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Legislative Council - Fifty-First Parliament, Second Session (51-2)
2008-07-23 Daily Xml
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STATUTES AMENDMENT (BUDGET 2008) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 18 June 2008. Page 3405.)

The Hon. R.I. LUCAS (00:00): At this very late hour—obviously legislation by exhaustion is the government's intention—I rise to support the second reading of the bill. On behalf of opposition members, I apologise to hardworking Treasury officers who have been delayed until this ridiculous hour and who, as I understand it, have only just been allowed to go home.

The Hon. B.V. Finnigan: All your private members.

The Hon. R.I. LUCAS: I think the Hon. Mr Finnigan knows that he and others were playing games earlier in the evening. Anyway, at least on behalf of Liberal members, I apologise to those hardworking public servants who have been delayed. As indicated, the opposition is supporting the bill. The shadow minister for finance, the member for Goyder, spoke briefly to the legislation in the House of Assembly and indicated the opposition's support.

Put simply, it introduces the tax change elements of the budget which have been introduced by the government and which we will consider in more detail in the Appropriation Bill debate over the coming two sitting days—as I understand it, tomorrow and next Tuesday. The Leader of the Opposition has commenced the debate on that this evening. I will not deal in great detail with the more broad budget related issues in this bill. I will refer narrowly and specifically to the issues that are canvassed here, and they are the two budget changes relating to payroll tax changes and also the changes relating, in essence, to what most people would colloquially refer to as the First Home Owners Grant.

In relation to the First Home Owners Grant, the government is introducing a $4,000 bonus, which, on a sliding scale, reduces for a home up to the value of $450,000. It is a benefit and a concession which I am sure will be welcomed by that section of the home purchasing community, namely, first home owners. I might say that it is modelled on the proposals made by the Liberal Party at the last election in 2006. The then leader of the opposition (Hon. Rob Kerin), as part of a tax relief package, promised a $3,000 bonus. This one is a $4,000 bonus, which, added together with the federal bonus of $7,000, totals $11,000—or, under the Liberal scheme, $10,000.

As the Hon. Mr Ridgway indicated earlier in welcoming some of the government planning changes in recent times following on from Liberal Party initiatives earlier, this one—

The Hon. B.V. Finnigan: The one you criticised yesterday.

The Hon. R.I. LUCAS: Well, the Hon. Mr Finnigan—although out of order—makes an erroneous interjection. I made no criticism of the policy decision at all. I just raised questions about transparency and accountability.

The Hon. D.W. Ridgway: Something you're afraid of.

The ACTING PRESIDENT: Interjections are out of order on both sides.

The Hon. R.I. LUCAS: It is something the Hon. Mr Finnigan is afraid of and, sadly, cannot understand, either. At the time the proposal from the Liberal opposition was criticised by the Labor government. There was criticism about bringing forward purchases in the housing market. The Treasurer and I think one other minister—I do not have the particular transcripts with me this evening—but certainly the Treasurer was critical of the Liberal Party proposition of a $3,000 bonus. It is amazing that two years later virtually the same policy is now introduced by the Labor government.

Clearly, concerns they were expressing about the Liberal policy in 2006 have been either jettisoned or forgotten. We in the opposition are not churlish. If it is a good policy—and Rob Kerin came up with that policy in the first instance—then we will welcome and support the modest relief it will provide.

The second tax relief measure is a policy proposal following on from a Liberal policy proposal; that is, at last we will see some increase in the payroll tax threshold. Members of the opposition in this chamber and also in the House of Assembly for a number of years have highlighted the fact that the payroll tax threshold in South Australia was the lowest of all the states at just over $500,000, compared with a threshold in other states and territories of just over $1 million. Some small businesses in South Australia were paying payroll tax at just over $500,000. Those same small businesses could have employed staff and paid salaries of around $1 million in some states and territories before they started paying payroll tax.

Prior to the last election, the Liberal opposition as part of its tax relief package committed to an increase in the payroll tax threshold. Therefore, we welcome the Labor government's finally conceding the accuracy and value of the Liberal policy of 2006 by, at last, responding by increasing the payroll tax threshold.

The Hon. R.P. Wortley interjecting:

The ACTING PRESIDENT: Order! The Hon. Mr Wortley should cease interjecting.

The Hon. R.I. LUCAS: I suspect that the simple answer is that whilst they agreed with those policies they did not agree with other aspects of what the Liberal Party was putting at the last election. They did not reject this particular policy because even the Labor government, albeit reluctantly and in a delayed fashion, is now agreeing with and introducing it. It is increasing the threshold to just over $550,000 and, ultimately, to $600,000 as part of a phased increase in the threshold.

It would still be significantly less than the most generous thresholds of just over $1 million that exist in some other states and territories but, nevertheless, for the small number of businesses that will be assisted we certainly welcome that change from the government; I know it has been welcomed by the business community, as well. Also, a modest reduction has been foreshadowed in the actual rate of payroll tax from 5 per cent to 4.95 per cent.

