Bills

Appropriation Bill 2015

Introduction and First Reading

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (15:07): Obtained leave and introduced a bill for an act for the appropriation of money from the Consolidated Account for the year ending 30 June 2016, and for other purposes. Read a first time.

Second Reading

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (15:07): I move:

That this bill be now read a second time.

This government is embarking on the most comprehensive state tax reform in South Australia's history. Jobs are the centrepiece of our reform package. Our reforms create jobs, maintain jobs and build the enterprises that create careers.

Our tax reform package is about rewarding activity, the doers, the risk-takers, the small business owners, entrepreneurs, our miners and explorers, the start-ups, new and long established family businesses, our farmers and primary producers, our retailers, our developers, our service industry, corporates large and small and, most importantly, our manufacturers. Every single business and enterprise in South Australia, whether big or small, can benefit from these changes.

This government's tax reform stands our state out as a beacon for business investment. No other state has embarked on such a comprehensive reform. It is about recognising that as a nation the next wave of productivity will not come from federal reform but will be driven by improved productivity coming from state-based reform.

The genesis of this strategy began long ago; it is based on a well-reasoned and deliberate strategy of giving South Australians the tools they need to carve out our own future, to stand on our own two feet and to grow our economy. Our aim is to create an efficient tax system that rewards effort, minimises harm to the economy and incentivises investment decision-making by businesses by removing destructive transactional taxes.

South Australia faces serious challenges. These challenges have not suddenly presented themselves over the last few weeks but over a period of time. The failure of the commonwealth to invest in our automotive industry, the uncertainty over our submarines and frigates build, the high Australian dollar over a prolonged period of time, lower commodity prices and cuts to spending by the commonwealth in the areas of health, education, training and infrastructure have all had an impact on the economy. However, in a positive sign, the most recent commonwealth budget had a good small business package, the exchange rate is dropping and commodity prices are stabilising. However, unemployment remains unacceptably high.

These reforms do have a cost to the budget, but with prudent and sensible decisions our budgets will return to balance, providing budget surpluses, giving our community and business the confidence that our state finances can manage this once in a generation tax reform. It is a difficult task, but we welcome the challenge. We must lower the cost of doing business in South Australia and unlock the entrepreneurial spirit that has grown this state, helping South Australian business invest and grow.

Over the next four years, this government will invest almost $985 million in supporting job creation through reforming our tax system and investing in new and growth industries. The 2015-16 budget delivers a new state tax system, support for northern Adelaide following the closure of Holden, and provides an economic stimulus through strategic investments in health, education, community safety, the vulnerable and our regions.

Importantly we return the budget to balance, delivering surpluses from 2015-16 through continued expenditure restraint while taking prudent steps to invest in our community, create jobs and protect the most vulnerable. In total, almost $670 million in tax reductions will be returned to businesses and families over the next four years, reducing the costs of doing business. These reforms include ongoing reductions of more than $268 million per year from 2018-19. Over the next decade, these tax reforms will return almost $2.5 billion to businesses and the community. Beginning today we ask the parliament to support the government's plans to:

abolish share duty;

abolish stamp duty on non-real property transfers, including non-fixed plant and equipment;

expand the stamp duty concession for exploration tenements, including retention tenements; and

expand the eligibility criteria for corporate reconstruction relief.

As of 1 July, we will:

abolish the Save the River Murray levy, saving households $40 and business $182 per year;

introduce the cost of living concession for pensioners and low-income earners, protecting the most vulnerable in our community;

offer a small business payroll tax rebate;

increase the land tax thresholds by around 2.5 per cent;

introduce conveyance duty and land tax exemptions for principal residential properties transferred into special disability trusts for no consideration; and

abolish the Hindmarsh Island Bridge levy.

