Prosper Australia grew out of the appetite for social reform at the beginning of the twentieth century. Although there was landowner opposition to the idea of taxing land instead of income from labour, the reform enjoyed widespread support during the progressive era (1890-1920). During the first twenty years or so of the last century, our journal Progress reached a circulation of 20,000. Both the conservative and Labor Parties had Land Value Taxation in their policy platforms. We were part of a wider movement for a more equitable society and dynamic economy.
During the dislocation of the depression and war years, support tapered off. However, a dedicated cadre remained enthused. A band of businessmen including American designer of Canberra, Walter Burley Griffin clubbed together in 1920 and bought a property so the organization would have a permanent home in Melbourne. A generous benefactor, Edgar Culley donated money and founded the Henry George Foundation of Australia on the 25th of May 1928. These initiatives gave the movement a sound financial base.
Key economic reforms could be made at a local level: to levy council rates on the value of the location and not on the buildings. The plan was, once the merits of land value capture were demonstrated locally, we could then move onto State and Federal tax bases.
The federal land tax was introduced in 1910 to break up big estates. This worked well despite the Australian Taxation Office being required to exercise a 5000 pound threshold and apply progressive rates to the land valuations.
In Victoria, to make the change from Net Annual Value to our preferred Site Value rating in 1920, a ratepayer poll was required in which 10 per cent of ratepayers demanded council conduct a poll to decide on the rating system preferred. Data was painstakingly collated showing site value rating was just and equitable and that most people would benefit from the change. Councils gradually submitted to the demand of ratepayers with changes to site value rating through the 1920s-80s. This was clearly democracy at work.
In the 1970’s, a change to the law in Victoria introduced a charge of $1 to view a municipal valuation. This had previously been free for the sake of ratepayer transparency. There was an issue for ratepayers and a setback for our organisation, and others compiling government statistics. Our statistics had shown conclusively that ordinary people and hardworking businesses were better off with Site Value rating. Further challenges to our local government work saw the introduction of the Capital Improved Value rating system. This was disguised in the Kennett-era amalgamation of councils (1995). Ratepayers who had used the democratic process to move the rate base to Site Value or land value only were now to be rated on the combined value of land and improvements.
Canberra and Leasehold
The Site Value system of revenue-raising worked very well in Canberra. Early 20th century planners knew that the announcement of the location of the new national capital (Canberra) would prompt a crippling land grab. A leasehold system was devised to stop this. Canberra was created without land speculation or prohibitively high land prices. Canberra designer Walter Burley Griffin, a member of our organisation in the early years, helped draw up the leasehold system. This stood the test of time until the 1970’s when the Gorton Government all but abolished it. At the time Prosper campaigned for a revamp of the leasehold system, as we saw the real problem was not the leasehold system but that the 20-year intervals between valuations were too lengthy, and valuations unrealistically low as a result.
Prosper Australia Today
The loss of the federal land tax, the leasehold system in Canberra and the site value rating at local government in Victoria were part of the continual attack upon the world’s longest-serving land tax system. Even in the site value rating states of Queensland and New South Wales, the introduction of ‘minimum rates’ has distorted the rating system such that owners of lesser valued land are effectively subsidising owners of more valuable sites. Local government initiatives have been defeated. A change of strategy ensued – to look at the macro effect of rising land prices amidst an inaccurate tax system. Regular analysis such as the Speculative Vacancies report, our investigations into reforms in the ACT and our periodic work assessing monopoly rents as a percentage of GDP continue to help shine a light on a more rational, fairer economic system. Importantly, these reports provide a public-interest perspective on the property-oriented news cycle. Today, the popularity of tax havens, Australia’s repetitive land bubbles, the compliance costs heaped on business and the steep taxes on labour mean our views are being considered with fresh eyes – because nothing else works.