Ms PATTEN (Northern Metropolitan) (14:52): I am pleased to rise—I will try and make it brief—to speak on the Windfall Gains Tax and State Taxation and Other Acts Further Amendment Bill 2021. As we know, the bill does several things, but I think one of the areas that probably I was most interested in and the Reason Party was most interested in, because it has been a policy of ours, was really working out ways to encourage build-to-rent programs in Victoria. This bill goes towards that. Build-to-rent along with build-to-buy schemes are innovative policy solutions, and I am seeing a number of these types of projects occurring in my electorate of Northern Metropolitan. It closes the gap between people who can afford to rent but cannot save the amount to get a deposit. Build to rent refers to, as the bill states, residential developments in which all apartments are owned by one entity, often a managed investment trust, and then leased out to tenants. This is different, obviously, to the most common build-to-sell method, where a developer builds a residential development and then sells the apartments.
We have seen some really innovative work done in this area and some really good designs, designs that are also designed to create some social cohesion in these spaces. I commend a company in my electorate, Assemble, which is operated by a great guy called Kris Daff. When you look at the way they design some of their buildings, they really look at some of the issues that I was going to yesterday around loneliness: when people come in, they will see their neighbours; there are lots of common spaces; it is expected that you might share tools to fix your bike or that you might share workspaces. It is around creating communities, and in build-to-rent models these are things that can be done effectively and, I think, very well. So I am pleased that we are seeing those tax concessions there.
Probably where the government could have gone further—and certainly Mr Daff mentions this—is in encouraging that from a social housing perspective, so really looking at increasing those concessions when social housing is a proportion of that. Sadly, I think the Greens with their amendment possibly go too far at 90 per cent.
I would have liked to see 40 to 50 per cent, but it is something that I will continue to explore with the government going forward, how we can do that.
The bill, as Ms Lovell and Mr Davis mentioned, removes the charitable exemption for men-only clubs or for single-gender clubs. As Mr Davis mentioned, I am a member of a private club, but it has men and women as members. Apparently it was very progressive in 1996, but it seems a number of the men’s clubs still do not see that that is the way to go.
Of course I brought a bill to this chamber last term to remove other charitable exemptions on land that was owned by religious organisations but used for commercial purposes and certainly land that was used just for the advancement of religion. I think Sanitarium is a great example of this. Here is an extremely profitable company that competes in the open market against other companies like Kellogg’s, Kraft and Nestlé. They do not have to pay land tax because they are a religious organisation and the money, they say, goes to advancing religion. Now, if you were using that money to solve homelessness or to help the disadvantaged or to set up hospitals or for health, then that I get, but not when it is used for this very loosely described intention of ‘advancing religion’. I understand Weet-Bix do not advance religion of course, although I think Kellogg did have some very bizarre ideas about what breakfast cereal could do. However, the fact that those profits go to some, as I say, loose term of ‘advancing religion’ I do not think should qualify those companies for land tax exemptions. Certainly where you worship should remain protected and those who, as I said, reduce poverty and protect health. I will continue to fight for changes around the types of exemptions that we provide.
But the thrust of this bill is to introduce a windfall gains tax on the uplift in land value resulting from planning scheme amendments that change the zoning of land. I certainly did meet with the Housing Industry Association, I met with many of the building industry groups—in fact I have had a number of meetings—and certainly when I met with them last year about this what they were facing was very different to what this bill is now. There have been some significant concessions. Certainly I know the Property Council of Australia acknowledged that, that there had been delays in the start of this, and much to probably the criticism of other organisations that said, ‘No, let’s start it now’. But obviously this proposal does not begin until 2023.
And let us remember that you do not work for a windfall. It is not like you grow something and then the land is rezoned. This is something you are given. This is effectively almost a gift. No goods are exchanged so there is literally nothing to be done. And we know that people buy land to speculate on it. We know that there are rent-seekers out there that purchase land on the hope that there will be a windfall, that there will be a rezoning. Or they go further than hope and they start campaigning and lobbying for that rezoning. It was not that long ago in this house that the City of Casey came under quite a bit of review and speculation. In fact the City of Casey has gone into administration for this exact reason—because it was found that they were being lobbied via paper bags of money for rezoning and other development favours. Given that the government is the one who makes the decision about the rezoning, I think it seems reasonable that it should get a cut of the profits to reinvest into the local community and across the state.
