Private Members' Statement

Mr ANOULACK CHANTHIVONG (Macquarie Fields) (19.19): — I make another instalment in the humble working-class economist series, this one about the Liberal Treasurer's snake-oil never-ending land tax on the family home.

It is a forever tax on people's forever home. Despite the Treasurer and wannabe Premier's big boasts of being the self-appointed great reformer—saying "Progress is never made by taking ideas off the table", talking about his "innovative reform" and of course his new favourite US presidential linguistic parallel that "We cannot let our success be our failure in the future" — this snake-oil salesman of a Treasurer cannot even decide whether he wears his darker-framed glasses to audition for Superman or his retro transparent ones for the lead role in Boogie Nights 2. He really is a puffed-up policy peacock, all plume and ready for a plucking.

Housing affordability was the current Premier's top priority, yet we saw nothing from the Treasurer and heir apparent in this budget, despite his promise from last year. He awarded a $5.5 million contract to KPMG, and all we have so far are some glossy discussion pamphlets that promise everything to everyone and say it is the Pareto-optimal panacea to housing affordability.

There are no losers in this new tax con—which brings me to his progress paper released earlier this month. Going through the paper, two things really stuck out to me. First, the paper mentions a 50 per cent increase in property transaction volumes in reference to the Malakellis and Warlters 2021 paper. I thought, "Gee, that's a frightfully big number".

Secondly, it mentions that house prices—not land values, I might add—would decline by 3 per cent to 4 per cent but makes no reference to the source. A conclusion with no reference does not sound very rigorous to me.

One would have thought that as part of the positioning and strategy of this spin campaign, a reduction in house prices would be used as a political missile to launch the policy. The fact that it was assigned approximately 40 words in a 61-page document with more than 17,000 words made me curious about the accuracy of this conclusion.

For one, the Australian National University and University of Canberra modelled the impact of the ACT stamp duty reforms compared with a land tax and concluded that house prices increased by 9 per cent and units by 4 per cent.

Without going through each analytical step, the 50 per cent figure was obtained — in consultant‑speak — through a literature review of academic journals using a symmetrical inversion approach to the findings and then applying linear interpolation. In community-speak it is, "Let us use and summarise other people's work, reverse the findings to meet our needs, use the mathematical timetable, find a gullible Treasurer to pay $5.5 million for it and throw in some happy pictures of beautiful, smiling people". Voila — produit fini.

This would never pass the pub test so I got even more curious to source and analyse the academic papers — especially the ones that use Australia data — to determine where the 3 per cent to 4 per cent house price decline came from and whether it is even true.

It is amazing what one finds when one goes digging. The Davidoff and Leigh and the Adams, Nassios and Sheard papers were the most relevant to what happens to house prices and land values when one imposes a land tax. And guess what? Neither paper supports the conclusion that house prices or land values fall when one takes away stamp duty and/or imposes a land tax. In fact, the model results show the opposite: House prices and land values actually appreciate. Oh, deary me — just when I thought the snake-oil forever land tax on the forever family home could not get worse.

Here are some of the findings as detailed in both papers, using Treasury's assumption that stamp duty equates to about 3.99 per cent. Firstly, a 10 per cent reduction in stamp duty — that is going from about 4 per cent to 3 per cent — will increase land values to the tune of 1.8 per cent to 4.1 per cent. But that is only a 10 per cent reduction, not taking it away totally.

If one applies the linear interpolation approach used in the Treasury paper, the estimated land values increase many times. I will be conservative and say that a 1 per cent reduction in stamp duty from 4 per cent to 3 per cent could result in land values increasing somewhere from 3.6 per cent to 8 per cent. But then, of course, one needs to take the reduction to 0 per cent. This means that the estimated land value increases a minimum of about 12 per cent, which just means a higher land tax that goes on forever for the unsuspecting first home buyer.

For the average house, a 10 per cent reduction in stamp duty increases the house price about 3 per cent but that is only taking it down by 10 per cent. If one applied linear interpolation then house prices would increase a minimum of 15 per cent.

The blunt conclusion is this: House prices and land values go up with this snake oil. First home buyers are priced out. The increase in land value means first home buyers will continue to pay a forever tax on their forever home. The humble working-class economist series continues.