Thursday, 30 November 2023

Bills

State Taxation Acts and Other Acts Amendment Bill 2023

Second reading

Debate resumed.

Adem SOMYUREK (Northern Metropolitan) (12:55): I rise to speak in support of the State Taxation Acts and Other Acts Amendment Bill 2023. The most controversial aspect of this bill is the land tax on vacant homes and land as well, so I will speak directly to that particular part of the bill. I have said numerous times in this chamber, almost every second speech, that I think the housing crisis is the single biggest issue facing Victoria, indeed Australia, at the moment, and I have been critical of the government for not doing enough in this space. In a time of crisis we innovate and governments innovate. In this instance the government should be coming back with policy innovation.

In the context of the housing crisis that we are going through, unfortunately this might mean compromising things like local democracy, such as calling in the planning powers of local councils or implementing other measures that may circumvent procedural orthodoxy for the greater good of building more homes. Obviously I believe in transparency, I believe in accountability and I believe in decentralisation too. I am not normally a centrist, as I am making out here, but I think these measures are hard to roll back. Once government starts centralising it is difficult to roll back, and once you start eroding local democracy it might be difficult to restore. But we do need extraordinary measures during this time of crisis.

I think this bill takes a step in the direction of addressing or ameliorating a little bit the housing crisis ‍– not as much as the Treasurer makes out, and I am sure there is a bit of revenue raising in this given the finances of our state. However, it would be hypocritical of me to keep banging on about the housing crisis and asking the government to do more and then fail to support a bill that takes even a minor step towards addressing that important issue. Land banking by greedy developers is a big issue and needs to be confronted by government policy, but we have also got individuals who are perhaps wealthy enough, fortunate enough, to have land sitting there or houses sitting there when we have got a housing crisis. I think it is fair enough that they are given some incentive to utilise the housing stock of our state to help people less fortunate or people that actually do want to buy a house and might have a bit of money. With that, I support the bill and commend the bill before the house.

Sitting suspended 12:59 pm until 2:03 pm.

Georgie CROZIER (Southern Metropolitan) (14:03): I rise to speak to the State Taxation Acts and Other Acts Amendment Bill 2023. As we know, this government just loves to tax Victorians, and they have done that consistently. As my colleague in the other place has noted, a new tax has come into being every couple of weeks but more frequently under the new Premier. That just demonstrates the dire state that Victoria is in. Our financial state is very, very serious, and as a result, this government is taxing Victorians any way they can.

I note that what this bill is about is another tax on Victorians. It is to expand the vacant residential land tax. It will also tax any residential land that has been undeveloped for more than five years, and it will prohibit the apportionment of land tax and known windfall gains tax liabilities between a vendor and a purchaser. That all sounds very well, but like all of these things with any of these taxation bills, the devil is always in the detail. I think it was Benjamin Franklin who said that if there is something that you can be sure of, it is death and taxes. Under this government you sure can rely on taxes, and I hope I am wrong in saying it is the death of the state. But you cannot tax your way out of this incredible death that you have put us into. The Labor government has done that, and as a result they are going after property owners. They are going after aspirational Victorians who want to have choice and send their kids to independent schools. They want to tax those hardworking Victorians who have got a holiday home or an investment home. They want to tax businesses, and they are taxing businesses.

Melina Bath: GPs.

Georgie CROZIER: And now, as Ms Bath just said, which I wanted to get to, they are going after GPs – a health tax. It is a health tax that will see retrospective payroll tax being applied to medical clinics, where GPs, dentists and allied health professionals are going to be taxed. When I speak to the proprietors of those medical clinics, they tell me that they cannot afford to stay open. Some of them are struggling. When I spoke to Dr Geetha in Broadford with Mrs Cleeland, she said, ‘I can’t even afford the recruitment costs to get a new doctor into our clinic, which services our community and which looks after those veterans and other vulnerable members in the community – people that come to the clinic to get assistance and be bulk-billed.’ Well, bulk-billing will go, but so will this clinic. This clinic will close down, and that is just going to put more pressure on other clinics in the area but also on already busy emergency departments. It makes no sense that this government continue to apply this retrospective payroll tax in the way they are to medical clinics. It makes no sense whatsoever yet the government is insisting on doing it because the state is broke. That is where we are at. The state is in such a dire situation financially that the government sees that the only way out of it is to tax, tax and apply more tax.

I cannot go without saying that, well, the former Premier is done and dusted. He is just a feather duster now. No-one wants to know him – certainly no-one in a golf club. He looked down the barrel in 2014 of that Channel 7 camera and said, ‘I give you my word – no taxes.’ Well, we have had 53 new or increased taxes under this Labor regime in nine years, and it is causing so much distress. The government are racking up a debt because they are so hopeless at managing projects and so hopeless at managing taxpayers money. There is gross financial mismanagement across the state, across the board. The stories we are hearing day in, day out about the appalling waste of money, the appalling way that projects are being handled and the cover-ups and what is occurring that is leading to these blowouts show that it really does seem that clearly nothing is getting better. In fact, it is only getting worse. As a result, and as those that have spoken out have said, look at Victoria’s financial position, look at that economic management and be very careful because what is happening in Victoria is a lesson to other states and territories on fiscal mismanagement and bad government policy. Now, the government will argue otherwise, but it is there to see, and we know that it is there to see through those figures – through that data and through those figures.

