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GUEST OBSERVATION
Australia’s private debt dynamics have been thoroughly <a href="https://www.macrobusiness.com.au/2014/10/australias-addiction-to-private-debt/">explored elsewhere</a>, but less well understood is the country’s position relative to the <a href="https://en.wikipedia.org/wiki/Organisation_for_Economic_Co-operation_and_Development" target="_blank">OECD</a> and <a href="https://en.wikipedia.org/wiki/BRIC" target="_blank">BRIC</a> nations.
Thankfully, the Bank for International Settlements (<a href="https://www.bis.org/" target="_blank">BIS</a>) provides a useful database of unconsolidated household, non-financial business and total sector debts to enable a meaningful comparison.
The difference between consolidated and unconsolidated debts is an important consideration. The former constitutes debt that is netted out within the sector, and only records debts owed to other sectors, while the latter is the actual debt a sector owes, irrespective of to whom. Unconsolidated debts are typically larger than consolidated debts.
Caution must be taken when using measures of consolidated debts as it assumes intra-sector solvency; an assumption the global financial crisis (GFC) revealed to be precarious. Consolidated debts disguise the risk of intra-sector debts that can metastasise and threaten financial stability.
In retrospect, Ireland, Spain and the US are three countries that clearly experienced debt-financed housing bubbles, thus providing a useful benchmark for comparison. Australia’s household debt to GDP ratio is clearly higher than both Spain and the US at their peaks, and remains only slightly below Ireland’s peak. <img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/Egan_Soos_01.png" alt="">
In the BIS dataset comprising 34 nations, Australia has the unenviable status of ranking fourth-highest, only below that of Denmark, Switzerland and the Netherlands. Ironically, the pathology of financial capitalism drove the world’s leading social democratic state into accumulating the largest household debt ratio, peaking at close to 140% in Q2 2009.
A range of factors may have boosted the income flows of Danish households and enabled such accumulation: a low unemployment rate relative to the Eurozone nations, very low income inequality, the world’s highest minimum wage, and a generous social welfare system.
As of Q2 2014 (the latest available BIS data), the Netherlands is just 0.3% higher than Australia. As the former deleverages, Australia should rank third-highest by the next quarter. The ratios have remained stubbornly high in both Denmark and the Netherlands despite deleveraging, as their weak economies have resulted in falling nominal GDP (the denominator).
<img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/Egan_Soos_02.png" alt="">
Australia’s total debt to GDP ratio peaked at 190% in Q2 2009, before falling slightly as the non-financial business debt ratio fell. As of Q2 2014, the total debt ratio was 189%, and is expected to set a new peak in the next quarter or so.
<img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/Egan_Soos_03.png" alt="">
The following table lists the debt ratios for the OECD and BRIC nations. For some nations, household and non-financial business sector debts are not available, but total debt data are available for all. The non-financial business sector debt ratios are on the high end for Ireland, Luxembourg and the Netherlands, likely reflecting their generous international business taxation policies.
<img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/Egan_Soos_04.png" alt="">
The BIS has done a commendable job in gathering long-term unconsolidated data from the OECD and BRIC nations and making it publicly available. It would be helpful if the data was further classified into categories of personal, mortgage and non-banking financial sector debt, as the latter is important when analysing banking and financial cycles.
As household debt has boomed exponentially over the last two decades, the savings of the household sector has plunged. According to the official household savings ratio provided by the ABS, it briefly became negative during the early 2000s, and then rebounded as the GFC shocked households into saving more. <img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/EganSoos5.png" alt="">
In 2013, <a href="https://www.macrobusiness.com.au/2013/11/is-australias-high-household-savings-rate-an-illusion/" target="_blank">analysis</a> by Credit Suisse revealed that the official ratio included superannuation contributions and extra principal repayments, which arguably should not be counted as disposable savings. After controlling for these two artefacts, the ratio falls significantly, exhibiting a persistently negative trend since 1997.
The household sector’s savings situation is dire, as reported by <a href="https://www.mebank.com.au/media/1518946/213737-HFCR_FINAL-iPAD.pdf" target="_blank">ME Bank</a> in a 2014 report:
<ul>
<li>Only 46% of households reported the ability to save each month;</li>
<li>Only 32% would easily be able to raise $3,000 in an emergency;</li>
<li>50% aren’t confident they have enough savings to last if unemployed for three months;</li>
<li>35% reported having less than $1,000 cash on hand;</li>
<li>17% have less than $100 in savings;</li>
<li>60% have less than $10,000 in savings; and</li>
<li>In 2009, Australians were saving a median $300 per year (<a href="https://www.melbourneinstitute.com/downloads/hilda/Bibliography/Other_Publications/pre2010/AMP.NATSEM_Saving_Tomorrow_Report.pdf" target="_blank">AMP/NATSEM</a>).</li>
</ul>
Australia’s private sector is grossly over-indebted, especially the household sector. The hysteria surrounding Australia’s non-existent public budget ‘emergency’ is a smokescreen cloaking the critical household budget crisis. The fictional narrative concerning public debt arises from an unshakeable adherence to <a href="https://www.propertyobserver.com.au/https://www.amazon.com/Debunking-Economics-Revised-Expanded-Dethroned/dp/1848139926" target="_blank">pseudo-scientific economic theory</a> and class war, such as ‘justified’ public austerity policies which target the poor and marginalised.
Meanwhile, the public is distracted from the true threat: the unrestrained private spending spree that further enhance the power, profit and authority of the horde of private monopolists, usurers, speculators, rent seekers, free riders, financial robber barons, control frauds and indolent rich.
The current dynamics of the political and economic system means private debts will continue to spiral out of control, until the catastrophically-inefficient FIRE sector inevitably implodes. Nevertheless, the current housing booms in Melbourne and Sydney show no sign of abating in the short-term, with 2012 an opportune time to purchase according to the ‘<a href="https://www.macrobusiness.com.au/2014/12/property-speculation-to-boom-in-2015/" target="_blank">Speculative Index</a>’, which measures the irrational exuberance embedded in prices.
If the real estate fever gripping the nation does not break soon, Australia may well secure the top OECD ranking for the most over-indebted household sector. A financial crisis beckons, for history documents that extraordinary over-lending routinely precipitates chaos; falsifying expert claims that ‘this time is different’.
Paul D. Egan was previously employed as a supervisor and policy officer at the state government level. He holds a BSc Hons (Class I) and co-authored, with Philip Soos, Bubble Economics: Australian Land Speculation 1830 – 2013. He may be contacted at <a href="https://www.macrobusiness.com.au/2014/11/victorian-politicians-136-million-property-holdings/paul.egan@openmailbox.org" target="_blank">paul.egan@openmailbox.org</a>
Philip Soos is a postgraduate candidate at Deakin University, and holds IT and MBA degrees from Swinburne and RMIT Universities. His website is<a href="https://www.macrobusiness.com.au/2014/11/victorian-politicians-136-million-property-holdings/www.philipsoos.com" target="_blank"> https://www.philipsoos.com/</a> and can be contacted at <a href="https://www.macrobusiness.com.au/2014/11/victorian-politicians-136-million-property-holdings/psoos@deakin.edu.au" target="_blank">psoos@deakin.edu.au</a>
This article first appeared on <a href="https://www.macrobusiness.com.au/" target="_blank">MacroBusiness</a>.
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Australian private debt points to a potential financial crisis

