Retail and Commercial Leases (Miscellaneous) Amendment Bill

Second Reading

I would like to thank the representative of the opposition as well as the members for Florey and Hammond for their contributions.

In respect of the matters raised by the member for Florey and the question of the constituent's concern about section 5, and I tried to note it as quickly as I could, it sounds remarkably like a matter that was raised with me in consultation. There is an answer in relation to that, and I will make sure that is provided to the house, as it has been raised in the house, but also to the member for Florey. If there is ancillary documentation around this submission by the constituent, if it has been sent to my office this morning, then I am happy to have a look at it.

Thresholds, whatever they are, and rules around who is in and who is out are significant, and I am mindful—because I know this aspect has been raised, and I think it is in relation to a similar matter that the member for Florey is raising—if the rent is agreed to be reduced below that threshold, which can occur. My recollection, in short, is that there is no change as result of that voluntary reduction in rent, but I will make sure that information is made available.

As to the increase in penalties, which has been raised by the member for Florey and I think echoed in some commentary by the opposition spokesperson on this matter, I think it is fair to say that these are matters which have been comprehensively considered by all the stakeholders, including, of course, Mr Alan Moss, who conducted the review on this matter. We have listened to them. We are acting on them in this bill, as was proposed by the previous government, in relation to the bill that lapsed as a result of the proroguing of parliament prior to the last election.

It is important, obviously, whatever the penalties, that they be contemporary, that they be effective. They are designed to act as a deterrent in relation to any penalties. The financial penalties that apply to these contractual arrangements are significant. Whether they should be higher I suppose does remove from it the fact that there are significant commercial arrangements between the parties in these cases. Very often, we are not talking about two small businesses being involved in both landlord ownership and tenancy; sometimes, we have very significant players in both categories.

I have always thought it rather unusual in these types of cases that we always talk about very large national companies which own shopping centres and the small tenant who occupies them, who is not Coles or Woolworths, to be fair, but a smaller unfranchised operation. We do not often talk about the power imbalance that might exist between the Coles or Woolworths—this is no reflection on them personally, but they are national, well-known tenants—and a Mr and Mrs Teague, or someone we might pluck out, who might be the owner of the particular strip shopping centre who is not, I think I will use for this example, a multinational.

Mr and Mrs Teague happily live in the Adelaide Hills and they might have invested their life savings into a shopping centre, and along come Coles and say, 'We are very happy to be your anchor tenant,' and Mr and Mrs Teague think this is a wonderful idea and they are happy to pay more than $400,000. Where is the power imbalance there? I do not think it is, as we would expect, the purpose of this legislation, so we do need to think about all the parties that are likely to be affected by this legislation and perhaps not always look through the prism of a large multinational landlord and an impecunious, vulnerable tenant.

I appreciate that is the whole purpose of the general legislation, to provide a regime of protection and clear understanding on behalf of the landlords, but really this legislation is about protecting potentially vulnerable tenants in commercial and retail arrangements. I do not doubt for one moment that there is a very significant portion of those who are positively affected by the protections of this type of legislation that we are upgrading, but there is also a cohort who get the benefit.

I think we need to place this on the record. Given that the member for Florey's constituent has raised the question of land tax, I am not sure whether or not he or she presented their argument to the member for Florey before he or she read this morning's paper, but if they had then he or she would have had a wide smile on his face when he or she read The Advertiser this morning because they would have, I am sure, welcomed the announcement of the government to put out for consultation a comprehensive reform in relation to land tax for consideration in a bill which will be welcome relief to many of the parties who are affected by this legislation.

These are landlords and tenants. Let's be frank here: this act, and in particular the threshold, is very much about who pays the land tax. One of the threshold benefits is that with those tenancy arrangements below the $400,000 the tenant does not pay the land tax. I do not know still to this day why the former government increased the threshold from $250,000 to $400,000 overnight. That is still a mystery to me.

At first blush, you would have to say that surely they would have considered the massive number of arrangements in retail and commercial leases that would have been captured by this change and been suddenly forced to pay land tax or relieved of land tax. We are not talking here about tiny amounts of land tax. The new government is proposing significant relief. However, land tax at 3.7 per cent, at the highest rate, in the leasing arrangement contracts that we are talking about here is very substantial—tens of thousands of dollars, millions of dollars. Who has to pay these things? I am still at a loss.

I can recall matters being raised in this chamber by parties who ultimately went to the Supreme Court. We have heard about the Diakou Nominees case and the judgement of Justice Stanley, which I do not reflect on in any way. However, I make the point that there were consequences when the previous government of the day ratcheted up the threshold from $250,000 to $400,000 overnight. There were consequences for people's livelihoods. Landlords, who would have to pick up these massive land tax bills, were immediately impacted. Hopefully, with the passage of this legislation in due course, we will be implementing a mechanism by which that will not happen again.

There will be a Valuer-General's assessment and review and an independent process of ensuring that we keep our laws contemporary in this regard and account for the fact that there is a movement in the value of the assets we are talking about, which have become the subject of these leases. What the previous government did must never be repeated. It is fair to say that even when it was brought to their attention, they refused to fix it.

They had an opportunity to fix it. I recall the former member for Newland, when he was minister, publicly raised his concerns regarding the issue of who was trapped as a result of this decision—this stroke of the former government's pen to raise the threshold from $250,000 to $400,000—and I commend him for doing that. Clearly, he was overruled by the cabinet of the day and no action was taken to remedy that.

The bill in its previous form under the previous government came before the parliament circa 2016-17—as we know, it died as a result of the parliament being prorogued—and was under the responsibility of the then minister who was the member for Waite. He also is no longer in the parliament. These issues were raised with him and he did not do anything about it. He was supposed to be an independent member of the then Labor cabinet of South Australia. He did not do anything about it.

There is no question that we have some people who, as a result of the government's action, have been trapped in a twilight zone, and what we have done is try to continue to work with how we manage this bill to ensure that that situation does not happen again. We cannot go and fix up all the mess of the former government administration, but we have acted to try to ensure that we do not have this situation arise again under a future irresponsible government.

I make the point that, whilst we will get particulars back to the members for issues raised, we are proud to progress this legislation and provide the protections for those who are within the ambit of this act. We are going to cut out the weakness to ensure that ministers do not come in and with the stroke of a pen decide who is going to pay land tax and who is not. We are going to fix that for the future.

I wish to place on record my appreciation for the advice of the Small Business Commissioner in relation to the development of this legislation under our former minister, the Minister for Innovation and Skills, who has progressed the matter to date—it has now been committed to me for the purposes of its passage through the parliament—and also for ultimately managing the small business commission as an agency within the Attorney-General's Department. I am proud to do that.

As I say, in relation to land tax generally, I am very proud to be a member of a government that has announced a model today that has gone out for consultation to try to give South Australians relief overall: 92 per cent of individuals who pay land tax are going to get relief. What a great day for South Australians!

With those few words, I thank members for their contributions. I acknowledge to the parliament that we are not able to progress to committee stage on this matter at this stage. I am advised that the Small Business Commissioner, who has the responsibility for this legislation, is not available today, and so it is the government's intention to propose to the parliament that we move to adjourn at clause 1 so that we can make him available as the specialist adviser in this field. It will give us an opportunity to clarify the specific matters that have been raised by the member for Florey, and I thank her for raising them. I commend the bill to the house.