From the date of assent of amended legislation we will:

amend the Stamp Duties Act 1923 to:

expand the stamp duty exemption for farm transfers between family members;

extend the definition of family groups in the Stamp Duties Act to include de facto couples;

replace stamp duty ex gratia relief administrative schemes for disability service providers, incapacitated persons and property donations to charities with legislative exemptions;

amend the Motor Vehicles Act 1959 to replace a registration fee ex gratia relief administrative scheme for vehicles used to transport incapacitated minors with legislative relief; and

amend the Taxation Administration Act 1996 to only require 50 per cent of the tax in dispute to be paid before an appeal can be lodged.

From 1 July 2016, we will reduce by a third the stamp duty on non-residential real property transfers, with a further third reduction of stamp duty on non-residential real property transfers by 1 July 2017. On 1 July 2018:

abolish stamp duty on non-residential real property transfers;

abolish stamp duty on transfers of units in unit trusts; and

abolish stamp duty on transfers of mining licences and tenements.

Our reform package over the next four years will abolish eight taxes. Over the next four years, almost $670 million will have been provided in tax reductions to business and families in this state, putting back more than $268 million per year from 2018-19 into the pockets of households and business, all with no new taxes—no tolls on our roads, no taxes on foreign investment, no broad-based land tax on a family home.

There is no better example of our commitment to lowering business costs than the difficult reforms the government took to the last election in relation to WorkCover. These reforms, with the help of the opposition, passed the parliament and will become a reality on 1 July 2015. South Australian businesses will save close to $180 million per year from the government changes to the WorkCover scheme. This is yet another decision that was taken in the long-term interest of our state by a government that has a long-term vision for a better future. Since coming to office, this Labor government has already:

cut the payroll tax rate from 5.67 per cent to 4.95 per cent and increased the tax-free threshold from $504,000 to $600,000;

increased the tax-free threshold for land tax from $50,000 to $323,000 along with changes to other land tax brackets and rates;

introduced annual indexation of land tax thresholds which provides ongoing relief to land owners and investors;

abolished mortgage duty, debits tax, cheque duty and lease duty;

introduced a stamp duty concession of $15,500 for eligible purchases of off-the-plan apartments;

introduced a Seniors Housing Grant of up to $8,500 for people over the age of 60 who want to right-size their principal place of residence and purchase a new home to live in; and

significantly increased the level of household concessions available to eligible South Australians, protecting the most vulnerable in our community.

Extending the small business payroll tax rebate to 2015-16 will mean that around 2,200 employers will receive payroll tax relief of up to $9,800. On average, only 10 per cent of South Australian businesses pay payroll tax; over 130,000 small businesses in South Australia pay no payroll tax. Even without our payroll tax concession offered in this budget, South Australia's payroll tax regime remains the lowest-taxing effort in the nation.

However, tax reform cannot alone achieve our goals. We can no longer rely on the support of the commonwealth in sustaining our car industry, our defence industry or our renewable energy sector. We cannot rely on others. We must truly create an international economy that engages with the rest of the world.

Our future is not limited to the growth of local businesses alone but in our ability to attract new businesses and new investment into our state. We will commit $15 million to fund and secure new investment in South Australia through the provision of targeted assistance to support the attraction of new businesses and the development of key industries within this state.

We make no apology for this strategy. This government will invest to attract new head offices of national and international companies to South Australia, invest in new growth industries and aggressively pursue more private capital investment, foreign or domestic.

Our efforts must not only continue to support the emergence of new industries and new business but also support important growth industries such as tourism and education for international students. Tourism contributes $5.2 billion and 32,000 jobs to the South Australian economy and is growing. It has the potential to deliver $8 billion by the end of the decade.

Nearly $1 billion is being spent on upgrading infrastructure facilities like the Adelaide Oval, the Convention Centre, the Riverbank development and attracting and supporting events that bring people and investment to South Australia. This budget includes a $50 million package to drive jobs and growth in tourism and events. At the heart of our package is an unprecedented spend to promote South Australia to key international markets, secure new major events and conferences, and create thousands of tourism-related jobs.

