Land tax

Mr DULUK (Waite) (19:30): Today, I also rise to speak to the Land Tax (Miscellaneous) Amendment Bill.

Members interjecting:

Mr DULUK: Sir, please, I have barely started and look at them going at me already.

The SPEAKER: Order! The member for Waite has the call.

Mr DULUK: Sir, as you know, in the lead-up to the state election, our side—the Marshall team—said that it would be a reformist government, and I think in many senses we have continued down that very path. We said that we would bring a reformist agenda to government, one that is focused on the economy, one that is focused on creating jobs, which I know those opposite are so interested in, yet when we have good job statistics, as we recently had the other day, they do not celebrate them. In fact, they do not like good stats because it takes away their ability to counter—

Mr Malinauskas interjecting:

The SPEAKER: Leader of the Opposition!

Mr DULUK: —their poisonous attitude in their conversation with the people of South Australia.

The SPEAKER: Member for Waite, be seated for one moment. The Leader of the Opposition spoke to this part of the second reading speech unhindered pretty much. It was pretty good behaviour from the government side, and I ask the Leader of the Opposition to return the favour to the member for Waite.

Mr DULUK: Thank you so much, sir, for your protection. As you know, they hate good news. They hate it that job numbers are—

Members interjecting:

The SPEAKER: Order, member for West Torrens!

Mr DULUK: —positive for South Australia, as they were most recently. They hate that we are out there creating jobs, which we are. They hate it that we are out there reforming the VET sector and the TAFE sector, as the Minister for Education is doing, putting money back into the system, investing in jobs. They hate that. They hate good news.

We have had 16 years of Labor here in South Australia and we need to reform, and land tax is part of that reform we need to undertake. That is why we want to deliver tangible benefits to South Australians. We made a commitment to the people that we would lower taxes and other costs—and we are doing that. We have abolished payroll tax for so many small businesses in South Australia. Do those opposite thank us for that? No, it is something they never did, something they did not want to do. They do not like people who employ people. They only like the unions. That is what the Labor Party is in for.

We have put back the remissions on ESL and returned cost-of-living savings to households across South Australia. We remain committed to capping council rates, reducing electricity prices and cutting water bills, but there is plenty more to do and, as part of that, far-reaching land tax reform is very important. Major reform is never easy. It is not even popular and it is often controversial. However, that does not mean that we should take the easy road, as it says in the Good Book. We have an opportunity for true economic reform—

The Hon. A. Koutsantonis interjecting:

The SPEAKER: The member for West Torrens is called to order.

Mr DULUK: —reform that will benefit South Australia's economy, reform that will benefit businesses large and small, reform that importantly will actually support mum-and-dad investors and, ultimately, reform that will benefit the community. Governments must have adequate revenue to provide essential services, but I believe in growing that pie—

The Hon. A. Koutsantonis interjecting:

The SPEAKER: Member for West Torrens!

Mr DULUK: —to provide those essential services, rather than increasing taxes to deliver those essential services or privatising government assets, such as the Motor Accident Commission, which goes straight into general revenue, or ForestrySA, which goes straight into general revenue—which those opposite did so easily in their last term of government.

True economic reform will achieve this important end. I appreciate that there are many voices in the debate on the nature of the reforms that we should pursue, but there is one thing that has unanimous support—that is, urgent reform is necessary to send a clear message that South Australia is open for business, that South Australia is indeed the best place in the nation to invest in property and that South Australia is the best place to run a business large or small.

As we seek to grow our economy and repair 16 years of Labor mismanagement, the stakes are too high for any missteps. There is no doubt that the proposed land tax aggregation changes have caused significant angst and uncertainty amongst the community. I am the first to admit that the land tax journey to this place since the state budget announcement has not been an easy one and I, too, was an early critic of the process undertaken. At this point, I would like to thank the many constituents who have contacted my office, as indeed they have yours, sir. I include industry bodies such as the MTA, the UDAA and the MBA—

The Hon. A. Koutsantonis: UDIA.

