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LAND TAX (MISCELLANEOUS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 11 May 2010.)

The Hon. I.F. EVANS (Davenport) (16:23): I am the lead speaker for the opposition in relation to this bill. The opposition will be supporting this bill because, essentially, this bill implements the Liberal Party policy from the last state election.

The Hon. K.O. Foley interjecting:

The Hon. I.F. EVANS: And the Treasurer well knows it. It is a good bill because it was a good policy. After eight years of plundering South Australian land owners through the nation's worst land tax regime, great credit goes to the former shadow treasurer and the former leader for holding a tax summit in 2008. We held the tax summit. There was a great debate about a whole range of tax issues, and the land tax regime in South Australia was the subject of much discussion at that particular summit.

We are here today to support this particular bill because, ultimately, it was the Liberal Party's policy that delivered this bill to the parliament. It was the political pressure put on by various opposition members, whether it be the member for Morialta, the member for Norwood or the member for Adelaide, or the candidate for Hartley, who ran public meetings, or the Hon. John Darley in another place who ran public meetings, bringing to the attention of the government the outrageous unfairness of the land tax regime as it stands. We welcome the fact—

The Hon. K.O. Foley interjecting:

The Hon. I.F. EVANS: Well, the Treasurer collected a lot more money through the land tax provisions, and he will know the cumulative nature of the land tax reforms that have occurred over time had some quite devastating impacts on business. The reality is that there was something like 69,000 people paying land tax previously, and it increased to 188,000 people, or entities, paying land tax during the last financial year, or last year.

The Treasurer may try to make the cheap political point about whether this existed under previous Liberal regimes. The reality is that three times as many entities were paying land tax under the Rann government's land tax arrangements than previously. The only reason the government moved was because of political pressure: it has had eight years to make these changes and did not. It was only through the great work of candidates, and now members of parliament in the seats of Adelaide, Norwood and Morialta, and Joe Scalzi as a candidate in Hartley, a whole range of people who went out and applied political pressure to this particular issue, and the government caved in.

The government did not want to cave in. It was only in June 2009 that the Treasurer was crying poor and telling the South Australian public, 'Our budget is running deficits. We can't possibly afford to reform the land tax regime in South Australia.' That was the intent of the quote by the Treasurer in June 2009. Well, lo and behold, we are still running budget deficits and, lo and behold, we now have the capacity to change the land tax regime.

We announced our policy in October 2009, and I think it was only a couple of months later, in the lead-up to the federal election, as part of the Mid-Year Budget Review, if my memory serves me right, that the Rann government came out and said, 'Lo and behold, even though we are still running'—

Mr Pederick: 28 January.

The Hon. I.F. EVANS: On 28 January they announced this, thank you, member for Hammond—'Lo and behold, even though we are still running budget deficits it now won't be irresponsible to change the land tax regime because the Labor Party are changing it and not the Liberal Party proposing it.'

So, let the record be crystal clear in the Hansard as to exactly what happened here: the Rann government was totally opposed to land tax reform in this form for eight years. There was political pressure applied by the Liberal Party across a whole range of suburbs and electorates right across the state—great work by the Hon. John Darley from another place and the Land Tax Reform Group. The Labor Party was telling the South Australian public, 'We are running budget deficits, we can't afford to reform land tax.' The Liberal Party, having held its tax summit, announces a land tax policy, and three months later, lo and behold, the government has found the mechanism to change its land tax regime that is reflected in this particular bill.

The Treasurer will quite rightly get up and say, 'Bad luck. We're in government and we'll implement the policy.'

The Hon. K.O. Foley interjecting:

The Hon. I.F. EVANS: Yes, that is right; I have seen the script. You are starting to sound like Stephen Baker; when he was treasurer he used to say that. That is the Treasurer's right to say that because governments ultimately get to implement their policies—well, most of them, at least. The reality is that this policy, this legislation, has been delivered because of the good work of the Liberal Party, the good work of the former leader, the good work of the former treasurer, who applied the political blowtorch to the government and got it to move.

Even after these changes the government tells us that there are about 74,500 to 75,000 entitles who will now not pay land tax under this regime. That means that there will be about 120,000 entities paying land tax. When the Liberal Party last left government there was only 66,000, so it is still double the amount. That is the reality. There will still be double the number of entities paying land tax under this regime.

We are pleased that the government adopted our policy of exempting aged care facilities and not-for-profit organisations providing living accommodation, medical treatment and nursing. All those groups become eligible for land tax exemptions. The threshold is going to be increased from $110,000 to $300,000 under which there will be zero tax paid. Importantly—and I think this is a good initiative—there is the indexing of those thresholds annually so that they rise—

The Hon. K.O. FOLEY: That was not a part of your promise.

The Hon. I.F. EVANS: Of course it was. I announced it at a public meeting at Blackwood late in the campaign. Weren't you there? Of course it was part of our promise—to the best of my memory. I give credit to the Treasurer: that is a good initiative. I would encourage him to look at doing it to other thresholds in the taxation system.

The way the indexing will work is that it is based on the average of the property values across the sector. There is a weighting among residential, commercial and industrial sectors. I do have a two page brief given to me by the Treasurer's office in regard to how this index is calculated. I do not intend to read it into Hansard, as it has some rather complicated mathematical formulas. I asked the Clerk whether I could insert it as a statistical record, and unfortunately I am unable to do that, so I will forward it to all members of the non-government parties so that they are crystal clear as to how the property values are going to be calculated. It is important that we have a clear understanding of how that will happen.

Importantly, under this legislation, the threshold cannot drop. The thresholds are adjusted by a formula based on property values which, as I said, are weighted based on sales, modelled roughly on an existing New South Wales formula. If property values drop for some reason, then the threshold will remain high, which means fewer people will pay land tax. Then, I understand, what will happen is that threshold will be held at that level until the revenue lost due to a downturn in property values has been recovered following an upturn in property values. That was certainly my understanding of the briefing. If that is not correct, the Treasurer can correct me.

I could speak for a long time about land tax and these changes. I know that others who were more involved in the formulation of this policy want to have their say, and I think that is fair. I just want to say, again: congratulations to those on my side of the house for their good work on this matter. The member for Waite has some amendments which the Liberal Party is supporting. We welcome those amendments and congratulate him on them. We congratulate the government on adopting our policy even though it took it eight years to do so.

Mr HAMILTON-SMITH (Waite) (16:33): I rise to support the bill and to commend my friend the member for Davenport for his remarks with which I wholeheartedly agree. This problem of land tax is one that perplexes the entire nation but which perplexes South Australia in particular. The opposition, as the member for Davenport has observed, was quick to move on this in the last term of parliament. The house will recall we held a tax summit in April 2008. A group of about 100 people assembled right here in this chamber. Various speakers were asked to address the summit. Opposition MPs attended in abundance, and we consulted and listened to people. It was interesting what they had to say, particularly because at that time our land tax regime was clearly the most punitive and onerous in the nation.

