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Land Tax

The Hon. J.A. DARLEY (15:05): I seek leave to make a brief explanation before asking the Treasurer questions about land tax.

Leave granted.

The Hon. J.A. DARLEY: In an article in today's InDaily, the Treasurer's cabinet colleague, the Hon. David Speirs, is quoted as saying:

As a member of the cabinet, I’m quite supportive of the change and I’m supportive of our overall aim to reduce land tax across the board, which is the policy direction of the government.

My questions to the Treasurer are:

1. Is it a policy direction of the government to reduce land tax across the board?

2. If so, why has the Treasurer been quoted as saying that the new aggregation measures announced on budget day will raise an additional $40 million?

3. How has the $40 million been calculated and does it include any advice from the Valuer-General concerning the impact of her ill-conceived revaluation initiative stage 2, effective from 1 July 2020?

The Hon. R.I. LUCAS (Treasurer) (15:06): I think, as the Premier and I have outlined on a number of occasions, the land tax reform package the government has introduced comprises three essential elements. One is the increase to the threshold to $450,000, where many thousands of South Australians who are currently paying land tax will no longer pay land tax. Secondly, there is a legislated proposal and a proposed extension of that to reduce the top rate of land tax from 3.7 to 2.9 per cent.

A culmination of both those factors in 2020-21 is estimated to reduce land tax collections by just under $50 million a year. Aggregation is estimated in the same year to collect $40 million. A simple comparison of the almost $50 million and the $40 million shows a reduction in total land tax collections, which is the point that the Hon. Mr Speirs is referring to. In 2022-23, if you look at the budget papers, the estimated land tax reduction through the increase of the threshold and the reduction of the top rate is estimated to cost revenue just under $60 million a year. With aggregation estimated to collect $40 million, the net reduction in land tax is about $20 million.

The Hon. Mr Speirs is entirely correct to say that the land tax reform proposals are geared towards reducing the total amount of land tax to be collected from the land tax reform proposals. The honourable member needs to refer not just to the aggregation aspect of the land tax reform package, but also the increase in the threshold and the reduction of the top rate as being the three elements of the land tax reform package.

What the Premier and I have said on a number of occasions is that if, for example, it transpires that the $40 million to which the honourable member is referring to—the estimate of what might be collected from aggregation—is an underestimate of the collection, then the government's commitment to reducing total land tax collections from its land tax reform proposals will mean the capacity to either more quickly reduce the top rate or, indeed, potentially look at further reductions in the top rate of 2.9 per cent to something closer to the national average in relation to the top rate for land tax.

So the government's commitment is clear from its land tax reform proposal: those three elements. We are looking to collect less land tax from the community, rather than more, and the commitment the Premier and I, as Treasurer, have given is consistent with that particular aspect.

In relation to the estimate, we have discussed this before. The government has commissioned one of the four big accounting firms to look at the reasonableness and the accuracy of the Treasury estimate of the $40 million. It is complex. No one can say definitively, because ultimately it will depend on the numbers of people who are currently not paying any land tax at all. I have given an example on any number of occasions where if I as an individual were to own seven separate properties next year at $400,000 site value each and own $2.8 million in property, under the proposed arrangements, if they were in separate companies or separate trusts, I would not pay a single dollar in land tax to the state of South Australia.

Treasury's estimate in 2015 for the former Labor government of the same proposals was an estimated collection of $30 million. The estimate they have given the new government is $40 million, but as I said if the number ultimately proves to be higher than that, should the reform package be accepted by the parliament, the government is committed to further reducing land tax collections so that there is a net reduction in terms of the land tax reform proposal.

Finally, in relation to the honourable member's question about the revaluation initiative, he has had a long history in relation to this. He knows it was an initiative first commenced by former Treasurer Mr Koutsantonis. The Valuer-General is completely independent of the government of the day and of me as Treasurer. She has to undertake her statutory responsibilities in relation to fair and accurate valuations of property, and the new government, unlike the former government, has actually made it easier to challenge the accuracy of the valuation.

I know the Hon. Mr Darley often refers in his radio interviews to the fact that if you do not believe the valuations of the Valuer-General, why don't you challenge it? The new government has actually made that easier by allowing a lower cost jurisdiction, in the SACAT, rather than having to go to the Supreme Court to undertake that challenge, which was much more difficult under the former Labor government.

So we have made it easier for people to challenge the accuracy of the valuation, and if ultimately the SACAT determines that the Valuer-General got it wrong, then the valuation will be changed accordingly, consistent with the decision of SACAT.