State Revenue Legislation Further Amendment Bill 2009

The Hon. ERIC ROOZENDAAL (Treasurer) [5.31 p.m.]: I move:

That this bill be now read a second time.

The State Revenue Legislation Further Amendment Bill 2009 is the latest in a series of bills to amend Acts administered by the Office of State Revenue. This is to ensure that the legislation is current and consistent with best-practice tax administration. It makes amendments in five broad areas to provide revenue protection measures and address tax avoidance practice; provide tax concessions for duties and land tax; improve administration of first home benefits under the First Home Plus and First Home Owner Grant schemes; improve administration of fines enforcement; and clarify provisions in State revenue legislation to align them with current practices and interpretations. It also makes a number of legislative changes arising from the mini-budget. It enacts the Federal Government's First Home Owner Boost Scheme, which is administered by the New South Wales Government and requires State legislation. The bill makes substantive amendments to the Duties Act 1997, the Fines Act 1996, the First Home Owner Grant Act 2000, the Land Tax Management Act 1956, the Petroleum Products Subsidy Act 1956 and the Taxation Administration Act 1996. The bill also makes consequential and statute law amendments to various other Acts. I will deal with the amendments to each principal Act in turn.

The bill implements the decision announced in the mini-budget on 11 November 2008 to replace the land rich provisions of the Duties Act with a landholder model. From 1 July 2009, under the new landholder model, transfer duty will be payable when a 50 per cent or more interest is acquired in an unlisted company or unit trust that owns land in New South Wales with a value of $2 million or more. The bill imposes duty on the acquisition of 90 per cent or more of a listed entity or widely held trust with 300 or more investors. A concessional duty of 10 per cent of the transfer duty otherwise payable is provided, rather than the full duty rate charged by Western Australia and the Northern Territory. This provision will not commence until 1 October 2009 to allow those affected extra time to get ready for the new provision. To provide consistency with the tax treatment of direct transactions, landholder duty will apply to the acquisition of land and goods.

I seek leave to have the remainder of my speech incorporated in Hansard.

Leave granted.

In response to representations by professional and industry groups, the bill includes changes to raise certain thresholds and harmonise more closely with other jurisdictions. In addition, the bill includes several other integrity and revenue protection measures. The bill introduces a general anti-avoidance provision for duties.

Over the years, adopting provisions that specifically address identified avoidance practices has successfully protected the duties revenue base. Unfortunately, new schemes increasingly being used are to avoid significant duties liabilities on one-off transactions. To combat these practices, most Australian States and Territories have introduced general anti-avoidance provisions for duties in recent years. The challenge for these provisions is to ensure that a taxpayer who is confronted with alternative methods of achieving the same end is not guilty of tax avoidance merely by choosing the option with the lesser tax liability.

The bill adopts a general anti-avoidance provision similar to the provisions in other States. This is built around the concept of a person entering into a scheme for the "sole or dominant purpose" of tax avoidance in circumstances where the scheme is "artificial, blatant or contrived". The experience to date indicates that provisions of this nature operate as a deterrent to avoidance schemes, such that the provisions rarely need to be invoked or litigated. Any assessment pursuant to the provision would be subject to the same objection and review process that applies to other assessments by the Chief Commissioner of State Revenue. The provisions will apply only to duties liabilities arising on or after 1 July 2009.

The bill implements two other revenue protection measures for duties. The first is to clarify the basis upon which duty is paid on transfers of the goodwill of a business. A liability to transfer duty on goodwill requires a relevant connection with New South Wales. In cases where the business also operates outside New South Wales, the value of the goodwill is apportioned. A recent decision of the Supreme Court identified some deficiencies in the current provisions. The bill clarifies those provisions by adopting provisions similar to those currently operating in Queensland and Western Australia. Once a relevant connection to New South Wales has been established, the apportionment provisions will continue to ensure that duty is payable only on the New South Wales proportion.

The second measure both protects mortgage duty revenue and ensures an equitable result for mortgages relating to property both in and outside New South Wales. Mortgage duty has been abolished on owner-occupied housing and investment housing finance taken out by natural persons. The remaining mortgage duty will be abolished on 1 July 2012. In the interim, anomalies in the current New South Wales law would create significant inequities and avoidance opportunities. The bill removes these anomalies. The bill provides that duty is payable by reference to the New South Wales proportion of the total property used as security at the time of each duty liability point. To eliminate the possibility of double duty, an optional duty credit is provided in some instances. A liability will arise on the making of an initial mortgage, the addition of further securities, and on the making of advances of money. These changes will ensure that mortgage duty is payable on no more or less than the New South Wales proportion of the security for advances at each liability point.

