CGT change will increase business investment costs: RBA analysis

The Reserve Bank says the Albanese government’s changes to capital gains tax will modestly increase the cost of investment for business, which economists warn will exacerbate Australia’s productivity challenge.

Internal RBA documents analysing Labor’s tax changes said they could deter investment in high-growth companies, including start-ups, and encourage investment in lower-growth, higher dividend-paying firms.

The RBA documents said there would be a “modest increase” in the overall cost of capital for non-financial businesses across the economy of 0.11 of a percentage point to 0.26 of a percentage point – the equivalent of about one interest rate rise.

The increase in the cost of capital would be larger for start-ups, unlisted firms and high-growth sectors, including their underlying investors such as venture capital and private equity, the RBA noted in documents released in response to a freedom of information request.

A high-income individual investor could face an effective tax rate of 32.9 per cent on capital gains, up from the previous 22.5 per cent.

But the capital cost increase would be smaller for established and larger listed companies on the ASX, lower-growth sectors and businesses with more investment from foreign investors and superannuation funds who were exempted from the CGT changes, the RBA noted.

The CGT changes will tax high returns more and low returns potentially less, relative to inflation.

The government axed the 50 per cent capital gains discount for most assets in its contentious May budget, but retained carve-outs for new-build homes, small businesses turning over less than $10 million and some innovative start-ups. Treasury is consulting on the start-up exemptions.

The changes sparked a backlash from business and investors, leading to the government pledging concessions for SMEs, start-ups and inheritances hit by a so-called “death tax”.

A new inflation-indexed system will begin on July 1, 2027, and tax real gains at a minimum rate of 30 per cent.

A low-income investor could see their effective tax rate rise to 19.3 per cent on capital gains, up from 12.5 per cent, due to the 30 per cent minimum tax rate, the RBA said.

The government also eliminated negative gearing for future housing investors – except new-build homes – and is introducing a 30 per cent minimum tax on discretionary trust distributions.

Treasury projects that the combined changes will increase the government’s tax take by $88 billion over a decade.

The RBA’s analysis of the CGT changes, conducted about two weeks after the May 12 budget, said increasing the effective tax rate on capital gains for some investors would raise the pre-tax returns they demanded to make their investment worthwhile.

“By making investment less attractive for some investors, these changes have the potential to increase the cost of capital for Australian businesses,” RBA analysts noted.

“The aggregate allocation of capital may tilt more towards sectors with more mature assets that generate steady income (e.g. utilities), and away from firms where capital gains comprise a large share of expected returns (e.g. start-ups).”

Because superannuation funds would retain the low 10 per cent tax rate on capital gains, the RBA said retail investors may shift away from direct equity investments towards investing via their super funds.

University of NSW economics professor Richard Holden said that a higher cost of capital made some marginal investment opportunities not financially worthwhile to pursue.

“Conceptually, raising the cost of capital means less investment,” Holden said.

“In the midst of a productivity crisis where we’ve had more than a decade of extremely lacklustre business investment, this makes business investment more expensive.”

Reserve Bank of Australia governor Michele Bullock said last week that historically weak productivity growth was constraining economic growth and contributing to inflation pressures.

Business investment in tools, machinery, equipment, and software has historically been a key driver of increased worker productivity.

Australia is experiencing a boom in investment in data centres, but investment by other businesses remains weak.

Treasury said in a May briefing note to the government that the average tax rate on capital gains will only increase from 19.3 per cent to 21.4 per cent over the next decade and is unlikely to affect overall investment in the economy.

Individuals hold less than 15 per cent of shares listed on the Australian Securities Exchange, and they will retain a strong incentive to invest in assets that are expected to deliver strong growth, Treasury said.

“Changes to the CGT arrangements for individuals is likely to have very little impact on the level of investment in Australian equities.

“Australian equities are mainly held by superannuation funds and foreign investors, and their tax settings are unchanged.”

Treasury secretary Jenny Wilkinson said in May that parts of the tax package would boost investment and productivity, including allowing small businesses to carry back losses against tax previously paid, expanding venture capital concessions and making the $20,000 instant asset write-off permanently higher and better targeting the research and development tax offset.

Economists back in One Nation’s tobacco tax slash

Economists have backed One Nation’s plan to slash the tobacco excise and freeze indexation for three years, saying it could help disrupt the booming black market cigarette trade and reclaim billions in lost tax revenue.

One Nation leader Pauline Hanson pledged to cut the tobacco excise by 75 per cent – or an estimated $46 reduction for a pack of 30 cigarettes – and pause indexation of the excise for three years to combat the growing illegal tobacco trade, which has eaten into government revenue.

The government raised just $4.1 billion from the excise in the 2026 financial year, down 310 per cent from the record $16.3 billion haul in 2020.

“[Tobacco excise] policy is in such epic disaster territory that I don’t care where the ideas are coming from,” said independent economist Chris Richardson.

Earlier this year, Richardson called for a 40¢ per cigarette tax cut – which would be about a 26 per cent drop in the excise – but now says he would support an even larger reduction to stamp out the illicit operators becoming increasingly entrenched in the industry.

He has also called for greater enforcement against illegal importers.

“Organised crime is getting better every day at defending its patch,” said Richardson.

“It’s now got the economies of scale. It’s got the supply chains. It’s got the personnel, and it’s increasingly got a marvellous motive to fight any attempt to fight back.”

Richardson estimated the government could raise an extra $15 billion a year if illegal suppliers were reduced to the same share of the market they had in 2019-20.

“The longer it takes before we do something, the more dramatic what we do has to be, in order to have a chance,” he said.

One Nation’s pledge comes as the Senate prepares to hand down its report on the illegal tobacco market next week, and ahead of the November’s state election in Victoria, where the prevalence of organised crime in the state is already a hot-button issue.

Cutting the excise would reduce the cost of legal cigarettes to ostensibly make them more competitively priced against their illegal counterparts.

However, health experts warned against making legal cigarettes cheaper to buy.

“Illicit cigarettes can cost as little as US20¢ [28¢] a packet to manufacture. Price-matching criminals is not going to get us out of this crisis,” said Australian Council on Smoking and Health chief executive Laura Hunter.

“It will make it harder for people to quit and easier for young people to start.”

Advocates of the One Nation policy argue the excise cut could stem the bleeding in government tobacco excise receipts.

In May, the government forecast tobacco tax revenue to drop by $8 billion over five years from the 2026 financial year on the back of the booming illicit trade.

Rohan Pike, an illicit trade expert who created the Australian Border Force’s Tobacco Strike Team, said international modelling showed halving the excise would boost government revenue.

He said a 50 per cent cut was the bare minimum needed to deter organised crime while also discouraging smoking.

“At the moment, we’re arguing about a policy while Rome burns,” said Pike.

“We just need to do something – 20 per cent, 25 per cent, 30 per cent, it won’t be enough to change the needle. It needs to be over 50 per cent – 75 per cent is a bold number.”

The tobacco excise reached almost $1.53 per cigarette earlier this year, up from just 19¢ at the turn of the century. In inflation-adjusted terms, that is more than a 300 per cent increase.

The percentage of consumed tobacco coming from illicit sources ballooned from just 12 per cent in 2017 to 80 per cent by 2025, according to research from the Australian Bureau of Statistics.

University of New South Wales economics professor Richard Holden said that was because the excise had risen high enough by the end of the 2010s to make illicit importation sufficiently profitable.

Holden said that policymakers should go even further by temporarily doing away with the excise altogether before rebuilding the tax rate over time to stamp out the blackmarket once and for all.

“You want to make this like a knockout punch,” he said. “The much bigger game here is getting them out of the market and rebuilding the revenue to some degree over the medium term.”

‘Up to him to explain’: Bragg denies speech was leadership related

Opposition Leader Angus Taylor has chipped shadow minister Andrew Bragg for freelancing on policy in a speech that drove speculation among conservatives that leadership issues in the Coalition were about to resurface.

After Bragg, the shadow minister for housing and environment, gave a provocative and wide-ranging policy speech to the National Press Club, Taylor volunteered that he had had a word to his charge.

“Andrew expressed some of his personal views yesterday, and I’ve made clear to him his job is to express the views of the Coalition team,” Taylor said, adding that he had not read the speech beforehand.

Bragg, one of the few Liberal moderates, sounded frustrated as he called for the Liberal Party to break from the policy malaise to which it had contributed over the past two decades and engage in risk-taking.

He took aim at compulsory superannuation and advocated cuts to government spending, taxing tech giants, cutting net overseas migration to 180,000 a year, and paring back the housing construction code from 200 pages to 80 pages so people could build cheap houses if they wished.

“At the moment we don’t have enough houses – we just need to get more houses rather than get the best houses,” Bragg said.

“The house won’t be gold-plated, but it won’t fall apart. It will be safe.”

Some was already Coalition policy and some was not. Regardless, Bragg was unfazed by his dressing down from the leader,

“I welcome feedback, sometimes you get good feedback, sometimes it’s more constructive, and that’s always good,” he said.

The breakout came at a time both Taylor and the Coalition continue to struggle for oxygen against an ascendant One Nation. Since Taylor deposed Sussan Ley for the leadership in February, the Coalition’s standing in the polls has failed to improve.

Bragg supported Ley during the leadership fight, but there was no suggestion from the moderates the speech was an exercise in destabilisation.

Asked if he backed Taylor taking the Coalition to the next election, Bragg said: “Of course.”

However, leading conservative and Coalition defence spokesman James Paterson was suspicious.

“Andrew can speak to his motivations,” he said when asked if Bragg was up to mischief.

He said he was not surprised by the speech.

“Andrew is an outspoken person, he’s got lots of strong views, and he shares them freely,” he said.

“The approach that I take in my portfolio is that if I want to get up a policy in the defence space, I have to convince my colleagues, I have to do the work, I take it through our processes, I have to consult my stakeholders, and then when I receive that support I can make an announcement and I don’t speculate about other colleagues’ portfolios.”

