19 June 2014

The new rates regime

| Sebastian Fernandez
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household-rates

I don’t want to beat a dead horse, but I have to again raise that I’m extremely worried about the direction this city is heading in re household rates.

I’m a homeowner and I intend to stay in my house for a long time.

I understand that on average, Canberra homeowners move every 7 years, but I intend to be well above that average.

Those of us who do stay in a home for 10, 15 or 20 years will end up paying more than we did under the old system. We won’t benefit from the saving of the reduction in stamp duty.

I know this hasn’t been in the news cycle of late, but I think it should be.

We’re setting up Canberra to be one of the most expensive places in which to live in the entire country, if it isn’t already. Sure, you won’t have to pay that dastardly stamp duty when you buy a house, but if you’re got to pay 10K in rates every year, what’s the diff.

I still can’t believe that Andrew Barr’s only answer to this when questioned in a some Legislative Assembly committee, his only answer was get a higher paid job, or negotiate for more pay.

What planet are these people from.

I’m not a huge fan of Jeremy Hanson, or for that matter Zed Seselja, but I have to concur with their assertion that our rates will triple in around a decade. Where do you think rents will go ? In a city which is already way to expensive to rent in, it’ll just get worse.

How sad if we have hundreds of Canberrans who make the call to move out of town because they can’t afford to pay the rates.

I guess the big question is, could the Libs wind this all back should be elected, given that they’re going to be so busy ripping light rail out of the ground ?

 

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HiddenDragon said :

davo101 said :

HiddenDragon said :

My understanding is that FHOGs – in some shape or form, and with varying values in real terms – have been around for a long time, so there would surely be plenty of older people who would have received such assistance, not just the current generation of first home buyers.

Wow, I must be getting old when 1 July 2000 was a “generation” ago.

In reviving this thread re the South Australian proposal, I noticed the preceding observation about first home owner grants (and suchlike).

As I suggested in my earlier comment, such assistance has been around for a long time – in fact 1964 (not 2000):

https://books.google.com.au/books?id=gIAm0Ylz9bQC&pg=PA464#v=onepage&q&f=false

Yeah, I got one in 1985 when I bought my first house. As I was newly married and now have a grandchild, that was by definition, two generations ago.

HiddenDragon8:42 pm 11 Feb 15

davo101 said :

HiddenDragon said :

My understanding is that FHOGs – in some shape or form, and with varying values in real terms – have been around for a long time, so there would surely be plenty of older people who would have received such assistance, not just the current generation of first home buyers.

Wow, I must be getting old when 1 July 2000 was a “generation” ago.

In reviving this thread re the South Australian proposal, I noticed the preceding observation about first home owner grants (and suchlike).

As I suggested in my earlier comment, such assistance has been around for a long time – in fact 1964 (not 2000):

https://books.google.com.au/books?id=gIAm0Ylz9bQC&pg=PA464#v=onepage&q&f=false

HiddenDragon8:20 pm 11 Feb 15

And another cash-strapped jurisdiction miraculously discovers compelling arguments in favour of land tax for all:

http://yoursay.sa.gov.au/yoursay/tax-review-in-south-australia

If this goes ahead (as if it won’t) Canberra may need to get another airborne whale to lure back all those smart investors and entrepeneurs looking for the very best place in Australia to put their money.

rommeldog56 said :

Or is the intent to unilaterally force the elderly, sick, disabled, old, etc out of their homes ? Sounds like that would be an eventual outcome.

If you are a pensioner or suffering hardship there are a number of options for assistance.

Dondon said :

rigseismic67 said :

Has anyone factored the rate rise to increased rental costs? I for one will be putting up the rent to cover these costs

I would say good luck with that at the moment. From what I have seen a lot of rentals have lowered their asking prices.

Would be interesting to see the ACT Gov’ts “modelling” on that – if any.

I would think that there is a possibility that investors, if they can not pass it onto renters, might start to divest their properties. Also, the Annual Rates increases everywhere, including the artificially higher ACT ones, would be claimable as a taxation deduction paid for by the Fed’s / rest of Australia’s taxpayers !

Apart from the impact on self funded retirees (and, given some of what I would regard as the callous and uncaring attitudes shown by some to those in this thread) – and I really dunno why anyone would want to be a self funded retiree these days – what about the impact of the Annual Rates rise regime on Pensioners ?

I think (and correct me if Im wrong) that Centrelink beneficiaries/age and disabled pensioners get a 50% discount on their annual Rates in the ACT ? So, if those rates are currently, say $1,500pa, thats $750pa in Annual Rates to the ACT Gov’t.

But what if Annual Rates are $4K pa in a few years, for arguments sake. Can those people afford $2K pa in Annual Rates ? Does that mean that along with ramping up annual Rates each year, that the ACT Gov’t will also have to proportionally increase that discount – maybe to say, 85% ? Or is the intent to unilaterally force the elderly, sick, disabled, old, etc out of their homes ? Sounds like that would be an eventual outcome. I would like to see that “economic” and social modelling too – if any. It must have been considered ?

rigseismic67 said :

Has anyone factored the rate rise to increased rental costs? I for one will be putting up the rent to cover these costs

I would say good luck with that at the moment. From what I have seen a lot of rentals have lowered their asking prices.

rigseismic67 said :

Has anyone factored the rate rise to increased rental costs? I for one will be putting up the rent to cover these costs

Well you can try but just as likely the price of your investment property will fall slightly to reflect that the carrying costs of the asset have gone up.

HiddenDragon said :

My understanding is that FHOGs – in some shape or form, and with varying values in real terms – have been around for a long time, so there would surely be plenty of older people who would have received such assistance, not just the current generation of first home buyers.

Wow, I must be getting old when 1 July 2000 was a “generation” ago.

rigseismic675:54 pm 24 Jun 14

Has anyone factored the rate rise to increased rental costs? I for one will be putting up the rent to cover these costs

HiddenDragon5:22 pm 24 Jun 14

Maya123 said :

HiddenDragon said :

aussieboy said :

Abolishing stamp duty is very good policy.

You should not be rewarded for staying in the same house for 20 years – if anything you should be punished. There are far too many retired couples living in 4-5 bedroom houses in Canberra’s inner suburbs. Meanwhile, young families are pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking.

If retirees can’t afford the new rates, they should move into a smaller place.

In the long term, this won’t be an issue – basic economics suggests that house prices will fall to compensate for the PV of increased rates – people will just need to factor rate costs into their affordability calculations.

This policy isn’t going to make things any better for the young families who are currently “being pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking” – they’ll still be heading in that direction, and just paying a bit less for stamp duty when they buy, and somewhat more each year, for rates, for ever after. The desirable houses in desirable inner suburbs will continue to go to people with deep pockets – all this policy will do is make the total cost of buying such houses a bit lower if it’s a buyer’s market, and the seller’s net proceeds a bit higher if it’s a seller’s market.

If the ACT Government really cared about housing affordability they would take a different approach to the zoning, pricing and release of land – but they are heavily dependent on land revenues and cannot afford to do so.

The real financial issue at the heart of all of this is the level and sustainability of ACT Government spending, not how the land revenue component of funding for it is derived. The arguments about the supposed economic efficiency and fairness of the rates/stamp duty trade off is ultimately just diverting window dressing (“it has to be paid for somehow, so let’s not engage in selfish debates about who pays what”) and a quite clever exercise in divide and rule.

“facilities/services are lacking”. If that’s the case it’s more important that older people live closer to the facilities/services, as some might no longer drive, and the older the person generally the more things like medical facilities are needed. They also need to be closer to shops, or at least on a direct bus route to one. Older people are no longer as physically active and need to be closer to services. That’s probably why near where I live many of the government retirement homes have been built near to shops or on a bus route. Younger people, on average, need to visit the doctor less, are more capable of cycling/walking to the closest shops (surveys show most trips are five kms or less, and these distances are easy to cycle); they also are more likely to have a car and drive. The children can attend the nearest school, even in the outer suburbs. Any other school is a choice and the parents shouldn’t use that to complain about having to travel so far. It was their free choice. The people living in the outer suburbs can save, live frugally and when they get older move to a better location. I get the feeling that a lot of groaning from people who find they can’t get a place to live that matches the standard of accommodation they will accept in an inner suburb, is because they want to be able to walk to a perceived ‘fancy’ cafe area such as Manuka. The lack of facilities/services is just an excuse. Is there really that much difference in availability for schools, etc across Canberra.

In all of that, there’s actually an important point regarding the claim that the new rates system will “encourage” (wonderfully euphemistic) and facilitate the movement of older people to more appropriate housing. If the Government is serious about this, and wants to do it in a thoughtful way, they will be giving careful attention to the range of services available in the more affordable suburbs, and take care to ensure that the services are not just directed at younger families with dependent children. They could also look at what scope they have, through planning and zoning policies etc., to encourage a good range of housing options for down-sizers – there has been at least one recent, high profile instance which illustrates that not everyone sees small(ish) high-rise apartments near a group centre or town centre as an acceptable alternative to a free-standing home on a suburban block.

watto23 said :

Maya123 said :

Watson said :

The only place I could afford to buy was a brand new 2 beddie on the very edge of town. Not only was it significantly cheaper than any other house for sale at the time, I also only had to pay a deposit on the land, not on the combined value of land and house.

Do I think I deserve to get cheaper rates as compensation for living there? Hell yeah! It’s a sh!thole.

So stop your complaining about your high rates in the Inner North or South. At least you can save money by cycling places or strolling to your local shops. You might even be able to take a bus to work and save on petrol and parking. You have parks and ovals you can walk to and good places to walk your dog. If you don’t like paying for those privileges, I’m putting up my house for sale in a few months time. You are more than welcome to put a bid on my shoebox and my rates are only about $1,000.

What my main gripe is with, is people here suggesting because I’m older I should sell my house (which I only moved into a year ago after saving for it for over twenty years) and move into a one bedroom unit. I liked Old Canberrean’s comment, “I suppose you are thinking of something small and comfortable like a coffin. What a ridiculous and heartless suggestion.”
No, I’m keeping my house, despite a certain section of the correspondents here believing anyone over a certain age is better ‘packed’ away, and the houses made available to real people. Those same people will be at retirement age one day and how will they feel then when the next generation makes similar comments to them. Very limited imagination those people have living in the here and now.
I commiserate with you for your small ‘beddie’, but it doesn’t have to be forever. Pay it off and move to a better place. That’s what I did, although it took me twenty five plus years to do it, but I was aiming higher than I needed to and could have moved earlier. Rent the spare room if you can get anyone willing to move to the edge of town. My first tiny house was three bedroom and I rented out the other two rooms for several years.

