Page 3581 - Week 12 - Thursday, 19 September 1991
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months. That was a view which did not last very long, and today we have a more frank admission from the Government that, in fact, the tax will be passed on in some cases, although the level has been variously disputed.
I think it is worth bearing in mind that there are different views about what people might do in these circumstances. I think Mr Berry is saying pretty clearly that, in his view, landlords are pretty pernicious people and that - - -
Mr Berry: I did not say that.
MR HUMPHRIES: I think you were implying that. I think you were saying, by making snide references to market forces, that some landlords certainly will not pass on windfalls that occur through decreases in interest rates but will pass on increases in land tax. That seems to be the implication of what Mr Berry was saying.
I think he ought to bear in mind, though, that high interest rates have not been a permanent feature of Australian life. Indeed, high interest rates can be traced very directly to the Hawke Federal Labor Government. And many people bought their properties before interest rates were so high. So, when those rates come down, I think it is quite excusable for landlords to say to themselves, "I have had to bear a much higher burden for this investment of property", or whatever it might be, "over the last few years because of high interest rates".
Rents, as such, need not necessarily reflect those high rates, because they are a question of the market, as Mr Berry has well indicated. But the interest rates would have to, in some cases, have been borne by the landlord because they have no choice.
Mr Connolly: So, decreased interest rate costs will not be passed on, but increased tax will be passed on.
MR HUMPHRIES: I remind Mr Connolly that it is only a year or so ago that, in fact, there was quite a glut of rental property in the ACT market. At that time, high interest rates or not, you would have got for your property rather less than you would get today because there is considerably more demand for those rental properties. I say this because I am both a landlord and a tenant myself, and I assure you that that is the way in which the market is working at the moment.
Mr Kaine: You are one of those terrible profit takers, are you?
MR HUMPHRIES: I am one of those terrible profit takers. As it happens, I bought my investment property when interest rates were quite high. I might be blamed, therefore, for not passing on the reduction in interest rates.
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