Debate resumed from 17 June 2009.

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.

Mr NINOS KHOSHABA (Smithfield) [8.19 p.m.]: The State Revenue Legislation Further Amendment Bill 2009 seeks to amend several Acts relating to the administration of taxes, first home buyer benefits, and fines. Apart from provisions that expressly address tax avoidance issues, much of the bill is aimed at clarifying and simplifying the legislation administered by the Office of State Revenue. A number of the amendments relate to first home benefits. First home buyers who receive a duty concession or exemption under First Home Plus, or who receive a first home owner grant, and who fail to satisfy a residence requirement are required to pay the normal duty and repay the grant. The Office of State Revenue assesses approximately $18 million each year in duty, grant and penalty under these schemes. The bill strengthens the power of the Chief Commissioner of State Revenue to recover these amounts by creating a statutory charge on the land.

The bill also amends the First Home Owner Grant Act to permit the chief commissioner to correct a decision to pay the grant at any time when the decision was based on false or misleading information provided by the applicant. The bill authorises information about grant applicants to be disclosed for the purposes of the Commonwealth's First Home Saver Accounts Scheme, and limits the circumstances in which information may be disclosed for the purpose of legal proceedings. The bill clarifies the land tax liability of people who own land jointly with a body that is immune from State taxes by the operation of a Commonwealth law, removes the application of land tax to lessees of Crown land on Lord Howe Island and clarifies provisions whereby land tax exemptions or concessions continue after the death of an owner. Taxpayers who fail to pay the correct amount of tax are liable to pay interest on the amount outstanding. Currently, the rate of interest is adjusted annually, and this can result in the rate being out of step with market rates. The bill provides for automatic quarterly adjustment of the rate of interest in line with market rates.

The bill also seeks to clarify the fines legislation and improve processes relating to the administration of penalty notices and fines enforcement by the State Debt Recovery Office. A penalty notice enforcement order is the first step of enforcement action taken by the State Debt Recovery Office when a person fails to pay or otherwise deal with a penalty notice. In limited circumstances an enforcement order may be annulled and the matter referred to court. This process is open to abuse by delaying court proceedings or by delaying or avoiding the imposition of driver licence demerit points. The bill requires mandatory annulment only if the person was not aware that a penalty notice had been issued, or the person was hindered from taking action, but only if the application is made within a reasonable period after the person became aware of the penalty notice or became able to take action. The discretion for State Debt Recovery Office to grant an annulment in other circumstances will continue to apply, but only if the person had no prior opportunity to obtain a review. A decision by the State Debt Recovery Office not to grant annulment continues to be reviewable by the Local Court.

Mr RUSSELL TURNER (Orange) [8.22 p.m.]: As the member for Manly indicated, the Opposition will oppose the State Revenue Legislation Further Amendment Bill 2009. I specifically raise my concerns regarding the State Emergency Service amendments, whereby the Government will be able to spread the cost of running the service in a similar way to home insurance and business insurance. As the member for Manly mentioned, last week the Government was promoting the fact that there would be no increased taxes in the budget. However, there is every indication that there will be a number of increases in existing taxes, as we might say, through the backdoor. The member for Manly has highlighted that that will only add to the non-competitive nature that already exists in New South Wales as compared with Queensland and Victoria. It will further add to the cost of running a business in New South Wales. Among other things, the bill seeks to make further provision for the charging of duty in respect of the transfer of business assets and to provide for further concessions in respect of transactions charged with nominal duty. The member for Manly highlighted how some of those backdoor tax increases may affect the transfer of business.

Tonight I will highlight something that has concerned me for some time: the taxes levied by the Government on home insurance and on business insurance. I have been to many Rural Fire Service events that have involved the opening a new fire service headquarters or taking delivery of some new fire equipment, which might be worth anywhere between $200,000 of $500,000. For example, it might be a new fire truck with fantastic equipment on it. The State Government takes all the accolades and pats on the back for providing that new equipment. However, in effect, the State Government is contributing only around 13 per cent of the cost of building that new shed or providing that new equipment. Local government contributes roughly 13 per cent and insurance policyholders contribute the rest. Yet the State Government takes all the credit. It is now about to do the same thing with the State Emergency Service.

