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Rates war explodes after Liberals pledge four-year freeze

Ian Bushnell 7 June 2019 58
Affordable housing

Rates will go up 7 per cent in 2019-20 as part of the Government’s ongoing 20-year tax reform program.

The Canberra Liberals’ pledge to freeze rates for the four years of its first term in office if elected at next year’s election for the Legislative Assembly has drawn a withering attack from a Government that recognises the popular appeal of a pause in its 20-year tax reform program.

Opposition Leader Alistair Coe told the Assembly in his ACT Budget reply speech that a Liberal government would end Labor’s rates rip-off and bring relief to ordinary Canberrans who were hurting.

He said a freeze would ‘take the pressure off households, give certainty and end Labor’s punitive rates regime’.

Anticipating the Labor response that this would be irresponsible, Mr Coe said pressing on with the tax reform process was reckless and unethical, despite Chief Minister Andrew Barr saying the heavy lifting was over and the rate of rises to come would slow.

Setting the scene for an election battle over tax and spending, Mr Barr said in a statement that the Liberals’ alternative Budget would be a cocktail of service cuts, job losses and tax increases.

The two leaders traded blows over how much rates have increased with Mr Coe saying rate revenue had doubled and was set to triple, while Mr Barr countered with average rates figures denying this.

“In 2016, the Labor-Greens Government doubled its rates revenue to $423 million, up from $209 million in 2012. In 2021, rates will more than triple to $652 million and keep growing the year after to $698 million,” Mr Coe said.

“The Government is doing this at a time when its total revenue will soon pass a record-breaking $7 billion.”

Mr Barr said that in 2012-13 average household rates were $1426 a year and in 2019-20 they would be $2373. “Household rates have not tripled, and will not triple under the ACT’s tax reform program,” he said.

It may be a case of comparing apples and oranges, but there is no doubt the rates issue is biting.

The Ratepayers Association of the ACT welcomed the rates freeze pledge,  saying large rates increases every year for almost a decade had been a dishonest revenue raising ploy by the Government.

“The massive increases in rates have not seen equally large dollar reductions in total stamp duties receipts,” it said. “It’s good to see more first home buyers benefiting from stamp duty abolition. However most states have already been doing the same without offsetting increases in rates.

“Home owners and tenants are paying the added rates and land tax costs which are making life very difficult to unbearable and impossible. Rates payments have become the equivalent to a second mortgage which can never be paid off whilst payments increase dramatically every year.”

But Mr Barr said stamp duty rates had been cut every year since 2012-13 and continued to fall in every year of the current ACT Budget.

“The buyer of a $500,000 home now pays $9100 less in stamp duty than when tax reform commenced. They also save $10,570 compared with the stamp duty payable in Victoria or $6590 compared with New South Wales.”

Mr Barr also attacked the Liberals’ 2018 pledge to axe the lucrative payroll tax which he said would cost the Budget more than $600 million a year from 2020.

“His plans would mean cutting the equivalent to one-third of the ACT’s total spend on health every single year,” he said.

“Over 90 per cent of ACT businesses pay no payroll tax at all. Mr Coe’s plan would mean cutting essential services for Canberrans in order to give a massive tax cut to multinationals and big national companies like supermarkets, banks and utilities.”

Mr Barr said Government help for those on low or fixed income would amount in 2019-20 to $76.5 million worth of direct assistance to households through concessions, including on general rates, transport and utilities costs.

”Mr Coe has also shown yet again that he is willing to blatantly lie when the facts don’t fit with his constant negativity about Canberra’s economy and tax reform,” he said.

He rammed home the point that the Liberals were planning huge cuts to services.

“When will you tell Canberrans what’s on the chopping block, Mr Coe? Are you ruling out increasing any other tax or charge? Will you reverse stamp duty cuts, or reintroduce insurance taxes?” he said.

But Mr Coe won’t be drawn on cuts, his focus will remain on rate rises, the cost of living and what the Liberals will argue is wasteful Government spending.

 


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58 Responses to Rates war explodes after Liberals pledge four-year freeze
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Camm Kelly Camm Kelly 10:05 am 08 Jun 19

Anyone voting for the Liberals for a rate cut is chasing fools gold - you'll simply feel it instead with infrastructure and services cut backs.

    Grant Tobias Grant Tobias 10:10 am 08 Jun 19

    Jacob Kelly you mean carefully considered infrastructure spend within our means and needs?

