Page 1493 - Week 05 - Wednesday, 10 April 2013
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The context of this is: why has it come to this? There are three reasons, and the first is simply that it is just bad policy. It is a tax on housing affordability. In effect, this is probably the only government in the country addressing housing affordability by increasing taxes. It discourages infill developments, and yet the government’s stated aim is that 50 per cent of future accommodation will come through infill. It has been a very, very bad process.
The government snuck in the change in the first Gallagher budget and tried to pretend it was not a tax by saying it is a charge. But let’s face it, it is a tax—the lease variation tax. They wildly altered the legislation through its drafting and then hid the details. Until the very last moment, even when the bill was to be voted on, not all the key documents were on the table and available for review. What we have is a bad piece of legislation. You have only got to read one of the sections—276C states:
Lease variation charges—amount payable
(1) The lease variation charge for a chargeable variation of a nominal rent lease is—
(a) for a s 276E chargeable variation—the determined charge for the variation;
If ever legislation was drafted to make it difficult to understand let alone to comply with, this legislation is it.
As much as the government tries to hide the fact that this is a tax by calling it a charge, it is a tax on development; it is a tax on that infill that delivers 50 per cent of future accommodation in the ACT. The truth is that it is impossible to levy a charge of up to $50,000 on every unit in an apartment development and not have an effect on housing affordability and the development sector. In this year alone, multi-unit alone—
Mr Barr: Why have unit prices fallen, then, Brendan?
MR SMYTH: Why has the number of developments fallen? In this year alone, multi-unit developments of five to 10 units will incur the following tax increases: Braddon and Turner, $24,500 per unit; and Phillip, $19,250 per unit. Dual occupancy developments will face increases such as: Kambah, $15,750; Mawson, $24,500; and Aranda, $21,000.
Consultation with Canberra residents and industry has found unanimous agreement that the lease variation tax will have the unintended consequences of increasing the prices of homes, increasing rents, discouraging infill development and thereby limiting scope for effective and efficient public transport, decreasing property values, increasing industry uncertainty and decreasing job opportunities, perhaps leading to skilled workers leaving the ACT.
Since ACT Labor and Greens implemented this tax, we have heard of many projects stalling or being cancelled in the ACT. However, the negative picture is not based on mere anecdotal evidence; according to ABS data, approvals fell by 18.5 per cent in
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