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Legislative Council - Fifty-Third Parliament, Second Session (53-2)
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Bills

Budget Measures Bill 2017

Second Reading

Adjourned debate on second reading.

(Continued from 31 October 2017.)

The Hon. T.J. STEPHENS (11:33): I rise today to speak on the Budget Measures Bill 2017. The commonwealth major bank levy within this bill is nothing but a desperate attempt to stave off the collapse of an ever-dwindling pool of revenue by a government bereft of ideas. You cannot and never will be able to tax your way to prosperity. Taxation upon further taxation does nothing but stagnate growth and investment. You cannot rely on continuously draining the taxpayer and expect to create a flourishing economy. The government has attempted to play this levy off as standing up for the little guy by going after our biggest earners; however, this levy will be nothing but a drain on the everyday taxpayer, thinly veiled as a tax on the big end of town.

The government has tried to seek out an economic scapegoat, someone or something to pin the blame on for its abject failures and the economic mismanagement of our great state. In their musings, they have come across an easy target—the major banks. The Treasurer describes the banks as undertaxed. In his eyes their profits are something unsightly that must be reclaimed. What he fails to mention is that these same banks are the largest corporate taxpayers in the country.

This government is recklessly targeting success with this measure, as they do not have the capacity to foster it themselves. How can such a measure give business enough confidence to attempt to prosper in the state? What incentive does this tax give to business in order to take risks, invest and become successful in their own right?

It is difficult to see how this government can reconcile itself by dubbing this year's fiscal measures as a jobs budget. I do not see how this is possible when they plan to inflict on the people of this state a brand-new levy. Additional taxes are not job creators, they are job and investment killers. This is something that is obvious to the rest of the state but seems lost on this government.

In a recent BDO survey, 72 per cent of small to medium South Australian businesses were opposed to the levy measures in this bill. They have good reason to be. If we were to implement such measures, these same businesses would struggle to gain access to further lending. For the majority, it is an already difficult market. There will be less incentive from the major banks to invest their money in South Australia.

On a national level, we will be viewed as an uncompetitive option overnight. Such a loss of investment would mean that potential job opportunities for average South Australians would go with it. With the state already losing much of its younger workforce interstate, the likelihood that this levy would propagate the problem further is quite high. We have already seen the beginning of the kind of hindrance this tax will have on our state.

A number of high-profile investors have come out against the management levy, and the fallout has started to take effect. Jupiter Fund Management has specifically cited the bank levy as a key reason for it reducing its exposure to the Australian market. It has described such a measure as 'entirely unreasonable and a misguided policy'—a succinct description of a debilitating tax on jobs and investment.

Bank SA immediately halted its move to expand its back-end operations in June. This has resulted in the suspension of a further 150 jobs within their automated processing centre. The ANZ Bank began to offload millions of state-backed bonds at the same time, of which the major banks are the largest proprietors. This is just a taste of the cost that the people of South Australia will have to absorb if this bill passes, while, at the same time, illustrating my exact point. Increased taxation costs jobs and it costs investment.

The Treasurer has sounded out that these measures will not hit customers. This could not be further from the truth. It will be everyday South Australians who will have to, once again, foot the bill for this government, as they have done so many times in the past. They would like to have you believe that the only stakeholders to feel the impact of this measure are the major banks. What they fail to elaborate on is the flow-on effect and to accurately articulate just who could be classified as a stakeholder of a major bank.

As with any company, there is a cost to doing business. Increasing these costs will cause significant repercussions. The impacted parties are far-reaching: mum and dad investors and even those with investments through superannuation would have to wear any additional costs. They would see the impact that the levy would have firsthand through their dividends and return on investment. Stakeholders such as shareholders, employees and customers will ultimately lose out.

To put this in perspective, the government wishes to inflict further immediate strain on 146,500 shareholders, 6,500 employees and 900,000 customers within South Australia. A measure such as this is nothing more than another dip into the pockets of ordinary hardworking South Australians; the same hardworking South Australians who already face exorbitant taxes such as the increase in the emergency services levy. This government has run the state's economy into the ground and this tax will aid in no way to rectifying their mistakes.

In terms of population, South Australia is a small market, both on a global and a domestic scale. As such, we must be forward thinking in the manner in which we aim to attract outside investment. There are some areas of business where we cannot compete, such as the scale of our market and labour costs; however, our ingenuity and resourcefulness gives us an edge. It is the responsibility of the government to create the conditions that give South Australians the opportunity to use these skills to flourish.

