Page 2580 - Week 09 - Tuesday, 24 August 1993
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BETTERMENT ARRANGEMENTS
Ministerial Statement
MR WOOD (Minister for Education and Training, Minister for the Arts and Minister for the Environment, Land and Planning): Mr Deputy Speaker, I ask for leave of the Assembly to make a ministerial statement on betterment.
Leave granted.
MR WOOD: Mr Deputy Speaker, some time ago, towards the end of March, I indicated that the Government would examine and review current betterment arrangements. The review was to look at, amongst other things, who in the process benefits from any lease change. Considerable work has been done both within my department and the Treasury and by consultants in the Australian Valuation Office. The matter has generated some debate in the community over recent times. Some comments in the media have been inaccurate or malicious and have done little to further inform consideration of the many and varied issues.
Many of the issues that have been raised are those which have already been subject to consideration by the department. I have also sought the views of various eminent persons and peak bodies. The review is nearly complete, and it is my intention to make a further announcement in the Assembly during the September sittings and to outline at that time any legislative changes which the Government deems necessary. However, I would like to take the opportunity today to address a number of the factors which are central to this debate.
At the outset, for the benefit of members, I would like to outline the present betterment arrangement, as there appears to be some confusion as to how this charge is determined. Where a lease variation increases the market value of the lease, the Land (Planning and Environment) Act provides that an amount commonly known as betterment shall be paid by the lessee when the lease is varied. The regulations set out the formula by which that amount is determined. There are two elements in calculating betterment. First, the before and after values have to be determined. These values, which are calculated by the Australian Valuation Office, are based on the unimproved value of the lease before the change in use and after the actual change in use. The amount payable is equal to 100 per cent of the difference in value unless the lessee is entitled to a remission. The remission rate is based on the age of the lease. It varies from zero for a lease less than five years old to 50 per cent for a lease that is 20 years old or older.
Many of the commentators have recognised these two elements and have then proceeded to recommend changes to the arrangements in an effort to ensure that the community receives a more equitable return for the change in lease purpose clause. This presupposes that the current arrangements do not ensure that the community receives adequate compensation, and there has been much debate about the formula having to include potential in the before value which affects the likely amount to be charged. It has been suggested that the formula should be changed to exclude potential. Certainly, if potential were excluded, a greater return could be expected. In a recent instance a before value of $900,000 was levied on a consolidation of four blocks to enable a medium density development. If potential had been excluded, the before value would have been $600,000 - a difference of some $300,000.
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