Legislative Council, Wednesday 19 June 2024

Ms FORREST (Murchison) - They would be surprised if I did not get up, perhaps not the new members. I do note this bill, the Taxation Legislation Affordable Housing Employment Support Bill fulfils some promises made during the recent election campaign, as does another bill that just landed in this place, the Taxation Legislation Miscellaneous Amendments Bill 2024. I did ask about this in the briefing. This surprises me.

Firstly, that these two matters were not contained in the same bill in the first place, and in the absence of that, brought on for debate at the same time. It appears they were both tabled very close together in the other place. It does surprise me.

We had an explanation that was provided at the briefing. The Leader might like to reiterate that, as to why we are dealing with two separate bills. I might say the same speech again next time because it is all relevant. What I say to this bill is absolutely relevant to the next one when we deal with that after the winter break.

You might ask, why do I suggest this? The second reading speech for this bill and the one that follows offers little more than a description of the measures that are being taken in each of the bills. This is fine; we expect the reading speech to do that. The confirmation of what the government is doing and what it promised in the election is fine; no issue with that.

What is missing in this one - and in my view, in the next one too, which I will not reflect on until it gets here formally for debate - is any semblance of a policy debate on the bigger picture. There is no explanation of what these measures will actually cost the budget bottom line. I am hoping the Leader has a figure that she can provide to this place as to the impact on the general government sector's bottom line, by revenue foregone, which is effectively what all this is. I am confident that she will be able to provide that in her reply.

There has also been no discussion in these bills at all about how these measures fit in with, promote or undermine the government's own fiscal strategies and the so called strategic actions. As outlined in the Revised Estimates Report that was released in February this year, just prior to the election, it was clear that without these measures, we are likely to breach a number of the government's own fiscal strategies over the period of forward Estimates.

These measures are likely to further undermine our capacity not to breach the fiscal strategies. Yet here we are, making decisions that will impact on the general government sector's bottom line, with no explanation of the overall policy piece, that not only describes the impact of these bills, but talks about the big picture that is our financial position in this state.

We know Mr Eslake is doing some work on that. I am sure his report will be very interesting reading for everyone. I am not sure what it will mean for the members whose agreement in the other place led to that, what they will think of it, but I am sure I have a fair idea what is going to be in it because I have been banging on about this for years. It is not news. Well, it is not news to me. It should not be news to anyone in this place, who has been here any length of time.

There is no discussion; no explanation of the overall policy piece that sits behind these decisions, other than the election promise. Nor does it describe the impact of these bills. We may get an answer in the Leader's reply. I am hopeful of that. At least we will know what it is going to cost us. All available evidence suggests that the full cost of election promises will be $1.4 billion. That is for this election. It was the same for the other early one, less than three years ago, or more than three years now, but less than three years when the second one was called.

What is that cost of revenue forgone? I am sure that in the big picture the overall effects to the bottom line will be quite modest. It is something the government promised to do. That is accepted. I am not questioning that at all.

It may seem somewhat churlish of me to argue against any provision within this bill on the basis of those facts. My problem with this bill is that it continues to pattern the minor changes to our tax system, tinkering around the edges that are always described in dribs and drabs. The spreading of this bill from the other one, which both address government election commitments, splits it further.

In our briefing, the Treasury officials suggested that they would have preferred to be in the same bill, and the Leader can explain why it was not. I hope she can do that in her reply. In any event, with tinkering here and tinkering there, with no regard to the overall picture. None of these measures is particularly problematic taken one at a time. We can all justify why the measures are appropriate in many respects.

It is a little frustrating that we keep going round and round in circles here, tinkering away without actually doing a proper policy piece on this. These measures, and the ones that are yet to come, need to be reviewed together rather than in this piecemeal approach; the government appears to always be adept at getting legislation through without any serious discussion about the merits or the overall impact. That is why I am now banging on about it again.

An approach, in which the whole tax system is considered, is the only way we will be able to see the overall effects and assess any tax proposals in a responsible way.

I am not sure if you have had the time to look at a recent slide package from Mr Saul Eslake. It is not available on his website, but it is out there in circulation. It covers the state of the Tasmanian economy and Tasmanian public finances. It is not the report he is doing on behalf of the agreement with the Jacqui Lambie Network with the government. It is a separate package of slides which provides quite a lot of interesting information. Some of the things I have been saying myself.

Slide 48 in that pack confirms that in 2023 24 Tasmania raised $277 million, or 16 per cent less than it would have done if taxes were levied at the same rate on the same basis as the averages of all states and territories. That means we do not raise as much as we could. I am not saying we should. I said we could, compared to other states, if we were to use the same approach as the other states. Some would say it is a good thing. I am just making the observation.

