The ACT government will hand down its budget on Tuesday following its announcement on Monday night of a $5.4 million convention centre refurbishment and new figures showing the extent of the government's reliance on increasing rates and land tax, with revenue up 60 per cent in just four years.
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The business community has pushed strongly for a new convention centre, for many a higher priority than the tram, but the project was pushed back by the $1 billion buyback and demolition of Mr Fluffy asbestos homes.
ACT Chief Minister Andrew Barr said he would still "make the case" for a new convention centre and seek help to finance it.
The existing convention centre in Constitution Avenue would get new carpets and curtains, fresh paint, upgraded digital signs, new seats and hearing loops, a bathroom makeover, new ovens and fire measures. Obsolete technology including security systems, movable walls and lighting would also be replaced, Mr Barr said. The $5.4 million would be spread across two budgets.
With Mr Barr having released a raft of information about his budget, including even the deficit figure, rates remain one of the few financial unknowns.
Tuesday's budget will set out the updated revenue from rates, but on current figures, the government expects to collect $425 million from rates in the coming financial year, plus $93 million in land tax. In 2011-12, it took $210 million in rates and $115 million in land tax. The total increase over four years is 60 per cent, or just shy of $200 million.
Rates revenue is boosted by year-on-year rises of about 10 per cent, as well as by increases in property values, and by the increasing number of homes and rateable properties.
Previous government modelling suggested a 10 per cent rise is also on the cards in Tuesday's budget.
Homeowners of properties with an unimproved value (land value) of $300,000 paid about $1330 in rates in 2011-12. This year, their rates bill is about $1590, up 20 per cent over the three years. Another 10 per cent would bring that to $1750.
For properties with unimproved values of $500,000, rates have increased by about $600 in three years, to $2480 in 2014-15, up 32 per cent. Another 10 per cent increase would put their bill at $2730.
Impact of loss of stamp duty
The government is increasing rates to offset the loss of stamp duty on property sales and insurance tax. It is phasing out stamp duty over 20 years from 2012, reducing the tax year on year, including a saving of $1200 for most purchases in 2015-16.
If stamp duty revenue comes in at the forecast $226 million, the government will be taking in $41 million less in stamp duty than it was in 2011-12, a reduction of 15 per cent. Stamp duty is less predictable than rates, depending on the number of house sales, but is forecast to remain relatively stable at about $230 million a year.
Property Council ACT executive director Catherine Carter said the government must stick to its promise of making its tax changes revenue neutral. The property sector was already over-taxed, she said.
"Ongoing increases in general rates on commercial properties – increases that are much greater than the reduction in stamp duty and insurances – will stifle building and growth in Canberra," she said. "The increase to date in general rates on the non-residential sector has been much greater than the increase in rates on the residential sector."
She pointed also to the differences for businesses in Canberra compared with NSW, which was pushing businesses over the border.
A spokesman for Mr Barr insisted the tax changes were revenue neutral.
Payroll tax and insurance tax had been cut for businesses, he said, citing a
