Page 1983 - Week 06 - Wednesday, 7 June 2017
MR BARR: Yes, there are a number of factors that are impacting on the revenue increase for rates in the city, the first of which is tax reform, a transition away from stamp duty to the rates base. The marginal rating factors are determined on a year-by-year basis to ensure principles of equity within the rates system so that higher valued land attracts a higher charge as there is a very close correlation between the value of land people live on and their wealth and income. Unsurprisingly, there is a close correlation. It is not a perfect correlation, but there is a close correlation, particularly with wealth. But also there is a very strong correlation with income.
What the Leader of the Opposition neglected to mention in his question is, of course, that the total number of properties in the territory continues to grow each year; hence revenue grows in advance of the percentage rate of increase of rates each year because there are more rate-paying properties.
MR COE: Chief Minister, would you please advise what assumption there is in the forward years for the number of dwellings and also what assumption there is for the forward estimates regarding the amount of the increase or the total that comprises the transition from stamp duty?
MR BARR: The rate of increase that is assumed is very closely linked to the population growth rate increase in the territory. The exact number I would need to take on notice, but there is a factor of increase. We are anticipating the equivalent of eight additional suburbs in Canberra over the next four years. That is the equivalent of adding Weston Creek to our city’s population. So it will go from 400,000 people as we are now to around 425,000 to 430,000 people over the next four years.
Our revenue projections are updated in the mid-year update and in the budget each year. So they are updated every six months. The Leader of the Opposition can wait till the next budget update for the answers to his question.
MRS JONES: Chief Minister, do the forward estimates include annual increases in the average unimproved value of properties? If so, what are those increases?
MR BARR: Yes, the average unimproved value of properties is undertaken for rating purposes on a rolling three-year cycle. Significant fluctuations year to year are smoothed out by the fact that there is a rolling three-year cycle. But the way the system works is that a level of revenue is determined, all properties in the city then have their average unimproved value, and that is shared amongst all of the properties. So if values go up in one part of the city over another, and we have certainly seen that in the context of land values associated with a significant transport project, that part of the city pays a greater share of the overall rates burden. That is what is happening in Canberra at the moment. Those who have looked at the detail of the impact of rate increases in recent times would note that land values have increased significantly in the inner north and in central Canberra in particular. So the greatest burden of increase has fallen on those highest value pieces of land.
Mr Coe: Point of order.