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Estimates Reply - Ferguson

Cassy O'Connor MP  -  Tuesday, 14 June 2022

Tags: State Budget, Economy

Ms O'CONNOR - I have to agree with, Mr Winter, the member for Franklin, on the GST issue. I was somewhat surprised having heard crickets from the former treasurer and the current Treasurer on the issue of basically the end of horizonal fiscal equalisation from 2026 27 and then to see a story on 6 June in the newspaper of Mr Ferguson really chest beating over the GST. Now that we have a new government in Canberra, we have our new Treasurer urging the new federal government to guarantee Tasmania will not be left worse off under looming changes to the distribution of GST revenue to the states. In this article by journalist Rob Inglis, the obvious is pointed out, that:

Tasmania is extremely reliant on GST payments, which make up about 40 per cent of the state Budget.

There was a deal done that ripped Tasmania off. We had silence from our former premier and treasurer, Mr Gutwein, and we had silence from the new Premier and Treasurer, then we had a new federal government and, lo and behold, suddenly the chest beating starts. I wish the Treasurer all the very best because that is a looming financial disaster for Tasmania.

Mr Deputy Chair, in relation to the Budget, to be fair to the Liberals - and I do try to be fair - they are dealing with a set of circumstances that are not entirely of their own making. In terms of the superannuation liability, Mr Winter, it was former premier Jim Bacon and then premier Paul Lennon along with treasurers Aird and Crean who, to my memory, raided the super fund and created a problem for future governments. It is an issue for this Government but it was created by a Labor government.

On the level of debt that the state is in, we were party to briefings with Treasury last year where there was a discussion about the state needing to borrow money in order to get through COVID-19 but also a discussion about how cheap money was to borrow then and how borrowings could be invested in intergenerational infrastructure. It was on that basis that we were quite comfortable, so long as it was carefully managed, with the state borrowing some money, but it is about how the borrowings are spent.

Mr Ferguson, the Treasurer, will always see roads and bridges as intergenerational infrastructure and a number of them are, but when you are in the grip of a housing crisis, when people are leaving the island because they can't find an affordable home, I think it is on the Government of the day to recalibrate its priorities.

You have a budget that has 54 per cent of the infrastructure spend going into roads and bridges and maybe 10 per cent going into the delivery of new social and affordable housing. What we gleaned from the conversation with the minister for Housing, Mr Barnett, is that it is pretty clear to us that the majority of the money that is now retained by the state through the forgiving of the Commonwealth-state Housing debt will not be going to Housing Tasmania to build more social and affordable housing that the state owns in perpetuity, but a very substantial amount of it will be directed towards community housing providers, who we agree do a fantastic job and have helped to lift supply, but there is a looming issue, 30 or 40 years down the track, when the ownership of those homes and whether they are in fact ultimately available for affordable rentals will come into question.

The state has a revenue problem and a looming revenue problem and then we go and cut land tax rates two years running. We asked the Treasurer in his first Estimates as Treasurer what his response was to the very well-regarded economist, Saul Eslake, who said the following in response to yet another cut to land tax to the property class:

It is a myth propagated by the property industry that land taxes affect rents. They don't. Rents are determined by the interaction of demand and supply in a land market in the rental housing market.

This has been a well understood reality of economists for a very long time and yet we had two pieces of land tax legislation go through this place and in each instance the Treasurer said the effect of this would be to put downward pressure on rents. If that was a fact, after the first piece went through last year we would not have seen rents increase to the extent they have, and they are not just jumping up incrementally in $10 a week increases. We are hearing from constituents who are being told their rent is going up by $80, $100 and $150 a week, so tight is the housing market.

The first cut to land tax did not do anything to put downward pressure on rents, they kept going up and now we have another land tax cut that is very unlikely to put any downward pressure on rents. I did note with interest in the weekend Age there was a discussion about treasurers coming together around potential tax reform. I would be very interested to know the Treasurer's position on this one, which is a conversation that has been had amongst the tax policy wonks for a long time about the removal of stamp duty and application of a broad-based land tax which you would grandfather in as a more sustainable tax structure. The Age newspaper reports that the treasurers will be meeting to discuss this with the new federal Treasurer.

If the Treasurer wants to give us an update on that issue that would be very interesting, because he did say in response to our questions on the fact that Tasmania has very low royalty and licence fees that he is open to ideas. 'I am a new treasurer', he said, 'I have been there for all of eight weeks and I have not asked for that advice' - and that was when I asked him whether or not he had sought advice on how we might rejig the royalty and licence fees for Tasmania to deliver a better return to the Tasmanian people and a better foundation in the budget. He said he does not intend to soon, 'but I am open to proposals that sustain and grow the economy and jobs and reduce the tax burden on taxpayers wherever possible'.

There will be a bit of an issue come crunch time on the GST if the state is basically cutting state-based taxes and state sources of revenue and then we go to the Commonwealth and say please can we have a little more. I do not know that those two scenarios are going to be tenable to the new federal Treasurer.

Finally, in what became a slightly terse exchange between the Treasurer and me - and I certainly did not mean for it to be terse - I asked him his view on Tasmanian author, James Boyce, who believes the Treasurer misrepresented the casino pokies tax rate and what it meant to Federal Group when he went on radio the day after the state Budget was delivered and said that Federal Group took a $20 million hit. James Boyce said:

The Tasmanian Treasurer just lied on ABC Hobart about his casino tax cuts. Federal Group is not taking a $20 million hit, they are not livid. The tax arrangements were first set out by them.

I understand why the Treasurer would take offence at that accusation. He tried to explain his feelings about that and maintain that the Federal Group did take a $20 million hit, but we are talking here about a corporation which for decades, because it had an exclusive monopoly deal, was raking in millions and indeed in the vicinity of $1 billion or more out of the pockets of some our poorest people.

Parliament should remind itself that the casino pokies tax rate, which was negotiated in secret with the Federal Group, is exactly the tax rate that Mulawa Holdings or the Federal Group proposed to the Tasmanian Government before the expiry of the monopoly deed. The Treasurer, like his predecessor, misrepresents the expiry of that monopoly deed. He tries to tell us that it would have just kept going, when in fact it would have taken a letter from the treasurer of the day to inform the Federal Group that the deed was coming to an end and that the rolling extension period was given effect. We do not buy that rubbish and we encourage the Treasurer to be a little more straight up and down about dealings with the Federal Group.