Land Tax

The Hon. C.M. SCRIVEN (14:31): Further supplementary, given that won't be ruled out: does the Treasurer agree that the government's land tax aggregation measures will result in many small business tenants paying higher rents?

The Hon. R.I. LUCAS (Treasurer) (14:31): It is possible that there may well be some impact on rents in some sections of the market. What that final impact will be will depend on the net result of the impact of the land tax package which is being introduced. There are two or three scenarios which are being promoted by opponents to the government's land tax reform package. One is that everyone will get out of investment properties and sell up and move interstate. Others are saying they will pass it through in relation to higher rent increases.

It will really depend ultimately on the final shape and nature of the government's tax reform proposal and then secondly which one of those scenarios ultimately proves to be the case. The realistic assessment would be it may well be a combination of both; that is, clearly not everyone is going to, as some are suggesting, sell up their investment properties and get out of the investment market, but realistically some may well reduce their property holdings and move into other forms of investment.

That then depends on who purchases the investment properties. If more home owners purchase those particular investment properties, the government has a housing stimulus reform package which provides interest-free loans for a small number of low income households, and with the changes that are occurring at the federal level, with much lower interest rates and income tax reductions, there may well be a more productive environment for investment.

I note that the independent analysis by BIS Oxford Economics, respected economic commentators, on the property market in South Australia, released after the state budget, forecasts moderately strong property growth in South Australia—and stronger than in some of the other states: 11 per cent property growth in terms of the investment market for property in South Australia.

So there are lots of predictions as to what might be the impacts. No-one at this stage can definitively say what they will be. Ultimately, it will be what is the final shape and nature of the government's reform package, what the parliament's decision is in relation to the reform package, and then what the impacts will be.