The property market is a favourite for money launderers, forcing ordinary Australians to compete with organised crime for their dream home, says investigative author Nathan Lynch. He blames the power of lobbyists as a cancer on our democracy. Lynch’s new book is a wake-up call, writes Stephanie Tran.
Australia has been captured by a phenomenon called the property industrial complex. It poisons our politics and institutions, but worse, it forces aspiring home-owners on restricted incomes to compete with the bottomless pockets of criminal networks.
This is the convincing hypothesis of a new book by crime investigator Nathan Lynch. The Lucky Laundry, subtitled How the Aussie Economy Got Hooked on the World’s Dirtiest Cash, delves deep into how political inertia has enabled “dark money” to pollute our financial system. The book is a wake-up call.
Having spent over two decades investigating the murky world of “dark money’’ in organised crime, Lynch has encountered some colourful characters. They feature heavily throughout the book, putting human faces to the nebulous world of organised crime and money laundering.
Are our laws strong enough?
Tranche 1 of the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF) was passed under the Howard government in 2006 with bipartisan support. Tranche 2 was slated to follow promptly. However, 16 years later successive governments have failed to get the laws through.
Australia is one of the few countries that have failed to pass Tranche 2 of the act. “Australia is now left in a position where it can’t be an international pariah much longer with impunity,” says Lynch.
The Australian property market is a favourite for money launderers. Our failure to regulate the flow of “dark money” has led to billions of illicit funds flooding the property market, forcing ordinary Australians to go up against organised crime and corrupt oligarchs, says Lynch.
Lights out and blinds drawn on the Australian dream as black money fuels house prices
“When you’re at auction bidding your hard-earned savings you can’t guarantee that [you’re not going up against] a buyer’s agent that’s bidding on behalf of a criminal group that just wants to wash proceeds of crime through Australia.”
In fact, based on Australian Federal Police (AFP) seizure data, well over half of the money that is laundered in Australia goes through our property market.
For every million dollars that the AFP is seizing, in proceeds of crime, about $575,000 is real estate.
The property industrial complex
”Property industrial complex” is a loose term to describe the interaction of government, property investors and speculators, other vested interests such as banks and real estate agents – and of course (unintentionally), criminal networks. The term derives from the term ”military industrial complex” coined by US President Dwight Eisenhower in 1961 to describe how security and military interests had sought increasing wealth and power by persuading politicians that their interests and the interests of the nation were one and the same.
In Australia the interests of the property industrial complex have been conflated with the interests of the nation. Even as home ownership falls, especially among people under 40, vested interests ensure that owners of multiple properties, who price first-home buyers out of the market, are rewarded by the tax system.
Politicians who seek to challenge this complex often don’t fare well. When Labor leader Bill Shorten proposed modifications to the negative gearing regime at the 2019 election, he was swamped by a well-funded scare campaign, a phenomenon widely blamed on Labor’s narrow loss.
The cancer of lobbyists
“The property industrial complex is a monster that has devoured Canberra. We now run our political system around the propagation of house prices. It influences elections,” asserts Lynch.
“At the end of the day, if you want to fix these things, the place to start is with lobbying. Lobbying is the cancer of democracy. There’s lobbying from interest groups that is just too powerful in Australia. And we’ve been captured by it, partly because we are such a trusting country.”
“We have a really good system and that has made us naive about the level of malevolence that lobbyists can exercise over our political ecosystem. If we get consumed by the love of money and wealth to the point where we don’t put any limits or controls around what money we accept then we cannot delude ourselves that our democracy will withstand that.”
We need to remind ourselves of what makes Australia so great. We shouldn’t give up what’s so special about our culture, in pursuit of greater and greater levels of material wealth.
The Lucky Laundry (How the Aussie Economy Got Hooked on the World’s Dirtiest Cash) is published by HarperCollins – link here.
National Press Club: The Lucky Laundry @Canberra Writers Festival
Stephanie is the editor of the Revolving Doors series. She is studying a Bachelor of Communication (Journalism)/Bachelor of Laws at the University of Technology Sydney. She was a finalist for the 2021 Walkley Student Journalist of the Year Award and the winner of the 2021 Democracy's Watchdogs Award for Student Investigative Reporting.