Tuesday, 29 August 2023

Economy and Infrastructure Committee

Inquiry into Land Transfer Duty Fees

Georgie PURCELL (Northern Victoria) (13:00): Pursuant to standing order 23.22, I table a report on the inquiry into land transfer duty fees, including an appendix, extracts of proceedings and minority reports, from the Economy and Infrastructure Committee, and I present the transcripts of evidence. I move:

That the transcripts of evidence be tabled and the report be published.

Motion agreed to.

Georgie PURCELL: I move:

That the Council take note of the report.

It is a pleasure to table my first report as chair of this house’s Economy and Infrastructure Committee, which examined land transfer duty fees, or stamp duty as it is commonly known. I am probably stating the obvious when I stay that stamp duty is a highly contentious tax. Anyone who has purchased a home, or has dreams to, knows this. It is paid by the purchaser of any non-exempt property and as a result increases the cost of buying property. Throughout the inquiry it was presented to the committee that stamp duty is inefficient, unpredictable and inequitable. However, what also came through to us was that it represents a significant percentage of the Victorian state government’s budget. It is therefore difficult to eliminate without impacting current service delivery.

During this inquiry the committee heard from a range of industry and professional associations, companies, tax experts, community organisations and individuals expressing strong views and proposing different solutions to the problems raised by stamp duty. What became clear to the committee is that the question of whether or not stamp duty is the most appropriate way to tax property is very complex. Because of this, the committee did not recommend one single solution through the inquiry process; rather, we have made 11 findings and three recommendations to the government in our final report. One of these recommendations is that the government address the issue of bracket creep, which has increased the cost of stamp duty well beyond what was originally intended. We have also recommended that the government should pursue a national approach to the issue and in the meantime should investigate some state-based solutions, just as has already been done across the border. This includes the possibility of replacing stamp duty with a broad-based land tax, which we also acknowledge could come with its own set of challenges.

I would like to thank all of those who made the effort to make high-quality and thoughtful submissions and those who gave the committee their time and expertise appearing before the committee in public hearings to give evidence. I would also like to thank Mr Limbrick for referring this issue to the committee for inquiry and all of my other committee colleagues for the professional and courteous way they approached the inquiry from the start. As is often the case in this place, there were different perspectives among members, but at all times there was a collegiate approach taken, and I greatly appreciate the manner in which the committee members conducted themselves throughout the inquiry process.

Finally, I would like to thank the secretariat of the committee for the professional and exemplary support they provided to the committee throughout the inquiry. In particular I give thanks to committee manager Michael Baker, who we all hope will get well soon; inquiry officer Caitlin Connally; and the administration team of senior administration officer Julie Barnes and administration officer Jo Clifford. I am sure I speak for all committee chairs and members when I say that the committee staff make an enormous contribution to the committees’ work and function, and we all very much appreciate their hard work and efforts. The committee looks forward to the government’s consideration and response.

David DAVIS (Southern Metropolitan) (13:04): I want to associate myself with this and thank the chair for her contribution there. I want to particularly single out Michael Baker and hope that he makes a speedy recovery, because he has done an enormous amount of work on this and so many other inquiries. I also want to thank the other committee staff for their work as well. This was a difficult inquiry in the sense that there are a range of views on this. The point I would make very clearly is that whatever the theoretical aspects of stamp duty change and reform, whatever the economic theory, our fear is that in the hands of Daniel Andrews, Tim Pallas and an Andrews Labor government –

A member: It will go up.

David DAVIS: Not only will stamp duty go up, but any plan to shift stamp duty to some other taxation arrangement will actually result in double taxation.

