I was thirty thousand feet above the Great Dividing Range, sipping a moderately acceptable Qantas business-class Shiraz, when I first truly grasped the sheer human toll of the Albanese government’s proposed budget.
Sitting next to me was Tristan. Tristan is twenty-six, wears a Patagonia fleece vest with an understated elegance, and is the visionary founder of a B2B SaaS platform that utilizes generative AI to optimize the way human resources departments schedule Zoom meetings. Under normal circumstances, Tristan would be radiant with the invincible aura of a man who just closed a $40 million Series A funding round. Instead, he looked as though he had just been told he had to fly commercial economy.
His distress, it turned out, was entirely the fault of federal Treasurer Jim Chalmers. The recent federal budget’s sinister adjustments to the capital gains tax (CGT) framework have sent shockwaves through the startup ecosystem, threatening to force our nation’s most brilliant innovators to pay a fractionally higher percentage of tax on their theoretical millions. As Tristan explained it to me, tears welling in his eyes behind his Warby Parker frames, the government was essentially punishing him for his bravery.
Let us be perfectly clear about what is at stake here. For months, the startup community has been pushed to the absolute brink, forced into a corner by a Labor government that simply does not understand the psychic burden of having equity. And so, the founders did what any marginalized group must do when faced with existential erasure: they took to the internet and launched a meme-fuelled backlash.
I must admit, I am not typically one for 'internet culture'. But when I logged onto my LinkedIn and Twitter feeds later that evening from the Qantas lounge, the digital carnage was awe-inspiring. I saw venture capitalists bravely posting reaction GIFs of popular sitcom characters looking frustrated. I saw angel investors deploying images of cartoon dogs sitting in burning rooms, courageously asserting that the room was, in fact, not fine. This was not mere complaining. This was a modern-day Tolpuddle Martyrs revolt, waged entirely on Slack channels and subreddits by men named Jasper and Hugo.
And thankfully, the adults in the room are finally starting to listen. Speaking to a number of Labor MPs nationwide over the past few days—many of whom I regularly dine with at Machiavelli in Sydney or during quiet, off-the-record symposiums in Canberra—it is obvious that the government is terrified. The backbench is trembling. Several MPs confessed to me, strictly on the condition of anonymity between courses of kingfish crudo, that they are desperate to see tweaks and concessions for startups.
Why? Because the scare campaigns are getting out of hand. One senior strategist physically blanched when I showed him a particularly devastating meme depicting Anthony Albanese as SpongeBob SquarePants holding a piece of paper labelled 'CGT Discount'. You cannot fight that kind of raw, populist messaging. The Treasurer's office is now scrambling to engage directly with the sector, slowly realizing that if you antagonize the people who build our digital pet-sitting apps, they will post you into electoral oblivion.
I simply cannot fathom how the government thought they could get away with this without a clearer explanation from the Prime Minister. The fundamental misunderstanding at the heart of this policy is the failure to recognize the concept of 'risk'. When a teacher or a nurse goes to work, they face no financial risk; they simply exchange their labour for a predictable, heavily taxed wage. But when a startup founder like Tristan registers a web domain and convinces a hedge fund to give him fifty million dollars, he is taking a colossal risk.
What if the company fails? What if the market fundamentally rejects the need for an AI-driven HR scheduling tool? If that happens, Tristan loses everything. He will be forced to shut down the company, write off the losses, and perhaps even fall back on a mid-level executive role at Atlassian, or worse, rely on his family’s trust fund for a few months while he ideates his next venture. The sheer horror of this potential outcome is something the working class simply cannot comprehend.
It is fundamentally un-Australian to expect a visionary who has bravely raised fifty million dollars of someone else’s money to pay standard income tax when they inevitably sell their loss-making enterprise to a larger, equally doomed conglomerate.
I was reminded of this structural inequity during a panel I recently hosted at the South by Southwest Sydney tech summit in Barangaroo. The general consensus among the C-suite attendees was one of profound betrayal. We are constantly telling our brightest minds to stay in Australia, to build the future here, to disrupt our legacy industries. But the moment they do, the moment they artificially inflate the valuation of a company that has never turned a profit and attempt to cash out to an American private equity firm, Jim Chalmers suddenly wants a cut to pay for trivialities like Medicare and roads.
It is the arrogance of the masses demanding revenue from those who are actively saving them. The everyday Australian simply does not understand that without the capital gains tax concessions, the incentive to innovate vanishes entirely. Why would anyone spend eighty hours a week developing a blockchain-based loyalty program for boutique coffee shops if, at the end of the rainbow, the government is going to treat their financial windfall like regular, taxable income?
Some of the more radical voices in the media have suggested that perhaps capital should be taxed at the same rate as labour. This is, quite frankly, the kind of dangerous, class-warfare rhetoric that drives capital straight to Singapore or Miami. We are not talking about greedy monopolists here. We are talking about everyday, mom-and-pop angel investors. The quiet Australians who just happen to have a spare half-million dollars to drop on a seed round for a company that promises to revolutionize the way we rent electric scooters.
Labor MPs are right to expect eventual concessions. In fact, concessions are the bare minimum. If Jim Chalmers wishes to salvage his reputation among the only demographic that truly matters—people who use the word 'synergies' in casual conversation—he must not only reverse the proposed CGT changes, but he must apologize.
He must look Tristan, and every other fleece-vested innovator, in the eye and admit that the government was wrong to ever covet their theoretical wealth. Until that happens, the memes will continue, the reaction GIFs will escalate, and the moral arc of the universe will remain stalled. A small request to the Australian working class: please, stop complaining about the cost of living for just one second, and spare a thought for the founders.