Carol Nader reports in the Age that
HUNDREDS of children are spending 60 hours or more a week in child care, a Federal Government report has revealed.
The article then critiques the Federal Government’s policy of encouraging as many mothers as possible into the workforce. What are the underlying economic forces encouraging such workforce participation? We know that home owners are paying the highest amount ever recorded for land and housing, at 6.6 times the average wage, versus the long term average of half this.

Children are left in such long day care because families are struggling to pay for land. This flows through into prices for milk ($4 for $2 litres at the milk bar!!!), petrol and other key ingredients. As revealed at the recent ABC People’s Summit at the Victorian Parliament, the competition for limited child care places is also hindered by child care operators refusing to open more centres when the cost of land is so high.

Another reason is that workers are commuting longer and longer distances as ’speculative sprawl’ forces them to chase affordable housing in areas bereft of public infrastructure such as child care centres and train stations.

Is marrying your housemate the way to survive uni? That’s the question Farrah Tomazin puts forward in today’s blockbuster edition of the Age. This will see a short term benefit for students being able to afford more food.

However, those versed in economics will understand that in the near future landlords will see that their tenants have a greater purchasing capacity. Rents on new leases will continue to climb. Just like the FHOG, any added purchasing power given through increases in Austudy is captured by those who already own land.

What is needed is a supply side solution to land and housing affordability. The minimal $1000 - $2000 in holding charges on land allow property to be withheld from the market because it makes economic sense. Consider a higher holding charge on land, in the name of a Site Rental. Then the 119,623 properties found vacant in the 2006 Census would be encouraged onto the market. Instead of owners being able to fat cat along and remain nonchalant about whether their asset is covering costs, now they would have to earn $5000 plus per annum to pay the Site Rental. The added supply of land, housing or rentable accommodation pushes down prices.

A home bought for $110,000 in Flint, Michigan (2005) was recently foreclosed and can’t be sold for even $5,000. In an ominous sign of financial troubles;

Fannie Mae acquired twice as many homes through foreclosure in the first quarter as it sold, regulatory filings show.

The oversupply of homes is now coming home to hurt the US and increasingly the global economy. As Phil Anderson explained on yesterday’s Renegade Economists, land prices play a unique role in the economy in that they are the security for the vast majority of bank lending. Thus if the property market falls, inferring that land prices are also falling (land makes up the majority of each housing price), then banks are limited in the credit they can supply.

With more banks reporting massive write downs this week (Bank of America reported a 41% drop in quarterly earnings), we thought it timely to publish this funny take on how the subprime banking model was supposed to work. Flick through this humorous powerpoint, complete with lively stickman descriptions on …

A kilogram of beef contains between 15,000 and 100,000 litres of embodied water. For every kilogram of wheat grown in Australia, seven kilograms of topsoil are lost. We give lip service to concerns about peak oil and greenhouse gases, yet our …