Land Tax Rating Amendment Bill 2022
Ms WEBB (Nelson) – Mr President, I will find my way back to where I needed to start here. Thank you, member for Murchison for that contribution which was quite comprehensive around the issue, unlike the second reading speech, unlike the absence of any evidence base presented along with this bill for the claims made in that scant second reading speech about its apparent intent. It does not even warrant pretending to present an argument to give this gift to people who in many instances will be utterly unrequiring of it. To pretend that doing that, putting a veneer over it, that somehow this is helping people with cost of living or housing affordability, it is quite offensive.
I recognise the bill intends to implement commitments made during then premier, Mr Gutwein’s state of state address in March. I note this is the second amendment to the state’s land tax rate that we have had following last year’s Treasury Miscellaneous (Cost of Living and Affordable Housing Support) Bill 2021.
What we have here is a bill which is an example of incredibly problematic public policy‑making. It is based on flawed and entirely discredited ideas like trickle-down economic theory, that somehow providing an economic benefit to the haves will somehow trickle down to people who are the have-nots. That it is a nonsense, it has categorically been shown to be. There is no guarantee at all the stated goals of this bill can or will be delivered by it.
The only guarantee of financial relief in this bill is for a particular stakeholder group, the housing pr property stakeholder group, who are land tax payers. Certainly, in a Venn diagram that group does not overlap very much with the people who are most vulnerable in terms of housing affordability and cost of living in this state. This bill is not driven by evidence-based data and does not include any measures directly linking land tax relief to rent relief or housing affordability. I will speak about that more later, because other jurisdictions have tackled things like this regarding the issue of land tax, but they have made those links more explicit and direct so, intended outcomes could be more robustly expected to be delivered.
We have not bothered to do that here, we have just gone with some rhetorical veneer that this is somehow about assisting people who need it, it is not. As land tax is only paid by those who own more than one property, this is a risk of a potential perceived conflict of interest in debating and passing a land tax relief package, without disclosing the benefit that might come to us, or me, as an individual voting on the bill.
It is particularly important in this instance, given the failure of this bill to mandate that savings or benefits received are somehow passed along to those in need. It should be acknowledged that one may be a beneficiary, and certainly I feel that way about myself.
The community expects members in this place to deliver proactive, routine and accountable declarations of that nature, where there are both perceived or potential conflicts of interest, as well as material conflicts of interest. Material conflicts of interest might mean we recuse ourselves. In this instance, I believe a perceived or potential conflict of interest, or being a beneficiary of this bill, warrants a declaration. Of course, people could go to members’ Declarations of Interest to ascertain who might benefit from this bill. That is in the public domain. But that is a high bar to expect people to go through. I would like to see something much more proactive and routine than that.
We also know that members’ interest declarations are not current, as they look retrospectively at the year that preceded them being publicly tabled. That means that whenever a bill might be before us, even if people were to look back to declarations of interest, they might not find something that related to the bill but that had come about and been part of it.
That is why I am making it clear. I am a prime example. Since our last declarations were made, I now have a property that is tenanted and, therefore, I may be perceived to be, or potentially be a beneficiary of this bill. People would not necessarily find that in the public domain in my current declaration of interest. They will see it in next year’s declaration. I put that on the record here. I do not consider it means that I need to recuse myself from participating in the debate or the vote, but it is appropriate in the context of my contribution, and appropriate for the public to understand.
The second reading speech, scant though it was, says that this bill is the Government taking further action to do two things. Firstly, to ease the cost of living for Tasmanian families, and secondly, to continue adding downward pressure on rents. We will unpack both of those here, and the member for Murchison has already done some of that unpacking for us.
Before I do that, I note that this is the second time that we have had these sorts of measures brought to us, and passed through, to provide similar sorts of relief. That must surely mean we could have confidence that the first iteration has been fully assessed and evaluated for its impact, and the level of success it had in achieving its stated outcomes in terms of cost of living, housing affordability, and other expected outcomes.
Surely, that would be an important piece of evaluation of a policy and legislation that would then feed through into the development of a Mark Two, if you will. A 2.0 attempt.
Surely, we could have confidence that such an evaluation and analysis would have occurred after the first time we gave people similar land tax benefits. However, we have not been provided with any work of that nature, or anything to indicate that we could point to a previous policy that provided similar land tax relief, that then flowed through and provided outcomes in cost of living relief or housing affordability relief to those who need it.
