(This has been adapted from a contribution I made to a discussion "Vote Yes In Toowoomba" on John Quiggin's Web site at: http://johnquiggin.com/index.php/archives/2006/07/28/vote-yes-in-toowoomba/#comment-62780
- possibly a bit OT in that discussion I would now agree):

An article “Why Investing in Real Estate is so special” printed in Brisbane's Courier Mail on Friday 23 June 2006 by Noel Whittaker who is clearly a proponent of land speculation was very revealing. Whitakker wrote:

"An obvious but often overlooked quality of about real estate is
that … you can live in it and avoid paying rent. If you already
have a place of your own, you can rent your second home out and
it will produce income as well as capital gain."

Two paragraphs later he wrote:

"The next big benefit of owning your own home is that you control
it which provides security for you and your family. You become
free of the worry of a landlord returning from overseas and
wanting to move back into his own house or being evicted because
the owner suddenly decides to sell the house to raise money. You
have control of your own future."

Noel Whitakker failed to draw the obvious link, that is that the income of those who are lucky enough to have two or more homes must ultimately be at the expense of those who are unable to own even one home and must consequently face the often debilitating insecurity of not knowing when they may suddenly forced to move.

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In 1999 I reluctantly sat through a negotiation for a purchase by a friend of an investment property. The Real Estate agent confided in us that of every three residential properties bought by an investor, one is paid for by his tenants, thanks to the negative gearing laws.

Daggett “the income of those who are lucky enough to have two or more homes . . at the expense of those who are unable to own even one home and must consequently face the often debilitating insecurity of not knowing when they may suddenly forced to move.”

we all make our own choices.

Some folk decided to invest their savings (deferred consumption) into houses for rent.
Others choose the stock market.
Others get drunk on a Saturday night and generally, “consume” instead of saving.

Some folk, instead of going out drinking decide to study, improving their lot and earning potential, which enables them to save more, which they then invest into rental housing to rent to those who went out drinking and unable to save a brass razoo

Those with the foresight who end up owning two or more homes are being more morally responsible than their prospective tenants.

Those who find life and the responsibility of a mortgage too difficult to handle need to be able to access rental property, or have no where to live.

That they might at some time experience some “debilitating insecurity” is a matter of their own making.

1/3 rental properties is paid for my tenants. Sure and the other two are funded by the deferred consumption of the investor. Everything comes back to this simple truth

If you want to be “responsible”, then be responsible first for yourself and your family.

If you want to be irresponsible, don’t blame the consequences of a dissolute lifestyle on those who chose a different one.

From a social perspective, a “self-funded retiree” is one less person drawing a pension from the public purse. That his retirement income might be sourced from investment properties is a social benefit. What about the dissolute renter, he still gets a hand out from the state, despite his life of irresponsibility.

For those who talk about “social justice”, you should analyse the “reality” of life.

Without individual people acting in their own best interests to secure their own future, we would ALL be worse off.

Col Rouge,

Your post completely misses the essential point I made based upon the words of property speculation insider. The simple point was, once again, that the income derived by property owners was necessarily at the expense of others who were not able to buy property.

In the same article Noel Whittacker (apologies for mis-spelling it as 'Whittakker' and 'Whitakker' above) wrote in the same article:

"What are the factors of that makes house values rise? Firstly,
the supply of land is not elastic - when all the land on a river
bank is built on, there is no more vacant land left there."

To expand upon that, the supply of land close to all of those things necessary for a decent quality of life - natural beauty, public amenities, recreational facilities, and, most important of all, jobs - is not unlimited, contrary to what has been repeatedly asserted in this discussion.

Speculators use their economic advantage over others in order to monopolise an essential commodity in order, at a later point, be able to gouge those less fortunate than themselves for much of their hard-earned income. It has little to do with on the one one group "being more morally responsible" than another group.

As has been shown in this forum repeatedly, many of those who have missed out in recent years have missed out, not because they decided to "get drunk on a Saturday night" but because they have been out-bid by those able to take advantage of negative gearing laws.

It is time that the negative gearing rort was scrapped so that those seeking to profit from the misfortune of others would, instead be made to invest their surplus wealth more productively.

That would then make it possible for at least a few more in our society to eventually own their own dwelling.

States and Territories release more land and the speculators will gobble it up before genuine home owners will have a chance to make a bid.
Abolish stamp duty and the speculators will still beat the genuine home owner to the vacant freehold land. This is all the legacy of the Howard syndrome the same happened under Thatcherism.

Daggett “It is time that the negative gearing rort was scrapped.”

every commercial transaction is between parties in which the income or one party is the “expense” to another party.

What is your view to the profit made by say Coles on your grocery bill, how about Target (or whoever) for generating profit from selling you clothes?
What difference is there between those who people who invest in real estate to sell accommodation versus someone who own shares in Coles or Target?

(the “Risk profile “ is the only difference).

Why make one conduit of investment different (no negative gearing) because it supplies housing rather than food?

Shares in Coles and Target, like every other investment option, qualify for “negative geared investment” tax relief (for anyone with the blind faith / stupidity to buy them that way).

Your approach is “Quixotic” and for some reason you see private housing investors as your windmill of choice.

Property investment, commercial or residential, is presently treated by the ATO, no differently to any other form of investment or income generating activity, the principle being

The costs associated with the generation of an income are allowable as an expense available for offset against all incomes of the entity (being the individual tax payer).

As for “made to invest their surplus wealth more productively”.

The movement of share markets of the world in the past week,

if we look at “returns” based on the listed values of investments held at the end of October 2007 (3 months ago) and their value today,
you would be lucky to find an “investment” !

“Investment” returns have been negative therefore none have been “productive”.

Certainly those who decided to buy real estate in October 2007, rather than shares, will today consider their choice “productive”.

BroncoLane “States and Territories release more land and the speculators will gobble it up before genuine home owners will have a chance to make a bid.”

Only if the (Labour) State/Territory governments “collude” with speculators.

As for Howard / Thatcher - neither of them changed investment laws so your claim is rubbish.

Col Rouge asked: "What is your view to the profit made by say Coles on your grocery bill, how about Target (or whoever) for generating profit from selling you clothes?"

My view is (notwithstanding very unethical practices by such companies as Woolworths - see for example http://www.malenyvoice.com/pages/boycott.php and most likely Coles as well) they do provide a useful service, that is, the distribution of commodities we need, including for everyday life.

As I have argued, and as Noel Wittacker has confirmed, property speculation is simply about one section of society monopolising a finite commodity that everyone needs in order to live a dignified existence. No land speculator has ever created a single additional square foot of land.

Without property speculators the land we all need would still be there and we could easily find other far more equitable and efficient means of allocating it. One was the Housing Trust of South Australia, referred to above, which provided affordable good quality housing to all levels of South Australian society and never cost taxpayers a cent.

Therefore, we could easily cope perfectly well if there was not a single land speculator in the country. It would be more difficult (although I would argue not that much more difficult) to cope without Coles, KMart, Wal-Mart or Woolworths.

A far more important principle than simply treating all supposedly equivalent transactions in the same way, is what best serves most of society - and, I would add, what serves to prevent the impoverishment any minority within our society.

Treating financial transactions concerning land speculation as different from other transaction could serve the best interests of the majority of society. We would be a far more harmonious and productive society if everyone either owned their own home, or else had secure tenure of a publicly owned dwelling.

Abolishing the negative gearing scam would be the first necessary step toward achieving that.