Rating System Undermined

It was announced last week that council rates are set to be capped next year – a measure Prosper Australia opposes. We released a media statement following the announcement:

The integrity of Victoria’s local council rating independence was dealt another blow by the arbitrary limit on council revenues. Local Councils will now have to deal with more red tape as they struggle to fund increased service obligations handed down the governmental chain.

Prosper Australia has witnessed the continual undermining of the rating system over decades. The Kennett Liberal Party last engaged in rate pegging. This led to chronic underfunding of roads and local services. Now even the Labor Party is indulging in rate pegging, user charges are set to grow.

Thursday February 26th, 6.30pm
Level 2, 22 Punch Lane, Melbourne
Presenter: Karl Fitzgerald
RSVP 

Last year was Australia’s 3rd hottest on record. The likelihood of a radical future grows with each day we do not take action.

The need for greater economic flexibility is vital. How can the economic system support cyclists and seaweed cultivists for their carbon commitments? Dozens of changes are needed in a manner that does not drown the economy in green tape. How could we finance a world class train network whilst encouraging urban infill? Provide tax incentives for science as we manage fisheries more sustainably?

Join 3CR’s Renegade Economist Karl Fitzgerald for a dynamic presentation on the economics of possibility. This workshop is part of the Sustainable Living Festival.

Last week Cameron Kusher of CoreLogic RP Data called for conveyancing Stamp Duty to be replaced with a universal land tax.  David Collyer delves further into the argument for reform in his post ‘Ditch the saddlebags of deadweight losses – for the win‘ on the Prosper blog:

You ought to be very angry about these deadweight losses.  People complain about welfare cheats and big business wheezes, while overlooking the structural flaws in the tax system that destroy value and reduce the living standards of everyone.

In case you missed it over the holiday break – investment bank Schroders released a devastating critique A wolf in REIT’s clothing of Australia’s listed real estate trusts, saying management’s only reason for existing was to manage debt and orchestrate mergers while paying out more in distributions than earned in rents. This is a highly unattractive asset class.  A must-read for investors.

And, while you’re at Prosper check out our run down of this interview between Nobel laureate Joseph Stiglitz and Lynn Parramore of the Institute for New Economics in which Stiglitz highlights the difference between land and capital and why it’s vital to delineate between the two:

There’s some debate about this, but I think most readers of Piketty’s book (Capital in the Twenty-First Century) get the impression that the accumulation of wealth — savings —is responsible for the rise in inequality and that there is, therefore, in a way, a link between the growth of the economy — the accumulation of capital— on the one hand and inequality and wealth. My paper begins with the observation that in fact, you cannot explain what has happened to the wealth/income ratio by that analysis. A closer look at what has gone on suggests that a large fraction of the increase in wealth is an increase in the value of land, not in the amount of capital goods.

If you missed them we recommend catching up some Renegade Economists highlights shows from over the New Year. The 2014 Collage Crew show mixes some of the best interviews from the year with beats and soundscapes, and the Scarcity Storyline features highlights from people like Lindy Davies and Michael Hudson, or give Protest Sounds a listen for some of the best songs of protest from 2014.

While you’re catching up make sure you don’t miss our lively discussion with Cameron Murray on the links between corruption and property rights in QLD and around the globe – highly recommended!

And, for those following the story of the sharing economy you don’t want to miss last weeks excellent discussion with Janelle Orsi (www.theselc.org) about the role her NGO plays in developing legal tools for the developing sharing economy.

 The Private Earth

How can 80 people on this planet possess the same wealth as 3.5 billion others? This discussion with economist Michael Hudson, Max Lawson (Oxfam) and Richard Wellings (London Institute for Economic Affairs) is essential listening for everyone who wants to know how and why this has happened:

They’re creditors to the bottom 99 percent that are debtors and renters. If you look at these wealthiest families, there are a number of common denominators: They didn’t earn their income, and yet economists only look at how people earn their income. President Obama last week said, “Well, if you have the desire to get rich and you work hard, you can do it.” But that’s not how these families got their wealth.”

On the subject of inequality – the Senate tabled a report on the extent of income inequality in Australia (download). Emiritus Professor Robert Douglas has highlighted some of the findings in an article at The Conversation, and also notes that non-government representatives reached consensus on the key findings with only the government senators filing a dissenting report.

In Singapore vacancy rates are on the rise and are predicted to reach 10% this year. After five years of price gains, the property market is cooling and those who were banking of future capital gains are feeling the pressure:

For the first time in six years, Mr King was able to negotiate a lower rent with his landlord.

Landlords with multiple properties are most exposed to the softening rental market. With resale prices falling as well, they often can’t recoup the price they paid for properties they are unable to rent out.

We hope you’re all as excited as we are for 2015. In coming weeks Prosper will be focused on our pre-budget submissions for the state and federal budgets.

We have plenty planned over the next few months so make sure you stay tuned to Evolving Economics for all our upcoming events and follow our Twitter feeds for up to date commentary on economic issues as they hit the news @earthsharing & @dontbuynow. 

Thanks for your support,

Jess Wright