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Legislative Assembly for the ACT: 2000 Week 5 Hansard (9 May) . . Page.. 1326 ..

MR HUMPHRIES (continuing):

We have recently announced an increase in the thresholds of payroll tax from 1 January 2001. It is a tax on business. As far as I can see, that increase in the threshold has support across the chamber. Why? Because we know that reducing taxation levels in the area of employment taxes will increase the opportunities for businesses to employ. Why do we believe it will be different in the area of betterment tax, the change of use charge? Why do we believe it is different in that area? No-one has explained to me why taxation in this level has no impact on economic activity whereas it does in respect of payroll tax or land tax or any other of the taxes that apply to businesses. Until they make that explanation, Mr Speaker, the argument should be accepted, based on Professor Nicholls' report, that betterment tax is a disincentive to economic activity and hence to employment, and reducing it therefore stimulates economic activity and creates jobs.

MR QUINLAN (5.25): Mr Speaker, just to clarify one point that was part of Mr Humphries' argument, the opposition supported 75 per cent as a compromise and not particularly because we adopted lowering the betterment tax at all.

I was not particularly taken with the logic of Mr Humphries using a one-off example like Impulse Airlines to say that there should be a general subsidy in which government is not involved. I have no doubt that in every activity within an economy there is a level of subsidy somewhere that will increase activity. Quite clearly, if you throw enough money around, someone is going to pick it up. Let me also make it clear that the ALP is not against government involvement in the stimulation of economic activity, but I would be fascinated to hear Mr Smyth, when he rises to close this debate, explain how it works in practice.

The Liberal Party is the party of economic rationalists, the party of pure market economics. If that is the case and we have a betterment tax, why is it not so that the value of the betterment tax is not automatically pushed down to the original owner of the property? In fact, if pure economics worked at all, then it would not stimulate any more activity at all. It would just up the price of the land if there are, in fact, legitimate market forces in operation. I would like to hear how that is going to happen. Have we really just got property owners and developers who are a bit smarter than old home owners?

Mr Humphries concentrated on betterment tax almost exclusively as a subsidy for economic activity. If that is the desired outcome, why don't we introduce a more logical, more efficient, and better targeted process, the individual subsidy that Mr Corbell mentioned in his speech? Why don't we target those areas that we want to happen and not generally allow a subsidy for every development? Quite obviously, in the current situation, as Mr Humphries quite accurately pointed out, many, many developments do not need the subsidy to have taken place. If we had the subsidy, the indiscriminate subsidy, then, of course, the community has paid for a great many developments that it need not have. So it seems to me to be quite dumb logic to say that we need a general subsidy, and I think we ought to dwell a little more on those particular activities that we do want to subsidise and that we do want to promote.

There must be in the ACT, eventually, a limit to the amount of redevelopment we do. There must be a limit to the amount of commercial space that we want. There must be a limit to the number of townhouses that we wish to build in inner city suburbs. So, sooner

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