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.
(more…)

With Oil soon to hit $120 a barrel, public interest is building on the role speculators play in pushing prices higher. India’s Solution for Oil Prices: Ban Speculation by Banning Trading quotes:

“Buying stakes in overseas oil properties is proving much cheaper for India than purchasing crude on the open market. In some areas where India has purchased stakes in oil fields, it is pulling light crude oil — the kind that sets the benchmark oil price — out of the ground for less than $40 a barrel, Mr. Srinivasan said.”

We aren’t supporters of regulation. Using economic analysis we can see that any price above the $40 India can pull light crude out of the ground is economic rent. Thus in many situations, speculators are accounting for two thirds of the price of oil. We propose that the government can eradicate speculation by adopting a more effective revenue raising system. If a resource rental was charged per barrel of oil then resource hoarding would no longer be financial. The resource rental acts as a holding charge, set at approximately 5% of the value of the resource. This rate would soak up the economic rent and deter the buying and selling of oil.
(more…)

by Karl Fitzgerald

as published in Arena Magazine, Feb-March, 2008, Edition 93

In a period where the twin crises of global warming and the wealth gap are attacking society from both sides, policy makers are continually limited in their effectiveness by a two dimensional approach to economics.

Land prices have increased at 4 times the rate of GDP and dwarfed wages growth by 1000 to 1 since WW2 (The Poverty Inquiry to end all Inquiries, Tony O’Brien, Figure 1, p5) . Such damning statistics beckon the ALP to take a hard look at the economic fundamentals undermining union wage demands. For Julia Gillard’s ‘War on Poverty’ to be successful, policymakers must look outside the square.

2008 marks the half way point in our promise to halve world poverty with the Millennium Development Goal’s 2015 deadline. With the wealth gap accelerating in both Developed and Developing countries, a serious flaw is evident in modern economics.
(more…)

With the recent passing of the highly respected Georgist Clyde Cameron, we feel it is timely to look at the wisdom of his core beliefs:

EXTRACT FROM AN ADDRESS BY THE HON.CLYDE R. CAMERON A.O.

But now it is an oversimplification to say that the lessons of the Maritime Strike of 1890 were the sole reason for the formation of the Australian Labour Party in the following year. In South Australia; the seeds of discontent were sown on 28th December 1836, when the first white settlers came ashore at Glenelg. Among them were unemployed working men in search of work in the new colony.

South Australia was the only Australian Colony that did not at any stage rely upon transported convicts for cheap labour. And yet the real cost of employing what passed for free men was very much less than the cost of housing., feeding and guarding convict laborers in New South Wales, Victoria, Western Australia and Tasmania.

South Australia was able to prove that wage slavery can provide cheaper labour power than any other form of slavery. Slave owners have the responsibility for feeding and housing their human beasts of burden and of keeping them healthy enough to perform a full day’s work.
(more…)

The front cover of today’s Herald Sun has a huge photo of Horse Stud owner Steve Spiteri (looking hard done by!) with a caption: ‘Thanks Premier: Steve Hits Paydirt’. Yesterday’s announcement to rezone all land residential within Melbourne’s 2030 boundary has made landowners, typically land bankers and the occasional farmer on the edge of the sprawl, rich overnight. Mr Spiteri bought his property for $375,000 twelve years ago and with the new zoning is now estimated to be worth $11 million dollars.

How much money will Spiteri make when he sells the property? Lets give him a million dollars for council rates, real estate commissions and to cover the next few years Land Tax (about $330,000 p.a). If we assume he pays capital gains tax at 30%, he will take home over $7 million dollars. This equates to more than 122 years income for the average wage earner.

That’s as if he’s earnt $11,217 per week for the last 12 years. Staggering!
(more…)

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.”
(more…)