The rumours were true, the budget brought big changes for negative gearing and the capital gains tax discount!
Welcome to Talking Business, a podcast produced in Melbourne Australia. The podcast is available on the Acast site, my own website, the Apple podcast store or wherever you go to get your podcasts. Or you can get it at the Business Acumen website at https://www.businessacumen.biz/.
I am Leon Gettler. My job is review and monitor the week’s news in business finance and economics. I bring it all to you every week.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com or whatever your favourite podcast platform is.
This is episode number 15 for 2026 and today’s date is Friday, May 15.
First, I’ll be talking to Chris Van Langenberg about how businesses can use AI to increase their visibility
And I’ll be talking to AMP Capital chief economist Shane Oliver about Australia’s inflation and the RBA’s decision to raise rates.
But first, let’s talk to Chris Van Langenberg
So what’s happening in the news?
Our big story this week is Australia’s Federal Budget. It’s huge.
Okay, so the big one first. The Albanese government has killed negative gearing for future purchases of established investment properties. This is a massive deal — and a massive broken promise, because Albanese spent the entire 2025 election campaign promising he wouldn’t touch it. So what actually changes? Right now, if you’re a property investor and your rent doesn’t cover your costs — your mortgage interest, maintenance, agent fees — you can write that loss off against your salary. It cuts your income tax bill. Under the new rules, you can only write that loss off against rental income or future capital gains from the property. You can carry losses forward, but you can’t use them to shrink your regular tax bill anymore. Now — there are carve-outs. New builds are still fully negative gearable, because the government wants to encourage housing supply. And if you already own an investment property, you’re grandfathered in — nothing changes for you until you sell. Contracts already signed before Tuesday night are also safe. It all kicks in from July 1, 2027. What does Treasury say it’ll do? House prices grow about 2% less over a couple of years, saving the average buyer around $19,000 on a median-priced home. It should help around 75,000 extra first home buyers get into the market over the next decade. The downside? Rents could tick up by about $2 a week. And over ten years, housing supply might be around 35,000 dwellings lower than it otherwise would’ve been. Revenue-wise, this and the CGT changes together raise $3.6 billion in their first three years, growing significantly after that.
Now the capital gains overhaul, which is just as significant. Currently, if you sell an asset — property, shares — and you’ve held it for more than a year, you only pay tax on half the gain. That 50% discount is gone from July 1, 2027. What replaces it? An inflation indexation model. So you’ll only be taxed on the real gain — the gain above inflation. Treasury says this is actually fairer, because the old 50% discount has been over-compensating property investors for inflation for years. There’s also a new minimum 30% tax rate on capital gains. This stops retirees — who often have little other income — from paying very low effective rates when they sell assets. Treasury’s modelling shows that between 2010 and 2023, the average investor was only paying about 25% on capital gains. That’s less than a full-time minimum wage worker pays. So they’re fixing that. One striking change: assets bought before 1985 have been completely CGT-free for over 40 years. That’s ending. Pre-1985 assets will be taxable on gains from July 2027 onwards. Superannuation funds keep their one-third CGT discount. And the government says it’ll consult with the startup sector — there was an immediate outcry that early-stage businesses could get unfairly hammered.
This one hits wealthy families hard. The government is introducing a minimum 30% tax rate on distributions from discretionary trusts — the family trusts that high-income households have used for decades to split income with lower-earning spouses, adult kids at uni, or bucket companies. About 840,000 trusts are affected. Currently, a high earner can distribute trust income to a family member on a lower tax rate and pay much less overall. Under the new rules, any distribution gets taxed at a minimum 30%, regardless of the recipient’s marginal rate. It kicks in from July 1, 2028. The government is giving trusts three years of rollover relief to wind up and transition — probably into company structures. And there are exemptions: testamentary trusts set up through wills, super funds, special disability trusts, and charitable trusts are all out. Primary production income also gets a carve-out. One industry expert put it bluntly: “This ends the use of the discretionary trust as a household cash-flow and income splitting tool.”
