Victoria’s treasurer has shocked the property industry and even some of his colleagues by announcing an expansion of taxes on vacant residential land during Jacinta Allan’s first day of parliament as premier.
Tim Pallas told an industry breakfast on Tuesday that he planned to introduce legislation to parliament this week, which will see the vacant residential land tax expanded to include the whole state from 1 January 2025.
The tax currently only applies to empty residential properties the inner and middle suburbs of Melbourne that have been vacant for six months, and is charged at 1% of the total value of the property, including the buildings on site.
Another tax will also be introduced on vacant residential land that has been unimproved for five years or more in established areas of metropolitan Melbourne from 2026.
“We can’t afford really to have vacant land in metropolitan Melbourne sitting idle year-on-year,” Pallas told a Property Council breakfast.
“Our clear message to landowners is to either develop the land or sell it to someone who will.”
Pallas said land owned by the government will be held to the same standard.
Cath Evans, the executive director of the Property Council’s Victorian division, said she was “shocked” at Pallas’ comments and noted the government made no mention of the plan when it jointly signed an affordability partnership with the sector just two weeks ago.
“Industry went into this partnership in good faith with the understanding that there will be consultation on any reforms going forward that affect the availability of housing stock,” Evans said.
“There has not been good faith in the execution of the agreement to date.”
The assistant treasurer, Danny Pearson, said he was “not across” the proposal when he arrived at parliament on Tuesday morning.
In her first question time as premier, Allan batted off suggestions by the opposition leader, John Pesutto, that Pallas had also taken her by surprise .
“Of course I was aware,” she said, noting the legislation would be before parliament later this week, having been ticked off at cabinet on Monday.
Speaking to reporters, Pallas said it would have been disingenuous to speak at the property council event without announcing his intentions to introduce the new taxes later this week.
“I know it would have been for a much healthier breakfast for me – a little less tense – if I’d avoided having that unpleasant conversation,” Pallas said. “But I also think it’s a fair thing to do – to look people in the eye and tell them why you’re doing what you’re doing.”
Pallas expects about 600-700 extra homes will be affected by the expansion of the tax, generating about $6m in revenue annually. A single family holiday home will be exempt from the changes.
“This is a very modest measure,” he said.
Pallas said the second change was designed to discourage long-term land banking.
Allan took her place in the leader’s chair in the legislative assembly with little fanfare on Tuesday afternoon, just a week on from Daniel Andrews’ resignation.
The speaker, Maree Edwards, told parliament she had formally received Andrews’ resignation, to which there was a small cheer of “hear, hear” from Coalition MPs.
Allan received a round of applause from Labor MPs when she was first referred to as “premier” by Edwards.
Meanwhile, another bill limiting the opening hours of pokies venues was the first legislation introduced by the Allan government on Tuesday.
Under the legislation, which will come into effect by mid-2024, all gaming machine areas in all venues – except Crown Casino – will be forced to shut between 4am and 10am.
The reform was part of changes to announced by Andrews in July, which also include a new $100 load-up cap, mandatory pre-commitment limits and carded play. At the time, he claimed the changes would give Victoria the toughest electronic gambling and anti-money laundering restrictions in Australia.
Allan said the changes would address evidence that some venues were staggering opening hours to encourage patrons to move between nearby venues.
