The ACT Government has agreed to set up an inquiry into how the ACT Department of Environment Land and Planning undercharged the Yowani Golf Club $1.5 million in betterment tax for a housing development. The Minister for Planning, Gary Humphries, initially expressed concerned that there would be another expensive inquiry which might find no more than a difference of legal opinion. Independent MLA Michael Moore, however, counters that the Yowani error might be symptomatic of a wider problem. If that is the case, the cost of an inquiry would be chicken feed. The Yowani matter is disturbing.
The general problem is that decades ago many bodies were given the use of a large tracts of Commonwealth land for sport, charity and club purposes. When the city grew, these clubs thought they could make a large profit by building houses or offices on the land. But the profit in the change of land use rightly belongs to the community and should be protected by the betterment tax system. When the land use is changed, the lessees should pay the difference in value to the community in the form of a tax, less perhaps a small percentage for margins of error in valuations; and incentive to develop to more efficient land uses as the city grows and for the administrative convenience in having the existing holder do the development _ say a discount of 10 to 20 per cent for existing lessees like Yowani to change land use from golf to housing. But the Yowani got a 50 per cent discount, which is an unjustifiable transfer of community assets to a few members of a golf club and a developer. The department initially agreed this was the rate. Later legal advice says this was an error and that Yowani should have paid an 80 per cent tax. Perhaps this indicates a mere clash of legal opinion.
It might also indicate that the department, for whatever reason, wrongly described the nature of the lease and applied the wrong rate to it _ an administrative error. It might indicate a pro-development bias that misconstrues the public good as being identical with development and therefore gives it a de-facto subsidy. It might show a department making as best fist it can in an environment of constant political and legal change. An inquiry might find out, provided it is comprised of people who are prepared to investigate thoroughly _ say, a lawyer with a strong planning background, an auditor and an independent planner. The issue transcends Yowani. Canberra was built on a sheep station which had virtually no land value in 1913. The bulk of the value in unimproved land has been added by community input.
It may have been wise to encourage building from 1913 to, say, 1970 by virtually giving leases away. That is no longer the case. Nor is it wise now to give land value away by allowing changes to use without the developer paying the community for the change in value. No ACT Government should be allowed to cry poor when it comes to providing community services if it is willing to give away community land value without seeking a proper price. This inquiry is about application of betterment tax, not the issues canvassed by the Landsdown inquiry. It should be given a wide brief to see what has happened in the past and to recommend how the Government should proceed in the future.