Prosper Australia

photo credit: chaosinjune

letter to the Monash Journal

Site Value

ANGE Siouclis is correct to suggest “why not trim excess expenditure and unwarranted perks and costs” at Monash Council (Your View, November 24).

But to say that we all should pay the same amount of rates is wrong. That’s what Margaret Thatcher tried to push through in England. People in the former Shire of Mulgrave which became, in turn, the City of Waverley and now the City of Monash, have always favoured site value rating because it is fair.

As site value rating is the best system because it doesn’t fine you for improving your property, our new councillors shouldn’t tamper with it unless there is a ratepayer vote on the matter.
Anon

photo credit: Dunechaser

It seems that another whitewash of economic theory is being subtly thrust upon us with the ongoing Henry Tax review. According to Henry, he has re-written economic theory.

The 3 sources of taxation are now labour, capital and consumption. The Corruption of Economics continues with Land, the most essential of all factors of productions, all but left out of the equation.

We predicted that the outcome of this tax review would support a higher GST. We still have a year of compromises to go until the final report, but one would expect this damaging development to continue.

And here we have the property lobby commenting in typical unbiased fashion:

The Housing Industry Association’s acting Victorian executive director, Robert Harding, said a higher GST would be a more efficient money-raiser for the states if it were allowed to replace stamp duty, but he doubted that any government would have the political will to push such a change through.

Marc Moncrief quotes an independent source!

Why is the GST the preferred new medium of tax experts? It is a sleight of hand to introduce regressive taxation. A worldwide development is seeing GST as a means to downgrade the importance of progressive taxation (the lesser of two evils).

As the GST is a flat tax, with no tax free threshold, all citizens and visitors pay the same rate. This hurts the poor more than the wealthy.

If the mobility of labour is cited, surely the progressive means to capture revenue is via a Land based tax. A Site Rental on all land at a flat rate would naturally be progressive. Those living in Toorak have a higher site value due to location than those struggling families forced to live in the sprawling suburbs.

In the above quoted article, Brumby states that the Henry push to remove stamp duties and payroll taxes can only be funded by a lifting of the GST. We wait with baited breath in the hope that some sensibility will be reached by avoiding an increased GST. A higher holding charge on land will remove the speculative impetus that has caused this Global Financial Crisis (GFC). It would also fund the removal of the damaging payroll and stamp duties that we have been lobbying for.

Compliance anyone?

Fred Foldvary’s rapid fire insights on the GFC are summarised in this excellent speech “Why the Predictable Crash of 2008 was not a Market Failure”. From money supply manipulations to bailouts to the needed remedy, Foldvary flies through the stages of the cycle that have brought us to where we are today. Hitting it hard and straight to the point, Foldvary explains how Austrian economics interprets money supply and how this can be linked with Georgist critiques of the land based economy.

Fred Foldvary speech

Above is the main slide Fred refers to in terms of growth rates in the business cycle.

Stay tuned to the Renegade Economists this week for a fascinating interview with Fred Foldvary.

photo credit: 3blindmice

Land speculators with portfolios in Coolaroo, Cranbourne East, Caroline Springs, Nunawading and Parkville will be celebrating with their second free lunch in as many weeks.

Brumby’s announcement of new train stations in these suburbs has delivered windfall gains to those speculating on future infrastructure projects. One just needs to visit Coolaroo to see a number of vacant or under-utilised sites laying in waiting for such an announcement.

This handout follows hot on the heels of the 134,000 lot expansion in the 2030 boundary last week and the 90,000 re-zoning Brumby performed for the property lobby in March this year. It certainly rounds off a productive year for Melbourne’s real estate lobby. Surely there is no doubt as to who are the biggest contributors to state government coffers?

Whilst some are laughing all the way to the bank, commuters are befuddled at why they are facing a 5% increase in rail fares during an age of climate change.

These two extremes could be neutralised via a Land Value Capture system. If all landholders in the vicinity of the new train stations were to pay 5% of their land value back to the government over 20 years, then future rail expansions could occur within the time frame that future generations expect. This is how Japan and much of East Asia has profitable rail systems.

This handout is especially concerning when the 2008 I Want to Live Here report found thousands of inner city properties lying vacant. Why the need to stretch our infrastructure when central locations could be used more effectively with a more logical tax system?

photo credit: Poppyseed Bandits

When: 7pm, Thursday Dec 11th
Where: Prosper Australia, Frank Halkyard Library, Level 1/ 27 Hardware Lane, Melbourne
Why: Because the US style bailout is heading our way
Who: Fred Foldvary is the Senior Editor of the highly regarded Progress Report.

Fred Foldvary (USA) will provide an explanation of the real estate and business cycles, and their fiscal and monetary causes and remedies. Especially for daring minds, he will explain how to stop the current recession.

Hear Fred’s speech

With auction clearance rates in Melbourne again in the mid 50’s over the weekend (55% this week, re-iterating the trend of the last 2 months), there is a growing backlog of properties waiting to be sold. What is not widely publicised is that there are 30% less properties on the market than this time last year. This implies that beyond the low clearance rate and the mounting number of properties passed in, there is in all likelihood a growing number that are being withheld from the market until prices re-bound.

This is akin to late 2006/ early 2007 in the US housing market when there was a stand off between sellers demanding certain prices and buyers who were unwilling to enter the market. Six months later the mexican standoff was over and a cascade of properties hit the market, pushing down prices and triggering the sub-prime crisis.

Fred is one of our brightest minds. We hope you can attend this important lecture.

RSVP appreciated, gold coin donations to cover nibbles, drinks

photo credit: Dean Terry

If ever we needed any more motivation to burn the midnight oil, the Brumby government’s latest handout to the property lobby is just this. Just nine months since he handed out free lunch with the 90,000 blocks of zoned land announced in March, Brumby has now extended the 2030 boundary to accommodate 134,000 new homes.

Royce Millar was using the right language when he said:

BIG-NAME property speculators were celebrating yesterday, with the proposed stretching of Melbourne’s city limits set to deliver windfalls of many millions to some of Australia’s largest developers.

Will people put 2 and 2 together to realise that these windfall gains could help fund the abolition of regressive taxes like the GST? Do they realise there are more effective ways to push down the price of land?

Why did Brumby roll out the picnic blanket? Because the property lobby asked for it. What the property lobby asks for, the property lobby gets. The backbone to the release was a growing cascade of property reports showing that housing construction is falling behind population growth. But as our friends at bubblepedia have so eloquently shown by analysing Census figures, construction has outpaced dwelling growth by 4% (scroll to bottom of link).

Land supply is not the solution or the 90,000 land blocks released in March would have made a difference to Victorian land prices.

Land banking is the problem. Speculative hoarding of prime locations is the advantage land speculators have over other small businessmen. A higher Land Tax or Site Rental would discourage such activity and ensure the community gets a share of re-zoning windfalls over the long run, rather than hitting current first home buyers once off with a $95,000 development fee per hectare. Developers will laugh this off by passing on the $4,750 per site to buyers.

A new report by Tohm Curtis will soon expose the need for greater utility of land and housing for housing – not speculative hoarding. The inner city has thousands of vacant abodes and blocks of land that should be used before more greenfields are ripped up.

One day young people are going to realise how badly they are getting ripped off.

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