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House of Assembly - Fifty-Second Parliament, First Session (52-1)
2010-11-25 Daily Xml
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VALUATION OF LAND (NOTIONAL VALUATIONS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 1 July 2010.)

Mrs GERAGHTY (Torrens) (10:52): The Hon. Iain Evans indicated that the motivation for the bill derives from the valuation of the Flagstaff Hill golf course and the notion that it has been valued at a level comparable to the sale of the Cheltenham Racecourse.

The Valuer-General has advised that a review of the Flagstaff Hill golf course and similar recreational sports properties was undertaken for the 2008-09 financial year general valuation. At this time the values were considered to be very conservative. As a result of the subsequent revaluation, the Flagstaff Hill golf course capital value was amended from $2.675 million to $4.65 million.

The Valuer-General has advised that while the valuation increased, it had regard for the property being subject to an open space proclamation. The effect of the open space proclamation on this property results in a significant reduction in the land valuation, with the potential for subdivision being ignored; that is, resulting in a value similar to a notional value being applied.

An objection to the capital value lodged by the Flagstaff Hill Golf Club resulted in the capital value being amended to $3.75 million for the 2009-10 financial year. In analysing these value levels of 2009-10, the valuation of the Flagstaff Hill golf course equates to $6.80 per square metre, including the value of improvements. In contrast, the sale of the Cheltenham Racecourse, which has residential development potential, reflects a value of $140 per square metre for the land only.

If the Valuer-General were to apply evidence from the sale of the Cheltenham Racecourse to a parcel of land with residential development potential located at Flagstaff Hill, this would result in a value of approximately $120 per square metre, a value far in excess of the $6.80 per square metre currently applied to the golf course. The Valuer-General has valued the Flagstaff Hill golf course land considerably lower, due to an open space proclamation.

I also understand that senior staff of the Office of the Valuer-General met with the Hon. Iain Evans to explain the valuation approach applied to the Flagstaff Hill golf course and to clarify the basis for identifying properties and land uses that would be granted notional values under this bill. It is understood that the proposal by the Hon. Iain Evans is to ensure selected sports and recreational associations become more viable through reduced rates and taxes as a direct result of the land they occupy being eligible for a notional value.

Under the Valuation of Land Act 1971, the proposed amendment will require that the Valuer-General value land that meets the criteria for a notional value under this bill and disregard any existing divisional potential for subdivision or for any higher or better use. The Valuer-General has advised that provision for similar rating and taxing valuation outcomes already exist as a result of current valuation policy and practice. In addition, rating and taxing exemptions and concessions are available and applied through other existing legislation by rating and taxing authorities.

With respect to the Flagstaff Hill golf course, its eligibility for a notional value through changes proposed by the Valuation of Land Act 1971 will not result in any significant valuation change. This is due to the current valuation approach taking into account that it is restricted by way of an open space proclamation. The proposed changes to the Valuation of Land Act 1971 may however, have wider implications for the valuation of other properties.

Introducing notional values to properties used for sport and recreation, as proposed by the bill, has the potential to result in a reduction in the valuation base utilised for rating and taxing purposes. Although this amendment would not only apply to properties that are potentially already exempt from land tax, no analysis has been undertaken to quantify the loss of revenue for the state government or any potential redistributive effect on council rates. It is likely that shortfalls in rates on properties receiving a notional value would need to be recovered from other remaining property owners.

The full effect of introducing the bill requires further analysis by rating and taxing agencies to assess the impact, together with analysis to establish the number and types of properties likely to be granted notional values under this amendment and any redistributive effects on remaining property owners. Under this bill, the Commissioner for State Taxation would be required to provide a list of properties that are currently exempt from land tax under section 4 of the Land Tax Act 1936. Properties matching the criteria contained in the bill would need to be identified from the dataset provided by the commissioner and reviewed for any variation to values.

With the current provisions in place for similar rating and taxing valuation outcomes, and lack of analysis and consultation undertaken to determine the wider implications to stakeholders or potential loss of revenue, the government's position is to oppose the bill. In conclusion:

current valuation processes by the Valuer-General, and rating and taxing authorities, generally provide for similar valuation outcomes as those provided for in the bill;

existing legislation currently provides for a range of rating and taxing concessions;

the impact on rating and taxing has not been analysed;

the potential loss of revenue, as a result of the bill, has not been quantified;

redistribution of rates may occur as a result of the bill;

the number of properties affected by the bill has not been determined; and

consultation with key stakeholders, including property owners, has not been undertaken.

Due to the current valuation practices, the lack of supporting evidence and analysis of the impact of the bill, the government is opposed to it at this particular time.

The Hon. I.F. EVANS (Davenport) (10:59): The contribution from the member for Torrens is, of course, a contribution given to her by the appropriate minister's office to put on the record the government's view. So, the argument I am about to put is not against the member for Torrens personally, it is more against the Treasurer whose office, no doubt, wrote the brief.

The government's contribution is quite extraordinary. The Flagstaff Hill Golf Club approached me, as their local member, and the member for Fisher because they received letters from the government agency that said that, because of the sale of Cheltenham, the valuation of the Flagstaff Hill Golf Club increased. For the government to come in here and say that it had nothing to do with the sale of Cheltenham is extraordinary.

If the government had looked at my contribution they would see that I referred to the letters about the sale of Cheltenham in my contribution to make it clear. However, what happened was that the Cheltenham property was sold and the Flagstaff Hill Golf Club's valuation increased as a result. I do not have the documents in front of me but, from memory, it was from somewhere in the high two millions to around $4 million.

The resulting impact of that was that their tax take from local government and the various government agencies that have property-based valuation went up by about $10,000 or $12,000 extra each year. It was quite a significant tax increase. The purpose of the bill was to guarantee that the properties of sporting organisations and recreation grounds, like golf courses—and I use Flagstaff Hill as the example—would be based on a notional valuation; that is, basically a non-development valuation.

The government officers, to their great credit, came to Blackwood and had a coffee and talked to me about it. I thank the Treasurer for sending his officers to talk to me about it, because they wanted to be crystal clear what I was trying to achieve. I indicated to the officers, as I have on all of my bills before the chamber, that I am happy to accept government amendments to improve the bill, because we all know that the government has the Department of Treasury to look at these matters and we have one staff member to look at these matters. While we can sometimes catch the Department of Treasury out, they are generally better at modelling these things than Her Majesty's loyal opposition.

The government has decided not to look at it; that is fine, but the reality is the Flagstaff Hill Golf Club did have an increase in tax charges as a direct result of a revaluation, and I will bring the letters in another day and remind the house. I will read the letters again to the house, because it definitely raises the issue of the sale of Cheltenham. Why the government would want to make it harder for sporting clubs to exist is beyond me. Why they seek to make no change to this issue that increases charges to sporting clubs is beyond me. The government have decided their position—

The Hon. M.J. Atkinson interjecting:

The Hon. I.F. EVANS: The ghost of defamation past is back, Madam Chair. It is good to see him here. I know he is excited; he has gone nearly two weeks without defaming anyone. Aaron Fornarino says hello.

The Hon. M.J. Atkinson interjecting:

The Hon. I.F. EVANS: Yes, he's a good lad. He says hello, and he is back in Davenport, I understand. However, I will take this matter up behind the scenes with the government again. I think the principle is right. I think the government's position is wrong on this. All the government have done today is make it harder for sporting clubs. I think that is a shame.

Second reading negatived.

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