Skip to content Skip to main navigation

News

Skilled legal advice with
accessible & personal attention

Ratepayers to feel the pinch as ACT Government spends up on infrastructure

By Glynis Quinlan 6 June 2017 40


The ACT Government believes it is on track for its budget to be back in balance in the 2018-19 financial year despite the Mr Fluffy hit on its books in 2014 and a big-spending infrastructure program for health, schools and public transport.

However, ratepayers will feel the pinch with rates to again rise by around seven per cent in the coming financial year and for each year in the foreseeable future.

Unit owners will be slugged with an added rate increase for each of the next two years, paying an extra $150 in 2017-18 and a further $115 in 2018-19.

The 2017-18 ACT Budget brought down today has a projected deficit of $83.4 million with a forecast of returning to a small surplus of $9.7 million in the 2018-19 financial year.

Big ticket items include an increased investment of $443 million in health, $210 million more for local schools and $53.5 million to design the route for Stage Two of the light rail network to Woden.

Many of the commitments in today’s Budget have been foreshadowed during a flurry of ACT Government announcements in recent weeks but details of a new $500 million centre for Canberra Hospital were released today.

The Government has committed $236 million over the next four years to design and start construction of a new Surgical Procedures, Interventional Radiology and Emergency (SPIRE) Centre within the Canberra Hospital precinct.

The centre will have a ward dedicated to elective surgery and offer world-class radiology services. It will also have a much larger emergency department with a separate paediatric ward.

Features of the new SPIRE Centre include:

  • a larger intensive care unit with 48 beds
  • a 24-bed coronary care unit
  • more inpatient wards with 64 beds for overnight care
  • more elective and day surgical spaces
  • state-of-the-art surgical, procedural and imaging facilities

Once the SPIRE centre is built, the current emergency department will be dedicated to providing specialist emergency healthcare for women and children.

Other Government funding commitments in the 2017-18 ACT Budget include:

Health

  • Almost $70 million to expand the Centenary Hospital for Women and Children, delivering a new ward with another 40 maternity beds
  • $17.3 million to renovate the existing acute aged care and cancer facilities at the Canberra Hospital
  • $14 million over five years to build and plan for new nurse-led Walk-in Centres in Gungahlin, Weston Creek and the Inner North
  • $12.1 million to build a new health centre for Aboriginal and Torres Strait Islander Canberrans
  • $3.3 million to begin planning for enhanced northside hospital facilities
  • $16.1 million to ensure full operational readiness for the new University of Canberra Public Hospital to open in 2018
  • $4 million to invest in initiatives as part of a new preventative health strategy to reduce the burden of chronic disease
  • $3.2 million to purchase and operate two additional mobile dental vans to provide dental care closer to home for those who need it
  • $2.7 million to establish a new Year 7 health check for Canberra students
  • $36 million to train and support more frontline health staff, including 12 new nurse navigators to support patients with complex needs
  • $2.7 million to establish a new University of Canberra clinical school for nursing, midwifery and allied health

Education

  • $100 million for upgrades to ACT schools including $85 million to public schools. The upgrades include $5.9 million for stage 3 of the Belconnen High School Modernisation, upgrades and extensions to new and existing classrooms, and new gardens and horticultural facilities
  • $26.2 million to expand schools in Gungahlin, including Harrison School, Gold Creek School, Neville Bonner Primary School and Palmerston District School
  • $17.2 million provision to deliver technology-enabled learning devices for students, helping to ensure that every public high school and college student has access to a device
  • $16.1 million for school assistants to help provide better support for teachers
  • $3 million to support students with disability
  • $3.3 million to improve the safety of students walking and cycling around schools
  • $2.4 million to fund the first five of 20 new psychologists for public schools
  • $1 million for safer workplaces for teachers, educators and support staff

Public Transport

Funding of $65 million over four years to improve Canberra’s public transport network, with initiatives to include:

  • $53.5 million for the second stage of light rail between the City and Woden
  • $7 million for free travel on two new Rapid Bus routes, free off-peak buses for seniors and concession card holders and to continue the Free City Loop, Airport and Route 182 Weston Line services
  • $2.1 million to progress procurement of integrated bus and light rail ticketing and investment in ticket machines
  • $1.7 million for faster bus travel though bus priority infrastructure, bus service improvements and new bus stops

An investment in the 2017-18 ACT Budget of $54 million in upgrades to roads across the ACT including:

  • $35 million for stage two of the Gundaroo Drive duplication, replacement of the roundabout at Gundaroo Drive/ Mirrabei Drive/ Anthony Rolfe Avenue with traffic lights, a new four-way signalised intersection at the Federal Highway and Old Wells Station Road and stormwater works on Flemington and Morisset Roads
  • $8 million to construct an access road to the Canberra Brickworks Precinct
  • $6 million to investigate upgrades and duplication of the Monaro Highway and Pialligo Avenue
  • $4.5 million over three years for increased road resealing across Canberra
  • $900,000 for design works on upgrades to Bindubi Street and William Hovell Drive in Belconnen and east-west arterial roads in the Molonglo Valley

In addition, the Government has made a commitment of $8.3 million over four years into community transport through the Community Transport Coordination Centre, incorporating the Flexible Bus Service and special needs transport.

City Renewal

  • $59 million over four years to enable the City Renewal Authority to revitalise the CBD, Dickson and Northbourne Avenue and create a lakeside precinct in West Basin
  • $8 million over two years to revitalise Canberra’s shopping precincts
  • $4.7 million for design works and construction of the Belconnen Bikeway linking Belconnen Town Centre to educational and health institutions and Lake Ginninderra
  • $11.1 million to improve waste management, prepare for the rollout of a Territory-wide bulky waste collection service from 2018-19 and the introduction of a container deposit scheme
  • $5.4 million for the Quality Sportsgrounds Program
  • $4.5 million over three years to resurface up to 150,000 square metres more of roads each year
  • $3.1 million to renovate Woden Town Library and improve public access to library records
  • $2.3 million for city services in Canberra’s new suburbs
  • $1.9 million over two years to remove more weeds along major roads, provide more street art coordination and graffiti removal and the like
  • $1.3 million over two years to better control weeds in Canberra’s urban open space, along rural roadsides and within nature parks
  • $1.2 million to ensure we can better manage animal welfare including more funding to the RSPCA and expanding the size of the pound
  • $5.3 million nightlife package which will deliver a variety of initiatives including $4.9 million over four years for six additional police officers to patrol nightlife precincts

What’s Your opinion?


