Page 3190 - Week 10 - Wednesday, 18 October 2006
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(2) calls on the Government to initiate an urgent and open review of the land tax system in the ACT in order to create a simpler and more equitable land tax regime.
I draw the Assembly’s attention to a serious situation that has arisen it the ACT. It is clearly affecting both residential property investment levels and at the same time rental prospects for young families, first-time investors and those in need of affordable housing. I am referring to the situation where exorbitant land tax rates have created such a disincentive for investment in residential property in Canberra that we are now seeing the adverse flow-on effects in higher rents, fewer affordable rental properties and an even more crippling financial burden on Canberra families.
We have recently learned, through media reports and published data, that median weekly rents for a three-bedroom home in Canberra are now the highest in Australia, at $320, and that median unit prices are $300 a week. One has to wonder how such a situation has come to pass. Having rentals that are at record levels in the Australian national context is not necessarily a great badge of honour. It is a sign that the increased costs that landlords are enduring through higher land rates and increased charges on their investments are now filtering through to renters.
To appreciate these costs, let us review some comparative national figures which demonstrate that the land tax on a property valued at $150,000 in the ACT is $1,335, almost double that of the next most expensive jurisdiction, Tasmania, at $737.50. New South Wales and Queensland property owners do not pay any land tax at this level. It gets worse. In the ACT, land tax on a property valued at $350,000 is $4,900. Again, that is more than double that of the next most expensive jurisdiction, Tasmania, at $1,837.50. Once again, neither New South Wales nor Queensland property owners pay any land tax even at this level.
If we go further and take a more generous figure and examine how the ACT sits in these ranges and look at the land tax on property valued at half a million dollars, what do we find? It comes as no surprise to me that, once again, the ACT is top of the field, charging $7,000 in land tax, which is an incredible $2,162.50 more than second-placed Tasmania. If you choose to invest in Queensland and you have got a property of that value, what do you think you will pay up there? $500.
I am conscious of the fact that a median-priced home includes a house, but the data that is accessible relates to all those components. For the record, simply looking at the value issue, a property valued in the median price of our market, at $386,500, attracts a tax of $5,411. Extraordinarily, in Sydney, which is the next most expensive city in Australia, where the median price is $495,700, the tax on a property of that value is $2,542.90. It is $5,411 in Canberra, sitting at the $386,000 mark, and $2,542 in Sydney, at almost the half-a-million-dollar mark. What boggles the mind is that the figures for the ACT are not just a little more expensive but are several thousand dollars more expensive in a number of cases than any other Australian state or territory.
If you narrow the focus from the national to the local level, my attention was drawn to a letter in the Canberra Times on 11 October. It encapsulates the problem being faced by mum and dad investors. I have heard Mr Hargreaves’s view before about the capitalist
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