Wednesday, 1 May 2024

Bills

Commercial and Industrial Property Tax Reform Bill 2024

Second reading

Debate resumed.

Richard RIORDAN (Polwarth) (18:07): We are back to the Commercial and Industrial Property Tax Reform Bill 2024. I think for most Victorians the concept of reforming stamp duty is in fact a worthy cause for us to talk about here in this chamber. Moving from our reliance on the endless cash cow of property is an important and noble objective of government. With higher taxes on land and property and people’s ability to invest, if we get out of sync with other states, it becomes a huge disadvantage of doing business in Victoria.

This bill being presented by the government, to start in only a couple of months time, has as its essence a recommendation that says you should get rid of stamp duty – it is an inefficient tax, it does not add value to decision-making or investment decisions here in Victoria. If you get rid of it, it will free up the property market and allow investors to more quickly and nimbly move from a good investment to a better investment. What we know about stamp duty is that it is a huge inhibitor of mobility in property. What this means is that businesses that may have been set up somewhere but market conditions have changed or business opportunities have altered can more quickly move from one property to another without being lumbered with a massive tax impediment that may distort or alter their decision-making process. We know, for example, on a relatively simple commercial property worth perhaps $3 million-odd, a business would be currently paying many tens of thousands of dollars in stamp duty. If they were to move on from that property in a short amount of time and go to another property, they will have paid a lot of tax for very little benefit.

What this commercial and industrial property tax seeks to do is make the market more nimble. It will mean that businesses will have a smaller annual fee to pay and that therefore big up-front tax costs, hopefully, will not be an inhibitor. However, as with most things this government does, have they got it 100 per cent right? I would contend today in this chamber that, no, this tax has been tinkered with in isolation and without full context of the other tax regimes that currently exist in the state.

One of the great concerns I have got with this tax is it is going to be another 1 per cent on the land tax bill that you have already got. We get the land tax bill at the start of the year, and now, for many people, that is already a very significant bill. I did some sums earlier today of what people might expect to pay on land tax at the moment. For example, for a property of around a million dollars, you are looking at $5800 or thereabouts. If you are looking at that property being owned by a trust – and let us face it, many, many corporate structures will be buying their business properties in trusts or some other sort of corporate mechanism – your bill is considerably more; it is nearly twice as much, at $9800. For every million dollars of property value in this, you are adding another $10,000. Depending on the corporate entity or the entity that owns the property, you are getting a very large starting figure of land tax with another 1 per cent on top. There are many not large businesses that are going to wake up on 1 January each year and go, ‘We’ve got 14 days to pay another $20,000, $30,000 for what are quite simple commercial properties.’ This government will say, ‘Oh, wow, they didn’t have to pay up-front.’ But if anyone on the government side has ever run a business, it is not what you have done over the course of the time, it is the cash flow that you have available at the time that matters most. Of course, turning up with quite large bills to pay in 14 days at the start of any year – at the Christmas break – and with all the other considerations that arrive at that time of year, this tax will be seen as another large imposition.

The government has demonstrated that over a 10-year period the average punter will not expect to pay that much more than what they would have under existing circumstances, and based on the current rates, that may in fact be fairly true. However, overwhelmingly, a lot of small businesses in particular own their properties for a lot longer than the average of 10 to 12 years. They may in fact own them for the lifetime of the business; they may own them for a very long time. What this means is the new tax that this government proposes, the new commercial industrial property tax – an extra 1 per cent on the land tax you already pay – will in fact go on for perpetuity, which means over the course of owning your commercial property you will in fact pay a lot more tax, a considerably larger amount of extra tax, than what you would have paid under the old system. On top of that, you will also be paying normal land tax.

