Treasury 'modelling' shows unit rates up by as much as 60 per cent in 2017-18

The existing rating system has had progressive scales for a long time as well.

And I would hardly say a few comments from negatively affected people here shows a fraying of support for the change, the government still won the last election fairly easily, although there were obviously multiple issues at play.

And over time, this change will make housing more affordable in the ACT so I don’t know what you’re on about there, it’s not like the ACT property market has been booming. Most areas of large growth have been in suburbs close to the light rail line, which is understandable.

If land is used more efficiently, which this change incentivises, housing will be more affordable than it otherwise would have been. By encouraging housing mobility, you make it more likely that the housing stock is better utilised.
Note that this doesn’t mean that you’ll be able to buy a cheap house, just that the alternative would have been worse.

Hi Chewy14 you often raise good points, but the problem with the progressive scales for ACT Rates calculations (as I have mentioned before) is they are far ‘too flat’ in their percentage rises and the payment thresholds are far too low, you get to the top rate at just $600k which is below the median ACT house price. It’s like bringing the highest marginal income Tax rate at $40k instead of at $180k.

The base fixed amount Rate Figure (that doesn’t take into account land value) has risen far too steeply at the same time as introducing the flat amount for the Fire and Emergency Services Levy (FESL) and the Safer Families Levy. Joe Blow in Charnwood pays exactly the same amount as Malcolm Turnbull at the Lodge for the three base charges.

The flawed Rates Model, has led to the ACT Government hitting poor homeowners and renters disproportionally harder than rich inner city homeowners with growing land values, increasing Government services and improved public facilities.

That’s why I keep saying Mr Barr’s rates system has become “take from the poor to give to the rich”. Economists and demographers like me, support the move to Land Rates from Stamp Duty, but not when its been so poorly designed and so inadequately implemented.

BJ,
the valuation charge is applied to the unimproved value of the land.

$600k for the unimproved value of land is far above the average land value in the ACT, you’d expect that amount to only include houses of near $1M in value or more.

The fixed charge is designed to reflect the costs of certain services that are similar no matter where your house is, which is why Joe Blow would pay the same as Malcolm Turnbull at the Lodge. It’s striking a balance between adequately having a progressive land taxation system whilst not unfairly burdening those on more valuable land to pay for services used by other people.

Whilst I don’t think it’s perfect, it’s better than the alternatives.

Yes I know the rates charge is only on unimproved value I was just trying to simplify the point that the rates percentage progression is too flat and the top rate kicks in way too early.

Also trying to highlight that the base charges have increased way too much for poorer households.

With inflation running at under 2%, more than 80% of unit owners incurred rises that represent increased real taxation. You seem to have forgotten, or decided to leave out, the fixed component of rates of $1,089 p.a. including the levies. Under the old rules, your hypothetical block with 6 apartments on it was guaranteed to pay a lot more in rates than the single house. Now its even more.

Actually modelling doesn’t show that at all. The toy train as you put it is taking up less than 1% of total expenditure. And on income only 1/4 of income comes from rates. So the actual figure for the cost of the toyvteain in terms of rates is 1/4 of 1%. But hey need to blame something.

Completely misleading to reference this 1% figure, when most of the government revenue and expenditure are fixed and recurring. For example GST revenue is one of the major sources of revenue and can’t be unilaterally increased.

The tram is a far higher percentage of the government’s discretionary spending and rates are by far the easiest revenue source to raise, which is exactly what has happened.

Don’t you think public transport is essential expenditure? Also, land tax is a very efficient tax so it’s the best tax to raise. Would you prefer they simply sold more land? Rip off future generations by selling a public asset for less than its worth?

JC, that misleading 1% figure put out by Labor in the last campaign only referenced the ongoing payments to the consortium for stage 1. There’s also a $375m lump sum once construction is complete and there are other costs being incurred by government in addition to the payments to the consortium. The government is also pressing ahead with stage 2 as fast as they can with an announced intention to build a full network linking the town centres. The Auditor General costed stage 1 at $1.8b and it’s likely to be the most cost effective with the full network likely to be $10b+. As light rail will take over the profitable express routes for the buses, we’re not likely to see a drop in the annual subsidy for ACTION either. Even after allowing for continued population growth, we’re looking at the percentage cost to the budget for public transport at least tripling if the light rail vision is completed. In contrast the comparison with BRT that the government tried to hide by classifying it as a confidential cabinet document showed that we could have had 90% of the benefits of light rail for less than half the cost. Rates and charges are the variables in the budget controlled by the ACT government, so it’s entirely fair to calculate wasteful spending in terms of Rates.

A good portion of the lump sum is coming from the asset recycling scheme. Any short fall only has a minor one off hit to the bottom line. The 1% is on the ongoing recurring cost of light rail and is actually less considering the fare box goes to consolidated revenue.

As for the comments about where the money is coming from the percentage of fixed and variable is irrelevant. What is relevant is the total annual budget of which the ongoing cost for stage 1 is 1%.

Oh and the $1.8b figure is also a tad misleading as it is in future dollars not present day dollars. The liberal party likes to use that figure a lot to make it look scarier than what it really is.

