TIMBER GETTING, NORTH COAST DISTRICT
In 1887 Sir S. W. Griffith passed an amending and consolidating Divisional Boards Act in which many defects of the original measure were corrected. About the same time he passed an Act to relieve the Treasury from the excessive burden of the £2 for £1 endowment, which had been extended in 1884 for a second five-year period. Under the amended law only such sum as Parliament might vote in each year was to be rateably divided among all local authorities. After that time the endowment diminished until in 1893 it reached a very small sum. Afterwards the amount remained at about 6s. in the pound until 1902, when, in passing the new amending and consolidating Local Authorities Act of that year, the Philp Government made no provision for continuance of the endowment. In 1903, therefore, owing to the embarrassment of the Treasury in consequence of heavy deficits for several years in succession, the endowment altogether ceased, and since that time the Government have steadfastly refused to listen to proposals for renewing the payment, on the ground that each governing authority should raise its own revenue by taxation or otherwise, and not depend upon endowments collected by any other governing authority. The stoppage of the endowment was in some degree compensated for by the extension of the rating powers of the local authorities, but the exercise of these has no doubt accentuated the drop which occurred in assessment values after the crisis of 1893. Some councils, through failure to make use of their powers of rating, have had an insufficient income, so that in parts of the country the roads are now in a less traffickable condition than they were a quarter of a century ago. In other cases, however, the local bodies have so used the powers conferred upon them that they make no complaint of insufficient income.
From the day of the presentation to Parliament of the Divisional Boards Bill there had always been an outcry, among the farming ratepayers chiefly, against the taxation of improvements. In 1890, therefore, after ten years' experience, the Government of the coalition, whose leaders had long been severed by difference of opinion on the subject of land taxation, perceived in a universal levy on the unimproved value, so called, a method of mutual reconciliation which would meet the demands of many true exponents of local government principles, and they agreed to introduce the new system. The "unimproved value" is by no means an accurate definition of what either the taxpayers or the Legislature at the time desired. But no one has yet discovered a more satisfactory definition, and therefore it stands.
Up to 1890 the assessment had been on the net rent a property might be reasonably expected to yield after deducting the cost of rates and insurance and the amount necessary to maintain the property in a condition to command such rent. This was, in short, the old basis of assessment in the mother country; but to meet the objection to the assessment of improvements the Government, in introducing the first Divisional Boards Bill, had modified the valuation clause by the proviso that the improvements on land should be assessed at one-half their value. This was a modification of the New Zealand assessment method, and it gave fair satisfaction for a time.
Country ratepayers for the most part approved the change to the unimproved value assessment; but speculators in unoccupied city, town, and suburban lands regarded it as a gross injustice. They not unnaturally complained that an allotment bare, or with a mere hut upon it, would pay as much in rates under the new system as the adjoining allotment which might be the site of spacious business premises or of a palatial dwelling. To this the reply was that the speculative holding of city and suburban lands inflicted gross injustice upon the man who wanted at existing value an allotment for his own use.
The Valuation and Rating Act of 1890 passed, however; and the law as it stands has the undoubted merit of simplicity in valuations. On the other hand, the rate levied under the unimproved value assessment upon vacant lands is sometimes oppressive, and appreciably reduces their capital value. Another unforeseen effect has also been realised. The value of a highly improved allotment tends to become depressed to the value of the unproductive and unoccupied allotment contiguous or adjacent to it. Hence an intending buyer is apt to ascertain the local authority valuation of any land he needs, and to regulate his price accordingly. In a buoyant land market this might not much affect the selling value, but for twenty years past the land market for city or suburban properties has been the reverse of buoyant. So the unimproved value mode of assessment has apparently assisted to make a substantial reduction in the market value of city and suburban properties. But that is perhaps a less evil than may at first sight appear. The speculative inflation of land values is simply a tax upon the user for all time; and the moment the income-earning value is exceeded the excess must be regarded as an unjust charge upon posterity.
Of course land values will eventually find their true level, whatever law of rating may be in force. It may be conceded that the unimproved assessment has caused distress among landowners who had no means of improving their properties, and could only find a market for them at a heavy sacrifice. Still there is no disposition on the part of the majority of ratepayers to revert to the old annual value system, and there is not likely to be any alteration in the law in this respect unless for the removal of some obvious administrative anomaly. For, as the coalition leaders agreed nineteen years ago, the local rate has become a land tax pure and simple, and if it be held that more money is wanted for development the simpler course is to allow the local authorities to give another twist to the rating screw. This, as a matter of fact, most of them have of late years done, and in many local jurisdictions the rate is now 3d. in the pound, when twenty years ago only 1d. or 1½d. was levied. In 1884 the total local rates levied were £120,479; in 1908 the total was £452,052 for, it must be remembered, an identical aggregate area. A local authorities' rate has the distinct advantage in a young State like Queensland that, whereas a Treasury land tax would reach only the freeholders of less than 20,000,000 acres, the local government rate is levied upon 460,000 square miles.