Thursday, 26 May 2022

State Taxation and Treasury Legislation Amendment Bill 2022

Second reading

Debate resumed on motion of Mr PEARSON:

That this bill be now read a second time.

Ms McLEISH (Eildon) (11:59): I rise to begin our contribution on the State Taxation and Treasury Legislation Amendment Bill 2022. I would just like to thank the minister’s office for their cooperation with this, for the Treasurer and me, and Emily Biggin from the State Revenue Office (SRO), Angus Mackellar from Department of Treasury and Finance and the minister’s adviser, Henry Williams, who has been very forthcoming with information and responding to queries that we have had.

Victoria, as we know, is the highest taxed state in Australia, and we know that Labor love their taxes. They love them so much that in their time already they have introduced 41 new or increased taxes. We know that in 2014 the Premier, when he was given an opportunity to speak on TV, said that there would be no new taxes. What a falsehood, what an untruth, that has proved to be, when they have now gone on and popped in 41 new or increased taxes.

The opposition have a very different view on taxing to Labor. Labor tax at all costs and slug the taxpayer at every opportunity. Well, we know we need tax. We are about lower tax, reducing tax and relieving people of the burden of tax. But the way you do that when you are managing your economy is you need to look at innovative and creative ways to increase the revenues, whether that is through efficiencies of process, helping to establish and encourage new businesses or working with the private sector to make sure that they can thrive and that they can do their bit for the economy. They are a great source to generate revenue and growth for the state, and that is something we are very keen to promote and to work with. We do not want to penalise people for having a crack, for investing or even for becoming a self-funded retiree. They think they are doing the right thing, but they are constantly hit by the government, who taxes at every front.

As happens every six months or so, there is an omnibus tax bill before the Parliament, and this is what we have today. This tax bill makes a number of updates and, typically, has lots of administrative changes. Usually there are a couple of these a year. Typically the state taxation and treasury legislation bills have gremlins—they have gremlins where they are slugging people for different reasons. Now, forgive me for being a cynic. This one does not have the gremlins that they normally do, but we are in an election year. We are only a few months out from an election, so I think that the government has tried to ease up on the taxes, knowing that in the last two terms they have popped in 41 new or increased taxes.

There are even a couple of small benefits to consumers in this bill, and we are certainly not going to be opposing those in this place. The changes that will be brought about by this bill are quite diverse, and I will be talking about each of those in turn. Being the autumn budget, it has budget initiatives. There are two budget initiatives related to this bill. That is the exemption for motor vehicle taxis with disability access, and that is a revenue cost of about $700 000 per year over the four years. And there is also another tax that is mentioned in the budget, not in this bill, and that is the increase in the casino pokies tax to align with pubs and clubs. That is going to be part of the government’s ongoing response to the Royal Commission into the Casino Operator and Licence, and that will be in a separate bill.

The bill before us amends the Borrowing and Investment Powers Act 1987, the Duties Act 2000, the Essential Services Commission Act 2001, the Land Tax Act 2005, the Payroll Tax Act 2007, the Taxation Administration Act 1997 and the Windfall Gains Tax and State Taxation and Other Acts Further Amendment Act 2021. There are always consequential amendments to other acts when you have so many different areas being covered off. Interestingly, for a number of these acts the changes will come in at royal assent and others will come into operation on 1 July, which is the new financial year, and those are to the borrowing and investment powers, duties, Essential Services Commission and land tax acts. By and large, these are tax reductions that we have got here—not huge tax reductions, only small ones. This is really in stark contrast to Labor’s early years. In addition, we also have clean-ups that are cleaning up the problems that Labor has created with the introduction of new taxes.

First of all, I am going to the Borrowing and Investment Powers Act to deal with the amendments there. When you read the legislation and have a good look at it, it looks a lot more complicated than it actually is. In a nutshell, this amendment brings councils or the local government areas under the Borrowing and Investment Powers Act. They are not currently included. In addition, there are a number of administrative changes that are being made for simplicity. It is quicker, simpler and hopefully it should have less legal costs, because at the moment under this act there are a lot of one-off approvals, and being able to do those as a group should have those associated savings. If you are needing to seek legal advice and you only need to seek it once instead of five times, that will certainly be a saving.

Within this bill TCV, Treasury Corporation of Victoria, will be able to make a loan to councils under the government’s local council borrowing program. That money will come from the Consolidated Fund along with any liability for TCV under this loan. Councils can borrow money at the moment from anywhere, and they do. We know that councils are not always flush with cash and there are times that they need to raise capital, get funding, to do particular infrastructure programs. We know with the rate caps, for some councils that has made it very difficult. What this is going to allow is councils to actually get the best available rates. Rather than go out into the commercial market they can get the cheaper rates of TCV.

