Connell Road Coalition

LAND TAX - THE UNTOLD STORY

CORRUPTION is the abuse of entrusted power which
- Undermines fairness
- Distorts decisions
- Erodes public trust in institutions.

"Sunlight is the Best Disinfectant."
— Anonymous

INTRODUCTION

I own a 60 year old plain vanilla warehouse in Oakleigh. It has four walls and a roof and sits on 903 square metres of land. Between 2022 and 2026 my Land Tax went up from $1,200 to $10,230. This is a 852% increase. This is astounding since my Capital Improved Value did not move.

What is even more interesting is that during this period the Valuer-General’s surrogate put up my Capital Improved Value by 32% and then reduced it by 24% a year later. What is the bizarre valuation programme they are using to get this result?

FORMATION OF THE CONNELL ROAD COALITION.

I visited my neighbours at 38 to 48 Connell Road in Oakleigh to see what their experience had been. These blocks of land are identical in size and all six warehouses are almost the same in size and cover the same land area. Their experience was the same as mine.

Examples:
No. 38 – A cabinet maker employs 2 people and had a 576% increase
No. 48 – A wine merchant had a 975% increase

Small businesses have no way they can defend themselves from such enormous increases, as one only gets a 60 day window to lodge an objection. I therefore decided to create the Connell Road Coalition and see what we could do.

WHAT IS LAND TAX?

LAND TAX is the tax on the value of the land of a commercial premises ASSUMING NOTHING IS ON IT. That value of the block of land is called the SITE VALUE.

WHO DETERMINES THE SITE VALUE?

The SITE VALUE is determined by Valuer-General’s surrogates. They determine the CAPITAL IMPROVED VALUE (which includes buildings) as well. These figures are on everyone's rates notices.

WHO ARE THE VALUER-GENERAL’S SURROGATES?

In 2022 the Valuer-General finalised its centralisation of all 79 valuers who previously worked for the Councils into its head office. The valuers who do the work for the Valuer-General receive their work after they tender for it. What possibly could go wrong?

From 2022 Land Tax in the state of Victoria took off.

They did a very good job generating revenue for the Jacinta Allan government. Unfortunately the viability of the state’s small businesses took a big hit. Coffee shops, hairdressers, small businesses are all going broke to pay for Jacinta Allan's endless credit card spend.

Some interesting links:
Valuations detailed spreadsheet.
Hurting property owners and businesses alike.
Land tax rip-off.
More than $82 million in incorrect land tax bills.
Valuation Best Practice Guidelines 2025.
38-42 Connell Road detailed image.
44-48 Connell Road detailed image.
Market Rental Worth 42 Connell Road.
Estimated Building Cost 42 Connell Road April 2025.

Land Tax Chart

Site Value Chart

Building Value Chart

38 Connell Road graphs

The Questions that have to be asked...

Did the Jacinta Allan government ask the Valuer-General to increase Site Values in 2022?
Did the Jacinta Allan government give the Valuer-General a budget to fulfill in 2022?
Were the Valuer General’s surrogates given a budget to fulfill by the Valuer-General in 2022?

Transparency and accuracy of valuations...

The tender process as well as selection criteria for external valuers needs to be transparent. There needs to be continuous oversight to ensure the valuations reflect commercial reality. In particular there should be no real or perceived pressure on valuers to provide valuations that maximize the Land Tax collected. The methods used by valuers need to be continually scrutinized. For example, ensuring the valuations are not simply updated by computer algorithms without sufficient real world data being used.

DETAILS OF THE VALUATION MANIPULATIONS...

FOUR YEAR SUMMARY OF OUR COALITION:
- Average Capital Improved Value: +16%
- Average Site Value: +60%
- Average Building Value: -40% ( (or -48% if you take building inflation into account)
This has led to astonishing Land Tax increases for all of us.

Property CIV SV Building Value Land Tax
38 +21% +78% -46% +476%
42 No Change +42% -40% +752%
44 +19% +41% -12% +1239%
46 +21% -41% -46% N/A
48 +36% +78% -20% +975%

Some of the most absurd building valuations by the government's valuer -

Property #48:
A 650 square metre, 8 metre high modern warehouse valued at $290,000 in 2024. Laughable - replacement cost would be $1,500,000.

Property # 44:
A 775 square metre old style warehouse valued at $250,000 in 2024. Laughable - replacement cost would be $1,200,000.

Property #42:
In 2022 CIV was valued at $1,900,000. In 2023 CIV was $2,500,000 then in 2025 CIV was back to $1,900,000

WHAT THE VALUER-GENERAL DOES NOT WANT YOU TO KNOW...

If one takes the Site Value from the Capital Improved Value you get the Building Value. This is where the ABSURDITY or the CORRUPTION lies – depending on what your perspective of the situation might be – probably the latter as this State Government tolerates corruption.

The average Building Value assigned to the Connell Road Coalition has DROPPED 40% according to the Valuer-General’s surrogate. This is astounding given that building costs have INCREASED by a minimum of 20% over the same period.

THIS HAS LED TO A 60% INCREASE IN LAND VALUE FOR EACH OF OUR COALITION OR A TOTAL INCREASE OF 1035% IN LAND TAX FOR THE WHOLE OF OUR COALITION.

42 CONNELL ROAD SUBMISSION FOR SITE VALUE REDUCTION...

I have made a submission to have my Site Value reduced by 39% from $1,310000 to $800,000. This would lead to a 66% drop in Land Tax.

My methodology is:
1. Remember Site Value is calculated as a vacant block of land.
2. I had an architect draw up a warehouse on my “vacant block” of land.
3. I had the building costed and was given an estimate of $1,200,000.
4. An Estate Agent advised me I could lease the new building for $100,000 p.a.
5. I assumed a capitalization rate of 5%.

This would result in a Market Value or CIV of $2,000,000 less building cost of $1,200,000 which means the Site Value must be $800,000.

I am in my seventh month waiting for an answer to my objection from the government's valuer. My workings have been shown to a number of Commercial Real Estate Agents who cannot fault my methodology.

I hope this is of interest to any small business struggling under the weight of this extraordinary business destroying tax.

IF EVERY COMMERCIAL PROPERTY HAS BEEN TREATED LIKE THE CONNELL ROAD COALITION THEN EVERY SITE VALUE IN VICTORIA HAS BEEN OVERSTATED – AS WELL AS EVERY LAND TAX INVOICE.

WHAT YOU CAN DO...

If you feel your valuations are wrong or artificially adjusted to increase the Land Tax payable, the first step is to lodge an objection. You can also make others aware that they need to scrutinize their Rates Notice to check the valuations.

Use the link below to provide feedback and suggestions. Also let us know if you would like to be contacted in the future and include your contact phone number.

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