<a href="https://www.apartments.com.au/developers/consolidated-properties">Consolidated Properties Group</a> (CPG) is approaching the launch of its latest Brisbane riverfront development, Castile, on the dress circle Skyring Terrace in Newstead.

VIP buyers are now being engaged, with a full public sales launch coming later this year.

Positioned as the final opportunity to secure a new absolute riverfront residence on the East bank of Newstead, Teneriffe or New Farm, Castile at 47 Skyring Terrace has been designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> as a timeless addition to the Brisbane skyline.&nbsp;

[smartcode_project:default project_id=150489 project_image_fid=371113]

The name Castile draws on themes of permanence, sophistication and legacy, reflecting a broader vision centred on enduring architecture and timelessness in the rarest of riverfront positions.&nbsp;

CPG Chairman and CEO Don O’Rorke said the project had been envisioned as a future Brisbane icon.&nbsp;

“With 47 metres of direct river frontage and never to be built out views, 47 Skyring Terrace is the definitive address on the Brisbane River,” O’Rorke said.&nbsp;

[smartcode_project:default project_id=150489 project_image_fid=371114]

“Rather than following trend-based apartment design, Castile draws inspiration from Brisbane’s great heritage buildings, reinterpreting classical architecture into a contemporary riverfront landmark designed to stand proudly for the next 100 years,” he said.&nbsp;

The approved development will comprise 227 apartments across a 25-storey tower alongside a boutique six-storey riverfront building of just 12 residences.&nbsp;

Construction is scheduled to commence in September 2026.

[smartcode_project_cta:default project_id=150489]

Joel Robinson

CPG unveils Castile Newstead ahead of upcoming sales launch

Australia’s online shopping habits have shifted dramatically over the last decade. As eCommerce volumes surged, so too did the frustrations that came with traditional parcel delivery: missed deliveries, long Post Office queues, parcel theft and the challenge of being home during business hours.

Australia Post’s Parcel Lockers emerged as one of the more practical responses to that changing consumer behaviour.

What started as a relatively niche delivery option has evolved into a nationwide network of more than 1,400 self-service Parcel Lockers positioned at train stations, shopping centres, supermarkets and Post Offices across the country. The system allows Australians to send, collect and return parcels 24 hours a day, fundamentally changing how many people interact with deliveries.

The appeal is relatively straightforward: flexibility.

Instead of waiting at home for a delivery driver or rushing to a Post Office before closing time, users can direct eligible parcels to a Parcel Locker location of their choice. Once the parcel arrives, Australia Post sends a notification with a collection code or QR access through the AusPost app, allowing customers to retrieve their package at any time within the collection window.

For apartment residents in particular, the system has become increasingly valuable.

Higher-density living has created logistical challenges around deliveries, especially in buildings without concierge services or secure parcel rooms. Missed deliveries are common, while parcel theft has become an increasing concern as online shopping volumes continue to rise.

Australia Post itself has repeatedly highlighted the growing issue of “porch pirates” during peak shopping periods, encouraging customers to use Parcel Lockers as a safer alternative to unattended home deliveries.

That security aspect is one of the key reasons the Australia Post Parcel Locker network has grown so rapidly.

Parcel Lockers are positioned as secure, monitored collection points that reduce the risk of theft while also improving delivery efficiency for Australia Post. Instead of multiple redelivery attempts, parcels can be consolidated into a single secure destination.

The Parcel Lockers themselves are free to use through a MyPost account and support a range of parcel sizes up to 16 kilograms and dimensions of approximately 35 x 44 x 61 centimetres.

Beyond receiving parcels, the system has increasingly become integrated into the broader eCommerce ecosystem.

Customers can now use Parcel Lockers to return online purchases, while retailers have embraced the model as a way to improve delivery success rates and reduce friction in the shopping process. Australia Post has actively expanded partnerships with major retailers and promoted Parcel Lockers as part of a broader out-of-home strategy.

The timing of that expansion aligns with broader changes in Australian shopping behaviour.

The acceleration of online retail during and after the pandemic placed enormous pressure on delivery infrastructure. Parcel volumes reached record highs, particularly during Black Friday and Christmas periods, with Australia Post delivering more than 100 million parcels during peak festive seasons.

That growth forced logistics providers to rethink the “last mile” of delivery, widely regarded as the most expensive and operationally difficult stage of the process.

Parcel Locker systems have increasingly been viewed as part of the long-term solution.

The concept itself is not unique to Australia. Parcel Locker networks have become common globally, particularly across Europe and Asia, where dense urban environments and apartment living create similar logistical challenges. But Australia’s geography and suburban sprawl made adoption slower initially.

Now, however, the convenience factor is driving mainstream usage.

For commuters, Parcel Lockers near train stations allow parcels to be collected on the way home from work. For apartment dwellers, they remove the uncertainty around access and missed deliveries.

The rise of the AusPost app has also streamlined the experience, centralising notifications, tracking and Parcel Locker access into a single platform. Australia Post has increasingly pushed customers toward app-based delivery management, partly as a way to combat phishing scams and fake delivery notifications, which have become more sophisticated in recent years.

The Parcel Locker model is also beginning to influence property development itself.

Parcel management has become a growing consideration in apartment building design, particularly as online shopping becomes embedded in everyday life. Many new residential developments are now incorporating dedicated parcel rooms or Parcel Locker systems into foyers and communal spaces.

For developers, parcel management is increasingly viewed as part of the broader resident amenity offering, alongside gyms, wellness spaces and communal work areas.

That reflects a wider evolution in how residential buildings are designed.

Apartment buyers are placing greater emphasis on convenience, security and operational functionality, particularly in higher-density urban environments. Parcel delivery, once considered a minor operational detail, has become an increasingly important part of that equation.

Australia Post’s Parcel Locker network sits at the centre of that behavioural shift.

What began as a simple alternative delivery option has evolved into a key piece of infrastructure supporting Australia’s growing eCommerce economy and changing urban lifestyles.

And as online shopping continues to expand, the role of Parcel Lockers is likely to become even more embedded in how Australians live, shop and receive goods.

How Australia Post Parcel Lockers changed parcel delivery convenience in Australia

Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Policy

<html><body>
As we approach the federal budget, once again we have to endure another round of economic nonsense as the Treasurer tries to convince ordinary Australians that the country is running out of money – facing a ‘budget crisis’.
So ingrained is this message, that few question it.
Instead, <a href="https://www.3aw.com.au/blogs/3aw-drive-blog-with-tom-elliott/my-fivepoint-plan-to-fix-australias-budget/20131211-2z5mw" target="_blank">talk radio</a> is flooded with callers outraged at the ‘debt burden’ they imagine will be passed onto their children. A lifetime of work and servitude lay ahead – not only charged with the responsibility of paying down their own debt – but the government’s debt as well!
For an administration that wants to retain leadership through blaming the last government for the ‘mess’ they’ve reputedly left us in, it’s a convenient message to sell.
‘Fiscal responsibility’ is the catch term of the day, cuts to health services, education, welfare, job seekers allowance, wages, and proposed back to work assistance for those laid off  from the car industry - you name it, it’s on the table. 
Everything that is, except the golden egg of speculative windfall gains that can be gleaned from the increasing value of land.
In countries such as <a href="https://catherinecashmore.com.au/wp/?p=400" target="_blank">Germany</a>, they have historically managed to divert speculation away from residential real estate, with the focus being on productivity instead. Here we’re all subject to an economy built on the retirement ‘wealth egg’ of land – our personal economic leverage for all lifestyle and business needs.
It used to be called Monopoly. Today its termed - 'Getting onto the property ladder'. 
The rules of the game are simple.  The player uses as much debt as they can borrow - to buy and hold as much as they can – and those who got in at the beginning of the lending boom, securing the best plots available, win the game.
In relative terms, the ordinary home owner doesn't advantage much, but what else can they do? Retire still renting? Or become a contestant and hope their house yields enough appreciation to support them when they retire.  (But not so much that their children can't get a foot onto the first rung of course, and leave home before the age of 40.)  Our lives are therefore spent working to pay off a mortgage - or two. (That is, unless you're an unlucky tenant who doesn’t have the funds to buy, in which case you play a game called The Rental Trap.) 
The question we ask however is: at what expense? – Or perhaps at whose expense?
As demonstrated by a recent <a href="https://hia.com.au/~/media/HIA%20Website/Files/Media%20Centre/Media%20Releases/2014/national/Residential%20Land%20Market%20Pressures%20Continue%20to%20Mount.ashx" target="_blank">HIA report</a> – land values continue to skyrocket – with the weighted median across all capitals during the final quarter of December 2013, rising to the:
“Highest level on record… a 22.3% increase on the final quarter of 2012.”
 <img src="/images/2014/05/12/cashmore%20may%2012%20one.png" alt="">
Or perhaps it can be better illustrated on a graph <a href="https://www.newgeography.com/content/004261-urban-containment-land-price-up-5-times-income-smaller" target="_blank">Wendell Cox</a> (author of the <a href="https://www.demographia.com/dhi.pdf" target="_blank">Annual Demographica Housing Affordability Survey</a>) constructed which cuts through the usual measures used to convince readers that “housing has never been more affordable”, with overwhelming focus on mortgage serviceability rates alone.
Instead, it demonstrates the speculative nature shaping the property cycle, which affects not only established house prices, but building activity as lot sizes reduce, whilst land price per square meter, outpaces income growth considerably.
  <img src="/images/2014/05/12/cashmore-may-12-two.jpg" alt="">
<a href="/expert-insights/investing/who-is-really-benefiting-from-the-property-cycle-and-at-what-cost">The smoke screen debates on affordability and scrapping negative gearing</a>, are just that, smoke screens.  Something that was subsequently confirmed upon release of the government's Commission of Audit, which ruled out any consideration of a change to housing policy – better to tax income instead – easier for the top 10% to avoid it, whilst low to middle income earners suffer the shortfall.
Importantly, the Commission of Audit’s terms of reference was to concentrate on direct government expenditure - such as grants and transfer payments rather than tax expenditure - rebates, exemptions and so forth (such as negative gearing, capital gains).
We all have to shoulder the burden, tighten belts, work harder – pensioners included!
‘All’ that is, except those imposing the rules – whose entitlements are immune from any fiscal responsibility.  
Yes – the members of our federal government - the issuers of our monetary supply, offset through taxing those who do have to earn dollars before they can spend it – whilst our government earns nothing – but is rather elected, and charged, to manage the budget in the best interests of its working population to promote economic growth – for which education, health, back to work initiatives and so forth, are vital pillars.
There is no evidence and no economic wisdom that indicates running a surplus under current conditions is good for the economy, especially if that surplus is to be achieved through the measures suggested. 
Article continues on next page. Please click below.
<hr class="system-pagebreak">
The Henry Tax review set out a framework that would move us to good model of economic management - a well managed deficit in order to achieve this is better than a running for a surplus at any cost - harming productivity in the process - as well as exacerbating private debt - which is high by any measure.
Something, <a href="https://www.youtube.com/watch?v=D0iFiUfDqSw" target="_blank">Steve Keen</a> does an excellent job of demonstrating in a recent lecture given in Sydney, in which he shows the inevitable consequence to GDP should our government attempt to presently do so.
Economic orthodoxy, which stubbornly insists austerity measures to pay down government debt, should take precedence whilst imposing onerous taxes on its working population, are lessons that should have been learnt following the Great Depression in the 1930s.
There is nothing new about this – indeed, Australia’s oldest PhD at 93  - Dr Elisabeth Kirkby - has just written a 100,000 word thesis on it. And whilst valuable lessons reaped from the grains of history are ignored, the patterns that led to our greatest economic disasters are repeated.
What all demonstrate is, when the government tightens its belt, for no other reason than a vain attempt to spruik a surplus, it has the unwonted effect of withdrawing money from the economy – leaving the private sector (the working class population) to pick up the slack.
Therefore “repairing the [government] budget” with the claim it’s putting Australia “on the right track” – is not putting the fate of Australians on the right track.
It is the government’s responsibility to manage the monetary system for the needs of its population (whether surplus or deficit) - spending enough money into the economy to keep employment and productivity boosted, which by design, reduces pressure on the welfare state.  
Yet it chooses instead to penalise productivity and ignore tax expenditures such as the capital gains exemption on owner occupied housing or scaling back negative gearing.
In this respect, it is economically irresponsible to have a growing deficit offset by tax receipts that reward speculation and by consequence, widen the wealth gap between rich and poor.  Ironically, the very gap the tax and transfer system is supposed to narrow.
In other words, we are not burdening our children with debt – we are burdening them poor economic management.
As austerity measures bite and the retirement age increases, the majority of Australian’s will be working longer and harder – and whilst the government pays down its reputed debt burden – private debt levels will continue to increase as families borrow to afford the basic necessities they need, most likely leveraged against their own homes.
Notwithstanding, most of our debt, is bank created debt – arguably, a far greater concern than government debt.
For those that need a reminder – as demonstrated in the latest <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Lookup/4102.0main+features202014" target="_blank">ABS social trends report</a> – total household debt was $1.8 trillion as at the end of 2013 - higher than it has been at any other time over the past 25 years.
<img src="/images/2014/05/12/cashmore-may-12-three.jpg" alt=""> 
Real Household Debt Per Person, Source: ABS
Low interest rates aside - $1.8 trillion is a hefty figure.
To put it in some kind of context – a trillion, is a thousand billion. 
The sun is set to burn out in approximately 5 billion years. A trillion is so large; it’s almost meaningless in real terms.
Total government debt is around $542 billion (as at March 2014 - <a href="https://www.rba.gov.au/" target="_blank">RBA</a>) – that’s about 35% of GDP.
In contrast, our household debt to GDP ratio is estimated to be around 97% (as at December 2013 - <a href="https://www.rba.gov.au/" style="line-height: 1.3em;">RBA</a>) - assisted by low interest rates and an array of financial products to ‘woo’ new borrowers into the property market (such as shared equity schemes, interest only loans, redraw facilities, offset accounts and so forth). 
Notwithstanding – the increase in bank created debt is a far greater issue than \government debt.
Therefore instead of our current leaders asking Australian’s what they can do to assist government debt. We should be asking the government what it will do to assist private debt. Particularly as we move forward over the next 12 months or so, and the lending cycle turns.
Capitalism?
Of course, this problem is not unique to Australia.  Thomas Piketty’s book <a href="https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/067443000X">Capital in the 21st Century</a> has just come out to great acclaim, choc full of statistics to demonstrate how income earners – the vast body of productive workers, who prop up the local economy through the taxes they pay and products they produce - are the losers, compared to those who hold stores of unproductive wealth. 
The book focuses on the ‘1%-ers’– advanced through gifts of inheritance – those who hold the vast majority of assets; controllers of the stock and bond markets - collecting their economic rent by way of hording property, and effectively, buying protection through lobbying seats of power.
It’s an age old game and in a world where gaining political leadership is only possible with vast sums of advertising dollars, lobbying is crystallised into the system.
We’re currently seeing this with the <a href="https://www.3cr.org.au/economists/podcast/renegade-economists-07052014" target="_blank">ICAC investigation</a> as it uncovers a web of alleged political corruption, with illegal donations from property developers and other sources, funnelled into a Liberal Party <a href="https://www.smh.com.au/nsw/icac-to-be-suspended-as-mike-gallacher-investigated-for-serious-electoral-funding-irregularities-20140506-zr59n#ixzz30xGqICRV">slush fund</a>.
Meanwhile, Clive Palmer has been accused of “<a href="https://www.theaustralian.com.au/national-affairs/palmer-spending-like-a-drunken-sailor-on-poll/story-fn59niix-1226871364428" target="_blank">spending money like a drunken sailor</a>” to secure a third seat in Senate for his PUP party.
Palmer reportedly entered the leadership battle due to “poor policy decisions” by the Gillard government – the carbon tax in particular being highlighted, which promised to negatively impact his core business.
However, his other policy evaluations leave much to be desired.
For example, Palmer’s <a href="https://palmerunited.com/national-policy/" target="_blank">housing affordability</a> plan, is to make home loans tax deductable for the first $10,000 – a move which will unquestionably push land prices higher, as future buyers factor the savings into their budget and adjust price expectations accordingly.
But then, considering Mr Palmer’s significant land holdings, which are said to <a href="https://en.wikipedia.org/wiki/Clive_Palmer" target="_blank">include</a>;
<ul>
<li>“A six bedroom, 11 bathroom, 22 car garage property in Queensland - along with;</li>
<li>An array of golf courses. As well as;</li>
<li>“Family and associates” owning a total of “11 homes in the Sovereign Islands” on the banks of the Southport Broadwater - as well as;</li>
<li>“Other known properties at Broadbeach Waters on the Gold Coast, Fig Tree Pocket in Brisbane, Jandowae on the Darling Downs, Queensland, and Port Douglas” and notwithstanding;</li>
<li>“An undisclosed number of properties held in trust for their daughter.”</li>
</ul>
I suspect lowering land values, may not be top of mind.
The wealth tax solutions Piketty proposes to stop the gap widening fail not only by the confused definition of what one would consider wealth (a Rembrandt painting, or luxury yacht for example?), but also that of capital.
In modern terminology, capital is used for anything that yields a profit – which under our current system includes land. However, in classical terms, capital is a factor of production - a depreciating asset and one, which can be reproduced.
In a society built on the foundation of free markets, factors of production flourish under competition. If one widget costs too much, an entrepreneur will find an innovative way to produce the same widget at a cheaper price. 
It’s called capitalism.
Land however is not a factor of production. It can’t be moved or reproduced and it’s limited in supply. Therefore the revenue stream generated from the unimproved portion alone is due to its locational advantage, and little else.
The free market activities in a capitalist society, cause land values to increase – and considering this is through no act of individual exertion on the vendor’s side, but rather the collective efforts of the community, it makes sense that most consider owning a well located plot of land, better than both money in the bank and the wages they have to earn.
This is why increasing charges on the revenue stream ensuing from the locational value of land, and recycling it back into the community - (which is where it came from, and where it belongs) – by way of a tax shift offproductivity (wages) and onto our valuable and limited natural resources - was termed the ‘least bad tax’ by the capitalists <a href="https://www.macrobusiness.com.au/2013/11/land-tax-must-kill-negative-gearing-stamp-duty/" target="_blank">Milton Friedman and Winston Churchill</a> – to name but a few. 
Rising land values harm capitalism, they increase the rent for small business owners, always benefitting the landlord but never benefitting the wage earner. Furthermore, rising land values force young people out of the market, whilst making those in the market wealthy – and widening the gap between rich and poor.
When land prices inflate, jobs are lost as more revenue is taken away from productivity and soaked into the ground.  
It’s not called capitalism; it’s called capitalising - taking advantage of community created revenue - the total of which is pocketed by the land owner.
This is why land prices are so high and vested interests of policy makers <a href="https://catherinecashmore.com.au/wp/?p=503" target="_blank">always act</a> to push them higher.
The great man Buckminster Fuller – architect, systems theorist, author, designer, inventor, and futurist – once said:
“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” (H/T author of soon to be published book Land by <a href="https://medium.com/p/18066c10ac50" target="_blank">Martin Adams</a>)
We live in a democracy, therefore any change to the status quo needs to come from the ground up – we will never get it from the top down.
The Henry tax review set out recommendations for transitioning our economy based on the ideas penned above. 
 How we get there is worthy of debate – however thankfully, due to the internet and a new age of enlightened priced out folk, we can start that debate in 2016/17 by using our own preference and economic wisdom to vote a government which acts to widen the rich/poor divide out.  By which time there may be better options to vote in.   
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catherinecashmore-6LXia3pPQj

Economic nonsense and the consequences for future generations

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The current NSW ICAC hearings which appears to link clandestine property developer payments to the NSW Liberal Party ought trigger the strategic delay, though not the death knell, of key NSW state government's planning reform initiatives.
Can the freshly installed Baird government ministry now be seen to handsomely reward the property development industry with long-desired legislation against the backdrop of alleged corrupt influence over their parliamentary colleagues and hangers on? Ditto the NSW opposition.
The controversial planning and strata legislation were already looking like courageous endeavours with an apprehensive public, but with the ICAC hearings to resume again in August and the March 28, 2015 election looming, both the NSW planning and strata reforms may possibly not deserve to be high on the agenda before the state Parliament rises in late November this year.
It's not to deny that the majority are cleanskins in the government, opposition and property development industry, but the pall over them all just doesn't sit well.
The new Planning Minister Pru Goward certainly doesn't shy away from doing the tough policy implementation - as her public housing housing tenant reforms showed - but already she has acknowledged her planning bill quandary. She understands the community concern over the derailed planning legislation going too far, even without the troubling backdrop that it now sits within.
''She understands there is community concern about getting the planning reforms right and she'll be very keen to listen to the views of everyone involved and work towards getting the balance right,'' her spokesman said on her appointment last month.
Then a few days later after assuming the ministry Pru Goward acknowledged the public perception.
"Development is a very expensive and highly-invested sector, and there will be plenty of people who want me to do what they want to make money for them, and every community in NSW will want me to listen to them," she told News Ltd papers.
Touted as the biggest shake-up in urban planning for three decades, the overhaul has effectively been in limbo since late 2013 when the Labor opposition and the minor upper house parties forced major changes, with 51 amendments. The government's plan to fast track the approval process for code-complying developments in high growth areas within a 25 day period was struck out in the upper house along with the intention to have the economic significance of mining projects deemed a principal consideration in the approval process.
The other key reform, and gift to urban renewal property developers, is the so-called "collective sales and renewals" initiative which will allow developers to evict strata home owners from their apartments. The renewals policy will actually force elderly owner occupiers out of their homes by developers. 
Currently 100% of strata lot owners have to agree to any replacement and redevelopment.
The property development industry has successfully lobbied the state government to reduce that to a 75% threshold with conciliation and mediation to encourage consensus.
The 75% threshold is a very generous threshold especially as each lot will have one vote, the decision will not be based on the more worthy unit entitlement. It is extraordinary that on such an important issue the lawmakers would seek to have the penthouse owner's voting entitlement the same as the viewless studio down near the laundry in the basement.
Yes it will start slowly with select blocks mostly with water views, but I think there will be an outcry once the electorate understands the disruptive compulsory eviction outcome, let alone The Castle movie-like denial of rights to ownership.
Of course the government has done the talk to the stakeholders routine, but once it filters down to the property ownership constituency there will be no tolerance of the 'Making NSW No.1 Again: Shaping Future Communities' spin. 
Hardly an initiative I'd suggest that reflects the moniker of the NSW Fair Trading department, but rather a scheme that developers have won from lobbying Macquarie Street.
One legislative clause apparently gives all lot owners and mortgagees just 60 days to consider the proposal and to seek independent advice. Hardly fair if you've been resident for many decades, and betcha the wishful stay-put strata owners get their letters early December, just before the lengthy Christmas summer holidays.
Compulsory acquisition by local council and state and national governments has been around in some form for ever for development purposes when they consider this to be in the best interest of the community - and leaves a sour aftermath, but this legislation is handing private nest eggs over to a ambitious private developer. It will involve resumptions eventually on a scale perhaps not seen since farmers lost land for the 1940s postwar soldiers settlements. Milder metropolitan dispossessions subsequently took place on the Macquarie University construction at North Ryde, the Eastern Suburbs railway line, and the Gore Hill freeway, all for the community benefit by government.
This time the supposed net public benefit is going to be harder to cop, especially in the face of big profits for developers. The proposed legislation is really just making life easier, and cheaper, for the developer who view the task of getting 100% as taking too much time and profit.
I don't see why the legislation can't have a graded threshold of say 95% where the building is less than 15 years old and 85% if the building is more than 15 years old. As we already occasionally see amalgamations can happen, and did so recently along the Cronulla beachfront when the Sunland Group consolidated a 2,398 square metre Prince Street site - from nine separate sellers - and then got approval for 12 luxury apartments.
There have now been three Fair Trading ministers with carriage of the task over the past seven months.
Anthony Roberts, the then Fair Trading Minister, told the Strata Community Australia (NSW) last November that the government’s commitment to change has been responding to the community’s calls to modernise the state’s strata laws.
NSW was the first jurisdiction in the world to introduce strata title laws, back in 1961, so there is no doubting they need modernisation, and the economic boost that will come from infill housing, rather than greenfields development. Some 30% of residential strata schemes in the Sydney metropolitan area were registered more than 30 years ago.
Only 826 strata schemes have been terminated since 1961, out of over 72,000 schemes in New South Wales.
Almost all of these terminations have been made following an application to the Registrar General unanimously signed by the lot owners, with only five schemes being terminated by Supreme Court orders.
It is estimated that more than 30% of the State’s population live or work in strata and within two decades around half of NSW’s population will be living or working in strata.
Roberts said the government was undertaking a landmark reconsideration of the strata and community schemes legislation, which will lead to important reforms in the sector in 2014. Termination of a strata scheme without the unanimous support of all apartment owners occurs in countries including Singapore, New Zealand and the United States.
It was Robert's aim of the bill being introduced to Parliament early this year and to commence the new laws by the middle of this year.
Then Fair Trading Minister Stuart Ayres drafted legislation for cabinet approval this month, with hopes to table it in Parliament this month too.
Yesterday MLC Matthew Mason-Cox was appointed the latest Fair Trading minister.
He might reconsider the specifics of the drafts.
It's not just the Liberals who've found the going tough.
Previous Labor governments have averted the emotional legislative debate about property rights with developers expressing their frustrations since the days of the NSW premier Bob Carr.
Then in 2007 the Planning Minister, Frank Sartor, had plans for the Morris Iemma cabinet to drop the threshold to less than 100%, but a decision was made at the last minute to retain the status quo.
The Keneally government envisaged similar legislation in 2010. 
Stand by to watch the potential evictees heading off to the High Court with the Magna Carta of 1215 and the more recent Mabo judgment.
The drama of dozens of Daryl Kerrigans, mimicking the lines from the film The Castle, will be a news feast since compulsory acquisition is almost un-Australian.
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jchancellor-FAypfDUnLy

