The territory government is set to review one of its most controversial taxes, after a massive spike of development applications rushed in before a budget tax hike took full effect this month.
Subscribe now for unlimited access.
or signup to continue reading
Planning officers were hit with a whopping 152 development applications for land use lease variations before the tax hike took full effect on October 1, compared with 90 such applications in 2016-17 and 60 the previous year.
The property industry has been quietly pushing for a full-scale review of the LVC regime, after it was not consulted on the tax hike, leading to the government bowing to pressure to give developers a brief reprieve.
But Chief Minister Andrew Barr has instead agreed to a Greens proposal for a review, which may be run internally by the territory's Revenue Commissioner, despite the motion calling for it to "be conducted in consultation with the community, industry groups and other stakeholders".
The motion, from Greens MLA Caroline Le Couteur, is expected to be debated in the coming October sittings of the Legislative Assembly.
But Mr Barr's spokesman said the review was unlikely to be a public process and that it was a "not a review of whether we should have the LVC or not", as such a proposal was "not on the table".
The amount of revenue the tax has raised doubled in the past two years, up from about $1.3 million in 2015-16, linked to 60 applications for an extra 204 dwellings, to more than $3.7 million for an extra 675 dwellings in 2016-17.
Despite that, across several years of budgets, the government has consistently over-estimated the revenue it forecast from the tax, lending weight to Opposition arguments it should be abolished.
Property Council ACT executive director Adina Cirson said the industry had been talking to government about "further reform" of the tax, but was no longer pushing the case for abolishing it altogether.
"Nobody believes they shouldn't pay anything, but we do think in terms of the LVC, it's time to review it and how it's affecting other policy priorities, such as urban renewal, public transport, planning and development," she said.
"That's certainly the conversation we've been having with government and other parties and if a review can get up through the Assembly, we believe it could have excellent outcomes for the community."
Ms Cirson said the spike in recent applications showed the government had "underestimated the level of activity in this part of the market".
Of the 152 LVC-related applications since the budget, 147 were filed before the end of financial year, for an extra 720 dwellings, while five, for an extra 17 dwellings, were lodged in the three month reprieve period for blocks bought in the past year.
None of those were for actual development work, simply applications to change the use of the land, which attracts the tax.
Master Builders ACT chief executive Michael Hopkins said the increase to the LVC had "significantly reduced" the industry's ability to supply townhouses, and the rush on applications showed developers were trying to "minimise the impact".
He said such properties were the "missing middle" between high-rise apartments and houses, a key market segment with the potential to address worsening affordability issues, house the city's ageing population and meet changing household characteristics.
Ms Le Couteur said she was concerned the tax hike would lead to people who owned RZ2-zoned blocks deciding to build "a McMansion" on the land, instead of townhouses or a duplex.
She also wanted the review to examine the LVC remissions regime, to see what further changes could help encourage affordable housing.
Her motion sets out that the review should examine simplifying the charge, the wider viability of development, coordinated with the housing affordability strategy review, include modelling of the impacts of the tax and be conducted on a revenue-neutral basis.
But Canberra Liberals' planning spokeswoman Nicole Lawder said the Greens were "trying to have it both ways" on a policy the minor party had endorsed and now wanted to review.
"The LVC shouldn't have been put in place in the first place and the new increase is making a bad tax even worse," she said.
"Secondly, a review could go either way, it opens the government up to consider even higher charges."
