Debate resumed from 30 October 2009.

Mr MIKE BAIRD (Manly) [5.08 p.m.]: I speak on behalf of the Opposition to the State Revenue Legislation Further Amendment Bill (No 2) 2009 and state at the outset that the bill contains some sensible amendments that will clarify the administration of some taxes. However, I highlight that the tax does little to ease the burden on businesses as the State starts to limp out of recession. The object of the bill is to make several amendments to the Payroll Tax Act 2007 and the Duties Act 1997 to clarify compliance administration, including the introduction of a new secondary nexus provision so that payroll tax for employees who work partly in New South Wales and partly interstate, such as truck drivers, is payable based on where the worker resides rather than where the wages are paid. The primary nexus provision remains unchanged—that is, for employees who perform work only in New South Wales payroll tax will continue to be payable based on where the work is done. The Opposition has concerns in relation to that issue in areas such as the Tweed and Albury. The member for Tweed will talk about those concerns, and I will refer to them later in my speech.

The bill also aims to increase the threshold for landholder duty, which is payable on acquisitions on interest rather than the outright purchase of land or property, from $2 million improved, which is land with a building, to $2 million unimproved, which is land only. The bill also seeks to clarify the creditor exclusion for landholder duty to distinguish between debt and equity interests to determine which interests are dutiable; to clarify that an agreement for sale of an interest in a landholding is taken to be completed within 12 months from the date of that agreement, acknowledging that it is possible for people to use long-dated or undated transactions as a means of avoiding duty and this will close that loophole; and to clarify the imposition of landholder duty so it is payable on changes of beneficial ownership in landholding, companies and trusts.

The bill also seeks to clarify that duty is payable on the transfers of mining leases, and I will refer to the New South Wales Minerals Council later. The bill provides that carbon sequestration rights are not interests in land for the purpose of the Duties Act, as set out in Council of Australian Governments agreements to harmonise the issue of those rights across various States. The bill also makes a minor amendment to the Parking Space Levy Act 2009 No 5 to clarify the imposition of the levy as from 1 July 2009. I understand a Parliamentary draftsman picked up a drafting error and we congratulate whoever that was.

I understand that in June all States and Territories agreed to a new secondary nexus provision, which will obviously assist in the harmonisation of payroll tax and help drive New South Wales to become the first place to do business—a stated economic goal on this side of the House. We support harmonising wherever we can because it provides a huge relief from the regulatory burden on businesses in this State. There is also value in introducing a nexus provision as growth in the electronic transfer of wages has made the administration of payroll tax more complex. It has become common for employees to have their wages paid to more than one account and in jurisdictions other than where they have performed services. A nexus provision will make it easier for companies to administer payroll tax.

The bill effectively raises the threshold for landholder duty. That makes sense because it is the first time the threshold has been raised since 2003. In some cases the full payment of the purchase price has been delayed, sometimes indefinitely, as I said earlier. I note that the Property Council of Australia has raised concerns that legitimate transactions could be caught by this provision. I will allude to some of the Property Council's concerns later and ask the Minister or the Parliamentary Secretary to address those concerns when he replies to the debate and to provide some comfort to the Property Council.

Adopting the test of the Australian Tax Office to distinguish between debt and equity interests in property will help to ensure that genuine creditors are exempt from landholder duty. Clarification of the imposition of landholder duty is needed to ensure that the acquisition of a corporate trustee of a discretionary trust is not used to avoid landholder duty. Having seen creative lawyers and financial engineers at work, I can understand the need to close some of those loopholes. Most of the provisions address what is clearly, according to Treasury advice, the means and mechanisms that people use—intellectual capital that could be applied in other ways—to avoid paying duty. The bill certainly closes those loopholes, and we commend and support those provisions.

We have some concerns that the changes to the calculation of landholder duty may be more complicated for taxpayers to understand as the threshold is based on unimproved value yet the amount of tax they have to pay is based on improved value. The distinction between those two issues may provide a complication and we hope it is made clear in the information that is distributed to taxpayers. The Property Council of Australia has raised some specific concerns that we ask the Government to address. The Property Council has raised concerns that the provisions relating to a discretionary trust are "unclear and uncertain in their intention and operation" and that "they appear to make it impossible for a person to determine whether they are acquiring an 'interest'". The Property Council considers that the existing clause should remain, and we are open to the Government's advice in relation to that issue. The Property Council also makes the point that determining the ultimate beneficial owner of a bare trust in part 2A is "difficult, if not impossible". Even if it is difficult perhaps the Minister or the Parliamentary Secretary could suggest how it could be clarified.

The Property Council of Australia believes the amendment to part 2A "gives rise to the potential for unintentional double duties", which should be avoided and should be addressed. The Property Council opposes the provisions intended to close the loopholes regarding the timing of payment of landholder duty as it "creates an additional cost for genuine transactions that may not be agreed to be completed within 12 months". Even though there is a provision for a refund, it does not include interest and would create additional red tape. I believe that particular point is open to interpretation, but the Property Council raises it as a legitimate concern and I can understand that people may use that particular mechanism to avoid paying duty. I look forward to the Government's response in relation to that issue. The Property Council is also concerned that legitimate equity schemes of arrangement will now be liable to duty and believes that the commissioner's powers under the anti-avoidance provisions are "sufficient to deter avoidance behaviour".

I was surprised that the New South Wales Minerals Council was not consulted about the bill in relation to the potential duty on the transfer of mining leases. Part 32 of schedule 1 to the bill confirms that duty is now payable on the transfer of mining leases. I believe the New South Wales Minerals Council is open to that provision, but it should be acknowledged that the council is a stakeholder that is directly impacted by the actions of this legislation. As such, it should be consulted and its concerns should be allayed in this debate.

