All the great social philosophers have held that land must be rented, not sold, if communities aren’t to implode. One of them put it into a formula, saying that if we were to capture the social surplus, then labour and profits will receive their full and rightful income—their ‘private property’?—undiminished by arbitrary taxation:-

i.e. Production (P) minus land rent (R) leaves wages (W) and profits (I), or P – R = W + I.

We’ve chosen to do the opposite, that is, to capture publicly-generated land rent privately, capitalising it into land prices. So, not only do our homes literally cost the earth, but our wages and profits become significantly taxed – as though ‘earning a living’ is some sort of crime.

Paying these taxes is sold to us as our ‘social responsibility’, and there are even people to be found who insist they are happy to pay higher counter-productive taxes if they can achieve greater government services. Surely, less government intervention would be necessary in a functional economy?

We miscall this system ‘capitalism’ when, in fact, it is systemic rent-seeking, or ‘rentierism‘, an unproductive economics which, whilst inflating land prices and debt, penalises work and industry. This quite illogical regime, which we’ve come to accept as ‘normal’, provides massive unearned profits for those businesses such as finance, insurance and real estate (the ‘FIRE’ sector), which parasitically extract wealth from the economy whilst leaving labour and capital with enormous deadweight costs of taxation amounting to more than $2.00 for every dollar of tax ‘raised’.

To deal with all the corruptions and ills flowing from this terribly pathological economy, Australia has set up a number of doomed-to-fail regulatory bodies such as the Reserve Bank of Australia (RBA), the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulatory Authority (APRA), the Australian Competition and Consumer Commission (ACCC) and the Productivity Commission (PC). Reflection discloses the fantastic irony that the perversions rent-seeking sets up effectively tie the aims of these bodies into impossible knots. Their CEOs clearly accept that their salaries are contingent upon them being prepared to be made to look like idiots at every official inquiry.

Think about it.

Maybe all the great social philosophers who said we need to capture the rent of land were correct?


I remember, having got through my real estate valuations course in the early 1970s, coming across a shop in Hardware Street Melbourne which had a little pamphlet that astounded me.

The shop/office was the home of “The Henry George League”.

I had completed my Valuation qualification without having once heard the name ‘Henry George’, but here was an outfit telling me that not only is the value of a factory, shop or office found by capitalising its net annual rental as I had been taught at RMIT, but that land price was also determined by the extent to which the net publicly-generated land rent was privately capitalised!

Couldn’t be! It’s surely simply the price paid for a piece of land, depending mainly on its zoning, size, shape, topography, proximity to facilities and, most importantly, its supply?

It wasn’t until I read Henry George’s masterpiece “Progress & Poverty” that I realised I’d been wrong: I’d been misled by omission. Those criteria were important, but they were very much secondary to how much of the site’s land rent was taken by government.

If the whole of the rent of a piece of land were captured for public purposes–mainly to enable taxes to be retired on productive activity–land price could actually disappear to zero!  The site’s rental value would remain, of course, but its actual price would disappear if its rent were completely captured because there’d be no rent left to be privately capitalised into a price!

I’ve often wondered, not only why I didn’t learn this fact in my course, but also why  so few people now understand this important concept because it obviously carries significant implications for making housing affordable. Is the informational void to hide how the 0.1% make money in their sleep at our expense? Even economists seem to believe that escalating land prices are simply a matter of an under-supply of land. Are they ignorant of what constitutes land price, or do they act as stooges for the 0.1%?  Maybe a bit of both?

Next time you hear an economist say that Australia’s incredibly high land prices reflect a shortage of supply of sites, tell them they’re dreaming ….. talking drivel! You might even point them to Melbourne’s 80,000 vacant homes.





In 2015 the Crown Estate delivered a record £328.8 million to the Exchequer from its thirty wind farms and central London assets.

This was up 8.1% on the previous year, taking the total the Estate has returned to the Treasury over the last decade to more than £2.6 billion. The capital value of the overall estate increased by 2% to £13.1 billion.


