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State Tax Hikes – A Direct Attack on Jobs

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Mr MORRIS (Mornington) (16:35): I thought I had heard it all in this chamber, but I think I have just heard a bit more.

The last contribution in particular, but many of the contributions we have heard from the government benches, just make it so clear that they have absolutely no conception about how an economy works. If there is anything more important to mental health than jobs, than having a job and having the opportunity to get up and go to work every day, I have not heard of it.

A member interjected.

Mr MORRIS: This bill, despite the claims of some, and particularly the member who has just spoken, is not a mental health bill. It is a tax bill.

It is true that extraordinary times call for extraordinary measures, and we have before us, it has to be said, an extraordinary measure—an extraordinarily bad measure. Victorians have worked incredibly hard to come back from the difficulties of the last 12 months and the economic impact of the health challenges that we have had. They worked incredibly hard and they deserve great credit for it.

Every Victorian deserves credit for what has been achieved.

It also has to be said, I think, that the policy contribution of the commonwealth, the provision of JobKeeper, which certainly lived up to its name, bought us time. It bought individuals time. It bought businesses time, and it provided that lifeline that was so desperately needed.

If it had not been for JobKeeper, the economy would have been drowning in a sea of red ink by now, but it is not. But let us not kid ourselves: the recovery is tenuous at best. Confidence is incredibly weak, and that is not surprising.

The events of this week speak for themselves, and we now this afternoon find ourselves close to what appears to be imminent lockdown. Let us hope it does not happen.

Let us hope it does not need to happen from a health point of view, and let us, for the economy’s sake, hope it does not happen, but we are on the brink again. And if it does happen, it is likely to be the end for many, many small businesses. They just will not survive a further lockdown, and that means not just the end of the businesses but the end of the jobs that go with them.

So there is a genuine risk to confidence, and unfortunately history tells us that economic events of this nature frequently have false recoveries. We hope certainly that the green shoots that we are seeing, the economic green shoots, are not a false signal. They are the fruits of the labours of all Victorians.

But it has been hard enough to survive the pandemic, which of course is still going on, without the odds being stacked against businesses, without the odds being stacked against individuals, by increasing the tax burden. Yet now, as we are seeing, as I have said, those green shoots of recovery, we are also seeing the tax burden increased under this legislation.

I think the Treasurer’s revenue plans in this budget demonstrate very, very clearly just how damn lucky he has been to be Treasurer over the period.

Yes, he has certainly primed the pump with public sector works, and you have only got to look back at the investment figures over the period of the government. Yes, he certainly primed the pump with public sector spending, and we know what the impact of that is, but he has also been, I think, assisted enormously by the recovery from the private sector from the 2013–14 slump.

But with this measure he clearly does not understand basic economics. If we look at budget paper 2, tabled last week, page 20:

… private demand rose by more than 9 per cent in the December quarter, although it remains well below pre-coronavirus … levels. By contrast, public demand has risen strongly to be well above where it was in early 2020, which has helped cushion the effect of the coronavirus …

Yes, it has, and I do not think anyone would argue with that, but the fact that private demand is stuck at less than 95 per cent of its level pre-COVID—doesn’t that tell you something?

Doesn’t that tell you that the recovery is weak? Doesn’t that tell you that business has minimal capacity? If they are not investing, if they are not spending, it means they have diminished capacity.

And the flow-on from that diminished capacity to invest, to employ people, is evident a couple of pages on in the same budget paper, where the unemployment rate is forecast through the forwards, a higher rate of unemployment in this state than the national average, and that equates to 113 000 people who do not have jobs—113 000 people who do not have jobs that in New South would have jobs, in Queensland would have jobs and in other places in the commonwealth would have jobs, but not in this state.

The impact of this tax is evident in the Treasurer’s own budget papers. So this is the worst possible time to increase taxes.

There is a reason investment is down. There is a reason those employment figures are down. The form of tax that has been chosen is probably the worst possible tax of all.

The sort of tax that the Treasurer is proposing even in a boom would increase prices, but under the current economic conditions, yes, it will increase prices but it will also lead to fewer jobs, because if you tax people, they can employ fewer people. They are not going to invest. Those numbers are there.

If you set out to undermine the recovery, you could not do a better job than bring in measures of this nature.

Certainly the media and the commentary from others confirm that story. We have had Saul Eslake, who I am sure is well known to all members of the house, saying:

What he—

referring to the Treasurer—

is doing is taking a tax that is universally recognised as being the worst tax in the armoury of taxes levied by Australian governments and making it worse.

Shane Oliver from AMP says:

It’s not just high-end buyers who will be affected—

and I make that point to the government members: it is not just high-end buyers who will be affected—

… it’s middle income ones as well. 

And the Grattan Institute said:

It is the most economically costly tax levied by state governments …


Increasing it takes us in the wrong direction.

The economy is incredibly fragile, and this government is imposing a tax that, according to the Grattan Institute, increasingly takes us in the wrong direction.

We certainly saw plenty of commentary in the papers in the days following the budget: the Herald Sun—‘Covid budget whack’; the Australian—‘Victoria’s greedy tax hikes will harm jobs and growth’.

I know the term ‘jobs and growth’ is much maligned, but it is jobs and growth that allow us to do all those other things. Without jobs and growth, we cannot afford mental health services, we cannot afford hospital services, we cannot afford education services.

You need those jobs; you need that growth. And, worst of all, is the impact on housing affordability, which raises the cost of taxes and local government charges to 40 per cent.

This budget is an absolute stinker.

This bill is a shocking, shocking measure. It will have a direct impact on housing affordability, it will have a direct impact on employment and it should not pass.