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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2009-04-28 Daily Xml
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STAMP DUTIES (TAX REFORM) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 8 April 2009. Page 2330.)

Mr GRIFFITHS (Goyder) (12:00): Again, I confirm that I will be the lead speaker for the opposition, and I indicate that the opposition will be supporting the bill without amendment. I must admit that I will have to be a little more careful about any reflections I make in the chamber, because the Treasurer is quite good when it comes to identifying anything that is said that he can construe in a way that provides an advantage to himself. However, that is part of the cut and thrust of this game, I suppose.

I note that this bill was introduced on 8 April by minister Koutsantonis (the member for West Torrens) on behalf of the Treasurer. Again, a briefing was provided on very short notice, and I express my gratitude for that and also for the degree of detail that was provided to us. As I understand it, this bill is part of an acknowledgment of an issue contained in the 2005-06 budget that was presented by the Treasurer, and this bill introduces legislative amendments to phase out rental and mortgage duty as from 1 July 2009, the date upon which these amendments will commence.

On reviewing this issue as part of the briefing process and after looking at the budget papers, it is interesting to note that significant dollars are involved in the process—and the Treasurer is nodding his head in agreement. Looking at the rental duty (and I think this is across the forward estimates; the Treasurer will certainly correct me if I am wrong), I see that it is something like $39.6 million; and mortgage duty is $192.2 million. Again, the Treasurer is nodding his head in accepting those figures as being of that order. I note, though, that the stimulus for this comes from the inter-governmental agreement that was prepared prior to the implementation of the goods and services tax in July 2000.

There was heated debate in all parliaments across Australia prior to the introduction of the goods and services tax—and it was certainly an election issue the Howard government took to the Australian community in 1998—and the opinions of various people across the nation were quite divided on its introduction. However, no-one can argue that the introduction of the GST has provided great financial benefits to states such as South Australia.

I think the Treasurer himself (or it might be figures I have seen) has identified that the level of GST revenue received has been greater than expected over the seven or eight years since its introduction when it was predicted it would be something in the order of $1.9 billion—and if the figure I have quoted is incorrect, I apologise. However, substantial dollars have come through the fiscal equalisation that occurs as part of the GST, where it is not necessarily the level of GST revenue generated by the individual states but an equalisation of GST revenue across all the states. There is no doubt that that process has benefited this state, and it has provided opportunities for services to be upgraded and infrastructure projects to be undertaken.

It is important that this bill is supported. I note from the second reading explanation that the finance industry made representations recommending that the legislation be amended to enable all rental contracts in existence as at 1 July 2009 to attract the benefit arising from the abolition of rental duty. We were advised subsequently that the industry had revised its position following the receipt of more detailed advice in relation to the application of the GST which removed the need for GST adjustment notices when stamp duty rates were changed. This is an incentive; it is recognised that stamp duty in a variety of areas across the state is considered by some to be an impost. Certainly, those people who purchase a home or, indeed, business groups and investors who purchase large office buildings are very concerned about the level of stamp duty they pay.

Having purchased a residential property myself late last year, I think that stamp duty on that property was in the range of $22,000. I recall having a discussion with a person within the property area who talked about the stamp duty on a very large office building valued in the range of $100 million—so a large multi-storeyed structure—amounting to $8 million.

In highlighting that figure, he mentioned to me the fact that, because in many cases these buildings are being purchased by superannuation schemes, the cost of that stamp duty actually reduces the long-term benefit of—

The Hon. K.O. Foley: So, you're going to cut that one, are you? You're going to cut stamp duties on that.

Mr GRIFFITHS: Treasurer, I am pointing out some comments that have come through to me and putting them on the public record, that's all, and what some of the impacts of stamp duty are.

The Hon. K.O. Foley: You can afford stamp duty.

Mr GRIFFITHS: Well, like everybody else, I have had to take out a mortgage.

The Hon. K.O. Foley: You can afford it.

Mr GRIFFITHS: Like everybody else, I can hopefully meet my liabilities each month for the next 25 years, but we shall see. One can enjoy the home and like where it is but that, in addition to the purchase price, makes it difficult. So, rental duty being cut by nearly $40 million and mortgage duty being cut by $192 million across the forward estimates is actually a progressive step; I acknowledge that. There is reason for businesses and individuals within South Australia to be pleased with that, because it will reduce the cost of these sorts of transactions.

