Page 205 - Week 01 - Wednesday, 26 February 2014
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There are a number of reasons why the government decided to change the income eligibility criteria in the new scheme. Under the old scheme eligibility was determined on the income of the lessee. As Mr Smyth has indicated in his comments, this could exclude the income of domestic partners depending, of course, on who was named on the crown lease.
In changing the system, the government increased the income threshold to a household income of $160,000 per annum to bring it into line with provisions in the homebuyer concession scheme. This is more reflective of applicant income, it ensures that the scheme remains targeted at those who need it most and it allows an appropriate assessment of capacity to finance the arrangement.
In reviewing the scheme, the government considered the issues related to changing the eligibility criteria. However, the decision was taken not to apply these changes retrospectively to contracts entered into prior to the new regime starting on 1 October last year. Changes in public policy do alter from time to time the benefits available to and obligations imposed upon citizens. I suspect that the best contemporary example in the housing market to illustrate this is that from time to time governments have changed the level of the first homeowners grant.
At various points in time that grant has been $7,000, $14,000 and $21,000. To apply the principle that Mr Smyth is suggesting would require the government to go back and give everyone who got a $7,000 first homeowner grant or a $14,000 first homeowner grant a $21,000 because at one point in time that was the public policy arrangement and the people who got in at that time benefited from that particular arrangement. People who came on later did not. That is the nature of change in government policy.
I think the important thing to stress here is that governments have an obligation to ensure the changes do not retrospectively disadvantage people, and no-one is retrospectively disadvantaged. It is not possible, nor is it desirable, for the government to commit that citizens who have entered into a particular incentive scheme at a particular point in time are able to access benefits from changes in the future should a new scheme be introduced.
I understand that there are some concerns about changes in the eligibility criteria and that some existing land rent lessees who do not qualify for the discount rate in the old regime could potentially qualify for the discount rate in the new regime. But I think it is important to note that there are a number of important differences between the two schemes and that those who are utilising the old scheme have a range of additional benefits that those in the new scheme do not have.
For example, lessees in the old scheme are able to move freely between the four per cent rate and the discount two per cent rate while lessees in the new scheme who cease to qualify for the discount rate are required to transition out of the scheme altogether, either by selling their property or by purchasing their land. Land rent leases in the old scheme can be transferred to any purchaser, while land rent leases in the new scheme can only be transferred to parties who meet the eligibility criteria for the discount rate.
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