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Legislative Council - Fifty-Fourth Parliament, First Session (54-1)
2019-10-30 Daily Xml
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Land Tax

The Hon. F. PANGALLO (15:07): I seek leave to make a brief explanation before asking the Treasurer a question about land tax.

Leave granted.

The Hon. F. PANGALLO: One of South Australia's largest employers and property owners has said today the rejection of the government's proposed land tax reforms is 'common sense'. Peregrine Corporation director, Dr Sam Shahin, went even further, describing the changes the government sought to introduce as worse than the current model, which he himself describes as the worst in the nation. The family-owned Peregrine Corporation operates the extraordinarily successful On the Run chain of service stations and employs more than 4,000 South Australians. Dr Shahin was quoted in the media today as saying the government's proposed changes were a 'bad deal' for South Australia and:

It is incredibly sad that we are now pleading to maintain the status quo—that is how bad the proposed land tax changes are.

Aggregation totally obliterates any 'reform' delivered by dropping the top tax rate.

The only winner from the proposed changes is the government collecting an additional $70 million of tax from the taxpayers of South Australia.

The changes are not going to improve investment in South Australia, not going to improve certainty of our economy, and definitely not going to reverse the hordes of capital leaving our State. No-one should mistake the fact that the final outcome of aggregation is effectively higher taxation.

Stinging criticism indeed. My questions to the Treasurer are:

1. Does he concede that the government has got it wrong with its proposed tax reforms when one of the state's biggest employers and property owners voices such stringent opposition to them?

2. Does he agree with Dr Shahin that aggregation totally obliterates any reform delivered by dropping the top tax rate?

3. Does he agree with Dr Shahin that the changes will not improve investment in South Australia, will not improve certainty for our economy and definitely will not reverse the hordes of capital leaving our state?

4. Finally, does he agree with him that the final outcome of aggregation effectively is higher taxation?

The Hon. R.I. LUCAS (Treasurer) (15:10): Put simply, no, I don't agree with Mr Shahin. He has put his point of view directly with me and put his point of view publicly, so there is nothing new in the statements he has put. He has advocated that, instead of a 3.7 per cent top land tax rate, we should drop the rate to 1.5 per cent in South Australia, at what would be a very significant cost to the taxpayers of South Australia in terms of lost revenue.

As I said, the government's position is that we don't agree with the position that Mr Shahin has put, and I have expressed that view to him. Without commenting on the specific taxation arrangements of Mr Shahin's companies, what I have said publicly is that there is no doubt that in South Australia a number of companies and interests have structured themselves in such a way—and I have given the example of one or two companies or groups in South Australia—that they have up to, potentially, 300 or 350 separate companies, each holding a separate property, and not having their total property values aggregated. The government does not believe that that is a fair arrangement.

In relation to the purported statements about aggregation, they misunderstand the current position. Aggregation has existed in land tax law in South Australia ever since the inception of land tax. This government is not introducing aggregation—it has existed for many decades, since the introduction of land tax. The government is introducing changes to aggregation provisions similar to those that already exist in all other jurisdictions, in particular the jurisdictions in the eastern states with which we directly compete in many areas for investment.

The notion that in some way capital will flee the state to go to other jurisdictions, where these rules already exist, defies logic. The property interests, prior to the election and since the election, have said to this government that, because of our 3.7 per cent top land tax rate, people are already not investing in South Australia. Anyone who has followed the land tax debate and property debate over the last 10 years will know that people, in particular investors, are saying that they are no longer investing in Adelaide because of the 3.7 per cent—they are investing in the western suburbs of Sydney and the western districts of Melbourne, in particular in opposition or alternative to investing in Adelaide. That already existed prior to the government's debate and endeavours to amend land tax.

I will not repeat the half dozen quotes I have given to this chamber in response to other members' questions earlier, where institutional investors from interstate, including Colliers, Quintessential Equity and a number of others with significant sums of money to invest, have said that the Adelaide property market is bright, is looking prospective and, in particular, with this combination of land tax reform, stamp duty changes and also the impending growth in our market with defence shipbuilding and the Australian Space Agency, that people in other states and overseas are looking to invest in the property market.

The simple answer to that part of the question is that yes, we conclusively disagree with Mr Shahin in relation to what the impact might be on economic growth, investment and jobs growth in South Australia as a result of these particular reforms. The bottom line is that, if the Mr Shahins of this world have their way and if the Labor Party and others in the parliament have their way, the reality is that South Australia will retain the highest land tax rate in the nation, at 3.7 per cent. That's the simple end result of the opposition to the land tax reform package.

It will also mean that I, as an individual investor, could structure myself with seven separate companies or seven separate trusts, own $3 million in property and not pay a single dollar in land tax. It's up to the Mr Shahins, the Labor Party and others to defend the fairness and equity that I can own $3 million in property and not pay a single dollar in land tax and to defend that as a fair and equitable system that will encourage investment and growth in South Australia.

We disagree with that position strongly. I disagree with the position of Mr Shahin and others who have put that position publicly. When we had a very respectful conversation when he came and met with me in the last few weeks or months—I can't remember exactly the date of the meeting—we respectfully disagreed in relation to our particular views on land tax reform.

The PRESIDENT: The Hon. Mr Pangallo, a supplementary:

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