Tim Colebatch’s article Tolling existing freeways on wish list in THE AGE today warrants a response.

The Property Council of Australia has produced a report Supercharging the Victorian Economy which obviously doesn’t want property investors to pay their fair share of the uplift in values new infrastructure provides.  They prefer instead:-

Melbourne’s freeway network should be converted to toll roads, leased out to private operators and subjected to peak-hour pricing as part of a series of reforms proposed to tackle congestion, build new infrastructure and make the most of what we have.

Yep, that’s “supercharging” alright! [Don’t you love the dramatic irony?] Surely this is nothing but an extension of the “user pays” model, the inspiration of Ayn Rand, Ronald Reagan, Margaret Thatcher at al which has delivered nations to the point where economies are collapsing about our ears? (“Move along people! No such thing as community interest here, folks !”)

Spokesperson for the Property Council of Australia, Jennifer Cunic, interviewed about the report by Ross Stevenson and John Burns on 3AW’s breakfast program this morning didn’t give an inch. The absence of land value capture in the Property Council’s proposals was palpable.

Ross and John then proceeded to conduct a survey showing 81% of people to be against further toll roads and 19% in favour, but you’d have to admit such self-serving reports in favour of big real estate interests have had a habit of getting up as policy.* Beware, be very aware. Let’s hope we can make the transition from the niggardly “user pays” to land value capture, where the beneficiary pays, because there is a community interest here guys – and it’s represented by unprivatising community-generated land rent.

Maybe the following explains why land value capture doesn’t loom large on the big rent-seekers’ agenda. They’re wanting a free lunch:-

* STOP PRESS: How prophetic!  It did turn up as policy in Victorian Treasurer O’Brien’s budget later today. The East-West tunnel link is to be commenced and developed as a Private-Public Partnership (PPP) venture, despite these starting to fail around the country. [Sigh!]

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.

BANK BUBBLES AGAIN

Talking about frank analyses of bank bubbles, I was just watching Alan Kohler with ANZ Bank’s Mike Smith on the topic on the ABC’s “Inside Business” this morning.

Desultory conversation skirted around the point of a banking bubble and, after touching upon Australian banks’ high P/E ratios and ROEs relative to other banks, the ever-urbane ANZ boss mentioned we’ve been relying on central bank monetary policy because fiscal policy is failing. He then faced Kohler’s final question which brought him back to the topic: “Will it come to an end?”

“It will come to an end …. with a degree of pain”, Smith responded.

You been at the truth pills, Mike? Westpac’s Gail Kelly was truer to bankster form when the same question had been put to her elsewhere. She simply obfuscated.

All those dollars and nothing to do with them, huh, guys?

The bubble burst is coming, and it’s coming fast. High Australian dollar? I wouldn’t bet on it staying there!

VOTERS

Understanding the above might assist to solve a paradox that seemed to elude Barrie Cassidy in the ABC’s preceding program “Insiders”.

When polled, people strongly favour the fibre-to-the-home NBN, the NDIS and the recommendations of the Gonski Report.

However, when the question includes Julia Gillard or the government’s implementation of the NBN, the NDIS and Gonski, the popularity for these programs seems to fall away substantially. It’s an understatement to say the minority government is on the nose.

I think you know governments lose elections, Barrie. And they usually lose them because of the “hip pocket nerve” syndrome: not because of the voters welded on to either the ALP or the Liberal party, but because of the swinging voter.

And, if you haven’t noticed, Barrie, the swinging voter has been doing it very hard – along with many of the limpets attached to the Lib/Labs who won’t change their vote. He or she has taken out a mortgage on a new or updated home, taken the credit card up to its limits, and still the bills continue mount. It’s a real worry! And it must be the government’s fault!

Debtload is apparently all the government’s fault. Those of us with excessive debt rarely blame ourselves for our own stupidity with the banking parasites.

Trust this solves your polling conundrum, Barrie? Problem-solving’s my game.

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.

Another record profit off the back of the world’s greatest residential real estate bubble. How on earth was Westpac, like the other big three, able to manage that one? Quelle surprise!

But what about its risk management? Remember, Westpac nearly fell at the late 1980s commercial bubble hurdle, at the same time the State Bank of Victoria went under (due to the excesses of Tricontinental). Did the bank learn anything from that episode about what happens to land values when a bubble bursts?

