LOCAL GOVERNMENT (RATES) AMENDMENT BILL

Introduction and First Reading

The Hon. J.A. DARLEY (21:05): Obtained leave and introduced a bill for an act to amend the Local Government Act 1999. Read a first time.

Second Reading

The Hon. J.A. DARLEY (21:06): I move:

That this bill be now read a second time.

The bill has two aspects, both relating to rates that are charged by councils in accordance with the provisions of the Local Government Act. Section 153 of the act provides that a council may declare a general rate on all rateable land within its area for a particular financial year or differential general rates on rateable land within its area for a particular financial year.

The first aspect of the bill deals with differential rates applicable to vacant land. Differential rates may be applied to properties according to the different uses of land. This includes a higher rate for vacant land as opposed to land used for residential purposes. Generally speaking, when a person buys land they usually do so with the intention of building a house. This can be a lengthy process and, in many instances, land will remain vacant for a prolonged period of time before building works actually commence. This can arise as a result of financing issues, the drafting of building plans and the subsequent council approval process.

A number of councils, including Charles Sturt, Port Adelaide Enfield, Prospect, West Torrens, Marion and Gawler, are charging premium rates for vacant land under the guise of encouraging people to develop their land as opposed to holding onto it for long periods of time. In at least one case, the rate in the dollar charged on vacant land, as opposed to residential land, is 20 per cent higher.

This is a significant cost impost on landowners who purchase a block with the intention of building a house. It makes building a house all the more costly and all the more difficult, particularly for first home buyers. The last thing that people saving to build a house need, particularly in today's economic climate, is to be paying higher premiums.

The amendment overcomes this by providing a grace period of three years for people who buy land with the intention of building a home. During that grace period, councils will not be able to charge rates in excess of what would otherwise be imposed on land used for residential purposes. The three-year period is a reasonable time frame, given that buyers, and first home buyers in particular, may need additional time to finance the building works. Once that occurs, we know it can take up to 12 months for plans to be prepared and approved and a further 12 months to actually build the house.

The second aspect of the bill relates to rates on marina berths. Normally, a property is rated on the value of the property as a whole; that is, per allotment or ownership. Generally speaking, in the case of marina berths, where you have one owner of a single allotment, the owner is charged a minimum rate. Where you have one owner of a single allotment which has multiple occupiers under lease or licence agreements councils are charging a separate rate for each occupation. In the past, some councils have applied a discretionary rebate in place of a minimum rate on the occupation of wet marina berths and hard stand berths.

The Port Adelaide Enfield Council has adopted this approach for over 20 years. I am advised the rebate was initially introduced during the construction period around the Port Adelaide area in recognition of the inconvenience the construction works would cause for locals. In more recent months, the council received legal advice to the effect that the rebate should have expired in the late 1990s. As such, it was deemed appropriate to charge the minimum rate of $750 per annum for each marina berth within a marina.

I am advised that the Minister for State/Local Government Relations provided advice on this issue in June of this year, indicating that there were other avenues available to council to reduce the rates burden on berth owners. Despite this, the council persisted on levying the minimum rate on each marina berth. It was only after overwhelming community outrage that the council agreed, somewhat reluctantly, to transition the application of a minimum rate across all berths in its local government area over a seven-year period.

I am advised that, in the Port Adelaide Enfield area, the current average value of a wet berth asset is $50,000 and the current asset value of a hard stand is $5,000 and, in some cases, as low as $2,500 due to a fall in demand, arguably as a result of the imposition of the minimum annual council rate of $720 per annum. This is the equivalent to the rates that would be payable on a residential property with a capital value of approximately $274,000 or a commercial/industrial property with a capital value of $132,000. These properties are valued at some three to five times higher than marina berths, yet marina berth occupiers are paying the same in rates.