Under current arrangements, the Queen receives back 25% of the Crown Estate’s revenues in the form of a Sovereign Grant, which is used to fund her official work and the upkeep of her residences. The 8% uptick in revenues means she will receive a £6 million boost in funds to £82.2 million in the Sovereign Grant, which is paid two years in arrears.


It’s a great pity the 300 acres of Mayfair and Belgravia held by the parasitic Duke of Westminister in the Grosvenor Estate doesn’t do similarly: or, for that matter, the other six or so aristocratic London holders of great estates.

Such were among details delivered to the audience of one hundred in an entertaining 126th Henry George Commemorative Dinner & Address delivered by Philip Anderson of Cycles, Trends and Forecasts at The Woolshed in Melbourne last night.

Anderson explained the eighteen-year real estate cycle, due for another calamitous bursting in 2026 (can the Australian bubble hold out until then?) and gave insights into WD Gann’s remarkable stock market cycles.

President Catherine Cashmore provided the audience with an account of Prosper Australia’s involvement in assisting the states of Victoria and New South Wales with some of Prosper’s statistical techniques relating to the Australian property market.

Anne Schmid was presented with a bouquet of flowers for her twenty years of devoted service as Prosper Australia’s secretary. Anne is to remain on the executive committee after handing the key position over to Bill Payze during the year.

Was it EJ Craigie award winner Adam Creighton from The Australian who suggested no other Australian body could possibly boast holding 126 consecutive annual dinners?  Creighton won the 2017 award from a field of four other nominees for a challenging piece of writing on land tax’s positive potential to address the issues of our times. (The article is reproduced below *).

Prosper Australia’s Project Director Karl Fitzgerald is to be congratulated for organising a most enjoyable event.

Land levy an efficient and moral revenue raiser

·         The Australian

·         12:00AM August 28, 2017

Adam Creighton      

The landlord “renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived”. Who said this? Surely a left-wing propagandist.

The person goes on: “Roads are made, streets are made, services are improved, electric light turns night into day … and all the while the landlord sits still. Every one of those improvements is ­affected by the labour and cost of other peoples and the taxpayers.”

Actually, it was conservative Winston Churchill, speaking in the House of Commons in 1909. Scion of a powerful landowning family, he would have had personal insight into the level of ­effort and innovation required to inherit and manage property.

Churchill was, however, only making, colourfully, one of the most powerful arguments in ­economics. Taxing the unimproved value of land, at a low flat annual rate, is the most efficient, and even moral, way of raising revenue.

It’s efficient because taxing land won’t reduce its quantity. Plus, land can’t be hidden or shifted. Sydney’s eastern suburbs can’t be towed to the ­British Virgin ­Islands and putting it in a trust or bucket company would be about as helpful as a giant tarpaulin.

It’s moral because, as Churchill said, taxing windfall gains is better than taxing individual’s actual­ ­effort.

Taxing land is likely to lower rents, too, by bringing swaths of unoccupied accommodation to market.

About half of Chinese investors in Australian property, for ­instance, are leaving their properties vacant, according to a recent survey by UBS.

In a world of increasingly malleable and mobile income — and indeed workers themselves — these arguments have never been so relevant.

Increasingly, penal marginal rates of income tax will slowly crush Australia’s economy, fuelling a massive tax avoidance ­industry and pushing more smart people and ideas offshore.

“A land tax is not only harder to avoid and more efficient, but also surely more equitable, since the ‘social dividend’ that accrues to land owners, particularly in our major cities, simply via the effluxion of time as growth occurs around them, is really impossible to justify,” said former Treasury secretary and renowned conservative John Stone, in a recent interview with The Australian.

In the four years to last March, the value of Australian households’ land (excluding the houses and apartments that sit on it) has surged 52 per cent to $4.7 trillion. For context, that’s about eight years of total federal income tax receipts.

A flat 1 per cent land tax, which might cost an average Sydney homeowner about $7500 a year, would raise enough cash to ­abolish income tax for about 70 per cent of taxpayers, or, alternatively, hugely reduce marginal ­income tax rates. Depending on his circumstances, the Sydney­sider would be better off.

