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Legislative Assembly for the ACT: 1997 Week 2 Hansard (25 February) . . Page.. 420 ..

MRS CARNELL (continuing):

Mr Speaker, this system has been designed to combine capacity to pay and the cost of providing services with certainty to ratepayers and minimum fluctuation in annual rates bills. It achieves these goals by retaining unimproved capital values which broadly reflect capacity to pay, a fixed charge which reflects the cost of services, and a threshold, revenue targets and average values to smooth out valuations from year to year. Administrative efficiency and cost-effectiveness have still been achieved.

I would like to bring to the attention of Assembly members that the three-year average value will also be used as the basis for land tax. The current rates and land tax system utilises the one valuation basis for both calculations, for administrative efficiency. (Extension of time granted) Mr Speaker, the system draws on findings of previous reviews - we have had a few - and presents a package which I hope will be suited to all Canberra ratepayers.

Mr Speaker, I think that some of the comments that have been made here today need to be addressed. Mr Whitecross indicated that somehow the Government had not done what it promised in its election campaign. What we did in our election campaign was to promise to cap rates to the CPI, which we have done - - -

Mr Whitecross: For one year.

MRS CARNELL: For one year; that is right. We did not say that we would not do it for two years or three years or four years, Mr Speaker. We said that we would cap rates to the CPI for one year and have a full review of rates, which we did. We had an external review of rates, which came up with findings which, as those in the Assembly would know, the Government believed were unacceptable. The Government believed that they were unacceptable because what the recommendations of that review would have done would have been to create enormous increases in rates in some of the outer suburbs, in some of our lower unimproved capital value areas of town, and actually a decrease in the rates burden in some of the areas which could be regarded as the more affluent parts of Canberra.

We believed that the recommendations of this review were unacceptable because they created inequities in the system. On that basis, the total of the rates review was not accepted. On that basis, we decided to go for a second year of CPI increases - again, a situation significantly more predictable for ratepayers than the system that existed under the previous Government, where people could get increases of 30 per cent in any one year and, in fact, even more at certain times. We then went about putting together a system based on some of the outcomes of our rates review and some of the outcomes of the 1994 in-house review. By the way, Mr Speaker, our own people in Revenue and Treasury have indicated, as I am sure they did to Ms Follett, that the three-year rolling average in itself would not overcome the problems. It certainly flattens the system, but only in the short term. Mr Whitecross, I am sure, would be aware that a three-year rolling average, again, on its own, would not solve the problems that existed. Mathematically, it simply does not work on its own. That is the problem, Mr Speaker.

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