What we have seen, tragically, in this state – and this has ended up costing renters, people in homes; this has cost people right across the economy – is this government cannot be trusted to leave the tax settings where they are. We know, for example, that under the current regime, under their current modus operandi, it is 1 per cent today, but the question is: what is the tax rate going to be in three years time or four years time? Will they creep it another 0.25 per cent, another 0.3 per cent, another 0.5 per cent? In a state where we know that debt exceeds that of the combined debt of the three other eastern seaboard states, what confidence could Victorians possibly have that this tax is not just a Trojan Horse, that it is not prying the door open to put yet another tax on property owners here in the state of Victoria? This of course is a huge concern to me, and I know it will be a huge concern to the voters and the investors and the commercial property owners right throughout the electorate of Polwarth.

The other issue of course is that land tax is not always the most efficient way of judging the return on investment or the value of a property. For example, land in some regional communities – such as in mine, in some of my coastal communities along the Great Ocean Road – has had quite distorted value. But at the end of the day they are still trying to provide very basic regional community services, such as a cafe, a local builder or plumbing supplier, or a hardware shop or other essential service in country towns, where the land value can in fact be high relative to the normal operation of the business. Once again, this tax will inadvertently hit some people and some businesses harder than it should otherwise, if sharing the burden of tax across the state of Victoria.

It also concerns me that the government is not guaranteeing that the 1 per cent stays in place. The opposition has recommended that it looks at offering a lower starting point that actually more accurately reflects the longer term tax burden of a property owner, so at least you could argue that this was a revenue-neutral tax replacement. It could, for example, also put in a sunset clause which meant that after you paid the tax for a certain amount of time it maxed out. Both those suggestions would make this tax immeasurably more efficient and immeasurably fairer to property owners in the state of Victoria, but they would also make it a tax that truly was tax reforming rather than tax increasing.

Therein lies the challenge that this government has. It fails time and time again to present to this Parliament real reform – reform, particularly of tax, that actually makes a difference to the lives of people in Victoria, to businesses in Victoria and – increasingly, we are seeing – to general investment in Victoria. Victoria is currently suffering a flood of capital out of it. The Property Council of Australia and developers – everyone you talk to in Victoria now – talk about how Victoria is just no longer an attractive place to invest because you just do not know from one minute to the next what impact this government is going to have on your investment through its taxation regime, and, most importantly, its increasing taxation regime.

The opposition will not be opposing this bill because we support the concept of stamp duty tax reform, but we caution Victorians, we caution this Parliament, on the hidden dangers that this bill may propose.

Dylan WIGHT (Tarneit) (18:18): It gives me great pleasure to rise this evening to speak on the Commercial and Industrial Property Tax Reform Bill 2024. Just before I get to the substantive content of the bill I thought I would address some comments made by the member for South-West Coast. A little bit earlier I was in my office and had the pleasure of watching her contribution. She came in and quoted me. Yesterday I absolutely stood in this place and spoke about the fact that Victoria is one of the most attractive places to invest in all of Australia. The member for South-West Coast came into this place not too long ago and rebutted that by saying that 8000 businesses had left Victoria. Firstly, I would like to point out to the member for South-West Coast that from time to time businesses do close, and 99.9 per cent of the time they close for reasons that have absolutely nothing to do with the state, federal or local governments. What I thought that I would do, given the member for South-West Coast enjoys quoting me so much, is give her a little bit more information that she might be able to use in her next contribution.

In February of this year there was a report by Deloitte, the Deloitte Access Economics Business Outlook report. That report predicts that Victoria will lead all Australian states in economic growth over the next five years. The report forecasts Victoria’s growth in gross state product in 2023–24 at 2.5 per cent, outpacing all other states and territories. Victorian economic growth will lead all states over the next five years to 2027–28 at an average rate of 2.3 per cent. But it does not stop there. The forecast follows recent ABS figures showing Victoria’s economic growth outpaced New South Wales, outpaced Queensland, outpaced Western Australia and outpaced Tasmania over the previous two years. Victoria’s strong economy has also enabled record job creation. Employment levels are just shy of the all-time high that we achieved late last year, a total amount of employed people of 3.68 million. Almost 530,000 Victorian jobs have been created since September 2020. Currently we have a labour force participation rate at 67.4 per cent, which is also a record high.

