Mrs MARKUS (3:33 PM) —I welcome the opportunity to speak on the private members’ motion on land and vendor taxes before the House today. Land and vendor taxes place a great burden on the people of Western Sydney, including those that I represent in the electorate of Greenway. At their core, the New South Wales land and property taxes are restrictive and inequitable. It becomes more difficult to enter the property market in New South Wales and investment is driven out of the state to more tax friendly environments. In Western Sydney 60 per cent of people are endeavouring to buy their own homes. This is very different in areas in the eastern suburbs, where it is around 30 per cent. My understanding is that it is the state’s responsibility to look after public housing.

Most people who enter the property market and are affected by this tax are not wealthy. They are the mum and dad investors who are seeking to provide for their futures and boost their superannuation. Increasingly, they find themselves unable to invest in property in New South Wales. After the tax-free threshold was removed in 2004, the number of people liable to pay land tax increased significantly. Coupled with this, the introduction of the progressive land tax scale has resulted in serious inefficiencies in the property market. To illustrate this, let me share with you the example of a couple who live in my electorate, in the suburb of Glenwood. These are the very people I spoke of earlier, who want to prepare for their future. The family bought the property before the introduction of the land tax. Within weeks of the tax being introduced they were faced with the challenge of a falling property market. Now the value of the property has dropped below its original purchase price.

Concerns have been raised that in New South Wales the land valuation system contains significant flaws which lead to undervaluations of properties. This allows the government to simply raise land valuations closer to the market rates, increase their own revenue and leave the mum and dad investors with increases in their tax liability from year to year. It is hardly surprising then that property investment in New South Wales is falling. When travelling around Greenway, I am also highly aware of the impact of the vendor tax. It is very easy to see this tax is purely a structural tax. It is, however, a tax of paradoxes. When it was introduced to New South Wales it was estimated to raise $690 million a year as well as to act as a disincentive to buy and sell property. This was supposed to help ease the pressure on the property market. In the next financial year the tax was estimated to have raised $367 million. The paradox is clear: the New South Wales government introduced a revenue raising mechanism that slowed growth, reducing the overall tax take and negating the need to introduce it in the first place. But the Carr government have no plans to abolish the tax.

When I visit local businesses in Greenway I see first-hand the effect of the vendor tax. The market has slowed significantly. When staff leave places of employment they are not replaced because employers simply cannot afford it. The Real Estate Institute of New South Wales noted this year that the vendor tax especially hurts the people of Western Sydney. A substantial proportion of property investors reside and invest in Western Sydney. Now they are looking to invest in other states, primarily Queensland. Construction is slow, property transactions are falling and housing affordability in New South Wales continues to be out of the reach of so many. The Carr government continue to ignore the people of Western Sydney. But they continue to claim they have been hard done by when it comes to the GST.

This year New South Wales will receive an almost five per cent increase in GST revenue. Budget balancing assistance will begin in 2006-07 to ensure that New South Wales is no worse off due to tax reform. The Carr government signed up to the GST agreement in 1999 knowing all the details of the collection and distribution of GST revenue. Now, after six years, they have begun to complain. The reality of the situation is that these taxes could easily be abolished with no financial penalty for New South Wales, freeing the property market to increase, enabling people to be able to invest, and encouraging employment in the real estate market. The vendor tax and the land tax must be abolished, and it is with great pleasure that I support this motion.