All posts by Bryan Kavanagh

I'm a real estate valuer who worked in the Australian Taxation Office (ATO) and Commonwealth Bank of Australia (CBA) before co-founding Westlink Consulting, a real estate valuation practice. I discovered, by leaving publicly-generated land rents to be privately capitalised by banks and individuals into escalating land price bubbles, this generates repetitive recessions and financial depressions. We need a tax-switch: from wages, profits and commodities onto economic rents/unearned incomes, if we are to create prosperity and minimise excessive private debt.


      "Nice article, Michael!"


I read with interest the comments on Michael Hudson’s article in THE AGE on Wednesday.

Amongst other things, Hudson had suggested:  “HIGHER land and house prices typically lead to an increased supply of housing. Yet at the peak of Australia’s perennial housing affordability crisis, the Housing Industry Association declared that there would be a 13 per cent fall in housing starts this calendar year, compounding last year’s 18 per cent fall.

In light of massive rezonings in Victoria and improved planning bureaucracy in many states, this can only be seen as a warning that property insiders expect there to be a price crash.”

Hudson also had the temerity to say:  “Property prices are defined by how much a bank will lend.”

Well … didn’t that elicit comments from those who remain in denial of the world’s biggest real estate bubble?!


“In fact, it’s the opposite. The bank lends based on the value of the property (you must never have had a home loan).”

“… there’s a big housing shortage here”

“It’s important not to lump different types and markets into one.”  [Well, there goes the ‘Barometer of the Economy’ and ‘the Kavanagh-Putland Index which does exactly that!]

“What a ridiculous article based on nothing other than property developers not being able to borrow millions anymore.”

“A 70 year old lecturer at a minor campus university is (sic) the USA is now the sage on Australia’s impending property disaster.” [Er, you would perhaps prefer the self-justificatory comments of the same Ivy League Harvard boys who sponsored this GFC, Greg?  BTW, UMKC is the centre of credit analysis in the US.]


I am sometimes afflicted with secret doubts about the perspicacity of some of my fellow Australians.  These same few will undoubtedly support our upcoming bank bailouts – although it defeats me how a government rescue of the banking sector at the expense of its citizenry can be seen as anything but the most obscene of all corruptions.


Connie Hedegaard
Connie Hedegaard

Connie Hedegaard, the Danish Minister for Climate and Energy, has been a solid citizen in the area of alternative energies. But she and the world’s leaders will join the ranks of con-artists and purveyors of derivatives if they try to tie us into emissions trading schemes (ETS) as a response to pollution/global warming in December at Copenhagen.

Let’s keep it simple. The problem is pollution – so let’s tax polluters. The fact that taxes destroy CAN be usefully employed in this instance. Let’s destroy pollution!

Abattoirs, once notorious polluters in Australia, have been forced to address waste water issues by providing settlement ponds, anaerobic and aerobic. Also, the horrible odours that had previously escaped from these premises were remedied by after-burners and underground bio-filter beds, the latter kept moist to ensure that the micro-organisms which attack these offensive effluvia remain happy.  Simple!

Hey, c’mon guys! We didn’t start trading in waste water and odour rights between abattoirs to get this done!  (Or is this one somehow going to be turned on its head in Copenhagen, too?)

Let’s see. We’ve got this terrible pollution happening, so let’s create a trade in the right to pollute, so that sometime we might be able to reduce pollution levels? To what level of stupidity IS it possible for humanity to descend?!

Kevin '07
Kevin ’07

The most frightening thing is that these people are deadly serious! Kevin Rudd got into his now-famous hissy fit last week about those who baulk at the ETS he’s been asked to promote. Maybe attack is the best form of defence when you’re found short on logic?

The real problem for most Australians, not having been convinced at all by the Minister for Climate Change and Water (Penny Wong) nor Prime Minister Rudd about carbon trading, is that the leader of the opposition, Malcolm Turnbull, having close ties to investment banks (who will no doubt see this new form of derivative as an absolute boon) ALSO favours the costly and ineffective carbon trading option!

December 2009 in Copenhagen promises to be hilarious.  Go, Kevin ’07!


David McWilliams
David McWilliams

The first episode of David McWilliams’ “Addicted to Money” on ABC1 last night was compelling viewing. Making reference to the cargo cult culture increasingly evident over recent years in our own long-running soapie Neighbours made the wordwide financial collapse a little more poignant for Australian viewers who have been largely insulated from the GFC to date.

Trinity College Dublin-educated McWilliams worked as an economist in the banking industry before turning his undoubted talents to journalism and documentaries.

Comparisons can be made between the engaging techniques of McWilliams and Michael Hudson, the latter who has just completed a successful tour of Australia. Both have the insider’s knowledge of the financial system and share an ability to expose and lambast its shortcomings.