In relation to the Tweed—and we know the local member is 100 per cent for the Tweed—the Minister for Finance offered support and made a direct promise to provide staff on the ground to work on harmonising taxes in the Tweed. There is no doubt that the Tweed suffers and it is unlike any other region in the State, except perhaps Albury—and the member for Albury would raise similar concerns. Businesses in this State operate at a competitive disadvantage to those located a few hundred metres down the road. As a matter of priority, the Tweed must be considered a particular economic zone and the significant competitive disadvantage that businesses in the community suffer because of their proximity to Queensland must be noted. We on this side of the House join the member for Tweed in asking the Minister for Finance to honour his commitment to prioritise this matter—a commitment we understand he made directly.

We need to prioritise these issues—not just tinker around the edges—when tax laws impact across borders. Places like the Tweed should be front and centre of the economic plan to restore this State. My colleague and good friend the member for Tweed will work on the issue directly, but we ask the Minister for Finance to honour his commitment and look very closely at the problems facing the Tweed, such as how we can start to make the region competitive with its neighbours across the border. In regard to the parking space levy, the bill makes a small amendment relating to dates and the enforcement of a particular date. But it would be remiss of me not to put on record that the parking space levy is a good example of how this Labor Government announces policies without conducting any analysis. A document obtained under freedom of information provisions states:

Treasury documents obtained by the NSW Liberals & Nationals have revealed "little research" was done into the "effectiveness of the PSL [Parking Space Levy}, which was almost doubled by the Rees Labor Government in last year's Mini Budget.

It was claimed that the levy was necessary to reduce congestion and increase the use of public transport, but we know that that claim was made without any clear evidence whatsoever. It was revenue first, and analysis and reasons later. One cannot get a better example of how this Labor Government goes about its business. It has a budget shortfall and it needs to find revenue but it does not want to consider what the impact will be and it does not want to consider a broader strategic policy. Is the Government trying to impel people to use public transport? If it is—and that seems to be the intent of this levy—is public transport in a position to cope with the increased demand? Should there be a congestion charge? We do not know; there is no analysis. Who is going to determine how those funds will be used?

I have heard the Minister for Transport say that the revenue will go to parking stations, but we do not know how the funds will be used. If a government wants to run a broad policy it should do the analysis first. This is a good example of how that has not happened. In the next two years revenue of about $100 million will be collected from the levy, but no analysis has been done on the impacts, whether we were ready for such a levy or how the proceeds will be used to make this city more sustainable. The Treasurer should take responsibility for that. I call on him to undertake appropriate analyses. That should happen before any announcement is made: the long and short-term impacts of every decision should be analysed.

The Labor Government's economic management strategies are called into serious question given its handling of payroll tax. The Treasurer's new favourite term is "green shoots". He is driving us all mad with his constant references to green shoots. Walt winds him up and tells him to say only two words—green shoots—and he religiously follows those instructions. It is amazing that he can use them every time he opens his mouth. He forgets that it was this Labor Government that scorched the earth of the New South Wales economy. The Treasurer used a prop in the other place that looked as though it was from his grade 6 science project showing green shoots emerging from the earth. This is a serious issue, but the Labor Government attacks the problems facing the economy by spinning a nice line. Walt does that incredibly well. The approach is cloaking very serious problems and that is why our economy continues to struggle. This State continues to struggle because the Government is not dealing with the real issues.

Only this Labor Government could be excited about a $1 billion deficit. The Government was told that the deficit would be $1 billion rather than $1.3 billion, but that was only because Kevin Rudd provided extra funds. Members opposite organised a press conference to announce to the world that this State has a $1 billion deficit and we were supposed to be excited. We need some facts put on the record about this Government's policy response to the global financial crisis rather than Walt's spin. Of course, Eric would have nothing to say if he did not have that spin. How has this Labor Government responded to the global financial crisis, which has been a huge economic challenge for the State? The response by the Treasurer and the Premier was the New South Wales Housing Construction Acceleration Plan. That was a cornerstone of the budget. It was supposed to be worth $64 million. The Treasurer recently said that homebuyers had saved $7.2 million in stamp duty. That equates to about 0.0018 per cent of stamp duty receipts, and I acknowledge that contribution. However, it is about 11 per cent of what was promised.

The Treasurer talks ad nauseum about infrastructure and record spending. The truth is that Morris Iemma announced the infrastructure program almost two years ago. The mini-budget explicitly cut infrastructure funding. Of course, Kevin Rudd then rescued the State Government. New pictures of Kevin and Nathan are appearing because this Government is desperately trying to latch on to Kevin's popularity—which is questionable. It is trying to take credit for the stimulus provided by the Rudd Government. This Government's spending on infrastructure has actually declined. Treasurer Roozendaal talks about record spending on infrastructure, but if we were to subtract the funds provided by Kevin Rudd it would be clear that the amount allocated to infrastructure has declined.

The allocation for the north-west rail link did represent an increase in infrastructure spending, but it was cancelled, which resulted in a decrease in spending. At the height of one of the biggest economic crises this State has faced, this Government cut infrastructure spending. Regardless of the spin members opposite try to put on it, that is the truth. Government members also go on and on about all the jobs that have been created. We were told about the $7.2 million contribution, but the Government spent $2 million on an advertising campaign to tell everyone what a good budget it had handed down so almost all that contribution is gone. Robert Carling, a former Treasury official, said:

The statement that infrastructure spending will ‘support up to 160,000 jobs’ is an unsourced, unsubstantiated assertion. It is stated as a scientifically verifiable fact but is impossible to substantiate...