Please login to post your comments, or connect with
40 Responses to
Ratepayers to feel the pinch as ACT Government spends up on infrastructure
Filter
Showing only Website comments
Order
Newest to Oldest
Oldest to Newst
Rover 11:25 pm 14 Jun 17

wildturkeycanoe said :

oh_ said :

Houses on the other hand, have done really well so I have a lot less sympathy for owners who cry poor at the rate increase – sorry but your house has gone up way more, in most areas by hundreds of thousands, you can afford it more.

That is totally irrelevant to home owners unless they intend to sell their home. Who cares if your house is worth more if you intend to live in it for the next 20 years. The rates increases plus home loan interest rises, on top of stangating wages will make home ownership more of a struggle. Sure the investors will be laughing, but families will do it tougher. A better home valuation is no reason to celebrate if it is eating into your grocery bill to avoid default on the mortgage.
I have little sympathy for the unit owners, as they know full well the costs involved are offsetting the lack of yard maintenance and other costs borne by house owners. They are also getting better public transport, something the outer suburbians hope for in vain.

Unit owners pay body corporate fees for yard maintenance and other costs “borne by house owners”, whatever they may be.

“Better public transport” depends on your definition. I am lucky enough to live and work in the inner south . If I drive to work, it’s 12 minutes door to door. If I catch the bus, it’s at least 45 minutes.

bj_ACT 6:07 pm 14 Jun 17

chewy14 said :

bj_ACT said :

Chewy14, Your claim that rates will go down in an area if their UAV drops, is just not true! As I keep stating, there is a set in stone, built into the system growth percentage for Rates during the shift from Stamp Duty. A residents UAV could drop by $10,000 each year for the next three years in a row and their annual rates will still go up, not go down as you claim.

That’s why Kambah residents ‘from 2012 to 2016 average house values’ climbed by only 5% and their rates still increased by 48% since the new Rates Tax model started. In comparison, O’Connor residents house values have increased by more than six times the Kambah rate at 31% growth and their annual Rates have increased by 64% (only a bit more than a quarter over Kambah’s rates increases).

So O’Connor had Six times the home value growth, but just one quarter the annual rates growth over Kambah. The Stamp Duty transition model that you keep supporting is a dud and unfair on lower socio economic homeowners in outer areas with low property growth.

I was specifically talking about rates going down under the existing system outside of the changing taxation mix that is occurring, but has nothing to do with how AUV’s are set. If the AUV falls, rates would go down under the existing calculation. With the change to more revenue being gleaned from rates, all rates will be going up but will go up higher in areas with AUV increases and lower in areas with AUV reductions if they occur.

And I don’t know how many times I have to say it but short term property sales have very little to do with how the unimproved value of land is set. Repeating them ad infinitum doesn’t make them more relevant.

Unless, as I’ve said you actually want to move to a rating system based on improved value, which is a completely different argument.

However, If you want to convince me that the land value is set in error, you’ll need more than short term property prices, which incorporate many other factors that you’re trying to ignore in your comparison. What specific part of the legislation and the way the land values are assessed is wrong in your opinion?

Chewy 14 – You say you were “specifically talking about rates going down under the existing system outside of the changing taxation mix that is occurring” Can’t you see that this is the big part of the problem. Ignoring the new rates model transition in your opinion pieces doesn’t mean that a household on $50k a year in Kambah can ignore their $1,000 dollar rates rise.

You chose to ignore the set rates increases that are part of the 20 plus year transition process in your support for the new model. Out of the average 7% rates increase that is happening this year, how much do you reckon is due to UAV rises and how much is due to the transition to the new model? ACT Government do not release the data, but based on reverse engineering of Rates increases and house price growth since 2012, I calculate that 5% is built in to the Rates transition and just 2% is due to UAV (on average across Canberra). Although I am now happy that you finally admit that your claims of fairness in the new system were not including the transition part of the Rates increases.

chewy14 8:29 pm 13 Jun 17

bj_ACT said :

Chewy14, Your claim that rates will go down in an area if their UAV drops, is just not true! As I keep stating, there is a set in stone, built into the system growth percentage for Rates during the shift from Stamp Duty. A residents UAV could drop by $10,000 each year for the next three years in a row and their annual rates will still go up, not go down as you claim.

That’s why Kambah residents ‘from 2012 to 2016 average house values’ climbed by only 5% and their rates still increased by 48% since the new Rates Tax model started. In comparison, O’Connor residents house values have increased by more than six times the Kambah rate at 31% growth and their annual Rates have increased by 64% (only a bit more than a quarter over Kambah’s rates increases).

So O’Connor had Six times the home value growth, but just one quarter the annual rates growth over Kambah. The Stamp Duty transition model that you keep supporting is a dud and unfair on lower socio economic homeowners in outer areas with low property growth.

I was specifically talking about rates going down under the existing system outside of the changing taxation mix that is occurring, but has nothing to do with how AUV’s are set. If the AUV falls, rates would go down under the existing calculation. With the change to more revenue being gleaned from rates, all rates will be going up but will go up higher in areas with AUV increases and lower in areas with AUV reductions if they occur.

And I don’t know how many times I have to say it but short term property sales have very little to do with how the unimproved value of land is set. Repeating them ad infinitum doesn’t make them more relevant.

Unless, as I’ve said you actually want to move to a rating system based on improved value, which is a completely different argument.

However, If you want to convince me that the land value is set in error, you’ll need more than short term property prices, which incorporate many other factors that you’re trying to ignore in your comparison. What specific part of the legislation and the way the land values are assessed is wrong in your opinion?

bj_ACT 6:17 pm 13 Jun 17

Chewy14, Your claim that rates will go down in an area if their UAV drops, is just not true! As I keep stating, there is a set in stone, built into the system growth percentage for Rates during the shift from Stamp Duty. A residents UAV could drop by $10,000 each year for the next three years in a row and their annual rates will still go up, not go down as you claim.

