Parliamentary Speeches
Land Tax ( 27/06/2008)
Mr DONALD PAGE (Ballina) [12.15 p.m.]: I bring to the attention of the House the grave concerns I hold for the Ballina electorate in relation to land tax. The Independent Pricing and Regulatory Tribunal [IPART] has now released its review of State taxation report to the Treasurer. That report contains a recommendation to increase land tax revenue by broadening the land tax base and increasing the land tax rate. The effect of such a strategy on the Ballina electorate would be devastating. The report discusses the broadening of the land tax base by including owner-occupiers, farmers and properties currently below the tax-free threshold. The Ballina electorate—and indeed the whole of New South Wales—is currently facing a significant housing crisis.
According to Moody's Investors Service, New South Wales has Australia's highest rate of mortgage defaulters. In March the Reserve Bank estimated that 40,000 borrowers were behind in their mortgage payments. Adding to the crisis is the desperate shortage of rental properties and surging rental rates. The IPART recommendation to increase the amount of land tax collected in New South Wales will worsen the current housing crisis. It will also hurt struggling small businesses, farmers and homeowners. Land tax is exacerbating the housing crisis in New South Wales by discouraging people from investing in property, especially rental property. Other more attractive investments such as shares do not attract land tax. In its review of New South Wales State taxation, IPART recommended:
In the long term, the Government should develop a strategy for increasing property holding taxes (for example, broadening the land tax base, increasing the land tax rate and/or increasing municipal rates on land values)
In recommending the broadening of the land tax base the report discusses the advantages of putting land tax on all residential owner-occupiers and rural landholders. Land tax should not be levied on every household or on rural properties. Homeowners and primary producers are doing it tough already; they do not need a new tax. The Government must look at ways of reducing its reliance on land tax, not increasing it. The New South Wales Government collected $1,955 million in land tax in the 2006-07 financial year, which represents more than 12 per cent of the total revenue collected by the Government in that year.
As fewer people see rental property as a desirable investment because of land tax, less stock will be available to rent, which will drive up rents in available rental accommodation and worsen the current affordable housing crisis. In our current housing crisis the State Labor Government should be doing more to increase property investment. Increasing land tax will have the opposite effect. In the Ballina electorate that effect will be even greater due to its proximity to Queensland, where property investors are achieving good returns on their investments without the impost of the high land tax rates that apply in New South Wales. I know of many property investors and small business owners who have sold their properties due to land tax and those people have either relocated to Queensland or found alternative investments.
Land tax is also a huge disincentive for those who are trying to become self-sufficient in their retirement by having an investment property nest egg so they do not have to rely on taxpayers in their later years. The IPART recommendation to include homeowners would have a devastating effect on retirees and pensioners who own their own homes. Given the ageing population and our relatively high retirement demographics, the Government must do more to decrease this sector's reliance on the government pension. Increased land tax will also impact negatively on businesses in New South Wales. Many business premises attract land tax, which has to be paid by either the owner or the tenant. Either way it is an extra impost on business that it cannot afford. An increase in land tax will impact negatively on businesses that own their own premises or are renting premises.
Business owners in the Ballina electorate told me that this year had been their worst for 20 years and that that was due to several factors. The dreadful weather we had during what is normally the busiest time of the year for tourism led to a dramatic reduction in turnover for local businesses. Additionally, retail rents increased substantially during the past financial year. If we add those two factors to the increased interest rates and petrol prices we begin to see the dire situation businesses in the Ballina electorate are facing. Any increase in land tax will be passed on to tenants in rental properties and will directly affect the bottom line of businesses that own their own premises. The effect of such an increase on the local economy would be devastating.
I believe that the IPART recommendation to increase land tax is flawed. That is not the way to solve the problems facing New South Wales in relation to the housing crisis and the burden of taxation on business, farmers and householders. We certainly need taxation reform in New South Wales, but increasing land tax and broadening its base is not the way to go. I urge the Government not to impose this IPART recommendation on the people of New South Wales. I call on the New South Wales Government to implement measures to ease the housing crisis and the burden on New South Wales businesses by reducing land tax in this State.