You are taking things far too personally here. I understand retirees may be living on land worth a fortune and can’t afford the rate increases and moving older people is always difficult and a place is full of memories, but at the same time their house is worth a bucket load more money also. If they can’t afford the rates, at least under this system they won’t be penalised in stamp duty to move somewhere else. I agree the transition is where its difficult, but if someone came up with a solution rather than just complain about a policy then there would be value in that.
Stamp duty on houses is just a bad taxation policy, kind of like working off a commission, you never quite know how much money you’ll have in your budget and if something affects the local market that is outside the control of the ACT Gov, then the government loses revenue, gets a deficit in the budget and go into debt. Its safe to say most people want a guaranteed income stream, which is what this government policy is about.

Rates might triple, but I bet they would have at least doubled regardless under either government.

“You are taking things far too personally here.” Of course I am likely to take it personally when some write that empty rooms are a waste and I should sell up and move to a unit and let (younger) people have my house. If they had just said that those that can’t afford rate increases should move that would have been one thing, but older people were singled out. As though retired people don’t have use for a study (maybe still working part-time from home), which is what one of my bedrooms is used for, or have family and friends come to stay at times. I too like to be able to cycle or walk to my destination, grow a vegetable garden and fruit trees to be as self sustainable as I can be food wise, which is actually putting the land to a productive use. A lot of the arguments are about ‘wasted’ bedrooms. I haven’t heard any argument about wasted land with an oversized, energy hungry house built on it. I built an energy efficient house, small by today’s standards, and the resulting available land will be used more productively than most gardens. The trend is when younger people buy and redevelop an established house, where once sat a modest house, it is replaced with a giant house that goes from boundary to boundary with very little land left. Let’s shift the discussion of waste from older people living in houses, to the waste that modern families (smaller than in the past) and couples are creating by building these huge energy hungry houses. Perhaps there should be two families in the bigger ones, or this is a waste. By the way, I can likely afford the rate increases.

HiddenDragon4:58 pm 24 Jun 14

dungfungus said :

HiddenDragon said :

aussieboy said :

Abolishing stamp duty is very good policy.

You should not be rewarded for staying in the same house for 20 years – if anything you should be punished. There are far too many retired couples living in 4-5 bedroom houses in Canberra’s inner suburbs. Meanwhile, young families are pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking.

If retirees can’t afford the new rates, they should move into a smaller place.

In the long term, this won’t be an issue – basic economics suggests that house prices will fall to compensate for the PV of increased rates – people will just need to factor rate costs into their affordability calculations.

This policy isn’t going to make things any better for the young families who are currently “being pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking” – they’ll still be heading in that direction, and just paying a bit less for stamp duty when they buy, and somewhat more each year, for rates, for ever after. The desirable houses in desirable inner suburbs will continue to go to people with deep pockets – all this policy will do is make the total cost of buying such houses a bit lower if it’s a buyer’s market, and the seller’s net proceeds a bit higher if it’s a seller’s market.

If the ACT Government really cared about housing affordability they would take a different approach to the zoning, pricing and release of land – but they are heavily dependent on land revenues and cannot afford to do so.

The real financial issue at the heart of all of this is the level and sustainability of ACT Government spending, not how the land revenue component of funding for it is derived. The arguments about the supposed economic efficiency and fairness of the rates/stamp duty trade off is ultimately just diverting window dressing (“it has to be paid for somehow, so let’s not engage in selfish debates about who pays what”) and a quite clever exercise in divide and rule.

Aren’t the young still getting a first new home owner’s grant? This is ontop of stamp duty concessions.
This is something older Canberrans never got yet who do you think is subsidising this?
If you claim the new policies are not making things any better for the young then what are the policies doing for us at the other end of the scale?

Others have already made the point – which I share – that the FHOG tends to be of more benefit to the seller, than the buyer – unless it’s a truly saturated buyers’ market. That’s why I think the spin about the new rates system assisting with housing access and affordability is just that – spin – the beneficiaries will tend to be sellers (particularly the investor/flipper category). Likewise, I think the main beneficiaries of the phasing out of stamp duty on insurance policies will be the insurance companies and their shareholders – not the policyholders.

My understanding is that FHOGs – in some shape or form, and with varying values in real terms – have been around for a long time, so there would surely be plenty of older people who would have received such assistance, not just the current generation of first home buyers. I’m sure there’s scope for debate about the real or relative value of past FHOGs, and there may have been periods when it didn’t apply at all but, as I say, it’s not exactly a novel idea.

I don’t think I’ve ever suggested that the new rates system is doing anything for people (as you put it) “at the other end of the scale” – I’ve been a consistent critic of it for the reasons summarised in my previous post. That said, I thought there was something in the recent Budget about extending stamp duty concessions for seniors(?) – not relevant to me, so I didn’t explore the details, but others may find it useful to do so.

VYBerlinaV8_is_back4:24 pm 24 Jun 14

watto23 said :

Rates might triple, but I bet they would have at least doubled regardless under either government.

Drawing a long bow. I suspect the ‘others’ would have cut spending rather than increasing taxation. Whether or not this would help overall is another matter.

That said, not paying for the new train set would go a long way toward getting our financial predicament back under control.

Maya123 said :

Watson said :

The only place I could afford to buy was a brand new 2 beddie on the very edge of town. Not only was it significantly cheaper than any other house for sale at the time, I also only had to pay a deposit on the land, not on the combined value of land and house.

Do I think I deserve to get cheaper rates as compensation for living there? Hell yeah! It’s a sh!thole.

So stop your complaining about your high rates in the Inner North or South. At least you can save money by cycling places or strolling to your local shops. You might even be able to take a bus to work and save on petrol and parking. You have parks and ovals you can walk to and good places to walk your dog. If you don’t like paying for those privileges, I’m putting up my house for sale in a few months time. You are more than welcome to put a bid on my shoebox and my rates are only about $1,000.

What my main gripe is with, is people here suggesting because I’m older I should sell my house (which I only moved into a year ago after saving for it for over twenty years) and move into a one bedroom unit. I liked Old Canberrean’s comment, “I suppose you are thinking of something small and comfortable like a coffin. What a ridiculous and heartless suggestion.”
No, I’m keeping my house, despite a certain section of the correspondents here believing anyone over a certain age is better ‘packed’ away, and the houses made available to real people. Those same people will be at retirement age one day and how will they feel then when the next generation makes similar comments to them. Very limited imagination those people have living in the here and now.
I commiserate with you for your small ‘beddie’, but it doesn’t have to be forever. Pay it off and move to a better place. That’s what I did, although it took me twenty five plus years to do it, but I was aiming higher than I needed to and could have moved earlier. Rent the spare room if you can get anyone willing to move to the edge of town. My first tiny house was three bedroom and I rented out the other two rooms for several years.

You are taking things far too personally here. I understand retirees may be living on land worth a fortune and can’t afford the rate increases and moving older people is always difficult and a place is full of memories, but at the same time their house is worth a bucket load more money also. If they can’t afford the rates, at least under this system they won’t be penalised in stamp duty to move somewhere else. I agree the transition is where its difficult, but if someone came up with a solution rather than just complain about a policy then there would be value in that.
Stamp duty on houses is just a bad taxation policy, kind of like working off a commission, you never quite know how much money you’ll have in your budget and if something affects the local market that is outside the control of the ACT Gov, then the government loses revenue, gets a deficit in the budget and go into debt. Its safe to say most people want a guaranteed income stream, which is what this government policy is about.

Rates might triple, but I bet they would have at least doubled regardless under either government.

bikhet said :

watto23 said :

I don’t see how this policy is unfair.

It is unfair because, as others have pointed out, existing owners have already paid the stamp duty and so the changed rating arrangements should affect their properties until the blocks are sold.

It may be more efficient, it may be necessary to fund better services, but it is unfair.

Yes I’m in this boat as well I paid stamp duty on my place, but how else are they going to change the policy. It is being done over 20 years which sounds very reasonable to me.
Rates are always going to rise as well. Its reasonably fair solution to a bad taxation policy which is stamp duty. If they just removed stamp duty overnight, its not fair to those who just bought either. And an instant rates hike would bankrupt people.

Its extremely fair on people when say they run into some financial trouble and decide to sell, they’ll have no stamp duty to pay and why should they pay to sell or buy another house. You should pay for your choice of land based on size and location and that is very fair.

So I understand while its unfair to those of us who paid stamp duty, ultimately it will be much fairer system.

justin heywood said :

chewy14 said :

1. A government is not the same as a household. It’s good economics to borrow for needed infrastructure during downtimes, particularly with interest rates so low at the moment. Whether the proposed infrastructure is a good long term investment is another matter.

OK, I’ll stop you on this first point. Correct, a government is not the same as a household; a business would be a better analogy. And a business that is already spending more than it earns – with a serious prospect of harder times to come, does not resolve to relieve the pressure by spending even more. It is not good economics, except maybe for the green/Left.

And ‘needed’ infrastructure? Given that light rail is the major item, who has decided that this is what’s needed? Do you think anyone outside of the relevant politicians would have come up with the current plan? Do you think they support it because it’s ‘needed’ infrastructure?

Nobody on the government side is telling the truth, which is why their message is so confused. The whole dog and pony show is about Assembly politics, not ‘good economics’, not ‘needed infrastructure’ not anything else.

So you would prefer governments that acted pro-cyclical when it came to spending? I’m pretty sure that economists of most persuasions would disagree with you.

The argument isn’t about whether debt is always bad, and if you think it is, this conversation is over. The argument is whether the proposed infrastructure spending is actually “good” debt that will deliver long term benefits.

Saying things like ” cut your spending to meet revenue” is meaningless in this context. Saying things like the proposed infrastructure won’t provide the predicted benefits or would be better spent on other projects is reasonable and fair.

Watson said :

The only place I could afford to buy was a brand new 2 beddie on the very edge of town. Not only was it significantly cheaper than any other house for sale at the time, I also only had to pay a deposit on the land, not on the combined value of land and house.