The bill makes two changes to ensure that the First Home Plus scheme is received only by genuine first home buyers. First Home Plus provides a duty exemption or concession on properties valued at up to $600,000. The bill clarifies the eligibility criteria relating to whether the applicant and his or her spouse have previously owned residential property. The bill also introduces a measure to assist in recovery of duty on ineligible transactions. Approximately $10 million in duty and penalties is reassessed on First Home Plus transactions each year and approximately $8 million in grants and penalties on the First Home Owner Grant Scheme is required to be repaid each year. In cases where a person who has received a concession or exemption is subsequently found to be ineligible, such as where the applicant fails to satisfy the residence requirement, the bill provides that the unpaid duty is a charge on the land. This will enable a more consistent process for recovery of duty and grant moneys.

The bill provides minor extensions of three duties concessions. The first will correct an anomaly in the concession for certain conversions of title to land. The second will extend the concession on a transfer of dutiable property between custodians and sub-custodians under managed investment schemes. The third will ensure the exemption from duty for transfers of property following the breakdown of a de facto relationship continues to apply following the referral of State powers to the Commonwealth. The emergency service levy to fund the State Emergency Service commences on 1 July 2009. Consistent with an existing provision in the Duties Act that specifies that the fire service levy is included in the amount of premium for insurance duty purposes, the bill provides that the emergency service levy is also part of the premium. A complementary amendment is made to the Insurance Protection Tax Act 2001. The bill also specifies that insurance duty on trauma and disability policies is calculated at 5 per cent of the total premium, to remove uncertainty as to the applicable rate. The final change to the Duties Act made by this legislation is an update to the list of Crown bodies that are subject to duty. That list is included in the principal Act, and the Duties (Crown Immunity—Application of Act) Order 1998 is repealed.

The First Home Owner Grant Scheme identifies six criteria to determine whether an applicant is eligible for the grant, and an applicant's status in relation to some of these criteria can change during the application period. For example, an applicant may not be an Australian permanent resident when buying a home but may obtain that status before applying for the grant. Since the scheme's commencement in 2000, the practice of the Office of State Revenue had been to determine eligibility at the date of application, being the date on which the applicant declared the truth of the facts contained in the application. However, since a decision of the Administrative Decisions Tribunal in 2008, applications are now determined at the commencement date for the transaction, such as the date contracts are exchanged. The Act as currently worded remains ambiguous, and other State and Territory revenue offices have variously interpreted the same or similar provisions in different ways. The bill amends the Act to confirm that an applicant's compliance with the eligibility criteria for the grant is to be determined at the commencement date for the eligible transaction.

The bill implements the Commonwealth Government's announcement of an extension to the First Home Owner Boost, which provides additional assistance to first home buyers until 31 December 2009. This is in addition to the $7,000 First Home Owner Grant provided by the New South Wales Government and to the $3,000 New South Wales New Home Buyers Supplement, which was extended in the budget until 30 June 2010. The bill also implements the mini-budget announcement to introduce a cap on grant payments, limiting eligibility to the grant to homes valued at no more than $750,000. This provision will come into force on 1 January 2010 once the Commonwealth First Home Owner Boost scheme ends.

The Chief Commissioner of State Revenue currently has the power to correct a decision to pay the grant within five years of that decision. Experience has now shown that this is insufficient time when dealing with cases of fraud and identity theft, which may not come to light until many years later. The bill allows a decision on the grant to be varied or reversed more than five years after it was made if it was based on false or misleading information provided by or on behalf of the applicant. This is consistent with provisions allowing reassessment of duty under the First Home Plus scheme. The bill also clarifies the circumstances in which information obtained in administering the grant may be disclosed. Disclosure to the Commonwealth will be permitted for the purposes of the First Home Saver Accounts scheme, and disclosure of information for the purpose of legal proceedings will be limited to proceedings arising out of the administration of the First Home Owner Grant Act or a taxation law.

