National prosperity is an economic mirage
(As published in the AFR, 25 January 2022)
Exorbitant land prices act like termites upon an economy, bringing social and economic division, decline, and eventually, collapse. Any perception the Morrison government has boosted national prosperity by facilitating the latest property boom is an economic mirage.
The reality is that our GDP and wages have been in the doldrums for the past decade and in that time unimproved land values have doubled and continue to rise, on average by around $500 billion a year.
Scott Morrison’s legacy is the entrenchment of a distorted “fairy floss economy” that rewards usury and speculation and punishes hard work. A good government would lift taxes off the backs of Australian workers and collect land rent for public revenue.
Ronald E Johnson
Charnwood, ACT
The endless rise in land prices is costing Australians dearly
(As published in The Canberra Times, 27/1/2022)
Your editorial (“Why is the real estate market not front and centre of the election campaign?“, canberratimes.com.au, 24 January) incisively points out that Australia’s “real estate woes… are the most under-debated issue of the upcoming federal election”.
It is worthwhile adding that the problem of runaway land prices (with unimproved land values doubling to $8 trillion nationally in the last decade) is inextricably linked with the crisis of stagnant wages growth.
The general level of wages in an economy is determined by the ease or difficulty with which labour (and capital – which is just stored up labour) can gain access to land for productive purposes.
For nearly a decade the federal Coalition governments appear to have deliberately pursued policies that drive up land prices and suppress wages. We have an economy that, more than ever before, rewards speculation and usury far more than honest and productive toil.
Rising land prices have undermined the value of labour and made it much more difficult to build homes and to engage in productive enterprise. The Morrison government may win a scattering of votes in the forthcoming election from home owners or mortgagors placated or conned by the illusion of wealth flowing from rapidly rising property prices.
But the large majority of home owners should see that they have been handed a very hollow victory. All that has really changed is they are now relatively more privileged than young people stuck in the family home, renters or the homeless.
We need to level the field by lifting taxation off the backs of workers and collecting the rent of land for public revenue. Will Labor rise to the challenge?
Ronald E Johnson
Charnwood
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