To do so, it must be delivering budget measures which make it easier to start up and invest in business. Introducing a state-based bank tax works against any competitive advantage we could deliver. We will not find economic success through increased regulation and taxes. Instead, we will lose all incentive for investment.

With additional costs filtered through and lines of credit harder to obtain, how can anyone find the right incentive to invest in this state? The bank tax further impinges on direct investment, which has already been diminished with high power costs, the cost of doing business and red tape.

In order to improve the economic fortunes of South Australia, we must shift our focus away from costly short-term gain. We must give business, particularly our small businesses, the capacity to grow. To do this requires limiting costly taxes. Only when we drive down the cost of doing business can those businesses then increase their investment opportunities and seek to employ more South Australians. While this measure, if implemented, will increase revenue for the state in the immediate future, it will do so at an inordinate price long term.

The conditions will not be there for increased direct investment from outside of South Australia. Businesses will funnel their earnings into the rest of the country or, more damagingly, avoid South Australia altogether.

Other states are aware of just how economically disastrous a tax on the banks could be. Western Australia has recently rejected any notion of introducing such a damaging measure themselves. Their Treasurer is happy to let South Australia take the risk and go it alone. He realises that a levy on the major banks does nothing but have the potential to threaten jobs and investment. Other Labor governments in this country are not willing to bring on these measures themselves due to the potential ramifications it could have on economic growth.

This fact alone should send a message to the Labor government in this state that these measures will not work. It is once again placing the people of South Australia in the role of test subjects for the government's own ideological gain. As they have already done with electricity, it will be everyday South Australians who are forced to bear the brunt of the costs.

This measure does nothing to improve South Australia or its people. It does nothing in addressing the systemic and structural economic issues we are facing. Instead, it further exacerbates them. When all is said and done, a levy such as this could have a net loss on the state, due to missed investment. Further taxation is not the answer for South Australia. We should be doing all we can to free up investment and bring down taxes to make it easier for South Australian businesses to compete, to grow and to employ people. With measures such as the commonwealth major bank tax levy, the only conclusion one can reach is that it is an ill-conceived bill. It does nothing but prop up the government's ailing bottom line at the expense of average South Australians.

The role of good opposition is not to sit back and watch as such measures are passed. We are now in desperate times. It is to call out the government when it makes poor decisions and attempt to reverse them where possible. This is why I speak to this bill and why I see it as being of vital importance to oppose the draconian bank tax levy.

The Hon. K.J. MAHER (Minister for Employment, Minister for Aboriginal Affairs and Reconciliation, Minister for Manufacturing and Innovation, Minister for Automotive Transformation, Minister for Science and Information Economy) (11:42): I thank members for their contribution. As I believe there are no further second reading speakers, I will conclude the debate and I will respond to a number of issues that have been raised, particularly by the Hon. Rob Lucas in his second reading contribution on 19 October.

I have advice that in relation to clause 5 and the publishing of gross state product percentage for each financial year, the gross state product percentage is based on the publicly available data from the Australian Bureau of Statistics. There is a limited number of taxpayers that will be liable for the levy. Publication of the percentage on a website determined by the commissioner is considered appropriate.

In relation to clause 13 and its application, I am advised that this creates a legal prohibition on directly recovering the major bank levy payable by authorised deposit taking institutions from customers of the institution. It has been drafted broadly to capture a range of potential arrangements. Noncompliance with clause 13 of the bill would be a breach of the law. The remedy for such a breach is an injunction. The courts have a jurisdiction to grant an injunction preventing the breach of a statutory obligation or duty.

In relation to schedule 2, part 1, clause 2 and the issue raised about the provision relating to genuine farms, I am advised that this clause simply relocates the current section 18BB, which was inserted in 2008 to the preliminary part of the act. I am advised that the operation proposed in section 6A will not depart from the existing section 18BB in any way, and that RevenueSA is not aware of any applications that have turned on the definition of 'genuine farm' or their interpretation of it.

