It is a pleasure to rise to speak on the State Taxation Acts Amendment Bill 2015. I have to say at the outset that this is a very shoddy effort from this government.
The first point to make is that this government was elected after having campaigned on the commitment of no new taxes. The Treasurer — then the shadow Treasurer — on 27 November last year told 774 ABC Melbourne, 'We will introduce no new taxes', and so did the Premier. I quote the now Deputy Premier with Neil Mitchell on 3AW Mornings on 14 November 2014:
Mitchell: No new taxes?
Mitchell: No new fees?
Mitchell: No new bills, nothing going to sneak in on us?
Mitchell: Okay, promise?
This is a clear broken promise from a dishonest government. We heard so much bluff and bluster in the Treasurer's budget speech about the government keeping its commitments. This was another Labor lie. We have new taxes and broken promises. The government does not like being reminded of the fact that it made a commitment to Victorians that there would be no new taxes and that this bill breaks that promise. I would love to see one member from the other side get to their feet in this chamber and defend it.
But of course we know that broken promises and higher taxes are in Labor's DNA, in its blood line — it cannot help itself. It is not enough that the government is forecasting an extra $1.1 billion in taxes in 2015–16; this bill raises an extra $333.1 million in new taxes over the next four years. Labor has driven Victoria's budget into deficit in just six months.
Mr Foley — Stay vaguely on the facts.
Mr M. O'BRIEN — The only way it is not actually in deficit — —
Mr Foley — So it's not actually in deficit!
Mr M. O'BRIEN — It is effectively in deficit. The only way Labor can stop the Auditor-General calling in the books is by refusing to hand back $1.5 billion received for the east–west link. It is extraordinary to take money on false pretences. How can you take money to build a road, not build the road and then not send the money back? This government has damaged this state so badly in just six months that it needs to resort to over $333 million in new taxes to try to prop up its shoddy budget. It is disgraceful. This government is selling this state down the river after only six months.
When this bill was released there was a shocked response from the development industry in this state, and not only because it was a clear broken promise but because of the damage that this botched and bungled tax grab would cause. sWhile the Treasurer in his second-reading speech claimed that the bill supports housing affordability, you have to wonder: how do higher taxes on property support housing affordability?
Mr Nardella interjected.
Mr M. O'BRIEN — Thank you, Pauline Hanson. Thank you very much.
This new tax bill is a strong contrast to what the former coalition government did. We knew that in order to try to encourage housing affordability you release additional land to meet the demand of the market and you introduce a 50 per cent discount on stamp duty for first home buyers. That is what the coalition did. That is what I did as Treasurer: 50 per cent discounts for first home owners. That is what it is all about. In addition to that, we created a $10 000 grant for those buying a newly reconstructed first home. That is how you improve housing affordability, not through new taxes on property. Labor has only one answer to everything: higher taxes. That is what it is all about.
Here is what the deputy executive director of the Property Council of Australia said as reported on the Domain website:
'This new tax will add $6000 to house and land packages in the growth areas and approximately $19 000 to housing costs of an average home in the existing suburbs', he said.
'This cost will be passed on home buyers because of its scale and lack of implementation time for business to prepare.
'It will also act as a disincentive to foreign investment in Victoria, which is crucial to prosperity and job creation.
'The easiest way to improve housing affordability in Victoria is to stimulate the construction of new homes. This tax will discourage new home construction activity by making it more expensive to build.
That is not rocket science. It is pretty much common sense: if you put taxes on something and you make it more expensive to build, then it is more expensive to buy. It is not rocket science, but apparently it is beyond this government and it is certainly beyond this Treasurer.
This is a bill which sends fundamentally the wrong message on investing in this state. We want to attract investment into this state. We need to increase the supply of housing. We need a greater housing stock if we want to reduce pressures on housing affordability. This is a state with a growing population — nearly 110 000 additional people each and every year. We need additional housing stock to avoid putting more pressure on housing affordability. This bill makes the cost of purchasing and holding property higher. That is what it does.
Many new housing developments, especially apartment projects, need a substantial precommitment by purchasers before they can proceed. Frankly, the banks will not agree to lend money to developers unless there is already a significant amount of investment signed up at the start.
Honourable members interjecting.
Mr M. O'BRIEN — Members opposite do not understand this. Perhaps the member for Melton, who owns half of his suburb — the greatest landlord in this Parliament — knows a bit about property investment. He is pretty good at knowing a deal; he is pretty good at knowing rental yields. He has got quite a few titles there, but even he will put the interests of his government before his own personal interests, so good on him for doing that.
