Page 832 - Week 03 - Wednesday, 22 March 2017
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instance, the Victorian system assumes that everyone pays land tax. It is an opt out system. It is up to you to advise the Victorian Office of Regulatory Services if you are an owner-occupier of a property or if it is used for agricultural or charitable purposes. Apart from these exemptions, the presumption is that land tax would be paid regardless of whether or not a property is vacant and/or available in the market.
By contrast, we have here a system in the ACT which requires you, in effect, to opt into paying land tax, that is, an investor is meant to advise the ACT Revenue Office that they are renting out their residential property so that the ACT Revenue Office can charge them land tax. In the ACT you are opting in. In other places you are opting out, which is in many ways a simpler system administratively as well.
Secondly, in other states they add up all an entity’s property holdings except, of course, the exempt ones and tax the owner on the combined value of their real estate holdings in that state. This is actually important because land tax regimes normally have a fixed base amount and then a sliding amount which relates to the value of the property. So if all your properties are amalgamated for land tax purposes, then the entities who own many properties will end up paying a higher amount of tax. I actually have no idea how important that is in the ACT, but I think that is one of the things that the ACT government could look at and would look at if my motion was passed today.
While the ACT is quite different from Victoria, I think it is warranted that we do some research and get some data into the hidden vacancy rate in the ACT. While I am mentioning Victoria, they have done quite a lot of work on that. They have looked at water consumption of houses and apartments. There are new blocks of apartments where well over 25 per cent of the apartments, it is believed, have never been occupied. This is on the basis of water consumption data. These apartments basically have never used water; so you could hardly believe that they were ever occupied.
There is a non-profit group in Victoria that has been working on this for a few years. They have figures that suggest that in some suburbs up to seven or eight per cent of all the residential property is unoccupied. This is on the basis of the total lack of water consumption. I doubt that it is anything as bad as this in the ACT but I guess part of my point is, a, we do not know how bad it is and, b, even if it is only a couple of per cent—one or two per cent—this will make a difference to housing affordability.
I imagine, of course, that there might be some people who are concerned about how this might catch property owners who are not actually trying to withhold their property from the market. There are legitimate complications here and there are motivating factors which could lead to buildings being idle. Some of them are undergoing significant renovations and there may be, of course, deceased estates where the family is finding it both practically and emotionally very difficult to get the family home sorted.
The Victorian scheme certainly has exemptions, in particular for deceased estates because of the inherent complicated issues in some of those. I also acknowledge that our population does have some transient elements in it, for example, the diplomatic
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