Doctors sued for malpractice. Politicians too?

#discuss

Doctors sued for malpractice. Politicians too? The Fisherman’s Bend development with Rowan Groves by Renegadeeconomists on Mixcloud

Renegade Economists Show 359

As broadcast on 3CR Wednesday 24th September.
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This week an insight into the Fisherman’s Bend developments with Rowan Groves (Fisherman’s Bend Network Committee). The Planning Minister commits a planning 101 multi-million dollar mistake but few are aware of the cost.

Show Notes

City of Port Phillip sustainability goals watered down

Ninety per cent of the 250-hectare area falls within the City of Port Phillip, which had drawn up draft design guidelines for development that mandated surpassing the building code in relation to sustainability.
Measures the council proposed include a preference for cogeneration, solar power and grey water recycling; a requirement all developments of more than 20 dwellings to utilise rooftop space for gardens or recreation areas; and a guideline that minimises car park provision to 0.5 spaces per two-bedroom dwelling and generally none for one-bedroom dwellings, while increasing the amount of bicycle parking.

Under the state government’s new Fishermans Bend Urban Redevelopment Authority design guidelines, sustainability aspects beyond the bare minimum required under the Building Code are “encouraged”, rather than required, and the guidelines also clearly state at the outset that “prescriptive” measures will be avoided.

Affordable Housing Targets – Development incentives (DCP exemption) to deliver community diversity.
Ignored

the $340 million planning blunder

The state government could be forced to spend up to $340 million buying private land to turn into public parks at vastly inflated prices in light of a major planning blunder in the new inner city suburb of Fishermans Bend.

The Sunday Age can reveal the government’s decision to re-zone 250 hectares of industrial land in Port Melbourne and South Melbourne before creating parks and open spaces has doubled or tripled its value virtually overnight, raising the spectre of a blow-out in costs for taxpayers.

This will cost us $340 million to buy the land at inflated prices. Then the billions of dollars required to build the infrastructure in the area will further add to land values, leaking from the public purse into the deep pockets of the property development industry. For this we will receive some $44m from developer charges. The stamp duty revenues will be considerable but will be passed on to the buyer, in effect exempting those who benefit most from paying much back to the community.

Our guest Rowan Groves stated 10% of the $44m in developer charges will be paid upfront. We will await the Fisherman’s Bend Network Committee Freedom of Information request for more clarity. With total development costs estimated at $738m, the $4.4m won’t pay for much infrastrucure, meaning that budgets for health and education will be squeezed. We do agree there needs to be a fairer method of funding infrastructure. Developer charges are inefficient. It would be far fairer to spread that cost over the 20 year lifecycle of the asset and recoup them with value capture.

Read more on Value Capture
LVC Primer
LVC Historical examples

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HIA’s save Neg Gearing report

New research released today by the Housing Industry Association (HIA) confirms that
restricting access to negative gearing for residential property would reduce investment in
housing, erode housing affordability and put upward pressure on rents.

Saul Eslake on Negative Gearing

This assertion is actually not true. If the abolition of ‘negative gearing’ had led to a ‘landlord’s strike’, as proponents of ‘negative gearing’ repeatedly assert, then rents should have risen everywhere (since ‘negative gearing’ had been available everywhere). In fact, rents (as measured in the consumer price index) only rose rapidly (at double-digit rates) in Sydney and Perth – and that was because in those two cities, rental vacancy rates were unusually low (in Sydney’s case, barely above 1%) before negative gearing was abolished. In other State capitals (where vacancy rates were higher), growth in rentals was either unchanged or, in Melbourne, actually slowed (see Chart 9).

How to Value a House

How to Value a Home: Karl on why renters are shunted and the latest on derivatives by Renegadeeconomists on Mixcloud

Renegade Economists podcast 358

As broadcast on 3CR, Wed 17th September, 2014.
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How to Value a House show notes

336 Burnley St, Richmond. High profile, high profits, $900K in 2 years – nice work if you can get it. Obviously been vacant for years. 1971 calendar covered in cobwebs. View the news story. Summed up in this facebook poster:

Burnley_whopays_FB2

Have u ever wondered why renters get pushed out of a property when a property goes to auction?

Its essentially an admission that the new rental price demanded to meet the auction price paid will be above and beyond what the current renter has paid in the past.