The amendments will make it quicker and easier to amend the regulations should new entities be added. At the moment there are several methods where specific persons or entities are included, and they will be recorded and registered in the one place. This will make it certainly a lot easier administratively for TCV and the department when they are chasing up information, rather than having to work out in which place that might be, so this will in fact streamline that and make it simpler. The relevant government departments will notify Treasury as to what they would like prescribed in the regulations, and this will make them easier to amend.

There are a couple of risks here. With councils borrowing money—and they can borrow it on the open market or borrow it through the government now, through Treasury Corp—there is a risk that the government will lend money to councils who cannot afford it. If councils default or if they cannot pay it back in that particular time period, they will have to go, probably—and we will get this clarified in the upper house—into an arrangement where they change and refinance their borrowing terms. But you do not want councils, with this, being able to borrow more than they can actually pay back. At the moment, I believe, in the 2021–22 year, just shy of $1 billion has been borrowed by councils, $938.4 million, and this is not expected to change. We have asked about a breakdown by councils, but it is considered commercial in confidence, and that information is not published. As I said, we will be clarifying in the other place exactly what happens if a council defaults—will they be charged interest or is the taxpayer going to be picking up that tab?

But with regard to TCV—a lot of people will know that the Treasurer is responsible for the administration of the Treasury Corporation of Victoria Act 1992—it is subject to the general direction control and specific approvals, requests and determinations by the Treasurer. Each year TCV must pay from its surpluses a dividend to the consolidated fund. The dividend is such an amount that the Treasurer determines, and the chair of the board here would be speaking with the Treasurer, as the chair of the board reports directly to the Treasurer. If we have a look over the recent five-year period from 2015–16, on average these bills have crept up from around $30 million to $49 million–$50 million, so we can see that there are significant dividends being paid to the government each year from TCV.

Now, when you compare budget paper 5 from last financial year and the one that has just been mentioned, you can see that last year over the forward estimates it was expected that in dividends there would be $217 million paid to the government from Treasury Corporation of Victoria. And we can have a look now: that has been bumped up this year. They have revised that; they have revised it up by another $26 million. And instead of the average being around $50 million expected each year, it is hovering between $60 million and $70 million. So you can see where the government is really strapped for cash, with its enormous overruns. I think we are up to $27 billion of overruns since the member for Mulgrave has been Premier in this Labor government, so that is really quite extraordinary.

We have seen also in the financial statements that the TAC is being raided to the tune of $3 billion, which is extraordinary, and that may in fact limit the good work that they can do. They provide money every year to the police to do a lot of road safety initiatives—drug testing, working with speed detection cameras and the like—and if such a large amount of money is being pulled from the TAC, being raided from the TAC, I think it really jeopardises those programs that they have. Equally it is not just the treasury corporation that is paying dividends. In fact now these are not even from TAC and the Victorian Managed Insurance Authority—they are not called dividends anymore; it is going into grant revenue under a tricky bit of accounting. But they are also pulling out $100 million there, and this is an organisation that is barely solvent. If it were not for some tricky financial revaluation of assets, you would see that they are in negative equity; in fact you can see that quite clearly on their balance sheet.

Moving on to the next area that is being amended, it is the Duties Act 2000. Again, we pay duties. Current motor vehicle duties are paid when you apply to register or transfer the registration of a motor vehicle. There are some exemptions and some concessions. The amount that is expected in the budget is $1.08 billion in the vehicle registration and transfer duty; that is up from $0.98 billion last year. So we can just see all of these taxes creeping up, creeping up. As I said, with these duties, with the registration or transferring of registration of a motor vehicle, there are exemptions, and obviously to get an exemption you need to lodge an application and provide supporting documentation. This might be the death of an owner or a breakdown of a marriage or domestic relationship. Licensed motor car trader guys are exempt, as are primary production and firefighting, as you would expect. But more specifically related to this bill, we have the transport of disabled, handicapped, incapacitated or injured persons and/or wheelchairs; there is already an exemption for that, and this is when private motor vehicles have been modified or specifically converted to accommodate wheelchair access—they are eligible for an exemption. So this is extended now. The amendments here extend this to include an exemption from motor vehicle duty in relation to certain wheelchair-accessible motor vehicles that provide unbooked services in a commercial passenger vehicle. Now, unbooked services means if you are at a taxi rank or if you hail a cab in the street. Obviously you need to apply. This applies for vehicles registered on or after 1 July 2022 and ones that are less than two years old. This is intended to and should actually empower wheelchair users to access transport methods that work for them. So as I said, if that is hailing a taxi or picking up one at a taxi rank, it is easier for them to have ones with wheelchair accessibility because of that exemption that is being made here.

