Wednesday, 30 October 2019

State Taxation Acts Further Amendment Bill 2019

Second reading

Debate resumed on motion of Mr PALLAS:

That this bill be now read a second time.

Ms STALEY (Ripon) (10:46): I rise to speak on the State Taxation Acts Further Amendment Bill 2019. At the outset I thank the Treasurer and his staff for facilitating a briefing on this bill. I note with some amusement that I raised that there were some outstanding matters from that briefing at 1.30 pm in the house yesterday, and the letter I was seeking arrived at 3.20 pm by email. So I also thank the Treasurer for responding to my request, finally.

This bill has a number of provisions, some of which are machinery provisions and some of which have some greater effect. I will begin with the section of the bill that amends the Gambling Regulation Act 2003. We strongly support this part of the bill. We have consulted with both the racing industry and veterans communities, and the shadow minister, the member for Gippsland East, has undertaken extensive consultation, and they are supportive of this change. What this part of the bill seeks to do is, in light of point-of-consumption wagering and betting taxes, change the payment that is currently made to veterans from the—

The DEPUTY SPEAKER: Order! I remind members to acknowledge the Chair when they leave the chamber.

Ms STALEY: the Anzac Day races. As result of that change, and also as a result of changes to the patterns of betting, that payment to veterans has been declining. What this bill does is change the basis to one-thirtieth of all wagering and betting tax revenue paid during the month of April, and it is paid to the Anzac Day Proceeds Fund. It also makes some changes to how that money flows. However, those changes do not change the amount of tax that is collected from operators, nor does it change the amount of support that is offered through taxation to the Victorian racing industry. It does, we have been told, substantially increase the amount of money going to the Anzac Day Proceeds Fund which is available to veterans, and for that reason we support this part of the bill.

A second part of the bill are amendments to the Land Tax Act 2005 around changes to who is an appropriate primary producer to claim the land tax exemption for primary production within the greater Melbourne zone. Within the greater Melbourne zone there has always been a higher test than elsewhere for what constitutes primary production. This has been a policy objective for many decades, and it is designed to ensure that those who are claiming an exemption from land tax on the basis of primary production within the greater Melbourne zone are real primary producers.

The idea is that if you farm your own land you should not have to pay land tax, but if you are not farming your own land, irrespective of whether that land is being used for primary production or some other purpose, it is subject to land tax. What these changes do is make it clear that it is not enough for a person who may themselves be a farmer elsewhere to own land within the Melbourne growth zone and have farming done in the Melbourne growth zone, but not by them, and then claim an exemption. This changes that, and we support that aspect.

We asked specifically in the bill briefing, and I note that in the Treasurer’s second-reading speech it says:

… the amendments will not affect the exempt status of their primary production land if it is located in the relevant zone.

We took the opportunity to ask very carefully, and we wanted to understand that there are no changes from this bill to what constitutes primary production within the urban zone. To be specific, we wanted to make sure that if someone currently has under the legislation a primary production exemption because they are farming—for example, they are growing grapes on their farm—they can continue to obtain an exemption on the basis of agriculture. We were told that that is the case. That being the case we do not oppose this change within the bill. However, I do note that there continue to be, particularly within the greater Melbourne zone, many wineries that are running a cellar door or a winery on their property which are now continuing to get letters saying that they are not able to maintain the exemption. As I said, we have been told this bill is not changing that. However, there is still movement, if we like, within that, and we do not support that tax grab that we are getting from the State Revenue Office.

There is a very minor change to the Duties Act 2000 which updates the title of the secretary of the department. We do not oppose that. There are various other technical amendments concerning implied and constructive trusts. When we asked we were told in the briefing that there is no revenue attached to these provisions, that they simply create some clarity around these vehicles. On that basis we do not oppose those.

Then there is the Valuation of Land Act 1960. There are changes which align the valuation dates with councils’ standard rates cycles. We wrote to every council as part of our consultation on this bill, and the responses we received back from councils said that they are supportive of these provisions. On that basis we do not oppose them either.

However, we then come to a further amendment to the Land Tax Act 2005, and this is a change to the vacant residential land tax. The change proposed extends the vacant residential land tax to uninhabitable properties, and it gives the owners two years to renovate and to make them habitable. We do not think that this is an appropriate extension of the vacant residential land tax because there are people within local government areas covered by the vacant residential land tax who may, for example, be very elderly and live in a house that is not renovated and needs quite a lot of work on it, and they go into care—so they either have dementia or just become frail and they go into care. Under this bill they or their children or people who act on their behalf will have to renovate these properties, because quite often the sort of properties somebody will live in as an owner-occupier are not going to meet the standards for that of a rental property. People will allow things to be let go, they will allow their own maintenance to not be kept up, and so in terms of a rental property the properties would be classified as uninhabitable.

We do not think that it is fair to levy a tax at 1 per cent of capital improved value. I took the opportunity to have a look at some of the property prices in a couple of local government areas. I will start with Banyule and refer to Ivanhoe. The median property price for a house there is $1.3 million, so this tax would be $13 000 a year on that property. If we are looking at an elderly person who may have a fraught relationship with their children it may not be an easy thing for them to get a renovation done on their house, and in fact it may be impossible. Yet this will then, at the very least, require them to go through some unspecified process to get that extended beyond the two years. So that is $13 000 for a median-priced house in Ivanhoe, and $4660 in tax on a median-priced apartment.

The median price in Boroondara is $1.96 million, so that is $19 600 in tax from this tax grab. We just cannot support this. We cannot support vulnerable people being required to renovate their houses when they have never had any intention of letting them and they have never been part of the rental housing stock. These have been owner-occupied houses where the people occupying them have just been unable to continue to occupy, often through ill health or perhaps dementia. So we do not support and in fact do oppose these changes to the Land Tax Act 2005.

There is one other section of this bill, and that is a change to insurance duty. What it does is it seeks to ensure that irrespective of when someone takes out general insurance, whether they use an Australian-based insurer or an overseas-based insurer, they are liable for stamp duty. I think there is agreement that going forward it is a clear public policy intent that you should not just be able to avoid paying stamp duty by using an overseas insurer, and to that extent we do not oppose clause 7 of the bill to amend the Duties Act 2000.

However, when we get to clause 8, that is a different question, because clause 8 seeks to retrospectively introduce this change to when the law was last changed in 2014–15. We cannot support a retrospective tax. While we recognise that the state Parliament of course does have the right to levy a retrospective tax, it should do so in a very considered and careful way, and not be buried in an omnibus bill. On this basis we cannot support this bill as it now stands.

Business interrupted under sessional orders.