Hansard debates

Mrs McARTHUR (Western Victoria) (16:44): I rise to speak on the State Taxation and Mental Health Acts Amendment Bill 2021. It is a classic of the left-wing, socialist, anti-enterprise genre: a short-termist, self-defeating attack on wealth creation. This budget would be damaging at any time, but coming after the greatest economic shock since World War II, at a time when recovery should be paramount, it is absolutely unforgivable. With a lust for taxes like a vampire’s for blood, the Treasurer is sucking $5.8 billion in new taxes from the productive heart of the Victorian economy. We can certainly award marks for thoroughness: stamp duty, land tax, payroll tax—he taxed them all. And of course for a Labor Treasurer the only thing to do with a tax is to put it up. This is a budget of tax, tax, tax and nothing else—no incentives for Victorians to work hard, to buy homes, to start businesses, to invest or to create employment and deliver services.

The most charitable observer might just consider the Treasurer optimistic or perhaps simply misguided about how economics work. I am afraid I cannot share that judgement. To me it is clear that this is a cynical bill, which trades the long-term prosperity of the state for the short-term electoral advantage of the Labor Party. Examining the detail, at every stage we see a government which has run out of creativity, energy and confidence and instead resorts to its first and fundamental instinct: punitive taxes against wealth creation, an economically illiterate, historically catastrophic approach cheered only by the political support base of the Labor Party.

First then, on housing and the amendment to the rate of stamp duty in the Duties Act 2000—amending upwards, naturally—I oppose the intent. It is a straightforward tax on aspiration, pandering to an ideology which craves punishing success. The new 6.5 per cent rate on properties valued over $2 million does not just hit the top end of town, as they like to suggest. There are 26 suburbs in the state which already have a median price above that level, and as the market rises the percentage of homes captured by the rate will continue to rise. But I also oppose the mechanism, using a tax which is widely regarded by professional economists as highly inefficient. There are of course substantial economic theses behind these critiques, but I enjoyed the catchy phrase of economist Saul Eslake, who described the Treasurer’s actions as, I quote:

… taking a tax that is universally recognised as being the worst tax in the armoury of taxes levied by Australian governments and making it worse.

At some point we have to ask: where do we stop with taxation? The impact of these latest rises, it has been calculated, is that more than 40 per cent of the purchase price of a home will be made up of state and local government costs in fees, duties and charges—just think about that. Forty per cent is an extraordinary figure, yet it is hardly a surprise. We hear a lot about the 38 taxes this government has increased since coming into office, but how often do we note that 22 of them are levied on property. Surely even Labor members must recognise that we have gone badly astray to reach this pass. And what are the results of this massive market intervention—targeted and productive public spending, a plentiful new housing supply? Labor has been in charge for 17 of the last 21 years, so there is no excuse on that score. No, of course not. In exchange for 22 new taxes, 40 per cent property levies and countless billions in the state coffers, we have a $5.3 billion Big Housing Build over 10 years, which is failing to deliver public housing where it is needed, and average house prices which have blown out by more than 30 per cent in the seven years of this government.

The commercial property market suffers in this bill too. Increasing land tax on properties from $1.8 million to $3 million in value is not just going to hit billionaire property moguls. A $1.8 million commercial property in many parts of Melbourne probably represents the asset of a small business owner who bought in decades ago, based the business they worked hard to develop there and who may now be renting the site to support themselves in retirement. Where exactly do Labor think the money this tax raises comes from? It comes from these landlords or the business to whom they rent the property or the consumers in those shops and businesses paying higher prices.

At what point will Labor understand that taxation does not create wealth? It is a blindness which extends to the payroll tax. Surprise, surprise, that is going up too. A few weeks ago in this place I was pleased to support Mr Quilty’s motion to reduce the burden of payroll tax. In fact I think I went a little further than that in my speech. Ultimately we should abolish it. Any government attempting to create jobs with one hand and jack up this tax with the other is clearly terminally confused. There could be no better way of reducing our state’s competitiveness. Well, I suppose shutting down all businesses across the state repeatedly probably does even more damage, but barring that, this is about the worst measure the Treasurer could conjure up.

Of course, ever the political operators, the Andrews government has inextricably linked this tax and the $2.9 billion it will raise in the next four years to the $3.8 billion it lists in expenditure necessary to deliver the recommendations of the Royal Commission into Victoria’s Mental Health System. There is no doubt that this is an important issue and that the findings of the royal commission cannot be backed by warm words alone, but it is a core function of government to provide this funding. It must be financed from general revenue, not a special tax—a levy—on productive industry. Dressing it up in this way may make it more politically palatable, but it makes not a cent of difference to the businesses involved. It is a feel-good charade which cannot hide the damage it will do to the economy in the long term. It cannot hide the reality from those who lose jobs or who are denied new jobs which might otherwise have been created, let alone an increase in their wages. Even the Treasurer’s own forecast in this budget acknowledges that Victorians will suffer a higher unemployment rate than the rest of Australia. How clever is that? Personally I am proud to be in a party which not only opposes this rise but has committed to dramatically reducing payroll tax on employers, particularly smaller businesses, which after all are the driving force of job creation and economic growth in Victoria—although the way they have been treated lately, you would seriously wonder.

The proposed payroll tax also brings me to the final point I wanted to make. My opposition to the taxing thread which runs through this bill does not just come from the different view I take on economics, history, political philosophy or human nature, it is also about competence. I might mind less about the vast tax burden, the degrading of our competitiveness and the damage to our economy if I were confident that the money would be well spent—but it will not be. It never is. The same carelessness which the Treasurer exhibits in failing to notice the universities would be hit by payroll tax in this, the Education State, is the carelessness and lack of competence which is the hallmark of almost all Andrews government spending. The budget papers reveal $22 billion in cost overruns on the government’s Big Build: the North East Link at $16 billion, not $5 billion; the Metro Tunnel at $12.5 billion, up from $9 billion; the level crossing removals at $8.3 billion, a blowout of $5 billion; and who knows how much more? Mr Ondarchie has given a wonderful list of the extraordinary cost blowouts, many of them in my electorate. It is staggering.

This is a budget which finally buries the Education State and heralds the taxation state. It is devoid of incentives for hard work, education, investment, innovation—all the things which actually create wealth. It falls back on higher tax and higher debt. The Treasurer manages to rake in ever higher revenues—$5.8 billion more in this bill alone—and yet simultaneously sets us on a course to a record debt of $156 billion. How has he managed it? The only explanation is truly epic levels of public spending—spending which we know on this side of the house at least will not create a single sustainable job. This is a government which spends other people’s money—badly, I might add—then puts its hand out for more. I urge members here and the Victorian public finally to say, ‘Enough is enough’.