Often it has been the foreign investors who have been the cornerstone investors of these large apartment developments, and if their money is not there, then projects do not go ahead. That means the jobs are not there and the housing supply is reduced. By having Pauline Hanson as its tax adviser the government is sending a message that foreign investment is not welcome in Victoria. It is going to hurt Victorians. It will hurt Victorian jobs, it will hurt Victorian housing supply, and it will hurt Victorian housing affordability.
It is not just me who has raised this concern; others have raised concern that there is a bit of a whiff of xenophobia about this bill.
Ms Thomas — That is a disgrace.
Mr M. O'BRIEN — I welcome the interjection, because I am going to read from some commentary on this. I am going to read some very interesting commentary. Here is one commentator, who said:
… I see this property tax as a reaction, not a solution …
The additional taxes send a very near negative message to foreign investors … There is no doubt that foreign investment in Australia's property market increases housing supply and at the same time creating more jobs.
The writer went on to say under the heading 'Does xenophobia still exist in Australia?':
While Australia and other governments around the world claim these foreign buyer property taxes are not aimed at a single nationality, I cannot help but wonder if this is the case.
He went on to say:
As an Australian of Chinese heritage, the Victorian government's newly imposed property tax on foreigners draws similarities to the Chinese Immigration Act introduced in 1855 during the Victorian gold rush. Responding to local miners, the Victorian government imposed a head tax of 10 pounds on every Chinese migrant entering a Victorian port. While times have changed, I cannot help but wonder whether xenophobia feelings specifically towards Chinese investment and migration remain in Australian society.
This was an article by Mr Jieh-Yung Lo, who is a councillor of the City of Monash — an elected representative. When we do a bit of googling and go to the Sydney Morning Herald we see an article headed 'On the campaign trail — the Asian-Australian story'. It says:
… Jieh-Yung Lo, the deputy mayor of the City of Monash and a Labor Party activist …
When Labor Party activists, a Labor Party councillor, Labor Party elected representatives compare this bill to the Chinese head tax during the gold rush, you have to worry. What message is that sending in terms of Australia's and this state's investments and our economy?
Honourable members interjecting.
Mr M. O'BRIEN — You have to worry when people are interjecting and complaining that we are reading into the record comments of Labor Party activists.
It is also notable that another Treasurer has specifically ruled out following Victorian Labor's moves. This would be the Queensland Labor Treasurer, funnily enough. He said in his press release of 6 May:
We want to send out a very clear message that Queensland is open for business and that we welcome foreign property investment …
We have a Queensland Labor Treasurer running a mile from this. He is saying foreign property investment is a great advantage for Queensland, and that it is a great policy for Queensland. But this Labor government in Victoria is sending the message that it does not welcome foreign investment.
This is not a good bill, and not even just from a policy point of view. When you actually look at the bill itself and the loopholes in it, you realise there are some amazingly inconsistent outcomes — for example, in this bill a discretionary trust with a single foreign beneficiary is treated as though all of the trust's landholdings are foreign owned. But instead of a discretionary trust, if you have a fixed trust with a single foreign beneficiary, that will only attract a pro rata surcharge based on that specified interest. Let me give the house a practical example. If an Australian family trust was set up to provide for family properties to go to the children of a family, and one of the kids falls in love with an American, goes to America and becomes a US citizen — which means they have to renounce their Australian citizenship — all of a sudden the family home in that trust is treated as foreign owned and the new surcharge applies. What a ridiculous position. I will give another example.
Mr Nardella interjected.
Mr M. O'BRIEN — I say to the member for Melton, maybe it is a gay Australian who has gone to Ireland to marry his Irish partner! Don't be xenophobic and homophobic. It is really not a good idea. This is a discriminatory bill, whichever you way you cut it.
Let me give another example. In relation to the land tax surcharge, where an Australian holds 8 out of 10 shares in a company that owns the land, no surcharge applies, even though 2 shares out of 10 are held by a foreigner. But if an Australian holds an 80 per cent equitable interest in a title, then a 20 per cent surcharge applies. So basically exactly the same landholding by a foreigner is treated completely differently depending on the legal structure used. This is not a fair bill in the way in which it applies, because you would think the same foreign holdings should be taxed the same. They are clearly not under this bill.
Let us have a look at this supposed great saviour, the guidelines. Again, it is an example of how sloppy this government is that it is saying, 'Don't actually look at the bill itself. Don't worry about the letter of the law in the bill. We will get around that, and we will issue non-binding guidelines with no legal authority whatsoever. Forget the law; this is how we will actually make it work'.
