The death of aspiration.

The Budget's tax changes are being sold as a gift to future generations. Young entrepreneurs are footing the bill.

The 2026-27 Budget has been sold as a generational correction. A rebalancing in favour of the young, against those who accumulated assets on the back of tax settings that no longer reflect a fair social contract.

Somebody should tell this to the young entrepreneurs.

There is a person the Treasurer did not appear to have in mind when he described his reforms as a victory for “workers, first home buyers and future generations.” This person is young. They are ambitious. They have spent the better part of a decade taking risks their peers avoided: forgoing salary, carrying personal debt, betting on an idea instead of a pay cheque.

They are now looking at a tax system that punishes every single one of the paths they were relying on to make that risk worthwhile.

The centrepiece of Tuesday’s Budget is the abolition of the 50 per cent capital gains tax discount, replaced from July 1, 2027 with a return to the pre-1999 inflation indexation model. Assets held for more than 12 months will be taxed on real gains above CPI, at the higher of the individual’s marginal rate or a new minimum 30 per cent floor. The Government frames this as closing a loophole that disproportionately benefited the wealthy. In practice, it also closes the mechanism that made founding a startup financially rational.

Here is the calculation a young founder has always made. You take below-market pay, or sacrifice a pay cheque completely so you can pay your staff. You forgo years of superannuation contributions. You carry personal and financial risk that a salaried employee never touches. The deal, at the end of it, is that when the company sells, the CGT discount softens the tax treatment on what you built. Remove that discount and you have altered the fundamental equation of entrepreneurial risk.

The startup community has not been quiet on this. Before the Budget, economists warned that abolishing the discount would be catastrophic for early-stage investment. It’s been widely reported that entrepreneurs, investors and tax experts were warning of a talent exodus from Australia. The Government’s answer has been to preserve small business CGT concessions and promise further consultation on startup-specific investment settings. All welcome considerations, but they don’t take into account the bigger picture.

The Treasurer has been at pains to note that small business concessions remain intact: rollover relief, retirement exemptions, the 15-year asset exemption for qualifying businesses. This is true. But the 15-year exemption requires 15 years of continuous ownership and the founder being 55 or older. The retirement exemption caps at $500,000. Neither applies to a young founder who exits in year seven. And angel investors, venture capitalists, and early employees holding equity options are looking at a different regime entirely. The people most likely to back a first-time founder, or to join a startup at a fraction of market salary in exchange for equity, now face a materially less favourable tax outcome when that equity converts. The incentive to take that bet has been made meaningfully smaller. Promising further consultation is too little too late.

The CGT hit is only the first bill.

The same young founder who built the company - now looking to deploy that capital, to build the kind of private financial security that justifies the risk they took - has just been handed another one. Investment properties purchased after Budget night are locked out of negative gearing from July 2027, unless they're a new build. Treasury's own modelling concedes 35,000 fewer homes will be built over the next decade as a direct consequence. The Government says this will help first home buyers into the market. Maybe. But the person being squeezed out is not the passive accumulator the Budget's rhetoric is aimed at. It's the founder who just exited a business and is trying to figure out where to put the proceeds.

For many young founders, property ownership has been out of reach throughout the years spent building their companies. Mortgage lenders require consistent, documentable income - the kind a salaried peer produces without difficulty, and a founder drawing below-market pay or equity distributions cannot satisfy. The same period has seen median property prices move faster than any deferred compensation package could track, pricing out an entire cohort of high-potential earners who simply weren’t paying themselves. The budget’s negative gearing reforms close the remaining entry point.

Then there is the share market. Young Australians who have spent the last decade investing in equities - partly because property was already unaffordable, partly because they understood the logic of owning productive assets - now face the same regime. The Government’s justification is that the 50 per cent discount was too generous to property relative to shares, and that indexation restores the original intent of taxing only real gains. Fair enough in theory. But paired with the new 30 per cent minimum tax rate, it means a young investor on a lower marginal rate now pays more tax on the same profitable trade than they would have a year ago - precisely the cohort the reform claims to be helping.

Taken together, this is what a triple whammy looks like. Property investment, constrained. Share investment, taxed harder. Business exits, clipped. The three primary mechanisms by which someone without inherited wealth builds private financial security in this country have all been simultaneously narrowed.

What stings is the framing. This Budget has been packaged, with real conviction, as a gift to future generations. The language of intergenerational fairness is doing heavy lifting throughout the budget papers and in every ministerial press conference and media release since Tuesday night. But the generation being taxed most harshly here is not the comfortable property investor sitting on a portfolio of negatively geared assets accumulated over twenty years. It is the 35-year-old who spent six years building a company from nothing, who took the risks that most people are sensible enough to avoid, who did not inherit a property portfolio and was never going to. That person was planning to build one. The Budget has decided to make that substantially harder.

This article is not intended as a “woe is me”. Founders make a choice - they choose the risk, the uncertainty, the months without salary over the steady pay cheque. Nobody forced them. But a society that benefits from that choice, that relies on entrepreneurs to create jobs, build industries, and generate the very tax base the Treasurer is so eager to reform, has an obligation to make the incentives make sense. The 50 per cent CGT discount was not charity but the implicit acknowledgment that aspiration should be rewarded.

To the cynical, this might all sound a bit performative, coming from a card carrying member of the Liberal Party. But I became a member of that Party because I truly believe these issues are existential. The death of aspiration is the death of a nation.

Aspiration is not an asset class. It does not appear on a balance sheet and cannot be indexed to CPI. But it operates on incentives, and incentives respond to tax law. A system that clips the reward for risk, at exit, at investment, at every subsequent wealth-building stage is a system that has decided ambition is the thing that needs to be taxed.

So this is what pushing the aspiration generation out actually looks like. In one Budget, and a decision by the people who build to build somewhere else. Call it tax reform for future generations if you like. Just be honest about who’s paying the bill.