Page 226 - Week 01 - Wednesday, 15 February 2012
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To ensure this is recognised, my motion calls for support for the application of the charge towards the urban improvement program. This is to be a program of investment in the urban infrastructure to support a very important policy—namely, reinvestment of the proceeds of these benefits back to our city. It is not just fair; it is economically sound. The report from ACIL Tasman, advisers to the Select Committee on Estimates for the 2010-11 budget, states that the change of use charge has a very strong basis in economic theory. They also said that the rationale for the change of use charge would be in keeping with the recent Henry tax review.
As members would be aware, the government announced the codification of the change of use charge in the 2009-10 budget. This improved transparency in the system is a good outcome for our community. A further benefit is that developers are now able to determine up front the charge that they will be required to pay for undertaking their redevelopments. This has provided further certainty and clarity to the industry and increased efficiency in the territory’s planning system.
There has been a lot of noise from those opposite about the LVC, but let us run through how the system works. The framework is underpinned by 10 core principles which apply to the entire lease variation charge system. These are effectiveness, simplicity, transparency, fairness, growth, timeliness, certainty, exclusivity, stability and universality. These are important principles and ones that will underpin the lease variation charge system now and into the future. I am sure that no member could reasonably disagree with these principles,
The key element of the codification system is that the schedules are based on current market values and accurately reflect the changes in the territory’s property market. For the residential sector, the lease variation charge is calculated on a “per additional dwelling” basis for all ACT suburbs categorised according to the density of the development. For commercial and industrial sectors, the lease variation charge payable is calculated on a rate per square metre of gross floor area. The schedules are calculated annually by the Australian Valuation Office, through reference to its land value database for residential, commercial and industrial redevelopments in the territory.
To smooth out any sharp movements in market values, the Australian Valuation Office uses a market rate index averaged over three years. Importantly, to enhance transparency around the charges payable further, the schedules are annually reviewed by a panel of experts prior to their release. This panel is chaired by Professor Des Nicholls of the Australian National University and includes representatives from the Australian Valuation Office, the Australian Property Institute and the government.
In addition, there are a series of remissions to allow industry certainty to deal with the transition from change of use to lease variation charge arrangements. These are generous remissions, because the government listens. We recognise that change is often best achieved over time.
The government has recently announced its urban improvement program, which will be funded from the funds raised through the lease variation charge. This program will
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