Budget Measures Bill 2017

Committee Stage

In committee.

(Continued from 9 August 2017.)

Clause 1 passed.

Clause 2.

Mr MARSHALL: I move:

Amendment No 1 [Marshall–1]—

Page 4, lines 4 to 22 [clause 2(2) to (6) inclusive]—Delete subclauses (2) to (6) inclusive and substitute:

(2) Schedule 1 Part 3 clause 14 will be taken to have come into operation on 1 July 2016.

(3) The following provisions will be taken to have come into operation on 22 June 2017:

(a) Schedule 1 Part 1 (other than clause 11 which comes into operation in accordance with subsection (1));

(b) Schedule 1 Part 2;

(c) Schedule 1 Part 5.

(4) The following provisions will be taken to have come into operation on 1 July 2017:

(a) Schedule 1 Part 3 (other than clause 14 which comes into operation in accordance with subsection (2));

(b) Schedule 1 Part 6.

(5) The following provisions will come into operation on a day to be fixed by proclamation:

(a) Schedule 1 Part 4;

(b) Schedule 1 Part 8.

Amendment negatived; clause passed.

Clause 3.

Mr MARSHALL: I move:

Amendment No 2 [Marshall–1]—

Page 4, line 24—Delete 'a Schedule' and substitute 'Schedule 1'

Amendment negatived; clause passed.

Clause 4.

The CHAIR: Your amendment on this clause, leader, is actually to oppose the clause, which means we have to put the clause so that you can actually physically oppose it.

Members interjecting:

The CHAIR: Order! It is technical enough for all of us to be listening very, very carefully. The table is advising everyone impartially. It is not our role to put words in your mouth. We need to make sure that you all understand where we are. My advice is that we put clause 4 as printed because your amendment is to oppose it anyway.

Clause passed.

Clauses 5 and 6 passed.

Clause 7.

The committee divided on the clause:

Ayes 22

Noes 16

Majority 6

Clause thus passed.

Remaining clauses (8 to 14) passed.

Schedule 1 passed.

Schedule 2.

The Hon. A. KOUTSANTONIS: I move en bloc:

Amendment No 1 [Treasurer–1]—

Page 24, lines 15 to 16 [Schedule 2, clause 26, inserted section 72(7)(b)(ii)]—Delete 'the person or trust has paid, or is liable to pay, the foreign ownership surcharge' and substitute:

a foreign ownership surcharge has been paid, or is liable to be paid,

Amendment No 2 [Treasurer–1]—

Page 25, after line 29 [Schedule 2, clause 27, inserted section 102AB]—After subsection (2) Insert:

(2a) If a foreign entity is a member of a group that notionally acquires an interest in residential land as a result of a transaction to which this section applies, the entity is liable to pay a surcharge (a foreign ownership surcharge) to the Commissioner in addition to the duty payable on the transaction by the group.

Amendment No 3 [Treasurer–1]—

Page 25, line 30 [Schedule 2, clause 27, inserted section 102AB(3)]—After 'surcharge' insert:

under subsection (2)

Amendment No 4 [Treasurer–1]—

Page 25, after line 32 [Schedule 2, clause 27, inserted section 102AB]—After subsection (3) insert:

(3a) The amount of the foreign ownership surcharge under subsection (2a) is 4% of the value of the foreign entity's interest in the interest notionally acquired by the group in the residential land (as determined under section 99).

Amendment No 5 [Treasurer–1]—

Page 25, lines 41 and 42 [Schedule 2, clause 27, inserted section 102AB(5)(b)]—Delete paragraph (b) and substitute:

(b) at the time the entity ceases to be a foreign entity—

(i) the entity retains the interest notionally acquired; or

(ii) in the case of an entity that paid the surcharge by virtue of being a member of a group that notionally acquired the interest—the group retains the interest notionally acquired, and the entity retains its interest in the interest notionally acquired by the group,

Amendment No 6 [Treasurer–1]—

Page 26, line 6 [Schedule 2, clause 27, inserted section 102AB(6)]—After 'foreign entity,' insert:

or, if the interest was notionally acquired by a group, an entity that is a member of the group (and was a member of the group at the time of the acquisition) becomes a foreign entity,

Amendment No 7 [Treasurer–1]—

Page 26, after line 24 [Schedule 2, clause 27, inserted section 102AB(6)(b)]—After subparagraph (i) insert:

(ia) in the case of an entity that is (but for this subparagraph) liable to pay the surcharge by virtue of being a member of a group that notionally acquired the interest—the group ceased to have a notional interest in the residential land, or the entity ceased to have an interest in the interest notionally acquired by the group, before the entity became a foreign entity; or