The episode distracted the Coalition from its focus on Anthony Albanese’s continued refusal to apologise for comments he made in a podcast in July about the melons he was given by Japanese Prime Minister Sanae Takaichi

Paterson received support from all non-Labor parties in the Senate ordering the government to produce on Monday all documents between the prime minister’s office and the Japanese relating to the incident.

NSW Premier Chris Minns sought to protect Albanese after a journalist asked a question about the melons during a press conference announcing a $2.5 billion bailout for the Tomago aluminium smelter.

“Go and ask 1000 workers what they care about today,” Minns barked at the reporter.

Albanese again brushed off questions.

“The Japanese prime minister and I have a very good relationship. The Japanese ambassador made very clear statements about how warm our dinner was. And it was indeed,” he said before the Minns’ interjection.

Labor MPs are lost in housing’s hall of mirrors

Prices are falling, but the government is reluctant to claim the credit. So its MPs have resorted to rhetoric about renewed optimism for first home buyers.

Ask a Labor MP whether falling house prices are a good thing, and you will quickly discover there is no approved answer.

Too enthusiastic and you terrify home owners. Too negative, and it is harder to argue the government’s housing policies are improving affordability.

It was backbencher Josh Burns’ turn on Wednesday morning. Asked whether he was concerned about borrowers slipping into negative equity – when their home is worth less than the mortgage secured against it – Burns pointed to Reserve Bank of Australia figures showing a higher share of borrowers had been in negative equity in 2018 and 2019 under the Coalition government.

Burns’ attempt at political point-scoring undermined the argument he was trying to make. More borrowers found themselves in negative equity during the Coalition-era downturn because house prices had fallen 8.2 per cent – making homes more affordable for aspiring buyers.

Burns was left trying to square Labor’s housing circle: arguing that weaker price growth was improving affordability, while reassuring existing home owners the value of their asset would continue to appreciate over the long run.

“If you look at property price growth over the long term, people aren’t losing money while holding property,” Burns reassured ABC listeners.

The challenge for Labor is the constituency cheering lower house prices is small. As RedBridge pollster Tony Barry points out, the main beneficiaries of the current downturn are first home buyers with substantial cash savings who are ready to buy.

Everyone else either remains locked out of the market regardless of modest price falls, or already owns property and is watching the value of their biggest asset erode.

“If people feel that their biggest asset is about to lose value, it usually elicits angry responses, despite the laudable ideals of trying to put the brakes on the housing market,” says Barry.

Deputy Prime Minister Richard Marles on Tuesday attempted to reconcile those competing constituencies, saying the government wanted to see “sustainable growth” – slow enough for younger Australians to enter the market, but not the sort of outright price falls that leave recent buyers in negative equity.

The only hitch is that prices are already falling.

Figures from Cotality released on Monday showed the national median home value fell 0.7 per cent in July to $928,421, the biggest monthly decline since December 2022, as the correction triggered by rising interest rates and amplified by the government’s negative gearing and capital gains tax overhaul gathered pace.

Housing Minister Clare O’Neil made the mistake of acknowledging the obvious in June, describing the market as being in a “correction”.

Following O’Neil’s remarks, Treasurer Jim Chalmers quickly distanced the government from the slump, arguing the decline reflected “reasons that go beyond changes in the budget” and insisting the market had not met the “technical definition” of a correction.

Never mind that property experts generally agree there is no universally accepted technical definition of a housing market correction. It is more a vibe.

If anyone was still struggling with the terminology, Immigration Assistant Minister Matt Thistlethwaite on Monday showed they were not alone.

He confidently declared that 99 per cent of borrowers using the federal government’s 5 per cent deposit scheme could not possibly be in negative equity because they were keeping up with their mortgage repayments.

“No, that is not true. That’s not how it works,” responded Liberal senator Maria Kovacic, who seemed more aware of the difference between negative equity and a non-performing loan.

With prices falling but the government reluctant to claim either the credit or the blame, Labor MPs instead instead reached for pleasant anecdotes about renewed optimism among first-home buyers.

Burns said he was hearing that more young people were having conversations around dinner tables about finally getting into the market.

Whether those conversations are translating into purchases remains to be seen. The Australian Bureau of Statistics next week will release first home buyer loan approval data for the three months to June, providing a partial read on the post-budget period.

That will show whether aspiring buyers are indeed rushing into the market or sitting on the sidelines to avoid catching a falling knife.

Debt, corruption, and blind loyalty: Inside the fall of Jacinta Allan

Victoria’s new premier Ben Carroll faces a monumental task: he must distance himself from a decade of Labor rule and halt an impending electoral disaster. He’s got 119 days.

Just four months after Daniel Andrews led Victorian Labor to another landslide victory, his shine had well and truly worn off. But he didn’t know it yet.

It was around the time of the Aston byelection, in April 2023, and the newly elected Albanese government was trying to pull off a historic feat by winning the middle-class seat in Melbourne’s eastern suburbs from the Liberals.

Emboldened by his recent election win, and in his trademark bravado, Andrews, during the byelection, would speak openly to colleagues about how “terrible” Prime Minister Anthony Albanese – his former roommate in the 1990s – was, and refer to federal treasurer Jim Chalmers as “that f---wit Chalmers” during cabinet subcommittee meetings.

The Victorian Labor Party decided to conduct some research in the midst of that campaign to test both leaders’ popularity – and the results were dire for Andrews. While Albanese’s net approval rating was about plus 10, Andrews’ was minus 30, according to Labor sources who saw the research.

Five months later, Andrews would resign, and Jacinta Allan would replace him as Victoria’s 49th premier. He was deeply unpopular, and she was a blank canvas to voters. Political hardheads and campaign staff repeatedly advised Allan to immediately differentiate herself from her predecessor.

Karl Bitar, the former secretary of the NSW Labor Party, told the Victorians that when Morris Iemma succeeded Bob Carr in 2005, he immediately began a series of backflips to appease aggrieved groups. He promptly ditched the vendor tax on the sale of investment properties, raised the land tax threshold, and embarked on an infrastructure agenda. Iemma won the election two years later. The underlying message was clear – Allan should do the same.

She never did.

She never distanced herself enough from Andrews, remained fiercely loyal, even retained all his senior staff for at least three months after he resigned in September 2023, often sought counsel from him, and made the conscious decision to largely continue on his trajectory.

A lot has been said about why Allan was forced to resign on Tuesday after months of speculation about her leadership. But the beginning of the end for Victoria’s second female premier – who had hoped to become the first to win an election in her own right – came the moment she took power.

There was criticism of her policy direction, her inability to connect with voters, her failure to instil confidence in her colleagues that she had a credible plan for the election, and her dogged refusal to even recognise that an integrity crisis over her handling of CFMEU corruption and criminality on construction projects was threatening to bring down her government.

So, as soon as he was sworn in at Government House, Ben Carroll made his way back to the Office of the Premier of Victoria at 1 Treasury Place alongside his deputy, Gabrielle Willams, and declared “enough was enough”.

He did what Allan failed to do: he announced that the state was under new management and that he would take it in a new direction.

“In my government, integrity will not be optional. Whether in business, politics or the union movement, there will be zero tolerance for those that misuse their positions. That is why my first action as premier will be to call a royal commission into the construction sector,” Carroll told reporters.

“Let me make one thing very clear: I am not Daniel Andrews. I am not Jacinta Allan. I will do things differently because different times require a new approach.”

Carroll acknowledged that Victorians were concerned about the level of government spending, with net debt forecast to climb to $199.3 billion in four years, and promised to treat taxpayer money with respect, care and responsibility. He said he would prioritise community safety, and vowed to listen to and work with the business community to improve the state’s economy. On Friday, he even announced that he had appointed economic hardhead Chris Barrett to lead his department, replacing communications professional Jeremi Moule, who was installed by Andrews six years ago and retained by Allan.

As far as words went, it was a good start.

He did what Allan had stubbornly refused to do: distance himself from his predecessors and call a royal commission. But can the mild-mannered Carroll convince a weary electorate, bogged under high taxes and exorbitant debt, that he actually represents a genuine change?

Benjamin Alan Carroll was born in July 1975, the eldest of three children raised in Airport West, a suburb that today is part of his electorate of Niddrie where he lives with his wife, Fiona, and their young daughter, Madeleine.

He was elected to the Victorian parliament in 2012 after former attorney general Rob Hulls resigned following Labor’s surprise 2010 election loss, and his rise through the government ranks under Andrews and Allan had been slow. He has held 16 different portfolios and faced a tough battle to win the deputy leadership three years ago.

Carroll is cut from a different cloth than his predecessors. Andrews and Allan were from the Left; Carroll is from the Right. Where Andrews ruled with ruthless centralisation and Allan unsuccessfully attempted to replicate it, Carroll is a centrist and pragmatist. But the problems facing the state and the Labor Party are mounting.

Victoria’s net debt is forecast to climb to $200 billion within four years and interest repayments are set to make up 10 per cent of revenue. The state’s unemployment rate of 5.1 per cent is the highest in the country, and businesses have warned that Victoria is increasingly becoming anti-enterprise. The Coalition under Jess Wilson has become competitive, and One Nation is threatening to break into Labor’s red wall in the north and west.

After the big-spending agendas of Andrews, a masterful communicator, and his protege Allan, Carroll is a relatively anonymous figure who still sounds stiff in media conferences. Is he the right man to bring Labor back from the brink of an anticipated electoral wipeout on November 28?

Former federal Labor leader Bill Shorten this week described Carroll as an honest man with integrity, and the type of leader the party needs heading into this year’s state election.

“He’s his own man,” Shorten told News24. “[People] are craving someone who says it as is, will choose people over the elites. I think he’s the real deal.”

Labor MPs privately acknowledge that Carroll is not a rock-star candidate who can deliver the party another landslide victory after 12 years. They were frustrated that he didn’t act sooner to topple Allan, and infuriated that he invoked his daughter at a news conference in June when declaring he wouldn’t challenge the premier at a caucus meeting the following day. They had complained that he hadn’t shown enough interest in the job and that he was waiting for the mantle to be handed to him.

