The ACT needs an independent body to set rates in Canberra, in line with the system in New South Wales, to prevent the territory government raising rates to exorbitant levels, an inquiry into commercial rates has heard.
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In the second day of hearings at the inquiry, the head of the Real Estate Institute ACT's commercial property committee, Guy Randell, said he believed the territory needed an independent body to set rates.
While both NSW and Victoria have independent bodies or legislation which caps the rates councils can charge property owners, with only one level of government the ACT has no such body, leaving the territory government in control of rates rises.
The territory government has abolished stamp duty for commercial properties worth less than $1.5 million and removed insurance duty, but commercial rates continue to rise - which many in the property sector say has outweighed the gains.
Mr Randell said the government had already gone too far in charging "exorbitant" rates on property owners, many of which were family investors with only one industrial or retail property that they planned to use to fund their retirement.
But he said a succession of year-on-year rates rises well above inflation had seen some forced to sell their properties, or for those on more flexible leases, pass on the costs to often low-cost tenants who were also unable to meet the costs.
Mr Randell also reiterated concerns voiced on Wednesday by the ACT representative of the Australian Property Institute, valuer Greg Cummins, who called for the government's valuation office to be removed from Treasury and made an independent statutory authority.
Mr Randell said he was not concerned about the integrity of valuers doing their work for the government, but the function it performed, which directly affected rates and land tax revenue, needed to be seen to be independent of the revenue office.
He said government valuations were always based on the highest and best use of a property, often residential, and owners and tenants had to foot the bill even if they had no immediate intention of using the property for a new purpose.
Mr Randell said a better option would be for rates and land tax bills only to be charged on current use - so even if there was a more valuable use allowed on the Crown lease, it was not activated until the land was actually being used for that purpose.
He cited one air-conditioning business in Fyshwick which as a result of revaluations had faced its rates bill going from $18,000 a year to $60,000 a year, an increase that could spell the end for such a business.
Mr Randell said many of the owners who were affected owned properties with older buildings that did not reflect the true resale value on government valuations, and while commercial rates were nine to 9.5 per cent higher than residential rates, there had not been any commensurate rise in commercial rents.
Car dealer John McGrath also fronted the committee on Thursday, telling it a recent bulk revaluation in Phillip meant he was now paying as much as three times the rates on that block of land, compared to similar blocks in other industrial areas.
Mr McGrath said his firm had calculated rates on each block on a per-square-metre basis, showing the Phillip land cost about $45 per square metre a year, compared to an average of $15 per square metre a year for the company's blocks in Belconnen, Mitchell and Fyshwick.
He said that compared with about $4 per square metre in rates (including land tax in NSW) in Goulburn and Queanbeyan, making it more difficult for Canberra car dealers to compete with those across the border.
