STAMP DUTIES (OFF-THE-PLAN APARTMENTS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 30 October 2013.)

The Hon. I.F. EVANS (Davenport) (15:44): This is the Stamp Duties (Off-the-plan Apartments) Amendment Bill 2013, and this is the government's third attempt to try to get this policy right. We remember that they introduced it in the 2012 budget, and the opposition pointed out to the government that it had left out its own development down at Bowden and that there was a development out at Gilberton it had left out. Embarrassingly, the government had to sneak back into the house a couple of weeks later and say that it would amend it to include a slightly broader area to pick up those particular developments.

How the whole cabinet missed the Bowden development is a mystery to all of us, but one would assume that someone in cabinet might have thought that, since that development was having lots of apartments, it might have been wise to have this to actually encourage people to invest in that development. However, as luck would have it, the government has now decided that what it will do is further expand the area. So, this will be the third attempt.

The new area, you will be pleased to know, Mr Speaker, is now defined in the bill as the area constituted by 'the thick black line on the map'. I can just imagine some lawyer taking it to court and arguing about what it has to do to be defined as 'thick'. We understand it is an area to be bordered by Regency Road, Hampstead Road, Portrush Road, Cross Road, Marion Road, Holbrooks Road, East Avenue and Kilkenny Road. One assumes—although I will need to go into committee on this one, minister—that it is only one side of those roads, not both sides of those roads. I am just wondering how the government has actually defined that.

The amendments seek to make the eligibility area for the stamp duty concession for apartments bought off the plan to include the inner metropolitan area, as I have defined. The concession will be available for contracts entered into from 28 October 2013 so, even though the bill is not passed, if someone has already signed a contract later than 28 October this year they will be eligible for this particular concession.

The concession remains available up until 30 June 2014—which, we note, is about 10 weeks after the state election—so one assumes it is simply a short-term measure, and I will ultimately ask the minister about that in the committee stage. All this simply does is broaden the area and slightly extend the period in which the rebate is available, and the opposition will support the bill.

The Hon. M.F. O'BRIEN (Napier—Minister for Finance, Minister for Police, Minister for Correctional Services, Minister for Emergency Services, Minister for Road Safety) (15:48): I have little to add other than to thank the member for Davenport for the continued assistance he offers the government in remedying our very rare defects.

Bill read a second time.

Committee Stage

In committee.

The CHAIR: Would the member for Davenport indicate where he would like to ask his first question?

The Hon. I.F. EVANS: I would like to start at Mauritius, but we are here, sir. Why not clause 4?

Clauses 1 to 3 passed.

Clause 4.

The Hon. I.F. EVANS: The way I understand clause 4 is that it simply replaces 31 May 2012 with now two dates: one being Area A which is the existing area, 31 May 2012, which means any contract entered into after that date in Area A can attract the off-the-plan rebate; and then it replaces 31 May for the broader area, for any contract from 28 October. The way I read this I am assuming that, after 28 October, Area A becomes irrelevant because all the contracts must be written in Area B which, by its nature, includes Area A. My question is why do we need Area A in the bill at all since we are past 28 October and it is now irrelevant?

The Hon. M.F. O'BRIEN: The explanation that I have been given is that there is a kind of hiatus period if you like between 31 May 2012 and 28 October 2013 and for that reason we have framed the bill as we have.

The Hon. I.F. EVANS: I understand that, minister, but 28 October is gone, so no-one can now apply for a grant in that period. They can only apply from 28 October on. In fact, they can only apply basically from 28 October on because the government announced they would be eligible from that date. So, the way I read it, they are automatically eligible for Area A and B. Area A becomes irrelevant after 28 October and, as it is now 14 November, why do we need 28 October in there at all?

The Hon. M.F. O'BRIEN: What we are dealing with is settlement date falling obviously after contract date, and application being made on settlement date, and that is why we have basically framed it the way we have—to deal with the fact that people have entered into a contract purchase but they have not settled, and with settlement comes the application.

The Hon. I.F. EVANS: Clause 4(3) defines Area B, which means 'the area bounded by the thick black line on the map', which is very scientific, and 'an area constituted by sites contiguous with the area described in paragraph (a) (being sites that include land that runs immediately alongside the outside of the boundary constituted by the thick black line on the map set out in Schedule 3)'. The way I understand that, and the minister can tell me if I have it wrong, is that that means, every site on either side of the road that constitute the outside boundary of area B, if an apartment is built on that land they are available to receive the off-the-plan apartment stamp duty exemption.

The Hon. M.F. O'BRIEN: That is correct, and it applies if they entered into a contract on or after 28 October. The member for Davenport is correct that it applies to both sides of the road along which the thick black line runneth.

The Hon. I.F. EVANS: The way I understand this rebate is that they get a rebate for a purchase of an off-the-plan apartment. At what point is the rebate paid and, up until this new scheme when this bill was introduced, what is the number of rebates that have been paid since the scheme has been introduced?

The Hon. M.F. O'BRIEN: It is paid on settlement, and 63 have been paid to date.

The Hon. I.F. EVANS: What was the budgeted amount? What was the expected number? Sixty-three have happened. When the scheme was introduced, Treasury would have assumed that X number were going to happen. What is the expected and budgeted for number of rebates to be paid?

The Hon. M.F. O'BRIEN: I did query that I thought 63 was a low number, and it has been explained to me (and it is readily understandable) that, generally, the developer would wait until he has sold a given number of apartments, at which time he would realise the project is viable and then it has to be constructed. There would be a significant number of contracts let on buildings on which construction is yet to be commenced or currently under construction. As to what the budgeted figure is, I will endeavour to come back to the member for Davenport. We just do not have that in the briefing documents.

The Hon. I.F. EVANS: This is a stamp duty rebate so it must only occur when a contract has settled, so when an actual apartment is built. This scheme has, so far, only resulted in 63 apartments being built?

The Hon. M.F. O'BRIEN: I think it would be more accurate to describe it as 63 apartments either being occupied or owned. It does not mean that there is not a large number of other apartments currently under construction and awaiting final completion so that settlement can occur. All we are saying is that 63 apartments have now been either occupied or are completed.

The Hon. I.F. EVANS: If there are apartments being built that have not yet been subject to this particular rebate, doesn't that mean that the economic activity is already happening because the apartments are being built, and therefore you do not need the rebate to generate that activity? Those apartments are already being built. They just have not been contracted for sale yet; the contract has not been finalised. That is why I am interested in how many extra apartments Treasury thought would be in receipt of this particular rebate, because 63 since May 2012 is only four or five a month.

The Hon. M.F. O'BRIEN: I think a lot of purchasers and investors are attracted to off-the-plan purchase because of the various tax concessions and this is one of them. They are generally seen as a spur, if you like, to construction, so I think it is probably unfair to say that this construction would have occurred regardless of whether incentives were being offered. I have a sales profile in front of me—a table that indicates that we are expecting there to be ultimately in the year 2012-13, 265 sales; in 2013-14, 430 sales; in 2014-15, 555 sales; and similarly in 2015-16. These are end of year totals.

The Hon. I.F. EVANS: On what date does the current scheme run out? When does it become ineligible?

The Hon. M.F. O'BRIEN: There is a full exemption to 30 June 2014 and a partial exemption to 30 June 2016.

Clause passed.

Remaining clause (5) and title passed.

Bill reported without amendment.

Third Reading

The Hon. M.F. O'BRIEN (Napier—Minister for Finance, Minister for Police, Minister for Correctional Services, Minister for Emergency Services, Minister for Road Safety) (16:03): I move:

That this bill be now read a third time.

Bill read a third time and passed.