But they described him as less combative and a steady person for the job. Under Allan, they believed they had no chance of winning. Under Carroll, they think they have a better chance – and even if they can’t win, they no longer fear they will be annihilated.

Former premier Steve Bracks, a longtime mentor to Carroll, said his former staffer’s elevation had improved Labor’s prospects in November.

“He’s hit the ground running and there’s more to come – more policy announcements about what sort of government he would lead,” Bracks told ABC Radio.

Carroll, after nine years in cabinet and three as deputy premier, cannot entirely detach himself from the decisions of the past or the failures of the administration he was a part of.

In public, he supported the government’s position not to establish a royal commission and build the Suburban Rail Loop, while being privately opposed.

The Coalition has already painted him as Allan’s second-in-chief and a minister who sat around Andrews’ cabinet table. They are still hopeful of finally winning after spending only four of the past 27 years on the government benches, although they privately concede they have just lost their biggest election-winning strategy in Allan.

But the business community is pleased they now have the ear of a Labor leader who is at least willing to listen to their concerns. Carroll has already indicated he would make “sensible” changes to the state’s contentious work-from-home laws his predecessor had introduced.

Victorian Chamber of Commerce and Industry chief executive Sally Curtain says Carroll has always attended their events and opened his door to the business community.

“He comes when he doesn’t have an official role, and he engages authentically with business and genuinely,” Curtain says. “I certainly expect that will continue. Really turning around the economy and building confidence in business will take time, but these early signs are good.”

There were three things VCCI asked for when Allan was told by her colleagues on Monday that she had lost the confidence of the caucus: reduce debt, tackle crime and restore confidence in the Big Build program.

“The three things business said we needed, he has already answered,” Curtain says.

The Victorian Labor government looked on track to be reduced to a rump in the 88-seat parliament under the leadership of Allan. Every announcement was lost under the thick haze of corruption.

For more than 18 months, Allan had managed to bat away questions on CFMEU lawlessness. But in February, it all turned when the chief investigator appointed by the union’s administrator, barrister Geoffrey Watson, SC, provided evidence to a Queensland commission of inquiry, that criminals and corrupt crooks had infiltrated the government’s Big Build projects and cost taxpayers $15 billion.

Allan dismissed the figure as “unfounded and not well tested”, and she became visibly angry at news conferences and scolded journalists.

The stories about corruption and integrity on government projects, first revealed by The Australian Financial Review and The Age in June 2024, were finally cutting through to the Victorian community after Watson had quantified its cost.

And MPs were being hounded by their constituents on why the government had handed over $15 billion to crooks and criminals.

Allan continued to dig in, the pressure continued to pile, and Labor’s primary vote continued to slide. MPs now feared they would be annihilated at the ballot box, and ministers believed the premier’s response in cabinet meetings was “surreally ridiculous”.

She would insist privately and publicly that the culture on building sites had changed. But a news story, predominantly led by The Age’s investigative reporter Nick McKenzie, would be published shortly after her assurances, suggesting otherwise.

She would tell journalists that allegations should be referred to the police. But the police were saying they did not have the powers to investigate the alleged wrongdoing.

The volume of stories about the extent of lawlessness on infrastructure projects she first had responsibility for as a minister under Andrews had just become too overwhelming to ignore. Allan narrowly survived a leadership spill in June when Carroll invoked his daughter to say he would not challenge the premier at a caucus meeting the following day.

But instead of using the five-week winter break to reset and cauterise a growing wound, Allan did neither.

The Australian Financial Review published a series of stories that exposed the depth of anger, frustration and worry inside the Victorian Labor Party, which holds 54 seats in the 88-seat Legislative Assembly.

Party headquarters had written off nine seats, allocated extra resources to 27 seats, and identified 45 seats it would campaign in. A *Financial Review/*Redbridge/Accent Research poll showed One Nation had overtaken Labor and the Coalition, and Allan’s approval rating had sunk to a record low. A seat-by-seat poll conducted by Redbridge for the Victorian Trades Hall Council revealed Labor would win 35 seats in a median case scenario.

Meanwhile, MPs who were door-knocking their constituents were being accused of being corrupt. Allan was avoiding regular media appearances, and ministers loyal to the premier were predominantly sent out for news conferences. Allan began making a series of promises to unions and MPs in desperate last-ditch attempts to retain her leadership.

By last Monday, when Labor MPs had gathered for a two-day caucus conference, tensions had reached boiling point. Police Minister Anthony Carbines, part of the cross-factional delegation who eventually told Allan she should resign, launched a stinging rebuke of her handling of integrity.

Factional powerbrokers and Labor figures who then attended the party’s national conference in Adelaide from Thursday became utterly convinced Allan needed to go. She was often unfavourably compared with South Australian Premier Peter Malinauskas and even NSW Premier Chris Minns.

They knew she was driving the party off a cliff – and they pointed to two events over the winter break: the Redbridge poll for Trades Hall and the rolling series of stories about continued CFMEU corruption.

Factional powerbrokers believed the party’s headquarters was pressured by Allan and her senior advisers to stretch its resources and campaign in 45 seats – the minimum number of seats needed for a majority government – instead of the 35 it was most likely going to win.

One figure said the political professionals knew Allan and her loyalists were “lying” about the true state of play and the party was spending money on seats it was losing, instead of on the electorates it needed to defend.

That was unacceptable to Labor hardheads – and it became the final straw for Allan’s leadership.

The clock is now ticking for Labor’s new leader. Carroll has been in the role for less than a week, but he can’t afford to waste any more time.

There are only nine parliamentary sitting days remaining. The government will enter into caretaker mode in just 94 days, early voting will open in 109 days, and the election will be held in 119.

Redbridge director and former Labor Party strategist Kos Samaras says Carroll, who represents a working-class north-western suburbs seat, understands the issues facing the communities that have abandoned Labor in successive years.

He has championed the Melbourne Airport Rail that will run through the western suburbs, including his electorate of Niddrie, pushed back on the government’s previous plan to phase out gas connections from households, and worked closely with the business community.

Samaras points to the SRL, with the first stage to run from Cheltenham to Box Hill in Melbourne’s east, as a big part of Labor’s decline in its heartland.

“The Suburban Rail Loop is a project that encapsulates everything that has created a massive headache for the Labor Party. It’s not just about the cost. It’s about the absolute obsessive focus on the south-eastern part of the world and ignoring every other part of Melbourne,” Samaras says.

“You could see even by 2022 there were emerging trends [of populism]. We had the lowest turnout since 1943 and Labor had swings of 20 plus per cent in some Labor seats. There have been swings in the west and northern parts of Melbourne for three consecutive elections against Labor.”

After 12 years in power, Carroll will need to unshackle the Labor Party from the Andrews and Allan eras, contend with a surging One Nation that is polling in the mid-20s, deliver a clean break from his predecessors, and convince an angry and weary public that he truly is leading a new regime.

Renegade Liberal backs carbon price push

Renegade Liberal senator Andrew McLachlan has backed a push by economists to broaden Australia’s carbon pricing policies to the electricity sector to help boost the rollout of new clean energy and more cheaply reduce emissions from coal and gas.

The South Australian senator, who has long championed environmental causes, said the adoption of an economy-wide carbon price would be a more effective and efficient way to reduce emissions than the government’s current patchwork of policies.

McLachlan’s view is drastically out of sync with the rest of the federal Coalition, which formally scrapped its support of policies to reduce the country’s carbon emissions in November last year after an aggressive internal push by the party’s conservative wing.

It is also more ambitious than the Albanese government’s existing suite of electricity sector policies, which provide underwriting support for new renewable energy projects but do not apply any constraints on the emissions of coal or gas power generators.

The electricity sector produces more than a third of Australia’s carbon emissions, but is carved out of Labor’s main climate policy, the Safeguard Mechanism, due to the perceived political risk of any adverse impacts on power prices.

McLachlan said an upcoming government review of the Safeguard Mechanism should be broadly framed to consider the best policies to drive sustainable economic growth.

“The most effective and efficient policy settings cannot be dismissed simply because of the ideological fashions of the day,” he said.

“A broad-based carbon price across the economy should seriously be considered to achieve decarbonisation. The adoption would provide a more consistent policy framework rather than the current patchwork of measures.”

Former Australian Competition and Consumer Commission chair Rod Sims on Monday said Australians had moved on from a kneejerk fear of carbon pricing, which was a simpler and cheaper way to tackle the energy transition.

Australia’s existing carbon pricing policies include the safeguard, which covers 200 of the biggest industrial emitters, and the New Vehicle Efficiency Standard, which incentivises the uptake of electric vehicles.

McLachlan said any move to extend carbon pricing would need to be accompanied by a broader range of reforms to drive economic growth and protect critical sectors such as manufacturing.

“Much of our economy runs on carbon. We need to be realistic about the costs of transforming the economy. There is no point pricing it without other economic reforms. Otherwise, we will hamper our manufacturing sector and import carbon from overseas,” he said.

“[But] there is no point promoting economic growth and also destroying the very planet we rely on for life.”

Politicians of all stripes have long ruled out a return to carbon pricing in the electricity sector after the fight over the issue turned toxic during the first round of Australia’s climate wars in the Rudd-Gillard era.

The Australian Energy Council, a group representing retailers with coal assets, said earlier this month that extending the safeguard to electricity was not practical and would pose challenges for reliability and system security.

But carbon pricing advocates including the Productivity Commission and the Grattan Institute think tank have argued that a carefully designed policy could provide the right incentives for new renewables projects without significant power price effects.

Barry Sterland, who leads Climate and Energy policy at the Productivity Commission, said applying a policy like the Safeguard Mechanism to the power sector would be relatively easier to implement, provide good incentives to reduce carbon emissions and have smaller price impacts.