Hasn’t the bank once again lent against a gargantuan bubble?  [Remarkable!]

Take your dividends while you can, folks, but the question of failed risk management must be asked of each of big four banks before one cent of Australian taxpayers’ money is spent on bailing them out.

Oh, there’s no chance of that happening this time around because they’ve packaged up and onsold many of their mortgages in CDOs? And they’ve conducted worst case risk management scenarios, haven’t they?

Oh really? Pull the other one.

—ooOoo—

[Wouldn’t it be nice to see such fresh analyses in the Fin Review, or on “Inside Business”?]

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.

Good stuff on THE AGE letters pages today:-

Not fit for purpose

Under an income tax, expenses are deductible against income only if they’re incurred in earning that income. Negative gearing violates that rule: a loss on your investment property is deductible against your salary although it’s not related to earning your salary. Meanwhile the cost of travelling to work is not deductible although it is related.

This rort costs many billions a year (The Age, 1/5). It also fails to achieve its stated purpose of providing affordable rental housing. You can claim negative gearing if you buy an existing home, which forces a prospective owner-occupant onto the rental market. The solution is to allow negative gearing only on new homes. Only this would increase the stock of rental properties.

Gavin Putland, Melbourne

__________

And (same page) the RSPT mining tax that became the MRRT:

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.

Want to hear a good interview by Karl Fitzgerald with Ron Johnson, union official and secretary of the Association for Good Government, Canberra?

So there is a natural form of industrial relations!

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.

Negative gearing stinks.  See the teaser for Philip Soos’ report or read the report itself.

Even those who were sold the negative gearers’ dream by the spruikers are starting to realise it just doesn’t work in the long run.

Scrap it.

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 the Australian Bureau of Statistics and the Land Values Research Group (Dr Gavin Putland)

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.

Today’s news for first home buyers is outrageous:

http://www.news.com.au/breaking-news/national/budget-boost-for-new-first-homes-in-vic/story-e6frfku9-1226631006624

David Collyer’s media release in response for Prosper Australia:

http://www.prosper.org.au/1sI

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.

SOLVING THE DEPRESSION

Forget technical jargon. That only ties us in knots.

Is nobody doing well?

They are? Who?

The “one percent” are doing exceptionally well at the expense of others?

So, the problem is one of distribution, rather than one of generalised poverty?

How was the distributional flow constricted in such a manner that the 1% could be rewarded out of the earnings of the 99%?

Let’s draw a picture of flows within the economy to see how a fair distribution might have been denied the 99%.

Natural income flows (before taxation) can be seen as: wages to workers; profits to capital; rent to land.

First, let’s remember that in economics land is any natural resource, be it land, sea(fisheries), or air(waves). Rent flows to the “owners” of these natural resources, as it does to other government-granted privileges, such as taxi licences, etc.

But do not those granted ownership, title or licence over natural resources have a duty to pay the rent for them back to society?

Did they create land (the natural resource)? No?

Does paying an ingoing absolve the necessity to pay the rent? No?

By definition, labour earns its wages and capital its profits – yes?

Could the privatisation of public rent (i.e. rent-seeking) explain the knot in the distributional system which favours rentiers as a class as against labour and capital?

Could that default also explain why it has become necessary to introduce taxes on labour and capital for the necessary running of government?

Is it possible to remedy this misdistribution by abolishing taxes on labour and capital and funding necessary government out of government-granted privileges, super-profits, or rents that are not available to everyone else?

No? Why not? What are the obstacles? The rent-seeking 1%?

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.

Cheap as chips – unless government has a hand in it – Tim Colebatch, The Age 25/4

Dear Editor,

Although Tim Colebatch’s piece (“Cheap as chips – unless the government has a hand in it” 25/4) does include the 40% increase in the cost of homes/renovations over the last ten years, it fails to include the 116.3% increase in Australia’s land prices. ABS Catalogue 5204.0 Table 61 shows that Australia’s total land prices rose from $1.7033 trillion in 2002 to $3.6841 in 2012. This is surely an important ‘non-government’ expense in which many Australians have been involved over the last ten years?

Bryan Kavanagh

…  and they’ll be paying it off for 30 years!

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.