Bills

Budget Measures Bill 2017

Committee Stage

In committee (resumed on motion).

Clause 2.

The Hon. K.J. MAHER: I might use this opportunity to get on the record a couple of questions that we were left with after we started the committee stage this morning. The Hon. Rob Lucas had questions about when the commonwealth act came into operation and particularly, effectively, the head of power for the collection of the first two quarters at the end of that second-quarter period. I am advised that the commonwealth's Major Bank Levy Act 2017 received assent on 23 June 2017 with commencement on the following day.

Section 4(1) of that act states that the levy is imposed on an authorised deposit taking institution for a quarter starting on or after 1 July 2017. In terms of the specific question about the ability for those first two quarters to be collected at the end of that second quarter, I am advised that, pursuant to an extract from the explanatory memorandum to the major bank levy circulated by Treasurer Scott Morrison, section 1.52 states:

However, as a transitional rule, in relation to the major bank levy that an ADI [Authorised Deposit-taking Institution] is liable to pay for the quarter ending on 30 September 2017, the due date for payment will be deferred by a quarter. [Treasury Laws Amendment Bill, Schedule 1, sub-item 23(2)]

The Hon. R.I. LUCAS: I thank the minister for that explanation. That explains the delay of the first quarter of the Commonwealth Bank levy to be collected at the end of the second quarter period. Whereabouts therefore in this legislation, in the state act, does it in essence say, 'Okay, that was in the explanatory memorandum and we will do the same thing here for the collection of the state bank tax levy'?

The Hon. K.J. MAHER: My advice is that that could be taken from clause 8—Payment of levy:

State major bank levy for a quarter of a financial year is payable to the Commissioner on or before the day on which Commonwealth major bank levy for that quarter is due and payable under the Commonwealth law.

The Hon. R.I. LUCAS: I move:

Amendment No 1 [Lucas–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.

We now approach the substance of the debate in relation to the Budget Measures Bill. I suggest at the outset, I am not sure whether the Leader of the Government on behalf of the government members agreed with the process issue or not, but I have a series of two pages of amendments drafted by parliamentary counsel on file, seven individual amendments. My advice from parliamentary counsel is that they are a package.

My proposition is that we have a test case debate vote on the first amendment. If that is successful, then I would propose to treat the remaining six amendments as, in essence, consequential. Certainly from my viewpoint I would not want to re-enact the debate in relation to the first test debate.

The Hon. K.J. MAHER: I can suggest that we are almost in the agreement and will meet the honourable member halfway. There will be some debate over this first amendment obviously. We will obviously be voting no as a government. Depending which way the vote will go, I foreshadow that, whichever way it goes, I expect there will be a division on that.

What we would propose to do, I think there are another six or seven amendments after that. Depending on the way that vote goes, we will not call a division on each of those, but we will quickly move through those without further debate and just vote on the voices, following the will of the house on that. We agree to the extent that we treat it as a test clause for the rest, but rather than move them all as a whole package, if we move them individually and allow the voices to accept what the initial division has shown us.

The Hon. R.I. LUCAS: I think that is essentially agreement between the government and the opposition anyway as to a sensible process for managing this particular debate.

In moving this particular amendment, it is one of a package, but I intend to debate the arguments for and against the bank tax. The substantive provisions are actually in later amendments. This is in essence a consequential amendment, but it actually comes first. But we will have the substantive debate here and certainly from our viewpoint we will not re-enact the debate on the subsequent amendments.

I do not propose to speak at length in moving this particular amendment. I will briefly summarise the Liberal Party's position. I have outlined at some length at the second reading our arguments for the removal of the bank tax from this particular Budget Measures Bill and the reasons why we will be voting against it. I will summarise our position in two parts. The first part is that we think the bank tax is bad for South Australia, it is bad for the South Australian economy, it is bad for South Australian jobs, it is bad for South Australian investment, and we can see no redeeming feature for it at all.

Also, in relation to that, we just do not accept the argument of the Treasurer and the government that South Australian families and businesses will not pay for the imposition of a bank tax in South Australia. When we get to clause 13 later on I have some specific questions in relation to that because that is the particular provision where the Treasurer said, 'Don't worry; we have a clause in there that says that the levy shall not be paid by customers.' Well, excuse me for not bursting my sides laughing at that particular provision.

The brutal reality for anyone who understands the operations of financial institutions is that if a $100 million tax is whacked on the financial institution in one form or another, someone else is going to end up paying in one way or another. The Hon. Robert Brokenshire highlighted issues in relation to investments, superannuation and shareholders, etc. I will not repeat the arguments he put on the public record.

If one looks at things like line fees for businesses: anyone who understands how banks operate—for example, over recent years, given the acknowledged greater business profile risk in the Whyalla community up until the recent decisions—for a business in an economic environment like the Whyalla community and an equivalent business in a community like Adelaide, the banks were making different judgements in relation to line fees for businesses operating in those particular areas. There was a greater degree of risk from the business viewpoint of the bank or the financial institution in relation to businesses operating in that particular area.

These are not headline fees or charges which are promoted on television; they are individual commercial decisions made by bankers in relation to businesses and how they operate. There are various other decisions. Anyone who has been involved in a business and has had to borrow money from a bank and negotiate with a bank will know that it is not just line fees, it is, in essence, the security and a whole range of other issues that businesses have to argue about in terms.

If you are in a humming economy and things are doing really well, there are different commercial judgements the banks will make with you as opposed to if you are in a community where it looks like the whole world is going to fall in, potentially, over the next couple of years, then different commercial judgements are made. There are all those sorts of decisions that are taken. In relation to mortgages, for example, there is the headline variable rate which is advertised by banks in relation to mortgages.

I do not know what the numbers are but reasonable numbers of customers get percentage reductions off the standard rate. You go along to your bank and the bank says, 'You have been a fabulous customer of ours. We will take half a per cent off the usual rate in terms of the home mortgage', or whatever it is. That is an individual commercial decision that banks take on a regular basis: the advertised rate is this but the actual rate is being offered to who knows how many customers. There is nothing that can occur which will basically say, 'Okay, you were offering those sorts of discounts at this level prior to the imposition of the bank tax, and afterwards that has changed completely to, "We are not going to offer those same level of discounts."'

So, the cheek, or maybe the lack of understanding and the incompetence of the Treasurer, who actually thinks that by passing a proposed two-line provision in this that, magically, there will be no increase in costs for South Australian families or businesses or anyone else in South Australia, is, frankly, laughable in relation to this. The bottom line is that the bank tax will slug families and businesses in South Australia.

