Wednesday 14 October 2009

Hansard of the Legislative Council

Mr FINCH (Rosevears) - Madam President, just on the subject of land tax, I did attend the briefing this morning and we had discussion about it yesterday and you may, Treasurer, have answered some of these things in your discussion yesterday.  In light of the evidence that we heard today and the inference that land tax is going to be an election issue coming up to this next election, can you apprise me of your situation?  Do you intend to review land tax or are you going to hold your line on land tax?  What are your plans for the election in respect of this issue?

Mr AIRD - I thank the honourable member for his question.  I will tell you one thing, I am not going to telegraph my punches.  Ken Henry is undertaking an overall review of taxation, excluding the GST, and I would imagine what he would be doing as part of that review is making an assessment of State taxation regimes and I think he would have to in one way or another address three important areas in terms of the State's revenue-raising measures.  One is land tax, the others are payroll tax and duties - conveyance duties particularly.  There will be an assessment. 

The overall assessment I make is that we cannot afford to let our own source of revenue drop lower than 35 per cent.  That is where we are now.  We are relying on Commonwealth grants and transfers to about 65 per cent of our income.  I do not think anyone would like to see our own source of revenue drop below 35 per cent and therefore if there was going to be any change in payroll tax, land tax or duties, then there would have to be a relationship with the capacity of the Commonwealth to provide some further measure back to the States.  I do not know how that is going to work but it would have to be designated as States' own revenue, in my opinion.  I might be wrong in that, but that is the way I would see it. 

To sum up, I am going to wait until the Henry review comes out and makes a call on the future of taxation in this country.  Any changes to taxation between the States and the Commonwealth will have to be signed off by the various jurisdictions along with the Commonwealth and that could take some time.  Nonetheless -

Mr Finch - When are you expecting the Henry review?

Mr AIRD - That is a good question.  There was an expectation that it would be released in December.  I am not too sure about that, but that was the expectation.  Can I also say about land tax that we went to the last election holding on to our existing position on land tax and the Liberal Party went to the election with abolishing land tax, and we know the result of that election.  Because something is an election issue does not necessarily mean that people are going to change their votes on the basis of one issue.  They might, but generally they weigh up a whole range of other factors.

Mr Harriss - Including scandals and bungling.

Mr AIRD - They will make judgments, but they will also make a judgment that we have the strongest economy in Australia and that is a bigger judgment.  What will people be interested in?  Protecting their jobs, and the fact is that those who have invested in Tasmania over the last 10 years have got good returns. 

Some people might change their vote on one issue but I am not persuaded by that argument.  I think people will respect a government which is trying to manage the State's finances in a sustainable way, knowing that we have to provide services back to the community.