It is about sharing that sometimes absolute motza that people can make from a planning decision. This can be a win for the developers. I mean, the developers are the ones who actually do the hard work. They are the ones that actually plan it. They put the infrastructure in. They do the hard work. Those that are possibly just speculating on the land, the cowboy rent seekers, now will not be able to take all the cream and leave the site with very little money. So when you see that huge gain from the landowner, it really shrinks what the developer can invest in that property. So I think this means that rather than profits going to overseas companies, property share portfolios, those funds will be reinvested into roads, plumbing and the environment.
I am certainly happy to say that, as I said, I believe that the property council has made very good points to the government, and I understand that the government has listened to those. I know the property council and others would like to see further changes, but I think this actually finds a very good balance.
In fact I was actually somewhat surprised about this, because I had a meeting with a developer just yesterday, Mr Tom Roe, who is down in the Geelong area—a big developer, passionate about growth. In fact he was the chair of the Urban Development Institute of Australia for the Geelong branch for some years. He could not spruik windfall land tax more. He is an absolute advocate, and when I put to him the property council’s arguments that they had to put to me, he whacked every single one of them away—and he knows a lot more about it than I do. So he was meeting with me to convince me to support this, and he said it actually would help developers. He said and I think the UDIA said—and I certainly think some of the opposition’s amendments go to this—it is somehow creating a growth areas infrastructure contribution that covers everywhere. So rather than just a GAIC for the growth areas, we would have one that covered the whole state.
Now, Mr Roe is not that keen on a GAIC. He thinks that is actually really bad policy, so he thought it would be even worse policy to expand that idea. He argued—I thought very, very well—that this type of tax is actually the fairest one and that it will not lead to a change in housing prices, it will not lead to a change in a reduction in development. All of the fears that have been placed up here, he says that that will not happen. And this was reiterated by the Grattan Institute and by Prosper Australia, who again made some really good points and went through a lot of the points that the property council raised with me. They are saying it is very unlikely that taxes will lead to higher house prices, and this was also confirmed by, as I say, Mr Roe, and also confirmed by Prosper, who again, does not have a dog in the race, unlike the UDIA and the property council, where a number of their members could be described as property speculators.
So this is just one of those pieces of policy where there is a simple solution to the problem, and this probably could have been done many years ago. It makes a lot of sense. We know that the ACT did this, and I know the ACT is still going through a housing boom and there are still properties being developed, because the land is being released by the government.
I am not going to stand here and stand in the way of this. I have listened to the industry. I have listened to Grattan, I have listened to Prosper and I have listened to property developers, as I say, such as Mr Roe, such as Robert Pradolin, and they have all said that this is actually the correct way forward. This is the way to ensure this.
I would just make one note. There is one area that I do think we should be considering, and this is because having done the homelessness inquiry we know that that transitional housing that people need when they are experiencing homelessness is desperately needed and we just do not have it. People are leaving hospital into homelessness. People are leaving prison into homelessness. People are leaving mental health facilities into homelessness. We cannot allow this to happen in this rich state. This must change.
Property developers are getting behind this idea. They want to retrofit their vacant properties while they are going through the planning process to provide transitional housing with wraparound services for people experiencing homelessness, for people escaping family violence, for people coming out of prisons and for people coming out of hospitals. And they are suggesting that a land tax concession in those circumstances would encourage more developers to do this. So rather than looking around the city and looking at those empty buildings that are getting ready for development—we know that planning can take five years at least for big developments—rather than those buildings just sitting empty while people are sleeping in the doorways of them, we could be encouraging more developers to take on retrofitting and putting transitional housing into those buildings while those people get on their feet to get into the private market, while we are building more social homes and also while those buildings remain empty. I will leave my comments on this at that.
Fiona Patten MP
Leader of Reason
Member for Northern Metropolitan Region
Second reading speech 18/11/21