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Revaluation Initiative Project and Land Tax

1 August 2019

The Hon. J.A. DARLEY (15:17): I seek leave to make a brief explanation before asking the Treasurer questions about land tax.

Leave granted.

The Hon. J.A. DARLEY: The Valuer-General is currently undertaking a revaluation initiative of all properties in the state. I understand the purpose of the revaluation is to collect additional data on properties which should result in more accurate valuations, although I am concerned that no research was undertaken to prove this.

I understand the first local government areas which were targeted by this initiative were Unley, Walkerville and Adelaide Plains and that the Valuer-General has a schedule by which certain local government areas will be revalued until all properties are completed by 2021-22, which in my opinion is a deliberate breach of the Valuation of Land Act.

My questions are:

1. Can the Treasurer advise, as a percentage, what the average increases were for properties in the Unley, Walkerville and Adelaide Plains council areas for the 2018-19 financial year for both site and capital values?

2. Has the Treasurer spoken to the Valuer-General about the effect the revaluation initiative will have on the values of properties in South Australia and as a consequence land tax, water and sewer rates and the emergency services levy?

3. Does the Treasurer have an indication from the Valuer-General of how much values are expected to rise for those council areas targeted in the 2019-20 financial year?

4. Does the Treasurer have an indication from the Valuer-General of how much values are expected to rise for those council areas targeted in the 2020-21 financial year?

5. Have these increases been taken into account when formulating the state budget and in particular when calculating the estimated revenue for land tax in the 2019-20 and 2020-21 financial years?

The Hon. R.I. LUCAS (Treasurer) (15:19): The simple answer to the question: have I had discussions with the Valuer-General, is no. As the honourable member will know, I think under the former government the Valuer-General was stationed with reporting, perhaps is the best way of putting it, through the Treasury department. Under the Marshall Liberal government, that has returned, rightfully, to the Department of Planning, Transport and Infrastructure. Nevertheless, the Valuer-General, as the member knows, is completely independent. The answer to the question: have I had discussions, is no, I have not had any discussions.

In relation to budget estimates, I can only repeat what I have said on a number of occasions and that is the former treasurer, the member West Torrens, Mr Koutsantonis, included on their best, I assume, combined then valuer-general (there was a previous one) and Treasury's estimates, a figure of $19 million a year extra from the valuation exercise. I would need to check the exact year but I think it was for 2020-21 or 2021-22.

As I have indicated before, the former treasurer hid that number in contingency and didn't reveal it prior to the election in the expected land tax receipts in the forward estimates. When I became aware of that, as Treasurer post the election, I insisted that it be included in the forward estimates of land tax. I have had that discussion with the Hon. Mr Darley on a number of occasions that we at least were transparent and accountable and put it into the forward estimates rather than hiding it in Treasurer's contingency. That is what is currently included in the forward estimates.

In relation to Unley, Walkerville and Adelaide Plains, which I think are the three initial councils that have been revalued, I can take advice on that, but the Valuer-General has issued a public statement by way of a press release, which I think is available on, I assume, the Valuer-General's website. If it is not, I will get the detail, but if it is I refer the honourable member to the Valuer-General's website. They have indicated there what the estimates are of average increases in land values in those particular council areas and they are significantly less than some of the figures that have been quoted of 20 per cent and 100 per cent and 60 per cent increases that some have been talking about.

They do indicate that, whilst that is the average, there are some—and I think they actually list the number of properties—that had increases in value of between 10 and 20 per cent, those that had increases in value of between zero and 10 per cent, and those that actually had reductions in values.

Valuation, of course, one is assuming is always up, but in some cases there has actually been a revaluation downwards in terms of properties, and she lists the number of properties that were revalued downwards in terms of the estimates. If it is not on their publicly available website, then I am happy to bring back the answer, but if it is I can only refer the honourable member's question to their publicly available information on the website.

Finally, in relation to potential impacts: yes, it obviously impacts on land tax and I have indicated what the former treasurer estimated the impact might be. In relation to ESL, for example, then it is not a direct impact because what the government has done with its $90 million remissions is we look at what might be collected through the ESL, what has to be spent, and we work backwards as to what the rate might be.

The issue might be in relation to local government council rates, that if valuation is increased and if they don't adjust downwards their rate in the dollar, then they might reap significantly increased sums of money as a result of revaluation in a particular area. It was, of course, one of the reasons why some of us were very passionate about local government council rate capping in terms of capping council rate increases as a result of, for example, a revaluation like that.

In relation to sewerage, again, that is more likely to be governed by decisions of the independent regulator, which is ESCOSA. The two where there is potential exposure as a result of revaluations upwards are, clearly, land tax, which the former treasurer has included in the forward estimates, and, potentially, local government councils' rates, and that is a decision for individual councils, ultimately. Many councils, I suspect, will adjust their rate in the dollar down if the total valuation goes up, but not all of them will do so, and that is something that I guess will need to be the subject of public criticism if people do take advantage in that way.



1 August 2019

The Hon. R.I. LUCAS (Treasurer): I have been advised the following:

The average % increase for site values in Unley: +11.2%

The average % increase for site values in Walkerville: +10.1%

The average % increase for site values in Adelaide Plains: +7.1%

The average % increase for capital values in Unley: +5.4%

The average % increase for capital values in Walkerville: +4.8%

The average % increase for capital values in Adelaide Plains: +11.0%

To arrive at the above percentage figures the following calculation was undertaken:

the percentage change of each property was determined and the average of those changes was calculated for the three local government areas requested;

the valuations that have been used were in force in the 2018-19 financial year compared to the 2019-20 financial year (2019-20 data was as at 8 July 2019);

where the owner of land was entitled to a concessional notional value, these were ignored in the calculations and the regular substantive values for the property were used in their place; and

the calculation also included the uplift in value associated with new improvements, such as houses being valued for the first time resulting in valuation changes much greater than regular market movement.