Mr DEAN (Windermere ) - I intend to go through some general issues and I just wanted to briefly look at the 4 per cent first of all. As I understand it, it was not plucked from the air. I did have an explanation at one stage about the origin of the 4 per cent, but I cannot recall now what it was. It was set on what was believed to be a reasonable percentage when looking at what a house would return in rent. I think the member for Nelson was suggesting that might have been the case but there was a basis for it, there was a strategy behind it.

Mr Wilkinson - It related to rentals and it related to what that property could return as a result of rentals and what I am saying now is because of the house price hike over the last four to five years, that intention and the relationship behind that figure now are out of kilter.

Mr DEAN - I do not disagree with what the member for Nelson is saying, Mr President, and I do not disagree with his position on this. It ought to be considered and investigated further, reviewed, whatever. I believe that in Tasmania there ought to be some consistency around the State so I do not think it ought to be left to individual councils. I think it ought to be a State position. I agree with the member for Nelson and I support his argument on this.

The valuation of land in the last three-year period has created an immense amount of anguish, hurt, frustration, trauma, disbelief, disgust, any number of adjectives I could use in relation to it, Mr President. The position is that it has come back to local governments who have had to get through this; they are the ones who have had to provide reasonable answers to those people who have complained following the revaluation process.
It has caused an enormous amount of frustration and some people to leave their homes. The person that I feel sorry for is the aged person who has lived in their home forever. I can give an example, Mr President, of a lady living in pretty well central Launceston aged 90 years plus. She had lived in her matrimonial home for some 50 to 60 years, alone since her husband had passed on. She was property rich but money poor and, as she said, she had nothing to do with the cost of her house going up and therefore felt that she should not -

Mr Parkinson - The value of the house going up.

Mr DEAN - That is right. She had no control over that. She was able to comfortably live in that home prior to the last revaluation by the Launceston City Council, she was able to pay those rates, but because of the revaluation her rates almost trebled. It really did create an enormous impost on that lady. It came down to her family becoming involved as to whether or not they had to put her into another home and/or whether they would make a contribution to help her stay in there.

Mr Parkinson - That is probably an argument also in support of adjustment factors because you do not get the big peaks.

Mr DEAN - I support the bill, let us make no mistake about that. What I am saying is that the previous process we had did cause extreme problems. Reverse mortgages have been discussed, Mr President, and some people have taken out reverse mortgages. I do not know if that is the real answer but it has allowed some people to stay in their homes. People seeking information have been told to go to their financial advisers and accountants. It was not a matter for councils to advise people.

There are a number of local governments still to go through the process and they will feel the same hurt and, in most cases, feel the same frustration that those councils have felt that have gone through it already. You can learn from them but there is only a certain amount that you can do to try to ease the financial burden because the revaluation is a State position and it must occur. Interestingly a number of people have indicated they were going to sell up in the Launceston City Council area and move into West Tamar or another area. As they have been advised, those areas are yet to go through their revaluation so they may well move this year but next year they will probably move back again. That is the unfortunate situation that we have. Devonport is one example where all they really did was shift the burden from those living in the very, very expensive and very, very valuable homes back onto those people living in the homes of a much lesser value. I do not know whether or not that is a fair way to do it either. I guess that is debatable.

Interestingly Glamorgan/Spring Bay Council has been in the press because they attempted to soften the blow in their revaluation year and we know in fact that that backfired. This current year I think they had to pass an increase of 27 per cent to catch up. What they did to soften the blow did not work and that is what is likely to happen with a lot of other local government areas as well.

They went into damage control to resurrect their position. I am not sure whether they are out of the woods yet. I do not think they are. According to a press release or a comment made in the press this week it would seem that they are still going through some extreme difficulties in that area. They will not be the only council.

Mr Hall - Who was that?

Mr DEAN - Glamorgan/Spring Bay.

I think what happens in some of those cases, and I do not know whether it happened in the case of Glamorgan and/or Spring Bay, but because members are elected in some instances for short periods of time there is a tendency at times to make a populist decision rather than a proper decision. That in itself does create and raise some concerns.

Yes, Launceston City Council - and I do have some knowledge of that council, Mr President -

Mr Wilkinson - I hope so.

Mr DEAN - decided to ride out the storm, as it were, knowing very well what was going to happen when they structured their rates last year - that is, 2005- 06. As I mentioned in the briefing this morning, I am not quite sure of the total number to finish up with but I think it was between 1 200 and 1 500. I do not know if I am getting a nod or a shake. It was the number of people appealing their revaluations. I think it was only about 1 200 to 1 500 from memory, and so really it was not a huge number when you have 25 000 properties.

Certainly the firm doing the revaluations got it wrong in some cases but in the main, looking at it across the whole spectrum, they really got it right in most cases or the people were satisfied with the revaluations, one or the other, and did not take it any further.

Mr Wilkinson - Or they thought, what is the use?

Mrs Rattray-Wagner - I think that is more to the point.

