Second Reading
Danny O’BRIEN (Gippsland South) (16:00): This is referred to as the State Taxation Further Amendment Bill 2024, but it should in fact be known as the Clayton’s bill, because this is the bill where you provide an exemption where there should be no need for an exemption, if we believe what the government has been telling us for the last two years. This is the bill to fix up the government’s mess of its health tax – the health tax that was brought in by the Treasurer, the Minister for Health and the Premier, even though time and time and time again last year and again earlier this year they said there was no health tax. This is a bill to provide an exemption to a health tax that the government says does not exist. If you do not believe me, you can go to the Hansard and you can find it for yourself. Time and time again – in question time, in debates on matters of public importance and in contributions on the budget last year and again this year – we have had the government say, ‘Look away. There is nothing to see here when it comes to a GP payroll tax.’ Indeed I can give you the quotes directly. When asked about these things on 21 March 2023 the Treasurer said:
… we have not changed in any material way the procedure by which the State Revenue Office seeks to raise payroll tax from GPs. In fact I went further than that.
He was talking about a meeting he had had with health representatives:
I took the opportunity to indicate to the representatives of GPs that the SRO would sit down and work with them and issue a practice note to make it clear to GPs that there was no intention to change the tax liability of GPs …
So he was saying that these GP clinics, which were suddenly getting bills for payroll tax for contractors that they engaged and which had previously never paid payroll tax on those contractors, were wrong, that there was not any change and we did not need to worry about that. Further, on 29 August 2023 the Minister for Health in response to a question said:
… when it comes to payroll tax absolutely nothing has changed. There has been no change. There has been zero change to the way in which the payroll tax operates.
Again, very clearly the Minister for Health was saying that nothing had changed. So we are today debating an amendment to provide an exemption to something that did not exist in the first place, according to the minister and the Treasurer. The very next day, 30 August 2023, the minister again said:
But let me be clear: there has been no change.
And then the Premier herself said, on 1 November last year, almost exactly a year before this bill being introduced:
As I have said previously, as the Treasurer has said previously, the payroll tax arrangements continue to operate in the same way as they have for some time since 1983 across all sectors.
So they were saying ‘Nothing to see here, ladies and gentlemen, Victorians, doctors and people needing to get into a GP clinic. Nothing to see here. We haven’t changed. Nothing has changed.’ And yet here we are today debating an exemption to a tax that the government said did not exist.
The government has obviously responded to the political pressure that it has been under on this. It has obviously responded to the concerns of GP clinics around the state, but it has not responded to the allied health professionals and their practices that will continue to attract payroll tax on contractors – notwithstanding this legislation, because it only applies to general practice. The government really has not covered itself in glory in this. It has made it very, very unclear, to misquote the Minister for Energy and Resources. That is why I support the reasoned amendment of the member for Sandringham:
That …‘this house refuses to read this bill a second time until the government commits to a payroll tax exemption for all medical and allied health providers.’
That is what the Liberals and Nationals will do. We have made the commitment already, and we repeat it here again today, that if elected in 2026 we will provide that exemption, not because this is something that impacts on GPs and GP clinics, because ultimately it would impact on patients.
We heard in some of those quotes that I read out surrounding the commentary from the Minister for Health repeated comments about the status of primary health and how critical it was to take pressure off our health system. We agree entirely, which is why we do not think this tax – whether it is for GPs, whether it is for dentists or whether it is for physios, podiatrists, psychologists, psychiatrists, osteopaths or any of those allied health providers – should be on there. Our commitment is already clear to the people of Victoria that, if elected, we will make a full exemption for those contractors because we do not believe they are in fact employees.
We know that there are concerns about this. We know the Australian Dental Association Victorian Branch has said that it leaves dental clinics across the state calculating whether they will have to close or how much they will have to charge patients to cover a possible tax debt through no fault of their own. That is the concern, and it is repeated across the state. In my own electorate I consulted the GP clinics throughout Gippsland South earlier this year. One of them told me that if they had to pay back pay for five years, which has been the case last year and this year with some clinics, they would face a bill of $375,000. They would be expecting a bill annually of $70,000, and they said, ‘That would kill us.’ The comment from a very, very longstanding and very well respected GP in my electorate at the time was that 25 per cent of GPs would probably retire, because that is, sadly, the number that are close to that age anyway. There is a significant concern, and I think this was from the AMA or the Royal Australian College of General Practitioners, that one-third of clinics would go if the tax was applied across the board. We are certainly not opposed to, and in fact we support, this bill’s intent to provide that exemption; we simply do not think it goes far enough. That is why I am supporting the member for Sandringham’s reasoned amendment. We think this is a good step in the right direction, but it does not go far enough to deal with the issues that are truly there.
The bill before us not only deals with the health tax on GPs; there are a couple of other aspects to it that I will touch on briefly. The bill proposes to repeal the existing tax exemption for friendly societies under the Duties Act 2000. This is an exemption that currently applies to transfers of property or declarations of trust involving both charities and friendly societies. I would not have thought it was a great move by government to be introducing a tax on something called friendly societies, but there you go. It also introduces a new section to ensure the foreign purchaser additional duty is enforceable for foreign property buyers in Victoria. That responds to some recent federal reforms via the Treasury Laws Amendment (Foreign Investment) Act 2024 and ensures that we are lined up with the federal government.
There are some other changes, including to land tax, and we are all hearing a lot about land tax at the moment given the government’s so-called COVID debt recovery plan, which has reduced the land tax threshold from $300,000 to $50,000, has seen rental vacancy rates plummet and has forced many people into great hardship because they are facing, for the first time, a land tax bill of either $500 or $975 and as a result are struggling. Then of course there is the increase in the rate above that $300,000 threshold as well. This bill provides a vacant residential land tax exemption for alpine resorts. That also does not really scream to me as something that a social Labor government would be keen to do – to make sure that those who have got their chalet in the snow are looked after – but I do understand the common sense of that particular one, given the vacant residential land tax criteria surrounding how often those properties need to be used. Clearly it is not going to be that often when it is only being used in snow season. Ensuring the holiday home exemption continues for a transitional period after the property owner’s death is the other aspect of it.
This bill, as I have said, we do not oppose. It is a Clayton’s bill, though, because it is providing an exemption to a tax that the government insisted for well over a year did not actually exist. Clearly this bill is an acknowledgement that it does in fact exist. We will not be opposing the bill, but we are moving that reasoned amendment to ensure that all medical and allied health providers are captured by this exemption.