Opinion The housing dream that became a nightmare - and isn’t over yet Ross Gittins Economics Editor September 16, 2022 https://www.smh.com.au/business/the...tmare-and-isn-t-over-yet-20220915-p5big7.html If you think the rich are getting richer, you’re right – but maybe not for the reason you think. It’s mainly the rising price of housing, which is steadily reshaping our society, and not for the better. We know how unaffordable home ownership has become, but that’s just the bit you can see, as the Grattan Institute’s Brendan Coates outlined in the annual Henry George lecture this week, “The Great Australian Nightmare”, a magisterial survey of housing and its many implications. There are fears the growing divide between those who own property and those who don’t risks becoming entrenched as wealth is passed on to the next generation.Crediteter Rae But first, let’s be clear what we mean by “the rich”. Is it those who have the most annual income, or those who have the most wealth – assets less debts and other liabilities? The two are related, but not the same. It’s possible to be “asset rich, but income poor” – particularly if you’re living in your main asset, as many oldies are. The Productivity Commission argues that the distribution of income hasn’t got much more unequal in the past couple of decades, though Bureau of Statistics’ figures for the growth in household disposable income over the 16 years to 2019-20 seem pretty unequal to me. They show the real income of the bottom quintile (20 per cent block) grew by 26 per cent, which wasn’t much less than for the middle three quintiles, but a lot less than the 47 per cent for the top quintile. Two points. One, the top one percentile – the chief executive class – probably had increases far greater than 47 per cent, which pushed up the average increase for the next 19 percentiles. It’s CEO pay rises that get publicised and leave many people convinced the rich are getting richer – which they are. The other point is Coates’: if you take real household disposable income after allowing for housing costs, you see a much clearer gradient running from the lowest quintile to the highest. The increase in the bottom quintile’s income drops from 26 per cent to 12 per cent, whereas the top quintile’s growth drops only from 47 per cent to 43 per cent. Get it? The rising cost of housing – whether mortgage payments or payments of rent – takes a much bigger bite out of low incomes than high incomes. Credit:Matt Davidson “People on low incomes – increasingly, renters – are spending more of their income on housing,” Coates says. But it’s when you turn from income to wealth that you really see the rich getting richer. Whereas the net wealth of the poorest quintile of households rose by less than 10 per cent, the richest quintile rose by almost 60 per cent. And here’s the kicker: almost all of that huge increase came from rising property values. Other figures show that, before the pandemic, the total wealth of all Australian households was $14.9 trillion. Within that, the value of housing accounted for nearly $10 trillion. Over the past 50 years, average full-time wages have doubled in real terms. But house prices have quadrupled – with most of that growth over the past 25 years. Be clear on this: research confirms that the huge increases in home prices relative to incomes in advanced economies in the post-World War II period has mainly been driven by rising land values, accounting for about 80 per cent of growth since the 1950s, on average, with construction and replacement costs increasing only at the rate of inflation. Coates reminds us that, within living memory, Australia was a place where housing costs were manageable, and people of all ages and incomes had a reasonable chance to own a home. These days, plenty of people even on middle incomes can’t manage it. It’s obvious that the better-off can afford bigger and better homes than the rest of us. Many probably also have an investment property or three. But it’s worse than that. Coates says the growing divide between those who make it to home ownership and those who don’t risks becoming entrenched as wealth is passed on to the next generation. An increasing share of our wealth is in the hands of the Baby Boomers and older generations. The swelling of our national household wealth to $14.9 trillion – largely concentrated among older groups – means there is an awfully big pot of wealth to be passed on, he says. “Big inheritances boost the jackpot from the birth lottery. Richer parents tend to have richer children. Among those who received an inheritance over the past decade, the wealthiest 20 per cent received, on average, three times as much as the poorest 20 per cent.” In fact, one recent study estimates that 10 per cent of all inheritances will account for as much as half the value of bequests from today’s retirees, he says. “And inheritances are increasingly coming later in life. As the miracles of modern medicine have extended life expectancy, the age at which children inherit has increased. Over the past 50 years, average full-time wages have doubled in real terms. But house prices have quadrupled – with most of that growth over the past 25 years.Credit:Kate Geraghty “The most common age to receive an inheritance is late-50s or early-60s – much later than the money is needed to ease the mid-life squeeze of housing and children.” Coates says large intergenerational wealth transfers can change the shape of society. They mean that a person’s economic position can relate more to who their parents are than their own talent or hard work. Coates argues that the ever-growing unaffordability of housing caused by present policies – which politicians on both sides keep promising to fix, but never do – is not just making our society increasingly divided between rich and poor, it’s also making the economy less efficient. In modern, service-based and information-dependent economies, “economies of agglomeration” – benefits from firms and people living and working close together – mean productivity, innovation and wages are greatest in big cities. But if we don’t pack in enough housing, and so cause house prices to go sky high, we don’t get all the benefits. Long commutes make it harder for both parents to work. The economy becomes less “dynamic”, and productivity is slow to improve. Not smart. Ross Gittins is the economics editor
Opinion A home of one’s own: So good only the rich need apply Ross Gittins Economics Editor September 21, 2022 https://www.smh.com.au/business/the...only-the-rich-need-apply-20220920-p5bjf8.html Slowly – but sooner than you may think – this country, so proud to be a nation of home owners, is turning into a nation of renters. Perversely, it’s happening because we value home ownership so highly. And we’ve never much worried about what happens to those who don’t make it onto the home owners’ merry-go-round. Illustration: Simon Letch.Credit: Historically, the reason we want so much to own the home we live in is security of tenure. We don’t want to be beholden to a landlord deciding whether we stay or must go. We don’t want to live in a place where someone else decides if we can have a pet, whether we can knock a nail into a wall, whether the place needs a coat of paint, or when they’ll get around to fixing the leaky toilet. That’s always been the chief reason for wanting to own the place you live in. What’s changed is that a second motivation has become more prominent in our minds: homes turn out to be a good investment, a good place to put your savings and watch them grow. Whereas the value of shares goes up and down with the