Stamp duty actually affects other areas, too. The Treasurer has no doubt had submissions put to him by the Insurance Council of Australia, which talks about stamp duty costs on insurance policies—

The Hon. K.O. Foley interjecting:

Mr GRIFFITHS: I probably do not get them as often as you, but I have also met with them. The Insurance Council of Australia talks about the fact that the stamp duty cost on insurance policies acts—in its words—as a very serious disincentive to consumers actually taking out insurance that they need or, indeed, under-insuring on the value. There is debate occurring about that. Indeed, the Insurance Council has evidence which supports its position, and it has been interesting to review that.

The Hon. K.O. Foley: Are you going to cut stamp duties on insurance now?

Mr GRIFFITHS: Treasurer, one thing I am learning is that responding to you will actually only create more problems for me, so I am going to choose to focus on what I want to talk about and not necessarily reflect upon what you might say across the chamber.

Mr Venning interjecting:

Mr GRIFFITHS: Yes. In addition to abolishing the rental and mortgage duty, the government has also taken the opportunity to extend concessional stamp duty treatment provided to exploration licences to include geothermal licences. Again, this is a step forward, and I acknowledge the effort that has been made in this regard.

Energy production is an enormous challenge for all parts of the world. Within Australia, the fact that the majority is from coal fired plants does, in itself, create the need for opportunity to actually seek any other form of energy production. I know that the member for Flinders has spoken quite often in our party room, and to me personally, about opportunities for alternative energy production within her electorate. She is quite passionate and pursues every possibility of that.

As I understand it, South Australia is well placed when it comes to geothermal energy production, but the financial challenges are quite immense in those industries, too. Again, I am not fully aware of the dollars that go into exploration and the potential use of this technology, but the chances to ensure that where—

The Hon. K.O. FOLEY: Point of order, Madam Deputy Speaker. This is all very interesting, but I just have no idea what geothermal has to do with abolishing stamp duty on mortgages and rental duties.

The DEPUTY SPEAKER: I will ask the member to explain to us very quickly what the relationship is.

Mr GRIFFITHS: I shall, by actually referring to the fact that it is in the second reading speech that the Treasurer presented to the parliament.

The Hon. K.O. Foley: Is it?

Mr GRIFFITHS: Yes. It is rather interesting that the Treasurer is calling a point of order, questioning the inclusion of the comments about that. I would have thought that the Treasurer would have supported that industry and would have made sure that he was aware of any opportunity to improve the viability of that. That shows rather flippant regard for what should be an important opportunity for the state. The Premier actually refers to it quite often as one of the future opportunities for our state.

The Hon. K.O. Foley: I didn't know what it had to do with this. I'll have to read my second reading speech.

Mr GRIFFITHS: Yes. Well, I actually referred to it in the brief contribution that I made, too. Anyway, I also note that—

The Hon. K.O. Foley: Oh, yes.

Mr GRIFFITHS: —yes—other amendments have been made, including repealing of redundant provisions in relation to cheque and lease duties, which have not operated for some time. So, there is a variety of areas that the Treasurer has chosen to pursue within this bill. Some appear to have slipped his mind, but he has an immense number of issues occupying his time—there is no doubt about that.

The stamp duty reform is a positive one. It will create the opportunity for fewer costs to be incurred by individuals and businesses and, especially in these trying times, the appropriateness of the timing of the implementation of this legislation is good. I am sure that, while other opposition members in this chamber will speak in regard to this matter, there is no doubt that we certainly support the intent of the bill and we look forward to its speedy passage through the house.

Mr PISONI (Unley) (12:10): I would like to make some comments on this bill. Our lead speaker, the member for Goyder, and our shadow finance minister covered a number of points to be made on the measure. If my understanding of the bill is correct, I think we may very well see more competition between the banks for mortgages. Those who are not happy with the bank that they are using at the moment will be able to move that mortgage from one bank to another without incurring any additional stamp duty, or people may be able to adjust their borrowings, their mortgage levels, to suit different circumstances without incurring stamp duty penalties at all.

Stamp duty is, of course, a major source of revenue for state governments. Prior to the introduction of the GST (a tax on which state governments so quickly become reliant), I think it is fair to say that the Treasurer of this state had a view, which he no longer holds but which he expressed when he was fighting for his federal Labor colleagues in the lead-up to the GST election in 1998, that GST was—and I will paraphrase—an insult to every working South Australian. I think it is fair to say that the Treasurer, the member for Hart (I think it was back then), was wrong when he said that, because we have seen tremendous growth in the economy since the introduction of the GST.

