"Greed is at the root of the housing crisis"
- Kenneth Davidson 19/6/2008
* June 19, 2008
"The first rule of any housing policy should be to provide shelter."
It sounds simple, but for ten years the Howard Housing Bubble,
in which housing became unaffordable for Australian working
families, was about speculative investors bidding up prices to
gain windfall profits.
"BY THE 1990s, successive Australian governments lost sight
of the fact that their primary objective in housing policy was
to meet the shelter needs of the community. This reflected the
changing aspirations of the middle-class, who saw investment in
housing as a safe store of value and property as a more tangible
form of investment than shares.
It wasn't long before the politicians saw that one of the most
effective ways of attracting and retaining the aspirational
voter was to change the tax system to make investing in housing
more attractive than alternative investments."
# Subject: Re: Housing in Australia
# From: fasgnadh <fasgn...@[EMAIL PROTECTED]
>
# Message-ID: <45a48690$0$9770$afc38...@[EMAIL PROTECTED]
>
#
# Encouraging the property speculators to bid up the price
# of homes pushed many owner/buyers out of the market and
# the rest are now over burdened with debt.
#
# Most of the increased demand is not from population growth
# (more people requiring a house to live in) but from
# SPECULATORS buying investment properties, driving owner
# occupiers OUT of the overheated market!
# And they do it with DEBT financing;
#
# # "In the last five years spending on property by
# # owner-occupiers have increased 58%
# #
# # During the same period investment properties
# # have increased by 152%"
# #
# # - (Real Estate Institute of Australia, REIV)
#
# Howard fueled it with the poorly targeted home buyer handouts.
#
# Under the tory government settings the economy became a huge
# debt-driven property bubble.. or, as the mainstream media put it;
#
# "Australia's property frenzy - driven largely by speculative
# investors- " - The Age 13/6/2003
#
#
# http://www.geocities.com/fasgnadh/aussie_dream
#
"The result is that housing is now less affordable
(prices and market rents in relation to incomes) than
any time over the past century.
Professor Julian Disney, director of the Social Justice
Project at the University of NSW told the Senate Select
Committee on Housing Affordability summed it up:
"A major cause of our problems is that we have excessive
exemptions for owner occupiers from capital gains tax,
land tax and the pensions asset test. They are so generous
they have driven up housing prices. They have ended up
being not in favour of home owner****p; they are in favour
of current owners."
The subsidies are breathtaking. According to the inquiry,
in addition to the $50 billion a year in tax expenditures,
the exemption of owner-occupied housing from the assets
test for the aged pension costs a further $10 billion a year.
All these tax breaks are justified on the grounds that
they encourage home owner****p and they allow landlords
to charge a lower rent than would be the case if the
concessions were not available.
The counter argument is that the concessions have been
capitalised into the price of the existing stock of housing,
which compounds the problem of renters buying property and
eventually the higher price of housing flows through into
market rents.
Certainly, if the discount on capital gains for investor
housing and negative gearing were abolished, the $8 billion
a year revenue savings spent on affordable housing would
quickly remove the backlog and reduce the price of the
existing stock of housing without harming the real
interests of owner-occupiers.
Witnesses to the inquiry pointed out that concessions
on capital gains for both investor and owner-occupied
housing tends to favour expensive, rather than affordable,
housing.
According to ANU Professor Pat Troy, owner-occupiers were
encouraged to over-invest in housing producing the
so-called McMansions. He says: "This was, in part, a
logical response to the fact that capital gains tax
is not paid on the family home."
The weight of evidence to the inquiry was also highly
sceptical about increasing affordability by releasing
more land. Perth trans****t planner Professor Peter Newman
referred to the "Marchetti constant" that states people
in cities on average spend no more than half an hour each
way in commuting to work.
"For most of history there were only 'walking cities'
about five kilometres across. From 1850 to 1950 'transit
cities' emerged, spreading 20-30 kilometres and clustered
along tram and train lines. Since the 1950s 'automobile
cities' have emerged, spreading 50 kilometres in all directions.
"An implication from this is that larger Australian cities
are reaching limits to their expansion and if oil (price)
rises start to reduce the feasibility of commuting by car,
unless public trans****t is improved, development on the
fringes will stall."
