Premier and Treasurer facing a new internal revolt from Liberal backbenchers furious over land tax changes
Premier Steven Marshall is facing a growing internal party backlash over his Treasurer’s controversial land tax changes, as sources warn it could lead to Liberal MPs crossing the floor.
Premier Steven Marshall is facing an internal party backlash over controversial land tax changes, with warnings it could trigger another embarrassing split on the floor of State Parliament.
Senior Liberal sources have told The Advertiser there is “very widespread anger” about the surprise State Budget move, which could end in MPs again crossing the floor again in defiance of their own government’s policy.
Four renegade Liberals earlier this month voted against government legislation on mining, claiming it undermined farmers’ rights and public consultation had been inadequate.
Many Liberals, including backbench MPs, are furious that they first heard about Treasurer Rob Lucas’ $40 million per year land tax clawback from media reports about the Budget.
There are growing concerns about a possible voter backlash in key marginal seats, and a significant hit to the party’s fundraising capacity.
It is understood Mr Lucas was confronted about the issue in a partyroom meeting a fortnight ago, and also “copped it from deep blue Liberals” at a fundraiser on Monday this week.
One senior Liberal source said: “The angst is very widespread, and growing.”
“None of these measures were flagged with the partyroom,” the source said. “This is not about the so-called ‘big end of town’. It is going to have an impact on mum and dad investors.
“These are aspirational people who are the base of our party. They’ve set up their affairs in a completely legal manner, and are now being hit with more taxes. It’s not what Liberals do.
“The depth of the feeling means there is going to have to be some kind of compromise.”
There is also concern that, on top of expected fights with unions, the State Government has chosen to do battle with traditional allies in the investment community and small business.
Another senior Liberal source said the “arrogance in dropping this on the backbench” had caused significant angst, and the policy would be tough to sell in a clutch of key seats in Adelaide’s northeast that were crucial to Mr Marshall’s election win last year.
“We’re making unnecessary enemies,” the source said. “There’s people with deep pockets now getting ready for a concerted campaign, and the risk of losing touch in marginal seats.
“Some in the party are saying ‘who in the Liberal base is left?’ There has to be some sort of compromise because of the angst it is causing.”
The complex tax changes seek to prevent land owners from paying less by splitting their properties between multiple legal structures, including trusts. Land is taxed in a similar way to income, where the percentage rate that is paid by an owner increases depending on the total value of property they declare.
The ability to split means a lower rate for each property, and less tax paid overall.
Mr Lucas’ internal critics draw comparisons between the mooted change and former federal opposition leader Bill Shorten’s failed changes to dividend imputation. They say people have arranged investments based on existing law, and retrospectively punishing them is “unfair”.
Internal opponents of the policy say they would be willing to accept changes that stop property splitting, if the land tax rate paid were also cut at the same time.
The Property Council of SA says the state has the highest land tax rate in Australia.
One Liberal MP said there was “a real possibility” of colleagues crossing the floor if changes were not made to the policy before the necessary legislation was brought to Parliament.
Mr Lucas said the Government planned to undertake extensive consultation on the plan, and possibly accelerate cuts to the top rate of land tax, as part of a final package.
He intends to bring legislation to Parliament before the changes take effect next year.
“We said right from the word go that some of our strongest supporters would be very concerned,” Mr Lucas said. “We have acknowledged there will be concern from some of our significant supporters and stakeholders. We might amend the final package that’s introduced.”
Mr Lucas said he would not talk about private discussions with colleagues.
He was confident that some opposition would subside when the details were known.
“Ultimately, as with all Bills, it will be subject to the decisions of the Parliament,” he said.
“Yes, there is concern. If it is unsuccessful, as I’ve canvassed publicly, we would have to find $40 per year from either other revenue or expenditure options.”