Our good friend Frank de Jong has set up Earthsharing Canada. Check the new look website where you can read Frank’s erudite writings like:

Untax Business, Uptax Nature
By Frank de Jong

Well, the federal political parties are saber rattling again, threatening an election over the corporate tax cuts which will be in the upcoming budget.

The Conservatives are sticking with their plan to roll back corporate taxes from 22% in 2007 to 15%, that corporate tax cuts are good for the economy…, while the Liberals say this is a bad idea in the face of a $56 billion deficit. The NDP are of course lined up behind the Libs.

Both sides are half right and half wrong, giving the Green Party an excellent opportunity to promote our economic program.

Harper is correct, corporate taxes are bad for the economy. Taxes on productive activities are “dead weight” taxes which make some marginal productive activities uneconomical that otherwise would be viable, creating jobs.

But the Libs and NDP are also right, that the gov should not run a deficit, should not mortgage our future, nor should it cut programs that hurt people, especially the vulnerable, and lower the quality of life.

Green economic theory agrees that governments should untax businesses to encourage economic activity, jobs, providing goods and services. There should be no taxes at all on businesses. We want businesses to be successful so why would we punish them with taxes??

But green economics is socially progressive and fiscally responsible, so clearly governments should not run deficits and governments need revenue to provide the programs we need and want.

What to do?

The Green Party solution is to untax people and businesses and instead generate needed revenue by collecting fees and levies on the use and abuse of nature. This approach will right-price nature, preserving it, and at the same time encourage businesses to be more resource efficient (conservation) and labour intensive (more jobs).

If the next federal election is fought over corporate tax cuts, we will have an excellent angle, a very strong platform.

Our slogans can be: Pay for what you burn, not for what you earn. Pay for what you take, not for what you make. The government should collect unearned income, not earned income. Government shouldn’t punish someone for having a job or punish a business for being successful!

By untaxing jobs and business and instead collecting “economic rent” (revenue without a corresponding cost of production), government would be putting renewables on a level playing field with fossil fuels, would make walkable communities attractive compared to sprawl, and bias organic, local agriculture over industrial/factory farming.

Land Value Taxation comes to Ireland

A very good development coming out of the Irish meltdown, the introduction of nation-wide land value taxation policy. http://www.thejournal.ie/government-announces-new-site-value-tax-from-20…

Site Value Taxation (or Land Value Taxation) is like the property tax except that it levies only the value of the lot underneath the buildings, not the value of the buildings (improvements). It is a tax shift, not a tax grab, since other taxes will be reduced.

One benefit is that it doesn’t punish those who renovate, expand or who build affordable housing. In Canada, multi-unit and commercial buildings pay 4 – 10 times the rate of detached houses.

Another is that it “right prices” land which will incent efficient land use, reducing sprawl. A vacant lot will carry the same charge as a lot with a building on it, encouraging people to build or sell, rather than hold land out of production for speculative purposes.

Also, assessments are more accurate and simpler when only the lot is assessed, and not the buildings, a problem which hit the papers in Ontario.

LVT is not just for the municipal level. The Ontario and Canadian governments should generate most of their revenue from land value taxes plus levies on resource use and pollution, in lieu of income, business or consumption taxes. Income and business taxes kill jobs and damage the economy, but taxing nature doesn’t.

Andrew Sadauskas

It was a cold Thursday morning when I set out on my quest. My mission? To find the heart of Melbourne’s housing affordability and traffic problems. My quest took me to the middle of Melbourne’s great southeastern sprawl, which now stretches as far as Pakenham.

After a morning spent hunting for it on Melbourne’s public transport, I reached my unlikely destination: the carpark behind the Village Green Hotel, in Brandon Park.

On its asphalt surface stand the cars of about a dozen gamblers, who can’t resist their early morning gaming fix, and little else. Buried under its acres of asphalt, where the morning puters have parked, are several acres of land where houses don’t stand. Across the ever congested Springvale Road stands Brandon Park Shopping Centre; a shrine to the 1980s that Centro’s cash-strapped management now almost certainly regret buying.

If the Coliseum symbolises Ancient Roman cruelty, what does this carpark say about us? Are we addicted to the car like those punters at the poker machines inside? Are we willing to lose the house for our habit?

DO YOU HIGHLY RECOMMEND I GET ON THE BUS?
“[Melburnians drive] because the public transport system we have in Melbourne is inadequate. Governments of recent decades have failed to upgrade, or recognise what they need to do to make public transport to competitive with car travel,” says Jeremy Lunn, from the Outer-East Branch of the Public Transport Users’ Association.

