SA property developers savage State Government plans to reform land tax, say it would be disastrous
Some of SA’s biggest property developers have blasted the State Government’s land tax plans, calling it disastrous and “dumb and dumber” — warning they will not negotiate.
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The state’s biggest private employer says it will shift investment interstate if the State Government proceeds with its controversial land tax plans.
Some of the state’s highest-profile businesspeople gathered in Adelaide on Wednesday to discuss the plans, with one prominent property developer labelling the Premier and Treasurer “dumb and dumber”.
During a near five-minute broadside from the floor of the Property Council lunch, John Culshaw, who owns Majestic Roof Garden Hotel and serviced apartments in North Adelaide, said he’d “put my life into this state and I cannot believe what’s going on”.
“This is the worst chapter in South Australian history for business,” he said.
“It’s dumb and dumber — Marshall and Lucas, dumb and dumber.
“$50 million putting into this state, 500 people I employ and these people are stuffing it up.”
Earlier, Peregrine Corporation executive director Sam Shahin said land tax aggregation measures, announced in June’s budget, would be “disastrous”.
His company controls a portfolio of close to 250 properties across the state, including the OTR network of service stations.
Asked whether it would cut local spending in favour of investment interstate in the event of new aggregation rules, Mr Shahin said it “without a doubt” would.
“We employ 4233 people — the vast majority of those are South Australians … and I would be 100 per cent certain that land tax affects the vast majority of all those employees,” he said.
“With respect of investment decisions — absolutely — land tax in the way that it’s proposed is nothing short of disastrous for this state and future investment in the state.”
As part of its land tax package, the State Government has pledged to reduce the top rate from 3.7 per cent to 2.9 per cent by 2027-28.
But Mr Shahin said it must go further in order to be competitive with others states.
“The case has to be so compelling for somebody to either want to come and live here or to come and invest here, otherwise why would you? It’s certainly not going to be the new tourism ad that’s going to drive people here,” he said.
“I think we need to be much better than the (national) average — if you were to key in a number I would say we would have to be under 2 per cent.”
The State Government’s aggregation measures would prevent land owners from paying less land tax by splitting their properties between multiple legal structures, such as trusts.
Maras Group managing director Steve Maras, whose family oversees an extensive portfolio of office, retail and other commercial property, said the changes would have a devastating impact on the local economy when combined with a statewide revaluation of property currently underway.
“I think the whole aggregation measure has been a decoy to the big white elephant in the room, which is the revaluation process,” he said.
“I think revaluation is the bigger issue — the combination of those two is a double whammy that sends this state into recession.
“We’re not here to compromise or negotiate on this — and the reason why we won’t do that is we don’t know what the impact of the revaluation process is going to be.”
Marissa Schulze, who runs mortgage broking and financial advice firm Rise High Financial Solutions, said many of her clients were in “panic mode”.
“They’re facing a situation where they’re going to lose everything they’ve worked so hard to build,” she said.
“We’ve got a situation where we’re killing families who have really tried hard to build a nest egg for their children, we’re going to destroy the self-funded retirees — many of them are going to be forced to sell (their properties) and rely on the pension again — emotionally this is very hard for these people.”
Premier Steven Marshall said the State Government would have some “positive announcements” on its revised land tax plans next week, following “frank discussions” at a party room retreat in the Barossa on Tuesday.
“We are all agreed that we want to bring the cost of tax in SA down,” he said.
“We are getting some final modelling later this week. We hope to have something back to the Liberal party room and the Cabinet early next week, with a release very soon thereafter.”