The Property Council says it is stunned by the ACT government's foreshadowed slowdown in abolishing stamp duty, saying it has a dramatic implication for rates, housing affordability and fairness and threatens Canberra's prosperity.
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The council's ACT director, Catherine Carter, accused Chief Minister Andrew Barr of reneging on a promise, with the property sector having been told the pain of tax reform would be felt in the first five years, after which there would be a pay-off in lower stamp duty.
She was commenting after Mr Barr told ACT estimates hearings on Monday that cuts to stamp duty would take "a number of decades". While the original plan was to abolish it over 20 years from 2012 to 2032, Mr Barr said the government would remain flexible on timing, was "not going to quibble over a handful of years", and its current aim was to deliver the lowest stamp duty in the country. His comments provoked widespread surprise, given the abolition of stamp duty over 20 years featured in the budget he delivered just a fortnight ago.
But when Liberal leader Jeremy Hanson pushed Mr Barr in estimates hearings on Tuesday to clarify, Mr Barr appeared to backtrack, saying it remained the government's intention to abolish stamp duty by 2032, but the government would need to be "re-elected again and again and again in order to achieve that".
"I've cut more stamp duty than you've had hot dinners," Mr Barr told Mr Hanson. "All this mock concern from you about cutting stamp duty is a joke."
Chief executive of the Real Estate Institute of the ACT Ron Bell said Mr Barr was already well short of stamp duty targets, and had "a long way to go" to achieve the cheapest stamp duty in the country.
The abolition of stamp duty was clearly beyond the capacity of state and territory governments and would need federal help, he said, pointing to the pressure on the ACT budget.
"I think he's rethinking the stamp duty aspect because the hike in rates, at 9 per cent, has not been received all that well, and they've got budget problems. You want to do light rail, you want to do Fluffy, you've got not a lot of revenue coming in from land sales. You've got to cut your costs."
Ms Carter also pointed to the troubled budget, saying the government appeared to have "hit a brick wall", but said rates had increased fast and had not been offset by decreases in stamp duty, despite Mr Barr's oft-stated claim that the shift from stamp duty to rates was revenue neutral, she said.
"The promise was for revenue neutrality, and certainly in terms in commercial property that's just simply not true. We've now got a situation where commercial rates have skyrocketed but stamp duty thresholds essentially remain intact," she said.
Residential rates had increased by an average 42 per cent over four years and commercial rates by more – up 14 per cent in some parts of the city centre last year and 27.5 per cent the year before.
"Here's the conundrum that we find ourselves in, we're stuck at a point in time where the trade-off in stamp duty versus rates has not been revenue neutral. We've had a big jump up in general rates, particularly applied to commercial, but we haven't had the corresponding reduction in stamp duty," Ms Carter said.
