The federal government is facing fresh criticism over its controversial changes to capital gains tax (CGT), accused of creating one rule for foreign investors while taking discounts away from Australians.
Under a new plan, foreign investors in Australian renewable energy assets will be offered a 15 per cent rate until 2040 in a bid to turbocharge the country’s energy transition.
Clean Energy Investor Group CEO Richie Merzian said on Thursday the concession increased “the chances that this much-needed source of capital will continue to flow into Australia and support our future economic prosperity”.
Mr Merzian noted more than 70 per cent of investment in Australian clean energy projects came from overseas.
The move, which came amid a deal between the Labor government the Greens, was seized on as unfair by critics of the wider CGT changes announced in May’s budget.
Scrapping of the old 50 per cent GCT discount in favour of a rate based on inflation for all asset class caused widespread outrage from within the finance industry.
Opponents have argued the changes would discourage investment in high-growth or start up ventures and instead see vast amounts of money parked in safe options like legacy stocks.
It has also been credited with accelerating a downturn in Australia’s housing market, along with the scrapping of negative gearing for existing homes, as the government sought to reduce incentives for property speculation.
Stockspot founder Chris Brycki has described the new rules as a potential “wrecking ball” for the economy.
He has said the CGT changes would make investment in smaller companies less attractive, and long-term returns would be smashed by higher taxes.
Former government medical officer turned political commentator Dr Nick Coatsworth said the announcement this week had created “one tax system for global capital, another for working Australians”.
“If you’re any Aussie investing in a company you believe in you’ll lose your 50% capital gains discount,” he wrote on X.
“If you’re an overseas company investing in renewables we’ll let you off with 15% tax.”
Fierce critic of the changes Geoff Wilson, the head of Wilson Asset Management, agreed with Dr Coatsworth and claimed the Albanese government was “destroying Australia ownership of Australian businesses”.
Mr Wilson said the government “must stop this insanity”.
“Aussie investors lose the 50% CGT discount for backing companies they believe in. Foreign capital gets a concessional 15% tax rate on renewables until 2040,” he said.
“One rule for global capital. Another for working Australians who actually take the risk here.
“This is not reform. It’s preference.”
Treasurer Jim Chalmers has defended the government’s reforms against claims they would prevent Australians from getting ahead through investments.
Mr Chalmers has said he believed some asset classes were being “undercompensated” by the previous scheme and the new settings would be a “more neutral” CGT calculation.
“I understand that when you’re making difficult tax reforms, ambitious tax reforms, which are all about cutting taxes for workers and making things fairer for first home buyers, there won’t be unanimous support for that,” Mr Chalmers said in June.
“Its always the case in this country, when you’re engaged in difficult economic reform and particularly tax reform, that it will be contested, there will be people who campaign against that, and that’s what we’re seeing now.”
Mr Wilson has been among the leading opponents to the CGT reforms, calling it “economic vandalism” and earning personal a rebuke from Prime Minister Anthony Albanese.
“Geoff Wilson has been a political participant for some period of time,” Mr Albanese said in May.
“Everyone knows that that’s the case, so I expect no different from Tony Abbott opposing whatever’s in the budget, or John Howard will oppose whatever’s in the budget.”
The Business Council of Australia has also been a vocal opponent of the government’s new tax bill, which it said would increase costs for millions of Australians and leave the nation less competitive.
Chief executive Bran Black said in June the reforms did “not stack up” and a series of analysis and inquiries had unearthed more questions than answers.
“The test for any tax reform is whether it increases investment, grows the economic pie and boosts living standards. This legislation fails that test,” he said.
“Despite a rushed consultation process, rushed Senate inquiry and rushed parliamentary debate, significant questions remain unanswered, including basic issues like how many Australians will end up paying more and how much it will cost to comply with these changes.”