11 ways to break a promise: Victoria hit with 11 new taxes in Labor’s 2017 Budget

Budget Speech Hansard Extract: 22 June 2017

I rise to join the debate on the motion that the house takes note of the 2017–18 budget papers. All budgets should be based on honesty and integrity, and the budget papers should be a set of financial accounts that every single Victorian can trust and rely on. The problem is that when you make a number of claims running into an election about how you will conduct yourself, people take note, and obviously one of those issues around budget papers is that when people, whether they be industry, commerce groups, students or university lecturers, read them they expect that what is in the budget papers are commentary and numbers that we can actually trust.

What I want to do is just look at the lead-up to the election and the way the Andrews government was elected and how it impacts on this budget. I know it has been mentioned in this house a number of times, but on 28 November 2014 — so just a couple of days out from the election — Peter Mitchell from Channel 7 asked this question:

Daniel Andrews, all the polls say you will be Victoria’s next Premier. If you are do you promise Victorians here tonight that you will not increase taxes or introduce any new taxes?

The Leader of the Opposition at the time, now Premier, said:

I make that promise, Peter, to every single Victorian.

That is, that there will be no new taxes or higher taxes.

On 19 November, when interviewed at the Sky News election forum, David Speers asked:

So, any higher taxes, levies?

The member for Mulgrave said:

Absolutely not …

So it was not a maybe, could be, should be; ‘Absolutely not’ was the response.

On 6 November 2014, it was reported in the Herald Sun:

Opposition leader Daniel Andrews said yesterday Labor would reveal its full costings before the election, and said he had ‘no plans’ to increase fees and fines.

On 5 November it was reported:

Mr Andrews ruled out increasing state taxes or household fees and charges to fund Labor’s promises.

That was on ABC News, under the heading ‘Victoria election 2014: Labor to build new schools, change state’s number plate slogan’.

So we were told, we were assured, we were promised, that there would be no new taxes or higher taxes. When you compare that to what has actually happened, the facts, and when you look at the 2017–18 budget, there are significant numbers of increased or new taxes. For example, we have the energy tax on coal royalties; the taxi and Uber tax; the land tax surcharge for absentee owners introduced at 0.5 per cent and then increased to 1.5 per cent; the stamp duty surcharge for foreign buyers introduced at 3 per cent and then increased to 7 per cent; a significant increase in the fire services property levy; the increase in stamp duty on new cars; new stamp duties on off-the-plan purchases; new stamp duties on property transfers between spouses; and new annual property valuations to increase land tax. We have seen the significant impact of some of these taxes.

I know the government is very keen to say the energy tax on coal royalties was fair, but one of the reasons for having an energy tax on coal royalties obviously was the closing down of Hazelwood in the Latrobe Valley. We had a farcical situation in question time today when the Minister for Industry and Employment was asked how many of those 750 people who lost their jobs because of Hazelwood closing down now have new jobs. You would have thought the minister would have had a very quick, sharp answer. But unfortunately he did not have the answer, and of course we can only assume that the answer is ‘Not many’.

Regarding the new annual property valuations to increase land tax, we still really do not understand how much it will cost to value on a yearly basis rather than every second year. We have had about $1.4 billion over four years in new taxes and increased taxes — $1.4 billion.

I have great respect for the Department of Treasury and Finance (DTF), but there are a couple of things that are bothering me about the way that the department has actually been implementing its accounting standards and guidelines. I will make a preliminary point first, and that is the Auditor-General made comments about the previous budget, and it is relevant to the point that I am going to make in regard to the Labor Party’s commitment to increase funding for regional rail. Dr Peter Frost, the Acting Auditor-General, said:

On 4 November 2015 the Treasurer transmitted the annual financial report of the state of Victoria (the AFR) to Parliament. This was 15 days after the date required by the Financial Management Act 1994 and reflects a difficult and challenging year in financial reporting for the public sector.

I signed my audit opinion on the AFR on 30 October 2015. The AFR received a modified audit opinion, containing two audit qualification matters.

For a Treasurer to put forward any document that has to be qualified by the Auditor-General means that the Auditor-General believes the accounts are outside the accounting standard or there is a mistake. This is what the Acting Auditor-General said:

Firstly, the AFR failed to record the state’s obligation at 30 June 2015 to return $1.5 billion in commonwealth government funding relating to the cancelled East–West Link project.

Omitting the obligation to return the East–West Link funding from the AFR has meant the reported results and the state’s liquidity ratio are overstated. Consequently, the correct accounting treatment for this transaction reduces the net result from transactions for the general government sector. This means the state has not achieved its key financial measure of generating a net surplus from transactions of at least $100 million.

