Tax relief and home ownership at heart of opposition budget pitch, but savings lacking

The Victorian opposition has sketched its plans for the state’s financial recovery, with a promise to cut tax, restore budget integrity, reduce debt, enable home ownership and shift the balance of economic activity away from the public sector and towards private business.

Shadow treasurer James Newbury, delivering his first budget reply speech 18 months out from the next state election, offered a traditional liberal remedy to what he characterised as Victoria’s “slide” into a high-tax, high-debt, welfare state where “the only sure thing is that when you put your hand in your pocket, Jacinta Allan’s hand is already in there”.

James Newbury presented a bleak picture of Victoria’s economy as he outlined his plans for financial repair. Credit: AAPIMAGE

The centrepiece of his budget reply – a pledge to lift the current first home buyer stamp duty ceiling from $600,000 properties to $1 million – is one of several tax changes the Coalition is promising to make if elected in November next year.

Newbury also said the Coalition would scrap recently legislated changes to the Emergency Services Levy, abolish the Short Stay Levy on Airbnb properties and reinstate payroll tax exemptions for non-government schools and GPs.

He said the stamp duty change, based on an estimated additional 17,000 exemptions a year, would cost $1.09 billion, the Emergency Service Levy $3 billion and the entire tax package about $4.6 billion over the four years of the budget.

He did not nominate any savings measures to offset the reduced tax take.

Newbury flagged the introduction of a debt cap – to be measured as a proportion of gross state product – but declined to say what the legislated limit would be.

These omissions were derided by Finance Minister Danny Pearson, along with the recycled “Go for Growth” title chosen for the Coalition’s economic plan.

“What a limp-wristed performance from the K-Mart Costello,” Pearson ridiculed. “Honestly, if you are going to come into this place, have a bit of vim and verve, and have a bit of originality.”

He accused Newbury of “talking the joint down” and diminishing the strength of the Victorian economy.

Housing Minister Harriet Shing disputed the $1.09 billion pricetag for additional stamp duty exemptions and said the Coalition’s policy would cost at least double that. She said the government’s existing stamp duty concessions, which waives stamp duty at purchases below $600,000 and discounts up to $750,000, cost the budget $836 million a year.

Premier Jacinta Allan was not in the Legislative Assembly during the speech.

One of the key themes of Newbury’s speech – a direct appeal to young Victorians trying to save for and buy their first home – sets up an electoral contest between Labor’s offer to boost housing supply through planning changes and higher-density development and the Coalition’s pitch to reduce the tax barrier to home ownership.

Where Allan has declared she “wants to be the premier who got millennials into homes”, Newbury said falling rates of home ownership among people under the age of 40 showed Labor’s ratcheting of property taxes was killing the Australian dream. “On behalf of the Liberal-National Coalition, I say to every Victorian with a dream of owning their first home: we want to help you.”

Expanding on his theme of budget integrity, Newbury singled out former treasurer Tim Pallas’ practice of using treasurer advances to fund infrastructure projects without cabinet or budgetary oversight and the average $14 billion difference between the government’s forecast and actual annual spending.

A Brad Battin government would commission an independent audit of Victoria’s finances and introduce a charter of budget honesty, he said.

Pearson pointed out that state budgets were already audited by the Auditor-General.

The budget reply speech offered a bleak and at times dark picture of Victoria and Melbourne under the Andrews and Allan governments, with Newbury claiming Melbourne had gone from being the world’s most liveable city to a place of nationally high taxes, debt and unemployment. “We’ve become the rundown state.”

He said Victoria’s underperforming economy, marked by rising business insolvencies and an unemployment rate above that of other Australian states, was the consequence of a “repositioning” under Labor, where public sector expense was crowding out private sector investment.

Newbury described the state’s net debt as a “ticking debt bomb” that, according to last week’s budget, will cost $1.2 million an hour in interest payments to service by 2028-29 when cumulative debt reaches $194 billion. “That level of debt is just not sustainable,” he said.

His prescription for defusing this bomb is largely the same as the government’s. Rather than pledging to return the budget to overall surplus and to retire debt, he promised to expand the economy so the ratio of debt to gross state product shrinks. “We believe the only way out of debt is to grow our state.”

Doffing his cap to the Jeff Kennett years – the last time the Liberals led a state government of consequence in Victoria – Newbury promised to “get Victoria moving again” by reducing the tax burden on the property sector, removing restrictions on new gas developments and establishing a royal commission into union corruption and misconduct on government building sites.

He also promised to establish a Victorian Productivity Commission.

While Newbury’s plan invites Labor’s charge that a Coalition government would also mimic Kennett’s deep cuts to hospitals, schools, public transport and other government services, Newbury hopes his speech can provide an economic narrative for his party to develop over the next 18 months.

Speaking outside parliament, Newbury said the financial impact of every measure in his budget reply speech would be announced before the election and the Coalition’s costings released “in the usual way”.

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