Land Tax

The Hon. F. PANGALLO (15:15): I seek leave to make a brief explanation before asking the Treasurer a question about land tax.

Leave granted.

The Hon. F. PANGALLO:The Advertiser reported today that some of the state's most influential property developers and industry groups will meet the Treasurer tomorrow to strongly reinforce their views that the government's proposed increases to land tax, already the highest in the land, could bring South Australia to a crisis point. There are widespread industry fears that this will lead to an increase in property prices as home building companies, already feeling the pinch with up to eight going bust already, could either walk away from projects and/or pass on those costs to new home owners.

Just to remind the Hon. David Ridgway, after his subtle dig at the election of the popular member for Mayo, SA-Best's Centre Alliance colleagues in federal parliament have today played an integral role in passing the Coalition's full $158 billion tax package, which will provide a significant boost to the state's economy by giving more than 700,000 South Australians a windfall—a $1,080 windfall.

Members interjecting:

The PRESIDENT: Don't respond to them, the Hon. Mr Pangallo. Through me: complete the question and ignore their jibes.

The Hon. F. PANGALLO: My question to the Treasurer is:

1. Can he advise which industry groups he is meeting tomorrow, and whether he called the meeting or those attending did?

2. Can he reveal which modelling he is using for his new land tax slug?

3. Can he also explain what modelling his department used to come up with the figure that the new taxes will generate about $40 million a year, a figure the industry believes is significantly underestimated?

4. Can he explain how such moves will not impact on housing affordability, and not drive investment and jobs interstate?

5. Is he open to renegotiating and lowering his land tax rate to an acceptable national average?

The Hon. R.I. LUCAS (Treasurer) (15:19): I am not sure if I can remember all of the questions. I made an open invitation to anyone who wanted to meet with me—as always, my door is always open, my telephone is always available for people to speak to me—and the UDIA, I believe, took up the opportunity to request a meeting and I readily agreed to that as quickly as possible. Given the degree of interest in this particular issue and other issues, such as other issues in the budget, there have been a range of groups who have asked to see me or meet with me in relation to land tax. The UDI is but one and I am meeting them—they requested the meeting.

In relation to the estimates, certainly some within the property industry are claiming that the government and Treasury in particular have underestimated that we will really collect $300 million from the proposed changes. As I have said to these particular individuals, that is highly implausible, given that our total collections from the private sector are about $380 million to $390 million or something. The estimates that are in the budget are the best estimates that the Treasury can put together in relation to the potential impact of the land tax proposed changes.

In relation to reducing the rate of land tax, I am not sure whether the honourable member was here last year for the budget; if he was, then he would have voted for a budget change. That is already legislated to reduce the top rate of land tax for properties between $1.2 million, as it was then, up to $5 million from 3.7 per cent down to 2.9 per cent. This particular proposition has a seven-year further reduction for property values above $5 million which remain at 3.7 per cent to come down to 2.9 per cent.

I have said to the industry generally, the Press Club and indeed to many others who have spoken to us that if either (a) financial circumstances change—in particular, that is obviously the GST—or, more particularly, (b) in further modelling, either from the Treasury or indeed from anyone else who wants to model the proposed changes, we are convinced that we will collect more than $40 million, the government's intention in all of this is to see a reduction in the total land tax collections from our land tax reform provisions, which is currently the case in the proposed package.

If we are convinced that we will collect more than $40 million, we will hasten the speed of the reduction of the 3.7 per cent down to 2.9 per cent; that is, instead of seven years, we might be able to do it in three years, or perhaps even more quickly than that. I have made that quite clear in relation to the government's position on it.

In terms of the national average, the national average is changing pretty quickly. In response to the same problems that we confronted—the GST—Queensland have significantly increased their top rate of land tax and they have now gone to 2.75 per cent. Queensland, because of the cut in the GST, have gone the other way: they have actually increased the top rate of land tax to 2.75 per cent, so they are getting much closer to the 2.9 per cent. We are still higher than New South Wales and Victoria, which is the point that people in the industry have raised.

I think that is the bulk of the handful of questions that the honourable member raised. If not, I am happy for him to buttonhole me after question time and I am happy to answer any remaining questions that I didn't.