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Real estate backlash on tax as Government on “a ride to hell”

Politics

Rents could rise for small businesses as a result of proposed land tax changes, Treasurer Rob Lucas has conceded, as the Marshall Government faced another day of backlash over the contentious budget saving and the Liberal Party was forced into an embarrassing apology.

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A bungled ‘robo-call’ survey asking respondents whether they thought the state was “generally heading in the right direction or… seriously heading in the wrong direction” went out to households before sunrise today, generating a flood of unhappy talkback callers – and potentially putting the state party at risk of a fine for breaching the telecommunications industry standard.

“I don’t know the detail, but I suspect the company that’s been employed may well have pushed 6am instead of 6pm,” Lucas told ABC radio today.

“I would imagine if that’s the case someone’s backside should be kicked, and very firmly.”

HEAR THE ROBO-CALL BELOW:


A statement from Liberal state director Sascha Meldrum said the party “apologises for some early morning telephone surveys that went out in error this morning”, explaining the calls were made “across a number of suburbs which were scheduled to go out last night but due to a technical error went out between 6:15am and 7:15am”.

“I sincerely apologise for any inconvenience or annoyance caused by these early morning survey calls to households,” Meldrum said.

The gaffe was an unwanted distraction for the party as Lucas and Premier Steven Marshall prepared for an Opposition grilling on the opening morning of budget estimates, with controversial changes to the state’s land tax aggregation regime again leading the agenda after the Treasurer conceded the measure could see rental costs rise for small businesses.

“It is possible that there may well be some impact on rents in some sections of the market,” he told parliament in response to Opposition questions yesterday.

“What that final impact will be will depend on the net result of the impact of the land tax package which is being introduced.”

Lucas said opponents of the scheme – which is billed as closing a loophole that sees owners of multiple properties “unfairly” dodge paying their “fair share” of land tax – have variously argued that “everyone will get out of investment properties, sell up and move interstate” and that costs will be recouped through higher rents.

“The realistic assessment would be it may well be a combination of both,” he concluded.

“Realistically, some may well reduce their property holdings and move into other forms of investment… [and] one can’t rule out that there might not be some impact in relation to small business tenant rental as a result of any land tax reform proposal.”

One of those scenarios appears to be playing out already, with North Adelaide Heritage Group doyen Rodney Twiss putting his heritage-listed bed and breakfast accommodation Buxton Manor on the market, listed at $3.75 million, citing the state’s land tax impost and uncertainty about the proposed changes.

Everyone in the property industry’s in shock – we can’t believe they’re proposing it

In a social media post, Twiss – a longstanding Liberal supporter – noted his family had poured more than $500,000 in land tax into state coffers in the last decade, but “if I lived here myself … or was a not for profit… I would not have to pay one dollar”.

“I cannot believe that we had large photos of [Adelaide Liberal MP] Rachel Sanderson on a number of our buildings just 18 months ago, asking our friends and neighbours to vote for her… guess what happens next time?” he added.

David Smallacombe, the managing director of the Smallacombe Real Estate group, told InDaily the land tax aggregation changes would have “a very negative effect on the property market across the board”.

“Everyone in the property industry’s in shock, I think – we can’t believe they’re proposing it,” he said.

Smallacombe said the Liberal Government had “got off to a really good start” but “then they talk about bringing this in, which will just knock the property market for six”.

“It’s like the Government hasn’t really thought it through,” he said.

“I think they haven’t really thought about how severe the impacts will be… people I’ve spoken to, who are property people with a fair bit of property, say they could see an increase of hundreds of thousands of dollars in their land tax.”

And he warned the measure could see investment flee the state.

“People underestimate how important that end of town is… people have options, they don’t have to invest in SA,” he said.

“Adelaide’s a great place to live and raise a family, but it’s not the only place people can invest their money.

“For a Liberal Government to turn around and impose a change like this – it’s unheard of… they’re doing themselves a lot of harm, and a lot of people are up in arms about it.”