Land tax is a very peculiar tax. It falls only on holders of land at the time. The present value of tax liabilities is incorporated into the property value so that it is similar to a lump sum tax and efficient in that particular sense. It allows the community to share in increases in wealth resulting from increasing value of land, which in turn may result directly from public investment in surrounding infrastructure.

As our summit revealed, however, there are a number of weaknesses with the tax, some of which are addressed by this bill but others which are not. It is likely that the land tax on commercial land is less efficient than land tax on residential land, reflecting the more pervasive distorting effects on business cost structures. This tax is a real burden to businesses, particularly businesses that are competing for business in South Australia with companies based interstate that do not have to work with such an onerous structure. We have had the case of plant, equipment and contractors employed on the Northern Expressway and the desalination plant coming from interstate where, in some cases, if they come from states like Queensland, they are paying no land tax at all up to a value of $500,000 and far lower rates in most other states than us at almost every category level. This enables them to come over and knock off our people—our civil contractors—when tendering for jobs. That is just one example of how this tax hurts South Australian businesses and South Australian families.

The average efficiency in comparison with other states' taxes is variable. Efficiency is diminished with land tax as a result of exemptions provided for residential and primary production land, but in some states the narrowing of the base has been associated with steeply progressive tax rates, and I think South Australia certainly fits that description. Arguably, a proportional rate structure would be more efficient, and I commend the government for introducing these changes to that structure but, as the member for Davenport has observed, we would not be here discussing this bill today had it not been for the opposition taking up the cudgel on behalf of South Australian families.

As we know, revenue from this tax is volatile, reflecting asset price fluctuations, particularly in commercial property but also residential. It also carries with it a high administrative burden for collection, as land data (particularly for valuation use) is required, and it is an expensive tax to raise in that regard. The system is based on modelled valuations, not market values, and these valuations may be significantly different from market values in some markets and similar in others. That is a particular issue.

People often feel that they are paying a land tax burden that is above what they think their property is actually worth, and that really hurts. It hurts shop owners. It hurts professionals who may be operating from a premises upon which they are required to pay tax. There is one group in the community that I have particular empathy for on this tax, and that is retirees, particularly from migrant communities, who came out here in the fifties and sixties when the regime was different and, not accustomed to a system of superannuation, chose over a period of time to acquire the odd property as a form of superannuation.

They might have acquired one property in the sixties, another property in the seventies, another property in the eighties. At the time those properties may not have been very expensive at all, but in time they have grown in value. I have extended family who are in this position, being married to a Greek. They are 78, 80 years old, they have a couple of investment properties, they rely on that investment property for their income, and they are suddenly finding themselves burdened with an unsustainable land tax bill that is coming out of what is, in effect, their pension, and this really hurts. I know it hurts families and communities in the seat of Norwood.

Mr Marshall: Absolutely.

Mr HAMILTON-SMITH: The member for Norwood has been very vocal on this. I know it hurts families and communities in the seat of Adelaide. I know this because my mother-in-law lives there and I know she has been onto the member for Adelaide along with her friends. I know it affects the seat of Morialta and I am sure it also affects the seats of Chaffey, Unley, Davenport, Waite and Hammond. We are all here and we all have families in this situation where this is their retirement and it is being taxed, and it is not being taxed in the same way that other superannuation assets are taxed.

In that regard, it would be interesting for the government to consider some way of providing relief for families that fit this category. I am not sure how we would apply that. I am not sure if there would be an age criterion or if there might be some other avenue. It is more than likely that such a review would need to form part of a review of federal-state financial relations, because it would need to be changed in the context of superannuation taxes, which are within the federal jurisdiction. But somehow or other we need to make sure that people with one superannuation investment (that being property) are not penalised alongside others with different superannuation investments.

A number of people will be pleased with this bill. I know from our tax summit and from discussions from 2008 right through to the current day that the Property Council was arguing for a lift in this threshold along the lines that are contained in the bill. I know Business SA made strong representations at our tax summit that this threshold should be raised. I know members of the other place, particularly the Hon. John Darley, made similar recommendations. The Real Estate Institute of South Australia argued strongly that the thresholds should be raised.

The Productivity Commission advocated broadening the land tax base to include principal place of residence, and I can tell you that is something that I would not be supporting. At the tax summit it was consistently raised as a point that the thresholds needed to be raised to better reflect the market today, and this bill does that as a result of the efforts of the opposition in, if you like, pushing the government to this point.

This is an example of how an opposition can achieve results from opposition, even though you are stuck in opposition. By arguing a case, by pursuing it with vision and determination, you can push the government through the force of your argument and the way in which you put it to make some sensible decisions. I think this is a sensible decision, and I commend the government for bringing it forward. I think it is an appropriate measure.

It will still leave us, though, at a competitive disadvantage compared to other states, and I think we do need to go further in a new wave of reforms. I note that the Treasurer, from his earlier remarks, is focused on Victoria, but we really should be no further north than the median land tax burden across the nation. I really think we should be striking some sort of an equilibrium where we are in the middle of the pack at each category and level of land tax payable. It should be no more of an advantage or a disadvantage to set up business here in South Australia and to operate from here because of the land tax regime. At the moment it is, and even after this bill is passed it still will be. So we need to find a way to head in the long term to a more sustainable future on land tax rates.

I will speak during the committee stage of the bill on a particular amendment that I propose to move, so I will not go into detail on that now in the second reading, but I will thank in anticipation the government and the minister for being prepared to listen to that amendment. I will talk more about it in committee. It has to do with this situation of land tax payable to families, where their house is destroyed through no fault of theirs, by fire, earthquake, flood or impact, and a loophole or a weakness in the legislation whereby such families can have to pay land tax while they are rebuilding their home. As I said, I will not go into that in detail now because I will address it in committee.

I conclude my remarks by again commending the government for bringing this bill forward. You could have toughed it out. You could have continued to defy the opposition and the public on this and you could have continued to say no. But you were struck by an irresistible force: the state Liberals and the people of South Australia, who were determined to bring land tax reform to this state, and we have succeeded. It is an example, I think, of a commonsense outcome that will benefit a lot of families and really make a difference to the lives of a lot of people, particularly those on low to medium incomes who are going to most benefit from the changes contained in the bill. I commend the bill to the house.

Mr GARDNER (Morialta) (16:45): I indicate to the house that I will be supporting this bill and I would like to congratulate the architects of this piece of legislation all of whom, of course, sit on this side of the chamber because last year it was the Liberal Party that was arguing for land tax reform. It was the Liberal Party that was arguing for land tax reform in 2008 when, I remember, the Treasurer, when asked about it, argued that people with valuable properties whose land tax bills were going up should be enjoying the fact that their houses had had a large capital gain. He made comments in the house in November 2008 to that effect and at other times in the media.

