Legislative Council Fifty-First Parliament, Third Session (51-3) 51 3 Parliament of South Australia Legislative Council published Question Time Question Time Taxation TAXATION The Hon. D.W. RIDGWAY Legislative Council Leader of the Opposition TAXATION The Hon. D.W. RIDGWAY (Leader of the Opposition) (14:23): I seek leave to make a brief explanation before asking the Minister for Small Business a question about government taxation policy. Leave granted. The Hon. D.W. RIDGWAY Legislative Council The Hon. D.W. RIDGWAY: A number of us have just had the pleasure of attending the MTA president's annual lunch. While that was a pleasure, we were addressed by the Premier and I am not sure that that was entirely— The Hon. R.D. Lawson interjecting: The Hon. D.W. RIDGWAY Legislative Council The Hon. D.W. RIDGWAY: The Hon. Robert Lawson interjects that it was not an address; it was a lecture. The Hon. C.V. Schaefer interjecting: The Hon. D.W. RIDGWAY Legislative Council The Hon. D.W. RIDGWAY: The Hon. Caroline Schaefer interjects, saying that it was a campaign speech. Mr President, I know you are becoming a bit upset by the interjections and I thank you for your— Members interjecting: The Hon. D.W. RIDGWAY Legislative Council The Hon. D.W. RIDGWAY: You cannot stop them now; they have all started! The President Legislative Council The PRESIDENT: Order! The Hon. Mr Ridgway has the floor. The Hon. D.W. RIDGWAY Legislative Council The Hon. D.W. RIDGWAY: Thank you, Mr President. In his lecture to the gathering the Premier spoke about how the government had reduced the massive tax burden on South Australian businesses—in particular, significant reductions in payroll tax. In fact, he went on to talk about the $3 billion in tax cuts that business in South Australia has received since his government came to office. He spoke about the changes to WorkCover, and it is interesting to note that the unfunded liability now is in excess of $1 billion. He also mentioned the 25 per cent reduction in red tape. It would be interesting, at some stage, to see whether you could quantify that reduction. However, of most interest to me was a comment made by one of the MTA members I spoke to at the lunch. In fact, they were sitting at my table. As a result of their land tax bill, they now have had to lay off staff. They could not afford to keep the staff as a result of this arrogant approach to land tax. The Premier said that he was not interested in reducing land tax and that, in fact, sometimes you just have to pay tax. Does the minister now agree that his government's arrogant approach to land tax is costing South Australians jobs? Members interjecting: The President Legislative Council The PRESIDENT: Order! The Hon. P. HOLLOWAY Legislative Council Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (14:26): This is extraordinary: an arrogant approach to land tax. I remind members that, in the past 15 years— Members interjecting: The President Legislative Council The PRESIDENT: Order! The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: —there have been only two reductions in land tax rates, both of those under a Labor government. The only effective increase in land tax because of thresholds occurred under the previous Liberal government. That is the history of land tax. The Hon. D.W. Ridgway Legislative Council The Hon. D.W. Ridgway: It's costing jobs. The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: The honourable member said that it costs jobs. Any charge that is paid by industry, whether it is a payroll tax, corporate tax, GST or any other form of tax, will presumably, at the end of the day, be one of the extra charges for business. You can put the argument that it will cost jobs, but why would it be one form of tax more than any other? If there have been increases in land tax for industry in those areas, there would essentially be two reasons why that would happen: one, because there has been a significant increase in property values, because the rates certainly have not gone up, so that would mean that the wealth of the company or the individual concerned would have significantly increased; the other, because people had been using artificial contrivances to avoid land tax and they have been tightened up under the legislation. The Hon. R.I. Lucas interjecting: The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: The honourable member laughs. Does he think it is good to have an uneven playing field out there? If you have businesses and individuals paying the right level of tax— The Hon. D.W. Ridgway Legislative Council The Hon. D.W. Ridgway: I think it's good to have people employed. The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: So, you let people cheat on their taxes. So it is good. Providing somebody has a job, it is okay if they do not pay their WorkCover levies or taxes? In other words, it is done illegally. Of course, there is a black economy. Effectively, the Leader of the Opposition is arguing that we should have a black economy in this country where people do not pay taxes. This government tried to remove anomalies in land tax which favoured some individuals over others. The principles of taxation are such that there should be a level playing field so that all individuals and all companies in the same situation should pay the same tax. If people use artificial contrivances to reduce that, then this parliament has an obligation to close those off. That is the equity argument for tax and, if the honourable member wants to argue for an inequitable tax system, one where companies in similar positions pay different levels of tax because some can use contrivances, he is welcome to produce that policy at the next election. If the Liberal policy at the next election is to create artificial contrivances for certain companies to avoid tax but not others, they can do that. The fact is that, at the moment—and this is a policy that the Liberal Party has 12 months to come up with—members opposite know that we are facing incredibly difficult world economic times. We know that budgets around the world are moving into deficit. If members opposite wish to put up a policy to cut particular forms of tax, then they can do so, but they will need to explain to the people of this state how they are going to balance the books in the longer term. Although we are already moving into deficit because of the cyclical problems we face, if we give away our tax base, ultimately, this state will be in big trouble. Of course, it was no coincidence that, during the previous eight years of Liberal government, there were deficits. If honourable members opposite wish to put that policy, they are welcome to do so, but several things need to be said. There is no doubt that businesses within this state are hurting; there is no doubt that government budgets are hurting; and there is no doubt that the economy throughout the world is hurting. We are going through difficult economic times and, of course, people will be looking for every advantage that they can. It is important that, through this time, governments support— The Hon. D.W. Ridgway interjecting: The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: Well, you do not support people by throwing away your tax base. Essentially, the Leader of the Opposition is saying that, under a Liberal government, a much larger deficit would exist than under this government, because they are saying that we will be giving our tax base away. In the short term, you might argue that that will save a job or two but, in the long term, we know that running policies that are totally fiscally irresponsible will lead to much greater, prolonged and deeper unemployment and, indeed, a whole lot of other social ills. This government has managed the finances of this state responsibly for the past seven years, and we will continue to do so. Where we have the capacity to offer tax relief, we will do so. This government is mindful of the pressures that face individuals of this state, as well as companies, and we will do what we can within a fiscally responsible environment to help them. What members opposite need to do is come up with some proper costed policies that will assist industry in the longer term rather than going for short-term political gain. They have failed to do that today, they failed to do it when they were in government, and I think it is pretty obvious that they will fail to do it in the next 12 months leading up to the election.