I say again: you cannot continue to tax your way out of this enormous debt that you have placed on not just this generation of Victorians but generations of Victorians to come. That is the alarming thing. They seem to not care. They seem to think it is just like a household budget – ‘Oh, yeah, well, we’ll pay it off in due course.’ No. There is an enormous amount of interest that is paid each day that cannot be applied to services that needs to be applied to services.

Our standards are falling. When a woman has got excruciating pain and needs an ambulance and does not get one for 4 hours and subsequently loses a leg because of no ambulance being available, that is not an isolated story. When there is story after story after story where Victorians have appealed for help to get the services they need and they cannot get them, you know our standard of living is falling. We have got a cost-of-living crisis that is wreaking so much damage across households and businesses because of the cost of energy and the cost of goods going up. The cost of running a household is just becoming out of reach for so many people because of those increasing costs, largely driven by a lot of government expenditure and the ongoing mismanagement.

We have got to drive these taxes down. We do not want more taxation applied. It is absolutely disgraceful what is happening. So I say that this Premier, who is just exactly the same as the former Premier, is ideologically driven in the same way, does not understand prudent fiscal management, does not care about prudent fiscal management and just sees spending taxpayers money in the way they do as a vote winner. You put on a hard hat and go out to the Metro Tunnel but have no real regard for what you are actually doing.

So I say that, as my colleagues have pointed out, we are very concerned about the increasing taxes put onto not only this generation of Victorians but future generations of Victorians. This bill is another bill that goes to the heart of what this government will do. It will tax, tax and tax more Victorians, and we will not be seeing the last of it I am sure because of the rising debt, the out-of-control debt that this state is being placed under because of the mismanagement and bad policy decisions driven by government. I think it is pretty clear where the opposition stands in relation to tax, and we do not support the government’s latest tax grab.

David ETTERSHANK (Western Metropolitan) (14:11): I am delighted to make a brief contribution to the State Taxation Acts and Other Acts Amendment Bill 2023. This bill amends several acts in relation to Victoria’s taxation and land valuation laws. Among other things it closes some loopholes to prevent land taxes and windfall gains taxes being passed on to unsuspecting buyers and reforms the Land Tax Act 2005 to expand the definition and geographical boundaries of vacant residential land. This is designed to encourage the owners of those vacant and unoccupied homes to make them available for rent or occupation. Other members have spoken and I am sure will speak on these and other aspects of the bill.

I would like to turn my attention to part 8 of the bill, which specifically reforms the capital improved value of land provisions. Part 8 amends the calculations for capital improved value of land by including the value of the fixtures on the land – so the infrastructure on the land – regardless of whether those fixtures are owned by the owner of the land or the tenant or any other occupier of the land. During our consultations with various stakeholders we learned that the changes to part 8 affect how the fire services levy is calculated, and this is where it gets a bit tricky. An increase in fire services levy under the new capital improved value would significantly impact renewable energy facilities. Renewable energy facilities such as wind, solar and battery facilities do not generally own the land on which they house their infrastructure, and that infrastructure is very expensive. One wind turbine typically will cost around $6 million, so the value of a wind farm with 50 turbines and a 25-year life span would see its capital improved value go from around $10 million to $300 million and lead to an increase in the fire services levy from around $200,000 to over $6 million over the course of the facility’s life.

We heard from stakeholders, including the Clean Energy Council, the Clean Energy Finance Corporation and Environment Victoria, that this would have a chilling effect on investment in Victoria’s renewable energy sector and create a genuine disincentive to renewable energy project development in this state. That is surely the last thing the government wants to do given its ambitious renewable energy targets. It would also see a rise in the cost of renewably sourced electricity, which would inevitably be passed on to the consumers. Legalise Cannabis Victoria brought this to the attention of the Treasurer and to our colleagues in the Greens, as it happens. To the government’s credit, they took on board our concerns and consulted with the Clean Energy Council and the Clean Energy Finance Corporation. They have developed an elegant solution, amending the fire services act to place wind, solar and battery facilities in the ‘public benefit’ category for the purposes of calculating the fire services levy. This means renewable energy facilities will pay 5 cents per $1000 in place of 77 ‍cents per $1000. This is a massive reduction in FSL fees, and we commend the government for this amendment.

This is a win for the renewable energy sector and ultimately for every Victorian struggling to pay their power bills. I would like to sincerely thank the Treasurer and his advisers for the constructive approach they took in working with Legalise Cannabis Victoria and the rest of the progressive crossbenchers. It has resulted in a better bill and proof that a collaborative approach can yield positive outcomes. I commend the bill to the house.

Melina BATH (Eastern Victoria) (14:16): I believe that Victorians are a fair group of people. The overwhelming majority of Victorians understand that their hard-earned cash needs to be paid in taxes ‍– proportional taxes – to provide all the services that are so vital: our hospitals, our schools, our roads that are supposedly car worthy, our police force, our ambulance services, and I could go on. They are fair people, but I believe they also have a limit. I believe we are reaching a point now where, with the Andrews government, now the Allan government, since 2014, since Mr Andrews actually looked down that camera lens and said, ‘I will not introduce new or increased taxes’, we are up to the 52nd ‍tax. I believe fair Victorians are quite reasonably and quite justifiably sick to death of these new taxes.