Victoria has long been and will continue to be one of the most robust drivers in Australia’s economic landscape. That strong economy, our strong economy, the Allan Labor government’s strong economy, has been as I said driven by an incredibly strong labour market creating over 500,000 jobs since 2020. It is absolutely no surprise to any of those on this side of the chamber that that is the case, because investing in infrastructure and investing in large-scale projects is good for productivity and good for getting people from A to B, and they are also enormous economic drivers and they are job creators, and that money goes back into the pockets of Victorians and goes into the Victorian economy. That is why those on this side of the house have had such a large infrastructure agenda over such a large period of time, while those on the other side want to cancel projects. When they were in government between 2010 and 2014 –

Bridget Vallence: On a point of order, Acting Speaker, we are, I understand, talking about the Commercial and Industrial Property Tax Reform Bill, but I believe that the current speaker on his feet has strayed well beyond that and is not talking to the tax bill whatsoever. I would request that you bring him back to speaking on the tax bill.

Ros Spence: On the point of order, Acting Speaker, I put to you that this has been an incredibly wideranging debate. In fact it has been so wide that when I came in earlier today when we were previously debating it I had to check with those opposite what bill we were on, because the speaker who was on at the time was making no relevant comments whatsoever. So I would say this has been very wideranging and the member could continue.

The ACTING SPEAKER (Iwan Walters): I will rule on the point of order. It has been a wideranging debate. I have been listening very intently to the member for Tarneit’s contribution, which has been dwelling upon dimensions of the bill, which has been a wideranging contribution. There is no point of order.

Dylan WIGHT: Thank you, Acting Speaker – a great ruling in my opinion. As we know, from 2010 to 2014, the last time those opposite had an opportunity to govern this state, there was not one major infrastructure project – not one. Just before an election in fact they decided to rush the signing of a contract of an infrastructure project that made absolutely no sense but had four –

Bridget Vallence: On a further point of order, Acting Speaker, the member on his feet is talking about infrastructure projects, which have absolutely nothing to do with the tax bill. I would ask that you call him back to –

The ACTING SPEAKER (Iwan Walters): Member for Evelyn, I have ruled on this point of order. I encourage the member to continue to ensure that his comments are germane to the bill.

Dylan WIGHT: Yes, I will wind up that part of it. Those opposite build nothing. Those on this side of the house have created a massive pipeline of infrastructure, which has been fantastic for Victorian business. Anyway, to the substantive content of the bill – how long have I gone? Seven minutes. Where I started was that yesterday I spoke about the fact that there is no better place to invest for business than Victoria. I have rattled off all of the stats, which I hope the member for South-West Coast uses next time she comes in here. I am sure she will. I am sure she is watching. But this is just another example of how the Allan Labor government are making it easier for businesses to invest in Victoria. By replacing stamp duty with the commercial and industrial property tax, as I said, it will encourage business to expand or set up in the best location – for example, closer to their consumers, saving on logistical costs, or where there is a growing workforce. It supports business to invest in buildings and in infrastructure, because they have got more money in their pocket to do so. It also promotes more efficient use of commercial and industrial land. Put simply, the change means a retailer will be more likely to buy the new premises they need for their business to take the next step, or a transport company will have a reason to move into a larger warehouse.

I know that these changes will be fantastic news for businesses in my electorate, particularly those in Hoppers Crossing. There is a large industrial precinct in Hoppers Crossing – which employs a significant portion of my electorate – as well as the neighbouring Laverton business precinct. If I could just indulge the house for a moment to give a little bit of a plug: we are about to run a bus route from the Tarneit station out to that Laverton employment precinct, which was announced earlier last week ‍– absolutely amazing. By making it easier for new or expanded warehouses and businesses to open up in the outer west, this legislation will help make life more convenient for my constituents in Tarneit and Hoppers Crossing by bringing jobs closer to their homes. By removing a key barrier to more effective investments, the benefits will multiply across the economy.

