Last week I offered a solution to the blight caused by vacant or disused sites in central Melbourne. Everyone is diminished by landowners leaving valuable land unused while they agitate for rezoning profits.

The Age’s Bruce Guthrie hopped into the discussion for a hand-wringing but offered no solution. 

The problem would be reduced by council using its rating power properly – moving from basing rates on the value of land and buildings to the land only.

There is another player in this derelict taxing equation: the Victorian Government.

Between 2004 and 2009, under the Bracks and Brumby ALP governments, State Land Taxes were cut firmly. In 2004, the top rate was 5 per cent on total land holdings over $2.7 million.














By 2009, the rates had been more than halved to 2.25 per cent on total landholdings over $3 million.  The changes saved commercial and industrial property owners $1,000 million over five years. 










“There has been a significant escalation in property prices, probably more than we expected or any government could have expected. The majority (of people paying land tax) are at the low end (of the scale) . . . but there is a problem as some people have moved through the rates and also the valuation of their property or their investment enterprise has gone up.” Premier Bracks said in 2004.

How anyone owning over $2.7 million in taxable land – remember, principal place of residence is exempt – and enjoying significant capital gains could be regarded as deserving charity escapes me.

2,300 land tax payers benefited from this deeply compassionate gesture by Premiers Bracks and Brumby.  The rest of Victoria’s 5.6 million people now have to pay more in tax or endure lesser services.

Students of the history of the Australian Labor Party would know the angry, steely determination of earlier labor leaders to ensure rentiers and major landowners paid their fair share of the cost of government, through eminently fair and economically efficient land taxation.

Premier Napthine’s Treasurer Michael O’Brien is looking for quality revenue sources to plug the black hole in the state’s budget.  Here is one. And he could drive the development of these awful eyesores.