The Hon. J.A. DARLEY (14:32): I seek leave to make a brief explanation before asking the Treasurer a question regarding land tax.
The Hon. J.A. DARLEY: Last year's budget detailed that land tax relief will be provided as of 1 July 2020 by reducing the top rate of land tax from 3.7 per cent to 2.9 per cent and increasing the tax-free threshold from $369,000 to $450,000. However, the Valuer-General's ill-conceived revaluation initiative is estimated to lead to substantial increases in land tax from 1 July this year.
My questions to the Treasurer are:
1. Why was the announced land tax relief not applied for the 2019-20 financial year?
2. Can the Treasurer advise whether further land tax reforms will be announced in consideration of the impact of the Valuer-General's revaluation initiative?
The Hon. R.I. LUCAS (Treasurer) (14:33): I thank the Hon. Mr Darley for his excellent series of questions. The reason for the commencement date of 1 July 2020 for the land tax reforms was that was the commitment we made to the people of South Australia prior to the election. Being a responsible opposition party, we worked through the cost of the promises that we were making and, as the member will know, we staged those promises. The $90 million cut in ESL was to be 1 July last year, the abolition of payroll tax for all small businesses was 1 January this year and land tax, which was the third in the package of tax reform measures, we promised we would introduce from 1 July 2020.
The simple answer to the honourable member's question is: it was a commitment and a promise we made to the people. When we were in opposition, we were not aware at that particular time that the former treasurer and the former government had hidden an estimated uplift in land tax of $19 million in what's known as Treasurer's contingency rather than in the estimated land tax receipts.
As the honourable member will know, I indicated that we discovered that when we came to government, and in last year's budget papers we revealed what the former treasurer and former government had hidden from the people of South Australia prior to the election. It was included in the forward estimates of land tax, and we indicated the reason why there had been this potential uplift whilst at the same time there was a reduction in land tax because of the government's commitments.
I know the member's ongoing interest in issues in relation to both valuation and land tax. I have been on public record both prior to the election and since the election saying that, as financial circumstances permit, we believe we in South Australia need to be, with our cost of doing business in the state, nationally and internationally competitive. One of those is in the area of land tax, but we are and will still be uncompetitive at land tax rates, particularly at the highest level, because of the government's promises. The reduction of 3.7 per cent to 2.9 per cent commenced just above $1 million in aggregated values—about $1.2 million—and actually cuts out at $5 million. We did not have the available funding to be able to afford to extend that 2.9 per cent rate for aggregated values above $5 million.
We are on the record as saying that, as economic circumstances and financial circumstances permit, we believe there does need to be further land tax reform. Clearly, that area of aggregated values above $5 million is one area of potential reform. The other area of potential reform is that, even at 2.9 per cent, we are still significantly higher than the Eastern States in particular. I think the average is around 2.25 per cent, but if that number is wrong I will correct the record at some later stage or perhaps during the budget debates, but it is certainly a lower figure. So we are still uncompetitive, even with the reforms that the government has introduced.
In conclusion, the government is not in a position to be able to correct all of the wrongs of the past 16 years overnight. We have embarked on, we believe, a sensible and affordable process of reducing taxes in relation to ESL, payroll tax and land tax. We are committed to continuing with those and, whenever possible, wherever possible, at some stage in the future further continuing those particular reforms.