Duties Amendment (Abolition of Vendor Duty) Bill
Debate resumed from 13 September 2005.
Mr PETER DEBNAM (Vaucluse—Leader of the Opposition) [10.05 a.m.]: I usually start my contribution to debate on a bill by saying that it is a pleasure to talk on the bill, but it is not a pleasure to talk on this bill. This bill had to be introduced because the tax should never have been introduced in the first place. This bill is needed to abolish that tax and obviously the bill would have been unnecessary had the Labor Party managed the budget, but it did not. The object of the Duties Amendment (Abolition of Vendor Duty) Bill is to amend the Duties Act 1997 to abolish vendor duty, and duty on the disposal of interests in land-rich companies and trust schemes, on and from 2 August 2005, which is a very important date, as we discussed yesterday.
Clause 1 of the bill sets out the name, also called the short title, of the proposed Act. Clause 2 provides for the commencement of the proposed Act on 2 August 2005, being the date on which the abolition of vendor duty was first announced, and I will come back to that. Clause 3 is a formal provision that gives effect to the amendments to the Duties Act 1997 set out in schedule 1 to the bill. When the Premier introduced this bill yesterday he said:
It is a very simple piece of legislation and it does two things. First, it abolishes vendor duty for all contracts exchanged on or after 2 August this year. Second, it abolishes disposal duty, the vendor duty equivalent for people with indirect interests in property, for all contracts exchanged on or after 2 August this year.
The Premier was correct in only one part of that statement, that is, it is a very simple piece of legislation and that it does do two things. First, it confirms the Labor Party as the biggest hypocrite in New South Wales, ever. In that regard it confirms financial mismanagement as the key issue in New South Wales today, and for the next 18 months, and probably for the next five to six years.
Ms Virginia Judge: We have a triple-A rating in this State.
Mr PETER DEBNAM: The honourable member for Strathfield jokes about a triple-A rating. Obviously she does not remember that even Standard and Poor's, one of the two key credit agencies in establishing that triple-A rating, warned the Government a couple of months ago that it was in dire peril of unravelling the budget. It was Standard and Poor's that noted New South Wales was the highest taxing State in Australia and put the Government on notice that the budget was unravelling.
Mr SPEAKER: Order! The honourable member for Strathfield will come to order.
Mr PETER DEBNAM: I think she is doing a good job on behalf of the Government in highlighting financial mismanagement. A couple of months ago Standard and Poor's confirmed to the Government that it was in real trouble. As the honourable member for Southern Highlands confirmed time and time again, the Government was in deep deficit and its taxing position for the past 10 years meant that it had very few options to get out of that deficit. The Duties Amendment (Abolition of Vendor Duty) Bill does two things: first, it is simple and confirms Labor as the biggest hypocrite in the State and, second, it gets rid of the world's dumbest tax.
For months the Opposition told the Government that the vendor duty was the world's dumbest tax. The Premier has had to come into the Chamber and apologise to the people of New South Wales for the dumbest legislation ever introduced into this Parliament. Also, the date was critical because as the Opposition demonstrated yesterday, the Government simply delayed the date. It knew that there would be a new Premier and that the new Premier needed something to kick-start his so-called new Government. That kick-start was the abolition of this tax, but the net effect was that it took $60 million from the people of New South Wales who were forced to pay that duty between the time the Government decided to get rid of the tax and the time it decided it was politically opportune for Premier Iemma to get rid of it. The Opposition would like the Government to say how many people were affected in that period, how many people contributed to that $60 million unnecessarily, because Sussex Street wanted to delay the removal of the tax until 2 August.
Mr SPEAKER: Order! The honourable member for East Hills will come to order.
Mr PETER DEBNAM: Treasury and the people of New South Wales might like to tell the Opposition where those people are, in which electorates. I am sure that the honourable member for East Hills might have one or two, or even more, of them in his electorate. I would be happy to meet with them, as I meet with his constituents on planning, rail, road and policing issues. I have received many requests to go out to the electorate of East Hills—which I have had to delay for a few weeks—because people know that he is the lazy member in Parliament. We made the point yesterday that with this particular tax the Labor Government had dug a hole and now it is claiming credit for filling it in. It is the world's dumbest tax and it was at that time. It killed investment activity and building activity in New South Wales and, finally, the Government was forced to get rid of it. But even then, in its usual hypocritical fashion, the Government delayed doing so until it suited the Sussex Street mandarins.
This tax killed investment and building activity and the sincere hope in the Labor Party is that things might pick up quickly. We are very aware that Premier Morris Iemma has a dream, and that dream is to reintroduce this tax. He attached himself wholeheartedly to this tax and his dream is to reintroduce it. If Labor felt it was in a strong position some time in the next 18 months it might be bold enough to do it. I am of the view that Labor will not be in a strong position in the next 18 months, and it is another reason that people simply will not vote Labor on 24 March 2007. They know that philosophically Labor is deeply attached to this sort of tax. And, heaven forbid, if Labor were to be re-elected on 24 March—and I do not think that it will be—the people of New South Wales know that the Government would reintroduce the vendor duty. Indeed, not only would it reintroduce this duty, it would also increase land tax, immediately put up train fares and probably start to look at those other taxes it has had to amend over the last couple of years as it got into real trouble.
The people of New South Wales know that if Labor were re-elected on 24 March 2007 it would be on for young and old—for all the Treasury mandarins to get out their wish list and go through one tax after another, one charge after another. As the Government has demonstrated over the past 10 years, its only creativity is increasing revenue. On behalf of the people of New South Wales we say thank goodness the Government has now acknowledged that this was always the world's dumbest tax. We also put on record that we all know what the Government is planning. We know it has a dream and that it will reintroduce this tax.
Ms VIRGINIA JUDGE (Strathfield) [10.13 a.m.]: I support the Duties Amendment (Abolition of Vendor Duty) Bill. Over a period of time people in many areas of New South Wales, but particularly in the inner-west electorate of Strathfield, which I am privileged to serve, have expressed concern about the introduction of the New South Wales vendor tax. It is important to keep in context that the decision to first impose this tax was at a time when the property market was in a sudden surge of rapid growth. That is no longer the case and over a period of time I have received a substantive amount of correspondence on this issue. Constituents wrote to me complaining about the tax, which they thought discouraged people from buying their own homes.
Most people realise the importance of owning their own homes; they are our nest eggs, our safety nets. Those who are privileged enough to have jobs and to afford to buy a home realise that they are a tangible asset, which we may, at some point in the future if we so desire, pass on to our children and then our grandchildren. I received a well-constructed letter dated 7 March 2005 from one of my constituents in Croydon Park, which stated:
We are writing to you as our local member to seek consideration of you making a representation on our behalf to the State Treasurer—
Of course, we have a different Treasurer now and I did write to him—
We request that the lowering of the threshold of land tax on non-residential properties, and the imposition of a vendor tax on these types of properties be reversed.
Our circumstances are that we have our principal residence here in Croydon Park and a modest home unit at The Entrance. The unit is used by ourselves and other family members for holiday purposes and does not generate any rental income.
We are not high income earners and have acquired this holiday property through savings. The new tax imposes an increasing burden upon our income and is considered by us an impost with little benefit for the average income earner.
We ask that we be given the opportunity of meeting with you to discuss this matter personally …
The phone number was provided. I had a long conversation with one of the generators of this letter. Indeed, this is why the State Labor Government, this progressive Government, has agreed to scrap the tax. We listen and we act and this bill is in response to genuine concerns expressed by members of the community. The tax will be removed from all contracts exchanged from 2 August 2005 and we make no apologies because it is a good initiative. The decision to remove the tax will help stimulate market activity and provide a positive atmosphere for the property and building industries. Indeed, research shows that the average property investor could save around $10,000 as a result of the decision to scrap the tax.
This excellent decision by the Iemma Labor Government has been well received by the community. Since the decision was made, I have received a number of letters and phone calls thanking the Iemma Government, and I am sure my colleagues have received a similar response. We have also ensured that strict anti-avoidance measures are in place to prevent any scurrilous activities by people seeking to avoid the vendor tax by cancelling contracts that were exchanged before 2 August 2005 and replacing them with substitute contracts. The provisions have been widely publicised to deter people from rescinding contracts for which they are liable. The abolition of the vendor duty was one of the first actions of new Premier Iemma and demonstrates that he is listening to the community. I congratulate the Premier and all Government members.
Contrary to the false assertions of the Leader of the Opposition, this bill is a pro-active response. We have listened and heard the concerns of the community and acted accordingly. The Leader of the Opposition said that our new leader had a dream. I am sure that our Premier has many great dreams and ideas about ways to broaden opportunities for those who live in New South Wales. Contrary again to the false assertions of the Leader of the Opposition, this State is managed well and has a sound economy. The bill demonstrates that Premier Iemma is a sensitive man who has listened to the community. Indeed, as members of Parliament we are elected to do the best we can to broaden opportunities for all Australians. I congratulate the Premier on this initiative and commend the bill to the House.
Mr DONALD PAGE (Ballina—Deputy Leader of The Nationals) [10.20 a.m.]: This legislation is proof that this Labor Government is incompetent. The vendor tax is a bad tax, for at least four reasons. It killed the New South Wales investment property market and sent investors across the border, which in my part of the world meant Queensland. We have an ageing population in this State and should be encouraging people to be self-sufficient by creating nest eggs for their retirement, not depending on the Government for their retirement income. With the introduction of the vendor tax people were more reluctant to invest in property. That meant they were less likely to be able to provide for their own retirement and, therefore, more likely to be dependent on taxpayers in future.
If we take into account the number of baby boomers in our community and our ageing population, it is a significant issue. The vendor tax was a poor tax from that broader social perspective. We have an affordable housing problem in New South Wales. The vendor tax also caused people not to want to invest in investment properties, in particular, rental properties. If fewer investment rental properties are available, fewer people can rent them at a relatively cheap price. People are experiencing difficulty in finding affordable housing. The vendor tax had the effect of driving people away from the investment rental property market. About six months ago I was talking to real estate agents who indicated that they normally sold about seven rental properties a month but they had not sold one in three months.
The vendor tax has had a significant impact on the investment rental property market. The vendor tax has also impacted on mum and dad investors and it has had a broader impact on the market as a whole. The March 2005 quarter had a 27 per cent slump in property turnover for houses and a 30 per cent slump in turnover for units as a direct result of the vendor duty. The vendor tax had a broad impact on the property market, which resulted in investment being moved away from New South Wales and into other more favourable States. The vendor tax also impacted unfavourably on people. In my electorate many people have suffered great financial hardship as a result of this unfair tax. Local residents were charged vendor duty on their principal places of residence.
In one case a family had a sudden change in its personal financial circumstances and was unable to complete the construction of its home. The family had to take out a loan to pay land tax on the property and was faced with selling the half-completed home to service the debt, thereby making itself liable for vendor duty on the sale of the home as it was unable to complete construction and move in. Another couple, having moved from their principal place of residence in Lennox Head to another house in the same town within the two-year period mandated by this Government, paid vendor tax of over $9,000. They simply moved from one principal place of residence to another, which we should all have the right to do.
As a result they were hit with a massive vendor tax bill. They earned no investment income on their property and never intended the property to be used for investment purposes. As a result of implementing their free choice to move to another family home within a two-year period they were hit with a massive vendor tax bill. These cases highlight the unfairness and harshness of the Labor Government's vendor duty. If Labor wanted to kill the property market up and down the New South Wales coast it has certainly succeeded. As Macquarie Bank predicted:
Demand for property along Australia's East coast will continue to be subdued in 2005, with worst hit the investor market as investors hold off buying residential property and pursuing alternative investment classes instead.
The subsequent flight to investments in property other than in New South Wales was understandable. The vendor duty not only was an unreasonable tax; it was also implemented in an unreasonable manner. Property owners were forced to pay the duty prior to settlement, hence people had to take out bridging loans to pay vendor tax. One of my constituents attempted to access her superannuation early, which would be at a penalty of course, so that she could pay her vendor duty. The New South Wales Government's mismanagement and unfair property taxes have discouraged investors and aggravated the housing affordability problem, and they will continue to do so.
In my view New South Wales has an unhealthy reliance on property taxes which now account for approximately 40 per cent of total tax revenue—a jump of 22 per cent in the past decade. The New South Wales Joint Property Group estimated that combined State and local taxes on a new house in a greenfield estate would cost a purchaser more than $145,000. That comprises approximately 9.4 per cent of the overall house and land value compared to 6 per cent in Victoria and 5 per cent in Queensland. Why would residents in New South Wales not look over the border to Queensland when they know they are going to be hit in New South Wales with high stamp duty on purchase and uncompetitive land tax while they own the property?
The Queensland Government, unlike this incompetent Government, knows that taxes have to be competitive to attract investment. It is doing something about it. The abolition of this tax is too little too late. The New South Wales Government needs to do far more to make us competitive with other States. New South Wales still taxes each resident more than any other State. Each New South Wales resident can expect to pay, on average, $2,350 per annum compared to $1,650 in Queensland. The State Government fails to understand that the tax regime and charges in New South Wales make it uncompetitive for industry and small businesses.
A recent analysis by Australian Business Ltd shows that employers in New South Wales are paying an additional $1,100 per employee in payroll tax and workers compensation premiums than are employers in Queensland. Research shows that New South Wales businesses pay, on average, $2,627 in payroll tax and workers compensation charges per employee compared to $1,533 in Queensland; 41 per cent higher than Western Australia at $1,866; 40 per cent higher than Tasmania, at $1,870; 28 per cent higher than South Australia, at $2,055; and 19 per cent higher than Victoria. Whilst the abolition of this vendor duty is a move in the right direction it should never have been imposed in the first place.