vagaries of the sharemarket, the price of homes just keeps going up and up. (As we’re seeing now, that’s not quite true, but we still believe it.) And because home ownership is such a national priority, it comes with many exemptions. When we decided to start taxing capital gains in the mid-1990s, we exempted the family home. And, unlike other assets, the home you own is largely ignored when assessing your eligibility for the age pension. Any savings I invest in making my principal residence bigger and better won’t be subject to gains tax, as most other investments would. Actually, homes are such a good investment, why don’t I invest in more than one? I’ll have to pay gains tax when I sell, but this time I’ll get a tax deduction on the mortgage interest I pay. And naturally, being a home owner with a big investment, I’ll make sure the local council knows how opposed I am to people building those terrible high-rises anywhere near my place. See what happens? The more benefits we attach to home ownership and the more people want to own a house or three, the more they bid up the price of houses. That makes being on the home owners’ merry-go-round an ever-better investment, but that much harder for others to climb aboard. The more we favour home owners, the more we disadvantage renters. The more we encourage multiple home owning by those who can afford it – which most rich countries stopped doing long ago – the more unaffordable buying your first home becomes. But not to worry. I’ll just give my kids a leg up in putting a deposit together. Of course, this just keeps home prices high and makes those kids without well-off parents worse off. Tough. The other thing it does is more sharply divide Australia by making home ownership something only the well-off can afford. Why don’t the politicians do something about it? Because that would involve reducing the privileges of existing home owners, who’d fight it all the way, led by real estate agents and developers. There’s always been a minority of life-long renters but, home ownership being the national obsession it is, we’ve never worried about them. Renters have much greater legal rights in other rich countries than they do here, but that’s never bothered us. Renters, we happily assume, are just youngsters on their way to their first home. This was never true, but it becomes more untrue as each census passes. In a major speech last week, the Grattan Institute’s Brendan Coates said “home ownership rates are falling fast, especially among the young and poor”. Over the 40 years to 2021, home ownership rates among 25- to 34-year-olds fell from more than 60 per cent to 40 per cent. Among the lowest-paid 40 per cent of that age group, it has more than halved, from 67 per cent to 28 per cent, Coates said. Last year’s census shows we’ve started seeing accelerating declines among middle-income households too, with noticeable falls in home ownership at all age levels, including older middle-income households. The proportion of people who reach retirement never having been able to afford a home is increasing, as is the proportion of home owners retiring with unpaid home loans. I wouldn’t like to be in the shoes of the 70-year-old pensioner living in a small town, who told Tenants Victoria she had to work two days a week to afford the ever-increasing rent on a granny flat in an old house. We can keep ignoring the poor treatment of renters because they’ll soon get a place of their own, or we can take the controversial measures needed to stop housing from becoming ever-more unaffordable. But even if we put through all the necessary changes tomorrow, we’d still end up with many more people spending most of their life as a tenant. Time we cared about renters.
Opinion The property tax debacle unfolding in Canberra During a huge property price boom fuelled by low interest rates and constrained land release, the ACT government has become addicted to collecting stamp duty to fund its ever-increasing spending. John Kehoe Economics editorSep 28, 2022 https://www.afr.com/policy/economy/the-property-tax-debacle-unfolding-in-canberra-20220913-p5bhqy Amid the furore over Queensland’s double taxation of interstate investment property owners, a property tax debacle is unfolding in Canberra. A decade ago, the ACT Labor government pledged to phase out stamp duty and gradually phase in a broad-based land tax on property owners over 20 years. A 20-year plan to remove stamp duty in the ACT has hit a roadblock. In theory, it was the gold standard of tax reform, even if it was going to take longer than ideal to make it politically feasible. Most economists approved shifting from a bad tax on property transactions to a less economically damaging annual tax on the value of unimproved land. Commendably as part of the package, the ACT in 2016 eliminated stamp duty on insurance policies worth about $50 million a year. Conveyance duty on commercial properties worth $1.5 million or less was abolished in 2018, while concessions for first home buyers were increased. But halfway through the 20-year journey, the ACT is raising significantly more nominal revenue from conveyancing duty on residential and commercial property transactions. The $433 million collected in 2021-22 is approaching double the $253 million in the pre-COVID 2018-19 year. A difficult path As a share of the ACT’s own-source tax revenue, total conveyance duty and insurance duty revenue has only declined from 26 per cent in 2012-13 to about 18 per cent in 2021-22. But that decline overstates the transition because the ACT is relying more on other inefficient revenue such as inflated land sales and higher land taxes on investors. Stamp duty is not on a path to ever being abolished. During a huge property price boom fuelled by low interest rates and constrained land release, the Labor-Greens ACT government has become addicted to collecting stamp duty to fund its ever-increasing spending. At the same time, property tax bills on landowners (imposed via rates on principal places of residence and an additional land tax on investors) have significantly escalated. Annual rates now cost many homeowners more than $4000 year, and are closer to $10,000 for investment properties paying the extra land tax. Rates now account for about $674 million or 30 per cent of the ACT’s own-source revenue, up from 17 per cent in 2012-13. Land tax on investment properties delivered a further $158 million or 6.6 per cent of own-source revenue in 2021-22, about double the nominal $70 million in 2012-13. This is not the vision the government sold ACT voters when the promising reform was outlined in 2011, when Jon Stanhope was chief minister and Katy Gallagher was treasurer and later chief minister. Gallagher is now federal finance minister. Independent economist Stephen Anthony. Arsineh Houspian The now Chief Minister Andrew Barr and his Greens colleagues in the ACT Labor-Greens government have botched the reform. Independent economist Stephen Anthony says the original property tax reform proposal was “brilliant”. “But politicians backslid and forgot that their intent was revenue neutrality, not to pull in a big new stack of revenue. “The greedier they get, the more people detest a reform and the harder it becomes to implement.” The ACT experience is a cautionary learning tale for other states. Former ACT senior Treasury official, Khalid Ahmed, who was the public servant heading the territory’s tax review taskforce, says the ACT reform is “stuck”. “After 10 years at the halfway mark, we should be on a path to abolishing it,” Ahmed says. ‘Bracket creep’ through the roof “But doing reform