Donors threaten South Australian Liberals over property tax reforms

Liberal Party donors are threatening to desert the party in South Australia over contentious land tax changes.

South Australian Treasurer Rob Lucas. Picture: AAP

Liberal Party donors are threatening to desert the party in South Australia, warning that ­Steven Marshall risks becoming another one-term SA Liberal Premier as a result of land tax changes that critics say will smash the investment property market.

State Treasurer Rob Lucas yesterday upped the ante, saying party donors “do not set party policy” and that he intended to stick by the changes.

Mr Marshall, elected last year after 16 years of uninterrupted Labor rule, faces his first major test at this weekend’s state annual conference, with party backers vowing to leave the Liberals if the new land tax regime slugging property trusts is not scrapped or modified.

The coalition against the ­reforms is formidable, with every key industry group and South Australia’s peak business body, headed by former Adelaide lord mayor Martin Haese, condemning the changes.

More dauntingly for Mr Marshall, individual Liberal donors who have poured thousands into party coffers are threatening to pull their support ahead of the 2022 election, which is winnable for Labor’s Peter Malinauskas.

“Labor is absolutely within striking distance and I have been inundated with emails and calls from Liberal Party loyalists who are saying that they can forget about getting a single cent unless this policy goes,” one party donor told The Australian yesterday.

The government hopes to raise $40 million a year by preventing land owners from reducing their land tax bills by splitting their properties between multiple legal structures, including trusts.

Businesses and individual prop­erty owners fear the actual tax grab will be higher, as the state’s valuer-general embarks on a review to ­reflect the gradual but significant growth in the value of South Australian real estate.

Business, investors and even some Liberal MPs are comparing the surprise nature of the land tax changes to Bill Shorten’s attempt to target franking credits at this year’s federal election.

They include newly elected Liberal senator Alex Antic, who took the provocative step of ­releasing a letter he had written to Mr Marshall.

“With the benefit of the federal election campaign fresh in our minds, it strikes me as unconscionable that our party would seek to prosecute an argument for an increase in land tax,” Senator Antic said in the letter.

Former Australian Hotels Association South Australian chief Peter Hurley emailed Liberal MPs yesterday expressing anger at the changes.

“At least Shorten and (Treasury spokesman Chris) Bowen told us they were going to savage our ­retirement savings and people were able to vote accordingly,” Mr Hurley wrote.

Mr Lucas said the only compromise the government was considering from the original plan in the June state budget was to ­reduce the rate of land tax from 3.7 per cent to 2.9 per cent more swiftly than the seven years outlined in the budget.

He delivered a blunt warning to donors threatening to ditch the party. “This is not the Labor Party where the shoppies union gives you a million dollars and gets to determine your policy on trading hours. We are always respectful of the people who support us but they do not get to set the party’s policies.”