Interest Rates under the PMs of Australia

I have added the first of a series of quick facts.

This one links to a graph that shows at a glance the standard variable home loan interest rate as under the various governments.

The backhand of Socialism

The invisible hand is actually more kind than socialism. At least with the free market and liberty the interaction is voluntary. With socialism, unions and lobby groups still seek thier own self-interests, and if they can make those interests into law, then force is also used to enforce it.

Money and Elections

No politician can buy votes unless the people are first ready to sell them.

Radio Adelaide Interview

Had a 5 mins interview on The Wire recently. The Wire is a program on Radio Adelaide (FM 101.5) and had been interviewing senate candidates each week.

Download it here (1 MB)

Educate to Preserve Liberty

Educate and inform the whole mass of the people. Enable them to see that it is their interest to preserve peace and order, and they will preserve them. And it requires no very high degree of education to convince them of this. They are the only sure reliance for the preservation of our liberty

Thomas Jefferson

a Founding Father of the United States of America

1743-1826

Verify Yourself!

The Australian Electoral Commission has a handy feature to verify your details are up-to-date on the electoral roll. (ie eligible to vote in your area)

Take a second and check it out here

Remember if you are enrolled anywhere in SA you can vote for me!

Donate to Our Cause!

Why money, and what will it be used for

If you agree with what I stand for, help me get elected. Here are some ways...

The most pressing need is to run on a "ticket" for the Senate. This is where you vote "above the line" in a single box. 95% of voters do this. To run on a ticket I need a fellow candidate - which will cost an extra $1000. All initial donations for this will go solely to this priority. I am using my own pocket money for my candidacy.

You can make donations under $200 anonymously if you please. Pay now via PAYPAL, send a cheque, or email me for bank deposit details.

to donate and for more info: www.stewartglass.net/help

Holloway calls for abolishment of SA Upper House

Article from Adelaide Now - 20 Mar 2007 (italics my own):

Council is 'wasting our cash'

SOUTH Australian taxpayers have been told to watch members of the Legislative Council in action to see how their taxes "are being misspent".

A bitter row has erupted between the State Government and the Opposition and independents in the Upper House over the way it is operating.

Government Leader in the Council Paul Holloway said if taxpayers watched the chamber in action on Wednesdays "they would be calling for its abolition as soon as possible".

"Just come and see how your money is being misspent," he said. Mr Holloway's frustrations boiled over at the weekend, as the result of a move by the Opposition to ensure select committees of the Upper House were chaired by independents instead of a Government MP.

The Opposition has claimed that because Government MPs are chairmen, they are restricting the committees' operations.

Mr Holloway slammed the move as a breach of time-honoured political conventions. "The Legislative Council is reaching crisis point," he said. "The sooner it is abolished the better." He said the Government had a "big legislative program" and it did not receive any consideration.

"Yet we have nearly a whole day each week being devoted to private member's business," he said. Mr Holloway said that one sitting day in three, not a single piece of Government business was being discussed.

He said that last week, on one of those days the chamber had sat until after midnight "yet they are never ready to discuss Government Bills".

Opposition Leader in the Council, Rob Lucas, said it was a bit rich of Mr
Holloway to attack the Opposition for not debating legislation when it had to force the Government to sit on Tuesday last week after the Adelaide Cup day holiday.

When Mr Holloway calls for the abolishment of the Upper House because it misspends money, does that mean that he would support the abolishment of the Lower House if it is the same?

Proportional representation, as is in the Upper House, helps keep give SA some political diversity, could be said to more accurately represent the voters and helps keep us from a being 2 party system - like you see in the USA.

The Rann Government still has twice as many days as private members bills to debate, and to suggest that you have a mandate for a "big legislative agenda" (when you don't actually have the numbers to do it) is a little silly. I guess we will see if the electorate supports Mr Holloway's suggestion when Premier Rann has a referendum on abolishing-reforming the Upper House in 2010.

Housing Unaffordability by Land Shortage or Taxes?

My thoughts on an article where it is presented that home prices are due to government taxes not land supply.

(bolding and italics added by me)

No land shortage, blame taxes by Anthony Klan
26 Feb 2007 - news.com.au

MORE than 150,000 housing lots are available for development in the nation's three biggest cities, refuting the Howard Government's claims of a land shortage.

The figures, compiled by The Australian, show there are 155,500 lots across Sydney, Brisbane and Melbourne zoned for residential development - between three and eight years' supply - despite John Howard's claims last week that a shortage of land was contributing to the housing crisis and driving up rents.