There is a serious social issue when something like 30 per cent of homes are not insured; I am not sure what percentage of businesses are not insured. People are either taking a risk or they simply cannot afford the cost of insuring their homes. Those who are insured cop the cost of financing the Rural Fire Service and, under this bill, the State Emergency Service. The Government has to tackle that issue of getting an equitable spread of the cost of that fire service levy. I do not now how it will do it. I know it has proposed using the local government rate notice to issue accounts through the rates. I have been very much against that. If it is just lumped on the bottom of the council rates, it will be seen as a huge increase in rates. Again, the State Government will get away with raising that levy from council rates—that is all it will be seen as. I do not know what the Government will do about that issue.

The Government is now proposing to bring the State Emergency Service in line with other emergency service agencies by putting the levy on insurance policies and onto local government. A lot of people already find local government rates too high. This will put further pressure on local government. Only a couple of weeks ago it was acknowledged that something like 26 local government areas are under threat of bankruptcy because they do not have enough finances or assets to continue operating the way they are. However, the Government is proposing via this bill to increase the cost of running local government. This is cost shifting by the Government onto local government without giving it the ability to raise revenue appropriately. For that reason alone, I will be opposing this bill. This bill is a blatant example of cost shifting that does not give local government the ability to increase its revenue. The Government says that it has consulted with the affected parties; I wonder whether the Local Government Association has been consulted. When councils realise the implications of this bill they will be screaming from the rafters. The Government has not consulted the insurance industry and policyholders, who are already struggling to pay insurance costs.

With respect to the measure in the bill amending the Insurance Protection Tax Act to ensure that the premium payable for general insurance includes any contribution required to be paid by an insurer under the State Emergency Service Act, I accept that the bill will result in a major upgrade in equipment for emergency services such as the much-needed upgrade for the Rural Fire Service. This has made the job of fighting fires much easier and safer for Rural Fire Service volunteers; previously the equipment was an embarrassment. It is an indictment of governments of both persuasions, which over many years allowed the Rural Fire Service to be underfunded and under-resourced.

In fact, I moved a motion when I was a councillor on Orange City Council and Orange City Council became the first council west of the mountains to take the brave step to buy three new tankers. That set an example to other councils west of the mountains and it is now commonplace for local councils and local Rural Fire Service brigades to buy new equipment whereas previously we were happy to take on second-hand equipment from Sydney and coastal brigades, which could afford to upgrade their equipment. We accepted their cast-offs because it was still better than our equipment. Fortunately, things have changed, but I am against the way in which those changes have been financed.

Responsible people who have insured their homes and businesses are the ones who are paying. Whether it is a rural fire in a grass paddock or a house fire in a town, village or city such as Orange, the fire service turns up just as quickly to the 30 per cent who are not insured, while the responsible people pay. As I said, the State Government pays only about 13 per cent but it takes all the credit for badly needed upgrading. The member for Manly highlighted the increases in mortgage duty, the extension of the first homeowner grant and the increase in cost to business, particularly regional businesses still suffering the impacts of drought. I conclude by reiterating what the member for Manly said, that New South Wales used to be the premier State. We are now known commonly as the taxing State. The Opposition opposes the bill.

Ms NOREEN HAY (Wollongong) [8.33 p.m.]: I support the State Revenue Legislation Further Amendment Bill 2009. The bill includes provisions to strengthen and clarify various tax liabilities, concessions and exemptions, and to improve administration of taxes and grants. The amendments also include anti-avoidance and other revenue protection measures. The bill introduces a general anti-avoidance provision in the Duties Act that will apply when a person enters into a scheme for the sole or dominant purpose of tax avoidance in circumstances where the scheme is artificial, blatant or contrived. These tests ensure that a taxpayer who is confronted with alternative methods of achieving the same end is not guilty of tax avoidance merely by choosing the option with the lesser tax liability. The provision is similar to those operating in Queensland, Western Australia and Tasmania.

The bill also improves the mortgage duty provisions to close avoidance opportunities in relation to property in New South Wales. The amendments provide that duty is payable by reference to the New South Wales proportion of the total property used as security at the time of each duty liability point. To eliminate the possibility of double duty an optional duty credit will be provided in some instances. The bill implements two initiatives announced in the 2008 mini-budget. The first introduces landholder provisions in the Duties Act to replace the land rich provisions, which have operated since 1986. The provisions ensure that interests in land are taxed on a similar basis regardless of whether they are acquired directly or indirectly. This measure will harmonise New South Wales with the Northern Territory, Australian Capital Territory and Western Australia and facilitate further harmonisation.

