Page 2973 - Week 07 - Thursday, 30 June 2011
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As I said in my comments on the Economic Development Directorate and in relation to the lease variation charge bill we debated last week, the tax system and the various levers and incentives that can be created through the taxes and charges that we impose should not be underestimated. We all agree that taxes and charges do have dual functions and should be used to achieve much more than just raise the necessary revenue for government services. I hope that following the release of the report we can have a robust debate about any recommendations and that ultimately we improve taxation here in the ACT.
In relation to the revenue management output more broadly, I take the opportunity to again reflect on the questionable expenditure we make on the first home owners grant. Processing these applications is listed under the revenue management output and I would again take the opportunity to point out the range of reports, including by the Productivity Commission, that this program simply drives up house prices and in fact does very little to assist home buyers.
On the issue of revenue management and the level of own-source revenue, I would make the point again, as I have done many times before and as the government has recognised in its response to a recommendation from the estimates committee on this matter, that the real opportunity to do this and to drive increased economic activity within the territory is through the green economy. That of course is locally referred to now as the clean economy.
The reality is that there will always be vertical fiscal imbalance, and that is the reality of our federal system. Of course this does not mean that we should not endeavour to create sustainable economic activity outside the public service, the by-product of which will be a greater level of economic prosperity for the people of the ACT. And this is one area where I hope Treasury and Economic Development will be able to work very closely together to ensure that we do have a comprehensive, clean-economy strategy that is coordinated with things like new or revised taxation measures and other government initiatives.
On revenue management, we have just passed a bill to harmonise our single biggest own-source revenue item with other Australian jurisdictions and, whilst this will probably do relatively little to the actual amount of money we receive, it is an important reform. We know that the Henry review made some somewhat open findings on payroll tax, and I understand that it is not exactly clear how we would apply the recommendation to tax the value-add of labour as recommended by Henry. But I am sure that the tax review will have something to say on this. Whilst of course the implementation may be somewhat problematic, given that we have just achieved harmonisation and there may be an understandable reluctance to move away from that, I do not think we should see this necessarily as a reason not to contemplate reform and hopefully get an outcome that assists business and encourages enterprise and employment as well.
Briefly on the subject of land-based taxes, which are the biggest combined own-source revenue, the first observation must be that the land is the territory’s most valuable asset. We know that. So we do need to see this as the way of future reforms
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