In Sydney, where housing affordability is the lowest in the nation and continuing to deteriorate, developers have thousands of housing blocks ready to sell, and are sitting on tens of thousands more.

"Every time I see John Howard blaming land supply I see red because it's just not true - there are literally thousands of lots available," said Peter Icklow, chief executive of one of Sydney's biggest developers, Monarch.

Mr Icklow said rather than land shortages, it had been increases in property taxes - levied by all levels of government since the beginning of the property boom - that had led to the affordability crises. He said there was plenty of land available for sale and for development, but there were no buyers at current prices and developers could not drop prices any further without losing money.

"I've got about 3000 lots of land and I can't develop any of them until they take some of these taxes off or we get a 20 per cent lift in prices," he said. "And we're not doing this to be greedy, we just need to make a return. The bank won't lend me money if we can't show a return."

Residential Development Council executive director Ross Elliott said governments at all levels had used the property boom as an easy cash cow, but now that the boom had receded the effect of the new taxes had come into stark focus.

He said inflated taxes were stifling any recovery in the property market and in turn driving the rental shortage. Starting with the Howard Government's introduction of GST on all new homes, and culminating with the NSW Government's infrastructure levy on new homes introduced last year, property taxes had ballooned since 2000.

Taxes associated with a typical house-and-land package have grown by an average of $77,000 nationally in the past six years, with the problem most pronounced in Sydney's northwest, where government costs have ballooned by $115,000 in that time, according to research by consultants Urbis JHD. The group said taxes and red tape cost more than the land.

Illustrating the amount of zoned land available for development across the nation, Stockland, Australia's second-biggest property group, controls 66,600 housing lots, which it will gradually feed to the market as conditions improve. But lot sales are expected to remain low until at least next year in the face of poor rental
returns and low housing affordability. Of the 1900 blocks Stockland sold in the past six months, just 96 - or 5 per cent - were in NSW. And ANZ senior economist Paul Braddick said there was no historical evidence to suggest lack of land supply had significantly driven up prices.

Maybe it is just my skeptical side but the land triumvirate seems to be:

1. State Governments (who generate land tax revenue and money from land sales via the LMC)
2. Banks (higher mortgages mean more profits from interest) and
3. Large Developers (whom the LMC seems to sell the state land to).

You might possibly add in newspapers (who do a heck of a lot of real estate advertising).

Now I don't dispute that the unfair land tax and the GST have contributed to housing inflation, but even if they were removed entirely, houses would still be priced far above their true market value.

It is interesting that the 2 of the land triumvirate are the ones that fail to acknowledge land supply as a root problem. Why would they? They are a main beneficiary! Until other developers (including private land holders like farmers) are able to enter the market, they can (and will) sit on their land til it sells at astronomical prices.

See also: Why Land is Bananas

AdelaideNow... Land bank's policy 'is driving up prices'

Commentry on article by Greg Kelton on 6 Mar 2007 (emphasis my own):

AdelaideNow... Land bank's policy 'is driving up prices':

THE state's biggest landholder - the Land Management Corporation - has been accused of hurting new home buyers by creating false land shortages, driving up prices. ...

In a submission to Parliament's Statutory Authorities Review Committee, the Housing Industry Association says
...

'The dominant practices of LMC are also exposing the taxpayers of SA to enormous financial risk and undermining affordability through anti-competitive practices,' the HIA submission says.

The HIA warns:

THE state is in danger of losing its traditional competitive advantage of affordable housing.

THE LMC has shifted its role to that of maximising profit and return for the Government, which exacerbated affordability problems.

RESTRICTIONS on the urban growth boundary has created a 'chronic shortage' of residential land, leading to massive increases in prices.

Infrastructure Minister Patrick Conlon yesterday said the claims were 'extreme and absurd'.

He said they were motivated by greed, and the private development sector's 'long-standing antipathy' towards the corporation was because the developers wanted to make more "

Minister Conlon's claims of 'extreme and absurd' I feel are misplaced. I came to the same conclusions about land prices and the urban boundary independantly. and this was one of my main issues when I ran for Mayor of Onkaparinga last year.

In fact, one of the goals outline in the charter of the LMC is to make profit. So the government creates the virtual monopoly (via the Urban Boundary) and the LMC makes the profit for the government!

Talk about putting the cat in charge of the canary!

Liberty and Safety

Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety

motto on the 1759 title page of
An Historical Review of the Constitution and Government of Pennsylvania

A profound explanation on Tax in Australia

A analogy on progressive tax, and tax cuts for the higher margins.

Let's put tax cuts in terms everyone can understand.
Suppose that every day, ten people go out for dinner. The bill for all ten comes to $100.

