I rise to speak on the Land Tax (Miscellaneous) Amendment Bill 2019. I start by indicating that I pay land tax. I have for nearly 30 years and I have hated paying it every year—to whatever government. I have waited a long time in this parliament to see some genuine land tax reform. It is something that I follow with some interest.
In terms of the history of land tax in South Australia, it was introduced in an attempt to ensure that those coming into the new colony bought town acres, did not land bank and buy more than one. A tax was supplied for that purpose, and it was a worthy purpose because the whole migration experiment for South Australia relied on new people coming to South Australia and being prepared to invest here and set up their families and businesses and, even harder still, go out into the regions to make a living to ensure the prosperity of the state, in copper and wool in those days. I think the purpose of its establishment was a worthy one, and we seem to have lost sight of it.
I certainly am concerned—and this is why I am a member of the Liberal Party and not the Australian Labor Party—that the Labor Party have consistently maintained a view where they hate people—hate people—who are going to go out and earn and accumulate some asset. They are pretending at the moment as though they care about people who might be affected by tax reform, but this is the reality of it. The Australian Labor Party were so intent on ensuring that people did not aggregate property that they objected even to putting a central railway in South Australia through to the Northern Territory. It ended up having to give away the Northern Territory to the commonwealth. Why?
Mr Brown: That was a while ago.
The Hon. V.A. CHAPMAN: Yes, 100 years ago. Why? Because they could not bear the idea that there would be land speculation developed along the railway and stations throughout the Northern Territory, that the rich of the south were going to go up there and buy more land and speculate. Read your history books. These people hate people who have a go, who have a crack, who actually make provision for their families.
To be absolutely relevant to today, it irks me to come into this house to hear this pretend care for the people who have worked hard to aggregate some extra properties, that in some way we are going to destroy and demolish it on this side of the house. I was frankly insulted by the contribution from member for West Torrens, and not because he quite reasonably made a shout-out for the people who came here after the war to build a life, as though these men were giving up their soccer games with their children.
I lived through a generation where our families gave up a lot. Our fathers did not ever come to sports events. They were out there working lots of jobs. My mother worked in separate employment. My grandmother gave up her opportunity during the war to work extra jobs to be able to support her daughter, to be able to make sure that there was some future for them in the new Australia after the war—yes, great. Let's recognise that there were many people in that generation who—apart from sacrificing the lives of young men, mostly, in those families—also had to work hard. Let's not forget them. They have made a contribution.
I remember the previous Labor government, just in the time I have been here, under treasurer Foley. I remember minister Conlon at the rallies against land tax against the previous Labor government when they were going to make amendments to land tax, when they were going to abolish the rort of removing minority shareholding in companies of ownership of land when there was 5 per cent owned by mum or dad.
What did treasurer Foley say about that? He said that that was just a rort, that he was going to get rid of it, that it was no longer going to be recognised and that there was going to be a change. So please do not come into this place and start giving lectures to this side of the house when we say there must be comprehensive reform. We have some good runs on the ground in the Tonkin administration, which gave to South Australians—
—the principal place of residence to be land tax free. The previous Labor government could not bring themselves to come in and actually put land tax back on the principal place of residence, so what did they do? They smashed it with ESL instead. They made you pay tax to live in your own house. What did we have to do when we came in? Give the $90 million a year back to the people of South Australia to ensure that we had some remedy. The reality is that these people hate others getting ahead. They hate that, and they have demonstrated repeatedly throughout history their refusal to recognise the blood, sweat and tears of people who make a decision to invest in property.
I can tell you that after nearly 30 years of paying land tax I am very pleased that finally a government is prepared to comprehensively review the rate, the threshold, the obligations in relation to property development who utilise trusts who will have a surcharge and, most importantly, to be able to look at the question of aggregation, which has been with us for as long as land tax has existed, and be able to say, 'Fair crack of the whip. Those who own a portfolio of a number of properties versus those who own the same value in one property are going to share the load.' It is not easy because people have structured their financial arrangements. Sure, they have some time to restructure them.