requires budget discipline and policy coherence to make sure the reform stays on track.” Despite revenue windfalls, the ACT’s operating budget has been in an annual deficit of about 5 per cent of annual budget expenditure for the seven years before COVID-19 and is forecast to remain in large deficits. Ahmed says that under the original recommended reform model that was accepted in-principle by the government, the ACT should have cut stamp duty rates and adjusted price thresholds to raise about $120 million a year by now, about one-quarter of the 2021-22 collections. The problem is that stamp duty “bracket creep” has gone through the roof. The modest reductions in stamp duty rates and adjustment in thresholds have failed to keep pace with house prices. The ACT has made the stamp duty situation worse by squeezing the supply of new construction. Stamp duty payable on the Canberra median house price has increased by almost $16,000 in a decade, when stamp duty was meant to be phased down. Stamp duty on the median house price ($553,069 according to CoreLogic) in 2012 was $20,970. Today, stamp duty on the median house price ($1.03 million) is $36,927. This year’s budget only transfers $10 million worth of stamp duty to rates, a trajectory that means stamp duty cannot ever be abolished. Worse, the ACT government has contributed to the housing affordability crisis by limiting the supply of new homes. Creating its own problems The government is the monopoly controller of land supply, under a 99-year leasehold system. Restricting dwelling supply has artificially propped up government revenue by pushing up the price of land that the ACT sells to developers, while also inflating stamp duties and land taxes on homes. The number of new dwelling sites released has averaged 3430 annually over the four years to 2020-21, 1000 homes fewer a year than the preceding nine years. Despite fewer sites being released, land sale profits have jumped to an annual average of $265 million, versus $151 million. Government profit margins from land sales have surged to 72 per cent over the past four years, versus 46 per cent over the preceding nine years. Then ACT chief minister Jon Stanhope with his successor Katy Gallagher. The government goals of raising revenue and housing affordability are in conflict. Stanhope is frustrated that his Labor successors have made ownership of detached housing unaffordable for lower income earners, as the government favours the release of inner-city apartment sites under a Labor-Greens urbanisation policy. “The ACT government has a total monopoly over the supply of land for housing and it simply hasn’t met demand,” Stanhope says. “How does a regional city of 450,000 people where the government owns all the land have the highest rents in Australia and the second-highest median house price? “The consequences are quite dramatic for people in the bottom two income quintiles who have knowingly and deliberately been kept out of the detached housing market.” Unintended results The lack of supply of new detached homes has delivered windfall gains to homeowners who are typically wealthier. The capital gains have also helped investors, contrary to the aim of boosting homeownership. Under the reform model, an additional land tax on investment properties was supposed to be abolished and brought into line with rates on primary places of residence. But under an agreement with the Greens, the land tax surcharge on investors in rental properties has increased to try to push out investors and increase homeownership. But the strong capital price growth has overridden this. “In a supply-constrained market, if you increase the land tax, it will be passed on to renters and that’s exactly what has happened in the ACT,” Ahmed says. “Unless you limit capital growth in property prices, investors will happily hold the properties.” The government says the percentage share of own-source tax revenue from stamp duty is forecast to fall to 10 per cent in 2025-26. Based on experience, the ACT will be raising and spending a lot more than that. Ahmed says: “There are some good lessons to be learned from this. But I hope it doesn’t put other states off tax reform.”
Opinion The knowledge economy is behind the soaring price of land Ross Gittins Economics Editor September 30, 2022 https://www.smh.com.au/business/the...he-soaring-price-of-land-20220929-p5bm32.html Over the two centuries and more that people have made a serious study of how the economy works, economists have fallen in and out of love with land. At first, they thought it was at the centre of everything, then they decided it wasn’t terribly important. But the wheel may be turning again. In a major speech last month, the Grattan Institute’s Brendan Coates criticised his profession for its “longstanding intellectual neglect of the economics of land”. You don’t have to think about housing affordability for long to realise it is not actually the high cost of building a house that’s the problem, it’s the high cost of the land it’s built on. But why is the cost of land rising much faster than the economy is growing? And why don’t economists take more interest in why this is happening and what we could do about it? Coates began the annual Henry George Lecture by summarising the history of economists’ waxing and waning interest in land as a resource used to produce goods and services. Economic activity is concentrated in CBDs, with the Sydney and Melbourne CBDs accounting for 10 per cent of all economic activity in Australia.Credit:Wayne Taylor The first economists – the Physiocrats – thought of almost nothing other than land, he says. Land was fundamental: agricultural labourers were the source of economic growth, while landlords simply commandeered what the workers produced and flowed it through to the rest of the economy. The next generation of economists, the “classical” economists of the 18th century, broadened their focus to studying the complex interaction of three “factors of production”: land, labour and (physical) capital. Adam Smith, a Scotsman known as the father of economics, argued that the “division of labour” – workers specialising in different occupations – and technological innovation were what drove economic growth. But land was still central. David Ricardo, an English member of parliament, argued that landlords were simply the lucky beneficiaries of land’s natural scarcity (any country has only a fixed amount of it) and its productive capacity, to produce food and fibre and even valuable energy and minerals, Coates says. And Henry George, the last great classical economist, argued that the rental income enjoyed by landlords must be socialised by taxing the unimproved value of all privately owned land. Do that, and you wouldn’t need any other taxes. George campaigned hard, but never persuaded any government to follow his advice. Coates says we “would have done well – possibly much better than we have done – if we’d heeded the lessons of Henry George and paid more attention to the economics of land”. But in the 19th century the classical economists were replaced by the neo-classical economists, who were a lot less interested in land. And in 1956, the great American economist Robert Solow developed a theory of economic growth, which held that it was improvements in the efficiency with which labour and physical capital (machines and buildings) were combined that drove our standard of living. The role of land in production - and in inequality - disappeared from the theories economists devised to explain the world, Coates says. Instead, land was treated as just another form of physical