Page 2170 - Week 06 - Tuesday, 21 June 2011
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The next, but very separate, question is the amount of the charge. This, of course, has been the subject of what could probably best be described as less than completely accurate claims. That is not to suggest, of course, that it is not a significant issue, but that we should address it as a separate and essentially standalone question.
On the first question, the scheme itself rather than the rates, I think we all agree that codification is a good idea and that we need a simpler and more transparent scheme that is both easier to administer and easier for the community to understand and plan around. It is no secret that there have been significant problems with the charge. We all know about the flat fee arrangement that came into being, contrary to the explicit requirements of the existing legislation. We also know that somehow things like demolition costs managed to creep into the equation despite there being no legislative capacity for this.
It should be a significant concern to all here that this happened, and I think that the proposed bill goes a long way to addressing these concerns. The Greens will have a number of amendments which are designed to even further improve the scheme, making it more transparent and, hopefully, easier to administer.
We all agree, including the ACT Property Council, that we need a better scheme, and a codified scheme that better reflects the value of the right that is being assigned to the lessee is the most appropriate way to go.
The scheme is premised on the idea that property developers should not receive a windfall gain because of the rights assigned to the lease by the community. This is a gain that does not come about because of their enterprise or ingenuity; rather, it is a recognised value that accrues because of new development rights granted by the lease. That value, of course, belongs to the community. The gain that belongs to the developers is the one they accrue from building a product that people want to buy—reading the market and people’s tastes and preferences for housing.
There will, of course, be an argument about the practical reality in trying to fully articulate the extent of the right and the commercial reality of the returns that can be achieved from redeveloping Canberra properties. Everyone has recognised this reality, and the bill caters for this concern. That said, the Greens do have an amendment that more clearly articulates and responds to these issues.
It has been said that because there has to be a remission or some remissions, it is a bad tax. That, of course, is not the case and there is an intellectually honest way of addressing this issue. Without venturing into the numbers, I think that the proposition that the value of the right being assigned should be paid for is one that I certainly hope we all agree to, and to do anything other than that would not be good public policy. The public has a right to know how the system works and the amount of money by which the community is effectively subsidising development.
I have no doubt that the proposed mechanisms, within both the bill and the Greens’ amendments, will overcome any risks to ACT redevelopment, and will be effective levers to ensure appropriate development and efficiently respond to the prevailing market circumstances.
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