That’s why Kambah residents ‘from 2012 to 2016 average house values’ climbed by only 5% and their rates still increased by 48% since the new Rates Tax model started. In comparison, O’Connor residents house values have increased by more than six times the Kambah rate at 31% growth and their annual Rates have increased by 64% (only a bit more than a quarter over Kambah’s rates increases).

So O’Connor had Six times the home value growth, but just one quarter the annual rates growth over Kambah. The Stamp Duty transition model that you keep supporting is a dud and unfair on lower socio economic homeowners in outer areas with low property growth.

HiddenDragon 6:16 pm 13 Jun 17

The three word slogan for the (very) gradual shift from stamp duty to rates is “Simpler, Fairer Taxes” with much being made of the claimed fairness for first home buyers – and yet we now have this completely unsurprising news from just across the border –

http://www.afr.com/real-estate/sellers-want-to-raise-prices-to-extract-more-money-from-first-home-buyers-20170608-gwn97q

“Sydney home sellers are pushing up their asking prices to take advantage of the cuts in NSW stamp duty and increased demand from first-home buyers, real estate agents say…….”

In a sellers’ market – which we still reportedly have in Canberra, even if it’s not quite as mad as Sydney – what else would any logical person expect? So until and unless we have what is unambiguously a buyers’ market, the “Fairer Taxes” will be somewhat more so for sellers (notably for those who do not need the sale proceeds to put another roof over their heads) than for buyers (particularly first time buyers).

chewy14 5:06 pm 13 Jun 17

cont. from previous comment.

And it’s actually funny that the higher revenue amounts in the last couple of years have been achieved not through higher than predicted rates increases but by windfall gains from property conveyances, under the old system they’d have taken in more revenue which was part of the problem the change in taxation mix is trying to avoid. Wildly uneven revenue based on housing market cycles are not good for anybody.

But regardless, the revenue predictions are simply being met with a different tax mix, exactly as I said they were.

So, you could just face the facts that the changes are revenue neutral and admit you’re just salty that the government has made wild spending promises and is actually collecting the revenue to meet them. That you don’t like that increased spending for whatever reason (and I actually agree).

You know what you can do about it? Vote for other parties and convince others to do the same, but you can’t blame it on the tax reform package that has been telegraphed for years and is delivering what they said it would.

chewy14 5:04 pm 13 Jun 17

Mysteryman said :

chewy14 said :

Mysteryman said :

chewy14 said :

Garfield said :

HiddenDragon said :

The Budget Papers released today estimate that general rates revenue will total c.$487m in 2017-18 ($172m. commercial and $315m. residential) with c.$268m revenue from property conveyancing duties ($74m. commercial and $194m. residential).

By way of nostalgic comparison, the figures for 2011-12 were c.$209m. for general rates (separate figures not given for commercial and residential) and c.$268m. for property conveyacing duties, with c.$47m from insurance policy duties.

So for all the talk about “simpler, fairer taxes” etc. etc. conveyancing duty revenue is unchanged in nominal terms (in a period of notably low inflation), and general rates revenue has increased by 133% (or 110% if the insurance duty phase-out is discounted against the general rates increases).

A good reminder for people that ACT Labor’s claims that their tax reform would be revenue neutral was a bald faced lie.

How is it a lie?

They never said that the overall tax amount wouldn’t increase (which would be stupid), they said that the mix of taxes would change such that the change would be revenue neutral.

They’d still be receiving the same amount of total revenue today without the changes, simply where that money was sourced from has changed.

Not true. If there was going to be no change to the amount of revenue received, they’d have never changed the model in the first place. This rubbish about stamp duty being an “inefficient tax” was trotted out as a justification to change the system. What it actually means is that it’s harder to increase revenue through stamp duty, and much easier to do so through jacking up rates. And it’s evident in the fact that in 6 years the yearly revenue has jumped nearly 50%.

Ah, so you know better than every reputable economist?

If anything, they’d be earning more revenue now without the change due to the fact that property prices have been increasing.
.

Wrong. They are earning more now because they have raised the rates to double in many places, heading towards triple (as was predicted by anyone with a brain), without removing stamp duty. Do that maths yourself if you refuse to trust the numbers others have provided. The minimal changes in the amount of stamp duty paid will be offset within 2 years of paying rates for home owners. There’s nothing revenue neutral about that.

I’m not sure you even know what an efficient tax is. Every “reputable economist”, of which I’m sure you wouldn’t know even one, knows that “effecient tax” means that the government gets to slug everyone with it, very few can avoid it, and it’s easy to administer. You’re keep parroting the Labor line like it’s a wonderful thing. What you’re effectively saying is that their poor governance and budgeting should be rewarded with home owners (and by extension renters) being charged ever increasing amounts to cover the shortfall, and that we should all be happy about it because “efficient”. Ridiculous. Good on you for being on board with throwing your money at the government to fill their idiotic budget promises. Many of us – particularly those who know what “efficient taxation” actually means – would rather the idiotic spending stopped, so we can keep some of our money.

Where in any of my posts have I supported the government spending more money or encouraged wasteful spending? In fact, I’m on the record here many, many times rejecting spending that is inefficient or wasteful. But regardless it actually has nothing to do with the benefits or downfalls of the changes in taxation mix, it’s a completely separate argument.

What exact information are you basing your argument that they are earning more now than if they hadn’t moved more heavily to revenue from general rates? So far I’ve seen nothing that even slightly suggests that the change hasn’t been revenue neutral, simply that they’re collecting more money overall which in of itself is proof of nothing.

You want me to “do the math”? OK, lets look at the government’s own budget figures back to 2012 when the changes started.