Corrupt influence backdrop ought stall overly generous NSW strata and planning initiatives

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Developers are putting little effort into building more sustainable residential properties due to a lack of consumer demand, industry leaders have said.
People buying houses in new residential developments typically planned to live in the property for only up to five years, which limited the payback period for environmentally friendly features, CSR managing director Rob Sindel said.
“They say ‘I’ll worry about the environmental stuff when I can afford it’,” he said at a Green Building Council of Australia breakfast meeting last week.
Consumers were more interested in features such as granite bench tops, high-end appliances and automatic garage doors than in energy or water saving measures. Marketing companies that sold newly developed residences promoted lifestyle benefits rather than sustainability, Sindel said.
Developers of multi-unit residences also faced challenges to building more sustainable dwellings, Leighton Properties managing director Mark Gray said.
Like buyers of freestanding homes, people who bought into multi-unit developments were attracted to the precinct’s amenities and community.
Gray said there were opportunities for precinct-based initiatives, where measures were installed to improve the sustainability of the entire multi-residential development, but these could be hampered by service authorities.
“Service authorities are sources of great frustration for developers as they [the service authorities] don’t like change whatsoever. They don’t like individual precincts, they want control over everything,” he said.
Gray said to overcome the barriers to increased adoption of sustainable principles in residential construction, there was a need for further awareness and education in the community to boost demand.
“Unless we get people a lot younger and educate people at a much earlier age, we won’t get the outcomes that we all desire,” Gray said.
Dexus Property Group executive general manager, property services and chief operating officer Tanya Cox said the frequency of changes to public policy surrounding green building initiatives was a challenge to all sustainable development.
“Property is a long-term investment and long term investment businesses need policy stability,” she said.
She added that the politics of the climate change debate had made it more difficult for green building to gain traction.
“The conversation has changed from reducing excesses and pollution – we know that pollution is bad for the environment. Whether climate change is man-made has made the conversation much more difficult for us,” Cox said.
In addition to their roles as business leaders, Sindel, Gray and Cox are board members of the Green Building Council of Australia. 
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zfielding-GvX3Uq9KTa

Lack of consumer demand for sustainable residential property

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Yesterday’s decision at the monthly Reserve Bank of Australia meeting to keep interest rates on hold was unsurprising. However, the response to this period of stability, with a focus largely on next week's budget announcements, has been fascinating.
Housing Industry Association economist, Geordan Murray, said that recent commentary from RBA officials had everyone expecting the no-change result of yesterday, however said that the statement suggests the board’s confidence has been buoyed by positive developments in the household sector. This was, as <a href="/expert-insights/finance/strong-expansion-in-housing-construction-expected-rba-governor-glenn-stevens">you can read in Glenn Stevens’ speech yesterday</a>, largely related to strong leading indicators for residential construction.
Murray noted that it’s the strength of the labour market that is now at the forefront of the Board’s concerns “although the statement belies a confidence that the accommodative monetary policy settings will enable conditions to improve within the foreseeable future”.
Similarly, the strength of the Australian currency struck Murray as something the Board is watching closely, however there is “no sense of urgency” as it sits a level lower than a year ago.
Mortgage Choice spokesperson Jessica Darnbrough explained that inflation is sitting comfortably within the target range, with positive employment data and property prices now climbing modestly.
However, despite this, it appears some are more concerned about increases in the near future than others – while most are now turning their attention to the budget.
“There is no doubt rates will climb eventually, but right now they are sitting at historically low levels. So for those potential borrowers who have the means to get onto the property ladder, now may be a good time to do so,” she said.
CEO of RateCity, Alex Parsons, said that consumers should not be complacent in today’s low-rate environment.
“We're at record low interest rates so over time they are only likely to go up so make sure you can afford to withstand some increases in interest rates,” Parsons explained.
“The second thing is we've heard a lot from the government in the recent few weeks around the prudent budget and so that is going to hit people in the back pocket I would suspect,” he said.
REINSW president Malcolm Gunning also said that it’s the budget that has the attention.
“We are not surprised by the RBA's choice to leave interest rates in a holding pattern. All eyes are now on the federal budget, which could have wide implications for Australians and the future direction of interest rates,” he said.
“While the housing market remains firm, we watch with interest the delivery of the budget, the high Australian dollar and rising unemployment levels which could negatively influence consumer confidence,” Gunning explained.
While Laing+Simmons’ general manager Leanne Pilkington also said that we should now be looking more closely at the changes to be made next week, with the finer details of foreshadowed changes to taxation to be identified.
“While many young people struggle to build a suitable deposit, many existing mortgage holders are struggling to meet repayments, and pensioners have also been put on alert,” warned Pilkington.
“There is general acknowledgment that next week's budget must be tough, however it is important that Government supports those already in a precarious financial position,” she said.
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jduke-EHk3XBmHkn

RBA holds rates as expected, but federal budget the focus of the month

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The proposed car park tax in Adelaide has seen an opposing petition signed by 10,000 South Australians to halt the introduction, with fears it will be carried by those who shop, work and reside in the city.
However, they have also been joined by senior politicians and businesses, according to the Property Council of Australia (SA Division) executive director, Richard Angove.
Family First’s Robert Brokenshire and Dennis Hood are planning to block the Transport Development Levy.
“Public opposition to the tax has held sway with senior politicians and divided Parliament's Upper House,” said Angove.
The parking tax in Adelaide’s starting rate would be set at $750 per annum – more than triple the rate in Sydney. Angove warns that there is no assurance it won’t also ripple out towards the suburbs, as Sydney’s had. He also noted that since 1992, Sydney’s car park tax has increased eight times.
“South Australians have been staunch in their objection to this discriminatory, inefficient tax,” he said.
“The cost of the Adelaide car park tax, like Melbourne, like Sydney, will be borne by those who choose to shop, work and enjoy the activities in our city.
“The Property Council is urging politicians to oppose this tax on productivity, on business and on central city vibrancy,” Richard Angove said.
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Adelaide’s proposed car park tax faces public, business and political opposition