I turn now to the Land Tax Management Act. Where land is jointly owned and one of the joint owners is exempt from land tax, the exemption applies only to the interest held by that joint owner. Other joint owners remain liable for their interest in the land. An example is where one of the joint owners is a Commonwealth Government body, which is exempt by the operation of a Commonwealth law. However, there is uncertainty about how the land tax liability of the joint owner who is not exempt should be calculated under the legislation, particularly where the other joint owner is entitled to constitutional immunity. It has been past practice to assess the non-exempt joint owners on the value of the property reduced by the proportionate interest of the exempt joint owner. The bill amends the provisions relating to the assessment of joint owners to confirm the current practice. The bill also clarifies that where a joint owner is immune from State taxation by the operation of Commonwealth law, the immunity does not extend to the interests of any other joint owners.

Land tax is a first charge on land, and the charge remains with the land until the tax is paid, even if the land is sold. These provisions also apply to company title land where the home unit company owns the land and building, but the shareholders are deemed owners of each individual unit for land tax purposes. As a result any land tax owed by the owner of one unit would be a charge on the entire property. It is not reasonable to place a charge on an entire parcel of land owned by a company due to a single defaulting deemed owner. It is therefore proposed to amend the Act to exclude land owned by a home unit company from the land tax provisions imposing a charge for unpaid tax. Since 1987, lessees of Crown land have been deemed to be the owners of the land for land tax purposes.

The whole of Lord Howe Island is vested in the Crown, so lessees of land on the island are potentially liable for land tax. Most of the land leased by the Lord Howe Island Board would be eligible for exemption as the principal place of residence of the various lessees, or as land used for primary production. However, a small number of parcels of land could be liable for land tax, including leases used for commercial purposes. Land on the island is not valued on a regular basis, nor are values recorded on the Register of Land Values maintained by the Valuer-General. Therefore, lessees would be unaware of any potential land tax liability, and no lessees have ever been assessed for land tax by the Office of State Revenue. Furthermore, the commercial use of land on Lord Howe Island is limited by the island's World Heritage status and is strictly regulated by the Lord Howe Island Board.

The limited valuation information that is available suggests that land values on the island are generally below the land tax threshold. Any revenue generated from land tax would not be sufficient to justify the additional costs of maintaining valuations on the Register of Land Values. The bill therefore provides that the whole of Lord Howe Island is excluded from the application of the Crown lease provisions of the Land Tax Management Act. The exclusion is backdated to the introduction of the liability on lessees in 1987. The land tax exemption for a person's principal place of residence continues to apply for one year following the death of an owner, to allow time for the executor or administrator to administer the estate. However, the concession applies only to residential land that does not include a strata lot or a residence located in a non-residential building, such as a flat above a shop. The bill clarifies that any land that was entitled to an exemption or concession because it was used and occupied by the deceased owner as a principal place of residence is entitled to continuation of the exemption or concession for one year after the death of the owner.

The mini-budget foreshadowed that the petrol subsidy in northern New South Wales would be abolished if Queensland went ahead with its proposal to restrict its subsidy scheme to Queensland residents only. The Queensland Premier has now announced that Queensland will abolish its petrol subsidy from 1 July 2009, and legislation was introduced into the Queensland Parliament on 16 June. The bill provides for the abolition of the New South Wales petrol subsidy on 1 July 2009, in line with the announced Queensland abolition. In order to prevent recipients from increasing their last subsidy payment by bringing forward sales of product, the subsidy payable for June sales will be capped. This is achieved by limiting claims to either a 10 per cent increase on the average subsidy payable for sales in the previous 11 months of 2008-09, or a total claim of $10,000, whichever is greater.

I turn now to changes to the Taxation Administration Act. Taxpayers who fail to pay the correct amount of tax are liable to pay penalty tax and interest on the amount of tax outstanding at a rate that includes two components—a market rate and a premium rate. Currently, the market rate is adjusted on 1 July each year, based on a rate published by the Reserve Bank during the preceding May. To ensure that the rate more closely reflects market interest rates, the bill provides for automatic quarterly adjustment of the market rate component from 1 July 2009. The bill also clarifies the circumstances in which the penalty rate can be reduced for a voluntary disclosure by the taxpayer.

The bill implements improvements to the administration of fines and penalty notices by the State Debt Recovery Office. A penalty notice enforcement order is the first step of enforcement action by the State Debt Recovery Office following the failure of a person to pay or otherwise deal with a penalty notice. An enforcement order may be annulled if the person was unaware of the penalty notice or was unable to take any action in relation to the penalty notice. In these cases the person has the right to pay the penalty amount without incurring additional enforcement costs, or to dispute the alleged offence and penalty in court. Evidence has emerged that the annulment process is being abused to delay court proceedings or to delay the imposition of driver licence demerit points.