Government’s predicted revenue in 2015-16 for each budget 2012-2016 from rates and conveyances

2012 budget: $695 million
2013 budget: $660 million
2014 budget: $662 million
2015 budget: $648 million
2016 budget: $687 million

And then the same for the 2016-17 revenue from rates and conveyances for each budget 2013-2017

2013 budget: $721 million
2014 budget: $726 million
2015 budget: $701 million
2016 budget: $712 million
2017 budget: $749 million

Hmm, it doesn’t look like those predictions have shifted much at all each year, with the government actually telling you exactly how much revenue they were going to take all the way back to 2012 and then actually doing it.

cont.

Mysteryman 11:03 am 13 Jun 17

chewy14 said :

Mysteryman said :

chewy14 said :

Garfield said :

HiddenDragon said :

The Budget Papers released today estimate that general rates revenue will total c.$487m in 2017-18 ($172m. commercial and $315m. residential) with c.$268m revenue from property conveyancing duties ($74m. commercial and $194m. residential).

By way of nostalgic comparison, the figures for 2011-12 were c.$209m. for general rates (separate figures not given for commercial and residential) and c.$268m. for property conveyacing duties, with c.$47m from insurance policy duties.

So for all the talk about “simpler, fairer taxes” etc. etc. conveyancing duty revenue is unchanged in nominal terms (in a period of notably low inflation), and general rates revenue has increased by 133% (or 110% if the insurance duty phase-out is discounted against the general rates increases).

A good reminder for people that ACT Labor’s claims that their tax reform would be revenue neutral was a bald faced lie.

How is it a lie?

They never said that the overall tax amount wouldn’t increase (which would be stupid), they said that the mix of taxes would change such that the change would be revenue neutral.

They’d still be receiving the same amount of total revenue today without the changes, simply where that money was sourced from has changed.

Not true. If there was going to be no change to the amount of revenue received, they’d have never changed the model in the first place. This rubbish about stamp duty being an “inefficient tax” was trotted out as a justification to change the system. What it actually means is that it’s harder to increase revenue through stamp duty, and much easier to do so through jacking up rates. And it’s evident in the fact that in 6 years the yearly revenue has jumped nearly 50%.

Ah, so you know better than every reputable economist?

If anything, they’d be earning more revenue now without the change due to the fact that property prices have been increasing.
.

Wrong. They are earning more now because they have raised the rates to double in many places, heading towards triple (as was predicted by anyone with a brain), without removing stamp duty. Do that maths yourself if you refuse to trust the numbers others have provided. The minimal changes in the amount of stamp duty paid will be offset within 2 years of paying rates for home owners. There’s nothing revenue neutral about that.

I’m not sure you even know what an efficient tax is. Every “reputable economist”, of which I’m sure you wouldn’t know even one, knows that “effecient tax” means that the government gets to slug everyone with it, very few can avoid it, and it’s easy to administer. You’re keep parroting the Labor line like it’s a wonderful thing. What you’re effectively saying is that their poor governance and budgeting should be rewarded with home owners (and by extension renters) being charged ever increasing amounts to cover the shortfall, and that we should all be happy about it because “efficient”. Ridiculous. Good on you for being on board with throwing your money at the government to fill their idiotic budget promises. Many of us – particularly those who know what “efficient taxation” actually means – would rather the idiotic spending stopped, so we can keep some of our money.

dungfungus 9:49 am 13 Jun 17

chewy14 said :

HiddenDragon said :

chewy14 said :

Mysteryman said :

chewy14 said :

Garfield said :

HiddenDragon said :

The Budget Papers released today estimate that general rates revenue will total c.$487m in 2017-18 ($172m. commercial and $315m. residential) with c.$268m revenue from property conveyancing duties ($74m. commercial and $194m. residential).

By way of nostalgic comparison, the figures for 2011-12 were c.$209m. for general rates (separate figures not given for commercial and residential) and c.$268m. for property conveyacing duties, with c.$47m from insurance policy duties.

So for all the talk about “simpler, fairer taxes” etc. etc. conveyancing duty revenue is unchanged in nominal terms (in a period of notably low inflation), and general rates revenue has increased by 133% (or 110% if the insurance duty phase-out is discounted against the general rates increases).

A good reminder for people that ACT Labor’s claims that their tax reform would be revenue neutral was a bald faced lie.

How is it a lie?

They never said that the overall tax amount wouldn’t increase (which would be stupid), they said that the mix of taxes would change such that the change would be revenue neutral.

They’d still be receiving the same amount of total revenue today without the changes, simply where that money was sourced from has changed.

Not true. If there was going to be no change to the amount of revenue received, they’d have never changed the model in the first place. This rubbish about stamp duty being an “inefficient tax” was trotted out as a justification to change the system. What it actually means is that it’s harder to increase revenue through stamp duty, and much easier to do so through jacking up rates. And it’s evident in the fact that in 6 years the yearly revenue has jumped nearly 50%.

Ah, so you know better than every reputable economist?

If anything, they’d be earning more revenue now without the change due to the fact that property prices have been increasing.

They could have done what other government’s have done and taken extra stamp duty revenue during booms and suffer the shortfalls during downturns, but that would be stupid. Changing the mix more heavily to rates also allows a much smoother revenue stream.

The fact that revenue has increased overall is irrelevant to the argument about the tax reform, it’s simply a function of the massive spending items they’ve been starting.

Unlike the ACT, some of those other governments are currently running surpluses, which may well evaporate if/when the property boom/bubble pops, but that is still likely to be a better position than what we have with a continuing susbtantial reliance on stamp duty, in spite of all that extra revenue being extracted via annual rates – and with a surplus always going to happen some time in the future.

Some of those other jurisdictions are also less reliant on a benevolent carve-up of GST revenue – another Magic Pudding which may well shrink, with serious consequences for a big-spending ACT Government, in an economic slowdown. In the latter event, no amount of petulant finger-pointing at whoever is in power federally will change the grim facts of life for the taxpayers of the ACT.

No, we’ll be in a better position because we’ll be far less reliant on stamp duty over time and revenue will be more stable than other states.

Also, what’s so benevolent about our GST revenue, we’re currently receiving a GST relativity of around $1.1 for every dollar. Hardly excessive and unlikely to move far.

