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Rates danger looms for Government

Ian Bushnell 19 August 2019 117

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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Rates danger looms for Government
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Jimmy J LaRue 11:27 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.

dustytrail 5:15 pm 21 Aug 19

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!

noid 3:59 pm 20 Aug 19

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 Retro 3:32 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?

noid 1:50 pm 20 Aug 19

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!

noid 1:26 pm 20 Aug 19

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.

9:05 pm 19 Aug 19

https://www.canberratimes.com.au/story/6019589/bill-to-help-increase-act-land-tax-by-45-per-cent-over-five-years/

9:02 pm 19 Aug 19

https://www.canberratimes.com.au/story/6032145/rates-up-63-per-cent-across-canberra-since-tax-reform-began/

ohz0ne 8:10 pm 19 Aug 19

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!

HiddenDragon 7:20 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 Retro 6:58 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?”

3:26 pm 19 Aug 19

I don’t mind paying rates. At least they are fairly priced, based on the value of the land which you own. Compare to land tax on apartments which is somehow as much as a house on land. It’s blatantly unfair & disgusting. If libs want to campaign to make land tax fair, they have my vote.

    8:35 pm 19 Aug 19

    Stephen Roberts sadly the damage has been done, my rates have doubled, future relationships increases will jump on board.

bj_ACT 1:33 pm 19 Aug 19

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?

JS9 12:55 pm 19 Aug 19

“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 Canberra 4:10 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 Canberra 11:27 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!

10:25 am 19 Aug 19

Look at it in the context that we do not have one fully staffed fully funded hospital in the ACT. Whatever we do with our income in the ACT we have to learn to do it more efficiently.

    8:13 pm 19 Aug 19

    Trevor Watson, we’d have a lot more without the stupid tram. It’s introduction has worsened our bus system. Suburbs that aren’t serviced by the tram lost bus services, simply appalling

    8:22 pm 19 Aug 19

    But the tram is paying for itself and the busses are not... I think we need better and far more efficient management of our public transport.

    1:33 pm 20 Aug 19

    Trevor Watson By the ACT Government's own figures the tram costs $140,000 each and every single day of its lifetime (2016 money). I am not sure it is paying for itself.

    2:57 pm 20 Aug 19

    Jeff Smith I wonder why DB took out a 20 year lease to run it at a loss then? Sounds very shonky...... Or do the ACT ratepayers have to bail out DB when they realise they are not making a profit?

    4:39 pm 20 Aug 19

    Trevor Watson Not sure what you mean? I checked the website (as I had seen this daily cost figure discussed in a few places) and it says the ACT Government will pay $54 million next year to the consortium (including DB), which over 20 years of gradual annual increases to the charge up to $78 million for the year 2038. The build costs and ongoing payments from the ACT Government will make it unlikely that DB would run at a loss. The Canberra metro partnership do not rely solely on commuters to ensure the "Tram pays for itself", like you said. If the Tram was indeed paying for itself, I think the ACT Government would simply let the market build the next few stages itself.

    4:53 pm 20 Aug 19

    Actually does anyone know who keeps the revenue from Light Rail ticket sales? If its My Way I presume it all goes to the ACT Government, or maybe its split between the LR consortium?

10:09 am 19 Aug 19

Coe lowers rates he wins. It’s that simple. Living in Downer the rise and rise of rates has been extraordinary for a train that services Gungahlin. We’ve had a Labor Government here for what nearly 30 years? That’s madness. Governments are definitely like smelly nappies...

    10:21 am 19 Aug 19

    Jim Hosie yes. Simply because we will vote for whoever leaves us with more money in our pockets each payday. We the public only ever see the cash in our hands.

    10:30 am 19 Aug 19

    Trevor Watson the pressures are real.

    11:38 pm 19 Aug 19

    Trevor Watson place Liberals in, you will end up with less of everything, including your money. Canberra will go backwards, But the rates will not go down.

    12:38 pm 20 Aug 19

    Jim Hosie it’s actually not that simple, myself and tens of thousands of other young voters in the ACT don’t own houses and still remember when we had higher penalty rates before the LNP began cutting them every EOFY. Many of us don’t care about rates, and most of us don’t understand as nothing about them is taught at school sadly.

    5:37 pm 20 Aug 19

    Andrew Dudley true, ppl need to educate themselfs about where their money goes.

    7:20 pm 20 Aug 19

    Andrew Dudley don’t forget that higher rates mean you also pay higher rent if you’re renting. I’m not a political fanboy of any party. I voted independent last election and pride myself on being free thinking enough to change my vote. The fact is that rate rises in the ACT are out of control. It’s up to Mr Barr to address the electoral discontent or risk being the first Labor leader to tip the boat the other way in a very long time...not because the other mob are outstanding.

9:17 am 19 Aug 19

The thing is rates and state-based taxation is going up all over the country. The ACT has to pay for increasing costs of healthcare for a start. Plus the rising costs of everything else, means the ACT needs more revenue. The policy of removing stamp duty and increasing rates is fair, but perhaps the economic climate is not ideal right now. However freezing raters completely will hurt the territory as service gets cut. It is easy to blame the tram, but the tram cost is insignificant compared to the real drivers of the higher rates, which is the ever-increasing cost of education and Healthcare, which are two essential budget items taking up almost 2/3rds of the budget. I don't have a solution, but I know the ACT government can not do much to solve it right now, other than try to balance the budget the best it can.

    10:00 am 19 Aug 19

    No government of any political persuasion should be in power for twenty years. Breeds laziness,inefficiency and arrogance .....along with insanely high rates.

    10:11 am 19 Aug 19

    Justin Watson what a billion dollars???

