Legislative Council, Wednesday 7 August 2024

Ms FORREST (Murchison) - I would not like to miss this opportunity, Mr President, to speak on this matter.

We previously debated a taxation-related bill that was also brought in to effectively give effect to the government’s promises during the election campaign. Some of the comments I am going to make on this one, as I had foreshadowed in the previous one, are similar. I do not apologise for that because it is relevant to both. If anyone goes back ever and is sad enough to be reading this Hansard in the future, they can read what I have said on this as well as the previous bill.

I note in the Leader's introduction comment the government is delivering on its promise to provide a 50 per cent stamp duty concession to buyers of new apartments and units, off-plan or under construction, valued up to $750,000. The other claim is they will assist in giving certainty to builders as well as consumers seeking to buy such property. But as I did ask in the briefing, it does not necessarily create a whole heap of certainty if the builder still goes bankrupt during it. It is a little bit unclear what will occur in those circumstances, but I would imagine that, in most of the cases, the person who signed up to buy the unit or property off the plan would need to re-enter another arrangement. We do not want this to happen. We obviously do not want builders to go bankrupt or belly up, but we have seen it quite frequently, sadly, in recent times, particularly since Covid, with increasing prices and supply-chain issues that feed directly into that in many respects.

I am not sure how much difference this will actually make. Maybe it will encourage more people to consider buying off the plan, but you still got to have the way to be able to do that in the first place. Anyway, I will ask some similar questions as I have previously.

All available evidence suggests that the full cost of the election promises, including what was in the previous tax bill that we dealt with a few weeks ago, will be about $1.4 billion. That is a figure that covers this year under the previous forward estimates as I understand.

I would like on this occasion to be given some clarity on what the budget bottom line is in relation to this measure, in addition to the other bill we passed. What is the effect? What is the revenue foregone as a result of this particular bill - acknowledging we do not know how many people will take it up, but Treasury must have done some sort of modelling to determine what that figure might be? I hope the leader can respond with that.

I know it will not be an accurate figure because you do not know how many of these units might be built or what the uptake will be. I assume in the big scheme of things that the effects on our bottom line will be quite modest and it is something the government promised to do, so it seems a bit churlish to argue against it.

As I have said before on many occasions, not just in the previous bill we dealt with a few weeks ago, my problem is that we continue to see a pattern of minor changes to our tax system. We continue to tinker around the edges and it is always presented in dribs and drabs. Yes, it may be an election commitment, but how about an election commitment to look at the whole picture properly? That is a challenge for all political parties to think about how we could look at the whole picture and put in place a taxation system that is fair, equitable, easy and sustainable, and where the tax burden falls where it should because so much of it does not.

We continue to do this. None of these changes are especially problematic. I supported the previous bill and I will support this one reluctantly as well. When you take these bills one at a time, we fail to look at the whole picture. They do need to be viewed together rather than the piecemeal manner that this government has adopted throughout its 10 years plus. Every time we do it, there is no serious discussion about the overall impact or the overall picture or whether what we are doing is meeting the expectations of Tasmanians to have a fair, equitable, efficient and sustainable taxation system.

An approach where the whole tax system is considered would enable us to understand more fully where the pressure points are and where more broad changes could possibly be made. I know that members were aware in the previous debate of information released by Mr Saul Eslake. I note that within a few weeks at the most he will be releasing information about the state of the economy and the financial position of the state. I must say he and I are quite aligned on much of the thinking and commentary in these matters in the past.

In any event, it is clear from the publicly available information that Tasmania does not raise as much as it could if we used the same approaches as other states for revenue raising and levying taxes. Many would suggest that we do not want to do things the same as other states when it comes to taxation. It is an important distinction, but it is one that is often relied on by government when it suits them - to do things differently and not raise the revenue we could.

I am not saying it is a bad thing to have a lower taxation rate than other jurisdictions, but what does it mean in the big picture? What does it mean when we go cap in hand to the federal government asking them for more money when we are part of the Federation.

