Page 3401 - Week 09 - Thursday, 22 August 2019

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(7) Further to part 6, can the Treasurer advise in (a) dollar figures and (c) percentage, what proportion of the increase in residential rates for (i) houses and (ii) units in each financial year since tax reform to date is attributable to (A) tax reform, (B) growth in the number of properties and (c) value of new properties.

Mr Barr: The answer to the member’s question is as follows:

(1) The total number of rateable properties as at April 2019 was:

a) 112,878 houses (note this is an estimate only, derived from the total number of standalone residential properties);

b) 52,011 residential properties that are unit titled;

c) 173 rural properties;

d) 6,328 commercial properties;

e) 1,587 other standalone residential properties.

(2) Other standalone residential properties are residential properties that are not unit titled and are not included in the above estimate of houses. This can include residential blocks currently being developed, some community and social housing, and some retirement villages.

There are no further defined categories for rating purposes. The definition of the types of rateable properties (residential units, residential standalone blocks, commercial units, commercial standalone blocks, and rural blocks) is set out in the Rates Act 2004.

(3) Treasury estimates the additional total rates revenue raised from new residential properties in each year rather than the individual drivers of rates revenue.

(4) As noted above, Treasury does not estimate individual drivers of rates revenue as part of its rates revenue estimates. Therefore, it is not necessary to forecast growth in rateable properties to estimate the percentage of rates revenue that is attributable to new properties.

(5) Property average unimproved values (AUV) changes for existing properties do not impact residential rates revenue as residential rates revenue is set for a given financial year to achieve the target average increase in rates (either the target average increase under the tax reform program or the increase in the Wage Price Index prior to tax reform). The marginal rating factors are then set to achieve the target average increase in rates, which are then applied to property AUVs. Property AUVs for the budget year are used to determine how much each individual property contributes to the total rates base.

(6) Treasury estimates total residential rates revenue as the total revenue based on last year’s AUVs and tax rates, increased by an announced percentage. AUV changes for established properties do not affect this estimate. Changes in AUVs affect the distribution of rates collected across properties.

Treasury also estimates a small amount of additional revenue in total for new properties. The actual amount of revenue received from new properties depends on the number of new properties, their value, and the length of time each individual property is rateable.


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