The bill also implements the abolition, from 1 July 2009, of the petrol subsidy scheme that operates in northern New South Wales. The scheme is no longer necessary following the Queensland Government's decision to abolish its petrol subsidy scheme. Finally, the bill makes a number of minor statute law amendments to the principal Acts and to the Betting Tax Act 2001, the Health Insurance Levies Act 1982, the Payroll Tax Act 2007 and the Unclaimed Money Act 1995. I commend this bill to the House.

Mr VICTOR DOMINELLO (Ryde) [8.36 p.m.]: I speak against the State Revenue Legislation Further Amendment Bill 2009 for a number of reasons, which have been adequately articulated by the member for Manly. This bill obviously has draconian consequences for the economy of New South Wales. To the extent that Ryde is one of the economic powerhouses of this State because of Macquarie Business Park, it is really important that I take a stance against this bill, in particular, the proposed amendments to the Duties Act 1997.

In going through the history I should detail that prior to the budget the Property Council of Australia called on the New South Wales Government to commit to no new property taxes or increases to existing taxes. They stated, for obvious reasons, that no new taxes were important to give appropriate stimulus to a very much flagging economy. When the budget was handed down on 16 June 2009 the Treasurer obviously did a great sales job. There was obviously a lot of spin because when the Property Council of Australia released a statement on its web page it said:

NSW Treasurer Eric Roozendaal MLC handed down the 2009/2010 budget this week. No new taxes or tax increases were announced.

Nothing could be further from the truth. If we look at the tenor of the Act, in particular references to changes in the stamp duty tax base, it is clear there is effectively a new regime for stamp duty tax. There is a change from the land rich to the landholder model of transfer duty. Of concern is proposed section 163K, which defines the goods of a landholder. What is clear when one reads proposed section 163K is that under these new arrangements duties will be charged on goods that could include buildings, fit-outs and plant and equipment. This will obviously have a significant impact on New South Wales businesses and people who want to acquire property in this State.

The Property Council of New South Wales calculated that the acquisition of a retail store with $7 million in assets and 25 employees that owns its own building worth $4 million would involve the payment of $21,000 under the current system and $214,490 under the new system. I ask the question: Why would people want to do business in New South Wales, as opposed to Queensland or Victoria, our major eastern seaboard competitors, when they have to pay an extra $200,000 in New South Wales to transact the same business? We need to give businesses incentive to come to New South Wales. The bill simply acts as a disincentive.

It is not as if we have plenty of other things going for us. We have a government that has been effectively constipated for the last 14 years: no real activity of any merit has been undertaken. Even the Epping to Chatswood rail link was three years over time and more than $1 billion over budget. How can business have real confidence in New South Wales with statistics such as those? There are no real public transport options here. Why would a business come to this State when it can go to Victoria? Kevin Rudd gave Victorians a whole lot of money to enable their transport system to be world-class, whereas we got effectively the scraps. We need to encourage businesses to come to New South Wales. This legislation waves a red flag to tell them to stay clear.

The way the bill has come about is very dishonest. As I said, one need only read the press releases from the Property Council of Australia in which the council states that it believes there are no new taxes. But, clearly, the levy is in effect a new tax, and a very serious tax, on businesses. I return to the North Ryde Business Park. The legislation is important for the people of Ryde. There are reports that within 10 years the Macquarie Business Park will be the second largest central business district in New South Wales. At the moment Ryde is home to more than 12,500 companies and more than 40,000 employees. Indeed, Ryde is one of the economic powerhouses of this State. This legislation acts as a serious disincentive for people wanting to acquire businesses in Ryde. Using the simple example to which I just referred, why would a business pay $200,000 for the benefit of coming to a State that is lumbered with a government that has given us no vision and no direction over 14 years? Businesses would much rather spend about $200,000 on employing additional staff, or on investment in further plant and equipment. For all these reasons I, together with my colleagues, oppose the bill. It is another example of the Government applying the brakes to our economy.

