Congratulate Your MP!

Wednesday Dec 9th
Presenter: Catherine Cashmore
Venue: Our new premises – Level One, 64 Harcourt St, North Melbourne
RSVP – limited seats

Our eighth report into vacant housing supply will again turn heads at the vast numbers of empty properties abounding in the face of the housing frenzy. The findings are right up there with our highest numbers.

Report author Catherine Cashmore has delivered an extensive investigation into the state of a housing market in turmoil. In what other market could the two pricing indicators – prices and rents – be working in opposite directions? She demonstrates how the role of investment has split the market from reality, revealing the hidden supply of housing helping deliver billions in unearned income.

We cannot have a serious conversation about Australia’s housing supply ‘crisis’ without addressing the fundamental drivers that permit – no-less encourage – owners to lay a significant proportion of prime urban land to waste.

The Australian Financial Review have an exclusive to release the report. Our team have a vibrant media campaign in place and hope you can support our work in the comments boards. International media interest has been building as well. We look forward to seeing you at the first public function in our new office space. This is a free event – donations appreciated.

With the interest generated by PM Turnbull’s support for Value Capture, we have been busy with a Parliamentary submission defining the varying methods for value capture. This led to the Select Committee presentation Catherine Cashmore and I made. Read the transcript to delve into some of the behind the scenes detail we deal with, including this:

Mr Fitzgerald : So yes, it would be good if these cost-benefit analyses included the cost to the funding mechanism if value capture is ignored. Here we are struggling to fund the Metro Rail Loop in Melbourne, with no long-term financing established, and Premier Andrews has allowed Parkville, neighbouring one of the most prominent train stations around Melbourne university, to be rezoned. He has handed out the free lunch before we have actually figured out how to fund that lunch—this train line that is going to lead to double or triple the land values for those who have those development rights within the first 500 metres.

Miss Cashmore : Rezoning is a real problem, because as soon as you rezone land the land price takes the gain. We are talking about increasing density, and a lot of land around Melbourne and particularly north of Melbourne has been rezoned to increase density, whereas the southern councils have restricted that by having what are called Neighbourhood Residential Zones, which limits density to just a subdivision or two. But the more you increase the density the more the land can yield, so obviously the land price takes the gain; it makes it more valuable to developers. That is another problem: we cannot deliver affordable accommodation while we are always feeding growth in land prices, which is the biggest component of the property price.

There are virtually daily media mentions on the topic around the nation that could do with any support you can muster.

Our continued campaign against the GST continues with David Collyer leading the way, today taking AFR economics editor Alan Mitchell to task:

Yes, the best taxes are on land and resources.

Taxed labour sulks; taxed capital leaves; taxed land simply surrenders the economic rents that fall to it.

PM Malcolm Turnbull recently told ABC Melbourne’s Jon Faine he didn’t want to win an economics prize with his tax reforms. That’s political code for taking second-best options that protect rent-seeking behaviour.

Collyer was also out in A Bigger GST Cements Our Place As A Second-Class Country: 

Australians have to endure waves of disinformation around the tax reform options before us. Every vested interest in the country is sharp-elbowing for advantage and the yelps of pain are deafening.

GST is a vile tax because of who pays it.

It does not matter whether tax is taken under one name or another or even when you earn it or spend it. What matters is the entire tax system, and to get a clear picture you must add it all up.

David has also published a recent edition of Progress magazine with another on the way soon.

Martin Adams is the author of the highly recommended ‘Land’, which many say is the best introductory text for newcomers. He was recentlyinterviewed on What’s Next with Peter Buffett (yes – that’s Warren Buffett’s son). Martin wrote online ” I often felt during the interview that Peter was saying what I was about to say—we connected well, and had a lot of fun.”

As a measure of the rising sentiment, in The Australian this week Adelaide University’s Paul Kerinm and Paul Findlay promoted the need to discuss the logical need for Land Tax to be included as a funding mechanism over GST, just as Ross Gittins passionately did recently. With talk about taxing the family home rising, Michael Pascoe is out in support this afternoon. But with the political realities of the voting public tilted by property spruiking reality TV, we must ask – what is the cost of poor economic literacy to the economy? More news stories can be seen here or on our daily facebook and twitter sites.

All this sentiment augers well for our continued work raising money via the philanthropic sector. Keep your fingers crossed for our big application to Perpetual Philanthropic this week. Do we have any experts in the field willing to assist us on future endeavours? Please get in touch.

We’re doing ok but we always need more if we are to go all the way! If only we had an even larger army of economists, PR insiders, animators, infographics experts and those willing to help distribute or share our work online. This is the most opportune time. Our members are rising in numbers but more participation is encouraged – we are getting close! We need your support by becoming a member and donating to our tax deductible entity the Prosper Australia Research Institute.

Yesterday RP Data released housing price data for November with news Sydney was down 1.4% and Melbourne a significant 3.5%. Hobart, Brisbane and Darwin also suffered falls. On cue, just as housing supply is set to assist affordable housing, calls to increase our immigration rate began with one of Australia’s wealthiest developers Harry Triguboff:

“I will tell you what worries me. If we don’t increase migration, many councils around the country are approving too many apartments.

“I believe that the country’s future depends on achieving growth, which requires building accommodation. We are an empty continent.

After a decade of lobbying for housing supply constraints to be lifted to meet affordability pressures, Triguboff wants more migration to counter the chance for affordability. Or does he? Is he being reasonable? Are developers caught in a bind as banks pressure them to curtail land price falls, to avoid the following credit crunch? We hope public policy outcomes are closely monitored. Please write to your local MP and/or Treasurer congratulating them for their work in assisting more economic housing. We’d rather the politicians listened to you than Triguboff, as recorded by the AFR in 2012: 

Apartment billionaire Harry Triguboff was surprisingly candid at a lunch held by the American Chamber of Commerce last October.

He told the audience he was able to pay “very little tax”.

“I keep a lot of my properties. And if you keep them and there’s capital gain it’s beautiful,” he says “You don’t pay tax. I don’t lease them so I don’t pay tax on the rent, but I get depreciation.”

He paid tax on apartment sales but that’s where the land banking came in.

“You have to buy lots of empty land,” he said. “You keep the land and it brings you no income, so you claim it against your tax.”

An interesting period awaits as the business investment capex plunges amidst the drying up of local and foreign property investment. What next for the Great Australian Economic Miracle? Triguboff’s ’empty nation’ urgently needs an employment driver beyond housing construction.

The year has flown by with two office moves. We have also had some exciting role changes with our dynamic new Office Manager Emily Sims joining us in the last few weeks. In the last few months we have enjoyed our new President Catherine Cashmore’s guidance. More on these changes soon. Former office manager Jess Wright, whom many of you knew over the last three years, was given a warm send off at a wee dinner. She’s currently enjoying what remains of Tasmania’s deep green forests.

Thanks for your support, let’s hope for a busy few weeks.

Karl Fitzgerald
Project Director