As I said at the beginning of my contribution – and I have said it many, many times in this place – there is no better place to do business than the state of Victoria, whether it is the examples that we have just given of making it easier to invest, making the settings easier to invest, or whether it is our renewable energy pipeline making energy prices cheaper. I commend the bill to the house.

Jess WILSON (Kew) (18:28): I too rise to speak on the Commercial and Industrial Property Tax Reform Bill 2024, and I will try to keep my comments more confined to the tax bill at hand. But I will take up the member for Tarneit’s last point: that there is no better place than Victoria to do business. We could take the member for Tarneit at his word, but I am not sure that that is the authority we should go on. I would rather look at the Victorian Chamber of Commerce and Industry, whose Cost and Ease of Doing Business in Victoria report reported that more than half of national businesses said Victoria was the hardest place to do business and revealed that Victorian businesses pay the highest national and state taxes relative to gross state product in the country. So I am not sure that we should take the member for Tarneit at his word; I would rather look to the Victorian Chamber of Commerce and Industry and their continual comments in this space and warnings to the government that it is simply getting harder to do business in the state of Victoria.

If we turn to the bill at hand, as the Shadow Treasurer the member for Sandringham said in his leading contribution on this bill, the opposition does not oppose this bill, because we see the importance of trying to move away from stamp duty and looking at ways to reform our tax system. We know that stamp duty is among some of the most efficient taxes available to the states and territories. It strongly discourages people from transacting property, and in the case of commercial property this impacts on the business’s ability to grow, to create new jobs and to employ more people, and importantly to increase productivity in this state.

But only under this government would we have a situation where we have tax reform on the table and a suggestion that we should move away from stamp duty, but not in a way that will reduce the tax burden. We are not seeing the stamp duty for commercial and industrial properties replaced with no tax, we are simply seeing it replaced with another tax, and over time there is a real possibility that businesses in this state will not only end up being taxed twice but will end up paying more under this reform. They could end up paying higher taxes under this reform, unlike under the South Australian government, which undertook a similar reform a number of years ago and instead of replacing stamp duty with another tax actually just abolished the tax all together.

But as I said, we will always support reforms that try to reduce the tax burden on Victorians, and we are seeing a situation here where for 265,000 commercial and industrial properties in Victoria we will look to remove the up-front costs of property transaction and provide an opportunity to allow for businesses to grow and create those new jobs. I know the member for Sandringham spoke extensively on this in his contribution and on the amount of consultation that he has done, speaking to the Victorian Chamber of Commerce and Industry, the Grattan Institute and the Property Council of Australia. They are all broadly supportive of removing stamp duty on commercial and industrial transactions but have concerns regarding the proposed scheme before us today. For that reason I support the member for Sandringham’s reasoned amendment, which highlights some of these concerns and proposes improvements to the legislation before us today to ensure that we are not seeing a situation where businesses end up getting taxed twice or paying more under this tax reform than they would have otherwise, provides investors with certainty and confidence against any future tax increases and actually provides some transparency not only for the underpinning $50 billion of economic uplift that the government claims this reform will deliver but also for the rationale when it comes to the risk margin component of the proposed 10-year transitional government loan and how the Treasurer will actually make that decision and what that decision will be based on.

I will turn to some of the concerns that have been raised by industry and by the opposition members on this side of the house. The government have stated that they are anticipating that $50 billion in economic value will be generated over the next 40 years due to this reform. We have no sense of the modelling or the assumptions that are underpinning this figure, and it is unclear why the government is unwilling to provide further detail. So through our reasoned amendment we have called on the government to provide the public with their assumptions and provide more confidence and certainty about these reforms.