Moving on to the Essential Services Commission Act 2001, this bill is going to amend the ESC in relation to the enforcement fund and the operating fund. So we know that the Essential Services Commission has this enforcement fund which is to help fund litigation and other enforcement actions. Now, this here is to clarify funding arrangements under the enforcement fund. This is not terribly old, and it was established in response to the government’s energy fairness plan and to help fund that litigation and other enforcement action that the commission undertakes, such as against energy retailers. I think at the back end of last year there was a bill here about ramping up the compliance and enforcement powers of the ESC, and I would have thought that this would have been picked up at that time. Whether this is an oversight, an omission or just sloppy work I am not 100 per cent sure.

But in reviewing the latest ESC annual report I did notice that penalty notices of more than $2.5 million had been paid by four energy retailers, and these include notices for billing errors. We had external sales agents sign people up without their consent, and there was some discrimination against people with rooftop solar. There have been 240 energy industry penalty notices relating to alleged contraventions by energy retailers and a further 30 penalty notices in relation to solar discrimination. Apparently the legislation is not robust enough and has not had that required flexibility, and it will now cover enforcement action under the Victorian Renewable Energy Act 2006 and the Victorian Energy Efficiency Target Act 2007. I would have thought, as I said, that this should have been picked up previously, but it has not been.

There are changes now to the Land Tax Act, Acting Speaker Dimopoulos, and I can see that you are intensely interested in this, given that your phone is occupying a large amount of your time in the chair there. We have had an enormous slug to taxpayers with land tax, and if we have a look in the budget, it is expected that there is going to be $4.84 billion paid in land tax. That is up from the $4.29 billion that was in last year’s, and there have been some horrific examples of the government’s grab for land tax. As I mentioned earlier, a lot of people who are self-funded retirees have investment properties, whether that be a shop or whether it be a residential dwelling. You pay land tax if you do have investment properties, residential rental properties or commercial properties. That is shops, offices, factories, holiday homes and vacant land. And there has been a bit of revaluation going on here. One of the tricky moves that the government pulled was to remove the power for local government to undertake land valuations and centralise this process so the valuer-general does this now every 12 months instead of two years.

I have got a couple of horrific examples. This one is from the Surf Coast shire. For 30 years, from 1983 to 2014, a couple had cattle graze on their property. For over 30 years they had grazed cattle on their property. What happened was that there was drought, there was less water and there was less feed available, and this couple were older and stopped running cattle. Then, a surprise to them, they received a land tax bill of $868 162.50. That is getting up to $1 million, backdated to 2015. We have got a small property that for 30 years had cattle grazing on it and the last six or so had not. That was rezoned, and they were hit with almost a million dollars in land tax. I find that absolutely extraordinary. Even when they were objecting to this, the State Revenue Office insisted that while this process was underway they must pay the bill or the SRO would include an 8 per cent per annum interest bill. That is extraordinary. These are self-funded retirees, and to be hit with something like that is just beyond belief.

I have had other examples. Somebody I know whose address was changed not by them—it was changed twice just because of the naming of the road—was hit with a land tax bill despite the fact that they only owned one property, their primary place of residence. We also heard in this place about a residential investment property in East St Kilda; Sam had the property’s land tax increased by a couple of years worth in one year alone—$4000 to $6300; that is over a 50 per cent increase. So these mum-and-dad property owners who are the backbone of Victoria’s rental market, whether that is housing or commercial, are being slugged. It is not like these people are wealthy. And if you do your homework, you will find out that most people have one or two investment properties; they do not have 10 or 20. These are the mums and dads, the self-funded retirees. You would look at a number of people who did not buy shares but invested in property, and when they were older they were hoping to use that income to offset some of their pension or to add to some of their pension or to be entirely self-funded retirees. So when they start to get their bills pop up by 50 per cent, it is a real kick in the guts for those people who have really tried to do the right thing.

What we have had also is something that has been quite unfair here. And what the government does do here—and this is actually not too bad, because there is an ability to have a refund on land tax that is paid—is propose to replace the current refund model for recently constructed or renovated principal places of residence with an up-front exemption from land tax. So this includes a principal place of residence exemption where a person is absent from land because of construction or renovation of a residence. This exemption is available for a maximum of four years. This was a bit out of whack from other systems and processes in place. Currently you pay up-front, and when it is complete—the renovation or the construction, however long that might be—you have got to pay the land tax up-front. You have got your construction costs or your renovation costs—you have got all these costs up-front—and then you can claim a refund. So now this is being replaced, and we have a much fairer method where it happens up-front. In the exemptions from the land tax, there is also an exemption for land on which a specialist disability accommodation enrolled dwelling is being constructed. Currently SRSs, the specialist residential services, have these exemptions, and what we are putting here is a two-year tax during construction. This is going to be pairing these together; it will be matched.

