State Taxation Acts Further Amendment Bill 2016


Debate resumed from 8 November; motion of Mr DALIDAKIS (Minister for Small Business, Innovation and Trade).

Mr RICH-PHILLIPS (South Eastern Metropolitan) — I am pleased this afternoon to rise to speak on the State Taxation Acts Further Amendment Bill 2016. This is one of a number of state tax amendment bills which come before the house generally seeking to tidy up unintended consequences or technical errors in taxation legislation. Typically the Parliament deals with these bills two or three times on an annual basis, usually following the passage of the budget. In May or June of each year there is often a taxation amendment bill which seeks to introduce new or amended taxation provisions to give effect to policy announcements articulated in the budget and in the Treasurer's second-reading speech. From time to time there may be, as in the case of this bill, other amendments to the taxation legislation to correct anomalies, to correct unintended consequences, to fix errors et cetera. That is largely the purpose of this bill that the house is dealing with this afternoon.

This bill is an omnibus bill. It seeks to make amendments to the Land Tax Act 2005, to the Payroll Tax Act 2007, to the Planning and Environment Act 1987 and to the Valuation of Land Act 1960. I will outline the main provisions of this bill with respect to each of those principal acts. With respect to the Land Tax Act 2005 the purpose of the bill is to amend that act to align the date for the determination of the taxable value of non-rateable non-leviable land with the date that applies to other land and to correct an error in one of the surcharge rates of the land tax for absentee trusts, which is to change that rate, which is in clause 5 of the bill, from a rate of 2.075 per cent to what should have been 2.0575 per cent. This is an example of the minor technical corrections that a bill of this nature seeks to make.

The next principal act the bill deals with is the Payroll Tax Act. With respect to the Payroll Tax Act the bill seeks to amend that act to change the determination of the exempt rate for the purpose of calculating the exempt component of motor vehicle allowances in accordance with commonwealth changes, and that will have retrospective application to 1 July this year. The other change of limited consequence and concern is in relation to the Valuation of Land Act 1960. The amendments the bill seeks to make to that act are to make further provision in relation to the definition of general valuation, to permit the valuer-general to accept a late nomination from a collection agency to be the valuation authority for the purpose of valuing non-rateable leviable land and to require notices of valuation to show the Australian valuation property classification code — AVPCC — which is the valuation classification for land which indicates the nature of the land use.

The amendments with respect to the Land Tax Act, with respect to the Payroll Tax Act and with respect to the Valuation of Land Act are all minor and technical in nature and not opposed by the Liberal-National parties. We see those as relatively minor technical changes, though we do note that the change to the Land Tax Act is to fix an error that was introduced with the last state taxation acts amendment bill following the budget. The fact that error was in the bill — that it was not picked up by the Treasurer's office as that bill was dealt with and brought into the Parliament — suggests a certain element of sloppiness on the part of the Treasurer's office in the handling of that bill and the preparation of those budget-related bills and documents, but this bill corrects that, and the coalition parties certainly do not oppose that.

The other provision, however, that this bill seeks to enact — the fourth element of the omnibus bill — relates to the Planning and Environment Act 1987 and the framework for the growth areas infrastructure contribution, or GAIC, within that piece of legislation. As members of the house may recall, in 2009 the Parliament enacted the growth areas infrastructure contribution, which was a scheme to recognise firstly that in growth areas around Melbourne there is a high demand for new infrastructure. As land is subdivided, particularly as farmland is subdivided, new estates are developed and broadscale development takes place. There is a need for substantial investment in public infrastructure, and the GAIC framework structure was introduced in 2009 to provide a source of revenue to provide that public infrastructure associated with the development of those growth areas.

This is something which has particular application in the south-east of Melbourne, where over the last decade or 15 years we have seen enormous growth take place through the City of Casey, currently through the Shire of Cardinia through areas such as Pakenham, which is now undergoing enormous growth, down to Bunyip, which is growing, and down through the areas of Berwick, Berwick South, Cranbourne and Narre Warren South, all of which have seen collectively over that period of time hundreds of thousands of new dwellings created across certainly those two municipalities, with the attendant pressure on public infrastructure.

