Page 3024 - Week 10 - Tuesday, 14 September 1993
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of the most fundamental changes, Prime Minister Gorton in 1970 did away with the payment of land rent, with the loss of income being made up through increased rates. This decision struck at the heart of the leasehold system with what was, in effect, a decision by that Government to forgo collecting the unearned increment through land rent.
At the same time, a system of betterment was introduced which required lessees to pay for any added value that resulted where a lease was varied. The community thus receives a share of the increased value of the land. The formula that has been used to determine betterment has varied over the years, to the one which now applies in the Land (Planning and Environment) Act 1991. Since its inception, the system of betterment has had its critics. The recent media debate has highlighted once again its complex nature and the wide-ranging views it raises. Comments have been made about the method by which the values used in calculating betterment have been assessed, with the issue of potential receiving much attention. The other part of the formula, the remission scale, was also criticised, with some commentators claiming that the community should receive the full increase in value when a lease is varied.
Madam Speaker, all these views were taken into account by the Government. However, I must admit to being concerned about the views of those who have come to see betterment as the land rent replacement system which enables the community to receive the increases in land value in the same way that increases in land rent did prior to 1970. Betterment applies only in cases where a lessee seeks a variation to the lease. In the majority of cases, most lessees will not seek a change and therefore will not pay for any unearned increase in the value of the land. As the city grows, land values naturally increase, regardless of whether the land use changes. This is a difference which must be taken into account when considering the arguments put forward that betterment of 100 per cent should be levied on unearned increased land value.
It is important to recognise that by doing away with the land rent in 1970 an important aspect of the leasehold system in the ACT changed. The system has been changing and evolving since that time in response to what were government objectives of the day. There are those who would say that these changes have been ill advised and would suggest a return to the pre-1970s principles in determining the formula for betterment. I cannot accept this. It is incumbent on the Government to use whatever means it has at its disposal to achieve its varied objectives.
While the main purpose of betterment is to return to the community the unearned increase in land value, it may also be seen as a tool of renewal and urban policy. With other legislative and policy initiatives available to the Government, it can assist in reinvigorating the inner suburbs and provide a wider range of housing in those areas. At the same time, the right of the community to a just return on the increase in value through a change in use must be accepted. Having purchased a lease with a bundle of rights, as it were, from the community, if the lessee wishes to increase those rights, it is only appropriate that the community be paid for the increased rights. How much they should pay is the issue at the heart of the matter.
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