In the Holdfast Quays Patawalonga area, the current average value of a wet berth asset is between $25,000 and $29,000. The minimum rate for properties in the area is $832, which is equivalent to the rates applicable to a residential property with a capital value of $328,000, or $226,000 for any other property other than residential. Again, these properties are valued at some nine to 13 times higher than marina berths, yet marina berth occupiers are paying the same in rates.

As alluded to, the Port Adelaide Enfield Council is not the only council to implement this sort of rating policy based on separate occupation rather than ownership. It applies equally to the City of Holdfast Bay, which also charges a minimum rate for each marina berth within a marina. Nor is the policy limited to marina berths; it has been adopted across the board by most councils in relation to rateable land in general, particularly where separate occupation is concerned. I understand some councils are even charging a minimal annual rate for space which privately owned ATMs occupy in shopping centres, pubs and clubs under lease agreements.

The argument by councils against my proposal is similar to that argued by the government in relation to crown land leases for shacks on waterfront locations; that is, if a person is wealthy enough to afford a boat, they are able to afford the higher rates. This argument flies in the face of the Local Government Association's rating and taxing principles, which include that in levelling taxes the ability of the taxpayer to pay the tax must be taken into account. Having regard to that principle, they argue that the best measure of a person's ability to pay is the valuation of their property. On that basis, occupiers and owners of marina berths and hard stands are being ripped off. They are paying far in excess of the true value of their property. Worse still, there is absolutely no justification for these charges by council.

There are no services being provided on these individual pieces of land and councils are not recouping any costs in any way. It is simply a revenue-raising exercise at the expense of boat owners. Any argument that local residents are subsidising wealthy boat owners is unwarranted on this basis alone. The bill deals with this issue in two ways.

First, it provides that where two or more pieces of land within a marina are owned by the same owner, a minimum amount payable by way of rates or charges may only be imposed against the whole of the land and not against the individual pieces of land. The minimum amount payable cannot exceed the total that would be payable if the pieces of land were a single piece of rateable land or any lesser amount fixed by regulation. The practical effect of this is that the maximum rate that will be payable will be the aggregated value of the land in its entirety as if the land were held as a single allotment.

Secondly, if an owner owns a single marina berth within a marina, the council will be able to charge a minimum rate. However, if the value of the particular marina berth is less than 50 per cent of the notional value of marina berths within a marina, then the amount payable by way of rates will be 50 per cent of the minimum amount or any lesser amount fixed by regulation. What is meant by a marina berth is clearly defined in the bill to include land within a marina used for berthing or mooring vessels and dry storage of vessels.

I have met with representatives of the boating industry, including the Boating Industry Association of South Australia, the Cruising Yacht Club of South Australia, the Royal South Australian Yacht Squadron and Holdfast Quays who, together with Refuge Cove Marina Berth, have been lobbying the government on this issue on behalf of their members, especially as a result of the recent decision of the Port Adelaide Enfield Council. I understand these same groups have also lobbied the opposition on this issue.

There have been several stories in the media about this issue. Boat owners have raised their concerns over the fact that these changes will make it unaffordable to lease a marina berth and it has even been suggested that as a result we can all expect to see more boats parked in people's front yards. This matter needs to be resolved once and for all in order to provide these individuals with a fair and reasonable outcome. I believe this bill achieves that.

As I mentioned at the outset, normally a property is rated on the value of the property as a whole, not on each separate occupation. The fact that an allotment is divided into separate occupations should be of no significance at all for rating purposes. I foreshadow that in the new year I will be introducing a further bill that deals with rating policy in relation to other rateable land more generally in an effort to provide more equitable outcomes for other individuals or businesses who are facing similar issues to the boating industry.

In closing, this bill proposes two very straightforward and, indeed, reasonable changes in terms of rating policies for vacant land and marina berths. There is simply no justification for charging owners more rates than what their land is worth. I hope that both these matters will be given due consideration by all honourable members. With that, I look forward to progressing this bill further in the early stages of the next sitting year.

Debate adjourned on motion of Hon. J.S.L. Dawkins.