But Sterland, who helped design the Carbon Pollution Reduction Scheme under the Rudd government, said the key to the success of any market mechanism was that it was sustained over time.

“A market is more efficient when people can rely on it to provide longer-term signals. So policy-makers need to consider mechanisms that both work well, and will be sustained,” he said.

“You want efficient mechanisms that produce the requisite credible signal for investors, assisting efficient capital allocation and maximising productivity benefits.

“We think there is value in building on current efficient policies like the Safeguard Mechanism to meet Australia’s domestic and international emission reduction commitments at least cost.”

To save you a click: It will cost $38 900 for mono tone paint and $39 400 for two tone.

Even if the price shifts downwards by a few thousand, I think that will still make it DOA for most people.

It will only be popular with high income inner city hippies who have a genuine need for a small EV for narrow streets, don't mind the short range, will appreciate the fancy speakers built into the A pillar and the fake car noises coming from said speakers.

Then again, most inner city residents don't have off street parking, so charging at home may be more difficult than someone further out in the suburbs.

It's hard to see who this is for, to be honest.

The meteoric rise and bitter downfall of Moira Deeming

The teacher and mother of four went from a conservative superstar backed by Tony Abbott to a Liberal outcast in a single term, after tearing her own party apart.

It was a sold-out crowd at the Club Italia Sporting Club when Moira Deeming took to the stage six months ago.

Sky News host Peta Credlin, former prime minister Tony Abbott and Indigenous businessman and Liberal personality Warren Mundine all joined her at the event, electrifying a crowd that included Victorian Liberals like Bev McArthur, Chris Crewther and Ann-Marie Hermans, as well as all manner of rank-and-file members.

How the foursome were seen is evident from the collectables on offer for the true believers, of whom 450 had gathered to hear about “holding the line and winning”.

These included illustrations of the four speakers as superheros, as well as trading cards of the four in the style of Shepard Fairey’s iconic Barack Obama poster.

Two of Deeming’s three guests – all deities of the Australian conservative movement – had flown interstate to stand alongside her.

Now, all have distanced themselves from the controversial upper-house member once considered a junior member of their pantheon.

Credlin, who once told Deeming she would “lead the party one day”, has called on Deeming to apologise for accusing a fellow Liberal politician of assault.

Abbott, who in March said an earlier decision of party members to vote for another politician atop the Liberal ticket was “crackers”, said Deeming’s refusal to do so was “unbecoming of an MP”.

Mundine told AFR Weekend he wished Deeming, whom he described as a friend and “powerhouse in western Melbourne”, had spoken to him about it all beforehand.

“I was very shocked … and disappointed”, he said. “The focus has to be on winning the next election in November.”

For the Victorian Liberals, Deeming has been a lightning rod of discontent. But now, and possibly for the first time, a clear majority are united in their disavowal.

For the Victorian Liberals who watched her rise, few topics are as potent as their role in it, and whether it was their fault.

Recriminations and self-justifications lie thick over the memories of a contested preselection, full of foreboding and compromise. In light of what happened after, the introspection is understandable.

In a single, four-year parliamentary term, and as the Liberals battle One Nation for opposition status and a tired and unpopular Labor Party for government, Deeming has blazed through the caucus like a crashing meteor, altering the landscape, potting it with scars.

Friendships have ended. Political momentum has ground to a halt, restarted, and stalled again. Most are hopeful a line has been drawn on the saga. Few actually count on that.

Late on Friday last week, Deeming was formally disendorsed from the top of the Liberal ticket for the Western Metropolitan Region, concluding a process that began when she accused former leader Matthew Guy of assaulting her at a community function.

CCTV footage from the venue showed he briefly touched her back while leaning over to speak to her in a noisy and crowded function centre. The police dismissed a complaint and Guy called on Deeming to apologise.

Deeming has not done so and has rejected suggestions she made a false police accusation.

She says the physical contact was unwelcome and unexpected, and that she is willing to work with the party to resolve the matter, but the party has either not believed her, or concluded there is nothing unresolved.

Deeming took legal action to stop her disendorsement, before withdrawing it. The party, led by state president (and Credlin’s husband) Brian Loughnane, swiftly dumped her as a candidate. She declined to respond to a detailed list of questions.

Deeming was born in 1983 in Victoria’s Western Districts, to a Labor family. Her great-grandfather was a Labor MP, her mother a nursing federation official.

As a child, she suffered sexual abuse, the fact of which she has acknowledged publicly but the details of which she has kept largely private.

She studied at La Trobe University, where she met her husband, Andrew (he captained the men’s soccer team, she the women’s). Both soon joined the Liberal Party where they started a branch with other university Liberal Club members.

Deeming became a teacher and had four children, during which time she and her husband let their membership lapse. They rejoined in 2014, inspired after attending a speech by former deputy prime minister John Anderson.

Almost immediately, Deeming became a Liberal political candidate, running for election that year in the safe Labor seat of St Albans (which she didn’t win).

As a teacher, she was deeply involved in the Safe Schools controversy, in which socially conservative parents fought against the implementation of a program they argued indoctrinated children into being gay or transgender (the program has since been rolled back in several states).

Between 2014 and 2022, when she was finally preselected top of the ticket, she would run in every state election in an unwinnable position, and reliably campaign, for both herself and others.

She was elected to the Melton City Council, and soon made a point of attending every public council meeting across Melbourne to ask whether it would be legal for that council to allow only “biological” men and women into its gender-designated toilets (it isn’t – as she was trying to point out).

This and more earned her a reputation as a dependable branch member and Liberal supporter: one who would turn up, can canvass for votes, and present well, including on the transgender issues important to many Liberal voters.

In the western suburbs of Melbourne, dead-red Labor heartland where the Liberal Party has virtually no infrastructure, Deeming could be counted upon.

Within the Presbyterian church – a close-knit and relatively conservative congregation – Deeming was by then already prominent and respected as a researcher on its Victorian Church and Nation committee. This provided her with a base of support from which to pursue political office.

In a 2022 email later revealed through Freedom of Information, Deeming said her preselection was thanks to God and the Christians who “joined up and voted according to their consciences”.

In another email, she makes a case for herself as a Liberal candidate, saying her supporters had, to date, raised “almost $1.5 million for the party”, and references another donor who promised $100,000 if she were preselected.

Within the church, Deeming stood out for her willingness to do battle. Other emails in the trove, which was sought and released publicly by a sex worker lobby group, would also raise eyebrows.

One email was a lengthy diatribe that took aim at an opinion piece on a conservative evangelical website arguing for greater acceptance of gay and transgender people within the Christian community.

It lashed the original article for a lack of engagement with “the worst consequences of trans ideology”, and accused the author of “a thinly veiled attempt to demonise Christians whom [the original author] clearly knows nothing about, and yet deeply disdains”.

It is not clear who wrote this email. AFR Weekend asked Deeming whether she did, but received no response. The spiky screed is identical to one anonymously published on the Christian website that carried the original piece. It drew its own public backlash from some discomfited by its tone, and no longer appears online.

These conflicts are unlikely to have been obvious to most Liberal Party electors. But many already viewed Deeming as a zealot. Her preselection for a safe upper house seat in Melbourne’s western suburbs to replace the controversial Bernie Finn was quickly mired in controversy.

It cannot have helped that Finn, whose fervent anti-abortion views had seen him expelled from the party, described her as a “protege”, or that the federal party had a few months earlier kiboshed her candidacy for the federal seat of Gorton.

Her views on transgender issues came up in candidate vetting and, when run past then-prime minister Scott Morrison’s office, were deemed “not helpful” to the campaign effort, despite her endorsement by senator Sarah Henderson.

(In the same election, Morrison would hand-pick fellow anti-trans-women-in-sport crusader Katherine Deves to run against teal independent Zali Steggall in Warringah, the Sydney northern beaches electorate formerly held by Abbott.)

A few months later in discussions for the Western Metropolitan ticket, Deeming was the clear choice of the rank-and-file membership, earning double the votes of the next-placed candidate. At the state administration committee, a majority rubber-stamped her preselection.

But the opposition to her was notable. Heavyweight members Louise Staley, former state president Michael Kroger and Liberal Party elder Andrew McNabb were opposed. Supporting her, however, were 16 others, including a mix of moderates and conservatives.

In the Victorian Liberal Party, factions are based less on ideology than personality. It is unremarkable that Deeming, an ideological conservative, enjoyed the backing of members of the moderate faction, though those who voted for her have found it hard to live down.

Those who opposed her argue they showed great foresight in doing so.

Staley would tell the court during Deeming’s defamation battle with Pesutto that she had “a settled reputation … as someone with fringe and extremist views”. Others, including former Liberal politician Andrew Elsbury, would leave the organisation in disgust at Deeming’s elevation.

Former Liberal member Fred Ackerman, who ran in the ballot in which Deeming triumphed, says people such as Deeming and Finn who have “ratbag social fringe agendas” should nominate for a lower house seat to test their level of support.

“That Moira Deeming failed to win her 2026 preselection by a wide margin was a measure of a lack of work she had done in the Western Metropolitan region, the lack of support for her social agenda, and the wreckage she had visited upon the Liberal Party.”

But those who supported Deeming in 2022 say she was the best candidate in a slim field. “We didn’t realise how Moira was … but she had overwhelming local support,” says an admin committee member.

Another Liberal argues the preselection has done “more damage to the party than any I have seen”.

“It has cost the party and Moira more than $5 million in wasted legal costs, and driven this completely unnecessary factional war,” they say.

“This, more than any other decision, divided the party between the left and right, because of her single-issue campaign order on gender rights. It elevated the issue to the top of the policy pole, [diverting] attention away from the major issues confronting our state.”

Atop the Liberal ticket, Deeming was easily elected to the Victorian upper house, and took some pride in her campaigning.

Her affidavit in her later defamation battle with then-party leader Pesutto claims she had every booth in the western suburbs staffed with supporters, secured sizeable donations, and achieved an above-average swing (the election was a Labor landslide, but Melbourne’s western suburbs had a swing towards the Coalition, at a time when most urban seats moved away from it).