Moving on to payroll tax exemptions, there is an exemption here for employment agents. This is quite an interesting case, and it is based on the outcome of an interstate court case, one in Queensland. Victoria’s system actually reflects the Queensland system quite closely, so Victoria is moving, gosh, even onto the front foot to have to do this. New South Wales are not in the same boat as us. So this confirms that an exemption applies to certain wages paid under an employment agency contract and other related arrangements where the agent on-hires their common-law employees to a client who is exempt from payroll tax—that might be a charity or a public hospital. The definition of a charity is a common-law definition which applies across a number of taxing acts, and this is also outlined on the website. There was a case in Queensland before the Queensland Court of Appeal, Compass Group Education Hospitality Services Pty Ltd & Anor v. Commissioner of State Revenue of 2021. So this will now align Victoria with that Queensland-New South Wales policy. What it means basically: if I run a hospital which is exempt from payroll tax but I need to rely on a bank of nurses from an agency, then I do not have to pay payroll tax. The agency who is providing me with that bank of nurses, who are coming to work for me, then does not have to pay payroll tax in that instance. I would expect from this that schools that also operate on a not-for-profit basis and which satisfy a lot of particular conditions would be under the same arrangement. The Governor in Council is enabled to prescribe by regulation specific circumstances and persons eligible for the exemption so it continues to operate as intended.

The Taxation Administration Act deals with a couple of areas, and it concerns deemed assessments of dutiable transfers processed using the online duty payment system. We know that we have all moved to the online payment system, the vast majority, and the matter of a payment being deemed was not so simple because at the point of validation it was not defined and there were several points where the commissioner could validate the information. Now it is taken to have been made and served if a person uses the online duty payment system, so that ascertains that an estimate provided also is not the actual assessment.

There is also a number of information-sharing disclosures relating to compliance here. It amends the act to allow the SRO to disclose tax-related info to the Australian Financial Security Authority and the Australian Transaction Reports and Analysis Centre, and it is very clear about which agencies are authorised recipients of this relevant information. We know in times of investigations and law enforcement activities that this is important, and this includes commonwealth enforcement bodies as well. There is one area of concern here, and that is the lodgement of objections outside five years. The change that is being put forward here was suggested by the SRO or requested by the SRO commissioner wanting more finality in tax matters and in calculating final revenue. If an objection has not been lodged in five years, to date there was a discretion of the commissioner to accept that. And in very exceptional circumstances ex gratia relief was open to the minister—that is still open to the minister. Now, there may be very legitimate reasons why an objection has not been lodged in time. This is related to section 34, and we might be questioning this further in the other place. This is consistent on one hand with limitations in other areas—the retrospectivity of assessments, withdrawal of assessment, issuing reassessments—but there may be legitimate cases, complex wills or prolonged illness, where taxpayers may otherwise be able to convince the commissioner that they really do need to accept theirs late. In the last financial year only seven out-of-time objections were received. There were 13 in the year before, 11, 15. So there have not been an enormous number, but certainly there have been enough that you would wonder about this.

Finally, the windfall gains tax changes: well, this is fixing a stuff-up because the government absolutely went full at it to implement the windfall gains tax where property values were boosted via a rezoning. This was raised at the time: ‘Where do the universities fit in here?’. The government in their wisdom had gone hell for leather to get this moving, and they had not thought it through. They had not thought this bit through, and they should have. When we asked the question ‘What does it mean?’, the Treasurer did not have any answers. The universities did not have any answers. So we now see that this has to be fixed up. The windfall tax was really to try and hit developers and speculators, but actually we know that that is going back to the home buyer, because they are going to slug an extra $20 000 on those bills—on the supply of land to new home owners.

What is being put forward here is an exemption from the windfall gains tax on lands that are owned by a university in certain circumstances. Now, there is a discrete exemption where it is satisfied that the revenue derived from the rezoned land will be spent in fulfilling a charitable purpose. For a university that may be a campus relocation or that could be for research or day-to-day running. Now, we had quite a bit of discussion in the bill briefing about this because universities may go into joint ventures with private operators. How does that work in those instances? This is one area that I was very pleased that the Treasurer’s staff came back to us on to clarify a number of areas in this regard, because it is certainly not unfeasible that they could enter into joint ventures. But as long as the intent is that they are really fulfilling their core business, what they are known for, which could be research, it could be with a private provider or ongoing education—if it is linked, it can now be exempt.