On the other side of the ledger, 13.3 million workers will receive a new $250-a-year Working Australians Tax Offset. It effectively raises the tax-free threshold for work income by $1,800, to just under $20,000. The catch? You won’t see it until you do your 2027-28 tax return — so July 2028 at the earliest. It costs the government $3 billion a year. The broader picture on income tax is pretty sobering though: individual income tax is heading for its highest share of total government revenue since 1999 — back when the GST was introduced and income taxes were slashed. By 2029-30, individuals will be paying 54.5 cents in every dollar of tax the government collects. A lot of that is bracket creep, which the $250 offset barely dents.
So, the Albanese government’s latest budget is stirring up some controversy — and the Reserve Bank is not going to be happy about it. Here’s the core issue: the government is injecting an extra $18 billion of spending into the economy at the exact moment inflation is at its worst. Economist Stephen Smith from Deloitte put it bluntly — the biggest spending surge is landing in the year when prices are rising fastest. Not great timing. Now, Treasurer Jim Chalmers said the budget wouldn’t add fuel to the inflation fire. But the numbers tell a different story. Spending is up on hospitals, defence, the PBS, and a range of other programs. The government is actually spending five-and-a-half billion more than it’s saving this financial year alone. The RBA has already hiked rates three times this year — taking the cash rate from 3.6% up to 4.35% — trying to drag inflation back into that 2 to 3% target band. Right now it’s sitting at 4.6%. And last week, RBA Governor Michele Bullock warned governments directly: it doesn’t take much extra spending to make our job harder. On the positive side, the deficit picture has improved — about 45 billion dollars better than December’s forecasts. But here’s the catch: over 90% of that improvement came from economic conditions — things like high commodity prices and population growth — not from anything the government actually did. Economist Chris Richardson called it simply “a gift.” There’s also a trillion-dollar milestone coming — gross debt is projected to crack a trillion dollars in 2026-27, and keep climbing past 1.2 trillion by the end of the decade. And one big wildcard: the government is banking on saving nearly 38 billion dollars from the NDIS over four years. But the scheme is currently growing at 10% annually, and the budget assumes that somehow drops to just 1% next year. A lot of economists are raising eyebrows at that one. So the big takeaway? A budget that looks better on the surface, but one that’s making the RBA’s inflation fight a whole lot trickier underneath
Finally, the NDIS. The government is projecting $36 billion in savings over four years by tightening who can access the scheme. The numbers are stark. Without changes, the NDIS was heading toward 1 million participants and a $96 billion annual cost by the mid-2030s. The government wants to bring it back to around 600,000 participants by 2030, with growth capped at 2% a year. A new standardised assessment tool rolls out from January 2028 to determine eligibility more consistently. People who lose access won’t be left entirely without support — there’s $3 billion from the federal government, matched by states and territories, for programs outside the NDIS. And a new program for kids under nine with autism and developmental delays starts rolling out from October. Health Minister Mark Butler called it unavoidable. “The NDIS costs too much and is growing too fast,” he said. “Unless we act, it simply will not be there for the Australians who need it most.”
So here’s something wild — we’re in the middle of a war between the US and Iran, and Wall Street is booming. The S&P 500 has shot up over 16% since its wartime low in late March — that’s more than ten trillion dollars in market cap added. Tech earnings have been stellar, the jobs market is strong, and American investors are basically shrugging off the conflict. Australia? Completely different story. The ASX 200 is down nearly 5% since the war started. Three rate hikes, miserable consumer sentiment, and some of our biggest blue chips — CSL, Cochlear — taking a hammering with major earnings downgrades. The key divide, according to the experts, comes down to two things: technology exposure and oil. The US market is loaded with tech stocks riding the AI spending boom. Ours is heavy on banks and resources, which have a much murkier outlook right now. And even though Australia is a net energy exporter, investors are still treating us as a loser from higher oil prices — because our economy runs on consumer spending, and consumers are getting squeezed. Bond markets are also flashing warning signs. Yields are climbing in both countries as traders price in longer-lasting inflation. Oil futures are sitting around $89 a barrel for December delivery — meaning commodity markets aren’t betting on a quick resolution either. Peace talks aren’t going well — Trump rejected Iran’s latest response on Monday — so until something breaks, Australian investors are essentially stuck waiting for relief that hasn’t come yet.
