photo credit: waferboard

Land in Short Supply in Perth

The Urban Development Institute says there are currently fewer than 1400 blocks of land for sale in Perth.
..
But, the Real Estate Institute believes there are a lot of speculators sitting on land waiting for prices to improve before releasing them for sale.

The UDIA is concerned that with 1200 migrants visiting Perth each week, the 1400 blocks of land for sale is insufficient to address affordability.

With only 7 auctions last weekend and 20 on Feb 21, for example, it seems that the property downturn in Perth is still in effect. How many other blocks are being withheld and aren’t up for ransom at present?

With higher populations, the demand for land will rise. The REI rightly states that many speculators are sitting on idle blocks waiting for money to grow on trees.

Higher populations should encourage development upwards, not outward. Prime locations become more valuable, ensuring that owners have to make their land more productive to warrant the investment.

The issue is that with more and more builders turning to land banking as a means to an ends – free skiing in Aspen funded by you the taxpayer, you the worker – there is less motivation to build upwards.

This trend will hit the Rudd Government this election year. The rush to remove democratic rights of appeal for local communities in a bid to counter the private sector’s preference for land banking, may well cost some Victorian ALP members their seats.

When will government’s of all persuasions look lobbyists in the eyes and tell them to disappear? Land banking is not only forcing our mortgage costs through the roof, but it is robbing communities of our best and brightest people. How many GP’s have given up their practice for such speculative activity?

Renegade Economists Podcast 130

As broadcast on the mighty 3CR – Wed March 03, 2010
Subscribe to the podcast

Show Notes – ‘All Puns Intended’
Internationally acclaimed multimedia artist Paul Millar (DJ Spooky) discusses his Nauru Elegies project. Hear with interest how Nauru, the modern day equivalent of Easter Island, has overexploited its resource base.

Neo-colonial resource stripping amidst poor economic policy have much to answer for.

The multimedia show touring the globe highlights: “Polyphonic issues including matters of ecology and raw material (phosphate), geo-political history, virtual-banking and economic corruption, global climate issues and information networks.

The interview, recorded on the Yarra River, features music from DJ Spooky’s new album, the Secret Song.

Download the interview (30mins)

photo credit: striatic

Our submission to the Digital Dividend green paper for the sale of 4G Electro Magnetic Spectrum licenses.

Karl Fitzgerald

The electro magnetic spectrum is a scarce resource.

Over time it will increase in value, especially with the advent of new technology.

As such, the recent release of the iPhone 3GS has delivered windfall profits for the telco’s with the additional use of video/ web apps. 4G will dramatically speed up the search times and thus useability of the resource and technology.

In order for the public to gain a share of the naturally increasing value of the 4G resource:

A yearly EMS rent is to be paid by all EMS license holders at a fixed percentage, based on it’s ANNUAL value.

Property valuers and media consultants can quite easily determine the yearly value of a telecommunications license.

We propose a 10% annual licensee rental based on the yearly value.

This will keep a lid on speculative interests that may find motivation in flipping such a resource for exorbitant profits.

By doing so, the Rudd – Conroy government will help to keep a lid on the price of telecommunications, the very breath of the market system with it’s desire to deliver ‘perfect information’ to consumers.

With land prices increasing $766 a DAY in the December quarter, Phil Anderson will analyse economic prescriptions and asset bubbles. Are bubbles essential for banking liquidity? Who is meant to borrow this credit and for what?

Phil Anderson, Director of Economic Indicator Services and author of The Secret Life of Real Estate, will discuss economic policies in light of his arresting array of charts.

We will be challenged with fresh findings from a range of markets (gold, copper, real estate, shares and a few surprising markets) as we sculpt a new perspective on future economic outcomes.

Phillip’s predictions from last year’s talk have been remarkably accurate. Forecasting is always fun with Phil.

$5 entry, 6.30 – 8 pm | JASPER HOTEL (former YMCA)
489 Elizabeth Street | Melbourne (right next to the Vic Market)
RSVP

photo credit: dbgg1979

Today’s Crikey had this corker:
The housing market:

Ben Loiterton writes: I am hoping you are alert to a gigantic sleeper issue building up steam in the community, although I haven’t seen any commentary from you at all.

The issue is the alienation of the entire younger half of the population from the housing market as the bubble keeps inflating due to deliberate Government policies and the relaxation of laws allowing foreign home-buyers to bid up prices.