The Government needs to do a lot more to its tax regime in order to make New South Wales competitive. I assure those honourable members who do not live near a border as I do that this is a significant issue. A lot of people are not investing in New South Wales but they are investing in Queensland because of the tax regime in this State. The sooner this Government realises it has as real issue on its hands in relation to taxation the better.
Mr ALAN ASHTON (East Hills) [10.28 p.m.]: The honourable member for Ballina just said that this Government has the highest tax regime in Australia. If that were true it would be true only because the Federal Coalition Government decided to take $13 billion from New South Wales and return only $10 billion, leaving us with a $3 billion shortfall. It has the highest paid teachers, nurses, police officers and public service members, so the money has to come from somewhere. To use a phrase that that genius Andrew Peacock used, it is as clear as night follows day that the money has to come from somewhere. The money is not coming from Canberra.
When the GST was first introduced the Federal Government said that all the money would go to the States. Most of the Premiers signed an agreement on the basis that all the money would go to the States and that it would be reasonably distributed based on the size of a State and its needs. Yesterday the Premier said—I and other Government members have said this before—that people believe in a degree of socialism. So it is quite appropriate for bigger States to subsidise the Northern Territory, South Australia and some other States that might be battling at times. However, the idea that we should be supplementing the incomes of the people of Queensland—Government members do not call them bludgers—is ridiculous. We should not be subsidising Queensland to such an extent, but we are not the ones doing it; it is Canberra and the Commonwealth Grants Commission. The Opposition amendment put forward yesterday was ridiculous.
Mr Thomas George: Nothing's changed.
Mr ALAN ASHTON: Every time I interjected I was called to order. The honourable member for Lismore should be quiet.
Mr Peter Debnam: You're a schoolteacher.
Mr ALAN ASHTON: And I do not want to go back to teaching in a hurry! The Opposition amendment put forward yesterday was a joke because it said, "Let's go to Queensland and say to Peter Beattie"—he is one of the shrewder State premiers—"'Peter, give us our money back'." Of course that will not happen. Under the Constitution, the only people who can do that are John Howard and Peter Costello. And soon it will be Peter Costello—John Howard will be ancient history. The Prime Minister has certainly made a lot of mistakes lately, and intermingling in New South Wales State politics is clearly one of them. I am sure that more will be said about that on another day.
The vendor tax was introduced at a time when the market was bowling along but at an unrealistic level. Properties were being put on sale for hundreds of thousands of dollars more than their real worth. Anyone who knows a little about history—everyone accepts that I know a little about history at least—knows that it was reminiscent of the 1920s, when people bought things they did not need on the basis that they could sell them the next day on the New York Stock Exchange for twice the sum. And it worked for many months until suddenly overproduction and underconsumption became a problem, and we were left with the Great Depression. The lesson from that is that when times are going along just a little too well and everyone is on the bandwagon it is a good time not to jump on. It is a good time to sit back and see whether these things are realistic.
In some cases people in my electorate were charging ridiculous prices for properties. Yet the banks were in a frenzy to pay out the loans because they were making so much money on them. People were overcommitted. Problems arose not because of the introduction of the vendor tax or the land tax; it was simply a correction of the market. We saw the impact of the 2.5 per cent increase in interest rates on the country earlier this year, just after a Federal election in which interest rates were probably the major issue. There are many other components to how an economy runs than just the vendor tax. Honourable members should remember that the Federal Government reduced taxes as well. Having said that, I am not supporting the vendor tax. It is fairly obvious from the representations that Government members made to the then Treasurer and the then Premier that the vendor tax was not the greatest legislation ever put before the Parliament. It was not the greatest tax ever thought of, and the basis of changing it involved a lot of hard work and many representations.
No doubt members opposite also made representations—they know what is going on in their electorates. Government members made many representations to the Government leadership about the need to change the land tax and the vendor tax, and the Government has done so. It was ironic to hear the new Leader of the Opposition speak about Sussex Street and a new Premier making announcements about the tax regime when everyone knows that Bob Carr had not made up his mind about whether he would leave the premiership or stay on, or what he would do. The idea that he would take Sussex Street into his confidence before other colleagues is ludicrous. It was ironic to hear the Leader of the Opposition define what Sussex Street means to the Labor Party—from those who have been the victims of what is called the Taliban of the Liberal Party.
I congratulate the Leader of the Opposition on his appointment. We have always enjoyed a degree of rivalry across the Chamber. Interestingly, this morning he was surrounded by members of the non-Taliban faction—the moderates—of the Liberal Party. Only five or six of the hard-line Taliban faction are left in the Coalition caucus; there may well be more after the next round of preselections unless deals are honoured. We will be sorry to say goodbye to some of the moderates in the Liberal Party. Having said that, members opposite will not have to talk about Sussex Street and we will not have to continue reminding them about the Afghani faction that seems to operate in the background of State Liberal Party politics, if not nationally. It is absolutely a case of winner takes all.
Mr Daryl Maguire: Point of order: The honourable member for East Hills has been speaking for several minutes. During that time he has continually strayed from the leave of the bill. You should ask him to debate the content of the bill.
Mr SPEAKER: Order! The point of order has some validity. I was minded to ask the honourable member for East Hills to return to the leave of the bill. I uphold the point of order.
Mr ALAN ASHTON: I accept the point of order of the honourable member for Wagga Wagga; he is a true judge of a point of order. As I said, the vendor tax was introduced to raise funds simply to run our hospitals and schools, the police service and other services. Of course, to some extent it had an impact in terms of killing off investment in New South Wales or at least putting on the handbrake harder than necessary. Government members who are in consort with the Real Estate Institute and the real estate industry, some of my mates who are real estate agents and others who assess the wealth of property and the like have spoken to me about the impact of the vendor tax on property sales. Indeed, representatives of the Construction, Forestry, Mining and Energy Union—a union I have some time for—said that the vendor tax is having a dramatic impact on its members and on building opportunities for both employers and employees. As a result the Government realised that the tax had affected many more people than intended.
The great strength of the new Premier was to quickly announce, "It's a new regime, and there will be a new tax regime as well." I congratulate the Premier on doing that immediately upon his election to the position; there was no hesitation or delay. It was almost like the new Premier was stamping his authority over Treasury, rather than Treasury seemingly dominating, in some cases, the politics of New South Wales, for the better. Let us hope that the new regime is maintained. It is necessary to have a cut-off date for the abolition of the vendor tax. One person visited my office to complain about being caught in the middle; they had exchanged a contract before 2 August and would be caught under the old regime. While I was sympathetic and sent letters to the Treasurer about that matter, the difficulty is that there will always be someone who misses out, whatever the cut-off date.
I remember that someone in my electorate was able to claim $3,000 after having a baby at five minutes after midnight on 1 July last year. That is a true story. If the baby had been born six minutes earlier that person would not have received the Federal Government's $3,000 baby bonus, which had been conveniently announced. I am sure that many people—perhaps hundreds throughout New South Wales—did not receive the baby bonus because they had their baby only one or two days before the cut-off date. It would have been nice if people had been warned about the cut-off date of 2 August, to which the Premier referred in his notes yesterday. However, that was impossible and, whatever the date, someone will always be caught out.
My final point relates to the GST. That topic is relevant because the Premier referred to it during his second reading speech yesterday, and I am entitled to talk about it within the leave of the bill. At a Liberal Party meeting some time ago the Prime Minister, John Howard, promised to do everything he could to destroy the New South Wales Labor Government—that is on the record—and that the GST was the easiest way to do that. If New South Wales is starved of proper funding and its fair share of the GST revenue, cuts will be made or taxes will be increased. Let us not underestimate John Howard. The Labor Party has underestimated him for too long, as has the Liberal Party. Honourable members should remember that the Liberal Party did not want a bar of John Howard in the 1980s. He was Mr Non-electable; it was a case of "Why does this man bother?" But with the advantages of being in Government he has developed a great skill, which is to ensure that New South Wales does not have the funds necessary to maintain essential services; therefore, the New South Wales Labor Government will become unpopular with the electorate and eventually will be turfed out.
That is the only hope the Opposition has. Everyone knows that New South Wales is the major driver of the Australian economy, and it always will be. We have to back this State. I ask the Opposition, which supports this legislation, to back us in another way. I urge Opposition members to come to Canberra with us and put pressure on the Prime Minister. I urge them to return to the old idea of the Liberal Party, which was "States' rights first". We need more Barnaby Joyces on the other side of the Chamber, who will put this State before Canberra and get a fair deal for New South Wales. I am happy that the Premier has decided to abolish vendor tax, which will happen formally when the bill is passed by Parliament.
Ms PETA SEATON (Southern Highlands) [10.40 a.m.]: What a disgrace! This week we have seen the new Premier, the puppet of Sussex Street, and his puppet masters—Mark Arbib, Eddie Obeid and Graham Richardson—attempt to try to convince people that the vendor duty, which the Duty Amendment (Abolition of Vendor Duty) Bill will abolish, was nothing to do with the Premier. Give me a break! The Premier said on day one that he was anyone but Bob Carr, he had never met Bob Carr and he did not know whom we meant by Bob Carr. His leadership acceptance speech was a twenty-first century version of the Egyptian twelfth dynasty execration texts. This practice involved the new Egyptian ruler writing the names of his enemies on pieces of pottery, breaking them and casting them out. That is exactly what the new Premier has tried to do, but no-one will believe him.
The Premier was up to his ears in the vendor tax decision. He sat around the same Cabinet table, day in, day out, and agreed with everything Bob Carr, Michael Egan and Andrew Refshauge served up in terms of new taxes, including the vendor tax. The vendor tax is the Premier's tax 100 per cent. Remember that Michael Egan said the vendor tax was good for everybody—and there was not a word of dissent from the Premier at that time. If he had had any principles at all he would have joined the honourable member for Blacktown in speaking out against the world's dumbest tax. But, no, he sat compliant through debate on the revenue bills and voted against the Liberals and The Nationals on every occasion that we opposed the tax and when we introduced our own bill to abolish vendor duty. I ask every Labor member in the Chamber this morning why they did not back the Coalition's bill to axe the vendor tax. They are absolute hypocrites.
If the Premier had been fair dinkum he would have passed the Coalition's bill. But, no, he followed Sussex Street instructions. He decided months ago that, even though the Coalition, the real estate industry, the Housing Industry Association, the Property Council of Australia and the Urban Development Institute of Australia—all the stakeholder groups—were right, he was too self-interested in his career and his ambitions to oppose the tax when the decision was taken. Instead the Government forced more and more investors to pay vendor duty until the time suited the Labor Party to announce a policy backflip. So the Premier got a good story on day one—shame that it cost the investors of New South Wales an additional and unnecessary $60 million! But Labor members do not care: It is not their money; it is someone else's. I do not know how they can look themselves in the face. Labor members are shameless. They run this State with the propaganda finesse of the Soviet Iron Curtain, not caring who they carve up, rip off and leave in their wake.
I want to know when the Premier first discussed, and with whom, the decision to abolish the hated vendor tax. I want to know whether he or Walt Secord was lying about revelations that taxpayers were forced to pay $60 million extra in vendor duty in order to give the Premier a story to spin on day one. I note that the Premier and Treasurer is not in the Chamber this morning to listen to this debate. He is not in the Chamber to take responsibility and be accountable for his decisions. As the puppet master Graham Richardson said, "Whatever it takes". Well, it took $360 million of investors' money plus an unnecessary $60 million to buy the Premier a good television grab. In the first three days of the Iemma-Richo partnership Labor insiders made some very interesting admissions. First was the admission that we are in deficit in New South Wales and it might take two budgets to get out of it. Even worse, remember that, according to the long-established government finance statistics net lending format, the half yearly review 2004 said that we were already in deficit by $684 million.
The Labor Government magically turned this into a $303 million surplus in the 2005-06 budget, courtesy of a change to the reporting format. But even then Standard and Poor's described it as a "paper thin" surplus and used words like "precarious" to describe the state of the New South Wales budget. This is not what we would expect from a government that enjoyed 10 years of the best possible economic conditions and $8 billion in windfall tax revenues. We were very suspicious when Michael Egan cut and ran last December. Bob Carr could see it getting worse and he bailed. Andrew Refshauge, after surely one of the most pitiful performances in the Treasurer's seat, pressed the ejector seat button—and now we know why. All the Opposition's claims about the worsening state of the budget and the looming threat of more Labor taxes and asset fire sales have been vindicated. Labor and the Premier are taking New South Wales down the Kirner-Cain pathway. The Hon. Michael Costa admitted Labor's fiscal vandalism to radio 2GB's Philip Clark on 3 August this year, when he said:
It's likely we'll have a deficit in this year's budget. I don't think that is avoidable … The issue with the financial audit is to look at the medium term to find a strategy to make sure we are sustainable … we need to have a situation where our finances are much more sustainable.
Michael Costa continued:
Yes, you are going to see a financial audit and also potentially an economic statement on the back of that.
