Some ACT residents receiving rates notices early in the next financial year will be pleased that their rates have dropped, but will be worried that that the reason for it is because the value of their property has fallen. Others, receiving increases in rates will wonder why they have to pay more for exactly the same range of services as those whose rates have fallen.
Unimproved capital value summaries made public last week reveal a continuing trend towards disparity between the different regions of Canberra. At the extreme, Belconnen values are tumbling and the inner south is booming. In a market of generally falling or stagnant prices with fewer sales overall, the few buyers around can be choosy, especially as housing finance is readily available. It results in a greater disparity of prices as some out-of-favour suburbs have great difficulty attracting buyers without radical reductions of price.
In the face of these changes the question is whether UCV is a suitable base for rates. It is only a very rough guide indeed to capacity to pay. Frequently elderly people on low incomes in inner suburbs are faced with large rates increases.
To some extent the Government overcame the problem of large fluctuations in one year by basing rates on a floating average over three years. But the fundamental problem of basing rates solely on UCV remains. At the last change the Government also introduced a fixed-charge component of $220 in all rates assessments, but it almost exactly off-set this by setting a $19,000 UCV threshold which accounts for the first $204 of rates. But at least the basis for gradual reform has been set. The Government should gradually increase the fixed component and gradually decrease the threshold. This would make rates more even, reflecting the evenness of services throughout Canberra and recognise that UCV is not a reliable guide to capacity to pay.