Mr DEAN - Well, they may well have done that, but I might add that some of those people who appealed had their valuations increased as well. Some stayed the same, some increased, some received a lower valuation of their property. But people are interesting. I will just give you an example of one case where a person living in a highly valued property, about the $500 000 mark, appealed against the valuation of their property, and I might add successfully appealed the valuation - it was decreased - and within a matter of days, that property was placed on the open market at about $100 000 above the original valuation as provided by the valuation company. That is a fact; it was in the paper and it was identified. People like the value of their homes being increased, they do not like the extra rates that apply to it, but of course at the end of it if they sell their property they very much appreciate that, and I suppose that is reasonable.

Mr Wilkinson - Did they sell it?

Mr DEAN - Yes they did.

Mr Wilkinson - For the same price?

Mr DEAN - Well, I do not know whether they got the $100 000 over, but they had advertised it for that and so no, I cannot be absolutely sure.

Mr Wilkinson - A friend of mine - through you, Mr President - just recently purchased a house on the virtual guarantee of the real estate agent that they were going to get x amount. It did not sell; they had to buy the other house; it was not subject to a finance clause or subject to selling the other house clause, then they had to sell theirs for $60 000 under what the real estate agent told them was going to be the minimum price that they would get. Funnily enough, the real estate agent got the contract to sell theirs.

Mr DEAN - Yes. Strange deals go on out there, there is no doubt about that.

People accept increases on properties, but I guess because of the long period between the valuations in Launceston in particular, and a lot of that was not the doing of the council, it was a problem that has already been referred to in a briefing we had this morning where a valuer was contracted to do it, that fell apart and of course time went on as well and by the time the valuation was done it was about seven -

Ms Thorp - The rate could have been dropped considerably though.

Mr DEAN - Well, it could have been but unfortunately it was not, it was still going up right at that very time. People can accept increases in property valuations but, as I said, when it is 200 per cent and 300 per cent and even more - there are cases where properties have gone up even more than 300 per cent in the Tasman area for a start; I read in the paper where some had gone up in excess of, as I understand it, 300 per cent - it is a huge jump and it means a jump in everything else unfortunately, particularly the rates. But we have gone through, I guess, the most volatile three-year period for property increase - three or four-year period - that I am aware of in this State and whether or not we will ever see another one, Mr President, I do not know. This situation may not occur again in the foreseeable future and I would think probably it will not.

Mr Hall - I think you are right; it has levelled out now.

Mr DEAN - Yes, it certainly has levelled out now and in actual fact it is coming back the other way. That is where this bill will be very effective because where house values now decrease, Mr President, that will be shown in, of course, two-year valuations of these properties -in their rates - and therefore one would expect their rates to decrease at the end of that two-year period if property valuations are dropping. Before, of course, because of the seven- year period, even if they dropped they got no relief from that at all because the revaluation was done at the end of a seven-year period and that is the sad situation. It became very upsetting to have elderly people walking into the office in tears pleading for help and the council not being able to give it to them; it was a very, very frustrating period for the council and Launceston in particular and, I would suggest, for those other councils who have gone through it.

The fact remains, Mr President, that we cannot ever go through that situation again and a repeat of that would have diabolical repercussions and therefore, as I said, this bill was necessary. I commend the staff within the government area who have brought this bill forward. Very clearly the bill is supported and I will talk on that in a moment from the point of view of our corporate services officer who provided me with a report on the way he sees the new bill.

This caused the Launceston City Council, and I dare say other councils, to get out there and look at the rates to see how they can better adjust them from a number of other points of view as well. It is no secret that the Launceston City Council went right around Australia and very closely reviewed 18 other systems used in and around Australia to come up with what they thought was probably a better option. But, unfortunately, the position was that the system we were using was found to be probably up there with the better ones. This year the council saw the position of setting a number of set prices for sewerage, water and a few other things which has now levelled things out a little bit more. It has provided some relief for those people right at the top end and again those at the bottom end have had to pick up a little bit because they were getting cheaper sewerage rates which were set on the annual assessed value of their properties, but now it is a fixed rate. It does not matter where you live you pay the same sewerage rate and I think you should do too.

Ms Thorp - Sewerage is one of the great equalisers, isn't it?

Mr DEAN - It is a great equaliser.

Members laughing.

Mr DEAN - I will just quote from a couple of documents here from the Group Manager of Corporate Services in the Launceston City Council who had a close look at the bill. The document reads:

'The valuation profession has had difficulties attracting people over recent years.'

And we know that that has been a cause of great concern and that was mentioned this morning in the briefing, Mr President. It needs to be addressed. We need a lot more people coming into that area and it would be certainly good, in my view and I think the view of a lot of councils, for this position to be one within the Valuer-General's area, Mr Rae's area. If it was operated from there I think we would get a much better service and a much more accurate return on property valuations. It is just sad that that really has not been able to continue.

Again I quote:

'Those who have taken on property valuation as a career have often been attracted to private valuation work rather than the "mass appraisal" government work.'

And that is what has happened. They have moved off into the private sector where it has been far more attractive to them as far as the financial recompense is concerned.

