Prosper Australia

Gavin Putland

The ACT’s Land Rent Act, with promised savings of 79% compared to the standard mortgage-based system of home ownership, took effect on July 1. This is an innovative housing affordability policy. Here’s what I wrote about it a week before it became law.

I make the following assumptions (which do not seem to be spelt out in the Bill):

• that the capping of increases in rent will be apportioned to some measure of the general level of wages;

• that a land rent lease will be granted without any up-front payment other than the first rent instalment;

• that if a land rent lease is transferred, the transfer price (if any) will be included in the single price of the “house” or “home”;

• that the proposed extension of the scheme to lessees on higher incomes will be accomplished by repealing or amending paragraph 5(2) of the Bill.

From my reading of the Bill, I understand as follows:
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This article was presented at a late 1980’s meeting prior to ACT self government and published in the Canberra Times.

Terry Dwyer

ACT finances will come from three sources - taxes, grants and borrowings. I do not propose to say much about borrowings because borrowings are not a source of current revenue. Australian Governments are generally coming to the realization that borrowing for current deficits is a dead-end road . The end comes when you have to flog whatever you can to pay your accumulated debts and you still can’t pay the housekeeping bills. Borrowing, other than for capital works which will repay principal and interest, is a shifty expedient in Government finance which is best avoided.

Turning to grants, much is clearly outside the ACT’s control. We do however need to point out firmly and clearly to the Grants Commission that there are features of the ACT which do reduce its taxable capacity in comparison to the States. Apart from the obvious National Capital functions and the ACT’s increasing service role for the South-East of NSW, there are other disabilities such as the high portion of exempt governmental or diplomatic activity here. Again the ACT suffers more than the States from the Federal monopoly of income tax because of the high proportion of higher income and two income households in Canberra. Many of Canberra’s fiscal disadvantages are well set out in the ACT submission to the Grants Commission.
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by Leo Foley
The primary source for this paper is “Canberra in Crisis” by Frank Brennan, 1971

The Road to Leasehold - the origins of the Canberra leasehold system..

Canberra is the offspring of politics and a social ideal.

• The politics were those of Federation and nation making.
• The ideal was one of social and economic freedom.

In the early years of Federation, there was a widespread belief in the need for government ownership of all the land within the proposed federal territory. It was considered that the taking of the unearned increment for the people would make the capital city a paying proposition within a few years. In 1901, the Prime Minister, Edmund Barton spoke of the territory to be chosen for the seat of government: “we shall be able to get the land on fair terms, lease it on fair terms and still make a profit for the Commonwealth”.

These were the years when the words ‘unearned increment’ were basic to any discussion of leasehold tenure in the proposed Federal Territory. As King O’Malley (Labour, Tas) saw it, ‘Every dollar spent by the people of Australia in the erection of that capital will create an unearned increment in the property for miles around. The question is, are the people of Australia prepared to spend thousands, yea millions, and then lose the benefit of their expenditure? I say the unearned increment created by the expenditure of the people’s money belongs to the people…”
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