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The practice by unethical real estate agents to – ‘quote them low and watch it go’ could very well finally be a thing of the past – well in Queensland anyway (for starters). Governments from all political persuasions have struggled for decades to establish a best practice platform for the real estate industry.
Queensland is close to implementing the new legislation although they are struggling at the last hurdles given they are seeking that agents are not permitted to provide any price guides. The reforms have now been altered to permit agents providing a price guide on the internet.
This just keeps getting dumber and dumber given this whole process could be fixed so easily – all that’s required is for the vendors to publish their reserve price to all parties making inquiries. The prospective purchasers then make up their own minds as to what they believe the property is worth based on the published reserve price – a clean and transparent selling process.
I have always argued (successfully) that the difference between a good real estate agent and an average one is about 10% of the sale price. The difference by not quoting the agents price guide is that this figure is generally skewed to the attraction price as against the selling price which is exactly what should be the case in this day and age.
If a buyer wants to pursue a property at the vendor’s reserve price then all well and good. If on the other hand they construe that the expectations are too high then let the property run a reverse course – which is interesting as this then goes back to the respective agent’s negotiating skills. I’m not exactly sure what parts of this the agents don’t get as reserve price quoting will reward the agents with superior negotiating skills – which is exactly what vendors should be looking for.
There is a great role for public auctions in the real estate industry, just the system requires critiquing because rogue agents will always struggle with the truth. Watch this debate get very heated in coming weeks and months although rest assured there will be major changes across the board to the Australian property auction system.
Another fascinating week that had the “experts” (whatever they are) calling the end of the biggest Sydney property boom in a decade – what a load of rubbish!
To add some weight to these idiotic statements there are approximately 637 (and growing) suburbs that make-up Sydney. Yet in typical lackadaisical reporting fashion we read “dwelling values across Australia’s capital cities have recorded declines” – so they take the weighted averages over 637 suburbs in the case of Sydney to get an accurate positioning? Anyone applying this methodology is simply delusional as this in no way accurately defines real estate market trends – until such time as it is suburb by suburb this collective data is as useful as an ashtray on a motor bike.
<a href="https://www.rwm.com.au/files/2014/05/30-04-2014-1-59-49-PM.jpg"><img class="aligncenter size-full wp-image-8520" src="https://www.rwm.com.au/files/2014/05/30-04-2014-1-59-49-PM.jpg" alt="30-04-2014 1-59-49 PM" width="647" height="342"></a>
Source: Digital Finance Analytics
<a href="https://www.rwm.com.au/files/2014/05/30-04-2014-1-58-58-PM.jpg"><img class="aligncenter size-full wp-image-8521" src="https://www.rwm.com.au/files/2014/05/30-04-2014-1-58-58-PM.jpg" alt="30-04-2014 1-58-58 PM" width="664" height="361"></a>
Source: Digital Finance Analytics
The latest monthly banking statistics from APRA identify consistent lending to the end of March 2014. In February owner-occupied and investment loans were $1.231 billion and in March they came in at $1.236 billion. The ‘Big Four’ increased their market share from 84.3% to 84.4% which will have many suggesting that should there be a correction they will be in all sorts of bother.
What I would like to see is a graph showing where their respective loans were as we should remember during the global financial crisis (GFC) Mosman was tipped as having the highest delinquency rate in Australia where it was later proved it had the lowest.
As they say, be careful about calling yourself an expert. An ex is a has–been and a spurt is a drip under pressure. For some, it’s human nature to predict/promote themselves as some type of modern day Nostradamus who quite remarkably possess this innate ability to read the future.
Recently we read that in America, Dr Marc Faber is predicting that this year we will witness a 1987-type stock market crash although this time it will be much more severe. For those who have no idea what exactly happened here it is <a href="https://www.federalreserve.gov/pubs/feds/2007/200713/200713pap.pdf" target="_blank" title="Black Monday – 1987.">Black Monday – 1987.</a>
Given what transpired recently in the GFC, I would think that the vast majority are erring on the side of caution – which history has conclusively shown to be the smartest path.
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robertsimeon-hRNTwJyXkQ

Is the public auction system going – going – gone?

