|
Mr MIKE BAIRD (Manly) [7.58 p.m.]: I speak in debate on the State Revenue Legislation Further Amendment Bill 2009, which the Opposition will be opposing for a variety of reasons. The bill gives effect to a number of revenue measures that were outlined in the mini-budget—the document that everyone in New South Wales is trying to forget. It also contains changes to first home buyer grants, a series of anti-avoidance measures and minor changes to the operation of revenue legislation. Suggestions that this legislation will provide greater uniformity in some areas of the law appear to be nothing other than a smokescreen or a grab for cash by this Labor Government.
While the mini-budget appears to state that only $20 million in additional revenue will be collected as a result of these changes, the Coalition believes that that may be a significant underestimate. We asked during the Treasury briefing for the specific costing or modelling showing what is included in the budget. We have still not received that information. We are unsure about the impact on the budget—the only figure we have is $20 million and it is suggested that it will be much more. The Government should encourage businesses to establish in New South Wales, not hit them when times are tough. It should also encourage transactions in this State. The Government has said that it wants Sydney to be the financial services capital of this country. If that is true, it should be providing every business with a chance to grow and invest, but it is sadly lacking in that regard. This legislation once again puts up the sign that New South Wales is closed for business.
The impact of this legislation will be a loss of jobs. One cannot draw any other conclusion without access to the modelling demonstrating its impact. Those potential job losses may well be significant. When New South Wales has the highest unemployment rate in the country, the last thing the Government should be doing is hitting businesses again. It will be another nail in the coffin of struggling businesses that are trying to find a potential buyer. These new taxes have the real potential to turn buyers away and to change the dynamics of any transactions designed to save businesses. This legislation will not only affect the big end of town; mum and dad businesses will also be hit. We will not hear about that in the Government's television advertising campaign. It is an irony that those advertisements talk about creating jobs when this Government appears to be doing the exact opposite.
The Treasurer's claim that the budget introduces no new taxes is an overstatement. The budget has no credibility. This legislation is a clear demonstration that the Government will increase its revenue take and may well in the process destroy jobs in this State. The budget again hits businesses when they most need support. The Treasurer very proudly announced that the budget introduced no new taxes. That is dishonest because, although that may be true of the document to which he was referring, the remanent effects of the mini-budget, which are being implemented at the same time, tell a different story. New taxes are being introduced and the Government is not being honest and transparent with the people of New South Wales.
This legislation continues the trend of New South Wales not being competitive with every other State and it is time that that cycle stopped. The Coalition wants New South Wales to be the first choice when businesses are deciding where they will establish. That was signalled in the Leader of the Opposition's reply to the Treasurer's Budget Speech. He outlined targeted payroll tax relief and the establishment of Infrastructure New South Wales so that this State can finally start delivering infrastructure on time and on budget and with significant strategic intent.
The overview of the bill is huge, so I will highlight only the key tenets. The objects are to amend the Duties Act 1997, the Fines Act 1996, the First Home Owner Grant Act 2000, the Land Tax Management Act 1956, the Petroleum Products Subsidy Act 1997, the Taxation Administration Act 1996, the Betting Tax Act 2001, the Payroll Tax Act 2007, the Insurance Protection Tax Act 2001 and the Unclaimed Money Act 1995, and to make minor amendments of a law revision nature to the Health Insurance Levies Act 1982, together with other provisions and schedules.
I will restrict my comments to the key provisions in the legislation that the Coalition finds it difficult to live with. The mini-budget outlined changes to move from what is described as the land-rich model for calculating the transfer of duty, to the landholder model. Under the land-rich model, transfer duty is paid only when a company has 60 per cent of its assets held in land and land holdings worth more than $2 million. Under the proposed landholder model, that 60 per cent threshold is removed and the duty will now apply to all landholdings worth $2 million or more. The legislation also includes a new tax that we did not know about until we saw this legislation. Importantly, that tax is not charged by our key competitor States—Victoria and Queensland.
The tax will apply to corporate transactions when an unlisted company acquires an interest greater than 50 per cent and when a listed company or unit acquires an interest of greater than 90 per cent. For listed entities, duty will be calculated on the basis of a flat rate charge of 10 per cent of the total duty payable as soon as the 90 per cent threshold is reached. For major public takeovers, this could add a very significant transaction cost. The Government described the change in the mini-budget overview as providing a more robust base in the future. As I said, the Government predicted that $20 million in additional revenue would be raised.