For my part, I am willing to concede that the infrastructure spending and associated tripe will help support 70 jobs – those of the Labor members of the NSW Parliament.

Mr Carling is a respected commentator and what he said is the truth. A freedom of information request revealed a comment written on a draft of the budget speech by a Treasury official stating that the department could not verify the claims about jobs supposedly being created at Port Botany and Orange or by Pacific Highway projects. I have sympathy for the Treasury officials who have to try to give some credibility to the Government's pie-in-the-sky job numbers. The Government cannot verify the creation of those jobs and infrastructure spending has declined. That is its response to the global financial crisis and the final infrastructure stimulus figure is $7.2 million. Eric Roozendaal and Nathan Rees are kidding when they pretend that this Labor Government has created any sort of economic stimulus.

The Opposition obviously supports the allocation of $7.2 million in stamp duty relief. However, that is the only measure that this Government is entitled to talk about. It has done nothing else in response to probably the most serious economic event in recent history. The downturn has been less severe than anticipated, but this Government decided to do nothing in response. Treasurer Roozendaal can spin his green shoots, but this Government is responsible for the scorched earth that is this State's economy. We are limping out of the recession and we will continue do so because this Labor Government is happy to spin ideas and to take credit for improvements when it has done nothing to achieve them.

If the Government had adopted the Opposition's payroll tax policy it would have directly stimulated the businesses that employ two million people across this State. If it had done that, if business confidence had improved, if employment had increased and if investment had grown, I would have been the first to applaud. Sadly, that did not happen. This Government did absolutely nothing at a most critical point. While there has been some improvement as a result of the Federal Government stimulus it has impacted on retail sales. I have heard Treasurer Roozendaal take credit for increasing retail sales. He should understand that when stimulus money goes into consumers' pockets they spend it and retail sales increase. The State Labor Government cannot claim credit for that.

I acknowledge that the CommSec report released last month is only one report, but it contains a few points that the Treasurer should take on board. It ranks the economic performance of each State and Territory Government over the past 10 years using various economic indicators. On economic growth, New South Wales ranked eighth; on retail trade, seventh; on unemployment, sixth; on construction work, eighth; and on dwelling starts, eighth. Overall it was also ranked eighth. That independent report states that over the past 10 years New South Wales has come last in the economic performance rankings. The first thing that a genuine, transparent government that is trying to fix problems should do is to acknowledge them. It should try to understand the reasons for them, the blockages and how to attack them.

We have outlined plans in relation to payroll tax. The payroll tax reductions that Government members spoke about were outlined well before the global financial crisis, so the Government's policy response in relation to payroll tax during that time was nothing. The Opposition has outlined a payroll tax plan. We have also outlined Infrastructure New South Wales. There is an opportunity for this Government to bring together a body of experts, not just from around the country but also from around the world, to deliver infrastructure in this State. When plans are put forward infrastructure will be delivered. That is a commitment from this side of the House.

Whether it be infrastructure, payroll tax reform or doing something about the regulations, we need to return confidence to businesses in this State. If we return confidence to businesses, they will start employing people, start investing and start helping to turn the economy around. Holding up a poster of green shoots is not the way to do it. That is a stunt. It is symbolic of the way the Government goes about its economic management. It has a huge responsibility to drive this economy forward and the unfortunate reality is that we are doing nothing more than going backwards.

While we support the tenets of this bill and the concept of harmonisation and closing loopholes for people who have been creative in avoiding duty, we make the point that both the Premier and the Treasurer have much more to do to turn New South Wales around, to apply themselves seriously to the job of economic management of the State and to not take credit for things they have not delivered. As soon as they start understanding that, the State will be in a much better position and can start leading this country again.

Mr NINOS KHOSHABA (Smithfield) [5.31 p.m.]: The State Revenue Legislation Further Amendment Bill (No. 2) 2009 seeks to amend the Payroll Tax Act 2007 and Duties Act 1997. Payroll tax legislation has always contained nexus provisions to avoid double taxation for the same wages where an employee provides services in more than one State or Territory, such as interstate truck drivers or domestic airline crew. Until now liability for this type of employee has been based on where wages are paid. With the growth in electronic funds transfer it is common for employees to have their wages paid into multiple accounts. This has made administration of payroll tax more complex. The proposed amendments will resolve this complexity.

The new nexus provisions will apply so that tax is payable for employees providing services in more than one jurisdiction where the employee has his or her principal place of residence. All States and Territories will adopt these changes in the spirit of payroll tax harmonisation. The bill also makes amendments to the Duties Act that will protect revenue and improve the administration of the Act. Finally, the bill ensures that carbon sequestration rights are not land for the purposes of the Duties Act, consistent with the intergovernmental agreement on Federal financial relations. I commend the bill to the House.

Mr GEOFF PROVEST (Tweed) [5.32 p.m.]: I speak on the State Revenue Legislation Further Amendment Bill (No. 2) 2009. I agree totally with the comments of the shadow Treasurer, the member for Manly. I make particular reference to the Payroll Tax Act 2007 and the Duties Act 1997 but I will focus on cross-border issues. The object of the bill is to make several amendments to clarify compliance and administration, which includes a new secondary nexus provision so that payroll tax for employees who work partly in New South Wales and partly interstate—for example, truck drivers—is payable based on where the worker resides rather than where the wages are paid. The primary nexus provision remains unchanged—that is, employees performing work only in New South Wales will be paid where the work is done.