Do I think I deserve to get cheaper rates as compensation for living there? Hell yeah! It’s a sh!thole.

So stop your complaining about your high rates in the Inner North or South. At least you can save money by cycling places or strolling to your local shops. You might even be able to take a bus to work and save on petrol and parking. You have parks and ovals you can walk to and good places to walk your dog. If you don’t like paying for those privileges, I’m putting up my house for sale in a few months time. You are more than welcome to put a bid on my shoebox and my rates are only about $1,000.

What my main gripe is with, is people here suggesting because I’m older I should sell my house (which I only moved into a year ago after saving for it for over twenty years) and move into a one bedroom unit. I liked Old Canberrean’s comment, “I suppose you are thinking of something small and comfortable like a coffin. What a ridiculous and heartless suggestion.”
No, I’m keeping my house, despite a certain section of the correspondents here believing anyone over a certain age is better ‘packed’ away, and the houses made available to real people. Those same people will be at retirement age one day and how will they feel then when the next generation makes similar comments to them. Very limited imagination those people have living in the here and now.
I commiserate with you for your small ‘beddie’, but it doesn’t have to be forever. Pay it off and move to a better place. That’s what I did, although it took me twenty five plus years to do it, but I was aiming higher than I needed to and could have moved earlier. Rent the spare room if you can get anyone willing to move to the edge of town. My first tiny house was three bedroom and I rented out the other two rooms for several years.

The only place I could afford to buy was a brand new 2 beddie on the very edge of town. Not only was it significantly cheaper than any other house for sale at the time, I also only had to pay a deposit on the land, not on the combined value of land and house.

Do I think I deserve to get cheaper rates as compensation for living there? Hell yeah! It’s a sh!thole.

So stop your complaining about your high rates in the Inner North or South. At least you can save money by cycling places or strolling to your local shops. You might even be able to take a bus to work and save on petrol and parking. You have parks and ovals you can walk to and good places to walk your dog. If you don’t like paying for those privileges, I’m putting up my house for sale in a few months time. You are more than welcome to put a bid on my shoebox and my rates are only about $1,000.

watto23 said :

Maya123 said :

rommeldog56 said :

I should have included context :

1) Tuggeranong
2) An “average” location in an “average” Tuggers suburb – not Fadden, Monash or Gowrie.
3)And I suppose this is the killer – a 948sm block – which is common in a suburb established 24 years or so ago.

640sq m block. Typical size (Lower) Narrabundah. Rates 2014 $2266. (Established 50 – 60 years ago.) A previous house, also in Narrabundah, which I sold a year ago, had only slightly lower rates. That house’s block was about 460 (possibly a bit less) sq ms. That small 99sq m fibro house would definitely have been worth much less than most houses in Tuggeranong, had a smaller block, but still higher rates.

You have both highlighted why the new tax system is better, because people who want to either have larger blocks of land or live closer to the city pay for that privelege.
No body is forcing anyone to move houses, but making it easier to downsize or upsize when needed. My parents downsized happily after 25+ years in a 4bedroom house on a battleaxe block to something smaller because they didn’t want to look after the large block of land and the extra space. Others might be happy to do so, but relying on people moving houses is a bad way to tax people and unfair overall.
The money was always going to come from somewhere and the Liberals like their federal counterparts haven’t exactly put up any other ideas have they?
The rates policy is similar to how rego is done, the bigger the vehicle the more you pay. In fact its a very Liberal idea that people pay for what they want/use. I don’t see how this policy is unfair.
It may be unfair if you want to have a large block land close to the city and unwilling to pay for it. As for growing vegetables, I can grow them in my small courtyard townhouse, my rates are under $1k a year as well. Under the new system you have a choice, nobody is forcing you to do anything. As the liberals would say, live within your means and end the age of entitlement, which is exactly what this labor policy is doing.

“I can grow them in my small courtyard townhouse”.
I think it’s wonderful when people utilise the space they have, even if it’s only a balcony, but unless it’s a very big courtyard I doubt you can grow most/all of your vegetables, for use fresh and to store for winter use, such as potatoes, pumpkins, beans (to dry), chillies (dried), etc. Plus frozen vegetables. Then what about fruit trees, vines and bushes? I do hunt for feral fruit, but the variety is limited (usually to plums, blackberries and apples) and so I like to grow my own too. I eat it fresh, but I also bottle the fruit for all year use. I have many shelves covered with bottled fruit. I couldn’t grow all this in a typical courtyard.
You also say you live in a townhouse, but some here are suggesting that older people like me should live in a one bedroom unit. That has no garden, and the neighbours might smoke. Having visited people in flats (nice ones too) if someone smokes in a nearby flat, I noticed the smoke smell in my non-smoking friends flat too. Until flats are non-smoking, no thank you. The example I am thinking of the visitors could smell the smoke and commented on it, but the owner couldn’t. I guess they had become accustomed to the smell, but that didn’t make it any less healthy.

justin heywood11:47 am 24 Jun 14

chewy14 said :

1. A government is not the same as a household. It’s good economics to borrow for needed infrastructure during downtimes, particularly with interest rates so low at the moment. Whether the proposed infrastructure is a good long term investment is another matter.

OK, I’ll stop you on this first point. Correct, a government is not the same as a household; a business would be a better analogy. And a business that is already spending more than it earns – with a serious prospect of harder times to come, does not resolve to relieve the pressure by spending even more. It is not good economics, except maybe for the green/Left.

And ‘needed’ infrastructure? Given that light rail is the major item, who has decided that this is what’s needed? Do you think anyone outside of the relevant politicians would have come up with the current plan? Do you think they support it because it’s ‘needed’ infrastructure?

Nobody on the government side is telling the truth, which is why their message is so confused. The whole dog and pony show is about Assembly politics, not ‘good economics’, not ‘needed infrastructure’ not anything else.

Canberroid said :

Maya123 said :

Canberroid said :

dungfungus said :

Aren’t the young still getting a first new home owner’s grant? This is ontop of stamp duty concessions.
This is something older Canberrans never got yet who do you think is subsidising this?

You only get that if you buy a brand new home, and given that shoddy houses on tiny blocks on the outskirts cost $800k, it’s not much of a concession.

Older Canberrans didn’t face the current ridiculous realestate prices; in fact they benefitted from it and helped make it happen.

If you think a house costing $800,000 on the outskirts is shoddy, you must have had a very spoilt upbringing, and an inflated sense of entitlement. A more realist price $499,000 – the first house I checked. There might be cheaper: http://www.allhomes.com.au/ah/act/sale-residential/37-helen-leonard-crescent-forde-canberra/1316906749411

Neither spoilt or entitled, but thanks anyway. I just wouldn’t pay $500k for a new house on a 325sqm block with eaves that touch the neighbour on one side and are beneath the two storey neighbour on the other side, even if it wasn’t all the way out in Forde. Good luck getting any sun in that place at all – abysmal planning.

Yes, houses are being built far bigger than in the past. A typical two or three bedroom house that was built fifty years ago would likely fit better, but the insulation would probably be non-existent then and the older house a lot colder and more expensive to heat than the modern house. My first three bedroom house, built in the 1950s was 9.9 squares (about 99sq m?). Initially it had no insulation, but by the time I bought it it had thin batts in the ceiling. But I was a young first home buyer; I could handle temperatures at times down to 3C inside. It gets harder for the older person. Modern houses, even unheated, with their better insulation would be unlikely to get as cold. I think the planning of new suburbs is abysmal. The streets and house blocks need to be planned to allow good solar orientation and access to an address by road should not need to involve winding in and out of streets all over suburbs using up petrol. There’s a lot to be said for the old grid street pattern. And this doesn’t mean than interesting open spaces can’t be incorporated. This pattern (with parks, etc included) makes driving more direct and allows for solar access, but no, this is so old fashioned for modern planning. With good planning, and house sizes not built to ridiculous dimensions (households/families these days tend to be smaller than households in the past too) a smaller block can have good solar access.
I live in a solar house now and as I write this on this cold, wet day I have no need of a heater and have none going, but my first house was a cold fibro box, much worse than the houses you are rejecting. (My solar house by the way is about half the size of most new houses built today.) If I were looking to buy a first home on a limited size block, I would look at the smaller houses that allowed more room for a vegetable garden, even if it had to be the front garden, and that faced north. Then I would live very frugally, rent out any spare rooms, pay it off as quickly as I could, save and look to move.

JC said :

Maya123 said :

Canberroid said :

dungfungus said :

Aren’t the young still getting a first new home owner’s grant? This is ontop of stamp duty concessions.
This is something older Canberrans never got yet who do you think is subsidising this?

You only get that if you buy a brand new home, and given that shoddy houses on tiny blocks on the outskirts cost $800k, it’s not much of a concession.

Older Canberrans didn’t face the current ridiculous realestate prices; in fact they benefitted from it and helped make it happen.

If you think a house costing $800,000 on the outskirts is shoddy, you must have had a very spoilt upbringing, and an inflated sense of entitlement. A more realist price $499,000 – the first house I checked. There might be cheaper: http://www.allhomes.com.au/ah/act/sale-residential/37-helen-leonard-crescent-forde-canberra/1316906749411

The first, cheapest and ONLY house you checked I would say. A more realistic price for Forde, going by all places on offer is closer to $700-$750kk, which is a surprise because a year back $800k for Forde would have been about right.

