Unions/Super complex’s conflict of interest on CGT and housing

First published in the Financial Review

The capital gains tax discount was designed by John Ralph to promote investment. That's what it has done.

It's a good thing that 2.3 million Australians provide housing for other Australians.

Australia faces a housing crisis where younger people are giving up hope. It is cruel for people who are well-informed to lay the blame for this at the feet of the capital gains tax (CGT) discount.

Changing the CGT discount and/or negative gearing would have an immaterial impact on first-home prices.

The biggest driver has surely been the complete collapse in housing supply from an average of 200,000 dwellings per year under the last Coalition government. This has fallen to 170,000 per annum under this government.

ANU Professor Robert Breunig confirmed this was the big driver at the Senate hearings into the CGT discount.

Meanwhile, our population has grown by 1.6 million people since 2022. We have fewer houses but more people.

The unspoken agenda, which is emerging from the Senate hearings, is the government and the unions seem to want to change the character of Australia's housing stock.

They want to remove incentives for individuals to invest. Simultaneously, the government is doing everything it can to promote the ownership of housing by institutions.

There are two nonsensical and dangerous themes emerging from Senate hearings.

Firstly, apparently there is "good" investment and "bad" investment. The AMWU argues in their submission that "there are already enough houses available" and "capital investment into housing means there is less capital available to invest in more productive sectors of Australia's economy".

The nation needs more investment in housing if we are to get to the 280,000 dwellings needed this year. We are only on track to hit 180,000. The assertion that investing into housing is not "productive" is very dangerous.

Under the AMWU's plan, the CGT discount would be abolished completely for individuals.

The ACTU made similar points about cutting it in half to 25 per cent. But they only want to cut it for housing. They want to leave it in place for every other asset class. So it would be a plan to actively reduce investment into housing during a housing supply crisis.

Secondly, these same groups think Australians should turn over all housing stock to fund managers and super funds.

The Association of Superannuation Funds has previously said that they believe Australians would prefer to live in houses owned by institutional investors.

The unions/super complex therefore want to push out the mum and dad investors where the majority (61 per cent) of the rental property owners earn $100,000 per annum.

They are seeking to delegitimise individual owners by smearing them as super rich through distorted tax expenditure presentations. Of course, most of the concessions accrue to higher income earners. They pay most of the tax in Australia.

Push to weaken disclosure rules

The top 15 per cent of income earners pay 68 per cent of the income tax paid.

What the big unions don't say in their submissions is they want to keep the CGT discount for super funds intact. Entirely.

In a howling conflict of interest, they don't declare that they literally own super funds.

The ACTU owns shares in AustralianSuper. They appoint directors to the boards. They receive directors fees and have partnership agreements and sponsorships. They have a direct financial interest.

AustralianSuper, together with HESTA, also participates in Labor's $11.4 billion Housing Australia Future Fund through a jointly owned entity called Assemble.

The AMWU appoints directors to Cbus and Spirit Super.

How many of these conflicts of interest were pointed out to the committee in submissions or oral presentations? None.

Meanwhile, these same organisations are working on Jim Chalmers to weaken the disclosure rules for super funds so they can cover up their stamp duty costs.

They want to weaken disclosure in ASIC's Regulatory Guide 97 because they worry their fee disclosures are too high and it might put off investors. Their solution: hide the fees from prospective members so they can become bigger landlords.

Cbus has been pushing for this for years with its secret lobbying. In November 2023, Treasurer Jim Chalmers filed a baseless public interest immunity claim to prevent disclosure of Cbus' overtures.

Embarrassingly for Chalmers, he said the disclosure of Cbus' documents would provide an unfair advantage into Cbus's private opinions and business affairs, and this would destroy commercial-in-confidence information.

The Information Commission threw out his claim.

The lobbying to cover up stamp duty fees gained traction after Labor's Economic Reform Roundtable. Somehow, Chalmers forced ASIC to investigate this idea.

ASIC found that the costs of stamp duty would be smoothed out over many years and given super is a long-term investment, there wasn't a case to accede to the wishes of big super.

As Super Consumers Australia said: "There is no evidence that stamp duty disclosures adversely affect super fund investment decisions, super funds continue to make large investments in Australian property."

The unions/super cabal will never stop until they have replaced mums and dads as landlords. Their Australian dream is for Melbourne and Sydney to be like Atlanta and Jacksonville, where 25-30 per cent of houses are owned by institutions.

That's not the Coalition's dream. We want all Australians to have their own home. For many Australians, the pathway will be to own an investment property. That's wealth creation we want to see in the hands of Australians, not Labor's mates.

Andrew Bragg is a Liberal senator for NSW, and shadow housing minister.