We are already seeing a fascinating split between Michael Costa and the Premier on economic management. On 2 August the Premier said that the long overdue vendor tax abolition would be funded by undisclosed expenditure savings and refused to detail what they would be. He still has not outlined those expenditure savings. But he said:
That means a relentless drive to reduce government administration, duplication and waste. The new Minister for Finance will have direct responsibility for bringing proposals to me for the cutting of waste. This will commence with an audit of New South Wales Government expenditure which will be completed before the end of the year when I will make a comprehensive economic statement.
That was a lie. We now know that Labor is so desperate to conceal the true budget deficit that it is telling us that the economic statement, mini-budget or whatever it might be will not see the light of day until next year. Why not? If the Premier cannot stand up in this Chamber today and tell the people of New South Wales what the budget deficit is he does not deserve to be Premier or Treasurer. More than 200 people are in the Treasury offices right now, most of whom we hope would know the actual deficit figure. I hope John Pierce knows. If he does not, why is he paid all that money? Why does the Premier not come clean and tell us what the deficit is? That is a very simple question.
Perhaps the honourable member for Campbelltown can tell us what the deficit is. Maybe he can come clean about how much New South Wales is in the red as a result of Labor's fiscal vandalism. The honourable member should be worried about what is going on at Campbelltown Hospital right now. Despite all the promises made, the spin, the glossy pictures and the media reports, Campbelltown Hospital remains in crisis. The honourable member for Campbelltown is avoiding my eyes; he is not looking up. Campbelltown Hospital is in crisis and will continue to be in crisis until the Government gets the State's finances in order and focuses on the front-line services that are required. But it gets worse. The Premier said:
I'm not ruling anything in or out. That'd be silly today to be doing that". There will be a thorough examination of our expenditures, where there is inefficiencies and duplication.
But on the Mike Carlton radio program on 4 August the Premier backflipped and said:
We are not in the business of forced redundancies.
So the Premier is not ruling anything in or out but he is not in the business of forced redundancies. Mike Carlton then asked, "So no public servant will be sacked?", and the Premier replied:
But there's no change to the Government's policy of forced redundancy.
That means that the Government will continue to entrench duplication and wasteful fat cat bureaucrats rather than putting resources into places like Campbelltown Hospital, where they are needed. There is no solution in sight to the deficit, and yesterday in this place the Premier failed to rule out new taxes or tax increases. We needed him to do that because Budget Paper No. 2 warns that if wage increases are not contained to 3 per cent it will require a structural response such as reduced spending elsewhere and/or higher taxation. The Premier has already ruled out significant structural responses, even though Michael Costa wants to cut 20 per cent of public servants.
That leaves tax increases as the only remedy for this budget position. We know how much Labor loves tax. Since the May budget it has brought in numerous new taxes and tax increases. They include extended vendors duty to include land-rich transactions and an increase in the insurance stamp duty rate from 5 per cent to 9 per cent. That came in on 1 September and many people are now paying more tax as a result. Labor failed to make any statement about the criteria that will lead to the end of the insurance protection tax. It extended duty to put and call options. It made more partitions transactions dutiable. It removed the exemption for mortgage refinanced duty and extended the circumstances in which employee benefits can be considered dutiable for payroll tax purposes.
We want a guarantee today that the taxpayers of New South Wales will not be asked again to bail out Labor's fiscal vandalism. I challenge Morris Iemma to do what the Liberal-National Coalition has done and commit to no new taxes and no tax increases. It is about time the Government respected taxpayers—the businesses and families—of New South Wales and took on some self-discipline to rein in expenditure, waste and duplication and divert the savings to tax relief and front-line services. It is not the Government's money; it is taxpayers' money, and they deserve value for money.
The three key budget assumptions are already in ruins as a result of Labor's fiscal vandalism. New South Wales budget papers indicate that the New South Wales economy will accelerate a notch, reflecting the beginnings of a recovery in the housing sector. I would like the honourable member for Campbelltown or maybe one of the Treasury people to define what a notch is. Everyone would like to know how much is a notch. It is certainly not happening. The fine print in the May budget warned that pay rises in excess of 3 per cent would require a structural response such as reduced spending elsewhere and/or higher taxation. Wage blowouts have worsened Labor's deficit crisis. Again the budget papers say:
At this stage, there remains considerable risk to budget outcomes unless settlements are consistent with the Government's wages policy.
That is 3 per cent. The budget papers go on to say:
Wages outcomes affect long term structure of budget expenses. Public sector pay rises in excess of the Government's wages policy therefore require a structural response such as reduced spending elsewhere and/or higher taxation.
The wages policy implies normal pay rises of up to 3 percent per year through negotiated settlements.
All of these negotiations are centred on the wages policy of up to 3 per cent. The budget papers also state:
At this stage there remains considerable risk to budget outcomes unless settlements are consistent with the Government's wages policy.
They also note:
Each 1 percent rise in wages weakens the Budget result by an estimated $202 million. In addition, a 1 percent pay rise adds an estimated $57 million to employee entitlement liabilities.
We have seen police, health and other pay rises since the May budget, all of which have exceeded that 3 per cent. In the days after Morris Iemma became Treasurer, the Australian of 3 August reported Labor's plans to sell off State assets including forests and waste services to boost recurrent cash levels. Labor is set to take us back down the policy path of Labor's Joan Kirner and John Cain. This is sheer economic vandalism and shows Labor has learnt nothing. These are highly dangerous and irresponsible fiscal principles that will drive New South Wales further into financial crisis and endanger our triple-A rating. This is Labor selling off the silver to pay for their unstoppable spending addiction and waste. It is the same as someone saying we will have to sell off the family home so we can buy some beer and cigarettes.
The third budget assumption that is in tatters is that general government total expenses will halve to 3.4 per cent in 2006-07, when for the past five years they have been rising to a record rate of increase of 6.4 per cent. Labor has not met a forecast rate yet, so why would we believe it will rein in the rate of growth of government expenditure next year in the face of these public sector wage rises, which have largely been made without any significant embodied structural or productivity gains?
I can only conclude the desperate state of the budget lies behind Labor's refusal to brief the Opposition on key budget issues, let alone provide the basic briefing that is customary in any accountable Westminster system. On 25 August I wrote to the Premier and asked him to brief me on the extent of the New South Wales budget deficit, the reasons for the delay in the promised audit and economic statement from November 2005 to January 2006, plans by the Government to sell economic assets to fund recurrent expenditure blowouts, and the budgetary impact of public sector wage determinations exceeding Treasury's 3 per cent assumptions. I also noted the Government's refusal to grant me a portfolio briefing. To date, Morris Iemma is refusing to answer this request and is carrying on with the financial disaster he has created. I challenge him today to agree to brief me and Opposition members on these questions and to tell us what the budget deficit is.
This bill would not have come about if it were not for the hard work of, in particular, four key groups: the Property Council of Australia [PCA], and Mark Grey in particular, and Ken Morrison; the Real Estate Institute of New South Wales [REI], ably led by Rowen Kelly; the Housing Industry Association; and the Urban Development Institute of Australia. I also note a number of other stakeholder groups have been very influential in making the case to the Government. They knew from the outset that this tax would kill the already slowing property market and send investment and jobs to Queensland and other States. They were right, and that is why the Liberal-National Coalition voted against Labor's vendor tax bill.
That is why we drafted our own bill to abolish the vendor duty. That is why we stood with the PCA, the REI and the Construction, Forestry, Mining and Energy Union and others in a rally outside this place to mourn the death of the New South Wales economy. I did not see Morris Iemma at that rally and I did not see any Labor members, who all opposed every single move by the Liberal-National Coalition to abolish this vendor duty. Every Labor member should be writing to their constituents today admitting they were wrong on the vendor duty and explaining why they did not abolish this vendor duty when they had the opportunity. [Time expired.]
Ms PAM ALLAN (Wentworthville) [10.55 a.m.]: I congratulate the honourable member for Southern Highlands on the well thought out budget speech she gave for at least the last third of the time she had allocated. I hope her new leader, the honourable member for Vaucluse, was listening, because he wasted an opportunity in seizing the shadow Treasury portfolio to himself. It would have been far more appropriate if the honourable member for Southern Highlands had been allowed to battle on in that capacity. She was beginning to demonstrate a very wide and persistent knowledge of the area. She has demonstrated that yet again in her contribution this morning and I think it is a tragedy, as do many of my colleagues, that she has been denied the opportunity to move inexorably towards what she would like to think her rightful place would be as the State's first woman Treasurer. I suspect that is not to be now and we will have a look on this side of the Chamber for an alternative woman Treasurer in the future.
I also congratulate the hardworking Parliamentary Secretary, the honourable member for Campbelltown. He received a bit of a rough time during the last presentation about Campbelltown Hospital. The honourable member for Campbelltown has been a vigorous advocate on behalf of his constituents in relation to this issue of vendor tax and I am delighted he has the honour of being at the table when we pass this historic legislation.
Yesterday in this Chamber, when the Premier answered a question from the honourable member for Drummoyne about this issue, he referred to a real estate agent in western Sydney, Pat Fraser Real Estate of Westmead. Although its office is not in my electorate it operates extensively in my electorate, and the contact from Pat Fraser Real Estate came through my electorate office. I thank my electorate secretary, Cathy Parmeter. I thank Trevor Oldfield from Laing and Simmons at Wentworthville. We keep in touch with Trevor because he is also president of Wentworthville Leagues Club. We have a regular dialogue with him about issues such as vendor tax and the state of the local residential market.
It was Trevor who assisted my office and me to come into contact with Mr David Levitt. Mr Levitt, as the Premier indicated yesterday, is the gentleman who was due to exchange contracts on his property at Vernon St Wentworthville just prior to 2 August. Because he had to go to another appointment at Broken Hill, he missed that appointment and had to reschedule for 2 August. Was that not fortunate for Mr Levitt? He is delighted he was able to benefit from the Premier's announcement on 2 August of the abolition of the vendor duty. Yesterday, on behalf of Pat Fraser Real Estate who, with Laing and Simmons at Wentworthville, had been involved in the sale, George Jushan and Joseph Chidiac were able to be in the gallery. The other person who is very active on behalf of Pat Fraser Real Estate is Anthony Chidiac, who is also active in the Westmead and Wentworthville community, and I consider him and his family to be very close friends.
I do not think it is necessary to traverse all the arguments about this important legislation. It has been mentioned here on several occasions over the past few months. The momentum about the abolition of the vendor tax has been building for some time and is entirely appropriate. Many people in my community will benefit because the area has had a large amount of redevelopment in the last decade. Many sites in the area that were previously zoned for single-dwelling housing have now been redeveloped for medium-density housing. In Westmead, Wentworthville, Toongabbie and Pendle Hill plenty of opportunities exist to redesign the housing stock and redevelop the sites. As the Premier indicated yesterday, the vendor duty did put a brake on opportunities for successful redevelopment in the area. Because of the sluggish market many units and townhouses have been on the market for some time without any chance of being sold. Certainly the vendor tax contributed to that sluggishness, as has been mentioned on many occasions in this Chamber, and as I have mentioned locally.
However, with the abolition of the vendor tax the residential real estate market in my area will begin to reassert itself. We all know that this is not going to be an instant fix for the current sluggishness in the market. As one drives down Bridge Road, Westmead, one can still see, after many months, many vacant brand-new units up for sale. Nevertheless, the local real estate industry and the Property Council of New South Wales report an increased interest in the disposal of those units. There are fewer "For Sale" signs now, more activity amongst the local realtors, and a great deal of optimism that with the abolition of the vendor tax the market will start to replenish. This is now a signal to the Federal Government to improve its performance in the area of economic policy, because we all know that unless the changes are made at that level there will not be a complete rehabilitation of the market.
I have spoken at great length on several occasions in this Chamber in the past few months about the important redevelopment of Toongabbie, which is directly related to this legislation. Mr Simon Symond, of North East Developments, gained approval from the council in 2003, and was granted a further extension of that approval this year, for a massive commercial and residential redevelopment of the old Piccadilly shopping centre at Toongabbie. Despite those approvals, and the removal of a great deal of the old shopping centre from the site, no building construction activity has been carried out on that site. I have spoken at length about Mr Symond in the past. When I last spoke to him on behalf of the local community I urged him to get busy and start work on the site, but all he has done is demolish existing shops and put a very ugly fence around the site. The Toongabbie shopping centre is now half the size it was more than 12 months ago.
When we last discussed this matter on the telephone most of his comments related to the fact that it was the vendor tax that was stopping this important redevelopment in Toongabbie. Mr Symond has approval and plenty of support within the local community for the project to proceed. With the introduction of this legislation he no longer has the disability of the vendor tax. I have always regarded his past excuses as feeble. Come on, Mr Simon Symond, let us get on with the job. This massive redevelopment, if it occurs, will improve the whole residential environment of the inner Toongabbie shopping centre precinct. The vendor tax has gone, and the real estate market is already very excited and is anticipating a great boost of activity in the area. Mr Symond can provide that much needed boost by finally getting on with the reconstruction and renaissance of Toongabbie shopping centre.
Ms GLADYS BEREJIKLIAN (Willoughby) [11.05 a.m.]: I will quote an excerpt from an article in today's Sydney Morning Herald which appropriately captures the true essence of this bill. The article states of the Premier:
He was surely joking when claiming the abolition of the vendor tax as an achievement, given it was his own Government's creation just 12 months before.
