Please note: This is an extract from Hansard only. Hansard extracts are reproduced with permission from the Parliament of Tasmania.

FIRE SERVICE (CONTINUITY OF REGULATORY

ARRANGEMENTS) BILL 2006 (No. 32)

Second Reading

[5.14 p.m.]

Mr LLEWELLYN (Lyons - Minister for Primary Industries and Water - 2R) - Mr Deputy Speaker, I move -

That the bill be now read the second time.

Retrospective legislation to cover the period between when the Fire Service (Finance) Regulations 1996 expired and the Fire Service (Finance) Regulations 2006 commenced is required to cover the collection of the insurance fire levy by the State Fire Commission in that interim period.

Under the Subordinate Legislation Act 1995, regulations automatically expire after 10 years unless a request to extend their life is made prior to them expiring.

The State Fire Commission approved the drafting of new regulations on 1 March 2006 but as the State election was called shortly after, there was no mechanism available to the commission to either extend the life of the 1996 regulations or make new regulations before the 1996 regulations expired. The 2006 regulations, which except for one new provision mirrored the 1996 regulations, were proclaimed on 16 May 2006.

The regulations contain, among other matters, the insurance fire levy percentages that insurance companies are required to apply to commercial insurance and refund this revenue to the commission. Given that there were no regulations in place for six weeks, it could be argued that the raising of the insurance fire levy in this period was invalid.

The proposed legislation will not impact on the money raised by the Commission but it will legalise the collection of the insurance fire levy in that interim six-week period. I commend the bill to the House.

[5.16 p.m.]

Mrs NAPIER (Bass) - This side of the House does not like retrospective legislation on principle. This is a piece of retrospective legislation which, as indicated, covers the period between when the Fire Service (Finance) Regulations 1996 expired and the Fire Services (Finance) Regulations 2006 commenced to cover the collection of the insurance fire levy by the State Fire Commission in that interim period.

The regulations as indicated were due to expire at midnight on 2 April 2006. I note that the State Fire Commissioner approved the drafting of the new regulations on 1 March; that is just one month before they are due to come into operation. So the regulations were due to expire on 2 April 2006, and the State Fire Commission, I am told, according to your notes, approved the drafting of the new regulation on 1 March 2006. That leaves one month to have them drafted and to get them through this House. Then, of course, the State Government calls an election. I would not make a joke of this, Minister, because we could in this House decide not to approve this retrospective legislation and require that your Government, through the Fire Service, return the proportion of money that has been collected during that time quite illegally, and disperse it proportionally back to the people. This would also have the impact of making it even more difficult for the Fire Service to stay on budget, given that your Government has progressively cut the contribution to the Tasmanian Fire Service and whacked it onto the consumer.

This is at the very same time that you have given the Fire Service additional responsibility taken away from the Ambulance Service in a bungled way, thereby providing antagonism between the ambulance people and the firies, which was not really necessary. The truth is, I think, that everyone could see that you had pretty well made up your mind that the job of removing people from accidents using the jaws of life et cetera, was going to move across to the Fire Service. I was just really interested that HACSU and some of the unions decided to lay low on that over the election, hoping that they were going to get a bit more consultation with the Government. Well, the Liberals made a commitment that we were not going to transfer it. It did not make any difference to the election, did it? So in that sense I guess the union trusted you. It will be interesting to see if they trust you again with the number of broken promises that your Government has managed to rack up over the past six months since the last election. There are little things like Spirit of Tasmania - lots of little issues and big issues, too. These were promises in relation to extra funding for hospitals, and extra people. You are kidding! You promise it and then you apply a 5 per cent efficiency dividend on top of an already over-run budget from the previous financial year. So there were lots of broken promises.

But getting back to the Fire Service, I was thinking about this and thinking why this has happened. They only allowed one month for them to be rewritten and approved, hoping they would be able to whip it through Parliament in time, knowing that the regulations could have been disallowed and that you would in fact still have the problem.

