Tuesday, 8 February 2011

Money for Nothing

I never seem tired of mentioning my dismay at the level of public debate Australia has to endure. To summarize my arguments, debate on the most crucial of issues (e.g., climate change) is often subdued due to political interests; the debate that does exist is raised to its stature by the same political stakeholders as they seek to satisfy their selfish agendas. The scraps of debate we do have are dominated by both major parties settling and insisting on irrelevant positions that totally ignore the elephants in the room.
A case in point is the issue of housing affordability, or rather unaffordability (check here for recent analysis on the matter). For example, there's the not so well kept secret that it is financially better to rent out a house you own rather than live in it, which explains why many prefer to rent a place to live in as they rent their own house to someone else. Real estate taxation is so twisted in favor of the well funded investor that the little people wishing for nothing but a place of their own to live in find themselves outgunned, big time, as the following example demonstrates.

A few years ago the house across the street from us was sold at an auction. The old house was sold to an investor for $560,000. That investor demolished it, built two new houses on the plot instead, lived in there for something like two years in order to rip the most of the owner benefits*, and is now selling. He expects the inferior of the two houses he built to fetch more than a million. A real estate agent we bumped into claims he knows the guy: he makes his living this way, never living in his house much longer than a year.
With that in mind, let's have a musical break:

Before you call the police, rest assured this neighbor followed the law to the letter; he just exploited as much of it as he can to make a bucket load of money. Sure, by demolishing and rebuilding Mr Freddie Freeloader contributed to Australia's GDP, but look what he has done to housing affordability: he took one semi affordable house and gave society two very unaffordable houses instead. With so much money to be made by him in the process and minimal risk, how can anyone of poorer means – that is, any average person who cannot afford to spend a million dollars on a house – expect to be able to buy a house in our area?

The matter of taxation benefits for real estate tycoons that need it the least brings me back to the debate dominating Aussie media at the moment, the one about the merits or the flood levy proposed by the Labor government. As I have argued here before, I don’t mind the levy and I don’t mind being taxed more if my taxes are used for good purposes like public education , public health, public transport, scientific research and welfare for those in need.
However, I do mind when I’m being levied while I and the rest of the tax payers subsidize real estate investments to the sum of many a billions a year. I mind being levied when religious institutions are tax exempt at the cost of around $15 billion a year. I mind being levied when constitution defying religious school chaplains are getting $220 million dollars to evangelize at public state schools. And I do mind when troops from my army are stationed at Afghanistan for no particular reason other than the childish political whims of little leaders with big egos, costing us billions in dollars as well as human lives. What did the soldier killed there last week die for?
Wake up, Australia. Your lives could be so much better, your houses affordable and your children alive with a little bit of awareness on your side!

*The owner benefits our neighbor is expecting to get are tax exemptions on profits from the sale of the house he resides in.

1 comment:

sunny said...

really enjoyed your blog greetings from across the POND......
I visited Israel when life was not so fraught