Page 4578 - Week 12 - Wednesday, 31 October 2018
squeeze businesses at every single opportunity. And this is particularly evident with regard to the rates that businesses are paying in Canberra.
There is no shortage of examples that we have seen right across the ACT. What I think is particularly telling is the disparity between the rates that property owners pay here in the ACT and the rates that are paid over the border in Queanbeyan. That is even when you consider that properties are probably going to be cheaper in Queanbeyan. But even if you compare like with like, even if you compare properties that have the same unimproved value, why is it that rates in Queanbeyan are so much cheaper than rates here in the ACT? For many properties, like for like, rates will be half over in Queanbeyan than what they are here.
We have competitive federalism in action. We have a jurisdiction just five or so kilometres to our east that is competing. And they are competing very well. Under the leadership of Tim Overall and John Barilaro, Queanbeyan is moving ahead quite quickly. But unfortunately a lot of that is actually coming at the expense of the ACT because Queanbeyan and the New South Wales government are putting up a far better product and service for small businesses than here in the ACT.
I am sure that the Chief Minister is going to say that we have got tens of thousands of businesses and there is a new business opening up every two hours in the ACT et cetera, et cetera. And I am sure that is all true. But the majority of these are home-based businesses. That is the first thing to note.
Secondly, whilst it is all very well to measure things by ABNs, active ABNs are of course more relevant here. But how many of these businesses have also closed or downsized? If you are going to talk about one end of the spectrum you have also got to talk about the other end of the spectrum to actually get the net impact on businesses here in the ACT.
There are a lot of businesses that are making investments here. There are a lot of businesses that employ staff here and do great things here. And we want to see more of them. We would love for the ACT to actually win back the businesses that have gone over the border into New South Wales. They exist. And whilst some people might be in denial, there really are businesses that are choosing to set up in New South Wales rather than in the ACT because of the rates regime here. If you have a property that is worth $540,000 here in the ACT you will pay about $28,000 in rates, including the fire and emergency services levy. Over in Queanbeyan you will pay $14,000. Why should it be half the cost to set up five kilometres that way?
This has a two-fold impact. Not only does it actually change the outgoings, not only does it actually affect the yield, but it also affects the value of the property as well, because commercial properties are largely going to be determined on the yield. What sort of net revenue can that property achieve?
For example, say a property was going to bring in $50,000 net. It might bring in $75,000 worth of rent, there is $25,000 worth of rates; therefore you have got $50,000 net revenue there. On the basis of that net revenue you might determine that the value of the property is $500,000 at a ratio of 10:1. But if the rates increase by