We have seen a lot of people pulled out of poverty. We have seen a decrease in the number of working poor in that time. We have seen an enormous increase in revenue to state governments because, of course, state governments receive the revenue from the GST. As a matter of fact, the Treasurer's very own budget has been saved a number of times from falling into deficit simply by GST windfalls, which have covered the annual overspending of the budget. It has been a boon for state governments.

I am pleased that with this bill we are seeing the removal of rental and mortgage duty. Stamp duty, I know, is a bone of contention for so many South Australians. Stamp duty revenues have grown enormously under the Rann government, as we know. It is interesting that we are discussing this bill today in relation to stamp duty involving mortgage and rental duty, and at this point I would like to refer to a letter in today's Advertiser by Brian Clark of West Lakes Shore, who, I am sure, had a very unpleasant surprise when he settled on the home he recently purchased. Under the heading 'Stamp duty slug'—a typical Advertiser heading to a letter—he states:

Help! Help! I've just been robbed. I've had to pay $24,500 stamp duty on a property I've just purchased.

That letter is obviously straight to the point. He was obviously shocked and surprised at the level of stamp duty on his purchase. I do not know the rates off the top of my head, but our shadow minister for finance would probably have an idea as to the value of that property for it to have achieved that stamp duty rate. He is very good with numbers.

Mr Pederick: Close to $600,000.

Mr PISONI: I have been advised that it would be close to $600,000 to attract a stamp duty of $24,500. I think the whole thing about stamp duty is that it is one of those taxes that is there. Businesses pay it often because they are buying and selling all the time. Generally, the general public only come across it on occasions such as that described by Brian Clark. Of course, it comes with mortgages as well.

With the removal of this stamp duty on mortgages, I would like to see families, particularly those who have mortgages, not to be reluctant to take their business elsewhere if they find that the bank is not delivering what they think is a fair and reasonable interest rate and is not considering their personal situation. If they have a good credit record and they are a low risk, of course, they should be rewarded.

Hopefully, this legislation will enable people to shop around without penalty. They can legitimately go to their bank and say, 'I'm not happy with the service you're giving me. If it doesn't improve, or if you don't improve this rate you are giving me on the mortgage, I'm going to take it elsewhere.'

Before 1 July, that is a bit of a hollow argument for customers to take to their banks, because the banks know that there is a very strong financial penalty in the way of stamp duty for that person to take their mortgage elsewhere. Because of that, we have not seen the competition in the banks that we deserve. We really only have the four big banks that we can turn to; of course, there are some smaller banks but, with the credit squeeze, we are seeing how difficult it is for people to borrow money, particularly businesses.

Businesses are finding it very difficult to borrow. Businesses have quite comfortably been heavily geared for a decade or so, having been told by their banks that they must reduce their exposure, despite the fact that they may very well have collateral to back up their borrowings. Banks are getting very nervous about business borrowings, and that is reflected in the higher interest rates that they are paying for loans. We have not seen anywhere near the reduction in loans for business overdrafts and borrowings that we are seeing in the mortgage market.

In the mortgage market we have seen the margins that banks are making between the Reserve Bank rate and their own high rates which, I would argue, are at historically high levels. We are down to about 3 per cent now on the Reserve Bank rate, but I know that many mortgages are somewhere between 5.5 per cent and 6 per cent. That is not bad money if you can make it.

The banks do these things because, unfortunately, there is very little competition for Australians to shop around for their mortgages. Having said that, we have a robust banking regime here in Australia, and I think it is fair to say that that has been managed very well by a combination of private sector involvement and government regulation. We have very little interference in our banks, and I think that we have had responsible government. I think that is fair to say in most instances. We have that on both sides of politics when it comes to banking.

It reminds me of a story that I heard when I was at the RSL breakfast at Unley on Saturday morning. One of my senior constituents was telling me that she was very pleased to be a supporter of the Liberal Party, but her mother had actually been a Labor member back in the very old days, and the Labor Party lost her mother when it tried to nationalise the banks. It was an interesting scenario that the distinct difference between the socialist way of thinking and the free market way of thinking had convinced somebody who was rusted onto the Labor Party to move over to voting Liberal for the rest of her life because of the threat of losing the independence of the banks from the private sector into government hands.