In April 2009 I attended a meeting along with about a thousand other people and a number of Liberal candidates. The member for Norwood was there and the member for Adelaide was there. I have a photo of the member of Adelaide at that function in front of me. The then leader of the opposition was there as was the current one. In fact the Liberal Party team was represented very well along with people like Joe Scalzi who worked very hard to ensure—

Mr Marshall: Was anybody from the government there?

Mr GARDNER: I will get to that. The member for Norwood asks if anyone from the government was there and I will get to that. Joe Scalzi was the Liberal candidate for Hartley and worked very hard along with the member for Norwood, the member for Adelaide and me to ensure that the Liberal Party policy on land tax was going to be taken to the election.

We wanted it to be announced early because we wanted this to be a bipartisan thing. We wanted the Labor Party to come on board because at the end of the day, more important than the political issue of who is going to take the points on land tax is that the land tax reforms are delivered for the people of South Australia, for businesses in South Australia, for landlords in South Australia, for the people who buy the products from those businesses and the residents of those rental properties. In this bill we see the culmination of that from the government's point of view.

However, the member for Norwood asks whether there was anyone from the government at that meeting. There was a cardboard cut-out of the Treasurer there and I subsequently found out that it was one of my constituents who threw a shoe at it. I think it is very poor behaviour but it summed up the anger of a thousand people at the Norwood Town Hall that the Treasurer, when told by John Darley from the other place that this meeting would be taking place, had no interest in attending or sending a representative to argue the Labor Party's case: that land tax reform was unnecessary and that people should be happy about the capital gains on their houses.

There was absolutely no consideration of those people, constituents in Morialta and in seats like Norwood and Adelaide where, as a result of the rules of aggregation, land tax bills increased from $12,000 a year to over $100,000 a year. People who had based their retirement incomes on the idea that they are going to have an income from their rental properties had those entire rental incomes taken up with tax bills because this government changed the rules on them.

I know it is not just Morialta, Norwood and Adelaide and other seats held by Liberal members where this is being heard loud and clear because, a little bit after the land tax forum organised by John Darley, I attended a meeting of the Campbelltown Residents and Ratepayers Association in the middle of last year which was also attended by the member for Hartley.

I was very glad to see the member for Hartley there. I thought that I would have a good old stoush with her, and that would be very good for the Liberal Party because I would be able to talk about how the Liberal Party wanted to reform land tax. I assumed that the member for Hartley would defend the government's position. It was very interesting to see that she did not. In fact, she criticised the Liberal Party's position on land tax—that we wanted to raise the thresholds—as not going far enough because it did not attack the real cause of the problem which was the aggregation introduced by this government.

I note that the member for Hartley is not here in this chamber to discuss land tax and this very important bill, but at that meeting, she was only too happy to say that she was arguing within the government for land tax reform and, if that is the case, I commend her for it. However, all I can say is that she was a part of the government that saw bracket creep effectively increase land tax revenues by 292 per cent and the number of people paying land tax increase from 69,000 to 188,000.

These reforms address some of that bracket creep but it does not even bring us back to the point that we were at before the Labor Party took power in South Australia. This is of great concern to landlords and to small businesses. Especially importantly, it is of great concern to people with low incomes living in rental accommodation whose rents are definitely always going to be affected by the amount of tax that their landlords have to pay. This is of great concern to anyone who wants to buy products from the small businesses operating out of these rental accommodations whose costs are higher. We know that the end cost will always be passed on to the consumer.

This brings us then to the Liberal Party's policy which has mostly been adopted by the Labor Party in this legislation. However, there is one part of the Liberal Party's policy that is contained in the title that the Labor Party has missed and it is very important that we consider this. The Liberal Party's policy was entitled Land Tax Reform: The First Step. That is what has been responded to in this legislation: the first step and the first step alone. I say that because in point three of the recommendations that the Liberal Party took to the election, we said that following this immediate increase in the thresholds to deliver this relief to a section of land tax payers and reduce everyone's bills by a little bit, the important part is that we would then embark on a reform program. This is not the reform. This is adjusting the brackets. The real reform has to come later.

We need to look at the way that aggregation has hurt South Australian landlords and the people renting from them, including the small businesses and including everybody who buys a product from a small business in South Australia that is operating out of rental premises. It is only the first step that we are dealing with here today and, quite frankly, it is not good enough from this government.

In November, again during the election campaign, I was pleased that the then shadow treasurer and the shadow finance minister, Rob Lucas, were good enough to come out to the seat of Morialta and listen to residents raise their concerns. We had a public meeting at the St Francis of Assisi church hall, many of whose congregation find this a very concerning issue. It was on 12 November and we had many people and heard their stories of their land tax bills increasing unreasonably during the course of the past eight years to the point where their retirement incomes were cruelly cut.

Following this, we announced the policy which we took to the election and which the government subsequently took as well. I am very pleased to vote for this bill. I look forward to voting for the member for Waite's amendments to the bill; but I flag to the house that there is a lot more work to be done to really bring land tax to the line where South Australia is not disadvantaged compared to other states.

Mr MARSHALL (Norwood) (16:53): First of all, may I commend the fiery, fired up member for Morialta on his speech on this important amendment bill.

Mr Gardner: It's of great concern.

Mr MARSHALL: It is of great concern to him, it is of great concern to me and, I think, it is of great concern to all of the people of Norwood. Of course, he has stolen most of my thunder and not left me much to talk about, so I will be brief.

The member quite rightly points out that land tax revenue over the life of this government has increased not incrementally but exponentially. Whilst the Treasurer points out that revenue, of course, is good—we need that revenue—we also need to look at the consequences of any taxes, any revenue that we raise, and we always need to be mindful of the double-edged sword of taxation. On one side, it does raise revenue for our state, but on the other side, of course, it could curtail future growth and opportunity for South Australia. It is some of those points that I would like to make briefly to the house this afternoon.

Land tax, of course, has a deleterious effect on many groups within society. I suppose principal amongst those, to me, is the investment that we have in our state. There is no doubt that, when you charge a land tax on a property investment, that has to be a disincentive for people to invest in that form of investment. Of course, a large component of the South Australian economy is based on the construction industry. If we have taxes that specifically attack the viability and feasibility of, and the return on, buildings in South Australia, this has a flow-on effect on our employees and businesses.

Other members and, importantly, the member for Waite, have alluded to this tax really hitting retirees. He is not alone with his family, nor with the electors of Waite. The people of Norwood feel really strongly about this. While I was out, in the lead-up to the election campaign, talking to the people of Norwood, I heard story after story of, often, migrant families who had worked hard every day that they had been in this country, often with second and third jobs, and they put the money that they saved into property, and in effect that was their superannuation. Of course, it was such an unimaginable body blow to them to have this ongoing increase and escalation in land taxes that they were being hit with.