capital. Coates says that “the shifting focus on land in the history of economic thought reflects the changing nature of the economies that economists were trying to explain”. The Physiocrats observed a world dominated by agriculture. It was obvious that the ownership and use of land determined what got produced, in what quantities. And who got what. The classical economists watched this world transition through the Industrial Revolution, and the neo-classical economists developed theories for a world that had made that transition. Economic power started to gravitate towards those who owned capital (whether physical or financial) and away from those who owned land. Agricultural production made way for industrial production. For most of the 20th century, the neglect of land was of little consequence. More important was the amount of capital invested (to make labour more productive) and the pace of innovation (ditto). “But as the advanced economies of the world have transitioned again – from manufacturing to services – land is back,” Coates says. Economies powered by intangible capital – how much you know; how much information you can gather – strive or stagnate on the ability of individuals to come together and combine their knowledge and skills. As any real estate agent will tell you, it’s about “location, location, location”. In Australia, it’s the Grattan Institute that’s done most to help us see that, these days, it’s big cities that drive the economy. Eighty per cent of the value of all goods and services produced in Australia is generated on just 0.2 per cent our land. Economic activity is concentrated in CBDs, with the Sydney and Melbourne CBDs accounting for 10 per cent of all economic activity in Australia – more than three times the contribution of agriculture. This concentration reflects the rise in knowledge-intensive services, clustered together at the hearts of our major cities. The willingness of businesses to pay high rents to locate in the CBDs of our big cities shows the value they gain from access to high-skilled workers and proximity to suppliers, customers and partners. Similarly, the willingness of workers to pay much higher prices for homes located close to those employment centres shows they, too, see value in being crammed in. Our experience of working from home during the pandemic has changed this a bit – three days in the office rather than five – but not a lot. All this helps explain why house prices have risen about five times faster than average full-time earnings over the past 25 years. And it means the price of land is a much bigger factor in the economy than it used to be. It’s leaving existing home owners seemingly much better off, but aspiring home owners much worse off. It’s the product of a clash between the rise of the knowledge economy and our longstanding attitudes towards the taxing and regulation of land. It should not be beyond the wit of economists to come up with a better approach.
Rent assistance is ‘laughably low’, economists warn, but calls for an increase fall flat By Melissa Heagney September 30, 2022 https://www.smh.com.au/property/new...or-an-increase-fall-flat-20220930-p5bmbt.html Key points The federal government will not review Commonwealth Rent Assistance payments, despite the Productivity Commission recommending it. Experts say the payment should be increased by at least 40 per cent to help those most in need. Rents are rising and ACOSS says tenants are skipping meals and medicine. Low-income households face the prospect of rising rents without an increase in rent assistance, as the government rebuffed calls to boost the payments on offer. An emphatic Productivity Commission report on Friday called for an overhaul of taxpayer spending on housing help, saying the government should prioritise a review of rent assistance given the “strong case” to improve its adequacy and targeting. Social Services Minister Amanda Rishworth said reforming Commonwealth Rent Assistance (CRA) was not on the agenda in the coming budget, blaming this on the “$1 trillion debt left behind” by the former Morrison government. “We would love to fund every good idea that has merit, but we need a way to pay for it,” Rishworth said in a statement to The Age and The Sydney Morning Herald. “Treasury estimated in 2020 that a 40 per cent increase to CRA would cost $1.7 billion extra each year in 2019-20 dollars. “We have to consider all potential increases to payments in the budget context. Reforming CRA is not something we are going to do in the October budget.” The news comes as cold comfort to those in most need. About a fifth of low-income households have less than $250 left after paying their weekly rent. People are in deep financial stress because of rising rents.Crediteter Rae Seventy-nine per cent of people who qualified for CRA receive the full allowance, which means if their rent goes up, they do not receive any more government help. Rental assistance allowances range from little more than $50 a week for a single in a shared house, to $100 for someone with three children. This compares with median Sydney rents of $620 a week for houses or $525 for units, or Melbourne’s medians of $460 a week for houses or $410 for units, on Domain figures. House rents for both cities have risen to record highs, while unit rents have risen by double-digits in the past year. Australia Institute senior economist Matt Grudnoff said higher allowances for the CRA would help but more needed to be done to address affordability. More social and affordable housing is needed across Australia.Credit:Scott McNaughton “It will give some immediate relief because rent assistance payments are laughably low compared to what it costs to rent,” Grudnoff said. “It may add fuel into the rental market, but on balance it’s a good idea.” Grattan Institute economic policy program director Brendan Coates has been calling for an increase to CRA for the past five years and said it should be a priority for the Albanese government. “The immediate priority is to raise the CRA – it’s the most cost-effective way to help Australians keep a roof over their heads, and the Productivity Commission report makes that clear,” Coates said. Payments should be lifted by a minimum of 40 per cent, he said, which would put an extra $1500 in the pockets of renters in need each year but would not resolve the issues for anyone in extreme financial distress. “Even raising it by 40 per cent won’t pull people out of rental stress and poverty,” Coates said. “Payments like JobSeeker and disability support are still inadequate. Raising the CRA is a great first step, but it doesn’t solve the broader problems in the income support system.” Australian Council of Social Service chief executive Edwina McDonald said CRA needs to be increased by at least 50 per cent. About 25,000 social and affordable homes are needed each year to meet demand, she said. “In a recent ACOSS survey of people on income support, it found that virtually everyone in private rental is in housing stress, people are living in tents and cars, and many are fearful they will end up homeless as they don’t know how they’ll pay the rent,” McDonald said. “People are already skipping meals and medicine in order to get by.” Housing Minister Julie Collins was asked on ABC Radio if the government would raise rent assistance but said only that the focus was on delivering election commitments for social and affordable housing. The government is “unlocking $575 million” to be spent on social and affordable housing to support the commitment to build 30,000 such homes over the next five years, she said in a statement.
