A.  The US approach: deficit budgets and printing money, in order to:

1. bail out the banks

2. keep the economy from falling off a cliff and

3. make ‘no hasty reforms’, so that

4. things might eventually improve

B.  The European austerity approach: cutting government excess to ‘restore economies’:

1. bail out the banks

2. slash government services, in order to

3. augment the pool of unemployment, and

4. let the unemployed compete for jobs by cutting wages

C.  The untested model: make business and industry more efficient and cost competitive by:

1. abolishing taxes on labour and capital

2. deriving necessary revenue from the holders of land and natural resources, based upon the value of land and natural resource ‘super profits’ (rents), and

3. reforming government expenditures as the economy improves

4. bailing out no banks

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

OK, so now we’re getting down to it: what Prosper Australia has been saying for years we need to address.

Last week the Business Council of Australia called for “meaningful tax reform” and yesterday the Grattan Institute pointed out that huge budget deficits are looming for Australia.

Grattan Institute chief John Daley says the combined deficits of state and Commonwealth government budgets could reach 4 per cent of GDP by 2023, or $60 billion in today’s dollars. He concluded that if government programs are considered essential, “the gap can only be closed by higher taxes”.

Of course Grattan, touted as an “independent and non-partisan” think tank–though supported by the Victorian and federal governments, BHP, the National Australia bank, the subdivider Stockland, and Wesfarmers–favours extending the goods and services tax (GST). Funny about that: extending the GST’s not likely to offend Victorian and federal governments, BHP, the National Australia bank, the subdivider Stockland, nor Wesfarmers. It’ll just hit the people again: especially those with no propensity to save.

I’ve never heard John Daley nor the Grattan Institute support the mining tax, nor a federal land tax to replace the mish-mash of state land taxes and the grab-bag of stamp duties on conveyances. Nor do they seem particularly troubled by the impossible level of Australia’s bubble-driven private mortgage debt.

Yes, tax reform is essential, but it would be a pity if the Grattan Institute or the Business Council of Australia are permitted to be its drivers, ‘cos they’re not proposing real tax REFORM, a shift from taxes to rents.

Everything should be on the table. Everything.

Including the excellent recommendations of the Henry Tax Review.

Grattan Institute: you’re next to useless!

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

Greater Sydney’s higher population and traditional physical constraints have tended to set its residential prices higher than Melbourne’s, although the gap has recently narrowed.

Sydney’s prices moderated several years ago during the current residential bubble, but Melbourne’s kept on escalating. Only in the last year or two have we seen residential prices slacken off in Melbourne.

Melbourne has a history of outdoing Sydney at the rate of increase off this lower base during boom and bubble periods, however.

The point is demonstrated in the above chart by Melbourne analyst, Philip Soos, who has recently compiled Australia’s most comprehensive data set on real estate prices.

Constant quality real housing price indices for Melbourne and Sydney allow us to make the Melbourne-Sydney comparison, from the 1880s boom (documented in Michael Canon’s “The Land Boomers”) to the starker differences during the current bubble (which is likely to spawn many post hoc books).

The slight downturn from Melbourne’s current peak suggests this may not be the time to buy in Melbourne.

Although Richard Cobden and John Bright had demonstrated to the British people’s satisfaction that the Corn Laws, and protectionist policies in general, only act to keep prices very high, particularly landlord’s, and Sydney accepted this free trade argument, Melbourne historically adopted a protectionist stance under the influence of David Syme at THE AGE.

And the banks were always happy to be headquartered in Melbourne which seemed a little more alert than Sydney to the lurks, perks and blandishments of finance and real estate. If land prices were about to skyrocket, Melbourne would be there in spades; production and manufacturing could come second.

That’s what people fail to realise: there IS a definite tension between productivity and real estate speculation. This is more readily visible at this point across the USA and Europe, but the Australian denouement proceeds apace.

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

Will Carleton’s “The Mortgage” makes the point, too.

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

Let’s hope it’s the end of an era.

It’s not to be doubted that governments have made terribly wrong decisions, but it’s nonsense to believe that anything connected with government must therefore be bad. Ironically, an open-minded read of Ayn Rand’s “Atlas Shrugged” which is meant to make the latter case fails completely to do so.

The most successful economies will be those free enterprise mixed economies in which government plays an essential role.

The greatest error of the Reagan-Thatcher era, to which many current day governments are still obviously wedded, was the selling off of natural monopolies as ‘a matter of principle’. These had been built on the backs of our forbears whom we disrespected terribly for the sake of a dollar when things got tough.

It was quite wrong, just as ‘user pays’ often is. Let the beneficiaries–usually the 1%–pay, the rent.

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

Oxfam’s 100 km walk is on once again this year over the weekend 19 to 21 April. It commences at Jells Park Glen Waverley and finishes at Wesburn after traversing through some beautiful countryside to Melbourne’s east. There’ll be 700 teams taking part: amazing!

As with institutions such as World Vision and St Vincent de Paul, Oxfam works to fight poverty and dispossession, a most worthy aim.

It’s ultimately disappointing, however, that these bodies–espying that poverty is man-made–still won’t contemplate signing up to a revenue system that will put an end to the 1% ripping off and dispossessing the poor.

To them Georgism remains akin to the mad uncle who must be kept up in the attic and never mentioned.

Donating money to projects to alleviate poverty can be palliative but can never replace the economic justice promised by land-based revenues.

I’m reminded of a withering letter the soap manufacturing magnate, Joseph Fels, sent in reply to a begging letter from the dean of a theological institution.

Fels’ response is sharp but not cruel because it covers the issue so factually. See what you think.

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

From Andy Wightman’s “Land Matters” website.

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

“Offshore Investor” issue 227 on Sovereign Risk,  June 2012

Former Treasury tax expert Dr Terry Dwyer challenges Australia squandering its luck.

He’s spot on.

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.