Page 3578 - Week 12 - Thursday, 19 September 1991
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MR BERRY (Minister for Health and Minister for Sport) (4.59): I rise to speak in support of this Bill. The first thing I want to address is one of the misapprehensions that have been created about the approach that landlords take to renting properties. We all know - and the Residents Rally members know as well - that it is the market forces that dictate rent in the ACT. It is a free market. We also know that over the last 12 months interest rates have dropped from around 18 per cent to about 15 per cent, depending on where you go. And we know that the average loan for these sorts of premises is around about $70,000. So, on the basis of those interest rate falls, you have a better return to landlords of about $30 a week.
If we follow the logic that landlords would pass on costs to tenants, you would think that they would be fair and pass on the savings. But, of course, that has not happened. In fact, what has occurred is that rents have gone up $10 a week. So, landlords are about 40 bucks a week better off, anyway.
Mr Jensen: Rates went up too, remember.
MR BERRY: They are about 40 bucks a week better off in rents alone. The market, of course, is tight, as Mr Jensen says; it is stretched right out to the limit. There is no way of avoiding that issue. I have yet to see that the rents will increase as a result of this land tax or for some other reason. My view is that, land tax or not, the rents will rise to take advantage of opportunities within the market.
Mr Jensen: They will rise, all right.
MR BERRY: And if there was a further four or five dollars there, Mr Jensen, they would have got it already. Those are the real issues. We have to be serious about the approach on this land tax stuff. Landlords are entitled to take what they can out of the market, and they do. I do not think that this increase in tax will affect the situation that much.
The expansion of the land tax base is an important revenue measure, not just from the point of view of helping to achieve a balanced 1991-92 budget but also because of other factors. Firstly, it goes some way to addressing the Grants Commission's assessment that the ACT's revenue from land tax is below standard - 54 per cent below standard under its 1990-91 assessment. This is attributed to the ACT's relatively low rate and the fact that the tax is currently restricted to commercial properties, whereas a majority of States also tax residential properties. Secondly, it addresses an inequity in the current tax system by bringing income earning residential properties within the tax net, along with commercial properties.
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