Forde homes advertised for sale for under $700,000. There are more for sale under this price than over this price, and even more places available if townhouses are included. Some of these houses are huge. If you have eliminated these houses as below what you would consider you have very inflated ideas of what makes a first home buyers house. In these suburbs it is usually first home buyers buying. I am not saying these prices would be easy for first home buyers, but to say houses are not available for under $700,000 (reduced from the initial statement of $800,000) is a mistruth and ignorant.
$439,950
http://www.allhomes.com.au/ah/act/sale-residential/forde/121485110
$495,000 (classified a townhouse, but looks like a house)
http://www.allhomes.com.au/ah/act/sale-residential/6-12-lomax-street-forde-canberra/1316894060811
$499,000
http://www.allhomes.com.au/ah/act/sale-residential/37-helen-leonard-crescent-forde-canberra/1316906749411
$534,950
http://www.allhomes.com.au/ah/act/sale-residential/7-callus-street-forde-canberra/1316830665011
$549,950
http://www.allhomes.com.au/ah/act/sale-residential/100-blizzard-circuit-forde-canberra/1316792422011
$564,950
http://www.allhomes.com.au/ah/act/sale-residential/1-26-loma-rudduck-street-forde-canberra/1316905058411
$575,000
http://www.allhomes.com.au/ah/act/sale-residential/133-amy-ackman-street-forde-canberra/1316908891311
$580,000
http://www.allhomes.com.au/ah/act/sale-residential/26-zakharov-avenue-forde-canberra/1316847032911
$599,000
$625,000-$650,000
http://www.allhomes.com.au/ah/act/sale-residential/no-street-name-provided-forde-canberra/1316812391011
$680,000+
http://www.allhomes.com.au/ah/act/sale-residential/36-beveridge-crescent-forde-canberra/1316907445111
$690,000+
http://www.allhomes.com.au/ah/act/sale-residential/6-volpato-street-forde-canberra/1316905535511

rommeldog56 said :

watto23 said :

Maya123 said :

rommeldog56 said :

I should have included context :

1) Tuggeranong
2) An “average” location in an “average” Tuggers suburb – not Fadden, Monash or Gowrie.
3)And I suppose this is the killer – a 948sm block – which is common in a suburb established 24 years or so ago.

640sq m block. Typical size (Lower) Narrabundah. Rates 2014 $2266. (Established 50 – 60 years ago.) A previous house, also in Narrabundah, which I sold a year ago, had only slightly lower rates. That house’s block was about 460 (possibly a bit less) sq ms. That small 99sq m fibro house would definitely have been worth much less than most houses in Tuggeranong, had a smaller block, but still higher rates.

You have both highlighted why the new tax system is better, because people who want to either have larger blocks of land or live closer to the city pay for that privelege.
No body is forcing anyone to move houses, but making it easier to downsize or upsize when needed. My parents downsized happily after 25+ years in a 4bedroom house on a battleaxe block to something smaller because they didn’t want to look after the large block of land and the extra space. Others might be happy to do so, but relying on people moving houses is a bad way to tax people and unfair overall.
The money was always going to come from somewhere and the Liberals like their federal counterparts haven’t exactly put up any other ideas have they?
The rates policy is similar to how rego is done, the bigger the vehicle the more you pay. In fact its a very Liberal idea that people pay for what they want/use. I don’t see how this policy is unfair.
It may be unfair if you want to have a large block land close to the city and unwilling to pay for it. As for growing vegetables, I can grow them in my small courtyard townhouse, my rates are under $1k a year as well. Under the new system you have a choice, nobody is forcing you to do anything. As the liberals would say, live within your means and end the age of entitlement, which is exactly what this labor policy is doing.

Geez watto23, a few points of difference if i may :

(i) “live within your means ” ?

Like, what the ACT Government is doing with its massive debt plan. Oh, that “means” !

(ii) “no body is forcing anyone to move house”. Huh. You have to be kidding !

Many will have no choice – because this is being applied retrospectively to those who have already paid stamp duty and have no doubt planned to meet their expenses in retirement. Now this – out of the blue.

(iii) Good on those who downsize voluntarily – if they can afford to do that.

What happens when Annual Rates on the traditional larger block in the burbs is so expensive that property prices drop. So downsizers – “forced” into that by the tripling of Annual Rates, have much less equity to harness in order to buy something smaller, perhaps close to the route of the toy train set. Conversely, the cost of smaller properties (with less expensive Annual Rates) will increase. Its not a good outlook, is it. No – you don’t have choice actually.

(iv) At the end of the day, I think “HiddenDragon” has a good point :

“The real financial issue at the heart of all of this is the level and sustainability of ACT Government spending, not how the land revenue component of funding for it is derived. The arguments about the supposed economic efficiency and fairness of the rates/stamp duty trade off is ultimately just diverting window dressing (“it has to be paid for somehow, so let’s not engage in selfish debates about who pays what”) and a quite clever exercise in divide and rule.”

1. A government is not the same as a household. It’s good economics to borrow for needed infrastructure during downtimes, particularly with interest rates so low at the moment. Whether the proposed infrastructure is a good long term investment is another matter.

2. If you can’t afford the rates, and don’t want to move you could always take out a reverse mortgage on the property. Its nearly certain however, that at some stage in the future you will move and this policy will help you do so.

3. I’m assuming that you are also complaining about the various government policies that have been designed to underpin and grow your property’s value? No?
Either way, if inner city property prices drop, its highly likely that the “downsizer” properties will also drop. I don’t know why you would assume they would rise?

4. Yes how the government spends our money is the real issue and you should focus your anger on specific spending items that you don’t agree with instead of complaining about a sensible change in taxation policy.

Maya123 said :

Canberroid said :

dungfungus said :

Aren’t the young still getting a first new home owner’s grant? This is ontop of stamp duty concessions.
This is something older Canberrans never got yet who do you think is subsidising this?

You only get that if you buy a brand new home, and given that shoddy houses on tiny blocks on the outskirts cost $800k, it’s not much of a concession.

Older Canberrans didn’t face the current ridiculous realestate prices; in fact they benefitted from it and helped make it happen.

If you think a house costing $800,000 on the outskirts is shoddy, you must have had a very spoilt upbringing, and an inflated sense of entitlement. A more realist price $499,000 – the first house I checked. There might be cheaper: http://www.allhomes.com.au/ah/act/sale-residential/37-helen-leonard-crescent-forde-canberra/1316906749411

Neither spoilt or entitled, but thanks anyway. I just wouldn’t pay $500k for a new house on a 325sqm block with eaves that touch the neighbour on one side and are beneath the two storey neighbour on the other side, even if it wasn’t all the way out in Forde. Good luck getting any sun in that place at all – abysmal planning.

watto23 said :

Maya123 said :

rommeldog56 said :

I should have included context :

1) Tuggeranong
2) An “average” location in an “average” Tuggers suburb – not Fadden, Monash or Gowrie.
3)And I suppose this is the killer – a 948sm block – which is common in a suburb established 24 years or so ago.

640sq m block. Typical size (Lower) Narrabundah. Rates 2014 $2266. (Established 50 – 60 years ago.) A previous house, also in Narrabundah, which I sold a year ago, had only slightly lower rates. That house’s block was about 460 (possibly a bit less) sq ms. That small 99sq m fibro house would definitely have been worth much less than most houses in Tuggeranong, had a smaller block, but still higher rates.

You have both highlighted why the new tax system is better, because people who want to either have larger blocks of land or live closer to the city pay for that privelege.
No body is forcing anyone to move houses, but making it easier to downsize or upsize when needed. My parents downsized happily after 25+ years in a 4bedroom house on a battleaxe block to something smaller because they didn’t want to look after the large block of land and the extra space. Others might be happy to do so, but relying on people moving houses is a bad way to tax people and unfair overall.
The money was always going to come from somewhere and the Liberals like their federal counterparts haven’t exactly put up any other ideas have they?
The rates policy is similar to how rego is done, the bigger the vehicle the more you pay. In fact its a very Liberal idea that people pay for what they want/use. I don’t see how this policy is unfair.
It may be unfair if you want to have a large block land close to the city and unwilling to pay for it. As for growing vegetables, I can grow them in my small courtyard townhouse, my rates are under $1k a year as well. Under the new system you have a choice, nobody is forcing you to do anything. As the liberals would say, live within your means and end the age of entitlement, which is exactly what this labor policy is doing.

Geez watto23, a few points of difference if i may :

(i) “live within your means ” ? Like, what the ACT Government is doing with its massive debt plan. Oh, that “means” !

(ii) “no body is forcing anyone to move house”. Huh. You have to be kidding ! Many will have no choice – because this is being applied retrospectively to those who have already paid stamp duty and have no doubt planned to meet their expenses in retirement. Now this – out of the blue.

(iii) Good on those who downsize voluntarily – if they can afford to do that. What happens when Annual Rates on the traditional larger block in the burbs is so expensive that property prices drop. So downsizers – “forced” into that by the tripling of Annual Rates, have much less equity to harness in order to buy something smaller, perhaps close to the route of the toy train set. Conversely, the cost of smaller properties (with less expensive Annual Rates) will increase. Its not a good outlook, is it. No – you don’t have choice actually.

(iv) At the end of the day, I think “HiddenDragon” has a good point :

“The real financial issue at the heart of all of this is the level and sustainability of ACT Government spending, not how the land revenue component of funding for it is derived. The arguments about the supposed economic efficiency and fairness of the rates/stamp duty trade off is ultimately just diverting window dressing (“it has to be paid for somehow, so let’s not engage in selfish debates about who pays what”) and a quite clever exercise in divide and rule.”

Maya123 said :

Canberroid said :

dungfungus said :

Aren’t the young still getting a first new home owner’s grant? This is ontop of stamp duty concessions.
This is something older Canberrans never got yet who do you think is subsidising this?

You only get that if you buy a brand new home, and given that shoddy houses on tiny blocks on the outskirts cost $800k, it’s not much of a concession.

Older Canberrans didn’t face the current ridiculous realestate prices; in fact they benefitted from it and helped make it happen.

If you think a house costing $800,000 on the outskirts is shoddy, you must have had a very spoilt upbringing, and an inflated sense of entitlement. A more realist price $499,000 – the first house I checked. There might be cheaper: http://www.allhomes.com.au/ah/act/sale-residential/37-helen-leonard-crescent-forde-canberra/1316906749411

Young people can only afford to buy new homes because the concessions discussed give them the leverage ratio to borrow the amount they need to complete the transaction. It’s how the Government keeps the developers (who have to buy land from the LDA) in business you know.

Maya123 said :

Canberroid said :

dungfungus said :

Aren’t the young still getting a first new home owner’s grant? This is ontop of stamp duty concessions.
This is something older Canberrans never got yet who do you think is subsidising this?

You only get that if you buy a brand new home, and given that shoddy houses on tiny blocks on the outskirts cost $800k, it’s not much of a concession.

Older Canberrans didn’t face the current ridiculous realestate prices; in fact they benefitted from it and helped make it happen.

