Jim Chalmers

What happened was in 1999, big change made to capital gains.

And what it did was it decoupled people's incomes from house prices.

And it meant that because the capital gain system was overcompensating investment in existing houses and undercompensating investment in other areas, more and more people were just ploughing into the housing market and it was crowding out more and more people, including or especially young people.

And so that's really the challenge that we're trying to address, to try and deal with that distortion which has crowded too many people out over time.

Yes, because I think something like 98% of negative gearing is property.

Yeah.

And so the focus in negative gearing is on

the focus in capital gains is across the system.

And again, that's deliberate.

We're trying to deal with the main challenges here around the fact that labour income and other income is out of whack.

the housing challenges that I mentioned and the innovation challenge I mentioned.

Yeah.

Well, there's $3.5 billion worth of tax cuts, which are all about investment and innovation.

So if you look at the tax package, it's broadly neutral over the four years of the budget.

And that's because what it raises, it provides back in terms of a working Australian tax offset, which has effectively increased the tax-free threshold for people who work for a living.

And it's got $3.5 billion worth of tax cuts for venture capital, for start-ups,

for the more innovative and more dynamic parts of our economy because we want to encourage more of that.

So across the board, it's very pro-investment and innovation because we want to get that dynamism and productivity in our economy.

Yeah.

So we're talking about a capital gains discount.