Opinion / Rate rise parks misery on Melrose Drive

Is it the beginning of the end for the Melrose Drive motor trade? Rate increases are squeezing dealers’ ability to competitively sell cars and employ people. DAVID ROLFE puts the case for moderating rate rises…

Melrose Drive.

CANBERRA is a great city to live in and it has been extremely giving to my family and our group of businesses over a long period of time.

When you’re in an extremely privileged position it is difficult to assess whether you have been dealt an unfortunate card in your business dealings.

After a great amount of soul searching I believe we have, as have our car-dealer competitors in the Phillip precinct.

Here’s why: on one of our large blocks of land that comprises three dealerships, the unimproved land value leapt almost doubling from $5,991,000 to $10,655,000 on July 1, 2017.

This equated to a jump in our commercial rates from $332,855 to $432,916 for the 2017 year. For the 2018 year, these rates jumped further by $107,732 and for 2019 I estimate them to jump another $100,000. That’s a 92 per cent rise in three years! I’m hoping this will level off in 2020, subject to any subsequent valuation increases and formula rate hikes. Despite making appeals to the ACT Revenue Office in early July, I’m advised they will not necessarily be replied to until January next year.

There are thousands of Canberrans who are doing it tough with residential rates increases and large heating and cost-of-living expenses, but I think that most fair-minded people would agree that these Phillip commercial rates increases are extraordinary and lead to some pertinent questions:

  • Is the valuation system based on most recent sales in the Phillip area fair and were the valuations before 2017, 100 per cent off the mark?
  • With more recent building sales in the last two years involving relatively poor sales outcomes, there has been no downward effect on the rates charges. Will these now be compensated for?
  • There has been no proportionate change in Belconnen and Gungahlin commercial rates. Is this a good result for North Canberra motor dealers or simply a delay until the trams are up and running?
  • There have been several sales of dealerships in the last short period. Is this largely due to the rates rises and concerns about economic viability in Phillip into the future?

The motor dealers in Phillip and beyond agree that we need to do our share of heavy lifting and are extremely grateful to the Canberra community for their continuing loyalty and custom, but we already contribute significantly through a range of territory and federal taxes and employ thousands of staff. We also try to do the right thing in terms of community and charity projects.

Melrose Drive

How are dealers expected to absorb increases like this when we are often constrained by manufacturers’ pricing edicts while juggling increasing costs in wages, rents and rates? Every expense item in our operation is under the microscope including jobs, which we did not even contemplate adjusting during the global financial crisis in 2009

Worse still, dealerships will have to consider moving from the central convenience of Phillip to the likes of Fyshwick, Queanbeyan and Hume. Does this spell the beginning of the end for the Phillip motor trade? Will our clients appreciate going out of their way for sales and servicing?

The Chief Minister and the Leader of the Opposition have heard my calls for some equity in regards to our rates charges. It’s time to review this injustice.

David Rolfe is the dealer principal of Slaven Mazda, which is located on Melrose Drive, Phillip.

 

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2 Responses to “Opinion / Rate rise parks misery on Melrose Drive”

  1. October 10, 2018 at 9:18 am #

    It would be interesting to know what these new rates represent as a percentage of your revenue.

  2. October 11, 2018 at 1:45 pm #

    David Rolfe is completely right, no business should see these massive cost increases with nothing to show for it, we are certainly not getting better government services.
    The above response “It would be interesting to know that these new rates represent as a percentage of your revenue.” comment must have been written by a public servant with no idea of economics. Revenue is immaterial, its the profit that counts. Also bear in mind these extortionate taxes apply irrespective of whether the property has a tenant.

    These types of rate increases are driven by the current government’s determination to extract every dollar out of property owners that they can. They are happy to throw out the long-established unimproved capital value that has been the bedrock of land taxes and rates because the increases are not rapid enough for them.
    This government uses the excuse of getting rid of stamp duty and hiking rates as a methodology to replace stamp duty with a promise of no net tax gain for the government. The blatant lie is exposed in the latest ACT accounts, stamp duty revenue has actually increased despite the promise to get rid of it. Rates in the forward estimates have increased by over 650% so we get shafted with both rates and stamp duty. This Chief Minister can’t add up or at least thinks that ACT ratepayers can’t. His stock answer is that every tax review in the country over the last 20 years has applauded the economic wisdom of what the ACT is doing. But how come we are the only jurisdiction in Australia to actually do this madness?

    How about Mr Barr running a business and learning first hand how difficult it is to cope with raging tax increases that cannot be passed on and completely disregard any relationship to profit. Socialism at its best.

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