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One of Australia's most well-known franchisors says he also offered to buy pie franchise Pie Face while it was in administration but administrators Jirsch Sutherland failed to follow up on his bid.
Tom Potter is best known as the founder of pizza chain Eagle Boys but he has a wealth of other franchising experience under his belt.
Potter has served on the board of several retail companies, including bakery franchise Brumby's. More recently he has built the Crusty Devil Bakehouse franchise, while also serving as chairman of burger chain Burger Urge.
Speaking to SmartCompany this week, Potter says he contacted Jirsch Sutherland on multiple occasions to attempt to speak to the administrators about his interest in purchasing the franchise.
Potter's revelation comes after Franchised Food Company chief executive Stan Gordon told SmartCompany he also had difficulty reaching the administrators to discuss buying the company, which entered voluntary administration in late November.
This week Gordon labelled the administration process as "disgraceful", after Pie Face creditors voted to support a Deed of Company Arrangement (DOCA) to save the company from liquidation in late December.
But Jirsch Sutherland managing partner Sule Arnautovic told SmartCompany Jirsch Sutherland only received one offer for part of the Pie Face group, but the offer was not "remotely close" to the proposed returns to creditors under the DOCA.
In emails seen by SmartCompany, Potter clearly stated to Jirsch Sutherland that he was an "interested buyer".
Potter also expressed an interest in acting as an adviser or management consultant to the administrators "on various areas of the business including franchising, production, overall profit and future options evaluation, marketing".
"I wanted to advise you over the last few years other than being partially retired I have built the Crusty Devil Bakehouse model from scratch ... and have intimate knowledge of the pie, café, bakery business," Potter wrote in one email.
Potter sent emails to Jirsch Sutherland on December 9, 10, 11, 15 and 23. On one occasion he received a response to say his details had been passed on the administrators managing Pie Face but says it wasn't until Christmas Eve that he received a phone call to inform him that a sale process would not proceed.
Potter told SmartCompany he was serious about his offer and he wouldn't have contacted Jirsch Sutherland if he wasn't.
"I made multiple approaches to buy Pie Face but I was ignored three times," Potter says.
"I received one email saying 'I'll pass on the information to the person handling the administration' but I didn't hear a word until Christmas Eve."
Potter says he was unable to specify an amount he was willing to pay for Pie Face as he did not receive an information memorandum.
Jirsch Sutherland managing partner Sule Arnautovic confirmed this to SmartCompany, saying Potter never made a formal offer for the business.
"They never signed a non-disclosure agreement, they never even got to the first formal stage of the acquisition process," Arnautovic says.
"They never paid the $40 fee to receive the summary information memorandum, they never made any offer, they never did any detailed due diligence via us or the Pie Face management team."
"Mr Potter offered his services as a consultant to Pie Face and any interest he had in acquiring the business appeared to be secondary to his desire to provide services to the Pie Face Group."
While Potter says it is "hard to know" what improvements are needed to the Pie Face business, he says he would have "looked at it as a turnaround".
"I would have worked at turning around the business quickly and then decide what to do. It would not have been a long-term interest."
And like Franchise Advisory Centre executive director Jason Gehrke, Potter also questioned the benefit to Pie Face creditors of the DOCA that was accepted at the end of December.
"The big question is why the creditors would accept a deal that would pay them 14 cents in the dollar in two years' time," he says.
This article was originally published on Smart Company.
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Eagle Boys founder also offered to buy Pie Face amid administration woes

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 Don’t let January slow you down, say our back on deck property commentators Jonathan Chancellor and Margie Blok.
While the real estate market eases off towards the end of the year holiday, especially after an action packed, hectic year for buyers, sellers and agents, sales do continue right up until Christmas Eve, and now throughout January.
So here are some tips on how to make the most of the new year.
Buyers:
<ul>
<li>Follow up on those properties that failed to sell at auction during November and December 2014. The owners of these properties might just be getting a little anxious, especially if they have already bought another property. With their properties languishing on the market for weeks, these vendors could be more willing to now accept a reasonable offer. </li>
<li>Auction clearance rates trended down a tad through Spring, so keep an eye out for those passed in prospects and, where appropriate, put in a tough offer because you never know what sort of pressure a vendor will be under.</li>
<li>Use this time to research sale prices of end-of-year listings – the late Spring/early Summer auction market was quite frenetic, so take the time to assess where values now sit, and then you can be knowledgeable about pricing the offers you make.</li>
<li>Hot summer weather, and families away on holidays, usually means a decrease in the number of attendees at inspections – so this could work to your advantage because competition for properties in popular price brackets may not be so strong. </li>
<li>Be ready for the next opportunity by creating daily or weekly alerts for new listings on real estate websites.</li>
</ul>
Sellers:
<ul>
<li>Choose an experienced local agent, who isn’t on their annual ski holiday - along with their hyper executive assistant who isn’t spending all their time on Julian Tobias’s The Island. Hopefully, the agent already knows the likely buyer from their database of unsuccessful bidders at their recent auctions. </li>
<li> Make the most of your time off in the New Year period to tidy up your property and get it ready for a marketing campaign commencing late January. Spruce up the inside of your home, as well as outside for it’s a lovely time of year to be in the garden. </li>
<li>Take down the Christmas tree, and ensure there is no sign of Christmas decorations in any of the marketing.  </li>
<li>If your property failed to sell at auction in the run up to Christmas, instruct your agent to indicate your willingness for extended settlement terms in the  internet advertising of your property, for this could be very attractive for buyers.</li>
<li> Remember the old saying “the early bird catches the worm” – rather than wait until the February auction season, tell your agent to immediately advertise your property as a "forthcoming auction" on the internet because buyers will be on the prowl for the latest offering.</li>
<li> Be mindful, especially with the dollar hovering around the low 80 cent mark: cashed up expats, who are home for holidays, could be house-hunting. </li>
</ul>
Agents:
<ul>
<li> Although agents may have had an exhausting year, they should be keen for new or repeat business. The local papers are devoid of property advertising, but the internet operates 24/7, and you never know who is around and what they might want to buy or sell.</li>
<li>Securing transactions without interfering with your family holiday plans is achievable, especially as most agents now have executive assistants who can do some of the legwork.</li>
<li>It can also be a good time to take advantage of social and networking opportunities, so that as the sales year heads towards the early April 2015 Easter break, you’re armed with fresh prospects. Keep networking, but in a relaxed fashion – schedule lunches, drinks or coffee with friends, past clients and vendors.</li>
<li>Get back to the office during early January and use the time to stay in touch with your clients by phoning to wish them a Happy New Year. Even if you make just 10 calls each day from Mondays to Fridays, this will add up to a large number of people over four weeks.</li>
<li>When you get back to office, update your databases and declutter your computer files, as well as other unnecessary paraphernalia lying around the office. Use this time to organize yourself in readiness for the year ahead. Evaluate your office systems and if these are not supremely efficient, then update software and set up new systems.</li>
</ul>
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Property marketing tips for hitting the ground running this January: He Said/She Said

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Guest observation
Losing a close relative or friend is a difficult time for anyone, and dealing with the deceased’s estate — although a necessity — can add to your suffering. Whether you have been bequeathed a property or made responsible for its sale, there are a few simple but vital steps you can take to ensure the process is as smooth as possible.
Change the locks 
It’s a good idea to change all the locks in the house as soon as possible. It’s likely that your relative has given spare keys to friends, neighbours, cleaners or repairmen, and it’s important that you know who has access to the property. This way you can take charge of who has a key, including home staging professionals and your real estate agent.
Have mail forwarded 
Even if you have access to the deceased’s property, you should still arrange for mail to be forwarded to your own address for the foreseeable future. This means you will be able to tie up any outstanding matters relating to the property, such as water charges, council rates and mortgage repayments. Forwarding mail also means you can let friends and family know of the death when their mail arrives.
Arranging to forward mail should be done in-person at a post-office, using a Mail Redirection application form. More info can be accessed <a href="https://auspost.com.au/parcels-mail/redirecting-your-mail">here</a>.
Gather important documentation
If you’ve been left in charge of the deceased’s estate, there are financial matters that you will need to attend to as quickly as possible. You should attempt to collect all of the following documents and ensure they are dealt with accordingly. All of these documents may already be with a solicitor that you can contact directly, but the responsibility to attend to any outstanding issues may fall upon you.
<ul>
<li>Rates notices and statements</li>
<li>Creditor letters</li>
<li>Bank account information</li>
<li>Home insurance — contact the provider to inform them of the death and arrange cover accordingly</li>
<li>Any documentation relating to ownership or maintenance of the home</li>
<li>Mortgage statements</li>
</ul>
Maintain payments 
Many mortgages are issued with the condition that adequate life insurance is in place, which will pay off the mortgage upon death. However, this doesn’t always happen automatically and you may need to contact the bank or mortgage company to inform them of the change in ownership status. You may also need to maintain repayments until the matter is resolved. If you are the legal owner of the property, you will need to keep up to date with council and water rates. These issues can be time-consuming, stressful and costly, so if you don’t intend to keep the house, securing a quick sale can be important.
Hire a real estate agent  
Given that the deceased relative may not have lived nearby to you, you will need a real estate agent who you trust and who you know will take a proactive approach when selling the property. For the best results, you should look for an agent who has specific experience selling homes quickly — and remotely, if that is your case. Particularly if you are in a different state, you should do your research to compare several agents in the area to get a good idea of their sales history and what their previous customers have to say about them.
Prepare the house for sale 
If you don’t intend to keep the property, achieving a quick sale at a fair market price is essential. Holding onto the house for too long could cost you money, so you and your real estate agent should select a listing price that represents value and attracts buyers. If you sell the property via the private treaty route, the original listing price just acts as a guide and if you can instil competition between buyers, you can drive up the price. You can ensure real certainty in terms of timescale by selling at auction. This decision can be made with the help of your agent.
If you’re looking to sell quickly, you should ensure to the best of your ability that it is ready to move into. This may require some quick repairs and alterations.
<ul>
<li>Remove old and tired furniture, and possibly temporarily furnish with some simple, modern items (you may consider hiring a professional staging company)</li>
<li>Remove personalised photos</li>
<li>Give the walls a lick of paint, and stick to neutral shades to appeal to broadest range of buyers</li>
<li>Make the rooms look as light and spacious as possible by removing unnecessary drapes and curtains.</li>
<li>Repair leaky taps, wobbly doors, and replace light bulbs.</li>
<li>Spruce up the garden as it’s often the first thing people see</li>
<li>Ensure your agent has access to the property at all times, especially if you don’t live close by</li>
</ul>
Selling the property of a deceased relative isn’t something most people are prepared for, and can often be someone’s first experience selling. Following the tips above will hopefully take some of the stress out of the process, so it’s important to surround yourself with people that you can trust have your best interests at heart.
Marta Higuera is the co-founder and co-CEO of real-estate startup <a href="https://www.openagent.com.au/" target="_blank">OpenAgent</a>.
 
