Land Valuation System inquiry – Government Response

The Broken Hill Chamber of Commerce has received notification that the Government response to the  Joint Standing Committee on the Office of the Valuer General titled Land Valuation System was  tabled in NSW Parliament on November 4, 2013.

The Committee has recommended a series of comprehensive reforms that address equity and fairness issues pertaining to the land valuation system;  a new process for objections and compulsory acquisitions that affords landholders procedural fairness; a clearer approach to valuation methodologies based on objective criteria or rules (a rules-based approach); and a new governance framework that replaces the Valuer General with a Valuation Commission. The Committee also recommends three year averaging of council rate valuations to dampen the material and significant volatility in the valuation system.

The Committee recorded four case studies arising during the Inquiry, the Leppington Compulsory Acquisitions, the Hornsby Quarry valuation, the Mid-Western regional valuations and the Perilya Mines litigation. The Perilya Mine case study related to rating and taxing valuations, and highlighted concerns about valuation integrity and quality control mechanisms, as well as demonstrating the significant impact that valuation decisions can have on local communities.

Perilya owns land with mining leases which consists of North, South and Potosi Mines and other land at Broken Hill (Perilya Mine). The land is used to produce lead, zinc and silver.

On 13 September 2007, the Valuer General determined the value of the Perilya Mine at $20.9 million for the valuing year commencing 1 July 2007. Broken Hill City Council relied on this valuation to levy rates on Perilya. Perilya lodged an objection with the Valuer General against the valuation, which the Valuer General disallowed. Perilya then appealed to the Land and Environment Court.

The Land and Environment Court allowed Perilya’s appeal and ordered that the Valuer General’s valuation be revoked and that, instead, the value of the Perilya Mine be determined at $4.9 million. The Valuer General gave effect to this decision by altering its Register of Land Values so that the value of the Perilya Mine was $4.9 million and providing Broken Hill City Council with this amended land value, causing a significant community issue about how a regional Council would repay $6.9 million.

Broken Hill Chamber of Commerce described to the inquiry of the impact of the Perilya land valuation decision in the Broken Hill community as follows:

“The financial uncertainty caused by this appeal and the flow on effects is already having an impact to businesses, especially small businesses. It has seriously undermined business confidence. Rate increases would significantly impact on the viability of a number of small businesses. This  would have a flow on effect to employment in Broken Hill.”

The Broken Hill Chamber of Commerce also said that the uncertainty in the community is exacerbated by the potential for other land owners to appeal valuations, particularly other mine operators in the region.

The Government’s response to the Committee’s report was received on 4 November 2013 and is available on the Committee’s website, along with the report and other documents associated with the inquiry.

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