The amendments in the bill will require applications for annulment to be made within a reasonable period after the person became aware of the penalty notice or became able to take action, and will allow annulment in other circumstances only if the person had no prior opportunity to obtain a review of the liability. The bill also limits the circumstances in which payment of the penalty notice amount without enforcement costs is an option. These amendments retain the current wide grounds for annulment but prevent delays and other abuses of the process being used to avoid liability for the fine or demerit points. Currently, any amounts paid under a penalty notice enforcement order must be refunded when the order is withdrawn or annulled, even if amounts remain unpaid under one or more other orders made in respect of the same person.

The bill authorises the State Debt Recovery Office to allocate any overpayments towards unpaid amounts under other enforcement orders of the same person, and requires the State Debt Recovery Office to notify the person of the allocation of the funds. The Fines Act specifies that fines and costs, when recovered, are payable into the Consolidated Fund unless another Act authorises payment to a specified body or account. This may conflict with another provision authorising the State Debt Recovery Office to deal with amounts collected in accordance with commercial arrangements with various government and statutory bodies. The bill confirms the authority of the State Debt Recovery Office to pay fines revenue to the body on whose behalf the fines were collected under those commercial arrangements. To simplify administration of the arrangements, it is further provided that the State Debt Recovery Office can retain the agreed fee rather than requiring that amount to be invoiced and paid back to the State Debt Recovery Office.

Finally, the bill makes a number of minor statute law amendments to the principal Acts and to the Betting Tax Act 2001, the Health Insurance Levies Act 1982, the Payroll Tax Act 2007 and the Unclaimed Money Act 1995. Most of the amendments contained in this bill have been the subject of consultation with professional and industry bodies, including the Institute of Chartered Accountants, CPA Australia, the Investment and Financial Services Association, the Law Society of New South Wales, the Property Council of Australia and the Taxation Institute of Australia. I thank those organisations for their valuable contributions to the drafting of this legislation. The amendments introduced by this bill will improve the legislation and administration of a wide range of taxes, benefits and fines administered by the Office of State Revenue, as well as other measures previously announced. I commend the bill to the House.

The Hon. MATTHEW MASON-COX [5.35 p.m.]: I lead for the Opposition in debate on the State Revenue Legislation Further Amendment Bill 2009. I do so noting that this bill arises from mini-budget measures introduced by the Government in November and gives effect to various miscellaneous amendments across a range of taxes that the State Government administers. In particular, I note that the objects of the bill are to amend the Duties Act 1997—and there is a whole range of amendments in that regard—as well as the Fines Act 1996, the First Home Owner Grant Act 2000, the Land Tax Management Act 1956 and a range of other Acts in order to give effect to the mini-budget measures announced last November. It is worth noting at the outset that the bill imposes new taxes or increased taxes upon New South Wales residents. When speaking to the appropriation bills that were debated earlier in this Chamber, the Treasurer trumpeted that there were no increased taxes in the 2009-10 budget. But this is the bill that contains the taxes that the Treasurer sought to hide by omitting them from the appropriation bills.

I note that the State Revenue Legislation Amendment Bill 2009 was cognate with the appropriation bills and, amongst other things, removed stamp duty in relation to caravans. The measures in that bill reduced taxation, but in this bill we find the nasties. They have been put into a separate piece of legislation so they are not linked directly with the budget bills. Indeed, one need only reflect on the mini-budget to remember the pain that New South Wales residents suffered at that time. The mini-budget was brought on by the resignation of the former Treasurer, the Hon. Michael Costa. I will not reflect too keenly upon the pain inflicted at that time. It certainly was a most challenging period for the new Treasurer and the new Premier, and the people of New South Wales certainly paid a very high price. I remember particularly the reactions when a number of infrastructure items were cut. That pain was inflicted in order to restore some balance in the budget. At the same time we saw the introduction of a range of measures that were meant to put balance back into the budget, so that instead of expenses outstripping revenues by 1 per cent, as has occurred over the past number of years, there was some balance between revenue and expense growth.

The measures that were called upon at that time are contained in this bill. I note in particular the significant expansion of the transfer stamp duty tax base as a result of the proposed amendments to change the measure from a land rich to landholder model. It is estimated that this change will bring about additional revenue of approximately $20 million, although one would question whether the amount raised by the amendment could be significantly more. I note particularly that these provisions have been modelled on the 2007 rewrite of the Western Australian Duties Act introduced by the former Carpenter Government and that the Northern Territory and the Australian Capital Territory have since introduced similar provisions. Victoria's legislation is similar to the current New South Wales land rich legislation, while Queensland has a land rich approach for companies and a landholder approach for trusts.

