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Duties Amendment Bill 2022

Cassy O'Connor MP  -  Tuesday, 24 May 2022

Tags: Treasury, Legislation

Ms O'CONNOR (Clark - Leader of the Greens) - Mr Deputy Speaker, the Greens do not oppose the Duties Amendment Bill 2022, but we do have a few observations to make and questions to ask on the way through. The Greens supported the original legislation that established the foreign investor duty surcharge. We believe foreign investors should pay a higher duty for homes and primary production lands that they buy on this island. It is unarguable that interstate and foreign buyers have helped to drive up the price and reduce the supply of affordable houses and land for Tasmanians. Tasmanians, as the Greens have long said, are being priced out of their own paradise by cashed-up investors who recognise the true value of Tasmanian real estate in an overcrowded, polluted, increasingly parched, and overheating world.

Over the past decade, Tasmanian house and land prices have been beyond the reach of everyday Tasmanians. As a few examples, if you look a there are weatherboard homes in fairly ordinary condition on the Brooker Highway going for more than half a million dollars; a three-bedroom brick home in Nubeena going for more than $800 000; and two little two-bedroom workers cottages in New Norfolk are on the market for prices in the vicinity of $400 000. These are very large price tags on an island which has historically been economically left behind the other states and territories, and particularly for people on low-to-moderate incomes.

It is not all about cashed-up investors, whether they be from the mainland or another part of the world. We have had a government that for years failed to increase the number of affordable homes and to this day refuses to rein in ballooning short-stay accommodation, and we know there are investors who have eight, nine or 10 homes within their Airbnb portfolio operating here in Hobart.

The Government continues to put some restraint on soaring rents. All of these are a factor in the difficulty many Tasmanians have finding a place that is affordable and secure to live. This is now impacting on decisions that Tasmanians are making about where they will live and people are going to the mainland to find a home. There are professionals who are coming down here to work - for example, Mr Deputy Speaker, in your electorate in St Helens - who come down for a good job in St Helens that would benefit the community and cannot find a good home to live in.

A huge problem with affordability is the failure at a federal level to rein in the tax perks of capital gains tax and negative gearing which massively benefit property investors and people who are buying their fourth, fifth or sixth property at the expense of young people trying to buy their first. These tax lurks for investors are supported by both the Liberal and Labor parties.

Locally cashed-up buyers from beyond Bass Strait have helped to drive up prices to unaffordable levels and to reduce supply, so we should find ways to disincentivise property speculators, but the kind of foreign investor duty surcharges we are talking about are no disincentive at all and nor is the modest top-up we require of foreign buyers on land tax. However a duty surcharge is a small step in that direction.

We have some questions on the legislation, particularly given Dr Broad's observations that there has not been a compelling case put by any affected group or class of people that the current framework is causing financial harm or is unfair. I am very interested to know which stakeholders have lobbied for these changes. I assume the Real Estate Institute is one of them and the Property Board is another.

I listened to what Dr Broad said about accommodation. There is this carve-out in the amendments for accommodation that relates to student accommodation or hostels or something like that, and Dr Broad talked about the accommodation the university has, but I did not know that the university was a foreign investor.

There may be an example in the proposed development at Kangaroo Bay which is owned by Chinese petrochemical company Shandong Chambroad, which would be a skills institute, as I understand it, although this piece of land, which was effectively gifted to this developer five or six years ago, remains undeveloped to this day.

I wonder if the minister could explain where the number 50 came from for homes that would be built in a 12-month period? It seems pretty arbitrary to me. Can the minister tell the House how much revenue has been raised by the foreign investor duty surcharge to date, since the legislation came into effect, and the number of properties that have been subject to the surcharge for residential and primary production land? If you go to the Foreign Investment Review Board's most recent data set, which is the sales of residential real estate 2018-19, it would not appear it is a huge issue here on the data.

If you have a look at the breakdown of purchase transactions by state or territory, in the 2018-19 year, Tasmania had 107 transactions, and fewer than five of those were valued at greater than $1 million. If you break it down by property type, on new dwellings Tasmania had 13 transactions valued at $6.2 million, which seems very modest to me; on vacant land Tasmania had 23 transactions valued at $4.7 million. Established dwellings is interesting. While FIRB technically requires a foreign investor to seek approval for purchasing established dwellings, Tasmania had 71 transactions valued at $34.4 million for established dwellings, which are home that have already been built.

If you break down the sale transactions by state or territory, South Australia and Tasmania each had fewer than five sale transactions with fewer than five valued greater than $1 million, but that is not the most recent data. We are interested in understanding what the most recent data is. You can see even in that data there is a relatively high interest in established dwellings from foreign buyers in Tasmania, so that is homes that have been built for some time. When you have a look at the latest FIRB guidance note number 1, which was updated on 31 July last year, it states:

Under Australia's foreign investment framework, foreign persons generally need to apply for foreign investment approval before purchasing residential real estate in Australia. The Government's policy is to channel foreign investment into new dwellings as this creates additional jobs in the construction industry and helps support economic growth. It can also increase government reviews in the form of stamp duties and other taxes and from the overall higher economic growth that flows from the additional investment.

It goes on:

Foreign investment applications are therefore generally considered in light of the overarching principle that the proposed investment should increase Australia's housing stock by creating at least one new additional dwelling. Consistent with this aim, different factors apply depending on whether the type of property being acquired will increase the housing stock or whether it is an established dwelling.

From the conversations I have with people who work in the real estate sector, there is sustained interest from foreign buyers in established residential Tasmanian properties. Has that changed since the most recent data came in from 2018-19, which points to only 71 purchases of established homes with a value of around $35 million? Has that changed in the past three years? I am quite interested in understanding that.

I am also very interested, and I think many Tasmanians are very interested, in the minister elaborating on how much primary production land has been purchased since the surcharge came into effect? Can the minister access that data? What has been the revenue to the state of that? The most recent information I have seen points to the fact that more than 20 per cent, in the vicinity of perhaps 24 per cent, of Tasmania's primary production land is foreign owned. We know, for example, that Forico is a foreign company which has vast tracts of land under plantation, and there will be a whole range of agricultural companies which come from all over the place who are buying our fertile lands. However, I am quite interested, and Tasmanians are too, in understanding the level of foreign ownership that the minister knows of, of primary production land in Tasmania, and what revenue this has brought to the Government through the foreign investor duty surcharge.

We will not be opposing this legislation but these matters are of interest to everyday Tasmanians, particularly people who cannot afford a home, people who are leaving for the mainland because they cannot find a home, and Tasmanians who want to have a reasonable picture of the level of foreign ownership of our primary production land.