The Coalition has asked for information about the modelling and what impact this measure will have on the budget, but did not receive it in time to refer to it in the debate on this legislation. The Government is undoubtedly making a larger revenue grab. When Western Australia introduced similar legislation, Treasurer Eric Ripper told Parliament in his second reading speech that the landholder regime would bring about a broadening of the stamp duty base and a shift in the incidence of duty. It was estimated that in the absence of any offsetting rate relief it would result in a net increase in annual duty collections of approximately $100 million. Translating those calculations to New South Wales, one suspects that $20 million is a gross underestimate at a time when business is hurting across the State. I acknowledge that the Western Australian Government actually collected less than the amount predicted but, again, without the benefit of the modelling it is difficult to articulate the impact on the budget. However, it is fair to say that it will be significant and business certainly believes it will be significant.
Understanding this legislation is best achieved by using examples. What will be the impact of the increased tax on everyday businesses this State? A number of organisations have done some calculations about the possible impact. Two examples prepared by Investment and Financial Services Association, Infrastructure Partnerships Australia and the Property Council of Australia reveal that under the land-rich model a retail business employing 25 staff with assets of $4 million in land and $3 million in other assets would pay $21,000. However, under this legislation, that would jump to $214,490. That money would end up in Treasury's coffers. I strongly argue that it could be used by businesses to employ additional staff or to enable them to invest in further capital to expand. We are talking about a 900 per cent tax increase. The Treasurer said that there are no new taxes and he talks about jobs, jobs, jobs, but this legislation tells a very different story.
Another example is a manufacturing business in western Sydney that employs 85 people, has land and buildings valued at $1 billion, has plant and equipment valued at $500 million and has intellectual property valued at $1 billion, but has debt of $2.5 billion. There is obviously no equity in the business and it is potentially under threat if revenues fall. If someone wanted to buy the company and to salvage it and the 85 jobs, under the current rules no duty would be payable. However, under this legislation, the business would be liable for $137.5 million in tax. The organisations that did these calculations point out that this additional duty will hurt business revenues, affect the value of property and ultimately lead to real job losses in New South Wales. That is hard to refute. If that business is acquired and $137.5 million is paid in tax, that is a lot of money that cannot be invested in jobs, plant and equipment and that may well have the negative effect on businesses and the economy that the Coalition has been talking about since the introduction of the mini-budget.
These examples highlight the impact this legislation will have on businesses when many are struggling to survive. Businesses looking to find a buyer to get out of a difficult financial position may face the prospect of the buyer paying more tax than there is equity in the company. In such a case, the business and the jobs that go with it may well go under. That is a very real risk, which has been well argued by industry. It is something that the Government should consider at a time when unemployment is at 6.4 per cent in New South Wales, compared with the national figure of 5.7 per cent.
The budget has unemployment continuing to rise to 8.5 per cent, while analysts have it rising even higher. Jobs are being lost in New South Wales. Current Government advertising is promoting jobs, but the impost provided in this legislation may well take jobs away from this State, and that sticks in my craw. The uncompetitive nature of New South Wales is at the core of our economic problems. To suggest that this change will harmonise our taxes with other States, as argued by the Government in the mini-budget, is misleading. I quote from the mini-budget:
Changing to a landholder model will also provide increased tax harmonisation between NSW and other jurisdictions that use the landholder model.
That is not correct. Our major competitors, Victoria and Queensland, have the ability to transition businesses from one economy to the next and do not have such legislation. New South Wales is primarily competing against those States for the businesses on the eastern seaboard. I do not see our competitors as the Australian Capital Territory, the Northern Territory, or Western Australia, where a model of this ilk is currently in place. New South Wales is already the highest taxing State in Australia. Last December Julie Novak from the Institute of Public Affairs put it best when, in speaking to a report into the tax competitiveness of the states, said:
NSW takes the unwanted title of Australia's high tax state this is on top of a moribund state economy and underperforming government and is a severe blow to business. The government must immediately reduce its taxes on business to avoid being a drag on national economic growth.
