16 August 2019

Rates danger looms for Government

| Ian Bushnell
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Money is getting tighter but Canberrans’ rates bills keep increasing.

When will the ACT Government admit it has a rates problem?

Half way through its 20-year tax reform program and facing an election next year, the Government is facing increasing disquiet about both residential and commercial rate increases, a fact that the Canberra Liberals are attempting to exploit for all its worth.

It’s looking more and more like Alistair Coe wants to frame the October 2020 poll as a referendum on rates, as he rolls out disgruntled business owners and MLAs park their cars emblazoned with anti-rates increase slogans on main roads around Canberra at peak hour.

He has nailed his colours to the mast, pledging a rates freeze.

Labor has seen it all before, surviving rates scare campaigns and convincing the electorate that it was on the right track by moving away from transactional taxes like stamp duty to a land-based system providing more sustainable revenue for a growing city that expects, as Chief Minister Andrew Barr rightly says, first-world services.

But for all the practitioners of the dismal science backing the reforms, the combination of a Government in power for 17 years, flat wages and an economy coming off the boil may cause voters to reappraise Mr Barr’s approach.

As Mr Coe said recently, “They said people would hardly notice it, well people are noticing it.”

Alistair Coe talks to Phillip businesses about their rates bills. File photo.

According to the Budget papers, estimated residential rates revenue for 2018-19 will be $359.1 million, rising to $388.4 million in 2019-20, with commercial rates at $199.1 million, increasing to $211.1 million.

The combined rates total for 2018-19 will be $587.5 million, a 180 per cent increase on the $2011-12 figure of $209 million before reform began, some of which of course is due to Canberra’s growth.

Stamp duty continues to rise despite windbacks for commercial and residential properties, including the scrapping of duty this year for first home buyers.

When the reforms began the Liberals warned voters their rates would triple and while we’re not there yet, a couple of elections and inquiries later, ratepayers are feeling the pinch.

Mr Barr’s reassurance at Budget time that the heavy lifting was over may not assuage voters facing a 7 per cent increase if they own a house or on average 11 per cent if they are unit owners. Business owners copped a 6 per cent rise, and some are saying enough is enough. One has seen a 76 per cent increase in the past three years.

Last week Minister Mick Gentleman was asked a Dorothy Dixer about police services but spent most of the time contrasting the Government’s responsible economic management with the Liberals’ inevitable need to cut the services Canberrans deserve.

The Government appears to be making the political calculation that the electorate will understand the need to put the Territory on a firm financial footing, especially if the alternative may mean a slash and burn Liberal government.

It may well say the Liberals do not have answers just slogans but it needs to beware of ratepayer fatigue, particularly if the national economic headwinds start to buffet the ACT.

And the Liberals do not need at this point to elaborate on the problem, only identify it.

The question is will Mr Barr next Budget have an election year plan B in his pocket to give ratepayers a breather or will he gamble on a lefty electorate sticking with him and ignoring the Liberal overtures that basically, it’s time.

The Government will need to do better than a scare campaign on cuts, and the Opposition will need to explain eventually how it’s going to pay for everything.


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Jimmy J LaRue11:27 pm 27 Aug 19

Greediest government in Australia when it comes to property. No wonder they’re looking to legalise 4 plants per head in the house because we’re all going to have to become weed dealers to pay for our “land” – Of course “land” in most new suburbs is an exaggeration – It will be difficult to grow the pot in the 50 cm’s between the back door and and the back fence.

I live in a townhouse and my Land Rates are around $1,350 my Body Corporate Levy is about $1,560. I have to look after my own garden and lawn, and everything else, the Levy basically only covers the building insurance (contents my problem) and “gardening” in the common areas.

I am not complaining, as such, just pointing out that YOU could be worse off.

At least owning a property when you retire is better than having to rent! Be happy!

We have 3 x 12m gum trees owned by the government within 10m from our house of which one has already dropped a large limb. It has taken more than 6 months for them to be checked, I was told by one of their employees they only have 6 staff responsible for tree trimming in the whole of Canberra???????

Capital Retro9:59 pm 20 Aug 19

They are probably working at the arboretum full time.

Capital Retro3:32 pm 20 Aug 19

After the revelations about the home unit problems from last night’s ABC Four Corners filter through it is highly likely that sales of those thousands of unsold home units in Canberra will
falter so where is all the stamp duty/rate revenue going to come from?

What is “Plan B”, Mr Barr?

What proportion of services are the landtax, stamp duty and fines paying for as these funds are variable? Are they paying for nice to haves or must haves? Considering low interest rates and wage growth this is sounding more like poor money management. Out of a total budget of $5,799,285,000 we spent a billion dollars on 12km of train track from a population of 420 000 of which there is a significant less number of actual rate payers. Just doesn’t add up, the government at least should have lobbied harder for the feds to kick in a greater amount considering this is the national capital!