Amendment No 8 [Treasurer–1]—

Page 26, lines 25 to 26 [Schedule 2, clause 27, inserted section 102AB(6)(b)(ii)]—Delete 'the entity has paid, or is liable to pay, a foreign ownership surcharge' and substitute:

a foreign ownership surcharge has been paid, or is liable to be paid,

Amendment No 9 [Treasurer–1]—

Page 26, lines 28 to 41 [Schedule 2, clause 27, inserted section 102AB(6)(c)]—Delete paragraph (c) and substitute:

(c) however, if an entity referred to in paragraph (b)(ii) is a corporation or trust that is not a wholly foreign owned corporation or trust, then—

(i) the entity is liable to pay a foreign ownership surcharge on the transaction; but

(ii) the amount of the foreign ownership surcharge is to be reduced by the amount of the foreign ownership surcharge (if any) paid in respect of the transaction by virtue of which the entity became a foreign entity.

Amendment No 10 [Treasurer–1]—

Page 27, lines 29 and 30 [Schedule 2, clause 27, inserted section 102AB(9), definition of foreign entity]—Delete ', a foreign trust or a group of which 1 or more members is a foreign person or a foreign trust' and substitute:

or a foreign trust

Mr GARDNER: I appreciate that some discussion may have taken place, but can the Treasurer briefly explain the amendments that he has moved?

The CHAIR: Yes, I am sure he can.

The Hon. A. KOUTSANTONIS: I have had a brief discussion with the shadow treasurer, whom we briefed between the houses. We received advice from several independent accounting agencies about some unintended consequences of some of the amendments. These amendments are in place—

Mr Marshall interjecting:

The Hon. A. KOUTSANTONIS: I do not think I would say that about parliamentary counsel. I do not think that is fair. Parliamentary counsel do an exceptional job for us and for the opposition. I do not think they deserve the criticism. Amendment No. 1 standing in my name relates to the clawback of an unpaid foreign ownership surcharge, where a resident person or trust acquires an interest in land only to later become a foreign person or trust within three years of that land acquisition. In these circumstances, a foreign ownership surcharge becomes payable on the original land acquisition.

If a foreign ownership surcharge is paid as a result of the transaction by which that person or trust became a foreign person or trust, the amount of the surcharge paid is rebated against the amount of a foreign ownership surcharge, payable under the clawback provision, to avoid double taxation. This amendment is required to ensure that no clawback is required at all where a person or a trust becomes a wholly-owned foreign person or trust within the three-year time frame. This is because the surcharge will be payable on 100 per cent of the value of the underlying interest in residential land, such that no clawback is required until the initial acquisition of the land.

Amendment No. 2 applies in relation to the operation of a foreign person surcharge, where a stamp duty assessment is issued under the landholder provisions to a group of associates. In certain circumstances, individual persons are determined to be associates and their interest in companies or trusts aggregated for stamp duty assessment purposes. The relationship between individual persons that can give rise to persons being treated as associates is drafted broadly to capture acquisitions by different persons acting for a common commercial purpose.

The grouping ensures, amongst other things, that contrived ownership splitting is not employed to avoid the payment of stamp duty. The government is proposing this amendment to ensure that a foreign ownership surcharge is only applied to the interest held by the foreign members of a group or associates and is not charged on the interest held by other group members. This amendment will ensure that direct and indirect acquisitions of interest in residential land by foreign persons and trusts receive equal treatment under the foreign ownership surcharge provision.

Amendment No. 3 to schedule 2 is complementary to amendment No. 2, which the government proposes for the same reason as I previously stated. Amendment No. 4 is complementary to amendment No. 2, which the government proposed for the same reason I stated previously. Amendment No. 5 is complementary to amendment No. 2, which the government proposed for the same reason as previously stated. Amendment Nos 6 and 7, again, are complementary to amendment No. 2. Amendment No. 8 has been made for the same reason as stated in amendment No. 1.

Amendment No. 9 is complementary to amendment No. 2, which the government proposed for the same reason as previously stated. Amendment No. 10 is complementary to amendment No. 2, which the government proposes for the same reason as previously stated.

The CHAIR: Is that sufficient explanation for you, on my left? Do you need anything extra?

Mr GARDNER: Thank you for the explanation.

Amendments carried; schedule as amended passed.

Schedule 3 and title passed.

Bill reported with amendment.

Third Reading

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (17:22): I move:

That this bill be now read a third time.

Again, I refer members to my remarks in the second reading closure of debate. I am disappointed that it has come to this—that the government's budget is not being given free passage through the house. It is an unfortunate new precedent being set by the opposition. Hopefully, common sense will prevail in the other place.