    They've got my vote - no one else in Australia pays 7k per year "rates"

    Kathryn Ingram Kathryn Ingram 10:13 am 08 Jun 19

    Grant Tobias Where did you get 7k per year from

    Camm Kelly Camm Kelly 10:16 am 08 Jun 19

    Grant Tobias We are rapidly running into the end of rampant property speculation being able to fund state and territory governments thru stamp duty. Other states won't be much far behind us in moving to land taxes.

    And "carefully considered infrastructure" from the Liberals means we'll half ass it and have to rebuild it anyway. NBN anyone?

    David Eschbach David Eschbach 10:34 am 08 Jun 19

    Kathryn Ingram plenty of Canberra suburbs with 7k a year rates.

    Only outter suburbs have rates of around 2k

    Gerard Dwyer Gerard Dwyer 10:36 am 08 Jun 19

    I wish I had a property worth enough to pay 7G in rates. I'm not that well off. But I have a house and am happy to pay my share.

    Grant Tobias Grant Tobias 11:28 am 08 Jun 19

    Jacob Kelly please don't manipulate facts to suit your narrative. NBN was not a State/Territory issue. I'm simply saying years of unquestionably voting the same party is perhaps to blame for rampant spending beyond our means at the pain of citizens whom never asked for some of these programs.

    Stas Idowu Stas Idowu 11:50 am 08 Jun 19

    Jacob Kelly that's an assumption.

    Julie Maynard Julie Maynard 12:17 pm 08 Jun 19

    Grant Tobias I pay roughly 2k in rates. How many properties do you own? Wow!

    Brendan Keogh Brendan Keogh 7:49 pm 13 Jun 19

    quarter acre blocks in turner, red hill and deakin are around $4.5k/year rates.. David Eschbach must be living in Government house to be paying $7k/y.. but yeah most suburbs in Canberra are around $2k/y give or take.

John Meyer Patricia Branford John Meyer Patricia Branford 10:18 am 08 Jun 19

I wouldn’t trust the liberals on this. Yeah sure rates will be frozen/cut, but in order to fund this... education, health and other services used by the peasants will be slashed

June Kirk June Kirk 10:45 am 08 Jun 19

Sorry Alistair, you have to do a whole lot better than this!

Geoffrey John Randal Geoffrey John Randal 10:51 am 08 Jun 19

We have very high standards and expectations in the ACT, some of them anchored in federal law, and we have very limited options as to how we pay for them.

Jenny McInnes Jenny McInnes 10:52 am 08 Jun 19

HA HA HA HA and I believe in the Easter Bunny too

Jodie SB Jodie SB 12:05 pm 08 Jun 19

Just watch a decrease in funding to essential services and infrastructure.... they did nothing and the ALP had a hell of a mess to fix up..

Widya Santoso Widya Santoso 12:46 pm 08 Jun 19

So you are happy to pay the 7% rates increase?

    Geoffrey John Randal Geoffrey John Randal 1:34 pm 08 Jun 19

    Yep, and it's good to know that overall the taxes and govt charges we pay in the ACT are around the average for Australia as a whole.

Leigh Brady Leigh Brady 12:47 pm 08 Jun 19

Any budgeting or numbers to show the coatings for that? Or just an unsubstantiated policy statement?

Randy Goldberg Randy Goldberg 1:16 pm 08 Jun 19

... And freeze four years of spending on services!

When will the public realise that the moneys collected in taxes, etc PAY FOR SERVICES, ie hospitals, police, fire services, ambulances, roads, public transport, schools, etc, etc, etc.

Cut taxes (even freezing them) cuts services.

Don't care if it's federal or state/territory.

    David Murn David Murn 4:01 am 09 Jun 19

    Stop wasting money on 'art' sculptures and tram tracks, and there's more than enough for the services.

    Natalie Ferris Natalie Ferris 8:24 am 09 Jun 19

    What has the labor done for health or education?

    Ben Davis Ben Davis 9:25 pm 10 Jun 19

    If only we had a reliable health system to show for our rates.

Roger Mungummary Roger Mungummary 3:27 pm 08 Jun 19

Yeah and ScuMo promised tax cuts for all of three days after his election. There's no trust in this what so ever

Andrea Lloyd Andrea Lloyd 4:50 pm 08 Jun 19

Yes we all know about Liberal “promises”! All non-core. Liberals run campaigns of lies. Recent events show this! I sure wouldn’t believe anything they say. And what would they do the replace these funds? Slash education, health and other essential services?

Christopher Goyne Christopher Goyne 9:17 pm 08 Jun 19

Barr is panicking.