Mr DONALD PAGE (Ballina) [8.44 p.m.]: As the shadow Minister for Small Business I make it plain that I oppose the State Revenue Further Amendment Bill 2009. The bill incorporates a number of changes to current legislation that I believe are not in the interests of small businesses and the people of New South Wales. In particular I bring to the attention of the House the introduction of an emergency services levy to be treated as part of the premium of an insurance policy for duty purposes. This means that the State Emergency Service in New South Wales will be funded by a levy that will be paid by insurance companies, in the first instance. Of course, insurance companies will add that levy to premiums, resulting in an increase in the cost of policies.

I state clearly up-front that I strongly support the State Emergency Service and the extraordinary volunteers who give thousands of hours every year to helping people in times of need and distress. Indeed, I made a speech recently in this place thanking the State Emergency Service and others for their terrific efforts during the recent storms and floods on the North Coast. The State Emergency Service certainly deserves to be funded, but my primary point is that I do not believe that adding a levy to insurance premiums is the way to go.

The State Government tells us that this emergency services levy is consistent with the approach for the fire services levy—that is, this new way of funding the State Emergency Service, of raising some $39 million, is consistent with the way the Government currently funds metropolitan and rural fire services. I believe that these levies should not be added to insurance premiums. The National Insurance Brokers Association believes that the cost of policies is escalating because of added levies and taxes, and there are growing concerns that people cannot afford adequate insurance, or are opting out of insurance altogether. I will provide the House with some figures on that in a moment.

My biggest concern is that home insurance policies and business insurance policies are becoming so expensive with the addition of levies, stamp duty and GST that people are not able to afford them. We have only to look to the recent bushfires in Victoria to see how dangerous this policy is. The National Insurance Brokers Association tells us that as many as 30 per cent of the people who lost their homes in the Victorian bushfires had no insurance at all. Is this a situation we want to see repeated in New South Wales? Victoria is even worse than New South Wales: its premiums are the highest in the world by a long way. That is because these levies are added on. The Government needs to take into consideration the fact that up to 50 per cent of the levy that people pay on insurance premiums comprises State taxes. It also includes a GST component, but it is basically State taxes. The GST component, which is levied by the Commonwealth, comes back to the States in any event.

I am very concerned about the imposition of an additional tax on insurance premiums. As I indicated, we have the massive fire services levy to start with, then we have 10 per cent GST, and then we have stamp duty on top of that: it is a tax, on a tax, on a tax. As I said, it is a disgrace that up to 50 per cent of the premium is basically taxation. That is a huge problem in terms of people being prepared to take out insurance. If 30 per cent of Victorian bushfire victims were not insured there is obviously a big issue there. The other point is that many people do not pay insurance at all yet they get the benefit of the services that are provided. Those who do pay for insurance are subsidising those who do not. Fundamentally, that is an inequitable state of affairs. The National Insurance Brokers Association supports the recommendation of the New South Wales Independent Pricing and Regulatory Tribunal Review of State Taxation in 2008, which, in reference to the Fire services levy, said:

In the short term, the statutory contributions by insurance companies to fund Fire services should be replaced by an equivalent, transparent property-based levy collected by local councils.

That means that the levy would appear on people's rates notices. Whether one argues, as the Independent Pricing and Regulatory Tribunal did, that it should be levied through local government, or whether one argues that it should come out of the Consolidated Fund, or whatever the source of the funding is, the State Emergency Service needs to be funded. My concern is that if we continue to fund the State Emergency Service, the Rural Fire Service and the metropolitan fire brigades through taxes on insurance we will inevitably force people away from taking out insurance because they cannot afford the premiums and they are prepared to take a risk.

That creates two problems. One is that they are not insured. The second is the inequity that exists between those who pay insurance premiums and, therefore, pay for protection, which the community generally considers appropriate, and those who do not pay any premiums and are subsidised. An issue of principle is involved, quite apart from the implications for businesses, in particular, which are being hit by more and more taxation. This bill hits small business by increasing their insurance premiums. It is another tax on a tax on a tax. It also impacts on household insurance policies. These extra taxes mean that many people will think twice about taking out insurance. It is a $39 million tax grab by the Government.

Thirty per cent of the people whose houses were destroyed in the Victorian bush fires did not have any insurance. It was not because they mistakenly omitted to do so; they did not take out insurance because the insurance premiums in Victoria are even higher than premiums in New South Wales. They are the highest in the world. There is a connection between insurance premiums and the number of people who take out insurance. My plea to the Government is to look at this issue more intelligently and not to continue to see insurance premiums as a milch cow for government revenue. Other implications that flow from the bill are negative for householders, insurance coverage, small business and, ultimately, the taxpayer. That is one of many reasons why I oppose this legislation.