Deeming entered parliament with some goodwill. Initially, she viewed those who voted for her as allies, and asked their advice. Pesutto, in December 2022, would ask her to be his party whip, a position of influence that would normally have made Deeming his eyes and ears on the backbench.

In his affidavit, Mundine recalls Pesutto being “impressed” with Deeming, and speaking “very highly of her”.

In February, the state leader refused to condemn his new MP when her emails were leaked, prompting then-premier Daniel Andrews to lash those who “use the trans community as a political weapon”.

The alliance would spectacularly unravel in March, when Deeming attended a rally with British anti-transgender agitator Kellie-Jay Keen-Minshull. Far-right groups gatecrashed it, leading the Labor government to accuse the Liberal Party of having representatives who fraternised with Nazis.

Pesutto had been trying to present an image of a more modern and inclusive Liberal Party. Deeming’s antics undermined this vision.

Under pressure from the Labor Party, Jewish community leaders dismayed by Nazi salutes outside parliament, and his own ideals and expectations, Pesutto would move decisively against Deeming, whom he said had associated with “people whose views are abhorrent to my values, the values of the Liberal Party and the wider community”. Deeming sued for defamation, and won.

Pesutto’s actions and Deeming’s lonely stand in response divided the party. In Pesutto’s high-handedness, many saw an establishment Liberal cowing a young mother on an issue of women’s rights. Credlin reached out and offered Deeming support, urging her to stay strong.

Others viewed Deeming’s actions and decision to involve the courts in a political disagreement with alarm. If she’d sue her own party leader as he began to make headway against an incumbent Labor government, they thought, what wouldn’t she do for her own vindication?

“A lot of us have lost a lot of friendships because we supported Moira,” says one politician of this period. “Lifelong friendships ended because [of] how bitter this internal battle was.”

It was also excruciatingly public. Caucus member after caucus member was forced to testify in court, laying bare the party’s processes and personalities.

Deeming would describe “something inhuman” about the way she was treated. “I wondered what sort of monsters they were, who didn’t care about me but only about the political career of the leader of the party. They seemed not to care about justice, or the truth,” she said in her affidavit.

Her husband Andrew would outline the devastating toll on their family life. He thought she might never recover. It’s hard to see how her relationship with the Liberal Party ever could.

A judge would ultimately decide Pesutto had harmed Deeming’s reputation by implying that she associated with neo-Nazis and by failing to consider her denials.

The judge also rejected Pesutto’s claims that his statements were in the public interest. Pesutto apologised, and Deeming was awarded $300,000 in damages.

Many outside the caucus hailed this as justice served. But Deeming’s $1.55 million in legal costs awarded against Pesutto – initially advanced to her by NSW-based property developer Hilton Grugeon – threatened to bankrupt the former leader, forcing a byelection in his seat.

The party’s controversial decision to fund his legal costs would cost it more than the money: then-administrative committee member Colleen Harkin took it to court trying to prevent the payment. That case is still in progress, and Harkin has since joined a number of high-profile Liberal defections to One Nation.

This year, Deeming considered doing the same, when her branches elected local party activist Dinesh Gourisetty above her atop the Liberal ticket.

It was the latest in a long series of slights. Deeming’s allies say despite her vindication in court, she felt her caucus colleagues continued to push her away.

Friends and supporters rallied to her side when she risked being supplanted by Gourisetty, lamenting what the loss of such a rising star would do to the Victorian Liberals.

Deeming’s position atop the ticket was secured when it emerged that her rival had provided references for a friend convicted of sexually assaulting a minor. Her brief and triumphant return to the Liberal ticket left One Nation hanging, which by all accounts that party has not forgiven.

One Nation leader Pauline Hanson has since explicitly ruled out accepting Deeming’s defection, citing Deeming’s refusal to apologise to Guy.

Another reason for Deeming’s rejection might be that among Hanson’s followers, Deeming is no longer as easy to support. Many conservative men and women are deeply concerned about men’s vulnerability to false accusations; Deeming’s actions, for the first time, have left her on the wrong side of the culture war.

For years her popularity– and her propensity to cite legal action – made Deeming difficult for institutional politicians to handle.

After the events of the court case, one Liberal insider remarks, managing Deeming had become one of the most important KPIs for whoever led the Liberal Party. Current leader Jess Wilson has been hailed for her success there, although she decided against giving Deeming a portfolio.

Wilson worked to retain Deeming atop the ticket, and made her displeasure with her allegation against Matthew Guy known only after the CCTV footage emerged. That is, around the time Deeming lost most of her supporters.

One caucus member who supported Deeming through her battles with Pesutto says the first-term parliamentarian was treated so badly at the beginning that the experience would stay with her for the rest of her life.

But Deeming’s allegation against Guy, ironically and for the first time, united the party against her.

“She won the court case, but instead of taking a step forward to being a part of the Liberal team and getting on with her career, she felt the need for absolute payback on anyone who opposed her during those awful times,” says the Liberal MP.

“I think that’s been the difference between what could have been an outstanding, incredible career where she had a broad-based support, to one where not too many people support her now.”

Deeming, who by June this year felt increasingly isolated, rarely turned up to parliament, could not be relied upon to vote in the chamber or stick to an agreed party position, and had begun to increasingly frustrate her colleagues.

The Liberals, for the first time in a very long time, felt as though they could win the state election in November, but knew they needed to lock in.

And yet, through this, Deeming wanted Wilson to promote her, in turn sending a message to her internal detractors to back off. Many urged caution on this.

“I think one of the difficulties of Moira being a shadow minister was the concept of shadow cabinet support,” said a Liberal MP. “You cannot have people speaking out against shadow cabinet decisions.”

Recently, when the party formally decided to oppose upper-house Libertarian David Limbrick’s stance on pepper sprays (he wants it legalised), Deeming appeared on Sky News and said she was supportive.

Deeming’s allies say she was never given the civility she deserved after her Federal Court victory – there were people who just wanted her to lose and treated her accordingly.

“She went through public humiliation. At the end of the day, she’s a mum of four kids, she’s got things she has been dealing with and it was a very difficult group to be around when you’re still being treated as though you are guilty and hadn’t been absolved by the court,” said one of Deeming’s friends.

“She’s not there for political game playing. She’s there to make a positive difference in families and children’s lives, and if no one else is talking about these topics, it says something about society.

“If you’re a political party and all you want to talk about is the economy, no one is going to listen to you. Social issues, health, family – these are all fundamental.”

In any case, it is all moot now. In light of her burgeoning unpopularity, some are reassessing Deeming’s electoral clout. Across western Melbourne, Liberal Party membership has halved.

As the most high-profile Liberal in the area, Deeming failed to arrest a rapid decline in party membership that has bedevilled most Liberal branches statewide. Though in her case, local factors have exacerbated it.

Some have left, citing her. Others have left citing the treatment dished out to her (“I resigned this week specifically over the lack of safety for a woman,” one newly ex-member told AFR Weekend). And many have left for One Nation, as has happened elsewhere.

The greatest concern of Liberals regarding Deeming is what she will do with power now. She will retain parliamentary privilege for another four months, in a position to exact vengeance upon a party that, for the first time in a decade, is competitive against Labor.

Within Labor, many expect she will run. “I think she’s weighing up whether to run in the seat of Melton, where she lives, or in the upper house,” says a Victorian Labor politician.

Like many, this person keeps an eye on Deeming’s social media accounts and says she has deleted some videos in which she was attempting to mend bridges with the Liberal Party.

But this particular member isn’t worried. Deeming now faces possible bankruptcy as a result of her financial backer Grugeon’s manoeuvrings to secure the still-outstanding legal fees from the Pesutto case.

If she is bankrupted, she won’t be able to return to parliament. If she runs, Deeming attracts strong support online, argues the Labor politician.

But Deeming’s supporters are ideologues scattered throughout the city, and not local to the area. That, supposedly, makes them no match for Labor’s ground game.

This view is fiercely disputed by Deeming’s supporters, not all of whom have deserted. And the swings seen last election to the Liberals in the traditionally Labor western suburbs must have something to do with their firebrand representative.

The member who left this week says Deeming was never given a chance. Something “clearly happened” with Guy, this member argues, but the party wasn’t interested in investigating. (Guy has vehemently denied the allegations against him.)

But Deeming, the sympathetic member argues, should have been extended grace, given it is clear her past traumas were triggered when she was touched unexpectedly.

Bernie Finn remains supportive, with no caveats. For him, it comes down to character. “I have known both Moira and Guy for a long time. If my life depended on it, I would always trust Moira over Guy,” he wrote on Facebook.

Another Liberal Party member who remains a close friend says those who question Deeming’s perseverance don’t understand her motivations.

As a follower of Jesus Christ, who, despite being free of sin was horrifically tortured, they say, Deeming has no expectation of better treatment.

Following Christian theology, she aspires to be a “servant leader”: one who serves others not from power but from empathy and understanding.

“Why has she held on and hung on? She wants to serve,” says a supporter.

“It’s been very painful seeing what I’ve read over the last three years, which does not match the truth or what I know of Moira.”

But as a Christian confident in her faith, this person continues, hope springs eternal. Deeming would know her troubles are “just a setback for her”.

Treasury can’t go ‘silent’ on controversial tax reforms

Treasury secretary Jenny Wilkinson says social media critics and misinformation have made it more difficult for governments to implement big economic reforms, so the public service must help politicians advocate for changes.

The public service must tread a fine line between helping the government publicly advocate for difficult reforms and avoiding being seen as political, she said.

Wilkinson delivered a speech on leadership in the public service in Canberra on Thursday, in the midst of Treasury’s close involvement in contentious tax changes by Treasurer Jim Chalmers to capital gains, negative gearing and trusts.

While she sidestepped talking directly about the tax changes, Wilkinson said it was becoming harder for governments to successfully implement big reforms such as those made to tax and climate change policy, which she has worked on in her almost two-decade career in Canberra.