Mr STAIKOS (Bentleigh) (12:30): It is indeed a pleasure to rise to speak on the State Taxation and Treasury Legislation Amendment Bill 2022.

Members interjecting.

Mr STAIKOS: Are you okay, Cindy? You do not look okay.

Ms McLeish: On a point of order, Acting Speaker, the member on his feet is using unparliamentary language, referring to members in a way that they should not be spoken to. I would have thought he would know actually not to respond to interjections and to use the correct title.

The ACTING SPEAKER (Mr Taylor): What is your point of order?

Ms McLeish: I ask you to counsel him and bring him back to using proper language in this chamber.

The ACTING SPEAKER (Mr Taylor): I do not uphold the point of order.

Mr STAIKOS: Dear, oh dear, oh dear. Well, I would re-read the talking points, member for Eildon, because they have got this list of supposed new taxes and tax increases by this government. She said there are 41, the Leader of the Opposition says there are 42. The reality is it is a list that is just full of inaccuracies, and perhaps I will demonstrate that a little bit later in this contribution. This is a bill that continues this government’s strong record of promoting a fair and balanced taxation system. It contains number 55, number 56 and number 57 in the long list of tax- and fee-relief measures delivered by this government—I will repeat: 57 measures of tax- and fee-relief delivered by this government. We are a fiscally responsible government, as this bill shows. We raise taxes from those most able to pay to fund the services and programs the community needs and to invest for the future while also reducing taxes and red tape wherever appropriate.

I am proud to say that as a government we have introduced many more initiatives cutting taxes or providing fee relief than we have introduced revenue-raising initiatives, including the exemptions provided for in this bill. The bill we are debating, for instance, exempts wheelchair-accessible commercial passenger vehicles that provide unbooked services from motor vehicle duty exemptions. This is to support more wheelchair-accessible taxis for Victorians. It also expands an existing land tax exemption for land under construction to include land on which a specialist disability accommodation enrolled dwelling is being constructed. Because this government is committed to delivering accessible transport services and accessible accommodation for Victorians, Labor ensures the tax system supports Victorians living with a disability. The bill exempts universities from the new windfall gains tax, where the revenue they derive from the rezoned land is used to further the university’s charitable purposes, and I will return to this measure in a moment and perhaps refute a few of the points that the member for Eildon made in the final minutes of her speech. It ensures Crown Casino does not have an unfair advantage over club venues, which are often smaller not-for-profit, community-based venues, by equalising the tax rates applicable to poker machines and other electronic gaming machines. This removes Crown’s preferential tax treatment and forms part of the government’s response to the Royal Commission into the Casino Operator and Licence’s findings. The bill also makes a number of more technical amendments to ensure Victorian statute law keeps pace with case law, is administratively efficient and continues to work for all Victorians.

To the windfall gains tax, I am actually very, very proud of this measure, I have got to say. I was very much involved in the implementation of the windfall gains tax as the Treasurer’s parliamentary secretary. It is based on the fact that rezoning decisions are decisions of government, and when local and state governments make a decision to rezone land, it is because there is a community need or benefit. Therefore it stands to reason that a portion of that windfall gain from that decision to rezone land is shared with the community. I think that that is a reasonable position for a government to take. The opposition is on the side of the property development industry. They pretend it is all because they are worried about first home buyers. In fact they are worried about their developer mates and use young first home buyers as cannon fodder. They did oppose the windfall gains tax, and I did hear the member for Eildon say that the measures in this bill around the windfall gains tax and the exemptions for universities amount to a stuff-up. Wrong, wrong, wrong, wrong.

In fact I met with the university sector throughout the process. We always said to the university sector that we would come back after further consultation with them to address their concerns, and that is what we are doing. That is absolutely what we are doing with this bill. In this instance, we are providing an exemption that will require universities to satisfy the commissioner of state revenue of a link between the revenue arising from the rezoning, including sale, rental or licensing proceeds, and the university’s charitable purposes. So a university cannot simply add the money to consolidated revenue for a use to be determined in the future, and it cannot put the money to a commercial purpose. There must be a direct link to charitable works for the community. This is entirely consistent with the aim of the windfall gains tax. It is to promote wider community benefits, in this case access to education, over purely private profits.

Land is one of the most important resources available to the community. Rezoning is a development control instrument we exercise on behalf of the community as a government, and this government believes land rezonings and developments should benefit the wider community, not a select wealthy few, whereas those on the other side of the house wanted to build a Gold Coast on the Yarra at Fishermans Bend to line the pockets of their developer mates.

