Prosper Australia

photo credit: wellurban

The Brumby-Madden announcement to increase Melbourne by the equivalent size of Canberra is exasperating.

100,000 vacant sites already exist in Melbourne in areas already serviced by infrastructure (according to the recent census).

The government has failed us economically.

The have failed us environmentally.

The have failed on inter-generational equity too

The social costs in hours of commuter time will rob young families from the quality time they need.

And to think this is headlined Delivering Melbourne’s newest sustainable communities

With over 225,000 rezonings announced in 2008, why haven’t housing prices fallen significantly with the combined effect of the GFC and this added land supply?

Reason – any land supply is drip fed back onto the market to maintain profits.

We call on the government to explain why the massive rezonings from last year have not assisted affordability.

We believe that our land use policies are to blame because they promote land hoarding. Capital gains are prioritised over affordability. The Managing Director of Mirvac, Nick Collishaw, admitted this on public record (The Age, 18/02/09).

First home buyers are being held to ransom by such monopoly powers.

Young people are being used as the funders of a bailout for property speculators. This inter-generational theft is unacceptable and immoral.

The Brumby-Madden plan will cost the community $40 billion in unnecessary infrastructure production above and beyond that collected by the unjust and inefficient GAIC tax.

We call upon the Brumby government to abolish the GAIC and Stamp Duty and replace it with a higher and flatter Land Tax.

Read the Press Release

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: 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.

Todays Age article on Land Tax Cuts Wont Bring Savings alerts all those interested in defending the communities right to a share of the free lunch land prices reflect. The next few weeks will see the property lobby step up their claims to pay less and less of the one tax their army of accountants can’t dodge.

Some points we agree with. The article states that the State Land Tax cuts over the last 3 years from 5% to 2.5% for the top marginal rate have been offset by rising land prices. Suprise, suprise! Lower holding charges on land encourage more speculation, especially at the top of the market, where capital gains have been higher in both percentage and nominal amounts in many suburbs.

What we do agree with is the warning on bracket creep. The Brumby government should index Land Tax rates to CPI or ultimately to land prices as calculated by the Victorian Valuer General.
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Prosper Australia today applauded the State Government’s announcement for taking housing affordability more seriously. However, questions must be asked about who benefits most from this announcement.

“Today’s declaration of residential zoning has made Victoria’s land bankers more money in a day than many earn in a lifetime.”

“Questions must be asked why the government is releasing 90,000 blocks of land when the property industry swallowed up at least 38,000 sites in just one year, as reported in the Age (22/09/07).” stated Prosper Australia spokesman Karl Fitzgerald.

“The property industry has dictated all housing affordability policies at both state and federal level.”
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