The second issue, in summary, relates to the extraordinary and untrue claims that have been made by the Treasurer, the Leader of the Government and the others that, in some way, what the Liberal Party is proposing here is unprecedented, never occurred before or since 1857, etc. As I highlighted in my lengthy second reading contribution, the hypocrisy of the Treasurer and the Labor Party knows no bounds.

In 1996, in this chamber, the Labor Party in opposition moved amendments to a money bill on gaming machines, which forced the then Liberal government to spend millions of dollars in particular funds out of gaming machine collections—a suggested amendment, which is what this is, moved to a money bill in the Legislative Council—and the government of the day accepted that the only way they were going to be able to get through their increase in gaming machine taxation was to negotiate a deal with the minor parties and with the Labor opposition. That amendment was moved by Labor members in this chamber to a money bill.

Last year, in 2016, the same bill, the Budget Measures Bill, the Leader of the Government himself moved amendments to the Budget Measures Bill. In 2015 the Labor Party in this chamber moved amendments to the Budget Measures Bill. Some of them were suggested amendments; some were just straight-forward amendments, but they were, nevertheless, amendments to the budget measures bills, moved by the Labor Party themselves.

As I highlighted, they did it in 2010; they did it in 2003; so the hypocrisy of the Treasurer, the hypocrisy of government ministers and others to say, 'Shock, horror, this is unprecedented, it's never been done before': their own leader in this chamber moved amendments last year to the same bill. They moved amendments the year before to the same bill. In 2010, they moved amendments to the bill. In 2003, they moved amendments to the bill, and they were just amendments that they moved.

As I highlighted in the second reading contribution, on a number of occasions amendments were moved by Liberal members and minor party and Independent members to the budget measures bills. The biosecurity levy was removed; police and court cost provisions were removed. In a number of cases and examples in this chamber, members, who have been sitting here for periods up to 16 years, would have seen for themselves that the budget measures bills have been amended by opposition members, by Independent or minor party members but, more particularly, by Labor Party government members themselves moving suggested amendments to money bills, budget bills, clauses in the budget measures bills, which had to be done by way of suggested amendments, and went down to the House of Assembly.

The rank hypocrisy of the Treasurer and the Leader of the Government in relation to these issues, as I said, knows no bounds. I do not have a problem with them saying, 'Look, we don't think you should do this,' and all those sorts of things, but don't run this line that we have never done it, don't run this line that it's never happened before.

You can argue the toss if you like that it shouldn't happen, it shouldn't be done, or whatever it is, but don't argue the toss that it has never been done before and that, 'We, the Labor Party, have never done it, we come to this debate as saints, and we come to this debate as never having soiled our hands in relation to a budget measures bill,' when, as I said, in 1996 they stood in this chamber, they amended a money bill from opposition against the Liberal government, they forced the Liberal government, with the support of minor parties and others to say, 'If you want this money bill through on gaming machine taxes, you're going to have to spend more of that money you collect in these particular areas.'

Worthy areas, I am sure: sport and recreation, charitable and social welfare, and community development funds, which had been established. I am not arguing about that. The government of the day had suggested a certain sum of money, but the Labor Party said, 'No, we are not prepared to accept it. If you want this through, you are going to have to amend it. You are going to have to put more millions into each of these particular funds.'

The government of the day had to negotiate its position and accept the reality that there are two chambers in this democracy; there is a Legislative Council. There is a situation where the government of the day, for the last 30 years or so, has never controlled the Legislative Council, and you get on with the reality of life rather than bellyaching about it, just because, as I said, the Treasurer of the day jumps up and down and says, 'You're going to pass this bill on Tuesday, because we say you will.'

One of these days the Treasurer of the state might recognise (or learn to count) that he has seven members in this chamber and there are actually 14 non-Labor members in this chamber. It does not matter what he says in terms of, 'You will do this on this particular day by this particular time,' that is not the way it is done or the way it is going to be conducted.

The reality is, again contrary to the claims that the Treasurer has been making, that all the Liberal Party is asking and seeking the support of the Legislative Council for is to vote against, by the mechanism of suggested amendments, the bank tax. We will be voting for the payroll tax concessions. We will be voting for all of the concessions (about three separate areas of concessions) for off-the-plan apartments and we are not going to be opposing the foreign investor tax provisions that have been incorporated into the legislation.

It is our proposition that we will pass the Budget Measures Bill. We are not going to block the bill in this chamber. We will pass the Budget Measures Bill, but we will have voted against the bank tax by way of suggested amendments and we will send the bill down by tomorrow to the House of Assembly to say to them, exactly as this chamber did in relation to the car park tax, exactly as the Leader of the Government did last year when he moved amendments in this chamber to the bill to say, 'We have amended this bill and we want you in the House of Assembly to take a mature response and to accept the amendments that the Legislative Council has made to the bill.'

We are doing no more, no less, than the government did last year and the year before and the Labor opposition did in 1996 in relation to a money bill. For those reasons, we strongly urge members in this chamber to support this particular amendment as the test amendment to vote against the bank tax as a measure to start the economic recovery for the state by stopping the imposition of a very bad tax on the people of South Australia.

The Hon. K.J. MAHER: The government is opposed to these amendments. I mentioned this before, but let's be very clear about what we are considering here tonight. If these amendments get up and this bill is blocked, it sets a precedent that will be acted upon by future Labor oppositions. There is no part of any budget that will be safe from vandalism by a future Labor opposition should this particular amendment get up and this bill be blocked.

Let's be very clear. Let's be clear about what we are doing here. Budgets must be viewed as a whole. The Hon. Rob Lucas knows that. He is being disingenuous and deceitful to suggest, 'Oh, we are happy with every other bit of it except for this one major component of the budget.' He knows that it does not work that way. A budget is a carefully crafted piece of work. You cannot rip pieces out and expect every other piece to be maintained as it is. The revenue raising measures, including the major bank levy, work in tandem with spending measures that stimulate the economy.

There are more than 3,200 employers in this state who are now benefiting from the lower payroll taxes of small businesses that is included in this Budget Measures Bill. If the bill does not pass, the bill that balances revenue with spending measures, then tens of thousands of small businesses will be told they have to pay more tax just because the Hon. Rob Lucas wants to favour the interests of major banks over the interest of small business owners in this state.

The council in agreeing to this will say it backs the big banks and the big bankers on their multimillion-dollar salary packages ahead of plumbers, electricians, concrete layers, small shopkeepers, farmers and the mums and dads running small businesses in this state, and many more. That is the choice that we are facing tonight. Also, losing the incentives contained in this bill will mean that hundreds of apartment buyers who have committed to a new dwelling since the budget was introduced to parliament will lose out. Many of these are young people buying their first home, young people making the biggest financial commitment of their lives, young people who want to live and work in SA but who will now be told by the Hon. Rob Lucas that they do not matter.

