Housing Exec Land Deals Cost Public Purse Millions
|July 19, 2012||Posted by Jeffery J. Smith under News|
Dudded Aussie Housing Data Enrich Speculators
Earth’s worth should not support thievery but all society equally. We trim, blend, and append two 2012 articles from (1) BBC, Jly 6, on dealing by J. O’Neill, and (2) Financial Review, Jly 7, on data by B. Hurley.
by Julian O Neill and by Ben Hurley
Housing Executive Land Deals Cost Public Purse Millions
The Northern Ireland Auditor General said evidence showed land deals were done without proper valuations or approval.
The public purse has lost millions of pounds because there were no valuations done, or there was “favoritism”.
A “significant proportion” of 27 sales — netting £84m — involved sites not advertised publicly to attract bidding. Instead they went “to preferred buyers.”
A range of issues was detected in violation of the housing body’s statutory duty to obtain the best value for the sites.
Under rules, the executive board must sign off on deals of over £100,000, but instead sales up to the value of £8m were being authorized at senior staff level.
The Auditor General also found fraud and error in housing benefit payments amounting to £10m.
The current Social Development Minister Nelson McCausland said at public housing contractors claimed for more doors than existed in a house.
JJS: If it’s not fraudulent deals in Britain then it’s fraudulent data in Australia.
Don’t be Dudded by Official Housing Data
The National Housing Supply Council (NHSC), an organization formed by the federal government, claimed Australia’s housing supply lacks 85,000 dwellings. The banking and real estate sectors argued “this shortage” strongly affected Australia’s rocketing housing prices. There was only one small problem: the purported shortage was complete fiction.
Australian economists Kris Sayce and Steve Keen unmasked the miscalculation. While homelessness is serious with tens of thousands suffering from this plight, these persons do not have the financial power to turn their needs into demand; same goes for the residents of caravan parks. The NHSC produced evidence of social need but not actual demand.
Who on earth rounds up to the nearest 5,000? The NHSC is a body stacked with industry and former government professionals. Its continued funding would most likely quickly dry up were they to find that no shortage but a surplus.
The pseudo-science of the NHSC has not prevented vested interests from promoting its conclusions as fact. They rely upon the public not reading through hundreds of pages of economic and statistical analysis. After all, the public relies upon and trusts the “experts”.
The year 2007 was the first time since 1950 that population growth was higher than dwelling growth. If the housing shortage argument was correct, housing prices should’ve started to rise from 2007 onwards, not 1996.
In the US, the Federal Reserve, National Association of Realtors, California Building Industry Association, and Harvard University’s Joint Center for Housing Studies produced sophisticated studies to show that the $8 trillion housing boom was caused, in part, by dwelling shortages. These studies were authored by professors, PhDs, and businesspeople, all with conflicts of interest that could fill a small book. Yet, their expertise was as illusory as the shortage when the housing market crashed.
Every country has always had its so-called ‘experts’ claim that prices were based upon shortages. The same again occurred in Ireland and Spain. These three countries are now bulldozing entire neighborhoods to reduce some of the massive oversupply.
Responding to critics, the NHSC chairman has reported that an undersupply could be incorrect. In fact, Morgan Stanley researchers have found that the current 228,000 dwelling “undersupply” has now become an oversupply of 341,000.
The run-up in housing prices is likely due to other factors, specifically the escalation in real estate speculation. As of 2011, mortgage debt reached $1.2 trillion or 85% of GDP. Combined with personal debt, this climbs to $1.3 trillion or 95% of GDP. Politicians make speculation easy, granting $53 billion in subsidies and tax breaks.
Apartment billionaire Harry Triguboff, Australia’s second wealthiest man, was surprisingly candid at a lunch held by the American Chamber of Commerce last October. He told the audience he was able to pay “very little tax”. “I keep a lot of my properties. And if you keep them and there’s capital gain it’s beautiful,” he said. “You don’t pay tax. I don’t lease them so I don’t pay tax on the rent, but I get depreciation.”
He paid tax on apartment sales but that’s where the land banking came in. “You have to buy lots of empty land,” he said. “You keep the land and it brings you no income, so you claim it against your tax.”
JJS: The article above referred to our sister organization, EarthSharing, producers of the film, Real Estate 4 Ransom, a documentary on the economic structures behind boom-bust-bailouts and the reforms needed, now on line. To read more
Even in the most “civilized” nations, there is so much easy money to be made in land and land related businesses — such as construction, maintenance, lending, and insuring of mortgages — that the temptation is too great and the less scrupulous among us cheat everyone else, whether by shoddy deals or shoddy data or other means..
The solution, of course, is to reduce the temptation. The way to do that, of course, is to not leave land value in the way of temptation but instead treat it as part of the common wealth, while treating buildings, earnings, and businesses as legitimate private property, belonging beyond the tax base. Australia once came the closest to this ideal — taxing land quite a bit — but today there’s still a long way to go.
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