Ms KATRINA HODGKINSON (Burrinjuck) [8.51 p.m.]: I speak to the State Revenue Legislation Further Amendment Bill 2009. As previous speakers have indicated, the Opposition will oppose this legislation. Many reasons have been expressed for our opposition to the bill, but I place on record my comments on behalf of the people of Burrinjuck. Last Thursday the Leader of the Opposition in his reply to the budget spoke about the Opposition's genuine concerns about the direction of the Government, particularly in relation to revenue. On 11 November last year the Government brought down the mini-budget. To be consistent with our position on the mini-budget, we oppose many of the measures expressed in this bill. We are particularly concerned about landholder stamp duty charges. These charges will act as a major tax increase on corporate transactions and a serious disincentive to investment in New South Wales compared with investment in our northern neighbour, Queensland and our southern neighbour, Victoria, which we compete with for business.

Frequently in this place the Opposition has raised the many cross-border anomalies that exist between New South Wales and Queensland, Victoria, South Australia and the Australian Capital Territory. On three separate occasions since I have been a member of this House the Opposition has tried to introduce a cross-border commission, and on three separate occasions the Government has knocked it back. The Opposition is concerned about the Government's lack of honesty and transparency on revenue-raising measures. We are very concerned that this bill will increase the cost of doing business and investing in New South Wales. It will make New South Wales even less competitive with its key competitor States of Queensland and Victoria. It will raise business taxes at the wrong time in the business cycle.

One of the exciting initiatives expressed by the Leader of the Opposition, Barry O'Farrell, and reinforced by the Leader of The Nationals, Andrew Stoner, has been our policy on payroll tax. If we were successful in winning Government we would introduce a one-off 15 per cent reduction in payroll tax for a 12-month period. Areas that were disadvantaged in relation to employment would receive an additional 5 per cent incentive. I have raised this policy with several businesses in my electorate. They have been hit hard by payroll tax. They are very pleased that the Opposition has taken this big step forward. They often say that they want to employ extra staff but to do so would cost them a lot of money. At a time when the Government should encourage employment, particularly in regional New South Wales, this legislation hits people who want to invest in this State. It will not encourage investment in regional New South Wales. It will not encourage and foster jobs. It will not encourage businesses to employ apprentices. The Government should encourage industry into our regions.

In this State there is a dynamic, readily accessible, fit and healthy demographic of blue-collar workers who are struggling to find employment and apprenticeships. I have spoken with many members of my electorate who are over the age of 18 years and under the age of 30 years, predominantly male. Many of them have children with their partners—they are not necessarily married. They are looking for stability and a solid income so that they can care for their growing young families. Finding a job or an apprenticeship in their local area is proving to be nigh on impossible. They want a job with a career path or an opportunity for stability. The more the Government disenfranchises industry the more it discourages investment and the less chance for these young people to have a career or stability in their chosen field of employment. Even if they cannot get employment in their chosen field, at least they should be able to get a stable job.

I wholeheartedly endorse the shadow Treasurer's comments in relation to this bill. I will refer briefly to some of his comments because they are worth repeating. I also note the comments of the member for Ballina, particularly in relation to insurance stamp duty. So many people do not pay for insurance. The member for Ballina capably covered the situation as a result of the tragedy in Victoria earlier this year and the floods on the North Coast, which have occurred three times this year. As I said, so many people do not pay for insurance, but those who do subsidise those who do not. The member for Ballina questioned whether that is fair. Anyone would say it is not. This legislation involves a $39 million emergency services levy which is to be included in the definition of "premium" for the calculation of insurance. That is to fund the State Emergency Service, which is a brilliant organisation. I have many personal friends involved with the State Emergency Service. There is also the fire services levy. When the two are added together there is a tax on a tax.