By way of background, the land rich provisions were introduced into the Duties Act in 1986 as an anti-avoidance measure to stop property transactions being structured as corporate or trust transactions to avoid paying stamp duty. The current test for companies is two-fold and the requirements are landholdings in New South Wales of $2 million or more and landholdings comprising 60 per cent or more of the value of all assets of the company or trust. I note that under the proposed changes the 60 per cent test will be abolished so that all companies and trusts holding land worth more than $2 million are covered.

Under the new scheme, duty is payable on corporate transactions when, for an unlisted company or unit trust, an interest of greater than 50 per cent is acquired and, for a listed company or unit trust scheme, an interest of 90 per cent or greater is acquired. Once a person is above the relevant threshold, any increase in their holding will also attract duty. For unlisted entities, duty is calculated on the basis of the percentage holding in the entity multiplied by the rate of duty that would apply to the value of all landholdings and goods owned by the entity in New South Wales. I note in particular that this will increase the level of duty payable by companies and trusts, and that the changes have been resisted by people and organisations that represent companies and trusts more widely.

The Property Council of New South Wales has calculated that the implications of the increase in duty will be a five-fold or ten-fold increase in some situations, which is indeed a significant imposition for New South Wales taxpayers. The Property Council put together a number of transaction examples to demonstrate the increase in duties that would apply. One involved the acquisition of a retail store with $7 million in assets and 25 employees that owns its own building worth $4 million. Under the old provisions, the company would pay $21,000 whereas under the new system with these changes the payment due would be $214,490. That is approximately a ten-fold increase in duty, which would be a very large imposition for companies or trusts caught by the new provisions.

I note also that the bill implements changes to the First Home Buyers Scheme. The bill clarifies the eligibility rules for First Home Plus, the stamp duty concession for first home buyers; places a cap of $750,000 on eligibility for the $7,000 First Home Owner Grant from 1 January 2010; and deals with insurance stamp duty. Members will remember that the mini-budget introduced a $39 million emergency services levy to fund the State Emergency Service. That is to be included in the definition of "premium" for insurance policies and the calculation of insurance duty. Whilst a similar approach has been taken for some time with the fire services levy, it is arguably a tax on a tax and is certainly a new tax for holders of insurance policies.

I note that insurance duty is levied at between 5 per cent and 9 per cent, depending on the type of insurance, and that the new stamp duty will raise an additional $3 million per year approximately. Whilst the State Emergency Service will certainly spend this money on very important community services, I note that there has been a transfer of the Government's obligations in this regard. Previously the approach taken to the State Emergency Service levy involved the Government paying much more to support the service. This responsibility has been transferred to the insurance industry, with funding now provided through insurance duty. It is most unfortunate, as the obligations in this regard have also increased for local councils. This transfer of responsibilities from the State Government to the insurance industry and local government is regrettable. It simply puts more strain on local government and on insurance holders, who will have to pay increased levies through their insurance policies.

That is regrettable, particularly in the current economic climate. We have seen the trouble caused by a number of major natural disasters on the North Coast and by bushfires, and insurance plays an important role in rebuilding affected communities. These types of imposts are simply an additional cost for everyday householders. I think it is more suitable that they be borne by the Government, given the public service provided by the State Emergency Service. Another area affected by the bill is mortgage duty, which has been abolished on residential property and investment housing and will be abolished completely on 1 July 2012. The bill abolishes the 1.2¢ a litre subsidy for fuel transported across the Blue Mountains by rail, which was announced in the mini-budget.

The bill also facilitates a number of minor amendments. I will not go through them in detail except to note that a number of the changes increase the cost of doing business in New South Wales—which is probably one of the major problems with the bill. That is understandable as the Treasurer was making a cash grab in November. Times were difficult then and they have worsened since. Many businesses are still having difficulties. These are further imposts that will be a distraction for existing businesses as well as a barrier to new businesses coming to New South Wales.

We have heard a lot of rhetoric from the Treasurer in relation to jobs and the importance of supporting jobs, and the fact that the 2009-10 budget is a jobs budget. The reality is the nasties that have been hidden away in this separate bill do exactly the opposite. The Treasurer is sighing because that is just one of the sad realities. No-one likes bad news, but this is the bad news bill—and it contains a lot of it. I note that a number of parties have strongly condemned the bill. The Property Council strongly opposes the legislation, as does the Investment and Financial Services Association, Infrastructure Partnerships Australia, the Shopping Centre Council of Australia, the Insurance Council of Australia—which is particularly unimpressed with the emergency service levy provisions—and a range of other interested parties.