One in 10 NSW MPs own four properties or more, documents show Anton Nilsson NCA NewsWire Mon, 3 October 2022 https://thewest.com.au/business/one...r-properties-or-more-documents-show-c-8428590 Independent Sydney MP Alex Greenwich owns several apartments in inner Sydney. Credit: Supplied One in 10 NSW Members of Parliament are in an elite club of Australians who own four properties or more, according to an analysis of property disclosures. Just 2 per cent of Australians own four or more properties – but in the NSW parliament, that group makes up about 12 per cent of MPs. The MP with the most properties, Shooters, Fishers and Farmers Party MP Roy Butler, reported 12 homes in his latest disclosure form. “I’ve been lucky, but it didn’t come without hard work and sacrifice,” Mr Butler said. Former SFF MP and now independent Helen Dalton disclosed seven properties, mostly farms in the country near Griffith where she and her husband work the land. But she also has a country home as well as a flat on Oxford Street in Sydney where she lives during sitting weeks. Murray MP Helen Dalton owns several country properties and an apartment in Sydney. Credit: Supplied Ms Dalton said she had worked hard to build up her property portfolio. Supplied Credit: News Corp Australia “I wanted a place in the city that I could call home and where I could keep my toothbrush,” she said. Another politician who has seven properties to his name is independent Wagga Wagga MP Joe McGirr. A physician by trade, Dr McGirr’s property portfolio includes three homes on Sydney’s north shore, two homes in Wagga, and a holiday home in Mareuil-sur-Cher, France. The seventh property appears to be a business address. Two Liberal MPs also stuck out with six properties each: former local government minister Gabrielle Upton and former multiculturalism minister Ray Williams. Ms Upton said three of the properties she declared were homes, including a terrace in Paddington, and the others included two commercial units and a carpark. Wagga Wagga MP Joe McGirr's properties include a holiday home in France. Credit: Supplied “A lot of people start with not much and work hard, which is how my situation came about,” the Vaucluse MP said. “I think that’s a good thing.” Seventeen NSW MPs declared having an interest in four or more properties, including some who have since retired from parliament. The other MPs who declared at least four properties included the retired party leaders John Barilaro, of the Nationals, and Jodi McKay, of the Labor Party, who have both left parliament since handing in their disclosure papers. Nationals leader and Deputy Premier Paul Toole is also in the club as well as other members from the Nationals, Liberals, Labor, the Greens and One Nation. Barwon MP Roy Butler, pictured on his farm near Mendooran in Central West NSW, owns the most properties in the NSW parliament. Credit: News Corp Australia, by Peter Lorimer. Independent Sydney MP Alex Greenwich has four properties as well – all located at the same address in inner Sydney – plus a minor share of a Queensland holiday home. Mr Greenwich said he and his husband rented one of the four apartments and owned the other three together. “We’ve acquired these properties over time, but owning them in no way limits my strong advocacy for greater access to social and affordable housing and making renting fair for people, and my record shows that,” he said. “We’re allowed to own properties and must disclose them, but we also have a duty to acknowledge we’re in a fortunate position, having good salaries, and it’s incumbent on us to have a strong focus on the affordability of housing for people right across the state.” Deputy Nationals leader Bronnie Taylor reported an interest in 12 properties; however, her office clarified only three of those were homes she co-owned. Independent Sydney MP Alex Greenwich owns several apartments in inner Sydney. Credit: Supplied The other nine properties were farmland held by a trust that the minister’s husband had an interest in, Ms Taylor’s office said. Mr Butler, Ms Dalton and Ms Upton all said they had worked hard to amass their property portfolios and had nothing to hide. Mr Butler said he had set out to learn about the property market as a teenager, had put in work to increase the value of properties and then borrowed against the equity to buy more homes. “I strongly believe we need to teach young people to be financially literate, and I have advocated for that issue in parliament,” he said. He said he bought his first home in 2001, and all except one of the properties he disclosed were bought before he entered politics. Recent data from the Australian Bureau of Statistics reveals 21 per cent of Australian households – about one in five, or just more than two million households – own another property other than their home. That figure would include households that rent, rather than own, their primary residence, the ABS said. Helen Dalton has one of the most extensive property portfolios in state parliament. Credit: Supplied There are 155,200 households in the country that own three or more properties on top of the house where they live, the data shows. Overall, about 60 per cent of NSW MPs disclosed interest in at least one property other than their primary residence. However, the exact rate of property interests among the politicians is difficult to pin down. That’s because different politicians take different approaches to the disclosure forms. Some MPs did not include enough information in their forms to determine what type of properties they had an interest in and whether a given property was a business location or a home. Another complicating factor is that some of the MPs disclosed properties owned by their spouses, while others did not. Former Greens MP David Shoebridge, for example, disclosed four properties owned by his wife. Mr Greenwich owns several apartments in the heart of Sydney. Credit: Supplied Former trade minister Stuart Ayres, on the other hand, disclosed a home in Mulgoa but not a Chippendale property that his partner, senator Marise Payne, reported in her federal disclosure form. A spokeswoman for Mr Ayres said he had no interest in the Chippendale property. The disclosures also don’t reveal the value of the homes, meaning an MP with just one investment property in an expensive area may have a more valuable portfolio than someone with several cheaper homes. The law governing the disclosures, the Constitution (Disclosures by Members) Regulation 1983, says each MP “shall disclose … the address of each parcel of real property in which the Member had an interest” at the time of the return. Vaucluse MP Gabrielle Upton has built a substantial property portfolio. Anton Rose Credit: Supplied Members hand in ordinary returns at the beginning of each financial year, covering the previous 12 months. They also hand in supplementary returns six months later, disclosing any changes that happened in the interim. The forms are lengthy, sometimes filled in by hand, and tabled in parliament in document bundles that are usually not automatically searchable. The most recent set of forms from both houses of parliament, including both ordinary and supplementary returns, total 1827 pages. A prominent integrity advocate said disclosing interest in properties and businesses was necessary to prevent conflicts of interest. “It’s plain as day that we need an ample system under which politicians and senior bureaucrats, who have entered public life and taken on the burden of doing so, must disclose potential conflicts,” said former counsel assisting the Independent Commission Against Corruption Geoffrey Watson SC. “When you take on public life, and the benefits that come with it, you also take on the consequences of doing so, and filling out these forms accurately is one of them.” Dr McGirr and Mr Williams were contacted for comment.
