Page 1599 - Week 05 - Tuesday, 8 May 2018
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MR PARTON: Not really. This bill does not have a great negative impact. Neither does it have a great positive impact, as I am sure the Chief Minister is well aware. What we are doing today as an Assembly is wasting everybody’s time. Earlier in the day, in response to a question from Ms Le Couteur, the Chief Minister was going through the time and the expense of answering questions on notice. I would love to know the actual cost of constructing this bill from start to finish, and everything associated with it. It is very clear, based on the response from industry and financial institutions, that it will achieve absolutely nothing.
The government assures us all that the lease variation charge is not having a negative impact on development in the ACT. Time and again the industry, the media and the various stakeholders appeal to the government to relax the LVC. That would instantly inspire the urban renewal that we all crave. But time and again this government clings to the ideological lie that this tax is justified and workable. “There is nothing to see here,” they say, “move along,” which is becoming a bit of a theme from this government.
If the LVC is having no effect on development, what is the point of the bill? If the tax is working perfectly and there is no problem, why is the government wasting this Assembly’s time with such an amendment that does not even achieve what it sets out to do?
This bill has an interesting and contentious background, as we remind ourselves that the 2017-18 budget skyrocketed the lease variation charge for apartment developments to $30,000 per unit. Prior to the last budget the developer paid $7,500 per unit for the first three units and then $5,000 per unit after that. By upping this tax to a whopping $30,000 per unit, the government has certainly given developers a bit of a fright.
Obviously this has not gone down well. The voices against this hike were loud. They came from all sectors of the industry, as well as from dismayed voters, who can see that this ideological bloody-mindedness is standing in the way of the urban renewal of our great city and having a negative effect on housing affordability.
From the government’s point of view it was a carrot worth biting, as it elevated the LVC revenue line from $23 million in 2017-18 to $28 million in 2020-21, which is a nice little earner indeed. The government would take the view that the property development industry is big, fat and cashed up, and can easily afford to pay this charge. That is how this government operates: identify people who might have a quid and squeeze it out of them.
This tax produces some pretty nasty collateral damage that extends well beyond the property industry. Apartment developments funded by loans and mortgages will be forced to take account of the LVC increase in their financing strategies. Inevitably they will pass most, if not all, of the LVC cost on to the community, as developers are unlikely to absorb it as some sort of altruistic gesture to the market.
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