I heard story after story of people who actually had higher land tax bills than the rent they were getting in. So, it hits our retirees, it hits our businesses and, of course, it also hits tenants. If investors in the property sector say, 'Look; we can't get a really good commercial return any more because of this punitive land tax rate', then they are going to reduce the number of properties for rental that are produced in South Australia, and, of course, there will be fewer houses to rent and rents go up. So, it hits our tenants, it hits our businesses, it hits our employees, and I think it is also at worthy to note that it hits affordable housing in South Australia.

When a property developer purchases a piece of property, that property developer holds that. If they are paying land tax on it, who do you think actually ends up paying for that land tax? In fact, of course, it is the person who purchases the land; so this has an effect on affordable housing in South Australia.

For all these reasons the Liberal Party focused on the issue of land tax in the lead-up to the election. In fact, the member for Waite quite rightly points out that he held a fantastic tax review forum here in the parliament in April 2008, and this is one of the major findings that came out of it. Another great thing is that the member for Waite not only spoke to the business community, he not only spoke to his own parliamentary colleagues, but he also spoke to all of the candidates. I must say, I felt very included when the member for Waite, our former leader, made contact with each of us candidates to talk about the important issues that were hitting our electorates and, of course, on many occasions raised the issue of land tax.

Mr Gardner: Relentless.

Mr MARSHALL: Relentless. In October 2009 I was very privileged to be present at the Liberal Party's unveiling of its interim land tax position, and that was done in the electorate of Norwood; in fact, just outside the Alta Villa Club on The Parade. It was great to have it there, and I think that our leader recognised the real pain that was being suffered by the imposition of land tax and the effect the punitive rates in South Australia had on the people of Norwood.

In fact, at the time of announcing the land tax threshold rate in South Australia, it was $110,000. We announced that we would move that to $250,000 and, importantly, we committed as a party to further bringing our state into line with other states. Now, this is very important. We did not just change the threshold: we actually made a commitment that in the future we would bring our land tax regime in South Australia into line with other states in Australia.

Now, how was this responded to by the government? I think other members have made the response very clear. Generally speaking, I think at the time the government thought that land tax was really something that is paid by rich landlords. It did not think about the consequences for employees, it did not think about these consequences for our retirees, it did not think about the consequences for investment and it did not think about the consequences in terms of affordable housing: it thought that this was a tax which was quite rightly levied on the rich. In fact, I think one comment of the Treasurer, which I will paraphrase, was, 'Well, if they don't like it, why don't they sell a property to pay for it?'

With this clear position of the government I was, of course, quite shocked—happily, I might say, when the mid-term review finally came down. Usually, of course, it is in December but we actually got it on 28 January. So it was with a great deal of surprise, but happy surprise, when the government substantially adopted the Liberal policy which was to change the threshold and, in fact, essentially propose the amendments that it has put to us today.

There is one final point I want to make, and that picks up the point made by the member for Waite when he said that many people feel frustrated by the current land tax situation and the inability of the ordinary person to query the land tax levy that they are given. Of course, the land tax levy is based upon the valuation rate. It is difficult for people to query that rate. In fact, I have one constituent at the moment who said that he queried the rate, he got a response, and his next course of action is to take this up with the Supreme Court. This seems to me to be using a sledge-hammer to crack a walnut. I think this is something that needs to be looked at. People do feel frustrated about valuations, and we need a clear and simple mechanism for people to query these rates—to get speedy but also cost-effective responses.

I also note that this amendment bill allows for indexation of the threshold. I note, though, that the indexation takes effect as of 1 July 2011. I think that, at the time the government announced it, it said that about 75,000 people who are currently paying the land tax would no longer be paying that land tax, but I wonder whether that takes into account that there will be two CPI increases before we get the change to that $300,000 threshold.

I support this bill, but what we really need in South Australia is parity. No-one wants to lose revenue in this state, as the Treasurer has already pointed out today, but we do need to look at the real costs—not just the short-term costs but also the long-term costs for our state and, importantly, our economy here in South Australia.

Ms SANDERSON (Adelaide) (17:02): I support the Land Tax (Miscellaneous) Amendment Bill, and we are very happy that the government has adopted the Liberal Party policy changes. Just this week, I received 30 survey forms back from members of my electorate and I can state that land tax is still the number one issue in my electorate. I reiterate, as the member for Morialta said, that this is the first step. So, whilst I welcome the changes, I reinforce that this is a first step and there are still a lot of people being affected by our land tax regime.

One of its effects is on affordable housing. As we know, there is a shortage of affordable housing because it is too costly for investors to purchase low cost housing for rent due to the aggregation of land. This has affected members of my own family who were renting out properties, and it is not worthwhile by the time you pay all the state taxes.

Businesses are also suffering. A year ago, I was looking at leasing a commercial property on Melbourne Street so I inquired about 10 that were available at the time. For one of the properties the lease was $50,000 a year. On top of that, of course, is $5,000 in GST to the federal government. I inquired as to the land tax component and that was $25,000 out of the $50,000. As anyone would see, they would not even be able to pay the mortgage on the building at that rate, and only the government is making money out of this. A person could have had a job for that $25,000 but is now probably on unemployment benefits. This is costing jobs and putting businesses under pressure in what is already a tough market.

As was also mentioned by the member for Norwood, retired people are being punished after spending years of their lives contributing to this community through paying their taxes and working hard. They have either saved up and bought rental properties for their superannuation or, as many have done, they spent $10,000 years ago to buy a shack on the waterfront which is now worth a lot more money and the land tax makes it unviable for them to continue with that property. That puts them in a very difficult position because if they sell the property they are subject to capital gains tax; and if they then put the money in the bank they will get a reduction in their pension. So they have to choose whether to keep spending money on a property they worked hard for. This needs to be seen as the first step, and I am very happy that we have taken that first step.

The Hon. A. KOUTSANTONIS (West Torrens—Minister for Industry and Trade, Minister for Small Business, Minister for Correctional Services, Minister for Gambling) (17:05): I listened with great interest to the crocodile tears from members opposite about land tax, and I think a few things should be pointed out. This is the only government that has lowered the imposition of land tax on ordinary South Australians. The former Liberal government lowered the tax-free threshold to $50,000. The former Liberal government made it illegal for landlords to pass on increases of land tax to their tenants. The Leader of the Opposition was on radio saying, 'This is appalling, because people passed on the increase in the land tax in their rent,' despite her own government making that illegal.

Mr Pisoni: No, that was Bannon. Bannon did that.

The Hon. A. KOUTSANTONIS: No, it was Graham Ingerson. Anyway, I will check my history. Another important thing to remember is that the Leader of the Opposition—once the government brought in its indexed tax-free threshold, after they refused to index their own tax-free threshold and it immediately matched ours—wanted to say, 'This only helps mum and dad investors.' So, 75,000 South Australians who no longer pay land tax are just mum and dad investors. It is crocodile tears.

