STAMP DUTIES (TAX REFORM) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 12 May 2009. Page 2255.)

The Hon. D.G.E. HOOD (21:54): This long overdue bill finally phases out rental duties and mortgage stamp duty for South Australia as at 1 July 2009. It is indeed a historic moment, as I have before me just on my table here, thanks to the wonders of the Freedom of Information Act, the very agreement containing the signature of the Hon. John Winston Howard and another signature, namely, that of our then premier (Hon. John Wayne Olsen) that foresaw this very day. This document, which is dated 9 April 1999, contains a promise that Mr Howard would pay GST revenue to South Australia if we revoked certain state fees and charges. Paragraph 6 of the agreement states:

...the commonwealth will make GST revenue grants to the States and Territories equivalent to the revenue from the GST subject to the arrangements of this agreement.

In paragraph 5, our then premier promised that, in return, South Australia would cease to apply the wholesale sales tax from 1 July 2000 and revoke bed taxes and the payment of financial assistance grants from the same date. FID and debits tax were to be abolished from 1 January 2001, then a whole raft of stamp duties were to be abolished, including 'stamp duties on unmarketable securities; business conveyances (other than real property); leases; mortgages, debentures, bonds and other own loan securities; credit arrangements, instalment purchase arrangements and rental arrangements; and on cheques, bills of exchange and promissory notes, from 1 July 2001'.

So, here we are, over 10 years from the date of this now yellowed and crumbling agreement, finally dealing with stamp duty on rental property and mortgage duty, all delivered much later than was originally promised. It is, indeed, an overdue bill. And still South Australian families face the worst (or equally worst) stamp duty situation when trying to buy their family home. When looking at the interstate figures, I think it is now fair to say that South Australia is, indeed, the equal worst with Victoria when it comes to stamp duty on the purchase of a home.

For first home buyers, New South Wales offers a full exemption for homes priced under $500,000 (I am talking about stamp duty on the house, not the mortgage stamp duty), with a sliding reduction in that exemption up to $600,000. Western Australia, again, offers a full exemption for first home buyers under $500,000. Queensland has a full exemption for home buyers under $350,000, with a sliding reduction in exemptions up to $500,000. The Northern Territory gives full exemptions to first home buyers for homes costing less than $385,000. In the ACT, the stamp duty rate that first home buyers have to pay is just $20 up to the $333,000 mark. So, that is $20 in total in stamp duty up to a value of $333,000. The average Canberra house price is only $350,000. So, many first home buyers (and probably almost all of them) can expect to pay just $20 in stamp duty for their first home.

Why is South Australian stamp duty so high? South Australia offers only a $4,000 rebate to our first home buyers who purchase a home for up to $400,000, and this phases out for a property with a market value between $400,000 and $450,000 by $8 for every $100 increase in excess of $400,000. For the $333,000 house that I mentioned a moment ago, where an ACT resident would be paying a total of $20 in stamp duty, a South Australian first home buyer buying a home of equal value pays some $12,980 in stamp duty, and that is even after the full $4,000 has been deducted. So, it would be $16,980, minus the $4,000 deduction, which leaves a figure of $12,980, compared to just $20 in the ACT and nothing at all in the other states that I mentioned.

Is it any wonder that in some cases we have a problem retaining our youngest and brightest who are looking at buying their first home in this state? Indeed, I personally paid some $42,000 in stamp duty when I bought a home in the not too distant past. I am sure that when the stamp duty legislation was originally introduced many years ago that was not what was envisaged.

South Australia, indeed, has a very high take on our residents with respect to stamp duty: an estimated amount of some $885 million in the 2008-09 budget. Stamp duty in Queensland for the median Brisbane house price works out to be about 1.1 per cent of the house price. For Adelaide, the stamp duty is 3.7 per cent of the median house price, which is the second worst to Victoria, at a ridiculous 4.8 per cent. In Queensland, a person will pay $6,500 in stamp duty for a $400,000 home compared to our $16,300, and just $10,000 in stamp duty for a $500,000 home, compared to $21,330 in South Australia. That is $11,330 more in stamp duty for a house of exactly the same value in South Australia compared to what someone will pay in Queensland. Despite all that, Queensland still manages to get a higher percentage of general revenue from stamp duty than we do in South Australia. They have a lower stamp duty but, clearly, higher sales volumes provide the necessary revenue. One of the reasons might be that people are more willing to buy and sell real estate in Queensland and, as a result, the turnover is higher in that state.

By contrast, the South Australian stamp duty rate can, I am sure, influence some home owners in their decision not to sell but stay in their existing house, which may not suit their needs any longer. I am sure that the high stamp duty rates have some impact on their decision of whether or not to move.

If the figures were available, I would expect to see South Australians living in the first home for much longer and moving far less regularly than their interstate counterparts, because we tax so highly families who want to move house to accommodate larger families or because their circumstances have changed. This is not something that Family First would endorse.

Family First believes that across-the-board reduction of stamp duty—as Queensland has done—is one of the key areas for the growth and prosperity of our state. It would certainly help those who face very high levels of unaffordability in buying their first home at the moment.

Returning to the main topic of this bill, Family First will support the abolition of these duties. We wish that more could be done and that it could be done more quickly, because we believe that South Australia's very high stamp duty rates are causing tremendous headaches for first homeowners and other homeowners who want to move because of growing families or changes in their circumstances.

In addition to the abolition of rental and mortgage duty, the government also proposes to extend concessional stamp duty treatment provided to exploration licences to include geothermal licences, a move that Family First also supports. We therefore support the second reading of this bill and, indeed, we support the bill itself; however, we say that this is something that has been coming for a long time. We certainly support the thrust of the bill and the reduction—or the elimination in many cases—of stamp duty rates. However, we believe that the next target should be the stamp duty on the sale of homes themselves.

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (22:01): I thank the Hon. Mr Hood, the Hon. Mr Ridgway and other members who took part in this debate for their indication of support. I commend the bill to the council.

Bill read a second time and taken through its remaining stages.