Despite this, and somewhat surprisingly, when it comes to land tax, we raise more on average than the other states. I note the provision here to raise the tax-free threshold to align it with the other bill we passed: the affordable housing and employment scheme, employment support bill, or act now, and so it is in line with the tax-free threshold in schedule 1 of the Land Tax Rating Act 2000. It is important to be consistent with that, so this is not a criticism, but the point I am making is that, on average, we do raise more through land tax than the other states. That could be a possible reason to support the bill.

This measure no doubt also seeks to account for the rising land values to enable those most able to pay to pay more. Some will drop out of the category to pay land tax, as this does not apply to the family home, the primary place of residence, but to other properties. However, we have recently seen significant upticks in valuations, as we do every time the Valuer-General does their work - sometimes just keeping up with that, mostly, increasing value. We have not seen it for a long time. I do not imagine we will.

However, with land tax, the tax burden does not always fall to those with the greatest capacity to pay and we do need to keep banging on about this because people often overlook this fact. Land tax is often paid by those renting, many of whom are among the least able to pay, because the landlord passes on the cost of land tax to their tenants. If anyone says that is not true, I can argue for quite a while that they are wrong.

Of course they do, and they are setting their rate. If the landlord's land-tax rate goes up, what do you think they are going to do? Raise the rent. And a lot of renters are among the least able to pay. So, the land-tax burden does not fall on the property owner who has already got their principal place of residence, perhaps a few other properties, it falls on the renter. Let us make no mistake about that.

When we talk about equity and fairness in our taxation system and we raise more land tax on average than the other states, we should think about that. We should have a formal and proper discussion about that. In any event, these measures in the bill mean that overall, we will raise even less revenue, while still going to the federal government with our hand out.

Ms O'Connor - But we are good at that.

Ms FORREST - We are good at that. We have been very good at that. I will come a bit more to that.

So I ask again: what is the plan to address this problem that over-reliance on the federal government compared to other jurisdictions to stop people like the nasty people in the west calling us a mendicant state and perhaps some others as well, the former prime minister too.

We need to play our own part as a member of the Federation. I know we are a smaller jurisdiction and we have a dispersed population, which adds to the cost of delivery of services like health, education, public safety, et cetera. But, we do need to have our own house in order and at least have some of those difficult conversations if we are going to continue to go cap in hand.

What is the answer to our situation? I do not think that Mr Eslake is going to be tasked with providing the answers. I think he is simply providing a summary of the reality. He may, and I really look forward to reading his report - I am sure it will not be short. I do not know that he was tasked with making suggestions about how we fix this, although he may have some thoughts on that. I am sure he has.

It will be laid bare and no-one will be able to hide. This was commissioned as part of the agreement with the Jacqui Lambie Network. They will not be able to hide. They will not be able to say they no longer know. Neither will the government or any member of this place in the parliament be able to say, 'oh, we did not know it was that bad'. I am presuming it is going to look bad, but I am not relying on my knowledge of that. I am relying on the Treasurer's own figures.

We know that is coming soon. We are going to borrow more to manage.

Ms O'Connor - Sell something, like public assets.

Ms FORREST - Sell Parliament House. If we do borrow more, the interest and debt servicing costs will increase. These are already budgeted to take an increasing share of revenue in the Treasurer's reports.

Will we spend less? That seems like a real-life possibility if you believe some of the commentary. We will have to wait for the budget to see what is happening there.

If we strip away debt servicing costs in the RER (Revised Estimates Reports), in the pre-election financial outlook, in any other Treasury document, from outlays and its expenses to deliver services, they are already budgeted to fall in real terms over the forward estimates, which means we will be spending less. That is the reality; that is what is being planned. Where are we going to spend this? That is not my question to answer. We will have to wait for the budget.

I want to repeat that last sentence because it is really important to understand this. If we strip away the debt servicing costs from the outlays the government makes to deliver services, the expenses, what it costs us to deliver services, it is already budgeted to fall in real terms over the forward estimates. I accept that forward estimates are guesses. Why would Treasury forecast or put that in there if they did not think that is the way it was going to look. I am sure Mr Eslake will shine a small light on that.