 
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How to cope with selling the home of a deceased relative

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Guest observation
Dozens of homes and outbuildings have been destroyed in bushfires that have <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2015-01-06/adelaide-hills-bushfire-temperatures-rise-crews-flight-blaze/6001568">ravaged parts of South Australia</a> reminding us again how poorly adapted we are to bushfire prone landscapes.
With 15 years experience in design and planning to mitigate bushfire risk I have found that the two main barrier to affordable bushfire-responsive housing are:
<ol>
<li>misinformation on the cost of building in bushfire prone areas</li>
<li>difficulties delivering an holistic design approach that integrates buildings and their landscapes in one risk mitigation/dwelling environment.</li>
</ol>
Misinformation on cost
There is a growing public perception that building to the Australian Standard for construction in a bushfire-prone area – <a href="https://infostore.saiglobal.com/store/Details.aspx?ProductID=1101539">AS 3959:2009</a> – is unaffordable.
This can be attributed to published construction cost premiums applied to each of the six bushfire attack levels (BAL) outlined in AS 3959, from BAL-Low, BAL-12.5, BAL-19, BAL-29, BAL-40 to BAL-FZ (Flame Zone). The source of these costings is the Australian Building Codes Board’s <a href="https://www.abcb.gov.au/~/media/Files/Download%20Documents/Archived/Consultation/Bushfire%20Construction%20Final%20Decision%20RIS.ashx">Regulatory Impact Statement</a> for AS 3959:2009.
This costing matrix, which has been represented on various state and local government websites around Australia such as <a href="https://www.swan.wa.gov.au/Our_City/Have_Your_Say/Bushfire_Amendment_Amendment_No_99/Bushfire_Amendment_FAQs">City of Swan</a>, in Western Australia, puts the extra cost of complying to the standards as up to A$20,885 for a “base home”.
These premiums have been derived from simplistic calculations where, for example, fibreglass fly screen mesh is upgraded to stainless steel ember mesh, or float glass is replaced with toughened safety glass.
The problem with this costing approach is that it assumes as a given, generic base house styles such as weatherboard construction and elevated lightweight construction. Elements are then substituted or added, such as the addition of bushfire shutters over conventional windows.
It is a very rudimentary costing exercise to take a generic home type and then substitute elements and ignores factors that contribute significantly to costs when building in bushfire prone areas.
Often the greatest contributor to cost is not the bushfire standards but the national energy rating requirements. This is because bushfire prone areas are both quite cold in winter and very hot in summer.
In these climate zones you need a building with mass – such as masonry – but also an open building with sufficient glazing to capture the winter sun and openings for natural cross ventilation.
The constraint against integrated design
Good design is about cross purposing – achieving more with less. So what designers should be looking for here are opportunities to integrate the otherwise disparate aspects of topography, thermal mass, radiant heat protection, insect control, flame contact, thermal comfort, sun shading, site access and escape into one holistic design.
One very practical example of this design approach is to eliminate veranda overhangs and eaves – which are proven weak links in bushfires – and replace these with perforated metal retractable shutters over windows.
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/68323/area14mp/image-20150106-18604-1xxtduw.jpg"><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/68323/width668/image-20150106-18604-1xxtduw.jpg" alt=""></a> A house the author designed with the perforated shutters to protect against bushfires, built to BAL-29. Andrew Halsall, Author provided
These shutters then control the sun, insects, glare and wind as well as embers and radiant heat. Our research has found that this delivers a significant cost saving, but importantly, the bushfire risk mitigation device is used on a daily basis rather than once in an emergency. That is, it is integrated into the daily life of the home – it is not a rarely used add-on.
Standards and planning
What further impedes the integrated design approach is a disconnect between AS 3959 and the bushfire-specific site planning regulations of our state and local governments.
For example, there is no provision in AS 3959 for the design of escape routes from dwellings.
More concerning is that there is usually no requirement to apply this building standard at all unless the site has first been formally declared as a Designated Bushfire Prone Area. WA is about to declare all areas within 100 metres of bushland that is greater than 1 ha in area as bushfire prone.
Once declared, it is virtually impossible to mandate the application of the standard to existing dwellings via retrofitting. So we can have the now not uncommon situation where a well designed bushfire responsive house has a neighbouring property with a fire prone timber bungalow.
The False-Sense-of-Security myth
Perhaps the greatest constraint to the integrated design approach is the reticence of fire authorities and local governments across the country, to support the two highest levels of bushfire design BAL-40 and BAL-FZ.
The perception here is that for home owners to build to these levels would create a false sense of security, placing them in unexpectedly high levels of danger.
The reality is that every level of BAL represents the same level of risk – the lower the BAL the greater the distance between a dwelling and the bushfire prone vegetation. The higher the BAL the closer that vegetation can be to that dwelling.
But agencies encourage the building of conventional houses with low to mid-range BAL level features – no higher than BAL-29 – and then expect the homeowner to actively manage the vegetation hazard.
The problem that we see every fire season is that these active measures are frequently not carried out despite the many annual warnings for home owners to be prepared for bushfires.
For the fire authorities to promote this approach is somewhat paradoxical because the first principle of risk mitigation is to prioritise passive protection (such as building better bushfire protection) over active measures (keeping hazard vegetation cleared). Compared to permanent building features, landscapes are highly dynamic and far less dependable.
The reticence within agencies to promote better design reflects misconceptions about costs of implementing the building standard and the underlying risk mitigation principle.
An integrated approach places emphasis on active vegetation management where this can be practically achieved and building design solutions that deal with the many aspects associated with living in bushfire prone areas.
Only then will we start to see a reduction in the number of homes and properties destroyed when bushfires strike again.
<img src="https://counter.theconversation.edu.au/content/35899/count.gif" alt="The Conversation" width="1" height="1">
<a href="https://theconversation.com/profiles/ian-weir-130364">Ian Weir</a>, <a href="https://theconversation.com/institutions/queensland-university-of-technology">Queensland University of Technology</a>
This article was originally published on <a href="https://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/we-can-build-homes-to-survive-bushfires-so-why-dont-we-35899">original article</a>.
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We can build homes to survive bushfires, so why don't we?