No doubt, future episodes of “Addicted to Money” will determine whether McWilliams is as solid as Hudson in his conclusions, but I was seized with the thought of how illuminating and entertaining it might be to get the two men in a room together to have a decent conversation about the cause and cure of the GFC.  

Although he didn’t speak to it, McWilliams made it easier for me to understand that, in terms of the world’s financial systems still running amok, there’s a certain sort of logic in Prime Minister Rudd appointing Peter Costello as a governor of Australia’s Future Fund. Costello fashioned the fund from taxes derived off the back of the world’s greatest real estate bubble over which he presided as Treasurer, so why not tie him to some responsibility for where we are heading with it?

Of course, I speak with a forked tongue: I’m not at all happy to see individuals connected with creating the bubble in the first place, whether it be Ben Bernanke or Timothy Geithner in the US or Peter Costello in Australia, having clearly demonstrated their inadequacy, being employed for their services by new governments that have, amongst other things, been given the electorate’s OK for financial reform.

Unlike McWilliams and Hudson, however, it seems that none of the major political parties has yet fathomed how cheap credit and property-directed tax systems have built real estate bubbles, then leveraged financial derivatives off them. That’s worrying!  Does this mean that Australia, too, will have to endure the obscenity of bank bailouts when our real estate bubble finally bursts?


ps.  Thursday 19 November 2009 (Episode 3)

Yikes, David!  You came so VERY close! Yes – the problem is THE ECONOMY and the ENVIRONMENT! And we can reconcile them both by collecting the RENT for using land.  Then, and only then, can we achieve the conservation of our planetary resources and environments; no more leveraging debt off real estate bubbles; no more recessions; no more depressions; in truth, a synthesis!

Somewhere, sometime, humanity will be struck by the realisation that a sane ECONOMICS utilises RENT (not taxes) as the means to reconcile PEOPLE with the PLANET.


images“The dog’s breakfast of state land taxes needs reform”

WE agree entirely with Tanya Plibersek and the Urban Development Institute of Australia’s Stephen Holmes that where capital works were once funded from local government rates, which can’t be passed on in lot prices, the more recent practice of hitting sub-dividers with up-front charges adds, of course, to the price of sub-divided land.

For the sake of more affordable housing, we should revert to the former system.

Whilst that situation is being remedied, we can also hope that Ken Henry’s review of the tax system has the gumption to recommend the elimination of the exemptions, thresholds, multiple rate and aggregation provisions that make state land taxes such a dog’s breakfast.

The principle at issue here is that local and state governments have an ongoing interest in capturing on the public’s behalf at least part of the uplift in land values provided by public infrastructure.

Up-front charges, including headworks charges, don’t do this; nor do our misbegotten state land taxes.

Bryan Kavanagh
Research Associate, Land Values Research Group
Melbourne, Vic


Sir Samuel Griffith
Sir Samuel Griffith
Prime Minister Rudd
Prime Minister Rudd


Sir Samuel Griffith (1845-1920), after whom Prime Minister Kevin Rudd’s federal electorate seat is named, would be turning in his grave over some of his acolyte’s recent shortcomings.

Rudd’s crazy “Indonesian Solution” to the plight of the 78 Tamil asylum seekers now refusing to budge from the Oceanic Voyager is in tatters, as it was always destined to be.  Sir Samuel, an advocate of immigration, would at least have had the 78 Tamils processed within Australia; he was a practical decision-making politician, not a shirk. Kevin Rudd has left himself open not only to the guffaws of Liberal Opposition Leader, Malcolm Turnbull, but also those of the Australian public. How did the Prime Minister dream this one up? Was he ‘set up’ by the Indonesians?

Griffith’s keen mind had early discovered that investigation and forethought will always trump glibness.

Maybe he would also encourage his similarly Ipswich-educated protege to revisit his Elementary Property Law Bill of 1890, if the Prime Minister wishes to develop an effective population growth strategy to accommodate Treasury’s estimated 35 million population for Australia by 2050.  But Griffith would cringe at Ken Henry suggesting (to a business lunch on 22 November) that Sydney and Melbourne’s populations would grow to about 7 million each in the next 40 years.

Sir Samuel’s Bill proposed a method for natural decentralisation of the population. A revenue system that, being based on land values and not upon what one earns, would charge regional cities and towns much less than capital cities, encouraging the flowering of the regions and arresting the drift towards Megapolis.  (Our town planners, too, would be well advised to look to Sir Samuel here.)

Griffith undestood that taxing work and industry was literally counter-productive. Rudd, having yet to learn this lesson, has therefore also come up short on any practical response to the GFC. But he surely doesn’t want to miss out on any of the G20 shoulder-rubbing and back-slapping!

Right at this moment, Sir Samuel Griffith is undoubtedly marking down his tyro’s report card.