Once again, the Tweed is in a unique position. As I have said in this place many times before, the front door of the Tweed is Queensland; the back door is New South Wales. Of the 30,000 full-time employees within the Tweed, just on 13,500 perform the majority of their work across the border. Similarly, in the reverse around 12,000 part-time and full-time Queenslanders are employed in the Tweed. This raises various issues, particularly with this legislation. The shadow Treasurer referred to the Minister for Finance. The Minister for Finance attended the Tweed about six months ago to promote harmonisation to our local businesses. The Minister made a commitment to me and to a number of people present that he would be sending an officer from his harmonisation office to attend to the many and varied issues.

The Minister also stated to the meeting that much work is done between the New South Wales and Victorian governments about this issue but, by his own words, very little has been done in relation to Queensland areas. This has created enormous strain in the Tweed. Currently the Tweed experiences on average approximately 2 per cent higher unemployment and about 3 per cent higher youth unemployment. Introducing a new secondary nexus provision so that payroll tax for employees who work partly in New South Wales and partly interstate in itself creates enormous problems. In recent times—in September 2009 and also June 2008—I asked a series of questions on notice of the Treasurer about how much payroll tax was collected from businesses in the Tweed electorate in several financial years. The answer I received was:

The amount of payroll tax collected is based on the registered address of the business. As some businesses in regional areas have their head office in another location, it is not possible for the Office of State Revenue to accurately report on the amount of tax collected by region.

That makes me wonder whether the Office of State Revenue is going to collect this other information and what plans it has in place. In September 2009 I asked for the total payroll tax collected in the Tweed electorate from three postcodes for a number of years. Once again, the answer came back from the Office of State Revenue:

The amount of payroll tax collected is based on the registered address of the business. it is not possible for the Office of State Revenue to accurately report on the amount of tax collected by postcode.

I find that unusual and I would like the Parliamentary Secretary, when replying to this debate, to articulate the exact method by which the Government is proposing to do this. The issue remains that the payroll tax paid in New South Wales is about 1 per cent higher than in Queensland but, more importantly, the threshold of $680,000 that the Treasurer promoted in this place when handing down the budget is still very low compared to the $1 million that is currently applicable in Queensland. It has caused an exodus of businesses from the Tweed over the border. I know a number of businesses that will benefit from moving their whole operation over the border. Their workers still come from both sides of the border, but the Tweed is not open for business because payroll tax is cheaper if they move over the border.

It has been said that the secondary nexus provision assists in the harmonisation of payroll tax. Like the shadow Treasurer, I am all for the harmonisation of services between States. Cross-border issues continue to be a major source of irritation and keep the Tweed behind. If the Government looked at the possibility of a Tweed economic zone it would encourage businesses be relocate to the Tweed and to employ people, which would bring greater tax revenue and greater prosperity. The shadow Treasurer touched on this issue. In addition, a number of years ago the member for Ballina put forward the idea of a cross-border commission that would perhaps lead to the creation of a Tweed economic zone. Currently it is very difficult to attract new businesses to New South Wales, particularly in the Tweed area, because of the differential with Queensland. Queensland is definitely open for business, which is quite relevant to the amount of people moving there on a regular basis.

Another major concern with the bill, and the last thing I would like to see, is more administration placed on those businesses—extra forms, extra tracking. When the bill was first debated there was reference to electronic transfers and to employees and other people—perhaps even members of this House—having multiple accounts into which funds are deposited on both sides of the border. Obviously, cross-border banking occurs in the Tweed. In fact, the Tweed probably has the highest number of such transactions in the State. It is not unusual for people to have a number of bank accounts to manage their business activities across the border. They will all be caught up by this legislation.

I would like the Parliamentary Secretary in reply to tell us what types of workshops and information sessions will be held. I note that there is a period of grace in the 2009-10 tax year to minimise any effect on businesses. To date I have seen no plan put forward and no staff allocated to inform businesses, notwithstanding the amount budgeted for that purpose. I know one business that could save about $200,000 a year in payroll tax if it moved across the border. That is an attractive plum to pass up, considering how tough things are with high unemployment. I would like to be advised of the types of plans in place to allow that to happen.

I would like the Parliamentary Secretary in reply to give an indication of the response from the Government's Queensland colleagues. I realise that the Council of Australian Governments [COAG] have signed off on the majority of these provisions. However, as with other legislation, at times Queensland seems to be a little advanced on New South Wales. Queensland is getting on with the job for the majority of the time. That is probably why Queensland built the five-kilometre Tugun bypass in New South Wales. I would like an update on the final COAG negotiations. Six months ago the Minister for Finance indicated that very little progress, if any, had occurred and he implied that an officer would arrive at the Tweed. I know that about 30 or 40 business representatives were present that evening, which was an indication of the level of concern about future harmonisation. Probably more importantly, it was an indication of the differential and the increase in paperwork with that exercise.

There are grave concerns with payroll tax, which could be addressed if the Government and the Treasury looked at the possibility of creating a Tweed economic zone, an area designed to stimulate economic growth and job generation. In many respects the Tweed could be called an outer suburb of Brisbane, as we are one hour's travel from the city. We are similar to the Central Coast in that regard, which is one hour's travel from Sydney. We were a holiday village and a retirement village until the Queensland urban sprawl reached us. The Tweed should be given special consideration.

