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The Forum > Article Comments > Housing affordability squeezed by speculators > Comments

Housing affordability squeezed by speculators : Comments

By Karl Fitzgerald, published 30/11/2007

Why should working class people pay taxes to fund infrastructure when the benefits are captured in higher land prices, leading to higher rents?

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Yabby “Thats why centralised economies fail”

Agree but not only central economies.

The Israeli kibbutz are collapsing as the “true believers” have focused more on their own children and grandchildren than the “total collective community”.

Cacofonix “by taxpayers funds having been spent on infrastructure”

You obviously do not understand building development. Before any dwelling or building is hooked up to any public service, a sizable charge is made for the privilege. Be that service electricity, gas sewerage or water.
The developer is, likewise, responsible for the initial provision of roads, storm drains and walkways. Part of the process of connecting to the water mains and sewerage requires the assignment ownership of the constructed water assets to the water authority, at no expense to the authority.

I have a private client who has subdivided a property into 3, following paying for all services and is now going to get shafted with some mythical “parks and gardens” surcharge, which is pure usury by the state government.

I would further note, no user connected to public services, be they water, sewerage power etc. is “free” but onwardly financed by power charges or municipal rates.

As for “whether it is right that today's homebuyers be made to bear the cost of housing inflation for the benefit of speculators?”

Since individuals are morally and legally entitled to hold land just as they are entitled to own any other form of asset, then the owner of that land is fully entitled to benefit from the reward for their fiscal deployment Indistinguishable from any other deployment.

The only distinction between land and most other assets is a perceived “limit of supply”. That is a common problem but since the population of Australia is 21 million or so and USA or Europe around 16 times that for a similar land area, I don’t think we are likely to run out of land any time soon, unless of course, we leave it in the hands of incompetent labor governments to run the states into the ground with imbecilic political agendas of pretending to make every thing “fair for everyone”.
Posted by Col Rouge, Thursday, 3 January 2008 3:46:15 PM
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Col Rouge,

It is been established by numerous studies both here and in the US that taxpayers have for years been subsidising developers who have avoided paying the full cost of the infrastructure necessary for the new housing development.

I can't cite any Australian studies at the moment, having mislaid the newspaper article, however, "Better not Bigger" by Eben Fodor published in the US in 1999 (see http://www.npg.org/footnote/better_not_bigger.htm) shows that communities that had grown had either higher taxes or else, if the taxes remained the same, reduced levels of services.

This appears to result from the dis-economy of scale referred to by daggett earlier. This is the exact opposite to what growth merchants had led us to believe. As cities get larger beyond a certain optimum size, the costs per person for infrastructure go up and not down.

I would suggest to you that the "parks and garden" surcharge is not for a mythical cost made up by council bureaucrats. Fodor's book shows that the cost of providing "parks and recreation" has usually been borne by the taxpayer and not developers (pp88-90).
Posted by cacofonix, Friday, 4 January 2008 1:26:06 AM
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I wrote: "The fact is that both WA and Eastern Australia are overpopulated as neither have enough water to sustain their existing populations without recourse to unsustainable fossil fuel-dependant desalination."

Yabby 'responded': "As to water in WA, desalination is the cheapest option right now, to guarantee supply in Perth, because water has not been used wisely and cost effectively. Lots is wasted in agriculture, due to lack of a trading market and water that is simply too cheap. That's now slowly changing. WA as a whole has huge quantities of water, but they are in the north, much of the population is concentrated in the South. Pumping it is simply too expensive, desalination is far cheaper."

What's any of this got to do with my original point?

Right now we know that there is not enough water (or electricity as well, it would now seem - see http://www.abc.net.au/news/stories/2008/01/03/2130995.htm). Whether efficiencies can be found to overcome this problem (and the sorry experience of water trading in the Eastern states gives us little cause to hope that they can), does not change the fact that if there is not enough water for Western Australia NOW and therefore, until a sustainable means of rectifying this problem can be found, WA is overpopulated.

What is the use of engaging in a dialogue with someone who habitually fails to address my arguments?
Posted by daggett, Friday, 4 January 2008 9:01:19 AM
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Cacofonix “It is been established by numerous studies both here and in the US that taxpayers have for years been subsidising developers who have avoided paying the full cost of the infrastructure necessary for the new housing development.”

My experience of Vic DSE (who run “water” in the state). Developers pay for water infrastructure as part of the development plan, as well as road construction in the development. For the water services, the ownership of the water assets were legally transferred as a free bequest to the water authority. I fail to see how you can determine any “taxpayer subsidy” from those transactions.

If you want to talk about trunk roads etc. well, they are all more than funded by fuel excise and special levies on fuel anyway. So, no subsidy there.

If you are talking about the provision of public transport, well that mess is financed by general taxes and if the socialists were ever honest, it would be abandoned as a pointless waste of resources immediately.

“I can't cite any Australian studies at the moment,”

How “convenient”

“either higher taxes or else, if the taxes remained the same, reduced levels of services”

Obviously!

Higher taxes, the consumer has no discretionary control.

I prefer to pay for the services I need directly, where I can negotiate terms and control the price, rather than leave it to some bodgey council official to rig supply.

If the “parks and gardens” were redeveloped into building plots, the urban density rates would increase (what seems to be one of the socialist objectives)

More “building blocks” would improve the “supply” and ease the price (another primary agenda).
The need for the maintenance of “parks and gardens” would diminish and thus the excuse for charging for the service.

Over $1billion has been filtered out from taxpayer paid water rates in the city of Melbourne through a “special dividend”.

This “special dividend” represents monies paid by the rate payers and developers for the maintenance and development of the infrastructure of the water industry, not for daycare subsidies for unmarried mothers or other whimsies of socialism.
Posted by Col Rouge, Friday, 4 January 2008 12:47:41 PM
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Daggett, you still don't get it, but I doubt if you ever will.

WA is populated at the rate of 0.83 people per sq km, one of the
least populated places on earth.

We in fact have lots of fresh water, but have decided for economic
reasons, to use gas for desalination instead, to supply the SW
for now.

Thats an economic choice we made, just like you make an economic
choice to drive a car, even if its not sustainable. I haven't
heard of you driving a solar powered one.

Mining will in fact provide the resources to tackle large infrastructure
projects like water, power etc. That could well
include large investments into sustainable solutions, as per
url that I posted on the topic. Sustainable solutions it seems
are just around the corner, care of American venture capital and
the good old market economy which you hate so much
Posted by Yabby, Friday, 4 January 2008 1:36:09 PM
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Yes, Yabby, that would seem to be superficially plausible justification for continuing to rape the planet. Somehow, I am unable to share your confidence that much of the wealth gained by exporting WA's mineral wealth and fueling global warming and China's horrific pollution will, from now on, help make our society more sustainable.

The claims you make in my terminology are called greenwashing.

Also, there's a huge slew of outstanding point of mine which have not been responded to.

The fact that you refused to provide a single example of truly Labor policy which you support (rather than policies originating from the Chicago School of Economics, foisted undemocratically upon the Labor Party by pro-big-business Labor leaders) makes your claim to be politically 'mainstream' about as credible as a similar claim made by Chris Mitchell editor of Rupert Murdoch's Australian in 2004.
---

BTW, I don't absolutely hate market forces in all circumstances, I just happen to think that democracy and the public interest should trump market forces. They should be no absolute principle that market forces must prevail, in cases where they are clearly not serving the public interest as is obviously the case with housing.
Posted by daggett, Friday, 4 January 2008 3:24:14 PM
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