Australia was not overrun and defeated.
It became dead at heart, and the rot and canker spread to its extremities.
Federally, proportional representation elected only the Senate,
because rent-seekers who divided and ruled the nation
charged that it created unstable government.
Neither main political party
offered apology for choosing,
instead of the Australian people,
the thrall of a powerful band of rentiers
using ignorance and fear as weapons.
Those who worked for a living were fined heavily
by every form of imaginable taxation,
by means of this self-serving tax regime,
natural resource holders divided Australia’s rents amongst themselves.
Everywhere, the deepening chasm between these and all others produced decay,
political, material, moral and mental.
Thus did Australians surrender their freedom
and come to languish in a slough of rent-seeking,
unwitting wage slavery and debt deflation.
Requiescat in pace

Britain calls it a depression

Phillip Street Sydney 1930s depression
Phillip Street Sydney 1930s depression


It’s starting to get interesting. Britain has just announced its sixth quarter of negative economic growth and is calling it a depression.  Not poor ol’ Gordie Brown, former world greatest treasurer, though!

As in the US, where Barack Obama has only bailed out the banks and Wall Street – not the people – there will be no recovery. The economy is people, and people need a dollar in their hands for the economy to work. If people have no more capacity to borrow, why do we bail out banks?

Australia’s land price bubble will burst shortly, so we have the advantage of extra time in which to let our press and media know there should be no bank bailouts, nor propping-up of collapsing businesses. That’s arse backwards. The people need support – through tax cuts and a national land rent system. It’s the only way out of a depression.

When our land bubble is allowed to burst, as it must, the banks must quickly write down mortgage values to market and do their sums based on that. If it means they go under, they will be picked up at their true value by other companies, as the capitalist system demands.

But socialism for banks who over-lent without concern for risk management isn’t on! ‘Retaining confidence in the system’ by bank and stock market bailouts is the greatest load of BS. It is simply a con to keep putting dollars into the hands of the wealthy and delaying events until THEY put THEIR affairs into order – and the devil take the hindmost!

If rational people can’t get this message out, you can bet your bottom dollar that Kevin Rudd’s also going to try to ‘convince’ Australians that we need to assist the wealthy, too!

That’s why Michael Hudson’s current Australian tour has been so timely. He’s slaying them talking about this depression! He’s one professor of economics prepared to call BS when he sees it.

Lifting the Lid on the GFC

Last Wednesday night’s symposium “Lifting the Lid on the GFC” at the Melbourne Town Hall – with Michael Hudson, Steve Keen and me – was an enjoyable and well-attended event.

The meeting  was chaired by the Henry George Foundation of Australia’s John Poulter, who provided nicely-researched comments, and provided Steve Keen with some jogging shoes for his upcoming ‘bet’ trek to Mount Koscuisko.

It was great to speak to people afterwards. Despite assertions of politicians and the media, people are  increasingly sceptical about the ‘relatively healthy’ state of the Australian economy in comparison with those countries whose real estate prices have tanked . Many believe it’s a matter of timing and that it looks like we’re  going to be one of the last cabs off the rank.

Click through my GFC presentation here.

Melbourne Town Hall
Melbourne Town Hall


Population control?
Population control?


The greatest problem confronting the world must surely be population growth? After all, look what we’re doing to the planet; look at the Global Financial Crisis; look at our overcrowded cities; look at the water shortages; look at global warming ….?

Although this is an intuitively appealing argument, in what way does limiting populating growth begin to answer the corruptions into which Western civilisation has degenerated, where finance, insurance and real estate have been mounted on an altar to which the poor and dispossessed and, increasingly, the middle class are required to genuflect before consideration is given to the needs of the citizenry and sustainable wealth creation?  Do not the 1.5 billion cattle that occupy 100 times more land than the 7 billion people on the planet pose a greater environmental threat?

Is the drift of population to the world’s great cities healthy? Is not the drift associated with the promotion of rent-seeking by errant tax regimes? Would the drift (in search of jobs?) be arrested if, instead of taxing people for working, we were to capture publicly-generated land rent, the annual value of locations? Would not the higher revenues drawn from cities act to reverse this drift and the rape of city hinterlands as Megapolis feeds upon itself at a terrible coast to rural and regional areas?

Although the Reverend Thomas Malthus was proven wrong and shown to have the cart before his horse, insofar as population growth has been found to decline with economic security, this hasn’t stopped the emergence a neo-Malthusianism which holds that populations must adapt to pathological environments before the health of the planet may be restored. This must be our starting point is their claim. But they are wrong.

I don’t know what constitutes a sustainable population but – like Bill of Rights advocates who fail to have peoples’ right to share equally in the rent that flows like oil from land and natural resources as priority one – zero population growth advocates are misguided. They’re akin to so-called  ‘Productivity Commissioners’ who refuse to see that taxation does indeed destroy, and that land-based revenues conserve.

Having dashed out these thoughts earlier today, I’ve subsequently found this from George Monbiot which expresses much the same sentiment about population.