Politicians, working hard to taking advantage of their created and protected taxation laws which only favor the rich. Conflict anyone? Ohhhh nooooo!
Opinion Young Australians are furious at the Reserve Bank. They have every right to be Osman Faruqi Culture news editor and columnist October 6, 2022 https://www.smh.com.au/national/as-interest-rates-soar-tiktokers-go-lowe-20221004-p5bn6p.html Songs from the popular musical Hamilton are often used to soundtrack memes and voice-overs on TikTok. But the musical’s composer, Lin-Manuel Miranda, probably never expected his track The Room Where It Happens would be used in a TikTok video to criticise the governor of the Reserve Bank of Australia, Philip Lowe. The video is just one of many where young TikTokers either take aim at Lowe and the RBA for hiking interest rates or try to explain why it’s doing so. Comedian and actor Luke McGregor has racked up over 300,000 views for one of his videos where he pleads with Lowe to stop raising rates. Young TikTokers are releasing videos criticising Reserve Bank governor Philip Lowe.Creditionne Gain The memes reflect growing anger and confusion among younger Australians about the RBA’s strategy under Lowe. Firstly, there’s the deep frustration about being locked out of a housing market turbocharged by near-zero interest rates. Many have given up hunting after watching prices rocket over the past two years. What good are record-low interest rates if you can’t get into the market? Next, there is a feeling of betrayal among those who managed to buy a house in the past couple of years, taking Lowe at his word that the RBA wouldn’t lift rates until 2024, only to be stung by the most rapid rises in years. These are vital issues for millions of Australians, and the RBA has played a role in all of them. Yes, central banks around the world have followed a similar pattern, the war in Ukraine contributed to inflation, and the federal government also has a significant role to play when it comes to house prices and inflation. But the government can be held accountable by the public. Not so of the RBA chief. Until recently, how many Australians could even name Philip Lowe? Over the previous decade the RBA remained relatively uncontroversial as it oversaw an extraordinary expansion in asset wealth, the result of its decisions to drive interest rates to record lows. The RBA’s formula was pretty straightforward: as house prices increase, Australians feel wealthier and therefore are more willing to spend, increasing demand and stimulating growth and employment. It became the bedrock principle of the last decade of Australian economic policy. As long as house prices continued to go up, the economy would be fine. And go up they did: doubling over a decade in many capital cities. It all sounds great, as long as you own a home. For those who didn’t and watched this policy in action for the past decade, it was infuriating. And even for those who managed to sneak onto the property ladder at the end of the boom, things are looking pretty grim. Because interest rates were already so low when COVID-19 struck, the RBA needed another lever to try to boost spending. During the pandemic it deployed something called “forward guidance” – essentially a statement of intent from the bank that it remained committed to low rates. It was great news for those who were keen to get into the market but worried about the possibility of sharp interest rate hikes in the near future. Plenty took Lowe and the RBA at their word and bought up, encouraged by the bank’s explicit focus on keeping house prices rocketing up, only to then be hit with the fastest rate rises in nearly 30 years. This masthead has reported the experiences of many young families who bought based on the bank’s forward guidance, only to face thousands of dollars more a year in mortgage repayments as rates soared. Interest rates have increased six times in the past six months, as the RBA tries to play catch-up after realising it got the economic forecast wrong. As a result, many new homeowners, including plenty of people in my social circle, are now in financial stress, or delaying starting families as a result of the pressure. Lowe says he’s now “embarrassed” by the board’s forward guidance, and has initiated a review into it. The federal government has also announced a review into the RBA. But aside from these reviews there’s been no consequences for Lowe or a board that knowingly created a housing boom which disproportionately benefited wealthier property owners and investors, locked out the rest of us, and now has left plenty of younger Australians in financial strife. Some will be forced to sell their homes, potentially at a loss. Factoring all of this in, it’s completely understandable that many younger people – including on TikTok – feel both anger and confusion towards Lowe and the RBA. The question is, what happens now? We’ve been told that the RBA board is supposed to operate like some cohort of divine, economic philosopher kings, whose fundamentally anti-democratic operation is all for the greater good. Given the mess so many Australians are currently in, whether they own a home or don’t, we’re owed much more from Lowe and his board than an admission of “embarrassment”. Private sector leaders would struggle to keep their job in similar circumstances.