I do not believe that evidence has been presented. If it exists, I would like the Government to present it. I would have presumed good policy-making would have meant it was the basis for the decision to undertake this particular policy and give it effect through this bill. Sadly, I suspect not.
In particular, we would expect to have seen evaluation of the extent that those aims were achieved, because what we are talking about is the potential to provide relief to those who need it most and whether we are doing that effectively.
There are ways we could do that in terms of land tax and relief that flowed through. We have not done it this time. I do not believe we did it last time. To paraphrase Oscar Wilde, to pass one suite of land tax relief measures without policy impact data to show it worked is regrettable. But to do it twice cannot just be regarded as carelessness; it is actually irresponsible and unconscionable for the Government to be doing this.
Let us unpack those stated aims We are told that increasing the tax‑free threshold to $100 000, increasing the maximum land value threshold to $500 000 and reducing the rate of tax on land under $500 000 to 0.45 per cent will provide cost relief to all land tax payers. Indeed, it will. We are given to understand that about 70 000 land owners will benefit from this. The Government estimates that around 7800 land owners will no longer pay land tax from the 1 July 2022 and that the average benefit in the first year would be around $581, with a maximum saving of $1625. Overall, the Government estimates that this will provide around $39 million of tax relief for property owners. Or, put another way, it will be a loss of $39 million in state revenue. We will talk about that loss of revenue later too, no doubt.
I was seeking answers to some questions in the briefing and the Leader has undertaken to provide this to me later. It is not going to be particularly helpful later but I would like to have it anyway. My questions were along these lines. We do not see any distinction in those figures between commercial and residential properties. Who are the 70 000 land owners who are benefiting? This is an important question because this is a key decision by the Government to provide this gift, essentially, to these 70 000 Tasmanians. What are the basic demographics of the beneficiaries of the legislation? Where do they live? What regions of our state? What is their income profile? What is their gender profile, their age profile? What is their disability profile? How many of them are currently securely housed?
This bill does nothing to guarantee that the financial benefits or relief from financial pressures it provides will be targeted to those most in need. Where is the evidence that land tax is a pressing burden to those in our community who are the most vulnerable to cost‑of-living pressures? If we went to our most vulnerable, I do not think that their land tax bill is the biggest burden they face. In fact, most of them would probably ask us, ‘The what?’.
Where is the analysis that shows that the group of beneficiaries from this policy and this bill are the ones who should be prioritised for government assistance and in this specific way?
Where is the modelling and analysis that tells us that this is the best way to spend $39 million of tax revenue for our state, that these people deserve that largesse more than other measures we could provide to others in our community?
I will most likely be a beneficiary of this measure and I can categorically confirm that I do not require it. In fact, I find it quite nauseating to be here facilitating what will be, in many instances, unneeded financial assistance for land owners, pretending that it is to assist with cost of living or housing affordability while far too many Tasmanians will be sleeping in cold cars tonight or tents by our highways. It is inexcusable that we do not have any argument presented from the Government to justify this gift and to compare it to other options they had before them to provide support on cost of living or housing affordability.
The second reason given here apparently related to this bill and this measure adding downward pressure on rents. I follow on and fully endorse the comments made by the member for Murchison on the absolute nonsense of this claim. In fact, it is interesting, there was even some backpedalling from the Government in some comments made, to move away from the idea of downward pressure on rents and to try and reframe it somewhat and instead run out a line that it was, in fact, potentially not to put upward pressure on rents. This is problematic, as soon as you start to back away and backpedal from a claim – which is still in the second reading speech, mind you, so I presume it is still a claim the Government would like to stand by, that this will somehow put downward pressure on rents. I would like to hear that argument prosecuted.
Mrs Hiscutt – Hopefully you may be one of the ones who passes it on to your renters.
Ms WEBB – Hopefully I will be, indeed, that will be an individual decision for me, there is nothing here though that requires me to do that. Other states have actually put more measures in place to make that a more direct flow of benefit. This Government – your government – did not do that, made no requirement for it, and as the member for Murchison pointed out, there is no market imperative for it to be passed on whatsoever, none.
I also note, I believe comments in the public domain from the Government to say, given that people kick up a fuss about increases in land tax putting upward pressure on rents, therefore this must do the opposite. Well, that is nonsense. Of course, if as a landlord my costs increase, given basic financial literacy, I will look to meet those costs through what I have available and therefore, potentially put rents up. That is a natural and understandable sequence of events. If I am provided with a saving, there is nothing that requires or prompts me to then pass that straight through to someone else. It is a gift outright to the person receiving it.