This opposition does not care about people who pay land tax, because, if it did care, instead of having a policy to review after the election, move the amendments now. What is your plan? What is the plan for the remaining 25,000 people who pay land tax? What is the plan? Silence. What are you going to do to the top end of town? Where are the tax cuts you promised in secret? That is the irony of the Liberal Party's case. When we cut land tax for the majority of the mum and dad investors who were doing it tough so they do not have to pay land tax, members opposite said, 'Oh, it's just mum and dad investors. What about the real investors?' Now that they are concerned about the real investors they have gone quiet. They had a secret plan, and it is so secret that they do not even know what it is.

I am sick and tired of the hypocrisy of members opposite when it comes to land tax. If they were serious about land tax reforms, announce it now. The bill is before the house. Let the shadow treasurer get up and explain to the house what he would have done if he were treasurer today. But, of course, he will not. I have since found out from the Fair Land Tax Party that the opposition intended to engage the Hon. John Darley to run a review. Well, that is interesting. They were going to outsource their land tax policy to an independent member of the upper house. That is fine. That is the rigour they have when it comes to land tax.

Perhaps members opposite, who are crying crocodile tears over land tax, could articulate to the rest of the people of South Australia what this secret plan meant. What are the parameters of this secret review the Hon. John Darley was going to conduct into land tax? Perhaps they could have told us why they did not tell the people of South Australia before the election that John Darley would be heading up this review into land tax. The shadow treasurer shakes his head as if he knows nothing about it. Maybe he was kept in the dark by the Hon. Rob Lucas; maybe he was not told about their plans.

I would like to know on the record from the opposition its plan for land tax. It cried long and hard for mum and dad investors, and then, the moment they got relief, derided that relief—mocked it and then matched it. These were the two plans: the Labor Party gives land tax relief, $300,000 tax free threshold indexed; the Liberal Party's plan, $250,000 tax free threshold not indexed, after a history of legislating increasing land tax. This is the only government that has cut land tax and continued to cut land tax. The Liberal Party has no credibility on land tax whatsoever. It cried crocodile tears.

But then we find out about this secret plan, and I am fascinated to know what John Darley's scope was going to be for his investigation. I am fascinated to know what the Hon. Rob Lucas had devised. Perhaps it is not true; perhaps that was just a nudge and a wink to people who were concerned about land tax: 'Oh, listen; we can't announce any more now because we'll have to pay for it.' So, nudge and a wink, 'If you elect us, if we win, we'll do more.' Well, the election is over now. Where are the amendments? Nowhere to be seen.

Where is this secret policy? Nowhere to be seen. I think that every South Australian who was given a nudge and a wink by the Liberal Party about fear of the reforms to come after the election should look at this debate and say, 'Oh, there's none forthcoming.' They do not even have the courage of their convictions to get up and articulate what their policy was. The best they can do is match our policy, not theirs, which shows their policy to be defunct, and then keep quiet about the big end of town. It seems to me that members of the Liberal Party are hypocrites on this issue, absolute hypocrites.

The Hon. I.F. Evans: That is unparliamentary.

The Hon. A. KOUTSANTONIS: No, it's not; move a point of order.

The Hon. I.F. EVANS: Madam Speaker, I draw your attention to the use of the word 'hypocrite', which previously has been ruled unparliamentary.

The SPEAKER: I did not hear the remark, but I take the honourable member's word, and I ask the minister to withdraw the comment.

The Hon. A. KOUTSANTONIS: I did not reflect on any individual member, just an ideology. I will say this in conclusion: I am proud of what this government has done in cutting land tax; I am proud that our cuts target mum and dad investors; I am proud that they are our first object. They are the people we care about the most. I see the crocodile tears for what they are, and I commend the bill to the house.

Mr PEDERICK (Hammond) (17:12): After that interesting tirade from—

Mr Hamilton-Smith: Intellectual contribution.

Mr PEDERICK: Yes, an intellectual contribution from the Minister for Industry and Trade. It is very interesting that he is making comments that the Labor Party cares about the mum and dad investors. Perhaps some of those mum and dad investors would like to check previous Hansard comments from the Treasurer in this place in which he made statements that you were wealthy if you owned investment properties. You could sell them and get the wealth. That is not the point.

The Hon. A. Koutsantonis interjecting:

Mr PEDERICK: It is on the Hansard, Google it. Do a Hansard search. The staff would be on it straight away.

An honourable member interjecting:

Mr PEDERICK: It is in there. Do the Hansard search. The Treasurer made comments that, if people had these properties they were wealthy. It is like anyone owning property, whether it is investment property, farming property or any property like this, it is people trying to make a go of life and get on with life, and you just cannot say they are wealthy because they have some property to their name. Most of this property is mortgaged to the hilt. It is people trying to make a go for themselves. It is people who have come to this country over many years, a lot of immigrants through the 50s and 60s, who have made this a better place. Immigrants of all nationalities have done so well in this state and in this country in forging ahead, yet they get told by the Treasurer of this state that they are wealthy because they might own investment property.

The Minister for Industry and Trade talked about the good job the Labor Party has done in bringing forward this policy. Well, how did this policy of increasing the threshold come about? The Labor policy of increasing the threshold of land tax came about only because of what the Liberal Party did as a first step in raising the threshold from $110,000 to $250,000.

An honourable member interjecting:

Mr PEDERICK: Exactly. The government said that it could not be afforded. Then they said they would bring it up to $300,000, because obviously polling at the time was killing them, and they knew that they needed to get back the votes of the mums and dads, especially in the suburbs around Adelaide.

We support these amendments, because we immediately matched the $300,000 threshold. The beauty of this bill will mean that 74,500 ownerships will no longer be liable for land tax in 2010-11. From 2011-12 all land tax thresholds will be indexed. The average land value increase will encompass residential, commercial and industrial properties and be weighted to take into account factors such as, amongst other things, the percentage of residential properties subject to land tax (which is around 25 per cent).

There is also the issue that when land values go down the tax threshold will remain the same, which means that people will be protected during times of economic downturn, when land values traditionally decrease. The new index value will be applied to the land tax threshold only when the new index value is higher than all the preceding index values, and there will not be any reductions in thresholds.

We must remember that the Labor Party would not have introduced this bill if it had not been for pressure from the public, from the thousand-strong meeting in Norwood and from the whole community of South Australia and if it had not been fearful of not winning the last election. Liberal Party policy made what is happening here today happen—and that is a fact. This bill would not have happened if we had not taken that step. The Labor Party said it was too expensive to implement it, but it was all about votes.

