With negligible media notice and less debate, the Senate yesterday quietly exempted portfolio foreign investors from Australian capital gains tax, except for real estate and mining rights assets.

The Smage reckons the changes were “controversial” but you’d have to search hard to find much public trace of the alleged controversy.

It’s no coincidence that the wave of foreign private equiteers hit our shores when CGT-free status was working its way through the system. Structure your deal correctly and you buy a chunk of a major Australian company with little cash down, gear it up so that the dividends pay the interest bill and you can maximise your equity exposure and then take a fat capital gain home after a few years all tax free.

Yes, it is rather outrageous, but it’s just happened with namby pamby Labor going along for the Liberal’s ride. At least Barnaby Joyce crossed the floor to vote against it.

What’s bemusing is that the business lobby that’s pushed this beast has justified it on the basis that it would attract more foreign investment and lots of other OECD countries do it to.

Well, I haven’t exactly noticed a shortage of capital looking for investments in Australia lately. For that matter, simply selling everything to foreigners at a 25 or 50 per cent discount would attract them. Heck, why not just pay foreign investors a couple of billion out of Costello’s surplus.

Re the “everyone else does it” line, I can hear various mothers saying “if your friends jumped off the Harbour Bridge, I suppose you would too”.

As Tony Harris has ruled, everything is capitalised. So this tax cut for foreign investors will rapidly be priced into the cost of assets and shares, quickly reducing the CGT-free-zone advantage. Just as halving the capital gains tax produced a residential real estate bubble, once the initial windfall profits are taken, the market is no better off.

And that’s just what “big business” lobbied for – a quick and easy boost for their share prices. Does wonders for the annual bonus.