Member for Western Victoria
Derryn Hinch’s Justice Party

Windfall Gains Tax and State Taxation and Other Acts Further Amendment Bill 2021

I rise to speak on the Windfall Gains Tax and State Taxation and Other Acts Further Amendment Bill 2021. We will not be supporting this bill. However, I am using a bit of my time today to talk about something I regularly speak about and that is the disparity between regional Victoria and suburban and metro Melbourne. I am making these statements on this bill because it is the unintended consequence of disincentivising investment and development in regional Victoria—that is, even further than what currently exists. As some may know, I recently asked the Parliamentary Budget Office to look into the financial inequity of government spending in regional areas of Victoria. The report found that regional Victorians receive around 11 per cent less government asset investment than their metropolitan counterparts. It shows that in the 2021–22 state budget the current government is investing $17 100 per person in assets for metropolitan residents and $15 351 for regional residents, and this is not new. We know that regional Victorians are already worse off when it comes to basically everything: income, infrastructure, access to specialists, even their rates of heart attack. I recently found out, on World Heart Day, that heart disease deaths are at least 50 per cent higher in some parts of my electorate than in Melbourne’s inner east. I digress from housing, but you can see that in almost every facet of life regional Victorians are supporting their metro counterparts without adequate support for them from the government. If we talk about housing, which is essentially what this bill really impacts, then we need to look at how this bill may impact the regional Victorian housing crisis, and I do not say ‘crisis’ loosely either. If you find a job in somewhere like Moyne shire, Colac Otway shire, Horsham, Warracknabeal or Nhill—the list goes on—good luck finding long-term accommodation. Regional Victoria has defied the government’s assumption that regional towns would be wiped out. They are prospering and their industries are growing, but they need housing. Housing is not just important for attracting and sustaining employment, it is important so that children in these townships feel they can stay and invest in the area they were raised but also for crisis accommodation—for example, I have heard since very early on, when I became an MP, that women fleeing domestic violence often have nowhere to go with their children, and I am sad to say that I still hear the same stories. While I have to say I support the idea behind a windfall gains tax, where you hand back some of the profit on rezoned land to the people of Victoria, the way this is being done is inequitable. I do not think there is much opposition to the fact that if by the stroke of a pen you make $10 million overnight, you should have to return some of that to Victorians—the court of public opinion would be supportive of that change; however, when you introduce a tax that will only encourage the government to look to certain areas to develop because it is cheaper, that is where the problem lies. I was glad to see the government go back to the drawing board after many conversations following the announcement of the tax at budget time this year. I will say that I appreciate the sensible changes made to the tax as a result of this extended consultation, including extending the time line to transition to this new model; a tax-free threshold of $100 000; the exemption of very small lots of up to 2 hectares with a dwelling on the land; the exemption of rezoning to a rural zone, with a few exceptions; exempting land that is owned exclusively for charitable purposes for 15 years after rezoning; but the one big exemption of concern is rezonings to and from urban growth zones within the growth areas infrastructure contribution areas. The growth areas infrastructure contribution was brought in in 2010 to create a mechanism to collect money from developers that would go towards necessary and essential infrastructure. This was obviously needed as populations grew in those areas, and it was funded by the uplift of value in the area as a result of rezoned land within the urban growth boundary. The GAIC, as it is known, and the windfall gains tax have the same intent generally, but they are implemented quite differently and at different rates. The GAIC, for instance, has a set price per hectare depending on the type of land it is. Type A land has a $100 000 GAIC uplift rate per hectare, and this, certainly for developers, creates a further divide between these highly sought after parcels of land in urban growth zones and land in regional and rural Victoria, which lands in the too-hard basket. For context, places like Hume, Melton, Mitchell and Wyndham have a GAIC, but because they have this tax developers looking in this area would not pay the windfall gains tax. I spoke to Ararat Rural City Council about this proposal, and it is safe to say they were very worried that this would only hinder their goals to attract more workers and investment into their local government area. As a very simplistic example of how this could impact investment in Ararat council, under the proposed windfall gains tax you could have Ararat land worth $2 million, or $10 000 per hectare. After it is rezoned it could have a total land value of $60 million, or $300 000 per hectare. The value uplift would be $58 million, and so $29 million, or $145 000 per hectare, would be payable to the government on this tax. Conversely, under the GAIC, an example the council supplied stated that a developer could purchase 16 acres of residential land for $640 000 per hectare in Beveridge within the City of Whittlesea. GAIC would be $48 266 per hectare under the current rates. The difference between the two is clearly what the disparity could be per hectare, not even taking into account the greater profits that will inevitably be made in Melbourne’s fringes per acre over that in Ararat, but also the windfall gain is paid by the property owner. This person is not necessarily a developer. Think about the competitive advantage you have Melbourne where the blocks are small, meaning less electricity lines need to be put in, less sewerage lines—you can squeeze more property into less land. Rural areas do not have these luxuries to attract development. To repeat the phrase of not only Ararat council, this approach by the government creates a two-tiered tax system and certainly disincentivises investment in regional Victoria for housing and commercial developments. The government has said that those who pay the GAIC also pay other developer contributions, but we know that all planning schemes have provisions for contributions by developers, and indeed in a number of areas in the state this occurs—Surf Coast, Geelong, Ararat, Mildura, Warrnambool and plenty of others have a contribution scheme. Ararat, for example, have a public open space contribution which is up to 5 per cent of the unimproved capital value of the developable land. Not only this, but it seems my electorate is seeing blow after blow when it comes to housing. Many, many areas in my electorate were just excluded from the Victorian Homebuyer Fund. This is a scheme where the government will share the equity of a property in order to help you purchase a property. Whatever your view of the tax itself, this leg-up should have been offered equitably. Stawell, a place with just three rentals available, which I might add is more than usual, did not get a look in. Aireys Inlet, Hamilton, Anglesea, Beaufort and Avoca are also on the blacklist. What is wrong with these towns? Should we not be encouraging people to buy in small towns like this? At the end of the day there is a maximum threshold for house prices, so it is not as if millionaires are able to exploit the scheme. Just recently the Council to Homeless Persons CEO, Jenny Smith, said rising rents and low vacancy rates were pushing more people into homelessness. She said, and I quote: Vacancy rates across South Western Victoria have been below 1 per cent for over a year and rents have jumped 12 per cent. Dare I make the point again that we need more housing in Western Victoria. Rural townships are screaming out for it, but instead we receive a tax system that will further ingrain them as undesirable places to invest money, and this is the opposite of what we need right now. It is for this reason that Derryn Hinch’s Justice Party cannot support this bill.


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