For anyone out there who thinks that we are seeing problems with affordable homes or affordable rentals, I would suggest that in a few months time there are a lot of people ( home owners ) who are going to be losing what they now own and have fully paid for!

I unfortunately live in a country area of the "Smart State" and believe me when I say I am starting to smart!

I have recently been "forcibly" amalgamated into a much larger Shire, have just prior received a 100% Unimproved Valuation Increase. I am now hearing the New Amalgamated Shire Council Mayor apologetically saying that "unfortunately, due to State Government financial inadequacies" the Ratepayers of our "brave new Shire" will probably have to face "substantial" Rate Increases!( we are talking about Rate increases indirectly of 300%)

Now correct me if I am wrong,...but I have been led to believe that I am living in a "Democratic" and "Lucky" country and under this democratic system I can purchase and own a Freehold Property!....But apparently this "Smart State" jack-boot government can impose whatever laws and sanctions upon its residents, and as it has now been legislated, can "forcefully Amalgamate" residents into an entity suitable to its own selfish requirements ( to save money for this money-grubbing government!)

Having battled to purchase and own what I and my wife now own, we are being threatened with an untenable Rates Bill ( a bill for which we receive nothing in return - NOTHING AT ALL!)

As Old Age Pensioners we do not have the financial capacity to absorb or pass on this extra cost, and in light of the rapidly escalating price of everything imagineable can foresee the situation where we will be "sold up" for non-payment of Rates in the not to distant future!

PS: We could have lodged an appeal against the increased UIV, but in doing so, the onus is on us to PROVE that the increase was "Unfair. as compared to other properties in the area!"....an impossibility when dealing with this type of "politburo"!

'Property investors don't "provide" housing unless they build new homes.'

The opening line should be engraved in seventy-two point font on the office door of every housing minister so they can see it every day.

I see a lot of complaining in this article, but what I'd like to know is what sort of incentives people should be given to create new housing?

Clearly, it can't be all government provided. For one thing, the government has other things to spend money on (hospitals and education, just for starters), but also the government has finite resouces which needs to be spread across many areas. So the private sector needs to be involved.

But what sort of incentives?

The author states that the first home owners grant should be either bigger or only for new houses, but is that really going to create a surge in new houses? with FHOG being ~$7k, it's hard to imagine that it would.

I don't see a lot of positive ideas being put forward. It seems that people are more interested in complaining than proactively addressing the solution

Of course BN is right in saying that governments have only so much money to spend, and many things to spend it on. But this does not limit the capacity of governments to provide INCENTIVES, because "incentives" include not only CARROTS (subsidies and tax concessions) but also STICKS (taxes, and withdrawals of subsidies and concessions).

Consider the incentives that I suggested in the article:

* Confining negative gearing to new construction would
increase tax revenue. Ditto for the discounting of
capital gains. Making the discount contingent on
offering the property for rent would increase revenue to
a lesser extent.

* Limiting the FHOG to new homes would reduce public
expenditure.

* Deeming every investment property to be earning 4% of the
site value per annum would probably reduce tax revenue
from properties that are used to their full potential,
but would increase revenue from underused properties.
The reform could be made revenue-neutral by suitably
adjusting the deeming rate.

BN may also be right in suggesting that the $7000 FHOG is too small to stimulate much new construction. But if the FHOG reform were made revenue-neutral (instead of revenue-positive as above), the cessation of the grant for existing homes would allow a substantial increase in the grant for new homes.

My OLO article mentions only small sticks, namely withdrawals of existing subsidies and concessions. A bigger stick would be a new tax on vacant lots and unoccupied dwellings -- that is, a new tax on failure to provide housing (see http://www.prosper.org.au/2008/06/26/a-tax-on-your-vacant-houses-gavin-putland/). If it is respectable to say that welfare recipients should be hassled into looking for jobs (http://www.onlineopinion.com.au/view.asp?article=7532), why shouldn't it be equally respectable to say that owners of scarce residential land -- most of which has appreciated at public expense since it was bought or inherited -- should be hassled into providing housing or selling the land to someone who will?

BN concludes that the private sector needs to be involved. Yep, and the way to get it involved is through appropriate incentives -- not to be confused with free gifts.

Hey you lot:... Why are homes so expensive? Why are rentals so expensive? Simply because everybody associated with providing housing and accomodation has their own particular snout buried deep in the trough and aims to make a quick killing!

Look at the Development costs associated with turning a paddock of vacant land into housing estate.
Councils require a plethora of applications, fees and consent before the Developer can make any move to build a house.
The Developer at the same time expects and makes quite a handsome return on his investment.
The Local Government Authority can and sometimes will complicate the application for development and consent by requesting ridiculous amounts of conditions, building plans,Studies ( E.I.S and the like) that have to be met, before any subsequent consent can be given to the Developer to go ahead and organise building. ( Kerbing, Channeling, Electricity, Water and Sewerage).

The true cause of lack of affordable housing is simply greed for profit! Land prices are absolutely over the top! Councils Fees and Regulatory charges are over the top! Building costs and materials are over the top!

What is going to happen to all the homeowners who are going to driven out of their own homes by the greedy State Government and Local Government Authorities who in their own greedy quest for money are now placing unrealistically high rating structures on these little battlers who simply do NOT have the capacity to pay?

It is not worth the trouble for little battler to own his own home, because in reality he does NOT own it (and under our system he never will!) and can be rated out of it whenever the Government Authorities see fit to apply the screws!

How many little people have legally battled a Government organisation and won?.....I couldn`t even find a Solicitor to represent me to take a fight to Council.

I make a simple statement:.....I will NOT be driven out of my own home (that I have bought and paid for!)....I will fight to the death if that is what it takes!

Mr Putland,

I'm seeing lots of sticks here, however I'm not seeing any carrots. If we want private capital being injected into the system then some carrots are required, and given the invasions of private property rights that you're suggesting, those carrots will need to be significant if they're to work.

I hope that you'll concede that supply of property is part of the problem. If you agree with that then you must also agree then that giving people an incentive (read: additional reasons) to invest in new property is a way to increase supply, and must form a major plank in the solution.

However all I see are sticks in what you're suggesting. Why would someone want to invest in property with the suggestions you're making?

And for clarity, what are the new carrots you're suggesting? What are you proposing that will make new people want enter the property market and build new properties?