They are young people who will be told that they do not deserve any assistance because the Hon. Rob Lucas and members of this council think big banks are more deserving of their support. For a very cheap stunt, this will mean that there will be many of these measures that will not be able to occur. It is completely disingenuous to suggest we will rip out this revenue measure and not have any corresponding effect on measures that stimulate the economy or spending measures. It is rank hypocrisy from the Hon. Rob Lucas. He knows better, otherwise he is completely and utterly ignorant which you would hope is not the case from someone who is has been on the Treasury benches before.

Make no mistake, as I said at the outset, if this precedent is set that an opposition feels at liberty to pick large pieces of the budget apart, that will be something that Labor in opposition will remember and take full advantage of and no part of a budget will be safe. On that note, I might like to read a quote from a member of the South Australian parliament about the budget:

The government of the day is the government of the day and they have the right to set the budget. They have the right to decide how the money will be spent. Her Majesty's Loyal Opposition has the right to understand, to question and to challenge that budget but not prevent it, unlike in America where, for instance, in most states the Governor, unlike our Governor who is basically a figurehead representing the Crown, is separately elected and has the right to veto the budget. We have no right as an opposition to do that.

That was former Liberal leader the member for Heysen, Isobel Redmond, and she is right.

The Hon. M.C. PARNELL: I do not intend to reagitate all the arguments in relation to the—

Members interjecting:

The Hon. M.C. PARNELL: As tempting as it is, I am not going to reagitate. I just want to take up the invitation of the Hon. Rob Lucas, which I think was seconded by the minister, and that is let's treat this amendment as a test for a package of amendments. The Greens' position is quite simple. We support the bank tax. We think the banks can afford to pay a fairer share towards the services that South Australians need and as a result of that position, we will not be supporting the opposition amendments.

The Hon. R.L. BROKENSHIRE: On clause 2 and relevant to the Hon. Rob Lucas's amendment and test amendment, I ask the minister first of all with respect to the bank tax, was this bank tax idea conceived in the Treasurer's office or did Treasury recommend that this bank tax occur?

The Hon. K.J. MAHER: I have no information in relation to that. Of course, in the development of policies I suspect as usual it is a combination of many areas of ideas that are put forward.

The Hon. R.L. BROKENSHIRE: On the clause, I have done quite a bit of work and had some legal advice. I have already read with interest the federal budget's bank tax bill and also I have read with interest the Chairman of the ACCC, Mr Rod Sims, who put out a statement saying that there was no way that they could stop the banks from passing on the bank tax. But what the ACCC would be doing would be watching very closely what happened. It is sort of a veiled threat to the banks a bit like the bullying and harassment charge we have just endured from the Leader of Government Business who basically says he will take his bat and ball and go home. Well, we have more responsibility than that in our party.

My first question is can the minister absolutely, categorically guarantee to this chamber that his government can stop the bank tax from being indirectly passed on to every mum and dad, every pensioner, farmer, small business person, large business person? Can he categorically, absolutely, legally guarantee to this chamber that he can stop the bank from indirectly passing on the tax?

The Hon. K.J. MAHER: What we do in here is make laws, and clause 13 states that a levy is not to be paid by customers. That is a law we make.

The Hon. R.L. BROKENSHIRE: This is really important. I have just had 29 business people in Parliament House for dinner, and I have spoken to those business people about this bank tax. Those business people are not fools; they are actually trying to make a living and grow their businesses in this state, and we had discussions about how some of them are going reasonably well and how some of them are doing it very tough.

The first thing they freaked out about was electricity prices. I will give the example of an olive grove processor down on the Fleurieu Peninsula in the new electorate of Mawson, the new Mawson boundaries. His electricity bill as an olive processor has just gone from $20,000 a year to $90,000 a year. I said, 'Well, go and blame Nick Xenophon, the Greens and the Labor Party because they chased each other for the green flags on green energy at all costs.' They understand that, and I talked about it in more detail as well, because I want to be very open with these business people.

The next thing was the bank tax. These business people, some of whom have been in business for 35 years, said that this tax will be passed on. So I am duty-bound, on behalf of those 29 and on behalf of all the other mums and dads and pensioners and everyone else, to establish whether the minister can categorically guarantee—and I do not want the nonsense from your Treasury advisers or from you, minister, I want the truth—whether Treasury and this government can categorically guarantee that this will not be indirectly passed on: yes or no.

The Hon. K.J. MAHER: As I said, we make the laws, and I have read out the section in the act. I do want to make this comment, though, for those 20-odd business people you talked about tonight. I can absolutely assure them that if they are one of the 3,200 employers who would have benefited from the payroll tax, for anyone who votes for this we will make sure all those people know that you got rid of their payroll tax by taking away the revenue measure associated with that.

We will also make sure that if any of those business people have anyone in their family who would benefit from the first homeowner's grant that will be done away with as a result of this, that they know what your views are, what the Hon. Rob Lucas's views are, what the views of Steven Marshall, as leader of the opposition, are about removing these benefits for South Australians. I can absolutely assure you that we will let them know that is what you have done.

The Hon. R.L. BROKENSHIRE: You can harass and bully me as much as you like, minister, but rest assured that first and foremost the Australian Conservatives are not blocking your bill. The only party that will block the bill is the Labor Party. They are the only party that will block the bill. We are arguing that one small part be extracted—and we are going to support these amendments because we want to see it go down to the other house. It is one small part; the rest of it they can have.

I want to say this. I do not know whether the minister lives in cuckoo land or whether he is actually a real minister when it comes to managing business and growth, but most of the small businesses in this state, the engine room of this state, do not pay payroll tax. The people who are in this olive processing plant in the new electorate of Mawson are mum and dad and a bit of part-time labour. What they do have, like the rest of us in business, is a mortgage, and they are concerned about the fact that will be passed on.

Before I go on any further I ask that rather than the minister selectively quoting that clause that he read out ,for the benefit of this chamber, the two specific sentences in the clause.

The ACTING CHAIR (Hon. D.G.E. Hood): Before you respond, minister, can I just remind the chamber to direct their comments through the Chair and not at individuals.

The Hon. K.J. MAHER: I thank the honourable member for his question. Clause 13 provides:

State major bank levy payable by an ADI—

an authorised deposit-taking institution—

under this Act cannot be directly recovered from customers of the ADI and must be paid out of profits or other funds of the ADI.

