Page 233 - Week 01 - Wednesday, 15 February 2012
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two fiscal years and decreasing by a further 15 per cent for each of the following two years. After a four-year transition period, the remission rate will be 25 per cent. This four-year transition period provides a significant subsidy to industry of around $45 million over four years, compared to paying 100 per cent LVC.
The size of these generous arrangements demonstrates the government’s commitment to allowing the industry time to adjust to the changed arrangements. Remission is also a sensible way of providing incentives to industry to achieve good social outcomes for the community. The government will provide a 75 per cent remission for environmental performance around the retrofit and reuse of office stock in town centres. This will allow for the conversion of old C-grade and D-grade stock to residential use, reinvigorating town centres.
We have heard a lot of noise from the Leader of the Opposition in relation to the developers charge. He has talked about it being a new tax. Actually, the charge has been in place in the territory for almost 40 years. Fears were raised that this sensible reform, a reform which provides certainty for industry, would crush the supply of dwellings. Fears were raised about crashing land prices and a massive increase in dwelling prices. The facts are otherwise. The actual experience to date shows that the system is working efficiently. The community is now getting the returns to which it is entitled. And let us remember that taxing economic rent means no change to production or consumption decisions.
Has this been borne out, Mr Speaker? Under the old change of use charge regime, the territory would have received around $5 million in the 2010-11 fiscal year. Instead, the territory received $14 million in revenue from the lease variation charge. That was $9 million more than it would otherwise have received; that $9 million would have been lost to the Canberra community.
This uplift in the amount of revenue received demonstrates that the territory is now receiving revenue from the lease variation charge which accurately reflects the actual values of the development rights being granted to developers. This significant increase in revenue demonstrates that the LVC has not stopped the property market, as has been suggested by some. The ACT community is now receiving a fair share of the revenue to which it is entitled.
In question time today, Mr Doszpot asked me a question in relation to current lease variation charge collections. I have data in front of me up to 24 January. Since question time I have asked for some more information. I can advise that from 24 January to the new updated date of information, 8 February, $6.5 million has been collected on 82 applications. That is a further half million dollars that have come into the ACT Revenue Office in the two weeks between 24 January and 8 February. This includes, on these 82 applications, in total, $1.6 million from residential developments from 282 units, $2.3 million from commercial sector redevelopments and $2.6 million from industrial, mixed and other redevelopments.
I should point out, as I did in question time today, that there are currently 86 applications in the system that have been determined, with $15.2 million still to come. This is revenue that the territory has not yet received, but it will flow through the
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