Page 2885 - Week 09 - Tuesday, 19 September 2006
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .
Federally things are moving forward, with households reaping the benefit of the sound economic management we have experienced for the past decade. In the ACT, however, we see the reverse occurring, with years of poor economic management translating into further financial punishment for Canberra households.
This punishment is guaranteed to be compounded in the coming years, courtesy of the government’s move to index its fees, levies and charges by the newly created—in terms of tax policy—wage price index, abandoning the consumer price index which has served all other Australian government jurisdictions for many years. I have seen colleagues in other states and territories and at the commonwealth level. Indeed, there has been absolute amazement at the introduction of this new method of regulating the rate of tax increases.
It seems that the ACT is a special case that deserves a higher rate of tax indexation. It will be at a rate some 45 per cent higher than was previously applied. The wage price index is expected to rise by four per cent compared to the consumer price index, which is only expected to grow by 2¾ per cent in 2006-07. Because the wage price index is 45 per cent greater than the CPI, it will greatly accelerate the increase in rates, administrative fees and charges, feeding inflationary pressures and prolonging the financial burden on the territory well into this decade.
Chris Uhlmann of the Canberra Times believes that the switch to WPI will mean that a rates charge of $1,000 this year will result in a cumulative difference of $729 to a household over 10 years. This means that under WPI Canberrans will be $729, in net terms, worse off than under the CPI. That may well mean that you would have to earn somewhere in the order of $1,400, if you are on the higher tax scale, to create these net additional available funds to meet the demands of the territory government.
What does all this mean for the people of Canberra generally? ACT households have one of the highest levels of debt in the country. The May 2006 Australian Bureau of Statistics housing finance report shows that in the ACT there is an average home loan debt of $231,700, which is the second highest in Australia.
In addition to the significant burden of mortgages, many Canberra households are struggling to control their credit card debt. This situation has not been helped by the rising fuel prices and, obviously, recent increases in interest rates. It will only get worse when the full impact of the ACT government’s increases to rates charges and levies is felt.
It is inevitable that ACT taxpayers are now going to experience significant pressure on both their home loan repayments and credit card bills, simply from the fact that they are having to pay more to cover necessities like petrol and housing costs in this financial year. Indeed, over the longer term it will not only be property owners who are adversely affected by these new charges but rent payers will also eventually feel the effect of the Stanhope government’s 2006 budget, through higher rent and utility bills each month.
It is interesting that when I was preparing these notes, it was in advance of the publication of data yesterday which showed that Canberra is now holding the title of having the highest median rent rate for a three-bedroom house at some $320 a week.
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .