Wednesday, 30 August 2023

Economy and Infrastructure Committee

Inquiry into Land Transfer Duty Fees

Trung LUU (Western Metropolitan) (17:42): I rise to make a statement on the report into land transfer duty fees that was tabled yesterday by Ms Purcell, the chair of the Economy and Infrastructure Committee. Land transfer duty, commonly known as stamp duty, is a tax most economists believe is a bad tax. The committee agrees with this view. We recognise that stamp tax is a bad tax – and to us common people it is another tax from the government – because it is volatile, it hurts affordability, it limits mobility, it slows development and it distorts the allocation of homes. So why do we still have stamp duty? Well, in simple terms, it is a cash cow for the government. Income from stamp duty has doubled from $5 billion to $10 billion since Dan Andrews took charge in 2014. Stamp duty makes up 34 per cent of state tax revenue.

To many Victorians it is a lot of money. The government will run this line that if we abolish stamp duty it will impact services to Victorians. The Department of Treasury and Finance told the committee that getting rid of stamp duty would mean they would need to find an extra $8 billion from elsewhere. Some may argue that we could replace it with land tax, while others suggest that it should be replaced with an increase to GST. The fact is the government cannot afford to lose $8 billion. The government desperately need this revenue because of the debts we have incurred from all the cost blowouts from all the major projects, and now we are paying for their incompetence and mismanagement. The budget can be managed with the abolition of stamp duty with better project management, keeping costs down and giving up on false promises before elections. The 2022–23 state budget revealed that the cost of government projects has increased by $8 billion. Let us not forget Dan Andrews was willing to throw away $1.3 billion to cancel the east–west link, and for what return? Zero. Now, due to poor management and overpromising, we have just wasted another half a billion dollars cancelling the Commonwealth Games. This government is incompetent and continues to waste taxpayers money. That is why we need to keep high taxes.

I live in the west. It is one of the fastest growing areas in the whole country. Many young families as well as many new migrants move to the west because it is the most affordable place in Victoria. But even there the house prices are going out of the reach of average Victorians. The fact is that one of the factors that makes houses so expensive is stamp duty. Over the last 10 years in the west the median price has gone up over 50 per cent. This means a family home that used to cost around $400,000 is now over $600,000, and buyers cannot claim the first home buyers exemption.

Stamp duty is set for a certain house price, but then as the house prices rise, more and more houses are caught in that tax bracket. As the median price rises, more Victorians will have to pay stamp duty, making buying houses even more expensive. So the serious question to ask the Andrews government is about housing policy: how can we make houses more affordable? Increase supply of new lands, promote development in regional towns and cities and look at rezoning middle-ring suburbs. If we really want to fix the housing crisis, we must make homes more affordable. The government must reduce the taxes for young families and new buyers. The Labor government say they want to address the housing crisis, and you hear this over and over again in this chamber, but are they making things more affordable? No, they are making them more expensive. The threshold for a first home buyers exemption needs to be raised, stamp duty needs to be indexed or abolished and land needs to be affordable – and no more taxes.

As reported in appendix 1 of the minority report, the Andrews government has imposed over 50 new taxes on Victorians lately. We are in the middle of a cost-of-living crisis and a housing crisis, and we must do whatever we can to bring the costs down. If we cannot abolish or replace stamp duty, we must index it or do something to reduce stamp duty. Affordability is the key. I support the recommendation in the minority report by my colleagues Evan Mulholland and David Davis that the stamp duty threshold needs to be raised to $1 million to make homes more affordable for Victorians so more people can have a home and aspirational young Australians can have a place to live – and to address this housing crisis.