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Guest observation
The wheels of justice grind exceedingly slow and nowhere slower than in the Sydney headquarters of the Australian Securities and Investments Commission (ASIC). A recent <a href="https://www.smh.com.au/business/anz-traders-sidelined-during-asic-inves">report</a> appears to show that ASIC is still, just under two years after the events, following leads on possible manipulation of the Australian interest rate benchmark, the Bank Bill Swap Rate (BBSW).
We know the BBSW was manipulated as evidenced by an <a href="https://www.asic.gov.au/about-asic/media-centre/find-a-media-release/2014-releases/14-014mr-asic-accepts-enforceable-undertaking-from-bnp-paribas/">enforceable undertaking</a> by the French bank BNP-Paribas almost one year ago. What we don’t know yet is whether there was any evidence of involvement by Australian banks and, if so, to what extent? But it would not come as a complete surprise if <a href="https://theconversation.com/dont-believe-the-hype-our-own-libor-scandal-could-be-in-the-wings-12652">local banks had been involved</a>.
However, the question of whether Australian banks were involved or not in manipulation is irrelevant. There was indeed manipulation and it went unreported to ASIC until overseas regulators began to investigate manipulation of the widely used <a href="https://theconversation.com/watching-the-dominos-fall-in-the-libor-crisis-11358">LIBOR</a>benchmark. There are two scenarios. First, local bankers (as the major players in the BBSW market) knew there was manipulation and did nothing, benefiting from the outcomes. Alternatively, they did not know of the manipulation, in which case they come across as provincial dopes. Either way the Masters of Martin Place do not come out of the scandal very well.
After strenuously denying for years that the BBSW could possibly be manipulated, the Australian Financial Markets Association (AFMA) changed the BBSW <a href="https://www.afma.com.au/standards/market-conventions/Bank%20Bill%20Swap%20%28BBSW%29%20Benchmark%20Rate%20Conventions.pdf">calculation methodology</a> in July 2013 to one which collected live rates from the market, rather than expert opinion, to calculate the benchmark. Supposedly this would be <a href="https://theconversation.com/is-there-egg-on-the-rbas-face-13136">less prone</a> to manipulation. How wrong they were.
Just last November, in what was obviously a coordinated effort, regulators in three countries <a href="https://www.bloomberg.com/news/2014-11-12/banks-to-pay-3-3-billion-in-fx-manipulation-probe">announced fines</a> of more than US$4.3 billion on six banks found to have manipulated the most widely used benchmark in the global Foreign Exchange (FX) market. As with LIBOR, manipulation of the London “WMR 4 o’clock FIX” was long running, widespread and profitable. But unlike LIBOR, the “FIX” was calculated from live market rates, and supposedly manipulation-proof. But human ingenuity and greed finds ways around such trivial obstacles.
The regulators found that traders from the world’s largest banks colluded, through conversations in internet chat rooms, to “nudge” the FX market in a particular direction to benefit their own positions rather than their customers. Traders found that it was sufficient to manipulate the market for only about 60 seconds “around the FIX” to generate illicit profits.
In its <a href="https://www.bis.org/publ/rpfx13.htm">latest triennial survey</a> of activity in the FX market, the Bank for International Settlements (BIS) found that the Australian dollar was one of the top five most traded currencies accounting for some 8.6% of overall volume. Although the initial fines concentrated on manipulation of the major currencies (the US dollar, the Euro and the British Pound) it stretches credibility to believe that traders did not also manipulate the Aussie benchmark rate. In fact, because of the time at which the benchmark was calculated (4pm GMT), the local markets would have been closed and hence, because there was less competition, the benchmark would have been easier to fudge.
Why is such manipulation important? Australian superannuation funds that have an international component, such as US shares, are regularly revalued against the market, often on a daily basis. Any manipulation will then directly affect the value of the funds, sometimes up and sometimes down, but most often to the benefit of the banks rather than pensioners.
Under Chairman Greg Medcraft, ASIC has announced <a href="https://www.ft.com/intl/cms/s/0/51e79260-af26-11e3-bea5-00144feab7de#axzz3NusDo4TK">an investigation</a> into possible manipulation of FX benchmarks, which is due to complete sometime early this year. And in a recent chat with journalists, Medcraft declared that Australia was a “<a href="https://www.afr.com/videos/national/medcraft-australia-paradise-for-white-collar-criminals-4yadc5ctryjjokkc4gd3biiv2dka_a0q">paradise for white collar criminals"</a> a comment he <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-10-23/asic-backtracks-on-corporate-crime-paradise-comments/5835194">then backed away from</a> after being contacted by the finance minister Mathias Cormann.
At this stage it would be customary to call for an in-depth inquiry into the banking industry and its ethics, but in the wake of the toothless tiger that was the <a href="https://fsi.gov.au/publications/final-report/">Murray Inquiry</a> which had only one reference to LIBOR (in relation to Withholding Tax), such a suggestion would fall on deaf ears. Medcraft has repeatedly made a strong push for additional funding for ASIC and heeding him, the Murray Report has recommended that an “industry funding model” be introduced - that is, “abuser pays”.
If the ASIC inquiry finds evidence of misconduct (and arguably even if it doesn’t in this particular case), the government should promptly allocate all of the funding that the corporate regulator needs. And, more controversially, ASIC, because it is too thinly spread, should be broken up to allow it to concentrate on preventing misconduct in the Australian financial system, if indeed it is such a paradise for white collar criminals.
Less controversially, AFMA is a trade association, governed by its members, the largest banks in Australia and the world. There is an obvious conflict of interest in also being the administrator of the BBSW benchmark. As in the UK, that responsibility should be delegated to <a href="https://www.theice.com/iba">an independent body</a>.
It is also a conflict of interest for any industry body to set the code of conduct for its members’ employees. Though AFMA’s <a href="https://www.afma.com.au/afmawr/_assets/main/lib90010/afma%20code%20of%20ethics%20code%20of%20conduct.pdf">code of conduct</a> specifically forbids market manipulation, the Board contains senior representatives of banks that have been fined for both FX and LIBOR manipulation. Furthermore, the AFMA code has not been updated since the revelations of wide-spread market manipulation; it is bland and ineffectual. ASIC should ensure that proper conduct including financial benchmarks is part of each firm’s corporate code of conduct and is strictly enforced by them.
Pat McConnell is Honorary Fellow, Macquarie University Applied Finance Centre, at Macquarie University.
This article was originally published on <a href="https://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/years-on-asic-still-grappling-with-swap-rate-fixing-scandal-35851">original article</a>.
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Years on, ASIC still grappling with swap rate fixing scandal

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GUEST OBSERVATION
One of the more noteworthy features of Xi Jinping’s presidency has been his apparently genuine and effective efforts to crack down on corruption. Like everything else in China, the scale of the problem is epic. But the number of “tigers” that have been caught in the net and the fact that prominent diplomats are now being ensnared suggests that efforts to combat graft are both serious and having the desired effect.
At one level, it’s not hard to see why China’s leaders want to be seen as “doing something” about corruption. If there is one topic that outrages many ordinary Chinese and threatens to send social media into meltdown, it is the idea that corrupt officials enrich themselves and go unpunished. More than 80% of people in China think that the rich get richer while the poor get poorer, according to a recent Pew survey.
This might be an uncomfortable public policy problem for any government. It is especially acute in the People’s Republic at a time when Xi appears to be trying to revive some of the key principles of Chinese-style socialism. China’s leaders are, after all, supposed to be representatives of the masses, not the executive committee of the bourgeoisie. That so many prominent political figures and their families have accumulated extraordinary wealth is not a good look for the vanguard of the people.
Disgraced former provincial governor Bo Xilai was the first of a string of high-profile leaders who have been brought down in the ongoing purge. The downfall of former security czar Zhou Yongkang was, perhaps, an even more remarkable scalp, given his former membership of the Politburo Standing Committee – China’s highest governing body.
The fact that Bo and Zhou were seen as allies and potential political opponents of Xi’s has led some to question whether the current campaign is more about Xi consolidating his remarkable personal power than it is about corruption per se. After all, corruption has become an entrenched part of doing business in China, with around 20% of firms reporting that they expected to give “gifts” to public officials to obtain things like import licenses and construction permits.
It is no surprise that China was rated as 80th out of 178 countries in Transparency International’s 2013 corruption perceptions index as a consequence. The big – generally neglected – question is whether it actually matters if “China” is judged to be corrupt. Plainly it has not stopped the “international investment community” from continuing to pouring money into China, despite the apparent difficulties of doing business there and the need to subscribe to local norms.
It is also clear that pervasive corruption has been no obstacle to growth. This is especially important given that the reason we all pay such keen attention to China is because it has been an historically unprecedented economic development success story. It is also a story with profound importance for dependent trade partners like Australia.
China’s experience with corruption is not unique either. One of the most striking features of Japan’s development – the previous holder of Asia’s developmental crown, let’s not forget – was that it was not inhibited by corruption or “money politics”. The corruption scandals that eventually engulfed former Japanese prime minister Tanaka Kakuei did little to hold back Japan’s economic renaissance.
A not dissimilar story can be told about Indonesia under Suharto. For all the Suharto family’s rampant corruption, economic development did take place. Cynics say that the one benefit of Suharto’s rule was that everyone knew who to bribe. Following a process of decentralisation urged by the international financial institutions, things are a good deal less clear-cut.
There is a serious point in all of this, but one that is normatively unpalatable. If we think of corruption as an informal type of taxation it becomes more understandable, if not more acceptable. In countries where the taxation system is ineffective and where wages may be low, the growth of corruption is predictable and difficult to eradicate.
What is more surprising is the persistence – even the growth – of corruption as living standards rise. It is not something that is exclusively a problem in Asia or the “developing world” either. On the contrary, recent revelations of the extent of corruption in New South Wales, not to mention Wall Street and the City of London, are a sobering reminder of the pervasive nature of corrupt practices.
China’s attempts to wrestle with this problem are, therefore, of particular interest and importance. It remains to be seen whether Xi will have any more success in rooting out powerful, corrupt vested interests than we have in this country. Likewise, it will be interesting to see what impact – if any – success or failure in this endeavour has on China’s development trajectory.
Ultimately, corruption may have more impact on the possible development of a collectively held sense of justice and equity than it does on economic growth. Still a good reason to do something about it, of course.
Mark Beeson is professor of international politics at University of Western Australia.
This article was originally published on <a href="https://theconversation.com">The Conversation</a>.
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Corruption in China: does it matter?