If you think a house costing $800,000 on the outskirts is shoddy, you must have had a very spoilt upbringing, and an inflated sense of entitlement. A more realist price $499,000 – the first house I checked. There might be cheaper: http://www.allhomes.com.au/ah/act/sale-residential/37-helen-leonard-crescent-forde-canberra/1316906749411

The first, cheapest and ONLY house you checked I would say. A more realistic price for Forde, going by all places on offer is closer to $700-$750kk, which is a surprise because a year back $800k for Forde would have been about right.

Canberroid said :

dungfungus said :

Aren’t the young still getting a first new home owner’s grant? This is ontop of stamp duty concessions.
This is something older Canberrans never got yet who do you think is subsidising this?

You only get that if you buy a brand new home, and given that shoddy houses on tiny blocks on the outskirts cost $800k, it’s not much of a concession.

Older Canberrans didn’t face the current ridiculous realestate prices; in fact they benefitted from it and helped make it happen.

If you think a house costing $800,000 on the outskirts is shoddy, you must have had a very spoilt upbringing, and an inflated sense of entitlement. A more realist price $499,000 – the first house I checked. There might be cheaper: http://www.allhomes.com.au/ah/act/sale-residential/37-helen-leonard-crescent-forde-canberra/1316906749411

dungfungus said :

HiddenDragon said :

aussieboy said :

Abolishing stamp duty is very good policy.

You should not be rewarded for staying in the same house for 20 years – if anything you should be punished. There are far too many retired couples living in 4-5 bedroom houses in Canberra’s inner suburbs. Meanwhile, young families are pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking.

If retirees can’t afford the new rates, they should move into a smaller place.

In the long term, this won’t be an issue – basic economics suggests that house prices will fall to compensate for the PV of increased rates – people will just need to factor rate costs into their affordability calculations.

This policy isn’t going to make things any better for the young families who are currently “being pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking” – they’ll still be heading in that direction, and just paying a bit less for stamp duty when they buy, and somewhat more each year, for rates, for ever after. The desirable houses in desirable inner suburbs will continue to go to people with deep pockets – all this policy will do is make the total cost of buying such houses a bit lower if it’s a buyer’s market, and the seller’s net proceeds a bit higher if it’s a seller’s market.

If the ACT Government really cared about housing affordability they would take a different approach to the zoning, pricing and release of land – but they are heavily dependent on land revenues and cannot afford to do so.

The real financial issue at the heart of all of this is the level and sustainability of ACT Government spending, not how the land revenue component of funding for it is derived. The arguments about the supposed economic efficiency and fairness of the rates/stamp duty trade off is ultimately just diverting window dressing (“it has to be paid for somehow, so let’s not engage in selfish debates about who pays what”) and a quite clever exercise in divide and rule.

Aren’t the young still getting a first new home owner’s grant? This is ontop of stamp duty concessions.
This is something older Canberrans never got yet who do you think is subsidising this?
If you claim the new policies are not making things any better for the young then what are the policies doing for us at the other end of the scale?

You seem to be under the misapprehension that first home owners grants actually help first home buyers rather than vendors. These types of policies only serve to prop up the housing market for existing owners.

And anyone who can’t think of policies designed to help older people or existing home owners, isn’t really thinking that hard. Generous tax treatment, those home “vendor” grants, restricted land release, tighter planning controls etc. All designed to maintain value for existing property owners

dungfungus said :

Aren’t the young still getting a first new home owner’s grant? This is ontop of stamp duty concessions.
This is something older Canberrans never got yet who do you think is subsidising this?

You only get that if you buy a brand new home, and given that shoddy houses on tiny blocks on the outskirts cost $800k, it’s not much of a concession.

Older Canberrans didn’t face the current ridiculous realestate prices; in fact they benefitted from it and helped make it happen.

dungfungus said :

Aren’t the young still getting a first new home owner’s grant? This is ontop of stamp duty concessions.
This is something older Canberrans never got yet who do you think is subsidising this?
If you claim the new policies are not making things any better for the young then what are the policies doing for us at the other end of the scale?

First home owners grant benefits the seller not the buyer. There are a lot of one bedroom apartments on the market perhaps the baby boomers can look into downsizing.

HiddenDragon said :

aussieboy said :

Abolishing stamp duty is very good policy.

You should not be rewarded for staying in the same house for 20 years – if anything you should be punished. There are far too many retired couples living in 4-5 bedroom houses in Canberra’s inner suburbs. Meanwhile, young families are pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking.

If retirees can’t afford the new rates, they should move into a smaller place.

In the long term, this won’t be an issue – basic economics suggests that house prices will fall to compensate for the PV of increased rates – people will just need to factor rate costs into their affordability calculations.

This policy isn’t going to make things any better for the young families who are currently “being pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking” – they’ll still be heading in that direction, and just paying a bit less for stamp duty when they buy, and somewhat more each year, for rates, for ever after. The desirable houses in desirable inner suburbs will continue to go to people with deep pockets – all this policy will do is make the total cost of buying such houses a bit lower if it’s a buyer’s market, and the seller’s net proceeds a bit higher if it’s a seller’s market.

If the ACT Government really cared about housing affordability they would take a different approach to the zoning, pricing and release of land – but they are heavily dependent on land revenues and cannot afford to do so.

The real financial issue at the heart of all of this is the level and sustainability of ACT Government spending, not how the land revenue component of funding for it is derived. The arguments about the supposed economic efficiency and fairness of the rates/stamp duty trade off is ultimately just diverting window dressing (“it has to be paid for somehow, so let’s not engage in selfish debates about who pays what”) and a quite clever exercise in divide and rule.

Aren’t the young still getting a first new home owner’s grant? This is ontop of stamp duty concessions.
This is something older Canberrans never got yet who do you think is subsidising this?
If you claim the new policies are not making things any better for the young then what are the policies doing for us at the other end of the scale?

HiddenDragon said :

aussieboy said :

Abolishing stamp duty is very good policy.

You should not be rewarded for staying in the same house for 20 years – if anything you should be punished. There are far too many retired couples living in 4-5 bedroom houses in Canberra’s inner suburbs. Meanwhile, young families are pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking.

If retirees can’t afford the new rates, they should move into a smaller place.

In the long term, this won’t be an issue – basic economics suggests that house prices will fall to compensate for the PV of increased rates – people will just need to factor rate costs into their affordability calculations.

This policy isn’t going to make things any better for the young families who are currently “being pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking” – they’ll still be heading in that direction, and just paying a bit less for stamp duty when they buy, and somewhat more each year, for rates, for ever after. The desirable houses in desirable inner suburbs will continue to go to people with deep pockets – all this policy will do is make the total cost of buying such houses a bit lower if it’s a buyer’s market, and the seller’s net proceeds a bit higher if it’s a seller’s market.

If the ACT Government really cared about housing affordability they would take a different approach to the zoning, pricing and release of land – but they are heavily dependent on land revenues and cannot afford to do so.

The real financial issue at the heart of all of this is the level and sustainability of ACT Government spending, not how the land revenue component of funding for it is derived. The arguments about the supposed economic efficiency and fairness of the rates/stamp duty trade off is ultimately just diverting window dressing (“it has to be paid for somehow, so let’s not engage in selfish debates about who pays what”) and a quite clever exercise in divide and rule.

“facilities/services are lacking”. If that’s the case it’s more important that older people live closer to the facilities/services, as some might no longer drive, and the older the person generally the more things like medical facilities are needed. They also need to be closer to shops, or at least on a direct bus route to one. Older people are no longer as physically active and need to be closer to services. That’s probably why near where I live many of the government retirement homes have been built near to shops or on a bus route. Younger people, on average, need to visit the doctor less, are more capable of cycling/walking to the closest shops (surveys show most trips are five kms or less, and these distances are easy to cycle); they also are more likely to have a car and drive. The children can attend the nearest school, even in the outer suburbs. Any other school is a choice and the parents shouldn’t use that to complain about having to travel so far. It was their free choice. The people living in the outer suburbs can save, live frugally and when they get older move to a better location. I get the feeling that a lot of groaning from people who find they can’t get a place to live that matches the standard of accommodation they will accept in an inner suburb, is because they want to be able to walk to a perceived ‘fancy’ cafe area such as Manuka. The lack of facilities/services is just an excuse. Is there really that much difference in availability for schools, etc across Canberra.

bikhet said :

watto23 said :

I don’t see how this policy is unfair.

It is unfair because, as others have pointed out, existing owners have already paid the stamp duty and so the changed rating arrangements should not affect their properties until the blocks are sold.

It may be more efficient, it may be necessary to fund better services, but it is unfair.

Missed a “not.” Fixed in the quote.

HiddenDragon5:41 pm 23 Jun 14

aussieboy said :

Abolishing stamp duty is very good policy.

You should not be rewarded for staying in the same house for 20 years – if anything you should be punished. There are far too many retired couples living in 4-5 bedroom houses in Canberra’s inner suburbs. Meanwhile, young families are pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking.

If retirees can’t afford the new rates, they should move into a smaller place.

In the long term, this won’t be an issue – basic economics suggests that house prices will fall to compensate for the PV of increased rates – people will just need to factor rate costs into their affordability calculations.

This policy isn’t going to make things any better for the young families who are currently “being pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking” – they’ll still be heading in that direction, and just paying a bit less for stamp duty when they buy, and somewhat more each year, for rates, for ever after. The desirable houses in desirable inner suburbs will continue to go to people with deep pockets – all this policy will do is make the total cost of buying such houses a bit lower if it’s a buyer’s market, and the seller’s net proceeds a bit higher if it’s a seller’s market.

If the ACT Government really cared about housing affordability they would take a different approach to the zoning, pricing and release of land – but they are heavily dependent on land revenues and cannot afford to do so.

The real financial issue at the heart of all of this is the level and sustainability of ACT Government spending, not how the land revenue component of funding for it is derived. The arguments about the supposed economic efficiency and fairness of the rates/stamp duty trade off is ultimately just diverting window dressing (“it has to be paid for somehow, so let’s not engage in selfish debates about who pays what”) and a quite clever exercise in divide and rule.

watto23 said :

I don’t see how this policy is unfair.

It is unfair because, as others have pointed out, existing owners have already paid the stamp duty and so the changed rating arrangements should affect their properties until the blocks are sold.