I find it quite galling that this Government, in this Chamber and in the public domain in recent weeks, has announced this as an achievement, given the amount of angst, confusion and economic mismanagement that has resulted from this policy of the Government. In fact, only one member of the Government had the courage to publicly criticise the policy, and that was the honourable member for Blacktown. When the opportunity arose in this Chamber for other Government members to speak about the pathetic nature of this tax, the world's dumbest tax, and represent the views of their constituents, they just sat there and chose to follow the Sussex Street line. They fell into line and publicly reiterated this policy position which has caused so much angst in the community, and should never have been introduced.
There is little scope for the people of the New South Wales to have any confidence in this Government. Yesterday the new Premier failed to rule out any new taxes or any increase in taxes. Given the abysmal failure of this vendor duty over the past 12 months and beyond, what confidence do the taxpayers of New South Wales have in this Government in regard to economic management? The Government's handling of this tax has been appalling? I join with the people of New South Wales in telling members of the Government that they are hypocrites. They pretend that this was a decision made by some government many decades ago, but they all sat in this Chamber on a number of occasions and refused to speak up about the true angst the tax was causing their constituents.
It is extremely hypocritical for them to now have the gall to support this legislation, when they had every opportunity to tell their leadership that it was a pathetic policy position. I remind honourable members opposite, and the people of New South Wales, of the actual policy failures of this policy implementation process. I remind honourable members that the Government had to introduce the State Revenue Legislation Further Amendment Bill because its original bill to introduce this policy contained so many mistakes. Not only did members of the Government have the opportunity to vote down the original bill, they also had the opportunity to vote down this policy when the State Revenue Legislation Further Amendment Bill was introduced.
Some comments made during debate on that bill show that this policy was policy on the run; it was introduced at the eleventh hour. At one stage the Government had the gall to state that only 250,000-odd additional properties would be affected by the legislation when, in fact, according to the Valuer-General, potentially approximately 800,000 properties would be impacted upon. I will read some email transactions between Treasury officials at the time the policy was introduced. In an email on 7 April 2004, one Treasury official said:
The date from which the tax applies is uncertain at this stage. It is our intention to have legislation prepared by May so that the tax could apply from 1 June. However, that may not be the case. If implemented, the tax will apply in the same manner as Transfer Duty … We wanted to say 1 June in the Budget but the Treasurer took it out so ask him what date is relevant.
Another email states:
This Bill incorporates yesterday's changes, has been approved by Parliamentary Counsel and is what is being printed to be wheeled out into the House at 10 am today when I assume Gary West will read the speech on behalf of Egan.
I think the email meant Graham West. It continues:
This means he will be in the Chair when debate resumes on Tuesday, and will be the one responsible for replying to issues raised by the Opposition in their speeches. Hope he is good at reading the hastily scribbled notes …
Another email reads:
Can we prepare Government amendments to make these changes in the LA debate on this bill tomorrow? We cannot make them in the LC as we argue it is a tax Bill and amendments of such a Bill can only originate in the LA.
I reiterate those points to highlight the fact that from the very outset this tax should never have been introduced, and that it was introduced on the run. At the time of its introduction constituents and residents of New South Wales were having to rely on the Office of State Revenue web site, which was giving different information from what the Treasurer was saying at the time was policy on the vendor duty. For most people, buying a house and exchanging property are very emotional events. For many it will be the largest financial transaction they will make in the course of their lives. Yet those people, at very critical times of such exchanges, were unaware what the policy was. The Office of State Revenue web site often was not in tune with what the Treasurer was saying.
Though the people of New South Wales have had to endure the uncertainty and angst associated with this tax for the past 12 months, apparently members are expected to sit back now and accept the Premier's argument that he has done a wonderful thing in introducing a bill to abolish the duty. He should be apologising to the people of New South Wales. I have not yet heard anyone from the Government side of this House—apart from the honourable member for Blacktown, who is present in the Chamber—speak about the people who have suffered as a result of the introduction of the vendor duty. They have not apologised to those who have had to pay the vendor duty and may have had to put off very important life decisions. Not one word has been uttered by the Government about what will happen to those people.
Nor has there been an acknowledgement from the Government that they should never have had to endure this vendor duty in the first place. I ask every member on the Government side, "Why did you not support the bill introduced by the Coalition to abolish the vendor duty?" They had to wait for their instructions from Sussex Street before they could get up in this place and, finally, agree with what Coalition members have been saying for 12 months. Members of the Coalition, and the honourable member for Blacktown, can hold their heads high, because from the outset we knew what a baseless tax this was. We knew how much hurt it would cause not only the people of New South Wales but our economy.
This tax has not only killed the State's property market; it has failed to meet Treasury's revenue forecasts, it has impacted on the State's stamp duty revenue, and it has resulted in a loss of investment to other places such as Queensland and New Zealand. More important than anything else is that the people of this State have now lost confidence in this Government's economic credentials. What confidence do we have, give the Premier's comments made yesterday, that Labor will not introduce further dumb taxes, or that it will not introduce further tax hikes? None—because the new Premier has not ruled out new taxes and tax increases.
Rather than coming into the House with arrogance and hubris, Labor members should be apologising to the people of New South Wales for causing them angst and confusion, and for making our budget position the worst it has been in living memory. Worse still, the Premier has told us that he does not know what the deficit is. So we are not being given even a true indication of the budget position; we are not being told the truth about the economic credentials of this State. This Premier refuses to tell the people of New South Wales about that. I find it very difficult to believe that the Premier does not know what the deficit is.
We do not yet know how the Government intends to budget for the deficit caused by the abolition of this vendor duty; we have not been told that yet. We have not been told how the Government will pay for that. We have not been told that it will not introduce other taxes. We have not been told that it will not increase other, existing taxes. It has no plan. All it has is spin. Treasury officials would now be in a spin about what to do next, because I am sure they will not have been properly briefed on the Government's agenda, because the Government is still working that out. At the end of the day the people of New South Wales are owed an enormous apology from the New South Wales Government—an apology not only for introducing the vendor duty in the first place, and for the angst and confusion it caused, but for running down this State's economy.
The arrogance of the Labor Party in New South Wales and Premier Iemma is evident in their failure to apologise to the people of New South Wales for introducing this tax in the first place, for developing policy on the run, for causing confusion and angst, for killing the property market, for not meeting revenue forecasts, for reducing stamp duty revenue, for losing investment to Queensland and New Zealand, and for putting this State in a pathetic budget position.
I would like to take this opportunity to thank the constituents of the Willoughby electorate who raised with me over the course of the past 12 months their concerns with the vendor duty. I am pleased to be able to say to them that as a State member I took every opportunity in this place to highlight the failings of this policy, which should never have been implemented. I am relieved that, due to enormous public pressure from the Opposition and from the community, finally the Government has acknowledged one of the biggest mistakes it has made—there are several others—in the past 12 months and beyond. I call upon the Government to apologise to the people of New South Wales, rather than claim abolition of this tax as an achievement. It should come clean on the budget position.
Though it is abolishing the tax, it does not tell us how it will raise revenue to pay for that. It does not tell us that it will not bring in other taxes. What confidence can we have that it will not introduce new taxes that will be as bad as, if not worse than, the vendor duty? We have no confidence that the Government will not increase taxes. What is the deficit? Those questions need to be answered. Premier Iemma has failed his first test. I expect he will continue to fail many other tests—until the Government comes clean with the people of New South Wales and acts like any government in its position should and apologise to the people of this State for introducing this tax in the first place, for being dishonest and for not giving the people the correct position on where the budget is today.
Ms NOREEN HAY (Wollongong) [11.17 a.m.]: First, I would like to congratulate the honourable member for Willoughby on applauding what is in fact an achievement of Premier Iemma in introducing this bill to remove the vendor duty. Before moving on, I would like also to say how amusing it was to hear suggestions from the Opposition that this Government should be apologising for communicating, listening and taking action, that the Iemma Government should be apologising for doing what it has been called on to do, when clearly this Premier has decided to abolish the vendor duty, even though that will result in a reduction in the funds available to this Government.
I listened to Opposition members speaking about what is in the best interests of the people of New South Wales. Their attitude is astonishing, because time and again in this place, when they have been asked to pick up the telephone and give their mates in Canberra a call and demand that New South Wales get its fair share of the GST—in other words, the $3 billion shortfall that the New South Wales Government has to take measures to address—we have heard not one word from them. Having heard the honourable member for Willoughby say that members should speak out against their own political parties, I hope she will take the lead in that respect, and will get up in this Chamber one day and say, "Yes, I was elected by people in New South Wales to represent them in State politics, and I demand from my Federal colleagues that they return to this State the $3 billion that John Howard steals from the pockets of New South Wales taxpayers." That $3 billion shortfall has never been acknowledged by Opposition members, yet they have the cheek to say that Government members should be apologising to the people of New South Wales for managing this State—
Mr Steven Pringle: Point of order: This is outside the leave of the bill. It has nothing to do with the bill. I ask that members stick with the leave of the bill.
Mr ACTING-SPEAKER (Mr Paul Lynch): Order! There is no point of order. The honourable member for Wollongong has the call.
Ms NOREEN HAY: The interjection is aimed at stopping us from mentioning the $3 billion that is taken from the pockets of New South Wales taxpayers by their Federal colleagues without one word of criticism from them. Do they care that we have to try to manage this State with $3 billion less than the Federal Government takes from it? No. They have not said one word about it. Instead they get up in this place to whinge and criticise. The first act of Morris Iemma as the new Premier of New South Wales was to remove the vendor tax that—
Mr Steven Pringle: Point of order: The second point that the honourable member—
Mr ACTING-SPEAKER (Mr Paul Lynch): Order! The honourable member for Hawkesbury should not make a speech. What is the point of order?
Mr STEVEN PRINGLE: The point of order is that it is within the leave of the Premier. The second thing is to go up to Peter Beattie and take some—
Mr ACTING-SPEAKER (Mr Paul Lynch): Order! That is a spurious point of order. I call the honourable member for Hawkesbury to order. The honourable member for Wollongong has the call.
Ms NOREEN HAY: Once again, the mention of the $3 billion shortfall to this State is getting a response, but it is not, "Yes, we should get the $3 billion back." Instead those opposite keep leaping to their feet to stop us from letting the people of New South Wales know that they support their Federal colleagues leaving us $3 billion short. As the Premier said yesterday, it is debatable whether Queensland can make any decision about the GST. However, it is quite obvious that Peter Beattie is doing what the people of Queensland elected him to do: grabbing every bit extra that he can for Queensland. Those opposite should take a leaf out of his book and say to the Federal Government, "We want returned to this State all the money you takes from New South Wales taxpayers." They should try to do the best they can for New South Wales instead of sitting there whingeing and criticising. They never whinge about or criticise the Federal Government for taking $3 billion out of this State that rightfully belongs to the people of New South Wales.
I congratulate the Premier, Morris Iemma, on his quick action. He listened, he communicated and then he took action. I congratulate the honourable member for Willoughby on applauding the Premier. My constituents overwhelmingly have welcomed the Premier's announcement. They realise that the Iemma Government supports their efforts to secure their families' future with the least possible burden. As the Premier said yesterday, This Government believes in low taxes, but we have to make up for the shortfall in funds from the Federal Government. The abolition of the vendor duty should assist in boosting the level of investment in this State and lead to an increase in building activity, which is good news for the whole of New South Wales, especially the Illawarra. Representations were made to me about the negative impact of the vendor tax. As soon as that impact was identified the Government acted. This would not be the first Government to listen to the people who elected it and make a change.
Members opposite would do well to get on board and support the New South Wales Government and its Premier in our demands on the Federal Government to give us back some of that money so that we do not have to recover the losses incurred from the abolition of the vendor tax. Do they think that money grows on trees? Do they think we do not have to make it up? The Government runs the State's budget very well. As the Premier said yesterday, the State's balance sheets have never been stronger. The balance sheets of the former Coalition Government were horrific. This Government has produced surplus budget after surplus budget. But under the former Coalition Government it was nothing but deficit after deficit. This morning in this Chamber the Leader of the Opposition said that no-one would vote for the Labor Party at the next election. He has a big surprise coming if he thinks they will vote for the Coalition.
Members of the Opposition come into this Chamber to whinge and criticise the Government instead of getting on board and supporting the New South Wales Government's demands to get back the $3 billion shortfall for this State. They should not look to Peter Beattie, who is doing the right thing—he is accepting whatever he can get. We would like to do the same, which is what those opposite were elected to do but to date have failed to do. The decision of this Government has been supported by stakeholders such as the Real Estate Institute, the Property Council and a number of smaller construction companies in my electorate who came to see me about the problems the vendor tax was creating for them. They are absolutely delighted with the Premier's, decision—as am I.
Yesterday it was wonderful to see Morris Iemma, the Premier, stand up in this place and put his case for the abolition of the vendor tax. Together with all members on this side of the Chamber, and the honourable member for Willoughby, I applaud him for that. Abolishing vendor duty is just one of the ways in which the New South Wales Government has supported Illawarra families to enter the property market. Its abolition enables the New South Wales Government to cut taxes to boost investment. We could cut more taxes if we could get back the $3 billion from the Opposition's mates. Recently the New South Wales Government made a number of decisions to assist the property market, including introducing the most generous first home buyers assistance in Australia by providing up to $26,9301 to young families. Those opposite should think about that and consider how they could compete with it. The Government has introduced one of the nation's highest tax-free thresholds for land tax of $330,000, indexed annually for property investors.
