Prosper Australia

photo credit: Dean Terry

Letter to the Age
DAVID BARKLEY
19 July, 2009

Dear Editor,

Graham Wines (Letters, 18/7) refers to the cost of urban sprawl. Some people hold land unused and grow rich while they sleep, as the land value increases.

The best way to curb the resulting outer metropolitan sprawl would be to have a flat rate land values tax. This would deter people from holding land unused to take advantage of rising prices over the years.

It would be a fair tax, as government expenditure is higher in denser areas.

The revenue could replace taxes impinging on productivity and other unfair taxes and charges. A good start would be payroll tax.

Yours sincerely,
David Barkley

photo credit: Birta Rán

Letter to the Age 01/06/09
Buy Australian veto
David Barkley
Box Hill

Dear Editor,

Finance Minister Lindsay Tanner says the Government will not accept a push that breaches trade rules (29/5). All we hear is what it won’t do. The Rudd Government should be saying what it will do, – not what it won’t do, to increase manufacturing in Australia. If we are to reduce future unemployment we need to stop penalising manufacturing.

The relatively high Australian wages are blamed for our uncompetitive prices, however the amount of production wages, here and overseas, in many items is only a small proportion of the final selling price in the market. There are 56 or more taxes and other charges in Australia, many of which impinge, directly or indirectly on manufacturing costs.

Government could exempt or rapidly refund taxes and other charges that unfairly affect manufacturing and make up the loss in revenue by a Federal flat rate tax on land values. A parliamentary inquiry into the effect of taxes and charges on our competitiveness in manufacturing should be held as a matter of urgency.

Yours sincerely,
David Barkley

photo credit: Xava du [photographer padawan]

Letters to the Editor
THE AGE
April 29, 2009
Dr Gavin Putland

The supply of land is fixed; they’re not making any more of it. Therefore the owners of land automatically constitute a cartel, even if they don’t bother organising themselves. And because access to land is essential, the rents and prices of land are competed upward to absorb the economy’s capacity to pay. That’s why the first home owners’ boost went straight into land values.

Any policy that would weaken the power of the land cartel — e.g. letting land tax rise with land values, so that absentee landowners have to seek tenants or buyers to cover the tax bill — is condemned as an assault on property rights.

And woe to any producers of any other essential commodity, such as cardboard packaging, who organise themselves as a cartel, making their product land-like and thus obtaining a share of the profits that would otherwise accrue to landowners. Yes, producers’ cartels make their unearned profits not at the expense of other producers and consumers, but at the expense of landowners. So they’re treated as criminal conspiracies, and only death will rescue the perpetrators from the prosecutors.

But landowners, whose unearned profits really do come at the expense of producers and consumers, are treated as pillars of society.

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

Letter to the Age

Thursday June 26th

WHEN we hear that the rental vacancy rate is less than 1% (“$155-a-week Lalor ‘shack’ highlights rental crisis”, The Age, 25/6), we need to remember that this figure includes only dwellings offered “to let”. If it included vacant lots and other unoccupied properties that are not on the rental market, the vacancy rate would be at least 10 times higher.

One obvious solution is a holding tax of several per cent per year on the values of all vacant sites, including those with buildings that have been vacant for more than a month. To avoid the tax, property owners would build on vacant lots and seek tenants for unoccupied buildings.

Gavin R. Putland, Dandenong.

The day after the 2008 Federal Budget, Gavin Putland (our Research Officer) sent three letters to newspapers.

This one was sent to THE AGE, which exercised its editorial discretion not to publish:

Cop-out On Inflation And Rents

If a Budget is to be anti-inflationary, it must stimulate supply more than demand. Most importantly, it must stimulate supply of accommodation, not only because residential rents feed into the CPI, but also because goods or services cannot be supplied unless (a) enterprises can afford commercial accommodation, and (b) employees can afford housing within commuting distance of the enterprises, on wages that the enterprises can afford to pay.

To boost the supply of accommodation, the Budget could have made the First Home Owners’ Grant available only for new construction, or confined negative gearing to new construction, or made the discounting of property investors’ capital gains contingent on new construction, or at least on offering the properties for rent. None of these things happened.

Meanwhile the Government proposes to increase the intake of immigrants, ostensibly in order to boost the supply of labour. Never mind that immigrants also demand goods and services and, most importantly, housing!

These observations show that the top priority of this “Labor” budget was not to contain inflation — let alone rents — but to maintain a desperate shortage of housing in order to drive up rents and prices for the benefit of incumbent property owners.

(more…)

Re. “Babcock bounces as Bear Stearns extracts more value” (March 25, item 17).

The Macquarie infrastructure model is dead, not because of any failure to “internalise management”, but because of a failure to tap the benefits of infrastructure in order to amortize the capital cost. The benefit of a new road, net of tolls, is manifested as an uplift in land values in locations serviced by the new road (or by other routes on which congestion is reduced by the new road). Hence, if the benefit exceeds the cost, the cost (net of tolls) can be defrayed by clawing back some fraction (less than 100%) of the uplift in land values. The rest of the uplift is a net windfall for the land owners — who therefore should enthusiastically support this financing method because it would finance projects that would not otherwise proceed, yielding windfalls that the owners would not otherwise get. But when a Public-Private Partnership builds a toll road, it doesn’t claw back any of the uplift in land values, but tries to finance the whole cost out of tolls. So the tolls are too high, patronage is too low, and the operators can’t pay their debts.

Gavin Putland

Letter to the Herald Sun

Monday Jan 28th, 2008

It is appropriate that the surge in Melbourne home prices has rekindled debate on stamp duty, but not at all appropriate that the discussion has focused on the size of the duty instead of its base.

Stamp duty is a transfer tax on the total value of a property, including the building(s) and the land.

By taxing buildings, the duty deters construction and thus reduces the supply of housing.

And by separately taxing every transfer in the supply chain, it impedes the process of bringing new homes to
market (and discriminates against owners who need to move frequently).

The solution is to apportion the duty to the increase in the land value since the last transfer of title.

Dr Gavin R. Putland, West End, Qld

Read Gavin’s commentary on Stamp Duty and development levies

submitted to the Age on January 22nd, 2008

Dear Editor,

Martin Feil and Ernest Rodeck in “The debt penalty: a matter of great import to all Australians” (Opinion, 21/1) express concern at the accumulation of foreign debt, partly due to two decades of buying foreign goods instead of Australian.

It is often said that we cannot compete with Asian countries because of their low wages. That is only a small part of the problem. If one buys an item for $10 in a supermarket, the cost of labour in making it might be less than $1. The remainder goes to handling, marketing, profit taking, etc.

What appears to be the main problem is 55 of the 56 taxes imposed in Australia, most of which directly or indirectly end up increasing cost of production. It penalizes manufacturing. At the same time those who hold land, which only has value because of the community and the infrastructure provided by government, pay very little for the benefit. A realistic community resource charge (or tax ) on land values would allow scrapping most of the 55 taxes. A good start would be payroll tax.

David Barkly

Letter to the Age

At last there is some openness from the property investor lobby! Caroline Lawrey, Housing Industry Association Victorian executive director, claimed that a property owner had the right to determine when and when it was developed (Age 16/11).

With rising land values, leaving land idle and preventing its use by others causes land values to rise. And it is not “houses” whose costs are spiralling upwards, but the land on which they sit!

The proposal to tax holders of under-used land more heavily would free up underused land and assist in making homes more affordable. But the HIA consider that property should be deemed an investment opportunity rather than as a family residence.

Karl Williams
Tecoma