I applaud any efforts at harmonisation, but there are issues apart from payroll tax that need to be addressed. I ask the Parliamentary Secretary to address some of those issues in reply, particularly about how much extra work is to be placed on businesses and what workshops are in place. We are halfway through the financial year. I know that when this bill is passed businesses will have a great deal of concern. I would like the Government to come clean and tell us what budget it has allocated to the Tweed. Once again, I am 100 per cent for the Tweed.

Mr GREG APLIN (Albury) [5.44 p.m.]: I follow the contribution of the member for Tweed and take members to the other end of the State, to the southern border region. Members would be aware that in previous debates I have raised the need for a cross-border commission to examine situations such as this. I intend to speak purely to the payroll tax aspects of the State Revenue Legislation Further Amendment Bill (No 2) 2009. As the member for Tweed ably pointed out, far too often New South Wales is disadvantaged when it comes to setting up businesses, attracting businesses and retaining businesses in the border areas.

Far too often it is the case that we lose competitively to our neighbours when businesses are set up in a neighbouring State often for reasons such as payroll tax advantages, business registration, vehicle registration, et cetera. In this instance, as the member for Tweed said, we need to have an education system that informs people on the borders as to the state of payroll tax amendments. That education process would assist them. Indeed, if the member for Tweed were successful in attracting some form of special economic zone, I would argue that the same should be applied on the southern border for exactly the same reasons.

Last weekend I attended a major function—a fundraiser for the Rehe family—in the Commercial Club at Albury. The surviving children, Eddie and Abbie, attend the Border Christian College. Their parents, Tex and Robyn Rehe, were truckies who were killed earlier this year in a dreadful accident. The Border Christian College, ably led by Christine O'Brien—whose husband runs a trucking company in Albury—and a host of other supporters set out to raise funds for Eddie and Abbie so that they could have a scholarship to equip them in future life. The point I am making is that 300 people attended that function; the facility was filled to capacity. Apart from the supporters who knew the family and were part of the school community, the majority came from the trucking community. It has been clearly pointed out that truck drivers in border areas form one particular sector, which will require education and assistance in coming to terms with the amendments that are contained in the bill.

As the member for Tweed pointed out, in 2007 changes were made to legislation for harmonisation. In July this year, and I am sure at other times, the Office of State Revenue conducted seminars and produced some papers. I urge the Office of State Revenue to take this matter further, as a result of this bill progressing, and conduct seminars in border regions. In July the seminar notes stated:

In response to business concerns about the compliance costs of eight different versions of payroll tax around Australia, all jurisdictions agreed to harmonise eight key aspects of payroll tax by 1 July 2008. NSW and Victoria introduced essentially identical legislation from 1 July 2007 and this wording was adopted by Queensland and Tasmania from 1 July 2008. South Australia and the Northern Territory will follow from 1 July 2009 ...

All jurisdictions are also committed to consistency of interpretation for identical legislation. NSW and Victoria have jointly issued 35 Revenue Rulings and other States have agreed to adopt these rulings when their legislation is the same.

The seminar gave various examples of the application of the threshold and the differences between the States. I will refer briefly to some of the material contained in the seminar of July this year and then lead on to the provisions contained in the bill. At the seminar in July people were told that all jurisdictions have identical provisions to determine in which State a wage is a taxable wage. We were told that a month's wages can only be liable in a single jurisdiction, even if work for that month is performed in two or more jurisdictions. We were also told that a wage is taxable in New South Wales based on two criteria: first, where the work is performed or, second, where the wages are received by the employee. The seminar notes show a series of questions and answers. For example:

When all the work in a month is wholly performed in NSWWhen all the work in a month is wholly performed in NSW

All the wages paid or payable for that work are taxable in NSW.

Work in a month is performed in two or more States in AustraliaWork in a month is performed in two or more States in Australia

All the wages paid or payable for that work are taxable in NSW if the employee is paid for that work in NSW, or paid into an account opened up in NSW.

The seminar notes continue: Work is performed overseas for more than six continuous months and paid or payable in NSWWork is performed overseas for more than six continuous months and paid or payable in NSW

None of the wages are taxable in New South Wales.

Further examples related to overseas work. I do not intend to go down that path because I am concerned mainly about people who are resident in the border region. As I pointed out, many major trucking organisations and freight companies are based on both sides of the border. They employ a range of people, including staff in administration work, line operation work and safety compliance work, as well as truck drivers on both sides of the border. Border Express is one of those major freight companies, O'Brien's Transport is another and Hume Transport is another. Just recently we have had the opening of the Ettamogah Intermodal Hub by Colin Rees, originally of Colin Rees Transport, whose main object is to bring containers from the docks at Geelong and Melbourne straight up to Albury and then to distribute the goods from there. Clearly, it is an area that employs personnel from both sides of the border and therefore it will be subject to the provisions of the bill.

To determine where a wage is paid or payable, the location of the business is not relevant, the Office of State Revenue said. Where an employee is paid is a simple question of fact. The office further said that if an employee's wage is paid into an account, it is the place where the account is held. If an employee is paid by post, it is the physical address the wages are sent to. If an employee is paid cash in hand, it is the place of payment. Until an employee changes it, the physical location of the branch in which the employee's account was opened will determine in which jurisdiction it is.

With regard to wages paid for multi-month services, the Office of State Revenue told us that not all taxable wages are paid or payable to an employee in the month of service. A good example is a termination payment such as paid-out leave. The office told us that paid-out leave is not a payable wage in the months and years in which it accrues and that it is only taxable when it is paid. When two or more months of service are involved in a paid wage, only the service in the month of payment is used to determine where the wages are taxable.

