Albanese government slashes climate funding while reforming capital gains tax
The Albanese government will scale back climate spending in next week’s budget while introducing major tax reforms. Finance Minister Katy Gallagher admitted current net-zero funding levels were unsustainable. At the same time, Treasurer Jim Chalmers is set to overhaul capital gains tax rules for long-held assets. Labor had previously pledged tens of billions for climate action during its first term. But Gallagher confirmed the government would now reduce that commitment, though it will still allocate $500 million to streamline environmental approvals. The shift comes as officials deny claims that high spending is worsening inflation.
The budget will also target housing affordability by cutting the 50 per cent capital gains tax (CGT) discount for assets held over 12 months. Chalmers acknowledged this move breaks from Labor’s 2016 and 2019 election promises, when the party proposed reducing the discount to 25 per cent but lost both races. He argued the government had been open about reviewing housing tax policies.
The changes arrive as research shows Australians now need an annual income of around $200,000 to buy a typical capital-city home without mortgage stress. Chalmers defended the CGT reform, framing it as a necessary step to ease pressure on the property market. The budget will mark a clear shift in both climate and tax policy. Spending on net-zero initiatives will drop, while the CGT discount cut aims to address housing affordability. The government insists the changes are transparent and necessary for long-term economic balance.
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