China FTA: Mr Robb sells out Australia at a bargain bin price

Yesterday Mr Robb rose from his sick bed to celebrate the latest “Aussie sell out” deal with one of our trade ‘partners’.

These agreements are not about trade they are about unproductive capital exports from China to Australia – end of story.

Long ago we reduced our tariffs on Chinese goods imported to Australia so we already have the benefit of low cost imported goods.  Anyone out there struggling to find some cheap Chinese imported goods in the shops?

So the only relevant trade issue is why the Chinese have not already removed their tariffs on all of our exports and why even after signing this agreement they will still maintain tariff and other barriers on a range of potential Australian exports.

But trade is a side issue as all these “FTA” agreements are really about is giving our exchange rate manipulating trade ‘partners’ an even easier path to exchange rate manipulation which they do by exporting ‘capital’ to Australia via several key channels that are described below. Continue reading

Land Supply Action: At last something we can all agree on!

It has been great to hear Mr Hockey explain that the real problem of housing affordability is a lack of supply.   Fantastic to hear the Prime Minister Tony Abbott say the same thing. And simply superb to have Mr Mathias Korman come out and sing the praises of supply, supply, supply.

We know the Home Industry Association is on board and so are the Master Builders.   Plus the construction unions and tradies will be keen to get back to building houses now that digging big holes has started to slow.

Even the RBA is keen on the idea now that the interest rate lever controlling the Debt Machine is making grinding noises and the clutch seems to have gone.

Now all we need are the Greens and the ALP to get on board and the ENTIRE nation can rally around and starting building all these new houses and apartments that we hear so much about but of which we see so few.

Just to ensure that no tedious little issues get in the way and stop the juggernaut let us tick them off one by one. Continue reading

Econ Weasel Words: “Affordable” Housing

One of the most popular weasel words in the housing debate is “affordable” as it allows the weasel word user to duck the issue of whether housing / land is expensive.

A new Ferrari is affordable if you are wealthy so why not call a Ferrari an “affordable” car?  It makes sense but it would not make sense to call a Ferrari a low cost or inexpensive car.

Joe Hockey’s statements to the effect that housing in Sydney is affordable because people are still buying fits this type of thinking.

With the housing debate steaming along on a diet of Hockey gaffs and snafus, the usual suspects in the usual advertorial media outlets have been singing the housing is still ‘affordable’ chorus like a gum tree full of cicadas on a hot summer’s day.   Generally, accompanied by a gaggle of greying butcher birds clacking on about how when they bought their first home they lived on gruel and built it with a combination of sweat and indignation.

Both the ‘housing is still affordable’ chorus and the greying butcher birds ignore the simple fact that land prices in Australia have risen dramatically over the last 20 years and that rise has been the result of long standing policy failure on both sides of politics.

The housing is still ‘affordable’ chorus has two key elements: Continue reading

Mr Hockey – Stop talking and show some leadership on housing supply

Joe Hockey says the housing affordability problem is about a lack of housing supply and that is a state problem.

Time to show some national leadership Joe if you want to be taken seriously as Treasurer and future leader of your party.

If Mr Hockey wants to get supply moving all he needs to do is to offer to pay the servicing and development costs of bringing new blocks of land to market with the proceeds of a small Commonwealth Land Tax or if he prefer a profit financing model – a municipal utility bond scheme for SMSF.

Commonwealth Land Tax

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Land rights! – More freedom of choice with a dash of sensible taxation

An interesting article in the conversation raised the possibility of auctioning off rezonings in order to ensure that some of the windfall that rezonings can produce is secured by the public authority who exercised the power to rezone.

“Rights to additional development density can be sold in local auctions. For example, a decision can be made for only one of a menu of possible rezoning decisions to go ahead, with landowners in the different areas required to bid against the other areas to get the one they want.”

An auction of development rights?

One might even think about applying the concept of an auction to the rights to export certain mineral resources – say iron ore. Still time for Joe Hockey and the junior miners to get together and talk sense and put in place a National Export Volume Auction (NEVA) for Iron Ore.

But I digress….

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House Prices: Mr Abbott sprinkles poisoned cheese for the ALP

There is lots of talk about Mr Abbott’s high praise for the joys of ever rising house prices.

Some are suggesting that Mr Abbott is insensitive to the fact that house prices bloated on household debt – secured by our taxpayer guaranteed banks borrowing off shore – are causing lasting damage to our economy and perhaps worst of all denying many young Australians the ability to obtain shelter without a lifetime of debt servitude.

They are are right of course but if the ALP are smart they will side step this bit of poison cheese laid out by Mr Abbott and make no promises to directly target the prices of existing housing.

No politician can win – and no politician will try to – with an argument that in any way could be construed as a direct policy to reduce the price of existing housing. End of story.

The only policies that makes any sense politically and economically and could be explained to the public  are: Continue reading