Matters of Interest

Land Tax

The Hon. F. PANGALLO (15:22): Today, I will shine a bright light on the biggest broken promise so far of the infant Marshall government: fixing the land tax mess. Until the Treasurer handed down his second budget a few weeks ago, aspirational South Australians, big and small, who worked hard to try to secure their futures and those of their families through property investment had no clue of the shockwave coming their way.

Yet, seven days before this government was elected, leader Steven Marshall pledged to increase the tax-free threshold while dropping the top marginal rate from 3.7 per cent to 2.9 per cent for holdings valued between $1 million and $5 million, effectively giving a tax cut to around 3,200 people. How good was that? Now some quotes from that statement are coming back to haunt the Premier and his Treasurer:

These amendments will assist small to medium businesses operating out of their own premises, as well as benefiting hardworking people who have investments in residential property which have appreciated over time and those whose superannuation includes property holdings…We need to even out the playing field and incentivise people to invest in South Australia.

There was nothing in there about the aggregation of their properties, many of which are split into trusts for legitimate reasons. As for lowering the highest rate in the country, it was going to occur at a snail's pace over seven years, and even then it would not come near the national average. Compounding that, however, the Valuer-General is rolling out revaluations of properties, which have already led to substantial increases in Unley council rates.

This is creating the perfect storm which will mercilessly batter business confidence and investment, as well as hurt the retirement hopes of so many who played by the rules, yet the Treasurer demonises them as tax cheats. This is risky territory for a government still on L-plates because they have turned on the very people, big and small, who swallowed their pre-election bull and put him in office.

However, it gets even more perilous because it has created dissent within their own ranks. Several members have voiced to me their extreme displeasure at what is going on. The hostility towards the captain and his first mate in the upper house is palpable. They think it will die down but I have been around long enough to spot a crisis when I see one, although I cannot say I have experienced one as early into a new government's first term as this one. As history often proves, it only takes one contentious issue before dissatisfaction builds to outright mutiny.

Property Council polling in marginal Liberal-held seats also made for disquiet, even though the Treasurer brushes it aside as the most obvious push polling he has seen in 30 years—just like the polling the Liberals trotted out about shop trading hours, I suppose, or their own bungled robocalls. The Treasurer only needs to study Bill Shorten's Voyage of the Damned to get a clearer picture of the iceberg where his ship is heading. Shorten wanted to take—like negative gearing and franking credits—from retirees, while Scott Morrison gave stuff, like tax cuts.

The land tax regime is Mr Lucas' reiteration of Shorten's retiree tax debacle and, like Shorten, he is dabbling in class warfare. His Treasury buddies have sold him the same pup they could not convince Labor to adopt. He keeps telling us they are still tinkering with it so we will not know what it will look like until the legislation lobs. That is not satisfactory, Mr President, because the lack of any detail has spooked many. Why would you now want to buy a block of flats in Clovelly Park, old Housing Trust houses in Parafield Gardens or shops in Salisbury when you can put that money, at record low interest rates, into the Australian share market, which this week beat the all-time high it set 12 years ago.

Everyone, from the state's top economists to our most prominent and successful business brains, is telling Mr Lucas and Mr Marshall, 'You've got it wrong; listen to what we're saying.' But egos have got in the way. Pat Gerace of the Urban Development Institute of Australia puts it into proper perspective in calling for sophisticated tax reform. I have also urged the Premier to refer it to his new Productivity Commission or a select committee, but he has flatly rejected it. South Australians only want a fair go. I am certain that they would support tax measures if the goalposts were not abruptly shifted. Thank you.