According to the Victorian Division of the Planning
Institute of Australia submission, the unbridled release
of land on the urban fringes without the development of
infrastructure that binds communities together "will just
create a bigger problem and the next Senate inquiry will
have to be about poor health in outer communities and
children living for a shorter time than their parents".
The Melbourne 2030 audit expert group set up by the
Brumby Government to *****s planning progress since
the publication five years ago of the plan for Melbourne's
future growth (which also gave evidence to the Senate
inquiry) was absolutely scathing about the recent release
of land for development around the urban growth boundary.
The main impact of the release is windfall profits for
developers. According to the Audit Group: "We consider
the (boundary) to be an effective planning tool.
Any debate over its impact on the price of land
on the metropolitan fringe is now meaningless,
however, as whatever impact it may or may not
have is a matter of history.
"Furthermore, any op****tunity for 'taxing' windfall
gains that may have arisen as a result of its
introduction - as a means of financing of infrastructure
and services - has also passed. Removing the (boundary)
would not reduce land prices but it would remove a
degree of the planning certainty that communities,
local government and the development industry yearn for."
Melbourne's urban planning is run for developers,
by developers with the passive acquiescence of the
current generation of home owners in established
suburbs who can't see beyond their tax-induced capital
gains to the impact on the health, happiness and social
solidarity of their heirs.
- Kenneth Davidson is a senior columnist."
..and a living national treasure of rational economics,
not economic rationalism!
---------
"Iraq War and the price of petrol" - ABC 23/5/2008
"Prime Minister Kevin Rudd said that not invading
Iraq would have helped keep petrol prices down
-- 'It's a factor in the global supply of oil.'"
Of course it is, Iraq has the second largest reserves of oil
in the world. Even if demand were not rising, which it is,
ANY disruption to supply will cause prices to go up.
As we have all seen at the petrol pump.
"There is no question that disruption in any im****tant
country in the oil universe is going to have some
effect on prices, there is absolutely no doubt about that."
- Vijay Vaitheeswaran, Energy correspondent for
the Economist Magazine and author of
"Zoom: The Global Race to Fuel the Car of the Future"
"Iraq oil output hits a new high
- BBC 26/6/2006,
"Production has risen to 2.5 million barrels per day (bpd)
from a steady 2 million bpd during the US-led invasion,
Iraq's new oil minister said.
"Before the war, output was around 3 million bpd,
peaking at a record of 3.5 million bpd"
So, for four years following Howard and Bush's invasion
based on falsehoods about WMDs, Iraqi oil production was
reduced to FIFTY SEVEN PERCENT of it's pre-invasion peak! 8^o
And now it has only inched upward to 71% of it's pre-invasion peak
"Iraq is a mid-level producer, it's not Saudi Arabia,
for example, which is a king pin of oil, or Russia, those
countries produce 9-10 million barrels of oil a day,
the Iraqi output is maybe 20-30% of that, it's more on par
with a country like Venezuela, but undoubtedly a disruption
of the kind which comes from an invasion would of course,
send prices higher"
You can thank Howard and the Lieberals for those higher petrol
prices every time you fill up, and then don't forget the GST
they put ON TOP of the excise, ON TOP of the Iraq War Petrol
Price Surcharge!!!!!
The Great GST Tax SWINDLE
http://www.geocities.com/wmds_r_us/tory_tax_swindle.htm
All courtesy of the most DISASTROUS economic mis-managers
in post war Australian government.. the Lieberal party.
ABC: "So can our Prime Minister get away with saying that
if we didn't go into Iraq, petrol prices would be cheaper?"
"I think that without this kind of Iraq invasion, this
outcome would not have happened."
"In this case, it's not just Iraq, if there were to be hostile
actions by the US against Iran, something President Cheney has
hinted at, you can bet the prices would go even higher.
It's a question of the global supply balance, that's the reason
why an action like this became so problematic"
---------
The Official [Est. June 2000] aus.culture.true-blue FAQ ;
http://geocities.com/fairdinkum_trueblue/faq.html
The true-blue Homestead;
http://geocities.com/fairdinkum_trueblue/
The true-blue Hall Of Fame;
http://www.geocities.com/trueblue_hall_of_fame/index.html
The Tuckerbox;
http://www.geocities.com/true_blue_tucker_box/index.html
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