There are different views on how to improve the situation, though. “Best to allow the entrepreneurs to seek out the markets [for public transport] and they will also – catallaxy style – find ways also to cooperate on linkages,” said Alan Moran, of the Institute of Public Affairs.

Such a view is not popular with the PTUA. “Clearly the IPA are living in a fantasy land that knows no sense of reality. One only needs to look at the recent history of transport in Melbourne to realise that this approach can never work. Even the earliest of railway and tramway companies had to be bailed out and rescued by the government as the private firms couldn’t stay afloat. The key to making public transport attractive is frequency of services,” said Mr. Lunn.

“It was believed that density was the key to increasing public transport patronage, though Paul Mees actually found that Canadian cities such as Vancouver and Toronto have similar densities to Melbourne, yet were far more successful in provisioning of public transport,” he said.

Between Monday and Friday, one nearby bus – route 736 – runs only once every half an hour (or less). The first service departs at 6AM and the last service at 11:35 PM. In comparison, Toronto’s route 52 runs every ten minutes, between 6:15 AM and 6:09 PM, every weekday. And, beyond those hours, it runs at least once every half an hour (except between 1:22 AM and 4:54 AM).

“The success of inner city trams has often been attributed to higher densities in the inner city. This myth was again dispelled by Paul Mees, who found that although the suburb of Fitzroy had a greater number of dwellings per hectare, Keysborough had a higher population density. In Keysborough, more people (i.e. families) were living in each dwelling. Clearly the success of public transport in Fitzroy could then be attributed to the frequency of services and superior route layout.”

According to Mees, 10% of Melburnians catch a bus or tram to the train station, compared to 76% of Torontonians. Toronto has a similar modal share to Melbourne, yet only has four train lines. Toronto’s publicly-run buses generally run directly along main roads and connect with train stations, forming a ‘grid’ (unlike Melbourne).

This raises a question: how should a ‘suburban bus grid’ – such as the one suggested by Mr. Lunn and Dr. Mees – be funded? An obvious answer would be to fund it from increased fares. But doing so neglects the fact that it is not merely commuters who benefit from improved public transport: shifting motorists to public transport means less traffic on the roads, and improved access means more potential customers for businesses.

This, in turn, flows on in the form of higher land values: after all, many people would pay a premium to live near decent transport. Existing land owners benefit from improved buses even if they never catch one. In short, higher fares would mean commuters cross – subsidising land owners. This, in turn, means penalising those who act in a socially and environmentally responsible manner (by catching public transport rather than driving), while benefiting those that act in a socially irresponsible manner (by engaging in land speculation).

In order to ensure that these land owners pay their fair share for the benefit, what we would need to do is place a rental charge on the unimproved site value of land (that is, a tax on the value of the land, minus the value of any building or other improvements made to it). What this would mean is that, where a Toronto-style ‘suburban bus grid’ is rolled out, land prices rise, and this rise would be captured by the Site Rental, which is used to fund public transport.

By doing this, we can in effect create a cycle of reinvestment in public transport, where public transport improvements are made, the improvements in land value are captured by the Site Rental, and these are in turn re-invested in public transport.

BUILDING UP, NOT BUILDING OUT
But even without improving public transport, logic tells us that Brandon Park’s publicans would be served just as well if their cars were parked in a multilevel car park, using less land. After the State Government’s recent 2030 audit, why does it make sense to keep the carpark as it is?

After all, according to property site www.realestate.com.au, the asking price for a 3 bedroom house in nearby Mulgrave is $420,000. It would, presumably, only take a small reduction in parking area for the owners to realise literally millions in return.

“Mainly, it’s the planning laws generally that say that for so many apartments, or so many bedrooms, or whatever, you’ve got to have so many car parking spaces, which is quite ridiculous, you’re right,” says Kevin Healey, of the People’s Council for Melbourne. Mr. Healey is also the host of 3CR’s ‘City Limits’ programme.

However, the faulty legislation does not end with mandates on carparking. There is simply nothing to prevent the owners of the Village Green pub maintaining acres of asphalt, speculating that they could sell it for more tomorrow than they can today, while our city sprawls further on the fringes. Nor is there any compelling reason, within our current tax system, to increase the population density on a given piece of land.