It seems that members of the Opposition want to criticise every action, regardless of whether it is positive or negative. But they should understand that in all budgets and all economies, as things change things have to be adapted. I know that is a strange concept for the Opposition, but this Government, in consultation with stakeholders, has recognised that and is prepared to adapt to change. I congratulate the Premier on acting so swiftly to abolish the vendor tax, which will result in an income reduction of $315 million for New South Wales. But that is a drop in the ocean compared to the $3 billion shortfall in funds from the Federal Government, and for which we get no support from members opposite. However, if they were to get on board and support our application to the Federal Government for the return of the $3 billion, New South Wales would not feel the pinch so much.
Thanks to the unfair distribution of the GST this Government faces the continuing burden of having to find enough money to carry out its normal business. It will have to consider reducing costs, although it will sack the thousands upon thousands of public servants that the Opposition has suggested it would sack. Its proposal to improve fiscal policy is to sack public servants first. But instead of sacking anybody Opposition members should get on the phone to John Howard and do what they were elected to do: represent New South Wales taxpayers. They should say to their colleagues in Canberra, "Give us the $3 billion." If they were to do that the people who elected them, as well as those who elected the Government, would benefit.
Mr STEVEN PRINGLE (Hawkesbury) [11.28 a.m.]: I am sure that everyone in the Chamber agrees with the honourable member for Blacktown that the vendor tax was the world's dumbest tax.
Mr Thomas George: He's the only one who spoke against it.
Mr STEVEN PRINGLE: He was the only one with some guts. We congratulate him on his stand. It is a shame that his colleagues did not support him and, in doing so, support the Coalition bill. The Government stands condemned for taking so long to get rid of this ridiculous tax that has been counterproductive for New South Wales. In April an historic alliance was formed between major property groups: the Property Council of Australia, the Urban Development Institute of Australia, the Housing Institute of Australia and the Real Estate Institute of New South Wales. Members of the group identified a series of major problems that the vendor duty was causing and the points they have made are worth restating in Hansard. They expressed the view that the vendor duty abolition substantially will be self-funding, resulting in a permanent annual increase in purchase duty receipts of between $140 million and $280 million. They are the group's figures.
The group points out that vendor duty is costing the Government money, with purchaser duty receipts behind budget for the first time in over a decade. They believe that vendor duty has applied a handbrake to property transactions, with sale numbers tumbling downward across residential and commercial markets. Every honourable member in this Chamber knows that that is what has happened. The group also stated that the vendor duty is driving investment dollars out of New South Wales, with Queensland being the main beneficiary. Earlier in this debate the honourable member for Wollongong spoke about how well Queensland is doing. Part of the reason for that is this Government's action of driving investment capital away from New South Wales and into Queensland and Victoria.
This coalition of property interests also made the point that vendor duty is reducing housing affordability in New South Wales. Surely a Labor Government is all about promoting housing affordability, but evidently that is not the case in New South Wales. The group also stated that the reduction in housing affordability in New South Wales has added to the burden of $145,000 in State and local tax costs that are already being faced by new housing developers in greenfields estates. They make the point that vendor duty has resulted in residential vacancy rates hitting a five-year low, resulting in both increased rents and increased competition for housing among renters. People who pay rent, the battlers, are not getting a fair go, thanks to the vendor duty.
The duty is hurting ordinary people. A large proportion of property investors are leaving Sydney to move to the western areas of the State and regional towns. The vendor duty is costing people their jobs. Construction and renovation activities are slowing down, with the result that there is less work available for builders and tradesmen. The union movement was one of the strongest opponents of this ridiculous tax. The vendor duty impacted on the Hawkesbury electorate by well and truly killing the investment market. One mortgage broker told me that over a six-month period only two out of approximately 400 mortgages arranged for investment properties applied to New South Wales. Most real estate agents have had to shed large numbers of staff and that in turn has increased local unemployment. Consequently, people have been forced to work outside the district, which has resulted in an increase in the number of cars on the roads and public rail transport congestion.
One of the important side effects of the introduction of the vendor duty has been the crisis of confidence it has caused. A whole series of industries was affected because people knew that the tax would reduce their disposable income in their retirement years. Talkback radio programs confirmed that sales in all categories were down. The Act was poorly drafted and its intention was not reflected in its implementation. I know of one company that had completed a three-lot subdivision, applied for an exemption under section 162S of the Duties Act, but did not obtain it. Although contracts had been exchanged, no settlement had been reached prior to improvements having been completed to meet conditions concerning water, stormwater, electricity and roads. The council could not release the subdivision because the conditions of the development approval had not been complied with. Consequently, the company suffered badly and reduced its investment in New South Wales.
The vendor duty has had an adverse impact on the ordinary mums and dads that Opposition members care for so much. I know of a couple who are both aged 73 years and who are still working on a part-time basis. They operate a small, specialised automotive restoration business that they set up in 1977. They do not have superannuation. One of the owners of the business underwent a triple bypass operation in 1979 but eventually the couple managed to get back on their feet. They purchased an industrial property in the late 1980s for the modest price of $180,000. The property was purchased as the equivalent of superannuation. They had hoped to sell the premises at full market value, but as a result of the vendor duty, the investment market collapsed. They have not been able to sell the property at its market value, which is $600,000. Even if they had been able to do so, they would have had to pay capital gains tax. They had planned to roll over the proceeds of the sale into superannuation.
Unfortunately, the Government would have grabbed $13,500 in vendor duty out of their $600,000, which they intended to use to avoid being on the pension. As a result, they have been forced to become self-underfunded retirees because, under current pension rules, they are not eligible for a pension and they have been unable to accumulate sufficient funds in superannuation. That is but one example of literally hundreds of cases set out in letters that my colleagues and I have received in opposition to this ridiculous tax. I agree wholeheartedly with the honourable member for Willoughby, who contends that this Government should apologise for getting the vendor duty so badly wrong, for making the New South Wales economy yet again less competitive, and for pushing New South Wales right to the bottom of the State rankings. The Government's economic incompetence has been aptly summed up by the Daily Telegraph as the beg, borrow and steal budget in which voters were slugged and the budget surplus was raided. The vendor duty is a wrecker's tax.
Mr PAUL GIBSON (Blacktown) [11.36 a.m.]: I support the legislation. At the outset I congratulate Morris Iemma on becoming the fortieth Premier of this State. I have no doubt that, in line with other great Labor Premiers of this State, he will do a great job. I give the Premier great credit for having the guts to kill the vendor tax. Shadow Ministers and member after member of the Opposition have suggested in this Chamber that the Government should apologise to the people of New South Wales. On the contrary, the Government should not apologise. Over the past 10 years Labor governments have been the most successful fiscal managers not only in this State but throughout this nation. Eight New South Wales budgets have been in surplus and this State has had triple-A credit ratings throughout that entire 10-year period.
Mr Barry O'Farrell: Point of order: The honourable member for Blacktown is correct. He should not have to apologise. He was the only member of the Government who said that the vendor duty was a crook tax from day one. He said so in public forums. He was the only member of the Government from the Premier downward who was prepared to say that the vendor duty was a crook tax.
Mr ACTING-SPEAKER (Mr Paul Lynch): Order! There is no point of order. In fact, it is a spurious point. I call the Deputy Leader of the Opposition to order.
Mr PAUL GIBSON: As I said, if anyone should have to apologise to the people of New South Wales, it would certainly not be the New South Wales Labor Government. The Government's financial record features eight budgets in surplus, the State now being in the best fiscal position it has ever been in. Based on the Coalition's record, those who should apologise are Opposition members. Under the previous Coalition government, every budget was in deficit. When Labor won office, it was confronted with a $12 billion deficit. The State of New South Wales was virtually bankrupted by the Coalition.
It is ironic that the honourable member for Hawkesbury, who is not presently in the Chamber, preceded me in this debate because he has been known as Mickey Mouse. The previous Coalition government was a mickey mouse government that nearly bankrupted this State with a $12 billion deficit. There is no doubt that the Coalition deserves to be in the Guinness Book of World Records for an unbroken record of poor fiscal management. I have no doubt that if the Coalition had remained in government, Coalition members would have surpassed their previous poor fiscal performance and that this State would have had a deficit of approximately $20 billion with nothing to show for it. In contrast to that, the Premier and the Government have had the guts to re-examine the position and move to abolish this bad tax.
The Premier has given the State Government credibility, not only from our point of view but from the point of view of the people of New South Wales. They like to see someone who is game enough to put up his hand and admit he has made a mistake. What would you rather have? It would have been a crime for the Government to come into this Chamber, put up the bat and say nothing about this tax. We have not done that. The people of New South Wales will acknowledge that the Government has been big enough to admit its mistake. There is no doubt that good government is about tough choices in tough times, and that is exactly what has happened. The real knock would have been to do nothing about the tax. Unfortunately for the Coalition, the bill gives it nothing, or very little, to run on. The Coalition is not interested in whether the vendor tax was good, bad or indifferent; it is looking at this matter from a political point of view to score political points. The Coalition has fallen by the wayside again.
When the vendor tax was brought in things were a little different than they are now. The people who introduced the vendor tax thought it was a good idea. Hindsight is a great leveller! The vendor tax was introduced because shortfalls were appearing. The greatest shortfall of all, as many members have mentioned, is the shortfall in the GST distribution, which has affected the people of New South Wales. It is hypocritical of the Coalition not to support the Government in the debate on the GST, because $13 billion has been taken out of this State and only $10 billion has been returned. There is no way in the world any business could support such a loss and remain successful. This matter was summed up on 25 May 2005 in an editorial in the Sydney Morning Herald, which stated:
The federal Treasurer, Peter Costello, teases the states for getting more than they expected from the GST but he never concedes that NSW benefits far less than the others. NSW did not get any of the extra until this, the fifth year of the GST agreement, while extras were flowing to Queensland in the third year and other states a year later. Per capita, NSW gets a piddling $33 in extra GST revenue—a quarter of what Victoria, and a fourteenth of what Queensland received …
Its ability to cut taxes is hopelessly constrained by the reality that it massively subsidises other states and the situation is getting worse. If the Opposition leader—
then John Brogden, now Peter Debnam—
put public interest ahead of partisan politics, he would be standing shoulder to shoulder with the Government's campaign for a fairer go, not barracking for Mr Costello.
Everyone in New South Wales would support that point of view. It is hypocritical of the Opposition to claim that the Government should be condemned for dropping the vendor tax. The real hypocrisy is the support of the Coalition for Peter Costello, and that will be reflected in the vote of the people in New South Wales in 2007. They know that the Opposition has done nothing while the Federal Government has robbed New South Wales of $3 billion each year, and they will pay out on the Opposition for that. The people will forgive the Government for the vendor tax, a tax that should have been removed anyway. I would be a hypocrite if I did not say that the vendor tax had to go. The vendor tax was a tax on tax, a tax on profit and a tax on investment. It hurt ordinary people, the people in my electorate.
The New South Wales Government, under Premier Morris Iemma, has been big enough to own up to a mistake and to make it right. That is far different from the situation the Opposition finds itself in as a result of its support for the Federal Government. Every man, woman and child, every mum and dad investor in this State, is being robbed blind by Peter Costello. He is robbing them of $3 billion a year. As I said before, the people of New South Wales will not forget the Opposition's support for Peter Costello.
Mr Thomas George: Can you comment on the club tax, please?
Mr PAUL GIBSON: I would be only too pleased to do that on another day.
Mr Malcolm Kerr: Another mistake.
Mr PAUL GIBSON: Talking about mistakes, I could refer to death duties and other taxes brought in by Coalition governments many years ago that have been knocked on the head. Governments are elected by the people to make decisions on their behalf. Sometimes those decisions are right, sometimes they are not. It takes a good Government and a good Premier to own up to a mistake. That is what we have done. We did not wait until two or three months before a State election to do it. To his great credit, the first thing Premier Iemma did in office was to drop the vendor tax. The people of New South Wales will judge him and the Labor Party by those actions and they will judge the Coalition for doing absolutely nothing while the Federal Government is robbing every mum, dad and child in this State of $3 billion a year. And the Coalition thinks that is a fair go!
Mr ANDREW STONER (Oxley—Leader of The Nationals) [11.45 a.m.]: The Duties Amendment (Abolition of Vendor Duty) Bill reflects the unbridled hypocrisy of the Labor Government, which expects thanks for removing the rip-off tax that it created. The bill is a late response to a Coalition promise to remove that regressive vendor tax. This tax has killed the property market in New South Wales. When the former Treasurer, Michael Egan, introduced the vendor tax he said that it was designed to cool off the property market. But it did more than that: it put the property market on ice. This tax has hurt hard-working families who have provided for their retirement by investing in property. The so-called mum and dad investors who deserve encouragement instead got a kick in the guts from the Labor Government.
Families who have invested in property are spread across the State, including metropolitan New South Wales. In the Tamworth electorate there are 4,150 property investors, in the Port Macquarie electorate there are 4,520, in the Northern Tablelands electorate there are 4,030, in the Dubbo electorate there are 4,060, in the Tweed electorate there are 4,885, in the Far West Murray-Darling electorate there are 3,290, in the Monaro electorate there are 5,080, and in the Bathurst electorate there are 4,440. That gives an overview of how many thousands of people were hurt by that regressive tax. That tax sent investment dollars to other States and New Zealand, where the former Premier, Bob Carr, invested in property.