Of course when you are having residential subdivisions which may be in the thousands of housing units coming on line in a very short period of time — it may be over 12 or 18 months that those lots are developed and come onto the market, and then consequently you see dwellings constructed in a relatively short period of time beyond that, 6 or 12 months after the sale of those lots — the pressure that very quickly places on local infrastructure is enormous and the need to provide local public infrastructure is very substantial, and it is frankly something which governments have not kept up with and, even since the introduction of the GAIC framework in 2009, are still not keeping up with, certainly down through the south-east growth corridor.

In 2009 this Parliament passed legislation to create the growth areas infrastructure contribution. It was based on the premise that there were growth areas around Melbourne — an identified boundary around Melbourne — which outlined what are regarded as the growth areas. If land fell within those growth areas and certain trigger events took place, the infrastructure contribution was payable. Those trigger events could be things as simple as the sale of the land — not necessarily the direct immediate development of the land, but the transfer of land within the GAIC area — as well as actual development activities, such as the issuing of schemes of subdivision, precinct structure plans and the actual sale of lots. Depending on how a particular development was structured, the trigger point for the payment of GAIC could be different.

At the time it was introduced it was a somewhat controversial measure because the trigger for paying the charge was not necessarily the development of the land. The transfer of land ostensibly for agricultural purposes, if it was within the growth area, could trigger the GAIC. It was legislation which was heavily resisted by many landowners in the growth areas, not because they were seeking to avoid making a contribution to developments but because they were looking to transfer their land for existing use. Of course down through the sand belt in the south-east there are substantial agricultural land uses which continue to this day, and there is transfer of that land between agricultural providers, which were at risk of having to pay the infrastructure contribution even when they were not seeking to develop the land. So the introduction of GAIC was at the time very controversial, and this Parliament spent a considerable period of time working through the eventual framework which was put in place for that infrastructure contribution seven years ago.

What we have in the house in this bill this afternoon is a proposal from the government to change the way in which some of the exemptions under that growth area infrastructure contribution currently apply. These are contained in part 4 of the bill, and they are amendments that the government seeks to make to the Planning and Environment Act. I will run through the detail of those provisions.

Part 4 of the bill makes further provisions for the imposition, apportionment and payment of the growth areas infrastructure contribution in certain circumstances. The bill ensures that the GAIC is payable in relation to a plan of subdivision which provides public purpose land (PPL). Public purpose land covers things such as utility easements, utility infrastructure and transport infrastructure, such as roads, rail et cetera. It clarifies the scope of certain excluded subdivisions. It provides for the GAIC to be apportioned on the issue of a compliance statement arising from a plan of subdivision for PPL. It enables the State Revenue Office (SRO) to issue a certificate for partial release where the GAIC has been paid in respect of PPL and to remove the GAIC exemption in respect of land compulsorily required by a public authority or a municipal council, which is one of the existing exemptions from GAIC in the current Planning and Environment Act.

Under the existing provisions certain actions outline a GAIC event which triggers the imposition of the GAIC. Some types of subdivisions are excluded from the GAIC. The effect of clause 9 of the bill would be to no longer exclude subdivisions solely to create a lot for a utility installation, transport infrastructure or for any other public purpose. This means that such a subdivision would now trigger the GAIC. I will come back to the basis of that shortly.

Clause 10 of the bill has the effect that where a subdivision has taken place for PPL reasons the non-PPL portion will not have the GAIC triggered immediately but will continue to have it deferred until the next trigger event.

Clause 11 has the effect that where a subdivision occurs and a statement of compliance is issued the GAIC liability must be apportioned across all the lots so that the GAIC attaching to the subdivision — which is the child lots, the part being carved off — must be in the same proportion as the GAIC which attaches to the balance of the land, the parent land, the remaining portion.