It may be more efficient, it may be necessary to fund better services, but it is unfair.

Maya123 said :

rommeldog56 said :

I should have included context :

1) Tuggeranong
2) An “average” location in an “average” Tuggers suburb – not Fadden, Monash or Gowrie.
3)And I suppose this is the killer – a 948sm block – which is common in a suburb established 24 years or so ago.

640sq m block. Typical size (Lower) Narrabundah. Rates 2014 $2266. (Established 50 – 60 years ago.) A previous house, also in Narrabundah, which I sold a year ago, had only slightly lower rates. That house’s block was about 460 (possibly a bit less) sq ms. That small 99sq m fibro house would definitely have been worth much less than most houses in Tuggeranong, had a smaller block, but still higher rates.

You have both highlighted why the new tax system is better, because people who want to either have larger blocks of land or live closer to the city pay for that privelege.
No body is forcing anyone to move houses, but making it easier to downsize or upsize when needed. My parents downsized happily after 25+ years in a 4bedroom house on a battleaxe block to something smaller because they didn’t want to look after the large block of land and the extra space. Others might be happy to do so, but relying on people moving houses is a bad way to tax people and unfair overall.
The money was always going to come from somewhere and the Liberals like their federal counterparts haven’t exactly put up any other ideas have they?
The rates policy is similar to how rego is done, the bigger the vehicle the more you pay. In fact its a very Liberal idea that people pay for what they want/use. I don’t see how this policy is unfair.
It may be unfair if you want to have a large block land close to the city and unwilling to pay for it. As for growing vegetables, I can grow them in my small courtyard townhouse, my rates are under $1k a year as well. Under the new system you have a choice, nobody is forcing you to do anything. As the liberals would say, live within your means and end the age of entitlement, which is exactly what this labor policy is doing.

rommeldog56 said :

I should have included context :

1) Tuggeranong
2) An “average” location in an “average” Tuggers suburb – not Fadden, Monash or Gowrie.
3)And I suppose this is the killer – a 948sm block – which is common in a suburb established 24 years or so ago.

640sq m block. Typical size (Lower) Narrabundah. Rates 2014 $2266. (Established 50 – 60 years ago.) A previous house, also in Narrabundah, which I sold a year ago, had only slightly lower rates. That house’s block was about 460 (possibly a bit less) sq ms. That small 99sq m fibro house would definitely have been worth much less than most houses in Tuggeranong, had a smaller block, but still higher rates.

I should have included context :

1) Tuggeranong
2) An “average” location in an “average” Tuggers suburb – not Fadden, Monash or Gowrie.
3)And I suppose this is the killer – a 948sm block – which is common in a suburb established 24 years or so ago.

BreeGirl said :

The Chief Minister still says that the Liberals were lying when about rates tripling. Difficult to know who to believe on this, but it looks to me as though rates will triple well before 2022

“Difficult to know” ? Not really. Here is my calculation for my Annual Rates over the next few years. It is predicated on 9.5% (which in my case, is the actual increase – others may be more – but the ACT Gov’t claim avg.10% pa) :

2013-14 $1,765
2014-15 $1,965
2015-16 $2,151
2016-17 $2,355
2017-18 $2,578
2018-19 $2,822

So, if u keep on calculating, at least in my case, the Lib’s claims of tripling in 11 years or so are pretty accurate. So, there it is in black and white – just for the ACT Government !

True. Annual Rates would have tripled anyway – but over a much, much, much longer timeframe – not in 11 years or so. I hope u are doing your Annual Rates forward projections in the ACT – something the ACT Government might call “vision”.

So, next time I hear the spin from the ACT Government that “Annual Rates Will Not Triple” – remind me to grab the nearest bucket ’cause I’m certain that I will chuck up !

BreeGirl said :

The Chief Minister still says that the Liberals were lying when about rates tripling. Difficult to know who to believe on this, but it looks to me as though rates will triple well before 2022

Katy Gallagher pretty much admitted the rates would triple a few weeks ago on 2CC . Parton said the rates are going to triple aren’t they and Gallagher said said “well not straight away”

The Government only gets bigger it never gets smaller. Government bringing in more money creates more Government bureaucracy so Government spend more money to pay for it , so Governments rise rates and taxes again.

While we get the calluses Government bums get shinier and their hands get softer.

old canberran3:57 pm 22 Jun 14

aussieboy said :

If retirees can’t afford the new rates, they should move into a smaller place.

I suppose you are thinking of something small and comfortable like a coffin.

What a ridiculous and heartless suggestion.

My parents lived in a house in Braddon for over 50 years and we lived in Watson for 25 years and left in 1988 when self government arrived. Back then I could see that Canberra was going to become a very expensive place to live without the development controls that the NCDC had in place. Someone has to pay for the unbridled development that has taken place over the past 25 years and unfortunately it is the people who live there.

dungfungus said :

People with large houses not only pay for the “priveledge” as you refer to but they also pay higher rates and taxes and also subdidise first home owners with smaller homes. We all started with smaller homes. It’s the first home buyers that are the burden.

It’s not the size of the house that increases rates, but where the block of land is. Two blocks side by side might pay the same rates, but one might have a small two bedroom house on it, while the other a large, two storey, many bedroom house on it. Same rates for each, as it is the land that the rates is calculated from.

aussieboy said :

Maya123 said :

I live in an inner suburb. So you would punish me for wanting to be within cycling distance of facilities and for wanting to grow my own food – fruit trees and vegetable gardens. Yes, I could move out of my house and into a unit. No room to grow anything, but what does that matter; I’m expendable. That’s how I read your post. But then being cynical, my house is only three bedrooms, one living area and doesn’t have a separate entertainment area or theatrette. What first home buyer would be interested in that? And first home buyers are usually younger; they can cycle further.
I retired (forced redundancy) and after saving for over twenty years finally managed to upgrade my house and get a bigger one (but still smaller than most built today). No, I am not moving after only just moving in, just to please your prejudices.

Every single person living in a 3 br house rather than a unit or terrace is another greenfield development site required for which the Government must build roads, sewers, electricity etc. Most first home buyers I know would much rather a 3br cottage in O’Connor than a 4br McMansion in woop woop.

There are real and signficant financial costs to society when bedrooms go spare in the inner city. Someone has to pay. While my comment might have made people seem ‘expendable’, yours makes them sound incredibly entitled.

If someone chooses to burden society with these costs by living in a house that’s way too big for them, that’s fine – but they should be forced to pay for that privilege.

So it would be alright then if someone built a one bedroom house on a block of land, so they could still grown their vegetables and be self sufficient and not need a car! No spare bedrooms then. And should families be allowed spare bedrooms too? How about demanding that children should share a bedroom. It worked in the past.
It could be pointed out that the population growth is what is causing these problems. Without that there would be no need for green field developments. We can’t keep expanding forever. It has to stop sometime and it’s better to stop now than cause an even bigger problem to future generations. This is not the fault of local government though. They are responding to policies enacted by the Federal government with its large immigration rate and the baby bonus.
If someone can’t afford to live in an inner suburb because what they expect/demand in a house is not available for their price range, and they are not willing to lower their expectations, then they might have to move to an outer suburb, but this doesn’t have to be forever. They can live frugally (as I did) by growing a large percentage of your food (might need to build a smaller house though – the size people thought was normal fifty years ago, rather than a McMansion – to have enough land to grow the food), forgoing overseas holidays, wearing cheap clothes until they wear out, riding a bicycle where you can (and even in outer suburbs you don’t have to drive everywhere), catch public transport, keep the same car for over twenty years, rent out spare rooms, then in twenty to thirty years you might be able to afford a nice three bedroom house in an inner suburb as I did. Some first home buyers have too much of a sense of entitlement and want it now. It’s likely your parents didn’t get it to start with. My first home with my parents was a flat over shops. Later we moved to a small house. It doesn’t have to be forever. But what you are implying is that after all this self sacrificing we should be willing to live in a one bedroom unit. Sorry, but singles and doubles have as much right as families to have a study and a spare room. We are not subhuman and we are not burdening society. The ones who are burdening society are those people who have more than a replacement number of children. The cost of infrastructure is huge for an expanding population. The normal taxes that extra people pay does not cover this increased infrastructure (hospitals etc).
Older people have likely lived in an area for many years, their friends are there, they know the area, the garden they planted and waited for to mature, has rewarded them and now you say they must give all this up and be discarded in some little unit, and likely all this bulldozed so someone else can build a McMansion (older houses are too small for the younger generation). That’s a waste of resources! The house they now live in might have been the outer suburbs when they moved there, or in my case an inner suburb that few people wanted to live in, and in fact other people warned me about and did their best to dissuade me from buying there. Hence the first house I bought, in an inner suburb, was the cheapest on the market at the time in all Canberra.
Suburbs do regenerate in time without moving out the present occupants into units before they are ready. People move into an area, they get older, their children grow up, move on, the people eventually (by their own free will) move to a retirement unit or die. Then younger people have the chance to move in and the cycle starts again.

aussieboy said :

Maya123 said :

I live in an inner suburb. So you would punish me for wanting to be within cycling distance of facilities and for wanting to grow my own food – fruit trees and vegetable gardens. Yes, I could move out of my house and into a unit. No room to grow anything, but what does that matter; I’m expendable. That’s how I read your post. But then being cynical, my house is only three bedrooms, one living area and doesn’t have a separate entertainment area or theatrette. What first home buyer would be interested in that? And first home buyers are usually younger; they can cycle further.
I retired (forced redundancy) and after saving for over twenty years finally managed to upgrade my house and get a bigger one (but still smaller than most built today). No, I am not moving after only just moving in, just to please your prejudices.

Every single person living in a 3 br house rather than a unit or terrace is another greenfield development site required for which the Government must build roads, sewers, electricity etc. Most first home buyers I know would much rather a 3br cottage in O’Connor than a 4br McMansion in woop woop.

There are real and signficant financial costs to society when bedrooms go spare in the inner city. Someone has to pay. While my comment might have made people seem ‘expendable’, yours makes them sound incredibly entitled.

If someone chooses to burden society with these costs by living in a house that’s way too big for them, that’s fine – but they should be forced to pay for that privilege.