The stamp duty that we are seeing removed today came about because of the introduction of the GST and the arrangements that were made between state and federal government at that time for states receiving the GST revenue. There was to be an orderly reduction in some state taxes. From my point of view, having been a former small business operator and somebody who paid payroll tax, for example, it would have been nice to see the GST introduction actually have some impact on the reduction of payroll tax, perhaps by way of an increase in threshold.

I think that is the important thing, and it is what many small businesses would like to see. I know from personal experience that, in tough times, when you are faced with saving money where you can and your customers are screwing you for better prices, when you have to get more efficiency out of your staff and you may have to cut staff, it is a heartless exercise writing out that cheque every month to Revenue SA for payroll tax when you know very well that you will be going to the bank yourself to make adjustments to your own overdraft or, alternatively, you will not draw a salary yourself that particular month.

For those of us who have spent many years in small business, one of the frustrating things about state taxes is that they do not reflect your profitability or your wealth. They are paid based on the size of your payroll or the size of the property you purchased or the property you own in the case of land tax. Do not get me going on land tax! Land tax is a very big issue for people in my constituency, in particular. The Greeks and the Italians who came to this country with nothing knew the importance of owning property for their future and for their children. Many of these properties were purchased for $50,000 or $60,000 some 20 or 30 years ago when they were working seven days a week on the factory floor.

My father was never reluctant to put in many hours of overtime at GMH. As a matter of fact, he was a prolific overtime worker, and he had his very own nickname. They used to call him 'Both Days' because the foreman would come out and ask, 'Who wants to work on the weekend?' and my father would jump up and down and shout out, 'Both days! Both days for me, please,' because he knew the importance of putting money away for the future and feeding four hungry boys as they were growing up.

Mr Venning: Were they all as big as you?

Mr PISONI: All as big as me. As a matter of fact, I am not the tallest, nor am I the heaviest. At mealtimes in the Pisoni household, if somebody walked in off the street, I think they would have confused it with the family having a party because there was so much food around. My father did the shopping; he was a stickler for good meat. I can remember at one stage complaining to my mother 'not scotch fillet again', after having it for five days in a row.

I do digress; I am speaking about the mortgage duty. This does go to the heart of home ownership and people having a choice; people being responsible for their own livelihood; people being responsible for their future; and people being able to make choices. This will minimise some of the burden of moving house, whether you are a young couple who has bought a small apartment when first married and then, when going through the family planning stage, buying a family home and increasing the size of the mortgage; whether you have transferred from one end of town to the other and decide that you do not want to do all that travelling and you want to sell your house and move, and you decide to buy a slightly more expensive house and as a result increase the size of the mortgage; or whether you decide to borrow money for an extension or something along those lines.

Obviously this will help people who want to make an investment in their own home or change their living circumstances. Of course, the rental duty is another important impost which is being removed by this bill. Obviously we are supporting this and we acknowledge that this is only possible because of the introduction of the GST. We do remember the political campaign that the Labor Party ran against the GST at the time. We also remember the opportunistic campaign of the Labor Party (when in opposition), opposing every economic reform put through by the former Howard government and looking for some way to try to run a scare campaign.

It is as a result of that economic reform made by the Howard government that we are now in this strong position in this global financial crisis. We entered this financial crisis with no debt whatsoever. We had money in the bank. We had future funds set up. We had an efficient tax system through the GST. We had reductions in income tax. If you recall, when John Howard came to office, for every dollar you were earning in excess of $50,000 a year, you were paying about 48¢ in the dollar in tax. You now need to earn in excess of $150,000 before you pay the top marginal tax rate, which has now been reduced to about 44¢ or 45¢—I do not know the exact figure. I think that will be changing again on 1 July.

We have seen significant reform in tax due to the former Howard government. This parliament cannot forget that that reform was opposed on every possible occasion by the Labor Party when in opposition. The very Treasurer who we have running this state today and the Prime Minister, Mr Rudd, his own finance minister and his then shadow treasurer opposed every one of those single reforms which has put us in the strong position we are in today to face this world financial crisis head on.

Mr VENNING (Schubert) (12:29): I was enjoying that. It was a good piece of history and very relevant to the subject. I also commend the member for Goyder, our shadow minister, in relation to preparing a case on this, because it is an important matter. This bill amends the Stamp Duties Act 1923 and will implement the legislative amendments introduced as part of the 2005-06 budget and passed to phase out rental duty and mortgage duty, with 1 July 2009 being the date on which both of these duties will be abolished. The bill reflects the changes requested by industry and ensures that no rental duty is payable on rental contracts on or after 1 July 2009.

