistant Minister for Technology and the Digital Economy Andrew Charlton, himself a successful entrepreneur, said on Wednesday that “nobody is paying their full marginal tax rate on a nominal gain”.

Viral Albanese meme

A viral social media meme among small business owners has emerged depicting Albanese as a 47 per cent part-owner of their business. The 47 per cent tax rate is the top marginal income tax rate, including the 2 per cent Medicare levy.

“Unlike what those claims and memes suggest, nobody is paying their full marginal tax rate on a nominal gain,” Charlton says.

“We are moving to shift the regime such that it taxes real gains instead of nominal gains, and those real gains will always be smaller than the nominal gains, and often substantially smaller.”

However, the dilemma for high-growth assets, such as successful start-ups and other businesses, is that inflation indexation will apply a much higher tax rate than the current maximum 23.5 per cent.

Small businesses with revenue below $2 million, or below $6 million in assets, will remain eligible for CGT concessions and exemptions. Treasurer Jim Chalmers says this means nine out of 10 small businesses can pay zero or reduced CGT when they sell their businesses.

However, if a business experiences exponential growth in value, the tax rate could be just below 47 per cent.

Sandon chief investment officer Gabriel Radzyminski calculates that for an investor who puts $1000 into a start-up, and whose share value grows to $250,000 over 10 years, the tax rate would be 46.7 per cent.

“The proposed changes can benefit low capital gains, but it definitely punishes high gains,” Radzyminski says.

Hence, there has been an outcry from venture capitalists and entrepreneurs, such as Square Peg co-founder Paul Bassat, about the CGT changes deterring investment, innovation and scaring talent into doing business overseas.

Labor is scrambling to try to make inflation indexation work more fairly for start-up businesses by adjusting the starting cost base valuation.

However, carve-outs or concessions will be difficult to draw a line in the sand on, and inevitably fuel further complaints that other successful investors and businesses will be punished with higher taxes.

Keating defends Chalmers and Albanese amid CGT backlash, as Minns blasts feds on income tax

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Former prime minister Paul Keating has accused investors criticising the capital gains tax overhaul of pure greed, leaping to Treasurer Jim Chalmers’ defence as NSW Premier Chris Minns admonished his federal allies for failing to provide bigger income tax cuts.

Minns’ call to let workers keep more of what they earn came on top of his refusal to endorse Chalmers’ changes to the CGT discount after questions on whether they would crimp investment and hurt the economy.

Paul Keating (left) and Jim Chalmers in 2022.Jeremy Piper

The NSW premier, who clashed with Prime Minister Anthony Albanese last week over funding for Victorian Premier Jacinta Allan’s contentious Suburban Rail Loop, said the CGT reforms were “not my changes”.

Younger shareholders and experienced venture capitalists have revolted against Labor’s “intergenerational equality” budget, which Chalmers and Albanese have said was designed to boost investment and productivity.

Keating, a mentor of Chalmers who first created the CGT, sought to shift the debate, saying investors wanted to exempt start-up capital and shares “as if the individuals commentating have not made a feast of it already”.

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Albanese’s now in a class war he previously shunned

“They want to retain a preference for capital over wage and salary income,” he said in a written statement.

Keating argued that John Howard and Peter Costello did a favour to “their used-car-selling and dodgy accounting mates” by creating a 50 per cent flat CGT discount, which the former prime minister argued had caused Australian house prices to become nearly the most expensive in the world. UNSW economist Richard Holden has questioned the link between the CGT change and price growth.

“A society that fails to house its children is a society in decline – this is what Jim Chalmers and his prime minister are seeking to arrest,” Keating said.

“Yet when Jim Chalmers announces a policy principle to restore the equity of taxing capital profits on a basis of equality with the taxation of income – we hear the howls for continuing preference.”

In response to investors’ claims that money would shift to places like Singapore and New Zealand which don’t have a capital gains tax, Keating said: “Punters with a big idea won’t be put off by some marginal change to the tax rate.

“The rush of entrepreneurial blood to the brain always dominates.”

Keating’s defence of Chalmers came a week after the treasurer, who wrote his PhD on Keating’s pro-market reforms, restored the CGT discount to a model similar to the one Keating created before Howard’s changes.

Critics say it was correct to scrap negative gearing and the CGT discount on housing. But they worry that by extending the changes to all assets, young entrepreneurs taking big risks would lose out and older people who invest in blue-chip shares would win.

Another talking point out of last week’s federal budget, billed as Labor’s most ambitious, was the government’s decision to offer a permanent $250 tax offset known as the Working Australian’s Tax Offset. Opposition Leader Angus Taylor followed up by pledging a structural change to income tax that would index the thresholds to inflation, permanently handing back bracket creep. Chalmers rejected indexation, and suggested Labor would continue to use the offset to provide relief.

Prime Minister Anthony Albanese.Dominic Lorrimer

Minns lent weight to the campaign for indexing proposed by Taylor. Keating and his union ally, Labor doyen Bill Kelty, have previously called for the top marginal rate of 47 per cent to be cut because, as Keating has said, the internationally high rate was “confiscatory”. So has independent MP Allegra Spender.

Minns told reporters: “The top marginal rate is 47 per cent. As I said in parliament last week, you work Monday, Tuesday, and half Wednesday for yourself and then Wednesday, Thursday, and Friday for the government, that’s a tough burden.”

“I know budgets are under pressure but, in a general sense, whether it’s now or in the future, we do need to make sure we’re taking urgent action when it comes to personal income taxes.”

Taylor seized on Minns’ comments on the tax contest, which has created an ideological tussle over aspiration that is set to dominate political debate before the next election.

“Even state premiers can see what Anthony Albanese will not admit,” he said.

The Victorian labor government did not buy in, saying only in a statement: “We are currently assessing the implications for businesses in Victoria.”

In Melbourne, Chalmers pushed back against Minns by noting that marginal tax rates did not operate in the way Minns had suggested.

“One of the problems with our tax system right now is it’s out of whack. It doesn’t reward work sufficiently, which is why we’re cutting taxes five times in three different ways,” he said.

“We’re taking some difficult decisions to fix that.”

Chalmers signalled some CGT changes for the start-up sector. These changes are unlikely to satisfy a growing host of critics including independent MP Allegra Spender and former Labor adviser Lachlan Harris who worry the new inflation-measured discount will chill investment and hurt many business people, not just startup founders.

Keating introduced the CGT in 1985 as part of a broad tax package that included deep cuts to personal and company tax cuts plus the creation of the fringe benefits tax. The Coalition then, led by John Howard, vowed to axe the tax at the 1987 election.

In 1999, then-Liberal treasurer Peter Costello overhauled the CGT, replacing the inflation-indexation system with a flat 50 per cent discount on all nominal capital gains. It was expected to boost investment into the share market, but critics argue that it instead drove a near 25-year surge in house prices.

Shadow treasurer Tim Wilson used a National Press Club speech to hail what he called a “truly organic” social media campaign which has poked fun at Labor’s CGT changes. He described Albanese as “the guy in that group assignment that does none of the work, but still wants the grade”.

“Where we should have got unity, we had the prime minister stoking fights around kitchen tables of the nation, pitting children against their parents, grandchildren against their grandparents,” Wilson said.

“It is a budget so absent of ambition for our nation that its failure is shown up in its own numbers.”

Chalmers blasted Wilson, describing his speech as “the least coherent, least credible shadow treasurer hit-out after a budget that anyone can remember.

“Tim Wilson’s misinformation and his lies didn’t last 30 minutes of scrutiny,” Chalmers said. “First of all, their policy is for bigger deficits and more debt and more inflation”.