In relation to schedule 2, clause 10 and the various decisions of the commissioner under the FOGS not being subject to objection, I am advised that, by now providing for objections to be made regarding penalties imposed, it is considered that the full range of decisions that can be objected to is complete. Further, in relation to the minister's title, I am advised that the Minister for Finance is the responsible minister for objections lodged under both the Taxation Administration Act 1996 and the First Home and Housing Construction Grants Act 2000. RevenueSA's information circular No. 33, which was issued on 28 November 2011, clearly sets out these arrangements.

In relation to part 2, clause 13 and the use of the word 'current', I am advised the legislation as drafted is a drafting preference of parliamentary counsel, and the government is comfortable with that drafting. In relation to part 3, clause 15, I am advised that these amendments confirm that the contractor exemption cannot be apportioned between exempt and taxable services. They are intended to operate on the basis that the contract is either fully exempt because it falls within the relevant exemption or is taxable because it does not fall within the relevant exemption during the financial year.

Further, in relation to the anti-avoidance provision, I am advised that this provision is a general anti-avoidance provision to ensure that contractual arrangements are not put into place to avoid the intended operation of the exemption. This provision applies across each of the contractor exemptions provided in sections 32(2)(a) to 32(2)(d). Previously, it only applied to sections 32(2)(c) and 32(2)(d).

In relation to part 4, clause 20, the commissioner issuing a certificate to a person on the application, I am advised that section 3E(3) of the Stamp Duties Act 1923 (the SDA) will allow the Commissioner of State Taxation to include any other information that the commissioner thinks fit on a stamp duty certificate and RevenueSA will continue to consult and give consideration to including further information on relevant instruments as required. Notwithstanding the secrecy provisions under the TAA, I am advised that the instruments that are now registered with the Lands Titles Office are already available to the public. Such instruments identify the relevant parties to the instrument.

Stamp duty certificate: the stamp duty certificate, which may also be issued for instruments that are not registerable with the LTO, notably those arising from landholder transactions, will certify either that: one, duty has been paid in respect of the instrument identified in the certificate; or that, two, the instrument has been assessed as not chargeable with duty. It will also include the applicable stamp duty identification number and any other information the commissioner thinks fit.

I am advised that, generally speaking, it would only be persons who are parties to the instrument and their agents who would be interested in applying for a copy of the certificate. It is unclear in what circumstances other persons not being parties to the instrument or their agents would be interested in applying for a copy of the certificate. In the limited circumstances that a third party may be interested in applying for a copy of the certificate, for example, for disputes before a court or tribunal, the current disclosure provisions in the TAA are sufficient to allow disclosure of such information with the consent of the affected person or person acting on their behalf. It is also the case that the commissioner may disclose information where it does not identify the taxpayer, either directly or indirectly.

Further, in relation to the stamping of information, I am advised that the proposed section 3E(3) of the SDA provides that the Commissioner of State Taxation must include the stamp duty identification number that is to appear on the instrument, and may include any other information the commissioner thinks fit, therefore linking the certificate and the instrument.

It is not proposed to include any further information on the instrument itself. However, RevenueSA will continue to consult and give consideration to including further information on the certificate as required. This may include the amount of duty paid and the number of instruments stamped, that is, original and copies, as suggested by the tax lawyer.

In relation to the instrument being duly stamped for relief to be available, I am advised that the SDA distinguishes between: one, instruments that are not chargeable with duty; and, two, instruments that are chargeable with duty.

Traditionally, an instrument that is not chargeable with duty has been stamped with a particular stamp denoting that it is not chargeable with duty. Comparatively, an instrument that is chargeable with duty has been stamped with a particular stamp denoting that it is duly stamped. Accordingly, an instrument is one or the other for the purposes of the Stamp Duties Act and cannot be stamped with both chargeable and non-chargeable with duty.

I am advised that a deed formally chargeable with stamp duty of $10 has been exempt from duty from 1 July 2006. Where a deed that is exempt from duty is required to be relied upon as being duly stamped for other purposes under the SDA (for example, to obtain the benefit of the exemptions under section 71(5)), the relevant deed may be stamped accordingly. However, RevenueSA will not insist on an exempt deed being stamped to be accepted as duly stamped.

I add that I am advised that parliamentary counsel has considered the submissions and does not consider that the current drafting requires any further amendment. The government is therefore comfortable with the provisions as drafted. In relation to parts 5 and 7, clauses 22, 26 and 27, the issue of foreign ownership surcharges, I am advised that parliamentary counsel and RevenueSA have made a conscious decision to adopt a certain drafting approach that achieves the goals of the government.