That’s cold comfort for a lot of use who have previously moved within the Territory two or three times in our life in in doing so have paid tens of thousands of dollars in stamp duty yet we still pay all the rate increases that are levied.

It would be fairer if we received some sort of rebate to offset the discrimination that has ensued.

chewy14 5:52 pm 10 Jun 17

bj_ACT said :

chewy14 said :

bj_ACT said :

Chewy14, if you say the data supports your assertion can you please provide it, not just claim it. As my previous data and examples presented on the RiotAct shows ‘the opposite’ of your claim. I will simplify things to a suburb level for people to check themselves.

According to AllHomes ‘Median Non Unit Price” for 5 example suburbs, Median house price have grown from 2012 to 2016 the following amounts, and according to the Canberra Times Rates growth from 2012 to 2016 grew the following amounts.

Kambah, Median House Growth 5%, Rates Increase 48%
Wanniassa, Median House Growth 10%, Rates Increase 45%
Downer, Median House Growth 26%, Rates Increase 68%
Dickson, Median House Growth 18%, Rates Increase 55%
Ainslie, Median House Growth 35%, Rates Increase 69%
O’Connor, Median House Growth 31%, Rates Increase 64%

Look at these values proportionally to each other, not just as a percentage difference between suburbs.

The median house price has grown in suburbs primarily due to land value increases. However, there is not a one to one relationship between Rates Growth and Land growth. As I keep saying, the new Rates Calculation Model has flaws because it does not accurately measure the real UAV when determining how much rates people should pay.

The UAV measures land size, aspect, location and a suburbs sales history, minus a determination of the house value and landscape improvement. I am sure we both agree with this. But the rates model the assessors use and the limited building and landscaping data they get, does not allow them to determine the UAV accurately.

I stand by my claim that poorer homeowners in outer suburbs are getting hit proportionally harder by the Rates increases than richer homeowners in inner Suburbs and unless the model changes it will remain this way.

But you’re still misunderstanding what I’m saying.

If your point is that the calculation of rates does not include the short term vagaries (often irrational) of the property sales market and redevelopment activities (like what is occurring in the inner north) of people upgrading/renovating their homes, then I would agree with you. That is all your data shows and I wouldn’t expect prices to ever match up with rate rises in the way you’re trying to compare them.

My point is that the calculation for AUV inherently takes into account the longer term values of the land, it’s defined in the act and calculated by professional land assessors. You’re arguing that these professionals are calculating the land values wrong but don’t have anything to back it up except short term property sales data which include a number of other factors outside of simple unimproved land value.

What it sounds like you’re actually asking for is a rates model based on improved value of the land like exists in some other areas of Australia. I personally think we don’t want that kind of rating system because it incentivises people to not fully utilise their land to the full extent because they will be punished for doing so. Rates on unimproved value, encourage efficient usage of the land.

So you said that my earlier data only covered a single period and that the rates are calculated over the 3 previous years from annual calculation. So I provided suburb wide home value growth data covering 2012to2015 and 2013to2016, that still highlighted my claim.

The professional land assessors in the ACT do not get the correct build price data, landscaping build data, view data to properly assess the UAV on houses and they rely on their old approach which was less of an issue when Rates were much lower across the ACT. As you can see from the data, a large proportion of the current rates rises under the new ACT system are not taking into account rising land values, but the rates increases are fixed across the board to cover Stamp Duty reductions.

Do you agree with this statement Chewy14? Under the current model Andrew Barr introduced, ‘even if house values fall in a Suburb, their annual rates will still go up’. This rates growth issue is actually artificially hardwired into the model to phase out Stamp-Duty.

This approach to shift to higher-rates, lower Stamp-Duty, obviously effects poorer people in areas with lower asset growth much harder than inner areas that have better facilities and services.

Our disagreements feel to me like the time I told Treasury their methodology was wrong to determine the Aged-Pensioner Tax Offset when the GST came in . They argued with me on the spot that I had it incorrect, they went away and a few days later came back and told me I was in fact correct and they then had to make a last minute $100 million dollar change to the system before implementing it in 2000. The difference is that it only took them a few days to convince them.

“‘even if house values fall in a Suburb, their annual rates will still go up'”

The answer is, as I’ve explained before, you don’t have enough information from that one set of data, although if house values fall over time, it’s almost certain that rates would reduce under the current system.

However, we all know that if this were to occur over time, the government would increase the rating factors to maintain revenue.

To me, our arguments feel like arguing with someone who’s suggesting that the price of oranges can be used to determine the price of bananas.

chewy14 8:34 pm 09 Jun 17

HiddenDragon said :

chewy14 said :

Mysteryman said :

chewy14 said :

Garfield said :

HiddenDragon said :

The Budget Papers released today estimate that general rates revenue will total c.$487m in 2017-18 ($172m. commercial and $315m. residential) with c.$268m revenue from property conveyancing duties ($74m. commercial and $194m. residential).

By way of nostalgic comparison, the figures for 2011-12 were c.$209m. for general rates (separate figures not given for commercial and residential) and c.$268m. for property conveyacing duties, with c.$47m from insurance policy duties.

So for all the talk about “simpler, fairer taxes” etc. etc. conveyancing duty revenue is unchanged in nominal terms (in a period of notably low inflation), and general rates revenue has increased by 133% (or 110% if the insurance duty phase-out is discounted against the general rates increases).

A good reminder for people that ACT Labor’s claims that their tax reform would be revenue neutral was a bald faced lie.

How is it a lie?

They never said that the overall tax amount wouldn’t increase (which would be stupid), they said that the mix of taxes would change such that the change would be revenue neutral.

They’d still be receiving the same amount of total revenue today without the changes, simply where that money was sourced from has changed.

Not true. If there was going to be no change to the amount of revenue received, they’d have never changed the model in the first place. This rubbish about stamp duty being an “inefficient tax” was trotted out as a justification to change the system. What it actually means is that it’s harder to increase revenue through stamp duty, and much easier to do so through jacking up rates. And it’s evident in the fact that in 6 years the yearly revenue has jumped nearly 50%.

Ah, so you know better than every reputable economist?

