Propping up Australian real estate

Two hundred and twenty-two years later, what’s to be the response of public policy to the GFC, to diminishing returns to labour and capital, and the impossible debt created by taxation and escalating property prices? There’s one solution only: to capture a greater part of our land rent for revenue, coupled with concomitantly less taxation on productive activity. A block of land with a $2,000 land tax upon it will always sell for less than a block with no such charge, despite claims to the contrary from the Australian real estate lobby.

It has now been exposed to the light of day that the First Home Buyers Boost was a cynical means of propping up Australia’s real estate prices rather than an attempt to make house prices cheaper and to assist our young folk into their own homes.

Remarkably, at each recession such as Australia is about to experience, the Housing Industry Association seems to prefer to go into hibernation rather than promote this rather obvious solution. The problem is not one of a lack of demand but of ineffective demand - or too much debt. A greater tax on land values would not only work for housing, it would also put dollars into people’s pockets, get the economy moving again and eliminate future recession-inducing real estate bubbles.

Surely, the HIA and the real estate industry also have an interest in a recession-proof economy? One in which our kids can still afford to buy their own homes?