    10:53 am 19 Aug 19

    Jim Hosie a billion give or take over 20 years, which is essentially paying for itself though the land sales along the corridor. So yeah a small amount, 1% of total budget compared to health and education which are about 33% each.

    7:26 pm 19 Aug 19

    Nowhere is going up this fast.. NOWHERE... commercial rates in particular is seeing some businesses pay 200% more rates than just 5 years ago.. so they move to QBYN or work fom home... paying LESS taxes... this is why socialism fails...

    7:58 pm 19 Aug 19

    Jim Hosie Thats over 20 years. Health and education are well over a billion dollars every year and costs are increasing by ~10% every year. The tram is 1% of the budget for 20 years, its not the problem.

    8:07 pm 19 Aug 19

    Scatty Anthony The ACT is still on the Australian average for state based taxation in the country. You are focussing on one tax, Victoria and NSW charge about 20-30% more a year average on state based taxation. We also have the cheapest electricity in the country. Now I understand rising rates etc. is not great, nobody wants anything to go up in price, but seriously you think its socialism that is the issue! I pay far less tax than I did 20 years ago, but the cost of living has gone up to ridiculous levels. Back when a house was easily available for about 3x your annual salary, but now its 5-7x your annual salary at least. Healthcare is unaffordable and causing excessive waiting queues in hospitals. Just so some rich arsehole can make shitloads of money by doing very little, while the real hardworking Australians get screwed over with ever increasing costs. As soon as you mentioned socialism, I know you have no argument, you have a bias and fail to understand that we need both capitalism and socialism in a well functioning society. The USA is king of capitalism and is an absolute shithole of crime and homelessness. Yeah it is working so well there. And guess what I say this as someone who earns a pretty decent wage and has a career, but I believe in actually working for my money, not screwing people over and getting favourable government policies, just so I can get richer at other peoples expense.

    8:18 pm 19 Aug 19

    Justin Watson really 🤔 those of us who down sized, have paid thousands in stampduty, now we get to pay doubled rates. While our income stays frozen in time. Us middle to old age folk are out numbering the young in ones. We will vote against BARR

    8:48 pm 19 Aug 19

    Sher Young yes, there are those of us who paid full stamp duty & who have to pay the increased rates as well. 😥

    9:29 pm 19 Aug 19

    Justin Watson clearly there is a problem hence the discontent in the electorate no matter how you try and spin it.

    11:40 pm 19 Aug 19

    Richard Navakas thats nonsense

    11:52 pm 19 Aug 19

    Jim Hosie the discontent is in every state and territory, across the country. Could be that the discontent is rising because of the Morrison goverment. Low wages, high cost of living, no job security, no jobs, homelessness, fear of what the future holds for our children etc etc. These are real concerns in the population. Lack of good governance in Australia the main cause o discontent.

    6:59 am 20 Aug 19

    Tuula Irene My rates have gone through the roof.

    7:01 am 20 Aug 19

    Tuula Irene and my kids don’t qualify for the “ no stamp duty “ exemption for first home buyers either.

    7:05 am 20 Aug 19

    Tuula Irene they hit that strange income point where they can afford to buy an entry level home but they blow the means test by $2,000 of joint income.

    9:40 pm 20 Aug 19

    Look I've paid stamp duty and rates also. I'm defending the principle of the policy, that getting rid of stamp duty is a fair thing to do. Pretty much every treasurer both Liberal and Labor have said it is a good policy. The ACT Liberals haven't even said its a bad policy, they just use the rising rates as a way to try and win an election. They've promised to freeze rates, but haven't said what will be cut when they do this.

    Without this policy though, rates would still be rising quite a lot, around 2/3 to 3/4 the amount it is now as the main drivers of rates rising is the costs of everything. The ACT government has to pay the same as everyone else for services and to provide healthcare that costs are rising for means the health budget also has to increase by 10% every year. Our rates are pretty covering the rising cost of healthcare. The ACT is still cheaper than NSW and Victoria for taxes and electricity. A lot of the issues are caused from Federal policies, because we keep electing for most of the past 26 years a government that has no interest in keeping down costs, because rising costs equals rising profits. Then you get a smidgen of tax back that doesn't cover the extra costs. If you think paying too much tax sucks, wait til you pay no tax but can't afford to live anymore.

9:02 am 19 Aug 19

The ACT has severe revenue problems, because of its very small size and the huge expectations of its people. Any effort to cut the impact of revenues on one section of the tiny population has a large effect on others. And trimming expectations doesn't get far - anyone happy with hospital services? If the Liberals had their miserable way our social and economic infrastructure would shrink, spreading the blight to all of us.

    7:33 pm 19 Aug 19

    Scatty Anthony ..... on another note.. have you seen Labor has blocked comments on the Light Rail, I suppose they got sick of all the bad publicity and now only allow you to like.

    Serious waste of money. Should of kept the busses and had more of then.

    Would of been cheaper and more efficient.

    Unfortunately people want to make a mark and a plaque to say they did it. WELL DONE!

    7:42 pm 19 Aug 19

    Scatty Anthony sorry, taxes here in the ACT are not high, nor are they high anywhere in Australia. We're very cheap when it comes to government, despite the great wealth some of us enjoy.

    10:01 pm 19 Aug 19

    Steve Austin govt revenues as a share of GDP are low in Australia compared to most other OECD countries - it's a fact, not an opinion. And Australia is one of the richest countries in the world.

    11:24 pm 19 Aug 19

    Paul Cee Light Rail ,one of the great things achieved by the Labor government. 😊🤗

8:55 am 19 Aug 19

We can only hope he's gone

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