Thursday, 23 March 2023

Adjournment

Land tax

Jess WILSON (Kew) (17:13): (121) My adjournment tonight is for the Treasurer, and the action I am seeking is for the Treasurer to provide advice on the impact of the land tax burden on Victorians. I have been contacted by dozens of constituents in recent weeks who have been hit by the significant rise in the rate of land tax that was brought in by the Andrews Labor government. Property is a common investment vehicle for Australians from all walks of life. It is by no means the preserve of the ultrarich. In fact it is not uncommon for Victorians to hold the vast majority of their wealth in a single property investment. According to ATO data, 72 per cent of Victorians who invest in real estate own only one investment property. The majority of these investors have an income of less than $100,000 a year.

You might be surprised to learn that the majority of Australians who own single or multiple investment properties are actually aged under 65. These are people who are seeking to build a comfortable retirement for themselves and a decent quality of life for their families. Such a steep increase in the rate of taxation is not good policymaking. It will add to the existing inflationary pressures on the Victorian and Australian economies. Furthermore, there is a real risk that this tax increase will impact rental prices in an already strained rental market plagued by affordability and availability constraints. Recent data from Domain shows a 64 per cent drop in rental listings over the last year. At the same time rental costs have skyrocketed, with the number of rentals below $400 per week dramatically falling across Victoria over the past year.

It appears the government has failed to take into account the significant increase in property prices that has occurred in Victoria over the past two decades. Melbourne property prices have been ranked the eighth most unaffordable in the world when compared to how much people are earning, faring worse than New York and London. In regional Victoria, according to a recent study by ANZ, the proportion of annual household income required to service a new mortgage increased to 42.8 per cent, up from 30 per cent in March 2020. Yet the tax-free threshold has increased only marginally, from $250,000 to $300,000. With the median sale price for houses in Melbourne currently coming in at $975,000, and $628,000 for units, even the new threshold of $300,000 would appear too low.

More broadly, I am concerned that Victoria’s tax base is overly reliant on property taxes. As I pointed out in my inaugural speech, 42 per cent of the state’s total taxation comes from land tax and stamp duty alone. We need to think much more creatively when it comes to the measures we enact to raise revenue, which is necessary due to the significant debt this government has accrued. And consider the impact of distortionary taxes on property and land. Housing affordability for first home buyers and the availability of affordable rental stock are vital to ensuring young Australians have a stake in their future and the community. We must ensure our taxation framework does not impede these goals.

I call on the government to use the opportunity afforded by the state budget to consider the pain Victorians are in due to the addiction to property-based taxes and instead responsibly manage our economy and stop wasting taxpayers hard-earned money.