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Legislative Assembly for the ACT: 1996 Week 5 (Hansard) 16 May) . . Page.. 1349 ..


Rates System

MR WHITECROSS: Mr Speaker, my question without notice is addressed to the Chief Minister. Chief Minister, in August last year you engaged three consultants - McCann and Associates, Coopers and Lybrand, and Mallesons Stephen Jaques - to review the ACT rates system, including the option of a flat fee component. You rejected the consultants' report. To be precise, you told the Canberra Times, "Basically we are throwing it out". Instead, you decided to freeze land valuations at the 1994 levels for a further two years and to increase rates by the forecast CPI increase. I am not disagreeing with your decision to reject the consultants' proposed rating system; but why did you waste $70,000 on the report which could come up with only one option, which you were not willing to accept? Given that you have already had a year to think about it, why were you not able to make an alternative decision about the future of the rates system? What do you expect will happen in the next two years which will make it easier to make a decision in two years' time about the long-term future of the rates system, given that you have been incapable of making a decision this year?

MRS CARNELL: Mr Whitecross, you are quite right: The ACT rating system report - the one that we promised the people of Canberra, the ACT community, that we would undertake - cost some $72,000. It came up with a number of options. Some of those options, we believed, were quite sensible. But the basic result of taking on board their recommended approach would have meant going to a fifty-fifty split in terms of the way we levy rates. Fifty per cent of rates would be a flat fee based upon service delivery and the other 50 per cent would be based on unimproved capital value - which is the current basis for calculating ACT rates. Mr Speaker, if we used the fifty-fifty split approach put forward in that report, we believe that, in a time of some economic uncertainty in the ACT, it would create a situation where rates in some suburbs - and potentially some of the newer suburbs - would, or could, increase quite substantially.

A number of other ideas have been brought forward to the Government, one of which includes using improved capital value at least as some part of the formula. Taking into account the very definite need for the Canberra community to have some confidence at this stage and to know exactly what their financial requirements will be over the next couple of years, when no doubt things will be quite tight in the ACT, we believed that the CPI increase was a sensible way to go while we continue to look at such options as improved capital value and flat fees. A flat fee may not be 50 per cent, of course; it could be at some other level.

I think that a number of the recommendations, and certainly the work that the consultants did, have been very useful and will be very useful in looking at these other options over the next couple of years. I think it is very useful for the community to see really what options exist for rating systems. I can guarantee, though, Mr Speaker, that one of the things that this Government will not be doing is bringing on board a rating system that produces 60 per cent increases in one year in some circumstances, as the previous Government did, or, on average, 30 per cent increases over a three-year period. That sort of huge increase that we saw under the previous Government caused people - particularly those who were least able to pay - enormous hardship. We saw people on fixed incomes,

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