Some will say, ‘Well, this one is only going to apply to the wealthy.’ I think middle Victoria – those mums and dads, those grandmas and grandpas – are getting increasingly burdened with these sorts of taxes. The government’s commentary around this tax is that it will increase housing supply, so let us tax vacant land, let us tax vacant property and let us tax Victorians as a way of increasing housing supply. The government has failed to show Victorians what basis for that modelling exists, because it does not exist. It is an apparition. It is a thought bubble. It is a cash grab of the Treasurer – the poor, suffering Treasurer. He has the job of dealing with this government’s incompetence, waste and mismanagement. It is his role to scratch around and find another tax. Well, here he has found one today. There is no modelling to demonstrate how this new tax will deliver greater housing supply.

We already know that Victorians are the highest taxed people in the nation. It is not an award that we want to win. Over $5000 per person – it is the highest in the nation, and it is not a crown that we want to wear. We see increases so far in the fire services property levy. We see increases to WorkCover average premiums, and we know that that has still got to be worked through and fixed because it is a burden that businesses are having to bear. We know that there are increases in payroll taxes on businesses and on the health tax. I was just listening to my colleague Ms Crozier talk about the local health tax on GP clinics, on dentists and on other health providers – this retrospective payroll tax. At a time when country Victorians are screaming out to get a doctor and to be able to book in for one earlier than a month in advance – we respect our doctors enormously and we value them enormously ‍– to have this level of stress on those local clinics, who are small businesses too, and have that retrospective tax is unfathomable.

A payroll tax on independent schools – the Nationals and the Liberals certainly helped to wind that back slightly, but that does not help people provide additional choice in the education sector. We have seen holiday and tourism taxes, and even this week we have seen the government increase charges on Victorian ports. Post COVID we need all the additional funds into our lovely state that we can get, yet we have got a government arcing up, increasing the taxes into ports so that cruise ship operators are now rethinking whether they will actually choose Melbourne as a port. Will they choose to put thousands of visitors into our state with their cash to spend in our fair city? No, they will not. They are saying they are walking away from that as well.

We see this vacant residential land tax. To my mind it is counterproductive to put a tax like this on other people. We understand the rental market is getting harder and harder. There are more people, and we heard today from Mrs Broad that one mother in Bendigo had applied for 300 rental properties and was turned away from 300 rental properties. It is getting harder and harder to rent. I know my own family members, my relatives in Melbourne, have gone back to live with mum and dad for a while – not me, but relatives – because there are 50 people at a rental property inspection at any given time. We know that rents are at record highs and growing. The median house rent is growing by over 11 per cent and the median unit rent is up by 22 per cent year on year. This makes it oh-so-extremely challenging.

The Nationals the other day had a conversation with Quentin Kilian from the Real Estate Institute of Victoria on rental landlords and their stress. The government seems to think that if you tax landlords, if you push them, then somehow this will further add to rental markets. What it is actually doing we do understand. We do know, the facts are there, that 70 per cent of landlords are mum-and-dad investors and 43 per cent of those earn less than $100,000 combined per year. They are not exorbitantly affluent people. These are normal everyday people thinking about how they can take their hard-earned cash and make something of it but also provide that service. If you are going to tax land, tax property and continue to tax these sorts of people, it is going to be a disincentive.

What is clear also from the Real Estate Institute of Victoria is that when those houses go back onto the market indeed there are a percentage that just do not go to rentals. Of course, when you put those houses back onto the market, people who are in rental situations are not necessarily the people who can afford to buy them. Unfortunately or otherwise there will be renters who will continue to rent for their lives. Taking houses off the market is unfortunate, and it does not help the situation. We need to see incentives for properties to go into this rental market, not deterrents.

The vacant residential land tax bill before us today is increasing taxes on property owners. This bill is going to apply to residential properties, as it stands, in inner Melbourne and Melbourne’s suburbs which are empty for six months, but this is going to be expanded to unoccupied residential properties across the entire state. It taxes residential land that has been undeveloped for more than five years, but now we see the government is looking at deals with the Greens to change that via amendments to three years. It is a frustration for people.

Unfortunately the expansion of the existing vacant residential land tax to outer Melbourne, regional Victoria and right across the state is expected to raise about $6 million a year from January 2025. The change will include land that has been vacant for, as I said, what was five years and now is going to go down to three under a nice little deal with the Greens. It is a challenge when we see the modus operandi of how this tax will work. Will neighbours be looking to dob in somebody whose house is next door and to whom they can see that this tax might apply? I do not feel that that is a very positive step in our great society.

The Liberals and Nationals certainly are very focused on cost of living, focused on people being able to make their way through life and support everyone, which I think is aspirational, to be able to have a roof over their head and to have that stability, that hierarchy of needs, that is so very important and very needed. One of our policies is in relation to reducing Victoria’s taxes. We have made the commitment, through our Shadow Treasurer, to have a whole taxation review, and I think this is a very wise and important step.

With those few words, Acting President McArthur, I will clearly state that the Nationals oppose this bill. I am sure you will be pleased to hear that as well. We oppose this bill. Victorians do not need another tax.