Isn’t it silly to squeeze the pips out of workers earning more than $180,000, who may well have little wealth to their name, yet leave massive, unexpected appreciations entirely untaxed?

If a federal income-land tax swap is too ambitious, at least state governments should follow the ACT’s lead and shift away from stamp duties on property, which massively hobble the ­efficient allocation of assets.

A credit for any stamp duty already paid would ensure no one is taxed twice. Perhaps buyers could also be given a choice between paying stamp duty on their new property, or land tax, after which time the property would forever be a “land tax” property. Asset-rich, cash-poor landowners could elect to pay out of their estate.

“If you reduce stamp duty and had a broadbased land tax we would encourage the transfer of property, there’s no doubt about that,” said NSW’s new Treasurer Dominic Perrottet, when he was finance minister. “You have retirees living in these five-bedroom homes by themselves while there are people with three children trying to buy into the property market,” he added, promisingly.

He’s right. A report commissioned by the NSW Treasury last year estimated that abolishing stamp duty — presently about $42,000 on a median Sydney house worth $1.02 million — would boost the number of property transactions in the state by 25 per cent, freeing up spare ­bedrooms equivalent to 70,000 houses.

“The economic case for taxing land is very strong,” concluded Sir James Mirrlees, a Nobel prize-winning economist, in a recent British tax review.

So, you say, if a comprehensive land value tax is so good, then why don’t we have one?

Here’s a clue: the burden of a land tax falls entirely on landowners, who naturally tend to be more politically influential than their raw numbers would suggest. ­The Treasury analysis referenced above, conducted by Peter Abelson, found house prices would fall 6 per cent over the ­medium term in response to a 0.7 per cent annual land tax (enough to replace stamp duty ­entirely).

Shifting to land tax won’t be easy in a country where about two million people own at least one investment property, even if, in reality, the hit to prices would manifest itself in slower appreciation. But as for smokers, it’s never too late to quit.

Speculating on land values, which has become a national pastime, isn’t especially productive. It’s hard to see how it will help Australia sustain its prosperity into the 21st century, especially, as is likely, the value of our resources exports starts to fall again.

Fortunately, both major political parties could get behind a land tax. Mr Perrottet and Mr Churchill’s insights aside, a Liberal Party that wants to tax effort and innovation less might have to tax land more.

As for the Labor Party, a comprehensive flat rate tax on the unimproved land was part of its platform from 1891 to 1905. The founders of the party were well aware that inherited land escaped taxation.

Churchill was making an argument for the common good that probably didn’t suit his or his electors’ short-term personal ­financial circumstances.

It would be good to see more of that today.



Motored along to Madeline’s for an enjoyable brekky with the fambly at 9:00 am. Mucked up payment, and staff had to chase after me. As Effie would say: “How embarrassment!”

Then, ‘cos football’s such a part of this ol’ town, I sloped along with the missus in the arvo to see The Coodabeen Champions at the Playhouse. Their interviews, banter and songs have become part of the household regime during the footy season.

They were entertainment-plus again, with all those cleverly contorted lyrics – and nice to see Doug Bigelow’s “From Whence It Came” get a run. (Would’ve loved to see Champs do one more number on his 12-stringer!)

They reckon–and I agree–the Coodabeens are just about due for a run at the ‘G on Grand Final day, AFL!  How ’bout it, Gillon McLachlan?

As Bob Murphy and Martin Flanagan suggested in this typically laconic footy discussion, we can do an excellent Grand Final day without having to turn it into a second-rate American NFL presentation.


Economists are very strange people.  Some of them say private debt doesn’t matter much, because banks simply act as intermediaries between people in the community who lend to each other, so that any private debt cancels out.  More realistically, other economists say that banks, by generating excessive debt, are responsible for the repetitive economic recessions we experience.

However, even the latter economists fail to see that land price represents this ‘excessive debt’ directly and is, in fact, the generator of inflation, along with the taxation of labour and capital. All economists, even modern monetary theorists, consider that land price is simply the ‘market value’ of a particular piece of land under a house, when in fact it is the most fundamental economic pathology, the actual measure of an economy’s illness.

