Midnight Wednesday, the Queensland Parliament amended the Local Government Act and the City of Brisbane Act to legalise the theft of around $2.3 billion in differential rates charged by 20 councils on non-resident owners over the last twenty years.
The Queensland government’s instinctive response puts protecting the revenues ahead of the law and the interests of ratepayers. Brisbane City alone has a potential liability of $1.1 billion.
The differential rate schedule obliges the owners of holiday homes and Queensland’s army of ‘little landlords’ to subsidize resident owners. It was struck down by the Queensland Supreme Court in Mackay, presenting councils with an obligation to repay the sum in full and exposing elected councillors as economically-illiterate fools.
The Orwellian remarks of the local government minster presenting the amendments to parliament were reported by the Brisbane Times with a straight face:
David Crisafulli introduced amendments … to prevent ratepayers from having the money returned to them, and to allow councils to continue using the differential rates system.
He said he was “cleaning up a mess” because ratepayers could lodge claims “back for the past six years”.
“Hence the reason why it is such an urgent matter,” he said.
“[The changes] give certainty for the future for councils currently doing their budgets. It also gives the safety net for the past.”
Retrospective changes to the law, particularly tax law, should only be used in the most extraordinary circumstances. Malcolm Fraser’s retrospective Bottom of the Harbour legislation in 1980 to end the practice of transferring company shells with tax liabilities to men of straw and throwing away the records shows how rarely this expedient is used – and the anger retrospective change attracts.
The Minister went on:
“My role is to ensure that a huge financial cloud could be lifted from ratepayers’ heads from the past, and to allow councils the right to rate the way they believe is right – and then people can cast judgment on the councils,” he said.
Mr Crisafulli said the amendments cleared up “any doubt about whether councils are able to issue differential rates for owner occupied versus investors”.
Ten days ago I was very rude about another aspect of Queensland’s disgusting differential rating system – the Minimum Rate – which obliges owners of low-value land to subsidize wealthy landowners.
There are profound tax principles involved here. Government should not discriminate between identical land uses based on who owns it. Also, all the services of councils are services to land.
That’s right: the benefit of libraries, rubbish collection, fire brigades, tree pruning and public swimming pools are immediately embedded in the market price of land. A bread and butter Site Value Rating – which Queensland has – is the best means to honestly and fairly pay for the services local government provides.
This is not over. The Local Government Association appeal against the Supreme Court ruling is likely settled by the state legislation, but the amount involved is so large disaffected ratepayers are certain to take it to the High Court of Australia. All this because of differential rates. Sigh.