Further, with respect to the foreign surcharge only being payable on a dutiable instrument, I am advised with regard to the submission concerning the term 'dutiable instrument' in paragraph 40 that both 'duty' and 'instrument' are defined in the Stamp Duties Act. 'Duty' ('dutiable' being a corresponding adjective of the noun) relevantly means duty charged under the act and 'instrument' includes every written document. By extension, 'dutiable instrument' is an instrument chargeable with duty under the act. Both 'dutiable' and 'dutiable instrument' are also already used elsewhere in the act. It is therefore considered that the drafting does not give rise to any interpretive issues so as to require amendment.

With respect to clause 22, residential land, I am advised that whilst there are no formal rights available in the Valuation of Land Act 1971 to challenge the land use code assigned by the Valuer-General, the Valuer-General will review land use codes on request. The commissioner also maintains a discretion to determine what he considers the predominant use of the land. I am further advised that the commissioner and the Valuer-General have had preliminary discussions about the issue raised and are committed to considering the issue in greater detail.

With respect to the point about the definitions creating issues in cases of property changing use or involving a mixed development, I am advised that with the abolition of duty on qualifying land from 1 July 2018, only dutiable transfers or acquisitions of land taken to be used for residential purposes and primary production will be liable to duty in the first instance. With regard to an intention to change the use of the land, the act already provides that the date that is relevant to a determination as to whether land is qualifying land or not is the date of the relevant transfer or acquisition.

The predominant use test is considered to be the appropriate test, as it can be readily identified from information presently available via the Valuer-General. This provides greater assurance to taxpayers on how the property will be assessed for duty purposes. Introducing a mixed use or intended use test as suggested would, in both cases, create uncertainty and be complex to administer, potentially involving significant costs and resources to RevenueSA, the Valuer-General and, more importantly, the taxpayer.

In relation to clause 22, foreign persons, I am advised that the definition of a foreign natural person is consistent with the approach taken in Victoria and Queensland and will be adopted in Western Australia. A dual citizen will satisfy the Australian citizen requirements, I am advised. Further, in relation to the issue of foreign persons establishing companies, RevenueSA understands, from discussions with interstate counterparts, that the vast majority of residential property purchased in other jurisdictions to which a foreign ownership surcharge equivalent has been applied have been purchased by foreign natural persons in their own right as opposed to the purchasers being foreign corporations or foreign trusts. Accordingly, the provisions in the bill are directed towards the purchase of residential property by foreign companies and foreign trusts and will likely have, also, a lesser application.

It is considered that the foreign corporation provisions, as drafted, provide an appropriate balance and measure for determining whether a corporation is a foreign person. It is also the case that the usage of the 50 per cent or more threshold (as opposed to, say, New South Wales' lower threshold of 20 per cent at which a corporation becomes a foreign corporation) is in keeping with Victoria, Queensland and the proposed Western Australian provisions, as well as the prescribed interest threshold which applies to the landholder under provisions in the Stamp Duties Act.

With respect to powers to appoint, I am advised that the drafting of the provision will prevent foreign persons having powers to appoint under the trust that could, in effect, give them control of the trust. As such, it is not proposed that the suggested deletion or limiting of the provision to a person with the power to appoint the trustee be enacted. The commissioner and parliamentary counsel are comfortable with the drafting as it stands.

In regard to the issue of a taxpayer in dispute with the commissioner, I am advised that the reference to 'an identified object under the trust' is a reference to the primary or specified objects of the trust deed. That is, the person must be identified in the trust deed by name. The term is not a blanket reference to a class or range of beneficiaries under a discretionary trust deed. The commissioner and parliamentary counsel, I am advised, are comfortable with the drafting as it stands.

Further, as to the issue of a foreign person being a taker in default of the capital of the trust, I am advised that the notion of 'a person who takes capital of the trust property in default' as drafted is commonly understood. For present purposes, capital would include residential land. The addition of the words, as suggested, would unnecessarily limit the provision to only instances where a person takes capital of the property in default of appointment prior to the ultimate vesting of the trust. For example, a deed may otherwise require a trustee to distribute capital at certain or regular times prior to the ultimate vesting of the trust. As such, a deed could provide for a foreign person to be a person who takes the capital of the trust property in default at those times. As such, it is not proposed that the suggested addition to the provisions be adopted. I am advised that the commissioner and parliamentary counsel are comfortable with the drafting as it stands.

