ACT News


ACT Treasury officials looked at setting rates on market values instead of land values

ACT Treasury have considered shifting to market value for rates instead of land value, officials revealed at ACT parliamentary estimates hearings on Monday.

Official Karen Doran said the idea had been rejected in favour of changing the way rates and land tax were calculated for apartments and units, which means a substantial rise for owners this year and next.

Under Treasurer David Nicol said Treasury had looked at the idea of shifting to market value last year given the online tools now available for measuring market value. But the calculators did not give values for particular houses, and instead measured broad factors such as the suburb average and the number of bedrooms, so were not always accurate for individual properties.

It would be very difficult to calculate "the value of the pool room or the serenity", Chief Minister Andrew Barr added.

Mr Nicol said it was not clear that calculating rates by market value would be a better system, and it had a number of disadvantages, including the possibility that it would discourage people from redeveloping their houses and increasing their value, so he did not believe the costs justified it.


Mr Barr also defended the big increase in rates against questions from the Liberals and the Greens, who asked about the unfair impact on people with fixed incomes and pensions in older suburbs, whose rates bills had surged.

The Liberals' Andrew Wall said the tax shift had a disproportionate impact on such people.

The Greens' Caroline Le Couteur said the cost of moving was huge, not only in stamp duty and other costs, but in the loss of community.

"Older people may well be millionaires in terms of their property but in terms of their income they are not well off," she said.

"... The reality is that new smaller houses in those suburbs are townhouses ... they're actually going to cost you more than your somewhat decayed 60-year-old house."

But Mr Barr said he was stunned at the focus on older asset-rich people, rather than on the young.

"Do we want to become a society that locks young people out altogether because we're mostly concerned about the situation of asset-rich income-poor people? What about asset-poor income-poor people?" he said.

"If that is your biggest issue I disagree ... I am not here to make rich people richer. I am here to close the gap."

People aged over 65 with a household income of less than $89,300 and a property with land value of more than $442,000 could defer their rates, he said.

"Your asset-rich income-poor person is going to fit that criteria."

The June budget pushed the average rates bill in Forrest to $9400, with seven suburbs paying more than $5000 a year on average.

Mr Wall also pointed to the situation of people who had bought homes before stamp duty started falling and were bearing the brunt of massively increased rates. But Mr Barr said people moved on average every seven years, when they would benefit from lower stamp duty.

"In any reform process you cannot perfectly design a system that will leave no-one worse off and that will just be a compelling argument to never do anything," he said, insisting the change would "do better for the territory overall and for the common good".

"That meant that yes, in some instances where people had purchased more recently would feel aggrieved, others would not," he said, challenging the Liberals to make tax reform an issue at the 2020 election.

"People have made up their minds now. You can decide to make it an election issue again in 2020 and have a third go at it by all means. Given the experience in 2012 and 2016 why not re-run these things a third time?" he said, suggesting they also "have another crack at light rail".

Mr Barr said rolling back the cuts to stamp duty would be a deadweight on to the ACT economy and mean a significant increase in house prices. The experience of Western Australia showed that when the boom ended not only in resources but in house prices the budget was plunged into a dire state.

"For ensuring a smoother ride between economic cycles, a fairer distribution of taxation and an economic bonus for your economy, this is the right reform path," Mr Barr said. "To unwind it would put at risk all of those gains and in the short term would push up house prices."

On the state of the budget, Mr Barr said his plan was for balanced budgets and modest surpluses but not for big surpluses. "I'm not going to run a half billion dollar surplus at any time in the future," he said. "That's not an objective."


Comment are now closed