Mr Llewellyn - It does not get whipped through Parliament; you should know that.

Mrs NAPIER - It can be. You can move to disallow them. You know that.

The point is that someone was slack in not making sure that those regulations were drawn up well and truly one month before the date of their expiry, which was 2 April 2006. We just make the point.

Mr Llewellyn - You're casting aspersions on the Fire Commission now.

Mrs NAPIER - Well, if that is where the responsibility lies, so be it, because it is inefficient to be running so close and it is not acceptable to just assume that this House is going to agree to retrospective legislation. That is what you have done. You have said, 'Do not worry about it, Parliament will just tick it over; they would not turn it down'. Well, the point is that we are at least identifying to the media and to the people of Tasmania that this is not an efficient way to run a fire service or the regulations under which it operates. That is what we are doing.

We are going to support the bill but we do it under protest because it is not good management. It is not good government practice and it is not good administrative practice to rely upon the goodwill of a parliament to pass retrospective legislation that should have been ready well and truly in time before they were due for expiry.

Mr Michael Hodgman - Shame on you, Noddy.

Mrs NAPIER - Those regulations contain amongst other matters, of course as we know, the insurance fire levy percentages that insurance companies are required to apply to commercial insurance. They refund this revenue to the commission and, without regulations in place for that six weeks, it could have been argued that the raising of the insurance fire levy during this period was invalid.

This State Government raked in an extra $3 million from householders and business when they increased the fire levy, a tax increase on the Tasmanian public by this State Government who every so often goes out and says, 'We do not increase taxes'. Of course they did. The Fire Service levy is the first good example of this, which was really forced upon the Fire Service in order to make sure they can continue the very good work that they do within the community.

I will take this opportunity to draw to the minister's attention the budget submission from the Property Council of Tasmania for 2007-08. Amongst a number of issues, they are arguing quite strongly that the current system for funding the Fire Service is unjust and unfair. I would appreciate a response from the minister on this issue. They particularly reinforce the fact that there is a tax on a tax in the way in which Fire Service funding is levied because the insurance levy is calculated by applying the levy percentage amount after GST has been added to the premium. That is quite clearly a tax on a tax. That is the first thing that you can improve. Every bit of this system not only is a tax on householders and businesses but it is also a tax on small business and a tax on the people who can least afford it - the people who rely upon rental accommodation.

Returning to the Property Council's view, they say that non-residential property owners and businesses are paying a sizeable subsidy to residential property owners. They argue that fire protection service requirements for non-residential properties and businesses are out of step with the cost of levies paid through council rates and the 28 per cent levy on insurance premiums. They argue that Fire Service funding can be made fairer by removing the double counting by abolishing the 28 per cent levy on insurance premiums payable by non-residential property owners and businesses, and adding the amount of insurance levies to council levies. The fundamental point there is that most businesses pay their Fire Service levies twice. They pay for them because they pay council levies and then they also pay because they are a commercial business, and that is a 28 per cent levy on insurance premiums.

I would be interested in your response to the concerns that they raise because it is a protest from the property industry about the high level of tax and the imbalance that they would argue is charged against the business community and non-residential property owners. They would argue that funding fire services through a single council levy is fairer because property owners and businesses that underinsure or do not insure will contribute equitably because they cannot avoid council rating. They argue that assessed annual values reflect asset value, fire risk, fire protection and building complexity. Most importantly, they argue that funding fire services through a single council levy is fairer because double-counting is removed.

I received this, as we all did, as a budget submission; it is called 'Don't Strangle the Goose that Laid the Golden Egg'. I think it is important that this Parliament has greater debate about the whole issue of property in the context of the housing debate. We should look at it in the context of the drop in confidence that has emerged in relation to business and what the future might hold.

