Wesfarmers, which owns brands from Bunnings and Kmart through to lithium mining operations, argues it can ride out a softer economy but not poor policy settings. The group is alarmed by the federal budget’s capital gains tax changes, which it believes will weaken incentives to back broad-based investments such as shares and businesses.
Management accepts tighter rules on negative gearing and higher CGT for residential properties, seeing these as targeted housing measures. It draws the line at lifting the CGT rate on wider investments to levels it sees as globally uncompetitive.
The conglomerate points to a pattern of policy moves that it believes chip away at ambition and risk-taking across the economy. Tighter industrial relations rules and repeated tax shifts are cited as examples of settings that make it harder to justify working longer hours or deploying capital into new ventures.
Wesfarmers argues these changes add to compliance and wage rigidity at the same time as returns on investment are being squeezed. That combination, it says, makes it less attractive for Australians to build businesses, back start-ups or expand existing operations.
From the group’s perspective, the danger is not a single bad year but a structural drag that could define the coming decade. Australia risks looking less appealing compared with other capital destinations if investors feel they are penalised on exit, not just at the point of taking risk.
Wesfarmers says that if households and institutions scale back exposure to productive assets because of tax friction, growth and innovation could stall. The fear inside corporate Australia is that the budget’s changes lock in a slower, more cautious economy just when fresh investment is needed most.
