Australian Investment Council statement to the Senate’s CGT Inquiry
16 June, 2026 - Thank you for the opportunity to contribute to the Committee’s work. Appearing with me today is Jenny Wheatley, a member of the Australian Investment Council board with 30 years’ experience in helping investors make capital allocation decisions. It is good to appear alongside Tech Council of Australia and AusBiotech colleagues, whose work is complementary to ours.
The Australian Investment Council is the peak body for private capital investors – venture capital and private equity funds, superannuation and pension funds and other institutional investors. Collectively, the Council’s members support 700,000 jobs, back 2,200 companies – mostly SMEs – and add $120 billion to the economy each year.
These are the people and organisations that allocate capital and invest it into start-ups and unlisted high-growth companies. Companies that are supporting national priorities, rebuilding resilience, underpinning a more dynamic and competitive economy, and ensuring that we keep making things in Australia.
Companies such as sustainable packager BioPak, phone mounting manufacturer Quad Lock, and total artificial heart developer BiVACOR. Investors in companies like these, do more than write a cheque. They put financial and human capital to work to build founder and team capability, develop product and expand into new markets. These investments deliver competition and choice in our economy.
We agree that tax settings are a lever for government to increase the supply and affordability of housing and there has been an extensive national discussion on this topic.
At the same time, Australia’s economy is not growing at the rate needed to sustain living standards. Just six months ago, the Productivity Commission stated: “the most important driver of productivity is new ideas” and “investment – both public and private – fuels innovation and growth”.
Productive risk sits at the heart of these two statements. It is the third type of earnings, alongside personal exertion and owning assets, and it was somewhat overlooked in the framing of the CGT changes.
Productive risk requires ideas, talent and capital – three legs of the one stool. If any one of these legs are broken, the stool falls over. There are two issues that put a sturdy stool at risk:
- First is a zero or low cost base which is an issue for both technology and non-technology businesses. Indexation is of no benefit – if you index a zero cost base, you end up with zero resulting in a far more punitive outcome than for other taxpayers.
- Second is Australia’s competitiveness relative to peer countries. Under the changes, CGT rates will be between 30 and 47 per cent. 47 per cent is about twice that of the US and the UK. Relativities matter. As a middle-power economy, Australia does not set the global market, yet we compete against G7 economies for capital and talent.
The impact of these weaknesses and the role of tax settings should not be underestimated in a world where capital and ideas are mobile and talent has choices. Canada recognised this last year when it cancelled CGT increases in – I quote Prime Minister Carney - “recognition of the vital role that builders and small business play in shaping Canada’s future.”
In Australia, the CGT discount has underpinned venture and growth capital policies, which have been supported by the Parliament over the past two decades. For example, the venture capital limited partnership program and its early-stage version have – since inception - channelled more than $36 billion of investment, backed more than 3,000 companies and galvanised more than 16,000 investors.
It is an example of the tax system as a driver of desired behaviour that is a feature of tax systems all around the world, not a distortion. In this case the desired behaviour is taking productive risk that grows the economy, strengthens it, and keeps our best assets onshore.
Thank you Chair. We are here to answer the Committee’s questions.