This bill has been a long time in the making. The removal of these duties was part of an intergovernmental agreement, stemming from the introduction of the goods and services tax in July 2000—some nine years ago. I had a discussion with the shadow minister a minute ago. He told the house about the amount of tax he paid on his own home, but a person buying a house paid not only tax on the house but also tax on the mortgage. It was a double dip, wasn't it? I am pleased that it is going because taxes on taxes are not on. In fact, in some instances we are taxing taxes; I think it is ridiculous.

It has taken nine years to gain this relief. The GST was supposed to reduce or even replace taxes such as this. In fact, that is the premise on which it was sold at the time. I know that former prime minister John Howard was very strong and brave in introducing a services tax such as this. We all support it and it is the proper way in which to do it. No-one objects to paying a tax as they consume something, and how much you consume determines how much tax you pay.

I understood at the time that these taxes were to go, but at that time all states had Labor governments; so there was hesitation and we still have them. I hope that over the years, as we finetune our tax regimes—and I would never say I support an increase in GST—we can be more efficient in tax collection in order to minimise or get rid of taxes such as this.

The savings to businesses indicated in the 2008-09 budget across the forward estimates as a result of abolishing stamp duty are estimated to amount to $39.6 million in relation to rental duty and $192.2 million involving mortgage duty; that is a total of $231.8 million. Given the current economic climate, business will be grateful for this relief. I will be interested to hear what the Treasurer will say about that and whether he has it up his sleeve. I am pleased that business is able to have that relief.

Stamp duty is another tax disincentive. I am also very concerned about what it costs to collect these taxes. It annoys me to pay tax and know that a fair percentage of it is spent on collecting that tax. That really gets under my skin. The bureaucracy seems to be able to get through a fair bit of money just collecting it.

Some areas of exemption in relation to taxes such as these are confusing, particularly for the average person who does not study tax law. Of course, we all pay accountants to make sure that they know the tax law because it is forever changing. The Treasurer talked earlier today about people avoiding tax. Well, tax minimisation, tax avoidance and tax advice are growth areas of the industry, and most members in this house, including the Treasurer (if he does not, I would be surprised), would take advice from a tax consultant. I take advice because I do not know the rules. As a member of parliament I have to obey the law and I am not so up with the tax law that I can get it right; and that is why I pay big bucks to consultants who are able to advise me so that I pay the correct amount of tax. I thought the Treasurer was a little naive and precious when he made that comment because, no doubt, being as astute as he says he is, he would have his own consultant.

This whole area of tax is confusing; it is not popular, and it is expensive. As the member for Unley just said, these taxes do not reflect the profitability or wealth of the people who pay them. We all have personal recollections of businesses and companies that have battled hard and got into financial difficulty—and I have a personal involvement with one at present. These sorts of taxes kill businesses. They are unable to avoid the imposts: the barriers that are put up there by government charges and taxes such as this. Every time they transact—when they buy a piece of furniture or a raw product and create something out of that—they pay tax. It all has to go on the top. It is no wonder that companies such as Pacific Brands bail out of this country and go overseas. When companies such as Bonds, Exacto and others go with it, it is a pretty sad state of affairs.

We as legislators at all times have to be mindful to try to make it easier for business to prosper, particularly now. The bottom line is often very difficult to estimate, and if it is not in the right colour—if it is continually red—you know where you are going. Bankruptcies today are all too prevalent and bankruptcy courts are extremely busy, which is pretty sad. We all know and deal with small businesses: we buy our furniture from them and undertake various transactions, but the next time you visit you notice that there are fewer employees working in these businesses.

I hope that the prediction by Access Economics of our having an unemployment rate of 9.1 per cent by 2012 is not right. On the Access Economics figures, the level of pain begins at about 8 per cent; that is the real level of pain. Any unemployment is painful, but if we reach 9.6 per cent—if these people are right—we will have to start looking at relief for business, particularly those businesses with a large number of employees. It should be easy for the Treasurer to pick them out, because he will know who they are; their receipts will tell him straight away.

I am very lucky to be in the situation in which I am and at the age I am, where I can now sit back and not experience this anxiety. However, anyone under the age of 45 or 50 will probably experience anxiety about what the future holds in a system like this, and we as legislators have to make it easier. We should all plan to one day have only one tax, a GST, which is a fair tax. If I want to buy an expensive motor car—a Rolls Royce, for example—I will pay a lot of GST.

Mr Goldsworthy: Haven't you got one?

