By Julie-Anne Sprague, Matthew Cranston and Thomas Henry
Government critic Geoff Wilson says his firm is a beneficiary of the capital gains tax reforms he vehemently opposes. And that’s part of his point.
They came brandishing placards saying ‘Axe The Tax’ and ‘We Didn’t Vote for This’.
A last-minute protest event organised by high-profile fund manager Geoff Wilson drew a crowd of about 100 people, who packed a room right next door to second day of the Senate inquiry into the government’s proposed tax reforms.
Held at the Sydney Masonic Centre, at one stage, the assembled crowd was asked to move along so as not to disturb the Senate inquiry, which despite it being a public hearing didn’t draw a crowd (and it wasn’t live streamed, so it’s not because everyone opted to stream on laptops instead).
Mr Wilson, who received an 11th-hour invite to appear before the inquiry following accusations of a government “whitewash”, told his event that the government’s changes to capital gains tax was “another nail in the coffin for the Australian stockmarket”.
The Wilson Asset Management chairman said the changes would be a disaster for small companies and yet his business would ultimately be a beneficiary.
“If this legislation goes through, the business which I’m the owner of will be a major beneficiary,” he said. This was because the new tax would make direct share investing less attractive, and push capital to structures operated by firms such as Wilson Asset Management.
“I’m in the fortunate situation that I’m in the latter part of my life. A lot of my wealth has been accumulated and I’ve accumulated it in the old system. I’m grandfathered on everything.
“So all those opportunities that hypothetically a young Geoff Wilson would have, then he won’t have them (going forward).”
Joining Mr Wilson to air frustrations at the government’s changes was Stockspot founder Chris Brycki, who often has opposing investment views to Mr Wilson. However, they agreed that the tax changes would push investors to structures such as exchange-traded funds, which his Stockspot business would benefit from.
Mr Brycki said the debate wasn’t about tax at all, but about opportunity.
“My concern is that these particular changes risk making it harder for the next generation of Australians to build wealth, buy a home, start businesses and participate in the economy,” he said.
“Ultimately, this debate is about opportunity. Young Australians are already being told that home ownership is becoming harder. Now they’re being told that investing and entrepreneurship should be less rewarding as well.
“At some point they’re entitled to ask: if we can’t afford a home, and we’re discouraged from investing, how exactly are we supposed to get ahead?”
James Walsh, a Queensland property developer, rejected the government’s claim that its reforms will help housing affordability.
“These changes will actually reduce the supply of affordable housing in many low income areas,” he said.
“And the reason it’s not taken into consideration is the behavioural changes of developers like us and our purchasers, who are investors.
“As a result of these changes, I can tell you we are 100 per cent ceasing all acquisitions. In that particular market, we’ve just completed projects that we believe are the most affordable apartments in Australia. I can’t find anything cheaper than what we’ve just built and I can tell you we won’t be building any more of them in those areas.”
He said this was because investors would no longer buy up the housing, and the people in the areas where the property was being developed were unable to save the sums required to buy them. While the idea is that the property becomes easier for homeowners to buy, he said what will happen instead is the properties would not be built.
Investor Lindsay David told the event his submission to the inquiry had still not been uploaded to the website after submitting it last week.
He said the government’s plan was “insane”.
“I’ve lived, worked, and done business in a lot of low CGT tax jurisdictions in this world during my career. These proposed changes that the government are proposing are simply insane,” Mr David said.
“They make no sense and not even remotely well thought through. It’s really banana republic stuff and uninvestable.
“Young Australians and entrepreneurs who seek to build businesses that spans overseas and choose to remain residing in Australia will have the highest taxable capital gain component of any other operating business in the world, particularly if they start from a low cost base. They are at an uncompetitive disadvantage.”
At the Senate inquiry, Australia’s accounting bodies sounded the alarm over Labor’s tax legislation, blasting the government for failing to consult with relevant industries on the reforms.
Institute of Public Accountants senior tax adviser Tony Greco claimed the government had “thrown the book out the window” in relation to consultation processes, and was increasing the complexity of the tax system.
“Regarding the actual consultation process or lack thereof, we’ve pretty much thrown the book out the window in regards to process,” Mr Greco said.
“There are consequences for doing it this way which is legislate, consult later. We end up with unintended outcomes, subsequent amendments, uncertainty, disputes and real world implementation issues.”
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