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GUEST OBSERVATION
Several Australian cities, such as <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2015-01-01/south-australia-to-swelter-as-heat-spell-looms/5995690" target="_blank" style="font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12px; line-height: 1.3em;">Adelaide</a> and <a href="https://www.perthnow.com.au/news/western-australia/heat-warning-as-temperatures-in-perth-forecast-to-soar-to-41c/story-fnhocxo3-1227174069845?nk=c20318fc5326e96c7db65d276cba3cb3" target="_blank" style="font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12px; line-height: 1.3em;">Perth</a>, have greeted 2015 with scorching weather as summer hits its stride – the kind of conditions that leave us crying out for an air conditioner, rather than dreaming of barbeques and beach trips.
Yet new research shows that Australians could end up feeling even hotter than expected over the next few decades, as changing weather conditions make climate change feel even more severe than it is. That’s bad news for Sydney and Brisbane, where sweltering humidity is set to rise.
In contrast, freshening summer winds in Perth, Adelaide and Melbourne could grant residents some relief by mitigating the apparent effects of rising temperatures. The mercury will still rise, but perhaps it won’t feel quite as sweltering as we would expect.
Feeling the heat
Days upon days of extreme heat make us feel irritable, uncomfortable and, in the worst cases, unable to cool down at all. Stifling conditions during the day, with no relief at night, place <a href="https://theconversation.com/how-heat-can-make-your-body-melt-down-from-the-inside-out-22042" target="_blank">physical stress on our bodies</a>. During heatwaves, vulnerable citizens such as the elderly, young children and the physically ill have a higher risk of adverse health effects. In some cases the stress can become too much, resulting in death.
In January 2009, a week before the devastating Black Saturday bushfires, <a href="https://docs.health.vic.gov.au/docs/doc/F7EEA4050981101ACA257AD80074AE8B/%24FILE/heat_health_impact_rpt_Vic2009.pdf" target="_blank">374 people</a> lost their lives as a result of heat-related stress during a three-day record heatwave in Melbourne. This was more than twice the number that died during the fires. Despite the implementation of <a href="https://docs.health.vic.gov.au/docs/doc/479050E85C879831CA257D8C0015FD87/%24FILE/Heat%20health%20alert%20system_guidance%202014%20-%202015.pdf" target="_blank">heatwave alert systems</a> in some Australian cities, many people are still vulnerable. An estimated <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-10-13/january-victorian-heatwave-deaths-up-24-per-cent/5810176" target="_blank">167 people</a> lost their lives during Melbourne’s heatwave in January 2014.
Keep your cool
The human body’s ability to withstand heat stress depends on being able to shed excess heat, often through sweating, to keep our core temperature at an optimal 37C. Very warm outdoor temperatures, or excessive exposure to the sun, heat our bodies. However, shedding that heat depends not only on the surrounding air temperature, but also on factors such as humidity and wind speed, both of which affect our ability to sweat effectively.
This can mean that the heat we think we feel is not necessarily the same as the air temperature we measure. That’s why a 35C day in Brisbane can feel so much worse than a 35C day in Melbourne!
Taking account of these factors allows meteorologists to predict what the weather conditions will “feel like” to an average person. For example, the Bureau of Meteorology uses a measure called the <a href="https://www.bom.gov.au/info/thermal_stress/" target="_blank">apparent temperature</a>. Measuring weather conditions in this way provides a better idea of when conditions are dangerous to health, so that appropriate warnings can be issued.
This article continues on the next page. Please click below.
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Which cities will fare the best?
Many recent studies show that <a href="https://theconversation.com/climate-council-heatwaves-are-getting-hotter-and-more-frequent-23253" target="_blank">extreme heat is increasing</a> around Australia, <a href="https://theconversation.com/human-hands-are-all-over-australias-hottest-ever-year-32267" target="_blank">mostly as a result of human-induced climate change</a>. But are we actually feeling any hotter? <a href="https://www.sciencedirect.com/science/article/pii/S0921818113001343">Recent work</a> by one of us (S.J.) showed that alongside the increase in air temperature, the apparent temperature (how we feel), has also changed across Australia.
In Sydney and Brisbane, the apparent temperature has increased by 1C since the 1950s, but the actual temperature has only increased by 0.5C. This means that what felt like 29C in the 1950s now feels like over 30C, on average. This is because the humidity has increased and it is slightly less windy on average in both locations. These muggier conditions make the weather feel hotter, as the body is unable to shed excess heat as effectively.
Perth, Adelaide and Melbourne fared better. Although, on average, it is nearly 1C warmer now than in the 1950s, people in these cities may not actually feel warmer. This is because it is also typically windier, so sweat can evaporate more effectively when it is hot, making us feel cooler than the real temperature suggests.
The largest trends in apparent temperature were found in Western Australia, with the Pilbara and the Wheatbelt hit hardest. In these regions, what felt like 38C in the late 1970s now feels like 41C, on average, potentially increasing the risk of heat stress to miners and farmers alike.
It’s getting hot in here
In the future, Australian heatwaves will likely become <a href="https://theconversation.com/more-angry-more-often-march-heatwave-signals-a-new-normal-13068" target="_blank">hotter, longer and more frequent</a> as the climate changes. But what are the consequences for the risk of heat stress?
Future changes in apparent temperature are somewhat uncertain. While we are confident of the forthcoming increases in temperature, we are less certain about how humidity and wind will change. Regardless, the data suggest that apparent temperatures will increase in most Australian regions – so wherever you are, it’s likely you’ll feel the rise in temperatures.
But the speed of the perceived warming is also important if humans are to adapt. If things get too hot to handle too quickly, communities will have little time to adjust, resulting in a dangerous situation for health.
The largest changes will be in Australia’s southeast, where climate models suggest that for the millions of people in Melbourne and Sydney, future summers will feel like they are warming even faster than the real temperature suggests, because of an increase in humid days. Residents in these cities will therefore be at a higher risk of heat stress when a heatwave strikes.
Meanwhile, in the southwest, Perth’s drying climate will act to slow the rate of perceived warming, enabling residents to adapt more easily to the new conditions.
Human-induced climate change is happening and we are already starting to feel the effects. Coping with the infamous Australian summer is already difficult, but in the future it might become even more stressful for some.
Stephanie Jacobs is a PhD candidate at Monash University.
Ailie Gallant is a ARC DECRA Fellow, School of Earth, Atmosphere and Environment at Monash University.
This article was originally published on <a href="https://theconversation.com" target="_blank" style="line-height: 1.3em;">The Conversation</a>.
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Bad luck, Brisbane: muggy cities will feel future heat even more