The Hon. R.L. BROKENSHIRE: So, therefore my question is on behalf of all the people who will be affected by this: unless we are going to turn into a totalitarian government situation, the word is 'directly' not 'indirectly'. Unless we are going to become a communist state and government, where you actually go line by line through everyone's books and through every bank's books, the fact is that you cannot stop it from being passed on. For once, be honest with the people. Treasury knows that it cannot be stopped. I have a lot more respect for Rod Sims than I would ever have for Treasury, who are happy to help the government flog everything off in this state. That is what the Treasury is prepared to do: flog the lot; support the government on that.

The reality is that we are not going to get an honest answer from the minister on this, but the truth is that this will be passed on, and this will hurt. For those reasons, on behalf of all South Australians we will support these amendments, but I want to reiterate again that we are not blocking the budget bill. We did not block the Appropriation Bill, and we will never block the budget bill. That is not our job and we do not have the capacity to block it. The only people who can block the bill are a majority of people in the lower house, which is clearly the government. So let us get the facts on the table and get some truth into it. We will be supporting it because the majority of South Australians are scared of this tax.

I have one other question relevant to the tax. You picked four or five big banks. I am advised that HomeStart, the government's bank for housing, is actually one of the larger lenders in the state. Why did you not put HomeStart in there?

The Hon. K.J. MAHER: I thank the honourable member for his question. It is because we are mirroring what the federal government is doing—the government of the same stripe as that party to which the honourable member used to belong. What the federal government is doing is what we are mirroring.

The Hon. R.L. BROKENSHIRE: I ask the minister: if this gets through, what is there to stop a future Labor government, or a future Liberal government for that matter, from actually expanding out from beyond the five that the federal government have in there and taking it through to Bendigo Bank, the Rural Bank, all the little credit unions and the Police Credit Union? What is to stop, once this goes into place, amendments that actually open it up to every lending institution in South Australia?

The Hon. K.J. MAHER: A federal Liberal government could put a new tax on all dairy farmers, that is true. That is something a future state Liberal government could do—they can do anything by legislation. If this were to be changed, it would require a whole new architecture to be developed by the state. What is being done here is that we are using the architecture that exists for the federal government's bank levy for the state one.

The Hon. J.A. DARLEY: I indicate that I will be supporting all the opposition's amendments.

The ACTING CHAIR (Hon. D.G.E. Hood): Can I confirm with the Hon. Mr Lucas that he has moved his amendment.

The Hon. R.I. LUCAS: I have.

The ACTING CHAIR (Hon. D.G.E. Hood): The question before the chamber—and remember, this is a suggested amendment—is that it be a suggestion to the House of Assembly to amend clause 2 by leaving out subclauses 2 to 6 and inserting new subclauses 2 to 5, as proposed by the Hon. Mr Lucas. If you support the amendment, you will vote yes.

The committee divided on the suggested amendment:

Ayes 11

Noes 10

Majority 1

Suggested amendment thus carried; clause as suggested to be amended passed.

Clause 3.

The Hon. R.I. LUCAS: I move:

Amendment No 2 [Lucas–1]—

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

This is consequential on the vote we have just taken.

Suggested amendment carried; clause as suggested to be amended passed.

Clauses 4 to 14.

The Hon. R.I. LUCAS: I move:

Amendment No 3 [Lucas–1]—

Page 4, line 26 to clause 14, page 7, line 13 [clauses 4 to 14 inclusive]—Delete clauses 4 to 14 inclusive

This is consequential on the first test vote that we took earlier this evening.

Suggested amendment carried; clauses negatived.

Schedule 1.

The Hon. R.I. LUCAS: I move:

Amendment No 4 [Lucas–1]—

Page 7, lines 14 to 21—Delete Schedule 1

This is consequential on the earlier vote we have taken.

Suggested amendment carried; schedule negatived.

Schedule 2.

The Hon. R.I. LUCAS: I move:

Amendment No 5 [Lucas–1]—

Page 7, line 22 [Heading to Schedule 2]—Delete the heading and substitute 'Schedule 1—Budget Measures'

This is also consequential on the earlier vote we took.

Suggested amendment carried; new heading inserted.

The Hon. R.I. LUCAS: Could we just hold for a tick?

The CHAIR: Yes.

The Hon. R.I. LUCAS: Mr Chairman, the amendments we have just passed now, the last one was on page 7, line 22, amendment 5, that's correct?

The CHAIR: Yes, that's right.

The Hon. R.I. LUCAS: I seek your guidance. If it is appropriate now, I do have some issues in relation to other aspects of the legislation that relate to the foreign investor tax, payroll tax and various other issues that were raised by the senior tax lawyer, which we raised and which the government and the minister have provided responses to.

On my reading, it would be appropriate to go through those particular clauses now before we eventually arrive at my amendments nos 6 and 7, which are the final consequential amendments on the bank tax levy. Is that all right?

The CHAIR: Yes.

The Hon. R.I. LUCAS: I could move to page 14, part 2, clause 13. For the benefit of the minister's advisers, it is amendments to the Land Tax Act. The issue that the tax lawyer raised, and that we received the minister's response to, is that, the tax lawyer has raised the issue that in relation to the current drafting of the Land Tax Act the concept of 'owner' is clear throughout all of the provisions in the Land Tax Act but, for some reason the drafting of these particular amendments, either parliamentary counsel or the government has introduced the concept of 'current owner'.

The suggestion that has come from the tax lawyer is: why has the government chosen to go down this path? It would make sense to use consistent language through the whole of the Land Tax Act and just use the terminology which is understood. It has been established in past practice and precedent in court cases, which is 'owner', rather than of introducing the new concept, whatever it is, of a 'current owner' as opposed to an 'owner'.

The government's response was that this was a drafting preference of parliamentary counsel. It really does not answer the question, it just says the parliamentary counsel decided it would put 'current owner' there rather than 'owner'. I am actually looking for an explanation as to why the government has decided to stick fat with the description of 'current owner' as opposed to the provision, which is used through the remainder of the land had tax, so I am advised, of owner?

The Hon. K.J. MAHER: My advice is that the benefit of that provision be bestowed on the person who bought it during that period, not any subsequent purchaser of it; hence the drafting 'current owner'.

The Hon. R.I. LUCAS: The minister is arguing, based on advice, I accept, that there is a different intended definition of 'current owner' as opposed to 'owner' used in other provisions of the act; that is, the lawyers are to interpret this differently to other provisions in the land tax legislation where the term 'owner' is used that is in a different context to what is intended here in terms of 'current owner'.

The Hon. K.J. MAHER: My advice is that it is specific to that clause, using the term 'current owner'.