Mr MARSHALL (Dunstan—Leader of the Opposition) (17:22): I am not really sure what the Treasurer is getting at. It is quite clear that this Budget Measures Bill will pass this house because the government is supporting it. The government has a choice. They had a choice today whether to support the opposition's amendments to remove the state bank levy. We have made it very clear to the government and the people of South Australia that this is something in this Budget Measures Bill that we find abhorrent.

Of course, the Budget Measures Bill will be passing this house today, and it will go to the Legislative Council. The government will have an opportunity again, at that point, to be either practical or pig-headed. They have an opportunity for the Budget Measures Bill, if they remove the state bank levy, to pass in the other place, or they have an opportunity to be pig-headed and for that bill to stall. I think the people of South Australia have made it very clear. I think there is very little doubt the people of South Australia reject this government's state bank levy. It is a differential levy; there is no basis for this levy. It is only going to further diminish our capacity as a state to attract investment capital into South Australia.

We have the highest unemployment rate in the nation. We have had that position for the last 31 consecutive months. The last thing we need to be doing is creating a further burden on people who would like to invest or employ people in our state. So we implore the government, if they do not agree to the removal of the state bank levy in this house, to consider it between the houses and do the right thing by the people of South Australia: provide certainty, reduce risk and remove this state bank levy.

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (17:24): In closing the debate, I have heard what the Leader of the Opposition has said. Quite frankly, I do not accept his argument. I accept his right to oppose measures because I think oppositions should always break out on their own and have their own policies and offer an alternative to the people of South Australia.

I do not accept that that means we should trash a convention that we have had in this parliament since we settled and had representative government in this state. I do not accept the argument the opposition is making that they are prepared—because they know that constitutionally they cannot amend the budget bill in the other house—to put at risk payroll tax cuts and other concessions for small businesses because the opposition are now a completely wholly owned subsidiary of the Australian banking association and the banks.

That is an unfortunate situation for them. I do not believe that they have thought this through. I do not believe that they understand the consequences of what they are doing. As I said yesterday in my remarks, the opposition leader has led his party to a cliff on this issue, and pride and ego do not allow him to take a backward step. All we are doing is what every other government has done since representative government began in this state.

We proposed a budget to the parliament, and the constitution has provisions in the passage of those bills to ensure that government bills are passed, and thus far the Legislative Council, throughout its entire history, has never blocked a budget bill. Yet we are being pushed to that very point, and he is pushing us to that point because he cannot take a backward step because of his own stubbornness. He is pushing this state. Going forward, if he is successful, the precedent he has set is that every budget, every appropriation bill, is up for grabs.

The example that they used on the transport development levy is not accurate because the government agreed to remove that measure. We decided in our cabinet to remove that and the cabinet decided to remove it through the parliament using the House of Assembly. That is how it has worked in this parliament forever. What the opposition are attempting to do is to stymie an entire budget for one measure—

Mr Marshall interjecting:

The Hon. A. KOUTSANTONIS: —and that will be the consequence. You just heard the interjection. The Leader of the Opposition interjects that it is the right thing to do. Well, tell that to all those small businesses that are currently paying 4.95 per cent payroll tax—that the opposition are prepared to use their numbers in the Legislative Council to block a tax cut to them. What have they done?

Mr Marshall: You don't need legislation.

The Hon. A. KOUTSANTONIS: I do not need legislation to cut a prescribed payroll tax rate? Yes, I do. Yes, I do, and that is why it is here and that is why it is in the bill. I also need these measures to offer stamp duty concessions for off-the-plan apartments to try to stimulate growth. But the opposition, following a man off the cliff, does not know the precedent it is setting. Dean Brown never did this. John Olsen never did this. Tom Playford never did this. Don Dunstan never did this. Steele Hall never did this.

Mr Marshall: It's a new Liberal Party.

The Hon. A. KOUTSANTONIS: That's right: it is a new Liberal Party—one that is unrecognisable to any other around the country, one that is unrecognisable to people who have supported it their entire life.

Since when does the Liberal Party ban gas exploration? Since when does the Liberal Party vote against tax cuts to small business, which is what they are going to do in the other house? The shadow treasurer has to block tax cuts to small business to save five businesses headquartered elsewhere—five businesses. He is prepared to save five businesses from paying $20 million a year. Following this folly, if successful, the Leader of the Opposition is consigning this place to chaos. How will they govern? How will they introduce new measures? How will they implement their agenda? But, again, this is called thinking ahead, planning ahead.

Mr Picton: Actions have consequences.

The Hon. A. KOUTSANTONIS: Actions have consequences. It is one of the oldest laws of physics: for every reaction, there is an equal and opposite reaction. I commend the bill to the house.

Bill read a third time and passed.

The DEPUTY SPEAKER: Everyone please have a careful few weeks away.

At 17:30 the house adjourned until Tuesday 26 September 2017 at 11:00.