Many would suggest that we do not want to do things the same as other states, necessarily, when it comes to taxation. However, it is an important distinction and one that is often relied on by government when it suits its narrative. Despite this, somewhat surprisingly, when it comes to land tax, we actually raise more than the average of the other states, according to Mr Eslake's same slide. That is a possible reason for supporting this bill, which aims to reduce land tax by raising the tax-free threshold. This measure, no doubt, seeks to account for the rising land values. We have just recently had a number of valuations. I do not think the punter out there is going to see much difference. I know my municipality has had a recent revaluation, so they will be a bit horrific, I am sure, but that is on the primary place of residence. I do not actually pay land tax, but it affects my rates. It will affect those who have other taxable properties who pay land tax. It will account for some of that rising land value.

We need to ensure that those who are most able to pay do. That is what state taxes should do. They should tax those most able to pay, not those who are not.

The point I am making is that with land tax, the tax burden does not always fall to those with the greatest capacity to pay. It is often paid by those renting, and many of these people are least able to pay. That is where the burden usually goes. You have to look at where the tax burden sits, not just the actual liability itself. In any event, this measure means that overall we will raise even less revenue. What is the plan to address the problem? That is the question for the government.

For the Treasurer, and I doubt the Leader will be able to shed some light on that question, although I would welcome her thoughts in the reply to the debate, if she can, about what the solution is, or what the plan is, to address the problem. Maybe they are waiting for Mr Eslake's final report so that they can look at it in all its glory.

Ms O'Connor - It will not be any prettier.

Ms FORREST - No, it will be worse. I am making a presumption there, but my presumption is based on some fairly solid background.

Interest and debt servicing costs are already budgeted in our state budget to take an increasing share of revenue. That is all there, laid bare, in our Treasury reports. So, what do we do? We spend less. If we strip away debt servicing costs from outlays, expenses to deliver services - this is the services we are delivering for health, education, justice, public safety - are already budgeted to fall in real terms over the forward Estimates.

I repeat that this is all in the Revised Estimates Report (RER), and the Pre-Election Financial Outlook (PEFO). If you strip away debt servicing costs from outlays and expenses, the expenses to deliver services are already budgeted in the forward Estimates to fall in real terms. I am not making it up. It is all there in the budget papers and in the RER and in the PEFO. That is where we are right now. In real terms, spending on services will fall, if you can believe the forward Estimates. It is all there.

Whenever the government feels under pressure to explain this, we will get hit with words to the effect that, 'we are spending $x million' which includes the budget and the forward Estimates. It is usually quite a big number and it does not mean much to most people, except that it is big. Or, 'we are spending a record amount of $x million' - big deal - due to inflation. If we are not spending more in notional terms, we are going backwards.

The fact that we spend more on health each year is just a rubbish comment, but we hear it every budget. Otherwise, you are going seriously backwards. Or - this is my favourite - usually with respect to health spending, 'we are spending $x million more than last year'.

Now, last year's amount, that is generally referred to in this statement, is the budgeted amount, not the actual amount or what is actually spent. Up until very recently, this has been hopelessly inadequate as far as the estimated outcomes because it has always been well short of the actual expenditure. It will be a bit closer this time; but when the budget usually occurs in May, we do not have any sight on the actuals at all. We will be getting close to the actuals by this budget; but I did ask that question earlier - 'no, we will not have them'. They will not be audited and tabled because the annual reports of the departments are not tabled until October. They will all be there, just after the budget. Anyway, I have already indicated my intention to be asking for all the estimated outcomes, at least from all our line items in the portfolios that committee A looks at.

I will not digress any further. My point is, that looking at revenue changes in a vacuum without the flow-on effects of the budget, is generally not something that sits very comfortably with me.

The other matter addressed in the bill is the measures related to the duty on the purchase of homes. Again, a fairly limited bottom line effect on the budget, I assume. Whilst it might assist those who qualify and have been able to benefit before that window of opportunity closes, it does not help overall. Some of these things are also captured in the second bill that is coming

If we were having a proper look at it, we would probably get rid of stamp duty altogether. It is the most ineffective, inefficient, unfair tax in our whole portfolio of taxes. It applies to the wrong point of a transaction. There is everything wrong about stamp duty; but, sadly, we are not having that discussion.

Mrs Hiscutt- Yes, we are.

Ms FORREST - Well, we are not because we are not talking about this in the big picture. You cannot talk about it in isolation. We have not even had a talk with those people in Canberra - the federal parliament and the federal government. We cannot do these things in isolation. We are a federation, and we need to look at these things as a whole - including the sacred cow of the GST, which has previously been removed from every review of tax and any opportunity for tax reform, including in the Henry Review, which seems like 100 years ago now. It was not quite that long ago, but it was during my time here -

Ms Rattray - Somewhere in those 19 years.

Ms FORREST - Yes, that is right. It is eternally frustrating. I also ask the Leader whether Treasury has done any modelling to determine what extent house prices rise when duty concessions are given. We know they do. Economists everywhere tell us that. But have they determined who benefits from these?

