Month: June 1998

After numerous inquiries into ACT land and planning and numerous recommendations, governments do not seem to learn. The pattern seems to be that a single developer puts up an idea which usually involves public assets in one form or another being transferred to the developer and the developer building something and selling it for a profit. The public asset can be raw land, existing public space, or the extra value created when permission is granted to change land use. Typically, the developer puts up a plan which involves extracting the maximum dollar in the short which usually means development densities so much higher than the surrounding built form as to be out of balance. Invariably, proposals come from single developers and go directly to the government with little initial public input. Invariably, they seek to capture value added by existing development.

It is a sad and misguided pattern which usually causes more political heartburn for whatever government is in power than the jobs created are worth. It is also bad for the city because a lot of the development is unsustainable or the price in residential amenity is too great.

The latest planning fiascoes have been Hall and Aranda. The hall fiasco began when developer Derek Whitcombe proposed a rural-residential development. The ACT Government signed a joint venture arrangement. Community anger flared and it transpired that Mr Whitcombe did not have the authority to deal with all the land in the proposed development. That gave the Government an out, so it terminated the agreement, nonetheless picking up all the costs. A fairly week motion in the Legislative Assembly expressing grave concern was lost. Independent Michael Moore, hitherto a champion of due process in planning, voted with the Government. It seems he has taken on board the Government’s past actions as well as future ones.
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Why aren’t Australians celebrating the highest economic growth figures in the developed world and among the highest in the region? Australia has an annual growth rate of real gross domestic production of 4.9 per cent, according to figures issued by the Australian Bureau of Statistics this week. This is substantially higher than was predicted a year ago. The figure should be welcomed as a very good economic result, but the share market and the dollar went down on the day of the announcement and unemployment is still expected to rise in the next few months. So there has been little celebration in either the financial markets or in the community at large.

The only celebration has been by the Government, in particular treasurer Peter Costello who described the figure as “”extraordinarily strong”. But we have come to expect governments to put the best gloss on whatever economic statistic is issued by the bureau, similarly we have come to expect oppositions to make them as gloomy as possible.

There are several good reasons for the lack of celebration in the financial markets and the wider community. The first is that GDP is not a perfect yardstick for economic growth. Secondly, it is not a good yardstick for improved well-being. Thirdly, GDP does not record the state of equality and equity within society.
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In the past three years the Carnell Government has done several things to improve the rating system, but it is still not perfect. Moreover, the system is changing by stealth more towards a user-pay system. That may be no bad thing, except that it is not being recognised and debated.

The Government is to be commended for dealing with the hefty rises in rates that some people suffered in the last two years of the Follett Labor Government. It did that by two methods. First, it changed the method by which individuals were rated. Instead of basing the rates on the unimproved property value of the past year, it based the rates on the average of the past three years. That meant that any large fluctuations in property values did not result in large fluctuations in rates. Rather trends up or down were more gradual. Moreover, the relativities between the various areas in Canberra did not move too quickly. So that large reductions of property values in one year in some areas did have to be compensated by large rises in rates in other areas where property values remained the same or went up in order to keep the overall revenue intact.

Secondly, it promised not to increase rates by more than the consumer price index, and by and large it has stuck by that promise.

Those two changes have done much to obviate the uncertainty of wild fluctuations in rates.

It also introduced a third reform which has not had much affect in the past two years, but will slowly have greater effect in the future. This was the introduction of the flat base fee. Initially, it was $220. It will go up to $240 in the next round. When the fee was introduced a rate-free threshold of $19,000 on the unimproved value was introduced to off-set it. Initially, that threshold was worth $201.50 off everyone’s rates bill, so it fell short of the flat fee by a mere $18.50. Few people noticed. In the next round, though, the $19,000 is not indexed and even at the right rate in the dollar of 1.114 cents in the dollar, the rate-free threshold will fall short of the flat fee by $28.34.
Continue reading “1998_06_june_leader04jun rates”

Will it stay up, or will it plummet before the Americans come to the rescue? Either way progress is bound to be erratic and reveal poor fundamentals.

We are talking, of course, about the Russian economy. And also, of course, about the Russian space station Mir. In both cases the West should help, but also encourage more fundamental changes to put the Russian economy and its space program on a more secure footing.

The space effort is a much easier proposition than the terrestrial one. Whether Russian President Boris Yeltsin can be brought down to financial earth is more questionable than whether the NASA mission succeeds. It now seems likely that the shuttle Discovery off today Australian time on NASA’s ninth and final shuttle hookup with Mir to bring home Australian Andrew Thomas, the last NASA astronaut to live on the aging Russian outpost.