If they paid their bill the way we pay our taxes, it would go something like this -
The first four (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh $7.
The eighth $12.
The ninth $18.
The tenth (the richest) would pay $59.

So, that's what the 10 people decided to do.
They ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a problem. "Since you are all such good customers," the owner said, "I'm going to reduce the cost of your daily meal by $20."

So, now dinner for the ten only cost $80. The group still wanted to pay their bill the way we pay our taxes. So, the first four were unaffected, they would still eat for free.

What about the other six, the paying customers? How could they divvy up the $20 windfall so that everyone would get their 'fair share'?
The six paying customers realised that $20 divided by six is $3.33. If they subtracted that from everybody's share, then the fifth and the sixth would each end up being 'PAID' to eat their meal.

So, the restaurant owner suggested that it would be fair to reduce each person's bill by roughly the same amount, and proceeded to work out the amounts each should pay.

And so -
The fifth, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33% savings).
The seventh now paid $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. The first four continued to eat for free. Once outside the restaurant, they began to compare their savings.
"I only got a dollar out of the $20," declared the sixth, pointing to the tenth diner "but they got $10!"
"Yeah, that's right," exclaimed the fifth. "I only saved a dollar, too. It's unfair that they got ten times more than me!"
"That's true!!" shouted the seventh. "Why should they get $10 back when I got only $2? The wealthy get all the breaks!"
"Wait a minute," yelled the first four in unison. "We didn't get anything at all. The system exploits the poor!"

The nine surrounded and beat up the tenth diner.
The next night the tenth diner didn't show up for dinner, so the nine sat down and ate without number ten. When it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

That, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table any more.

Source: Anonymous Email doing the rounds, similiar to one in the USA

The Democrats and Rent Assistance

My thoughts on an ABC article about Rent Assistance and the Democrats:

Assistance boost 'bandaid' solution to housing squeeze
ABC - Wednesday, February 21, 2007. 3:48pm (AEDT)

The Democrats say a potential increase in rent assistance would do little to alleviate the growing housing squeeze.

Prime Minster John Howard says he is considering giving assistance to people struggling with rising rents.

But the deputy leader of the Democrats, Andrew Bartlett, says that is an election year bandaid solution to a problem that needs major policy reform.

"A hike in rent assistance will probably just mean a hike in rents and all the extra money, or most of the extra money flowing into the pockets of investors and landlords," Senator Bartlett said.

"The big problem is we've got no housing policy.

"The Federal Government has vacated the field for the last decade and until we have a coherent national strategy that looks at all the different angles it's just going to be continual bandaids while the structural problems get worse."

Commentry:

Of course Senator Bartlett is correct when he says that "a hike in rent assistance will probably just mean a hike in rents". And the worst of it is you are taking taxpayers dollars and putting them in the pockets of private or company investors.

There is no effective way to get around the problem - except to hit is at the true cause.

The problem? Land supply restriction by state governments (ie zoning and land release).

The solution? Massive deregulation, particularly in land zoning, so private land holders can flood the market with land. This will inevitably drop house prices and later rental prices.

NB: For the record - as much as I wish I did, I don't hold any large tracts of land!

Policy: Tax

Tax doesn't get much flatter than "TaxOnce"

Every government requires funds to perform it's functions.

I propose a vastly simplified, but radical departure to the system, which for ease of reference I call TaxOnce: It is a once-per-year-only, fixed-amount tax for all electors (ie those eligible to vote), with a mercy clause for those unable to afford it.

Annual Fixed Tax

• Each elector (barring the mercy qualifiers) pays the exactly same dollar amount.


• There are no tax deductions, exemptions or rebates.


• No business activity is taxed.


• Your TaxOnce replaces all other federal taxes including income tax, GST, import and export taxes, Medicare levy, company taxes, petrol taxes 1 etc


• under current spending (which probably should be reduced) each elector would pay approximately $6,000 each (see "Questions about TaxOnce" below)
  

Mercy Clause

This applies if paying the tax would mean an elector would forfeit the basic necessities of life.

• Unpaid taxes accumulate, though the mercy clause may apply to some electors for their entire life.


• Tax debt cannot be transfered to other electors or posterity, though it may voluntarily be paid on an elector's behalf by a charity, relative or friend.


• Assets left upon the death of an elector would be used for any tax debt

What are the advantages to "TaxOnce"

1. Simple - there are virtually no loop holes to be exploited by dishonest people or crafty accountants. Your tax return could be done in 10 mins.


2. Fair - every one uses the services of defence, courts, police, roads and every equally pays


3. Incentive - once your annual tax is paid there is no penalty for working harder and earning more. Every extra dollar is 100% tax free.


