State Taxation and Mental Health Acts Amendment Bill

I am pleased to rise to make some remarks on the State Taxation and Mental Health Acts Amendment Bill 2021. The title of this bill is unusual in that it includes ‘mental health acts’. This is the bill that is introduced concurrently with the handing down of the budget to provide the mechanism to give effect to revenue measures announced in the budget. The fact that the title has been extended from ‘state taxation amendment bill’ to include ‘and mental health acts’ reflects the way in which the government is attempting to pitch this bill as one where funding is being hypothecated to its mental health package.


What we are seeing with this bill is a very substantial increase in taxation at a time when the Victorian economy cannot afford it. These are the wrong taxes at the wrong time. This bill was introduced with the budget as Victoria was emerging from the worst effects of the pandemic and the government-enforced lockdowns, which saw the state locked down for well over 150 days, and ironically, since the bill has been introduced and since the budget has been introduced we have seen a subsequent lockdown, which is now into its second week. So it is 14 days for this lockdown, and of course we know that is having a very significant impact on Victorian businesses. We heard in question time today about the impact it has been having on small business, but we know that it is having an impact on all businesses across the state. So it is completely wrong for the government to be introducing these taxation measures at this point in time when the Victorian economy is under such stress and businesses are suffering in the way they are.


What the government is seeking to do with its mental health element of this bill is to impose a mental health and wellbeing levy—so-called to make a distinction from tax—which effectively is an increase in payroll tax. It is being framed as a separate levy, but in reality the levy is a payroll tax impost. The government estimates that this new payroll tax impost will raise in the 2021–22 financial year $386 million, increasing to $880 million by the 2024–25 financial year, so this is a very, very significant impost on Victorian businesses and on employment in Victoria. We currently have payroll tax revenues of around $6 billion forecast for the budget year, and this will be an additional 5 per cent on top of that in total by way of the mental health and wellbeing levy. It is worth putting that in context. What does that mean for employment? The ABS estimated, I think, to November that average full-time weekly earnings in Victoria are around $92 000 per person. So this tax of $386 million on Victorian employers, on Victorian payrolls, is equivalent to more than 4000 jobs in the first year, rising to more than 8000, nearly 9000, jobs in 2024–25. So it is not only a substantial impost on businesses but a substantial drain on the potential for employment in this state. $880 million by 2024–25 is equivalent to 8800 jobs that will not be created or that will be forgone because employers need to pay the additional $880 million. Even with the base rate of payroll tax a similar calculation can be done, where in the budget year 2021–22 $6.5 billion in revenue is attributed to payroll tax. That is roughly equivalent to 69 000 jobs at average weekly earnings. So it is a very substantial drag on the Victorian economy, and it is a very substantial deterrent to job creation in this state.


For that reason the Liberal-National coalition will not be supporting this creation of the mental health and wellbeing levy. We believe that mental health services are important. They are more important now than at any point in time because of the way in which this government has harmed the social fabric and has harmed the mental wellbeing of the Victorian community. There is no doubt that mental health services are incredibly important, but they should be funded as the core base of government services, not through a tacked-on mental health and wellbeing levy.


Other areas where we have concerns with the bill include the increase in land tax rates for high-value landholdings, which will see $335 million raised in 2021–22 increasing to $433 million by 2024–25. This is something that the property industry has said very clearly is going to have a significant deterrent effect on investment in development in this state. At a time when Victoria is once again lagging behind the rest of the nation—and that is going to accelerate—we have a significant impost being imposed on property in this state which will simply deter investment. No other state has endured the shutdowns and lockdowns that Victoria has. No other state has fallen as far behind as Victoria has. And while those opposite might like to say, ‘Oh, the economy is growing strongly’, that is because of the tens of billions of dollars in unsustainable pump priming that the government has been throwing at it, which, when it falls away, will have a very significant impact on the economy.


Likewise, the so-called premium duty rate on land transfer duty for high-value properties, commonly known as stamp duty—this is the measure whereby the government is proposing to increase the rate of stamp duty on property purchases over $2 million initially to raise $136 million in the 2021–22 financial year, increasing to $229 million by 2024–25. Now, the Treasurer tried to spin this as, ‘This is only affecting the top end of town’—the usual class warfare rhetoric that we get from this government. In reality there are now dozens of suburbs in Victoria where the median house price exceeds $2 million. So this is not going to affect a narrow cohort of Victorians. It is actually going to affect vast swathes of suburban Melbourne and tens of thousands of families who buy and sell properties in those areas. So, again, we will not be supporting that measure.


There are a number of other measures that have been announced in the budget which have not yet been given effect to by way of legislation, including the windfall gain tax on land rezoning. It is going to be fascinating to see how the government seeks to enshrine that in legislation. We saw the mess with the EV tax two weeks ago, where the government has created a mechanism whereby drivers of electric vehicles need to photograph their odometer and send it in to the secretary of the department in order to have the excise or charge levied on them. It will be fascinating to see what sort of mechanism the government comes up with to determine how the so-called windfall gain tax will actually be calculated when it arises from a theoretical increase in value as a consequence of a rezoning. So the coalition has a number of concerns with this bill.


We also have a concern with respect to the way in which the increase in payroll tax, by way of the levy, applies to universities. And we saw the extraordinary situation with the Treasurer in an interview with Neil Mitchell not even being aware of whether this impost would hit universities, when in fact it is going to hit them to the tune of tens of millions of dollars and they are already at a very weakened position because of the lack of access to foreign students, which has been ongoing over the last 12 months. That is something that Dr Bach is going to have more to say about as the debate proceeds.


We have a number of concerns about this bill. These are the wrong taxes at the wrong time. The coalition will not support this bill, and if the bill gets to committee, we will seek to omit these taxes individually by way of omitting clauses. We will also seek, subject to the amendments being finalised, to give effect to the announcement made by the coalition prior to the budget that we would give effect to a reduction in payroll tax for small business in this state.


The announcement made by the Leader of the Opposition was that a coalition government would increase the threshold for payroll tax to $1.6 million, thereby exempting around 15 000 small businesses from the payroll tax net. We believe this is the sort of measure which is required at the moment. It is the sort of measure which will help our small businesses, which are struggling very badly as a consequence of the lockdown, and therefore we will be seeking to give effect to that by way of amendments if the bill gets to the committee stage. This bill is a bad bill, these taxes are the wrong taxes at this point in time. The coalition will be opposing them, and I would urge other members of the house to also oppose their introduction.



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