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Legislative Assembly for the ACT: 2000 Week 2 Hansard (2 March) . . Page.. 482 ..

MR CORBELL (continuing):

amount. In the period from 1992-93 through to 1997-98 the Territory received $24.1m in change of use charge. I challenge anyone to argue that that is not a significant amount of money. It is. As we all know in this place, any level of revenue the Territory can receive helps us to address the financial position we are in and helps us to provide the services our community needs.

The proposal that was put by Professor Nicholls and endorsed by the majority report is to move away from a change of use charge towards what is called a developer contribution. In New South Wales these are known as section 94 contributions. This proposal should not be considered by members in this place to be a way of achieving greater revenue of itself. The reason for that was very clearly highlighted by evidence presented by the Master Builders Association in its verbal contribution to the committee. They said they would support a developer contribution in place of a change of use charge "provided it is brought back ideally to 50 per cent - the equivalent of a 50 per cent change of use charge level". So the development sector is quite happy to replace change of use charge with a developer contribution, provided they do not have to pay any more. I think that underlines exactly the weakness of that proposition.

Shifting from a change of use charge to a developer contribution will have one other very important impact on the Territory's revenue base. Developer contributions will be required to be spent in specified areas where the development is taking place. It will be spent on infrastructure and on other services and facilities in the area where the development is taking place. That takes away any discretion the Territory can have to spend the money raised from the change of use charge for the benefit of the community overall. That is the whole purpose of change of use charge. We are selling an asset. In return we are getting revenue which can be spent in ways which benefit the whole community, not simply individual parts of the community as would be the case under a development rights charge or a developer contribution charge, such as the section 94 contributions in New South Wales.

The key purpose of the leasehold system is to ensure that the community receives the full return on the improved value of the land it leases. Removal of the change of use charge would remove the ability of the Territory, the community, to achieve this. Replacement of the change of use charge with a developer contribution would not result directly in an increase in revenue compared to a change of use charge, and that revenue would be restricted to being used in the area where the development was taking place.

The second important area addressed in my dissenting report relates to the appropriateness of a 50 per cent level of change of use charge. The Nicholls report and the majority report of the committee propose a reduction in the level of CUC to 50 per cent. The majority report makes this recommendation without recognising a number of key weaknesses in its argument.

First, the majority report does not take account of the untargeted nature of this subsidy compared with the types of grants and subsidies provided by the Government to other sectors of the community. If the change of use charge was to be at 50 per cent, it would be available to every developer who was seeking to vary a lease. It would not matter about the quality of their development. It would not matter about the innovative nature of the development. It would not matter whether it was of a high standard or a low standard. They would all get the subsidy.

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