4. Cheap - The ATO would be dramatically reduced in size. Administration costs that are currently paid by Australians would be saved by Australians


5. Accountable - because the tax is greatly simplified it will give the public an amount to latch onto. Come election time you are going to want to know how much tax candidates propose, and it will be obvious if that promise is not kept.

Questions on TaxOnce:

What about single income families?
Both parents would be liable for tax, though the mercy clause would consider the fact of dependants on a single source income. You might consider that this would disadvantage young families as they have the extra burden of children, yet also consider that those without children will need to save for their retirement (as they will not have children to support them in their old age).

What is the tax used for?
Since I oppose government welfare (vs private charity), the tax would be used only on the basics (including - defence, national roads, education of minors, police and courts). Let the citizens keep their money and decide which causes they will support themselves. The main focus is keep government small so you can keep the tax as low as possible.

No businesses tax? Won't this advantage big business?
Make no mistake - businesses pass on all costs to the end consumer, hence, all taxes that businesses pay are ultimately passed onto the consumer (who are taxpayers). If the market is free and open, industries that are making high returns will always attract competition, so extended profiteering is unlikely. (see Free Market Essentials)

How much would TaxOnce likely be?
I use this simple formula:

Services divided by Taxpayers (= Electors minus Mercy Clause Electors)

Though I am not an economist, this gives me approximately $6,000 each. (See Footnote 2)

Basic Government Services: $42,693,000,000 (footnote 2)
Population of Australia: 20,743,371
Approximate Electors: 10,000,000
Probable Taxpayers: 7,000,000

A likely trend is that most young families will be exempt under the mercy clause early in life, while many people later in thier careers will be paying the annual tax plus older debt.

.

Why not tax those below 18?
To quote the mantra "no taxation without representation". It is unfair to tax youth when they cannot help choose the government who tax them. This grace period will also give minors some opportunity to study, save, travel etc.

see also: Price Linking
Related Keys: 02-EQU, 15-LIM, 17-PRO, 20-TRN

Footnotes:
1. Events or products that are damaging to others, if they cannot be immediately disbanded, should be taxed to make amends for their damages. See Price Linking
2. Referencing the 2005/6 Part 1: Australian Government Budget Outcomes Table 3 and including: Legislative and Executive Affairs, General Services, Government Superannuation Benefits, Defence, Public Order and Safety, Education, Agriculture Forestry and Fishing, Transport and Communication

Many of us still think about the government the way five year olds think about their parents, the source of infallible wisdom and a bottomless purse.

adrienswords

Libertarian or Libertine?

Am I a libertarian or a libertine or both? (definitions in footnotes)

Well, though I support the right of people to do as they wish (as long as it is not harming others) I do not consider that anything not illegal is morally right.

I remember getting this confused when I was a small boy. I was watching a show, which we would probably consider now mildly questionable for a 6yr old. And I thought to myself "This can't really be bad because otherwise they wouldn't have let it on TV". You wouldn't want to apply that logic now!

And so I support freedoms that I am morally opposed to. And though I might support a bill that keeps pornography or smoking legal, this doesn't mean I won't speak out against them or use other tools (like the boycott) to fight them.

There are pragmatic reasons for this too. Most often the law is weaker way to fight social ills. Look how well the Prohibition Laws worked in the early 1900s. If you haven't changed the individual people find ways to get around it (like making moonshine).

I am proud to be a libertarian, but that doesn't mean you have no morals, just that most of them shouldn't be enshrined in law. So I am a libertarian but not a libertine.

-------

Definitions:
Libertarian: A believer in a political doctrine that emphasises individual liberty and a lack of governmental regulation and oversight both in matters of the economy ('free market') and in personal behavior where no one's rights are being violated or threatened.

Libertine: one who is loose in morals;

SA Govt subsidy for first home buyers

I came across an article today on how the SA government plans to help home buyers:

"SA Govt to help home buyers with loans"
30/01/2007. ABC News Online:

The South Australian Government says it will help home buyers enter the market by contributing to the cost of a home in return for a share of any capital gains made on it.
Government agency HomeStart has developed a new loan that gives a borrower up to 35 per cent of the purchase price.
When the property is sold, the Government takes the original contribution, plus up to half of the increase in the property's value.
Housing Minister Jay Weatherill says the scheme will help up to 500 people a year.
'What it's about is getting young people, families, people who are currently locked out of the housing market into a home,' he said.
'It will boost their borrowing capacity by about 35 per cent and it's a fantastically innovative product.'
Mr Weatherill says the program will allow low to middle income earners a chance to break the rental cycle.
He says the loan will make it more affordable for people to enter the market.
'It's really about sharing the capital growth in the value of a home,' he said.
'HomeStart Finance in that way is able to maintain mortgage payments at a low level an help these young families on low incomes into their first home.'"