“In this day and age, with social media, misinformation, and a 24-hour news cycle, significant reform is hard and requires political commitment,” Wilkinson said at an Institute of Public Administration Australia event.

In the recent tax policy debate, Treasury’s economic modelling came under scrutiny from the business, property and investment community, who argued the department had underestimated the negative impacts on investment, the housing market and small businesses.

Wilkinson said the “uncomfortable truth” for public servants was that departments sometimes did become part of the public advocacy for reforms by the government of the day, through economic modelling, speeches and appearance at Senate committees.

“If you present evidence that clearly supports a particular policy direction, and you do so in a context where that direction is being contested, you’re not a neutral actor,” Wilkinson said.

“But I don’t think the answer to this is for the public service to go silent. That would be a dereliction of our responsibility in working for the government of the day.

“The answer I think is for us to be clear about what the evidence shows. We can do that in a way which is rigorous, which has integrity, and which is apolitical.”

As part of the legislated tax changes due to begin on July 1, 2027, negative gearing and the 50 per cent discount on capital gains were scrapped except for new-built homes that add to the housing supply such as houses on greenfield sites, duplexes and apartments.

Treasury estimated in the budget that home price growth would be 2 per cent lower and the government’s changes would help 75,000 first-home buyers enter the market over a decade.

The tax changes would reduce the housing supply by 35,000 homes over a decade and rents would be $2 a week higher – about $100 a year higher – according to Treasury analysis.

House prices in Sydney and Melbourne are already falling due to a combination of interest rate rises and the exodus of home buyers following the tax overhaul.

In the May 12 budget, Labor also imposed a minimum 30 per cent tax on discretionary trust distributions and real capital gains including from property, shares, crypto and other assets such as investments in businesses with turnover of more than $10 million.

The top 1 per cent of income earners would have paid $400,000 extra tax over their lifetimes if the Albanese government’s proposed curtailing of tax breaks had been in place for the past 25 years, Wilkinson revealed in a separate speech in May.

However, higher taxes on capital gains and trusts and winding back negative gearing, combined with a $250 tax offset for working Australians, would leave 90 per cent of people aged 30 financially better off under the tax overhaul, she said.

They haven't gone as far as to suggest that redistribution should be prioritised over growth, but that seems to be the insinuation when they keep saying that most of the productivity growth has gone to business bottom lines rather than workers' pay packets.

TLDR: The most preferred "tougher government policy" is carbon pricing.

Will never happen under this iteration of Labor because most of the senior ranks have PTSD from the Rudd-Gillard-Rudd era when most of them were mid ranking cabinet ministers.

They'll probably fall back to some excuse like "renewables are the cheapest method of generating electricity" to avoid heavy regulation and to appease the centre right of the spectrum that like free market economics and low government intervention.

She is apologising for the "distractions", but does not mention that she may be the direct cause of said distractions.

It's also difficult to see how the court can override a political party's internal processes. I think the court is likely to say that she can still run as an independent and that candidate endorsement by a political party is up to them.

Australians suffer sharp decline in living standards: OECD

Australians have experienced one of the sharpest declines in living standards in the developed world since the pandemic, according to a new report from the OECD that warns real wages are set to fall even further this year as high inflation erodes workers’ incomes.

The release of the report came as Deloitte Access Economics warned Australia was facing its longest stretch of weak economic growth since the early 1990s recession, complicating the Albanese government’s efforts to argue it has made substantial progress in bringing inflation under control and easing cost-of-living pressures.

Persistent high inflation has contributed to a 5.1 per cent decline in Australians’ real wages since March 2021, according to the OECD’s annual employment outlook, released on Tuesday. In contrast, the average OECD member country enjoyed a 5 per cent lift in its workers’ living standards over that time.

“This sustained erosion of purchasing power points to persistent pressures on household incomes, even as the labour market has remained broadly solid,” the OECD said of Australia.

“These pressures are compounded by a decline in the real minimum wage between April 2025 and April 2026, placing Australia among only 11 OECD countries where this occurred and further weighing on the incomes of the lowest-paid workers.”

The OECD found the only other rich countries where inflation-adjusted salaries had fallen by a similar magnitude to Australia were New Zealand, the Czech Republic, Italy and Sweden. But while real wages were recovering in the latter three countries, living standards in Australia and New Zealand were still close to their post-pandemic lows, the OECD found.

The OECD forecasts Australian real wages will decline by a further 1 per cent by September as the increase in inflation from the conflict in the Middle East further erodes workers’ purchasing power. The findings were echoed by Deloitte, which expects wages to grow by 3.3 per cent this financial year, outstripped by inflation at 4 per cent.

Treasurer Jim Chalmers said the Deloitte report was a reminder of the lingering costs of the Iran war, but insisted Australia had “a lot going for us here at home” despite the consulting giant’s grim outlook for the economy.

“Under Labor, Australia has the lowest average unemployment of any government in half a century, smaller deficits and less debt than the Coalition left us, booming business investment, with tax cuts and higher wages that the right-wing parties oppose,” Chalmers said.

The Australian Financial Review reported on Monday that Australia now had the equal-highest core inflation rate among major developed economies and the second-highest across all advanced economies, behind only Iceland, after trimmed mean inflation – the RBA’s preferred measure of underlying price pressures – rose to 3.6 per cent in May.

The decline in real wages came despite the fact that Australia’s jobs market was relatively strong compared to other OECD countries. The country’s 4.4 per cent unemployment rate sits below the OECD average of 4.9 per cent, and Australia’s 81 per cent labour force participation rate makes it one of the strongest performers across the rich world.

Lacklustre productivity performance

Deloitte Access Economics partner Stephen Smith said the Australian economy had become more prone to inflation outbreaks at lower rates of growth due to years of lacklustre productivity performance.

“For too long, strong population growth has masked a weak underlying productivity performance and lifted aggregate growth while doing less to improve living standards,” Smith said.

With underlying inflation expected to rise to 3.9 per cent this financial year – far above the 2.5 per cent mid-point of the RBA’s target band – Deloitte Access Economics expects the RBA to raise the cash rate for a fourth time this year to 4.6 per cent at its next meeting on August 10-11, before leaving rates on hold for 12 months.

Markets are far less certain about an August rate rise, pricing just a 13 per cent chance of an increase at that meeting and a 38 per cent chance the RBA lifts the cash rate to 4.6 per cent by the end of the year.

HSBC chief economist Paul Bloxham said the slowdown underway in the housing market could translate into lower inflation and prevent the RBA from needing to raise the cash rate again.

“As there is a positive correlation between housing price cycles and consumer spending, and empirical studies show some small wealth effects, the fall in housing prices should be expected to weigh on consumer spending,” Bloxham said.

“Part of this reflects that falling housing prices tend to weaken housing construction, and with fewer new dwellings, there is less demand for new furniture and appliances.”

Commonwealth Bank economist Belinda Allen said the economy appeared as though it was slowing, with both business and household sentiment in pessimistic territory and signs of a consumer spending slowdown.

“The expected slowing of GDP growth is required to bring the economy back to balance and inflation to target,” Allen said.

While Chalmers pointed to an increase in investment as a point of optimism, Deloitte noted the strength was narrowly focused on the rapid build-out of data centres. The near-term benefits to the economy were less than the headline investment numbers implied, since much of the equipment was imported, which subtracted from growth.

New CGT laws expected to rake in $1b more than forecast

New laws to increase capital gains taxes on foreign investors are expected to raise more than $1 billion more than originally estimated, according to a fresh Treasury forecast, as renewables groups warn the rules will push critical capital to lower tax countries.

The forecast, which was included in legislation introduced on Thursday, estimates that expansion of a 30 per cent capital gains tax on offshore investors in energy, mining and infrastructure assets would raise about $2.3 billion over the next five years.

The expected tax take is a significant increase on Treasury’s original forecasts in the 2024-25 budget, which estimated the changes would bring in about $200 million per year, or $1 billion over five years.

The new rules will create difficulties for Energy Minister Chris Bowen, who is trying to turn around sluggish investment in the renewables rollout, to hit the government’s 2030 targets. More than 70 per cent of investment in renewables comes from offshore.

Clean energy groups have asked for existing investments made before the changes to be grandfathered, but the concession is a tough political sell for the Albanese government, which has already raised CGT for households in its most recent budget.

A 30 per cent capital gains tax on renewables would make Australia a higher tax jurisdiction for renewables than Canada, the US, Britain, Germany and the Netherlands, according to research by consultancy Mandala Partners.

The research, which was commissioned by the Clean Energy Investor Group, shows that renewables investors can pay as little as zero capital gains tax under certain scenarios in all five countries, compared with Australia’s new 30 per cent rate.

A ‘very bad trade’

Richard Holden, a professor of economics at the University of NSW, said it was “staggering” that the government appeared willing to put its energy transition goals at risk in exchange for a couple of billion dollars in extra revenue.

“A lot of investors would say, if it’s got the same returns and it’s Australia versus a foreign country, they’d invest here. But if you make it radically unequal, people are not going to feel that way – investment managers have a fiduciary duty.

“The government has a very aggressive energy target and wants to get as much renewables into the grid as possible as fast as possible – fair enough. But why would you try to make that harder for yourself just to collect a bit of revenue?” he said. “That’s mad. It seems like a very bad trade.”

Legislation introduced last week included a transitional rate of 15 per cent on renewable energy assets until 2030, and abolished a proposal that would have allowed the Australian Tax Office to reopen past transactions dating back up to 20 years.

The transitional arrangements were included in the May 2026 budget and are forecast to cost $425 million over the next five years.

But Treasurer Jim Chalmers has so far resisted lobbying by business groups and foreign governments to offer more concessions for renewables investors.

The government declined to say if Treasury had modelled the impact of the changes on the energy transition. Clean energy groups have since commissioned their own as-yet-unpublished modelling.