Meanwhile back on earth, the Russian stock market has fallen by 10 per cent after batterings earlier in the week. It has lost 44 per cent of its value in the past month. The financial problems — caused by the Asian crisis, lower commodity prices and coal strikes — could trigger political instability.
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Monday’s parliamentary debate on the GST was extremely disheartening. None of the time the Parliament took over the GST involved the merits or drawbacks in tax reform itself. Rather the politicians argued the toss over what Prime Minister John Howard and or Treasurer Peter Costello told a backbench committee and what Mr Howard told Parliament about what they had told the committee. Mr Howard

A chap gets shot in Sarejavo (the one I’m referring to was in 1918, there have been many since) and 20 million people lose their lives in the Great War.

My history text book listed the causes of World War I. The assassination of Archduke Ferdinand was list as on of five “”immediate causes of the war”.

There were also a list of underlying causes, one of which was Germany’s late emergency as a a nation state and its subsequent failure to attain an empire because Britain, France, Holland and Spain had pinched all the best bits of the world to colonise.

If the host had missed….

Death of history

Forces of history are really human forces. We do not tach history any more.

Australian not immune. QLd would have been a fascist state without he Oz fed… Xavier Herbert in Capricornia was right.

The latest High Court decision on defamation takes us back 20 years to the grim days of lawyer-take-all to the detriment of the public and all but a very few wealthy and lucky plaintiffs.

The decision over-turns or questions the few advances made in the past five years towards a better balance between reputation and the right to know.

The case was about a report in the Adelaide Advertiser on the Royal Commission into the near collapse of the State Bank. It has all of the elements of the complete failure of the courts and law to give reasonable remedies to the victims of bad journalism while ensuring the public right to know is not stymied.

For a start the article was published on July 18, 1992. It has taken nearly six years to resolve the matter. That on its own shows the system fails. Imagine any business that failed to deliver what it is supposed to after six years. It would be out of business.

Secondly, there will be no change out of $400,000 in legal costs. The costs will be higher than the damages at stake. That is a failure. When you prang a car and it costs more to fix than the car is worth, you scrap the car. Any panel-beater that charges more than the car is worth goes out of business.
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I have a horrible suggestion to help fix ACT finances.

Kate Carnell imagines that the ACT’s operating loss will be under control in three of four years. Spending will stay the same a revenue will go up gradually as greater employment yields more payroll tax and people pay steeper parking and speeding fines.

She’s dreaming.

The central problem is a narrowing tax base and in the ACT a failure to check spending.

The states have given away or lost to the Commonwealth a huge range of taxes in the past 25 years. Most recently the states have lost about $6 billion worth of tobacco, alcohol and petrol taxes to the Commonwealth under a High Court ruling. Of course, the Commonwealth has arranged to pass the money on to the states, but the long-term consequence is that the 1997 rates and arrangements are frozen. The states have lost tax discretion.

Earlier, under competitive federalism, under which the states compete to see how big a tax holiday they can give business to attract overseas industry or poach it from other states, the state lost chunks of stamp duty and some payroll tax.

They have had to turn to gambling in desperation.

The woes of state taxing began in 1942 when the Commonwealth took their income-tax powers. But competitive federalism began in earnest in the Bjelke-Petersen era in the 1970s when he progressively eliminated death duties. All the other states and territories have followed suit.
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At a glance

Economic:

Growth up from 1.4 to 3.2

Employment growth 2.3

No unmployment prediction

Op loss down from $211 to $151

C’w funding up 3 per cent

$4.2m for job programs

$0.4m for Restart Program to target over 40s

$6m over three years for tourism marketing

IT

Telemedicine
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I wouldn’t be King for a hundred pounds, says Alice.

Well, I wouldn’t like to be ACT Treasurer cobbling together a Budget even for 116 pounds.

There seems very few places to move for a state or territory treasurer these, and things can only get worse unless the Feds do something in the tax package. At present, though, the Feds raise the lion’s share of the all public sector revenue (72 per cent to be precise) but the states and territories have all the lion’s share of the responsibility for delivering the services. And these are the services that profoundly affect our lives: education, health, police, roads and so on.

The ACT has perhaps even less room to move than other states and territories.

Here are some of needles and threads hemming in ACT finances:

1. The ACT economy has already been smacked around by federal cuts. Any further public-sector spending cuts (territory or federal) would be greeted with extra horror. The ACT has a lower growth rate than the Australian average; a public-sector contraction would be bad economics.

2. Since self-government the ACT has done nearly all the easy revenue raising. At self-government ACT revenue raising was only 90 per cent of the average per head revenue by states and territories. Now it is average, or slightly higher. So there is less room to move with revenue raising
Continue reading “1998_06_june_act bug and state finances”