The Hon. R.I. LUCAS: We will need to agree to disagree, and I think the tax lawyer agrees to disagree on that particular issue. I will move to clause 15, which is the amendment to the Payroll Tax Act. A series of questions were put to the government, but specifically I seek a response to: the tax lawyer provided a particular example where he said in clause 27 of his advice, for the benefit of advisers:

The proposed amendment (clause 15(3)(2b)(b) appears to mean that if the designated person usually requires such services for a period of less than 180 days but in fact utilises a person to supply such services for more than 180 days in one year then such services would attract payroll tax. This will be the case even if it occurs by inadvertence. It appears to undermine the concept underpinning section 32(b)(ii) of what is ordinarily required.

Is it the government's advice that the tax lawyer's interpretation of those provisions is correct?

The Hon. K.J. MAHER: I think what the honourable member is saying is correct. If you are over 180 days you are over 180 days and it attracts payroll tax.

The Hon. R.I. LUCAS: Does the government's advice agree with the tax lawyer when he says it appears to undermine the concept underpinning section 32(b)(ii) of what is ordinarily required?

The Hon. K.J. MAHER: My advice is that the government's view is that, no, it does not. We agree with the first part in terms of: if it is 180 days, it is 180 days and does attract it, but we do not agree then with the second part and the follow-on from that.

The Hon. R.I. LUCAS: My next questions are in relation to clauses 19 and 20, part 4 of the legislation, which relates to the Stamp Duties Act provisions. The tax lawyer's advice is summarised in his paragraphs 30 to 32, but I refer in particular to his questions in relation to paragraph 32. I will quote it again:

The proposed provisions in clause 20 contemplates the Commissioner issuing a certificate to a person on application. It is unclear whether that will be limited to persons who were parties to the instrument and their agents or other persons who may subsequently be interested. Section 77 of the TAA prohibits disclosure of taxpayer information and section 78 enumerates particular exceptions to that. Section 79 permits certain limited general disclosure. Nothing in section 78 permits the disclosure contemplated by clause 20…

My question is: do the government's advisers agree with the tax lawyer's position when he asserts that nothing in section 78 permits the disclosure contemplated by clause 20 of this bill?

The Hon. K.J. MAHER: My advice is, very frankly, yes we agree that is what it does.

The Hon. R.I. LUCAS: If you agree that that is what it does, then how does the disclosure contemplated by clause 20 actually occur? If clause 20 is saying that you can disclose certain information, the tax lawyer is saying that section 78 of the TAA (Tax Administration Act) does not allow you to do it. So, if you have two pieces of legislation in direct conflict, one says you can disclose certain information, the tax lawyer says the Tax Administration Act, section 78, says you can't, you say you agree with the tax lawyer's view: are you not therefore conceding that there is an inherent conflict between clause 20 of this legislation and section 78 of the Tax Administration Act?

Whilst the minister's advisers are contemplating that, the further advice from the tax lawyer, his suggested fix or solution, which I did place on the public record, was:

In the circumstance it is suggested that section 78 of the Tax Administration Act be amended to specifically permit disclosure of such information to third parties on request. It is being amended by the bill for other purposes (see clause 31) if the instrument is not to otherwise be endorsed with the necessary stamping information.

So he is saying that there is this conflict, which the government's advisers say there is, and he is saying, 'Well, if there is this conflict and you do want to have disclosure under clause 20 of this bill, why not therefore in the same bill amend section 78 of the TAA, the Tax Administration Act?' I think that act is opened up in the Budget Measures Bill—it was opened up in the first part of schedule 1. So, this particular Budget Measures Bill actually does open up the Tax Administration Act. What he is saying is that you have this conflict, your advisers acknowledge there is this conflict, why not tidy up the conflict by amending section 78 of the Tax Administration Act?

The Hon. K.J. MAHER: I think I may have said this as part of my second reading speech, but I think the advice that I have in relation to that is that the proposed section 3E(3) of the Stamp Duties Act will allow the Commissioner of State Taxation to include—I will get to those provisions.

I will not restate everything that was put on the record in the second reading speech. Suffice to say that, before the example of where the honourable member is talking about a potential conflict, it is the view, I am advised, that generally speaking it would only be in limited circumstances of the example, when we are talking about instruments to do with the LTO and disclosure, and in the limited circumstances that a third party may be interested in applying for a copy of a certificate, for example, for disputes before a court or tribunal, the current permitted disclosure provisions in the TAA are sufficient to allow disclosure of such information with the consent of the affected person or a person acting on their behalf.

The Hon. R.I. LUCAS: That is a useful segue to my next question. I accept that clearly the government does not want to resolve what the tax lawyer has identified from his viewpoint as an inherent conflict between clause 20 of the bill and section 78 of the Tax Administration Act. In that response that the minister has just quoted, he says there could be:

…disclosure of such information with the consent of the effected person or person acting on their behalf.

What happens if the affected person or person acting on their behalf does not consent?

The Hon. K.J. MAHER: My advice is that that remains consistent with current provisions and, as the honourable member says, could only be released upon consent.

The Hon. R.I. LUCAS: It could only be released what?

The Hon. K.J. MAHER: Upon consent.

The Hon. R.I. LUCAS: And I think that is indeed part of the point that the tax lawyer is taking. The government's advisers are saying, 'Well okay, if someone agrees, they can release it,' but the tax lawyer is identifying the inherent conflict between clause 20 of the bill and section 78 of the Tax Administration Act. I have raised the issues on behalf of the tax lawyer. The government is aware of those issues and in its judgement—based on advice, I accept—has decided not to agree to make amendments in relation to those provisions. Nevertheless, the issues have been raised. We hope they do not cause grief at some stage in terms of a future legal action.

I note in relation to the further advice the minister provided to issues raised in paragraph 33 of the tax lawyer's advice, and I acknowledge that the government says there:

RevenueSA will continue to consult and give consideration to including further information on the certificate as required. This may include the amount of duty paid and the number of instruments stamped (i.e. original and copies) as suggested by the tax lawyer.

I acknowledge that RevenueSA, if I can read between the lines, does acknowledge that there is some sense in what the tax lawyer is suggesting there. They have acknowledged that they will continue to at least further consider the possibility of providing further information on the certificate, as has been highlighted by the submission from the tax lawyer.

If I can move on to the foreign stamp duty surcharge clauses, 22, 26 and 27. The first issue the tax lawyer has raised is in relation to clause 22, residential land. He is talking about the land use codes provided by the Valuer-General. He said:

There is no right to object to such code as may be assigned by the Valuer-General, yet such codes are being increasingly used. There should be a right to object to such land use codes. This should be addressed by adding a right to object to them in the Valuation of Land Act 1971.

The government's response to that, based on advice, was:

I am advised that, whilst there are no formal rights available in the Valuation of Land Act 1971 to challenge the land use code assigned by the Valuer-General, the Valuer-General will review land use codes on request. The Commissioner also maintains a discretion to determine what he considers is the predominant use of the land.