We will also further our investment in the state government's bid fund, with $5 million allocated to secure conventions and $10 million to secure new events. The expanded fund will allow the state to secure and develop more major sporting, music and arts events that will generate significant economic benefits for our tourism industry and our local small businesses, as well as creating and supporting hundreds of jobs throughout the state. After all, who could understate the value of seeing those magnificent lads in their red guernseys, the Liverpool Football Club, live at Adelaide Oval. Winning more conventions and events will ensure we exploit the full potential of the newly developed and expanded Adelaide Convention Centre and Riverbank Precinct, which includes our world-class Adelaide Oval.

This budget also commits $4.3 million in 2015-16 to upgrade the Middleback Arts Centre in Whyalla, the Northern Festival Centre in Port Pirie, the Sir Robert Helpmann Theatre in Mount Gambier, and the Chaffey Theatre in Renmark.

As the reality of climate change presents itself so is the increase in investments in renewables and clean tech industries. Risks become opportunities. We already lead the nation in the development of renewable energy generation, making up 39 per cent of electricity generation—on track of our target of 50 per cent by 2025.

The next logical step is to place our city at the centre of this new investment by making our CBD carbon neutral. Our plan is to make electric and hybrid vehicles the preferred mode of transport in our CBD, to create more green spaces and walls that reduce heat and improve energy efficiency, provide more renewable energy generation for use in the city, and attract and support hi-tech companies seeking to develop new technologies. This is a long-term vision that together we can achieve.

As the closure of Holden's Elizabeth plant in 2017 approaches, the state government will use all possible levers to support new and growth industries and stimulate the construction sector to protect and create jobs. This state government will stand up for communities in need and do all it can to deliver a sustainable future for northern Adelaide. That is why on top of our tax reforms we are committing an additional $1 million towards the development of a northern economic plan which will focus on job creation and skill development which will now have a budget of $5.4 million.

Other direct initiatives in the 2015-16 state budget include:

$2 million to develop a northern food park;

$25 million to renew ageing social housing stock;

more than $10 million over three years to upgrade schools and children's centres across northern Adelaide; and

$55 million to build a new road for the Gawler East housing development which industry estimates will unlock an additional 3,000 homes, $1 billion worth of investment, and create an additional 6,000 residential construction jobs over the life of the project.

The Northern Economic Plan will deliver a vision, a strategy and specific actions that support the industrial transformation of northern Adelaide once the car manufacturing era comes to an end.

A new food park will also be developed providing expansion opportunities for new and existing businesses that have outgrown their current premises. The state-of-the-art industrial food park will build upon the success of food production in northern Adelaide and enable food manufacturing businesses to access shared infrastructure and services buildings. The development of these industries in northern Adelaide will be greatly assisted by the significant suite of reforms laid out in the government's tax reform package by the removal of impediments to transactions allowing businesses to invest, grow and create jobs.

This government remains committed to building a stronger South Australia. In this budget we commit over a billion dollars this year on productive infrastructure underpinning long-term job creation. This government does not believe investing in infrastructure is a false economy. We know public sector investment leverages private sector spend and creates real jobs for real people. That is why this government has a long-term plan and commits to a minimum spend of at least $1.3 billion per year to create jobs and continue to build a stronger South Australia. By the end of the forward estimates our investment will grow to $1.5 billion per annum. Over the next four years, a $10.8 billion program will fund projects in key areas including:

$3.3 billion in health—including our NRAH;

$1.4 billion on road projects;

$353 million on public transport;

$216 million on educational facilities;

$197 million on the Adelaide Festival Centre Precinct; and

$1.7 billion on water infrastructure.

The program will support almost 4,700 jobs per year. We are stimulating the economy by replacing outdated facilities that are no longer fit for purpose, creating jobs for South Australians and better facilities for our community.

