Tourism Planning Taskforce Report - Western Australian Planning ...

Chapter 7Term of Reference 47 Term of Reference 4Investigate the implications of thedevelopment of permanent residentialaccommodation and/or strata titling of landzoned for tourism development on thevaluation of individual properties andsimilarly zoned land under the Valuation ofLand Act 1978 and associated land taximplications.The impact of land tax on the sustainableoperation of a range of regional touristaccommodation facilities has become an issueof significant concern to the tourism industryover recent years. Land tax increases havebeen perceived as affecting the generalaffordability of coastal holiday opportunities asoperators increase prices to meet increases inland tax. There also has been an impact onthe range of accommodation available, as thepressure for redevelopment has increased onlow-cost tourism facilities. In addition totourism industry concerns, this has resulted ina significant level of public reaction and isaffecting the Government’s ability to achieveits objective of providing a range of holidayopportunities in beachfront localities.In addition to the impacts of strata titling andthe introduction of residential components totourism developments on the valuation oftourism sites, the use of blanket tourismzoning structures under new town planningschemes has been a significant contributor tothis effect.7.1 BackgroundOver recent years, coastal towns in WesternAustralia (eg Busselton, Broome, Mandurah)have experienced high and sustainedpopulation growth rates, which have coincidedwith significant growth in tourist visitation andaccommodation development. These factorshave resulted in increased demand,speculation and increased property values forcoastal properties for residential and tourismuse.In 2000/01, the Valuer General’s Office (VGO)revalued land in a number of regional coastalareas, which resulted in many tourismoperators receiving substantial increases intheir land tax bills. These increases were mostpronounced in the Shire of Busselton, rangingfrom $2400 to $93000 (from 33 per cent to652 per cent). The process of objection to theunimproved valuations did; however reduce anumber of these increases, with the highestpost-objection tax increase being 343 percent. A number of the premises to receivesubstantial increases were caravan parks.This gave rise to expressions of operator andpublic concern as the increase in governmentcharges was seen to be promoting tariffincreases, thereby reducing publicaccessibility.The tax increases arose from increased landvaluations for the subject properties andprogressive land tax scales. Although landvaluations in the area are re-establishedannually, the increases reflected a four-yearperiod since the previous comprehensivevaluation review. The gazettal of a newplanning scheme that provided a blanketzoning for all tourism sites, from caravanparks to resorts, also resulted in upwardpressure on land prices and valuations. Anadditional unintended consequence of the landtax increases has been increased financialpressure for redevelopment of low-cost touristaccommodation facilities to styles ofdevelopment that achieve higher grossreturns, particularly along the coast. Responseto these pressures also has been facilitated bythe more flexible planning frameworkintroduced with the use of the blanket tourismzoning.It is noted that the VGO has committed toundertake more intensive annual reviews inmajor regional centres to minimise futurecatch-up increases in valuations.7.1.1 Land valuationsUnder the Valuation of Land Act 1978, land isvalued for land tax purposes at its unimprovedmarket value (UV), with this reflecting thehighest and best use of the land. Where arange of developments are included within asimilar land zoning, such as tourism, this canresult in similar land values on a per hectarebasis being determined irrespective of thenature of existing development on a site, eg acaravan park site may be valued on a unitarea basis equivalent to a five-star resort site.Tourism Planning Taskforce Report55