Those comments, made at the end of 2008, remain pertinent and are still right on the mark today. The Government has said it wants New South Wales to become a major financial services sector for our region. In the present financial global crisis the banking and regulatory systems of Australia have faired incredibly well. There is an opportunity for New South Wales to play a leading role in financial services for the next generation on the back of the strength seen across the country. However, the Deputy Chief Executive Officer of the Investment and Financial Services Association, Mr John O'Shaughnessy, has said this legislation will "impede the sector's ability to recover from the global financial crisis". They are not insignificant words. We need to think strategically if we are to fix the State's economic problems. No longer can we go from day to day or from budget to budget. We must start thinking about how we can turn the economy around and the way to do that is to think strategically. One way would be by turning bank and regulatory strength into a real opportunity for economic growth. If we are to introduce taxes that Mr O'Shaughnessy says will impede the ability to recover from the global financial crisis then that is a real issue. He said further:
The introduction of this new tax on business transactions will further decrease liquidity in asset markets to the detriment of all investors, including ordinary Australians investing their savings through collective investment vehicles.
At the moment we should avoid all of those measures. We need to support the finance sector and the opportunity it provides for jobs and investments in this State. In my view the legislation is working against that strategic opportunity. The Opposition views the insurance on stamp duty as a further grab for cash. We are potentially seeing another tax on a tax through the emergency services levy. Other Opposition members will talk in detail on that issue. The inclusion of a levy to fund the State Emergency Services, in a similar way to the fire services levy, will enable the Government to reap even more revenue. By adding it to the definition of the premium it enables the Government to increase its overall insurance duty, which is calculated on top of the final premium figure and varies between 5 and 9 per cent. An amount of $3 million may well be made in that process. We need to consider further debate on this issue as to whether the imposition of these duties on insurance policies is fair and equitable.
The bill includes some sensible provisions for first-time home buyers. It also gives the Office of State Revenue increased powers to reclaim moneys incorrectly claimed. Although sensible, the Opposition would argue that these provisions could be included in a different bill at a different time. The changes to mortgage duty are indicative of all that is wrong in the bill. The change to the mortgage duty, due to take effect from 1 July 2009, has been rushed through by this legislation. That means a number of people have been given only 12 days to prepare for this change. There are all types of provisions and legal considerations, as well as all types of business transactions being processed, that require a complete reconsideration to be given to this change. Rushing this change through with 12 days notice makes it a very difficult proposition for the businesses of this State. This tax will no longer be charged in any other State from July. Why is New South Wales the last State to retain this duty? Is this against the intergovernmental agreement? Why should the duty have to be redrafted when it should be within the last throw of the dice?
The imposition and the cost to business is significant, and the amount of work required to be done by the legal fraternity will be another cost. The petroleum products subsidy speaks for itself; some of my colleagues will talk in detail on that issue. At this time the key focus of the State should be on creating jobs. The Government has advertised lots of jobs, but the truth is that this bill does the opposite. The bill is a tax grab from a Government that claimed last week that its budget contained no taxes. We know why the Government made that claim: the taxes are hidden in this legislation. A revenue grab is occurring and we have not been provided with the details of its total impact. One thing we do know is that the impost on businesses may be significant.
The Opposition opposes the bill because it is yet another exercise in revenue raising and the Government has not been honest as to its impact. There is a need to support jobs and attract businesses to New South Wales to make it competitive once more. New South Wales has rested on its laurels. If the economy is to be turned around, that has to be understood. Businesses are making the decision to take their business across State lines because of our lack of competitiveness. New South Wales has a Government that is looking at every option to hit the people of this State with more taxes and, importantly, it does not have the decency to be honest. It is time for the Government to listen to every business in this State, which for the past 21 quarters has ranked last in business confidence.
The Sensis Business Index is not an insignificant survey; it is a fair reflection of what businesses across this State are talking about. Businesses in this State, which employ millions of people, do not have confidence in the taxation system or the regulation that is put before them. The Government is making the cost of conducting business too high, and the difficulty and complexity in business is too high. The Opposition wants to restore confidence in business by helping when economic conditions are tough. At this time payroll tax relief is exactly what businesses need. It will provide businesses with a stimulus whilst they are facing pressure from the economic cycle. That stimulus will amount to money to be invested in the creation of new jobs and business opportunities. Coalition members are determined to make New South Wales the first place to do business, but this bill does the opposite. The Opposition opposes the bill.
|