‘Really, really horrible’: Grim pickings for renters as vacancies dry up By Elizabeth Redman October 7, 2022 https://www.smh.com.au/property/new...ters-as-vacancies-dry-up-20221006-p5bnn9.html Key points Tenants are finding it harder to find a rental property as the vacancy rate holds at record lows. Some are accepting worse conditions in their homes to avoid moving, tenant advocates say. There has been an increase in tenants forming new households and a reduction in rental supply, pushing rents up. Tenants searching for a new home are facing the toughest outlook on record as the national rental vacancy rate holds steady at 0.9 per cent for the third month in a row, new figures show. Tenant advocates are concerned about rising rents and a shortage of available rental listings that can lead some tenants to accept worse conditions in their homes to avoid a situation where their lease is not renewed. A two-bedroom Carlton North terrace advertised for $415 per week. Sydney’s rental vacancy rate fell another 0.1 percentage points to 1.1 per cent in September, Domain figures show. Melbourne held steady at 1.3 per cent. A balanced rental market is considered to have a vacancy rate of about 3 per cent. The situation for tenants is even more difficult in Brisbane (0.6 per cent), Perth (0.4 per cent) Adelaide (0.3 per cent) and Hobart (0.5 per cent). “If you are forced to move, whether by eviction or work, you are facing a much harder time finding a home,” Tenants’ Union of NSW chief executive Leo Patterson Ross said. A West Ryde studio advertised for $250 per week. “It also means that while you’re in a home already, you start to change your behaviour to try to avoid being forced to move, and you might be putting up with things that you wouldn’t ordinarily.” He cited a two-bedroom property listed for rent even though one bedroom was unable to be used. Because of the risk of moving, more tenants are staying put, meaning there is less movement of stock, which can affect the vacancy rate, he said. For applicants who can afford a rental but consistently find themselves the second or third choice of landlords, the shortage of rental listings makes it more difficult to find a home, Patterson Ross said. “For people at the bottom of the line, it’s really, really horrible,” he said. “We obviously need a way of distributing the properties that we have in a fair way, but this competitive process is causing a lot of problems.” A Productivity Commission report last week found $16 billion a year in government housing assistance could be better targeted, while nearly $3 billion spent helping first home buyers works against improving affordability. It also called for an increase to Commonwealth Rent Assistance and improvements to new housing supply and social housing. In Melbourne, Renters and Housing Union secretary Eirene Tsolidis Noyce highlighted Victoria’s 300,000 empty homes, combined with rising rents and issues with application processes. A Melbourne studio asking for $280 per week. “It’s dire,” she said. “Our union is doing everything that we can to make sure that people can keep their homes.” She said some tenants were facing rent rises out of step with inflation for other consumer products. “You wouldn’t see this kind of steep increase in any area – and for such an essential need as well.” NAB head of market economics Tapas Strickland said more tenants were forming new households as pandemic restrictions eased. A three-bedroom house in Northmead is advertised for $430 per week, and the agents are offering one week rent free. Some young people had delayed moving out of home until this year, some share houses had broken apart as tenants sought their own space, and there was a rise in divorces, he said. There had also been a reduction in supply as landlords returned their properties to the short-term rental market after lockdowns ended, he said. He expects further pressure on rents because of rising interest rates, which have tightened conditions for property developers, and a return of international migration. As rents make up a fairly significant part of the consumer price index basket, this could have flow-on effects to inflation and the cash rate. “If you do see continued elevated rental growth that’s going to mean inflation in Australia is going to be sticky for longer,” he said. “Where interest rates are likely to settle in the cycle is likely to be higher.” Real Estate Institute of Australia president Hayden Groves said mum-and-dad landlords had started selling properties after recent capital gains, reducing rental supply. Although some investors sold to other investors, some sold to first home buyers who had been living with their parents, he said. “The rental shortage in this country is fast turning into a crisis,” he said. “It is fast looming to become a much more serious problem – it’s continued to deteriorate, it’s not getting better.” Groves said governments charged stamp duty and land taxes but had not built enough social housing and some investors were selling in response to rental law reforms, such as those in Victoria that increase protections for tenants.
Meanwhile, America has its own special problems... New York Faces Record Homelessness as Mayor Declares Migrant Emergency Mayor Eric Adams stepped up calls for state and federal aid as the number of people in city shelters topped 61,000. New people arrived at a homeless shelter intake center in Brooklyn on Thursday, many carrying bags from a Texas social services agency.Credit...Dave Sanders for The New York Times By Andy Newman and Emma G. Fitzsimmons Oct. 7, 2022 https://www.nytimes.com/2022/10/07/nyregion/eric-adams-migrant-crisis-response.html Mayor Eric Adams declared a state of emergency on Friday as the number of people in New York City’s overwhelmed homeless shelters headed for a record amid the influx of thousands of migrants from Latin America. He called for state and federal funding to help pay for housing and services, and urged the federal government to allow newly arrived asylum seekers to work legally and to slow the northward flow of migrants from the border. He spoke as the population of the city’s main shelter system, which stood at 61,379 on Thursday, was set to break the record of 61,415 set in 2019. At least nine more migrant buses arrived on Friday. Mr. Adams said that the migrants were on pace to send the shelter population soaring above 100,000 and that the influx could cost the city $1 billion in the current fiscal year alone. “We need help, and we need it now,” Mr. Adams said in a speech. The mayor’s declaration allows the city to open emergency relief centers more quickly by exempting them from the normal land-use and community-review process that often slows the opening of shelters. “New York City is doing our part, and now others must step up and join us,” Mr. Adams said. New York mayors have declared states of emergency in the past to free up resources and suspend local laws, including, during the monkeypox and Covid-19 outbreaks. But Mr. Adams’s announcement on Friday was one of the few occasions he has given a major speech at City Hall. Roughly 17,000 migrants, many of them fleeing Venezuela’s economic collapse, have arrived in the city since April. Thousands were sent on buses from Texas by Gov. Greg Abbott, a Republican who has been trying to pressure the White House to tighten border security. As of Sunday, the city said, 12,700 of the migrants were in shelters. But the migrants