If anything, they’d be earning more revenue now without the change due to the fact that property prices have been increasing.

They could have done what other government’s have done and taken extra stamp duty revenue during booms and suffer the shortfalls during downturns, but that would be stupid. Changing the mix more heavily to rates also allows a much smoother revenue stream.

The fact that revenue has increased overall is irrelevant to the argument about the tax reform, it’s simply a function of the massive spending items they’ve been starting.

Unlike the ACT, some of those other governments are currently running surpluses, which may well evaporate if/when the property boom/bubble pops, but that is still likely to be a better position than what we have with a continuing susbtantial reliance on stamp duty, in spite of all that extra revenue being extracted via annual rates – and with a surplus always going to happen some time in the future.

Some of those other jurisdictions are also less reliant on a benevolent carve-up of GST revenue – another Magic Pudding which may well shrink, with serious consequences for a big-spending ACT Government, in an economic slowdown. In the latter event, no amount of petulant finger-pointing at whoever is in power federally will change the grim facts of life for the taxpayers of the ACT.

No, we’ll be in a better position because we’ll be far less reliant on stamp duty over time and revenue will be more stable than other states.

Also, what’s so benevolent about our GST revenue, we’re currently receiving a GST relativity of around $1.1 for every dollar. Hardly excessive and unlikely to move far.

HiddenDragon 5:54 pm 09 Jun 17

chewy14 said :

Mysteryman said :

chewy14 said :

Garfield said :

HiddenDragon said :

The Budget Papers released today estimate that general rates revenue will total c.$487m in 2017-18 ($172m. commercial and $315m. residential) with c.$268m revenue from property conveyancing duties ($74m. commercial and $194m. residential).

By way of nostalgic comparison, the figures for 2011-12 were c.$209m. for general rates (separate figures not given for commercial and residential) and c.$268m. for property conveyacing duties, with c.$47m from insurance policy duties.

So for all the talk about “simpler, fairer taxes” etc. etc. conveyancing duty revenue is unchanged in nominal terms (in a period of notably low inflation), and general rates revenue has increased by 133% (or 110% if the insurance duty phase-out is discounted against the general rates increases).

A good reminder for people that ACT Labor’s claims that their tax reform would be revenue neutral was a bald faced lie.

How is it a lie?

They never said that the overall tax amount wouldn’t increase (which would be stupid), they said that the mix of taxes would change such that the change would be revenue neutral.

They’d still be receiving the same amount of total revenue today without the changes, simply where that money was sourced from has changed.

Not true. If there was going to be no change to the amount of revenue received, they’d have never changed the model in the first place. This rubbish about stamp duty being an “inefficient tax” was trotted out as a justification to change the system. What it actually means is that it’s harder to increase revenue through stamp duty, and much easier to do so through jacking up rates. And it’s evident in the fact that in 6 years the yearly revenue has jumped nearly 50%.

Ah, so you know better than every reputable economist?

If anything, they’d be earning more revenue now without the change due to the fact that property prices have been increasing.

They could have done what other government’s have done and taken extra stamp duty revenue during booms and suffer the shortfalls during downturns, but that would be stupid. Changing the mix more heavily to rates also allows a much smoother revenue stream.

The fact that revenue has increased overall is irrelevant to the argument about the tax reform, it’s simply a function of the massive spending items they’ve been starting.

Unlike the ACT, some of those other governments are currently running surpluses, which may well evaporate if/when the property boom/bubble pops, but that is still likely to be a better position than what we have with a continuing susbtantial reliance on stamp duty, in spite of all that extra revenue being extracted via annual rates – and with a surplus always going to happen some time in the future.

Some of those other jurisdictions are also less reliant on a benevolent carve-up of GST revenue – another Magic Pudding which may well shrink, with serious consequences for a big-spending ACT Government, in an economic slowdown. In the latter event, no amount of petulant finger-pointing at whoever is in power federally will change the grim facts of life for the taxpayers of the ACT.

bj_ACT 4:42 pm 09 Jun 17

chewy14 said :

bj_ACT said :

Chewy14, if you say the data supports your assertion can you please provide it, not just claim it. As my previous data and examples presented on the RiotAct shows ‘the opposite’ of your claim. I will simplify things to a suburb level for people to check themselves.

According to AllHomes ‘Median Non Unit Price” for 5 example suburbs, Median house price have grown from 2012 to 2016 the following amounts, and according to the Canberra Times Rates growth from 2012 to 2016 grew the following amounts.

Kambah, Median House Growth 5%, Rates Increase 48%
Wanniassa, Median House Growth 10%, Rates Increase 45%
Downer, Median House Growth 26%, Rates Increase 68%
Dickson, Median House Growth 18%, Rates Increase 55%
Ainslie, Median House Growth 35%, Rates Increase 69%
O’Connor, Median House Growth 31%, Rates Increase 64%

Look at these values proportionally to each other, not just as a percentage difference between suburbs.

The median house price has grown in suburbs primarily due to land value increases. However, there is not a one to one relationship between Rates Growth and Land growth. As I keep saying, the new Rates Calculation Model has flaws because it does not accurately measure the real UAV when determining how much rates people should pay.

The UAV measures land size, aspect, location and a suburbs sales history, minus a determination of the house value and landscape improvement. I am sure we both agree with this. But the rates model the assessors use and the limited building and landscaping data they get, does not allow them to determine the UAV accurately.

I stand by my claim that poorer homeowners in outer suburbs are getting hit proportionally harder by the Rates increases than richer homeowners in inner Suburbs and unless the model changes it will remain this way.

But you’re still misunderstanding what I’m saying.

If your point is that the calculation of rates does not include the short term vagaries (often irrational) of the property sales market and redevelopment activities (like what is occurring in the inner north) of people upgrading/renovating their homes, then I would agree with you. That is all your data shows and I wouldn’t expect prices to ever match up with rate rises in the way you’re trying to compare them.

My point is that the calculation for AUV inherently takes into account the longer term values of the land, it’s defined in the act and calculated by professional land assessors. You’re arguing that these professionals are calculating the land values wrong but don’t have anything to back it up except short term property sales data which include a number of other factors outside of simple unimproved land value.