You would know, Minister, the concerns that are held by people who own property in the Tasmanian business community in relation to the relatively high rate of land tax relative to capacity to pay. You might argue that we have some of the cheapest land tax about, but that is only based on the assessed value of the land, and the income base and the turnovers upon which businesses can succeed. The real, hidden victims in this are those people who rely upon rental properties. I am sure, Minister, you read the financial markets as much as any of us. The advice that is coming through very clearly, whether you make occasional reference to the Financial Review or to your usual smart investor magazine, is that property is not the way to go; do not invest in property. If you want a good investment, first of all you should invest in superannuation because the reforms that the Federal Government have introduced are very attractive for people to invest their money to look after themselves on a rainy day. The second message is that once you have invested within superannuation you should invest in shares, because over the past 10 years, certainly the last seven years, the return on shares is significantly above that which you can get back on property.

Mr Llewellyn - Are you offering financial advice?

Mrs NAPIER - No, I am reporting to you, Minister, in the context of the discussion on the fire services levy and the concerns the Property Council has in relation to the unfair proportion of that fire services levy being applied to business. That argument is not only relevant to the impact it has on business; it also has relevance in terms of the impact it has upon commercial property and residential property - residential property being rental property. Given that we have something like a 98 per cent full house in terms of rentable residential property within Tasmania, my concern is that people are going to stop investing in properties that can be rented out to others. We already have a significant squeeze on the market, and I think what you are going to find -

Mr Kons - If demand is up then you -

Mrs NAPIER - You are already having a debate over here on the left among people who oppose having a bidding process for rentable properties. That argument is there is because of the shortage of properties. I understand that. I do not want to provide any disincentive to investors who might be involved in the building of rentable properties. What I am saying, Minister, is that this fire services levy is an example of a tax that particularly loads the non- residential sector. That includes the property rental sector, which picks up rental accommodation. Quite often, your low-income earner is very much reliant upon it.

The point that they are making is that you need to reform. They have asked you to look at land tax and a variety of other issues. In particular they want you to have a look at reforming fire service funding. I draw your attention to that, Minister, because I think it is quite relevant. The Treasurer might look at that in terms of the level and balance of taxation revenue that this State is reliant upon, apart from the return from GST. It does apply to you, Minister, because you are responsible for fire services, and the fire services levy is, in effect, a financial impost directed disproportionately to the business community. I raise those points because there are rare opportunities within this Parliament. For some reason this Parliament does not like sitting. It is probable that you do not like having to answer questions or even to have a debate on something like this.

As I indicated, we were tempted to oppose the legislation because we see this as a sign of a slack government. You were reliant upon retrospective legislation to cover a very late move to set up new regulations. We are going to support the bill because the losers, otherwise, would be the Fire Service. The only reason we are supporting this is that we know the fire services do a great job. There is a hot summer coming and they deserve every bit of upgraded equipment and reward that they can get in both volunteers and training. Minister, they deserve much better than this legislation. The bottom line sticks with you, the minister responsible for fire services. Can I suggest that I would not want to see such a reliance upon retrospective legislation again.

[5.33 p.m.]

Mr MORRIS (Lyons) - This is not the first time that we have had retrospective legislation in this House and it probably will not be the last. It does clearly demonstrate that the Government does not have the appropriate processes in place to ensure that your regulations are updated in a timely manner. Something has fallen down; I am not sure who has responsibility. I would be surprised if the fire service was responsible for their own regulations. Anyway, I am sure that you can inform us of exactly who was responsible to make sure that the new regulations should have commenced prior to the other ones, or at the time the others were dealt with. What I am saying is that this should have been dealt with at this time last year, not now.

If it had been dealt with this time last year - had the alarm gone off six months before the regulation expired - then it would have been brought in to this place and we would not have had to face a bill which is retrospective by its very nature. I note, Minister, that you say that it could be argued that the raising of the insurance fire levy in this period was invalid. I think you yourself, by bringing in this bill, have clearly demonstrated not that it could be argued but almost certainly that it has been argued, otherwise you would not bother.