The bill amends the Payroll Tax Act 2007 and the Duties Act 1997 to protect the revenue, and improve compliance and administration. The bill amends the jurisdictional nexus provisions in the Payroll Tax Act 2007 for payments of tax where an employee performs services partly in New South Wales and partly outside New South Wales. We were told in the agreement in principle speech that payroll tax legislation has always contained nexus provisions in order to avoid double taxation on wages. This, of course, is vital. Liability has previously been based on where the service is performed and the wages are paid. However, the new provision takes into account that electronic funds transfer is now common for employees to have, and therefore wages are paid into more than one account and in jurisdictions other than where employees perform their services.

Under the bill, a primary nexus test will continue to apply the principles currently used to determine initial liability. This means that if employees provide services wholly in one State or Territory, payroll tax is payable in that jurisdiction. We were told in the agreement in principle speech that the test applies to approximately 90 per cent of the workforce in New South Wales. We need to take account of the border regions as specific areas where there will be greater questions than in other areas of New South Wales. They are areas where seminars need to be held, and where employers need to be advised of their responsibilities and of the changes that have been brought about as a result of the bill. Just as the member for Tweed argued with regard to the Tweed area, we need to look at the southern border region as an area of special concern where greater efforts can be made to attract businesses and retain businesses for the benefit of the State.

Mr JONATHAN O'DEA (Davidson) [5.54 p.m.]: In speaking to the State Revenue Legislation Further Amendment Bill (No. 2) 2009 I refer particularly to the amendments to the Parking Space Levy Act 2009. This House considered the Parking Space Levy Act 2009 in March this year. At that time the Opposition opposed the Parking Space Levy Bill 2009. Indeed, I criticised the bill as being an audacious and unjustified revenue grab introduced with a lack of parking industry consultation and without regard to current economic circumstances. I will not reiterate the arguments raised in the debate that took place in March this year. However, I emphasise that that lack of consultation may well have contributed to the situation we now face, which is a required amendment to that legislation. As has been acknowledged, obviously an error was detected, which is now addressed through schedule 2 [1] to this amending bill.

Rather than reiterating the arguments raised against the levy, I want to address the way the levy was received in the media. Prior to the passage of the legislation the Australian reported on the proposed levy under the headline "Welcome to NSW, the big tax state". The article pointed out that the New South Wales Labor Government had intended to raise an extra $3.6 billion "to plug a gaping budget hole". Subsequent to the end of that financial year and after the legislation had been passed, the ABC News published an article under the headline "Sydney parking hike a tax grab". The article reported comments by the Minister for Transport, which I will return to.

The Age of 7 July published an article under the heading "Sydney parking among world's most costly". We all want New South Wales to lead the world, but we do not want it to lead the world in terms of being the most expensive city in the Asia-Pacific region, other than Hong Kong, for parking in the central business district. Indeed, the average cost of parking a car in Sydney's central business district is the fifth most expensive in the world, according to a survey undertaken by property researcher Colliers International. As the shadow Treasurer pointed out, on 6 October 2009 the Sydney Morning Herald reported:

The State Government's claim that increasing the levy on private parking spaces across Sydney would reduce traffic congestion was not supported by any significant research, an internal Treasury email has revealed.

So, we have not had any great praise for this levy from the media or commentators. Let us revisit what the justification for the levy was. The justification of the Minister for Transport was, "The parking space levy is all about encouraging people to leave their car at home, and take public transport." All I can say with regard to people in my electorate is that the Minister for Transport has simply cut the services to the North Shore line, to all the train stations in my electorate. So, if the Minister's justification for hitting a lot of people in my electorate, including a lot of small business people and a lot of medium-size business people, is, "We want to get them on public transport", he is not acting consistently because we have just seen a cut of more than 20 per cent to all the train stations in my electorate of Davidson. I point out that hypocrisy.

I acknowledge that the bill is of limited scope, so I will not speak further to the issue except to say that I will stand up for small- and medium-size businesses, even though the Government will not. At a time when New South Wales has the highest unemployment rate in the country and we continue to live in difficult economic circumstances, the Government has implemented a job-destroying increase in the parking levy. It is not an appropriate solution to this Government's ongoing waste and mismanagement. It was not a proper solution when it was announced. It was not a proper solution when this legislation was passed in March. It is still not an appropriate solution as we again consider amendments that attempt to rectify inadequate legislation and the inadequate performance of the Government in this State.

Mr THOMAS GEORGE (Lismore) [6.00 p.m.]: I speak to the State Revenue Legislation Further Amendment Bill (No 2) 2009. The objects of the bill are as follows:

(a) to amend the Duties Act 1997:

(i) to make further provision for the valuation of land holdings of unit trust schemes, private companies and listed companies in connection with determining whether those unit trust schemes or companies are landholders for the purposes of landholder duty, and

(ii) to make further provisions for liability for landholder duty in respect of an acquisition of an interest in a landholder that is made by a trustee or by a person acting in more than one capacity, and

(ii) to make persons who acquire or hold an interest in a landholder as a creditor liable for landholder duty in certain circumstances and to clarify the meaning of "interest" in a landholder, and

(iv) to prevent the use of terms of contracts or other means to avoid liability for landholder duty, and

(v) to clarify the types of interest in land that are treated as dutiable property under that Act, and

(vi) to make other changes to that Act as a consequence of the recent significant changes to landholder duty and mortgage duty provisions,

(b) to amend the Parking Space Levy Act 2009 to clarify the time within which the parking space levy must be paid in order to avoid penalty;

(c) to amend the Payroll Tax Act 2007 to establish a new test for determining whether wages are taxable in this jurisdiction, which is consistent with complementary legislation being adopted by other States and the Territories.