Mr VENNING: Not yet, no. If I wanted to buy a second-hand Commodore, the GST would be a lot less. That is a fair tax; it is a tax that works. If people want to buy expensive goods, they will pay: if they want to buy the economy version, it will be minimised. That is fair. The problem is with the sorts of businesses that are transacting to make a living; those that are buying raw product and making a product and then on-selling it.

That is how I see it—and in business I have been reasonably successful. Over the years, as a farmer, we had tax exemptions in this area. That was also confusing, because some goods were exempt and some were not. At least we got rid of all that. Some of those products are now exempt from GST—of course, you have to go through all the hassle of getting it back, but it does not matter.

I think the GST is a good tax and I believe that it is now universally supported. I understand that all state and federal Labor governments in Australia now support it. I wish to pay the highest accolade to the Hon. John Howard for having the guts and the bravery to bring it in. Introducing a tax like that was never going to be popular, and I think we ought to be eternally grateful to him for doing so, because we are now able to have a very honest and straight tax regime.

I believe that the old income tax situation was not equitable in the least. It had pitfalls right through it. Our tax accountants could drive a truck through it, and a lot of us benefited over many years by having a very loose, inefficient and costly national taxation scheme. I think the state will fix that with the GST.

As I said, this tax does not reflect profitability and wealth—the same as land tax. Hopefully, in the next budget (which is a few weeks away), the Treasurer will address this tax and also, indeed, land tax. He has got to, because our land tax regime is way out of kilter with all the other states. I would be absolutely shocked and amazed if he does not address this. I know he says that he has not got much up his sleeve. We understand that he probably has not got much up his sleeve, but he has just got to trim his cloth in other areas. His priorities have to be such because this land tax is an iniquitous tax. Some people are living in family homes of a high value and just cannot afford that tax

Also, I believe that our state pays the highest levels of stamp duty in Australia. The Treasurer will tell me whether I am wrong. I am pleased that the mortgages are now exempt, as I said earlier. Should this tax be harmonised with the other states, as we have just done with payroll tax? If we could do that, again, it would make it a lot simpler for everyone. Like payroll tax, I believe this one should also be abolished.

The Hon. K.O. Foley interjecting:

Mr VENNING: It is, but altogether. Land tax should be gone, finished.

The Hon. K.O. Foley: All land tax should go?

Mr VENNING: I think so. In a glorified world—

The Hon. K.O. Foley interjecting:

Mr VENNING: I said 'should' not 'will'.

The Hon. K.O. Foley interjecting:

Mr VENNING: Rubbish! It is purely a desire, but whether—

The Hon. K.O. Foley interjecting:

Mr VENNING: Land tax has been with us for many years. Now that we have the GST, hopefully, governments in the future one day will be able to phase them out. That is all I can say. Do not put words in my mouth. I did not say that we would get rid of it when we got—

The Hon. K.O. Foley interjecting:

Mr VENNING: Anyway, I commend the shadow minister, and I do commend the member for Unley on a good speech. Certainly, I enjoyed that and I think that people will read that with some interest. We support the bill.

Dr McFETRIDGE (Morphett) (12:41): I will not keep the house long. The Liberal Party does support this bill, and I am sure that members before me have spoken quite comprehensively on this. There are just a few points I would like to make. Unfortunately, I was with minister Hill for a briefing on some health matters before and I could not speak on the Payroll Tax Bill. Before I start on this piece of legislation, can I say that payroll tax has come down in South Australia, but it has a way to go yet. It always seemed to me to be a disincentive to employ, but, unfortunately, like stamp duties and land tax, the revenue has to come from somewhere and it is a real balancing act.

When you have the financial economic crisis around the world that we are seeing at the moment and you see governments overseas, such as the Obama government in America and the Brown Government in the UK, going to the extent of not only massive stimulation packages but also going into what they are quaintly calling 'quantitative easing' (which is just another name for printing money), I start to get scared and worried about what is going on with the finances around the world. I just hope that the Rudd government does not indulge in 'quantitative easing'.

We have some easing here. We have some easing on the pressures on the people of South Australia in terms of the reductions in rental and mortgage duty. It has been a long time coming. It has been on the books for a while. It is good to see that this is actually happening. The $39.6 million for rental duty and the $192.2 million for mortgage duty will be another hole in the budget, which means that the Treasurer will have to try to juggle figures around to overcome it. Each year I wish the Treasurer well with his budgets and on his new tie, because I know that he does try to do what he can with the money. The sad part is that we have had the rivers of gold in the past seven years but now it is really tough.