Any government in power for this period of time becomes out of touch and arrogant. My question is more about what has the government done with all the revenue (apart from the train which we all had to have)? Considering all fees and charges have more than tripled over the last 10 years during a time of the lowest interest rates and wage growth. This government has also collected a large amount of stamp duty from the record amount of units that have and are being constructed. I for one have not seen any improvements to my services from when my rates were half the price. A review on all spending would be a good start especially when the Chief minister has a lazy $22k lying around for pet projects and the police have been under resourced to the point where they have had to recruit 60 new officers. We would be better off reducing Canberra to the size of the parliamentary triangle and having the rest becoming part of NSW and get rid of the this layer of government all together, save a fortune.

Rate rises applied across the board are simply unfair to a vast majority of Canberrans who are already struggling to pay for the essentials. The argument for continued rates rises is very one dimensional and the ACT Governments reliance on this revenue creates a house of cards for the budget. One slip and the whole lot will collapse. Its certainly time!

HiddenDragon7:20 pm 19 Aug 19

Aside from appealing to property owners who’ve had more than enough of the Labor/Green property tax experiment, the ACT Liberals could also point out – to the majority of Canberra voters who are not (yet….) on the ACT payroll – that recent pace-setting wage settlements in the ACT public sector are being paid for by their taxes, while their incomes languish.

Capital Retro6:58 pm 19 Aug 19

Quite a few comments indicate that health and education are the funding priorities.

If I were a retired ACT public servant I think my priority would be “am I going to continue to get my unfunded pension?”

My response is long, but hopefully frank, considered and apolitical.

There are flaws in the new Rates system, but simply freezing them is NOT the answer. It’s lazy policy design from the ACT Liberals.

7 years of cycling up the Annual Rates % based on the ‘per square meter land value of the best possible financial use of that piece of land’ doesn’t fairly tax Canberrans for their Government services.

Stamp Duty used to primarily tax expensive house sales, it now taxes land size whether it has a huge mansion on it or a tiny house. The rates change has hit the Canberra poor, harder than the upwardly mobile rich.

Why should someone on a large block in Tuggeranong pay more in annual rates than someone on a small block in the inner city, when their Tuggeranong house and land is worth less than half of the inner city property?

The resident paying so much extra may be someone in Tuggeranong or West Belconnen who lost their bus services, has poor community facilities, has seen their local schools close and their infrastructure crumble. On the other hand, the extra rates charges taken from residents pockets across Belconnen, Weston Creek, Woden, Outer Gungahlin and Tuggeranong have provided a host of additional infrastructure and amenities to the inner north of canberra in particular. Mr Barr’s electorate surprise surprise.

The ACT Liberals should actually look at how household and business rates are calculated and spent, not just simply freeze the tax. Their simplistic approach to cease Rates increases, will primarily benefit rich households in high property value areas. This proposal demonstrates why the Libs are not worthy of simply being in Government just because it’s time for change. Can someone please promise us a better and realistic vision for Canberra?

“The Government will need to do better than a scare campaign on cuts, and the Opposition will need to explain eventually how it’s going to pay for everything.”

I’m glad you put in that last very important line. Because it is of critical importance. We have an opposition talking about ripping out $500m+ by abolishing payroll tax and limiting rates increases. But to be able to make an informed judgment, we do need to know just how they intend to do that and not completely break what is already a pretty dodgy looking ACT Government Budget.

Mike of Canberra4:10 pm 19 Aug 19

Two points here JS. First, we don’t know the full details of what the Libs propose but we’re likely to learn this as the election gets closer. I doubt Barr will be slow to demand details and/or to fill any detail gaps himself. Second, should the Libs win office, I would think that some form of public Commission of Audit would be the way to go. This would not only highlight inefficiencies in current budget (I’ll bet these abound) but also advance options for improving the state of the budget. I think such a process would ensure a level of transparency that we have forgotten could be achieved, such is the state of affairs under Barr & company.

Mike of Canberra11:27 am 19 Aug 19

The real problem with the move away from stamp duty and towards domestic and commercial rates is that it has been anything but revenue-neutral. Instead, Barr has sneaked in large rate increases to fund ever-increasing expenditures. To those commenters who believe expenditures can never be contained in a growing and developing place like Canberra, check out the structure of the ACT Government some time and take note of the disproportionate focus on social engineering in various forms. The ACT Budget is overdue for a decent Commission of Audit – I’ll bet that could dismantle a few empires!

But perhaps the more pertinent question is what we are getting for our money. Apparently, our schools are pretty good, but they’re not streaking ahead in proportion to the level of rate increases we’re seeing. No one seems to have a good word for the hospital so that can’t be it. Perhaps it would be more relevant to ask what we’re not getting.

The Saturday Canberra Times featured a story about filthy, unkempt properties in Canberra and how our revenue-rapacious ACT Government never seems to do anything about them. We have just such a public housing property next door to us. It is filthy, overgrown and strewn with rubbish and the odd derelict vehicle. It is host to vermin and has been the source of rat plagues in our immediate area. And before anyone mentions that good old modern obsession, there are no mental health issues at this property. But guess what? In return for our near $6.5k in rates and despite many complaints, the ACT Government does nothing. This old, tired and hubristic government has to go!

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