The Opposition shadow Minister has given a broad view of the bill but I wish to refer to the section of the bill that deals with the Payroll Tax Act 2007, where the secondary nexus provision is being introduced so that payroll tax for employees who work partly in New South Wales and partly interstate is made payable based on where the worker resides, rather than where the wages are paid. The payroll tax measures in bills are largely the result of a meeting between all State and Territory Commissioners of State Revenue that was announced on 16 June 2009. The new nexus provisions arise from the growth of electronic transfer of wages, making the administration payroll tax more complex—that is, it is common for employees to have their wages paid to more than one account and in jurisdictions other than where they perform their services.

The new secondary nexus provision is unlikely to have a significant impact on payroll tax revenue but I would like the Parliamentary Secretary in reply to advise members how this will simplify the system. If a company is based in New South Wales and employs people who reside in New South Wales but part of their work is in Queensland and part is in New South Wales, how would an employer be expected to keep control of this? Cross-border issues have been highlighted in this House on a number of occasions over the years that I have been a member, and in the time of many members before me.

There is a differential in payroll tax charges in Queensland against New South Wales, yet companies based in this State are being forced under our legislation to employ truck drivers from Queensland. In order to comply with the needs of the road safety environment they get a driver to bring a truck from Brisbane to Kempsey, another driver takes the truck from Kempsey to Sydney, another driver brings the truck from Sydney to Kempsey, another driver takes the truck to Queensland, and yet another returns the truck to Coffs Harbour. I ask the Parliamentary Secretary to explain to me how organisations are expected to administer the breakdown of duties and time in each State. How is this to be controlled? What liability is to be placed on the company that employs these people?

In my past career as a stock and station agent based in Casino we had offices at Warwick, Stanthorpe, Casino, Bangalow and now Murwillumbah. Staff were criss-crossing the border all day. I believe a nightmare has been created for companies to keep control of what is done in New South Wales and what is done in Queensland. That would be fine if there was no differential but the threshold is totally different in Queensland from what it is in New South Wales and payroll tax in New South Wales is dearer than it is in Queensland. How are companies expected to maintain control? Are these companies expected to have logbooks? When fringe benefit tax came in, people who worked for me had to fill out a logbook for every kilometre they drove, which was a nightmare.

Will those companies now have to have a book to determine how many hours they had in Queensland and in New South Wales on any given day? It will be an ongoing problem and more red tape is being created. This is due not only to the inadequacies of the Government but because of the differential in payroll tax. This will apply not only to the Queensland-New South Wales border. The member for Albury spoke about the New South Wales-Victorian border. There is the New South Wales-South Australian border, the New South Wales-Australian Capital Territory border and the New South Wales-Northern Territory border. This will create a big problem and just what are companies expected to do to combat that problem?

Mrs KARYN PALUZZANO (Penrith—Parliamentary Secretary) [6.07 p.m.], in reply: The New South Wales Government is committed to having best practice revenue laws. The State Revenue Legislation Further Amendment Bill (No 2) 2009 makes important amendments to State tax Acts, both to protect revenue and to improve compliance and administration. The bill amends the Payroll Tax Act 2007 and the Duties Act 1997. Before going to the substance of my speech in reply I want to comment on the contributions of those opposite. Only the Opposition could make negative comments on the strength of the New South Wales economy, given its comparison with worldwide economies. Business is being carried on as usual in this State.

The Government has an infrastructure spend, jobs are being supported within our local communities, and new jobs for apprentices and trainees are being created. I recently met a new trainee from the Department of Commerce. Having met that trainee, I fail to see how the Opposition can say that the focus in New South Wales is not to support jobs. Comment has also been made about the parking levy. Obviously those media outlets are not going to outer western Sydney and seeing the car parking spaces being constructed there. They do not see the upgrades to Emu Plains railway station or the jobs in constructing the traffic lights at the Jamison Road intersection or the school fence as part of the Principals Priority Program at Jamison High School. These are the types of jobs the New South Wales Government is underpinning, thereby placing New South Wales in a good position for economic recovery.

Just as I see the green shoots of snow peas in my garden, we are seeing the green shoots of recovery in New South Wales. In comparison to other States, the numbers speak for themselves. Recently released investor housing approvals show that figures are up again for New South Wales—41 per cent year on year. These figures show improved confidence in the New South Wales housing sector. Those who work in the New South Wales housing sector know about the investor confidence. Housing—new or refurbished—means jobs and security for the mums and dads in western Sydney. The Opposition makes comparisons to other States. Unlike other States, New South Wales has maintained its triple-A rating. The Opposition is silent on that economic assessment.

The Government is delivering a record infrastructure stimulus program of $62.9 billion over the next four years. That means jobs in constructing the new commuter car park at Emu Plains and fences at Jamisontown Public School and in New South Wales hospitals, schools and police stations. It is the largest infrastructure investment in the history of New South Wales, and the largest of any other State. The Opposition remains silent on that issue. It also is silent on the State's unemployment rate of 5.6 per cent, which is the second lowest rate among States and below the national average. Western Australia and Queensland have higher unemployment rates, despite advantages provided by the mining boom.

