Chalmers’ multi-billion-dollar US super tax motivation

There is a good reason why the Treasurer, Jim Chalmers, said he would be raising issues with section 899 of the Trump Administration’s One Big Beautiful Bill with his US counterpart – the billions of dollars of exposure to US assets held by Australian superannuation funds.

Chalmers said ahead of a telephone conversation with US Treasury Secretary, Scott Bessant, that he would be raising section 899 of the US bill because it posed risk to Australian investments in the US.

“I intend to raise section 899 of the so‑called One Big Beautiful Bill, which does pose a risk to the very substantial investments that Australians, particularly Australian super funds but also the Future Fund and other institutional investors are making in the US,” Chalmers said.

“That flow of investment is a really important part of the mutually beneficial two‑way economic relationship.”

The magnitude of the potential impact of the US legislation was laid bare earlier this year by industry superannuation funds which attended the Australian Superannuation Investment Summit in the US, in February.

Answering questions on notice from the Senate Economics References Committee, Australia’s largest industry fund, AustralianSuper, justified its attendance at the summit by referencing the scale of its investment in the US.

“The US is AustralianSuper’s largest investment market outside of Australia. AustralianSuper has an overseas office located in New York. Currently the fund invests more than US$80 billion of members’ assets in the US market, and this is expected to grow significantly in the future,” the fund said.

Other major funds including Cbus and Aware Super gave similar explanations for their attendance the US with Aware Super stating that its diversified global investment strategy includes direct and indirect investments across multiple asset classes.

“The US is the second largest geographic exposure in our investment portfolio,” the Aware Super response said.

For its part, big hospitals sector fund, HESTA said it and its members “have significant portfolio exposure of more than $28 billion in the US including listed and unlisted investments”.

Section 899 of the US legislation imposes additional taxes on companies and investors from countries that the US deems to have punitive tax policies, with Australia being added to the list because of the so-called Google tax.