On the basis that the bill's provisions will deliver a major tax increase on corporate transactions and be a serious disincentive to investment in New South Wales relative to our competitors, particularly Queensland and Victoria, the Opposition will oppose the bill. We believe that essentially there is a lack of honesty and transparency in relation to revenue-raising measures. That is particularly borne out by the fact that the bill was not included with the appropriation documents for the 2009-10 budget. Whilst the Treasurer might argue that these provisions came out of the mini-budget in November, it is interesting to note that the bill that preceded this one—the State Revenue Legislation Amendment Bill 2009—was cognate with the appropriation bills. However, this subsequent bill, which contains the nasties—the increased taxes that the Treasurer did not want to acknowledge in the budget process—is not a cognate bill but is nonetheless being considered contemporaneously by the House.

I think it is a little bit rich—not land rich—that the Treasurer has sought to do this without raining on his parade and his ability to say that there are no new taxes in this budget. All that does is confirm the business world's cynicism about this Government and this Treasurer and their inability to put New South Wales and New South Wales business first. It continues the paradigm under which this Government operates, where it sees business consistently as a cash cow to be milked rather than as a means to drive the economy forward to provide the necessary revenues we all seek to build a better community. These are the philosophical differences between us. I will not dwell on them too much tonight, but they are a gulf between us. In the interests of brevity I simply note that this is a very bad impost on business, and accordingly the Opposition will oppose the bill.

Dr JOHN KAYE [5.50 p.m.]: If the State Revenue Legislation Further Amendment Bill 2009 signifies an ideological divide, it is very clear which side we are on. We are on the side of a fair tax system that collects revenue in order that the State can operate in a reasonable fashion. In our analysis, this bill does exactly that. It fixes a number of issues relating to revenue-based measures and makes them fairer. In some cases, it increases the tax collected but it does so by cracking down on loopholes and opportunities for people to avoid paying duties and taxes. I have to say—and I am sure the Treasurer will say it in his speech in reply to the debate—that in as much as an Opposition should be opposing and criticising the Government and pointing out where it is making mistakes, it also has an obligation to do so in a fashion that explains to the people of New South Wales how the Opposition would do it differently. It is not appropriate for an Opposition to say it is wrong to collect revenue here, it is wrong to close that loophole there and it is wrong to collect taxes, and then also say that it is going to spend a certain amount of money here and there. There needs to be some accounting between the failure to close tax loopholes and the increased expenditure.

The Hon. Matthew Mason-Cox: It is a bit rich you lecturing us, John.

Dr JOHN KAYE: I acknowledge the interjection. I do not think it is rich at all. I think it is entirely appropriate. We have been to every election that I have been involved with, which is a large number, with fully costed election promises. We never make promises that we cannot cost or cannot find ways to finance.

The Hon. Matthew Mason-Cox: You will never be in government, mate.

Dr JOHN KAYE: That is your supposition, Mr Mason-Cox, but it is really up to the people of New South Wales as to whether that happens. I turn now to provisions in the bill that refer to the administration of first home buyers benefits. There are a number of technical matters and clarifications that are important but that do not bear largely on the nature of the scheme. The biggest issue announced in the mini-budget last year was the introduction of a $750,000 cap on eligibility for first home owner grants from the beginning of 2010. This is a step forward in order to target first home owner grants so that they achieve the most positive outcome in improving affordability for those people who otherwise would find it difficult to enter the home ownership market.

There remain question marks about how much of the assistance to homebuyers disappears in inflated house prices. First home owners, and homeowners in general, receive all sorts of grants and assistance. While the Greens strongly support easing the way for people to become homeowners—it is an important component of people's security in old age and an important aspiration for many people—it is vital that we focus whatever financial assistance is given on making things more affordable, not on inflating house prices. That said, it is probably less true now that the first home owner grants end up in profits through inflated house prices for those who are selling houses, given the depressed state of the property market. When the market returns to boom, housing prices are generally set by what the purchasers are prepared to pay, or at least by the vendors' view of what the purchasers would be prepared to pay. In effect, vendors push up the price to take into account first home owner grants and other assistance such as First Home Plus and so on. Our concern is that public money ends up as private capital gains.