Samantha RATNAM (Northern Metropolitan) (14:27): It is my pleasure to rise and speak to the State Taxation Acts and Other Acts Amendment Bill 2023. The bill contains a range of changes, mostly minor, but there are two parts of the bill I will focus my comments on: the changes to the vacant residential land tax and the changes to valuations for the fire services levy.

Victoria is in a housing crisis. That cannot be disputed. Rental vacancy rates are historically low, meaning not just that renters cannot find homes to rent but also that renters are at the mercy of their landlord or real estate agent when it comes to unlimited rent increases. We have heard so many stories of renters just accepting horrific rent increases that are creating real cost-of-living pressures because they know the difficulties of finding somewhere else to live. Investors are hoarding empty properties while renters struggle to find affordable homes. In a housing crisis homes should not be sitting empty.

A tax on empty homes is an important tool to ensure houses and land are being used as homes and not just hoarded for wealth generation. Indeed this gets to a key driver of the housing crisis here in Australia. Over many years both Labor and Liberal governments have prioritised housing as a wealth-generating asset rather than a human right. There is an incentive for investors to invest in housing for the capital gains rather than for the provision of homes. House prices in Australia are continuing to rise, providing gains to investors while keeping young people out of the market for good. As Alan Kohler puts it:

Australia is a junkie hooked on rising house prices, which is killing us.

A tax on empty homes can provide a disincentive to hoard property and an incentive to make use of homes for people to live in, but such taxes have to work. The current vacancy tax simply does not work, and we were not going to agree to expand something that does not work without significant changes. I want to thank the Treasurer and his office for working with us to realise a package of reforms that will ensure Victoria has an effective tax on empty homes. Going into our negotiations on this bill we had two main issues we needed addressed, because we were not going to support something that would not work to provide relief to renters: (1) increase the rate so the tax acts as an incentive to use a property for people to live in and (2) ensure the tax is enforced.

One of the most ridiculous things about the current tax is that it is essentially voluntary. Analysis from the Parliamentary Budget Office suggests around 18 per cent of those liable for the tax pay it – that is, four in five landowners liable for the tax just simply do not pay it or have an incentive to change their behaviour. This is a joke. We desperately need empty homes made available for renters, and there are a lot of them out there. The PBO estimates that under the current version of the tax 5000 investors are liable to pay, and with the expansion in the bill 10,000 empty homes would become liable under the tax.

The Greens are very pleased to have secured changes that will see an increasing tax rate if investors keep their homes vacant year after year, with a 3 per cent rate on homes left vacant for three years, and that the government will now trial an enforcement regime that will see every property covered by the existing tax assessed for its liability. This trial will ensure those 80 per cent of investors currently not paying the tax will have to pay the tax or rent their vacant home or sell their property.

The report and data from the trial will be made public. We expect the trial to result in a better ongoing enforcement regime for the expanded tax, making it effective in providing relief for renters across Victoria and – as a bonus for the Treasurer – more revenue. We will also have better data so as to make further changes if more can be done to incentivise investors to make homes available to renters. As a result of these changes the 10,000 vacant homes and land that the Parliamentary Budget Office estimates should be captured by the revised tax could become available for renters or owner-occupiers.

There remains much more to do for renters. The cost of living is hitting our whole community hard, and rent and mortgage payments are really hurting. Unlimited rent increases should be illegal. Victorian renters need rent control. While the government and opposition seem content to ignore the plight of renters if it means doing anything to upset the property industry, we will not. We will continue to fight for renters. We will also continue to fight for real solutions to the housing crisis. An effective tax on empty homes is one part of what is needed, but what we also need is an effective regulation of short stays to bring even more homes into the rental market, as well as rent control.

Victorians struggling to find an affordable place to live also need the government to stop the wholesale privatisation of public housing and commit to building more. Privatisation never works in the interests of the community. The winners are always corporations. The solutions to the housing crisis do not lie with giving property developers carte blanche. Affordable housing will only become a reality when governments are prepared to intervene and build more public housing to end unlimited rent increases and, at a federal level, get rid of the tax breaks that encourage investment in housing as a wealth-accumulation strategy. Instead, all governments should start to treat housing as a human right.

The other issue I wish to address is the amendments that will ensure the bill does not act as a disincentive for renewable energy projects in the state. The changes in the bill to the definition of ‘fixture’ could have seen renewable energy projects having to pay tens of thousands, if not hundreds of thousands, of dollars in levies and rates. The Clean Energy Council was very concerned that this could lead to fewer solar and wind farms and battery storage projects. Thankfully, the Treasurer listened to these concerns and the proposals put forward to fix it, as a solution. We are pleased that renewable energy projects will now pay a much lower rate of the fire services levy and that the government has committed to ensuring commercial battery storage will also have rate relief from the implications of the changes in the bill.

We look forward to supporting the amendments that the government will be moving in committee and to the relief these changes will bring to renters. People are crying out for solutions and for people in this place to work together on the big crises that face us. We were pleased to work constructively with the Treasurer to achieve this outcome. Let us hope that we can continue to achieve much more by working together with genuine dialogue and a commitment to outcomes.

