Danny Betros, managing director of CBRE Cairns, unloads on Cr Moller’s justification for rate rise

Property market leaders warn of more rental pain if a Cairns council investor rates hike is adopted, with one calling it nothing more than a “wealth tax”. What they’re calling for.

A PROPOSED new rating category for investment properties has been labelled nothing but a wealth tax by a leading Cairns commercial realtor.

CBRE Cairns managing director Danny Betros said Cr Brett Moller’s recent justification for targeted rate rises on non-principal places of residence (N-PPR) was insufficient and demonstrated the council was “totally out of touch with reality”.

“The more disincentives this council puts in place to invest in Cairns, the less rental properties we’re going to have,” Mr Betros said.

Danny Betros, managing director CBRE Cairns, compared the council’s decision to rate investment properties higher to a “wealth tax”. Picture: Marc McCormack

“Investors make a three to four per cent return when they buy a house … this move is just going to make that return, and incentive to invest, less.

“This is like a wealth tax. It’s a stupid policy … it shows a complete lack of understanding of the market. This is the last thing we need right now.”

In an opinion article penned for the Cairns Post, Cr Moller said the combination of low past rates, asset management and capital works obligations, and an increase in the cost of procurement, meant council had identified a shortfall of $50m in a 10-year budget model, which meant an additional $5m in revenue needed to be raised each year going forward to balance the books.

He said a new rating category for N-PPR of between 15 and 25 per cent on top of general rates would avoid the budgetary balance being achieved by hitting all properties, including commercial, with a four per cent per annum rate increase “on top of CPI increases”.

Cairns Regional Council Division 1 councillor Brett Moller said the new rating category would rectify a $50m shortfall in the budget over the next 10 years. Picture: Stewart McLean

“If a new rating category is not introduced … those lessees and small business owners that pay outings in their lease will be slugged this extra amount,” Cr Moller said.

Mr Betros said an argument about which properties to target with a rate rise should be second to a discussion about how council should be looking to save costs elsewhere.

“There’s a lot of waste in this council and a lot of ways it could look to save. It should look there first,” he said.

“Why is there a revenue shortfall? Has anyone asked that? They’re admitting their incompetence over the last 10 years; they’re admitting they messed up.”

Speaking to the Cairns Post in October, Tom Quaid, REIQ Cairns zone chairman, said balancing council’s books at the cost of people’s homes would not be popular.

REIQ Cairns zone chairman Tom Quaid. Picture: Supplied

“We’re in a market where we need to be encouraging people to invest in property in Cairns. I think charging them more for that is a dangerous approach to take,” Mr Quaid said.

“I can appreciate councils need to make money where they can. It’s not like they don’t have the same inflationary costs everyone else has to deal with. But, at the moment, it’s a very delicate spot to be poking.

“Other councils, instead of applying this across all non-principal places of residences, have targeted specifically those set up for short term accommodation.”

Cr Moller said the council, in its budget deliberations, looked to find efficiencies in its operations to cut costs.

“Many sporting and community master plans have been delayed and projects reduced in scope or staged like the Kenrick Park Destination project … which was pushed out for stage one this year and another stage next year to be considered,” he said.

“Council rates revenue increases every year. As part of the 2022/23 budget deliberations, council looked at many options on how to equitably distribute the additional rating requirements.”

Cr Moller said the council’s past focus on efficiency and cost-effectiveness allowed for low rates and high capital spend for needed past projects.

“Council raises revenue to deliver this when it’s needed, not bank extra dollars away for a rainy day, always looking for a balanced budget of income against expenses in each financial year,” he said.

“With a world pandemic, volatility in procurement, CPI increases and mortgage rate increases, council needs to be able to adapt.”

Originally published as Danny Betros, managing director of CBRE Cairns, unloads on Cr Moller’s justification for rate rise