What it sounds like you’re actually asking for is a rates model based on improved value of the land like exists in some other areas of Australia. I personally think we don’t want that kind of rating system because it incentivises people to not fully utilise their land to the full extent because they will be punished for doing so. Rates on unimproved value, encourage efficient usage of the land.

So you said that my earlier data only covered a single period and that the rates are calculated over the 3 previous years from annual calculation. So I provided suburb wide home value growth data covering 2012to2015 and 2013to2016, that still highlighted my claim.

The professional land assessors in the ACT do not get the correct build price data, landscaping build data, view data to properly assess the UAV on houses and they rely on their old approach which was less of an issue when Rates were much lower across the ACT. As you can see from the data, a large proportion of the current rates rises under the new ACT system are not taking into account rising land values, but the rates increases are fixed across the board to cover Stamp Duty reductions.

Do you agree with this statement Chewy14? Under the current model Andrew Barr introduced, ‘even if house values fall in a Suburb, their annual rates will still go up’. This rates growth issue is actually artificially hardwired into the model to phase out Stamp-Duty.

This approach to shift to higher-rates, lower Stamp-Duty, obviously effects poorer people in areas with lower asset growth much harder than inner areas that have better facilities and services.

Our disagreements feel to me like the time I told Treasury their methodology was wrong to determine the Aged-Pensioner Tax Offset when the GST came in . They argued with me on the spot that I had it incorrect, they went away and a few days later came back and told me I was in fact correct and they then had to make a last minute $100 million dollar change to the system before implementing it in 2000. The difference is that it only took them a few days to convince them.

chewy14 3:12 pm 09 Jun 17

Mysteryman said :

chewy14 said :

Garfield said :

HiddenDragon said :

The Budget Papers released today estimate that general rates revenue will total c.$487m in 2017-18 ($172m. commercial and $315m. residential) with c.$268m revenue from property conveyancing duties ($74m. commercial and $194m. residential).

By way of nostalgic comparison, the figures for 2011-12 were c.$209m. for general rates (separate figures not given for commercial and residential) and c.$268m. for property conveyacing duties, with c.$47m from insurance policy duties.

So for all the talk about “simpler, fairer taxes” etc. etc. conveyancing duty revenue is unchanged in nominal terms (in a period of notably low inflation), and general rates revenue has increased by 133% (or 110% if the insurance duty phase-out is discounted against the general rates increases).

A good reminder for people that ACT Labor’s claims that their tax reform would be revenue neutral was a bald faced lie.

How is it a lie?

They never said that the overall tax amount wouldn’t increase (which would be stupid), they said that the mix of taxes would change such that the change would be revenue neutral.

They’d still be receiving the same amount of total revenue today without the changes, simply where that money was sourced from has changed.

Not true. If there was going to be no change to the amount of revenue received, they’d have never changed the model in the first place. This rubbish about stamp duty being an “inefficient tax” was trotted out as a justification to change the system. What it actually means is that it’s harder to increase revenue through stamp duty, and much easier to do so through jacking up rates. And it’s evident in the fact that in 6 years the yearly revenue has jumped nearly 50%.

Ah, so you know better than every reputable economist?

If anything, they’d be earning more revenue now without the change due to the fact that property prices have been increasing.

They could have done what other government’s have done and taken extra stamp duty revenue during booms and suffer the shortfalls during downturns, but that would be stupid. Changing the mix more heavily to rates also allows a much smoother revenue stream.

The fact that revenue has increased overall is irrelevant to the argument about the tax reform, it’s simply a function of the massive spending items they’ve been starting.

Mysteryman 1:45 pm 09 Jun 17

chewy14 said :

Garfield said :

HiddenDragon said :

The Budget Papers released today estimate that general rates revenue will total c.$487m in 2017-18 ($172m. commercial and $315m. residential) with c.$268m revenue from property conveyancing duties ($74m. commercial and $194m. residential).

By way of nostalgic comparison, the figures for 2011-12 were c.$209m. for general rates (separate figures not given for commercial and residential) and c.$268m. for property conveyacing duties, with c.$47m from insurance policy duties.

So for all the talk about “simpler, fairer taxes” etc. etc. conveyancing duty revenue is unchanged in nominal terms (in a period of notably low inflation), and general rates revenue has increased by 133% (or 110% if the insurance duty phase-out is discounted against the general rates increases).

A good reminder for people that ACT Labor’s claims that their tax reform would be revenue neutral was a bald faced lie.

How is it a lie?

They never said that the overall tax amount wouldn’t increase (which would be stupid), they said that the mix of taxes would change such that the change would be revenue neutral.

They’d still be receiving the same amount of total revenue today without the changes, simply where that money was sourced from has changed.

Not true. If there was going to be no change to the amount of revenue received, they’d have never changed the model in the first place. This rubbish about stamp duty being an “inefficient tax” was trotted out as a justification to change the system. What it actually means is that it’s harder to increase revenue through stamp duty, and much easier to do so through jacking up rates. And it’s evident in the fact that in 6 years the yearly revenue has jumped nearly 50%.

Very Busy 11:01 am 09 Jun 17

HiddenDragon said :

Very Busy said :

Can anyone point me to where I can find out what the new car and trailer registration renewal fees will actually be. The claims that caravan registration fees will halve appear to be very misleading and may only apply to the very heaviest of caravans which represent only a fraction of the fleet.

From Budget Paper 3 for the 2017-18 ACT Budget (page 60) –

“Carol and Warren’s caravan is in tare weight category 1,505 to 2,504 kg, with a registration fee in the ACT of $531.00 in 2016-17 (which would have risen to $541.10 in 2017-18), and $413.00 in New South Wales until 1 January 2018. Registration fees for caravans will align with New South Wales charges from 2017-18.”

Note – Carol and Warren bought the caravan when they hooked up (Bob, Ted and Alice have a Winnebago).

Interesting. In NSW the annual registration fee is $64. There is also a “motor vehicle tax” of $413.