I would like to hear from the Government exactly how they propose to demonstrate what impacts this policy has had on rents down the track, when we say a year in. How will they be assessing its success in either downward pressure on rents or any impact on rents? I would like to know exactly how that is going to be brought to us and demonstrated through analysis.
I also would like to know, not just some of those other breakdowns I mentioned earlier, which of these 70 000 are landlords and have rental properties currently rented out? If we are talking about this proposition of downward pressure on rents, how many rental properties are we talking about? How many of those are commercial, how many are residential? I am interested to know because that would tell us – in broad terms – how many current houses out there amongst our housing stock might be benefitted from this. It will also feed into however the Government proposes to evaluate its success. It will tell us broadly how many current tenants – who are generally amongst the most vulnerable people in our community; tenants in the private rental market – will tell us how many of them may potentially expect some benefit from this.
What is the cost-benefit for the state in forgoing this taxation revenue? Especially considering we could be devoting it to other areas of urgent need when we look at both cost of living and housing affordability. We can certainly look to our housing assistance services, our crisis accommodation assistance services and other programs of that sort and readily identify areas where $39 million could be used to great effect. I ask the Government to pay for this $39 million gift to property owners, what services to which groups of vulnerable Tasmanians are you cutting to provide this financial bonus to the property class in our state? How are you going to measure that is a worthwhile and cost-benefit positive measure for our state overall, compared to the things that will be cut to pay for it?
I would like to take a moment to remind us about why potential cuts to the services, or at least, the neglect to provide extra benefit and funding to the services that relate to our housing and homelessness programs is so outrageous right now. To neglect to support them, to neglect to prioritise those measures above this measure. It is absolutely unconscionable. We have a current crisis in affordable housing, but that does not do it justice. We have an urgent emergency in housing in the state.
I look at things like the rental affordability index done by the partnership between National Shelter, the Brotherhood of St Laurence, Beyond Bank Australia and SGS Economics and Planning. That is a regular and reliable measure of affordability across the nation. What does that most recent one from November 2021 – just a few months ago – tell us? On page 46 when it is talking about national trends and metropolitan areas, that rental affordability index tells us: (tbc time
Greater Hobart continues to be the least affordable capital city in Australia for the average rental households of each city. The improvement in affordability during the second quarter of 2020 was short lived, and rents have continued to rise rapidly, pushing affordability to a historic low point.
Over the past five years, the RAI score of Greater Hobart has decreased by over 5 per cent per annuum, leaving it as the only capital city in Australia where rental affordability for the average rental household is below the critical threshold of 100. With a RAI score of 87 in June 2021, the average rental household would pay 34 per cent of their income if renting at the medium rate.
Although household incomes in Tasmania are significantly lower than the national average, rents are only marginally lower than mainland averages. The gap between income and rent has been widening over the past four years, will little sign of abating. A comparison of RAI scores in Greater Hobart and Greater Sydney over recent years shows that while the two cities have shared similar levels of rental affordability in the past, the gap between their RAI scores has widened considerably since 2017.
There has been a stark contrast in affordability trends across mainland capital cities. Both Greater Sydney and Greater Melbourne have improved in affordability, both during the COVID-19 pandemic and over the longer term.
The point this report makes is that Hobart has got worse. Further comments recently, in media reported in The Mercury on the 1 May 2022, the Tenants Union claimed that over the past five years rents have increased significantly with Hobart seeing a 45 per cent increase in that time. Launceston, a 49 per cent increase; and the north-west a 27 per cent increase. The Tenants Unions says the data tells us Hobart is now more expensive to rent in than Perth, Adelaide, Brisbane and Melbourne. That picture is even more stark when we really dig down and look at the detail that is presented in Anglicare’s Rental Affordability Snapshot in 2022 which came out just last month. It is done every April over the course of one weekend at the beginning of April and gathers information of all property types advertised for rent in the state on that weekend, including share house options. It assesses the availability and affordability of the options available for rent across 14 low income household types.
Generally, it is very grim reading. During the years I was responsible for its production as the manager of the Social Action and Research into Anglicare, at that time we saw increasing intensity for our housing emergency and were just beginning to ramp up over 2015, 2016, 2017, 2018. Here we are in 2022, the affordability snapshot came out last month and it is even worse. On page 7 of the report, under the heading ‘availability’, it says this about the south of the state:
The decline in the number of rental properties advertised in the South has continued in 2022. There were 323 properties available this year, 25% less than last year and 75% less than in 2013. Since 2013, rental housing supply in the South has contracted by an average of 14% year on year.
