Tech entrepreneurs have mocked the government’s capital gains tax changes by posting AI-generated photos of Anthony Albanese as their “new founder” and warning that increased taxes could push people away from working for new businesses or send startups overseas.

Startups and entrepreneurs may yet receive a carve-out in the federal government’s planned changes to the CGT discount, with the prime minister saying he wanted to support innovation and the treasurer, Jim Chalmers, revealing that consultation was continuing with the sector.

The CGT changes – replacing the 50% tax discount on profits with “cost-base indexation”, meaning tax on profits after inflation, and a minimum 30% tax rate – were strongly opposed by some tech founders. Early stage startup companies with little cashflow often offer employees equity in the company, or stock options, in lieu of higher pay, while founders can be motivated to take risks with new ventures by a large potential payday when they sell their companies. Both could be affected by the CGT changes, the Tech Council of Australia warned.

“There is work to do to ensure Australia’s startup community doesn’t become collateral damage as a result of proposed changes,” said the council’s chief executive, Kate Cornick.

Tim Wilson, the shadow treasurer, warned of “founder flight” overseas. The cofounder of Boost Juice, Janine Allis, also warned that winding back CGT discounts would discourage innovative businesses.

A minor trend emerged among startup founders after budget night, with several posting AI-generated photos of Albanese in their offices.

“He’s having a great time with his new 47% equity,” wrote Jacques Greeff, the founder of the communications app Kinso, who posted AI images of the prime minister in the office with his staff, coding their product and working with customers.

“With the tax changes, [the] incentive to grow a business is greatly reduced, but all the normal risks remain,” Greeff told Guardian Australia, warning it would be harder to attract talented employees if their equity stake was less lucrative.

“Australia should be encouraging young founders to build the next Canva. My fear is they don’t even attempt it now or, worse, they go overseas and build the next unicorn and Australia misses out entirely.”

Julian Fayad, the chief executive of the loan comparison platform LoanOptions.ai, posted AI images of Albanese sleeping in his company’s office and scrolling on his phone. He also warned of the impact on attracting workers and risk-taking.

Fayad took part in a roundtable meeting in Sydney on Saturday hosted by Wilson, where founders were critical of the government’s changes, and joined the shadow treasurer at a media conference afterward.

“With the 47% CGT, the government’s message to founders like me is that if we succeed, they want nearly half of the hard-earned reward,” Fayad said.

“When I look at what countries like Singapore and the UAE are doing to attract and retain founders; the incentives, the structures, the genuine support, and then look at what Canberra is doing, it’s hard not to feel abandoned and hindered.”

Alfie Robertson, the founder of the video editing app Roll, posted AI images of Albanese in the gym, recording a podcast and working on strategy. He also feared startups could look overseas.

“The concern is not just about tax,” he said. “It’s about incentives. Policies like this shape where founders choose to build, invest and stay.

“If Australia wants to compete globally for talent and innovation, it should be rewarding people who take productive risks to build companies, create jobs and grow the economy, not reducing the incentive to do so.”

Asked about the backlash on Friday, Albanese said he supported the startup sector, pointing to a range of budget incentives for research and development and instant asset write-offs. Chalmers conceded that startups may have “a different kind of cost base” to other industries.

“We had already been engaging with the tech sector, in particular, with the VC and startup sector to make sure that the changes accurately reflect the contribution that we seek from that really important part of the economy,” he said.

Cornick said the Tech Council welcomed the new R&D tax incentives and reforms to venture capital regulation, and was keen to continue consulting on the CGT.

The economist Saul Eslake said there may be a case for more generous treatment for CGT, specifically for new businesses starting from scratch, as they may be paying tax on all profits due to having no cost base to index. He backed the government’s moves to alter CGT for property and shares, and said it wasn’t unfair to expect startup founders to pay tax on business earnings but conceded some new businesses like startups may need incentives to encourage innovation and risk-taking.

“There are still pretty powerful incentives,” Eslake said. “If, instead of becoming a billionaire, you make $800m, is that less incentive?”

Another economist, Chris Richardson, warned that it would be a mistake to “bend” on the CGT.

He said incentives including R&D tax offsets and the instant asset write-off were better than carve-outs for future profits to support early-stage businesses. Richardson also backed the broader move towards taxing income from assets and income from labour in a more equal way.

“There’s a Warren Buffett quote: ‘You may run into someone with a terrific investment idea, who won’t go forward with it because of the tax he would owe when it succeeds. Send him my way. Let me unburden him.’”

Yvette Cooper wrote a newspaper column about Palestine Action despite prosecutors warning it could prejudice criminal proceedings against six activists from the group, it can be revealed.

The then-home secretary wrote the column justifying Palestine Action’s proscription even though the Crown Prosecution Service advised it might unfairly impact a trial concerning a 2024 break-in at an Israeli arms manufacturer’s factory.

After a retrial, four of the defendants were convicted last week in relation to the raid on the Elbit Systems UK site near Bristol. It can now be reported that defence lawyers sought to halt the proceedings for alleged abuse of process, claiming Cooper’s column for the Observer was “an egregious example of contemptuous reporting which directly interferes with the court process”.

The article, on 17 August, said that charges against Palestine Action activists included a “terrorism connection” and also referred to violence, intimidation and “disturbing information” about future attacks.

In written submissions arguing that a fair trial would be impossible, the defence lawyers said the article was “dripping in innuendo. In one breath, she is saying that many important details cannot yet be publicly reported; in another, she is reporting some of those very details herself”.

In a pre-trial ruling last November, Mr Justice Johnson said: “It is to be taken that the home secretary was specifically advised that going ahead with the article might prejudice these proceedings, and that she went ahead anyway … The CPS made representations to the home secretary about the risk of prejudice. It follows that the home secretary took the action that she did, and made the public statements that she did, in the knowledge that these proceedings were extant and that there might well be a question as to the impact of her conduct and her statements on these proceedings.”

However, Johnson dismissed the defence application for abuse of process, saying: “The decision to proscribe Palestine Action was highly controversial and required public justification. It is unsurprising that the government sought publicly to justify the decision that it had taken and that it relied, in general terms (without naming individuals), on Palestine Action’s activities, including the activities that have resulted in these proceedings.

“In doing so, the home secretary ran a risk of causing some prejudice to these proceedings, but that is different from deliberately flouting a reporting restriction order.”

In arguing that there were “false and irremediably prejudicial public statements made by the government when seeking to justify proscription”, defence lawyers cited other articles, including a report in the Times that Home Office officials claimed Iran could be funding Palestine Action. The Home Office later distanced itself from the claim, which Johnson described as “misleading”.

The defence team also claimed there had been an abuse of process in the charges against the defendants having a terrorist connection, claiming that the authorities wanted to ban Palestine Action and “they were aware that this could not be done without pursuing terrorism related charges”. The jury was not told during the trial about the terrorist connection allegation, which could have resulted in Charlotte Head, 29, Samuel Corner, 23, Leona Kamio, 30, and Fatema Rajwani, 21, receiving much harsher sentences on 12 June for criminal damage.

The third and final ground for abuse of process alleged “collusion between the government and the Israeli state, Elbit Systems and the pro-Israeli lobby regarding the proscription”, citing meetings and/or communications involving the named parties.

Johnson ruled there was no political interference in the charging decision and that the communications with groups outside government did not come close to establishing improper conduct.

A Home Office spokesperson said: “The judge concluded that the article did not prevent a fair trial taking place.

“The trial found four Palestine Action members guilty of criminal damage, and one was also found guilty of grievous bodily harm.”