Retail sales in New South Wales have grown by 9.5 per cent since the worst days of the global financial crisis in September 2008. That is a full 2 per cent higher than the next best State, Victoria. It is 3.8 per cent higher than Queensland and 6.3 per cent higher than Western Australia. Through the year on State final demand we are above the national average—0.8 per cent compared to 0.7 per cent nationally. The numbers do not lie. We are starting to see improvements in the unemployment rate, improvements in retail sales and improvements in housing approvals. There is more work to be done, but the Opposition should not talk down an economy. The economy is rising slowly from an internationally inspired downturn. We are providing jobs throughout communities in New South Wales.

The member for Manly spoke about the Government's policy on payroll tax. Payroll tax is paid by less than 10 per cent of New South Wales businesses. The budget has funded a payroll tax cut from 5.75 per cent to 5.65 per cent commencing from January 2010. This follows the payroll tax cut already delivered in January this year from 6 per cent. The Government has budgeted to cut payroll tax further to 5.5 per cent in 2011. I remind the House that the last time the Coalition held office the payroll tax in New South Wales was 7 per cent. To further support business the budget has announced an increase in the payroll tax threshold to $638,000 from 1 July this year.

New South Wales is the only State to index the tax-free threshold so that businesses do not end up paying more tax due to bracket creep. The reduction of payroll tax rates and indexation of the tax-free threshold mean a New South Wales business with a $1 million payroll in 2008-09 will save around 20 per cent of its payroll tax bill once our program of tax cuts is fully implemented. This represents an injection of about $2.7 billion into New South Wales businesses over the next five years to 2012-13. Our cuts to payroll tax are permanent and fully budgeted, in contrast to a temporary cut proposed by the Opposition.

The bill's amendments to the Duties Act continue the implementation of landholder duty. The new landholder duty replaced the land rich duty on 1 July 2009 and imposes transfer duty on acquisitions of significant interests in companies and unit trusts that own land in New South Wales with a value of $2 million or more. The bill makes further amendments, including amending the land value threshold test for landholder duty. The current provisions apply to companies or trusts owning land in New South Wales with an unencumbered or improved value of $2 million or more. To enable taxpayers to easily determine whether the landholder provisions apply, the bill provides that where the landholdings have a land value for land tax purposes the unimproved value will be used for the purpose of the $2 million threshold test. This change will have the effect of significantly raising the threshold at which interests in companies that hold land will have a potential liability to landholder duty.

The member for Manly referred to the dissemination of information to the public in relation to the changes to the landholder duty threshold. The member can rest assured that the Office of State Revenue will advise the public in the usual way about the effect of this bill. I add that the Office of State Revenue website contains valuable information on changes to legislation. The member also referred to comments by the Property Council of Australia about these reforms. I inform the member that some of the reforms included in this bill are a direct response to Property Council submissions. Of course, the Office of State Revenue will continue to consult with the Property Council about the continued improvement of revenue legislation in this State.

The member for Manly and the member for Lismore spoke about the parking space levy. The parking space levy seeks to reduce congestion and promote the use of public transport in business areas that are well serviced by public transport. Under the Parking Space Levy Act the funds collected are used for the construction and maintenance of transport infrastructure, which encourages public transport use to levy areas. As the member for Penrith, I have already outlined the public benefit from the parking space levy to commuter car parks in western Sydney. I referred to the car park in Emu Plains that is earmarked for extra spaces from the parking space levy revenue. The revenue also goes to improvements to public transport infrastructure, including new buses for Sydney transport users.

This evening I will catch the 8.10 p.m. train to Penrith and alight at Penrith railway station at about 9 o'clock. Under the new changes to the bus timetable there will be buses to meet my train and buses will run later into the evening. I could catch the 774, 775 or 776 bus service. That is a brand new bus service that was introduced in the new timetable in October. The public transport infrastructure improvements also include new buses for Westbus. The service I catch travels along Derby Street and past the hospital. I get off at the roundabout at Bringelly Road but if I stayed on the bus I would go through the university campus, past the TAFE and on to St Marys railways station. I could get off at St Marys railway station and do the reverse journey to Kingswood. These brand new buses show the commitment to Sydney transport users. The revenue from the parking space levy will allow improved transport in western Sydney and greater western Sydney.

The member for Tweed and the member for Lismore referred to client education. I am advised that the Office of State Revenue conducts client education programs. As outlined by the member for Albury, it conducts seminars. Further, available on its website are information and brochures to either read online or download. It conducts a new client education program to provide advice to newly registered payroll taxpayers. As the member for Albury said, the Office of State Revenue goes to major centres.

It goes out to major regional centres and it also goes out to major Sydney centres. In fact, as the member for Albury mentioned, the Penrith Valley Chamber of Commerce held a seminar in conjunction with the Office of State Revenue. What was good about the seminar was that the chamber of commerce chief executive officer Jill Woods was able to liaise with the Office of State Revenue and tailor the seminar to the businesses in Penrith, which can be done after this legislation is passed. Chambers of commerce can ring up the Office of State Revenue and book a seminar for their businesses.

In relation to the concerns of the member for Tweed and the member for Lismore about the payroll tax nexus in border areas, I am advised that basing the nexus on the employee's principal place of residence means that tax is paid to the State that provides the services and infrastructure to the employee, rather than basing it on the actual toing and froing between States. The member for Lismore gave an example of what happened with stock and station agents going from State to State or from place to place. I am sure that each of those stock and station agents had a principal place of residence and if the principal place of residence is in New South Wales tax is paid to New South Wales, which provides services and infrastructure to the employee.

In conclusion, the amendments introduced by this bill will improve State tax Acts by increasing consistency with other States and Territories while protecting the revenue bases of both payroll tax and landholder duty. I commend the bill to the House.

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