The Australian Competition and Consumer Commission will allow property owners to use independently published GST adjusted inflation figures to calculate CPI linked rents.
In a move welcomed by the Property Council, the ACCC’s News for Business 16, published recently, said:
“Following consultation with the ACCC, a peak industry body commissioned an expert third party to develop time series data concerning the impact of the GST on the CPI for two years from 1 July 2000.
“The ACCC does not endorse in any way the estimates made but does accept their use to be an effective way of complying with the ACCC price exploitation guidelines as they relate specifically to the CPI linked price adjustments,” it said.
The confusion over how to calculate CPI linked rents arose when the ACCC warned property owners they could not include the GST induced inflation spike in rent calculations if it increased their net dollar margin.
The Property Council lobbied heavily for the use of independent CPI figures, hosting a private briefing last month with ACCC chairman Professor Allan Fels as well as regularly meeting senior ACCC officials.
The figures were released in December by the respected economic forecasters, Econtech, at the request of the Business Coalition for Tax Reform of which the Property Council is a member.
The figures give a state-by-state inflation forecasts for the next eight quarters.
Property Council chief executive Peter Verwer said the ACCC edict alleviated the industry’s concerns, particularly over a proposal to force landlords to gain permission from a tenant to use independent CPI figures.
He said the ruling was a terrific start to this year’s Property Council advocacy program.
“The ACCC’s ruling will ensure property owners don’t breach price exploitation guidelines, tenants are given accurate information and everyone benefits from a simple rent adjustment system,” Mr Verwer said.
“The win cures a major headache for the industry and we applaud the ACCC’s willingness to consult on this matter, particularly ACCC chairman Professor Allan Fels for listening to our concerns directly.
“With the Australian Bureau of Statistics and Federal Treasury unable to provide accurate CPI figures that take account of the GST, an alternative measure was paramount for property owners to comply with the law.
“In partnership with the Australian Retailers Association, we requested the Business Coalition for Tax Reform to commission an economic forecaster to calculate the alternative figures.
The next step was to present the figures and our case to the ACCC who were willing to consult at every turn.
“The end result has been a ruling that will provide much-needed certainty for tens of thousands of CPI linked property leases in Australia.”