The Barnett government is coming under pressure from the big end of town.
The Barnett government is coming under pressure from the big end of town.
Politics sometimes throws up some strange bedfellows. At the federal level (in this electoral cycle, at least) it is the Labor Party sympathising with wealthy superannuants over their treatment in the recent budget.
In Western Australia, state Labor believes land tax is hitting investors too hard, echoing statements by WA’s biggest independent land developer, Nigel Satterley, who has criticised the Barnett government for failing to ease the impact of the tax in its recent budget.
So what it going on? How is it that Prime Minister Malcolm Turnbull and Premier Colin Barnett are leading Liberal-National Party governments and yet seeking to boost government revenue by targeting groups that have been their traditional supporters?
As the economy has come off the boil, both governments have struggled to maintain extra spending programs introduced during the good times.
They’ve also been looking for savings, which is always unpopular, with estranged vested interests having the capacity to launch destabilising campaigns, regardless of the merits of the cuts.
The fact that both leaders have elections in mind – July 2 in Mr Turnbull’s case, and March 11 next year for Mr Barnett – is an additional issue.
Hitting battlers for extra revenue right now would be political suicide, so Mr Turnbull decided to wind back superannuation concessions at the top end (introduced by former treasurer Peter Costello). And Mr Barnett left land tax levels, which have been increased over the previous three budgets, unchanged.
Both have gambled that their decisions won’t be too costly electorally; that rusted-on supporters, while not thrilled to be paying out, will not change their vote.
But Mr Satterley, who has donated to both major parties in the past and will host a $1,000-a-plate dinner for Labor leader Mark McGowan in mid-June, has given the premier food for thought.
Ranked 173 in the latest BRW Rich 200 list – and worth $374 million – Mr Satterley upped his public profile with his recent warning that Mr Barnett faced a leadership challenge. Treasurer Mike Nahan was said to be nominating Corrective Services Minister Joe Francis for the top job. It didn’t happen.
The timing would have been especially awkward for Mr Francis, in any event. He was due for surgery to deal with problems with his voice, followed by two weeks of complete rest for his vocal cords.
Obviously property developers have been hit as the state economy has slowed. According to BNiQ search engine, Satterley Group is the state’s second biggest residential land developer when measured by the number of lots it expects to create this year. The group’s reported sales expectation is around 1,600 lots, much lower than the previous year.
Traditionally, land tax has not been a big money spinner in WA. But it was increased under then treasurer Troy Buswell’s fiscal action plan in the 2013-14 budget. It was decided land tax could help plug a revenue gap as the resources sector and property markets eased and the GST flow started to collapse.
“This measure is estimated to raise $73 million in 2013-14 … bringing total land tax revenue to $657 million,” according to the budget papers.
“It is estimated to raise a total of $338 million over the forward estimates period.
“Despite the increase in rates, Western Australia’s land tax will remain significantly below that of other jurisdictions.”
Land tax was increased in the two following budgets, although the family home continues to be exempt.
One issue concerning big landholders, especially Mr Satterley, would be the aggregation principle, in which the value of an investor’s holdings is totalled for taxation purposes. That takes them into a higher tax bracket than if their holdings were assessed separately.
Mr Barnett told radio 6PR he didn’t like aggregation either, but the government was not in a position to change it, given the state of the books.
In addition to the land tax issue, Mr Satterley is at odds with the government over his holding at Mandogalup, near Kwinana. The government is considering including it in a buffer strip between residential and industrial zones. The property developer, with much at stake, says his land is safe for a housing estate.
Mr Satterley is not the first land developer to walk both sides of the political street; what counts is how the major parties deal with him.