A tax on the unimproved site value of land would change this situation. If the owners of the Village Green pub were taxed for holding on to this land, they would almost certainly think twice about hoarding so much land so inefficiently; it would make financial sense to sell it off. Similarly, by building a multi-level carpark on a fraction of the land and releasing the rest for sale, the owners of this pub would also significantly reduce their tax bill, and thus the tax system would have a built-in mechanism for encouraging – and funding – higher density development.

CUTTING THE FRINGE?
An alternative to further development within Melbourne’s existing growth boundaries – on sites such as the Village Green pub carpark – is further growth on Melbourne’s fringe. “Releasing land at will is the key [on housing affordability],” says Mr. Moran.

But that leaves those who would rather live in a Brandon Park that exists, rather than a new one – complete with more carparks, shopping centres, and pubs – beyond Pakenham.

“There’s hypocrisy when the capitalists talk about ‘trying to provide affordable housing’ because, naturally, they want prices to rise all the time. The developers tend to buy chunks of land on the perimeter and build out there, there’s a bigger killing,” Mr Healey said.

Many of those reading this will undoubtedly cringe at Mr. Healey conflating land owners – who seek large economic rents while not contributing to the common pool of wealth – with ‘capitalists,’ who invest their wealth towards plant and equipment that increases the productivity of labour. This is a common mistake made within two dimensional economics.

Terminology aside, however, and Mr. Healey does make a very valid point about the impetus for further urban sprawl. Much of the push for further suburban sprawl is from developers who seek to purchase land on the fringes of suburbia and, with the stroke of a politician’s pen, see it rezoned as commercial and residential land, instantly generating wealth for themselves without actually contributing anything productive. Developers can, by ‘land-banking,’ create artificial shortages of land on the suburban fringes, securing more profits for themselves.

A charge on the unimproved site value of land would remove the incentive to engage in this practice, and instead would (as I pointed out earlier) encourage better use of land within the existing urban boundary.

This would, in turn, bring about what Ontario Greens leader Frank de Jong described as ‘walkable communities,’ where more businesses and services are within walking distance of homes, reducing car dependancy. Having higher density, walkable communities also allows for the more efficient provision of services such as schools, hospitals, and public transport, and makes them available to more people.

A (RARE) MOMENT OF AGREEMENT
Given this is (at times) a contentious debate, it seems amazing, then, that there are points that everyone seems to agree on.

“House owners are also concerned to ensure that land is kept in short supply to ensure they enjoy capital gains,” said Mr. Moran.

“The kind of problem you often face, that when you try to put low cost housing somewhere, you get a massive backlash from people who start complaining about the poor people who are going to live their and their own property values, etc… [Poorly planned high density development] creates the problems you’re getting in some areas of this backlash of people, so you really have to be well planned, it has to be done in ways doesn’t impose on other people, but that can be done.” said Mr. Healey.

Given this, it’s clear that the Village Green Hotel carpark says a great deal about us as a civilisation; perhaps as much as the Coliseum of the Ancient Romans. For the vacant lot and the sprawled carpark are the greatest monuments to the land-owning Caesars of sprawl. And the rest of us haven’t built up the courage to challenge them, by imposing a Site Rental on land; a charge that could be used to fund a Toronto style ‘bus grid’ that would reduce our reliance on the car. This leads us to being a civilisation clinging to the past, in the face of a walkable community future.

As such, in a sense, the Village Green Hotel carpark (along with many other single level carparks, empty blocks, and other wastefully used pieces of land across suburban Melbourne) is at the very heart of our current debates about housing affordability and traffic.

Frank toured Australia this time last year for the True Cost Economics Forum. He wrote this piece in lieu of exciting developments in Canada.

For the first time to my knowledge, Toronto will be collecting economic rent to pay for infrastructure — in this case to redevelop a section of a busy shopping street. (The wealth that accrues to locations is known as economic rent).

It was reported in the Globe and Mail as follows: “The city will borrow the money up front, to be paid off gradually by the businesses along the ritzy strip.”

Significantly, although the city has refused to pay for the street redevelopment out of property taxes, the adjacent businesses know the benefits to them will outweigh the costs, and are therefore willing to pay for it themselves. These Toronto businesses know that if infrastructure is warranted and beneficial it will raise the value of their land by more than the cost of that infrastructure. When redevelopment makes locations more desirable, more economic rent is attracted, over time, than the cost of the initial redevelopment.

This example is not at all unique; the economic theory is universal. The implication is that any infrastructure that increases land values should not be funded out of government tax revenue, but instead be paid for through the collection of the increased economic rent generated by the infrastructure, whether it is a hospital, school, sewer upgrade, park or transit system.

