ACT Government seeks independent rates review ahead of Budget

Ian Bushnell 6 November 2019 20
Chief Minister Andrew Barr

Chief Minister Andrew Barr wants to know the impact of his tax reforms on households. Photo: Michelle Kroll Region Media.

The ACT Government is seeking an independent analysis of the impacts of its tax reform program on households and the property market, including rents.

A tender has been released for one or more consultants to undertake the analysis, which the Government will use in the framing of the 2020 Budget when it will announce the next phase of reform.

The 20-year tax reform program began in 2012-13 and involves what the Government says is a revenue-neutral switch from insurance and conveyance duty to annual property taxes through the general rates system.

The Government says the review has always been planned and is timely given the reform program is at the halfway point.

The Standing Committee on Public Accounts report into the methodology for determining rates and land tax for strata residences also requested that the Government undertake further analysis.

Chief Minister Andrew Barr has consistently rejected the Canberra Liberals’ claims that the rate rises are hurting many sections of the community, driving homebuyers across the border and pushing up rents, arguing that ratepayers have benefited from cuts to stamp duty and other taxes and charges.

While the analysis may have been planned, it will also give the Government room to move in the Budget to assuage disaffected voters or provide an effective counter to what will be a ferocious campaign from the Opposition, which has already pledged a rates freeze.

The Government wants to know the impact of its rate rises on different sections of the community including first-home buyers, low-income homeowners, median-income homeowners, pensioners and fixed-income retirees, renters and women, as well as whether tax reform has been equitable and affected people’s ability to pay.

It also wants to see if residential property prices or property turnover are higher or lower than they would have been without tax reform, if home buyers are spending less overall on property purchases or buying higher-priced properties by adding the stamp duty saved to their purchasing budget, and whether the changes have made it easier for people to move to properties more suited to their needs, such as downsizing.

The analysis will also tell the Government if rental housing is more or less affordable and if rate rises are being passed on to tenants.

Economists have supported the ACT Government’s tax reform program and the Government has won two elections since it began but Opposition Leader Alistair Coe has put rates at the centre of his campaign for next year’s October poll.

While he has promised to freeze rates, Mr Coe has not said how he would pay for the policy.

The Government also challenged Mr Coe’s charge that Canberrans are moving across the border, saying that between 2011 and the 2016 Census the ACT gained 3946 people from NSW, releasing this table to support their claim:


Population moving into and out of the ACT between 2011 and 2016.

“The only age groups that have seen any significant movement out of the ACT are those of retirement age heading to the coast,” a spokesperson said. “Young people have been flocking to the ACT. We are one of the fastest-growing regions in Australia. Our population in 2011 was 357,220. In March 2019, the ABS estimated our population reached 425,700.”

The spokesperson reiterated that rates increases would be lower in the next phase of tax reform, with the heavy lifting complete now that insurance taxes in the ACT have been fully abolished and the payroll tax threshold has been lifted.

The tender says a final report will be due by 21 February 2020.

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20 Responses to ACT Government seeks independent rates review ahead of Budget
HiddenDragon HiddenDragon 8:29 pm 09 Nov 19

“The spokesperson reiterated that rates increases would be lower in the next phase of tax reform, with the heavy lifting complete now that insurance taxes in the ACT have been fully abolished and the payroll tax threshold has been lifted.”

The figures in the 2019-20 ACT Budget (Budget Paper 3, p.230) show that current annual rates on residential properties would need to increase by about half, and annual rates on commercial properties by about one third, to cover the revenue currently derived from stamp duties.

That would be in addition to annual increases in rates according to the Wage Price Index which the ACT Government uses to increase many of its charges.

Obviously what constitutes “heavy lifting” is a matter of opinion – perhaps that government spokesperson is a power-lifter in their spare time.

Acton Acton 1:58 pm 08 Nov 19

Stamp duty was a once only tax paid when you bought a house. Too high yes, but you only paid it if you could afford the house and you then worked to pay off your mortgage . Now mortgages will be harder and longer to pay off because rising rates reduce savings.

Increasing rates by 7-11% every year means we all have less in our pocket to pay our mortgage, food, car, electricity bills, insurances, kids, holidays etc. Unless of course you are on a high salary with guaranteed pay increases (like an ACT Chief Minister). Then you can just look down upon and smirk at the plebs struggling on tight budgets in the outer suburbs. They are the ones most punished by high rates.

Raising rates are regressive and unfair because they are not based on household income or capacity to pay. The ACT now has the highest residential rates and payroll tax rate in Australia while ACT Labor and its proxies still push the deceptive line that we are living in a lala land of low taxes. We are now the most unfairly taxed part of Australia. Compare your latest rates notice with what you paid in 2011-12. Over 8 years rates have increased by +250% and are on track to triple.

So a vote for 7-11%pa increases in rates is a vote for a 7-11%pa drop in your own standard of living. How dumb is that?