With those investment dollars went jobs in the real estate, housing and construction industries. One only need look at the spectacle of members of the Construction, Forestry, Mining and Energy Union protesting alongside business groups to understand the unity of the protest against this unfair tax. One need look no further than the embarrassing employment growth statistics for New South Wales over the past 12 months since this tax was introduced to understand its impact. Compared to other States New South Wales is at the bottom of employment growth. Clearly this tax, the general hallmark mismanagement and high-taxation regime of the Labor Government have hurt this State. That is nowhere more so than in border regions such Tweed on the far North Coast, along the Murray on the Victorian border, and along the Australian Capital Territory border.
Members representing the Tweed, Murray-Darling and Monaro electorates are not present in the Chamber, but they are on the record as having voted for that hated vendor tax when it was introduced. Despite its belated removal, they will not be forgotten for their treachery in selling their local communities down the tube. The Labor Party will not get away with its corrupt and duplicitous tactics of delaying the removal of this unnecessary and damaging tax for party political purposes. After the former Premier, Bob Carr, resigned in July his so-called communications director, Walt Secord, who is famously responsible for the beat-up over the Cecil Hills High School debacle, revealed to the media that the Government thought about removing the vendor tax in the May State budget because of the political damage the tax was doing to the Australian Labor Party.
The Labor Party decided to delay the removal of the vendor tax to give the new Premier some political kudos. As we all know, the new Premier's first announcement related to the removal of vendor tax—a transparent but corrupt tactic. That measure was nothing less than gross corruption. Labor has cynically used taxpayers' money to attempt to gain party political advantage. Property investors who were ripped off by this dishonest Labor Government between the State budget in May and the announcement by the Premier-elect on 2 August should have their vendor tax refunded. I made this call publicly on 5 August but, funnily enough, there has been nothing but stone-cold silence from this Labor Government. The Opposition does not oppose this legislation. After all, it is a longstanding Opposition policy commitment to axe the vendor tax.
Mr MATT BROWN (Kiama) [11.51 a.m.]: I am pleased to speak in debate on a bill that will abolish vendor duty in respect of contracts for the sale of property. Ever since the vendor tax was implemented I have lobbied the Government to abolish it. I understand why the Government introduced these taxation measures. We are not getting our fair share of GST revenue from the Liberal-National Government in Canberra. With less and less money coming each year from Canberra the New South Wales Government has a problem funding schools, hospitals, roads and police. We have to establish how to get additional taxation dollars into the State budget so that we can pay for front-line services.
Time and again Opposition members have said, "We support this measure because it is our promise." What have Opposition members not promised? They travel around the country promising everything. They promise more and more services and more and more tax cuts. If it were up to Opposition members, no-one in the State would pay tax, even though they are getting first-class facilities and services in every area. Members of the public have no faith in the Opposition. It has no credibility whatsoever in this place. Since its election in 1995 the Labor Government has delivered six surplus budgets. It has reduced by $10 billion the $12 billion deficit it inherited in 1995 when it took over from the Liberal-National Government.
The Government not only delivers surplus budgets; it also reduces debt. Good, sound financial management will attract investment to this State. When the Liberal-National Government was running this place, our triple-A rating was in danger of being downgraded. Each year since Labor has been running this State we have had a firm and strong triple-A rating. The vendor tax is not the sole reason for the movement of money away from New South Wales. The cost of homes in New South Wales is skyrocketing. We need only to look at my home town of Kiama to understand how difficult it is for young families to buy a block of land and put a house on it. Many cheaper properties are to be found right around the country. In some regions properties are one-sixth the price of properties in Kiama.
Investors can secure the same rents as those paid in New South Wales by investing elsewhere. The vendor duty is not the sole factor that determines where people invest their money. It might be one factor but it is not the main factor. When people invest they are looking for a capital gain on their investment and for a rental income that will help to pay for their investment. As I said earlier, the cost of homes in New South Wales has skyrocketed and other market forces are at work. At the last Federal election John Howard said there would be no interest rate rise but, as soon as he was re-elected, interest rates rose and property activity cooled.
Interest rate rises have a bigger effect on the decisions of investors than an exit tax, which is less than any real estate commission on a property. The removal of the vendor tax means there will be $360 million less in the State budget. If the State is to maintain its sound financial position we will have to find ways of recouping that money. Some economic modelling suggests that the removal of this tax will result in more activity in the property market and more stamp duty. The entry duty will also pick up some of that slack. The Premier promised he would cut costs in the public sector to maintain front-line services, an important element in running this State.
I place on record my appreciation of the Premier's announcement to abolish vendor duty. I hope this will have a psychological effect on the market and increase business and investment confidence so there is more market activity and more funds available to run those necessary front-line services. The people of the Illawarra and South Coast appreciate the new Premier's statement. Last Saturday night when I attended a football game and watched St George play a sterling game, the new Premier talked to many of my constituents, people living on the South Coast and in the Illawarra, and they thanked him for his decisive statement. From 2 August this year there will be no more vendor duty—a bold announcement by the Premier.
The Government is keen to ensure that New South Wales remains the economic powerhouse of the nation. The Government will bring down a good budget and ensure it does not make reckless promises about abolishing every tax and increasing services, as members of the Liberal and National parties do. The Government wants to help new homebuyers. We have the most generous first home buyer assistance package in Australia, which will provide young families who are buying their first homes with approximately $27,000. New South Wales has the highest tax-free threshold for land tax—indexed at $330,000 for the value of an investment property.
A number of other initiatives confirm that the Government is serious, but it wants to do more. However, it is difficult to do more when year after year the Federal Government returns less GST revenue to this State. We know what the figures are. Every year my constituents and other taxpayers in New South Wales contribute $13 billion in GST but this State gets back only $10 billion, a loss to this State of $3 billion. Much of that $3 billion is being used to subsidise wealthy States such as Queensland and Western Australia, which are receiving massive royalties from minerals and coal.
We are subsidising them to such an extent that the Queensland Government can afford to cut the price of petrol continually for its taxpayers. That is a shocking situation, which is annoying my constituents more and more. No matter how much Coalition members bleat that the distribution of GST revenue is a decision for State Premiers, it simply is not. That decision rests firmly with the Treasurer of Australia, Peter Costello. It says so in a Federal Act, A New Tax System (Commonwealth-State Financial Arrangements) Act 1999. Section 19 of that Act says:
The Treasurer may fix amounts, and time of payments, of financial assistance:
Financial assistance payable to a State under this Act is to be paid in such amounts, and at such times, as the Treasurer determines in writing.
That is the law: The Treasurer will determine how much he pays the States. The Federal Act does not say anything about State Premiers agreeing to make that decision. That is a Liberal Party furphy, and it does not wash. We want the Coalition to join the Government in mounting a spirited defence and getting a fair deal for our State.
New South Wales is the oldest State in Australia with the oldest infrastructure. It costs a lot more to build roads and railway tunnels and to fix crumbling infrastructure in New South Wales than in younger States. Unlike Queensland and Western Australia, we are not benefiting from a resource boom. We are not resource rich yet we continue to subsidise those States that are. We have no problem subsidising smaller States such as Tasmania and South Australia but subsidising Queensland and Western Australia is a joke. I support the new Premier's announcement and commend the bill to the House. I look forward to hearing from the new Liberal Party leadership some positive words about the State of New South Wales, not more reckless promises about abolishing taxes while increasing services.
Mr MALCOLM KERR (Cronulla) [12.02 p.m.]: What an extraordinary speech by the honourable member for Kiama! I am absolutely amazed. For the information of the honourable member, New South Wales has been a State since 1856. He claimed that infrastructure costs more in New South Wales because we are the oldest State in Australia. Gosh, infrastructure must cost an absolute fortune in Europe, where some countries are thousands of years old! They will demand their share of the GST if we are not careful. The honourable member for Kiama would be well advised to attend the function hosted by the honourable member for Bega about age and beauty to see how age can be a positive attribute.
Ms Kristina Keneally: Are you speaking from experience?
Mr MALCOLM KERR: I probably have a little more experience than the honourable member for Heffron, but we will not go there. Returning to the leave of the bill, everybody now admits that the vendor tax was a mistake. The honourable member for Kiama said that he was an early critic of the vendor tax.
Mr Barry O'Farrell: I don't remember that being said publicly.
Mr MALCOLM KERR: I do not either. We have had an amazing number of conversions this morning: It was like a convoy of long-distance truck drivers on the road to Damascus. One would think the vendor tax was introduced on Bob Carr's last day as Premier and removed on the new Premier's first day in office. One would assume that Labor members opposed the vendor tax when it was introduced a couple of weeks ago. But the vendor tax has been around for some time—in fact, the honourable member for Kiama would probably refer to it as an "old" tax, such is his sense of history. Why was the vendor tax introduced in the first place? A very confused Premier outlined yesterday the reasons that the tax was introduced by a Government of which he was a senior member and in which he was a decision maker. As the honourable member for Epping said yesterday, the new Premier voted twice for the vendor tax. Speaking about the timing of the tax's introduction, the Premier said:
The overheated market that existed prior to 2004 was squeezing out first home buyers, in favour of investors.
That was the reason for introducing the tax. But in answer to the same question the Premier continued:
The duty was introduced at a time that the property market was starting to cool.
That is an amazing statement: The Government introduced a tax that everybody acknowledges acts as a brake on economic activity when the "property market was starting to cool". It is not as though the Government had no warning about the effect of the tax. In the Daily Telegraph of 7 September 2004 under the heading "Vendor tax fails to hit its targets", Simon Benson wrote:
The State Government's controversial vendor tax, which investors pay for selling their properties, has failed to rake in even 20 per cent of the projected revenue.
Figures for the first two months of the 2.25 per cent tax show that less than $500,000 was collected in June and only $10 million in July.
The tax was not achieving in terms of revenue but it was probably hurting more people than there are entries in Mark Latham's diary.
Mr Barry O'Farrell: We'll wait to see that.
Mr MALCOLM KERR: Exactly.
Mr Barry O'Farrell: The honourable member for Menai was one of the bright spots in his life.
Mr MALCOLM KERR: I agree. We think the honourable member for Menai would have been a bright spot in Mark Latham's life, although one has to say it is not a great life. The Premier's explanation for the bill's introduction is confused. We would like the Government to give an undertaking in this place or in the Legislative Council that Labor will not reintroduce the tax in the future. The rationale of former Treasurer Michael Egan and of the honourable member for Campbelltown, who introduced the legislation, upon imposing the tax could apply in the future. The bill to remove the vendor tax is before the House not as a result of criticism by Labor members in Caucus but because the change of Labor leadership required a gimmick. That little public relations exercise was exposed by Andrew West in the Australian newspaper, when he wrote:
Former New South Wales Premier Bob Carr delayed a decision to scrap the state's hated vendor tax for two months to give his successor a head start with an electorally popular announcement.
The decision by Carr and Labor strategists to delay the move cost investors, who were forced to pay the 2.25 per cent levy on property sales, about $60 million.
Yesterday the Premier pointed to someone in the public gallery who is very happy that he missed an appointment with his real estate agent and therefore exchanged contracts after the Premier's announcement upon coming to office. A lot of people kept appointments with their solicitors and real estate agents.
Mr Barry O'Farrell: Those who avoided the trains and drove themselves to appointments.
Mr MALCOLM KERR: Exactly. Those who avoided the trains because of the slower timetables kept their appointments. Ordinary people who did what they were required to do had to pay $60 million, all because of a gimmick that was cooked up in Sussex Street. In the same question time, the Minister for Transport was very proud about the slower trains. We did not realise that slower trains might enable tax avoidance by preventing people keeping appointments with their real estate agents or solicitors. The Government used this gimmick to claim it had taken off another tax before the election.
Mr Thomas George: We are the oldest State.
Mr MALCOLM KERR: Yes, we are the oldest State, that is exactly right. It is no wonder that Mark Latham said in his introduction, "The view provided by the diaries is frightening. It reveals a poisonous and opportunistic Labor culture in which the politics of personal destruction are commonplace". Does that not apply to what we are discussing? The honourable member for Blacktown said the vendor tax legislation was a mistake that was obvious from the beginning to somebody as economically literate as the honourable member for Kiama, yet the Government persevered with it. When the leadership changed, the Government decided it would use it as a gimmick in a public relations exercise. It thought the public was gullible enough to believe that this new Premier never had anything to do with the vendor tax—and there is as much chance of that as the average person pronouncing his name.
The Premier made a series of radio advertisements about what he has done since he was elected: He has got rid of the vendor tax. The radio advertisements did not mention that he was a senior Cabinet Minister and part of the decision-making body in relation to this tax. An informed debate should be held about the vendor tax. The honourable member for Mount Druitt asked a question of the Deputy Premier and Treasurer. If members look in Questions and Answers, they will see that he asks some very interesting questions in relation to some of his former Cabinet colleagues.
Mr Barry O'Farrell: Who is writing them for him?
Mr MALCOLM KERR: That is a very good question.
Mr Richard Torbay: Richard is very smart.
Mr MALCOLM KERR: You might think that, but also consider that he is not smart enough to be in Cabinet.
Mr Richard Torbay: Does that mean you are not smart enough to be in the shadow Cabinet?
Mr MALCOLM KERR: I will leave it there. The honourable member for Mount Druitt asked:
(1) For the financial year ending the 30 June 2005, how many persons had paid the 'vendor tax' on the sale of their investment property in the entire State of the New South Wales?
(2) What was the total amount paid during the year for the State?
(3) From the abovementioned statistics, how many persons paid the vendor tax from the postcode areas 2770, 2766 and 2761?
