The Coalition would repeal all of Labor’s negative gearing and capital gains changes and spend $22.5 billion over four years handing back tax “bracket creep” to workers if elected.

Opposition Leader Angus Taylor used his first budget in reply speech on Thursday night to outline a tougher migration stance in a likely attempt to claw back Liberal voters who have turned to One Nation.

He named “mass migration,” net zero, the “locking up” of resources like oil and gas, and “big government” public spending on childcare and housing as the four “bad ideas” Australia must reject.

Business groups have welcomed Mr Taylor’s pledge to reduce red tape, but warned against excessive cuts to skilled migration and urged the Coalition to have a “clear funding plan” for income tax cuts.

Labor described the budget reply as “uncosted nonsense”, while One Nation said the Coalition had copied the minor party’s policies.

Taylor bets Coalition’s fortunes on permanent tax breaks

Mr Taylor unveiled an ambitious “tax back guarantee” plan to eventually index all income tax rates to inflation, starting with the two lowest brackets in 2028–29.

This would initially return $250 to the typical taxpayer in the first year and up to $1,000 annually by the fourth year, with the Coalition then planning to index the top two brackets from 2031–32.

The first four years of the lower bracket tax cuts alone would cost about $22.5 billion, which the Coalition is planning to fully offset with measures that would be announced before the 2028 election.

Labor this week unveiled an annual $250 Working Australian Tax Offset (WATO) to start flowing from mid-2028, which would cost about $6.4 billion in its first two years.

This would be paid for using revenue from sweeping changes to negative gearing, capital gains tax (CGT) discount and discretionary trusts.

But Mr Taylor said he would reverse Labor’s tax changes, describing them as an “assault on aspiration” that crushed the “reward for hard work” spirit of Australia.

Mr Taylor criticised Labor’s decision to bring the private health insurance rebate for over 65s in line with other age groups, but did not pledge to restore it.

Coalition to abolish climate programs and back coal

Mr Taylor cast Labor’s housing programs and climate initiatives, such as vehicle emissions standards, as “bureaucracies” the Coalition would cut entirely.

He reiterated his plan to abolish the safeguard mechanism which is designed to push heavy emitters toward decarbonisation.

Mr Taylor vowed to work with coal fired power station operators to keep plants “running as long and as hard as possible to get electricity prices down”.

He would also end a popular tax rebate for electric vehicles, which would save billions of dollars over four years.

Mr Taylor renewed the Coalition’s past election commitment to spend at least three per cent of gross domestic product (GDP) on defence and establish a future generations fund to bank 80 per cent of any windfall profits from resources.

That fund would be used to pay down government debt and invest in “nation building” infrastructure, with 25 per cent of spending reserved for regional Australia.

The Coalition would also allow any business with a turnover of less than $10 million to immediately deduct assets of up to $50,000 on a permanent basis.

Labor says Coalition’s plan is ‘uncosted nonsense’

The Business Council of Australia (BCA) welcomed Mr Taylor’s pledge to “rewrite and simplify” a raft of regulation including environmental laws, the building code, corporation, tax and competition laws.

But BCA chief Bran Black expressed concern about the Coalition’s proposed significant reductions in migration levels.

“Australia depends on skilled migrants to build homes, care for older Australians and keep essential services running,” he said.

“We support, and have long called for stronger links between population, housing and infrastructure, but the answer is to build more homes.”

Mr Black said indexing tax brackets was “good reform,” but the policy “must be backed with a clear funding plan”.

Labor Housing Minister Clare O’Neil was scathing of the Coalition’s budget response, noting Mr Taylor had not personally confirmed the cost of the tax cut proposal or how to pay for them.

“This is a complete thought bubble, uncosted nonsense, that isn’t going to end a single person at home get ahead, or pay their bills,” she said.

“In contrast, Labor has delivered five tax cuts to the Australian people.”

One Nation MP Barnaby Joyce mocked the Coalition’s plan with a reference to the Welcome to Country used by Indigenous Australians.

“I think they should acknowledge One Nation policies, past, present, and emerging,” he said.

“I’d like to thank them for basically reading off the One Nation script.”

Nationals leader Matt Canavan used a speech in the Senate on Thursday night to deliver his own budget reply, backing in Mr Taylor’s plan to curb “mass migration”.

“I commit that the Nationals and the Liberals will always fight to hand on a stronger and wealthier country than the one we inherited,” he said.

Taylor blames ‘mass migration’ for Australia’s housing crisis

Less than a week after voters in the NSW regional electorate of Farrer resoundingly voted to elect One Nation over the Coalition, Mr Taylor put migration at the forefront of his speech.

“The Coalition will deliver one of the biggest cuts to immigration in Australian history,” he said.

Mr Taylor pledged to tie Australia’s net overseas migration to new housing construction, which would cut the intake to about 170,000 people based on current building completion rates.

The average Australian dwelling is home to 2.6 people, but it is understood the Coalition’s plan would restrict migration at a one-to-one ratio.

Mr Taylor said the intake of migrants would actually need to be “significantly below our cap” in the early years of a Coalition government to allow the housing market to “catch up”.

“Only closer to the next election can we provide a precise immigration number,” he said.

This financial year the NOM is expected to reach 295,000, but Labor is aiming to bring it down to 225,000 by 2027–28.

Ending welfare payments for migrants ‘pure political theatre’

Mr Taylor said the Coalition would “reserve” the NDIS and 17 other government programs including Jobseeker and paid parental leave, for Australians “only,” which would “save taxpayers billions”.

“If you commit to Australia, then Australia will commit to you,” he said.

The restriction would be grandfathered so that current permanent residents would be able to continue accessing the payments.

But Asylum Seeker Resource Centre deputy chief executive Jana Favero said Mr Taylor’s speech was “pure political theatre”.

“He is misleading the nation in claiming that migrants are arriving and immediately accessing welfare payments when in reality most of the restrictions he’s talking about already exist,” she said.

“Newly arrived migrants face waiting periods of up to four years before they can access most Centrelink payments, even if they are permanent residents.”

Ms Favero said it was “fearmongering” designed to “scapegoat migrants” for housing pressures and the rising cost of living “instead of addressing the real causes”.

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