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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2009-03-05 Daily Xml
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TAXATION

Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (14:27): Does the Treasurer agree with business leaders who today described the state government's tax regime as having 'the potential to destroy a flagging economy'? Has the Treasurer undertaken modelling on the impact of Labor's land taxes on jobs, and what is the result of that modelling?

Modelling by consultants Hudson Howells in partnership with the Adelaide University's Business School, commissioned by the Property Council of South Australia, revealed that thousands of jobs would be created through tax reform. Business SA and the Motor Trade Association have echoed the Property Council's statement in response to the economic downturn that the tax regime is 'driving away investment and hurting businesses at a time when we can least afford to do so'.

According to the Commonwealth Grants Commission in South Australia, the government is levying its taxes more severely than any other state.

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (14:29): Can I answer the question by saying this. If the shadow treasurer were to be treasurer, can I give him some advice that, in the pre-budget period in the month or two that leads up to a budget, one thing is as predictable as Christmas, that is, that interest groups, business at the forefront, will argue publicly and in the media for tax cuts. It actually happens every year. What you have to do is be confident enough in your position that you can withstand that overt lobbying—

Ms CHAPMAN: On a point of order, Mr Speaker, we do not need a lecture from the Treasurer; we want an answer—

The SPEAKER: Order!

Ms CHAPMAN: —about whether he agrees with it or not.

The SPEAKER: Order! There is no point of order. The deputy leader must not use points of order to simply make debating points. If she has a point of order, she should raise the point of order and I will make a ruling.

Ms CHAPMAN: On a point of order, so far, in the answer to this question—

Members interjecting:

The SPEAKER: Order!

Ms CHAPMAN: —the Treasurer has announced what he thinks the opposition should do in the lead-up to an election. It has nothing to do with the question—

The SPEAKER: Order!

Ms CHAPMAN: —it is entirely debate.

The SPEAKER: Order! There is no point of order.

The Hon. K.O. FOLEY: No; it was a lead-up to a budget, deputy leader, not a lead-up to an election—and that was three minutes before, not five. It is normal for business to be arguing for tax cuts—and you do not have to be a rocket scientist to work out that people do not like paying taxes.

Mr Pengilly interjecting:

The SPEAKER: Order! The member for Finniss is warned.

The Hon. K.O. FOLEY: Since coming to office—up to calendar year 2010 since the day we were elected—the government has cut $3 billion in total value of taxes, largely business taxes. We have eliminated a whole raft of nuisance taxes on business and we have abolished a whole series of taxes on business transactions. We have also made two or three cuts, from memory, to payroll tax. We have lifted the threshold to $600,000—the first government to do that for many decades. We have reduced the rate. It is now down to 4.95 per cent, one of the most competitive in the nation.

Against stringent verbal opposition and undermining by members opposite, we have reformed, and are reforming, WorkCover to ensure that in as short a time as possible we will have a WorkCover scheme that is as competitive for business as any other scheme in Australia. That is the tax equation in terms of what we have delivered for business.

On land tax: I have acknowledged for some time now that we have an issue with land tax in this state. I have not walked away from that. I understand that, as a result of increasing property values in this state over the past five years or so, many companies and many individuals have gone into different thresholds and are paying more land tax. What I have been also honest and open about is my limited ability to—

Mrs Redmond interjecting:

The SPEAKER: Order! The member for Heysen is warned.

The Hon. K.O. FOLEY: —redress that issue. As the Premier quite eloquently put earlier, as well as quite eloquently speaking about WOMADelaide on the weekend—if anyone wants my tickets, see me after question time: no, I will be there, but not in cheesecloth—the global financial crisis has greatly constrained our capacity to deal with this matter. Is that just me saying that, or could someone else have said that the financial crisis and the fiscal position confronting the government has severe limitations? If members listened to the Leader of the Opposition they would think that he is advocating wholesale land tax cuts. That is the only interpretation they could put on the question.

Well, let us see what the Leader of the Opposition said only three days ago on ABC 891 morning radio when he criticised the government on land tax. The question was put to Mr Hamilton-Smith, 'What would you do? How do you fix it?' The Leader of the Opposition said:

First of all, it's going to be very, very hard. It is going to take time. We will have a Mid-Year Budget Review in January 2010. Now that we have a downturn, they ratcheted these prices up during the best of times—

I don't know what that means: I think he means that land values have gone up—

Now that we have had a downturn—

We have not increased the rate: in fact, land values have gone up—

we'll have to look at that Mid-Year Budget Review and start the long and painful process of getting this down, and it is going to be hard, and we'll have to spell that out after we've seen that Mid-Year Budget Review, but the message is when governments ratchet these taxes up at the best of times it is very hard and painful and it takes time to turn back the clock.

What he is saying is that he has no intention of cutting land tax quickly. He has no intention of cutting land tax. If he has any plan whatsoever, he will not volunteer it now. He will wait until February or March 2010, just like they did at the last election, when that rocket scientist of a shadow treasurer—admittedly, he was dumped by this leader—said, 'We're going to cut land tax by $70 million, but we can't tell you where, how, by what amount or which properties until we get into government.' It is a lazy, lazy opposition that is quick to criticise and they never ever come up with a constructive answer.

I conclude on two more points. One is that the global financial crisis, to a large extent, has both been the cause of and the result of serious property value decline in the western world. You have seen 250,000 houses repossessed per month for the last 11 months in the United States alone. You have seen property prices decrease by 20, 30, 40 per cent. You have homes in Detroit for sale for $1. In the United Kingdom, you are seeing prices plummet 20 or 30 per cent. We are now having trouble recruiting police officers out of the United Kingdom. Why—because they cannot sell their homes, even if they wanted to come to Australia. Right throughout Europe you are seeing big property crashes.

One of the great resilient elements of our economy is that we have stable house prices, stable commercial value and industrial value land and, if anything, it still continues to grow. I accept that land tax has to be dealt with at a point and at a time when we can afford it, but I would much rather have a regime and a system here that is underpinned by a strong property market that has some people—admittedly those who feel that they are having an unjust tax put on them—complaining, against what the business leaders of this state would be saying to this government if we had presided over a 20 or 30 per cent property valuation fall. The comparisons are stark and real, and this government, whilst acknowledging the problem, can only deal with it when we can afford it, which is exactly what the Leader of the Opposition said three days ago.

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