I am really looking forward to seeing how the Treasurer does perform. This reduction in income to the state is significant, but it is overdue. It was foreseen, it is not unexpected and so should well and truly be covered. I do have one question for the Treasurer: is there a GST component in this? I do not know. The one issue I have had with the GST is that, in many cases, you are paying a tax on a tax. I do not think that should ever be the case, whether it is on petrol or with respect to the other cases. Other than that, the GST, as a broad-based tax, is now welcomed by the Labor Party. It is a good tax. We are going to see massive reductions in it. I am pleased that this bill is reducing the tax burden on the people of South Australia. I commend the bill to the house.

Mr PEDERICK (Hammond) (12:45): I also rise in support of this bill and note the contributions of my fellow members and also the briefing we had from the member for Goyder and his comments in the house. I also note the excellent contributions by the members for Unley, Schubert and Morphett. This bill was introduced into the house on Wednesday 8 April 2009 by the so-called Hon. Tom Koutsantonis when he introduced—

An honourable member: Is he still here? Where is he?

Mr PEDERICK: —he drove in pretty quickly—the Stamp Duties (Tax Reform) Amendment Bill 2009, on behalf of the Treasurer (Hon. Kevin Foley), to amend the Stamp Duties Act 1923. During consultation in relation to this bill, as part of the 2005-06 budget, legislative amendments were introduced, and these were cast to phase out rental and mortgage duties, with 1 July 2009 being the date on which both these duties are to be abolished.

There has also been representation by the finance industry, and these representations have been considered during the process, with the industry position being revised following the receipt of more detailed advice on the application of GST on adjustment notices when stamp duty rates changed. As such, the current bill reflects the changes requested by industry and ensures that no rental duty is payable on rental contracts on or after 1 July 2009. We were told at our briefing that it is important to recognise that the removal of these duty costs was part of the intergovernmental agreement stemming from the introduction of the goods and services tax in July 2000 and not any sign of generosity by the Treasurer of this Labor government.

My own comment to this advice was that we have certainly been a long time waiting for these changes to come through. I was of the belief when the GST came in that most, if not all, stamp duties were to be abolished, so we have a long way to go. When my wife and I purchased a property three years ago, the amount of stamp duty paid was horrendous, and we have had massive GST increases—well above what was budgeted for—yet we still seem to pay stamp duty in many and varied ways.

The 2008-09 budget indicates that savings to business, and thus reduced revenue to government, across the forward estimates as a result of abolishing these stamp duties are estimated to be, in the case of rental duty, $39.6 million and, in the case of mortgage duty, $192.2 million.

In addition to abolishing both of these duties, the government has also taken the opportunity to extend the concessional stamp duty treatment provided to exploration licences to include geothermal licences, and that is a very good part of this legislation. As the new shadow minister for mines, it is heartening to see something like that coming through, and geothermal power, which could produce many hundreds, if not thousands, of years of power for this state if we can harness it, will be a great boost for the state and the economy.

We have only just come out of a summer with a hot spell during which 72 people passed away. I have not heard whether all deaths were attributed to the hot spell, but the morgues were full or operating at full capacity during that period. The advent of better assistance to renewable energy and any assistance that can be given to people in the geothermal field is to be commended. I was at the site at Innamincka about three years ago and a lot of work was going up on there, apart from geothermal work at Torrens Island and in the Flinders Ranges. I hope we get fast tracked outcomes, with companies being able to invest more money with pressure on harnessing this energy several kilometres down so that we can get better energy production for this state.

Other minor amendments have been included in the bill to repeal the provisions in relation to cheque duty and lease duty, which have not operated for some time and should be enacted as part of the bill. I looked at some of the taxes gathered by government and land tax revenue collected back in 1997-98 was $143 million: in this budget, 2008-09, it is predicted to be $511 million—a massive increase. It is threefold the amount of 10 years ago, yet the Treasurer cannot get his hands on enough land tax. When he goes on radio and people say, 'How do I pay my land tax bill, which has suddenly tripled?', he says, 'You are wealthy people, you can sell your asset.' Who will own the assets? No-one is wealthy if they own an asset. It is like owning a farm: a farm might be worth a lot of money, but it is only worth what you can make out of the day-to-day operations, like any other business, and it is only worth money with the capital realised when you sell it.