Muzza Mastrol Muzza Mastrol 10:57 pm 08 Jun 19

Anybody who thinks this government is a genuine ALP one must be kidding. The regular critiques of it by former Chief Minister Jon Stanhope are testimony to this. Further steep rate rises are coming for the next three years. Time to toss Barr and crew out. Further, we have Mick Gentleman opening the way to Google drone deliveries over more Canberra suburbs. That is, invasive noise that drove people in Bonython nuts. ALP – I don’t think so.

Christopher Goyne Christopher Goyne 11:06 pm 08 Jun 19

Labor have been in power for eighteen years too many. It treats its population with contempt and ignores legitimate complaints. The best it comes up with are wellness indicators, which I assume means feeling joy when getting the rates notice. Those well off enough to pay these rate increases good for you. However there are many who can't. When the coe government gets into power in 2020, I suggest these well off big mouths pay the rate increases planned by the Barr government.

    Muzza Mastrol Muzza Mastrol 11:12 pm 08 Jun 19

    Agree - there has also been a regular stream of complaint about high rise and units everywhere, with green space threatened, West Basin and more units and so on. The Greens are missing in action as more and more is concreted over. The rates increases also disadvantage those on relatively fixed incomes. Where do they think the money is coming from to pay for these steep year on year increases?

    Ian McLeod Ian McLeod 1:13 pm 09 Jun 19

    Christopher Goyne this is the fault of competition focussed, for too long, almost exclusively on the "culture wars" in neglect of presenting an attractive economic and social alternative to the Canberra electorate.

    In the absence of strong vision and competition the incumbent grows weak and bloated. But that's not their fault.

    We should ask more questions about the vitality of the competition and their role in this.

    Christopher Goyne Christopher Goyne 1:19 pm 09 Jun 19

    Ian McLeod good points but Barr must go.

Ian McLeod Ian McLeod 1:06 pm 09 Jun 19

Stamp duty absolutely has to go. This is widely regarded by economists everywhere and even the Henry Tax Review as an inefficient volatile tax stream that incentivises unsustainable planning practices in order to maximise stamp duty revenue (ie, Gungahlin post self government), while simultaneously penalising labour mobility in the most sparsely populated country on Earth.

Stamp duty, like negative gearing on existing properties, are massive tax distortions with only adverse and no positive outcomes.

They both absolutely have to go and stamp duty be replaced with land tax.

So although my rates have shot up as I live in one of the more expensive suburbs (Hawker) that gets hit quite hard, I knew this when buying here and accepted the consequence for a more sustainable funding model.

However, the ACT Government does need to provide clear assurance that stamp duty will decline and when rates rises will plateau.

And all Australian states should follow suit.

This is 20 years overdue and was an agreement all states signed up to with the Howard government when the GST came in to replace stamp duty, which states never did and just kept both instead.

So I support tax reform towards a more stable, efficient and cheaper to administer system and I expect the traditional party of economic vision to take the lead on tax reform and present a clear model also.

I eagerly await presentation of their economic and tax reform vision to compete with Labor's.

The time for bleating and whingeing is over. Our country sits on a precipice with no significant reform in decades and our coal and ore driven "luck" will run out eventually.

And when that happens, we will want all our reforms long behind us so our economy can quickly adapt.

    Leigh Brady Leigh Brady 9:30 pm 09 Jun 19

    Fantastic knowledge and explanation Ian, thank you.

    Ian McLeod Ian McLeod 10:45 pm 09 Jun 19

    Leigh Brady thank you

    Muzza Mastrol Muzza Mastrol 11:11 pm 09 Jun 19

    Former Chief Minister Jon Stanhope commented on such matters in an article entitled "Has the ACT government kept its word on historic tax reform?" in the Canberra Times, Sept 8, 2017. Here is an excerpt: Five years on, The Canberra Times reported last month the government was collecting $80 million (or 32 per cent) more in stamp duty than it did in 2012. The government's explanation is that the share of stamp duty as a proportion of total taxation has fallen from 24 per cent to 16 per cent.

    That explanation does not bear scrutiny because overall taxation has also increased well beyond the revenue replacement required, with general rates increasing from $209 million in 2011-12 to $452 million, and significant increases additionally in levies on households (e.g. the fire and emergency services levy, and the lifetime care levy) and charges (e.g. drivers licences, water and electricity). Indeed, analysis of Bureau of Statistics data indicates that stamp duty as a share of total taxation would be more in 2015-16 than in 2011-12 if the tax level relative to the economy was maintained. More at: https://www.smh.com.au/opinion/has-the-act-government-kept-its-word-on-historic-tax-reform-20170828-gy5g0w.html

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