Page 3072 - Week 10 - Wednesday, 16 September 2015
$21.5 million, less the cost of demolition, so $19.5 million. The value was $19 million, so change of use charge was paid at 50 per cent of the added value—half of half a million dollars, so $250,000. The government got $250,000 through the change of use charge because it was actually viable to go ahead.
Under the new system the LVC is calculated differently with the rate of the vacant land, excluding improvements, being in the vicinity of $8 million to $9 million. Based on the rating, value and sales of other office sites at the time, it would probably be about $8 million. The LVC would have seen 75 per cent of the $19.5 million approved value, less the $8.5 million for the existing land value, amount to a payment of $8,250,000. That is significantly higher than the $250,000 paid under the change of use charge.
Had you got that, well done to you. But the reality would have been that you would not have got it because it was not viable as a residential development at that stage. So based on that method, the improved residential value of the site, instead of being the $20 million that was expected, would have had to be purchased at $11 million to compensate for the $8.25 million of the lease variation charge. Nobody who owns a building worth $20 million is going to discount it by $8 million to give the ACT government the windfall because you have to share the increase in value. It does not happen. This is la-la land stuff.
If it had not gone ahead, what would have happened? You might have got a refurbishment under which no change of use charge would have been paid and no lease variation charge would have been paid; so you would have lost out. Let us face it: if the refurbishment had occurred and no residential had occurred, what would you have lost? You would have lost the stamp duty on 340 units—call it $8.5 million. You would have lost the change of use charge—$250,000; some GST was payable, about $14 million. And you would have lost the increase in rating over the next 10 years—about $250,000 per annum, so $2.5 million—and they are the moneys you can use for paying for other improvements, Mr Barr.
You would also have lost the stamp duties on the resale of units for the first five years, because there is turnover—call that $1.7 million. So the loss of this not going ahead would have been $27 million. But we want our $8.25 million, and if we cannot have that, we will forgo the $27 million. That is the economics of those opposite who fail to understand what the experts are telling them.
The other problem for the ACT is that we have limited land supply. This is the land-based government that runs a land-based economy and a land-based budget. Everything is about the next block of land, not about the long-term value of the land and what different economic uses might contribute to an economy long term. Andrew Barr is only as good as his next land sale so he can prop up his budget, just like Wayne Swan. If you have that attitude you cannot see the long-term future of the territory.
The Greens talk constantly about sustainability, but they are happy to give the government the sugar hit that the lease variation charge seems to give them if and when they get it, and they are not getting it a great deal under the current