Then under the heading of ‘Affordability’ it says:
The rental market in the South is hardest for families with children. A single person who is able to live in a sharehouse can find some options, but a family requiring a 3-bedroom property needs two fulltime wages coming in before they can afford a home in the Hobart area. A working single parent or single income family will find only a handful of properties in rural areas that they can afford.
Families on Centrelink payments have no options in the South except to pay more than 30% of their income on rent. This puts them into rental stress and is likely to cause financial hardship. Even at 49% of income, a single parent on Parenting Payment will only find six affordable 2‑bedroom properties.
And, as usual, there is nothing affordable for a young person on youth allowance or a single person on Jobseeker. I go back to the report, where it says:
A couple receiving the Age Pension would find three affordable studio bedsits, two of which were in a rural area, but nothing larger.
A [single] person receiving the Sge or Disability Pension would find 5 affordable sharehouses. Sharehouses are often unsuitable for people in these groups, but standalone units are out of their price range.
This is the situation we are in with housing affordability. This is why I find it offensive that the Government trots out claims about addressing housing affordability to put a little veneer on this bill, which is a gift to property owners who are most likely all securely housed, and pretend that it is about housing affordability and assisting those who are struggling in the current context. Our current context is utter market failure and this bill does nothing to address that.
Governments can do things to address it. This Government is doing other things towards that and I will speak on that in a moment. In the Gratton Institute’s submission to a Commonwealth parliamentary inquiry into housing affordability in 2021, they note in their summary:
It took neglectful governments two decades to create the current housing affordability mess. They preferred the easy choices that merely appear to address the problem.
The politics of reform are fraught because most voters own a home or an investment property, and mistrust any change that might dent the price of their assets. But if governments keep pretending there are easy answers, housing affordability will just get worse.
I agree with the Gratton Institute on that.
I will speak briefly about a couple of examples of what other jurisdictions are doing which show that it is possible to use land tax measures to deliver genuine outcomes on those areas the Government is talking about.
If the state government was genuinely looking to pull every lever they had available to them in addressing this housing affordability emergency, they would look to implement measures like the ACT’s Land Tax (Affordable Community Housing) determination from 2021. The website describes it thus:
A parcel of land is deemed eligible for an exemption if the owner of that land enters into an agreement with a registered community housing provider and makes the parcel of land available for the purpose of affordable community housing.
Rentals under the agreement with the registered community housing provider must be at a rate that is less than 75 per cent of current market rent. That is a measure the ACT is undertaking to encourage people, through land tax relief, to make their properties available for more affordable community housing.
In New South Wales there is a build‑to‑rent scheme with the explicit purpose of boosting new rental supply. It was outlined on the New South Wales Government website on 24 March 2022, under the heading ‘Land tax build-to-rent’:
The NSW Government introduced a land tax discount for new build‑to‑rent housing projects until 2040 and the new Housing Diversity SEPP to provide more housing options, greater surety for renters, boost construction and support jobs during the COVID‑19 recovery.
Eligible Build‑to‑Rent (BTR)properties will receive a 50 per cent reduction in land value for land tax purposes. The effect of this is that land tax will be reduced. BTR developments will also receive an exemption from foreign investor duty and land tax surcharges (or a refund of surcharges paid).
These are just two examples. We have a lot of levers available to us. Even a measure like the one described in this bill could be better directed to deliver the outcomes it is vaguely claiming it is about. We could have a requirement that some of it is to be passed through to tenants by owners of rental properties with residential tenants. We could contemplate all manner of things to make this a more genuine and effective measure.
Ms Rattray – Is the member aware of whether the people who are going to be renting have to come from the public housing wait list?
Ms WEBB – Are you asking about the measures from those other jurisdictions? Certainly for the one in the ACT because it is linked to the community housing providers, who would facilitate housing for people on their register the way it happens here. The New South Wales build‑to‑rent scheme is more about boosting supply to try to get more affordable housing through the supply of rental housing.
I do not want to get bogged down in those examples and argue that that is what we should be doing here. We should always determine the most appropriate measures for our own jurisdiction. It was more about linking the policy being suggested with the outcome you are claiming to want to deliver, which the Government has utterly failed to do. They have pretended that there are two outcomes they are interested in from this bill when they are simply gifting free tax relief to people they like – people who are in the property class, people they believe need a gift. That is not my view.