Our commitment to education and those early developing years is reflected in the additional children's centres that will be built and school upgrades across Adelaide as part of our $50 million investment by the state government to stimulate local jobs. The Department for Education and Child Development will consult with the local communities in the coming months to assess the particular needs of their students and determine the scope of the projects.

The government will also commit $65 million to the South Australian Housing Trust for the refurbishment and construction of public housing stock, creating 1,600 jobs. The investment includes $20 million of additional funds as well as bringing forward funding totalling $45 million from future years, further stimulating the sector.

As well as investing in key social infrastructure to grow jobs, the budget includes more than $165 million over four years for road infrastructure. This stimulus package will boost productivity, improve safety on regional and suburban roads, and support more than 400 jobs. Funding for critical road maintenance and road safety works will deliver more than 185 projects across the state, including upgrades to Happy Valley Drive, shoulder sealing along the Yorke Highway, an upgrade of the Copper Coast Highway and works along Goodwood Road.

Many of the projects will start immediately, with tenders being issued in the coming weeks. An extra $70 million over four years for critical road maintenance is on top of the more than $220 million already budgeted for maintenance works over the forward estimates in addition to the $572 million this state government is committing to upgrading South Australian roads over the next four years.

We are also spending more on justice, with an additional $85.1 million in new initiatives for our police, our courts and our prisons. We are reforming the justice system to ensure it serves the community and delivers improved outcomes. As part of this, new funds have been committed for improvements to the IT system of our courts.

When this government came to office, our annual health spending was $2.2 billion. By 2016 it will be $5.3 billion. To maintain a world-class healthcare system, it needs continued reform and investment. That is why $260.8 million will be spent to rebuild South Australia's health system as part of this budget. The investments include:

$159.5 million at the Flinders Medical Centre for a new 55-bed rehabilitation centre, a new older persons mental health service and a new multilevel car park;

$32 million at Modbury Hospital to develop a new dedicated eye clinic, a new hydrotherapy pool and more than double rehabilitation beds;

$20.4 million at The Queen Elizabeth Hospital to add an additional level to the Allied Health and Rehabilitation Building, a new hydrotherapy pool and on-ward gyms;

$16.1 million for more ambulance vehicles and ambulance stations;

$15.1 million for a new Post Traumatic Stress Centre of Excellence; and

new investments in both the southern and northern suburbs with improvements to the Noarlunga and Lyell McEwin hospitals.

Also, $4.8 million will be invested in replacing mechanical stretchers and handling units in all South Australian Ambulance Service vehicles.

We will invest an additional $5.1 million to support the work of the 450 people who work at the South Australian Health and Medical Research Institute (SAHMRI) as part of our government's long-term vision to create new industries and new jobs. To date, SAHMRI has brought to the state a total of $70 million in grants over the past two years, and the state government will continue to support the work they do.

The 2015-16 state budget includes more than $50 million for a range of reforms to improve and widen services for children at risk or in care. Over $20 million will go to reforms related to enhancing our foster-carer system and providing other positive alternatives for residential care for young people at risk.

Labor will always protect the most vulnerable in our community. We stood up to Prime Minister Abbott and his $30 million annual cut to South Australian pensioners. We will always fight for and protect our most vulnerable citizens. My parents are pensioners and, like many in this place, I have an electorate with a large number of older South Australians. Many older South Australians who have spent their lives building this state now feel forgotten by the commonwealth government. We will not leave pensioners and low-income earners behind. The South Australian government will legislate a new cost of living allowance to replace the $30 million in pensioner concessions cut by the Abbott government.

The new cost of living concession will be introduced from 1 July 2015 to replace the council rate concession. The new concession will provide an annual payment of $200 to eligible pensioners and low-income earners who own their own homes, $100 for eligible pensioners and low-income earners who are tenants for the first time, and $100 for self-funded retirees who hold a Commonwealth Seniors Health Card. Under the expanded scheme some 45,000 vulnerable households will receive the support they previously did not have.