I am further advised that the Commissioner and the Valuer-General have had preliminary discussions about the issue raised and are committed to considering the issue in greater detail.

My question to the Leader of the Government is: are the preliminary discussions about this issue between the Commissioner of Taxation and the Valuer-General discussions that precede the tax lawyer's advice to the parliament a little over two weeks ago? Have these preliminary discussions only occurred as a result of the issues raised by the tax lawyer, or are these longstanding issues that have been discussed between the commissioner and the Valuer-General?

The Hon. K.J. MAHER: I am advised that we think that the discussions, although we are not entirely sure when, started before the point of the mysterious tax lawyer's advice.

The Hon. R.I. LUCAS: I do not think he is mysterious. He is well-known to the commissioner of taxation and the government. It is just that I have chosen not to put his name on the public record. I think he does a service to the parliament through his advice. The government, to be fair, has also not put his name on the public record. As I highlighted in the second reading, on a number of occasions previously the government has amended bills on the basis of advice that he has provided. If I can continue with the tax lawyer's advice, he then starts talking about the particular definitions in these particular provisions and he says in his paragraph 43:

As will be highlighted, these definitions create significant issues in the case of property the subject of a changing use or involving a mixed development (e.g. deemed residential land currently unused but is acquired for the purpose of a development of commercial premises on the ground and lower floors and residential use in the upper floors.)

Can I clarify something? There is advice provided in four paragraphs after that, but just assist me in terms of understanding that advice. In the example the tax lawyer has given there, that is a mixed development deemed residential land currently unused but is acquired for the purpose of a development of commercial premises on the ground and lower floors and residential use in the upper floors. Is it the government's intentions with the foreign investor tax that they would be taxed?

The Hon. K.J. MAHER: My advice is if it was residential land at the time of the transaction, then yes it would attract that but regardless of a future intention to change away from residential to, say, commercial.

The Hon. R.I. LUCAS: Sorry, if there is a future intention for residential, it would not attract it?

The Hon. K.J. MAHER: It is based on the date of the transaction regardless of future intention to change is my advice.

The Hon. R.I. LUCAS: On that basis then, if there is a future intention for residential it does not matter. It would not attract the tax at the time of the transaction.

The Hon. K.J. MAHER: My advice is yes, if it is commercial, at the time of the transaction regardless of the future intended use, then that is correct.

The Hon. R.I. LUCAS: Clause 22 definitions in relation to foreign persons is obviously a matter of some interest at the national level at the moment. An actual person is a foreign person if the person is not an Australian citizen—

The Hon. K.J. Maher interjecting:

The Hon. R.I. LUCAS: No, we will come to that. A dual citizen would appear to satisfy the Australian citizen requirements evidently according to this legislation, so the deputy prime minister and a range of others were deemed to be Australian citizens according to this particular legislation. An actual person is a foreign person if the person is not an Australian citizen, the holder of a permanent visa or a New Zealand citizen. So the not small number of British migrants who came to Australia many decades ago and who have chosen to never become Australian citizens would be covered under the holder of a permanent visa-type provisions, would they?

The Hon. K.J. MAHER: I cannot speak for the individual situation of a particular person, I would not want to give that very specific advice on the record, but if they were the holder of the relevant visa then yes, they would be covered by that.

I think the question also referred to dual citizenship. Dual citizenship does not count for a foreign citizen under these provisions so yes, the former deputy prime minister and the former president of the Senate, former senator Fiona Nash and former senator Matt Canavan, and potentially former Senator Nick Xenophon and future member for Hartley Nick Xenophon would not be covered under this as foreign citizens, no.

The Hon. R.I. LUCAS: In paragraph 45 of his advice the tax lawyer says that a corporation is a foreign person if it is incorporated in a jurisdiction that is not an Australian jurisdiction. Can the minister clarify that that includes New Zealand, for example?

The Hon. K.J. MAHER: My advice is that the proposition outlined by the honourable member is correct. It would still be regarded as a foreign corporation even if, say, it included a New Zealand company.

The Hon. R.I. LUCAS: The issue the tax lawyer has raised, which does seem an extraordinary reach—and I understand it is probably what the government intended, but why have they intended it—is that he is saying that a corporation that is incorporated in New Zealand but which is owned wholly by Australian citizens is still to be regarded as a foreign corporation and subject to this foreign investor tax. So you have a company that is wholly owned by Australian citizens but which is incorporated in New Zealand that is going to be treated as a foreign person for these purposes and will therefore attract the tax.

The Hon. K.J. MAHER: That is correct. I think the advice would also be if it were a corporation owned wholly by Australians but incorporated in China or Finland, or was owned partly by an Australian person but was incorporated in Japan or somewhere, it would be regarded as a foreign company.

The Hon. R.I. LUCAS: My question is: if a company is wholly owned by Australian citizens but happens to be incorporated in New Zealand, why would you be treating Australian citizens as foreign investors?

The Hon. K.J. MAHER: My advice is that it is because it is a foreign company. It is consistent with what other jurisdictions have done in relation to their similar regimes for this. Of course, if it were a corporate entity wholly owned by Australian citizens it would be open for them to have an entity that was incorporated in Australia.

The Hon. R.I. LUCAS: I struggle to understand the logic of a vehicle that is 100 per cent owned by Australian citizens and that those Australian citizens are treated as foreign investors and therefore subject to a foreign investor tax.

An honourable member: It is corporations, not individuals.

The Hon. R.I. LUCAS: Yes, but the Australian citizens are actually Australian citizens. The bogey that is being propagated by the foreign investor tax in other states and South Australia has been that investors from China and other countries are buying up residential land in large chunks and driving up prices, and that has been what has driven the foreign investor-type taxes in other states. This is contrary to the original position of the Treasurer, in which he said he was not going to introduce these sorts of things, but he has now done so.

However, one can understand if, for example, a whole series of New Zealanders or Chinese or Japanese or Indian investors are buying up residential land, but these are Australian citizens who are buying up residential land. If, for whatever reason, they have incorporated their company in New Zealand, they are going to be treated as foreign investors. I am not sure why the vehicle is being treated as what determines whether you are a foreign investor, rather than who controls and owns the particular vehicle. In this case, it is 100 per cent owned by Australians.