Clause 16 has the effect that where PPL land is subdivided the proportional GAIC must be paid within three months of the issue of the statement of compliance of the plan of subdivision. Clause 23 of the bill has the effect of removing the exemption from paying the GAIC that previously applied in respect of compulsory acquisition of land, which I referred to before, which was one of the two key existing exemptions from the GAIC.

The government is presenting this bill as a status quo continuation of the 2009 GAIC framework. The government's argument is that the provisions contained in this bill do not represent a policy change from that agreed by the Parliament in 2009. It is the government's contention that these provisions are merely a response to a decision of the Supreme Court in the matter of Frontlink Proprietary Limited and the SRO. Frontlink Proprietary Limited is, incidentally, a development company in my electorate in the south-east which has developed a substantial amount of land in the Berwick, Berwick south and Clyde areas. Following the SRO's decision to interpret the application of the GAIC where PPL land was involved, Frontlink sought relief at the Victorian Civil and Administrative Tribunal (VCAT) and, as I understand it, was unsuccessful with VCAT but was successful on appeal to the Supreme Court.

The SRO then sought to have that decision reviewed by the Court of Appeal in the Supreme Court, and the decision in Frontlink's favour and against the SRO was upheld by the Supreme Court, which found that the GAIC provisions should be read effectively in accordance with black-letter law and that where PPL-related subdivisions took place, such as for the provision of public infrastructure or public roads, GAIC was not triggered by that subdivision for the PPL purpose. As a consequence of that decision against the SRO the government is now introducing this legislation, which has the effect of reversing that Supreme Court decision and providing that the GAIC would be payable certainly in the circumstances that confronted the SRO in the Frontlink case where a PPL subdivision was associated with a broader subdivision.

It is the coalition's view that what the government is seeking to do with this legislation which overturns the Supreme Court decision is inconsistent with the 2009 legislation. We do not believe that the Frontlink decision by the Supreme Court was an unintended consequence of the 2009 framework. We believe that the court decision was consistent with the intention of the 2009 framework. For that reason the coalition will not support the provisions related to the GAIC — the provisions which seek in part 4 of the bill to amend the GAIC framework to overturn that Supreme Court decision. To give effect to this we will be seeking in the committee stage of this bill to omit a number of clauses which relate to the provision of the GAIC. We will seek to omit clauses 8, 9 and 10, preserve clause 11 and omit clauses 12, 13 and 15 through to 24, which are the key provisions which give effect to this government approach.

The coalition parties have received a number of representations in relation to the government's proposal in this legislation. It is very much the view of the housing and development industry in this state that what is proposed in this legislation goes beyond the original intent of the GAIC legislation. Indeed representations received by the opposition from the Urban Development Institute of Australia, for example, indicate that the government will:…

 add further costs to providing housing to Melbourne's population thereby impacting housing prices and the attainability of housing.

The Property Council of Australia Victorian division has stated the bill:… 

will lead to a significant increase in housing costs and rent in growth area communities already struggling to secure affordable housing.

The property industry has been very strong in its advocacy on this matter and strong in its belief that the changes that are proposed by the government do not simply reverse an unintended consequence of a court decision but in fact expand the scope of the GAIC impost and will have a negative impact on housing affordability.

The coalition shares the view that has been expressed that these provisions expand the scope of the GAIC. They are not simply to preserve the 2009 framework; they seek to go beyond the 2009 framework. For that reason we will move our amendments in the committee stage of this bill to exclude the clauses that I outlined earlier. If those amendments are not successful, we will seek to move on the third reading of the bill a reasoned amendment seeking the government to withdraw this bill and go back and undertake further consultation on the GAIC provisions while preserving the balance of the bill. We do not believe that this bill in its current form should be supported, and subject to consideration of this bill in the committee stage and consideration of the amendments, the coalition will be reserving its position until the third reading. 

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