Anthony Albanese says his government needed to undertake contentious tax reform to protect Australia from joining the “social and economic dislocation we see overseas” amid surging support for One Nation.
In a speech to the Australia’s Economic Outlook 2026 summit jointly hosted by Sky News and The Australian on Friday, the Prime Minister will strongly defend his budget of broken promises, rebuff calls for big changes to the capital gains tax discount hit on businesses and investors and declare Australia open for international business investment under his government.
Mr Albanese will shift his narrative on the rise of One Nation amid polling showing it tracking towards being Labor’s biggest electoral threat, empathising with supporters of Pauline Hanson’s party rather than attributing its rise to the dysfunction of the Coalition.
With business demanding major changes to the capital gains tax regime unveiled in the budget and passed through the House of Representatives on Thursday, the Prime Minister will rule out a “long, drawn-out process that ends with fiddling around the edges of the status quo”.
Mr Albanese’s hosing down of calls for changes to his tax package will come after Treasury secretary Jenny Wilkinson acknowledged it was not entirely accurate for the Labor leader to claim his government was returning to the pre-1999 CGT discount method.
As One Nation’s surge threatens to replicate sustained right-wing populist revolutions in the US and parts of Europe, Mr Albanese will declare the moment demands “practical solutions, not slogans” in a speech that alludes to the rise of Senator Hanson without mentioning her movement by name. He will describe concerns of aggrieved Australians driving One Nation’s support as logical rather than just emotional.
“If you look around the world, you can see what happens to countries and economies when people make up their minds that the system is broken beyond repair,” Mr Albanese will say, according to a copy of his speech provided to The Australian.
“The decision for Australia is clear. We can choose whether the social and economic dislocation we see overseas is a warning that we act on or a preview of what is to come. Our government has no intention of standing around and wringing our hands about the consequences of a system that isn’t working for people. Instead, we are acting to fix it.”
Senator Hanson told Sky News over the weekend she had the ability to be prime minister, with the once-fringe party’s primary vote increasing from 6 per cent at last year’s election to higher than the Coalition at 27 per cent in the latest Newspoll.
Mr Albanese will say the budget hits on CGT, negative gearing and trusts were important for “our democracy and social cohesion more broadly”, as it better aligned the way Australia taxed income from wages compared with income from assets.
Declaring it problematic that Australians felt like the economy wasn’t “working for them”, Mr Albanese will nonetheless say the sentiment was justified as more voters consider dumping the major parties for One Nation.
“This sentiment hasn’t come out of nowhere; it is pressure that has built up, over years,” he will say. “And it’s not just a vague feeling; it’s a reality that working Australians are up against. It’s something they can see for themselves. It is a logical response, not just an emotional one. And it deserves practical solutions, not slogans.”
In a shot at Senator Hanson, Mr Albanese will declare people “might be able to build a brand of politics out of amplifying frustration and seeking to harvest it”.
“But that doesn’t take our country forward,” he will say. “What counts, what matters, what makes a difference, is whether you have a plan to do something about it. If big change was easy, Australia would not be two decades into a national conversation about why we urgently need tax reform.
“We do not doubt the challenges we are up against.”
The first tranche of Labor’s budget package passed the House of Representatives on Thursday, despite by the Coalition and teal independents to change it .
The bill, which includes capital gains and negative gearing changes, faces an uncertain path in the Senate, as the Greens demand the Treasurer extensively wind back the significant discretionary powers in the legislation.
With business groups demanding major changes to the CGT discount and calling for a longer period of consultation than Labor’s plan to make the reform law by July, Mr Albanese will talk up the four existing concessions available to 90 per cent of employers with a turnover of up to $2m.
“As we have said all along, we will engage in good faith on the detailed design of the legislation that will follow,” he will say.
“Over the last four years, my door has always been open to discussions with business. But this is not going to be a long, drawn-out process that ends with fiddling around the edges of the status quo.
“Because this moment presents a bigger opportunity for deeper co-operation.”
He will also reject claims from business that the tax reforms will deter international investment and encourage entrepreneurs to move overseas. “Whenever I meet with investors in New York, or Abu Dhabi, or Jakarta, or the EU, they want to do business here in Australia,” Mr Albanese will say. “Because whether they are building a data centre or opening a retail chain they recognise that investing in this country means buying in to a stable democracy with a skilled workforce. With an abundance of clean, cheap energy.”
In parliament on Thursday, Angus Taylor and the Coalition failed to change the legislation to separate the CGT and property crackdown from the $250 working Australians tax offset.
“These cost-of-living measures could have passed this parliament easily with bipartisan support, but tricky Labor, this tricky Treasurer has deliberately tied these measures to its toxic taxes,” the Opposition Leader said.
Labor also voted down attempts from teals Allegra Spender, Zali Stegall and Monique Ryan to limit the CGT changes to property, put an income-averaging mechanism on the new system, and offer more leeway for small businesses.
In Senate estimates on Thursday, Ms Wilkinson admitted several times that features of former prime minister Paul Keating’s CGT model were not in the new proposals, despite Mr Albanese saying that Labor was just returning to the system that was in place.
When asked if the pre-1999 system imposed a minimum 30 per cent tax rate as the new system, Ms Wilkinson said: “No it didn’t.”
She also played down Jim Chalmers’s significant ministerial powers in the current tax laws.
Read related topics:Anthony AlbaneseOne Nation
Greg BrownChief political correspondent