Even though we have the most expensive (and over-geared) houses in the world, it seems all the baby boomers really don’t want a house price correction — which is not surprising give they own 95% of the equity in Australian residential assets. Also seems the banks are not too keen either now that they have given up on being commercial banks (lending to businesses) and have, in effect, become giant mortgage funds … (that in itself could be a big problem for the country if the bubble deflates!).

Most folk under the age of about 40 in this country are simmering with anger — either they cannot get into the market and are paying record rents, or they are in the market in tiny units and semis but can’t afford to upgrade to family homes when they have kids.

The resentment is starting to really boil — just see the reaction/comments to articles like this yesterday.

The Ruddites relaxation of restrictions on foreigners buying residential property to put a floor under property prices at the exclusion of Australian homebuyers is simply outrageous. More and more young people are becoming outraged by the bubble and the government’s direct support for it as all in the name of protecting boomer’s housing equity and bank balance sheets – but having the effect of financially ruining the next generation or excluding them from the Australian Dream.

This could be a big vote swinger in Gen Y, most of whom voted for Kev07. Climate change and health might seem to be the electoral issues of the day, but this generational wealth injustice is fast emerging as the main issue facing young Australians trying to establish themselves in the world.

Taking our lead from a superb weekend of discussions amongst a gamut of switched on thinkers at the Sustainable Living Festival, Karl Fitzgerald and Andy Moore presented the Renegade Economists live from the event.

During the show we ran through a dream list of predictions for a Transition Decade to sustainability

Listen to the show (right click to download) as we make our way through:

2010
• Speculators Savaged by GFC

2011
• Vested Interests Exposed
• Lobbyocracy Outlawed

2012
• The People Awaken

2013
• Election based on Geonomics Tax Reform
• Income Tax Halved
• Stamp Duty abolished
• Land Rent system imposed (5% on yearly land valuations)
• Carbon Tax system starts with great fanfare
• Profits soar in green industries
• Affordability improves

2014
• Geonomics system expands
• Payroll Tax removed
• Company tax abolished
• Resource Rents capture 80% of mining profits
• Natural Monopolies pay annual license on value of privilege (ie banks, phone, water companies)
• Wage levels shoot up as less paid in rent
• Tax incentives for localised bio-char projects
• Council rates change to Site Value only (improvements no longer taxed)

2015
• Scare campaign by vested interests shot down by Chris Judd
• Urban Density, walkability jump
• Citizens paid for Eco System Services management
• Community Land Trusts surge in popularity
• Lord Mockton admits he was wrong

2016
• 7th new (magnetic) train line built in Melb
• 60% of houses have govt funded solar/ micro power generation

2017
• Carbon Taxes increased, air pressured cars outsell petrol

2018
• Extra government finance piled into saving plankton (possible as
  tax havens now rendered obsolete)

2019
• Govt encourages people to work from home
• People work less hours as less needed for mortgage

2020
• Greens around the world are thanked for saving the planet

photo credit: mescon

The merchant banker’s millionaire formula has been exposed yet again, this time in Greece. A country whose public finance mechanism has been undone over decades of lobbyocracy was left with little choice but to sell off its crown jewels.

It has been widely reported that Goldman Sachs helped create off sheet balance accounts where finance was provided in return for swaps to the rights to highways, airports and even the national LOTTO.

This is the merchant banker’s dream. The ticket to an ever lasting free lunch, bankers get to ramp up the fees for airport parking and highway tollbooths according to the projected desires of their next round of bonuses.

Taking ownership of LOTTO defines a new paradigm of monopolistic dominance over a society. One wonders why Macquarie Bank hasn’t thought of this earlier?

Now the vested interests have wound down our wages so much through land price appreciation/ aka asset bubbles that our employers have little to pay us.

For many people, gambling on a LOTTO ticket is our last remaining hope. And guess who now benefits from that in Greece? The people who have manipulated the people’s opportunity into their billionaire bonuses.

Will the home of democracy be the 2010 ‘tip of the iceberg’ that brings a sense of futility to democracy without economic justice?

photo credit: OiMax

Not only has the public re-organised spectrum space for the broadcaster’s new channels, but we’ve also gifted a rebate on their licensing fees! Some sort of Digital Dividend, Mr Conroy! A dividend for whom? Where will the missing $200 – $500m p.a come from?

The broadcasters should be paying more for the added access to the commons, not less. A yearly licensing fee commensurate with the value of the spectrum should be implemented.