I would also like to comment on what happens with land tax when someone in a partnership dies. Obviously, this happens with a lot of older couples in society. The surviving partner receives the land tax bill. Constituents would be going into offices, whether they be Labor, Liberal or crossbench offices, with complaints—

Mr Gardner: Regularly.

Mr PEDERICK: Regularly, as the member for Morialta interjects. Why all of a sudden do we have people aged 85 in their own residence, which is supposedly exempt from land tax, automatically getting a bill for land tax? It is absolutely ridiculous, and it could probably be changed through regulation. They come into the offices and they are confused. All of a sudden they have a bill for land tax. It just should not happen. The problem is that it is a sneaky way to gain more revenue for a government, because people see an account and think they have to pay it.

Once thing I will say in the department's favour is that when you get onto them it is usually turned around, but it should not happen in the first instance, because it upsets surviving partners if there is a change of ownership in a property. Most of these people are in the twilight of their life and do not need the grief. We on this side of the house support the bill. If it were not for the Liberal Party we would not be passing this legislation today.

Honourable members: Hear, hear!

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Federal/State Relations, Minister for Defence Industries) (17:19): I thank all members for their contributions. I will quickly address some of the issues, but I should say from the outset—and it is a pity more members are not in the house to hear my contribution—that, if people via history books or perhaps via Hansard on Google were to look at my career as Treasurer, as the head of the financial side of the administration of government, they would see that this government with this Treasurer has been the biggest tax cutting government, and I would be the biggest tax cutting Treasurer in this state's history since federation.

There is rarely a moment where I will seek to make a point of my achievements as Treasurer, but I think it needs to be put on the record that there should be a sign on my door: 'Tax-cutting Treasurer of South Australia'. I remember the member for Hartley's reaction when I told her about this cut in land tax. She hugged me and kissed me!

The Hon. G. Portolesi: No touching though.

The Hon. K.O. FOLEY: No touching. The truth is that in all humility I am the biggest tax cutting treasurer in this state's history—because that is what we do in Labor. We fire up the economy, we get people working and we cut taxes. That is what a good state Labor government does. I think this administration can be very proud of the fact that we have delivered jobs, investment, tax cuts and infrastructure—and a few other things.

Having just made the observation that needed to be put on the public record that we are a tax-cutting government, I will comment briefly on the contributions from the new members on the backbench. They were articulate and very passionate, and they are making policy on the run from the backbenches. That's fine; you do that. I think the member for Adelaide or it might have been the member for Norwood talked ill of aggregation; that we should get rid of aggregation.

Ms Fox: The member for Morialta.

The Hon. K.O. FOLEY: The member for Morialta. If that is the Liberal Party policy, let us see the amendment. Let us do it. Does the member want to move an amendment in that way? Member for Morialta, I cannot hear you. Do you want to move that amendment? I have to say on this whole land tax debate that, since day 1, the Liberals say one thing and do another. They have talked up big to the big end of town. I do not necessarily suggest that the shadow treasurer was involved, although it has his hallmarks—the Fair Land Tax Party and that quite vicious personal attack on me. I am tough enough to cop it, but we know who was behind that—Harry Perks and others who were openly funding that. I do not know whether the Liberal Party made any promises to the Fair Land Tax Party at the election. I was hearing reports that a number of promises were made about what would be done in government.

Mr Marshall interjecting:

The Hon. K.O. FOLEY: Now the member for Morialta is not sitting in silence. He sat in silence when I pinged him and I put him under pressure—if he wants to get rid of aggregation, move an amendment from the backbench—and he froze in sheer panic when he realised he had gone too far. He had to pull back from that moment of committing his side of politics to a tax cut that would be in the order of 200 million, 300 million—maybe not that much, but it is a significant number. My guess would be that aggregation would be well over $100 million, $150 million without the data in front of me.

Ms Fox: The silence is deafening.

The Hon. K.O. FOLEY: There is silence. Other members talked about various other concerns that they have for land tax, and again I have always said that our land tax regime had become punitive. The reason is that we have been so successful in firing up this economy that, after a period of stagnation with property values under the Liberals, a good quality administration comes along, and because we manage the economy so well, property values have risen under this Labor government. I do not think this state will have ever witnessed a commercial property boom the likes of what we have seen over the last six years in this city. You walk out and you can barely see the blue sky and the clouds because of the cranes from the skylines. We have office buildings, apartment buildings, retail, commercial. They are all happening because we have property values on the move. The issue of the widow that the member for—

The Hon. I.F. Evans: You are budgeting for a zero growth in non-residential property values this year.

The Hon. K.O. FOLEY: I have just said 'the last six years'.

The Hon. I.F. Evans: Zero.

The Hon. K.O. FOLEY: I said, 'The last six years.' The member for Hammond talked about the tax office sending land tax bills to widowers. That is unfortunate. It is not deliberate. Any suggestion that we do it on purpose or we do it—

Mr Pederick: It's wrong.

The SPEAKER: Order!

The Hon. K.O. FOLEY: The reality is that errors occur when you are sending out—

Mr Pederick: It happens all the time.

The Hon. K.O. FOLEY: Why don't you have a talk to the tax commissioner quietly and privately about it?

The Hon. A. Koutsantonis: I will say a few things, too.

The Hon. K.O. FOLEY: Have you been getting some? Our state taxation office handles large volumes of transactions—

Mr Pederick: It is standard practice. Ask other members, it is standard practice.

The Hon. K.O. FOLEY: I think you are embellishing it.

Mr Pederick interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: That is a very difficult change of circumstances to pick up, but, as I said, instead of talking under privilege and firing bullets at the tax office, why do we not just sit down and talk about it. I know Mike Walker, he is a good officer, and he is the sort of person who would sit down and constructively have dialogue to see whether there are ways of fixing it.

I cannot conclude without reflecting on the comments of the member for Norwood. I do not know who was in the chamber at the time but he was almost sycophantic in his praise for the former leader, the member for Waite.

Ms Fox: There was a lot of love.

The Hon. K.O. FOLEY: A lot of love; a lot of man love between them in a non-sexual way.

Ms Fox: Obviously.

The Hon. K.O. FOLEY: He was gushing in his praise of the tax summit and the leadership shown by the member for Waite and how the member for Waite sat down with all the candidates, brought them on the journey with him. Of course, they hit the brick wall and crashed and he was replaced.

The Hon. A. Koutsantonis interjecting:

The Hon. K.O. FOLEY: He got the young ones.

Members interjecting:

The Hon. K.O. FOLEY: The Pynesses have a little bit of fire in their belly. The member for Norwood made no comment about or reflection on the leadership of the current Leader of the Opposition, but very praiseworthy of the former leader—and that is commendable. That having been said, I have to also comment on the former leader's speech which I thought was Churchillian, and I thought that Duntroon education was taxpayers' money well spent. His stature, his command of the subject matter and his—

Ms Fox: Dignity.