Take the case of our colleague, Mr X, who has been living innner melbourne house for a decade. He started off paying $1000 p/m. For the last few years that increased to $1300. Remember the formula for valuing a house:

Monthly rent x 12 months x 20 years
$1300 x 12 months x 20 years = $312,000
Mr X has paid about $150 k over the last 10 years, about half what the place was bought for.
Recent sales in the area indicate this run down property will sell for $700K.
$2916 p/m v $1300 p/m = more than double in rents required to justify the expected price.
Investors have the ability to rent at a discount to this $2,916 because of negative gearing. The more investors lose on the property, the less they pay in tax. Nice incentives eh? They also understand they will enjoy a capital gain in years to come, making up for any short term losses. Read Philip Soos on just how much these negative gearing losses add up to.

Conservative commentators talking bubbles:
David Gonski
Peter Costell – running out of luck

Investors half of all housing loans

However, if you exclude refinance of existing loans, then a staggering 50% (rounded up) were for investment purposes. This is an absolute record, and represents a 4% uplift from last month. …. The attraction of lifting house prices and low interest rates make property investment for many compelling.

Derivatives and Australian housing

5232.0.55.001 – Assets and Liabilities of Australian Securitisers, Jun 2014
At 30 June 2014, total assets of Australian securitisers were $131.3b, up $2.5b (2.0%) on 31 March 2014.
That equates to 8% for the year.

Covered bonds

are debt securities backed by cash flows from mortgages or public sector loans. They are similar in many ways to asset-backed securities created in securitization, but covered bond assets remain on the issuer’s consolidated balance sheet (usually with an appropriate capital charge). The covered bonds continue as obligations of the issuer (often a bank); in essence, the investor has recourse against the issuer and the collateral, sometimes known as “dual recourse.”[1] However, there exist other variable types where assets come off balance sheet. As of 2012 volume of outstanding covered bonds worldwide was euro2,813 billion, while largest markets were Germany (€525 bil.), Spain (€440 bil.), Denmark (€366 bil.) and France (€362 bil.).[2]

ABS rank Covered bonds as ‘Other’ according to the relevant statistical department. These were listed at $22bn Mar 08 down to $1.3bn June 2013. The last few months they were not reported as volumes were so low. But then we come across this article.

Rental Backed Mortgages Securities

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New Aussie Mortgage Debt record

New Aussie Mortgage Debt record – but why? Dont crowd out the investors!! by Renegadeeconomists on Mixcloud

Renegade Economists show 357

New Aussie Mortgage Debt record – but why? Philip Soos & Prosper Australia Policy Director David Collyer discuss their Senate Housing Affordability Inquiry presentation amidst the fast moving economic environment. Listen to some easy reforms our leaders could be picking off, the state of the Chinese led iron-ore meltdown and whether the effervescent housing supply shortage is really to blame for those dinner table arguments.

Here is Philip’s article on political investment ownership levels.

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The Hope Behind Band Aids

The hope behind band aids : a special on Henry George by Renegadeeconomists on Mixcloud

Renegade Economists 356

As broadcast on 3CR radio, Wednesday Sept 3rd
Subscribe to the free weekly podcast

This week celebrating 7 years on air, the show tributes the work of Henry George with Mark Hassad, editor of the Prosperity Paradox.

George famously said “The equal right of all men to the use of land is as clear as their equal right to breathe the air – it is a right proclaimed by the fact of their existence.”

Give the Renegades a birthday present by becoming a member to our parent body Prosper Australia.

Thanks to John Worster, Channel 31 President, for the narration. Ch31 needs us to commit to community TV. Spread the word!

Music – Chinese Dance, Dance of the Mirilitons (from the Nutcracker) [1913] by the Victor Herbert Orchestra. Thanks to the Free Music Archive.

Quotes from Henry George’s Progress & Poverty (courtesy of David Brooks)

Page 2  “To those who, seeing the vice and misery that spring from the unequal distribution of wealth and privilege, feel the possibility of a higher social state and would strive for its attainment”

Page 9 “The people must think because the people alone can act.”

Page 28 “… discovery upon discovery, and invention after invention, have neither lessened the toil of those who most need respite, nor brought plenty to the poor. But there have been so many things to which it seemed this failure could be laid, that up to our time the new faith has hardly weakened. We have better appreciated the difficulties to be overcome; but not the less trusted that the tendency of the times was to overcome them.”

Page 29  “Where the conditions to which material progress everywhere tends are most fully realized—that is to say, where population is densest, wealth greatest, and the machinery of production and exchange most highly developed—we find the deepest poverty, the sharpest struggle for existence, and the most of enforced idleness.”

Page 30 “… it is at last becoming evident that the enormous increase in productive power which has marked the present century and is still going on with accelerating ratio, has no tendency to extirpate poverty or to lighten the burdens of those compelled to toil. It simply widens the gulf between Dives and Lazarus, and makes the struggle for existence more intense.”