In relation to a person who takes capital of the trust property in default, I am advised that similar to the 'identified object' provision mentioned above, a reference to 'a person who takes capital of the trust property in default' is a reference to a specified person in the trust deed. That is, the person must be identified in the trust deed by name. The term is not a blanket reference to a person who may potentially take capital of the trust property in default under a discretionary trust deed. I am advised that both Queensland and the proposed Western Australian provisions also have regard to takers in default in order to establish whether a trust is a foreign trust. The commissioner and parliamentary counsel are comfortable with the drafting as it stands, I am advised.

In relation to clause 26, foreign surcharge adjustment provisions, and the amount that the foreign ownership surcharge is to be reduced by the amount of foreign ownership surcharge paid in respect of the transaction by virtue of which the person or trust became a foreign person or a foreign trust. The legislation as drafted is a stylistic drafting preference of parliamentary counsel and the government is comfortable with the current drafting.

Further, relating to the proposed section 72(7) requiring the payment of the surcharge in certain situations, I am advised that the clawback provision is based on the Queensland model, which I am advised is also to be adopted by Western Australia, and is aimed at preventing the manipulation of interests held in the corporation or trust in order to avoid the surcharge.

With regard to the specific example provided at paragraph 60, I am advised that the foreign ownership surcharge is only payable on a dutiable instrument or acquisition. As the transfer in the example is made in pursuance of the provisions of a will, it is not chargeable with a duty pursuant to section 71(5)(h) of the Stamp Duties Act. As no duty is payable on the transfer, a foreign ownership surcharge is not payable.

With respect to a refund of the duty, if the trustee of the foreign trust distributes the land in specie to a resident beneficiary, I am advised that the refund provisions are consistent with the New South Wales provisions and will also be adopted by Western Australia. Victoria and Queensland do not provide a refund in these circumstances.

I am advised, with regard to the example in paragraph 63, that it would be prudent on the trustee, who was personally liable to pay the foreign ownership surcharge, to endeavour for the trust to cease being a foreign trust within 12 months and before it distributes the land in order to receive a refund of the foreign ownership surcharge it paid. I am advised that the commissioner and parliamentary counsel are also comfortable with the drafting as it stands.

Relating to a migrant purchasing land and obtaining a refund, I am advised that it would be prudent on foreign persons considering purchasing a residential property and their representatives to become acquainted with the operation of the financial surcharge before purchasing such a residential property, together with any other tax and costs that arise. In relation to the point about 12 months for refunds and three years for the payment of the surcharge being adopted, as previously mentioned the 12 months for refunds and the three years for payments of the surcharge time frames are consistent with those jurisdictions that have adopted similar provisions.

With respect to the adjustments where there is a change in the status of the land acquired, the government recognises that there may be some land acquisitions for developments that may benefit the state where it would be appropriate to grant ex gratia relief from the foreign owners surcharge; for example, Australian-based, foreign-owned developers who contribute significantly to the South Australian housing supply. Accordingly it is proposed to publish a ruling setting out factors that will be considered in determining whether ex gratia relief from the surcharge will apply to certain land. All other jurisdictions with the foreign owners surcharge exclude significant residential developments either by way of Treasurer's discretion or ex gratia relief.

In relation to the zoning of land at the time of acquisition for a development, it is not proposed to allow a change of status from residential land to commercial land within a specified period to receive a surcharge refund. No other jurisdiction allows a surcharge refund for change of status from residential to commercial land. As previously mentioned, introducing a change-of-status test or intended-use test, as suggested, would, in both cases, be complex to administer and potentially involve significant costs and resources to RevenueSA, the Valuer-General and, more importantly, the taxpayer.

In relation to clause 27, landholder provisions, and the operations of section 14(2), I am advised that the issues raised above do not concern the operation of the foreign ownership surcharge provisions. The calculation of and the amount of foreign ownership surcharge payable in both calculations—being $26,00—is the same. I am advised that the commissioner considers that the first calculation set out under paragraph 72 is correct. With the abolition of duty on qualifying land from 1 July 2018, only the non-qualifying land—being the residential and primary production land—would remain dutiable.