(4) What was the average amount paid by the taxpayers in these postcode areas?
I do not know whether the Parliamentary Secretary can assist with answers. She may wish to phone a friend. The answers are:
(1) For the financial year ending 30 June 2005 there were over 35,000 transactions assessed for Vendor Duty, including commercial and residential properties.
(2) and (4) To provide responses to these questions would involve considerable time and diversion of resources, away from core responsibilities, which cannot be justified.
The Government will not even tell its own members that type of revealing information because it is too embarrassing. The honourable member for Mount Druitt is no longer a member of Cabinet. The Cabinet turns off the airconditioning at meetings during winter to give the combined IQ of those in Cabinet a good chance of getting above room temperature. Every honourable member is entitled to the information sought by the honourable member for Mount Druitt. It is now conceded by every member of the Government that this tax has been a mistake—and if someone does not agree I want to hear from them. The honourable member for Liverpool might want to give a speech on behalf of the land-owing classes in relation to this matter.
I am interested to know whether someone can say it was a good tax and not a mistake. Of course it was a mistake, as the honourable member for Blacktown said. The Government persevered with that mistake, which hurt a lot of ordinary decent people and made them suffer. Australians who bought their properties as an investment for their superannuation suddenly had to pay out thousands of dollars that could have been used in their retirement. To make out that the Premier was not involved in any way, shape or form in the formation of this tax is ridiculous; it is a fraud and a scandal. Does anybody deny that what Andrew West wrote in that article was not true? Andrew West is a reputable journalist who recently resigned from the Australian over a matter of principle. If it is true, it is a terrible scandal that politics have been put above people. The Government is quite prepared, to use Mark Latham's adjectives, to be poisonous and opportunistic with its fellow Australians because it believes that the public is gullible enough to believe that because it has a new leader it is a new Government.
Ms MARIE ANDREWS (Peats) [12.17 p.m.]: I gives me great pleasure to speak in support of the Duties Amendment (Abolition of Vendor Duty) Bill. I take this opportunity to congratulate the new Premier and Treasurer on his decision to abolish the vendor duty tax effective from 2 August 2005. That decision has been warmly welcomed by the real estate industry at large and, in particular, by those operating in that industry within the Peats electorate. The comments of a Central Coast real estate agency were printed in the local press shortly after the Premier's announcement. It said:
This is excellent news. It will return a feeling of optimism and confidence in the market, especially among investors.
Immediately after the Premier announced the abolition of the vendor duty tax, I noticed a number of properties listed for sale in my local area, which, undoubtedly, has brought back buoyancy into the real estate industry. This Government does not like to impose further taxes on the residents of New South Wales but with a Federal Government that is intent on decreasing, rather than increasing, grants to the most populated State in the Commonwealth, that is, New South Wales, unfortunately other avenues of raising taxes have to be explored.
Yesterday in this Chamber the Premier said that New South Wales deserved a fairer share of the goods and services tax. I remind honourable members opposite that the GST is the tax that the Prime Minister, John Howard, told the Australian people he would never introduce. This tax affects every single member of the Australian community, whether or not they are old enough to vote. I am sure we are all aware that each year taxpayers of New South Wales pay $13 billion in GST to Canberra, but only receive back $10 billion. The $3 billion shortfall to New South Wales could be put to good use in areas such as health, education, transport services, et cetera. Today I have heard plenty of criticism from honourable members opposite. I am sure not many of them are lobbying their Federal counterparts to restore the $3 billion shortfall ripped off from the taxpayers of New South Wales. How hypocritical is that?
The Premier has made a good start, as he termed it, as the captain at the helm of the State of origin. As the new Premier, he has made two very important statements followed up by positive action: firstly, the announcement to abolish the vendor duty, to ensure that Australia's leading State, New South Wales, remains as the economic powerhouse of the nation; and, secondly, his announcement yesterday to commence a campaign to resolve the vital issue of the unfair distribution of GST revenues. I wonder how many Opposition members will get behind that campaign to ensure New South Wales gets a fair deal. Honourable members opposite conveniently forget that at the end of 2003 the property market was booming. The Reserve Bank then decided to increase interest rates, and that affected first home buyers.
Ms Angela D'Amore: I thought John Howard said they would not go up!
Ms MARIE ANDREWS: He did say that. But, of course, we cannot believe a word that John Howard says. The Carr Government and now the Iemma Government have been intent on assisting first home buyers. In addition to the unfair GST distribution and the interest rates increase, New South Wales had $400 million stripped from its funding by the Commonwealth Grants Commission. Nothing has been done by the Howard Government or Treasurer Peter Costello to address those anomalies and rip-offs.
Ms Angela D'Amore: Another raw deal for New South Wales.
Ms MARIE ANDREWS: That is right. On his first visit to the Central Coast as Premier, Morris Iemma presented a cheque for $7,000 to a young couple who purchased a home in the Peats electorate. That cheque, of course, represented a payment under the First Home Owner grant. Also, of course, the Government of New South Wales also encourages first home buyers through the abolition of stamp duty on the purchase of their first home. But, of course, we do not hear from Coalition members any mention of the positive measures taken by the Carr Government, and now by the Iemma Government, to encourage first home buyers in our State. I conclude by saying that I am pleased the Premier has announced, and is now acting on, the abolition of the vendor duty. Unfortunately, this was a tax that had to be introduced to overcome the shortfalls in funding to this State by the Commonwealth—shortfalls that are ongoing. I am sure the fact that this vendor duty is going will bring about a healthier real estate market. I commend the Premier and the Government on the introduction of the bill.
Mr BARRY O'FARRELL (Ku-ring-gai—Deputy Leader of the Opposition) [12.22 p.m.]: Having listened to this debate, I can only but marvel at the latter-day converts on the Government side to the evils of this vendor duty. As my colleague the honourable member for Lismore indicates, if one were to compare the speeches they make today with the speeches they have made since the tax was introduced 16 months ago, we would find an enormous gulf, and what the honourable member for Cronulla described as a truck convoy on the road to Damascus. We have seen a demonstration of hypocrisy at its worst. The only person opposite who need not apologise is indeed the honourable member for Blacktown, who came into this Chamber towards the end of the last session and said this was a bad tax, and that it was hurting people. He was prepared to put his reputation on the line and called it what it was. Not a single other member opposite used this Chamber over the preceding 16 months to do the same as was done by the honourable member for Blacktown.
This ought to be an example of democracy at its best when a government brings in a flawed policy, the vendor duty, that is harsh and unfair, and hits mum and dad investors—people that any government ought to be encouraging to get into the investment market. Governments should have a duty at all levels to encourage people to prepare for their own retirements. One of the ways in which governments can do that, whether in New South Wales or in those old European countries that the honourable member for Cronulla spoke about, is to invest in property. Instead, the proposal put forward by the Carr Labor Government, of which Morris Iemma was a member, sought to punish those investors. One of the highest proportions of those investors is in the electorate of Drummoyne, whose parliamentary member has said not a word against that tax in this Chamber in the preceding 16 months.
The vendor duty not only had a devastating impact upon property investors, it also had—as is now being admitted, latterly by honourable members opposite—a devastating effect on the property market. At a time when the property market was struggling, this tax—as the former Leader of the Opposition often said—killed the property market stone motherless dead. Even worse, it has continued to fail to meet the revenue forecasts made for it by two successive Labor Treasurers. So not only has the New South Wales Labor Government penalised people for investing and trying to get ahead, not only has it killed the property market, but it has not even achieved the revenue forecasts set for this tax from the outset. As a result, from day one, the former Leader of the Opposition and every member on this side of the Chamber, including the non-aligned members, opposed the tax root and branch on behalf of their communities and our constituents across the State, and indeed on behalf of Labor constituents, the Labor mum and dad investors who were trying to get ahead but were being stopped by this pernicious tax.
This ought to be a great example of how democracy works: opposition, on behalf of the community, points out the harshness, the unfairness of a tax, and finally government reacts. But that is not what happened. As honourable members on this side of the Chamber have said, today we have the final stage of something that was initiated by someone who is not a member of this Chamber, the General Secretary of the New South Wales branch of the Australian Labor Party, Mark Arbib. In his research earlier this year he discovered that this tax was not only hitting mum and dad investors, was not only hitting the property market, was not only failing to meet its revenue forecasts, but, as far as he was concerned, more importantly, it was doing this Government in within the electorate at large.
This tax, on its own, was a symbol of all that was bad about the high-taxing Carr Government and all that was bad about the Labor Party generally. What did the General Secretary of the Labor Party do? He commissioned research—research that was used to great effect against the Minister for Police and others in what was laughingly described as a leadership contest, when the former Premier decided to retire. The reality, as honourable members on this side have said, is that it was known that the tax would go. It was known, on the basis of research done by the New South Wales branch of the Labor Party, that the tax had to go if the Labor Government was to have any chance of re-election. Instead of the Government doing the right thing early, the decision was made to put off the removal of the tax until there was a new Premier, until there was a replacement for Bob Carr. Despite the fact that Morris Iemma, who is now Premier, announced on the first day he was in office that he would get rid of the tax, it had been known for months that the tax would go.
There can be no more cynical act, by what has been a very cynical faction of the Labor Party throughout its entire history, than the Mark Arbib, Bob Carr and Morris Iemma con on the people of New South Wales. That con has cost thousands of people in the vicinity of $60 million. Those people should not have suffered the impact that this tax had upon them. They were forced to pay it—despite being unfair, harsh, and damaging to our economy—because it did not suit the timetable of Sussex Street to hand the baton from Bob Carr to Morris Iemma. That is what is crook about the decision to introduce this bill today. Whereas members on this side of the House have said from day one that this is a crook tax, we celebrate the fact that it is going. What we bemoan is the cynical way in which the Government has sought to remove the tax. Yesterday, in question time, the Premier said that his Government ought to be praised for this decision. That is a bit like thanking the mugger when he finally stops beating the crap out of you!
Ms Alison Megarrity: An unfortunate phrase.
Mr BARRY O'FARRELL: That is exactly the sort of language that the honourable member for Blacktown used when discussing this tax before the last recess. The reality is that, as Mark Latham is going to show us on the weekend, this is a poisonous and opportunistic faction of the Labor Party that once again has put its political interests ahead of the public interests. The Government forced people to pay $60 million through a tax that it knew it was going to get rid of, simply because it did not suit their timetable for the change from Bob Carr to Morris Iemma. This is a Government, despite the change at the top, that is rotten to the core, that will always put its own interests ahead of the public interests. It deserves no praise over this sorry affair. Quite frankly, it ought to be giving back to those people who were forced to pay the vendor duty during that interim period the money that they have been forced to pay.
Ms ANGELA D'AMORE (Drummoyne) [12.30 p.m.]: I support the Duties Amendment (Abolition of Vendor Duty) Bill. I have heard from my residents about property taxes and I highlighted many times in caucus to the previous Premier and to the current Premier and Treasurer my concerns about the vendor duty. I welcome its abolition. The new Premier came to Breakfast Point, which is in my electorate, to meet with contractors, subcontractors, residents and investors to discuss the abolition of vendor duty. The discussion went very well. Last year I held a property tax forum—I understand I am one of the few members of Parliament who took such an initiative—to hear the concerns of my residents about vendor duty. Some 700 residents had written to me about property taxes. The forum was productive and resulted in a number of constructive suggestions to take to the Premier, one of which was to abolish the 2¼ per cent vendor duty.
I was vocal in caucus in highlighting that the introduction of the new tax was a result of an imposition by the Federal Coalition Government. In the Federal budget papers our Federal Treasurer, Mr Costello, quite clearly stated that the New South Wales Government has the capacity to increase property taxes and, therefore, we would have further GST revenue withdrawn. In the past 18 months what have those opposite done to convince the Federal Government that all residents in New South Wales who are property investors deserve some relief? That means giving back the $3 billion to provide that relief.
Because we are good economic managers we have been proactive in abolishing the vendor tax. We know how to manage our budget. Since we have been in office we have produced surpluses, which means that we can absorb the shortfall in revenue that will result from the abolition of vendor tax. We understood the pain our investors were going through. My residents were very clear about their concerns with the vendor duty. I have not heard what members opposite will do about capital gains tax, which is 25 per cent, not 2¼ per cent, on investment property. Those opposite have not said one word about capital gains tax, which is a Federal tax on property. That should be examined. It is important that I be an effective member of Parliament for my residents, that I consult with them directly and that I take my concerns directly to the Premier. Whatever theatrics those opposite think we should play out in here—
Mr Thomas George: He didn't listen to you.
Ms ANGELA D'AMORE: He certainly did.
Mr Thomas George: Bob Carr did, did he?
Ms ANGELA D'AMORE: He certainly did. They all listen to their caucus members. I have yet to hear any comments about capital gains tax from those opposite, but rest assured that members on this side will continue to raise the issue. The 700 residents to whom I have written have welcomed the announcement of the abolition of the vendor duty. Our phones ran hot. We received many emails from residents saying, "Thank you very much. The reintroduction of the land tax threshold and the abolition of the vendor duty have made a difference." There are a number of property investors in my electorate, as there are in other electorates. Many of my residents are more comfortable investing in bricks and mortar than in shares, and when one considers the Telstra debacle one can understand why that is so. Many residents in my electorate are self-funded retirees and because we do not have an effective superannuation system to provide adequate remuneration for people when they retire, they invest in property as a nest egg for their retirement.
