South Australia will become the only state not to charge conveyance duty on business sales, as Tom Koutsantonis today unveiled a budget aimed squarely at a political heartland – just not Labor’s.
In an unabashed pitch to business, the natural constituency of the Opposition Liberals, the Treasurer headlined taxation reform, almost all of it devoted to appeasing corporate South Australia and kickstarting a flagging state economy.
Sales of business and non-residential property will no longer attract “inefficient” stamp duty, which Labor says will save small businesses tens of thousands of dollars and larger companies hundreds of thousands, but broader structural reforms have been handballed into the “too-hard basket”.
The Budget predicts a return to a modest, scaled-back surplus within the next year.
In last year’s state election campaign, Labor’s slogan was an appeal to “keep building South Australia”, while Steven Marshall’s Liberals claimed to be “backing business to grow the economy”.
In his second budget since narrowly winning that election, Koutsantonis has unequivocally moved from the first mantra to the second, but insists: “It’s not a Damascus moment.”
“It’s not a Labor agenda or a Liberal agenda, it’s a South Australian agenda,” he told journalists at the Budget media lockup this afternoon.
“Because, quite frankly, it’s getting more and more apparent that we’re on our own.”
But while there was a “guarantee” to spend “at least $1.3 billion per year on infrastructure”, that figure is the lowest for any of the past five years.
And beyond a raft of already-announced measures, including a cost-of-living concession for pensioners and the abolition of the Save the Murray Levy, there was no further relief for ordinary families.
Instead, the fiscal focus was on private sector stimulus, and the rhetoric squarely fixed on jobs, in a budget the Treasurer claims “redefines the relationship between government and business”.
It’s predicated largely on the abolition of stamp duties for business transactions, most significantly on non-residential property and non-real property transfers – things like goodwill and intellectual property, those often intangible aspects of a business sale beyond the bricks and mortar.
But there’s a problem: the abolition of stamp duty for non-real property transfers has been planned ever since the GST was first introduced, and it was first budgeted back in 2005-06, to come into effect on July 1, 2013.
It was quietly cancelled in the 2012-13 budget, to re-emerge – and come into effect – today.
The broader abolition of conveyance duties on non-residential property sales will be phased in from next July, to be completely removed by 2018.
“This is the one that business have been asking for,” said Koutsantonis, arguing it would make SA “the lowest cost jurisdiction for conveyance duty in the country”.
“Think of what this will do for the commercial sector in the CBD, or for industrial estates in the north and south of Adelaide,” he said.
“It’s a remarkable reform and a reform that businesses have been waiting for a long time.”
The Government will also immediately abolish share duty and stamp duty on corporate reconstruction, and move to scrap the Hindmarsh Island Bridge Levy, paid by those wishing to develop on the island.
But Labor has squibbed on the major elements it put on the table of its recent tax review – payroll tax and land tax, with Koutsantonis already ruling out “a new tax on the family home”, despite further increasing the Emergency Services Levy. He handballed responsibility for reforming both payroll and gambling taxes to the Commonwealth, insisting: “I’m not chasing revenue here, these should be a national issue.”
Instead, there’s merely “a nod to payroll tax”, with existing small business rebates to be extended for a further year.
“Only 10 per cent of SA businesses pay payroll tax,” Koutsantonis argued.
“Yes, there’d have been a lot of people who work for industry associations applauding (if we’d scrapped it), but 130,000 businesses in this state would have had no benefit at all.”
The Treasurer denied seizing swathes of the Marshall plan to “back business”, arguing he has “not gone for the tax cuts Mr Marshall was talking about, such as land tax cuts”.
“What we’ve done is invested in people who are active in our economy: the risk-takers, the entrepreneurs,” he said.
He pointed to people “at the coalface” – “the ones who aren’t at the usual Steven Marshall fundraisers” – who he says wanted to see the back of “inefficient transactional taxes”.
“A lot of those family businesses struggle with next-generation leadership, (because) if a mother or father wants to hand over their business to the next generation, the Government is there to tax them,” said Koutsantonis.
“What I’m doing is removing that tax – we’re getting out of the way.
“You’ll see other jurisdictions look at these reforms and say they’re nation-leading.”
The tax review stipulated that the final outcome must be revenue neutral, but the Treasurer proudly admits “it’s not”.
“We’ve given this money back to the people of SA; it’s more useful to them than it is to me,” he said.
“I’m unlocking the entrepreneurial spirit that’s grown this state … we’re targeting activity, people who want to grow the economy, not people who invest.”
But, far from growing the economy, the revival is predicated on the sort of fiscal restraint rarely, if ever, seen in 13 years of Labor rule, with spending budgeted to decline by 0.9 per cent over the next four years.
It will require an ideological shift for a party that sought a mandate to “keep building SA”, and whose Treasurer today expressed “pride” at an inability to reduce public sector numbers, batting away questions of profligacy by arguing: “Your ‘overspend’ is our investing in the Festival Plaza or the Adelaide Oval.”
The 2014-15 deficit finished at $279 million, larger than the $185 million forecast in December’s mid-year budget review.
Correspondingly, the MYBR’s optimistic faith in a 2015-16 surplus of $265 million has been whittled down to a tenuous $43 million. But that is forecast to exponentially increase to $961 million by 2018-19 and, according to Koutsantonis, it will need to.
“They are very large buffers,” he said.
“And the reason we need those large buffers is we may need, with very significant structural reform in our economy, to stimulus-spend.”
That admission was perhaps the biggest nod to Labor budgets past, suggesting it is perhaps not just the state economy – but the Labor Party itself – in transition.
Local News Matters
Media diversity is under threat in Australia – nowhere more so than in South Australia. The state needs more than one voice to guide it forward and you can help with a donation of any size to InDaily. Your contribution goes directly to helping our journalists uncover the facts. Please click below to help InDaily continue to uncover the facts.