I moved the following motion on 7 March 1985 at the A.G.M. of the Victorian Division of the Australian Institute of Valuers

“THAT this Institute have input to the national summit on taxation reform by way of a submission which indicates the many practical defects of taxes on wealth, death, or capital gains, and which supports in lieu of those taxes, a flat rate federal tax on all Australian site values as an equitable, non-avoidable and relatively cheaplyadministered basis for raising revenue”.

The motion was moved by me, Bryan Kavanagh AAIV, and seconded. The President announced to the assembly that he was reducing my time to speak to the motion. I had only two minutes. I said the following (and snuck over my time):-


“Mr. President, fellow valuers …. the major political parties run scared of tackling the tough decisions that need to be made on tax reform. They need to be prodded into action – and we should play our part – both for the sake of the Australian community and of the valuation profession.

Since I forwarded notice of this motion to the Institute in January, I see that the Australian Democrats have proposed an identical tax, plus a ‘materials-added’ tax. I congratulate them for drawing attention to the need for a national property-based tax.

How bad is the Australian tax system? …. There are not too many convinced of its equity. The December half-yearly ‘Financial Review’ summary carried the excellent lead article by Peter Jay: “How Tax Distorts Australia’s Economy”. It documented how high marginal rates of income tax act to penalise job-creating capital investment by granting special favours to investment in capital gains-seeking tax shelters.

Most tax experts agree. Professor Russell Mathews opts for a value-added tax plus a capital gains tax to remedy the situation. We certainly need a tax on the current tax hedges themselves. But capital gains taxes as variously imposed in the US, the UK and elsewhere have not curbed speculation in realty. After indexing it against inflation after it occurs, the UK capital gains tax is just one more tax and yields only 1% of national revenue. Similarly, death duties and wealth taxes as employed overseas have not significantly deterred capital gain-seeking. These taxes are particularly intrusive, or invasive of personal privacy.

Here’s where valuers come in …. We don’t need these cumbersome forms of capital taxes used overseas. Unlike other countries, in site valuations throughout most of Australia we already have the simple structure and machinery on which to levy a federal tax which will deter non-productive property rorts. Naturally, Australian site valuations will have to be brought to a common date and reviewed annually. This indicates an expanded role for local government valuers.

A flat rate, universal site tax is the most practical when you consider parameters of simplicity, effectiveness and non-intrusiveness. It’s the cheapest form of tax to administer and can’t be avoided. Surely, the real estate industry has a greater interest in genuine property use than in fostering increasingly higher prices?

We are alone in the developed western world in having no national tax on capital per se. Property taxes comprise only 4.5% of all Australian revenues; income taxes comprise 56.4, so, there is certainly room to move in this direction. A Commonwealth Government site value tax could be deducted in instalments from salaries – with State and Local Government rates, if required. A 5% tax on site values would allow a 40% reduction in income tax, and the incidence would be more equitable.

Working in the Tax Office, as I do, it is quite obvious that there is no longer any connection between wealth and disclosed income – if ever there was. The name of the game these days is minimising income by investment in speculative tax shelters. It’s in those shelters true ‘ability to pay’ is to be found.

I’m not moralising against particular companies and individuals …. I’m looking at the damaging cumulative effect on Australians and the economy, saying – along with many others – that the tax system has set up false incentives …. destructive, non-productive incentives …. This needs changing.

The choice on this motion is simple: Are we, the Institute, prepared to promote the use of the existing Municipal site valuation structure to the Federal Government? Or, have we a greater commitment to preserving tax shelters?”


The motion was lost – overwhelmingly. The President declared that it had been “too political”.

Apparently it had now become ‘too political’ for an institution that had been founded by Federal Land Tax valuers.