It is important that the New South Wales Government examine property taxes. Self-funded retirees in my electorate rang me and thanked me for my stand. Unlike the residents of Lismore, my residents know who I am. My property investors know who I am because I have taken the time to survey them, to talk to them and to hold a property tax forum to ascertain their concerns. Many people in my electorate like to buy investment properties to assist their children to buy their first home and to assist their families. My father is a property investor and he was able to assist my husband and me to buy our first home, for which I am very grateful. The New South Wales Government takes seriously the concerns of our property investors. We will say to the Federal Government, "We will not increase property taxes. You give us back our GST so that we can provide further relief."
Certainly $3 billion is a lot of money, and it is our money. It is goods and services taxes that we pay on every single item that we buy every day. Why should that money not come back to us so that we can provide further relief? I am happy that the Premier took on board the concerns of the people of New South Wales and abolished the vendor duty. Representatives of the Real Estate Institute who came to see me are happy that the vendor tax has been abolished. Honourable members should note that many of our major associations and institutes have commended us for listening to people, taking this stand and reversing our initial decision. I have heard some debate in the Chamber about the date of implementation. I know that when capital gains tax was introduced many people were caught out. Certain individuals will always be caught out in a transition period.
Mr Thomas George: What about your land tax for this year?
Ms ANGELA D'AMORE: We will discuss that at a later date. I can assure the honourable member that we will come up with a solution for land tax—not those opposite. Labor members have more expertise and understanding of property taxes than the Opposition has. Land tax was introduced in 1948. It was given from the Federal Government to the State Government as a source of revenue. I welcome the announcement of the abolition of the vendor duty and the relief it will provide for investors. We will implement it because we are good economic managers. I have heard nothing from the Opposition to suggest that they understand the issues or that they have the capacity to lobby constructively. I am truly disappointed because their constituents deserve the same representation that our constituents receive. Members opposite should do their research and bring their arguments forward, as we do. As Labor members we were happy that we were able to deliver this outcome to investors in our electorates. I thank every single resident who spoke to me, attended my forum, emailed me and responded to my surveys on property taxes because it is with their assistance that I was able to put a constructive argument to our Government that finally resulted in the abolition of this tax.
Mr THOMAS GEORGE (Lismore) [12.38 p.m.]: It has been marvellous to sit here today and listen to the comments from those on the other side of the House. Not one of them can produce one reference in Hansard for the last 16 or 17 months about their having spoken about the abolition of the vendor tax. It is a disgrace for the honourable member for Drummoyne to come into this House and say that she did everything she could to have the tax lifted. It was her Government and her representation that implemented the tax. They continue to tell us that the tax was implemented because of the $3 billion shortfall in GST revenue from the Federal Government.
The tax was implemented to improve hospitals, police and roads. Are those services any better today after those opposite have collected $60 million from vendor duty? No. They are exactly as they were 18 months ago. They have not improved. Members opposite said they had to implement the vendor duty because of the shortfall, which has not changed. Why have they lifted the vendor duty? The shortfall has not changed. Finally the Government has realised the mistake it made when it introduced legislation that has been described as the dumbest tax of all, the vendor duty. I wish to restate for the Hansard record what I stated approximately one week after the vendor duty legislation was introduced. On 19 April Alister Somerville, a solicitor, wrote to me. As I stated at that time, I could not outline the facts any better than he has. His letter stated:
Since this Mini-Budget was announced I have been trying to find out as much as I can about the possible new legislation with a view to agitating for the demise of some of its parts.
I was shocked and dismayed that the Government was intending to move the goal posts so far as land tax was concerned, as well as introducing a new Vendor Transfer Duty of 2.25%.
I was also incensed, and continue to be so, as the answers that I have received from the Mini-Budget section of the Office of State Revenue confirmed my serious concerns. But those answers also revealed that the Government hasn't everything and is still trying to work out the "nuts and bolts" of the proposed legislation.
As I stated at that time, Alister Somerville had been in contact with the Government's own departments in an attempt to find out how the tax would work. He realised that the legislation had been brought in on the run. This Government deserves to be slammed over that approach to legislation. Mr Somerville rightly pointed out what had happened. The legislation was introduced on the run yet Government members, including the honourable member for East Hills, claim that too many houses were being put on the market at well above their market value—to the extent of hundreds of thousands of dollars. Many experts, including the Real Estate Institute, had warned the Government against this trend.
Members of the Opposition expressed strong views opposing the vendor duty legislation and wrote to various Ministers to outline the probable consequences. Despite that, the honourable member for Drummoyne has stated in this Chamber that she represents her constituents' views. Where does she think the Opposition was getting its information from 16 months ago? The Opposition was listening to grassroots constituents and it was bringing their views and concerns to this Parliament. Opposition members made representations to the Government: But, no, the Government would not listen. We had to have this tax.
It is obvious from the speeches that have been made during this debate that there is one concept that Government members do not like: that of people being able to get ahead. The honourable member for East Hills stated that people were putting their houses on the market at prices that were hundreds of thousands of dollars more than they were worth, but I ask: Is it a shame to make a profit? According to this Government, yes it is. Every time someone makes a profit this Government wants to take some of it. That is why New South Wales is the highest taxing State in Australia. Not one Government member listened when the vendor duty legislation was introduced, yet each and every one of them has come into this Chamber today and claimed that this amending bill has been introduced because the Government has listened to the people.
I wrote to the Treasurer on behalf of a constituent of mine, who lived with his wife in a house in Lismore. Because the mother of one of those constituents was relocating from the southern part of the State they needed a bigger house, so they bought a house in Casino, which they intended to be their residence, and retained the house in Lismore. When the market crashed they were unable to sell the house. When the mother arrived they had to move to Casino and because they did not wish to leave the house in Lismore empty they were forced to rent it. This Government regarded the property as an investment. They had to pay vendor duty on the sale of the house.
This Government did not exercise any discretion based on the circumstances: They had to buy a bigger home in another town to accommodate a family member who needed care. They had already suffered significant loss as a result of the introduction of vendor duty because the market had collapsed and land tax, which will apply until 31 December this year, also had to be paid. The couple had to pay vendor duty on what they regarded as their family home simply because they had been forced to rent the house. That example is typical of the situations that people have been faced with. In spite of that, Government members claim in this Chamber to have listened to their constituents. That may be the case now, but it took them a long time to arrive at that point.
The Opposition outlined in this Chamber 16 months ago the consequences of this tax. I will be comparing what Government members said in this Chamber when the vendor duty legislation was introduced with what they are saying now. It is very interesting on the one hand to hear comments by Government members in support of the vendor duty, and on the other claiming that the Government has done the right thing in abolishing it. It is about time the Government listened to its constituents and recognised that when Opposition members bring complaints and concerns before the House they are representing the people of their electorates. Members of the Coalition listen to the people they represent, despite assertions made to the contrary by the honourable member for Drummoyne. If she had been listening to her constituents, Hansard of 18 months ago would show the sentiments she has expressed today, but clearly that is not the case.
Mr RICHARD TORBAY (Northern Tablelands) [12.45 p.m.]: It is with pleasure that I support the bill. I have been very interested to hear the debate and recent political dialogue, but the main point is that it is good news for the people of New South Wales that this ridiculous tax will be abolished. I do not wish to enter into discussion on the political circumstances that have led to the introduction of this bill or the Chinese chequers that have been played in determining who should get the credit for the announcement and when the announcement was made because it is simply good news that the tax has been abolished, and that should be acknowledged.
When the tax was first announced, I said that it was a bad tax for a number of reasons. First, the vendor duty's impact on the connection between wealth creation and housing meant that the legislation potentially applied brakes to the economy at every level with resultant adverse effects upon the people of New South Wales. The impact probably has been greater in regional and rural areas, which are often overlooked when a one size fits all policy is applied. A significant number of investors are in regional and rural New South Wales. In the Northern Tablelands electorate there are well over 4,000 investors, and throughout country electorates in New South Wales there would be even greater numbers of investors. Investors not only take advantage of opportunities presented by a burgeoning economy but also provide very important residential services to the people of New South Wales—a factor that is often overlooked.
Comments about whether the current Premier or the previous Premier should have abolished the tax amount to mere political sparring, and it has not been helpful for some Opposition members and some Government members to refer to the antics of political parties, bearing in mind the previous four weeks that have been endured in New South Wales. However, I point out that it is not just comments that have been made in this Parliament that have caused the Government to take corrective action. As is the case in relation to so many other matters, pressure that causes a government to change course comes from the community. Honourable members should acknowledge that the community knows the difference between good legislation and bad legislation, and they have had their say on the vendor duty.
I point out to Opposition members who exhorted others to listen to people in the community that they should follow their own lead in relation to Telstra. I hope they do so because 80 per cent of the community is saying that they do not want Telstra to be sold. It is the community that will drive the determination of that issue. If the Opposition wants to be consistent in its philosophical approach in a debate on the elimination of an appalling tax in New South Wales—a tax that should be abolished, and I am glad that it will be—the Opposition should telephone their Federal Coalition colleagues and tell them to listen to the 80 per cent of people in the community who do not want Telstra to be sold.
I understand the pressures placed on a budget. As local members we attend many public meetings and one of the first things we are asked for is better and more resources for health, education and law enforcement. Tax dollars are under constant pressure because of community expectations—and rightly so. That is why I stand by the comments of Premier Iemma regarding the GST; that we should be united in making sure that New South Wales gets an equitable share of the GST. That issue should be above party politics. When we say to our constituents that we will represent them in getting additional resources, it is important that first and foremost we get an equitable share of the GST that they have paid.
We should acknowledge, for whatever reasons, the good news of the abolition of the vendor duty. Yesterday the Premier said that this abolition comes at a time when the economy is slowing. We have had enough evidence to know that. However, the vendor tax brought that decline to a standstill in a very short time. The new Premier was off to a good start in eliminating that tax. I hope we see some rollback on the clubs tax, on which the Premier has commented. Clubs provide enormous services in many ways, particularly to the non-government and community areas. It is important that that service be reflected in further discussions on taxation. Let us all get behind the initiative of ensuring that New South Wales has its fair share of the GST, so it can be distributed where needed in our communities.
Mr STEVE CANSDELL (Clarence) [12.52 p.m.]: The Duties Amendment (Abolition of Vendor Duty) Bill should be called the Abolition of Labor's Vendor Duty Bill. Today the New South Wales Labor Government is admitting its mistake; and it did make a mistake. What do we do when we make a mistake? We apologise. What do we do when we hurt someone by that mistake? Again, we apologise. But when there is no mistake and someone is hurt, what is that called? It is called a malicious intent. And that is basically what deliberately delaying the removal of the world's dumbest tax from May to August is: malicious intent. What should be done about usurping $60 million of New South Wales citizens' money through malicious intent? It should be paid back. So pay back the $60 million!
In an amazing three-year period New South Wales has seen a property boom and a property market slowdown. But following the introduction of the world's dumbest tax the property market in New South Wales has virtually died. The New South Wales property market has been buried, and investors are fleeing over the border to Queensland. Many investors in the Clarence electorate have told me that they will not buy property in the Clarence, and many have bought in Queensland. The vendor tax penalised small investors, mostly mum and dad investors, and also workers. Today Labor members said that the vendor tax was bad and that they were happy it had been repealed. They said they were representing their electorates. Members on this side of the House have not heard that or, as the honourable member for Lismore said, we have not read anything like that in Hansard.
When members on this side of the Chamber spoke against the vendor tax, comments from those opposite included, "You are looking after your North Shore mates". That comment has come back to bite them on their backsides, because although some North Shore investors have been hurt, many investors from Western Sydney, Labor's heartland, have been hurt and have turned away from Labor. This tax affects everyone. Because of that tax Bob Carr jumped ship. Andrew Refshauge, who inherited a hot potato, hit the ejector seat. Craig Knowles said, "Let me out of here too, it is getting too hot." This tax has caused pain, confusion, and loss of retirement security for many elderly people who sold their properties. The world's dumbest tax not only hit those people but also removed the threshold for land tax. That caused double pain for 4,000 investors in the Clarence Valley.
Those affected were not only retirement investors but also young people who were trying to invest for their families, for the future, so they could retire. Many people had sold their properties because they could not afford to pay the land tax. The Labor Party got a sudden wake-up call and removed the vendor tax, and it was about time. But it should never have been brought in in the first place. The economic dummies opposite supported its introduction when every organisation in New South Wales said it was a dumb tax. The Government gained $350 million, followed by another $60 million, through corrupt mercenary means, through malicious intent, by delaying the axing of that tax from May until August.
Only one member on the opposite side of the Chamber can hold his head up in this debacle; and that is the honourable member for Blacktown, Paul Gibson. He spoke up in caucus, and loudly in the Chamber, in the media and in public against that tax. He was not worried about losing his endorsement for the next election, but obviously many other Labor members were worried. They are now concerned and are listening to their constituents. The only reason they did not speak out earlier was that they were in fear of losing their endorsement for the 2007 election. They can breathe a sigh of relief: they have done the right thing by the Labor Party. They did not represent their constituents; they represented the Labor Party for 16 months by keeping their mouths closed. They now jump up and beat their chests because the Opposition and the community have put pressure on them. The voters of New South Wales are the victims in this matter. They have forced the Government to cancel the world's dumbest tax.
Debate adjourned on motion by Mr Daryl Maguire.
[Mr Acting-Speaker (Mr John Mills) left the chair at 12.58 p.m. The House resumed at 2.15 p.m.]