The revelations from last week’s commercial rates inquiry resembled, at times, something close to Kafkaesque comedy.
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“This Canberra pub's rates bill went up $60,000 in five years,” said one headline. “From $100k to $1.4m”, said another. The numbers sound ludicrous, but this is no joke.
There are rates increases, and then there are rates increases. In the case of several Canberra businesses, there are increases that are downright unsustainable. In the case of the owners of the office space rented, ironically, by the actual ACT Valuation Office, rates skyrocketed from $100,000 to $1.4 million in just three years, after a revaluation of the land.
The owner’s finance manager described it as “grossly unfair”, especially as the building owners had delayed redevelopment while the government’s new office building was still under construction.
The unfortunate pub referred to in the other headline, the Duxton in O’Connor, has, not surprisingly, found it difficult to absorb the massive increase in rates. The owner has pointed out that the extra costs are risking the viability of his small business.
"Coupled with the rising cost of electricity and wages, the costs of doing business are too great," he says.
Only a week or so ago, Chief Minister Andrew Barr was lauding Canberra as a better place to do business (than, say, Queanbeyan) because of the territory’s high payroll tax threshold. But this assertion has become hard to defend throughout this inquiry, as the benefits of this high threshold are being increasingly eclipsed by any accompanying rates increases.
One of Barr’s own predecessors, Kate Carnell, who is now the Australian Small Business and Family Enterprise Ombudsman, has pointed out that these inflated bills are appearing at a time when the market is relatively flat, both in Canberra and elsewhere.
“Nobody is running around at the moment saying in the ACT people are making a large amount of money in their retail or their restaurants or their cafes or whatever,” she says.
Her office has also pointed out that the rates increases are affecting business loans, with fewer being approved for small businesses with new money worries.
They may come from opposite ends of the political spectrum, but Barr should pay heed to what Carnell is saying. His assertions that Canberra is a good place to be a small business owner are undermined by the concerns currently being aired through the inquiry.
Governments have the right to make the most of their land, to extract revenue and plan accordingly. But businesses have the right and the need for certainty, especially those in the middle of long-term leases, struggling to find their footing in this “relatively flat” market.
Barr himself has already admitted charging such steep rates hikes - with just 28 days to pay - is an "issue of regret", but has continued to defend his tax reform.
Ultimately it is an issue of fairness. Canberra is a growing city that still depends, perhaps too much, on government revenue. Let’s protect our small businesses and allow them to thrive. Otherwise, we risk shutting them out, and forcing them across the border.