State Taxation Acts Amendment Bill 2017
I rise to make a contribution on this bill.
It is a bill which amends numerous acts and brings in many changes.
It amends the Duties Act 2000 in many ways, including in relation to off-the-plan purchases, first home buyer exemptions and concessions in relation to their principal place of residence.
It is a significant change in that it will also abolish stamp duty for first home buyers on homes valued up to $600 000 and it will provide stamp duty cuts on homes valued up to $750 000.
I understand it is estimated that this will benefit up to 25 000 people every year who are seeking to purchase their first home, and of course it does represent a significant benefit to rural communities where the price of a home is much more within the range of first home buyers.
In addition to this the bill will double the first home owners grant, to $20 000, for people building a home in regional Victoria. From a regional point of view, the bill introduces an exemption from insurance duty for agricultural products such as crops, certain farm machinery and the like, and it will help reduce some ongoing costs of farming operations as a result of that. Also a welcome change will be the bringing forward by 12 months of the previously announced payroll tax threshold increases and the reduction of the payroll tax rate for regional businesses to 3.5 per cent, which I understand should be the lowest payroll tax rate in Australia.
While these are measures which will help businesses in regional Victoria, I struggle to understand why we have a payroll tax at all. It seems to me that a tax which has the effect of making employers question whether they should employ more people or not because of the payroll threshold being reached is a real negative in terms of employment for people. Nevertheless, it is an amendment which I believe shows that things are heading in the right direction.
While there are many amendments in this bill, in the few minutes I have to make my contribution the one I would like to make a comment on, and the one which has caused me considerable concern and in relation to which people have made a number of representations to me, relates to the valuation of land for rating and tax purposes. The proposal seems to generally deliver little real value to the process or to the finances of the state, but brings about a situation where the government is effectively disrupting a sector that seems to be performing very well in terms of accuracy and efficiency. I am told that it is a model that is accepted as Australia's best practice, and other states are moving toward the Victorian model, not away from it.
In his second-reading speech the Treasurer stated:
… the Victorian government will centralise Victoria's valuation function with the Valuer-General Victoria and provide for valuations to be undertaken annually. This decision will enhance Victoria's valuation and rating system and improve the efficiency, robustness and cost-effectiveness of rating authority valuations in Victoria.
I question whether this will be the case. There are a number of issues which arise. Currently valuations of this nature for rating and taxation purposes are carried out biennially. I understand that there is a view among some local government organisations that there has been very limited consultation in relation to this particular change and there is a strong feeling that it may well adversely affect local government revenue. A lack of consultation will always create problems, and it makes it difficult for people to accept changes. There is a view that this change will also erode the independence of the valuer-general, and it risks creating perceptions of Victoria's land tax system really lacking fairness and operating in an arm's length kind of way.
There seems to be no strong reason that I can see to centralise this valuation path into the valuer-general's office. Surely to make such a change there must be a very strong reason for doing so. It seems to me that across Victoria we have many very significant regional valuation firms that conduct work on behalf of local government, and they do it well. They are significant employers in our community, and many of them do a lot of other work besides valuing land for land tax and rating purposes, but that would be a very significant part of their operations and their income.
We rely on having valuers in regional areas for many other reasons. For instance, I was a family lawyer for many years, and in all marriage breakdown situations you need to engage the skill of good qualified valuers. They exist in regional areas at the moment because they have a broad base of work to do, which enables them to then do what may very often be considered to be quite minor work at fairly low fees by comparison with some of the bigger tasks they do. I see it as a risk that should this centralisation into the valuer-general's office occur, many of our regional firms may really be impacted and may struggle, and that could then leave a dearth of good qualified valuers across regional Victoria, a situation we presently have.
These people know our local communities; it is where they do business. They conduct the valuations biennially, and their local knowledge is extremely important to the work they do. I know of a local valuation agency that employs up to 20 people in a smaller regional town. I have seen regional businesses struggle to maintain their viability when faced with the prospect of major metropolitan or indeed global companies coming into their space, centralising business and disrupting local businesses, leading to significant job losses. Some have fought against this successfully, others not so. On that basis alone, why disrupt established private sector business models in regional areas when there is really no need for government to intervene at all?
Further blurring of the lines of the independence of the office of the valuer-general will help no-one. I understand, and this information has come to me from an experienced valuer, that the valuer-general's office has significant market credibility in all sorts of sensitive government property dealings, and that is due in large part to its independence. The New South Wales government has recently conducted an inquiry into the operations of the New South Wales office of the valuer-general, and many of their conclusions touched on this aspect; something which is deficient in New South Wales. It is concerning for all the reasons I have stated.
I want to say something about the vacancy tax. To me it was always intended that this would be a tax that would deal with the notion that there are many properties in Victoria that are owned by overseas owners. They are not occupied at all. They are sitting vacant. There are vacant apartments in the Docklands and other places. I may be wrong on that, but if that is the case, then there are other ways of tackling a problem such as this. Certainly a register of foreign owners of land would go some way towards that, as indeed would, for many reasons, a register of foreign ownership of water in this state.
It is always disappointing when you are faced with a bill that does some really good things that are welcomed by the community and others which are of concern and where there seems to be a lack of clarity and understanding of how amendments might roll out on the ground. I will be continuing to talk with government in relation to the removal of this part of the bill — that is, the valuer-general provisions — because I think they are unnecessary and could have very significant and long-term damaging effects, particularly in regional areas. There is a need for more consultation. We need to be able to maintain a very high level of confidence in our valuation processes across this state, and we should be able to expect that of government. I will be supporting this bill, but it will be with considerable reservations and with the intention of further negotiations with the government on these issues.