I understand the government's position: they want to treat those Australian citizens in that particular circumstance as foreign investors. I guess that will be part of the public debate and argument about this. The tax law, in paragraph 46, goes on to state:

A corporation is also a foreign person if another person who is a foreign person or a trustee of a foreign trust, or a number of such persons in combination hold 50% or more of the corporation's shares or are entitled to cast, or control the casting of, 50% or more of the maximum number of votes at a general meeting of the corporation. As the emphasis is on voting power rather than economic consequences this provision will be relatively simple to circumvent with foreign persons establishing companies in which they hold the shares entitled to the whole of the economic benefits and sufficient voting control (that is less than 50% but sufficient to block any special resolutions) to prevent the change of such rights.

The tax lawyer is raising something that is not an uncommon device in corporate circles, and that is that clearly shareholders can control directions of companies holding less than 50 per cent of the shares of a particular company. You have 30 per cent or 40 per cent, or whatever it might happen to be, and that might be sufficient for you, in certain circumstances as outlined by a tax lawyer, to actually control the decisions of the particular company. So, what he is identifying is that the government's drafting has, in his view, a very significant potential loophole; that is:

…this provision will be relatively simple to circumvent with foreign persons establishing companies in which they hold the shares entitled to the whole of the economic benefits and sufficient voting control (that is less than 50% but sufficient to block any special resolutions) to prevent the change of such rights.

So, my question is: do the government's advisers acknowledge that the tax lawyer's advice is correct, and, if that is the case, do they have concerns that this loophole that has been identified by the tax lawyer will be used by clever lawyers and accountants to circumvent the provisions of the government's foreign investor tax?

The Hon. K.J. MAHER: My advice is this is consistent with the way that this scheme operates in other jurisdictions in terms of this particular provision. My advice also is that it is somewhat difficult to try to be specific commenting on an idea that is in the abstract without a specific example, but there would be substantial risk to a person who seeks to put together a situation like this. For the purposes of trying to avoid this, there would be substantial risks in them structuring their affairs in doing that.

The Hon. R.I. LUCAS: I do not see how the minister—based on advice, I accept—can actually argue that. What is substantial risk if the law says that if you hold less than 50 per cent of the corporation shares, a certain set of circumstances ensue; if you hold more than 50 per cent, another set of circumstances ensue? I am sure if the minister is not aware of these sorts of arrangements where shareholders can control a company with less than 50 per cent shareholding, I would hope the minister's advisers are aware that, in the real world, that occurs not infrequently. That is just the reality of the corporate world.

You do not actually have to have 50 per cent of the shares. Some of the big takeover plays that have been enacted have been done so from a base of much lower than 50 per cent. There is a sweet spot, depending on the particular company that is structured, where control can be grabbed by an individual shareholder or group of shareholders with less than 50 per cent of the share ownership.

I seek clarification from the minister's advice where he says, 'Beware, if you do this, you might get yourself into trouble,' in essence. If the law says you can do this, and that is the law, what the tax lawyer is saying, again, is this will be relatively simple to circumvent with the detail. It is not in the abstract. He actually gives the detail of what you would need to do. You establish a company that has shares entitled to the whole of the economic benefits and sufficient voting control that is less than 50 per cent but sufficient to block any special resolutions.

It is not in the abstract. He said, 'This is all you have to do.' This bloke has been involved in structuring corporate entities, providing advice in terms of tax arguments with the Commissioner of State Taxation and others for a very long period of time. He knows what he is talking about. He is providing advice to say you are asking the parliament to approve a new tax regime that he says has a very significant loophole in it. It is ultimately up to the government as to whether they want to proceed and ignore the advice that he has provided, but I am not sure where the minister is coming from when he says, 'Be careful if you are going to do this because you might get yourself into trouble.'

The Hon. K.J. MAHER: I will not agitate this too long. It is our view that these measures are appropriate, given they are consistent with how the regime operates in the other jurisdictions that have adopted these measures. Certainly, if it became apparent that companies were structuring themselves and taking risks—I take the honourable member's point that there are companies that seek to structure themselves for certain reasons in certain ways—if it became apparent that this was a measure, as the honourable member has suggested from the tax lawyer's advice, then, in the future, the government would not be closed to looking at changing the provisions. But this is consistent with how this drafted elsewhere, and we believe it is appropriate in these circumstances.

The Hon. R.I. LUCAS: All we can do at this stage, given the lateness of the hour, is to prosecute the case, identify the problem and hope that maybe the dilemmas do not exist. The reason for identifying them at this stage is that the government does have the power, if it so wishes, to actually amend the legislation and resolve the problems, rather than waiting for the problems to ensue and then try to close the door after the horse has bolted. But I accept the government is not going to move on that particular issue. In paragraph 47, the tax lawyer identifies as follows:

A foreign trust is one, where the beneficial interests are fixed, or one where a beneficial interest of 50% or more of the capital of the trust property is held by one or more foreign persons. In the case of a discretionary trust, it is a foreign trust if one or more of the following is a foreign person:

a trustee;

a person who has the power to appoint under the trust;

an identified object under the trust; or

a person who takes capital of the trust in default.

The tax lawyer goes on to say:

The last three of those trust nexus provisions have the potential to create real practical issues. One is the power to appoint that is vested in a foreign person, the second is an identified object who is a foreign person and the third is persons who may take the capital of the trust in default.

The first is the power to appoint. Most discretionary trusts have a wide range of powers to appoint, including the power to appoint property, income, a new trustee and a person to be a beneficiary. Most are held by the trustee though occasionally by a third person (e.g. the power to appoint a new trustee). So, if any person with any such power is a foreign person then the trust is a foreign trust without anything more. It is suggested this should be deleted or limited to the person with the power to appoint the trustee.

My question to the minister and the ministers adviser is: does the government's advice agree with the tax lawyer when he says, 'If any person with any such power as a foreign person then the trust is a foreign trust without anything more'?

The Hon. K.J. MAHER: In short, we agree with the proposition that has been put.

The Hon. R.I. LUCAS: The tax lawyer is then saying, in his view, that should be deleted or limited to the person with the power to appoint the trustee. He is saying that the government is proposing to call a whole range of trust arrangements, which are not unlawful; they are clearly lawful trust arrangements which individuals enter into. In certain—he does not use the word but let me use the word—bizarre circumstances, all of a sudden Australian citizens operating in this sort of an arrangement, because one of these persons who has the power to appoint something under the trust—not to actually appoint a trustee; they might be appointing property or income or something like that—is a foreign person, all of a sudden this is going to be treated as a foreign person and therefore subject to the provisions of the foreign investor tax.

You could have all these Australian citizens who, in essence, are part of the trust, but because you have one person who has the power to appoint not the trustee but either property or income by something like that, and that person is a foreign person, then all of the residential investments by that particular entity of Australian citizens will be treated and subject to the foreign investor tax. Is that the government's intention?