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Take a cursory look through the international press and reports on housing related matters, and it could be merged it into one text as property cycles become increasingly interrelated and investors search for ‘safe havens’ off-shore.
Overwhelmingly, affordability, bubbles, the rise of Asian investors, and fears of a new breed of non-home owning ‘renters’ dominates, and although headline chasing would place any sensationalist report front of line, the reader comments and related dialogue that follow present a familiar picture for the ordinary home buyer – no matter what reforms are taken, it never seems to get any easier. 
You could be forgiven in thinking it’s by some abject force of nature, bustled in at the time of the ‘big bang’ that property (or as I pointed out <a href="https://catherinecashmore.com.au/wp/?p=494" target="_blank">here</a>, ‘land’) is deemed unaffordable. Outpacing wage growth and inflation through the course of a cycle, subject to the whims of a bank’s propensity to lend - burdening buyers with one of the most stressful experiences they’ll go through in life. 
Or in the bleak words of the eminent poet <a href="https://www.youtube.com/watch?v=Lin-a2lTelg&amp;feature=kp" target="_blank">Leonard Cohen</a>:
“Everybody knows… That’s just the way it goes.”
This is what the real estate and finance industry would have you believe as they navigate through the fluctuations of the property cycle with authoritative analysis, on what and where to buy.  And no doubt, it’s been a prosperous affair.
The number of property investment <a href="https://www.propertybooks.com.au/">books</a> written by the ‘<a href="https://www.propertybooks.com.au/">I Did It - And You Can Too!</a>’ experts, belies belief. And yet, becoming successful in the game isn’t incredibly hard for anyone with an ounce of locational common sense. The authors are simply singing their own interpretation of an age-old song titled ‘Monopoly’. 
Over the course of a business cycle, which is both lead by, and correlated to the housing cycle, the gains – more correctly termed economic rent or “earnings from land,” alone - by far and away surpass those that can be gleaned from other more productive investments.
This was stressed in a recent submission by <a href="https://www.earthsharing.org.au/" target="_blank">Earthshare Australia</a> to the upcoming Senate enquiry into housing affordability:
“Unearned incomes in land increased a whopping $187 billion in the December 2013 quarter alone (<a href="https://www.propertyobserver.com.au/https://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0" target="_blank">ABS 6416</a>). Total yearly dividends (2013), for investors engaged in risk, was recently reported at $84 billion – $103 billion less for an entire year.
(Leading them to question) “Why invest in small business or the ASX when one can earn more for less risk at a lower tax rate as a land speculator?”
These gains occur primarily because we choose to leave the larger proportion of ‘economic rent’ (mistakenly termed, ‘capital growth’ – however in this context, we are talking about the unimproved value of the site) locked in the land, rather than recycled back into community – from where it evolved.
Hence why housing is so expensive – the financial benefit derived from improving the surrounding facilities, is not effectively utilised – and our tax and supply policies do little to assist.
The Henry Tax review was not slow to <a href="https://taxreview.treasury.gov.au/content/finalreport.aspx?doc=html/publications/papers/final_report_part_1/chapter_12.htm" target="_blank">point this out</a>, when it suggested progressively scrapping a vast array of ‘bad taxes’ (payroll, insurance, vehicle registration, stamp duty, and forth, as well as reducing those that reward speculation) and instead, collecting more of the economic rent of natural resources - significantly land. (Notwithstanding, it was another government review which fell largely on deaf ears.)
Yet, historically, the capture of economic rent (through land tax and to some extent ‘betterment’ taxes) financed some of the most remarkable infrastructure we have. Sydney Harbour Bridge being a case in point.
The tale of a bridge and our accumulated wealth
It was <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/radionational/programs/rearvision/tony-abbotts-big-plans-at-odds-with-infrastructure-history/5404212" target="_blank">acknowledged</a> at the time, that residents on the north shore would benefit significantly from an increase in their property values as a result of this essential piece of infrastructure.  Therefore, a framework was set in place to capture a proportion of the uplift – approximately one third – to assist with funding. 
This was in no way detrimental to the property owners. 
The increased advantage of economic activity coupled with the rise in prices resulting from the enterprise, more than compensated. A win-win if you like – and readily accepted by the public as fair.
Over time, changes in the way both state and federal government collected tax moved focus away from land values, onto productivity, effectively, placing a fine on labour and doing a good job of keeping us asset rich and income poor.
It’s great for the haves – but not the ‘have-nots’ (our growing pool of tenants.)
Consequently, the wealth locked in our residential land market, through the process of this accrued speculation – sits at post $4 trillion (add the buildings on top, and it’s an estimated $5.02 trillion).
It’s so large a number; it’s almost meaningless in real terms.
In comparison, the UK housing market is assessed to be $5.2 trillion with a population of around 60 million, so the distribution across a population of 23 million, is telling.
It’s this, that enables publications, such as the <a href="https://www.credit-suisse.com/ch/en/news-and-expertise/topics/wealth.article/article/pwp/news-and-expertise/2012/10/en/global-wealth-report-locating-the-super-rich.html" target="_blank">Global Wealth Report</a> produced annually by Credit Suisse, to assess Australian’s to be the ‘richest in the world’ in median terms. 
In other words – if you stand everyone in a long line, richest to poorest, the middleman has more asset wealth than any other country assessed.
It should therefore come as no surprise that our wealthy know where to bank their dollars - and it’s not down the high street.
As economist <a href="https://www.project-syndicate.org/commentary/adair-turner-explains-how-a-fresh-wave-of-automation-is-transforming-employment-and-much-else" target="_blank">Adair Turner</a> and others have pointed out in response to a recent report by Oxfam, which demonstrates how Britain’s five richest families are wealthier than the poorest 20% of the population.  The riches are only in part derived through productive activity – the vast ‘wealth’ however, has been derived through ‘rents’ (unearned gains) in land.
If you thought wars were about religion – think again.
The compounded rent is effectively what we pay for when acquiring real estate – a calculation that takes into account expectations of future growth, minus expenses for the time held – along with a range of other variables such as wages and borrowing rates.
Yet capturing a greater percentage of annual land values, whilst at the same time reducing those on productivity holds much in its favour.
<ul>
<li>It reduces the propensity of boom/bust housing cycles. 
</li>
<li>Encourages timely construction and effective utilisation (good for both the economy, employment and consequently, our welfare state). 
</li>
<li>Aids infrastructure financing. 
</li>
<li>Supports decentralisation. 
</li>
<li>Assists in keeping the cost of shelter affordable – levelling to some degree, the playing field between non-owners and owners. 
</li>
<li>And importantly, in regions where it’s been implemented with <a href="https://catherinecashmore.com.au/wp/?p=414" target="_blank">success</a> - Pittsburgh and Pennsylvania being examples - most owners pay less tax when there’s a shift from productivity onto land, than would be the case otherwise.</li>
</ul>
Article continues on next page. Please click below. 
<hr class="system-pagebreak">
Change ahead?
Of course, to change the mindset of any nation that has been encouraged to use their housing investments as leverage for economic activity, a welfare fund for retirement, collateral for the advancement of business and commerce, and an ATM for family emergencies, is no easy task. 
Not to mention the many vested interests in both government and the property industry, all of which derive their income from the promotion of it.
However, it’s vitally important we do so – because it sits at the very base of everyconversation government is current having regarding the welfare state, cutting pensions, and increasing the working age until retirement.
Even in our technological age of driverless cars, lasers that can change the weather, 3D printers that can produce substitute body parts, and solar farms that can produce enough energy to run a small city, nothing is possible without the land which gives us the food we eat, the water we drink, the air we breathe, and a rich array of commodities to fuel our appetite for ‘growth.’
There is nothing to be gleaned in from the hording of land, and whilst secure private tenure of property is vital in so much as land needs to be cared for, cultivated, and effectively utilised, a proportion of unearned economic gains that come from the locational rent of the unimproved value alone – should not be privatised to the extent that prices escalate through the inducement of speculative gain.
Can supply policy solve it alone?
We talk a lot about supply, but whilst the status quo exists - rising land values being used as the primary driver for economic growth – high prices ensure land will only developed for profit, timed to capture the upward wave of a cycle, rather than developed to meet the immediate needs of a home buyer, which does little to deter the wasteful process of <a href="https://au.news.yahoo.com/thewest/business/wa/a/22865421/developers-choking-land-supply/" target="_blank">land banking</a>.
It is not insignificant that the burdens to supply policy, which we consistently criticise – the structural impediments to development - were implemented along side a gradual shift of the rental capture of land, onto productivity.
As <a href="https://www.bobday.com.au/PDF/Home-Truths-Revisited-May-2013.pdf" target="_blank">Bob Day asserts in his submission</a> to the Senate debate on housing affordability:
“The regulatory seeds of the housing affordability crisis were sown in the 1970s. Until then land was abundant and affordable, and the development of new suburbs was largely left to the private sector.”
The 1970s was not only the point at which urban zoning (a process of false scarcity) was imposed by state governments – it also came at a time at which any hope of tax capturing the fair uplift in land values to keep construction timely and offset soaring costs, had been truly eroded.
This, coupled with a shift in infrastructure financing – as private enterprise played an ever-increasing role and projects were no longer provided with capacity ahead of time, but required to prove revenue – ‘user pays’ whilst home owner benefits – was the beginning of the end.  
A Glance Back At Policy
Early settlers had rejected the British system of taxing both land and buildings, in favour of the methods advocated by the classical economist <a href="https://www.prosper.org.au/about/henry-george/" target="_blank">Henry George</a>, who had previously presented his ‘single tax' theory in Australia to thunderous success. 
However, over time, the government’s inept and poor administration in the regularity and standard of valuations, the creeping in of exemptions (including the family home) coupled with lobbying from large landholders - a group which have historically maintained the greatest political clout – significantly eroded the system, and by the 1950s an array of taxes were falling increasingly on productivity, rather than land. 
In 1953 when the Menzies government abolished the <a href="https://www.prosper.org.au/about/geoists-in-history/clyde-cameron/" target="_blank">Federal Land Tax</a>, rapid post war population growth had firmly laid the foundations for a thirst to profit through capital gain (mounting land values.
The then Labour party – which had historically always rallied in favour of raising revenue from the economic rent of land rather than productivity, were up in arms, prompting <a href="https://en.wikipedia.org/wiki/Arthur_Calwell" target="_blank">Arthur Calwell</a> to speak in opposition of the plan, passionately declaring:
“We have always believed in the land tax…The land belongs to the people, and its use must be safeguarded and protected at all times!” (Hansard, Vol 221, pp 165-170 passim)
However, it was the beginning of the end. Up until 1961 it was an integral part of the Labour platform. By 1963 however, the commitment had been omitted all together, apparently, <a href="https://www.cooperativeindividualism.org/cameron-clyde_how-labor-lost-its-way-2005" target="_blank">without conference approval</a>.
When Whitlam came to power in 1972 (see Bob Day’s comment above) he ignored any call to bring in legislation to collect the economic rent of land, instead of levying heavy direct and indirect taxes on income, and in so doing, a politically fabricated boom in land values was underway.
In the decades that followed, the promotion of negative gearing (1985), halving of the capital gains on investors (1999), onerous levies on development and upfront infrastructure costs passed onto buyers - grants, incentives and so forth, had little to do with the delivery of affordable housing, and everything to do with escalating land prices.
It should come as no surprise then, that large landowners and the commission side of the real estate industry, shy away from any changes to the tax system. The smoke screen debates on affordability and scrapping negative gearing are just that.
So what now?
Due to China-led resilience and economic stimulus Australia, although in no way unscathed, avoided the disastrous consequences of 2008, resulting in thousands of foreclosures across the US and Europe, whilst banks were bailed and families <a href="https://stephendonnelly.ie/betrayed-by-victorian-era-debtors-prison-mentality/" target="_blank">continue</a> to be evicted.
Not so the recession that marked the early 1990s.  
Affecting 17 out of 18 comparable OECD countries, high unemployment, a large current account deficit and elevated level of foreign debt left many economists gloomy Australia would ever achieve long lasting economic recovery.
Endless debate was given to the causes and consequence, which left policy makers reassuring the community that lessons’, would be learnt! However, as the then Governor of the RBA, <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/radionational/programs/saturdayextra/ian-macfarlane/3378434" target="_blank">Ian McFarlane, later summed up in his 2006 Boyer lecture</a>:
“Any boom built on rising asset prices financed by increased borrowing has to end.”
And considering the date this lecture was given (2006), the following comment was insightful:
“No-one though has a clear mandate at the moment to deal with the threat of major financial instability associated with an asset price boom and bust.”
It’s unfortunate that “no-one” happens to be our most influential political and economic policy makers – and indeed, we’re not alone. 
After every economic crisis, there is always the promise that events will never happen again – safe guards are put in place and eventually the wreckage is cleared. however happen they do, and reforms that promise otherwise repeatedly fail.
Significantly, globalisation, the interrelating of major economies, is adding to the volatile nature of each economic downturn.  As Wayne Swan asserted in his speech <a href="https://ministers.treasury.gov.au/DisplayDocs.aspx?doc=speeches/2009/006.htm&amp;pageID=005&amp;min=wms&amp;Year=&amp;DocType=" target="_blank">“A Future Of Promise”</a> given at The Sydney institute in 2007:
“It is, truly, the sharpest synchronised global downturn in living memory… And it's being inflicted on good Australians through no fault of their own.”
No cycle is exactly the same, but while history may not exactly mirror the past, patterns do emerge. 
There’s only one reason we have devastating house price booms and busts –  and that is speculation induced, in this case, through the privatisation of unearned gains.  And whilst some continue to reap a windfall from exploiting the process, we really need to pause and ask – Who is it really benefitting?
It’s time for change. 
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Who is really benefiting from the property cycle, and at what cost?