Toop&Toop’s director of sales Bronte Manuel cited one client who could see their annual land tax bill for three properties escalate from around $6000 to $39,000.

“So $33,000 needs to be found to hold those properties, overnight… it’s a pretty gripping reality,” he said.

InDaily has been told the backlash has hit the party’s fundraising efforts, with organisers struggling to sell tickets for next month’s FutureSA annual showpiece, featuring Marshall.

“They’re lining up to avoid it,” said one insider.

FutureSA fundraising director Maurice Henderson told InDaily: “I don’t care to comment.”

Asked whether tickets were being offered at a discounted rate of $150 – down from $250 – he said there were “always discounts for members of the party”.

Liberal Party memberships are going in the bin

As social media continues to light up with opposition to the land tax changes from the Liberal heartland, one self-professed donor and fundraiser declared they would cease they efforts “as I won’t subsidise the pockets of those who clearly don’t understand who and what we are about”.

On another thread, prominent developer Theo Maras lamented: “Treasury has taken this Government for a ride to hell. Hope the door is still open because their mind seems shut.”

Former federal Liberal MP and prominent campaigner Michael Pratt told InDaily the Government had “a tin ear” to criticism of its plans.

“You wonder why our mob would take on the same people who tip into FutureSA, stand on polling booths, letterbox… Liberal Party memberships are going in the bin,” he wrote on Facebook.

“Didn’t Lucas and Marshall observe [Bill Shorten] and his disastrous election playbook?”

Lucas told estimates today he had asked “one of the leading accounting firms” to provide an “independent set of eyes in terms of the reasonableness of Treasury’s estimates” of the tax aggregation measure’s budgeted $40 million annual windfall.

Marshall, who yesterday doubled down on his intention to “eliminate that anomaly that currently exists” in land tax aggregation, has said he would consider alternate modelling provided by the Property Council, which is campaigning against the changes.

But Lucas argued: “Even the very best of independent accounting firms do not have access to the information that Treasury has in terms of the payroll tax grouping issues and a whole variety of other issues, in terms of the land tax base of RevenueSA.”

“However, it will provide the government – and we hope the community – with a degree of comfort that… the assumptions from Treasury were reasonable.”

“It is certainly not the Government’s view that this will have the sort of impact that is being predicted on the state economy by the Property Council and some others,” he said.

Adding to the Government woes is a scathing missive from the Civil Construction sector over Infrastructure Minister Stephan Knoll’s move to “bundle” contracts for new projects, including the $90 million duplication of the Port Wakefield Rd and the planned $160 million Joy Baluch Bridge at Port Augusta.

Civil Contractors Federation chief Phil Sutherland argues this will “immediately favour a contract award to interstate contractors with national footprints, deeper pockets and international partners, at the expense of spreading the work across multiple local firms without such clout”, relegating SA firms to “little more than sub-contractor status”.

“If ignoring industry pleas on the land tax issues hasn’t been enough, one of the state’s biggest industry employers, and potentially a major economic driver, has been dealt a sickening blow by this Government,” he said.

“The health of the infrastructure industry in SA is already under pressure yet it would appear its future matters less to this Government than adopting some allegedly risk-adverse approach of handing all responsibilities for these major build opportunities to one provider.

“This Minister is captive to his bureaucrats, and prepared to lock out South Australian firms with track records of high quality, on-time and on-budget infrastructure construction outcomes… any which way you look at it, it is a blatant slap in the face to numerous SA businesses from their own Government, and is unacceptable at every level.”

Knoll said in a statement the Government’s procurement process was “the only way to guarantee a model which allows local companies the best chance to be involved in the construction”.

“The Marshall government has built an $11.9 billion pipeline of infrastructure works… this procurement model will see an alliance delivery like we have seen on many other major projects around South Australia, including Torrens to Torrens, Oaklands crossing and Pym to Regency amongst others.”

He said there were also “specific provisions to ensure local work for Tier 2 companies”.

“I’ve spoken with many Tier 2 contractors who are more than happy with this procurement model,” he said.

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