We’ve come a long way in the last 3300 years, but maybe the legendary Moses was a step ahead of today’s economists when he delivered God’s ritual and legal proscription against the baneful effects of land price? “The land must not be sold in perpetuity, for the land is mine and you are but strangers and sojourners with me.” (Leviticus 25:23)

Let’s take a peep at the welfare of the fifteenth century English labourer and carpenter (family of five), respectively, when the land rent was paid by the ‘owerners’ (Middle English derivation of ‘owner’) and when there was virtually no other taxation.

Wages are shown against the (red) cost of living line. The wage ‘bulge’ in the latter half of the fourteenth century is mainly explicable in terms of the Black Death, or plague, but this is not the case with the prosperous fifteenth century and first quarter of the sixteenth – up until Henry VIII’s enclosure and sales of the monastic lands. During that century, we can see the labourer and, particularly, the skilled carpenter, had much of their wages left after food, clothing and shelter. Can we say this today, when these people are more commonly in debt?  It is more than arguable that land price, which was unknown until the time of Henry VIII, explains this retrogression in peoples’ fortunes.

Now, let’s look at Australia today to compare growth in Australia’s total land price (ABS 5204.61) against its economic growth (GDP at current prices).  Unlike in the past where there has been some relativity between land price and GDP increases, where GDP has trebled in the last 20 years, land prices have increased 5.5 times! Would anyone suggest that this land price growth represents productivity, that is, growth in real wealth?

What if I were to suggest that banks setting up mortgages against much of this detrimental growth in land prices actually explains Australia’s declining economic performance?

What if the American economist/social philosopher Henry George was correct that incomes and profits rise and fall together, inversely to land prices (i.e. inversely to the private capitalisation of uncaptured land rent)?  He, Adam Smith, John Stuart Mill and, more recently, Joseph Stiglitz said land rent should be captured to the public purse. But that would mean there’d be little or nothing left which could be capitalised into a land price?

That’s correct!  And banking and real estate would not be able to make ‘super-profits’ out of land prices!  And with a brake applied to rent-seeking in land price, wages and profits must increase and private debt must decline!

What’s wrong with that, all you economists out there?  So, let it slowly sink into your heads that land price and the taxation of labour and capital are the cause of inflation and debt – and the enemies of national prosperity.



The issues with banking are not simply a matter of failed risk management or fraud.  Its fundamental model is flawed. Banks are no longer about service delivery to customers, they are rent-seekers at the expense of the community, pure and simple.

They create money, and ‘super-profits’, as easy ‘credit’ inflates the land component of mortgages – so that a great part of the community has become shackled to extraordinary and quite unnecessary debt-servicing.

This is a characteristic of banking which merits education and exposure. A lack of housing affordability is a creature of the banks inflating land prices and inadequate public capture of land rent, not simply of an under-supply of land – as misunderstood by economists. Prosper Australia’s Melbourne water-use studies, show high levels of residential vacancies, in fact, in many suburbs, not just in high-rise apartments.

When hyper-construction fails to make any significant impact on housing affordability, given its dissatisfaction with the political class, it’s a distinct possibility that the  Australian people may also look to political demagogues for relief. No?  Haven’t we slavishly followed the US in most things?

Instead of assuming its proper role as a community service, US professor Michael Hudson suggests that the FIRE sector–finance, insurance and real estate–is running amok and has become the economy.  I consider Hudson’s on the money, if you’ll pardon the pun.

The failed banking model may only be rectified by greater capture of our publicly-generated ‘economic rent/surplus product’. This can best be done by an all-in, single rate land tax, together with more realistic mining and spectrum rent charges. That done, banks have less to capitalise into land prices, &c., and against which they may ‘lend’.

Like mining, banking is an ‘extractive’ industry. It needs to be put back in its place if the Australian economy is to recover.


It certainly is making itself weaker by failing to capture its massively-escalating land rent – and turning city developers into ‘land price billionaires’ whilst its farmers and those west of the rainfall line suffer in poverty. Will China come to realise the need to capture the land rent before the West does? We’ll see!