The Government here is doing numerous things towards improving housing affordability, to address some of the issues in our housing market. We hear regularly from the Government, from the previous premier and, no doubt, we will hear from this new Premier about these measures, and certainly in the upcoming Budget. They have even claimed in the other place that they are doing more than any other government in the history of Tasmania, which is an extraordinary claim.
You cannot claim you are pulling every lever if you are not. If we acknowledge that we are in a housing affordability emergency and we look at those people – we all know about them because they come to our offices. However, the ones who are even more concerning are those who do not come to our offices, because they are in the most extreme circumstances. The people who are in those cold cars, or in those tents in the bushland on the verges of our highways, are of most concern here. If we genuinely want to pull all the levers, the Government would do what it is already doing – that is fine – but it would also consider things like reforming our Residential Tenancy Act and have it brought up to date to contemporary standards to deliver better outcomes for tenants, and more security and more affordability.
Something as straightforward as a rental increase cap can be entirely reasonable. You could make it the case that rents can only rise by CPI, or CPI plus a small margin, each year. As simple as that – no detriment to landlords to raise rents by that amount, especially if they are being given a gift through this bill of less land tax to pay. No detriment to capping rents, but it would mean we would not have the people we are all seeing in our offices coming to tell us about their rents that have just been put up by 30 per cent, or 40 per cent, that have just been put up by$150 a week or the like. We all hear these stories. That kind of increase in rent is absolutely unacceptable. It is unconscionable. It is pure greed, and the reason we can do it is because our Residential Tenancy Act allows it. Our Residential Tenancy Act provides that the only constraint on rent increase is that it has to be market equivalence. However, because our market is going gangbusters, as soon as the guy up the road starts charging this high amount, everyone else around can argue market equivalence and bump theirs up to the same. Nothing happened to the house to justify that increase, but because it is possible to do it, that is what we are seeing. That is one measure we could be doing, through reform of the Residential Tenancy Act, and there are many other things that we could deliver to those most vulnerable people through reform of that act.
We could do the things that have been called for in the public domain by advocates in this space, if we genuinely wanted to deliver significant benefit and change in housing affordability, and address the emergency that we face. We could look at vacant property taxes, or capping the movement of whole dwellings from our private rental market into the short-term accommodation market. So far, we are tinkering around the edges. We are not even delivering catch-up through what has been proposed. I say proposed, because the announcement of around a billion dollars and the 10 000 homes over a decade is laudable. Until we see it delivered we cannot rely on it, and it certainly is a longer term outcome. It is not doing anything right now, and this bill is doing nothing to accompany it and deliver a better outcome.
We know the federal government could also step up. We would like to see the federal government address this sort of thing through increasing JobSeeker and rental assistance, providing funding to build more social and public housing, and taxation reform on a federal level.
Mr President, I do not support the bill, because I do not support the policy that is in it. I consider it is utterly ham-fisted and problematic in design. It lacks an evidence base or anything that says this is the right thing to do or indicates it is delivering the outcomes it makes claims to. In a sneaky way, it is delivering an outcome that I consider is perverse in the current context. It delivers benefit to those who are unlikely to be amongst those most vulnerable to, or most affected by, cost of living and affordable housing challenges. I encourage the Government to investigate those other public policy measures that could be implemented, whether we draw ideas from interstate jurisdictions, or we look at those other things that are available to us within our current context. If they do want to make changes to land tax, I encourage them to think about making it more directly linked to the outcomes put forward. Put something in there that requires a downward movement in rents, for example, rather than a fanciful suggestion that it might occur.
In considering this bill, we have to ask ourselves what value will the state receive for foregoing the revenue that is represented in it – that $39 million? Is that best use of our shared resources, this gift to property owners?
We should be very careful in our current context, knowing the pressures on our state budget, and the many responsibilities the Government has to meet in this current COVID-19 pandemic. We should be particularly careful about how we allocate our resources. I put it to this Chamber and to the community that $39 million as a gift to people like us is the wrong way for us to be investing precious dollars from our state resources when we know that there are people out there in much more dire need for the services and support that could be delivered with that money.
Mrs HISCUTT (Montgomery – Leader of the Government in the Legislative Council) – Mr President, the member for Murchison and the member for Nelson posed quite a few questions. I undertake to compile a list of the things that we are doing to help those people and will email all that to members for their information.
Ms Webb – Through you, Mr President. That was not a question. I did not ask for a list of things that you are doing to help anyone.
Mrs HISCUTT – The member for Murchison wanted to know what we were doing; and I will get the answers to your questions to you as soon as I can.
See more of Meg’s Second Reading Speeches
