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20 June 2023, 15:24
Victorian Legislative Council, Melbourne

David ETTERSHANK (Western Metropolitan):

I rise to speak to the State Taxation Acts Amendment Bill 2023 on behalf of Legalise Cannabis Victoria. The COVID-19 pandemic presented the most difficult financial management circumstances that a government could face. Thousands upon thousands of Victorians lost their livelihoods and lost their health. During this time, more than ever, Victorians needed the support of their government. There was no road map. There was no rule book for the pandemic or for the potential economic meltdown that it could have so easily induced. The government had to envisage the support that the Victorian people needed at the time and act swiftly, with the worthy intention of saving lives and warding off economic disaster. The Victorian government was not alone in pursuing this course of action. Who can forget Josh Frydenberg, suddenly an unexpected born-again Keynesian, quoting John Howard, saying that a massive government support program was too important for politics. Keynesian economics and the important role of government spending when the economy is on the brink was central to all governments, state and federal.

A member:

When the facts change, I change my mind.


Exactly. In Victoria we are carrying a large debt burden. There is no disputing this reality. But to put this in perspective, at 28 per cent of gross state product, the Victorian debt is proportionally well below the national debt, at over 50 per cent of gross domestic product. That said, if there are more effective fiscal management strategies that could have been employed, then we should have that discussion and we should learn from that experience. For those who now with the wisdom of hindsight wish to simply use the state budget as a cudgel to belt the government, I have limited tolerance. To put it simply, the price of a successful attack is a constructive alternative. It is fair to ask the questions, ‘How would you have dealt differently with a once-in-a-lifetime pandemic?’, ‘What public health initiatives would you have not funded?’, ‘What social supports would you have not created or bolstered?’ and ‘What price would you put on the lives that were saved, the additional health services delivered or the families preserved?’ But those are all now part of history. We are where we are, and the question now arises: how do we pay for it? More importantly, how do we pay for it and at the same time seek to provide some relief for the cost-of-living pressures that are prevailing upon the Victorian community and nationally?

In this State Taxation Acts Amendment Bill 2023 the government seeks to address these two complex problems. On the one hand, we have a series of measures designed to increase revenue, including a 10-year temporary payroll surcharge on larger employers; a temporary land tax surcharge, an increase to land tax; increasing the land tax contribution of absentee property owners; removing the payroll tax exemption for the highest fee non-government schools to simply equalise their contribution to that of our public schools – and I do take on board Dr Bach’s comments about the need for government to more accurately target what we mean when we talk about the highest fee non-government schools; and, finally, measures to reduce the capacity of property developers to dodge their obligations to contribute to the provision of critical services and infrastructure in our rapidly expanding but under-serviced suburban growth corridors. In short, these are all measures that target those most able to make a greater contribution. This is sensible and this is entirely appropriate.

At the same time, and without getting into broader budget initiatives, in this bill we see a number of modest measures that seek to assist those most in need. These include assistance for pensioners and land transfer duty and tax concessions for families supporting a family member with a disability. Let us be clear and honest with the Victorian public: these changes will increase the state revenue base and deliver some minor redistribution of wealth. This is both inevitable and desirable, and I would respectfully suggest that it is but a small taste of what will be required into the future. As a state and as a nation, we are going to need a lot more government revenue in the future. We have a society that is rapidly ageing as baby boomers transition through retirement and into old age. This will result in skyrocketing health, pension and social support costs over the next 20 to 30 years. How is this to be paid for? This problem has been spelt out clearly in multiple Commonwealth intergenerational reports. Are we simply going to require the proportionally smaller pool of younger and poorer workers to pay proportionally more and more tax to fund the passing of the baby boomers? That is not going to work.

Over the last 25 years we have also seen and continue to see major transfers of wealth in this country. This includes significant transfers from wages to profits and transfers from working- and middle-class families to families of the wealthy. At the same time we have also seen the aggregation of ever greater wealth amongst those, mainly of my baby boomer generation and older, who got into the property market when it was more affordable and have now seen our asset wealth increase hugely. Quite apart from being grossly inequitable, these are all changes that are simply not sustainable.

Could I also draw the attention of the chamber to a couple of other minor matters that might warrant a little consideration when we consider this bill and future revenue streams. Firstly, I know it is a bummer to bring this up, but the COVID pandemic is not actually over and we are but one nasty mutation away from another health crisis. Hopefully we will have learned from our recent experience and things may be handled somewhat differently, but if there is to be a new and virulent outbreak, it is going to be painful and it is going to be expensive.

Secondly, there is the unfolding dynamic of climate change. One of this Council’s committees is currently analysing the impact of the floods of 2022, the result of multiple climate confluences, including three consecutive La Niñas, and we are in all likelihood about to move into an El Niño period that may well have a profound impact on our country and our environment. It is to the great credit of members of this chamber that I do not think anyone in this place disputes the fact that the frequency of natural disasters is increasing and that this in turn is being driven by climate change. As lawmakers we need to recognise that the process of decarbonising, electrifying and transitioning our economy has great long-term economic and social benefits, but it will also require in the short to medium term significant investments from both public and private sources.

As lawmakers we also need to recognise that arising from the climate changes that we have already locked in there will be a major cost measured in billions, if not hundreds of billions, associated with adaptation measures. Inevitably there will need to be concrete measures introduced at both state and federal levels to raise the necessary funds to address these critical issues. To the degree that the modest changes in this bill seek to have those with the greatest capacity to pay contribute more, I say: get used to it. There is inevitably going to be more where that came from.

In closing, Legalise Cannabis Victoria would simply note that we paid a high price during the pandemic, but critically we paid to keep people in their homes, we paid to keep people fed and in their jobs and we paid to keep people alive. We recognise this bill as a necessary step in Victoria’s hopefully post-COVID economic recovery. We commend the government on this suite of generally equitable tax reforms. Accordingly, Legalise Cannabis will be supporting this bill.


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