Property Council pushes Darley to back land tax shakeup

Treasurer Rob Lucas is considering further significant reductions in land tax rates in a bid to appease interest groups and key independent John Darley, according to a letter sent by the state’s Property Council urging the intransigent crossbencher to back the Bill.

Nov 18, 2019, updated Nov 18, 2019
John Darley. Photo: David Mariuz / AAP

John Darley. Photo: David Mariuz / AAP

The letter, dated last Wednesday and seen by InDaily, confirms the development industry lobby group’s shift from the most prominent opponent of the Marshall Government’s land tax shake-up to its biggest backer.

But Darley remains staunchly unconvinced, saying the divisive debate has burned the Liberal base and “they won’t win another election for 20 years”.

It’s understood that of a raft of industry groups who met with Darley last week, the Property Council is the only one who has urged him to support the controversial legislation.

But the letter goes further, suggesting he use his influential position to gut Treasury’s budget windfall.

“In terms of the revenue position for government, you are in a powerful and unique position to negotiate further amendments and effectively render this budget measure revenue neutral,” the Property Council tells Darley.

The letter “encourages” Darley “support [the Bill’s] passage”, despite conceding “the initial proposal made in the Budget was haphazard, poorly costed and created in a vacuum”.

But the Government did a deal with the Property Council last month – as first revealed by InDaily – which raised the top threshold at which the highest rate kicked in.

This failed to win over other interest groups, including Business SA, who continue to argue that smaller so-called ‘mum and dad’ investors will continue to be burned by a planned crackdown on aggregation.

InDaily has been told that Business SA has pushed for a reduction in the middle tier threshold – currently taxed at 1.6 per cent – and could be mollified if Lucas adjusts it as low as 1.25 per cent.

The Property Council’s letter suggests this move is on the cards, telling Darley: “The Treasurer has moderated the State Government’s original proposal by [proposing] for the threshold between $755k and $1.1 million, to reduce the rate from 1.65 to 1.4 per cent (or potentially lower).”

It also outlines potential affordable and social housing initiatives and a $10 million compensation fund, as already outlined by InDaily last week.

“Our collective fear is that land tax reform will be permanently off the table if this Bill is defeated,” the Council tells Darley.

“This means that we cannot afford to let this opportunity pass us by, and with your support we can make that happen. It would be an immense and meaningful legacy that you can craft.”

It’s understood Darley and Lucas will meet this afternoon to discuss the Bill, but the crossbencher is increasingly dismissive of the contentious reform.

He dismissed the Property Council’s gambit, saying: “They go from total opposition to total support.”

“My concern is this is all self-interest,” he said of the various industry groups’ positions.

“I’m looking at the impact on the state… no-one’s thinking about the future – and I don’t think the Liberal Party are either.”

He said the Party had “shot themselves in the head” by alienating their support base with the land tax debate, and “they won’t win another election for 20 years”.

Asked about the middle tier land tax rate reduction, Lucas told InDaily “certainly one or two stakeholder groups have been arguing that’s what they prefer [but] there are others arguing for other things”.

“Certainly there are some stakeholder groups arguing they’d like to see more movement in relation to the smaller ‘mum and dad’ investors,” he said.

“What we’ve discussed with John is whether, as a result of any of these changes, would he change his position… and his position hasn’t changed.”

He said the various proposals were part of “a whole range of options that have been discussed with him [but] there’s no what might be described as a formal offer,” he said, adding that other groups such as the UDIA and Housing Industry Association had pushed for other changes that “don’t coincide with that particular view from Business SA”.

Business SA’s Executive Director of Industry and Government Engagement Anthony Penney said in a statement that “based on feedback from our members, there needs to be a material improvement in the rates at the lower end”.

“While 1.25 per cent is certainly a step in the right direction, those rates will ultimately come down to any negotiations between the Treasurer and the cross benchers, including John Darley,” he said.

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