That is where we are right now: in real terms, spending on services will fall. That is what the reports say. I am not making it up. It is coming directly from Treasury's documents.

Whenever government feels under pressure to explain this, we do get hit with the words like we are spending x million dollars, a figure that includes the budget and the forward estimates, the four years. It is usually a big number because we are spending a big number. It does not mean much to anybody except it is a big number; or are we spending a record amount of x million dollars, another big deal.

Due to inflation if we are not spending more in nominal terms, then you are going backwards. This argument we used to hear ad nauseam around our Health budget. Of course, you are spending more. There are more people here to look after. There is more technology that costs more; drugs are more expensive; all of those things. If you stop treating people that would save money, I do not think that is going to wash too well.

This is my favourite, or not really my favourite. It is usually used in health spending. We are spending x million dollars more than last year. Last year's amount is often referred to as the budgeted amount, not the actual amount and that can vary a lot when the actuals come out a fair bit later in the year. It will be very close to when the budget is released, as I mentioned this in the last tax bill we debated. It would be very close to when the budget is released but unfortunately, we will not have the figures unless the departments provide them to us because the budget and estimates are in September. The departments are not required to release their audited annual reports until after that. They will have the figures and we will ask for them.

I want to make the point that looking at revenue change in the vacuum without the flow-on effects on the budget, generally, is not something that sits very comfortably with me. The other matters that are addressed in the bill: the buying off the plan, the stamp duty relief and the land tax and raising the threshold, which is really just keeping in line with the other bill we did previously. I do not believe this has a massive impact on the bottom line. I am not arguing against it. I am making the point more broadly. I wish we could have a proper discussion.

Even in those who can access that duty relief who are buying off the plan and the eligibility is met, not everyone fits into that category who may wish to buy a home. They may not be able to buy off the plan. It might be hard for them to get the finance to do it. We do need to be really careful with these sorts of concessions, and the claim it will assist and give more certainty to buyers and builders. It may well do, but any time you are interfering in any way with the market, you risk the impact on prices. Every economist out there worth their salt will tell you there is an inflationary impact from some of these schemes, particularly things like the First Home Owner Grant, particularly when it was applied to existing homes. That was gotten rid of a long time ago, I think by all jurisdictions, because they saw the effect of that. Some of these are a little bit harder to gauge - these sorts of measures, but we do need to keep in mind the inflationary effect of interfering in a market where people have money they would not have expected, without their concession, they can put toward it. It would probably help that person, if that person is lucky enough to be in that situation. It does not help a lot of the other first home buyers who are trying to get into the market, who missed that opportunity because they have not quite saved enough yet for a deposit - or they have had unexpected expenses related to health, or a baby coming along, or whatever it might be for a new family.

It makes it harder for people in six months, 12 months, 18 months, because the prices have been pushed up because of this 'free money' in the system. That is how it works. That is the reality of it. People who end up shouldering the biggest burden of those about to buy their first home are those who have just seen prices rise as the flow-on effects from the assistance received by those ahead of them in the queue on some of these measures. It is really hard to get actual data on this, but economists look at it and see this and continually urge against interfering in this way, because it might help an individual here or there, but there are many others who are pushed further down the queue as a result. I say the queue - those trying to get into the market, trying to purchase a home. We are not talking about the first home buyer policy, but that first home buyer assistance was, and will remain, bad public policy.

At the same time, the government's Treasury documents note the reducing revenue through this and the previous tax bill. It also, and I mentioned this around the time of the previous bill and around the election campaign period, is a coordinated campaign to get more money from the federal government whilst we are also reducing our own revenues. It needs to be noted and is part of the way this government has been claiming to address the financial challenges: that the federal government should be treating us more fairly, and that is being disingenuous about the reality. As I noted previously, Treasurer Ferguson put out a press release on 14 June claiming, and I quote from that: TBC 11:38:50 am

… 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.