David DAVIS (Southern Metropolitan) (14:33): I am pleased to make a contribution to this much-delayed bill that the government got itself into so much trouble with, the State Taxation Acts and Other Acts Amendment Bill 2023. This is a bill that puts new taxes in place – new taxes that will hurt the economy, hurt families and hurt businesses. This is the story of this state government: a massive level of new tax – more than 50 new taxes since coming to government in 2014 – despite promises in 2014, in 2018 and in 2022 that they would not introduce new taxes and not increase the levels of taxes. On each occasion they have lied, and after each occasion they have brought in a raft of new taxes, which have smashed families and businesses.

It is not surprising that Victoria is now the most taxed state and also the most regulated state. Those materials from Victorian Chamber of Commerce and Industry make it very clear that we have got an entirely uncompetitive state because of the decisions of the state government, principally the former Premier and the current Treasurer. The new Premier seems to have no plan to get out of this, and the Auditor-General made it very clear in the report the other day on the financial state of Victoria. They have now gone after him. He has done too much. He has exposed too much, and they have now got him in the gun and they are going to go right after him.

Michael Galea: You have no idea what you’re talking about.

David DAVIS: I sure do. I know exactly what they are doing. We have seen this before. I have been in this place before when a government has gone after an Auditor, and it is not a pretty sight. It is the wrong thing to do. Independent officers should not be attacked in the way that we have had the government go after the Parliamentary Budget Officer. They have gone after the Ombudsman. They have gone after the Auditor-General. They went after Robert Redlich. We heard what happened here. We saw what happened at the Integrity and Oversight Committee. We saw what happened there – Harriet Shing cut the feed. We saw what happened at the Integrity and Oversight Committee. Let us be clear. This government has so much hatred of independent officers that they will go after them, and that is what they have done.

Let me be clear. The Auditor dropped a report just a few days ago, and it looks at the debt in Victoria. It is an extraordinary set of figures. It is clear that the debt is going up and up and up, and if anyone wants any sort of understanding, they should go to figure 2F on page 16, and they will see the comparative debt figures that are entirely the result of the Labor government since 2014. And the surge in debt began before COVID. It began when the government decided it was going to embark on a series of major projects without costing them properly, without controlling the costs on them properly. On these major projects it said it was going to increase the level of debt as a share of gross state product from 6 to 12 per cent. That is what Andrews and Pallas said in the week before the election in 2018. You may not have been here, but I was, and I remember and I heard them say it. Michael O’Brien went out and said this was the start of it, they were going to go nuts and they were going to spend money like drunken sailors, and that is what they have done.

Let us be quite clear: the state’s indebtedness has got worse, and the percentage of gross state product that we will have to pay has also gone up massively. I want to also draw attention to the waste. It is not just the more than $30 billion of waste on projects, where projects have started at a certain figure and surged massively beyond that. If you look at the West Gate Tunnel, it has gone from $4.7 billion now up to over $10 billion. That is all because of incompetence and the failure of the government to cost these things properly. If you look at the level crossings, we still have not had the prices of any single level crossing released.

Members interjecting.

David DAVIS: Tell me how much any of those 72 cost. Tell us how much any of those 72 cost. The cost of a level crossing that has been completed has never, ever been released by this government, not one of them. The reason is because they are ashamed of the blowouts. They do not want to see the blowouts in the public domain.

The Metro is massively over budget – almost every project they touch. The Mordialloc bypass – pick a project and it is over budget and often over time as well. But there are other types of waste too, and the Auditor also brought down that very enlightening report on contractors, consultants and Victorian public servants.

Members interjecting.

Joe McCracken: On a point of order, Acting President, the interjections are just unbelievable and I cannot hear Mr Davis make his valuable contribution.

The ACTING PRESIDENT (Bev McArthur): Continue, Mr Davis.

David DAVIS: The Auditor’s report on consultants and contractors in the Victorian public sector makes it clear that billions and billions of dollars are being squandered, that the amount of spending on consultants is surging, that the amount of spending on consultants has not been managed properly. We know that more than $24 billion has been spent on consultants, contractors and labour hire since the government changed in 2014. That is money that has not been well spent, by and large. A large chunk of it has been wasted, squandered and could have been reflected in lower taxes, lower charges and a stronger economy and less debt. This is a state government that is addicted to tax, addicted to debt and addicted to waste.

On the narrow points of this bill I want to draw the community’s attention to a couple of key points. The bill, in its original version, the version that we have in front of us today before the government circulates its amendments – I thank the government for sending the amendments so we have seen them today. They are not yet in the public domain, but I am going to foreshadow them in that sense, as others have in the chamber.

The bill as it currently is imposes a new and big fire services levy on renewable energy projects. It is an especially dumb new tax. We say we want new renewables; okay, let us have them. Bring them forward. You want to bring them forward –

Michael Galea interjected.

David DAVIS: No, no, it is your bill with the extra taxes. It is your mates who put the extra taxes in the bill. That is what it is all about. And we have said we do not want those new taxes, as have the Greens. They have said, ‘We don’t want the new taxes on renewables; we think it’s a dumb idea. A brand new tax on renewables and on batteries, a brand new tax on wind farms, a brand new tax on solar – what on earth is going on? You have got the federal government pumping new money into renewables and the state government putting a new tax on renewables. Let me be clear: the Attorney-General will come in here in a short period of time – I think there are two speakers left – and the Attorney will then circulate the amendments that say, ‘Uh-oh, we got it completely and utterly wrong.’ I thank the wind sector for the briefings they have provided me and the detailed notes they have provided me. The Clean Energy Council briefing note is very instructive on the impact. Let us be clear what happened here: the Supreme Court struck out some of the state government’s attempts to garnish extra tax out of the wind and solar energy industries. That is what happened, and the Supreme Court said, ‘No, you can’t.’ The difference between chattels and fixed assets is a fine legal point, but actually the Supreme Court made a decision. The government lost; the proponents won.

