Prosper Australia

photo credit: nicksarebi

Council Rates are again in the headlines, with affordability pressures crunching into a large number of rates payment defaults. How ironic is it that the charges that can assist in curbing the speculation induced affordability crisis (that caused so many defaults in the first place) are shot down in flames by this article?

Holding charges on land such as Council Rates (more effectively placed on Land as Site Value Rating rather than the distortive CIV) and Land Taxes (ideally scrapped in its present form and levied at a flat rate on all land) are the most efficient mechanism to unfurl the potential withheld from the community by speculative activities such as land banking and ghost owning of investment properties.

Fortnightly payments on council rates would certainly be a good step forward. Additionally, yearly valuations should be mandatory by all councils, so that such steep rates rises aren’t used as battering rams to shoot down this highly effective mechanism of self funding. The move towards Site Rental is the most important council reform needed.

Council Rates are a measure to ensure the prime locations are put to their best use. We need to inspire stories showing how these same pensioners face a higher rating burden (due to their improvements) than their neighbouring land banker.
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Saturday’s Age article on Melbourne’s rental growth outstripping all other states is reflective of current government policy at all levels - local, State and Federal. When combined with record immigration levels, property flipping will continue unabated.

Prosper Australia spokesman Karl Fitzgerald was quoted in another Age article on Home Buyers Lose out in Tax Change. We would have preferred a longer commentary covering the topic from this perspective:

The fillip to demand prevalent in Swan’s housing budget of $2.3bn will more than compensate for the comparatively small tightening on GST that the property lobby faces. The half a billion earmarked for infrastructure under the Housing Affordability Fund will result in higher land prices that alone will dwarf the closing of this GST loophole. The lack of supply side policies is the real criticism of this budget. Swan has failed economics 101 with the First Home Savers Accounts, creating additional buying capacity for first home owners with the $1.178 billion proposed. This capacity will be capitalised into higher land prices.
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The Swan Federal budget was limited in its’ vision, giving with one hand in the old welfare game but taking away with the other by providing further subsidy to propertied interests. Whilst it is widely reported that the wealthy were hit by means testing, fellow Georgists were busy joining the dots between the $40billion worth of major projects and its’ effect on land values.

It must be remembered that your tax dollars will finance infrastructure that increases land values, making it harder for renters to get into the property market. The government is investing your money but giving the return on the investment (the higher land values) to people with the most land. Its about time the government start collecting the return on its investment by collecting the site rental on land. Then it wouldn’t need to tax our income as much.

The largest migrant intake in 60 years added to the smiles of those in the know. More people means more demand. With the government only promising 50,000 new homes, the excess demand will curtail the effects of the global credit crunch.
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March 08 figures reveal that loans for first home owners dropped to just 16.4% of owner-occupied approvals. Yes 16.4%! The Great Australian Dream is being dominated by baby boomers and/ or speculators. Those that most need a roof over their heads are the last in the queue. Why is this so?

Loans for new dwellings dropped a massive 11.5%. The building industry must be extremely worried with this trend. Job losses come next. Interest rates are hurting.

Negative gearing on all second investment homes must be addressed in the first Swan budget. If this policy was designed to improve the supply of housing, at the very least it could be limited to only new housing. Best of all would be to abolish it and the First Home Owners Grant.

If a Site Rental on all land was implemented, we wouldn’t have the ridiculous situation we have today where small business owners and first home owners, traditionally the Messengers for future opportunity, are penalised, whilst speculators in the fruits of the earth are subsidised by the productive sector’s tax funded infrastructure.