are not the sole reason for the growth in the homeless population. Even setting aside the 12,700 migrants in shelters, the population of the city’s main shelter system has risen by 6 percent since mid-April — the biggest jump in that short a time since 2015. The causes are numerous, but they boil down to one thing, said Joshua Goldfein, a staff lawyer for the Legal Aid Society, which filed the suits that established New York’s unique right to shelter: “We haven’t addressed all the issues we knew we had before the migrants started to show up.” Rents are increasing, and too little affordable housing is being built. Evictions resumed after a two-year pandemic moratorium. Landlords get away with illegally rejecting tenants who pay with government vouchers because of understaffing at city enforcement offices. State prisons continue to discharge inmates directly into the city’s shelter system. And families who reach the maximum time limit at domestic-violence shelters run by other city agencies are forced into the Department of Homeless Services shelters. Marlon Martinez, 33, from Nicaragua, left, and Pedro Figueroa, 42, from Venezuela, right, are staying at a shelter in Manhattan after arriving in the city last month.Credit...Dave Sanders for The New York Times This year, Mr. Goldfein said, “a number of those things got worse.” People who enter shelters are remaining there longer. The average stay has more than doubled since 2011, to over 500 days. The arrival of the migrants has made all of these problems more pressing. Jerrica Ortiz, 33, a native of the Bronx, was placed in a tiny room with her two sons in a shelter on the Upper West Side over three years ago. Since then, she said, her attempts to find permanent housing have resulted in dead ends. She said she was told nearly a year ago that she qualified for a public housing apartment on the Lower East Side, but her move-in has been delayed because lead was found in her apartment. While she waits, she has asked to move to larger shelter quarters — her older son, who sleeps in the bunk above her, is about to turn 12 — but she said she has been told that the new arrivals are taking up all the available space. “I said ‘Listen, I’m a New York City resident, I’m homeless, and you can’t transfer me and my children from living in this box? That’s ridiculous.’” Sign up for the New York Today Newsletter Each morning, get the latest on New York businesses, arts, sports, dining, style and more. Plenty of people are entering the shelter system from places other than Latin America, too. On Wednesday, Leida Rivera, who had been flooded out of her apartment in Tampa, Fla., by Hurricane Ian, checked into the women’s intake shelter in the Bronx. She was assigned a bed in a 15-person room. “I woke up this morning not believing I’m here,” Ms. Rivera, 45, said on Thursday. At the intake shelter for families two miles away, Tara McEachin, 35, said she had moved to New York from Woodbridge, Va., in search of “better opportunities.” Ms. McEachin, a home health aide, said that she and a friend who also moved north “just haven’t gotten our foot in the door yet.” In the 40 years since courts began requiring the city to offer a bed to every person who seeks one — guaranteeing the so-called right to shelter — the shelter population has fluctuated, but the overall trend has been upward. (In addition to the Department of Homeless Services shelters, there are another 10,000 or so people in shelters run by other city agencies.) Mr. Adams said on Friday that the city was looking for ways to send some of the border-crossing migrants to other American cities. New York has been racing for months to keep up with the surge, opening emergency shelters in about 40 hotels and enrolling more than 5,000 children in public schools. Mr. Adams said the city was moving ahead with plans to build a tent intake center on Randalls Island, just off Manhattan, where new arrivals could stay for a few days. City officials are also negotiating with cruise line companies to house up to 2,700 migrants on a ship. Frank Carone, the mayor’s chief of staff, said in a brief interview at City Hall that the companies were Carnival Cruise Line, Norwegian Cruise Line and Tallink, which is housing Ukrainian refugees in Estonia, though Mr. Carone said Norwegian’s cost estimate was too high. Mayor Eric Adams said the city had been “overwhelmed” by the nearly 17,000 migrants who have arrived since April.Credit...Dave Sanders for The New York Times The tent and cruise ship proposals have drawn criticism from homeless advocates, City Council members and state legislators who have called for empty hotels to be used and for shelter residents to be moved into permanent housing. Mr. Adams has criticized Mr. Abbott for failing to coordinate migrant arrivals with his administration and called on him and other leaders to stop sending buses to New York and to spread the burden to other cities. He also asked the city of El Paso, led by a Democratic mayor, not to send migrants, following reports that the city had sent thousands of people to New York since August. “New Yorkers are angry,” Mr. Adams said. “I am angry too. We have not asked for this.” The mayor’s repeated calls for federal and state assistance are also putting pressure on President Biden and Gov. Kathy Hochul of New York, just a month before the November elections. Asked if he was putting Mr. Biden and Ms. Hochul in a difficult position, Mr. Adams said “No, not at all.” Mr. Adams said he had spoken to Mr. Biden recently about the crisis and that Mr. Biden and Ms. Hochul understood the challenges the city is facing. “They understand that this is an urgent situation and New York needs help,” the mayor said. A spokeswoman for Ms. Hochul said that the governor “remains concerned about the safety and well-being of asylum seekers” and that the state would “continue to coordinate closely with the city on the immediate response and support their requests for federal assistance.” For many of the people who fled the economic wreckage of Venezuela, the chance to work in New York City and send money home is paramount. Outside a former women’s shelter in East New York, Brooklyn, that has been repurposed as an intake center for migrant men, Cesar Rodriguez, 37, a refrigeration technician from the Venezuelan city of Maracaibo, said Thursday that he and several new friends had made the rounds of possible employers within a few blocks: metalworks, an air-conditioning contractor and a construction site. At every spot, he said, they were told that they needed a certificate from the federal government’s Occupational Safety and Health Administration. “It costs money,” he said, “but how can we make money if we can’t work?” asked Mr. Rodriguez, who said he had left his wife and five children back home. Brayan Gonzalez, 25, is from Venezuela but had been living in Colombia before he made the journey to New York City. He arrived Thursday.Credit...Dave Sanders for The New York Times A little later, a city bus pulled up in front of the shelter and discharged about 30 men who had arrived earlier in the day at the Port Authority Bus Terminal. The men, most holding pillows and plastic bags bearing the logo of a Texas social services program, lined up on the sidewalk to be processed. One of them, Brayan Gonzalez, 25, was asked what he thought of New York. “I don’t know,” he said. “I just arrived.” Kaya Laterman, Sean Piccoli and Karen Zraick contributed reporting.