Another concern that has been consistently raised by industry around the proposed scheme is the risk of double taxing Victorians. Under the proposal before us, the first purchaser of a commercial and industrial property transacted after 1 July this year will need to pay stamp duty for one final time. Then after that 10-year transition period, commercial and industrial property tax, the CIPT, is set currently at 1 per cent. But we have no confidence that that is where the rate will remain, given this state’s record debt levels and this government’s particular addiction to property taxes and increasing property taxes. The CIPT, set at that initial 1 per cent of unimproved land value, will need to be paid for every subsequent year of ownership. This means that investors that hold onto a property over that 10-year period and beyond will be hit twice. They will be paying stamp duty and then after that ten-year transitional period they will be paying the CIPT under Labor’s proposal, essentially resulting in the fact that while the initial stamp duty burden has been removed, they will continue to pay more tax than they would have otherwise under the current arrangements. So while this reform provides incentives for short-term holders and encourages transactions on commercial and industrial property, it does not actually benefit the large percentage of investors who purchase commercial property with the intention of holding it for the long term.

Regarding the high rate of tax that the government has put in place for the CIPT, there has been no transparency around how that rate was chosen, and this will, as I have said, impose a much higher tax burden over time than would have been otherwise paid through stamp duty. The major concern from this side of the house is around the removal of the stamp duty concession on regional, commercial and industrial property. At the moment stamp duty concession is currently available for commercial and industrial properties purchased in regional Victoria, but under the proposal in this legislation, under the Allan Labor government’s proposal, the CIP tax rate will remove the regional stamp duty concessions essentially by stealth and impose an ongoing 1 per cent tax on unimproved land for all properties regardless of whether they are based in metro or regional areas.

This proposal will erode the very incentive that this piece of legislation, this so-called tax reform, is designed to incentivise, and particularly it is going to hit regional Victoria. We know how important it is to drive investment in regional Victoria and not just here in inner-city Melbourne, so that is why the member for Sandringham has called for a lower rate for the CIPT for regional commercial and industrial properties, creating a much lower, fairer and simpler rate for investors and businesses of commercial properties in regional Victoria.

One of the other concerns that the industry has raised is the overly complex nature of this bill. Given the market uncertainty at this time, given the pressure on property owners more broadly, particularly due to the Labor government’s increase in land tax, we need to understand how this complex regime will actually impact transactions of property. There is a risk that, given the complexity of the regime, what we are likely to see is that investors in Victoria actually may avoid transactions after 1 July this year, instead opting to hold onto existing properties, and in the coming years this could create a commercial property market with multiple tiers – properties that have not entered the scheme, properties that have entered the scheme, properties that are exempt from the CIPT and properties now paying the CIPT indefinitely.

We on this side of the house will always support tax reform, but it is only under a Labor government that you could put tax reform on the table and end up taxing Victorians and Victorian businesses more.

Josh BULL (Sunbury) (18:38): I am pleased to have the opportunity to contribute to debate on the Commercial and Industrial Property Tax Reform Bill 2024, of course another significant and important piece of legislation that comes before the house this evening. This government is indeed committed to ensuring that we are delivering for each and every Victorian, making sure that as our state and our local communities grow and thrive we are providing businesses, those that want to start up new businesses and operate existing ones, the circumstances which promote and encourage employment and also foster the opportunity for them to grow, thrive and develop.

In the context of this bill, I am reminded of a visit from the Treasurer some time ago, where the Treasurer and I heard from a number of small business owners within my community to discuss the contribution that each of those businesses was making to the local economy and also to discuss broadly the work of this government. I want to take the opportunity this evening to thank all of those businesses for their work and what they provide our community, knowing that the opportunity for security, for dignity and for a good, stable job and good employment is something that this government will always fight for. We know that a job is more than just a pay cheque. It means being able to provide for your family and plan for the future.

Since 2014 our economy has generated more than 800,000 new jobs, including 170,000 jobs in regional Victoria. Employment, as we know, provides so much. It is a partnership of course, and it is an opportunity for contribution. When the horrors of the pandemic hit in early 2020, this government invested in jobs and invested in people and saved lives. We heard a response from the Treasurer today in question time that went exactly to that. We have of course had a target to create 400,000 jobs by 2025, half of them created by 2022. But the good news is exceeding that ambitious goal, being well ahead of schedule, with employment rising by more than 560,000 jobs since September 2020. We know that by investing in and providing that certainty, that confidence and those opportunities we will continue to support all of that employment, if you like, right across the state.

