AUSTRALIAN FINANCIAL REVIEW  19 September 2014

Don’t blame FIRB – collect land values tax

Coalition MP Kelly O’Dwyer has unfairly blamed a short-staffed Foreign Investment Review Board for not properly checking the legality of all of the $24.8 billion in foreign investment in Australian real estate that has occurred this year (“FIRB: We don’t have staff to veto foreign property buys”, AFR , September 18).

Perhaps Ms O’Dwyer imagined that Foreign Investment Review Board chairman Brian Wilson can succeed where King Canute failed, and somehow perform the equivalent of holding back the ocean tide with just eight sand bags. The natural laws of political economy reveal a much easier and fairer way to manage foreign investment.

Australia should charge all real estate investors (whether foreign or domestic) a fee equal to the annual unimproved value of the land upon which their property is built.

Land values directly reflect the social benefits accessible from each site due to public expenditure and are therefore the natural source for public revenue.

Failure to act will mean that Australian wage and salary earners will continue to be forced to subsidise the activities of land speculators, including by paying high prices for housing and high taxes for the privilege of working. A good government would replace all taxes on labour (including the GST) with a Commonwealth Land Value Tax.

– Ronald Johnson Association for Good Government, Holt ACT