The Hon. K.O. FOLEY: —dignity and his ability to acknowledge greatness on this side—it was the speech of a leader. I am predicting that over the next few months we will see a few more cameos from the former leader. I think he will come in on matters for which he has a good grasp of detail—

Mr Marshall: Yes.

The Hon. K.O. FOLEY: Yes; we have acknowledgment from the fan, who is the member for Norwood—the cheer squad. The cheerleader for Martin has now been outed and identified as the member for Norwood, and I guess the other Pyne-ites are in there as well.

Members interjecting:

The SPEAKER: Order! Would members please note the time and get back to the question and the issues involved.

Mr Hamilton-Smith interjecting:

The Hon. K.O. FOLEY: There is only so much I can do to pump up your tyres, member for Waite. The member for Waite, in a piece of political trickery—but he has redeemed himself by moving an amendment, and we have worked together to get it up—this is the case where he sent me a letter that arrived in my letterbox at five past nine (I was in Canberra) and he was on radio at 10 past nine attacking me for not doing anything about it—

Mr Hamilton-Smith interjecting:

The Hon. K.O. FOLEY: That is very funny, actually. That was somewhat tora, tora, tora-esque.

An honourable member interjecting:

The Hon. K.O. FOLEY: Yes; who finally won?

An honourable member interjecting:

The Hon. K.O. FOLEY: Yamamoto over there: Colonel Yamamoto. I think we might just steer this back into economic discussion. We have already upset the Israelis; let us not upset the Japanese. We could be causing a diplomatic stir without realising it. We need to go into committee, so I will commend the bill to the house and thank members for their contributions.

Bill read a second time.

Committee Stage

In committee.

Clause 1 passed.

Clause 2.

The Hon. K.O. FOLEY: I move:

Page 2, line 7 [clause 2(2)]—Delete 'Section 4' and substitute:

Section 4(1), (2) and (3)

I will not take credit for this because this is not my amendment. The member for Waite, as I said, indulged in a moment of political trickery but he then redeemed himself by coming up with a constructive amendment to the legislation to deal with the issue of the unfortunate family in Mitcham. I think, if we are being honest, we should say it is the Mitcham council's fault for taking an inordinate amount of time to approve this poor couple's house.

The Hon. I.F. Evans: Mitcham council do not rush in development applications.

The Hon. K.O. FOLEY: Apparently; and that gave rise to a situation where a family was hit with some land tax bills. We do not intend to pick these type of situations up where somebody has had a house burnt down—it was unfortunate. I undertook to fix it as soon as was practically possible, and I am here to support a refined amendment to pick up some concerns that my officers had about the application of it. I commend the member for Waite and I commend the government too for a constructive piece of bipartisanship. I guess it will be a race to see who gets on radio first tomorrow morning to claim greatness from it.

Mr HAMILTON-SMITH: We should do it together, Kevin. I need to get a few things on the record, because in speaking to the amendment in my name, I indicate that I will be withdrawing my amendment and, as the Treasurer has indicated, replacing it with an amendment from him that effects the same changes. Even though this has been subject to some media coverage, I need to tell the house that there is a weakness in the law that has resulted in this amendment being put.

It was brought to light by my constituents, Mr Rod and Deborah Westland of Mitcham, who found themselves in an awkward predicament with land tax after their house was destroyed in a devastating fire on 16 June 2008. After the fire, the family had to move to short-term rented accommodation provided by their insurance company until the claim was settled. In May/June 2009, the family then moved into a caravan on their property while rebuilding their home.

Due to planning issues with the City of Mitcham, this has been a protracted exercise and the rebuild had not commenced when they received a land tax assessment. The Westlands then wrote to RevenueSA disputing the land tax assessment on the basis that this place had remained their principal place of residence since the fire. A response was received from the Commissioner of State Taxation indicating that the criteria for a residential exemption from land tax was not satisfied.

The amount involved was significant. It was $7,148, most of which was for the home that they regarded as their residence and that would have been each year, so it would have been $14,000, and possibly as much as $21,000. The family had been through an extremely stressful experience and I was most concerned that they had been required to pay this massive amount of tax while living in a caravan on the property. I went up and visited them and saw the conditions they were living under. It was a quite tragic situation, and it occurred to me (as, of course, it had to them), that this was a case of there needing to be a change to the law.

As a result, I wrote to the Treasurer and asked him if he would be kind enough to review the case. I commend the Treasurer publicly for the good grace that he showed in providing a waiver for the family. I can tell you that they were extraordinarily relieved. However, it did occur to me at the time that if, at some time in the future, we were not blessed with such a wonderful Treasurer and such a graceful and understanding human being as the current incumbent, a future Treasurer might be a bit more grisly and not be inclined to act in such a graceful way and provide an exemption. Indeed, it was necessary for the law to be changed.

Subsequently, I prepared this amendment and here we are. The substance of it is that, in the event that a house is destroyed by fire, flood, earthquake, an impact or some circumstance beyond the control of the owners, they should have a three-year period of grace during which to sort out the rebuilding of their home without being burdened by a land tax bill.

I do accept that there may be some implementation issues here. An issue raised on my side (and I thank my side of the house for its consideration and agreement with this) is whether the family needs to apply each year for the exemption or whether there is some process for it to be automatically granted. That is something that the department and RevenueSA may wish to consider, but I am sure that once this amendment is agreed to, they will come up with the right implementing arrangements.

I received correspondence from a serving police officer that is relevant to this matter that I think should be put on the public record. The sergeant's letter states:

Mr Hamilton-Smith,

I wish you luck in your efforts re the plight of the Westland family. The legislation as it currently stands is obviously unfair. I have considered other circumstances in which it may also have an impact on a far greater number of people. After the Black Saturday fires in Victoria, a number of residents decided to go straight back to their blocks and commence rebuilding. Many were living in temporary accommodation of caravans, sheds, even shipping containers on their blocks of land. This is an important part of their emotional recovery process—getting straight back into getting their lives moving forward again. I wonder what would have happened if South Australia had not been so lucky on February 7 2009 and we had major fires resulting in losses of houses and dwellings.

As the legislation stands in SA, those people attempting to restart their lives by going back to their properties early and living in temporary accommodation on their blocks of land would receive hefty land tax bills. I am involved with emergency management and am concerned that this obstacle to the lengthy and difficult recovery process for disaster victims should be fixed. Good luck again.

He goes on to sign off by name. I think that does add some weight to the need for the amendment.

I thank the Treasurer and the staff of RevenueSA and also the Treasurer's Chief of Staff for their assistance with this. I note that the amendment that the Treasurer is putting forward is identical to my own with a couple of loopholes closed and I thank him for identifying those. I think this is a good case of bipartisan cooperation. Only a few people, hopefully, will ever be affected by this but, for them, it means the world. I thank the Treasurer for his agreement to the amendment which I hope will be agreed to by the house.

