Analysis suggests One Nation's Victorian financial policy contains $4 billion deficit

Total savings from One Nation’s state election promise to scrap the Suburban Rail Loop and Victoria’s treaty with its First Peoples would be wiped out by just one of three proposed tax cuts within its policy manifesto.

And property experts have warned that Pauline Hanson’s policy prescription for Victoria’s housing crisis will do little to improve affordability, and potentially make worse the chronic shortage of new homes.

One Nation, currently attracting the support of 20 to 25 per cent of respondents in published polls, is promising to lower taxes, make housing more affordable and rebuild the state’s “broken finances” if it gains power after November 28.

In its The Real Deal policy platform for the Victorian election, it has pledged to wind back increases to land tax introduced after the pandemic, increase the threshold at which small businesses become liable for payroll tax and abolish stamp duty on insurance.

The party separately promised in an Instagram post to abolish payroll tax for regional employers, although there is no mention of this in its published policy document.

Senator Hanson and Victoria’s One Nation state leader Warren Pickering say they will pay for these changes and a long list of law and order promises – including building three new magistrates’ courts, hiring 30 extra magistrates, opening a 24/7 bail court, additional funding for prosecutors and Legal Aid defenders and sign-on bonuses for experienced police – by cancelling the SRL and repealing the laws which enact Victoria’s statewide treaty.

One Nation provided no details for its planned changes to land tax or payroll tax, no costings for any of their policies and no responses to questions from The Age.

This is despite its policy document promising to be “honest about the numbers” and “tell the truth about what it costs”.

However, Treasury projections contained in the state budget show stamp duty on insurance, which One Nation promises to scrap, is forecast to generate $2.35 billion in tax revenue this financial year and $10 billion over the forward estimates.

These figures include a 10 per cent stamp duty on general insurance premiums, business insurance duty which the government is gradually abolishing, and a separate, Transport Accident Commission duty which last year contributed $254 million to the budget.

One Nation’s major savings policy – cancelling the first, $34.5 billion stage of the SRL – was independently costed by the Parliamentary Budget Office earlier this year when Libertarian MP David Limbrick submitted the same policy.

According to the PBO, cancelling the project would cost the budget $618 million this year and generate total savings over the forward estimates of $5.5 billion.

The PBO separately costed for the Liberal Party the budget impact of repealing Treaty and winding up the operations of Gellung Warl, the statutory governance structure which houses the First Peoples’ Assembly, a truth-telling commission and newly created accountability commission.

This would save the budget a further $342 million over the forward estimates, bringing One Nation’s total saving measures over the next parliamentary term to just under $6 billion – $4 billion less than what’s required to pay for one of its tax cuts.

The only other quantifiable savings in One Nation’s platform are from a promise to cut $1 billion in public-sector wages over four years by implementing in full the recommendations in the report of former public service boss Helen Silver.

Despite this, prominent One Nation candidate Mark Nicholson on Saturday said if elected, the party would rebuild the budget line by line. “Victoria does not have a revenue problem. Victoria has a spending problem,” he said.

Independent economist Saul Eslake said scrapping the Suburban Rail Loop would bring down capital expenditure but have little effect to the state’s operating balance. He said removing stamp duty on insurance had merit but not if it wasn’t funded with a new form of revenue.

“If you asked almost any economist about what should happen to state taxes, top of the list would be replacing stamp duty with a broadly based land tax,” he said. “The next item would be getting rid of insurance taxes, and replacing them with probably a levy on properties administered by [local] councils.”

Eslake said Victoria should reduce how much revenue it collected but needed to balance the budget through spending reductions.

Treasurer Colin Brooks said this week any party should provide costing for their election policies. “What we won’t do is make wild promises that we can’t fund,” he said.

Opposition Leader Jess Wilson on Tuesday said any party putting forward an agenda at this election should have their policies independently costed.

“We have a plan, a detailed plan that has been fully costed, because Victorians not only need to understand how you intend to implement that plan, but how you intend to pay for it,” she said.

One Nation in its election manifesto blames rising rents and housing construction costs on “rapid population growth, overwhelmingly fuelled by net overseas migration” and commits to a series of policies intended to improve affordability.

These include a gradual reduction of land tax, to which the Labor government and Liberal-led opposition have also committed, releasing “under-used” government land for housing, freeing up granny flats and spare rooms for rentals, incentives for the private sector to build more low-cost housing and increasing the duty imposed on foreign buyers investing in the housing market.

Victoria’s leading property industry groups – Master Builders Association of Victoria, the Housing Industry Association and the Urban Development Institute of Australia – welcomed any measures to reduce tax and regulatory barriers to building new homes but warned that more foreign investment, not less, was needed to revive the housing sector.

The latest figures published by the National Housing Accord show about 266,000 new homes will be built in Victoria over the next five years, which is 36,000 fewer than the state’s target. The UDIA said further penalising foreign investment needed to finance new housing estates and apartment buildings would make an already difficult situation worse.

“Victoria is losing out to states like Queensland and South Australia on new homes and jobs,” UDIA chief executive Linda Allison said. “Making it harder to attract global investment through increasing foreign-purchaser additional duty would be a disaster for Victoria.”

Allison said blaming immigration misdiagnosed Victoria’s housing problem, and most of One Nation’s policies would do little to improve affordability.

HIA Victoria executive director Keith Ryan said One Nation’s proposed land tax cuts would send a positive signal, but penalising foreign investors would further reduce the supply of homes to rent.

“Foreign investors cannot buy existing properties and they don’t add to demand for housing as they rent out their properties once built,” he said.

“Existing additional taxes on foreign investors have substantially reduced demand for apartments, and the One Nation policy would aggravate this problem.”

Master Builders chief Michaela Lihou agreed that population growth increased demand for housing but said Victoria’s housing problem was a supply shortage created by rising labour, material and construction costs, including negotiating nearly two dozen new regulations introduced since the last state election.

“Each new requirement adds time, cost and complexity, making it harder to deliver housing efficiently and affordably,” she said. “If we are serious about improving housing supply and affordability, we need smarter regulation, less red tape, a stronger skills pipeline and policies that make it easier, not harder, for builders to do what they do best – build homes for Victorians.”

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