Page 1327 - Week 04 - Thursday, 4 April 2019
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There was a problem that was revealed with the valuation office sitting within the revenue office. This creates a conflict of interest, borne out by reports that the valuation office does not appear to negotiate in good faith when valuation objections are raised. There is no independent avenue of appeal short of going to the expensive ACAT process. Other jurisdictions offer a better model by providing for an independent review of decisions and a statutory body to determine valuations, separate from revenue collection. It is the recommendation of the committee that this territory should do the same.
There is concern about the sheer scale of the impost placed on commercial ratepayers, which is having a negative impact on commercial activity and investment. The current system creates an incentive for investors and businesses to go across the border, which is not in the best interests of the territory. Simply put, the government runs the risk of killing the goose that laid the golden egg, and this is not good policy.
There are also more fundamental problems to which the ACT government must attend. In 1995 the Stein report noted tensions in the land tenure system in the territory between use clauses for individual leases and wider planning instruments. It is the case that this committee looked way back into the history of the leasehold system in the ACT. It is quite clear that this tension has not yet been resolved and it is important for valuations.
At present, for want of a better method and in the face of a complex body of information, the valuation office assesses value for small numbers of properties and then generalises across whole precincts. There are doubts as to the extent to which, under this method, rates liabilities actually match the real-life circumstances of individual leases.
In short, the territory has adopted the mass appraisal method used in other Australian jurisdictions without sufficient attention to the significance of use clauses for the value of individual properties, a factor not seen in other Australian jurisdictions. For mass appraisal to be effective, the ACT government must do something to rationalise the rating base. While the scale of this task is significant, not addressing it in the long run will be more expensive than doing nothing.
In 2012-13 the ACT government embarked on a process of tax reform that shifted the tax burden onto rates, and commercial rates in particular. Since that time contradictions have become more and more apparent, leading to the strange and unfair outcomes seen in the course of this inquiry. This could have been anticipated in 2012-13 but it was not. It is now a matter of urgency that the ACT government do the underlying work and at the same time convene a task force to create a new model for commercial rating in the ACT.
I turn now briefly to some of the recommendations of this inquiry. I think that the three main recommendations have already been outlined. They are that we have an independent rating evaluation office independent of the revenue office; that we have a better mechanism for appealing disagreements about rating value; and, most importantly—and this was a recommendation that came from many peak bodies in the
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