I quote again:

'Competition policy changes, concerns with the cost of municipal revaluation and difficulties recruiting qualified staff culminated in the tendering of local government revaluations. This has had limited success due to:
The shortage of valuers able to undertake the mass appraisal work, and Valuation requirements differing between States.'

And there is a difference between the States. I quote again:

'In the case of Launceston, the first tender resulted in an interstate contractor who was unable to complete the work. The second tender also resulted in an interstate firm being chosen. The valuation has been completed but it has involved a "steep learning curve" for all those involved in the process; valuers and contractor administrators alike.'

The future, and I quote:

'Hopefully training courses will be more accessible and people can be attracted to property valuation as a career. A mainland valuer has now established a base in Launceston and hopefully can now develop the local knowledge to complement its computing systems.'

That is a bright side of this where we may get some relief. The new valuation system with definite six-yearly cycles and introduction of indexation will hopefully stabilise the system and bring renewed credibility to the values that are set.

I just want to briefly quote from another document which is specifically looking at the new bill and some of the dot points here I will refer to, Mr President:

'Will assist in transition between revaluations. It won't of course change the values that are determined in the full revaluation.'

It cannot do that.

'Will be of particular benefit to property owners where the value of the property is decreasing'.

And I did previously refer to that.

'Previously these people could have to wait a long time for a reduction in rates'.

They were paying rates at that higher level when in actual fact if the two-year position had been in there previously their rates would have dropped in that period of time. Also:

'Will provide a transitional mechanism where values are steadily increasing and so may overcome some of the more dramatic changes.

Will place emphasis on maintaining the accuracy of property usage information to support the indexation process. This in turn should help the revaluation process.

Will mean at each two years Councils will have to manage a "mini-revaluation" and the uneven effect this has on rates across the municipality.

Should the Valuer-General now wish to review other aspects of the legislation to build on this improvement then this may be timely.'

This is, I think, what the member for Nelson was alluding to.

'For instance, there have been some calls for a review of the 4% minimum AAV. Whilst there are valid reasons for the use of 4% and I understand a standard 5% to NAV applies elsewhere, it may be worth revisiting.'

As I said from the outset I fully support the position of the member for Nelson, Mr President, and I understand you also had some concerns with regard to the 4 per cent position and so do I.

I just want to briefly quote a comment from the George Town Council when they had a look at the new bill:
'Council considered the implications of this legislation at its October meeting. It was acknowledged that the adjustment factor process would add some degree of complexity to the rating process and will involve some degree of additional work for Councils to maintain the property data base and manage queries in relation to the proposed changes.

Despite the above it was also recognised that the proposed process will allow for the application of changes to valuations to be implemented for rating purposes on a biannual basis, help to minimise the impact of large movements in rates caused by movements in the valuation base, and allow Councils to reconsider and amend their rating provisions to ensure rates calculations are equitable and remain within Council's expectations and give ratepayers the opportunity to adjust to increased rates over time, based on movements in the valuation base.

Taking the above into consideration Council supports the intention of the changes to the Valuation of Land Act 2001.'

I could go on Mr President. I was going to refer to the same document that the member for Nelson did from the real estate agent. I do not think I need to. That has been adequately covered with comments from that document.

Mr Parkinson - Have you spoken with the member for Nelson about his proposal?

Mr DEAN - I have discussed it with him.

Mr Parkinson - Wouldn't he listen?

Mr DEAN - He listened. I do not disagree with it. I have said all along that I do not disagree with the position of the reviewing of the 4 per cent. I think that is a reasonable position, a reasonable ask in all of the circumstances.

Mr Parkinson - But you are not asking for it to be changed now?

Mr DEAN - No, he is not. I do not think that he asked for it to be changed now. I think he is saying that it should be reviewed. It should be looked at. Now is the time to do that and I think he was asking -

Mr Parkinson - It is really a question of the type of review and how much angst you want to put local councils through as part of that review process. How much modelling do you want them to have to put up with?

Mr DEAN - As I said this morning during the briefing and I just repeat it again, the fact remains at the end of the day -

Mr Wilkinson - People are paying. You cannot forget about them.

Mr DEAN - The fact remains that councils have to get a certain return from rates to exist. Councils set what that requirement is and rates are calculated accordingly. If an adjustment is made to the 4 per cent, as I said to the member for Nelson, then that money has to be picked up somewhere else. You cannot get rid of that and still charge others the same. It has to be balanced out right through the whole process and that is where the difficulty comes. Is there a fairer way of doing it? If there is, we need to find it and that is why the review has been requested. Probably there is another way, I do not know. But I can assure this Council that I am aware of a number of local governments which are looking at their rates very seriously. A number of them have come to the Launceston City Council to seek some advice as to what is happening in that area, to give them an indication as to where they should go as well. So local government is working across the board with the Local Government Association of Tasmania to determine a better way forward in relation to this and I look forward to that, Mr President. I will be supporting the bill because it certainly does satisfy the concerns of most local governments and I can say that the Launceston City Council had already made a determination that they were going to go down this track whatever happened because it needed to be done.