Greenfield development costs = headworks. These are paid for by the developer (LDA) which is an ACT Government Agecy. Across the border they are paid by the private developer. The cost is capitalised into the finished product. The LDA in Canberra gests en-globo land for zilch and yet they make a miserable profit. This agency should be abolished and private enterpise (competition) should take over.
People with large houses not only pay for the “priveledge” as you refer to but they also pay higher rates and taxes and also subdidise first home owners with smaller homes. We all started with smaller homes. It’s the first home buyers that are the burden.

This whole policy trying to ‘encourage’ older people to ‘downsize’ is very rude and misinformed. Does the Treasurer (or whoever designed this daft, social engineering policy) really think that suddenly, on reaching a certain age, older people don’t need space for family members to stay, and don’t have hobbies that need space?
It is also clearly inconsistent with all the policies and services aimed at keeping people in their homes longer before having to enter aged care facilities (which are a great expense on the public purse).
A few may benefit from this policy, but they probably would have moved anyway without it. I think we can safely say it’s a Claytons budget sweetener.

Maya123 said :

I live in an inner suburb. So you would punish me for wanting to be within cycling distance of facilities and for wanting to grow my own food – fruit trees and vegetable gardens. Yes, I could move out of my house and into a unit. No room to grow anything, but what does that matter; I’m expendable. That’s how I read your post. But then being cynical, my house is only three bedrooms, one living area and doesn’t have a separate entertainment area or theatrette. What first home buyer would be interested in that? And first home buyers are usually younger; they can cycle further.
I retired (forced redundancy) and after saving for over twenty years finally managed to upgrade my house and get a bigger one (but still smaller than most built today). No, I am not moving after only just moving in, just to please your prejudices.

Every single person living in a 3 br house rather than a unit or terrace is another greenfield development site required for which the Government must build roads, sewers, electricity etc. Most first home buyers I know would much rather a 3br cottage in O’Connor than a 4br McMansion in woop woop.

There are real and signficant financial costs to society when bedrooms go spare in the inner city. Someone has to pay. While my comment might have made people seem ‘expendable’, yours makes them sound incredibly entitled.

If someone chooses to burden society with these costs by living in a house that’s way too big for them, that’s fine – but they should be forced to pay for that privilege.

dungfungus said :

rommeldog56 said :

aussieboy said :

Abolishing stamp duty is very good policy.

You should not be rewarded for staying in the same house for 20 years – if anything you should be punished. There are far too many retired couples living in 4-5 bedroom houses in Canberra’s inner suburbs. Meanwhile, young families are pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking.

If retirees can’t afford the new rates, they should move into a smaller place.

In the long term, this won’t be an issue – basic economics suggests that house prices will fall to compensate for the PV of increased rates – people will just need to factor rate costs into their affordability calculations.

People did factor Annual Rates increases into their affordability – and Stamp duty – and purchased a house that they could afford given both those things.

They also raised families in those houses – and had blocks that their kids could run around in safely.

To say, decades later, that they should not have done that IN CASE some idiot, economically and fiscally incompetent ACT Government decided to potentially triple those Annual Rates, is simply absurdly ludicrous.

No one would have seen that coming all those years ago.

For those people who have already paid their full share of Stamp Duty when they purchased a house, what the ACT Gov’t has now done is akin to “legalised” theft.

Retirees, after a lifetime of contribution to the economy and working to own a house, should not be “forced” to move into a shoebox somewhere (that will also be subject to proportionally increased Rates too btw). Particularly self funded retirees who are not a drain on the economy. These people should be looked after – not penalised financially by this idiot ACT Gov’t.

There must surely be better ways of encouraging the “target” people out of their larger homes and into smaller ones. The ACT Gov’t way of up to tripling Annual Rates is far, far too blunt.

I agree 100%.
We have to realize that the person who is causing all this future grief for us in not a family man so he is not considering the hopes, aspirations and needs of people who want to have a family as most of have. He is also totally clueless about the what able bodied retired people need.
He probably lives in a home unit, hmmmm, that could explain a few things.
Yet so many people claim to hate Tony Abbott who is about as family orientated as you can get.
There is a big article in the Canberra Times today about the big movers and shakers in Canberra. It’s long on their power and influence but short on their family values.
The times are changing.

What has being a “family man” got to do with this? Whether people have a family or not they need a place to live, and many live in houses. People with families can be so arrogant and excluding. Couples and singles too have a right to want a garden, and some make better use of it than families; growing vegetables for instance.
I’ve noticed that families living in ‘large’ houses generally is a modern thing. In the past three bedrooms did for many; even two, and growing up this was what my friends and I had; even the neighbours with seven kids only had three bedrooms. I bought my first three bedroom (99 sq metres) house from a family of five. Children shared rooms, but today that appears unthinkable. Why, according to some parents I’ve spoken to, children these days can’t even be expected to sleep in a single bed; these days they demand a double bed. So if you think the houses of the present retirees are large, just wait to see the size of the houses of the next generation; the ones demanding now that retirees should get out.
If one wants to encourage retirees to downsize, perhaps a better rating system would be one that took size of house into account, no matter what suburb that was in, because how will making rates so expensive for a retiree living in a small inner city house help a family who wants a large house for a family? Even if they can afford to buy the house, can they then afford to knock down the two or three bedroom house and build the bigger house many are demanding these days? Most likely couldn’t.

rommeldog56 said :

aussieboy said :

Abolishing stamp duty is very good policy.

You should not be rewarded for staying in the same house for 20 years – if anything you should be punished. There are far too many retired couples living in 4-5 bedroom houses in Canberra’s inner suburbs. Meanwhile, young families are pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking.

If retirees can’t afford the new rates, they should move into a smaller place.

In the long term, this won’t be an issue – basic economics suggests that house prices will fall to compensate for the PV of increased rates – people will just need to factor rate costs into their affordability calculations.

People did factor Annual Rates increases into their affordability – and Stamp duty – and purchased a house that they could afford given both those things.

They also raised families in those houses – and had blocks that their kids could run around in safely.

To say, decades later, that they should not have done that IN CASE some idiot, economically and fiscally incompetent ACT Government decided to potentially triple those Annual Rates, is simply absurdly ludicrous.

No one would have seen that coming all those years ago.

For those people who have already paid their full share of Stamp Duty when they purchased a house, what the ACT Gov’t has now done is akin to “legalised” theft.

Retirees, after a lifetime of contribution to the economy and working to own a house, should not be “forced” to move into a shoebox somewhere (that will also be subject to proportionally increased Rates too btw). Particularly self funded retirees who are not a drain on the economy. These people should be looked after – not penalised financially by this idiot ACT Gov’t.

There must surely be better ways of encouraging the “target” people out of their larger homes and into smaller ones. The ACT Gov’t way of up to tripling Annual Rates is far, far too blunt.

I agree 100%.
We have to realize that the person who is causing all this future grief for us in not a family man so he is not considering the hopes, aspirations and needs of people who want to have a family as most of have. He is also totally clueless about the what able bodied retired people need.
He probably lives in a home unit, hmmmm, that could explain a few things.
Yet so many people claim to hate Tony Abbott who is about as family orientated as you can get.
There is a big article in the Canberra Times today about the big movers and shakers in Canberra. It’s long on their power and influence but short on their family values.
The times are changing.

The money to run this city needs to come from somewhere. We’ve got people making demands about everything from dead trees to tyre slasher capture to billion dollar choo choo trains. It’s so much easier to spend money when it’s not yours.

aussieboy said :

Abolishing stamp duty is very good policy.

You should not be rewarded for staying in the same house for 20 years – if anything you should be punished. There are far too many retired couples living in 4-5 bedroom houses in Canberra’s inner suburbs. Meanwhile, young families are pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking.

If retirees can’t afford the new rates, they should move into a smaller place.

In the long term, this won’t be an issue – basic economics suggests that house prices will fall to compensate for the PV of increased rates – people will just need to factor rate costs into their affordability calculations.

People did factor Annual Rates increases into their affordability – and Stamp duty – and purchased a house that they could afford given both those things.

They also raised families in those houses – and had blocks that their kids could run around in safely.

To say, decades later, that they should not have done that IN CASE some idiot, economically and fiscally incompetent ACT Government decided to potentially triple those Annual Rates, is simply absurdly ludicrous. No one would have seen that coming all those years ago.

For those people who have already paid their full share of Stamp Duty when they purchased a house, what the ACT Gov’t has now done is akin to “legalised” theft.

Retirees, after a lifetime of contribution to the economy and working to own a house, should not be “forced” to move into a shoebox somewhere (that will also be subject to proportionally increased Rates too btw). Particularly self funded retirees who are not a drain on the economy. These people should be looked after – not penalised financially by this idiot ACT Gov’t.

There must surely be better ways of encouraging the “target” people out of their larger homes and into smaller ones. The ACT Gov’t way of up to tripling Annual Rates is far, far too blunt.

Maya123 said :

aussieboy said :

Abolishing stamp duty is very good policy.

You should not be rewarded for staying in the same house for 20 years – if anything you should be punished. There are far too many retired couples living in 4-5 bedroom houses in Canberra’s inner suburbs. Meanwhile, young families are pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking.

If retirees can’t afford the new rates, they should move into a smaller place.

In the long term, this won’t be an issue – basic economics suggests that house prices will fall to compensate for the PV of increased rates – people will just need to factor rate costs into their affordability calculations.

I live in an inner suburb. So you would punish me for wanting to be within cycling distance of facilities and for wanting to grow my own food – fruit trees and vegetable gardens. Yes, I could move out of my house and into a unit. No room to grow anything, but what does that matter; I’m expendable. That’s how I read your post. But then being cynical, my house is only three bedrooms, one living area and doesn’t have a separate entertainment area or theatrette. What first home buyer would be interested in that? And first home buyers are usually younger; they can cycle further.
I retired (forced redundancy) and after saving for over twenty years finally managed to upgrade my house and get a bigger one (but still smaller than most built today). No, I am not moving after only just moving in, just to please your prejudices.

Added: Rates, by the way, are not calculated on the size of the house, but where it is. A large six bedroom house in an outer suburb will have lower rates than a small two bedroom house in an inner suburb.

aussieboy said :

Abolishing stamp duty is very good policy.

You should not be rewarded for staying in the same house for 20 years – if anything you should be punished. There are far too many retired couples living in 4-5 bedroom houses in Canberra’s inner suburbs. Meanwhile, young families are pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking.