With the upcoming 4G license to be auctioned, the spectrum issue is heating up. Crikey’s investigative team reveals there’s a lot more to the story:

Free TV Handout’s – We Don’t Know the Half of It
by Crikey’s Glenn Dyer and Bernard Keane

The competition regulator should step in and force Free TV Australia, the television broadcasting cartel lobbyist, to change its name. There’s now no such thing.

A Crikey analysis has shown that the promised licence fee rebates of 33% this year and 50% next year to the television networks will be much greater than previously thought. Rather than $250 million, the likely cost to taxpayers will be closer to half a billion dollars from the Rudd Government.

Which means the free-to-air networks will cost us more than $20 a head for every Australian over the next 17 months.

Based on likely growth in advertising revenue as the economy accelerates, big sporting events such as the Commonwealth Games and the advertising frenzy of a federal election, the rebate could conservatively yield about $240 million in 2010 and $300 million or more in 2011.

Looked at another way, the roughly $500 million involved is 25% of the combined budgets of the ABC over the current and 2011 financial years. Imagine the complaints from the television networks (and not to mention News Ltd, Fairfax and Foxtel) if the ABC got a budget increase of that scale.

But this is effectively what Nine, Seven and Ten will be receiving.

The Seven Network will share in about $187 million in the next 17 months, based on its December half year 38% share of television advertising revenues.

The big beneficiary is Kerry Stokes and his family with whom, as The Australian noted yesterday, Kevin Rudd spent the night at Stokes’s Broome mansion. Stokes owns 48% of the Seven Network Ltd, which in turn controls 50% of Seven Media Group, where the TV network in the five metropolitan markets and rural Queensland sits.

About 47% of Seven Media Group is controlled by US buyout group, KKR, with a tiny stake held by Seven executives. The identity of the executives is unknown and the KKR investors are secret, but most are believed to be offshore. They will all derive a benefit from the taxpayer in that the value of Seven Media Group will rise now that this extra money will roll in the door.

Seven Media group was written down to nil value by Seven network a year ago. That is now a very obvious fiction.

The millions coming from the Australian taxpayer to bolster the finances of the over-geared media group will ease any concerns bankers to the media group may have had about its finances, thereby relieving Seven Network and Stokes from having to tip in any money.

Nine will get about $156 million, based on its ad share of a touch under 32% in the December half year. That will flow to PBL Media, controlled by CVC Asia, on behalf of unknown offshore investors, and executives including David Gyngell and Ian Law.

As in the case of Seven Media Group, the licence fee rebate represents a direct transfer from taxpayers to the benefit of a small number of paid executives.

Nine also shares its rebates with WIN, controlled by billionaire tax exile Bruce Gordon and his family. Gordon has to spend six months of the year outside Australia because he doesn’t want to pay Australian tax personally.

Nine also controls the regional broadcaster NBN. These fees will help it finance the huge $250 million purchase price for NBN a few years ago.

Ten is a listed company, 11.9% owned by Gordon as well, although Gordon doesn’t have a board seat. He will get the benefit of any increased dividend Ten pays as a result of these fees. It slashed dividends last year when it looked as though it could founder. Ten shares its fees with its affiliate, Macquarie Media, which has also emerged from a near-death experience, this time by staying too long in the Macquarie Group orbit. Now it is free, but it has some struggling newspapers in the US that are a drain on finances.

In each of the cases, the main networks, Seven, Nine and Ten, could claw back some of the rebates that end up at WIN, Seven affiliate Prime and Macquarie Media by way of higher affiliation fees. Those affiliation fees are a major source of easy money for the big networks.

The rebates will be given with no strings attached — not even a requirement that the money remain with the networks and not be returned to shareholders or sent overseas.

Likewise with the struggling PBL Media: the extra money will help keep the bankers and their $3 billion-plus debt happy. That also means the value of the equity the executives have will rise as the viability of PBL Media improves.

So it was no wonder Stokes, the younger, has hailed the rebate as an important outcome for the industry.
“Not only does it help bring the Australian industry closer toward international peers, it recognises the growing investment in Australian content and the increasing need for quality local content in a digital environment,” Stokes told a conference yesterday.

Stokes said free-to-air television was facing a time of “unprecedented change”, with competition from the internet and pay TV and the challenge of negotiating the switch over to digital television.

“In this context, we welcome the recent government announcement to protect Australian content on commercial television,” Stokes said.

