Page 3200 - Week 10 - Wednesday, 18 October 2006
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on all households. That is exactly what his land tax regime is doing. Maybe a review of this could come up with a simpler and more equitable land tax system that would assist people with low-cost accommodation.
If the government fail to support this motion, which they say they will, it will be a further indictment of their ability to manage the economy, given their record since late 2001. It also gives a true indication of their willingness to make or consider the difficult decisions required to improve housing affordability in the ACT. There can be no doubt that housing affordability is a serious issue that is impacting more and more Canberrans. Through this motion the opposition are providing an avenue for the government to address it. Just as it is not difficult to realise how housing affordability affects those looking to rent property, especially young couples, families and those at the lower end of the scale, it is not difficult to realise that investing in property is not as attractive a proposition as it once was.
We have heard from Mr Mulcahy some anecdotal evidence of the small returns an investor can expect to receive on a property in the ACT. I believe this sort of story is far from uncommon in the ACT. There is only so much rent you can charge a tenant. An article in the Canberra Times indicated that one fellow was getting, I think, $13,100 worth of rent for a property in Braddon and the expenses were $13,580. That is probably pretty well what the market can bear for a two-bedroom house, but the expenses resulted in a not very good economic outcome, and it is not all negatively geared. In some areas, with some types of houses you are simply going to pay more than you can possibly earn, because of the government rates and charges, especially land tax.
Why would a person choose to purchase an investment property in the ACT? There are numerous alternative investment options that offer significantly better returns. With the transient nature of the population in the ACT, the impact on the rental market of so many people coming to the ACT to work must be considered. If someone came to the ACT to work from, for example, another capital city and was looking to purchase an investment property, there is little or no financial incentive to do so in the ACT. If they were weighing up buying a property in, say, Perth or Canberra for $350,000, which is slightly more than the average purchase price in Perth and slightly less than the average in Canberra, they would pay $4,075 less in land tax each year if they chose Perth. If choosing between Adelaide and Canberra for a property of the same value, the difference would be $4,180. In Queensland or New South Wales, land tax would not even be charged on a $350,000 property.
I could mention any other capital city in Australia and come up with similar differences, but, put simply, land tax rates in the ACT are significantly higher here than elsewhere in the country. This is not open to debate. The Treasurer said yesterday that comparing jurisdictions was difficult because it was always hard to find, in his words, “apples and apples”. But when it comes to land tax there is no debate; they are higher here than anywhere else in the country and the government must at least acknowledge this. Their refusal to do so speaks volumes of their ability to provide sensible and rational economic management.
The Chief Minister’s claims about land tax made in the Canberra Times recently would be laughable if they were not so serious. He suggests there are no problems because the level of housing investment in the ACT is the same now as it was in 1991. Surely a
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