PUBLIC debate has been stirred again about land title. It has been stirred nationally about the Mabo decision. In the ACT it has been stirred about betterment tax. Oddly enough, the matters are similar. It is a question of who gets the occupation and use of certain tracts of land and what use can they put the land to.
In the ACT debate has widened about land tax. As the ACT Government faces harder times with less money coming form the Federal Government it has to either spend less or pick up revenue from other places. In that environment of economic pressure, a debate has ensued about revenue available from land, more especially about revenue gained from variations in lease purpose clauses, or to use the nomenclature of the states, changes in zoning.
The two sides to the argument can be put as follows. When a lease purpose clause is changed from, say, single density to medium density, the economic value of the raw land increases. The increase in value can be put down to two things: 1. the imagination and the entrepreneurial spirit of a developer to use bricks and mortar to convert the land to a different use and 2. the willingness of authorities to allow the developer to do that.
The imagination and entrepreneurial spirit of developers must be encouraged. However, the source of their profit has to be identified. Profit gained from the change in permissible land use does not properly lie with the developer. Profit that can be ascribed purely to a change in permissible land use from, say, single residence to medium density or residential to retail properly lies with the community, not with the person who happens to knock down the single residence and put up the medium density units or the retail shop.
From the outset of the development of the national capital, high-minded people in positions of power held the view that the profit from changes in land use properly belonged to the community. This was not a view held exclusively by some socialistic clique. It was held politicians of many persuasions.
Those of a liberal-capitalist-democratic bent, quite rightly, held the view that pursuit of profit could be a force of great national benefit. However, they thought that such a profit should come from the marshalling of building materials and labour to build a competitively attractive built environment, not from the stroke of a bureaucratic pen that made land once agricultural now residential.
Despite the maturity of that view, held by many since 1913, the ACT Government is even now falling into the trap that land development must be encouraged through subsidy, in this case through the form of a gift of increased value through change of lease purpose. The present ACT Government, quite wrongly, permits a developer to pay to consolidate revenue in many cases only 50 per cent of the increased value due to changes land use.
This is a silly nineteenth century view _ a view predicated on a nineteenth perspective that Australia is a barren waste and that people have to be given financial encouragement to do anything with it. Canberra is no longer like that. The land here has great worth that belongs to the community. There is no need to hand developers a free slice.
We have to encourage an entrepreneurial competitive spirit that gives developers good and reasonable profit from intelligent use of building materials. Conversely, we have to discourage development that relies upon profit from changes in land use created by the swipe of a bureaucratic pen.