The construction industry is having a really tough time right now, and it’s about to get tougher. Plumbing suppliers Reece and Tradelink have just announced another round of price rises kicking in from June and July — we’re talking plastic pipes up 23 to 35 percent in some cases, copper fittings, brassware, taps, shower heads — it’s across the board. Electricians are copping it too, with surcharges of 10 percent from May 1. The brutal part? A lot of these builders are locked into fixed-price contracts, so they can’t pass any of it on. As one insolvency partner put it — there’s no wriggle room. Construction already accounts for roughly a quarter of all company collapses in Australia. The good news, if you can call it that, is the numbers haven’t spiked yet — April insolvencies were actually down year-on-year. But the people in the industry are bracing for what’s coming.
Here’s a story that’s going to become very familiar across a lot of industries. MinterEllison has become the first big Australian law firm to actually come out and say it — AI is one of the reasons they’re hiring fewer graduates. Their 2025-26 intake is down almost a third, to 72. The reasoning is straightforward: AI is handling a lot of the routine work that junior lawyers traditionally cut their teeth on. Now, several other top firms — Herbert Smith Freehills, Norton Rose, Allens, Mallesons — also cut graduate numbers, though they’re attributing it more to over-hiring in previous years. Overall, hiring across the top eight firms is down seven percent to 716 graduates. A few firms actually bucked the trend and hired more. But the direction of travel here is pretty clear.
Rod Drury, who co-founded the accounting software giant Xero — now worth about $14 billion on the ASX — has agreed to hand back his New Zealander of the Year award. This comes after three women, including two former Xero employees, made allegations of unwanted sexual contact. Drury has strenuously denied all of it, saying any relationships were consensual and mutual. Xero itself has launched a review into how it handled a complaint made by one of the women back in 2017. The awards office said it didn’t want the integrity of the programme undermined while investigations are ongoing — and notably, the award won’t be given to anyone else this year.
So there’s another Woolworths executive taking the supermarket to court, and the details are pretty striking. Jane Frewen worked at Woolworths for eight years, most recently as director of facilities at their store design and fulfilment unit. She’s now suing in the Federal Court, claiming she was bullied into resigning early last year. Her main allegations centre on the managing director of her division, Rob McCartney. She says he publicly humiliated her in leadership meetings — things like telling the room she “never listens,” or dismissing a policy she’d raised by saying it was like “turkeys voting for Christmas.” She also claims he only announced the promotions of her three male colleagues when she was promoted in 2022, leaving her out entirely. And she says even after she resigned, he continued to target her. On the workload side, she’s alleging 12 to 14 hour days every weekday, plus weekends — up to 70 hours a week normally, and around 90 hours at peak times. And this apparently continued even when she was on leave. One of the more confronting parts of her claim involves the death of a contractor at a Woolworths facility in Newcastle. She says she was handed responsibility for the funeral arrangements — flights, transport, family communications — with no emotional support offered at any point. Then McCartney reportedly told her team they wouldn’t receive a bonus because of the contractor’s death. Frewen eventually checked into a rehabilitation centre for burnout late last year. Now, this isn’t the first time Woolworths has faced this kind of allegation. Former chief growth officer Miwah Van made similar claims last year — reportedly working up to 120 hours a week and sleeping just one hour a night. Woolworths says it will fight the lawsuit and hasn’t filed a defence yet. Frewen says she’s speaking out because she doesn’t believe her experience was isolated — and she wants other women in corporate Australia to feel they can do the same.
And that’s it for this week.
And next week, I’ll be talking to Penelope Barr, a former career executive and portfolio careerpreneur who now coaches people about how to avoid burnout.
And I’ll be talking to Dr Christian Gillitzer from Sydney University’s School of Economics about the tax implications of the Budget.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com or whatever your favourite podcast platform is.
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