I just want to touch on last year’s budget as we head to next week. This government in the last budget foreshadowed a whole series of tax reforms, and they form the basis or the genesis of today’s legislation. Those announcements included increasing the payroll tax threshold, the abolition of business insurance duty and, as mentioned and as is before the house this evening, the commercial and industrial stamp duty reforms. These reforms build upon a strong record of financial reforms aimed, as I mentioned previously, at supporting businesses and creating jobs. This is a government that is strongly focused on delivering the biggest transformations within this state that we have ever seen.

Right across each and every portfolio area, whether that be transport, whether that be health, whether that be education, we are getting on with delivering the projects that Victorians have now on three occasions voted for and projects that are widely supported right across communities – that is, the exciting opportunity to build and deliver and next year open the Metro Tunnel, five new stations, the direct connection between –

Bridget Vallence: On a point of order, Acting Speaker, I am pretty sure that in the Commercial and Industrial Property Tax Reform Bill the West Gate Tunnel Project is not a feature whatsoever. The speaker on his feet is straying far from the bill. I would ask that you call him back to the bill, please.

Ros Spence: On the point of order, Acting Speaker, those of us that have been listening for more than the last little while know that this has been an incredibly wideranging debate, and I would suggest that there is no point of order.

The ACTING SPEAKER (Iwan Walters): I will rule on the point of order. There is no point of order. It has been a wideranging debate, and the member on his feet has been discussing the micro-economic dimensions of the bill. Carry on, member for Sunbury.

Josh BULL: Thank you very much, Acting Speaker and the minister at the table, the Minister for Agriculture. I am always very pleased to talk about tax reform and always very pleased to talk about the significant announcements that are contained within this bill. As I was foreshadowing before the member wandered in and raised a point of order – the contributions of small businesses, of job creation, of all of those things that this government each and every day works incredibly hard to deliver – the record is strong and proud and bold, and I am not surprised that the opposition does not want to hear about some of those announcements and that is fine.

This is a piece of legislation before the house that forms part of a range of reforms – increasing the payroll tax threshold, abolishing the business insurance duty and of course implementing the commercial and industrial stamp duty reforms announced in the 2023–24 budget, progressively abolishing stamp duty on commercial and industrial property and replacing it with a more efficient annual tax based on unimproved land value, to be called the commercial and industrial property tax, as I mentioned earlier. The new tax will apply to commercial and industrial property transactions with both the contract and settlement date on or after 1 July 2024. For these properties, stamp duty will be paid one final time on the property if and when transacted and the new commercial and industrial property tax payable after 10 years and the final stamp duty payment regardless of whether that property has transacted again.

There are a number of significant and important benefits that are contained within these reforms. Many of those I foreshadowed earlier, but as we move towards delivering and handing down next week’s budget, this government knows and understands that it is the certainty, it is the confidence and it is the ability to deliver a series of reforms that enable the provision of all of those things, which of course those opposite certainly do not want to talk about, to make sure that we are delivering right across all of our portfolio areas. Acting Speaker Walters, you know and understand, and members on this side of the house know and understand, when moving around local communities, when speaking to businesses, when having that positive and strong engagement, as we did when the Treasurer was in town locally with me, that having a range of measures that go to providing economic growth, economic activity and essentially at its very core making sure that we are delivering a framework for business in this state to be the best it can be is something that we are focused on, and we continue to build on the strong and important record of all of those investments.

What we have heard through the debate on this piece of legislation today is a range of measures that go to much of that certainty and much of that confidence to ensure that we are making sure we are supporting all of those businesses and building upon a really strong and consistent record of jobs growth within this state. That does not mean by any stretch that the work is finished, that the work has been concluded. We will continue to work with local businesses to make sure that we are supporting them in each and every way.