Again, that is a modest reduction, but, certainly, it is one that the business community and the Liberal opposition would also support. I understand it is highly unlikely that officers this evening would have a ready answer, but Business SA has been campaigning for some considerable period of time for the payroll tax threshold to be increased to $800,000. I ask the government in its response to clarify, again, the full year cost of the eventual increase of the payroll tax threshold to $600,000. I make it clear that I am talking about the actual impact of the $600,000 increased cost, not a combination of the increase in threshold to $600,000 and the reduction in the rate from 5 per cent to 4.95 per cent.

Secondly, I seek from the Treasurer the best estimate from Treasury of a further increase in the threshold to $800,000, and what the full year cost of an increase in the threshold to $800,000 would be. As I said, this has been a policy for which Business SA and others in the community have been campaigning for quite some time. I think that before this bill passes it is not an unreasonable position for this chamber to be informed as to what the full year cost of an increase to $800,000 in the threshold would be. That is the only specific question I have at this stage, and that is why, from the opposition's viewpoint, we are happy to consider the second reading at this stage but to leave the committee stage for another sitting day.

The Hon. D.G.E. HOOD (00:12): I rise to make a contribution to this bill on behalf of Family First, and I will specifically be talking to the major taxation reforms outlined in that bill. Suffice to say that Family First welcomes both the measures contained in this bill as regards first-home buyers and payroll tax reductions—or, I should say, beneficial changes. I will start with the second by simply saying that the reduction of payroll tax is a welcome boost to business in South Australia, and we support it. The lifting of the threshold there is a boost to small business in particular, and Family First supports small businesses because, in many cases, they are also family businesses.

I will give an interstate comparison and simply remark for comparison purposes that the bill sets a 5 per cent payroll tax rate this financial year going down to some 4.95 per cent next financial year, with our thresholds up to $552,000 this financial year rising to $600,000 in the next. New South Wales has a higher taxing regime having 6 per cent payroll tax with a raised threshold this financial year from $600,000 to $623,000, then lowering to 5.75 per cent in the second half of this financial year. Victoria's rate is 4.95 per cent this financial year, down from 5.05 per cent in the previous financial year, and Queensland leads the way at 4.75 per cent.

Western Australia's rate is 5.5 per cent but interestingly has quite a high threshold of $750,000—under that no payroll tax is paid at all, although I note it is lower than the figure Business SA has been lobbying for. These comparisons on face value suggest that our payroll tax is still a little on the high side but, before other opinions are put forward, the question of cost of doing business in this state is a complex picture of which payroll tax is a significant but obviously not the sole component. We have just passed the payroll tax harmonisation legislation, and we hear a lot in this place about red tape for business from equal opportunities to other compliance legislation which raise the administration costs and hence the cost of doing business in South Australia.

In closing on that subject, we welcome the relief given to small business in particular in this budget, but we will have an open mind to calls from business or other parties for further reductions in years ahead; indeed, we would like to see the rate come down in the years ahead. It is a step in the right direction, but more can be done.

Family First has somewhat more to say about the second measure in this bill, and that is stamp duty relief for first home buyers. Honourable members will recall that I have asked questions about this issue before in this place on several occasions. For instance, on 27 March last year I asked the government a question about the threshold ranges, and I invite honourable members and readers of Hansard to look at that question which gives a background on the rises in those thresholds.

My question then was about the minimum threshold where a home buyer gets full stamp duty relief—they pay no stamp duty at all. At the time the threshold was a ridiculous $80,000. The Treasurer's reply on 19 June 2007 was largely couched in terms saying it was an issue in the mix, amongst other budget considerations. During question time on 3 June this year, I raised a question about stamp duty relief for first home buyers, noting the threshold range as from the 2004-05 budget was $130,000 to $250,000 for the purchase price of a house. I noted in that question that the 2004-05 budget had estimated a cost to the government of some $10.5 million recurrent per year to run that scheme.

It is a bit early yet perhaps but I will refresh my question here as a question on this bill, to ask what the 2004-05 budget measure actually cost the government in delivery of relief to first home buyers. Just to make the point: the estimate was $10.5 million and I am asking what the actual cost was. My point is this: Family First is concerned that the budget measure (and, before that, the previous minimum thresholds) meant little to nothing in real terms to families trying to buy their first home because housing prices have risen to such an extent as to render the thresholds quickly irrelevant.

Against this background the reform of the threshold system in this bill is welcome. The reforms were met with front page fanfare in The Advertiser on Thursday 5 June this year in a pre-budget release of measures to come. The Treasurer was quoted as saying that this reform will deliver significant help for first home buyers. Now the minimum threshold is some $400,000—in other words, homes purchased under this amount attract the full $4,000 bonus payment—and this phases out over a much narrower range than was the case before, phasing out over a $50,000 range—that is, by $450,000 no relief is attracted.