With respect to the change of status of the land from non-residential to residential, and in the context outlined by the honourable member, I am advised that with regard to the submission under paragraph 78 a foreign ownership surcharge would be payable where there was an acquisition of a prescribed interest in the landholding entity under part 4 of the Stamp Duties Act. I am advised that the conversion of the land as described in the submission would not give rise to a dutiable acquisition of a prescribed interest in a landholding entity under part 4 of the Stamp Duties Act. In the absence of a dutiable acquisition in the example, neither landholder duty nor the foreign ownership surcharge would be payable on the conversion of the land from non-residential land to residential land.

In relation to the example about a company that is wholly foreign-owned acquiring some shops and an old industrial site on the eastern edge of the CBD, I am advised that with regard to the example under paragraph 79 above the foreign ownership surcharge would only be payable where there is either (1) a transfer of residential land or (2) an acquisition of a prescribed interest in a landholding entity under part 4 of the Stamp Duties Act.

I am advised there is no transfer upon the deposit of the strata plan. Likewise, the deposit of the strata plan would not give rise to a dutiable acquisition of a prescribed interest in a landholding entity under part 4 of the Stamp Duties Act. In the absence of a dutiable transfer or acquisition in the example, no landholder duty or foreign ownership surcharge would be payable upon the deposit of the plan.

With those answers now in the Hansard, I commend the bill to the chamber and look forward to the committee stage later this afternoon. For the benefit of members, I indicate that it is the government's intention to press ahead with this bill, to return to this bill after private members' business concludes today, and to conclude all stages of this bill today.

This bill was introduced four months ago. I think our members are well aware of the operation and the aspects of the bill. It has been in this chamber for over 30 days. It is the government's intention to have all stages of this bill finished today. If, for any reason, that does not occur, it would be our intention to have all stages of this bill finished tomorrow, regardless of what time that means we finish sitting tomorrow.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. R.I. LUCAS: I thank the Leader of the Government for the answers he provided at the end of the second reading. In the interest of outlining a sensible process in terms of progressing the Budget Measures Bill, I can indicate, certainly from the Liberal Party's viewpoint, that we have been happy to process the Budget Measures Bill this week. The issue in relation to yesterday is that one of South Australia's best tax lawyers has provided detailed advice to the parliament, via me as the shadow treasurer, in relation to the Budget Measures Bill. As members would be aware, I have done this each year over the last four or five years. So, on the last sitting day of the last sitting week, I read some 14 or 15 pages of detailed tax advice from, as I said, one of South Australia's leading tax lawyers.

As I indicated in the second reading, on previous occasions the government has occasionally agreed with suggested concerns and amendments suggested by the tax lawyer and has actually picked up and moved amendments to some of the tax bills as a result of that particular advice. Yesterday, the government finally had detailed responses to the 14-page advice from the tax lawyer, which the government was kind enough by way of email yesterday afternoon to provide to me. That has now been placed on the public record in the second reading.

The reason for sensibly adjourning debate from yesterday to today is it allowed me as the shadow treasurer on behalf of the party to read the detailed response from the Commissioner of State Taxation and the government, and parliamentary counsel in some parts, to the tax lawyer's concerns and advice. I then, albeit I must say hurriedly, had some brief further consultation overnight and this morning in relation to the Commissioner of State Taxation's views and others'.

By and large, as the minister has just read, these concerns relate to other important provisions in the Budget Measures Bill. The entire public focus, and I think the government focus at least from a public viewpoint, has been on one aspect of the bill, which is the state bank tax, but there are significant other provisions in the bill, which relate to a foreign investor tax, payroll tax concessions, land tax changes and stamp duty concessions as well, and most of the detailed advice and concerns relate to most of those other particular provisions.

So, whilst the public attention and controversy relates to the bank tax, and we understand that, what I am sure members are aware of, but perhaps members of the community are not, is that the Budget Measures Bill addresses many other issues, and it is the role of this chamber and indeed the parliament to apply some rigour in terms of the drafting of that and highlighting potential concerns so that, at least if there are concerns further down the track, the government cannot say that the issues were not raised with the Commissioner of State Taxation prior to the passage of legislation, if ultimately we end up in a court of law and major loophole or drafting errors are established.

From my viewpoint, I am comfortable with the process of soldiering on today, both this morning and this evening. Certainly, I can indicate from the Liberal Party's viewpoint that we are quite comfortable with being able to complete this by the end of the sitting week, which was a not unreasonable position for the government to put. My understanding of the crossbenchers' position is they are comfortable with that as well.