If retirees can’t afford the new rates, they should move into a smaller place.

In the long term, this won’t be an issue – basic economics suggests that house prices will fall to compensate for the PV of increased rates – people will just need to factor rate costs into their affordability calculations.

I live in an inner suburb. So you would punish me for wanting to be within cycling distance of facilities and for wanting to grow my own food – fruit trees and vegetable gardens. Yes, I could move out of my house and into a unit. No room to grow anything, but what does that matter; I’m expendable. That’s how I read your post. But then being cynical, my house is only three bedrooms, one living area and doesn’t have a separate entertainment area or theatrette. What first home buyer would be interested in that? And first home buyers are usually younger; they can cycle further.
I retired (forced redundancy) and after saving for over twenty years finally managed to upgrade my house and get a bigger one (but still smaller than most built today). No, I am not moving after only just moving in, just to please your prejudices.

Abolishing stamp duty is very good policy.

You should not be rewarded for staying in the same house for 20 years – if anything you should be punished. There are far too many retired couples living in 4-5 bedroom houses in Canberra’s inner suburbs. Meanwhile, young families are pushed into the abysses of Tuggeranong and Gunghalin where facilities/services are lacking.

If retirees can’t afford the new rates, they should move into a smaller place.

In the long term, this won’t be an issue – basic economics suggests that house prices will fall to compensate for the PV of increased rates – people will just need to factor rate costs into their affordability calculations.

HiddenDragon6:30 pm 20 Jun 14

Mark Parton said :

I get so many calls to my radio program saying exactly this. I think the Government is now more aware of the problems connected to this policy but they must remain committed to it for obvious reasons. More than a lot of cities in Australia, Canberra has always been a great place to live, if you make lots of money.

I think your final sentence sums it up very nicely, Mark. For all the talk, and selective statistics to the contrary, Canberra remains a company town, heavily dependent upon federal government spending and with living costs – including ACT government rates and charges – predicated upon household incomes well above the national average. But with federal government spending now less lavish than in the past, at the same time as the rates and other ACT Government tax increases are starting to bite, more people will be really noticing the squeeze on their living costs – so all those calls are hardly surprising.

If it weren’t for the fact that the shift from stamp duty to rates is being approached with what seems almost like blind faith, a more pragmatic approach might be for the ACT Government to say, OK, we will go to a certain point, and not beyond, unless the other States* and Terrritory (but most particularly NSW, for obvious reasons) follow suit. In fact, if you look at the revenue projections in the recent ACT Budget papers, it looks like rates are being pushed up more quickly than stamp duties are being wound down – particularly for properties of middling values and above.

*I believe WA has started something similar, but I doubt, in practice whether we are too often in direct competition with WA for investment and productive residents, so that’s probably of limited relevance – for other than rhetorical purposes.

miz said :

Why can’t they just scrap it in one go?

Well they could have. Not sure how doubling rates in one go would have gone down with the electorate, but at least it would spare us 19 years of carping on about it while they transition it in.

Maya123 said :

I think a better plan would have been to apply the high rates to all new houses and when old houses change hands.

Would require the Territory to borrow the money needed to make up for the lost stamp duty that would not yet be covered by the new rates. More expensive in the long run as you have to pay back the interest.

Maya123 said :

I think a better plan would have been to apply the high rates to all new houses and when old houses change hands. If most Canberra houses change hands every few years, soon most houses would be under the new system; no stamp duty but higher rates. The older house owners paid stamp duty, so have made their contribution.

Which would encourage people under the old system to hold onto their properties for as long as possible.

ie. The exact opposite of what the goal of the policy is.

Maya123 said :

The older house owners paid stamp duty, so have made their contribution.

They may have made A contribution, but it is not sufficient to keep the city running. The only solution is do something with rates or a GST increase or maybe both.

Whilst I disagree with the approach the Federal government has taken in the last budget, the basics of Hockey’s rhetoric is right in that we do ALL need to contribute more into the future. Though in their case they are using this augment as a way to redistribute funds towards the big end of town. But I digress.

Locally it is no different we all have to pay and pay more into the future. Stamp duty isn’t the way.

I think a better plan would have been to apply the high rates to all new houses and when old houses change hands. If most Canberra houses change hands every few years, soon most houses would be under the new system; no stamp duty but higher rates. The older house owners paid stamp duty, so have made their contribution.

The new rates setup is designed not to save first home buyers money, as the government keeps insisting, but to bleed money from all existing and future home owners to help in propping up the budget. Rate WILL triple across the projected timeframe given by the Liberals. I raised this with Andrew Barr and it seemed very clear from the conversation that if you didn’t think the new rates regime is a good idea, then in his opinion you must be an idiot.

Quite honestly I think it’s a terrible idea born from poor fiscal management. Everyone is going to be stung by this in the long term. Next time I hear a Labor voter complaining about the rates rise, I’ll be sure to let them know that it’s their own fault.

Maya123 said :

dungfungus said :

It’s not just rates that are rising either. It is all contributing to less disposable income, especially hurting those on fixed incomes (and those on decreasing incomes if you believe the socialist propaganda).
I think the ACT Government has made some huge blunders as far as balancing the budget is concerned and they will soon be campaigning louder for an increase in the GST which will punish us even more.
There are signs that the real estate bubble has popped so we will see our wealth decrease concurrently with big increases in cost of living. An oil price rise shock is likely soon so that will add to the cost of running our cars and also increase the price (freight) of consumer costs etc. etc.
Inflation is certain to rise which could be good news for those with large home mortgages because it it will be easier to pay off yesterday’s debts with tomorrows’ income.
I think Point #1 in post #4 is an excellent idea.

Better get that vegetable garden planted!

and the home brew.

dungfungus said :

It’s not just rates that are rising either. It is all contributing to less disposable income, especially hurting those on fixed incomes (and those on decreasing incomes if you believe the socialist propaganda).
I think the ACT Government has made some huge blunders as far as balancing the budget is concerned and they will soon be campaigning louder for an increase in the GST which will punish us even more.
There are signs that the real estate bubble has popped so we will see our wealth decrease concurrently with big increases in cost of living. An oil price rise shock is likely soon so that will add to the cost of running our cars and also increase the price (freight) of consumer costs etc. etc.
Inflation is certain to rise which could be good news for those with large home mortgages because it it will be easier to pay off yesterday’s debts with tomorrows’ income.
I think Point #1 in post #4 is an excellent idea.

Better get that vegetable garden planted!

It’s not just rates that are rising either. It is all contributing to less disposable income, especially hurting those on fixed incomes (and those on decreasing incomes if you believe the socialist propaganda).
I think the ACT Government has made some huge blunders as far as balancing the budget is concerned and they will soon be campaigning louder for an increase in the GST which will punish us even more.
There are signs that the real estate bubble has popped so we will see our wealth decrease concurrently with big increases in cost of living. An oil price rise shock is likely soon so that will add to the cost of running our cars and also increase the price (freight) of consumer costs etc. etc.
Inflation is certain to rise which could be good news for those with large home mortgages because it it will be easier to pay off yesterday’s debts with tomorrows’ income.
I think Point #1 in post #4 is an excellent idea.

Doesn’t exactly encourage people to buy now either given you will still have to knowingly pay stamp duty effectively twice. Why can’t they just scrap it in one go?

Two questions.

1. What is the alternative?
2. Why should those that move house more often bear the burden? Surely there must be a better way, refer to Q1.

Using stamp duty to meet ongoing and future State and Territory costs is a flawed revenue base. Obtaining revenue through rates is a much better way to reflect and recover Government costs. As well it has an environmental benefit in that it better facilitates owners moving houses more regularly as their life changes – potentially freeing up land and building use and potentially reducing intertown travel needs.

There are several problems though which the Government appears to happily be ignoring:
1/ existing homeowners have not been given any credit for stamp duty paid on existing properties (eg they could receive a reduction based on how long they have owned their home for);
2/ some homeowners have improved or redeveloped properties based on factors such as the planning rules and rates system in force at the time of their development. Ongoing changes to planning rules – especially to allow ever increasing densities – and the new rates system could significantly devalue building structures for these people without them receiving any compensation by the Government.
3/ Government accountability for revenue received is reduced. For example, Governments can provide services and funding direct to key electorate or politically sensitive areas (eg light rail) but quickly raise revenue from all over Canberra – especially in suburbs with higher land value.
4/ Homeowners must have sufficient funds to pay rates which will now be much higher. Telling homeowners to “get a pay rise” just because their land is now worth more is quite naive (eg many older and/or unskilled employees have little or no bargaining power) and completely disregards the circumstances of most retirees.
5/ I suspect that the new rates system at a Territory level (and particularly if or when this occurs in the States) has the potential to affect Federal revenues especially if the properties are used for investment purposes.

“Those of us who do stay in a home for 10, 15 or 20 years will end up paying more than we did under the old system. We won’t benefit from the saving of the reduction in stamp duty.”

Probably. Pretty much any change to any Government policy will result in some winners and some losers.

“We’re setting up Canberra to be one of the most expensive places in which to live in the entire country, if it isn’t already. Sure, you won’t have to pay that dastardly stamp duty when you buy a house, but if you’re got to pay 10K in rates every year, what’s the diff.”

Exactly the opposite. Moving revenue away from stamp duties and towards land taxes/rates is extremely sensible economic policy. The ACT Government has done a lot of really dumb things, but this is certainly not one of them.

Transactions taxes (like stamp duty) are a horribly inefficient burden on the economy that destroy wealth, unlike taxes on land and property which are immensely more efficient. Getting rid of stamp duty will give the ACT a competitive advantage over states that have it.

“I guess the big question is, could the Libs wind this all back should be elected, given that they’re going to be so busy ripping light rail out of the ground?”

If the Libs are as committed to lower taxes and responsible economic management as they like to say they are, they’d continue full steam ahead with higher rates.

The Chief Minister still says that the Liberals were lying when about rates tripling. Difficult to know who to believe on this, but it looks to me as though rates will triple well before 2022

I get so many calls to my radio program saying exactly this. I think the Government is now more aware of the problems connected to this policy but they must remain committed to it for obvious reasons. More than a lot of cities in Australia, Canberra has always been a great place to live, if you make lots of money.

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