Mr DULUK: —UDIA—who have contacted me seeking a better overall land tax reform package. I acknowledge many of their concerns. I know that the bill before us that we are debating this week and the additional amendments proposed yesterday by the Treasurer seek to address many of the concerns raised about thresholds, rates and trust aggregation. I am glad to see that we are proposing to adopt a more Victorian aggregation system as opposed to a Queensland one and also a provision where companies that act in a development capacity are treated as trusts in their proposals.

We must not lose sight of our objective to create a competitive advantage over other states. This was certainly the mantra when Sir Thomas Playford was premier of South Australia: to make South Australia a low-cost jurisdiction. It is something that South Australia has lacked since the Bannon Labor disaster of the State Bank. I know that members opposite do not like to talk about the State Bank disaster.

Members interjecting:

The SPEAKER: Order!

Mr DULUK: Since the State Bank disaster, this state has not enjoyed a competitive advantage in almost any industry, especially in state-based taxation across the nation, mainly due to the monumental catastrophic devastation that the State Bank had on South Australia so that it was unable to grow over that period of time. When it comes to tax policy, I really think that South Australia has been too dependent on the other states. We have been too dependent on grants from the commonwealth, and this needs to change.

We need to grow our pie in South Australia. We need to grow our economy and grow jobs. I know that this government is committed to growing jobs: Labor only pay lip service to jobs growth. We need to grow the pie so that we can become a competitive, low state tax jurisdiction. Sir, I am driven, as I know you are, by conservative principles that lower taxes give us a competitive advantage so that we can grow our economy. I want South Australia to be known as a state with a fair and competitive tax system, a state that is an attractive place in which to invest and live.

For South Australia to achieve its population and economic growth targets, we must make sure that there is a competitive advantage relative to other states in terms of affordable housing, and we must also ensure that the tax burden is not disproportionately applied across the community. We must strive to achieve a fair and equitable system. South Australia's existing land tax regime is unfair and broken.

What we are really dealing with now are the so-called reforms of former treasurer Foley. The member for West Torrens was in the parliament and the government at that time and presided over the mess we have today. When he was treasurer in the former Labor government, he did nothing to fix this land tax mess we are in. He sits there, and he has been the best friend—

Members interjecting:

Mr DULUK: —of the Property Council for the last six months.

The SPEAKER: Order! The member for Finniss gesticulates. I ask the member for Waite to cease provoking the opposition, and I ask the opposition not to respond to that provocation.

Mr DULUK: Sir, as you know, the member for West Torrens served Her Majesty diligently as treasurer in the former Labor government. In that time, he did not once seek to reform land tax, but we are doing it. This government, the Marshall Liberal government, is doing it. We all know that, across South Australia, a top marginal rate of 3.7 per cent is too high and uncompetitive. Those opposite who do not want to support this bill are basically saying that it is okay to have a top land tax rate of 3.7 per cent.

Members interjecting:

The SPEAKER: Order! Member for Playford, be quiet!

Mr DULUK: If Labor oppose, they are saying, 'We want the highest land tax rates in the country.' They want the highest land tax rates in the country. It is unfair that South Australian investors pay the highest top marginal land tax rate in the nation. Land tax should be as broad as possible and as flat as possible. It is important that land held for investment purposes is treated the same from a tax perspective no matter what the ownership structure is. I think that is so important.

If we do not get it right, we will turn away investment and we will stifle economic growth. So the changes we are proposing—looking at lowering rates over time, looking at increasing tax-free thresholds—will help investors in South Australia and tell people that we are open for business. For years, investors have preferred to place their money in other states because of our historic 3.7 per cent top rate of tax. Over time, I believe we must also look further to reform the thresholds and rates paid for rateable land between the $755,000 mark and $1.1 million. It is important that we further lower the rate in that bracket.