The other point I will make is a word of advice to the slow-learning Treasurer in another place; that is, he still I do not think has worked out that in this chamber, the Legislative Council, there are actually only seven Labor Party members on the floor of the chamber, and there are 14 non-Labor members on the floor of the chamber. While the Treasurer of the state in another place jumps up and down and says, 'You will do all of this yesterday. You won't go through the bill thoroughly, and you won't have a chance to read the advice and take further consultation,' the Legislative Council and the parliament does not work that way.

Perhaps in the fool's world of the Treasurer that might be the way he would like to see the place operate, but the Legislative Council has not operated that way for 30 years or so, and I am sure it is not going to operate that way in the foreseeable future, because there will always be a position, I suspect, where governments of the day, whether they be Liberal or Labor, will not have a majority in this particular chamber. So that is the background.

In relation to how I intend to proceed with this to assist the process of the committee, I intend to raise the detailed responses raised by the tax lawyer in the individual clauses as we get through them. As I said, most of those issues and concerns are unrelated to the bank tax. They relate to the other provisions. There are significant concerns in relation to the foreign investor tax. The tax lawyer is very concerned about a potential loophole. I am not comfortable with the government's response, based on the advice of the Commissioner of State Taxation and parliamentary counsel, and I want to explore that in greater detail during those particular clauses later in the committee stage of the debate.

In relation to the bank tax, the Liberal Party has had on file now for some time two pages of amendments. Parliamentary counsel's advice to me is that the first amendment, as the Chair has outlined, is actually in clause 2. It is my suggestion to the Leader of the Government and to other members that it would make sense to actually treat the first amendment as a test vote on the package of amendments. It is not actually the most significant amendment. The most significant amendment does not occur until much later in the bill, but, as we move through this sequentially, it is part of the package.

If the first amendment is successful, the rest of the amendments, in my view, and in the view of parliamentary counsel, are consequential and are part of the package. Certainly, from our viewpoint, unless the government wants to re-enact the debate on the first test clause, it is not our intention to re-enact the debate on the bank tax for all the other amendments. I think there are some seven amendments in total, so that is certainly my suggestion in relation to the process. It is certainly up to the government and other members in the committee as well as to whether or not they want to proceed with it.

As I said, I will not be raising issues in relation to the forensic tax advice in relation to issues other than the bank tax during the clause 1 debate, but prior to actually opening up the debate and getting to the first amendment in clause 2 I did want to raise some general questions in relation to the operation of the bank tax and seek the government's response to it.

I will firstly ask the minister: should the parliament pass the legislation and should the government decide that it is not going to lay the bill aside—I know they are big ifs—when is it the government's intention that the act will come into operation in relation to the broad provisions in the Budget Measures Bill?

The Hon. K.J. MAHER: Can you start back with the 'ifs' again? I did not quite understand what you were saying.

The Hon. R.I. LUCAS: If the parliament passes the bill as the government would wish it, perhaps if I put it that way firstly—

The Hon. K.J. MAHER: If the bill passes as we put it up?

The Hon. R.I. LUCAS: If the bill passes both houses of parliament as the government would wish it, which is as it was originally intended, what is the government's intention in relation to the commencement of various provisions in the act?

The Hon. K.J. MAHER: Did you mean the bank tax particularly?

The Hon. R.I. LUCAS: All the provisions in there. Clause 2(1) says, 'Subject to this section, this Act will come into operation on the day on which it is assented to by the Governor.' It is a general provision which is there, but when do you intend that date to be?

The Hon. K.J. MAHER: I am advised that there are various provisions within the act that have operative starting dates for those different provisions in the act. The question is: when would the government—

The Hon. R.I. LUCAS: Assent to it, that's right.

The Hon. K.J. MAHER: Is it the bill as a whole—

The Hon. R.I. LUCAS: Yes.

The Hon. K.J. MAHER: —given that contained within the bill are various starting dates for various rate things that occur under the act? Is that the question, effectively?

The Hon. R.I. LUCAS: Let me clarify it to make it easier. Under clause 2(1), it says, 'Subject to this section, this Act will come into operation on the day on which it is assented to by the Governor.' Assuming the bill passes both houses of parliament in the form that the government introduced it, how soon after the parliament handles it are you intending to bring the act into operation?

