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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-10-28 Daily Xml
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LAND VALUATION

The Hon. J.A. DARLEY (17:49): I move:

That the regulations under the Valuation of Land Act 1971 concerning fees and allowances, made on 27 August 2009 and laid on the table of this council on 8 September 2009, be disallowed.

Pursuant to the Valuation of Land Act, the Valuer-General is responsible for providing valuations for the purpose of levying rates and taxes. Where a landowner disagrees with the valuation as determined by the Valuer-General, the act also provides certain rights of objection, review and appeal.

In accordance with the Valuation of Land Act, a landowner who objects to the evaluation, and who is still dissatisfied with the decision of the Valuer-General upon an objection, is able to apply for a review of the valuation. Reviews are undertaken by independent review valuers with experience in valuing land, who are appointed to a panel after being nominated by the Real Estate Institute of South Australia Incorporated or the Australian Property Institute Incorporated. A landowner who applies for a review is able to select a review valuer from the panel in order to conduct the review.

As stipulated in section 25B of the act, in conducting a review the review valuer is required to take into account matters set out in the application for review, any representations of the applicant and the Valuer-General, and any other matter that the review valuer considers relevant to the review of the valuation. Matters considered upon review must also be confined to questions of fact and must not involve questions of law. A person who is still dissatisfied with the decision of a review valuer may appeal to the Supreme Court.

The regulations which are the subject of this disallowance motion relate to the fees and allowances available to review valuers for the purposes of conducting a review. Prior to the changes, review valuers were paid $187 for a review of residential premises and $229 for a review of any other land, which includes commercial premises. The new regulations replace those amounts with various base allowances, depending on the value of the property which is the subject of review. For instance, the base allowance for a residential property valued at less than $1 million is $400; where the value exceeds $1 million the amount jumps to $600. Other land, which includes commercial properties, starts at $800 for land valued at less than $5 million and goes as high as $2,400 for land that exceeds $90 million in value.

In addition to the base allowance, the regulations also contain complexity categories. If a complexity category is assigned to a review by the Valuer-General, the allowance increases from anywhere between $200 and $1,000. So, at the top end of the scale, a review valuer could potentially receive an allowance as high as $3,400. That is approximately a 15-fold or 1,500 per cent increase under the changes.

Lastly, the regulations also provide for travel allowance, whether it be by vehicle, sea or air, as well as accommodation for up to two nights. The reasoning behind the changes in the prescribed fees and allowances was to bring the figure in line with current market rates and attract more review valuers to the role of conducting reviews.

I am advised that consultation with respect to the changes took place with the Real Estate Institute of South Australia Incorporated and the Australian Property Institute Incorporated, and certainly not the taxpayer. I am the first to agree that the allowances were due for review but, as a former valuer-general, I can assure members that these new rates are nothing but a drain on taxpayers' money. They are a gross overestimation of what is reasonable when considered in light of what is actually required or expected from a review valuer in conducting a review.

This brings me to my next point regarding complexity categories. I would have thought that, if we are going to have a series of categories which can be assigned to a review, we would also have some sort of guidelines to determine when they would apply. I also would have thought it reasonable to have a clear understanding of what was actually expected from a review valuer and in the form of some sort of guidelines. In this case we had neither. The regulations were re-drafted and the fees were prescribed even before considering what a review valuer was required to do. It is a classic example of putting the cart well and truly before the horse.

Over the past few weeks, I have been consulting with the Valuer-General through the minister's office with regard to both the regulations and the guidelines. In an attempt to highlight the gross overestimation of what is reasonable with respect to valuers' fees, my office picked a handful of valuers from the Yellow Pages and called to inquire about how much it would cost to have a proper valuation made on a residential property. All of the quotes included an inspection and a valuation report and ranged from $220 for an inspection and a three-page valuation report to $660 for a comprehensive inspection (including the interior) and a 15 to 25 page valuation report.

I might also add that at least one of the valuers that my office called is already a member of the panel. I am also advised by one well-known property group that it offers a valuation inspection service in relation to valuations of commercial premises for a fee of $500. Again, this includes a site inspection and a written report with regard to the valuation.

When considering this information, honourable members will bear in mind that a valuation is a more exhaustive process than a review. As already mentioned, it involves a property inspection, collation and inspection of sales evidence and the preparation of a valuation report. A review, on the other hand, involves making a decision based on material facts already provided, that is, the matters set out in the application itself, any submission made by the landowner and the report of the Valuer-General—and in light of the valuer's own understanding and experience of the market; in other words, a desktop review.

Review valuers are not required to provide written reports with respect to how they arrive at their decision. A further example of the disparity between what has been proposed and the actual work required becomes apparent when you consider the fees applicable to other land. In the context of some cases where you may have a review valuer making a decision on vacant land zoned as commercial and measuring, say, three metres by 10 metres, you will have review valuers being paid an exorbitant amount of money to value a block that is 30 square metres.

Another inconsistency arises where you have two identical properties in terms of character, land size and the like, but one of those properties is situated in, say, Burnside and the other in Brompton. The review valuer in both these scenarios will be required to undertake exactly the same amount of work but, where the property in Burnside exceeds $1 million in value and the property in Brompton is valued less than $1 million, the review valuer will be remunerated at a higher rate. There is no rhyme or reason to this.

I will conclude my remarks by saying that review valuers' fees need to be sensible and commensurate to the work required of a review valuer in conducting a review. They need to be realistic. I urge honourable members to support this motion and to disallow these regulations.

Debate adjourned on motion of Hon. J.M. Gazzola.

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