Malcolm Turnbull stood in the middle of the sports ground at the Australian International School in Hong Kong last November. Here were his people. Bold. Innovative. Reaching out. Engaged globally. He looked like he was being genuine when he thanked them for serving the Australian community abroad.
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The school choir, clad in green and gold, sang Advance Australia Fair to celebrate Turnbull's visit. No prime minister had visited Hong Kong in years. But it might not have been such a jolly occasion if the community of Australian expatriates had known they were about to be ripped off mightily.
Remember one of the Turnbull government's enthusiasms of 2017 was to make housing great again? And by great, I mean affordable. The approach was this – rush through legislation that would impose a capital gains tax on any foreign resident selling residential property in Australia. Sounds great, doesn't it? Surely that would slow foreign investors snaffling up Aussie homes and shore up the residential market for local first home buyers?
Maybe, but there was one other group caught up in this grand scheme – those Australian expatriates in Hong Kong and around the world, who bought their homes in Australia and moved overseas for boldness, innovation and reaching out. Exactly what this government encourages.
What those expats didn't know was that the government would be reaching out, around and into their pockets. The homes they bought when they were at the beginning of their careers would be taxed at an almighty rate. Yep, those buyers would have to pay capital gains tax from the date of purchase if that purchase was any time after 1985 (don't you love these retrospective nightmares). Not from the date they moved overseas. No recognition that in Australia those homes would still be the principal place of residence when Australians come home as we inevitably do.
What Jacinta Reddan found horrified her. Reddan, the chief executive of the Australian Chamber of Commerce – Hong Kong and Macau, more usually called AustCham, realised the problem earlier this year. She soon found Australians abroad had no idea what was about to happen as a result of these proposed changes. In March this year, expats all over the world swung into action and in late March, the head of the Australian International School in Hong Kong wrote to the Prime Minister begging him to rethink.
Hemphill wrote: "If you are truly supportive of our school, as you have publicly stated, you will not implement this proposed amendment."
He explained the amendment would discourage Australian teachers from coming to Hong Kong to teach in his school. Not every teacher would want to sell their house while away but it can be hard to wrangle home ownership from afar. Hemphill also feared the impact it would have on the families of the kids who attend the school, if forced to sell and then be impacted by the tax.
More seriously, this move would divide Australians. The Australians who stay home get one kind of tax treatment and the Australians who take the risk and work abroad and bring back a whole range of experience are treated differently.
That should not be how Australia works. We should all be treated the same way, particularly when it comes to our homes.
This government did not do enough consultation or enough modelling and Scott Morrison reveals a touch of captain's call dogwhistling. Keep Aussie properties for Aussies or somesuch.
As Reddan puts it: "One of the key issues here is that people might be forced to sell their home while overseas due to a range of unexpected life events: divorce, illness, loss of job. Why penalise people for this?"
Head of Policy at CPA Australia Paul Drum says he and his colleagues have been lobbying madly. He believes the changes are punitive and inappropriate.
"The government has not put forward reasons as to how it is good public policy that the CGT laws be changed retrospectively and to the detriment of taxpayers . . . it's draconian to change the tax treatment of the family home post the acquisition of that home – and for some citizens that are now non-residents, it may have been their family home for more than 30 years."
Had the government consulted before this daft scheme was devised, the CPA could have helped them avoid this embarrassment and put together a policy which achieved what the government really wanted, to limit foreign ownership.
It doesn't take all that long to become a non-resident – so it's damn lucky AustCham and CPA Australia started lobbying. Although the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 2) Bill 2018 passed the House of Representatives, it is now before the Senate and looks like it's on hold. It turns out ScoMo and Turnbull have been saved by Kelly O'Dwyer who appears to understand the impact better than others on the front bench. A good thing someone is actually paying attention.
The war on expats should be over before it even begins.
Jenna Price is an academic at the University of Technology Sydney and a Fairfax Media columnist.
