Thursday, 31 October 2024

Duties Amendment (More Homes) Bill 2024

Second reading

Debate resumed on motion of Tim Pallas:

That this bill be now read a second time.

Michael O’BRIEN (Malvern) (12:53): In the absence of the member for Frankston, who I think still had about a minute or 2 minutes to go – he has clearly given up, he has already gone home, he does not want to finish his contribution on this bill – I am very happy to step into the breach.

Don’t you love it when the chickens come home to roost? It was back in 2017 when this government increased taxes on off-the-plan apartments. We warned them that it was not going to work. We warned the government that it was an economically dumb thing to do, and the reason why it was an economically dumb thing to do is very simple. To get a new apartment complex off the ground financially you need to pre-sell a lot of them. The banks actually need to know that there are financial commitments there before they will lend money to a developer to build a new apartment project. The only reason why people would pre-commit to a new property they have not even seen yet is if there is a substantial financial benefit for them to do so. That was what the whole off-the-plan discount was about.

People are taking a risk when they buy off the plan, because they do not see the final product. You have already committed to buying it. You buy off the plan based on maybe a display suite, based on plans and designs, based on the marketing material, but you do not actually know exactly what you are getting. In order for you to take that chance that what you sign up for may not be what you get or may not be to your liking, you have got to have a big incentive for people to do that, and that is what the off-the-plan stamp duty concession was about. For those who do not know how it works, effectively if you buy off the plan then you only pay stamp duty on the value of the land at the time of that contract being signed. So if it is signed before the building is built, then the stamp duty only applies to the unenhanced land and therefore it is a much bigger saving.

In 2017 this government, through one of its I think now 55 new or increased taxes, the Treasurer decided to get rid of the off-the-plan stamp duty concession for everybody except for owner-occupiers. Now, the fact is that a lot of apartments are bought by investors. As soon as you say to investors, ‘We don’t want you to buy off the plan,’ because as I said there is no reason why you would buy of the plan unless you get a financial benefit for it, you are basically taking them out of the market. The fact is there are just not enough owner-occupiers who are willing to stand up and get these projects off the ground, and that has led to a reduction in supply. So when this government talks about responding to a housing crisis, it is a housing crisis which this government itself has largely contributed to, because this government made deliberate taxation decisions to stop apartments being built in 2017 when it got rid of the off-the-plan stamp duty concession for investors.

The Real Estate Institute of Victoria warned the government at the time. I understand the Treasurer probably did not want to get free advice from the former Treasurer, the Shadow Treasurer as I was at the time, but he could have listened to the REIV. Here is what the REIV said back in 2017:

The REIV does not support the removal of the off-the-plan concessions for investors. This change will reduce the attractiveness of property investment in Victoria, further limiting rental supply at a time when vacancy rates are already tightening.

The government was warned. They were warned by the people who actually know the property industry pretty well: the Real Estate Institute of Victoria. This was going to hurt supply, and that is exactly what happened. When I started off my contribution by talking about chickens coming home to roost, that is what I meant. This government were warned that what they were doing was economically reckless, was going to lead to a reduction in supply of new apartments, and yet the government ploughed on and did it anyway, and now all Victorians are reaping the consequences of this government’s failures.

Of course the government cannot even bring itself to fully reverse its tax increases from 2017. It is trying to sell it as a great tax cut, but it applies only for 12 months. This is not a permanent change, this is a temporary change. It is trying to roll something in glitter and pass it off –

Juliana Addison: Roll what in glitter?

Michael O’BRIEN: Something. I will let you fill in the gaps, member for Wendouree. So I actually feel very sorry for the Labor backbench who have obviously been instructed to come in here and try and big this up and sell this as being a great tax cut, when all it is is a temporary relief from a new tax that Labor imposed, which it is going to go back on in 12 months time.

Tim Richardson interjected.

Michael O’BRIEN: I would not be talking about polls if I were you.

Members interjecting.

The ACTING SPEAKER (Wayne Farnham): Through the Chair. Members on my right will cease interjecting. Member for Malvern, through the Chair.

Michael O’BRIEN: The REIV warned the government at the time. I warned the government at the time. Anybody with half a brain warned the government at the time, but this government of course thinks it knows better.

Now, how much did the government make when it imposed these new taxes back in 2017? $841.2 million was the additional revenue over the forward estimates – $841.2 million. The government says that this one-off 12-month tax relief will cost $55 million, so clearly the government does not think –

The ACTING SPEAKER (Wayne Farnham): At this point in time we are going to break for lunch, and hopefully everyone will get off the red cordial.

Sitting suspended 1:00 pm until 2:02 pm.

Business interrupted under standing orders.