The insurance duty is levied at between 5 per cent and 9 per cent, depending on the type of insurance, and it will raise an extra few million dollars a year. This legislation also provides that the rate of insurance duty payable on trauma and total and permanent disability insurance is to be 5 per cent of the annual premium. While there has not been consistent application, some companies have been paying duty at 5 per cent of the first year's premium. So the effect will be to increase tax on those companies. Another issue the shadow Treasurer capably revealed was the petroleum products subsidy. This bill abolishes the 1.2¢ per litre subsidy for fuel transported across the Blue Mountains by rail, as announced in the disastrous mini-budget of 11 November last year. The regions rely on fuel. Food and fibre cannot be produced without fuel. Regional people already pay much more for their fuel than those in urban areas. As a cost comparison, it would not be unusual in my electorate to see fuel prices 15¢ to 20¢ higher than those in most part of Sydney.

Once again the Government is penalising people for living in regional areas. There is no public transport, we have recently lost our coach services and we are getting fewer and fewer train services. The Government is closing down five branch lines, which will impact considerably on the transportation of grain around the State and into port. Once again, that grain will end up being carted by heavy vehicles on our roads. We have just finished debating another piece of road transport legislation that refers to point-to-point systems for heavy vehicles, yet the Government seems set to increase the number of heavy vehicles using our roads by removing rail from regional areas.

One of the key measures of this bill, as the shadow Treasurer also indicated, was a change from a land-rich to landholder model of transfer duty. The shadow Treasurer covered that aspect of the legislation quite comprehensively. However, it is important to note that in relation to this measure the Property Council calculated that a retail store with $7 million in assets—not an unusual figure—that owns its own building and has 25 employees would pay $21,000 under the current system if it was worth $4 million. Under the new system that same retail store would pay $214,490, which is more than 10 times the current amount. It is extraordinary that the Government seeks our approval for this bill when so many people have objected to it. Many people are opposed to the legislation, including the Property Council, the Investment and Financial Services Association, Infrastructure Partnerships Australia, the Shopping Centre Council of Australia, and the Insurance Council of Australia, which is unimpressed with the emergency service levy provisions. Other organisations that have been consulted include the Urban Taskforce and the New South Wales Business Chamber. Suffice it to say that a significant number of third parties very strongly and vehemently oppose this legislation, as does the Opposition for all the reasons I have outlined.

Mr THOMAS GEORGE (Lismore) [9.01 p.m.]: I speak to the State Revenue Legislation Further Amendment Bill 2009. The objects of the bills are to amend the Duties Act 1997 to make further provision for eligibility for a duty concession or exemption under the First Home Plus scheme; to make further provision for the recovery of duty where the duty concession or exemption under the First Home Plus scheme is wrongly applied to an agreement or transfer; to make the duty chargeable in respect of an acquisition of an interest in a landholder chargeable regardless of whether the landholder is land rich and to make other changes to the scheme for landholder duty; to revise and simplify arrangements for the assessment of duty on mortgages; and to deter artificial, blatant or contrived schemes to reduce, avoid or postpone liability for duty by introducing special provisions relating to the assessment of tax avoidance schemes.

This bill gives effect to a number of the revenue announcements made in the mini-budget last year, as well as changes to the first home buyer grants that have been announced previously, and a series of anti-avoidance measures and minor changes to the operation of revenue legislation. Again, we are going back to the mini-budget. The Government made a great announcement that it was going to wipe the bus subsidy support scheme. Then the Premier realised that it was a very bad mistake and backtracked on it.

ASSISTANT-SPEAKER (Mr Grant McBride): Order! I call the member for Shellharbour to order.

Mr THOMAS GEORGE: Now we have these changes from a land rich to a landholder model of transfer of duty. This is a significant expansion of the transfer stamp duty base, capturing a very large number of corporate transactions that would not otherwise have been dutiable. This was a mini-budget announcement and the mini-budget gave an estimate of $20 million in additional revenue, although given the scale of the changes, this would seem to be a significant underestimate. The New South Wales Government knows how to do only one thing: keep taxing people out of business. Other members have referred to insurance and stamp duty. We have heard how 30 per cent of the people who, sadly, were devastated by the bushfires in Victoria were not insured. Yet, we continually hit the people who try to pay their way and pay for insurance.