Normally the increased economic rent goes (untaxed) to the person or company that owns affected land, even though governments pay for the improvements out of the tax base. Taxpayers everywhere are unjustly expected to pay for improvements that only benefit the local land-owning minority.

The law of economic rent offers a model of how to finance more efficient transportation systems, reconstruct public infrastructure and green public buildings without bankrupting governments or raising taxes. Like this Toronto street redevelopment, all towns, cities, provincial and federal governments should collect the economic rent that migrates to land (and other finite assets like oil, aggregates, pollution) and use it to finance the greening of the country.

Scottish government: Developing a Methodology to Capture Land Value Uplift Around Transport Facilities

Wheels of Fortune: Self-Funding Infrastructure and the Free Market Case for a Land Tax: Fred Harrison

Frank de Jong interviewed on RRR’s ‘The Word’ (13.9MB, 15 mins)

Watch:

NZ YouTube interview (5mins)

[youtube]http://www.youtube.com/watch?v=OTpapvcLVnY[/youtube]

• Frank de Jong’s full speech ‘Combatting Greenwash Locally’ (VLGA, July 26th, 40mins)
• Combatting Greenwash Q & A session

Alternatively you can watch the VLGA speech via YouTube (in 6 parts)

[youtube]http://www.youtube.com/watch?v=oDrHNR_Qzko[/youtube]

Frank on Planet TV – NZ

Soon we will be releasing a multimedia highlights CD of recent events, including Frank & Alanna Hartzok’s recent tours & audio from Bryan Kavanagh’s groundbreaking presentation to his ‘Unlocking the Riches to Oz’ report.

Contact us if you would like a ‘best of’ collection of recent events and articles. A small charge will be required to cover postage and handling (appx $5).

Frank De Jong – Tools of Sustainability Tour
July 13 – Aug 3
Melbourne – Sydney – Auckland - Full Tour Itinerary

Frank De Jong, leader of the Ontario Greens (Canada), will be touring to discuss and demonstrate the economic tools the planet so desperately needs. Frank has a long history of campaigning, having competed in 12 Canadian elections over 20 years. He is renowned in Canada for having coined the term ‘the invisible green hand’ of market forces.

Frank will bring to audiences a positive message on how we can stay ahead of the greenwashing brigade. What are the latest sustainability trends in the Northern Hemisphere? How can we lobby for more environmentally efficient economic policy? Isn’t that true conservatism?

Beyond economic theory, Frank loves getting his hands dirty, having led protests against the largest nuclear power station in North America (Darlington), been arrested in Northern Ontario’s old growth forests and cycled through much of Canada.

Frank is an engaging speaker, making economics easy to understand.

Itinerary:

Sat July 14th, National Greens Convention*
Tues 17th, “Speculating on the Earth’s Future”, Whitehorse Greens, Place: Meeting Room 1, Box Hill Library (Entrance just to left of main library entrance in Whitehorse Rd), 7.30pm
Wed 18th, “Costing the Earth”, Selby Community House, Wombalana Rd (Enter Charles St) MEL 75 K11, 7pm
Thurs 19th, “Return to the Source: Preventative Policy”, Federal Campaign launch for Priya Carey, Candidate for Batman, Northcote Townhall, High St, 7pm
Fri 20th, “The Invisible Green Hand versus the Time Famine”, True Cost Economics Forum, Swanston Hall (Melb Town Hall), corner Swanston & Collins St, 9.15 – 1pm
Fri 20th, “International Wedge Politics”, Melbourne Greens, CII Restaurant, 470 Little Collins St, Melb
Sun 22nd, “Campaigning on Climate Change: A Canadian Perspective”, Sydney Greens, Venue TBA, 2pm
Tues 24th, “Climate of Change – Warming to Green Economics”, Warnambool Greens, Regal Cafe, Timor St ($10 p/h for a curry plate), 6.30pm
Wed 25th, “Economic Rent – Where’s our Money spent?”, Earthsharing Australia, Level One, 27 Hardware Lane, Melbourne, 6.30pm
Thurs 26th, “Combatting Greenwash Locally – Is less bad good enough?” (PDF 93kb), VLGA, 60L Building, Leceister St, Carlton, 7-9pm
Mon 30th, “Will Carbon Trading save the day?”, Auckland Greens, Wellpark Naturopathic College, 7 Francis Street, NZ, 7.30pm

Frank’s Biography (PDF 420KB)

All talks are free, RSVP appreciated

*(Green Members only)