Again, where the tax burden lies - not always with the person you might think should be paying it - but also where the benefit lies in terms of these concessions on paying.

I would be pleased if the Leader could inform me of the existence of any modelling or data, because I can always seek that later. I want to know if it is there, and has it been done? Do we know the extent to which house prices rise? Do we know who benefits? I hope we would. When we are making these policy decisions pre-election, I hope we would have some idea about that. I look forward to the Leader providing some clarity on that.

We all remember the First Home Buyers Grant when it was applied to existing homes. Thankfully, that was removed. Such was the effect on prices that it became known, quite rightly in my view, as the 'First Home Vendors Grant', because that is who it helped - not the purchasers, not the people trying to get into market. It benefited those who were selling and of course, the real estate agents, who got the bigger cut. Prices went up to such an extent that the major beneficiaries were sellers, not buyers.

All taxes and concessions share a similarity. A person who pays the tax or receives the concession is not necessarily the person who shoulders the burden or receives the benefit; and is it not important we know who it is, if we are trying to help people - which we are. These are cost-of-living pressures. Let us make sure we are helping the right people here.

When it comes to housing concessions, most probably flow to the builder or the seller, whatever the case may be. A first home owner may end up with some of the benefits if prices rose by less than the amount of the grant or concession, but probably not much; and only if they get in early.

The people who end up shouldering the biggest burden are those who are about to buy their first home, who have just seen prices rise through the flow-on effects of assistance received by those ahead of them in the queue; we know how tight the housing market is. First home buyer assistance is bad public policy. Just because a policy delivers some benefit to a few lucky recipients does not make it a sensible policy. Any widening of the gap between the haves and the have-nots is not sensible policy.

At the same time as the government is reducing revenue, it has launched what seems to be a coordinated campaign to try to get more money from the federal government. We are reducing our own revenues and then criticising the federal government every time we turn around for not giving us enough.

I will go to my other pet subject briefly; it is related.

The Treasurer, Mr Ferguson, put out a media release on 14 June claiming, and I quote from his media release:

The Tasmanian Liberal government will always stand up for Tasmania - against those in Canberra who want to dud us time and time again.

Every Member of Parliament should be doing the same thing. 

If anyone wishes to take the high moral ground, you would hope they had their own house in order first. The feds are likely to say, 'How come you are raising 16 per cent less revenue compared to the other states?' That would be a fair question to ask the Treasurer.

The Treasurer continued:

With a number of critical projects needing adequate federal funding to keep our great state moving forward, every member of Parliament - regardless of political party - should be making the case and advocating for improved outcomes and better funding for Tasmania.

Whether it is the Greater Southeast Irrigation Scheme, more funding for safer roads, an upgraded Antarctic gateway or many other economic opportunities - it is incumbent on parliamentarians to stand as one in pushing for Tasmania's interests. 

Most of what the Treasurer is after in that statement, with the absence of perhaps one that I will mention, are areas of state responsibility. It is our job to fund those.

The only possible exception is the Antarctic gateway that, notionally, has a national implication. You could argue that one should be quarantined or exempt from GST allocations. However, the rest of them are state government responsibilities. If we received a grant or more money for those, it would be clawed back through less GST over time.

I believe members of the general public are now getting this, after me banging on for a long time about it.

The Antarctic gateway may be nationally significant - I suggest it is, and I hope we can keep it - such that it would be treated differently by the Commonwealth Grants Commission when they assess how the grants will affect our GST share.

The other grants almost certainly will be clawed back with less GST in the future, which means any grant is simply a short-term loan from the Commonwealth. I think members understand this now.

I cannot believe we are getting these misleading statements from the Treasurer, who should know better. The Treasurer expects, and I am quoting again from his media release -

That all members of Parliament stood up for Tasmania every day of the week as the Liberal government's doing. Anything less is a betrayal of the Tasmanian people. 

It is a betrayal of the community to continually mislead the Tasmanian people about how the GST works and how the allocation of GST is apportioned through the Commonwealth Grants Commission. What are state government responsibilities? Why are we assessed at such a favourable rate because we have more disability; that is what it is called, in terms of meeting the health, education, public safety and other measures.

However, on a smaller, more immediate matter of what is in the bill before us, Tasmanian people have not been misled. The government is doing what it promised. I agree they are doing what they promised, but as I said, we are missing that whole policy piece.

I suspect we will only have to wait a little over two months to see Mr Eslake's report, which I referred to earlier, to see whether the government's strong plan has any hope or whether we as a state have been cavorting with the fairies for far too long.

With that said, I reluctantly support the bill. It is churlish to even speak against aspects of which I have not spoken against any particular measures in this. I have spoken against the lack of a policy discussion around this informing us; about giving us the full facts about the impact of this; looking at right now and at the future; and the disappointment I have that we continue to do this.

 

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