CPA Australia tax lead Jenny Wong said the increased revenue forecasts were driven in part by the breadth of the new rules and the absence of grandfathering provisions.

“Every infrastructure, energy and land-connected asset held by foreign investors today is captured on future exit under the expanded definitions – licences, contractual rights, installed assets regardless of state law treatment, water entitlements, options,” she said.

“The government describes these changes as a clarification, but the Federal Court has already determined what the existing law means, and it wasn’t the [Australian Tax Commissioner’s] view.

“A measure that raises $2.275 billion by reversing court outcomes isn’t clarifying the law; it’s changing it. Parliament is entitled to do that prospectively, but it should be called what it is.”

The Greens and the Coalition will consider sending the laws to a Senate inquiry, but a parliamentary committee voted on Wednesday night to defer the decision for another five weeks.

Shadow treasurer Tim Wilson said the rules risked putting a handbrake on future economic growth.

“The Albanese government only knows how to take from future growth and opportunity to cover for their inflationary profligacy today. Process is used as a validation tool,” he said.

“This is just another example to add to the pile after debt, higher capital gains taxes and attacks on artificial intelligence.”

Australia tops inflation rankings among all major developed economies

Australia has become an international inflation outlier, with economists arguing the Reserve Bank has not done enough to bring price pressures under control or offset the inflationary effect of elevated state and federal government spending.

The nation now has the equal-highest core inflation rate among major developed economies and the second-highest across all advanced economies, behind only Iceland, after trimmed mean inflation – the RBA’s preferred measure of underlying price pressures – rose to 3.6 per cent in May, according to data platform Trading Economics.

While differences in how core inflation is measured across economies make international comparisons imprecise, the figures nevertheless highlight the persistent domestic price pressures dogging the Australian economy as the Albanese government grapples with voter frustration over the cost of living.

KPMG chief economist Brendan Rynne said that with the benefit of hindsight, the RBA’s three cash rate cuts last year were a mistake.

“There was a general misreading of what was happening in inflation in the first half of last year, on the expectation that inflation was going to come back down within the target range, and therefore the RBA took its foot off the brake and started loosening monetary policy too early,” Rynne said.

The figures also complicate the Albanese government’s efforts to argue it has made substantial progress in bringing inflation under control and easing cost-of-living pressures.

Responding to the figures, Treasurer Jim Chalmers said Australia had an inflation challenge before the war in the Middle East, but the conflict had made that even harder.

He said the May consumer price index showed inflation increasing in areas affected by the war, such as construction costs.

“We’re seeing this across the world, with underlying inflation increasing in the US, the UK and New Zealand,” Chalmers said.

“If you want to make international comparisons, you need to make the full comparison – Australia has faster economic growth than every G7 country except the US and we have faster jobs growth than all of them.”

In response to the post-pandemic inflation surge, the RBA adopted the so-called “narrow path” strategy, raising interest rates by less than other central banks in the hope of keeping the jobs market as strong as possible while still returning inflation to its 2.5 per cent target.

But Rynne said the RBA had put too much weight on the full-employment component of its dual mandate – which requires the central bank to pursue both a strong jobs market and low inflation – and it should have either pushed the cash rate higher than 4.35 per cent or kept it there for longer.

“This narrow path idea of keeping your employment gains and slowly bringing inflation back down has lost its currency,” Rynne said.

“The RBA recognises from a credibility perspective, and from an inflation expectations perspective, they’ve got to be seen to be more active in getting inflation back down, and if that’s going to be at the cost of some employment, so be it.”

The RBA last month held the cash rate at 4.35 per cent after three consecutive 0.25 percentage point increases in February, March and May, prompted by a re-acceleration in inflation that came despite the central bank’s belief it had largely brought price pressures under control last year. RBA governor Michele Bullock first warned in December 2025 that inflation risks had tilted to the upside.

While markets ascribe a one-in-two chance of another 0.25 percentage point rate rise by December 2026, Rynne expects the RBA to hike the cash rate to 4.6 per cent at its August 10-11 meeting to address lingering inflation pressures.

John Simon, the former head of the RBA’s economic research department, said the “narrow path” approach had led to inflation being higher in Australia than in other countries, fuelled by persistent price pressures across the services sector.

“It’s been a deliberate policy choice. They’ve been quite explicit. We’re going to let inflation run higher for longer than in other countries. They said the trade-off was lower unemployment, but monetary policy can’t deliver permanently lower unemployment,” Simon said.

“It’s only a temporary trade-off. The costs, however, in terms of elevated inflation expectations that are now being built into wages and prices, are much more persistent.”

Simon said the RBA had let the country’s inflation problem go on for too long, and it was now going to be much harder to bring down the elevated price and wage expectations that had built up over several years.

“The consequence, I think, is going to be higher unemployment than if [the RBA] had actually got on with the job in the first place,” Simon said.

The RBA declined to comment. Deputy governor Andrew Hauser last month said the central bank still had work to do to reduce inflation.

“The goal of tighter policy is to deliver a period of below-trend demand growth, reducing capacity pressures and returning inflation to target,” Hauser told an Economic Society of Australia conference.

Government spending boom

Rynne said part of Australia’s inflation challenge was an artificially strong jobs market, driven by increased hiring in government-funded sectors such as health, education and the public service.

The strength of employment in those sectors was adding to wages growth across the economy and creating a pay floor in the private sector at a time of weak productivity growth, he said.

“Because there’s no slack in the system, because there’s no spare capacity in the labour market, because we’ve had a history recently of businesses passing those costs on instead of absorbing it in reduced margins – that’s why we’re getting this bump of inflationary pressure,” Rynne said.

The surge in government-funded hiring has coincided with strong growth in state and federal spending, including a rapid rise in Commonwealth outlays on the National Disability Insurance Scheme. Federal spending is expected to reach 26.8 per cent of gross domestic product, the highest level outside the pandemic since 1986-87, according to Treasury.

Simon said the RBA could always offset expansionary fiscal policy – it just needed to be willing to raise interest rates high enough.

“That’s the sense in which inflation is ultimately the RBA’s responsibility. It’s got all the tools it needs to achieve its mandate – even in the face of higher government spending,” Simon said.

“The RBA shouldn’t have been surprised that the government was going to be spending more money, particularly with an election, and that their fiscal restraint was not going to be as good as forecast. So government spending wasn’t an unexpected development, but something they chose not to offset.”

Former Treasury economist Peter Downes said alternative measures of consumer price inflation from the national accounts showed that price pressures were abating, while wages growth would likely ease over the next 12 months based on the RBA’s forecasts.

Downes said the main reason inflation had been above the band was a series of adverse shocks – COVID-19, Russia’s invasion of Ukraine and the conflict in the Middle East – combined with a soft-edged approach whereby the RBA avoided crushing the economy when external events temporarily drove up inflation.

But Simon said domestic price pressures were the main driver of Australia’s inflation gap with other countries, even allowing for its slightly higher inflation target.

“What’s been experienced in Australia is not a global phenomenon. Because to the extent that there’s a global phenomenon, you would think Australia would be around the average [for inflation] – or maybe half a per cent higher given a slightly higher inflation target,” Simon said.

Victorian Liberal MP Moira Deeming has told colleagues she regrets the damage her latest legal action against the party is causing, but claims she is trying to avoid its “self-destruction” by challenging the internal push to revoke her election candidacy.

The Liberal state executive was due to meet on Friday night to decide whether to remove Deeming as their candidate for the November election after she refused to apologise for an unsubstantiated assault allegation against former party leader Matthew Guy.

But Deeming launched urgent legal action in the Supreme Court to stop the meeting going ahead on the basis they had denied her “natural justice”.

During a brief hearing on Friday, lawyers for state Liberal president Brian Loughnane provided an undertaking that the party would not take any further action on Deeming’s position as its No.1 candidate for the Western Metropolitan upper house region until the legal challenge was resolved.

It has been set down for a one-day trial on 17 July.

Liberal leader Jess Wilson refused to answer questions about the matter at a press conference on Saturday morning, saying she could not comment while it was before the courts.

In a text message to colleagues on Friday night and seen by this masthead, Deeming acknowledged the court case’s negative impact.

“I deeply grieve it and regret it. I am doing my best to fix it,” she wrote.

“It may not appear so to you right now, but my actions today were designed to secure the reprieve needed to avoid a slip into self-destruction, and mediate this out of existence for all our sakes.”

In a sign that the dispute could be resolved before returning to court, Deeming said she was seeking to settle the issue with the party, but also defended her allegations against Guy.

“I’m not above helping the party save face – but it is not true that I made a deliberate or reckless false allegation,” she said.

“I believe what we need are formal, objective and fair internal processes. Because our relationships are so strained, it’s a strange environment and it’s the only clear way forward.”

The furore began when Deeming accused Guy, a former Liberal leader and parliamentary colleague, of assault, including an unfounded claim that he put her in a headlock at an event in May.

CCTV footage from inside the Macedonian community event instead showed an innocuous interaction in which Guy briefly put his arm on Deeming’s shoulder as the pair leaned forward to hear one another in a crowded room. In mid-June, Deeming made a complaint to police, which was closed without charge.

Guy demanded an apology, as did Wilson on his behalf, but this was refused by Deeming.

Her text message did little to soothe MPs on Saturday who were outraged by the damage Deeming was inflicting.

“Everyone can now see Moira for who she is,” said a senior Liberal MP, who requested anonymity to speak frankly.

“The sooner she’s out of the Liberal Party and parliament the better”.

Deeming had previously successfully sued former Liberal leader John Pesutto for defamation after he sought to suspend her from the party over her attendance at a Let Women Speak rally in March, 2023, which was attended by Neo-Nazis.

In that case, the embattled MP had the financial backing of NSW property developer Hilton Grugeon.

Grugeon told this masthead on Saturday that he was not financially involved in Deeming’s latest court case.

“But whatever help Moira needs, it’s there and she knows it. I’m heartened there are people now that are happy to be helping her too,” he said.