I do not think the world is going to fall apart. I do not think the sky is going to fall in, but there will be some people who are hurt. There are many more who will be advantaged by these reforms, and for those reasons I will be supporting them. I would like to just indicate on the speculation, perpetuated first by the Property Council and then by others, including the Labor Party, about how this was going to be damaging to mum-and-dad investors who might have a small portfolio. A number of myths were immediately trotted out as though this was going to be the consequence of this legislation. Most of these myths have now been exposed publicly, but let me just list some of them:
myth 1: that a person's principal place residence would be liable for land tax. The fact is the principal place of residence remains exempt from land tax;
myth 2: that a person with a PPR and other investment property—i.e. a holiday home—will have those properties aggregated. False. The fact is that the PPR will not be aggregated with any investment properties;
myth 3: that self-managed superannuation funds will be affected by changes to aggregation rules and liable for trust surcharge. False. The facts are that SMSFs will be excluded from changes to aggregation rules and, if a property is held within an SMSF, it will not attract a trust surcharge. A property held in an SMSF will not be grouped with property owned by a taxpayer outside the SMSF;
myth 4: that a husband with a property in his main and a wife with a property in her name will have their properties aggregated. False. The facts are that the husband with a property in his name and a wife with a property in her name will not have their properties aggregated;
myth 5: that all trusts will be aggregated. False. The facts are that different trusts will not be aggregated if they pay the surcharge. The trustees of existing family trusts—discretionary trusts, most commonly—will have a choice of nominating a beneficiary or paying the surcharge of 0.5 per cent, capped, as we know, under the proposal. Similar rules will apply for fixed and unit trusts; and
myth 6: that individuals who hold property as natural persons, trusts and companies will have all of their properties aggregated. That is absolutely false. The facts are that individuals will be able to hold land as a natural person in a trust and in companies without the properties being aggregated into one single ownership. Property held as a natural person will not be aggregated with property owned in companies and will not be aggregated with property owned in trust if the trust pays the trust surcharge.
This was how it opened. I do not think for a moment (and I said this to the chair of the Property Council) that this opening shot over the bow, I suppose, in reaction to the aggregation proposals in this part of the package—because, of course, they love everything else, they just did not like bits of it—was to try to muddy the waters. The assertion that on this side of the house, the Liberal Party had not consulted with stakeholders was completely and utterly false. I put this on the record: we had been consulting with major stakeholders over a number of years prior to the election. We had discussions with them about land tax reform. They were begging for it and we agreed with them.
We said, 'A rate of 3.7 per cent is completely uncompetitive around the country and is not acceptable and we need to fix it and we will sit down and go through it,' and we did. So that assertion is completely false and, I suggest, mischievous. Then, allowing people to be frightened in a circumstance with an envelope of fear was completely unnecessary. Having said that, we made the commitment that there would be proposals to complement other initiatives we had made to be effective from 1 July 2020. We made a commitment over a period of a number of weeks.
Of course, we have to take the flak from those who want to argue for and against bits and pieces of these proposals; we accept that. But the alternative is to do it the Labor way and just simply announce and introduce and then beg forgiveness down the track. Announce and defend, announce and defend, announce and defend—I had 16 years of that in this place.
It is not a model which we accept or respect. We are prepared to do this. We are prepared to do the hard yards. There are still aspects of this that are not agreed, but there are three aspects which are going to be moved in this house in committee and I outline them as follows: firstly, that there will be amendments to the Land Tax (Miscellaneous) Amendment Bill to increase the threshold where the top 2.4 per cent land tax commences. The threshold of the top land tax rate will be increased by $250,000, from around $1.1 million to $1.35 million in 2020-21. The threshold will then be increased by a further $250,000 to $1.6 million from 2022-23. The top rate will be indexed annually by site value growth post 2022-23, consistent with the existing practice.
Secondly, I will propose amendments to introduce a new marginal tax rate of 2 per cent between the previous top threshold of around $1.1 million and the revised top threshold. Thirdly, I will propose amendments to introduce a requirement for an independent review of the impact of the total land tax reform package in 2023. This will include the amendments introduced in the 2018-19 and 2019-20 budget. I will not go into any detail of those at present because we will be canvassing them in committee if it is the will of the parliament to progress after second reading.
I am confident that, for all the pain that comes with genuine consultation with the public and the refreshment of the positive response we have had in relation to this from those who will actually benefit from the aspects of this package, there will be a significant number of South Australians who will benefit from the near $90 million that comes with this package back to South Australians. That should be making the Hon. Mr Lucas of another place, our Treasurer, weep because of the extra revenue that he is going to have to hand back, but that is part of the deal here.
There will some who will be paying the price, as they will see it. There will be significant others who will get the benefit, and that near $90 million returned to South Australians so that they can spend it in the Liberal way, as they choose, will be singularly the most important feature of why we go through the pain of these things, because people do need to be rewarded. They need to throw off the shackle of the previous Labor government. We need to get this state competitive and we are up for that fight.