You cannot have all sellers out in the field just because they do not want to pay or have no capacity to pay land tax. People who have emigrated to this country are being crucified. They have come out in the past 50 or 60 years and bought property as an investment to keep their family and now they find that all the work they have done has come to nought because they have to realise it, otherwise they will be crippled with bills. These people believe in bricks and mortar and in industry and do not believe in other assets, like perhaps investing in the share market.

The Hon. K.O. Foley: This is not about land tax. Will you wind up or I will take a point of order?

Mr PEDERICK: It is about tax in general. The imposition of land tax and stamp duties in relation to purchasing property is a massive hit on investment. I note there were around 66,000 land taxpayers in 1999-2000.

The Hon. K.O. FOLEY: Madam Deputy Speaker, this is not a bill about land tax but is specifically aimed at abolishing mortgage rental duties. I ask that the speaker be contained within the ambit of the bill.

The DEPUTY SPEAKER: The member is straying quite considerably.

The Hon. K.O. Foley interjecting:

Mr PEDERICK: No problem: I am happy to stay here all day Treasurer—all day, no problem at all.

The Hon. K.O. Foley interjecting:

The DEPUTY SPEAKER: Order! Discussion across the chamber is out of order. The member for Hammond will focus on the bill please.

The Hon. K.O. Foley interjecting:

The DEPUTY SPEAKER: Order, Treasurer!

Mr PEDERICK: When I need advice from across the floor I will ask for it. As I said earlier, GST receipts have come in and given this state government a massive influx of funds, which have been fought hard against on a state and federal level, yet they still want massive tax grabs, including stamp duty, and much of it has been frittered away in the seven best years of earning capacity that this state has had. With those few words, I support the bill.

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (12:55): The member talked about money being frittered away, but what did this government do with the GST windfall? It actually eliminated all state budget debt—$1.2 billion or $1.5 billion, from memory—that was left to us by the former government. Since it came into office this government has cut taxes out to the year 2010 by $2 billion; it has employed thousands more teachers, doctors, nurses and service providers in the public sector. That is what this government has done with the GST.

They are a bloody greedy lot these Liberals, they fair dinkum are. Let us look at their contribution today about tax: it has all been about their own greed. The shadow minister for finance got up and his beef was about the amount of stamp duty he had to pay on a house mortgage. He is earning $130,000 a year and he complains about the stamp duty he had to pay on his house. It was not about any ordinary South Australian; it was about what it meant to him. Then the member for Unley got up and talked about the impact on him of the tax impost, about how it affected the way he was able to do business.

Of course, we then had the member for Schubert, who is always good for a 'foot in the mouth' moment. What did he say? The member for Schubert actually said that, with the tax he has had to pay, he has not been able to afford to buy a Rolls Royce—yet. Well, I hope the media were listening, because I was gobsmacked with what the member for Schubert then said; he said words to the effect that under the old system you could get a tax accountant who could drive a truck through the tax legislation, and it benefitted everyone. So, someone who has been in this parliament for 20 years, a very wealthy individual—and I respect that—just said that under the old tax system he and his tax accountants drove a truck through the tax law for his benefit. As I said, the Liberal Party of this state is all about tax minimisation.

The member for Hammond then got on his feet, and, of course, it was all about him; it was all about the cost of the stamp duty that he had to pay when it came to his home. All we have heard from members opposite, in a 45 minute spray, is about how taxes have affected the wealthy on the Liberal side of politics and stopped them from being even more wealthy.

However, do we all know what taxes pay for? Taxes pay for services in working class people's electorates. They pay for doctors, for nurses, for ambulance drivers and for police to keep them safe, and those of us who earn more should pay more. Where is the Liberal Party's policy going? The member says on the one hand that a building owner paying $8 million stamp duty on the purchase of a major building is paying too much, and therefore he will cut stamp duty at the higher end.

The member for Unley—I think he is the shadow small business minister—was going on about the indecent rate of payroll tax, stamp duties, blah, blah, blah. I assume there will be a wholesale cut right across the board by the Liberal Party in stamp duty, payroll tax and land tax as part of its election strategy. Well, it needs to come out now and say how it will pay for it—itemise dollar for dollar how it will pay for it—because it is disingenuous. It is a fraud on the taxpayers of this state to come out and give the impression that you will cut a whole suite of taxes yet not have the gumption or the ability to actually identify which tax and by how much. I appreciate the support of the opposition.

Bill read a second time and taken through its remaining stages.


[Sitting suspended from 13:00 to 14:00]


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