The same audit report you mention actually put this figure as $939m in present day figures including the lump sum and contingency. The annual repayments are $520m over 20 years in present day dollars which is $26m p/a or 0.5% of the total budget.

And of course none of the figures take into account the value add and potential savings elsewhere (more roads for example) by building the light rail.

No, the 1% figure is irrelevant and deliberately used here to make it seem like a small amount when nothing could be further from the truth.

The vast amount of territory expenditure is fixed and recurring.
Only 30% of the ACT’s revenue comes from local taxes and levies, with 40%+coming from the Commonwealth.

The ACT cannot easily drop spending or raise extra revenue. Land taxes and rates are the easiest to change. And they have.

The true comparison would be the percentage of the total public transport budget considering that this project will only service 10-15% of the electorate.

JC, are you familiar with the concept of opportunity cost? The asset recycling could have gone into any infrastructure, such as a more cost efficient BRT. Accordingly its a furphy to say there’s no or little cost to the budget for the lump sum. We also still need to pay for replacement public housing and by the way isn’t the federal contribution only something like $60m? $1.8b is what we have to fork out over the next 20 years for stage 1 and so that’s the revenue that the government needs to raise from us, for stage 1. You mention savings in road construction from increased public transport use, but that would have also come from the more cost efficient BRT option. I looked up the costs for road construction and maintenance in 2016 and they’re much smaller than the current subsidy to ACTION, so in the scheme of the cost of LR, they’re going to be very minor. There’s also the concern that many public transport trips are going to be slower with LR than they are now with express buses, meaning there’s going to be incentive for more people to use their cars. If the government directs all Tuggeranong express buses to the Woden LR terminus once stage 2 is complete, those commuters who currently go direct to the city are likely to have their travel times increased by 50% if not doubled. The business case for LR for Canberra has been pathetic from the start and isn’t going to get any better with more expensive stages 2+. Who knows, if we’d opted for the better value BRT option, we might have been able to fix our health system, part of which requires an urgent expansion to the hospital, not one that starts construction in 4 years time.

I am well aware of opportunity cost and thanks for raising that, what would have been the opportunity cost and social cost of not building light rail. It seems to have been forgotten in the hysterics of this misleading $1.8b scare figure.

Care to quote that figure in present day costs because that’s the only way it is possible to compare the true cost. Most people are not able to comprehend something that has a 20 year life cost and would assume that the $1.8b figure is the same as $1.8b today when it isn’t. But it is a good headline scare fugure isn’t it? And I get accused of misleading the 1% figure.

The government calculated the opportunity cost for us when they compared LR with BRT. BRT was going to provide more than 90% of the benefits for less than half the cost of LR. That means we could have had improved public transport down the Northbourne corridor and something like $50m p.a. for 20 years in additional spending on other projects. Let’s take the actual example of the promised new building for Canberra hospital. It was promised in the 2012 campaign, but then shelved to be re promised in the 2016 campaign, but with construction not to start until after the 2020 election. We have a health system that by all accounts is stretched thin with women in labour being sent home and new mothers discharged too quickly, all due to capacity issues. If the ACT government had committed half the funds set aside for LR to that expansion at the hospital we might be looking at those capacity issues being resolved by the end of this year, but they didn’t. A social cost of LR is the use of CFZ land to rehome public housing tenants away from good public transport links. They’re losing and so are those communities. LR is coming with big opportunity and social costs, not gains.

Re spending on the hospital to use your example funding for light rail has only just started so what are you blaming on the ‘underspend’ to get to this point in time. $144m on Majura parkway for example. That might have built a few buildings.

Oh and I always take what I hear from nurses and the like with a grain of salt. They are not silly they know these are emotive issues and use them to their own ends. And speaking from someone’s White who recently used maternity at Canberra all I can say is it is a great facility, great staff and bo issues.

I don’t think your figures are accurate.

The ACT government rego fees for your type of car (based on your total figure quoted) are:
Fees – $65
Tax – $530
CTP – $590-$611

NSW Equivalent are:
Fees – $65
Tax – $457
CTP – $480-$630

So the government difference is only $73 and potentially another $100 in CTP difference if you’re with the right insurer and haven’t had accidents or claims.

Where’d you get the $700 figure from?

CTP in NSW now $423. I’ll get back on the others.

I got the figures from the NSW government website, and to get a CTP quote that low you’d have to be a long term customer of the insurer who’s got a perfect driving record.

The difference between ACT and NSW isn’t that much and is mainly related to the different CTP insurance schemes and markets.

My renewal was $972.60. A little of the difference would be for seniors discount, but I don’t believe all the difference is, so why the difference? Is there a difference between more and less efficient cars and the like? I paid the lowest CTPI Premium offered.

Registration Fee: $366.30, CTPI Premium: $541.90, Road Rescue Fee: $25.90 (what is this; is it a sort of ambulance fee?), Road Safety Contribution: $2.50, LTCS Levy: $35.00, CTP Regulator’s Levy: $1.00.

Mine was $979 and no seniors discount here. And difference between mine and yours is in CTP.

My car is between 1155 and 1504kg. Guessing the wagon the OP was talking about is in the next weight category.