People Power and Housing – Centre, Left, & Right
|April 27, 2014||Posted by Catherine Cashmore under Editorials|
This 2014 excerpt of Property Observer, Mar 23, is by Catherine Cashmore.
Since the fall out of the last economic crisis, a concentrated outcry of public anger has penetrated democratic society and it’s not limited by ‘cause’ or segregated by age and status, but generated by the incredible impact of social media enabling a wide array of ordinary citizens to vent their concerns outside of sporadic government polls and the headline sensationalism of main stream media.
It is no longer merely representative of a minority that sits on the fringes of society; it signifies a clear message of distrust – a potentially destabilising force.
These protests, whilst not directly about land prices, were about community and social justice, of which housing forms an indivisible part.
Record prices continue to be regularly broken, affluent buyers continue to pay a premium. Yet the price is effectively ‘free,’ because if they hold onto the family home long enough, they are likely to receive a ‘windfall’ in unearned capital gains.
The sell off of public services was also highlighted. This too can also be associated with high land values, which have dictated what is assessed to be the more profitable offloading.
Our flawed system of taxation places a levy on productivity, (such as income and payroll taxes,) unwontedly impeding the supply of goods and services, which in turn raises prices, feeding inflation and increasing the unemployment rate arguably ‘required’ to lower wages sufficiently to stabilize inflation.
If we instead taxed the unearned gains from land (as mentioned above) rather than the earned gains from productivity, it would (as has been proven historically):
• Reduce social polarization – and therefore inequality.
• Remove the needed ‘sell off’ of public services due to high land values.
• Boost productive investment, assisting the job market and advancing competitiveness for small business.
• Reduce the speculative element that drives land prices ever higher.
• Provide a steady base of revenue to invest in public services as well as affordable housing, and;
• Ensure infrastructure is built for need – full utilization of land encouraged – and land banking reduced.
We have a lopsided economy, built on a $5.02 Trillion housing market ($4.1 Trillion of which is land) – and on this, and many other matters, a new generation of enlightened folk have clearly had enough.