I think it is important to place on the record what was not in the second reading inserted in Hansard but was in the press, being the cost to government. One might understand, given my earlier comments about the 2004-05 changes, that it is worth scrutinising how the actual cost measures up against the expected cost, because it shows how well the government's package has hit its intended target. The same Advertiser article I referred to says that the government will incur some $32 million in the current financial year, and then $130 million over the next four years in delivering its relief.

It is also worth putting on record the Treasurer's expectation in that article: that 9,000 first home buyers would receive the full $4,000 grant and that 95 per cent of all first home buyers would receive some form of assistance. This is, indeed, a positive measure. Family First welcomes this measure and we hope that it hits the mark as intended. We think it is worth casting a critical eye over this area because it promises so much for first home buyers and we hope it delivers.

Our strong intuition about the previous regime—and we have not seen the answers to questions about that regime as yet, referring back to the earlier period that I mentioned—is that it was failing to live up to expectations. I invite the government to demonstrate that the previous regime did better than regimes under previous administrations, because that would be a fair thing to do. It may be that under the previous regime, despite its failings, it was still more generous than others before it.

As I said in my question on 27 March this year, this sort of stamp duty relief for first home buyers began in 1979 under the then Tonkin government. I think it is worth noting that the day before the government's 5 June front page announcement (which I referred to earlier) the Queensland government announced for its budget that there would be no stamp duty payable for houses with a purchase price of less than half a million dollars—none at all. The median house price in Brisbane at that time—and it is only over a month ago—as reported by The Australian newspaper of 4 June, was $467,380. So, their threshold is actually substantially above the median price in that city.

A table published with that article was very insightful. It stated what stamp duty was payable on first home purchases in all the states as of 1 September, including the freshly-announced Queensland measure that day. Of course, the state government's announcement the following day renders the column redundant (that which outlines the South Australian figures) but the table glaringly showed how poorly we ranked at that time.

As I say, clearly, this measure is a step in the right direction but I think Queensland is definitely leading the way with respect to genuine relief on stamp duty, particularly for first home buyers, and the fact that their relief cuts out at a level above the median price of houses in that state, which is not the case here in South Australia.

Referring back to the table, I note that it shows that only Victoria has a higher stamp duty on first homes in the $600,000-upwards range, and below that South Australia was ranked worst in the $100,000 range (in fact, no other state imposed stamp duty on that purchase price at all), and South Australia was also worst at the $200,000, $300,000, $400,000 and $500,000 levels. Only Victoria and Tasmania were at that time imposing duty in those ranges, prior to Queensland's 4 June measure, it was the fourth state to impose stamp duty on first home buyers in the $300,000 to $500,000 band. As I have said, they changed that to raise their level up to $500,000, making it currently the best state.

Recent reports in South Australia suggest a cooling in our prices, but in this place we are hearing more and more about our mining prospects in particular. For instance, in places such as Whyalla, house prices are still surging. Talking from experience, I can say that house prices in my local area are still doing very well indeed.

So, on the back of the mining boom and other developments and advancements in the state, there is every chance that, during the life cycle of this package, these reforms might become redundant themselves, as house prices exceed the thresholds.

Family First will be watching the performance of this scheme, and we will have more to say about it as the weeks and months pass. As I have said, we see this as a positive measure, and we commend the government for introducing it. It is a step in the right direction but, clearly, Queensland leads the way due to the fact that its threshold expires above the median house price in the city.

The Hon. P. HOLLOWAY (Minister for Police, Minister for Mineral Resources Development, Minister for Urban Development and Planning) (00:22): I thank the Hon. Rob Lucas and the Hon. Dennis Hood for their contribution to the debate, and I thank other members for their indication of support for the bill.

The Hon. Rob Lucas asked questions, and the diligent RevenueSA officers who are here at this late hour have been able to provide the answers, so I will put them on the record now. The Hon. Rob Lucas asked about the revenue cost of increasing the threshold from $552,000 to $800,000. I can inform him that the cost of that is estimated at $46 million in 2008-09. The Hon. Rob Lucas also asked about the cost of increasing the threshold to $600,000. That information is provided in Budget Statement, Budget Paper 3, on page 3.2. In Table 3.1, right at the top of the page, are the figures for both the increased threshold from $504,000 to $552,000 and the increased threshold from $552,000 to $600,000.

The Hon. Dennis Hood also asked about the cost of the first home owners concession. Again, that information is provided in Budget Statement, Budget Paper 3. I refer the honourable member to Table E.1, on page E.6, under 'Stamp Duties, Conveyance Duty, First Home Owner Concessions', and it is a cost in 2007-08 of $5.8 million.

That should at least provide an initial answer to the questions asked. Of course, we can explore this in more detail when we resume the committee stage tomorrow. But, at this stage, I thank honourable members for their indication of support for the bill.

Bill read a second time.

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