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Legislative Assembly for the ACT: 2018 Week 05 Hansard (Tuesday, 8 May 2018) . . Page.. 1601 ..

Ms Cirson goes on to say, “All five institutional lenders outrightly rejected the notion that they would grant finance on any development that involved a deferred payment scheme that allowed the ACT government to take priority over their rights.” She went on to list the number of reasons: the risk to the institutional lender is far greater than the government’s for a deferred lease variation charge; institutions are constrained by company-wide banking policies, which apply right across the nation and would not allow priority to another party in relation to the land; and ACT is a small jurisdiction. They are not going to draw up special rules just for lending in the ACT.

The letter goes on to say, “When asked about why financiers didn’t have the same concerns about other deferred payments such as stamp duty and rates referrals, all responded that it is the quantum of the LVC that is of concern. Other taxes and charges owed to the government are simply dealt with at settlement and the costs are known up-front.” The Property Council went on to say, “Given the above, all five institutions said they would not allow their clients to enter into a deferred payment arrangement with first charge on land held by the government, thereby rendering this scheme unworkable to anyone requiring finance for a project.” I repeat: “rendering the scheme unworkable for anyone requiring finance for a project”.

Surely, the financial institutions would either lend the developer the LVC to pay it up-front or make their loans conditional upon the developer paying the LVC debt before any loans are issued. This would always guarantee the institution retains first charge over the finance asset and negates the core intent of this bill. It seems, therefore, that only developers who own the property would be in a position to take advantage of the government’s concession. I do not think that they are the people that it was designed to help.

We must remember that in 2017-18 the government also introduced a revised land rates calculation method for units. The cumulative impact of this plus the LVC hike is a massive impost on current owners of units and on those saving to buy one.

On 15 February this year Mr Coe presented a petition on the rates calculation methodology to this Assembly. Petitioners were asking the government for some justice and fairness, something that is supposed to lie at the very core of Labor’s values. Mr Coe noted that this government had created a two-paced society: one pace for those who can keep up and another for those who cannot. Here we have the classic case of imposing heavier shackles on the community disguised as tax reform.

There is very minor benefit that comes to anyone from this bill. We see it as tokenistic window dressing. If the government wanted to make a substantial difference to housing affordability and stimulate the supply of affordable dwellings, they would abolish LVC in the major town centres. In doing so they would provide a genuine stimulus to the supply of residential dwellings.

But when you consider the Chief Minister’s New York vision for Northbourne Avenue, with the prospect of 37,000 new units in the capital metro corridor and the lucrative revenue grab that can be harvested from that exercise, I am sure LVC will be here to stay as this government gouges as much cash as it possibly can from our community to move forward with the Chief Minister’s projects.

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