Justin Watson Justin Watson 10:03 am 08 Nov 19

I wonder when Canberrans don't have to pay stamp duty whether they thank the government for removing stamp duty. Are rates high? probably, but when you look at the levels of state-based taxation, the ACT taxes us less than NSW and Victoria and is on the Australian average according to the ABS. So the answer really isn't as obvious as everything thinks it is. Additionally, we have the cheapest electricity now in Australia and low vacancy rates on property. Investors with the intention of renting out do very well in Canberra. Investors playing the negative gearing and waiting for capital gains increases don't do so well as the land tax increases the risk of property speculation. Add to that, Canberra is easily one of the best place to live in the world, but we have a lot of people who've lost perspective or can't accept that things aren't as bad as they want them to be in their pessimistic view of the world. The government is not perfect, but puts the federal government to shame that is for sure, who've done nothing good for this country the last 5 or so years.

    Roderick Saunders Roderick Saunders 8:59 pm 08 Nov 19

    Justin Watson perceptions are reality and rates are due every quarter whereas paying stamp duty is a very rare event for many people

michael quirk michael quirk 8:33 am 08 Nov 19

One can expect the “independent” rates review to recommend tweaks to the existing rates regime. The gain community confidence the Barr government also needs to justify its expenditure priorities. Its Infrastructure Plan and ACT Planning Strategy provided no such justification. Why, when there are major unmet needs in health, housing and city maintenance, for a new theatre, the upgrading of stadium facilities, is the extension of light rail to Woden a priority? Its need is not urgent, as demonstrated by the high performance of the bus service currently operating, is extremely expensive relative to the benefits provided and is a technology likely to be superseded by far cheaper high capacity electric buses within the next few years. Mr Barr stop the obfuscation, be accountable and justify your spending and revenue raising priorities.

Rick Crombie Rick Crombie 7:29 am 08 Nov 19

They couldn't tell this by themselves they have to get an independent opinion, they are so bad and out of touch, what a joke, bring on an election.

Phil Andrews Phil Andrews 9:04 pm 07 Nov 19

2 options. 1. The answer is already preordained or 2. They did not do their homework properly. 1 is looking good 🤔

Cary Elliot Johnson Cary Elliot Johnson 7:40 pm 07 Nov 19

Come and visit my mates and I and you'll get and independent view and opinion. Won't be nice, but it will be truthful at least.

Meg Joy Meg Joy 5:50 pm 07 Nov 19

Hope they are going to look at the fact that some are still paying off stamp duty AND paying increased rates 🤬

Sher Bee Sher Bee 5:21 pm 07 Nov 19

The BARR rates hike, look no further. Vote him out

Shiva Sapkota Shiva Sapkota 2:52 pm 07 Nov 19

Just look at how expensive Queanbeyan and Googong have become compared to Canberra in the last few years!

Ursula Gamal Ursula Gamal 1:21 pm 07 Nov 19

Will it be truly objective or a whitewash?

    Sher Bee Sher Bee 10:06 pm 07 Nov 19

    Ursula Gamal it’s certainly not getting the traction Barr humbug would be wishing for. Whitewash is winning by a few body lengths

    Justin Watson Justin Watson 10:05 am 08 Nov 19

    The thing is those who want it to criticise the government won't accept an independent report unless it does as they've made their mind up. So the report is useless because if it finds anything positive, the same people will choose to not believe it and say it was done by his mates.

Acton Acton 11:55 am 07 Nov 19

The reform is intended to make the system fairer, according to Mr Barr, but he is simply replacing one bad tax with an even worse tax system by increasing rates and land taxes. Rates for houses and units are expected to increase, on average, by 7 and 11 per cent, respectively. Land taxes will grow, on average, by 7 per cent.

Rates rises of 7-11% pa are well in excess of wage and price increases so our disposable income is reduced. We are all worse off because we are paying more in rates. That is unfair.

First-home buyers, low-income homeowners, median-income homeowners, pensioners and fixed-income retirees, renters and women are all disadvantaged because they pay more in rates, more in property prices and higher rents because higher rates are passed on in the form of higher rents.

First-home buyers in the ACT don’t pay stamp duty on any residential property if their household income is less than $160,000. But once they move into their higher priced home they are trapped into paying annual rate rises of 7-11%, well in excess of their household income rises. If they have kids and go onto one income they are even worse off. But Barr doesn’t consider the effect on families with children.

The great ACT Government scam is that while buyers are promised less stamp duty, they pay more in rates, more in property prices, more in rents, while revenue from stamp duty has actually increased since the 20-year program begun.

    bj_ACT bj_ACT 11:41 am 08 Nov 19

    You’ve hit the nail on the head. The unintended reality of the Stamp Duty changes isn’t anything like the economic model championed by economists and the likes of the Grattan Institute.

    noid noid 5:35 pm 08 Nov 19

    Apparently you will be better off with the abolition of stamp duty if you buy and sell a house every 7 years. This was the supposed average people in Canberra changed houses? So you only lose if you stay in your house longer.

Ken Owers Ken Owers 11:42 am 07 Nov 19

Independent? Who is paying the consultants? Who is writing the criteria for the analysis?

Warwick Bradly Warwick Bradly 10:21 am 07 Nov 19

I’d say the verdict from the ‘independent’ consultants is pre decided. The well dressed and well paid consultants will report that ACT residents love the huge rates and land tax hikes.

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