There is also a huge risk that these sorts of assistance packages will increase the heat on the property market and make housing less affordable rather than more affordable. It is a perverse outcome that is not apparent at first, but because too many of these mechanisms push up house prices they drive people out of the housing market. As policymakers, we need to have an open mind about how to assist first home owners. Certainly, increased investment in social and public housing and planning instruments that support affordable housing are more effective and efficient supports for home buyers as they take the pressure off prices at the lower end of the market.

The second set of provisions in the bill refers to improved fines administration. This is largely to prevent abuse of the demerit points system by people delaying payment of fines. It is important to close this loophole to restore integrity to the traffic infringement system. The legislation also eliminates a number of loopholes in the State taxation system, including introducing a general anti-avoidance provision for duties. It is extremely important that we stop the haemorrhaging of duties through people seeking to avoid their payment. I want to ensure the immunity from State taxation enjoyed by the Crown does not apply to non-exempt landowners who own land jointly with a Commonwealth authority. We seek the Treasurer's assurance—which we are sure he can give us—that this will not adversely affect Aboriginal land councils or other traditional Aboriginal landowners. We have already been given to understand that, but we would like the Treasurer to put it on the record, if possible, when he replies to the debate. We ask him to give the House the assurance that the measure does not target Aboriginal land councils, which in some cases own land jointly with Commonwealth authorities. We have been given an informal explanation, but we view this as an important matter and it should be put on the record.

The last provision I wish to address is that of moving New South Wales from a land rich to a landholder model for assessing stamp duty liability. This measure was announced in the mini-budget last year; we supported it then and continue to do so. The land rich provisions are complex and provide opportunities for those who are seeking to avoid paying stamp duty or reduce their stamp duty liability to manipulate landholdings, not by changing their landholdings but by disguising them. We understand that the landholder model will reduce opportunities for that and as such we support it in order to restore and increase fairness in stamp duty revenue collection. The Greens support the legislation.

Reverend the Hon. FRED NILE [5.59 p.m.]: The Christian Democratic Party supports the State Revenue Legislation Further Amendment Bill 2009, which contains a number of procedural measures that will maintain and improve legislation administered by the Office of State Revenue. Many of the proposals will increase consistency of legislation and administration with other States. The bill covers five main categories, the first of which is the administration of first home benefits—an issue that is strongly supported by the Christian Democratic Party. We also support the introduction of a $750,000 cap on those who are eligible to receive first home owner grants from the beginning of 2010, as this was an area in which grants were manipulated. These grants are not intended to assist millionaires. A cap of $750,000 might be high, but at least it makes it more reasonable.

The second category in this bill relates to the need to improve fines administration. The third category is the elimination of loopholes in the State's taxation system. The bill contains a number of provisions to prevent people avoiding payment and it reforms the provisions imposing mortgage duty to improve simplification and equity. These provisions will ensure a reduction in penalty tax allowed for those taxpayers who make a voluntary disclosure of a failure to pay the correct tax, but those provisions will not apply to a taxpayer who has received a tax assessment. The legislation will also ensure fairness through concessions applied to State taxes and it will clarify and extend a land tax concession applying to the former principal place of residence of a deceased owner—a positive provision in this legislation. It also provides for a minor extension of duties concessions for conversions of title to land, and for transactions within managed investment scheme structures.

The bill contains a number of other minor miscellaneous improvements to State revenue measures. I support the move by New South Wales from a land rich to a landholder model of assessing stamp duty liability. Another matter of concern relates to the number of calls I am receiving from people who have holiday homes as part of their retirement plan, which appears to make them land rich but in reality they are cash poor. That situation would be greatly accentuated if they lost their jobs. A landholder could be paying rent for one property and own another property, but because he or she was unemployed that land tax could not be paid. The people who have complained to me have said that the land tax hardship provisions do not seem to be operating fairly. I ask the Government to give serious consideration to ensuring that those hardship provisions are reasonably applied to assist those who are unemployed. Some arrangements should also be made to enable the deferment of land tax, and other provisions must be implemented to ensure justice for those people. The Christian Democratic Party supports the bill.

The Hon. ERIC ROOZENDAAL (Treasurer) [6.02 p.m.], in reply: I thank members for their interest in and their contributions to debate on the State Revenue Legislation Further Amendment Bill 2009. This important piece of legislation maintains the various Acts administered by the Office of State Revenue. It also implements a number of other decisions that have previously been announced. Importantly, this legislation will improve the administration of first home benefits, clarifying aspects of eligibility and extending the Federal Government's First Home Owner Boost, which the New South Wales Government administers. It is worth labouring that point. The First Home Owner Boost is a critical element in the development of the First Home Buyers Scheme.