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GUEST OBSERVATION
The last two years have been somewhat of a testing ground for making property price forecasts informed by <a href="https://ckmurray.blogspot.com.au/2011/07/murrays-retrospective-indicator-for" target="_blank">my indicator</a>, which has a new name – the Speculation Index.
It is the ratio of housing gross yields to mortgage interest rates and captures the degree of price growth speculation embedded in current prices.
<a href="https://www.macrobusiness.com.au/wp-content/uploads/2014/12/buySellLongTerm1.png" rel="lightbox[335668]"><img class="alignnone wp-image-337022 size-full" src="https://www.macrobusiness.com.au/wp-content/uploads/2014/12/buySellLongTerm1.png" alt="buySellLongTerm" width="700" height="352"></a>
Source: Cameron Murray and Philip Soos.
Above is a new long-term series of this Index using data compiled by Philip Soos. It offers a number of insights into the history of housing credit, the durability of cycles in periods of apparent macroeconomic stability, and offers a warning about the future of residential property markets to those who hold out hope that maybe now is the beginning of that elusive era of stability.
The primary lesson from the long-term Speculative Index is that the easy money era since the late 1960s has been qualitatively similar to the pre-WWII period in terms of cyclical patterns, but far different in terms of scale. Whether this has to do with the openness of credit markets, dual incomes, or the development of private investor markets in Australian housing, it is best to consider this period a unique conflation of institutions that cannot be compared to prior periods.
Or it could just be terrible data. Take your pick.
We can gaze back at the early part of the 20th century, which followed a massive housing boom and slump, particularly in Melbourne, during the 1890s. The first decade, by this measure, was a period of relative stability for property prices in Australia.
After WWI a property boom took hold, peaking around 1921 as yields fell and interest rates crept upwards, and followed by a long slump that continued through the Great Depression. During WWII the market was completely unmoved as resources were sucked out of domestic private markets into the war effort and various administrative controls kept prices and rents steady.
The renowned stability of the 1950s and 1960s is on display in this metric as well, with housing capitalisation rates very stable compared to yields, with almost no price speculation built into prices. Perhaps this was primarily a product of tight credit to households, coordinated construction efforts, and relatively high levels of non-housing investment.
Post 1970 the modern finance era <a href="https://www.econ.mq.edu.au/Econ_docs/research_papers2/2004_research_papers/Abelson_9_04.pdf" target="_blank">kicked off with a Sydney boom</a>, which <a href="https://ckmurray.blogspot.com.au/2011/07/sydney-housing-boom-ripple-effect" target="_blank">rippled</a> across states and was over by about 1974. Then the 1980s saw another round of smaller surges of speculation, ultimately collapsing in 1989 and leading to a recession a few years later. The end of the 1990s recession ended appeared to be the best time to buy property in the past two decades, as this index and a whole host of property-related <a href="https://www.macrobusiness.com.au/2014/12/the-history-of-australian-property-values-redux-2/" target="_blank">metrics indicate</a>.
The massive 2000s boom then rippled across the nation, and as interest rates where ratcheted up on falling property yields we see another index peak in 2008, which plunged back in response to substantial stimulatory interest rates cuts.
In essence, housing prices were rescued by the RBA during this period. Historically low mortgage interest rates, the influx of foreign investment into the housing market (and mining) and the Rudd government’s bailout of the banking and financial system saved the day.
As I <a href="https://www.macrobusiness.com.au/2013/05/melting-towards-the-bottom-of-the-housing-cycle/" target="_blank">wrote early last year</a>, my Speculative Index again showed it was an opportune time to buy Australia housing. Prices are up over 10% nationally since, and around 17% in Sydney. Currently this Index suggests there is more to run in the national price cycle. Prices being more likely to rise than fall in the near future.
I add a dashed prediction line to show what might be the next moves in this Index, jointly arising from a number of evolving trends including
<ul>
<li>Rising mortgage interest rates 
</li>
<li>Flat or falling rents 
</li>
<li>Rising prices</li>
</ul>
For example, if prices rise by 10%, mortgage rates rise by 0.75%, while rents are flat, the Index will shift up to 2.1. That’s still a long way off the type of irrational exuberance we normally see, taking us only halfway from the buy line to the sell line.
Unless we see significant credit controls in the housing market, it is likely we will continue the property price cycle we have just started. This cycle itself will compress yields while rents are stable and result in a surge of the index, providing the boom for necessary for the next bust. The RBA, as usual, will be too late to increase interest rates. Governments at all levels will be too uncoordinated to increase public investment to smooth the transition to a higher rates or tighter credit environment.
If the Georgist 18 year average period of asset cycles has merit, then we are now likely living in a period much like mid 1990s – still cautious from recent experience and ignorant of the property cycle about to get under way. Remember though that this Index does not represent prices, but reflects the degree of speculative fervour in the market. The Index can rise without price price increases if rents are flat and mortgage interest rates are rising. Which of these factors we see play out will determine the scale of the price gains likely to be experienced.
Looking at the history of this index, coupled with the recent success of using its cyclical pattern to predict property market movements, suggests it is unlikely that ‘this time is different’.
Cameron Murray is an economist and PhD candidate at University of Queenland. 
Philip Soos is an economist and post graduate candidate at Deakin University. He has recently co-authored <a href="https://www.worldeconomicsassociation.org/files/Bubble_Economics_Egan_Soos.pdf" target="_blank">Bubble Economics: Australian Land Speculation 1830-2013 </a>with Paul D Egan.
This article first appeared on <a href="https://www.macrobusiness.com.au/" target="_blank">MacroBusiness</a>.
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Property speculation to continue boom, but will a bust follow?

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GUEST OBSERVATION
Ex-NSW Premier Nick Greiner has <a href="https://www.smh.com.au/comment/salt-and-pepper-sydney-social-housing-redevelopment-holds-promise-20141204-11uad3">proposed</a> that land value embedded in public housing estates be recycled to generate new social housing - by redeveloping the estates into higher density living. Greiner claims by using uplift in land values it won’t cost the government a cent.
A similar argument was made recently at the <a href="https://www.urbangrowthnsw.com.au/news/the-bays-precinct-sydney-international-summit-2014.aspx">UrbanGrowth NSW Summit</a> on Sydney’s Bays Precinct renewal project.
Have we finally found the Holy Grail for affordable housing? Is it really that simple – just target existing public land (or rundown estates), redevelop at unusually high density, and use the associated value uplift to secure a substantial slice of low cost homes within the overall project?
This is a neat political trick. It puts the onus on those in the community who might oppose greater density to do so at the expense of the most disadvantaged. How much affordable housing do you want? How much higher do you want the development to go? Government can effectively wash its hands of the decision. It’s a simple land deal.
But its not that simple, of course. More importantly, the solution to our affordable housing crisis lies not just with state governments, but is very much due to a failure at the top of our federal policy system.
A national issue
The current Senate committee <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Affordable_housing_2013/Terms_of_Reference">inquiry into affordable Housing</a>, due to report in March 2015, recognises housing policy is an issue of national significance that calls for national action. Many of the most significant government interventions in our housing market (think negative gearing and capital gains tax concessions, immigration and social security policy) are controlled at the federal level and not by the states and territories.
There are, of course, complexities to the Commonwealth government’s role in an area of “domestic policy” of this kind. Under our federal system, Canberra’s ability to impose housing system reforms would be limited, even under a government keen to do so. But neither is it tenable to claim that the Commonwealth has no remit or responsibly to lead and co-ordinate in this area.
State governments are (increasingly) starved of the resources necessary to run housing programs effectively and the essential coupling of housing, urban and infrastructure policies that should drive new residential development has been largely absent, another point recently lamented by Greiner.
Unfortunately, over a long period the scope for Commonwealth leadership in housing policy has been progressively undermined by vacillating political interest and a hollowing out of public service capacity in Canberra.
The US Housing and Urban Development administration is one example of how things could be done differently. It is resourced and empowered by the US government to play a role for America as a whole. Under the Abbott government, Commonwealth leadership capacity on housing policy has been further weakened by the abolition of the “housing minister” designation, and by the scrapping of the Housing Ministers Advisory Council. Scope for evidence-based policy in this area has been damaged by the disbandment of the National Housing Supply Council.
Although the majority of Australians are affordably housed, a rapidly growing minority is not. This is largely because what remains of our national policy framework was essentially created for an earlier age, when home ownership was a readily achievable goal for most households and property prices were not driven into the stratosphere by an overstimulated rental investment market. Moreover, housing policy has shifted substantially to a reliance on the market to supply the housing needs for all, including lower-income households.
Thanks to these changes our housing system is becoming increasingly dysfunctional. As well as undermining the welfare of lower income groups, this imposes growing economic costs on the whole country. Increasingly, for example, the working poor are being pushed to the fringes of our capital cities, remote from the job-rich inner areas, compounding their disadvantages in a difficult job market. While governments may sometimes speak of well-located “affordable housing” as desirable, there has been little or no effective action to counter intensifying spatial segregation to which housing markets are contributing.
Our federal politicians cannot absolve themselves of responsibility in this situation. It’s now over 20 years since Australia had anything resembling a national housing strategy. Since then, with only a brief exception around 2008, successive governments have turned a blind eye, failing to face up to the new social and economic challenges requiring housing policy reform.
And there are new dilemmas, such as growing numbers of people facing old age in rental housing as home ownership rates decline, especially among the Gen X and Y cohorts – the children and grandchildren of the Boomers for whom post-war housing policy created a previously unseen bonanza of property wealth. Similarly, with growing numbers of families living in private rental housing – many destined to remain there in perpetuity (the so-called “Generation Rent”) – the standard tenancy framework of short term lettings with no security and few rights to make a home is increasingly unsuitable. Sooner or later, this issue will gain political traction, demanding government intervention.
Article continues on the next page. Please click below.
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Market failure
Left to itself, the market does not generate well-located housing of reasonable quality that is affordable to less affluent Australians. Neither is there a simple answer to this in the form of increased gross housing supply, which some claim would be unleashed by further planning deregulation. The idea that a rapid upswing in new building sufficient to affect house prices would significantly improve affordability (even if the building industry could achieve this) is in any event laughable – how many developers would continue to build if prices were to fall? As history has shown time and again, only with active government intervention can a nation overcome the market’s failure provide adequate levels of affordable housing.
This issue is complex but not insoluble if addressed through smart policy. This should include:
<ul>
<li>national tax reform directed at achieving improved housing affordability</li>
<li>a national strategy for affordable housing supply</li>
<li>a national mechanism for financing affordable housing at scale via proven and cost-effective methods, such as a national housing supply bond</li>
<li>a larger role in housing provision for the non-profit sector</li>
<li>connecting infrastructure, housing and planning strategies at city and local scales to deliver integrated affordable housing outcomes on the ground.</li>
</ul>
The idea of simply achieving more affordable housing on the back of density bonuses, while a possible component of any local solution, is a myth that will not suffice long term. What happens when we run out of public housing estates to renew? And would this work in the lower value outer suburbs where much public housing is located?
The provision of affordable housing cannot be left to the market: it requires a commitment of government at all levels to develop a well-integrated and properly funded package of policies. With the “reforming Federation” debate under way, now is the time for these arguments to be had.
<img src="https://counter.theconversation.edu.au/content/35372/count.gif" alt="The Conversation" width="1" height="1">Bill Randolph is director, City Futures - Faculty Leadership, City Futures Research Centre, Urban Analytics and City Data, Infrastructure in the Built Environment at UNSW Australia.
 Hal Pawson is associate director - City Futures - Urban Policy and Strategy, City Futures Research Centre, Housing Policy and Practice at UNSW Australia.
Vivienne Milligan is associate professor - City Futures Research Centre, Housing Policy and Practice at UNSW Australia.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>. 
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Australia needs more than dense housing arguments

A collection of just 25 large-format apartments and penthouses overlooking Goodwin Park is entering the Coolangatta market, with <a href="https://www.apartments.com.au/new-apartments/marea-residences-coolangatta-27-27a-dixon-street-coolangatta-qld-4225">Maréa Residences</a> combining a low-density, residential-only approach with uninterrupted park and Pacific Ocean outlooks.