That is a load of self-interested, conflicted rubbish, just as the comments to The Oz by Free TV Australia chairman, former Queensland Premier Wayne Goss, are rubbish.

According to Goss, “fees in Australia were much higher and completely out proportion to what they were in comparable countries”. Free TV Australia CEO Julie Flynn said in the News Ltd tabloids this morning the rebates will enable the networks to keep their local content commitments. Both comments are simply spurious

What others charge their broadcasters is simply immaterial to Australia. Our broadcasters do not compete with US, Canadian or UK broadcasters. If spectrum licence fees were higher in the US, UK or Canada, then Australian broadcasters would be charged more for programming by the likes of CBS, ABC, NBC, Fox and ITV to recover the higher fees.

You can argue that in fact our networks enjoy a programming subsidy because these foreign licence fees are lower than ours.

When you throw in that it is taxpayers who provide much of the war chests for the major parties’ electoral advertising campaigns, and it is taxpayers’ stimulus package money that has kept the economy and big-advertising retailers afloat over the past 12 months, it is clear that so-called free-to-air television networks are firmly fastened to the taxpayer teat.

With Treasury fronting Estimates all day today, the Opposition should be demanding to know whether Treasury was consulted, and if so exactly what the hit on taxpayers will be from this sleazy Rudd handout.

photo credit: JPD Photos

AN EXPERIMENT IN INDIA

The much travelled and well known author, Karl Eskelund, whose many books on foreign countries and their people have countless readers, describes the effort which a band of young American and English Quakers made in the way of assisting some of the Indian population, millions of whom live at starvation level.

The young idealists took up their task in 1946 at the village district of Pifa, which lies in the Ganges delta, 45 miles east of Calcutta and four miles by bus from Basirhat railway station. They were fully aware that their work would test their patience, for in India you can get no results “at five minutes past twelve.” But after having outlined their plans to the peasants, the fishermen and the landowners, which met with general approval, they organised a co-operative enterprise in cultivating the land and in marketing the produce. They set up day schools for the children, evening schools for adults, clinics, etc.

After overcoming the initial difficulties, they saw signs of progress; inspiration grew. Health conditions improved. All took greater interest in their work and their earnings increased. New ideas took shape – there was advance along the whole line – an advance, slow but sure.

Five years after the experiment began Karl Eskelund visited Pifa and with one of the Quakers as his guide, he went through the village to see how it was faring. The Quaker had lost more than two stones in weight and was as thin and spare as the natives. But what was worse, he had lost heart because the experiment had proved a total failure. The day school still existed, but only one-fourth of the children attended it. The evening school was closed.

The clinic was hardly used. Agriculture, fishing and trade were back again to old methods. The author asked for an explanation of this fiasco. The young Quaker offered quite a number of reasons, none of which he could accept.

Finally he got to the root of the matter. This is what he says:- “In the first year after beginning the experiment, both peasants and fishermen earned more than ever before. What was the result?”

“The large landowners at once raised their rents and the smaller landowners followed suit. The peasants had to pay more for permission to cultivate the land. The fishermen had to find more money to buy permission to cast their nets on the flooded fields. In that way practically the whole of the increased earnings passed into landowners’ pockets.”

“The people of Pifa were unhappy at this. Nevertheless, in the next year they worked hard. Crops were plentiful; there was a rich catch of fish; good prices were paid for the produce. At once the landowners raised their rents still higher.”

“The people then began to lose courage. What was the use if for all their efforts they got no benefit? The land-owners waxed fatter. The peasants and fishermen did not become any thinner – that they could not, for otherwise they would die.”

“lndians are ignorant but they are not stupid. They can put two and two together. They had found themselves momentarily enriched by the new methods but in the end all the extra money went to the landowners. If one of the new ideas would not work, what faith could they put in any other novelties? Perhaps after all, the old methods were the best . . . ”
- “Land and Liberty.”

Like old typeface? Check the original document (PDF 756KB)

This depressing story illustrates the futility of dealing with superficial remedies when a radical reform is necessary. It is like applying skin ointment to a sick person when what is really needed is a surgical operation. All well-meaning efforts to help poverty in India or elsewhere will not get to the basic cause unless the social cancer of land monopoly is dealt with.

Where people can get access to natural resources they will be able to earn a living for themselves without resorting to aid and hand-outs from others, and their dignity will be restored as responsible human beings.

A RESOURCE RENT SYSTEM WILL PROVIDE THAT ACCESS.