In summing up, in conclusion, we are focused on making sure that we are investing in jobs, we are investing in education, we are investing in health, we are investing in transport. All of those things go to the provision and the administration of many of our tax reforms that we have delivered, but we will continue to make sure that we are providing all of the framework to make this state – this amazing state that we live in – better, fairer and stronger. I commend the bill to the house.

Jade BENHAM (Mildura) (18:48): I too rise this evening to speak about the Commercial and Industrial Property Tax Reform Bill 2024. At first glance, as I have heard many members on this side of the house say today, the Liberals and Nationals will always support tax reforms that enable people to do business in Victoria, but there are a few concerns with this. I have been speaking with some local stakeholders today in my electorate. Mildura is a very unique part of the state. It is actually a tri-state area, so we have a lot of visibility with New South Wales and a lot of visibility with South Australia, which I will get to shortly when I talk about their move away from and abolition of stamp duty on commercial properties in 2018.

As I said, at first glance a removal of stamp duty can be a really big inhibitor of businesses expanding and shifting premises and in fact continuing to do business in Victoria. As I said, we have got a lot of visibility on New South Wales. It is a 5-minute drive away for the communities – and we are talking from border to border here. The cross-border communities are literally over a river, and the rules are so different. We can see it now. And it is not only different for businesses doing business when you go from the highest taxing state in the country to a state that actually has been making it much easier. You see it also with housing developments and all sorts of things. You can literally see it expanding before your very eyes. So it has been an inhibitor. When I was speaking to people today, particularly real estate agents, eyebrows were raised and they went, ‘Well, this is interesting.’ However, the response that I got after discussing in some detail what we have been given was remarkable to say the very least.

I actually spoke to one of our major players in the commercial and industrial space in Mildura, Ryan Tierney from Tierney Real Estate, and he sent me an email afterwards and then called me with some great concerns. He has given me permission to quote what he has said to me today, because he is really concerned, because of course he can also see, and his books illustrate, that not only is he losing commercial businesses from his books, from his property management portfolio, but the rate at which he is losing rental properties in particular from his books is alarming. What he does say, and I will quote this, and I will pass it on, is:

Jade,

This blows me away!

The uncertainty and complexity will simply force a mass exodus from our regional market.

I heard the member for Kew mention how complex this all is, which is a really big concern for industry:

We have witnessed residential investors leave the market due to the governments poor management and decision making from 130 plus rental reforms and land tax.

These changes have delivered further outgoings that quashes affordability, reasoning to own an investment property, but for those fortunate to ride the wave pass costings onto the renters! Via rental increases that naturally feeds the current rental crises.

That backs up exactly what we have been saying. You need to incentivise the private market to solve a housing crisis, because that is where houses come from; that is where rental properties come from. To continue Ryan’s email, he says:

The commercial sector took a massive flogging during the pandemic, is now/finally performing well and the government wish to attack it!

This is totally wrong and UN-Australian!

As a licensed agent in VIC & NSW, I’m seeing investors leaving VIC for our cross border state, becoming time I consider making the move on the home front, investment and business front.

This is a real estate agent, one of the biggest in the region, considering moving his entire family out of the state and his business out of the state because it is becoming too hard. The last line that he left me with is unparliamentary, so I will paraphrase it, but he says the government is pretending to rain on investors’ backs. It would be unparliamentary of me to quote exactly what he said, but after that phone call it was very clear. I have other real estate agents in particular that I speak to often because of the rate at which commercial properties are being taken off the market. And they will sit empty or they will be used as storage. Something that could be productive for a business incubator, allowing small businesses in their infancy to expand at a decent rate, is not happening because it is not worth it to investors. They are moving across the river. We can see it even in the agriculture sector and the farm machinery sector and manufacturing – they are moving to South Australia.

