Valuer-General Delfina Lanzilli under fire ahead of five-year revaluation project

THE state’s Valuer-General has come under fire ahead of a $15.4 million program aimed at improving the accuracy of property valuations across the state.

Valuer-General Delfina Lanzilli. Pic: Dylan Coker.

THE state’s Valuer-General has come under fire from the Property Council and Upper House MP John Darley ahead of a $15.4 million program aimed at improving the accuracy of property valuations across the state.

They fear CBD property valuations could more than double as a result of the project, landing property owners with spiralling land tax bills.

The five-year project will commence later this year and will involve more rigorous valuation methods, including additional data collection, more physical site inspections and less reliance on the mass appraisal techniques currently used.

CBD properties will be targeted first, moving to the inner suburbs and then further outwards.

A State Government spokesman said the program would “reset the valuation base to market levels”, but would not comment on the expected revenue windfall.

In a 2016 budget and finance committee meeting, Under Treasurer David Reynolds denied Mr Darley’s suggestion the revaluation program formed part of a deal for Valuer-General Delfina Lanzilli to deliver additional annual revenue of $60 million to State Government coffers.

“I hope the revaluation program is not just a stealthy way for the government to raise revenue,” Mr Darley, a former Valuer-General said.

“It is up to rating authorities to monitor this and make adjustments if they get a windfall gain as a result of higher valuations.

“I am especially concerned about land tax. South Australians pay some of the highest land tax in the country and even relatively minor increases in large commercial properties will result in a windfall gain for the government.”

Site and capital values will both be assessed as part of the revaluation project, and are currently used to calculate council rates, water bills, land tax and other levies including the emergency services levy. However, land tax bills are expected to be hit hardest as they are calculated using a fixed rate rather than a variable rate set by individual authorities.

Land tax, which is calculated using site values, is paid by investors whose total landholding is valued in excess of $353,000.

It kicks in at a rate of 0.5 per cent, jumping to 3.7 per cent for holdings valued higher than $1.176 million.

Property Council SA executive director Daniel Gannon said he’d been informed by the Valuer-General’s office that property values in the CBD could double as a result of the revaluation project.

He is calling for a reduction to land tax rates to compensate property owners for the likely increase in valuations, calling for the top land tax threshold to be cut to 1.9 per cent - the average across other states.

“This exercise will not just hit owners of commercial properties, it will also have a direct impact on the 130,000 South Australians who own a residential investment property,” he said.

“The property sector is not against recalibrating valuations. If they need to rise, then that’s the will of the market. But improving valuations without improving land tax is fixing half the problem.

“The Government is behaving like the three wise monkeys because it is refusing to lower land tax rates at the same time it is looking increase valuations and double them in some cases across the CBD.”

The State Government spokesman ruled out any changes to the current land tax regime.

“The current revaluation program is intended to improve accuracy, not to simply increase valuations,” he said.

“Some properties may also decrease in valuation.

“A fair comparison of South Australia’s land tax with other states should not only consider the top rate but also the relative value of properties, as land values are generally lower in South Australia compared to other mainland states.”

Opposition treasury spokesman Rob Lucas said significant increases in property valuations could threaten the future of some businesses.

“The Weatherill Labor Government continues to slug South Australian households with high taxes and charges, and is refusing to even consider land tax reform,” he said.

“Unlike Labor, the Liberal Party will engage with South Australians on tax reform including land tax, and we will be releasing our overall tax package ahead of the state election.”

The new valuations will come into effect from the 2019-2020 financial year. Ms Lanzilli said property owners would be consulted with in the event of significant changes.

“Where they feel that their valuation is not supported by market evidence, they will have the right to object to their valuation at no cost,” she said.

The revaluation program was allocated funding in the State Government’s 2016-2017 budget announcement, a week after Ms Lanzilli and her staff were transferred from the Department of Planning, Transport and Infrastructure to Treasury.

Mr Darley suggested that move could have compromised her independence.

“I can see no reason why the Valuer-General moved from DPTI to Treasury,” he said.

“In the 60s the Treasurer instructed the Valuer-General to increase valuations in order to increase revenue. It would be a great concern if this were to occur again as the Valuer-General is an independent statutory officer who cannot be directed by anyone.”

A State Government spokesman said the transfer was made for “administrative reasons”.