Targeted to those most in need, the concession will provide recipients with greater flexibility to use the concession towards key cost of living expenses, whether it is electricity, gas and water bills or council rates. The cost of living concession is estimated to cost $36.5 million in 2015-16 and is in addition to the existing pensioner concessions available for water, electricity and the emergency services levy.

Many South Australians feel that we are on our own; feeling that we have to fight for every bit of our prosperity, every inch of it—be it the construction of 12 new submarines at Techport, the frigates build, the decision not to back Holden, getting more water down the River Murray or even for our fair share of GST. We cannot, however, ignore the significant impact the closure of the Alinta operations in Port Augusta and Leigh Creek will have on those communities and regional South Australia.

The loss of a coalmine and the closure of the coal-fired powered electricity generation will have a significant impact. We have heard claims about the end of Whyalla and Port Augusta before—but these communities are resilient; they are strong and, like all great regional communities across South Australia, they are willing and able to adapt to change. As a government we must work with those communities affected to focus our efforts and ensure that together we create the jobs for the future.

This budget reduces the cost of doing business and opens up new markets to create jobs. South Australia must reward the risk takers, the entrepreneurs, and the small business owners across this state who seek to carve out a better future for themselves, their community and our state. This budget redefines the relationship between government and business. It redefines the timing and type of taxation we ask our enterprises to work within. From now on, our business entrepreneurs will have a tax system that backs them to win.

I would like to place on the record my sincere thanks and appreciation to the Under Treasurer, Mr Brett Rowse, his executive management team and all staff in the Department of Treasury and Finance. Their professionalism and dedication during the annual state budget process is to be admired, and I would like to thank them on behalf of the entire government.

Honourable members: Hear, hear!

The Hon. A. KOUTSANTONIS: I would also like to thank my staff, including my chief of staff Mr Tom Carrick-Smith, my hardworking and fearless media adviser Lucy Hood, my advisers Michael Brown, Peter Labropoulos, Nick Antonopoulos and Ben Tuffnell, my officer and agency staff led by Sarah Goodchild and Carly McNeill and, of course, my personal assistant Sevi Livaditis. Budget processes are stressful periods for Treasurer's officers, and I thank them for their advice, their guidance and their support during this time.

I would like to thank my family for their love and support—without Anthea, Tia and Helena it would be very difficult to do this job. Most importantly, I would like to thank my caucus colleagues who, over the past six months, have assisted me and the cabinet to form this budget, in shaping the very important pro-jobs, pro-Labor budget we have just delivered. I commend the budget to the house. I seek leave to have the explanation of clauses inserted without my reading it.

Leave granted.

1—Short title

This clause is formal.

2—Commencement

This clause provides for the Bill to operate retrospectively to 1 July 2015. Until the Bill is passed, expenditure is financed from appropriation authority provided by the Supply Act.

3—Interpretation

This clause provides relevant definitions.

4—Issue and application of money

This clause provides for the issue and application of the sums shown in Schedule 1 to the Bill. Subsection (2) makes it clear that the appropriation authority provided by the Supply Act is superseded by this Bill.

5—Application of money if functions or duties of agency are transferred

This clause is designed to ensure that where Parliament has appropriated funds to an agency to enable it to carry out particular functions or duties and those functions or duties become the responsibility of another agency, the funds may be used by the responsible agency in accordance with Parliament's original intentions without further appropriation.

6—Expenditure from Hospitals Fund

This clause provides authority for the Treasurer to issue and apply money from the Hospitals Fund for the provision of facilities in public hospitals.

7—Additional appropriation under other Acts

This clause makes it clear that appropriation authority provided by this Bill is additional to authority provided in other Acts of Parliament, except, of course, in the Supply Act.

8—Overdraft limit

This sets a limit of $50 million on the amount which the Government may borrow by way of overdraft.

Schedule 1—Amounts proposed to be expended from the Consolidated Account during the financial year ending 30 June 2016

Debate adjourned on motion of Mr Pederick.