Quote from the Canberra Times, 8 October 2016, in the week leading up to the last ACT election:

“Labor has done its best to attract the baby boomer vote by promising to halve the registration fees for caravans and trailers, saving some owners more than $600 annually.”

Since when has half of $531 been $413?

Rover 8:57 pm 08 Jun 17

frankh said :

Rover said :

but consider that I also have body corporate fees to pay for things like waste management, mowing, carpark lighting – all the things that people in freestanding houses get as part of their rates.

Mowing and car park lighting are not services that the ACT Government provides to freestanding houses. If you look closely at your body corporate fees the vast majority of it will be made up of insurance, lift maintenance, gardening, sinking fund and management fees. These are things that freestanding house owners have to cover themselves.

I would argue that street lighting equates to car park lighting for most freestanding houses. My body corporate also pays for mowing of the street verges, contributing to a much better look for the entire neighbourhood. And less police costs from having better lighting within the complex and CCTV, all of which we pay for, not the ACT Government.

HiddenDragon 5:42 pm 08 Jun 17

Very Busy said :

Can anyone point me to where I can find out what the new car and trailer registration renewal fees will actually be. The claims that caravan registration fees will halve appear to be very misleading and may only apply to the very heaviest of caravans which represent only a fraction of the fleet.

From Budget Paper 3 for the 2017-18 ACT Budget (page 60) –

“Carol and Warren’s caravan is in tare weight category 1,505 to 2,504 kg, with a registration fee in the ACT of $531.00 in 2016-17 (which would have risen to $541.10 in 2017-18), and $413.00 in New South Wales until 1 January 2018. Registration fees for caravans will align with New South Wales charges from 2017-18.”

Note – Carol and Warren bought the caravan when they hooked up (Bob, Ted and Alice have a Winnebago).

chewy14 2:00 pm 08 Jun 17

bj_ACT said :

Chewy14, if you say the data supports your assertion can you please provide it, not just claim it. As my previous data and examples presented on the RiotAct shows ‘the opposite’ of your claim. I will simplify things to a suburb level for people to check themselves.

According to AllHomes ‘Median Non Unit Price” for 5 example suburbs, Median house price have grown from 2012 to 2016 the following amounts, and according to the Canberra Times Rates growth from 2012 to 2016 grew the following amounts.

Kambah, Median House Growth 5%, Rates Increase 48%
Wanniassa, Median House Growth 10%, Rates Increase 45%
Downer, Median House Growth 26%, Rates Increase 68%
Dickson, Median House Growth 18%, Rates Increase 55%
Ainslie, Median House Growth 35%, Rates Increase 69%
O’Connor, Median House Growth 31%, Rates Increase 64%

Look at these values proportionally to each other, not just as a percentage difference between suburbs.

The median house price has grown in suburbs primarily due to land value increases. However, there is not a one to one relationship between Rates Growth and Land growth. As I keep saying, the new Rates Calculation Model has flaws because it does not accurately measure the real UAV when determining how much rates people should pay.

The UAV measures land size, aspect, location and a suburbs sales history, minus a determination of the house value and landscape improvement. I am sure we both agree with this. But the rates model the assessors use and the limited building and landscaping data they get, does not allow them to determine the UAV accurately.

I stand by my claim that poorer homeowners in outer suburbs are getting hit proportionally harder by the Rates increases than richer homeowners in inner Suburbs and unless the model changes it will remain this way.

But you’re still misunderstanding what I’m saying.

If your point is that the calculation of rates does not include the short term vagaries (often irrational) of the property sales market and redevelopment activities (like what is occurring in the inner north) of people upgrading/renovating their homes, then I would agree with you. That is all your data shows and I wouldn’t expect prices to ever match up with rate rises in the way you’re trying to compare them.

My point is that the calculation for AUV inherently takes into account the longer term values of the land, it’s defined in the act and calculated by professional land assessors. You’re arguing that these professionals are calculating the land values wrong but don’t have anything to back it up except short term property sales data which include a number of other factors outside of simple unimproved land value.

What it sounds like you’re actually asking for is a rates model based on improved value of the land like exists in some other areas of Australia. I personally think we don’t want that kind of rating system because it incentivises people to not fully utilise their land to the full extent because they will be punished for doing so. Rates on unimproved value, encourage efficient usage of the land.

bj_ACT 12:52 pm 08 Jun 17

Chewy14, if you say the data supports your assertion can you please provide it, not just claim it. As my previous data and examples presented on the RiotAct shows ‘the opposite’ of your claim. I will simplify things to a suburb level for people to check themselves.

According to AllHomes ‘Median Non Unit Price” for 5 example suburbs, Median house price have grown from 2012 to 2016 the following amounts, and according to the Canberra Times Rates growth from 2012 to 2016 grew the following amounts.

Kambah, Median House Growth 5%, Rates Increase 48%
Wanniassa, Median House Growth 10%, Rates Increase 45%
Downer, Median House Growth 26%, Rates Increase 68%
Dickson, Median House Growth 18%, Rates Increase 55%
Ainslie, Median House Growth 35%, Rates Increase 69%
O’Connor, Median House Growth 31%, Rates Increase 64%

Look at these values proportionally to each other, not just as a percentage difference between suburbs.

The median house price has grown in suburbs primarily due to land value increases. However, there is not a one to one relationship between Rates Growth and Land growth. As I keep saying, the new Rates Calculation Model has flaws because it does not accurately measure the real UAV when determining how much rates people should pay. The UAV measures land size, aspect, location and a suburbs sales history, minus a determination of the house value and landscape improvement. I am sure we both agree with this. But the rates model the assessors use and the limited building and landscaping data they get, does not allow them to determine the UAV accurately.

I stand by my claim that poorer homeowners in outer suburbs are getting hit proportionally harder by the Rates increases than richer homeowners in inner Suburbs and unless the model changes it will remain this way.

Related Articles

CBR Tweets

Sign up to our newsletter

Top
Copyright © 2018 Region Group Pty Ltd. All rights reserved.
the-riotact.com | aboutregional.com.au | b2bmagazine.com.au | thisiscanberra.com

Search across the site