I said I would touch on the South Australian reforms. Victoria would be the second state in the country to legislate commercial duty reform, with South Australia being the first, and they did it in July of 2018. They managed to abolish commercial stamp duty in three years. When South Australia abolished commercial and industrial stamp duty, they did not replace it with any tax, which would explain why the South Australian economy had a really big uplift in their commercial and industrial investment. Again, we can see this because there is a lot of industry in the far north-west of Victoria that borders these two states that weigh up their options and go, ‘Well, we have to pay stamp duty here, it’s overregulated.’ It is far easier when weighing up the options between South Australia and New South Wales. The location then becomes, ‘Well, where do we actually want to be? Do we want to be in New South Wales or do we want to be in South Australia?’ because it’s much easier. Victoria is just completely cut out of the conversation when you talk about setting up these bigger commercial, industrial or manufacturing businesses, particularly for the ag sector, which does continue to boom, but again we see that moving over the river, or moving over the South Australian border. It is really quite alarming.

Honestly, if anyone wants to come to Mildura – I know the Minister for Agriculture, who is at the table, is coming to Mildura at the end of this month, which will be fantastic. Being the Minister for Agriculture, we will organise some really interesting meetings and tours of some farms, so she can see how close it is and what kind of an impact things like this have.

While I am on that, let me just touch on, with the couple of minutes that I have got left the removal – this is another one of those reforms that is one size fits all, and it just does not. It rarely does. The lack of consideration for the regions again – by abolishing the stamp duty concession that is currently available for commercial and industrial properties purchased in regional Victoria, the government’s proposed commercial and industrial property tax completely get rids of it, or gets rid of it by stealth, if you like. Imposing that ongoing 1 per cent tax on unimproved land for all properties regardless of whether they are in the regions, unlike how it is now, just seems like, again, it is a one size fits all. If it fits in the city, then it must be okay with the regions, and it is just not, especially when you get up to the tri-state area like we are in and it is so easy to move to New South Wales or South Australia. You can still live in Victoria if you happen to own your home there. The housing stock is zero at the moment because of red tape with housing development and all sorts of things, so they are building over in New South Wales. But if you are lucky enough to live in Victoria and not pay land tax, then you can stay there and still work over the border in New South Wales and South Australia. Like Ryan Tierney said, it just blows him away and he cannot understand it. He is really concerned, as are other real estate agents in the regions, about what next week’s budget will hold and what that will also do to their business, because not only is it now hard for commercial and industrial industries to do business, but real estate agents are finding it really hard. They are losing properties at a rate of knots from their books, because it has just become too hard.

With the amendments the member for Sandringham has put forward, we support those of course. Like I said at the beginning, the Victorian Liberals and Nationals will always support reforms that enable people to do business in Victoria, and maybe we will get to a point where we can bring some back.

Nathan LAMBERT (Preston) (18:58): It is always good to follow the member for Mildura. I note her comments there from Mr Tierney. I would have thought that commercial real estate agents of all people would be the most unambiguous winners from a reform that will increase the volume of commercial real estate transactions, but Mr Tierney is of course entitled to his views.

It is a more general pleasure I should say to rise to speak about a Georgist land tax, which as some of us know has been a very popular economic reform discussed in this chamber for a long, long time. In fact looking back at Hansard, it was first discussed in 1857 by Augustus Greeves, who was at the time the first lower house MP for the area now covered by Preston. It has been a popular topic ever since, and I know that when I was working for the Treasurer we would often attend business events and we would find afterwards that an enthusiastic young person would come up and say they had a great idea to share with the Treasurer. More often than not that great idea was to replace stamp duty with a broad-based land tax.

Of course the bill that we have in front of us today is a very important and groundbreaking partial implementation of that widely canvassed proposal. As the Treasurer would sometimes point out in those conversations, it is important to recognise that we of course already have land taxes in this state, including the vacant residential land tax, the fire property services levy and most notably council rates, which very closely resemble the classic broad-based land tax. Collectively those taxes raise about $14 billion, which is roughly twice the amount raised each year by stamp duty. With this bill that we have in front of us, the Treasurer is migrating a further portion of stamp duty, around 15 per cent, to a land tax.

Business interrupted under sessional orders.