House of Assembly Fifty-First Parliament, Third Session (51-3) 51 3 Parliament of South Australia House of Assembly published Question Time Taxation TAXATION Mr GRIFFITHS House of Assembly Goyder TAXATION Mr GRIFFITHS (Goyder) (14:51): My question is to the Treasurer. Why is South Australia, under this Labor government, the highest taxing state in the nation? A report in the Financial Review, conducted by financial consultants Pitcher Partners, confirms that the tax differential for businesses between the lowest taxing state of Queensland and the highest taxing state of South Australia is 50 per cent. The review measured taxes and charges, including payroll tax, WorkCover premiums, land tax and transfer of land duties in each mainland state. The findings of this review are confirmed by the Commonwealth Grants Commission, which states that South Australia levies its tax base more severely than any other state or territory. Mr Hamilton-Smith interjecting: The Speaker House of Assembly The SPEAKER: Order! Members interjecting: The Speaker House of Assembly The SPEAKER: I called for order! The Hon. K.O. FOLEY House of Assembly Port Adelaide Deputy Premier Minister for Industry and Trade Minister for Federal/State Relations The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (14:52): I find it interesting that one of the comparisons between Queensland and South Australia is the issue of the WorkCover premium, at which we are currently 3 per cent; I think Queensland is at sub 1 per cent. Think of the battle we had to get the opposition to agree— Mr Hamilton-Smith House of Assembly Mr Hamilton-Smith: You bankrupted it from $60 million to $1 billion, you galah; you wrecked it. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: 'Galah' is a bit unparliamentary, isn't it, sir? I think he should withdraw that. Members interjecting: The Speaker House of Assembly The SPEAKER: Order! I did not hear the remark. Did the member refer to the Deputy Premier as a galah? Mr HAMILTON-SMITH House of Assembly Mr HAMILTON-SMITH: I am terribly sorry for referring to the Treasurer as a galah for bankrupting the WorkCover scheme. Members interjecting: The Speaker House of Assembly The SPEAKER: Order! I direct the Leader of the Opposition to withdraw. Mr HAMILTON-SMITH House of Assembly Mr HAMILTON-SMITH: I withdraw. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: It was this government that had the political courage and the will to reform a piece of law that clearly was in disrepair. Members interjecting: The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: Well, why did you support us in the end? The government has addressed that issue. I accept that the member for Goyder may not be sufficiently well briefed on the historical context of taxation and budgetary policy in this state, but, historically, South Australia has been a higher taxing state than many other states. The reason is that, relatively, we have been a poorer state than many of the other states, and that has been a factor because of the post war period of heavy— Mr Hamilton-Smith House of Assembly Mr Hamilton-Smith: World War II. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: Post war period. Members interjecting: The Speaker House of Assembly The SPEAKER: Order! The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: The post war period saw our state heavily industrialised. A lot of heavily protected industries were brought into our state, and we had a large influx of low-cost labour. Mr Williams interjecting: The Speaker House of Assembly The SPEAKER: The member for MacKillop! The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: Well, these are the facts. If you guys are not prepared to accept historical facts, how can I have a proper debate about it? The percentage of government as a proportion of state gross product has always been very high in the state. Because we have not had an economy as dynamic as other parts of Australia, the government sector has had to have a higher percentage of gross state product than other states' government sector. To fund that, our state has had a higher regime of taxation. That has been a historical fact probably for all time but, certainly, since the post war period. When we came into office, we set about retracting from areas of government activity in the economy that— Mr Pengilly interjecting: The Speaker House of Assembly The SPEAKER: Order, the member for Finniss! The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: —other governments, both Labor and Liberal—fancy trying to have an economic debate with you two. I mean, honestly. Members interjecting: The Speaker House of Assembly The SPEAKER: Order! Members interjecting: The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: A bit like your business management skills. Members interjecting: The Speaker House of Assembly The SPEAKER: Order! The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: I did not go bankrupt, that is for sure. The Speaker House of Assembly The SPEAKER: Order, the deputy leader! Members interjecting: The Speaker House of Assembly The SPEAKER: Order! When the chair rises, members become silent. I have called members to order. I should not have to do that more than once. The Deputy Premier has the call. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: There were issues like the industry assistance program, when we came to office, where the former Liberal government (and not dissimilar policies to the former Labor government) was providing massive handouts of government subsidies to fly-by-night capital, which would only stay invested in this state as long as there was a subsidy attached to it. We are talking about call centres, low value added business, manufacturing; businesses that were not capable of staying here unless they had a government handout. We withdrew those subsidies. We also set about broadening our economic base and ensuring that we had a broader manufacturing sector so we were not over reliant on sectors such as the automotive sector. We have built up, and are continuing to build up, an outstanding defence electronics sector, where we are putting a lot of effort into expanding the expertise that we have available here way beyond the air warfare destroyer. That is a very good point for me to put on the public record, because I think it is a very good economic point for us now to be concentrating on. At present, three air warfare destroyers are to be built at Techport. We have the