The ACT Legislative Assembly has forced the Government to spend $400,000 in property valuations this year to calculate rates, when there was no pressing need to do so.
The rates question is a complicated one and all sides of politics have attempted to make as much capital out of it as possible since self-government. A reasonable compromise was worked out last year, but it seems that the Opposition, Independents and Greens did not read the detail of the compromise which left a 1997 valuation out of the new arrangements. Alternatively, it could be argued that the Government did not sufficiently highlight what could be seen as a significant part of the draft proposals that came out of the compromise.
The old system of basing all of rates on unimproved capital value of the land led to erratic changes to rates and some very steep increases, especially combined with hefty rises in the overall rates take. Liberal Leader Kate Carnell promised before the 1995 election that no ratepayer’s rates would go up by more than the CPI. She held to that promise, but in a way that everyone admits was ultimately unsustainable. The incoming Liberal Government just added a flat percentage increase that was less than the CPI to everyone’s rates _ 3 per cent. The trouble is that these increases in the past two years have been based on the 1994 valuations. Valuations were done in 1995 and 1996 but have not been used to adjust rates. Property values, of course, have fluctuated widely since then. Perhaps more have gone down than up, and importantly some areas have suffered great decreases, particularly the outer areas, while other areas, particularly the inner north, have held up well.
The broad long-term solution which all parties agreed to is for rates to be made up of a flat fee of about $250 dollars and a rate in the dollar to be based on the average of the past three years’ valuations with a $19,000 threshold. This is complicated but more equitable. It adds some efficiency but introducing an element of user pays. More importantly it gets rid of the wild fluctuations of the previous system.
Indeed, the valuation for any one year would not be hugely significant _ it affects around a quarter of the total rates bill (given the flat fee and the threshold). Given that valuers feel the 1997 valuation will not be much different from 1996, it will make little difference if the rates are based on 1994, 1995 and 1996 valuations rather than 1995, 1996 and 1997 valuations. Given its cost and the delay in implementing the new system, there is a good case for dropping it.
But easy to play upon people’s fears and sense of foul play because they retain the perceptions of the old system and one valuation will make a lot of difference and think it unfair that they cop lower property values without the benefit of lower rates. An extreme case of a 20 per cent drop in UCV against the average would not result in a 20 per cent rate cut, but something less than a 5 per cent cut.
That said, it appears there is a majority in the Assembly for a 1997 valuation, which will cost an average of $3 to $4 per rates bill.
There may be a case for a further refinement of the new system so that some year’s valuations are skipped if in the opinion of the valuer the expected variation between districts in Canberra would not be greater than some set criteria.
In any event, the new system seems much preferable to the old and should be implemented as quickly as possible.