"Every time you create an exemption, you create an avoidance opportunity," Keating said. "The cleanest tax is the one with the fewest exemptions."

The CGT changes are part of Labor's broader tax reform package, which includes measures targeting multinational tax avoidance, superannuation concessions for the wealthy, and negative gearing on investment properties. Together, the reforms aim to raise more than $30 billion over the forward estimates.

The political stakes are high. Labor promised major tax reform during the election campaign but faces a backlash from business and some within its own ranks who worry about economic impacts. The Coalition has pledged to reverse the CGT changes if returned to government, calling them a "tax on aspiration."

But polling suggests public support for making wealthy investors pay more tax. An Australia Institute survey found 67 percent of voters support reducing the CGT discount, including a majority of Coalition voters. The policy is particularly popular among younger voters locked out of property ownership.

Economists are divided on the impact. Some argue the current CGT discount encourages excessive property speculation and diverts capital from productive business investment. Others worry that reducing the discount could reduce housing supply by discouraging development.

Keating sided firmly with the reformers, arguing that housing supply problems stem from planning restrictions and infrastructure deficits, not tax settings. "If we want more housing, fix the zoning laws and build the bloody transport links," he said. "Don't give property speculators bigger tax breaks."

The CGT discount was doubled from 25 percent to 50 percent by the Howard government in 1999, justified as necessary to adjust for inflation. But with inflation lower than expected, the discount has become a significant tax concession worth billions annually, benefiting primarily wealthy investors.

Treasury modeling shows the top 10 percent of income earners receive 85 percent of CGT discount benefits, with the average discount worth just $340 for middle-income earners but more than $23,000 for those in the top tax bracket. The distributional impacts are stark: the policy predominantly benefits the already wealthy.

Labor's proposed 30 percent discount would still provide substantial benefit to investors while raising revenue the government argues is needed for essential services and budget repair. The revenue would help fund health, education, and infrastructure without increasing income taxes on wages.

The legislation faces scrutiny in the Senate, where Labor needs support from the Greens or crossbenchers to pass. The Greens have indicated they'd support the changes but want the discount reduced even further or abolished entirely for investment properties.

Keating's intervention carries weight within Labor. As the architect of major economic reforms in the 1980s and 1990s, his endorsement provides political cover for Albanese and Chalmers to resist business pressure.

"Labor governments do hard things," Keating said. "We reform the economy, we make the tax system fairer, and we don't apologize for it. That's what we're elected to do."

Whether the current government has the stomach for that fight remains to be seen. But with Keating's backing and public opinion on their side, Labor has the political ammunition to push ahead if they choose to use it.