An example of what we have done in this State is the fire service levy. As everyone in this House knows, I was previously Deputy Chairman of the Northern Co-operative Meat Company in Casino. The fire service levy for the company went from $86,000 in one year to $568,000 the next year—the fire service levy, not the premium. I might not have the exact amounts but they are within $5,000 or $10,000. Now the Government wants to bring in an emergency service levy. In Queensland, some 80 kilometres away from the Northern Co-operative Meat Company, the fire service levy is capped at $50,000. Yet, a company on the New South Wales side of the border has to pay a fire service levy that rose from $86,000 in one year to $568,000 because the Government likes to continually hit taxpayers. That levy would almost pay for a fire engine every year. It is a total disgrace. I remember making representations to the Premier's department and to the Treasurer, but there was no way around it.

I am no longer the member for Casino, but how is the member for Clarence going to go back to his electorate and say, "We are introducing an emergency services levy." I am one of the greatest supporters of the State Emergency Service and I agree it has to be resourced properly. But why do we keep hitting the people who pay insurance? For example, say I have a 2,000-acre paddock out at Rappville, just outside of Casino, with no buildings on it and I do not have any insurance on that property. Why would I need insurance if I have no buildings on the property? Yet, if a bushfire were to break out there next week I would get the help of the Rural Fire Service just as my neighbour would, who pays insurance because he has a building on his property. I pay nothing.

If I have a block in town that has long grass and there is a fire on that block, the local fire brigade would put out the fire, but I have paid nothing towards that service. That is wrong. We keep hitting the people who have protected themselves. Now we are going to say to them, "On top of your insurance costs, on top of your fire service levy, there will be another tax—we are going to support the emergency services unit." I do not disagree with that but we have to find a fairer way of imposing this fire service levy and the emergency services levy on everyone in our community and not just the people who pay insurance. Many people in the community access both services without paying $1 in insurance premiums despite the fact that they might have real estate valued at $1 million or more.

Often people do not find out the detail of insurance policies until there is a tragedy. Many of the people who suffered through the recent hailstorms and the succession of floods applied for payouts from their insurance company only to be refused. I know this has nothing to do with the bill, but I will put it on the record. An insurance company told one 80-year-old lady that her house was too old to be repaired. The company had been collecting insurance premiums for 20 or 30 years but it would not pay for repairs to her house. I will have a lot more to say about that on another occasion. This Government is hitting the people who pay insurance. How will that poor lady cope with an extra levy? I have been fighting her case for two years. The Government is now telling her—

[Interruption]

That is a fire truck. I hope it is being paid for by the levy. I am going to have to tell that poor old lady that I was not successful and that she now faces paying an extra levy on her insurance policy. That is typical of this Government—it keeps hitting the people who pay. That is no way to attract businesses and residents to this State. The maximum fire service levy in Queensland is $50,000. Just over the border—10 kilometres away in New South Wales—businesses pay $586,000. I do not know what will happen to the emergency services levy, but the same thing could happen with it in 12 months.

This Government is displaying a lack of honesty and transparency with regard to revenue raising. This legislation increases the cost of doing business and investing in New South Wales, and it disadvantages New South Wales compared with its key competitors—Queensland and Victoria. It raises business taxes at exactly the wrong time in the business cycle and in these dire world economic times.

Dr ANDREW McDONALD (Macquarie Fields—Parliamentary Secretary) [9.12 p.m.], in reply: I thank the members representing the electorates of Manly, Fairfield, Wollongong, Orange, Ryde, Ballina, Burrinjuck and Lismore for their contributions to this debate. The State Revenue Legislation Further Amendment Bill 2009 is important legislation that maintains the various Acts administered by the Office of State Revenue. It also implements a number of other decisions that have previously been announced. The legislation will improve the administration of first home benefits, clarify aspects of eligibility and extend the Federal Government's first home owner boost, which New South Wales administers. The changes to the New South Wales tax law will eliminate loopholes, improve equity and simplify our tax system. These changes will also ensure that our tax system is fair by having concessions apply in the right places.

I will respond to the matters raised by the Opposition. This is not a tax grab, nor will it raise additional revenue. It is about having the best practice revenue laws. It is important that State revenue laws are constantly reviewed and updated to ensure that New South Wales has business best practice legislation for first homebuyers, taxation and fines. This bill makes those improvements and I commend it to the House.

Question—That this bill be now agreed to in principle—put.

The House divided.
Question resolved in the affirmative.

Motion agreed to.

Bill agreed to in principle.

Bill declared passed and transmitted to the Legislative Council with a message seeking its concurrence in the bill.