A member interjected.

David DAVIS: Well, it was your plan to put tax on the renewables. I am picking up your interjection here. I do not want to put a new tax on renewables in that way. I do not know why you did. That is what your Treasurer sought to do. That is what this bill has got in it. If you want to read it yourself, go and read it. Rather than the printed notes that you are handed, go and read what is in there. You will see that there is a brand spanking new tax on the renewables sector.

Members interjecting.

The ACTING PRESIDENT (Bev McArthur): Order! Mr McIntosh, if you want to interject, you need to be in your place. Get in your place, Mr McIntosh.

David DAVIS: Even then, Acting President, interjections are disorderly. He also needs his speaking notes, which he reads very, very closely. We know that.

But the short story is that there was a Supreme Court case, and I am happy to provide the member with a copy of the case if he would like. I have had a good read of it –

A member interjected.

David DAVIS: Well, it would take a while. But I am precising what happened. The government lost, the proponent won and the attempt to redefine the fire services levy tax – let us call it what it is – was overturned. So the government comes in through the back door. You know, this is typical State Revenue Office behaviour and typical behaviour out of this Treasurer: ‘No, no, no, we don’t like what the independent umpire said over here; we’ll go back and we’ll go into the Parliament and overturn what was decided in the court.’ So that was what the bill tried to do, and I will welcome it when the Attorney comes in here with her tail between her legs on this and says, ‘Oh well, we got it wrong; we’re actually going to change the bill and we’re going to take the spanking new tax off renewables and we’re going to let the existing situation lie.’

That is what they are going to do. That is what the Attorney is going to do. And then it will go down to the lower house and they will stamp it, because the government realised eventually that there were enough people in this place that had woken up. We had been briefed by the people in the sector and the industry, and we understood very clearly that it was a dumb idea to put a brand spanking new tax on the renewables sector. The federal government pumping money in and the state government pulling money out – it is a bit like what is happening with the health tax. We want to strengthen primary care and we want to strengthen GPs, and the state government’s solution to that is to put a brand spanking new tax on GP clinics and say, ‘You’re going to have to pay this new tax.’

A member interjected.

David DAVIS: No, this is true to form. This is true to form for this government.

I want to also pick up a number of other points that are occurring with taxation at the moment. It is very clear that the decisions of this government with respect to contractors and consultants deserve much more scrutiny. We did the simple analysis. We added it up out of the Public Accounts and Estimates Committee (PAEC) figures. We now know, and it is proven in the Auditor-General’s report on contractors, that the definition between contractor and consultant is woolly. It is unclear. I might say I am troubled that the Department of Treasury and Finance has not agreed to clarify this and to implement what the Auditor has said. I am troubled because for years now the state government has been using this blurred line between contractors and consultants to avoid reporting what is actually going on. You can get to the list of consultants, but of course the consultants list looks a little smaller if the department just fudges it across and says, ‘No, no. This one’s a contractor.’ The definition is woolly – it is unclear – and the Auditor tested this. They tested the inaccurate and varied application of the definitions of ‘consultant’ and ‘contractor’. I think this has done a service, but I think DTF is going to have to come to the party. We are going to hound them and hound them until they do, because Victorians deserve to see the waste stopped.

The first part of stopping the waste is to have it accurately reported. We want to know how many contractors and how much. We want to know how many consultants and how much. We want to know how much labour hire and how much. And we want the aggregate figure in each and every department and each and every agency. That is not too much ask for. But at the moment you cannot get that figure easily anywhere. You have to go and dig for it. You have to dig for it out of PAEC. You have to piece together pieces of information, and you are never sure if the consultant and contractor numbers are right, because there is this fungible spread between the two definitions. You can only get to an aggregate for all three, because it is only in the aggregate that you actually know the full amount that has been spent, which is why when we did that $24 billion analysis that was all about the aggregate. And it has gone up massively over the period of this government – massively – despite them promising in 2014 that they would cut the number of consultants and contractors. That was a promise that was made in 2014, but it was not kept. Every year since then they have surged upwards.

Then we had Steve Dimopoulos make one of the strangest statements. He said that they were going to take on board the problems with contractors and so forth and consultants. This was a few months ago that he said this. He said they were going to cut it by 1 per cent, by $50 million. He said –

A member: Did he?

David DAVIS: That is what he said on the telly. I have got the clip. I have got it. He said they would cut it right across government by $50 million. But actually billions and billions are spent every year by this government on consultants, contractors and labour hire. Dimopoulos says we are going to cut it by $50 million. Well, do you know what that is? 1 per cent – we are going to cut it by literally 1 per cent.