The Liberals have found a way to keep themselves busy, as they fritter away their time on the opposition benches, by tallying up what they claim is a list of our new and increased taxes. But as is the Liberal way, they have inflated the list with double counting and outright errors and taxes they actually support. In a sign of desperation, they count the point-of-consumption wagering and betting tax, which they not only voted for but supported vocally. In a further sign of desperation they include the mental health levy, which they supposedly now support—although that seems to change from day to day, so we do not always know where they stand on that. Their list counts taxes on foreign purchases of property six times. Not only is this double and triple counting but these are not even taxes on Victorians. This government will never apologise for putting Victorians first, and we will never apologise for ensuring foreign investors pay their fair share of tax to the Victorian community.

I have to say that the opposition act like they do not want any changes to taxation in this state. Do they support Crown Casino paying more tax? Do they support Crown Casino being on a level playing field when it comes to electronic gaming machine tax with RSLs and community clubs? Are they going to add this to this bizarre list? I mean, frankly when it comes to taxation and their arguments, they do not have a leg to stand on. As I said at the outset of this contribution, there are 57 changes to tax where we have either abolished or reduced taxes—57 tax reductions. That of course includes—

Mr D O’Brien interjected.

Mr STAIKOS: They like to claim they are the party of tax reduction and red tape. I am happy to say that these 57 tax reductions—and there are regional MPs currently in the chamber. Last July we cut the regional payroll tax rate to 1.2125 per cent, just one quarter of the metropolitan rate and the lowest in the nation, and currently the regional unemployment rate is 3.4 per cent, the lowest since records began. This is a fantastic bill, full of important measures that support Victorian families. I commend the bill to the house and I wish it a speedy passage.

Mr D O’BRIEN (Gippsland South) (12:39): It is nice to get up and speak a few facts, unlike the historical revisionism we have just heard from the member for Bentleigh. The member for Bentleigh seems to have missed the point that it was his Premier and his still Treasurer who promised in 2014 that they would not increase or introduce new taxes. Do not sit there and say that we should all agree that taxation should not change. This was your promise, your government’s promise, that we would not increase, or introduce any new, taxes.

I would like to go back. I know my colleagues the member for Narre Warren North, the member for Pascoe Vale and the member for Mordialloc—I nearly said Sandringham, my apologies; they are brothers with their electorates next door—will be sick of me talking about the Public Accounts and Estimates Committee, but I do want to go back to that. On this promise we asked the Treasurer at PAEC about his promise not to introduce any new or increased taxes, and he said, ‘I did not say that in 2014’. But in fact the record shows different, because on Channel 7 news just before the election we had a clip of the Treasurer saying, ‘We will not introduce any new taxes or increase any taxes to pay for our election promises’. That was in 2014, and we all know and have all heard repeated the Premier’s promise from the night before the election when he gave Peter Mitchell on Channel 7 news the exact same promise.

The member for Bentleigh needs to understand that our criticism is of the government’s broken promise. There are 41 new or increased taxes. The rubbish he just went through a moment ago saying that we were double counting—when you increase a tax in 2019–20, in 2016–17 and in 2015–16, that is three increases, so that gets counted as an increase each time. He completely fails to understand that concept. Each of those adds to the tax burden on Victorians. The government stands condemned for breaking that promise. I am not going to stand here and say that tax will not change over time; of course it does. However, the Leader of the Opposition and the Shadow Treasurer have made that guarantee that we will not increase taxes if we are elected in November this year. I think it is in stark contrast, what the government has said and what the government has done.

This legislation is an election year piece of legislation. We have seen, as I have outlined, over the years, the government increase taxes just about every budget through its state taxation and treasury legislation bills. But 2022 is an election year, and obviously the government wants to make itself more attractive to the Victorian public, so predominantly there are minor changes at the edges and some changes to existing increased or introduced taxes, including the windfalls gains tax amendment. I just want to touch on that one briefly, because I note that of the 42 new or increased taxes about 21 of them are on property. I heard the member for Bentleigh say how proud he is of the windfall gains tax, and it is classic with those on that side of politics that they do not understand economics. If you tax something, you almost invariably increase the cost of it. That is what the GST did, and that is what the windfall gains tax will do. That is what the government’s proposed 1.75 per cent levy on property developments would have done and will do. No doubt, if this government is re-elected, it will reintroduce that proposal to add to the cost of housing. At a time when housing availability and affordability are such significant issues in our community, it beggars belief that the government would introduce or increase 21 new or increased property taxes and then be surprised that housing affordability has become a problem. It is just astounding. The government needs to understand what actually happens when you add additional taxes, particularly to an existing fairly hot market. It is going to have that impact of sending prices high, making it more difficult for Victorian families to afford a home.

