Ms THEOPHANOUS (Northcote): I rise to speak in support of the Windfall Gains Tax and State Taxation and Other Acts Further Amendment Bill 2021, and it is disappointing to see that those opposite are not supporting this sensible bill. As our state continues its journey towards social and economic recovery from the pandemic, we have a unique opportunity and a responsibility to build a fairer, more prosperous and just society. All aspects of government policy have a role to play in delivering better outcomes for Victorians, including our tax system. Our tax system should work for the good of all of us, creating revenue streams that ensure we can continue to deliver the services and infrastructure our communities need in a way that aligns with people’s ability to pay as well as the values and priorities of Victorians.

This bill reflects the government’s commitment to ensuring our tax system remains fair and supports our strong financial management. In addition to implementing budget revenue and tax relief measures from the last two Victorian budgets in a fair and efficient way, many of the amendments in this bill serve an additional purpose. Whether it be improving the integrity of our planning system or supporting the delivery of more safe and affordable homes, this government is about improving outcomes for Victorians.

One of the principal measures contained in this bill is the introduction of a windfall gains tax where rezoning decisions deliver a land value uplift of over $100 000. We know that when land is rezoned to expand the ways in which it can be used, landholders can often see an immediate and substantial increase in the value of that land. So, for example, industrially zoned land can be rezoned residential and immediately be worth more. The windfalls derived from these planning scheme amendments currently go solely to the lucky landowner. With this bill we are making sure that high-end property developers pay their fair share, and that will be up to 50 per cent of the value uplift. This is both fair and efficient. What it means is that multimillion-dollar profits can go back to the community through government investment in services and infrastructure. Brendan Coates, the director of economic policy at the Grattan Institute, has said of this measure:

As a tax, collecting unearned windfall gains is extraordinarily efficient, so efficient it shouldn’t even be called a tax but a charge for a change in allowable land use, which is what it is.

As someone who has grown up in and represents an inner urban area, I am acutely aware of the impact development can have on our communities. Our population is growing rapidly in the inner north and this has meant some pretty dramatic development, particularly at the site of the former Alphington paper mill where over 16 hectares is being redeveloped into multilevel residential homes. Planning for that kind of growth means carefully balancing the need for more homes with the impact on our environment, open space and neighbourhoods. But it also means planning for more services and infrastructure—services like health and education, infrastructure like roads and cycling connections and more opportunities to create local jobs. Those things require funding. The introduction of the windfall gains tax will help support the delivery of these critical things by creating a new revenue stream.

Critically, it will also improve the integrity of our planning system by reducing incentives for corruption when planning applications are decided. Too many times we have seen some pretty dubious dealings when it comes to developers buying up land and then reaping massive profits when the land is rezoned. Then the government is left to pick up the tab for public infrastructure on land with newly inflated land prices. All this does is lead to poor outcomes for our community. It exacerbates wealth inequality and it is not fair.

Now, I want to address a couple of the natural anxieties that might arise from a new measure like this. The changes will only apply to windfalls over $100 000, and a series of exemptions will mean the measures do not impact the family home, holiday home or residential investment properties. This is meant for higher end development projects, not your mum-and-dad investors. We are also continuing to support the important work of our charities by providing an exemption when the rezoned land continues to be used for charitable purposes for 15 years. Farmers will also be excluded from windfall gains tax when land is rezoned to any other rural zone, excluding a rural living zone, allowing them to continue farming unimpacted.

Finally, I want to address the spurious argument that windfall gains tax will scare off developers and substantially impact housing affordability. It is just naive to assume that rezoning windfalls have resulted in cheaper housing. Do you really think that landowners pass on these windfall gains when they get them? Developers do not pass on their windfalls to home owners. They continue to charge the maximum the market will bear because they operate in a competitive market.