We heard the Attorney-General here in the chamber yesterday or the day before – whenever it was. We asked that question about consultants and contractors, and in her department consultants and contractors have gone up massively over the period of this government. She is clearly looking at this and saying, ‘Actually, this is getting out of control’ – and it is. It is money that could be spent on people in need in her portfolio. It is money that could be spent on more court services, speeding up VCAT, speeding up the Supreme Court or the County Court – all manner of things. More police, for example, would be another alternative. The waste in this government is extraordinary. At the same time, the services are slipping. Health, education, ambulance – all of those services are sliding. (Time expired)

David LIMBRICK (South-Eastern Metropolitan) (14:49): On the last day in Parliament before the summer break, what a Christmas present this government is leaving for the state’s tourism industry.

David DAVIS: Oh, my God. It’s shocking, isn’t it?

David LIMBRICK: Yes, it is shocking, Mr Davis. Just yesterday we learned cruise ship companies who usually buy millions of dollars worth of food and fuel and bring thousands of tourists to Melbourne will give us a wide berth, quite literally, because of excessive taxes. We also learned this week that the government will have to refund taxes from their misguided tax on electric vehicles – and I would like to put for the record that I opposed that tax.

People that have been paying attention to the ongoing discussions around housing affordability and particularly investor sentiment would have learned that investors are fleeing interstate. We also learned this week that, under guidance from the economic gurus in the Greens, the government will be expanding taxes on people’s homes. But getting advice from the Greens about economics is like invading Russia in wintertime – it is one of those things you should never do. Only the Greens see a housing crisis and think the answer is to scare away property investors with red tape and more tax. And who could blame investors for going elsewhere? Why would you bother dealing with this red tape when you can invest in Queensland or New South Wales? The legislation will also need people to administer it – people who might otherwise be doing something useful. But mark my words, this scheme is so complicated I would not be surprised if it fails to make any money anyway.

And this war on short-term rentals is silly. People who use Airbnbs are not a problem. They are people who buy tickets to the theatre and concerts and museums. They go to restaurants and stadiums and other places that employ people. I will never understand the mindset of entitlement carried by people who are envious of the house next door. I believe there is nothing wrong with people owning more than one property, and what they choose to do with that property is their own business. Property and tourism are among this state’s most successful industries, but they are now suffering from death by a thousand cuts. The lesson we have learned and will continue to learn over the coming years is that taxes have consequences. Businesses and people change their behaviour. Economic reality will always trump socialist fantasies. The passing of this law will be a great day for Victorians who aspire to shuffle paper and for the economies of all the other states of Australia, which will suddenly become more attractive places to invest, and a rotten day for everyone else. The Libertarian Party never votes for higher taxes, and we reject this bill.

Jaclyn SYMES (Northern Victoria – Attorney-General, Minister for Emergency Services) (14:51): I will sum up and try and give a bit of an explanation about how this bill will proceed for the rest of the afternoon. Thank you to all the speakers and everyone that has participated in the development of this bill both within the Parliament and outside it. It is a government tax bill that is usually done twice yearly. It contains a raft of minor amendments et cetera to ensure that things are operating as intended. There are also in this bill, as we well know, changes to the vacant residential land tax to encourage more existing properties to be made available to renters right across Victoria and to encourage faster development of vacant land in established areas around Melbourne and also changes to protect consumers by prohibiting property developers and others from passing through their tax liabilities to often unsuspecting purchasers.

There are a range of amendments that will be subject to discussion in this chamber and also in the Assembly. Following advice from the clerks we have attempted to do this in the most streamlined way possible, bearing in mind some constitutional limitations on our place to make certain amendments. To prevent the bill bouncing between the two chambers today, which is not really going to be appreciated on the last day of Parliament for the year, we are proposing to do a series of amendments in this chamber which would not have to be suggested amendments for the Assembly, and they refer to the amendments in relation to the fire services property levy in regard to how this would impact renewable energy generation assets that may be located on land, such as wind farms and solar farms. The proposal is to move from the industrial classification to the public classification, which will have a significantly lower rate apply from 2024. They are cancelling each other out to make sure that that is a good policy outcome.

We will also be looking at amendments in relation to land tax and the windfall gains tax apportionment prohibition based on a property value threshold of $10 million indexed annually by CPI, land tax and windfall gains tax apportionment prohibition in relation to clarification that it does not apply to contracts entered into prior to 1 January and we are also providing clarity on the factors that a commissioner will or must consider when exercising their discretion to extend the five-year period in relation to unimproved residential land if there is an acceptable reason for not improving the land.

They are amendments 1 to 11 – 3, 7, 8, 9 and 10 – which we can deal with as substantive amendments here. It would be my proposition that we deal with those amendments and, depending on how they fall, they would form part of a final bill that we would vote on and send to the Assembly. The Assembly would then be looking at amendments which I will circulate in this chamber along with the circulation of the formal amendments. I might ask for that to be done now for optimum clarity.

Amendments circulated pursuant to standing orders.

Jaclyn SYMES: Members will receive a copy of the amendments that we are proposing to make that I have just gone through in summary. You will also receive a document which outlines, for your information, what the amendments will look like that the Assembly will be proposing to deal with. Those amendments for the Assembly relate to the 1 per cent, 2 per cent, 3 per cent proposition. They will also deal with the vacant residential land tax holiday home exemption to allow the 28-day requirement to be fulfilled by a close relative. They will extend the two-year new residential premises exemption to three years to provide a concessional rate of 1 per cent thereafter until sold and require the commissioner of state revenue to report on exemptions and also amend the transitional provisions for uninhabitable properties and properties under construction in the expanded area to clarify that the transitionals only apply to lands that were under construction or uninhabitable as of 31 December 2023.

