Prosper Australia

By Karl Fitzgerald

Crikey

If we are all borne onto this planet as equals, why are some subsidised to own the planet at the expense of others? Don’t we all deserve a roof over our heads? The right to participate in the Great Australian Dream? This is what Gen X, Y (& soon Z) are asking.

Why does Howard ignore these founding principles, preferring speculators profits over basic human rights?

Negative gearing gives over $2billion p.a to those already wealthy enough to own a piece of the planet.

Research by The Australian (26/02/07 - now only listed on Real Estate.com.au) found an existing 10 year supply of land in Sydney, Brisbane & Melbourne. Zoning approval for development on 155,000 lots is presently available. Why is nothing happening? (more…)

The Mercury

House prices have pushed us into the top 20 of unaffordable cities in the world. After seven years of boom, the legacy of this government, elected by ordinary working people, will be a city owned by the elites.

It need not be so. House building is a competitive industry, and with proper foresight on trade skills, costs will always tend to rise only in line with wages and the general price index. (more…)

The Australian

Mr Michael Janda’s advocacy of land value taxation as a means of lowering the tax burden on both workers and entrepreneurs is well advised. As Adam Smith recognized, there are only three factors of production - land, labour and capital - and only one of them does not flee or stop working or breeding when taxed.

In the modern context, land values cannot be shifted offshore to escape taxation (in contrast to nebulous and artificial concepts such as “income” or “capital gains”). Shrewd contemporary observers such as Samuel Brittan of the London Financial Times have recognized that taxing land values to reduce taxes on capital and labour can allow developed Western countries compete better against emerging low-wage economic giants such as India and China. (more…)

Crikey

Re. “The crisis in our housing markets” (yesterday, item 2). David Imber is right to point to the self-seeking publicity from the real estate industry. I’d like to add that the emotional term “home” and the more neutral one “house” disguise the fact that the largest component in domestic property prices is often the land.

Travelling through country Victoria over Christmas I saw many houses in agent’s windows half or even a third the price of otherwise equivalent properties in my city, Canberra.

The reason that the city properties cost more is simply demand — that is, their value derives from the proximity of services and employment, not the hardware that goes into their construction. House prices are rising, too; not because of better hardware, but because of demand.

What we need to do is to slice off this unearned value increase and return it to the people who created it (the Australians who provide the demand and the services), not allow it to slip unremarked into the pockets of “property developers” and “investors”.

Despite the logic of this solution, do you think it will happen?

No way — almost every legislator in this country has property investments and is counting on pocketing some unearned value for themselves — the parasites. The Tenants Union is probably one of the few places to look for unbiased policy advice in this area.

Canberra Times

The ACT Opposition would have us believe that land tax reduces the supply of rental housing. How so? The tax is on the land, not the housing.

The land can’t run away to escape the tax. The owners can’t escape the tax except by selling the land, and the resulting pressure to sell makes land more affordable for prospective buyers.

If the buyers are owner-occupants, they divert the demand for rental accommodation. If the buyers are investors, the tax gives them an incentive to seek tenants to bring in rent and cover the tax liability. To this end, the buyers must build on the land if it has not already been built on.

Thus the effect of land tax is to increase the supply of rental housing and therefore make rents more affordable. And the higher the tax, the greater the effect.

Dr Gavin R. Putland (Research Officer, Prosper Australia), West End, Qld

The Age

Dear editor,

Alan Moran (The Age, August 3, “Land-based wealth an illusion”) has it partially right. He correctly claims that inflationary pressures provide the impetus for interest rate pressures. He also correctly claims that there is a disparity between supposed wealth levels and savings levels, most of which is due to a monstrously artificially high price of land.

However he is incorrect to assume that this is entirely due to stringent zoning rules which reduce the supply of land. This does indeed play its part. But the other factor has been the ill-considered reductions in land tax by the State government and moves from rates derived from site rental to capital value by local governments.

Both of these actions punish people who are productive, constructive, improve their homes and provide employment. They encourage investment in land over labour and capital, with not one new job created or one new good or service from these so-called investments.

Who can seriously be surprised at the results?

Yours sincerely.

Lev Lafayette

Herald Sun

Dear Ms. Freegard,

I read with interest your report on May 26 (”Push to ease land tax pain”) in the Herald Sun.

As of course you would be aware, there is always two sides to every story, and the Property Council of Australia is an organisation which benefits from higher land prices.

As an alternative, may I interest you in the following pre-budget press release from Prosper Australia.

Please feel free to contact me for further discussion concerning this issue.

Kind regards,

Lev Lafayette

FOR IMMEDIATE RELEASE

Land Tax Changes “Shameful”

Proposed cuts to Victoria’s land taxes will be vigorously opposed by an economics lobby group who plan to target both the government and opposition in marginal seats on the issue.

Spokesperson for Prosper Australia, Mr. Lev Lafayette, said it was “gross negligence” to continue to tax productive activity and investment whilst encouraging speculation in holding resources.

“Economists from around the world are almost unanimous that it is much better to derive public revenue from site rental value rather than labour or capital investment”, Mr. Lafayette said.

“However Victorian politicians ignore this advice and the accumulated evidence in favour of preying on the ignorance of the electorate whilst accepting donations by organisations that have a vested interest in high land prices and reduced home affordability.”

The Property Council of Australia is once such organisation that has advocated reducing land taxes. Unlike other taxes which increase the price of a good or service, land tax would reduce the price of land as it is in fixed supply and available ‘by nature’.

In 2003/04 the Property Council of Australia donated $7,500 to the Australian Labor Party and in 2002/03 they donated $6,000 to the Liberal Party.

“Both John Brumby and Ted Baillieu ought to be ashamed of themselves”, Mr. Lafayette concluded. “Public leaders ought to act in the best interests of the state; not for short-term political gain”.

Prosper Australia will be holding public meetings across Melbourne in the lead-up to the State election and will be inviting politicians who support tax relief for working people and good investors.

Contact: Lev Lafayette,
Prosper Australia
03 9670 2754
media@prosper.org.au