Jamies McClurg: Property sector must focus on bigger picture

By raging against Treasurer Rob Lucas’s plan to ramp up land taxes, the state’s property lobby is doing itself no favours, writes developer Jamie McClurg.

• REACTION: Developer lobs land tax grenade
• Property industry fury grows over land tax changes
• No favours from Lucas for Lib-voting property lobby

There’s an old saying that goes roughly along the lines of: “Only a true friend will be honest with you, whereas fairweather friends will tell you what you want to hear”.

Therefore, when Treasurer Rob Lucas announced changes to land tax in the Budget, extending the net of those paying higher rates to include more “mum and dad” investors, the resultant robust criticism from the property sector should have come as no surprise.

Land tax has existed in South Australia since 1884 and, ever since, owners of residential investment and commercial property have sought to ensure they don’t pay more of it than intended.

Likewise, the State Government, itself over-reliant on property taxes since ceding the right to collect income tax to the Commonwealth during World War II, has continuously sought to extend the circumstances and amounts that property investors pay.

Last year, the Marshall Government honoured its election promise to reduce land tax rates, bringing them in line with the rest of the nation. However, that process won’t kick off until 2020 and will take seven years.

Jamie McClurg, Executive Chairan at Commercial & General. Picture: Alex Aleshin

The impact of the Treasurer’s new Budget measure should not be underestimated.

For those caught by the changes to their marginal land tax rates, the impost will be significant. However, in arguing against this measure, the property industry is at risk of missing the bigger picture.

The Government’s stated target of 3 per cent average annual economic growth is a much loftier ambition than what the state has managed to achieve in the past 15 years.

Economic activity of this magnitude would deliver property returns far in excess of the estimated $40 million a year that the tax changes are likely to generate.

The industry is also a major beneficiary of the $11.9 billion in infrastructure spending over the next four years. The lowering of payroll tax and changes to other policy levers have also been done with the express intent of increasing competitiveness. I’m not suggesting the industry should bite its tongue.

As one of the largest contributors to the state’s economy and a major driver of jobs, skills and innovation, the sector must be able to hold the Government to account.

It has been bold with its vision, so it can rightly anticipate scrutiny of its delivery. But at the same time, we need to look beyond our short-term interests and focus on the bigger picture.

And if that means we need to contribute a bit in order to support the Government’s economic agenda and help grow a vibrant future for the next generation, that seems like a fair trade.

Jamie McClurg is Commercial & General Executive Chairman