As I said, there have been a lot of discussions within the Parliament and outside the Parliament. I thank the Greens party for their consultation with the Treasurer and his office, also the Property Council of Australia and others who also sought to engage with the government on this bill and provide recommendations that have led to the house amendments that are split across the two chambers today. As I said, it would be my proposition, because I am taking responsibility for the committee stage of this bill, that on all amendments, whether they are to be dealt with here as substantive amendments or telegraphed that they will occur in the Assembly, questions can be asked in this chamber. I do not have any restrictions in relation to that.

I would also take the opportunity just to take the house through some changes that the government are committing to that do not form part of the legislation but form part of the package of changes. As I have said, there have been a lot of conversations with stakeholders inside and outside the Parliament. The government has committed to trials of enhanced compliance efforts with regard to the vacant residential land tax. There will be a compliance trial in the remainder of 2023 involving apartment towers and in 2024 involving inner and middle suburbs of Melbourne. The compliance trials will look at every dwelling in the areas covered. The State Revenue Office will use existing capabilities and compliance tools to identify properties that appear vacant and then seek further information from property owners to establish whether they are liable for the vacant residential land tax. The State Revenue Office will provide data on these trials to the government in 2025 and the government will publish this data.

The government will also include commercial battery storage facilities in the payment in lieu of rates scheme that already applies to electricity generators, including wind and solar farms. This change is to be worked through in the first half of 2024. Section 94 of the Electricity Industry Act 2000 allows electricity generators to seek to pay an amount in lieu of local council rates under the payment in lieu of rates scheme. The Electricity Industry Act does not account for battery storage technologies, which are relatively new and not strictly defined as generators. However, storage as we know will play an increasingly important role in supporting renewable generation, so to ensure consistency we will include batteries in the pillar scheme.

In the budget earlier this year the government introduced a new land tax exemption for land protected by a conservation covenant for the Trust for Nature from 1 January 2024. This move was welcomed by not only the conservation community and the Greens party but also the member for Sandringham in the other place. A conservation covenant is a voluntary legal argument made between a private landowner and Trust for Nature to permanently conserve land. This exemption was designed to encourage landowners to protect the conservation of land value. Any land that is exempt from land tax is also exempt from vacant residential land tax, including land protected by a conservation covenant with Trust for Nature.

The government has become aware through consultation that there may be some property owners within Melbourne who are or who wish to conserve natural vegetation but who do not currently have a conservation covenant in place and may become liable for vacant residential land tax on the vacant land from 2026. The government has committed to providing funding to help such landowners establish conservation covenants with the Trust for Nature.

Finally, the government is moving an amendment to extend the vacant residential land tax exemption for holiday homes used by owners for more than four weeks every year to include those that are used by family members. The government is also committed to extending the holiday home exemption to property owners in a trust or company as of 28 November 2023. Due to drafting complexity those specific changes are not being brought forward as part of the amendments today but will be brought forward in the first half of 2024 in a relevant piece of legislation.

With that, hopefully members are clear on the process for passage of this bill and the interaction with the Assembly this afternoon. I know there will be a few votes and a committee stage following Dr Bach’s valedictory.

Council divided on amendment:

Ayes (16): Matthew Bach, Melina Bath, Jeff Bourman, Gaelle Broad, Georgie Crozier, David Davis, Renee Heath, Ann-Marie Hermans, David Limbrick, Wendy Lovell, Trung Luu, Bev McArthur, Joe McCracken, Nick McGowan, Evan Mulholland, Rikkie-Lee Tyrrell

Noes (22): Ryan Batchelor, John Berger, Lizzie Blandthorn, Katherine Copsey, Enver Erdogan, Jacinta Ermacora, David Ettershank, Michael Galea, Shaun Leane, Sarah Mansfield, Tom McIntosh, Rachel Payne, Aiv Puglielli, Georgie Purcell, Samantha Ratnam, Harriet Shing, Ingrid Stitt, Jaclyn Symes, Lee Tarlamis, Sonja Terpstra, Gayle Tierney, Sheena Watt

Amendment negatived.

Council divided on motion:

Ayes (22): Ryan Batchelor, John Berger, Lizzie Blandthorn, Katherine Copsey, Enver Erdogan, Jacinta Ermacora, David Ettershank, Michael Galea, Shaun Leane, Sarah Mansfield, Tom McIntosh, Rachel Payne, Aiv Puglielli, Georgie Purcell, Samantha Ratnam, Harriet Shing, Ingrid Stitt, Jaclyn Symes, Lee Tarlamis, Sonja Terpstra, Gayle Tierney, Sheena Watt

Noes (16): Matthew Bach, Melina Bath, Jeff Bourman, Gaelle Broad, Georgie Crozier, David Davis, Renee Heath, Ann-Marie Hermans, David Limbrick, Wendy Lovell, Trung Luu, Bev McArthur, Joe McCracken, Nick McGowan, Evan Mulholland, Rikkie-Lee Tyrrell

Motion agreed to.

Read second time.

Lee TARLAMIS (South-Eastern Metropolitan) (15:11): I move:

That we adjourn debate on this bill until later this day.

Motion agreed to and debate adjourned until later this day.