Page 31 “* It is true that the poorest may now in certain ways enjoy what the richest a century ago could not have commanded, but this does not show improvement of condition so long as the ability to obtain the necessaries of life is not increased. The beggar in a great city may enjoy many things from which the backwoods farmer is debarred, but that does not prove the condition of the city beggar better than that of the independent farmer.”

Page 36 “The cause which produces poverty in the midst of advancing wealth is evidently the cause which exhibits itself in the tendency, everywhere recognized, of wages to a minimum.”
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Billionaires Crawling All Over Our Democracy

Billionaires Are Crawling All Over Our Democracy by Renegadeeconomists on Mixcloud

Renegade Economists podcast 355

As broadcast on 3CR Wed August 27th, 2014.
Subscribe to the free weekly podcast here or listen live 5.30pm.

Ferguson court revenues
Washington Post: Many rely on revenue generated from traffic tickets and related fines. According to a study by the St. Louis nonprofit Better Together, Ferguson receives nearly one-quarter of its revenue from court fees; for some surrounding towns it approaches 50 percent.

@earthsharing
Rob Oakeshott – They are crawling all over our democracy, and my worry is unless the audience is onto this and starts to respond to it, we are allowing democracy to be privatised.

Paraphrased as: The billionaires are crawling all over our democracy. We are allowing democracy to be privatised.

Tinkler donation for rezoning

ICAC reveals the pursuit of economic rents, the unearned incomes, the windfall gains that is the end result of rent seeking. Tinkler’s $18,000 donation via the Free Enterprise Foundation.

The Boganaire’s play:
180 hectares called ‘Yabornie’, North Richmond, City of Hawkesbury, $18,000 donation
2000 lots
= $180 p/h
2000/180 = 11 homes per hectare
at an average $330,000 land value = $3.63m p/h
broadly speaking, thats a 36,300% return on investment
The proposed re-zoning would give a $653.4m valuation of the land

The Buildev donation was made in Dec 2010, not long after donations by developers was made illegal.

Tinkler donation for rezoning

The Australian Financial Review revealed on Monday that within six months of the $18,000 donation Mr Bassett voted in favour of a Hawkesbury council residential land strategy that listed the controversial North Richmond development as “high priority”.

In June 2012 Mr Bassett voted for the council to ask the state government to fast track rezoning the project under a so-called state “gateway process”.

Mr Williams told the inquiry that in October 2012 Buildev sold its interest in North Richmond for $12 million.

It is instructive how soon after the rezoning fastracking that the site was sold.

Public Housing, long term renting with April Bragg (Housing for the Aged)

According to the 2006 census, Australia’s public housing stock consisted of some 304,000 dwellings out of a total housing stock of more than 7.1 million dwellings.

Vic Public Housing history
1960 – housing commish built 4500 homes for SEC workers in Churchill, Latrobe Valley
90’s – community gardens incorporated into pub housing estates
200’s – neighborhood renewal in highly disadvantaged areas
2010 – Eliz St Common Ground opened (supportive housing development) The development provided 131 affordable units and coordinated support for people who had experienced long-term homelessness or who were at risk of homelessness.

Begging a crime – Proceeds of crime’ seizure beggars belief … 8 cases over 12 months


Apartments sit idle as East West Link tunnel creeps up

Nearly 100 new apartments are sitting empty in one of Melbourne’s most desirable suburbs, nearly a year after the Victorian government bought them for $90 million.

The government bought all but two of the 175 apartments in the Evo Building in Parkville from off-the-plan investors in September last year, after it became clear that tollways leading to the controversial East West Link tunnel would completely surround the site.

Eight months after the apartments were first advertised in January, 99 remain unleased.

The Linking Melbourne Authority contracted Lilydale Real Estate agent Noble Knight, which is leaking the apartments on to the market at a rate of about 12 per month.

The agents were advertising some of the apartments at $570 per week but the most expensive on the market now appeared to be $495.

The vacancy rate in Melbourne’s inner suburbs is just 3 per cent, according to the Real Estate Institute of Victoria.
A government spokeswoman said the gradual release of the apartments was in line with advice from the Valuer General.

Council to Homeless Persons policy manager Sarah Toohey said she would like to see some of the remaining apartments used as social housing.

Check the rents charged by government:

$500 x 52 weeks x 20 years = $520K (potential home owners – thats the formula for valuing a property)
90m/173 apartments = $520,231
so charging about what they paid for them. No controversy there.

We didnt get to cover this interesting article on nursing homes in Coalition ditches another good idea, but I was very interested in the similarities between the nursing home leaseholds discussed by Kohler to Community Land Trusts. If only the public collected the rising land rents, not the nursing home corporation.

Opportunity and Equity