“This government has shown no prudence with money to the point we have lost our credit rating, have suffered a run of a dozen deficit budgets, have spiralling debt and are well advanced down the road to financial ruin.” JON STANHOPE & KHALID AHMED look at the ACT government’s unfair and unprincipled bullying of ratepayers with larger blocks. This is part of the Great Rates Rip-off series of articles.

A central defining feature of western democracies is the absence of a capacity by governments to exercise power arbitrarily. 

This principle has shaped governing structures and imposes a system of checks and balances on the exercise of power. It pervades our thinking and reflects the values we hold. 

As a society we regard unprincipled and unexplained decisions as unfair if not abhorrent.

We do not, of course, these days encounter any more off-with-his-head style pronouncements, but it would be naïve to think that a modern-day parliamentary democracy with standard administrative structures ensures a complete safeguard against injustice or unethical decision making. 

Individuals and bureaucracies will find it convenient (simpler) or expedient (efficient) to step around legal provisions, or disregard ethical bounds and principles, to achieve narrow and singular objectives, albeit that those objectives may be cast as worthy and beneficial in some way.

A stark example, still undoubtedly fresh in our collective memory, is the Robo Debt scheme, ostensibly created to identify welfare fraud and recover overpayments. Who could argue with that? 

Yet that scheme was found to be both unfair and illegal. It is possible that the scheme could have been made legal through amendments to the relevant law. That, however, would not, in the case of the Robo Debt scheme, have made it any more ethical.

In essence, the unfortunate victims were told “You owe us money because we (actually, our algorithm) have determined it to be so. Prove to us that you don’t, or else pay up.” In short, even if this “policy” could be rendered legal, it was arbitrary and unprincipled. 

It is true that, in the end, the “system” worked to put a stop to the Robo Debt travesty and to hold its authors to account. Despite this the Australian Public Service will bear the odium, for ages to come, for its stewardship of this unethical and cruel program. 

Relocation of public housing tenants an example of overreach

Here in the ACT, the forced relocation of public housing tenants under the Public Housing Renewal Program is a further, stark example of overreach. The program was ostensibly designed to renew ageing public housing stock. Again, who could argue with that?

The houses targeted in the program were occupied mainly by single women, elderly pensioners, people with mental or other health conditions, and the disabled. When they resisted the “voluntary relocation”, the program morphed into one of compulsory eviction. 

After initially rejecting the concerns of the tenants and their advocates, which unfortunately were few, the program was halted and the Housing Minister Yvette Berry apologised to the affected tenants. There has, in the interim, been a damning report on the program by the Auditor-General and some tenants have initiated legal action against the government.

We are mindful of, and acknowledge that, in terms of scale, the ACT government’s crusade against frail elderly widows and pensioners has no equivalence with the Robo Debt scheme. However, there is moral equivalence or at least parallels. The tenants were first asked, and if they resisted, forced to move for no reason other than that they appeared on a spreadsheet, and without any regard to their personal circumstances. In effect, they were told: “You must move because we have deemed it necessary that you do so.”

We are also mindful of the pending court cases launched by courageous evictees, and as such will refrain from commenting on the legality of the program. However, even if it is found to be legal, it was unprincipled and unethical – an arbitrary exercise of power.

All of the impacted 45,000 households liable to pay higher tax

Which brings us to the thrust of this column, namely the RZ1 zoning policy. We have previously written about the financial aspects of this policy, to the extent that they have been disclosed by the government through the freedom-of-information process. 

We have pointed out that through this policy, with the proverbial stroke of a pen, the ACT’s progressive Greens/Labor government has increased the General Rates base by around $8 billion. There will also be increased revenue from land tax on rental properties and lease variations, increasing the total tax base by up to $18 billion.

Exposed: How Barr rips higher rates from big blocks 

While the government is clearly unable to disclose how many of the owners of the blocks so zoned will ultimately decide to subdivide, but all of the around 45,000 households impacted by the RZI zoning policy are nevertheless liable to pay higher tax. 

Broadly, households subject to this policy fall into two categories: a relatively small number of who will decide to subdivide, and a much larger number of households who will not wish to subdivide.

For the former group, any barriers (legal or administrative) to subdivision could have been removed by changes in application processes and incentives, if considered necessary. It’s the latter group that has been unnecessarily captured by this policy. Within this group there may/will be households that are well-off and may not feel the increase in rates.

However, there will, without a doubt be a large cohort of pensioners and people on moderate to lower incomes who will be severely financially impacted by this policy. 

Their choices are (a) to cut other discretionary or essential spending; or (b) to defer the payment of rates, in other words, carry a debt; or (c) to sell their home to a potential developer and move house. 

None of these options are fair or progressive, particularly when the people so impacted have received no additional benefit or services in return. There will also, undoubtedly, be a significant cohort of people who will, for financial reasons, be forced to abandon the place they had planned to live out their lives.

The policy is not only oblivious to the potential financial hardship it will engender but disregards a fundamental principle in a fully functioning democracy, namely that people should only be required to pay for the benefit they enjoy. It is also an interference with an existing property right.

Whether this policy is legal or not depends on the interpretation of legislation on valuations and its intent. 

If there were to be some doubt about its legality the government could amend the legislation. However, that would not make it any fairer or any more principled. 

The message from Andrew Barr and Shane Rattenbury and their Labor/Green colleagues to around 45,000 Canberra households would remain the same, namely: “Your choices are: you can subdivide, or pay up to twice as much in rates, or sell up and move, because we have deemed it so.”

It is an arbitrary and bullying exercise of the taxing power.

What makes it even more brazen is the fact that this government has shown no prudence with money with a history of waste, for example, on failed and vanity projects, ministers’ learning exercises and inflated contracts for preferred tenderers to the point we have lost our credit rating, have suffered a run of a dozen deficit budgets, have spiralling debt and are well advanced down the road to financial ruin.

Jon Stanhope is a former chief minister of the ACT and Dr Khalid Ahmed a former senior ACT Treasury official.

The debt mountain and how you’re paying for it