Mr Llewellyn - No-one has argued about this; no-one has tried to get money back from the Government.

Mr MORRIS - That is correct.

Mr Llewellyn - Because of this, the Government is putting forward the cover for the illegality that was caused inadvertently; it is as simple as that.

Mr MORRIS - Minister, I disagree that it was inadvertent; I would say it was bad management. All the regulations automatically expire after 10 years. Surely there is a little alarm clock attached to each regulation, or someone who is instructed to go through on a regular basis. Surely there is a sheet somewhere that says which regulation will expire and when. If there is not, there ought to be.

Mrs Napier - Put a red flag on it.

Mr MORRIS - Yes, on every one of them. They all do the same thing; it is not as if this does not happen on a regular basis. I think we have dealt with a couple of other regulations this year on the same basis, or there were certainly a couple of other pieces of legislation of a very minor nature that have come through more or less in this manner.

I will move on to the substance of the bill itself. Minister, you also said that there is one provision that has changed. Can you please inform the House what that is and why it is? I have not looked up the 1996 regulations -

Mr Llewellyn - Were you slack?

Mr MORRIS - Busy. I will give you something to do, Minister - you are the minister.

I listened to the comments of the member for Bass on the issue of the Fire Service levy collected on insurances. That goes back to a bigger issue: the State Government has to get money from somewhere, various sources, from which to fund its programs. At this point in time we have all sorts of levies, taxes and so forth - from payroll tax, the council Fire Service levy, the insurance levy, motor vehicle transfers, property duties. There is a whole mix of taxes. Some of the principles that should apply to taxation should be that it should be fair, fall upon those who can afford it, and efficient to collect. Therefore I am not going to argue the case that this levy should just be dropped for the sake of dropping it or because there is the council Fire Service levy. However, if this levy was not fair, did not fall upon those who could reasonably afford it or was not efficient to collect, then the income received from this levy could be collected in a fairer and more efficient manner or fall upon those who could reasonably afford it or perhaps, in this case, had a higher risk of use of the service.

Certainly a debate and a consideration should be given as to whether or not what is here, a relatively minor levy in terms of total collections, might be cheaper and fairer for the community as a whole to have collected somewhere else. I am arguing strongly that in this case it should be revenue-neutral, accepting that the State Government still has to collect for the Fire Service the same amount of money that it determines on a year-to-year basis. I would not argue that this should be thrown out and that the Fire Service should have less money. I am certainly happy to consider whether or not the Fire Service could get the same amount of money in a more cost-effective manner. I guess if it can be done more cost effectively, then there is no reason why both the payers of the tax and the receivers of the tax should perhaps not share the benefits of collecting it more cheaply if that can be done.

My recollection is that this is actually quite an old levy. It has been around for a long time, I think; in fact, from recollection, taxes on insurances were originally a prime form of funding for fire brigades.

Mr Llewellyn - Yes, it's an old levy but it is still pretty current.

Mr MORRIS - Yes, that is right. Those who take out insurance are paying it. To come to this specific bill, I assume that the moneys that were collected during that six-week period where the other regulations had expired and the new ones had not come into play have possibly already been spent, so it is probably a good thing from the Government's point of view.

Mr Llewellyn - No-one noticed the difference - that's right.

Mr MORRIS - That is right, no-one noticed the difference. We did not advertise at the time that the old regulations had expired and the chances of anyone finding them by accident would be fairly slim. It is only when we actually got to raising it and having a debate about it here that anyone other than yourselves had the foggiest idea that the other ones had expired and that there was a gap. But I am sure that there were probably some people who paid a significant amount of tax within that period who might decide that they would ask for it back, if only they found out at some point in the future. So I understand why it is that you need to bring this bill in to make sure that there is no gap left for anyone to consider asking for their money back. That would probably be unfair on perhaps the Fire Service itself, and, more importantly, unfair on other people who had paid their Fire Service levy in the other 46 weeks of the year that this did not apply to.