What Minister Weatherill fails to mention is that housing prices remain at record levels of unaffordability primarily because of state government regulation. It maintains a stranglehold on supply by not releasing new land for development, and particularly by zoning privately held large pieces of land so it cannot be subdivided. This in turn limits supply and drive house prices through the roof (pardon the pun). see Why Land is Bananas. Government regulation was recently identified in an international study as why land prices in Australia are so high. So high, in fact, that out of 159 cities around the western world Adelaide ranks 27th in unaffordability.

So why am I not that impressed by this policy?
By increasing the ability of some 500 families to pay more, without increasing the amount of properties available, all you do is increase the price. So it benefits 500 (no doubt worthy) families to the detriment to all other home buyers.

Who benefits? Well mainly, the State Gov who gets extra for land taxes, and also gets a cut of the profits when the home is resold. The banks also get more interest on the higher mortgage.

So I say to the State Government - release your stranglehold on land release and division and prices will naturally and dramatically come down. House prices: it's not what you can do for us, it's what you can stop doing to us.

Footnotes and Links:
Demographia - See 3rd Annual Demographia International Housing Affordability Survey (2006)
News Release by Minister of Housing Jay Weatherill
Stewart Glass - land prices

Topics: Adelaide South Australia Housing Affordability Land Prices

The price good men pay for indifference to public affairs is to be ruled by evil men

Plato

Ancient Greek philosopher 428-348 BC

Something I learnt on Monday

You know the old saying "You learn something new everyday"? Well today I learnt that you can't taste sour milk in your hot cup of Milo.

You can however feel the congealed bits of milk in your mouth. (They have the consistency of broken-up yoghurt).

Article 05: The Invisible Wrist

What is alternate self interest?

In 1776 in The Wealth of Nations Adam Smith outlined the idea that self interest (or everyone taking care of themselves and their own) would drive an economy to prosperity. This is because no one voluntary enters into a transaction unless it is to their benefit (ie you want those shoes and the sports store wants your money).

He explained that the butcher and the baker provide food for our dinner not because of their generosity, but because of their own self-interests. Smith explained that even in acting selfishly, people are often "led by an invisible hand to promote an end which was no part" of their intentions 1

This is an incredibly robust motor because consistently through history people have had a keen interest in themselves.

Some claim however the dark side of the the invisible hand is that individuals become selfish, looking only after their own wealth. I believe however, critics overlook a principle I call the invisible wrist.

As with the invisible hand people look after their own interests, with the invisible wrist people next turn to the needs of people to whom they have something in common, or to whom they can relate to. It may also be termed alternate self interest, as people feel concern for others whom they feel they are akin to.

These examples are generalities, but are true more often than not :

• people who have lost a loved-one through cancer will often support cures for cancer research
• a mother with a 3 year old will be motivated to help after seeing footage of a toddler maimed in war torn city
• a wealthy inventor donates money to a program for educating young scientists
• we vividly remember when Hurricane Katrina hit in Aug 2005 killing 1,836 people, but how many can recall the earthquake in Yogyakarta that killed 6,234 this year? (May 2006 - it was in Indonesia) 2

Why do we do this? I believe it is because we can put ourselves in their shoes, and can empathise to how they might feel.

But the invisible wrist is also a motor, much like the invisible hand is. It motives people to look after those around them, once they have looked after themselves.

The invisible hand would fail society if individuals were only concerned with accumulating wealth, but we are also creatures of emotion, and most people once they gain an excess for their own physical needs, begin to fill an emotional hole by greater charity to others.

A real beauty of the invisible wrist grows from the diversity of human connections. One person in the city can relate to another of the same religion in the country, an elderly man can relate to a struggling young teenage from the same small home town, a lover of theatre can donate to the development of it. Age, culture, locality, common tragedy or abuse are all potential bridges.

Let us not fear the invisible hand of self interest. Just because the government lets us be free to be selfish, doesn't mean we will be selfish - for attached to the invisible hand is the invisible wrist of alternate self interest.

Related Keys: 05-LIB 11-SUP 15-LIM 17-PRO

Footnotes
1. Adam Smith - Wikiquote http://en.wikiquote.org/wiki/Adam_Smith#Investments_.26_Choice
2. May 2006 Java earthquake - http://en.wikipedia.org/wiki/May_2006_Java_earthquake