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The Abbott government’s National Commission of Audit has recommended the abandonment of Australia’s post-war fiscal structure in favour of a decentralised state-based model of taxation and service delivery that would significantly reduce the Commonwealth’s role in national life. It also recommends targeting pensions, disability insurance, carers, higher education students, foreign aid and the homeless in order to deliver a more sustainable long-term budget.
Across 66 recommendations aimed at reducing government spending by $60 billion to $70 billion per year by 2023, the commission, chaired by business figure Tony Shepherd, has called for a massive reduction in Commonwealth programs and substantial reform and restructuring of the public service. But the most radical call is for a return to pre-war taxation arrangements in which the states would partially control income tax.
Federalism:
The commission has called for the devolution of services to the level closest to those receiving the services — a common enough argument — but has backed it up by calling on the Commonwealth to reduce the current personal income tax rate and replace the reduced rate with an equivalent “state surcharge” revenue from which would be hypothecated to the states. State governments would then have the power to increase or decrease the surcharge “as a means of injecting further competition into the federation”.
GST revenue would also be split between the states on a per capita basis, with smaller states receiving top-up grants from the Commonwealth to ensure they are not worse off. In return, the Commonwealth would then slash tied grants to the states, in effect freeing up the states to use tax revenue as they see fit. Natural disaster payments to the states would also be reduced to one-quarter to one-third of the cost of recovery, and Commonwealth payments to local government would cease.
Transfer and social assistance payments:
The commission calls for a major overhaul of Commonwealth welfare programs:
<ul>
<li>Slowing indexation of the age pension so that it falls to 28% of average weekly earnings over a 15-year period and then remains at that level thereafter; 
</li>
<li>Automatically adjusting the eligibility age to 77% of life expectancy from 2033, such that the pension age would reach 70 in the 2050s; the superannuation preservation age would adjust automatically to be five years under the pension age; 
</li>
<li>The family home, above a high value threshold, would be included in the pension means test for new pensioners, and tapering rates increased, from 2027; 
</li>
<li>Making the Commonwealth Seniors Health Card harder to quality for; 
</li>
<li>Slowing down the roll-out of the National Disability Insurance Scheme; 
</li>
<li>Cutting off Family Tax Benefit A at a significantly lower threshold — just under $100,000 a year compared to $110,000 now, and reducing the level of benefits for families with more than one child; 
</li>
<li>Abolishing Family Tax Benefit B and replacing it with a sole parent family supplement; 
</li>
<li>Forcing young unemployed people to relocate to “higher employment areas” and increasing the taper rate for additional income; 
</li>
<li>More tightly targeting the Disability Support Pension and setting it at the same level as the age pension at the same time; 
</li>
<li>Consolidating indigenous-specific programs and altering arrangements for overseeing indigenous program spending; and 
</li>
<li>Dumping homelessness programs, as they are a state responsibility, and confining the Commonwealth’s social housing role to rent assistance payments.</li>
</ul>
Education:
The recommendations on education are straightforward — the commission wants the Commonwealth out of education as much as possible and wants higher education students to pay much more:
<ul>
<li>States to have full responsibility for schools, with the Commonwealth’s role limited to providing pools of funding for public, Catholic systemic and private schools, and funding capped at 2017 per-student levels indexed by a combination of CPI and the Wage Price Index applying education; 
</li>
<li>States to have full responsibility or vocational education and training; all Commonwealth programs to be abolished; 
</li>
<li>
“Significantly” reducing the size of the Commonwealth Department of Education; and 
</li>
<li>Students to pay a greater share of higher education costs — 55% from 41% now — and accelerating payments under the Higher Education Loan Program.</li>
</ul>
Defence:
The commission is sceptical of the government’s “aspiration” to lift defence spending to 2% of GDP (which would worsen the budget by $11 billion in 2023 if achieved, according to Shepherd) and suggests funding be driven by the capability required to counter the strategic risks Australia faces:
<ul>
<li>Moving the Defence Materiel Organisation back into the Department of Defence and privatising the Defence Housing Authority; 
</li>
<li>Cutting the level of staff in the Department of Defence to 1998 levels; 
</li>
<li>Greater transparency and budget accountability for the Department of Defence; 
</li>
<li>But on intelligence — bizarrely, no discussion of any kind by the commission of Australia’s massive intelligence budget.</li>
</ul>
Health:
While the commission wants the burden of healthcare shifted to the states, it recognises this is a more complex task than in education. Instead, its priority is imposing more user charges in health in order to deter overuse:
<ul>
<li>Punitive taxation for high income earners who don’t take out expanded, more flexible private health insurance, with no access to the private health insurance rebate; 
</li>
<li>All patients to make Medicare co-payments of $15 up to 15 visits a year and $7.50 thereafter, with lower rates for concession card holders; 
</li>
<li>State governments should impose emergency department co-payments for non-emergency treatment to deter avoidance of the GP co-payment; 
</li>
<li>Capping Commonwealth hospitals funding and reducing reporting requirements on hospitals; 
</li>
<li>Cap the Pharmaceutical Benefits Scheme, increase co-payments and deregulate the pharmacy sector; 
</li>
<li>Aged care reforms currently in train are supported, but implementing the full suite of Productivity Commission recommendations in this area; and 
</li>
<li>Means-testing carer payments and targeting them only at carers whose ability to work has been limited, and setting them (eventually) at the same level as the age pension.</li>
</ul>
Industry and employment:
Having proposed that the axe be taken to individual welfare, the commission couldn’t avoid proposing a similar approach to corporate welfare. But it also wants Australia’s lowest wage earners to have their remuneration held down until it reaches 44% of average weekly earnings.
<ul>
<li>Limiting industry assistance to “areas of genuine market failure” and transitional assistance for “genuine structural change”, including closing 22 existing programs (the remaining automotive industry assistance schemes included) costing around $5 billion, and curbing anti-dumping provisions; 
</li>
<li>Abolishing export assistance by closing the Export Finance and Industry Corporation, closing the Export Market Development program, ending tourism grants and cutting back Tourism Australian and Austrade funding; 
</li>
<li>Consolidating and reducing research and development funding; 
</li>
<li>Less independence for the CSIRO “to ensure that resources are being directed at areas of greatest priority”; 
</li>
<li>Curbing the growth in the minimum wage until it is 44% of AWE in 10 years; 
</li>
<li>Capping the paid parental leave scheme at average weekly earnings (but not means-testing it) and redirecting savings to childcare assistance, which the commission believes was more important to female participation than the PPL; and 
</li>
<li>Ending Farm Finance Concessional Loans.</li>
</ul>
Foreign affairs and immigration: 
<ul>
<li>Abandoning the current bipartisan policy of linking foreign aid with Gross National Income and only indexing current levels of foreign aid, and reducing it if fiscal needs require it; 
</li>
<li>Outsourcing visa processing; and 
</li>
<li>Reducing costs of detaining asylum seekers to 2011-13 levels, plus “renegotiating contracts and better targeting of services”.</li>
</ul>
Broadcasting:
<ul>
<li>Benchmarking the ABC and SBS against commercial broadcasters to inform decisions to cut funding.</li>
</ul>
Public service:
<ul>
<li>Abolishing 35 agencies, a list headed by the Australian Public Service Commission (to be folded into the Department of Employment); most casualties though are small advisory boards; 
</li>
<li>Merge or consolidate over 60 other bodies: the biggest is the merger of Customs and Immigration, and 22 health bodies should be considered for merger or consolidation; 
</li>
<li>Privatise Australian Hearing Services, Snowy Hydro Ltd, Defence Housing Australia, ASC, consider privatising Australia Post in the medium-term; 
</li>
<li>Outsource the Department of Human Services payments system; 
</li>
<li>Public service departments to shift away from middle-management heavy structures; 
</li>
<li>Public servants to be required to be “highly productive”; 
</li>
<li>Departments to provide corporate/HR services to small agencies in their portfolios; and 
</li>
<li>A more coherent and systematic alignment of key performance indicators, reporting requirements and program evaluation.</li>
</ul>
Infrastructure:
<ul>
<li>Commonwealth should only invest  in projects “that provide broad economic or social benefits beyond commercial returns but cannot be completely funded in the short-term by user charges and would not otherwise go ahead”; and 
</li>
<li>
“Over time”, move to road-user charging “for all vehicles to the maximum extent possible”.</li>
</ul>
This article first appeared on <a href="https://www.crikey.com.au/" target="_blank">Crikey</a>.
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bkeane-XQ2u7CA6bB

Commission of Audit recommends radical shake-up of state and federal government relations