The Hon. K.O. FOLEY: Just for clarity, as somebody who makes a habit of being across the detail and across my brief, I can just say to the committee that we have to amend clause 2 to ensure that clause 4 is not retrospective—because the Liberal Party hates retrospectivity.

Amendment carried; clause as amended passed.

Clause 3 passed.

Clause 4.

Mr PISONI: This clause refers to exemptions and I wanted to use the opportunity, Treasurer, to get clarification on a situation that happened to a constituent of mine, whose arrangements, I believe, are quite common. She is a woman who married late in life. She was her husband's second wife, as the husband's first wife had unfortunately passed away. They were married for 12 years before the husband passed away and she had been living in the house for three years as a widow from age 83.

She received a land tax bill for that property for the very first time. The land tax assessment she received related to the property in which she was residing. I have a copy of the certificate of title, where she is registered on the title as holding freehold title for life or upon her remarriage, whatever comes first. So, until she passes away or remarries, she has the right to live there. She was quite distressed.

I take note of your comment earlier that the member for Waite wrote a letter, it arrived in your letterbox at five past nine and he was on the radio at nine o'clock. This lady had written to the land tax department in December last year expressing concerns about why it was that all of a sudden she had been charged land tax. She is an intelligent lady, and as she understood that, in South Australia, if it is your primary place of residence and you own it, you are entitled to live there with an exemption and not pay land tax. If you are a tenant, my understanding is that landlords are prohibited to charge tenants land tax or pass it on.

The widow contacted me quite distressed, even though it was not a large amount of money; it was $895, based on a $375,000 value. I rang RevenueSA to try to get clarification of the situation, asking how this could be so, and the reply was that the woman had to apply for exemption, stating her reasons. They said, 'We sent her the form, and we want her to fill it out and explain her reasons.' I found it quite difficult to understand how she fell into a category of having to pay land tax because, as far as I saw it, she has a right to reside at the property until she dies.

She lived at the property as her husband's wife for 12 years prior to that and, when she does die or when she does remarry—and I think she is more likely to pass away than remarry—the property will then go to the three daughters. As I said earlier, this is quite a common arrangement. I spoke to a constituent who acts in law in this area, who said that this type of thing happens a lot for asset protection, when children want to be included in the will. Generally, it happens in second marriages and, unfortunately, it is often women who miss out under these arrangements, but in this instance the three daughters would be entitled to the assets on the death of the widow.

Part of the agreement was that she was to maintain all upkeep and pay all rates and insurances and so forth on the property. My question is: do we have exemptions in the current law—and the exemptions we are seeing moved by amendments today—that would exempt somebody living in this situation from having to pay land tax or having to put a case forward as to why they should not pay land tax?

It was a story on ABC radio today. The Tax Commissioner rang in, and my constituent did get a call from RevenueSA the very same day, before midday, I believe, saying that she did not have to pay land tax. So, what I would like to do is use this committee as an opportunity to get clarification as to whether or not people living under those circumstances are in fact required to pay land tax. If they are not required to pay land tax, how is it that people are receiving land tax bills for the very first time even though they may have been in this situation for years.

The Hon. K.O. FOLEY: Yes, the woman in that instance and others in that type of case are exempt from land tax already. It was an error in the land services department and an error within RevenueSA. Given that on land tax alone there are at least 120,000 transactions a year, there were data import errors, and that was an unfortunate error.

This is probably a naive call to members. The member went on public radio alleging that I had instructed the taxation commissioner to go through the files and try to find anyone possible we could ping with land tax, including, possibly, 84 year-old ladies. Let me just say, take a leaf out of the member for Waite's handling of his issue and how quickly we got rectified.

Mr Hamilton-Smith interjecting:

The Hon. K.O. FOLEY: Well, you did. You wanted to have a bit of a cheap shot on the way through. If you give my office a call on these anomalies, you get some of these from time to time right across my brief and I fix things for members behind the scenes all the time. I make that offer to members. I move:

Page 2—

After line 13—Insert:

(a1) Section 5(10)—After paragraph (a) insert:

(ab) land may be wholly exempted from land tax if—

(i) the land is owned by a natural person (whether or not he or she is the sole owner of the land); and

(ii) any buildings on the land of a predominantly residential character are uninhabitable; and

(iii) the Commissioner is satisfied—

(A) that the person has ceased to occupy any building on the land of a predominantly residential character because it has been destroyed or rendered uninhabitable by an occurrence for which the person is not responsible (whether directly or indirectly) or which resulted from an accident; and

(B) that any such building constituted the person's principal place of residence immediately before the date on which the building was destroyed or rendered uninhabitable; and

(C) that the person intends to repair or rebuild the building within a period of 3 years from the date on which the building was destroyed or rendered uninhabitable; and

(D) that the buildings on the land will, after the completion of building work, have a predominantly residential character; and

(E) that the person intends to occupy the land as his or her principal place of residence after the completion of the building work; and

(iv) the person is not receiving an exemption from land tax under another provision of this subsection in relation to other lands that constitutes the person's principal place of residence;

After line 21—Insert:

(1a) Section 5—after subsection (11) insert:

(11a) For the avoidance of doubt, land may not be exempted from tax under subsection (10)(ab) for a period that exceeds 3 years.

Amendments carried.

Mr HAMILTON-SMITH: I am wondering if the Treasurer would like to explain the loopholes that were dealt with by amendments numbers 3 and 4 in his proposed amendments that go beyond what I propose, just so that the committee is clear on what is to be achieved by amendments numbers 3 and 4.

The Hon. K.O. FOLEY: The tightening up of that amendment—as I said, it is a good amendment and practical amendment, and I congratulate the member for Waite for his foresight and the constructive way in which he has dealt with this. The two years there we have put a three-year limit on. What we have to be careful of is that we cannot have a situation where somebody may choose to take advantage of this for simply land banking and speculating property-wise and not getting a land tax bill. So we put a three year cap on it. And we also say that the person would not receive this benefit if they had received a benefit on an exemption from land tax in respect of the same land. You cannot get two exemptions at the same time.

Clause as amended passed.

New clause 4A.

The Hon. K.O. FOLEY: I move:

Page 3, after line 6—after clause 4 insert:

4A—Amendment of section 5A—Waiver or refund of land tax for residential land in certain cases

Section 5A—after subsection (6) insert:

(6a) A person is not eligible for a waiver or refund of land tax under this section if the relevant land becomes the person's principal place of residence for a financial year that immediately follows a period of 3 financial years for which the person has had the benefit of an exemption from land tax under section 5(10)(ab) in respect of the same land.

New clause inserted.

Remaining clause (5) and long title passed.

Bill reported with amendment.

Third Reading

Bill read a third time and passed.


[Sitting extended beyond 18:00 on motion of the Hon. K.O. Foley]


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