The Rudd Labor Government extended the First Home Owner Boost until September at full rate and it will then be halved until December this year. However, in order for us to implement those provisions we have to get this legislation through the House. We have seen a massive improvement in the number of first homebuyers in the market. In fact, we have had three record months. In the most recent month of May around 7,300 people took up first homebuyer benefits—7,300 new homebuyers out in the market. That dovetails nicely with this Government's First Home Owner Boost of $3,000, which it announced would be extended until 30 June next year to encourage and support first homebuyers, combined with other initiatives in the budget relating to the halving of stamp duty. The changes to New South Wales tax law will eliminate loopholes—it is important to have an honest, clear, understandable and transparent tax regime in this State—improve equity and increase the simplicity of our tax system. These are important objectives in the legislation. The changes will also ensure our tax system is fair by having concessions apply in the right places.

I will deal now with the matters that were raised by Opposition members. I reject any suggestion that this legislation is an attempt to grab at additional revenue. That is simply not true. These measures are about ensuring that New South Wales has the best revenue laws possible and they will implement a number of announcements that were publicly debated in the mini-budget process. Of course, the mini-budget was the critical stepping stone that enabled us to bring down the well-received record infrastructure investment in last week's budget. The mini-budget was the stepping stone that enabled us to increase revenues by around $3 billion and to implement savings of $3.3 billion. That important stepping stone led to the delivery of a budget that has been acclaimed and supported by everybody in the community—everybody other than the Opposition. It is important that State revenue laws are constantly reviewed and updated to ensure that New South Wales has best practice legislation for first homebuyers, taxation and fines. This bill makes those improvements.

I am advised that existing exemptions in the land tax legislation for Aboriginal land councils will remain. Those exemptions will not be disturbed by the amendments in this bill, which I am sure will ease the concerns of members who raised issues relating to that important matter. I am disappointed that we have not received the support of the Opposition, in particular, for the Federal Government's First Home Owner Boost. Kevin Rudd and Wayne Swan's budget provided additional support for first homebuyers and I am deeply disappointed about the position taken by Barrel O'Farrell—

The Hon. Greg Pearce: That is the second mistake that you have made. You also made a mistake yesterday.

The Hon. ERIC ROOZENDAAL: Are you keeping count, Greg?

The Hon. Greg Pearce: You mixed up the words "budget" and "surplus".

The Hon. ERIC ROOZENDAAL: I checked Hansard and I did not.

The Hon. Greg Pearce: You did.

The Hon. ERIC ROOZENDAAL: I reject that aspersion on Hansard. Referring to the First Home Owner Boost, it is critical for us to maintain the Australian dream of owning a first home, which is such a part of Australian culture. It is disappointing that Opposition members are opposing the First Home Buyers Scheme and the dream of all Australians to own their own homes. It is disappointing and economically and fiscally irresponsible, and it is not what a so-called alternative government should be doing. Clearly, it is irresponsible, and that is why Opposition members will stand condemned. This is an important bill for the future of this State and I commend it to the House.

Question—That this bill be now read a second time—put.

The House divided.

Mr Catanzariti Mr Cohen Mr Della Bosca Ms Fazio Ms Griffin Ms Hale Mr Hatzistergos Dr Kaye Mr Kelly

Mr Macdonald Reverend Dr Moyes Reverend Nile Mr Obeid Ms Rhiannon Mr Robertson Ms Robertson Mr Roozendaal Ms Sharpe

Mr Tsang Ms Voltz Mr West Ms Westwood Tellers, Mr Donnelly Mr Veitch

Mr Ajaka Mr Brown Mr Clarke Ms Cusack Ms Ficarra Mr Gallacher

Miss Gardiner Mr Gay Mr Khan Mr Lynn Mr Mason-Cox Ms Parker

Mrs Pavey Mr Pearce Mr Smith Tellers, Mr Colless Mr Harwin

Question resolved in the affirmative.

Motion agreed to.

Bill read a second time.

Leave granted to proceed to the third reading of the bill forthwith.

Motion by the Hon. Eric Roozendaal agreed to:

That this bill be now read a third time.

Bill read a third time and returned to the Legislative Assembly without amendment.