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GUEST OBSERVATION
Our federal budget is due to be delivered on Tuesday 13 May, 2014 and we are being repeatedly told that there has to be significant cuts to expenditure. Our state budgets will be delivered soon after that date.
In essence it is time for governments to deliver something which is new and helpful to maintain and increase housing stock, but at the same time does not simply drive housing prices higher. This definitely rules out changes to negative gearing as its removal would simply reduce investor activity and available housing stock.
There are two outcomes in our housing markets that are needed:
1. Ensure there is an increase in Australian citizen investment in new housing stock; and
2. Increase the number of first home owners in the market.
The first, in my view, is a state issue
Most of us will have family or friends who have been trying to buy a home and failed because they have been out bid by a cashed-up foreign buyer. One has to ask whether foreign buyers should have equal rights as Australian citizens. I suspect not. That is not to say that foreign buyers are not necessary in our markets, rather they are simply investing in a low risk, very attractive country and for that benefit they should have to pay some type of premium.
Altering our land tax regime would enable us to charge this premium from foreign investors and potentially decrease their activity without necessarily decreasing supply of new stock. This can be done by increasing the land tax payable by non-Australian citizens who own property in our country and at the same time, decrease the rate of land tax charged on property owned by Australian citizens, with all property purchased in the future and currently held, being subjected to these changes. Obviously, the amount of these alterations will need to be modelled and the changes would need to be phased in.
The consequence is clear. Foreign investment activity would be marginally reduced (depending on the altered tax rate applicable to them) and the lower tax rates for Australian citizens should cause increased investment activity by this group. It should also mean that the first home owner may have a better chance of competing when buying.
The second, in my view, is a federal government matter
The first home owner has been forced out of the market simply as a consequence of rising house prices and the consequent level of income needed to support a home loan.
In essence we need to organise things so this group – and everyone buying a property to live in – has adequate cash flow to meet the high home loan repayments. This will particularly be the case when interest rates increase in the medium term.
A relatively simple change to the capital gains tax (CGT) legislation is required.
This change would allow home owners to claim interest deductions on their home loan repayments where they elect to be subject to normal capital gains tax on the profit they make on any future sale of the property. In essence they exchange the right to have their home exempt from capital gains tax in exchange for the right to immediately reduce their taxable income by the interest they are paying on their home loan.
Being brutally honest given the government’s current budget problems they should simply just phase in the removal of the capital gains tax exemption on the family home all together and automatically provide first home owners who buy a new home with the right to claim interest deductions. Politically this might be better for government than altering pension rights and health benefits etc.
Allowing buyers to elect to claim interest as a deduction would mean an improved annual cash flow which will help to make housing more affordable. What is the cash benefit? Well assume someone has a loan of $400,000 and has a tax rate of 22% then the annual benefit at current interest rates would be in the order of $5,000 per annum or roughly about $100 per week.
The impact of this proposal on borrowers as interest rates increase should also not be overlooked. That is, deductibility means that interest rate increases will not have as large a negative impact on our first home owner as they would otherwise. As interest rates increase their deductions increase and their tax liability is reduced. Hence as interest rates rise, defaults on home loans are likely to also be lower.
There needs to be some detailed modelling to work out a progressive phasing in and potentially define a percentage of the interest cost on the home loan that would be allowed to be deductible. Once this is done then a reasonably solid estimate of the cost to the federal budget could be identified.
From any logical perspective, a combination of subjecting all of our owner occupied housing to a form of capital gains tax and allowing our first home owners to access interest tax deductions, does have merit. And provided it is structured in a manner which does not drive housing prices higher, it will also make housing affordable for the next generation.
The negative which could be seen as a benefit by some, is that it would encourage home owners to limit their trading activity in their own home. That is, a home owner would potentially be less inclined to use their home as trading stock and instead use it as a mechanism for wealth generation by buying with the intent of selling following renovation.
In the short-term we are going to be asked to accept some difficult decisions and perhaps the above, implemented carefully by government could potentially soften the perceived blow.
John Edwards is consulting analyst for <a href="https://www.onthehouse.com.au/" target="_blank" rel="nofollow">Onthehouse.com.au</a> and founder of <a href="https://www.residex.com.au/" target="_blank" rel="nofollow">Residex</a>.
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jedwards-8kHM8GNY6d

Two brave budget decisions that would benefit tomorrow’s generation

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GUEST OBSERVATION
Despite what you may think, that is not a rhetorical question.
The <a href="https://www.smartcompany.com.au/finance/tax/41486-ato-data-matching-targets-online-selling">Australian Tax Office</a> is a large federal government agency that comprises about 15% of the Australian Public Service, and has around 24,000 people in more than 60 locations around Australia. It’s a large organisation by any measure. Reinventing any entity that large is no mean feat – and it won't happen quickly.
Some may question why a country of 23 million people needs a tax agency that large. Well, our tax system is complex (way too much so), and the ATO has many taxes to administer. However, while the size itself of the ATO is one thing, how it operates is a whole other issue.
Tax Commissioner Chris Jordan is looking at how the ATO can reinvent itself to make it simpler and easier for people to comply with their tax obligations and to make the ATO a more responsive and “user-friendly” agency. These are not platitudes from the Commissioner; he means it.
In a recent speech, the Commissioner said that with the Coalition government's "open for business" mantra, the push for productivity increases and de-regulation, the ATO must be able to show improvements in efficiency and reductions in red tape. Jordan said he has promised government he will do everything he can "to improve the tax and super experience in Australia – making it simpler and easier to comply". He said he has also promised to change the culture of the ATO and is required to report back to the Assistant Treasurer regularly on that front.
The Commissioner said that building trust in tax administrations was critical to the success of tax systems.
Jordan said that when he was asked to take on the role, he was aware of feedback that despite best intentions, the ATO had become isolated from some of its key stakeholders and segments of the community. Jordan said he knew that trust and confidence needed to be lifted and he was asked to work on relationships with government, other agencies, and, SMEs will be glad to hear, the business community.
The Commissioner said his "fundamental belief is that in order to deliver to government, the ATO must use its power legitimately, build trust in its judgment and demonstrate fairness and integrity". He said the ATO has to design and operate a system for the majority of taxpayers who do the right thing,rather than for the few who don't [Commissioner's emphasis]. Jordan said the ATO was asking itself "how do we design the system so that it suits the 95%, rather than a system designed for 5%?"
The Commissioner said the ATO’s answer to this complex situation is to reinvent itself, transform how it goes about its core business, and make it a contemporary and service-oriented organisation. He acknowledged that reinventing the ATO is a long-term journey — recognising that building trust in a tax administration is not a simple or quick effort.
Jordan said the ATO has to build on the positives of its culture like commitment to its role, to service and taxpayers, integrity and ethics, but, in a frank assessment, he said the ATO also has to “acknowledge the negative aspects of our culture like risk aversion, righteousness, silo mentality and bureaucracy”. SMEs and their advisers would certainly agree.
Jordan said the ATO's approach to accountability needs to change – "to be simpler, clearer and connected to reward and consequence". He said the ATO's measures "have to include views from others and be related to effectiveness and outcomes…We must put a much greater emphasis on how others judge our performance."
Integrity is about character, Jordan said. In terms of the ATO and the tax system, he said  it is about doing the right things consistently by all of the ATO’s stakeholders (e.g. government, business, taxpayers generally) — “safeguarding and future-proofing the system on behalf of the Australian community and dealing with taxpayers in a way that is fair and right in the long run”.
The Commissioner said these thoughts have helped shape the ATO’s strategic directions.
Recognising that time is money for all businesses, Jordan said the ATO is focusing on early discussions between the taxpayer and relevant tax officers responsible for making decisions. These early, face-to-face talks, he said, aim to get to the core issues more quickly and short-circuit unproductive paper wars between the parties. SMEs will no doubt be delighted if the paper war can be won!
The ATO is also seeking to bring to a sensible close unnecessarily long running cases and audits — “recognising when we reach the point of diminishing returns or an impasse”, the Commissioner explained. Of course, if agreement or settlement cannot be reached, the courts will need to decide. In a refreshing stance, the Commissioner said that continuing dialogue for five years or more is not productive, prevents closure and damages trust.
The ATO is at the centre of the tax world in Australia. It deals with millions of taxpayers and their tax issues every day. Overshadowing all of that is the tax law. The Commissioner said it is important to him that the ATO is able to influence law design. He said the ATO has the advantage of seeing what works and doesn’t in practice and can use those insights to advise Treasury. The ATO’s new Integrated Tax Design Unit seeks to ensure requests to Treasury are prioritised and presented from a whole-of-system perspective. Jordan said there is limited capacity to change law and the ATO is looking at other ways to resolve issues.
Seeking the community’s perspective through consultation – knowing what problems exist and their ideas for possible solutions is, in the Commissioner’s view, vital in order for the ATO to provide the right advice to Treasury.
SMEs and businesses generally have avenues to make their views known, for example as I explained in my recent article about the Inspector-General of Taxation’s new work program. And the ATO itself is asking small business owners to join its new small business consultation panel to help boost the ATO’s small business expertise. In addition, the government has asked the Board of Taxation to identify features of the tax system that are hindering SMEs.
There is a lot happening at the ATO and in the tax system. The Commissioner says he is “going to do what I can to make improvements to the tax and super experience by reinventing the ATO”.
“I want the ATO to be trusted and respected…where people choose to comply and we make it as painless as we can. In the end, I want confidence in the ATO and the tax system so that there is conscious willing participation, hopefully higher than the current 95%.”
Can the ATO reinvent itself? The sceptics may have doubts, but the Commissioner is clearly serious and appears intent on giving it “a red hot go”. He has already got some runs on the board, so watch this space.
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/" target="_blank">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany.</a>
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