The Hon. K.J. MAHER: My advice is yes, that is the intention, but there is a simple way to avoid that: you do not have a foreign person as a trustee or as a person who has the power to appoint the trust and then you are not captured by it.

The Hon. R.I. LUCAS: I accept what the government has just said, but it just seems a bizarre interpretation of what I think is publicly portrayed as a foreign investor tax. As I said, the public perception is that large numbers of either Chinese, Japanese, Indians, Americans, or whoever it might be, are buying up residential property and driving up prices. Yet for a whole range of normal, legal structures and entitlements, the government is intending to catch them all and describe them as foreign investors, even if overwhelmingly they are Australian citizens, but because there is one particular person who has the power to appoint one particular part of a discretionary trust, all of a sudden that whole vehicle is going to be treated as a foreign person and subject to the foreign investor tax.

The concerns have been raised by the tax lawyer; the government obviously is not intent on amending those particular provisions, and I will leave it at that. I will move on to clause 26, the foreign surcharge adjustment provisions. In paragraph 58 of the tax lawyer's advice he states—and obviously prior to that—and the minister's advisers would have seen that highlighted:

In that situation, 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 person or trust became a foreign person or foreign trust. The meaning of this provision is particularly difficult to understand, as it is effectively an exclusion or an exclusion coupled with an apportionment. It is suggested that this exclusion on an exclusion be redrafted to simplify it, if possible.

The government's response is that this was a stylistic drafting preference of parliamentary counsel. Can the government offer any other clarity, other than that it was a stylistic drafting preference? Does the government accept that there is any problem with the drafting as identified by the tax lawyer? His suggestion was, 'It is suggested that this exclusion on an exclusion be redrafted to simplify it, if possible.'

The Hon. K.J. MAHER: My advice is that our view is that it is drafted the way it is for the reason that it is clear as it is and, on this occasion, we just disagree with the tax lawyer's view about the stylistic merits of the drafting.

The Hon. R.I. LUCAS: In paragraph 60 the tax lawyer highlights another example:

A simple example is a resident taxpayer's wholly owned company acquires residential land. The resident taxpayer dies shortly after that acquisition. The shares in the company are transferred to his non resident foreign citizen nephew pursuant to the terms of his will. The proposed section 72(7) will require the payment of the surcharge in this situation. Various other similar normal situations can be described.

Can we clarify: is it the government's advice that that is correct; that in those circumstances the foreign investor surcharge will need to be paid?

The Hon. K.J. MAHER: Your question is that it will need to be paid?

The Hon. R.I. LUCAS: No, he is asserting that. I think your advisers might be saying it might not be paid.

The Hon. K.J. MAHER: My advice is that it will not need to be paid.

The Hon. R.I. LUCAS: Further on, the tax lawyer highlights in paragraph 63 of his advice:

Whilst the trust refund of the surcharge is available if a foreign trust ceases to be a foreign trust within twelve months, it does not provide for a refund of the duty if the trustee of the foreign trust distributes the land in specie to a resident beneficiary of that trust within that period. Yet the effect is the same, the residential property is acquired by a resident.

My question is: why not? Why has the government chosen to not provide a refund of the duty in those circumstances?

The Hon. K.J. MAHER: My advice is that we believe this strikes an appropriate balance. I think it is in the second reading summing-up speech this morning that it would be prudent on the trustee who was personally liable to pay the foreign owned surcharge to endeavour for the trust to cease being the foreign trust within 12 months and before it distributes the land in order to receive the refund of the foreign ownership surcharge it paid. So, it is prudent for the trust to do these things. We think it strikes the appropriate balance and it is consistent with how the regime operates in other jurisdictions that have introduced it.

The Hon. R.I. LUCAS: In paragraph 74 of the tax lawyer's advice, he raises a simple example of what might occur. In this example he says:

…an intended migrant to Australia arranges for a relative in Australia to buy a residential property as trustee for the migrant. This is likely to constitute a foreign trust. The migrant arrives within 12 months and the land is transferred to the migrant within that time. A surcharge refund will not be available on such transfer.

Do the minister's advisers agree with that interpretation of the legislation?

The Hon. K.J. MAHER: My advice is if the migrant comes to hold a permanent visa within 12 months that may cease to be a foreign trustee and then entitled to a refund.

The Hon. R.I. LUCAS: Is entitled to a refund?

The Hon. K.J. MAHER: If the trust ceases to be foreign by virtue of the person within 12 months of getting the permanent visa, then, yes, entitled to the refund is my advice.

The Hon. R.I. LUCAS: In the tax lawyer's advice paragraph 67, he concludes—and I will not read all of it—he says:

It also appears to provide a disincentive for foreign developers to aggregate land for development that does not apply to local developers. Is this intended?

The response from the government is they:

…recognise there may be some land acquisitions for development that may benefit the state where it would be appropriate to grant ex gratia relief.

So, I think the government acknowledges what the tax lawyer is saying that this may well be a disincentive for people who want to invest in South Australia. It then says:

It is proposed to publish a ruling setting out factors that will be considered in determining whether ex gratia relief…

Can I ask for an approximate time line. If the legislation passes in the next week or so, whenever that is, how soon after that might a ruling setting out the factors that might be used in determining ex gratia relief be produced?

The Hon. K.J. MAHER: I am advised that there will be consultation with the State Taxes Liaison Group, of which the taxation lawyer is a part, so will be involved in consultation about that. My advice is that it is intended that it will be done as quickly as possible, and certainly I think it is 1 January that these provisions will come into effect if this bill passes, so it is intended to have it done by then or very quickly after that date.

The Hon. R.I. LUCAS: That is the end of my prosecution of the tax lawyer's forensic advice in relation to the administration act, so I am happy to move on to my next amendment No. 6.

Schedule as amended passed.

Schedule 3.

The Hon. R.I. LUCAS: I move:

Amendment No 6 [Lucas–1]—

Page 30, lines 22 to 31—Delete Schedule 3

It is consequential on the earlier test vote that we took earlier this evening.

Suggested amendment carried; schedule negatived.

Title.

The Hon. R.I. LUCAS: I move:

Amendment No 7 [Lucas–1]—Long title—Delete 'enact legislation in relation to the 2017 State Budget so as to impose a levy on major banks operating in the State; and to'

This is consequential on the earlier test vote we took.

Suggested amendment carried; title as suggested to be amended passed.

Bill reported with suggested amendments.

Third Reading

The Hon. K.J. MAHER (Minister for Employment, Minister for Aboriginal Affairs and Reconciliation, Minister for Manufacturing and Innovation, Minister for Automotive Transformation, Minister for Science and Information Economy) (23:27): I move:

That this bill be now read a third time.

Bill read a third time and passed.