So, yes, we are very reluctant to support retrospective legislation. We would ask you, Minister, to pass on to whoever is responsible for making sure that regulations are proclaimed on time - and we will remind you regularly - that retrospective legislation is not a good idea. It just sends a message out there that you guys are not on top of the situation, there is no doubt about that. I think that is the strongest message.

I have also received a copy of the Property Council's report. In fact, those of us coming in through the door this morning received a package of information from a person who I believe has vacant land and a substantial bill for land tax. He was arguing that it was unfair. I am not going to argue that it was necessarily unfair. I take on board what he says and I do think that the State taxation arrangements that we have in place are something of legitimate public concern. We must recognise, very strongly, that those who are subject to land tax have a good financial reason to argue that their particular category of property should have a lower or zero rate of tax and that someone else should have a higher rate of tax - although mostly they do not say that.

The member for Bass raised the issue of the land tax that is applied to rental properties. I have had several communications from people with rental properties who were unhappy about the rise in the rate of land tax in recent times. It does, on the surface at least look to be significant. I understand why it happens. Many of the tenants are able to claim the Commonwealth rental subsidy. If the land tax is increased on a rental property and someone in it is subject to the Commonwealth rental subsidy, then effectively we have the State Government passing tax costs through the landlords to the tenants who are then claiming from the Australian Government. So it is essentially another way of the Australian Government providing money for the State Government. I think that is a good thing. The only thing I would say is I think it is a very inefficient way of going about it.

Mrs Napier - Not everyone can claim that, though.

Mr MORRIS - That is right. So the ones who are hard hit by this are the tenants who are not able to collect the rental subsidy. For those who are able to collect it at least a significant part of their rental increases can be passed on and will be paid by the Australian Government. I would encourage us to have debates around this.

Mrs Napier - There has not been a review for 16 years on this stuff.

Mr MORRIS - Right. We should debate whether there is a category of property owners out there who have greater capacity to pay land tax or pay State-based tax in order to achieve some social policy objectives and reduce land tax in other areas. The one thing that I would say is that land tax is very often imposed on people who have not yet realised the value of their asset. So it may be that there is an argument for people to have the option of deferring all or part of their land tax until they realise the asset.

In the case this morning, someone had bought a couple of blocks of land at a reasonable price. I think they were valued at $50 000 each or thereabouts and they have now gone to $500 000 a piece over a period from 1992 to now. Nothing happened with those blocks in the meantime and there was no value realised from them, but the land tax had continued to go up and up, and for whatever reason that person chose at some point not to continue paying but to allow the bill to accrue. Now it may well be that it is not actually a bad way of going. Let the bill accrue and when that property is sold or transferred in some way then the bill is paid at that point.

Mr Llewellyn - You won't be able to transfer it if it has an encumbrance on it.

Mr MORRIS - That is right, until the bill is paid. So if it is transferred and there was a consideration given, then the government would get the first cut.

Mr Kons - You tell me when you do it at your house and I will be there.

Mr MORRIS - Right. I am just suggesting that this is a legitimate matter for debate. Some shack owners contacted me recently. Someone has retired. They have a house in town and a shack on the peninsula and the value of that shack has gone up quite dramatically, as most have, and he is paying a significant amount of land tax. His income has not gone up, he has not realised the asset, he does not want to be forced to sell that asset and he does not see why a paper increase in value should consequently cause him to have to pay out significant extra money on a yearly basis to the State Government.

So I just raise that. We should be debating this sort of stuff. We should be trying to have taxes being paid by those who can best afford them.

Mr Llewellyn - What is he going to do? Is he going to accrue or just not pay it?

Mr MORRIS - Well, I guess at some point he will no longer be able to use the shack. I do not have the solution. I am raising an issue and it may be -

Mr Hidding - The shack could be sold on him.