through life support until at least 2022, and beyond, of the six Collins class submarines; that is $150 million a year of work. We are very hopeful that the government will have a fourth air warfare destroyer. We will have to wait and see. The other night, if members missed it, the Prime Minister said that, in his view, we need to have a stronger defence force going forward and, in particular, we need a larger navy. Let us think about and concentrate on what that may mean for South Australia. When we won the air warfare destroyer contract, instead of just giving the infrastructure to the Australian Submarine Corporation, we kept it in government ownership and made it a common user facility. That will mean that the ASC will have access to it but other shipbuilders can also have access to it. An outstanding piece of work done by the Premier prior to the federal election was to get a public agreement, which has now been confirmed with Labor in office, that the next class of submarines will be built in South Australia—not necessarily at the ASC, but in South Australia—and a competitive option is that we have a common user facility available should there be a second builder. It will either be the ASC—and I would be a bit surprised if it was not—but you never know; there might be another builder who can access it. I say that for this reason. We are now not talking about six submarines. There are all sorts of— Mr GRIFFITHS House of Assembly Mr GRIFFITHS: Sir, I rise on a point of order. The Speaker House of Assembly The SPEAKER: There is a point of order. The Deputy Premier will resume his seat. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: I am getting to the answer. Mr Griffiths House of Assembly Mr Griffiths: You are getting to the answer—because I was going to challenge you on a matter of relevance? The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: Although I disagree— The Speaker House of Assembly The SPEAKER: Order! Both members will take their seat. There is a process, and it does involve the Speaker. It is not a private arrangement between the member of the opposition and the Deputy Premier. At the moment I do not uphold the point of order. I will allow the Deputy Premier to draw where he is going with the answer. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: Thank you, sir. Honestly, if members opposite can be just a little bipartisan and objective and think this through, the federal government has said, 'We need a bigger navy.' Mr Hamilton-Smith House of Assembly Mr Hamilton-Smith: You are the highest taxing treasurer in the country. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: But I am the Treasurer. Members interjecting: The Speaker House of Assembly The SPEAKER: Order! The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: We will build perhaps 10 or 12—or more—next generation submarines which will come into service in 2022. The design period and the selection period means that by 2010—only 18 months away—serious decisions will be made by the commonwealth government and detailed planning will have to begin at that point for the next class of submarine. That will involve hundreds of engineers and design experts. The point I am making is that, in that broadening of our economy, Techport Australia will be the home of all major naval construction for the foreseeable future of this nation. With a broader economy, we are able to start bringing down taxes. That is why— Members interjecting: The Speaker House of Assembly The SPEAKER: Order! The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: That is why we cut payroll tax in the last budget. Mr Pengilly House of Assembly Mr Pengilly: What about land tax? The Speaker House of Assembly The SPEAKER: Order, the member for Finniss! The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: Is it hurting you a bit? That is why we have brought down payroll tax and lifted the threshold and that is why we wanted to cut WorkCover, despite attempts by the opposition to stop it. Mr Williams House of Assembly Mr Williams: No attempt by the opposition to stop it. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: Members opposite are condemning us. He went out there and said that he would never support it but then did a backflip that should have been in the Olympics. Mr Koutsantonis House of Assembly Mr Koutsantonis: You moved a motion in this house. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: You moved a motion and voted against every clause. What a hypocrite! Members interjecting: The Speaker House of Assembly The SPEAKER: Order! I think we can proceed without interjections. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: One minute he said, 'We never opposed it,' and then he said 'Oh yeah, I did.' Mr Williams interjecting: The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: You said all that within 60 seconds. The Speaker House of Assembly The SPEAKER: Order! The Deputy Premier will get back to the answer. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: Thank you, sir. The whole point of the exercise is that we are cascading down the rates of tax in this state. We have been doing that and we have abolished taxes. We have cut billions of taxes— Members interjecting: The Speaker House of Assembly The SPEAKER: Order! The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: The Financial Review article is a bit swayed in its presentation. Let us not forget the 2008 KPMG competitive alternative survey. That report found that Adelaide outranks all other Australian cities. It has the lowest business costs compared with Sydney, Melbourne and Brisbane. In relation to some taxation levels we are higher than other states but in other levels we are lower. When one takes in the whole basket of business costs—land costs, electricity costs, water costs and all the other inputs to business—KPMG found that we are the cheapest city in Australia. That is how you properly evaluate whether or not this is a good place to do business; and the other way is to look at the level of business investment. We have a flood of business investment coming into this state. Unemployment today is down to 4.4 per cent. Ms Chapman interjecting: The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: She says that it is disgraceful—90,000 jobs since we came into office. I say to members opposite, particularly the deputy leader, that you have to accept we are a very good government when it comes to economic management.