They have already put in more than 50 new or increased taxes, and that is our fear, and we attached that list to the minority report. So people should feel free to read that minority report and see the list of taxes. But the story in the ACT is a very clear story where the Greens–Labor government has hoodwinked the people of the ACT, and they said they would get rid of the stamp duty and replace it with a land tax – well, that has not happened. There is now land tax and stamp duty. You get the double. You get both, and that is the fear. A Labor contribution to this, a Labor decision to do this, carries the very real risk that people will end up with a tax on the family home – a land tax on every family home – and stamp duty. So you get the double; you get both under Labor. That is what makes us very, very fearful indeed. We did push for increased land supply, and there are numerous – (Time expired)

Evan MULHOLLAND (Northern Metropolitan) (13:06): I just want to make a brief contribution on this and thank the committee members, led by Chair Ms Purcell; thank Mr Limbrick for referring this to the committee and for his active participation in the committee; and of course thank my colleague Mr Davis and my colleague Mrs McArthur and of course Michael Baker as well. I was very happy to contribute to the report and contribute also to the minority report with my colleague Mr Davis. We looked at a lot of options, and I agree with Mr Davis that one thing that did come up is that no witness, expert evidence or economist could guarantee that we would not end up with double taxation in changing the model to an annual land tax. What a lot of expert witnesses, definitely those in the housing industry, brought up was the issue around supply and particularly the government’s failure in adequately addressing supply issues.

Another issue that came up is the threshold for stamp duty. It is around $600,000. It tapers to $750,000. I know this is a problem that many in my age cohort face, and what we heard from expert witnesses was that it is creating a two-tiered housing system. In that price bracket you are either moving into a very small apartment in the inner city or moving out to growth areas, where we continue to see a lack of infrastructure and investment due to the government’s botched delivery of housing estates in our growth areas, so this is creating a really big issue. One of the things that Mr Davis and I put forward is that the government definitely needs to look at increasing that threshold. It is something the opposition called for at the last election and called for prior to the state budget to give young people that relief and allow them to get into the housing market.

David LIMBRICK (South-Eastern Metropolitan) (13:08): Firstly, I would like to thank the chair, my fellow committee members, people who submitted to the committee and also of course the committee manager and staff, who did an excellent job, and I agree with Ms Purcell in her assessment of that.

This inquiry certainly showed some serious flaws in our current system of taxation on property in this state. One of the submissions highlighted the very outrageous state of affairs which is that the average married couple in Victoria cannot afford an average property. Also one of the other problems of stamp duty which we saw was the gross misallocation of housing stock. And one of the awful effects, which I had not deeply considered until this inquiry was underway, is that of a divorce tax: people who are undergoing terrible personal problems in their lives and split up end up having to pay tax to effectively divorce, which is an awful thing.

I agree with Mr Davis in that I am scared about double taxation if we move to a property tax system, which is why in my minority report I proposed removing stamp duty – abolishing stamp duty – and replacing it with absolutely nothing. What we need to do in this state is scale back the size of the government, remove waste, stop wasting money and make things more efficient, but it is high time that we use this as an opportunity to wind back the size of the state of Victoria.

Bev McARTHUR (Western Victoria) (13:10): I was a member of this committee and I, like Mr Limbrick and others, thank Georgie for chairing it and the committee members for their contribution and the staff for their diligence. I am extraordinarily disappointed that we talked about taxation in a very narrow sense. We are in a state where we have 50 new or increased taxes, and quite frankly they all ought to be abolished and we ought to look at how we could review the entire tax system of the three levels of government and indeed the roles and responsibilities of the three levels of government, which increasingly overlap and trespass on each other’s territories. Quite frankly, I am not interested in replacing one tax with another tax. I agree with Mr Limbrick: get rid of it altogether ‍– it is an appalling tax. But we need to look at how we can do tax much better. I did think originally that the goods and services tax was there to replace all these state taxes, but they seem to be growing like Topsy, and meanwhile –

Nicholas McGowan: That didn’t work.

Bev McARTHUR: We know that did not work, but it should work. That should be the way to go, and we should have a review of the entire tax system of the three levels of government and the roles and responsibilities. So I am deeply disappointed that this narrow proposal looked at one form of taxation, which definitely should be abolished.

Motion agreed to.