Despite the ongoing ructions within the state Liberals, Wilson said on Saturday her team was “focused on the election this year and delivering that fresh start for Victoria”.

Labor reform will ban all gambling influencers

All influencers, no matter how big their audiences – as well as sports and racing personalities – will be barred from promoting gambling online if the Albanese government succeeds in pushing through proposed reforms, in a measure designed to block any person from promoting odds for money.

But the government’s long-awaited restrictions on gambling advertising may have hit another snag, with the Coalition and the Greens planning to thwart the long-awaited reforms if they are put to a vote in the Senate. The bill is expected to be introduced in the lower house on Thursday.

A group of independent politicians, including the teals and Senator David Pocock, targeted Prime Minister Anthony Albanese at a press conference on Wednesday.

“If we sound like we’re all ganging up and beating on the PM, it’s because we are,” independent MP Andrew Wilkie said.

Under the draft legislation, gambling advertisements will be restricted to three per hour, but ads can still be broadcast after 8.30pm. Radio ads will be banned around school pick-up and drop-off times, and online ads blocked for users under 18.

The government also intends to reduce the number of gambling ads on platforms such as Spotify and Apple podcasts, as well as search engines such as Google and Yahoo, if the legislation comes into effect.

Sources with knowledge of the exposure draft, who requested anonymity to speak freely, said the government would not place follower caps on influencers who accepted money to promote gambling companies as had originally been expected. Instead, any person or sports star – no matter how many followers – would be banned from working with bookmakers online for payment.

Influencer marketing has become a key method bookmakers use to find young and new audiences. The proposed legislation would remove the ability of bookmakers such as Benny Scarf and Billy Gowers to work with brands. The Karl Stefanovic Podcast, which was sponsored by Neds for several weeks, would also be prevented from accepting any further money.

The Australian Communications and Media Authority, which oversees the legislation, would be given flexibility to introduce stricter definitions should it want to do so. The government’s reform is intended to capture a broad range of people who are involved in the promotion of gambling, but it is still unlikely to appease Greens and Coalition senators, whose votes are required in the Senate.

Crossbench MPs and gambling reform advocates have argued for months that the government has failed to implement key recommendations of the parliamentary inquiry led by late Labor MP Peta Murphy, which had called for a complete advertising ban.

The prime minister last year intervened to kill off a policy being developed by former communications minister Michelle Rowland after meeting with executives from big television networks and sporting codes.

That policy had proposed a ban on all gambling ads on social media and limited ads on TV to an hour before and after live sport, with a cap of two ads an hour until 10pm. Nine is the publisher of The Australian Financial Review.

Liberal Senator Sarah Henderson said on Wednesday the Coalition wanted to ensure the new laws tackled gambling harm.

“After its budget of lies and broken promises, trust in Labor is at an all-time low,” Henderson said. “While we are continuing to work through the details in good faith, it’s no surprise we have concerns about the government’s bill, which should be referred to a Senate inquiry.”

Greens spokesperson for communications Senator Sarah Hanson-Young said the party would continue to fight for a complete ban on gambling advertising.

“The Greens are working across the chamber to ensure these gambling reforms are as strong as possible. We have sent this bill straight to an inquiry so it gets the consultation it deserves and delivers the best outcomes for the community.

“This is not the time for partial, Band-Aid fixes. We need long-term solutions that tackle the root of the problem and deliver lasting change for Australians.”

Wilkie said on Wednesday it was an “open secret” that former communications minister Rowland was leaning towards more reform before Albanese intervened.

“If she had stayed in that portfolio and had not been interfered with by the Prime Minister, I’m confident we would have seen better reform,” he said.

Teal MP Allegra Spender said they all agreed Albanese was the “blocker” on stronger reform to gambling advertising.

‘Like turning around a tanker’: Taylor pleads for time

Angus Taylor has asked for time to reverse the ailing fortunes of the Coalition, saying breaching trust with voters can happen in an instant, but rebuilding it is like turning around a large ship at sea.

With the Liberal Party despairing at the latest polling data showing its primary vote mired at record lows, Taylor traced the malaise back to the COVID-19 pandemic, when he said government grew too big, and then failed to have a plan to lower inflation caused by all the spending.

“There’s no question the government got too big,” he said. “We spent $311 billion. Labor wanted to spend another $100 billion on top of that. And frankly, we needed a plan coming out of that to get back to a smaller government and one that spends less, and that would have taken pressure off inflation, it would have got us coming out in a much stronger position.

“Labor has not fixed this, by the way. It’s not just what was done during COVID. It’s what’s been done since that has been a failure.”

Taylor also blamed the two splits between the Liberals and Nationals that occurred during Ley’s leadership for damaging the Coalition.

“You can breach trust in an instant, in an absolute instant, but it takes time to rebuild it. You can’t turn around a tanker in a few months,” he told 2GB radio.

“We have to just keep working and plugging away at axing Labor’s toxic taxes, at scrapping net zero, at ending mass migration, at putting Australians first.”

The latest The Australian Financial Review/Redbridge Group/Accent Research poll showed after a series of concession on its budget to try and soften the backlash from business, Labor edged back ahead of One Nation on the primary vote by 30 per cent to 29 per cent.

One Nation leader Pauline Hanson took a 10 per cent hit to her net favourably rating following a controversial appearance at the National Press Club two weeks ago. But, to the concern of Opposition MPs, the Coalition did not benefit from One Nation’s slippage.

Its primary vote slid back two percentage points to 18 per cent and Taylor’s net favorability rating fell five points to minus 9 per cent.

A Newspoll published in The Australian contained similar results.

When the Coalition’s primary vote was at similar levels in February, Taylor used it as rationale to take the leadership from Sussan Ley. He said the party must “change or die”.

There is now open talk in the Liberal Party about changing leaders again before the next election with Andrew Hastie being the most likely candidate. Hastie and his backers, however, say there is no rush and Taylor should be given longer in the job.

Last week, Hastie, who is being targeted by Hanson and her supporters, declared war on One Nation and repeated his statement that he would never “bow the knee” to the ascendant party.

Taylor says the focus of the conservative parties must be Labor, not each other.

“I’ve never attacked One Nation voters and I never would,” he said.

“Labor … is the problem for this country. Let’s be clear. They are taking us in the wrong direction.”

Coalition frontbencher Melissa McIntosh said the party’s brand was toxic, especially with women and young people.

“We can’t put the blame on Angus. The Liberal Party itself must go through a rebrand,” she said.

Labor was chuffed with the two polls, believing it has seen off the budget backlash. Frontbencher Murray Watt said Hanson appeared to have peaked after her Press Club speech served as a “reality check” for curious voters.

“They got to see that, as much as people are under pressure at the moment, things could get a whole lot worse under One Nation, with all of the cuts that they were talking about imposing,” he said.

“They are simply not on the side of working people, and all they ever put forward is division and chaos within the Australian public, and that’s not what people are looking for.”

A new party of teal independents is poised to launch as early as this week as part of a closely-held plan to formalise the group’s loose alliance under a fresh “community” label, counter new donations laws and push back at the rise of One Nation.

The plan is being pushed most enthusiastically by Warringah MP Zali Steggall, who has held briefings with interested crossbenchers over the past week to discuss details, according to sources familiar with the talks, who spoke on condition of anonymity.

The proposed party has a logo and a name, which includes the word “community”, but it is unclear how many independents have committed to joining the new group if and when it is announced. More briefings are scheduled this week.

Plans to formalise the community independent movement became public last month after Steggall and Wentworth MP Allegra Spender said they were both open to a new structure that preserved the core elements of their hyper-local campaign strategy.

Part of the impetus behind the push is the Albanese government’s new campaign financing laws, which will cap individual political donations at $50,000 per candidate each year and take effect in January 2027.

Steggall and Spender declined to comment on the new talks.

Writing in The Australian Financial Review last Wednesday, Steggall said it was time to expand access to the community independent model that teal candidates had successfully pioneered at the 2019 and 2022 elections.

“There is a growing argument for a different kind of political movement – one that seeks to build on the principles of the community independent movement rather than replace it,” she said.

She said a new community-based party would avoid top-down decision-making that alienated many MPs from their constituents.

“Australians have changed, and our politics needs to keep up,” she said. “The next chapter may not be about choosing between independents and parties, but combining the strengths of both.”

“Representatives would be chosen by their communities and answerable to them – not donors, lobbyists or party headquarters. They would be free to vote according to the interests of their constituents, not caucus directives.”

Several MPs including Kooyong’s Monique Ryan and Curtin’s Kate Chaney have already ruled themselves out of any immediate plans, while Sydney-based MPs Sophie Scamps and Nicolette Boele and ACT senator David Pocock have kept the door open.

Speaking earlier this month, Spender said her interest in forming a party was driven by a desire to innovate and find ways to have more impact as an independent.

“This is about saying: are there ways that I can or others can come together and create more value in the political arena,” she said.

“I’ve got an open mind in terms of where this may go or may not go, but that’s how I think about it.”

“I think it’s really important, being able to respond to community rather than basically [to] say whatever you’ve been told to say by the major parties.”

She said a new party of independents would not need to have a leader because it would only start with a small handful of members.

“I think you might need to have a leader if you’ve got 20 to 30 people, but if you’ve got a few people to start off with, I think that might not be how you would actually get things going,” she said. “We will see.”

The Financial Review reported last month that the push for a more formal structure was partly driven by a desire to expand the movement into the Senate, where balance of power arrangements could give it greater sway over policy.

Some believe the idea could work if focused on jurisdictions such as the ACT, Tasmania and potentially Western Australia, which are small enough for a senator to maintain a focus on local issues.

The teal independents movement has strong ties with Climate 200, a crowdfunding organisation founded by Simon Holmes à Court that has helped finance and co-ordinate local campaigns without directly controlling individual candidates.

However, some former recipients of Climate 200 financing have since distanced themselves from the organisation. Pocock has formally cut ties, while Steggall said she received no funding from the group before last year’s federal election.