The Australian Valuation Office is to be closed. What a pity! For the social and economic health of Australia, we ought to be witnessing the closure of the Australian Taxation Office, and the capture of our economic rents for revenue managed by the Australian Valuation Office – as once they were.
See Treason (Part 1) : Casino Capitalism
Not to forget Australia’s own “Real Estate 4 Ran$om“
Dr Gavin Putland submitted this letter to The Australian Financial Review. The AFR has published it today with some editing that removes the option of a charge on unimproved land values.
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I see Oxfam has published statistics showing 85 people control as much wealth as the poorest half of the world. I’d be much more impressed with Oxfam were they to observe that as those 85 people control much of the world’s natural resources, a charge on the value of natural resources held, as an alternative to taxation, is the best way to remedy this obscenity.
Economist Saul Eslake has slammed Australian housing policy, saying government self-interest has led to the worst affordability problem in more than 50 years, The Australian Financial Review reports.
According to the newspaper, the chief economist at Bank of America Merrill Lynch blamed government policies including cash grants to first home buyers and negative gearing for inflating the demand for housing without increasing supply.
“Politics – more than any other single factor – means that Australians are likely to have to live with a dysfunctional housing system for a long time yet to come,” he said in a personal submission to a senate inquiry into affordable housing.
Earlier, Antony Cahill, National Australia Bank’s executive general manager in charge of lending and deposits, outlined confidence house prices will continue to lift in 2014, according to The Australian Financial Review.
Mr Cahill said the sector, led by the largest market of Sydney, was performing “strongly” and we should see house price gains persist for a while yet.
“When you look at where we are in terms of values across the market place, affordability remains at good levels at this point in time,” he told the AFR. “We still believe there is room for house prices to grow.”
Mr Cahill pointed to low interest rates as a key to fuelling demand, while adding that Sydney could be in for more moderate growth this year given it outpaced most other markets last year.
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Comment
Saul Eslake’s heart is in the right place, but like most economists, he fails to understand high house prices–more correctly, high land prices–are mainly the result of local, state and federal governments capturing an inadequate portion of our site rents for public purposes via rates and taxes. Australians have become great rent-seekers. Were governments to capture a greater amount of site rents (and less taxation) there would be less rent to be capitalised into land prices. Simple.
On 2 September 2013, Eslake presented the Henry George Commemoration address “50 years of housing failure“. It’s worth reading.
The late Dr Adrian Wrigley had a brilliant idea: opt into a location value covenant and be granted exemption from taxes!
How much is America’s land worth? <- $14.488 trillion, according to this piece.
According to the World Bank, the USA’s GDP at 2012 was 10.6 times Australia’s.
Table 61 in Australian Bureau of Statistics Catalogue 5204.0 shows our total land prices to be 3.6841 billion.
Could that suggest, all things being equal, maybe US land values could be as high as 3.6841 x 10.6 = 39 billion?
Oh, wait on, all things aren’t equal: the US has had its real estate bust, and Australia hasn’t – yet. However, I don’t think the US decline would have averaged 63%.
Maybe Australians are simply better land speculators that US citizens? Maybe the US could learn a few things from the Australian tax system about to assist their rent-seekers even further?
I’d been unable to dig up the source for a lengthy quote linking the great Chinese leader, Dr Sun Yat-sen and Henry George, but one of my Chinese colleagues at the Chengdu seminar dug out an abstract from Herbert Rosenthal’s 1983 paper “Sun Yat-sen and Henry George: A Reassessment” in A Journal of European and American Studies, 13(3), pp 1-24.
The refereed Chinese academic Journal of Translation from Foreign Literature of Economics has kindly published my paper “The commonwealth as a response to bubble economies“. It is based on a talk I gave at a seminar in Chengdu on 28 November 2013 regarding the founding of Canberra on a system of leasehold land tenure.
I hope to be able to publish the English version later, but have first submitted it to my professional journal–Australia and New Zealand Property Journal–for their consideration.from Foreign Literature
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CANBERRA RETURNING TO ITS LEASEHOLD ROOTS?
Read the article: http://www.canberratimes.com.au/act-news/changes-to-land-rent-scheme-a-boost-for-newcomers-20140108-30hzm.html
Then Ronald Johnson’s insightful letter: http://www.canberratimes.com.au/comment/ct-letters/privatisation-lessons-20140113-30qqi.html
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INDUSTRIAL RELATIONS
Ronald followed up today with the following letter in the Australian Financial Review about the big industrial relations canard that Australians are paid too much:
Peter Pitt (“High wages force companies to consider offshore options”, AFR January 10) suggests that a lower minimum wage will improve employment retention in Australia. The lower wage countries he uses to support his point include the United States, United Kingdom, New Zealand and Japan.
Of these, only Japan actually has a lower official unemployment rate than Australia. However, Japan uses a narrower definition of unemployment, has a lower participation rate and has around one-sixth of its population living below the poverty line. Given that Australia has some of the most unaffordable housing in the world, fuelled by exorbitant land prices, lower minimum wages are a certain recipe for increasing homelessness and the numbers of working poor.
Australian wages are not too high. Rather, it is the exorbitant price of all types of land that is the real enemy of employment and progress. This problem is perpetuated by a taxation system that punishes effort and rewards unproductive speculation. Australia can increase employment and wages to their full and natural levels by freeing the labour market of land monopoly and other unjust privileges that block fair access to work opportunities. This can be achieved by removing taxes off the backs of wealth producers and returning the unimproved site value of land to the Australian people via the Treasury.
Ronald E Johnson
Association for Good Government
Canberra, ACT
