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Legislative Assembly for the ACT: 2000 Week 5 Hansard (11 May) . . Page.. 1423 ..

MR HUMPHRIES (Treasurer, Attorney-General and Minister for Justice and Community Safety) (10.52): Mr Speaker, I present the Rates and Land Tax Amendment Bill 2000 (No 2), together with its explanatory memorandum.

Title read by Clerk.

MR HUMPHRIES: I move:

I am pleased to present this amendment of the Rates and Land Tax Act which will define the rating factors for 2000-01. Members will recall that the current rating system was introduced in July 1997. This system is designed to reflect both the property owner's capacity to pay and the level of services received and to minimise the fluctuations in rates bills from year to year.

Features of the current rating system include a fixed charge for all properties except rural properties, a value-based charge using the average of the most recent unimproved values incorporating a threshold below which no charge applies, different rating factors for residential, non-residential and rural properties, and separate revenue targets to apply to the residential and non-residential sectors respectively.

Mr Speaker, this bill adjusts the rating factors, taking into account the estimated total rates revenue for 2000-01, the fixed charge, the average of the 1998, 1999 and 2000 unimproved land values, and limiting the total rates revenue target each year to the forecast increase in the consumer price index. For 2000-01, rates revenue is budgeted at $105.4 million, compared with $102.9 million in 1999-2000. This represents an increase of 2.5 per cent and reflects the forecast increase in CPI for 2000-01. Municipal rates charges have been included in the federal Treasurer's division 81 determination and are exempt from the goods and services tax.

Mr Speaker, this bill includes an adjustment to the fixed charge which applies to properties within the city area, from $260 in 1999-2000 to $280 in 2000-01. A gradual increase in the fixed charge reflects more closely a user pays principle, without causing major impact on individual rates bills. It distributes the liability more evenly according to the benefit received by property owners by recognising the minimum fixed costs of providing essential services to each ACT property, regardless of its location or land value. The fixed charge also reduces the proportion of rates based on the property value, therefore reducing the impact of movements in valuations from year to year.

Indeed, the marked improvement in the ACT residential property market after a period of slowdown has seen valuations for land in many suburbs across Canberra increase significantly. In particular, there is clear evidence of substantial increases in house prices in inner north and south suburbs. Without the increase in the fixed charge and the use of the three-year average valuation, many property owners would have experienced increases in their rates bill of up to 30 per cent, even though they are using essentially the

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