Located at 27 Dixon Street, Maréa comprises three and four-bedroom residences alongside a limited number of dual-level penthouses, with the project positioned between Goodwin Park and <a href="https://www.apartments.com.au/developments/coolangatta-qld-4225">Coolangatta</a>’s coastal precinct.

Construction has commenced, with completion currently estimated for late 2027. Three-bedroom residences are priced from $1.8 million.

[smartcode_project:default project_id=150999 project_image_fid=374005]

The project has been designed around its northern outlook across the park, with the building’s architecture, landscaping and material palette intended to establish a connection with the neighbouring green space. The residences have been configured to maximise natural light and views across Goodwin Park towards the ocean.

Inside, the material palette incorporates timber, stone and brushed brass, complemented by curved detailing and ambient lighting. Kitchens and bathrooms carry the same natural material approach, while residences also include basement parking, storage and lift access.

Maréa’s penthouses are arranged over two levels and include private pools, adding another layer to the project’s focus on larger-format apartment living. Across the development, residences are configured with three or four bedrooms rather than the broader mix of smaller apartment types commonly found in larger projects.

[smartcode_project:default project_id=150999 project_image_fid=374010]

Resident amenity is concentrated at rooftop level, where landscaped entertaining terraces and pools take advantage of elevated views across Coolangatta and the Pacific Ocean.

The project has so far been particularly well received by local owner-occupiers and downsizers, according to Urban Activation Property Sales and Marketing Director Matt George, with the residential-only format, construction quality and northern park outlook among the features resonating with purchasers.

“The uninterrupted northern aspect overlooking Goodwin Park has been a key point of difference, with buyers attracted to the sense of serenity and open space the park provides, while still enjoying easy access to the ocean and being within walking distance of the lifestyle and amenities Coolangatta has to offer,” George said.

[smartcode_project:default project_id=150999 project_image_fid=374002]

“The combination of high-quality construction, a residential-only building, park outlook and proximity to the beach has resonated strongly with the local downsizer market.”

The Dixon Street address is within walking distance of Coolangatta Beach and the broader southern Gold Coast coastline, including the surf breaks at Snapper Rocks and Kirra. Coolangatta’s cafés, restaurants and retail are nearby, while Gold Coast Airport is also within close proximity.

[smartcode_project_cta:default project_id=150999]

Joel Robinson

Maréa Residences brings parkside apartments to Coolangatta

Melbourne developer PDG has secured Victorian Government approval for its $1.5 billion Southbank development <a href="https://www.apartments.com.au/new-apartments/the-one-1-queens-bridge-street-southbank-vic-3006">The One</a>, clearing the way for the long-dormant riverfront site opposite Crown to finally be developed.

The Minister for Planning has approved the project at 1-29 Queens Bridge Street, with the Department of Transport and Planning issuing the planning permit following its assessment.

The approval will allow PDG to develop the prominent 5,059 sqm site with a major mixed-use tower comprising premium apartments, including branded residences, a luxury hotel and boutique office space.

PDG acquired the site in late 2024, with its position directly opposite Crown's main entrance and near Melbourne's Arts Precinct making it one of Southbank's most significant remaining development opportunities.

<img alt="PDG" data-entity-type="file" data-entity-uuid="3933013e-6332-4386-b9be-089df05caf17" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.22%E2%80%AFAM.png?VersionId=sITIgBqDL0N3VNSMwWEmF5UA.uvcsRyu" />

Designed by COX in collaboration with ODO and PDG, the tower's architecture draws on the movement of the Yarra River, with six vertical pleats running the height of the sculpted facade.

The project will also see the heritage-listed Queens Bridge Hotel restored and incorporated into the development&nbsp;with new hospitality and public uses, including a rooftop venue.

A significant component of The One will be its residential amenity.

More than 5,000 sqm of resident facilities will be delivered across a single level, making it one of the largest consolidated residential amenity offerings proposed in an Australian apartment development.

The planning approval also incorporates a major upgrade of Queensbridge Square, which PDG will deliver in partnership with the City of Melbourne.

<img alt="PDG" data-entity-type="file" data-entity-uuid="73167fcd-1031-4b6f-a408-a064cfe45ed1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.17%E2%80%AFAM.png?VersionId=Pf1AEWxw6SNmBqR0zQW5lyEze.MtxgFp" />

The existing square will be revitalised as a new civic and pedestrian space along the Yarra River, strengthening the connection between the project, Southbank and the riverfront.

PDG Founder and Managing Director Vince Giuliano said the approval represented a major milestone for a site which has remained largely underutilised for more than 15 years.

“This is the most significant Planning Permit approval Melbourne has seen in recent years,” Giuliano said.

“For more than 15 years, this site has remained underutilised. This approval enables us to deliver a project that will contribute meaningfully to the revitalisation of Southbank, restore and reactivate an important heritage building, and create a new civic and hospitality destination for Melbourne.”

The latest approval follows an earlier planning permit issued by the City of Melbourne covering demolition works across part of the site at 9-29 Queens Bridge Street. Those demolition and early works are already underway.

PDG has also started generating early interest in the residential component from owner-occupiers ahead of a planned public launch in early 2027.

PDG secures approval for $1.5bn Southbank apartment development, The One

Local developer Harridan is seeking to turn its Woolloongabba apartment project into the first stage of a broader transformation of Burke Street, using a new 16-storey mixed-use building to establish a greener pedestrian connection toward the rapidly evolving Boggo Road transport and knowledge precinct.

The South East Queensland developer has filed plans for 154 apartments on the <a href="https://www.apartments.com.au/new-apartments/4-burke-street-woolloongabba-qld-4102">southern side of Burke Street</a>, where its proposal has been designed alongside a wider vision by LatStudios for the street.

That vision positions the southern side of Burke Street for buildings of 15 storeys and above, while envisaging lower-rise development of up to five storeys on the northern side to transition into Woolloongabba's existing character housing. It also proposes wider pedestrian verges, deep planting, new street trees and upgrades to the pedestrian approach to Boggo Road Station.

The Harridan development itself has been designed by Brisbane-based Arqus Design and will comprise 154 apartments across 16 storeys. The mix is weighted heavily toward two-bedroom apartments, with 121 proposed alongside 10 one-bedroom and 23 three-bedroom residences. There will typically be around 14 units per floor.

A lower-ground car park and three podium levels will accommodate 156 resident parking spaces, along with visitor and commercial parking. There will also be 154 resident bicycle spaces and 40 visitor bicycle parks.

&nbsp;

Harridan is a family-owned developer and part of the Holmwood Highgate Group, with more than three decades of development activity across South East Queensland. Its portfolio spans residential, commercial and industrial property, with current residential projects including Riverbank on Byron in Bulimba, Esperance Residences in Carina and The Precinct at Kinross Road in Thornlands.

Wooloongabba has been popular for apartment developers, particularly since the announcement of the 2032 Summer Olympics games in Brisbane.

While there have been a lot of development applications, it has failed to materialize into real supply.&nbsp;

Sarazin has been the major player in the area. They are under construction at Murcia Residences, on the fringe of East Brisbane and Woolloongabba. They have just launched <a href="https://www.apartments.com.au/new-apartments/the-stanley-residences-woolloongabba-8-trafalgar-street-woolloongabba-qld-4102">The Stanley Residences</a>, in Woolloongabba on Trafalagar Street. They also have Nuage coming soon on the nearby <a href="https://www.apartments.com.au/new-apartments/nuage-woolloongabba-14-wellington-road-woolloongabba-qld-4102">Wellington Road</a>.

First look: Harridan plans Burke Street transformation beside Boggo Road transport hub

IN BRIEF

<ul>
	<li>
	Just three double-storey Sky Homes sit at the top of The Waterline, each with its own private marina berth and rooftop terrace.
	</li>
	<li>
	Construction on The Waterline is complete, with the first residents expected to move in from mid-October.
	</li>
	<li>
	Sky Homes range from 282 sqm to 367 sqm and are priced from $3.65 million.
	</li>
</ul>

<hr />
Lewis Land has opened the first completed sky home for inspection at Harbour Shores, giving buyers their first opportunity to step inside one of just three double-storey residences crowning The Waterline.

