Australias debate around tax reform challengesa system that hasdriven inequality and locked a generation out of housing, writesCarl Rhodes.

AS RECENTLY AS as six months ago, reform of Australias capital gains tax discount seemed politically unthinkable. As the May budget approaches, it has become not only plausible, but increasingly likely.

This may prove to be a pivotal moment in Australian politics, not simply because of the tax change itself, but because it could signal a decisive fracturing of the longentrenched neoliberal policy framework that has fuelled and justified widening economic inequality.

Since Labors election victory in May 2025, concerns about intergenerational inequality have steadily gained momentum, crystallising at TreasurerJim ChalmersEconomic Reform Roundtablein October.

Economic inequality is reshaping Australian politics. The May Budget will decide whether Labor tackles it or leaves the door open to populism.

That shift was reinforced this month when aSenate inquiryconcluded:

While the government remains cautious, all indicators now point towards change. The day after the report was released, Chalmerssaidthe government had an open mind to tax reform and was working up some options.

More than just a tax change

While tax reform is a crucial step in addressing worsening economic inequality in Australia, what is at stake here is much larger than fiscal setting. If the government does act in May, it will signal the unravelling of the neoliberal economic model that treated inequality as a market outcome rather than a matter of democratic choice.

Nowhere is this more evident than in the response from those resisting change. As they struggle with declining relevance and electoral appeal, the Coalition are clinging ever more tightly to an outdated ideological framework that increasing numbers of Australians are leaving behind.

Theirstatement issuedon the day the Senate report was released, tellingly titled 'Coalition stands firm against CGT changes', reads like a textbook expression of unquestioned neoliberal common sense. It abstractly defends the sanctity of markets while systematically evacuating inequality from political consideration, relying on the familiar trickledown assumption that protecting incentives at the top will eventually benefit everyone below.

The Coalitioninsists:

This reflects the familiar neoliberal dogma that optimising investment conditions will deliver growth that eventually benefits everyone, despitelongstanding evidencethat such benefits overwhelmingly accumulate at the top.

Rather than treating tax reform as a democratic tool for shaping fairer outcomes, it is cast as a market distortion that would punish mum and dad investors while threatening rents and investment.

An ideology past its use-by date

Opposition LeaderAngus Taylorhas dismissed any potential tax reform,saying:

It is difficult to read this as anything other than a refusal to confront the hardship created by levels of inequality that have placed home ownership beyond the reach for an increasing number of Australians.

If aspiration is being crushed, it is because Australia has an economic system built around rising asset values rather than broadbased opportunity. That is precisely why reform is needed.

We have arrived at the point where ideological gestures towards a better future cannot hold up against the lived experience of persistent and worsening housing unaffordability and cost-of-living pressures. The deregulated and financialised economic system that has dominated Australia increasingly feels stacked against working Australians.

Meanwhile, the Coalition is stubbornly holding on to ideas that have long passed their use-by-date. At this point, refusing reform is no longer a defence of aspiration, but a defence of a system that systematically undermines it.

The capital gains tax breaklays bare a system that rewards wealth over work.

The beginning of the end

It may have once been convincing that faith in markets, hostility to redistribution, and generous tax concessions for capital would lead Australia to greatness, but the realities of everyday life are eroding that conviction. What once passed for economic realism now looks like ideological inertia.

This is precisely why capital gains tax reform is now more likely to come from Labor. Unlike the Coalition, Labor has begun, cautiously but clearly, to treat inequality as a legitimate object of economic policy rather than a market outcome to be endured.

The CGT debate therefore matters far beyond tax design. It marks a moment in which longstanding assumptions about Australian economic policy are being openly questioned, and where the choice between democratic fairness and assetbased privilege is once again visible.

If Labor proceeds with reform, it will not simply be adjusting a tax setting but signalling clearly that economic fairness still matters in Australia. Much work remains to be done, but this could well be the beginning of the end for Australian neoliberalism.

Carl Rhodesis Professor of Business and Society at the University of Technology, Sydney. He has written severalbookson the relationship between liberal democracy and contemporary capitalism. You can follow him on X/Twitter@ProfCarlRhodes.

Related Articles

• Capital gains tax reform is necessary