I want to just go to some of the data that is there in the taxation estimates in the state budget. I absolutely understand that taxation from a state perspective is a very difficult issue. We have a very difficult problem in Australia where we have a vertical fiscal imbalance between the commonwealth and the states, where the states do the bulk of the service delivery but it is the commonwealth that has had the major revenue-raising capacity since the Second World War, when the commonwealth took on the main role of income tax collection. It does make it difficult for state governments to deliver what they need to do.

I will just make a couple of comments on the government’s figures this year for some of the main state taxes that we have—largely payroll tax, land tax and land transfer duty, otherwise known as stamp duty. This year budget paper 5, page 18, shows that land transfer duty is expected to be $8.2 billion. If you go back to the previous budget before the government came to power, land transfer duty was estimated at $4.4 billion. That is an increase of 85 per cent in land transfer duty that the government has had over that time. Land tax this year is estimated at $4.8 billion; in the budget before the government came to power it was $1.9 billion—that is a 154 per cent increase in land tax in that time. Finally, payroll tax is $6.8 billion. We heard the wonderful comments from the member for Bentleigh about how payroll tax is being reduced. Well, the quantum is still going up—$6.8 billion versus $5.1 billion in 2014–15, or a 32.7 per cent increase.

Now, of course all those taxes are going to go up if the economy is growing, particularly if the property market is growing, but it is just an interesting comparison of how much extra revenue the state has been able to reap under this government. You can look at it overall. Total taxation has gone up by $12.4 billion—state taxation—since the government came to power, an increase of 68 per cent. And that is versus an increase in expenditure of 74 per cent. That has gone up from $51.75 billion before the government came to office. This year the total expenditure from transactions was $89.8 billion, so a 74 per cent increase. That is clearly why we have got a budget deficit, where there is a 74 per cent increase over the last eight years versus a 68 per cent increase in actual income—state taxation income, of course, I am talking about here.

This issue remains a significant problem. I note there has been some recent discussion about horizontal fiscal equalisation, particularly from the Premier of WA. We are on a unity ticket on that issue—that Victoria is not getting what it should—but I note that both the former federal Treasurer and the current federal Treasurer have no intention of changing that. I do not agree with the Western Australian Premier saying perhaps we should not have gone for the money on the Commonwealth Games, but I do agree that perhaps the Victorian government should look at managing its finances better. If we had not wasted $28 billion on infrastructure cost blowouts, our budget situation and indeed our ability to fix the health system, to fix the 000 system and to fix the ambulance system would be a lot better off.

Just finally, we are not opposing this legislation. However, there are a couple of things that we are looking at—in particular clause 34, which relates to the discretion of the commissioner of state revenue putting effectively a time limit on whether or not he or she accepts an objection to a tax ruling made within five years. That is a little bit of a concern. We have sought some advice from the government as to the number of cases that might be involved or might be curtailed by the introduction of this five-year statute of limitations, if you would like to call it that, so we will consider that between now and the time that this legislation passes to the upper house. But we are not opposing this particular legislation. I note that this is an election year tax bill without any of the tax increases that we have seen but a reminder of the broken promise that the government made not to introduce or increase taxes in 2014, a promise that it has failed to meet, with 41 new or increased taxes since then.

Ms KILKENNY (Carrum) (12:49): Thanks, Acting Speaker, for the opportunity to contribute today to this debate on the State Taxation and Treasury Legislation Amendment Bill 2022. It was interesting to hear the member on his feet before me speak about revenue increasing since 2014. I actually take the state government revenue having increased as a sign of a strong economy, a growing economy, and that is a really good thing. When revenue increases, that means there is more money to spend on the things that are really important: the services, the infrastructure and the projects that every Victorian needs and every Victorian deserves. It is about improving the lives of every Victorian.

This bill does contain a number of proposed changes to Victoria’s tax regime. The most significant probably before us are the changes to the land tax. There are also proposed amendments to the new windfall gains tax, stamp duty, payroll tax and some state taxation and administration rules. I will just go through these briefly. We have heard already from the lead speaker from the opposition and our speaker on this side about what these changes are. But in relation to the Land Tax Act 2005, amendments will be made to replace the current refund model for land tax where a person is absent because of the construction or renovation of a residence with an exemption. In essence this will introduce a new principal place of residence land tax exemption, which will give landowners an opportunity to apply for an up-front exemption from land tax while a residence is being constructed rather than having to apply for a refund.

The bill also amends the Land Tax Act to provide an exemption from land tax for land on which a specialist disability accommodation enrolled dwelling is being constructed. This is important too. These specialist disability accommodations are specially designed for people with sensory, intellectual, cognitive or physical impairments. And again, this change will extend the exemption to land in the construction phase of those dwellings.

