Dominic Perrottet will have achieved his political ambitions if he manages to revise the stamp duty. He has not hidden anything. Unlike Scott Morrison, who was not interested in a legacy, Perrottet wants tax reform to be his.
The Prime Minister is brave enough to undertake the largest state tax reform in a generation at the end of the Coalition’s third term. For an aging government, and with the NSW Liberal Party and its brand in turmoil, it is a bold move.
Great ambitions … NSW Prime Minister Dominic Perrottet and Treasurer Matt Kean. Credit: Nick Moir
However, Perrottet is a believer. It is decided that the stamp duty is an inherently bad tax, despite its significant contribution to the state coffers. He is also convinced that the abolition of the stamp duty paid on the purchase of a property, and its replacement by a broad-based annual land tax, would help accessibility to housing.
Despite this passion, Perrottet’s pet project seems destined to fail before he has revealed the fine print. New federal treasurer Jim Chalmers has changed his language from his last days in opposition and appears to have little appetite for spending political capital to help states with tax reform. This is not surprising.
This is a big problem for Perrottet. The Prime Minister has made it clear that states cannot carry out such radical reform without the financial support of the Commonwealth.
Victoria now seems half-interested in pursuing a revision of the stamp duty, after putting it on ice during the pandemic. Perrottet hopes the power of the two most populous states will be enough to bolster his federal counterparts to support them. Health care reform, perhaps. Taxes, less likely.
Stamp duty reform will be on Tuesday’s budget, the last before the March election, but it’s likely to be a small start, perhaps limited to first-time home buyers. Perrottet’s reform plans may end up becoming a dream.
In addition to the stamp duty, the government has hinted that there will be other measures to make housing affordable in the budget. Perrottet has also championed the idea of a share capital scheme, whereby first-time home buyers could use a state contribution for their deposit in exchange for handing over part of the property.
This idea was also put forward by federal Labor during the election campaign. Morrison knocked him down and Perrottet fell silent. If the Prime Minister is to take seriously the rising cost of housing in NSW, he will need more than a stamp duty reform as a selling point of the budget and elections.