Mr MORRIS - Maybe it could become part of an agreement so that at the end of his life, as part of the winding up of his estate and in order to avoid paying the penalty, he does a deal so that the property is sold when he no longer has a use for it. Then the tax is payable at that point.

Mr Hidding - I don't think so.

Mr Llewellyn - There are some special circumstances about the shack sites legislation that enable people to buy over time, but that was a special arrangement.

Mr MORRIS - There you go. If you can make special arrangements for one thing then you can consider and debate them for others. I will leave it at that. I raise the matter for debate and I am very happy to do that - keen to do it, in fact. So, reluctantly, the Greens will support the legislation. However, Minister, I would ask you to answer those questions I have put up, and please have less retrospective legislation in future.

[5.51 p.m.]

Mr LLEWELLYN (Lyons - Minister for Police and Emergency Management) - I thank members for their begrudging support for this legislation - sometimes grumbling support, sometimes play-acting support from the member for Denison, but nevertheless support.

Much was made of the question of who should have done what sooner and so on, but in the second reading speech I read out the time scale associated with this . The State Fire Commission sits on a regular basis but needs to approve these issues. It did approve the drafting of the new regulations on 1 March. Normally, if Government had been sailing through in the normal way and had not been interrupted by an election, that matter would have come to the minister as a cabinet submission for approval, with endorsement to go to Executive Council. Ultimately, the Cabinet would have ticked off and Executive Council would have ticked off on this regulation. It would then have been promulgated and at some later stage would have come before the Subordinate Legislation Committee.

Mrs Napier - Are you saying you would have got that through in a month?

Mr LLEWELLYN - Absolutely. In normal circumstances that would have been quite adequate to get Executive Council approval process in place. The Government was in caretaker mode and Cabinet was not sitting, therefore the commission found itself with some difficulty. It was not until after the election that the process was formalised. The regulations were ultimately proclaimed on 16 May and there was that six-week gap in the middle. That is the problem we found ourselves with, so in those circumstances I do not think blame can be really laid at the feet of the Fire Commission, as the member for Bass, Mrs Napier, tried to do. I suppose the Fire Commission could have started that process a little earlier, but even so we still would have been inside the election period and it would have been very difficult. I am not sure exactly when the election was called but it was sometime in early February. There is that hiatus period so that, even if the Fire Commission had approved the drafting of the new regulations early in February, they still would have been caught up in the interregnum period, the caretaker mode of government. I do not see that that is an issue that the Opposition should be too critical on, given the circumstances. I know it is the role of the Opposition however to try to make points whenever they can. That is what has happened here tonight. The member of Bass actually provided the House with some financial advice and information about where to invest any spare cash or whatever that members might have. I take on that gratuitous advice. I do not think any other issue of note -

Mrs Napier - What about the Property Council's views in relation to the Fire Service levy and the double-dipping on GST and -

Mr LLEWELLYN - You made some points with respect to the Property Council. Well, I have read the Property Council's annual report as well, and the issue of rental accommodation at this stage and so on is certainly of concern. I think the Fire Commission would say to me, and through me to the Parliament, that the process that we have in place is a bit of a balance between commercial and residential responsibility and so on.

Mrs Napier - The Property Council would move all Fire Service levies over to the one council levy because then everyone would have to pay because a lot of people do not insure properly but still get the fire services. It is an unfair load on the people who have paid the 28 per cent.

Mr LLEWELLYN - Yes. There are arguments for and against, but I am not sure that the Property Council would actually agree with some of the things that you mentioned today. Maybe we could test that by giving them a copy of your Hansard.

Mrs Napier - I was going to do that anyhow, but it will show that you did not listen to what I said.

Mr Kons - I will be seeing them tomorrow.

Mr LLEWELLYN - The Attorney-General will be seeing them tomorrow so he will pass on those comments. Madam Deputy Speaker, I think I had better move that the bill be read the second time at this stage, otherwise we will run out of time.

Bill read the second time.