Page 2630 - Week 09 - Wednesday, 25 August 1993
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You will find that on page 52 of the "Report on the Canberra Leasehold System" presented by the Senate Standing Committee on Transport, Communications and Infrastructure. Successive Commonwealth and Territory governments have conveniently shunned or ignored the recommendations of these major inquiries. No major inquiry - none at all - has presented the opposite view.
Instead of embracing the recommendations, the general trend has been to further erode the system of leasehold away from its fundamental principles. Madam Speaker, those of us who were in the chamber yesterday heard Mr Kaine's comments on the leasehold system. He likened the leasehold system to a freehold system and said that there is basically no difference. That really leaves a great deal to be desired in terms of his understanding. I hope that the members of the Liberal Party and Mr Kaine will review their position, look carefully at all those inquiries and try to understand why it is that inquiry after inquiry has come out with exactly the same conclusions. The reason why they have come out with the same conclusions, Madam Speaker, is that they looked at what is in the best interests of the community as a whole.
The present administration of leasehold in the ACT fails to capture the full increases in value arising from redevelopment and will cost this community very dearly unless changes are made now to the way we capture betterment. The way in which the before and after valuations are calculated is as much to blame for loss of revenue as the sliding scale of charges. It is not logical, nor is it equitable, that in most instances 50 per cent of the revenue from increased development rights is forgone under the current arrangements. The reason why the 50 per cent rate applies to most redevelopment sites is that most sites that come up for redevelopment are over 20 years old. Therefore the most likely position is that there will be a 50 per cent betterment charge.
Madam Speaker, the Bill that I have tabled today deals with both those issues. It deals with, firstly, the notion that betterment ought to be paid not on a sliding scale, not on 50 per cent, but on 100 per cent of its value in accordance with the recommendations of every single inquiry into the leasehold system. Similarly, Madam Speaker, it takes into account the current practice of looking at the potential value of a site. A careful reading of those four inquiries into the leasehold system will indicate quite clearly that we should not be taking the potential value into account; we should be taking the value according to the original purpose of the lease.
The granting of development rights at less than their true value is an implicit subsidy. It seems to me, Madam Speaker, that a basic principle of public finance - I would have thought that Mr Kaine of all people would have concurred with this; he will certainly have time to think about it - is that all subsidies should be explicit and on the public record. If it really is important for us to encourage development, if it really is important for us to ensure that development goes on and requires a subsidy, then let us give the subsidy up front. Let us do the charging on betterment and actually write the subsidy that way.
Mr Kaine: You would be the only person in the world who describes it as a subsidy.
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