It was interesting to note another backflip from the Treasurer. On 9 May the Australian Financial Review reports:
Mr Pallas initially held firm on the tax grab on individual buyers and developers alike, confirming it would apply to companies with majority foreign ownership, when questioned by the Weekend AFR during Tuesday's state budget lock-up.
That response prompted a storm of protest from Mirvac, Stockland and other developers who pointed out the sting would be passed through to local buyers as well.
Then it says:
Behind the scenes, major players in the property sector are furiously lobbying the Victorian Treasurer to carve out local players from the new tax.
There are concerns the new taxes — which include a separate 0.5 per cent land lax impost on absentee landlords — could scare some foreign buyers out of the state and into … Sydney or Brisbane …
Lo and behold, the pressure has obviously worked. The Treasurer has not had the guts, the courage or the wit to come in and say, 'This bill is a mess. I am going to amend the bill. I am going to fix up the bill'. No, he says, 'Forget the law. I tell you that I will apply it separately. I will apply it to some and I will not apply it to others'. He says, 'I will issue guidelines'. The guidelines are not legally binding. The guidelines are not instruments of this Parliament. The guidelines have no effect whatsoever. He is saying, 'I will issue guidelines' and 'Trust me, we will work out any problems'. What a joke! What an absolute joke to have this Treasurer, who cannot get the bill right, cannot get the legislation right, cannot get the law right, saying, 'Come in here and we will put guidelines around the actual letter of the law and we will decide how that actually works'.
There are certain discretions that treasurers have under tax law and they can exercise them — for example, there can be what are called ex gratia payments that a Treasurer can make to a taxpayer. But in order to make sure that the Treasurer is accountable, that the Treasurer acts in the public interest, those decisions have to be published. Those decisions have to be recorded and published — made public. But under these dodgy guidelines there is no publication whatsoever. In other words, taxpayers can be let off this new tax. They can be let off this new law if the Treasurer feels like it, and he does not have to tell anybody about it.
You can just imagine the next recruiting effort for Progressive Business: hey, join Progressive Business and we will get your application in front of the Treasurer for tax relief. I am sure that might make the Labor Party a lot of money as its grubby mates line up for special treatment by the Treasurer, who never has to disclose publicly to whom he is giving the exemptions.
Mr Foley — On a point of order, Acting Speaker, the government has allowed the first speaker for the opposition a fair degree of licence, but he is nowhere vaguely on the bill, and I ask that you bring him back to order and back to the bill.
Mr M. O'BRIEN — On the point of order, Acting Speaker, the Treasurer's own office provided me with a copy of the draft guidelines to which I am referring. Unless the Minister for Housing, Disability and Ageing is claiming that we should not be taking the Treasurer at his word and that in fact those guidelines have nothing to do with the matter before us, I believe I am acting in accordance with the bill.
The ACTING SPEAKER (Mr McCurdy) — Order! I will overrule the point of order. Certainly the state taxation acts legislation is fairly broad. I will allow the member to continue, because there is a fair bit of interjection from the government side as well.
Mr M. O'BRIEN — The point is that the Treasurer is saying, 'Give me this discretion, I will use it according to the guidelines' — guidelines which we have not seen in Parliament, guidelines which have no legal authority, and guidelines which have no requirement to publish what decisions are made. How are we supposed to know that it is not a whole bunch of grubby mates of the Labor Party, a whole bunch of Progressive Business donors, who are not lining up outside the Treasurer's office to have this exercise of discretion used to look after their own business interests at the expense of Victoria's revenue? There is no accountability. There is no transparency. There is no legal authority. This is an absolute scam.
This is a government which cannot get the bill right in the first place, does not have the courage to fix it up, tries to come out with dodgy guidelines with no legal effect, and then will not even tell the public. The Treasurer will not even tell Victorians how he intends to use this power. This is appalling. What an appalling state of affairs.
The coalition wants to see this bill get the proper scrutiny it deserves, so I place on the record now that when it reaches the other place we will be referring it to a legislation committee for a proper review. We know the numbers are here to pass the bill. We know that the government will get this bill through this house, but we place on the record that we are very concerned that this bill will damage housing affordability instead of improving it. We are very concerned that this bill sends absolutely the wrong message about the need for new housing stock in this state. We are extremely concerned that there is a dodgy government with dodgy guidelines, which will not even tell Victorians how it is planning to exercise a multimillion-dollar discretion that the Treasurer is personally planning to exercise under this bill. This is another broken promise. This is another Labor lie. This shows once again why the budget is a bad budget and how this government is letting Victorians down.