So there was a rock-solid election commitment that there would be a surplus of at least $100 million. The Auditor-General has criticised DTF and criticised the Treasurer for not sticking to the accounting standards and for including the $1.5 billion for the east–west project which was given to it by the commonwealth government.

The context is that the DTF should be relying on best practice and must work within the accounting standards and guidelines. When that does not happen, you are going to get a qualification from the Auditor-General. The reason I raise this is because, although I know that this is not within the DTF’s remit, when the government came out and announced a $1.5 billion upgrade of Victoria’s regional rail lines to great fanfare, and I quote:

Premier Daniel Andrews promised upgrades on every regional rail line as the centrepiece of its regional package in yesterday’s state budget.

It includes $435 million for the Gippsland line, $110 million for a new Surf Coast rail project and $100 million for the Warrnambool line —

the problem was that the amount that was being offered by the state government was different to what was being offered by the federal government. In this article from the Weekly Times of 3 May, from which I have been quoting, it states:

Treasurer Scott Morrison previously offered $877.4 million under the asset recycling program for the sale of the port of Melbourne — below the 15 per cent of the sale price promised under the scheme …

This could have been boosted to at least $1 billion in the following week’s federal budget. So we have a situation where the state had assumed there was money available for regional rail and yet the federal government had quantified that by saying, ‘No, it will not be $1.5 billion’. The government had said something that it was not actually authorised to say. This is of great concern. When you are reading the budget papers and you are looking at the press releases, there is a significant difference between what is in the budget papers and what the expectation is in the press releases that are being put out. Regional Victoria quite rightly expected $1.5 billion to upgrade regional rail lines. It did not happen. That is incredibly disappointing. Once again it puts the figures that DTF put together in contrast to the press releases that are being put out by the government.

I am always amused when the Minister for Public Transport gets up and makes comments about what we did and did not fund — we funded this and we did not fund that — when the previous Baillieu-Napthine government was in power. It is just interesting to go back a notch and compare what the previous Liberal-Nationals government did to what is actually happening now. When the previous Liberal-National Baillieu-Napthine government came to power, state government expenditure was growing at 7.3 per cent annually compared to the average increase in revenue of just 6.9 per cent. If you think about that, if you have expenditure travelling at 7.3 per cent and compare it to annual revenue growth of just 6.9 per cent, it means you are in an unsustainable situation and you are going backwards every single year.

Then we had the global financial crisis of 2008, and the federal Rudd Labor government pumped a lot of short-term stimulus money into the Brumby government. Of course when that came to a halt, then obviously the government was in a technical deficit situation. When you are in a technical deficit situation, if you do not have additional revenue or you have your expenses running at 7.3 per cent, you are going to have a significant problem.

When we came to government we had the revenue and the annual expenses being different by 0.4 per cent. That gave us an enormous financial problem. Then of course we had the writedown of GST and stamp duty of $8.3 billion. So all the promises the Brumby Labor government made running into 2010, whether it was about police or whether it was other commitments they made, were wiped out by the $8.3 billion writedown in GST and stamp duty. There was no money for Victoria Police increases. Any money that was used to fund increases in Victoria Police was a result of decisions made by the Baillieu government in the 2011–12 budget. They were funded by savings and making very, very difficult decisions.

So when the Minister for Public Transport gets up and says, ‘The money was always left behind by the previous Brumby government to pay for the increases in police’, it is not right. It is just wrong. It is just blatantly incorrect, because the $8.3 billion writedown of the GST and stamp duty over four years wiped out all of those election promises and funding that had been put aside. In regards to all of those promises, of course we had to deal with Myki, regional rail and the like.

I will speak briefly about the electorate of Rowville. I note that although the government is so keen to push forward with public transport, this does not extend to Rowville. There was not one cent of funding for the Rowville rail link. This is so important in such a growth area. For starters we just want to be able to reserve that land that the member for Ferntree Gully and I have worked so hard on, with a feasibility study and the planning phase. We want to be able to reserve that land, and we are going to make sure that in November 2018, when hopefully the Liberal-Nationals win that election, we will be able to reserve that land so it can only be used for public transport and we can start moving forward.

I note with great interest that none of the schools in the Rowville electorate received funding. Rowville Secondary College, Scoresby Secondary College, Rowville Primary School, Karoo Primary School, Heany Park Primary School — none of those schools received any funding, which is incredibly disappointing.

With the short time I have left, I note that we will need to watch the deficit. We also need to watch the rate of expenditure that the government is committing to because whilst there is a significant increase in stamp duty the government’s expenditure at the same time is rising very quickly, with a massive increase in areas where we do not see that frontline service — and that is what Victorians are looking for. When it comes to the Country Fire Authority and the Metropolitan Fire Brigade, we will be looking very closely at just how much extra money is going to be pumped into that area.