Each sky home comes with its own private marina berth, rooftop terrace and Broadwater views, combining the scale of a larger home with direct access to the boating lifestyle that underpins the wider <a href="https://www.apartments.com.au/new-apartments/harbour-shores-biggera-waters-564-oxley-drive-biggera-waters-qld-4216">Harbour Shores</a> masterplan.

[smartcode_project:default project_id=113271 project_image_fid=366708]

Lewis Land Head of Development Michael Long said the inclusion of a berth with every Sky Home had become increasingly valuable as marina access across the Gold Coast tightened.

“Marina berths are becoming increasingly difficult to secure across the Gold Coast, so including one with every Sky Home makes this a genuinely rare offering,” Long said.

“The private 70-berth marina will accommodate boats up to 12 metres in length and is positioned just 2.5 kilometres from the Broadwater, placing the open ocean only 15 minutes away.

“Being able to step out of your home onto your boat is a rare luxury, and it’s something residents here can look forward to when it opens later this year.”

[smartcode_project:default project_id=113271 project_image_fid=366709]

The display opening comes as construction completes on The Waterline, with the first residents expected to move in from mid-October.

The three Sky Homes range from 282 sqm to 367 sqm and each feature three bedrooms, three bathrooms, multiple living zones, expansive kitchens with butler's pantries and large balconies taking in the Broadwater outlook.

Each residence also has three secure basement car spaces and additional storage.

“This is the first opportunity the Gold Coast has had to step into Harbour Shores and see, touch and feel what we’re bringing to life here,” Long said.

“There are only three Sky Homes within The Waterline, ranging in size from 282sqm to 367sqm, with each residence featuring three large bedrooms, three bathrooms, multiple living zones, expansive custom-built kitchens with butler’s pantry, and large balconies capturing Broadwater views.”

<img alt="Harbour Shores" data-entity-type="file" data-entity-uuid="bab65e10-4fab-45e1-92d8-fc56e2ab98ff" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%202.00.16%E2%80%AFPM.png?VersionId=XT8q76LsPkw3cYTsvN3JfFDaPLud90PN" />

Residents of The Waterline will have access to a private pool, along with Harbour Shores' wider collection of amenity including a lagoon pool, social clubhouse, tennis court, gym, yoga facilities and sauna.

Lewis Land partnered with Studio Collective to furnish the completed display, with the interiors designed to demonstrate how the residences could function as permanent homes rather than simply as show apartments.

Studio Collective Director Melissa Park said the surrounding waterways informed the interiors, but in a more restrained way than a traditional coastal scheme.

“We drew inspiration from the canals and coastal surrounds, but our approach was to interpret that subtly through layered materials and a grounded palette of earthy tones, rather than literal coastal references,” Park said.

“We introduced hero moments of green and teal to reference the surrounding waterways, while mirrored elements help reflect natural light.

“The result is a residence that feels elevated yet comfortable, somewhere buyers can genuinely imagine themselves living, entertaining and unwinding.”

Sky Homes are priced from $3.65 million.

Lewis Land is also offering private marina berths with The Residences, its limited collection of three and four-bedroom villas positioned directly along the Harbour Shores waterfront boardwalk.

Three-bedroom villas are priced from $2.99 million, while four-bedroom residences start from $3.19 million.

Harbour Shores is being marketed by Colliers International.

[smartcode_project_cta:default project_id=113271]

Lewis Land opens sky home display as The Waterline completes at Harbour Shores

St Vincent de Paul Society Housing Australia has filed plans for a major mixed-use housing precinct on the southern edge of the North Sydney CBD, adding another significant proposal to a pocket around North Sydn​ey Station that is quickly becoming one of the LGA's busiest development zones.

The State Significant Development Application covers a 5,990 sqm site at <a href="https://www.apartments.com.au/new-apartments/1-19-mackenzie-street-lavender-bay-nsw-2060">1-19 MacKenzie Street and 211 Blues Point Road in Lavender Bay</a>, immediately south of Nor​th Sydney Station and between the commercial core and the lower-rise Lavender Bay Heritage Conservation Area.

Designed by Wardle, the proposal would deliver a new residential tower comprising 88 build-to-sell apartments and 19 affordable apartments, alongside a separate co-living building with 57 rooms and a building manager's studio.

It would also see the significant restoration and upgrade of St Francis Xavier Catholic Church, the adaptive reuse of the former school building, new parish facilities, retail, a new public square and around 1,000 sqm of publicly accessible open space.

<img alt="Vinnies North Sydney" data-entity-type="file" data-entity-uuid="d5dd7f87-a617-463e-b577-17541e01f0e9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.10.13%E2%80%AFAM.png?VersionId=4R8TsFN3P_LrrXO2HswTOIrx2blil8lh" />

The project is seeking a concurrent rezoning of the site to R4 High Density Residential and an increase in the maximum building height to allow a tower reaching RL120, or up to 20 storeys. The proposal was progressed through the NSW Government's Housing Delivery Authority pathway.

The build-to-sell component will be weighted toward larger apartments, with just six one-bedroom apartments compared with 31 two-beds, 43 three-beds and eight four-bedroom residences.

The 19 affordable apartments will comprise two studios, 15 one-bedroom apartments and two two-bedroom apartments, taking the total apartment component to 107 residences before the 58 co-living rooms are included.

<img alt="Vnnies" data-entity-type="file" data-entity-uuid="7d568ca5-cb90-4e18-96c6-d9795dba0c56" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.10.05%E2%80%AFAM.png?VersionId=GY2R5M9VtQh0EKy1vajaea19PSLOPuRD" />

Wardle's design for the Vinnies site has sought to negotiate that emerging high-rise context while retaining the lower-scale character of MacKenzie Street and the adjoining heritage conservation area.

The main building adopts a three-storey podium and tower arrangement, with the podium aligned to the ridgeline and front setback of St Francis Xavier Church.&nbsp;Wardle has designed the podium with colonnades, seating, recessed entries and active ground-floor frontages, with sandstone-toned precast concrete and face brick referencing the materiality of the existing church.

The tower then steps back eight metres to the south and six metres to the north before rising in a sculpted form comprising four interlocking quadrants. Wardle has also introduced rounded forms and chamfered corners to reduce the tower's perceived bulk and improve view sharing with neighbouring development sites.

Resident facilities and outdoor areas are planned at the separation between the podium and tower at Level 3, oriented toward Sydney Harbour and the CBD skyline.

The tower itself will feature a glass reinforced concrete facade, with recessed balconies and deep reveals used both to provide shading and privacy and frame views toward the harbour and city. The lower levels take a different architectural approach, using brick and sandstone-toned finishes intended to establish a stronger relationship with St Francis Xavier Church. The Church itself will be conserved and upgraded for its continued use, while the former school building will be adaptively reused as part of the co-living component.

<img alt="Lavendar Bay" data-entity-type="file" data-entity-uuid="2d4418ad-90aa-4d49-af93-c80b140aea80" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.09.47%E2%80%AFAM.png?VersionId=Kv4gzbsACaGvZSRuaqcfGC54jEJRXIDJ" />

&nbsp;

The proposal adds to an increasingly concentrated pipeline of residential development around Blue Street, MacKenzie Street and Lavender Bay.

Just west of the site, Central Element lodged plans earlier this year for one of the most significant residential developments proposed in Lavender Bay in recent years.

Central Element's SJB-designed scheme at 64-66 Lavender Street and 3-7 Middlemiss Street would deliver 163 apartments across two towers rising 23 and 32 storeys, replacing five existing apartment buildings containing 32 homes. The project also forms part of the Housing Delivery Authority pathway.

<a href="https://www.apartments.com.au/news/nsw/first-look-central-element-reveals-lavender-bay-apartment-plans?utm_source=chatgpt.com" rel="noopener" target="_blank">First look: Central Element reveals Lavender Bay apartment plans</a>

Immediately around North Sy​dney Station, another two significant proposals have emerged at 5 and 15 Blue Street.

Zurich Australian Insurance Properties is seeking to adaptively reuse its longstanding commercial building at 5 Blue Street, directly above North Sydney Station, rather than demolishing the structure.

Its SSDA proposes converting the building into a 14-storey mixed-use development with 62 apartments and 86 co-living rooms, together with ground-floor retail and a major refurbishment of Blue Street Plaza. The application is currently at the Response to Submissions stage.

<a href="https://www.apartments.com.au/news/nsw/first-look-zurich-targets-north-sydney-office-conversion-with-148-unit-proposal-above-metro-station">First look: Zurich targets North Sydney office conversion with 148-unit proposal above Metro station</a>

&nbsp;

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