The Hon. K.J. MAHER: The advice is, as with most other bills, as soon as possible.

The Hon. R.I. LUCAS: There is a provision in the bank tax clauses that states that these clauses:

… will come into operation on the day on which the Major Bank Levy Act 2017 of the Commonwealth comes into operation (and if this Act is not assented to until after that day, those sections and that Schedule will be taken to have come into operation on that day).

Can the minister, through his advisers, indicate if that day, in relation to the commonwealth act, has already been specified?

The Hon. K.J. MAHER: My advice is that, under the commonwealth levy, the first payment is due on 21 March next year.

The Hon. R.I. LUCAS: That is another set of questions I have, but my question at this stage is: under this bill, which the government is asking us to support, it states, under clause 2(2), that the bank levy, in essence, (if it was to be passed) will come into operation on the day on which the Major Bank Levy Act 2017 of the commonwealth comes into operation. So, under the commonwealth legislation there is obviously a day which says, 'Hey, on such and such a date, the commonwealth bank levy will come into operation.'

What you are asking the parliament to support is: whatever that day is, the state bank levy will come in. So, it is not actually when the collections will be but when the legislation will be activated. My question is simply: what is that date? Has the commonwealth specified already the date on which the commonwealth legislation is to be enacted? Are you saying, as a government to the parliament, that you want this to be activated (if it is passed by the parliament) on that particular date?

The Hon. K.J. MAHER: The advisers do not have that date with them. They have the date for the first payment, but I am sure we will have the answer when we continue the debate over the course of today.

The Hon. R.I. LUCAS: I am happy to accept that; I think it would be useful to know what that date is. In relation to the answer to the question I had not quite put—but let me put it now; that is, the actual collection date—I think the minister has already indicated, based on advice, that the first collection is on 21 March, which is four days after the next state election. In the briefings that members were given, we were advised that the collection date is actually for the first two quarters. It is for the September quarter and the December quarter but that once the sequence is established the actual collection date is, I am assuming, 2½ months after the end of the quarter, almost. So, the 21 March collection date in future will be the collection date for the previous year's December quarter; is that correct?

The Hon. K.J. MAHER: My advice is—and I think it is as the honourable member has outlined—that for that first 21 March payment, the relevant periods it will be applying to for collection will be the preceding December and September quarters.

The Hon. R.I. LUCAS: My question to the minister is: where in the bill does that actually get specified? We were advised that the future operation of the bank tax will be collection quarterly and it will be around about 2½ months or so after the end of each quarter once the initial transition period is established. But we were advised, as the minister has just outlined, that the actual first collection, if this levy is to be passed, will be on 21 March for the two quarters.

Can the minister's advisers indicate where in the legislation that is made clear that the first quarterly collection is not collected when it might otherwise be due, that it is actually deferred and not collected until the second quarterly collection is payable, and that is the 21 March date?

The Hon. K.J. MAHER: I am advised that it is not specified in our state act, but it reflects the government's administrative decision to follow the administration of the commonwealth bank levy.

The Hon. R.I. LUCAS: Can I ask the minister to take that on notice as well, given that we are going to recommence debate either tonight and/or tomorrow. I am just interested to know what is the head of power which actually allows the banks, should this pass, not to pay their first quarterly payment but to pay the first two quarters on 21 March next year. If the minister says it is not actually in this bill, it is actually either in the commonwealth bill or it is in an administrative arrangement somewhere, then I think the parliament, at some stage, is entitled to know where the head of power is. If that could be taken on notice and provided at a later stage of the debate, I am comfortable with that.

The Hon. K.J. MAHER: This might be a partial answer, I think: my advice is that clause 10 specifies returns in relation to the state bank levy in respect to the quarter. Just so I am clear, it is not specifically the head of power that specifies quarter. The honourable member's question relates specifically to what is effectively the first or September quarter not to be paid immediately but to be paid in conjunction with that December quarter in March? The question is not the head of power to allow it generally, but for that very first payment—am I interpreting the question correctly?

The Hon. R.I. LUCAS: Yes.

The Hon. S.G. WADE: I ask the minister whether he can confirm that the government's commitment to allocate $41.5 million over four years for mental health and disability services is contingent on the Hon. Kelly Vincent voting for the Budget Measures Bill and not contingent on the bill passing this house? I should have said 'if the bill passes this house with the bank tax included'.

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