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Once upon a time in the West: A tale of two businesses


As Premier Steven Marshall stood before the media scrum at West Lakes this morning, flanked by an effusive property development heavyweight, a few hundred metres down the road the archetypal ‘mum and dad’ investor was sitting down with his spreadsheets to muddle through his looming land tax impost.

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James Turcinov has been investing in property for the past two decades. In 2002, he was negatively geared to the point that he couldn’t borrow to invest, and shifted his attention to property development.

“I’ve built quite a few homes across the state,” he said.

Then, in 2003, “we started my one little storage business on a piece of industrial land at Royal Park, and that grew up to 38 containers and caravans.”

Six years later, another piece of land on Old Port Road became available and he expanded, leasing out shipping containers for self storage across the two sites.

“I’ve continuously been doing small developments – most of them are just two houses on a site, some three… I’m only a little guy, but all the way along I’ve managed to keep some properties.”

His dream is to leave property for each of his two children.

Maybe I need to offload three or four properties to make this manageable

“I haven’t ever worried about land tax, to be honest… it’s never come into play,” he said.

“I’ve just received my bills and paid them… I didn’t realise the aggregation thing was such a big deal.”

But he says it will hit him hard.

“I’m losing sleep over this,” he said.

“I hope this doesn’t pass.”

The ‘aggregation thing’ has since become the biggest thorn in the Marshall Government’s side since its election last year, with the Liberal backbench threatening revolt and the property sector up in arms.

Both the backbench and the property sector are now divided in their opinions, with many mollified by Treasurer Rob Lucas’s revised gambit – an immediate reduction in the top land tax rate from 3.7 per cent to 2.4.

A buoyant Marshall had ‘top end of town’ support on show this morning, with Commercial & General CEO Trevor Cooke on hand at his company’s ‘West’ development on West Lakes Boulevard to proffer the view that “SA is now by far the most competitive tax jurisdiction nationally”.

“When you look at the previous measures introduced in parliament [by the previous Labor administration] in relation to removal of commercial stamp duties and overlay that with a 40 per cent reduction in land tax, you end up with the most competitive jurisdiction in the country,” Cooke insisted.

He speaks with some authority, having spent eight years as an executive director of the Property Council in Sydney before moving into the private sector. Before that, he was a ministerial chief of staff under Iain Evans in SA’s last Liberal government – making him the third former Liberal staffer to publicly weigh into the land tax debate this week.

Commercial & General has weighed into the debate before: its founder and executive chairman Jamie McClurg wrote an editorial in The Advertiser back in June warning the property sector not to rail against aggregation changes, saying “we need to look beyond our short-term interests and focus on the bigger picture… and if that means we need to contribute a bit in order to support the Government’s economic agenda and help grow a vibrant future for the next generation, that seems like a fair trade”.

One reason C&G wasn’t overly fazed by the aggregation changes was touched on by Cooke today: they were never affected by them.

“They don’t [affect us],” he told reporters.

“Aggregation is a tool that’s been utilised by other areas of the market, but not by us in our business.”

C&G is, he said, “the state’s largest private developer” and “bread and butter for us is large-scale residential development”.

“We have a real strong vested interest in attracting and maintain investment capital into this state, and a 40 per cent reduction in the top marginal rate really puts a flagpost into the ground and sends a signal to the market that SA really is open for business.”

Turcinov, though, is less confident.

He says he makes a modest return from his various investments – which will be vastly outweighed by the new impost he’ll be facing.

He invests in property via multiple trusts and owns the two self storage facilities, again through separate trusts.

He insists the measure is not to minimise tax, but “purely to protect myself… because if something goes wrong on site or a tenant sues me, that site is then at risk”.

“Yes, I’ve got a few properties, but I’ve also been working two jobs – plus property development the last several years… it’s not easy,” he said.

“At the moment my land tax bill is around $7000, so as far as I’m concerned I pay a lot of land tax.”

He fears for the future, with “multiple tradespeople” already pulling out of container hire in recent weeks, citing the cost of doing business.

“Everyone’s financials are going to be affected significantly, in terms of their capacity to borrow money to be able to invest,” he said.

“If my expenses go up even two or three per cent, it’s going to make it even harder again.”

“I’m still shocked,” he said of the aggregation change, which has prompted him to post several missives in opposition on social media and through InDaily’s reader comments page.

“I’ve never been into the political scene or anything like that, and have always voted Liberal,” he said.

“I’m a business owner… and we’ve kept a few of the properties along the way.”

He said most of his tenants pay “modest rent”, around the state’s average of $375 a week.

“I’ve had basically three jobs, working double time for the past 20 years,” he said.

“I cap my rents for my tenants – they look after the property, and I look after them.

“Maybe I need to offload three or four properties to make this manageable – then what happens to those tenants?

“I’ve built up a nice little portfolio for myself and my family, and I know I’m going to be worse off, quite significantly.”

Marshall today enthused about Adelaide’s west as a new frontier in property.

“Now we’re seeing families, people investing, people moving into a stunning part of our state,” he told reporters.

“We plan to put in place the largest land tax reform – the largest land tax cut – in our state’s history.”

He said Cooke’s endorsement was “in compete contrast with some of the doomsday predictions by other people in the property sector”, noting “the reality is the vast majority of investors will be better off under our changes”, which would “drive further investment, create more jobs and get our economy moving in the right direction”.

Turcinov, though, will be one of the 4300 individuals who are worse off after the $86 million annual aggregation grab.

Despite the 2.4 per cent top rate, trusts will also pay a 0.5 per cent surcharge – albeit capped around $5500.

Turcinov says he’s built houses, and paid hundreds of thousands of dollars in GST, taxes, levies, subdivision costs and open space contributions.

“There’s a whole list of different things, and this is how the little guys get repaid,” he said.

“That’s the contribution that little guys like me are making… people with just one investment or business property already pay virtually no land tax, the top end of town were already paying 3.7 per cent – so they’ve actually had a massive windfall with the cut to 2.4 – it’s the little guys in the middle who have got two, three, four properties who are getting hurt.

“It’s going to be tough, unfortunately.”

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