The top tax rate must be reduced. We must release that handbrake on investment. The legislation before us aims to create a fairer land tax regime than the current arrangements. These changes will result in a lower tax burden for more South Australians. These changes will also result in a fairer tax burden on South Australians. The payment of tax should be equal; it should not be based on how you structure your investment. But investment should not be a dirty word; in fact, investment should be encouraged.

We should not view the holding of an investment portfolio, whether it is one property or many, as a negative thing. We should not be singling out property investors, many of whom come from multicultural communities, and bemoaning their hard work, risk taking and resourcefulness. Property investors are not only key cogs in keeping our economy moving but they are essential to our economic growth and prosperity. They underpin our residential rental market and are an important source of rental stock. They are an important driver of residential real estate prices. A flatter, broader tax system is essential to providing incentive and reward to those who take risks. A tax system that makes lawyers superfluous to investment decisions is important.

The Hon. V.A. Chapman interjecting:

Mr DULUK: I apologise to the Deputy Premier for that. A tax system that is world's best practice, a tax system that encourages investment in residential and commercial real estate, and the positive flow-on effects this activity would bring would be of enormous benefit to our economy.

Middle-tier investors should not be disproportionately affected by changes in comparison with smaller investors and the big end of town, and vice versa. Investors should not be disproportionately affected by the approach they take to structuring their investments. Government, industry and investors all agree: reform is essential, but we must reform land tax with a positive impact. Too few have carried the large land tax burden in South Australia for too long. It is time we pursued a pathway of reform that reduces red tape, is easy to understand and is economically more efficient.

I welcome the amendments as flagged by the Treasurer yesterday that see a further flattening of the land tax rate with a new 2 per cent threshold, which sits at $1.1 million at the moment and ultimately increases to $1.6 million by 2023-24. I am pleased to see that self-managed super funds are exempt from land tax and, of course, that the primary residence is exempt from land tax. I know that members opposite would love to charge land tax on the primary residence.

It is actually in the DNA of those who love the politics of envy, which is the Australian Labor Party, to talk about taxing the family home. That is what they want to do. I know that that is what the member for West Torrens has previously floated when he was on this side of the house. The member for Enfield shakes her head, but she knows that that is what the Labor Party wants to do to her constituents as well, and that is put a land tax on the primary home.

I am more comfortable with the trust surcharge aggregation provisions than those first announced, but I note that caution should used in the implementation of these provisions, ensuring that those who legitimately use trust structures are given time to transition under the new rules and are also aware of their obligations in regard to beneficiary nominations. I urge Treasury to proceed with caution as they go about implementing this new regime, should the bill pass the house.

I also welcome the legislated independent review of these land tax changes in 2023, and I hope an independent review will call for further reductions in land tax. If I could finish with a few words of caution, any scope in the budget to fast track these tax cuts must be utilised, and of course there is the Mid-Year Budget Review coming up later this year. The drawn out debate over land tax reform this year, I believe, has impacted to a certain extent market and investor confidence. I encourage my colleagues to remember the Marshall Liberal team's commitment to an open, transparent and accountable government.

The development industry and those who are developers play a vital role in housing affordability and jobs. Land tax reform should respect the contribution this sector makes to the South Australian economy. The current statewide revaluation being undertaken by the Valuer-General began under the former Labor government, which they hardly ever mention in dispatches. But the process by the independent Valuer-General, which began—

The Hon. A. Koutsantonis interjecting:

The SPEAKER: Order!

Mr DULUK: —when the member for West Torrens was treasurer, may have a significant impact on the tax burden for all property owners. Investors may reach a tipping point in a concurrent process of land tax reform, if not managed carefully. We should not and we must not adopt a system that discourages multiple residential and commercial ownership in this state.

As we move forward with this legislation, we must tread carefully to avoid any unnecessary damage to the property sector and the state economy. To this end, I encourage my colleagues, the Treasurer and the Premier to work with key stakeholders to navigate our government's challenging reform agenda to ensure we deliver the best outcome for our state and for all South Australians. Anything less than that risks taking a wrecking ball to the economy.

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