Building on the taxation changes to support Victorians with a disability, this bill will also amend the Duties Act 2000 to provide an exemption from motor vehicle duty in relation to certain wheelchair-accessible motor vehicles. This will apply to new or near-new wheelchair-accessible vehicles that will be registered as a commercial passenger vehicle and meet the requirements of being unbooked, whether it is a taxi hail or a taxi rank. This is important. It builds on the exemption that currently applies for privately owned vehicles for either the disabled owner or the family member, and it is aimed directly at increasing the number of wheelchair-accessible taxis, which is a good thing. It provides greater autonomy to people who use wheelchairs—it enhances their independence—and we would obviously love to see these numbers grow to give further transport options to people who may use wheelchairs.

There are also some changes to the Payroll Tax Act 2007 in relation to certain wages paid under employment agency and other arrangements. These amendments now make it clear that where a service provider is a common-law employee of the agent and that person is on-hired to a client, the wages paid to the service provider will be exempt if the client is also exempt from payroll tax—that is, if the client is a charity or a public hospital.

There will also be some changes to the Windfall Gains Tax and State Taxation and Other Acts Further Amendment Act 2021. This is an act we brought in last year to deal with windfall gains, and the amendments here will provide an exemption from windfall gains tax for land that is owned by a university in certain circumstances. To be entitled to this exemption the land must be owned by a university, the university must be a charity and the commissioner must be satisfied that any revenue from the land will be used to further the university’s charitable purposes. This will commence on 1 July 2023. On the windfall gains tax and why this is important, I think it is really crucial to really specify that the windfall gains tax is about equity, it is about fairness and it is about value. It is about the right thing to do, because we know that when governments make planning decisions to rezone land, property prices can increase really dramatically literally overnight, and it is therefore only right that significant value increases in that land are shared with Victorian communities and used to fund the services and the infrastructure that these communities need.

Just to head off any scare campaign by those opposite, it obviously does not apply to residential land, it does not apply to primary production land that contains a home and obviously we are not talking about charities or universities. But we are talking about land like Fishermans Bend. I have to say this is the kind of thing we never, ever want to see again—the kind of unscrupulous, immoral, crooked, value-adding frenzy that took place when the now Leader of the Opposition, the member for Bulleen, was Minister for Planning back in 2012. Overnight we saw the member for Bulleen rezone about 250 hectares of land, which is now known as Fishermans Bend, and it triggered an astronomical hike in land values. The windfall gains were massive. Landowners, property speculators—some connected with the Liberal Party, we understand—gained from these land value increases, and there was no mechanism to capture those increases in land values to help pay for really vital infrastructure and services like schools, kindergartens and public transport. We really have to make sure that this kind of thing never, ever happens again, and the windfall tax is about this. It is about that distribution, it is about fairness and it is about equity.

Not unpredictably, we have heard the opposition get up today and talk about new taxes, whingeing about taxes, more taxes. A couple of fact checks: Victoria is not the highest taxing state in the nation. Second, these so-called new taxes, as the member for Bentleigh articulated, are things like the absentee landowner surcharge for foreign purchasers and the point-of-consumption wagering and betting tax—again, taxes that those opposite supported at the time of their introduction—and they also include the mental health levy. They will not mention of course the 57 taxes and levies that the Andrews Labor government has already abolished. They will not mention the lowest payroll tax rates in Australia and the savings to Victorian businesses in payroll taxes last year alone amounting to $1.7 billion. By focusing their debate so narrowly on this particular issue they are missing a really profound opportunity, and that is the importance of what we do on this side of the house, what the Andrews Labor government do—that is, we invest in Victorians. We invest in our people because it is the health and wellbeing of Victorians that determines Victoria’s success. Investing in our people, in our services and in our infrastructure is a choice, and it is a choice we on this side of the house make. We choose to invest in our people.

We know what happens when those opposite are in power. They cut services. They cut funding. They choose to decimate TAFE. They choose to not build one new school. They choose to put a brake on infrastructure and development and projects. Under their watch we see living conditions go down, we see unemployment rise. They cut funding—and this is crucial, critical funding. It is not discretionary funding. It is not, like the member for Ripon said, renovating a kitchen. I remember those opposite, when they had their chance, cutting the education maintenance allowance. I just think, ‘How mean can anyone get?’. The Andrews Labor government, we invest in our people. We are helping Victoria build back better than ever. This is about recovery from the pandemic. This bill is part of all of this agenda, and I commend the bill to the house.

Sitting suspended 1.00 pm until 2.01 pm.

Business interrupted under standing orders.