Mr President, if one wishes to take the higher moral ground, it would probably be good if you had your own house in order first. I suggest that the federal government is likely, and possibly within its rights to say, how come you are raising 16 per cent less in revenues compared to other states? We might have very good reasons for that. But if we are going to challenge them about treating us unfairly, well show us the evidence that we are actually doing all we can not to be in that position to need more from the federal government. Why should they give Tasmania a bigger handout? Outside of the Northern Territory, we have the greatest percentage of income from the federal government as a percentage of our state budget. And the Territory is a different situation, as I am sure all of you are aware.

The Treasurer then continued in his media statement:

…with a number of critical projects needing adequate federal funding to keep our state moving forward every member of parliament, regardless of political party…

Maybe I am outside of that. Perhaps he was not criticising me then.

… 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.

We all stand for Tasmania's interests, but most of what the Treasurer said relates to areas of state responsibility in that media release. The only possible exception is the Antarctic Gateway, which is still now a little bit contentious about whether that will remain here or go to another state. All those things the Treasurer mentioned in his claim that we are being treated unfairly - or we need to all stand up and get more funding from the feds - the only thing you could possibly cut out of that was the Antarctic Gateway that might have some federal or nationwide implications. All the rest - if we got extra money for those as a grant, it would be clawed back by a reduced GST. That is the way it works. We are part of a federation. Mr Saul Eslake has made many a public comment on the absolute worst public policy decision of all time. When WA was granted that ridiculous GST distribution, that was not what was recommended by the Productivity Commission. It was a purely political decision. I could not agree more with Mr Eslake more on that - and he is fighting a one-man battle over there, making no offence to WA, I might add - but that decision has made it even harder for the other states. All the other states are up in arms and Treasury wrote some really good papers on this. If you are interested in reading about it, go and look at the Treasury website. There are some very good position papers and discussion papers there going back a number of years when all this was going on.

But the Commonwealth Grants Commission, their process to maintain horizontal fiscal equalisation prior to that terrible decision was a fair, effective, and efficient process. It has been undermined somewhat. In a committee inquiry, our Treasury officials from this state were very clear they wanted it reverted basically back to where it was. Whilst there are always swings and roundabouts, winners and losers in all of these things, it had been and would continue to be a fair and more equitable system. Anyway, it is not completely destroyed, it is just not as fair and equitable as it was in the past. Certainly, WA gets the absolute lion’s share of the benefits. Even states such as Victoria and New South Wales argue against it.

Anyway, it is really important we understand how the system works and at the same time the government said it is reducing revenue foregone as per this bill. Even though I accept it is a small amount, we are demanding short-term loans from the federal government. The Treasurer also stated in his media release that all members of the Tasmanian parliament stood up for Tasmanians every day of the week, as they should:

… stand up for Tasmanians every day of the week as a Liberal government is doing. Anything less is a betrayal of the Tasmanian people.

It is a greater betrayal to continually mislead the people of Tasmania who do not understand how the system works and in fairness to them, I would not expect them to. But to continue to mislead the public about how the system works is disingenuous at best. To try to deflect and ignore our very high reliance on federal government funding should be part of the consideration when we are dealing with legislation that does not look at the whole picture - that continues to chip away at things, on their own that are inoffensive. For goodness sake, let us have a proper look at the whole picture.

On the smaller matter - not smaller, the more immediate matter - the bill before us, Tasmanian people have not been misled in that the government is committing to do what it said in the election. Fine, but just a shame they won't talk about the big picture. I suspect we will only have to wait a few weeks to see Mr Eslake's report into the state finances and we will see it all laid bare and to see whether the government's Strong Plan has any hope or whether we as a state have been cavorting with the pixies for far too long, denying the reality of what is there for all to see in the Treasurer's own reports.

I apologise for being somewhat repetitive in this tax-related legislation. I do reluctantly support the bill having made those broader comments.