Page 1816 - Week 07 - Tuesday, 15 June 1993
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The forward estimates require continuing real reductions in outlays. The Government proposes that this be set as an objective to be maintained over the following three years. Savings already incorporated in the forward estimates will need to be augmented by further restructuring and by a commitment to maximise efficiency in the delivery of services. Savings will also need to be found in areas of lower priority to provide scope to meet emerging community needs within the constraint of achieving an overall reduction in recurrent outlays.
Our strategies of financial management enabled the 1991-92 budget not to require any new borrowings. The outcome for 1992-93 will also see the ACT not resorting to new borrowings. The savings from these strategies will benefit future budgets. They place the ACT in a stronger position than otherwise would be the case to undertake a responsible borrowing program in 1993-94. This will be needed to fund capital works, which provide a long-term benefit to the community, the land release program, and restructuring and other initiatives which will generate future savings or revenue.
Whilst major savings initiatives must await the budget itself, the Government has decided to take significant revenue measures to improve revenue performance over that implied by the forward estimates. The Government has sought to balance the impact on the community of increasing taxes with the need to respond to the reduced level of funding from the Commonwealth and address the overall budget gap the ACT faces in 1993-94. Municipal rates and land tax contribute approximately $100m, or about 20 per cent, of all revenues raised in the ACT. The new property values assessed by the Australian Valuation Office to apply in 1993-94 show very substantial changes from 1992-93. The total value of land has increased by 8.7 per cent, from $7.57 billion to $8.23 billion. Total residential property values increased by over 12 per cent, whilst commercial valuations fell by just over 7 per cent. No change in the current rate incorporated in the Rates and Land Tax Act would result in an average 8 per cent increase in rates payable in 1993-94.
The budget position of the ACT demands very hard decisions. Accordingly, the Government has decided to adjust the rate to limit the increase in general rates payable to 5 per cent. The rates bill for the average non-commercial property will increase by $55, or 8.7 per cent. The rate for rural properties will continue to be set at half the general rate. The differing growth in valuations between the residential and commercial sectors will result in rates revenue from the commercial sector falling by 10.6 per cent. The shift in the rates burden reflects the continuing effect of the recession on commercial property values throughout Australia. The new rate will reduce the budget gap by $2.9m in 1993-94.
The Government is conscious of the increasing rate burden being borne by the residential sector. To redress this increasing imbalance, the Government proposes the introduction of a progressive rate of land tax on a similar basis to that operating in all the States. The graduated scale would maintain at one per cent the current rate of land tax on all properties with an unimproved value of under $100,000. For that part of land values between $100,000 and $200,000, the land tax rate will be increased to 1.25 per cent, and to 1.5 per cent for that part of the unimproved value over $200,000. This measure will reduce the budget gap by a further $6.1m in 1993-94. It will at the same time provide some equity in the tax burden borne by the residential and commercial sectors. It will also bring the ACT's revenue raising effort for land tax more into line with the States.
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