full
Episode 347 - Karl Fitzgerald
In this episode, Karl Fitzgerald discusses how we should view and tax windfall profits from land banking.
Mentioned in this episode:
Transcript
. Welcome back to you listener.
Speaker:This is the iron fist of the velvet glove podcast, a special episode.
Speaker:Another guest this time, uh, on this occasion, I've got, um, Carl Fitzgerald
Speaker:with me and, uh, welcome aboard Carl.
Speaker:Welcome to the podcast.
Speaker:Yes, Trevor.
Speaker:I feel like I should have my velvet glove.
Speaker:Yeah.
Speaker:So you're down in Victoria and it's cold and you've got a blanket
Speaker:and you've got gloves in your rug.
Speaker:Um, I'm in Queensland, it's probably 22 degrees outside, but I've still got a
Speaker:jumper on that's how soft we are up here.
Speaker:So good to have you on the podcast and people are wondering, well,
Speaker:who the hell is Cal Fitzgerald?
Speaker:We'll call is he's a cyclist and a Renegade economist.
Speaker:If I was to put it into a sentence, is that right?
Speaker:The short description car, how, how do you describe yourself?
Speaker:Um, yeah, well, I wasn't as a mad cyclist until we moved up here,
Speaker:uh, to the Bush five years ago.
Speaker:And since then, um, you know, the size of my girth has expanded as, uh, I
Speaker:replaced cycling with, uh, smashing GOs and thistles and whatever else needs
Speaker:doing here on, uh, our beautiful 27 8.
Speaker:Yes, we'll talk about that.
Speaker:That you're converting it into sort of some sort of community type of
Speaker:property, but, um, we'll get onto that.
Speaker:Uh, but basically you've got an interest and an expertise in economics, and
Speaker:you've got a particular interest in, in land and taxing windfall profits and
Speaker:the wealth that's created, especially through land and monopoly situations
Speaker:and how to rearrange our society.
Speaker:So it's fairer for all.
Speaker:And, um, just by way of background, then you were running a podcast which was
Speaker:called Renegade economists, which is still available for people to download.
Speaker:And I think you got to 601 episode.
Speaker:I have a 14 years, Carl.
Speaker:I mean, where's your resilience and your persistence.
Speaker:I did.
Speaker:It was pretty, um, epic a year, 14 years on community radio.
Speaker:That was podcasted as well.
Speaker:Um, fire the delightful three CR here in Melbourne and, uh, yeah,
Speaker:without an executive producer and having to churn it out weekly or
Speaker:then wound it back to monthly.
Speaker:And, um, yeah, it's just, uh, I don't know.
Speaker:I needed a break, so this is nice.
Speaker:This is the first time I've, um, I've done a podcast interview,
Speaker:uh, since November last year.
Speaker:So, um, yeah.
Speaker:Great to be back on air.
Speaker:Yeah.
Speaker:Well, you'll just slip back into the saddle and feel
Speaker:like you've never been away.
Speaker:So I've done about 350 over seven years.
Speaker:So I'm on track.
Speaker:Um, Yeah, I've got a feeling for what you've done.
Speaker:So, um, so anyway, um, let's talk about the issues that you talked about
Speaker:in your podcast and, and you've been involved with a group called prosper
Speaker:Australia and, and your podcast and the stuff you've been doing.
Speaker:So what is the main theme?
Speaker:The key idea that you've been chasing and trying to.
Speaker:Explain and advocate for, cause you're a communicator with a podcast
Speaker:and you're rolling prosperous trail.
Speaker:You was as an advocate.
Speaker:So you've been trying to get the word out about something.
Speaker:Carl, what is the word you've been trying to get out?
Speaker:Can I summarize it in 13 words or less?
Speaker:That is key.
Speaker:Uh, but essentially we are about rebalancing the so-called level playing
Speaker:field, so that monopolous who have a natural advantage over anyone trying to
Speaker:earn a wage or run a business, uh, pay a little bit more for that legal privilege.
Speaker:And from that, we can use that funding stream to reduce taxes on incomes,
Speaker:across labor and even capital.
Speaker:Yep.
Speaker:So there's a distinction between capital that is productive and
Speaker:capital, which is just extract.
Speaker:Unearned wealth is kind of what we're getting at.
Speaker:Is that rolling?
Speaker:Yes.
Speaker:Unearned income is the issue, uh, that, uh, property owners can, um, can make
Speaker:in their sleep as John Stuart mill said.
Speaker:So, uh, when, when you have that sort of disparity, you know, w w work is
Speaker:scrambling to get to work on time and, you know, 8 59, 9 o'clock in the morning,
Speaker:whereas the monopolist, uh, still ends money, whether they're on the ski slopes
Speaker:of Whistler or in a hammock in Hawaii.
Speaker:So that's, you know, that was, uh, uh, a prominent aspect of political
Speaker:analysis up until world war II.
Speaker:It really was one of the mainstays of, of, uh, public debate, whether
Speaker:you're a conservative or a progressive.
Speaker:So, um, it's all about trying to rekindle, um, this, this loss
Speaker:knowledge base that's been around for virtually thousands of years, right?
Speaker:So there was a recognition back then, but it's been lost.
Speaker:And I can sense that loss as well.
Speaker:I mean, I'm old fashioned Carl, I attend dinner parties and getting to
Speaker:arguments and often with people who own multiple rental properties and,
Speaker:and they will bang on the table about how hard they work in terms of looking
Speaker:after their properties and, and putting up with tenants who damaged them.
Speaker:And, and no doubt there is some time involved, but your analysis
Speaker:is that there's unearned income there that it's, it's profit beyond.
Speaker:What's actually.
Speaker:Normal or deserved.
Speaker:How does this, you know, people would say, well, you know, I
Speaker:worked hard, I paid the rights.
Speaker:I pay the interest.
Speaker:I had the deposit, I saved up my other money.
Speaker:I worked hard for this property portfolio.
Speaker:I have, I deserve everything I get from the, from the capital gains that accrue.
Speaker:So what are you saying?
Speaker:They just say they deserve a return on their capital for sure.
Speaker:But it's the locational value that typically is what rises.
Speaker:Uh, so we should all get a share of that.
Speaker:And, uh, there should be, um, Lower taxes on, um, company structures and so forth.
Speaker:So yeah, basically two thirds of the rent you would pay would
Speaker:reflect the locational value.
Speaker:And one third would be the rental value.
Speaker:So, um, ultimately if we were to have our system in place, people
Speaker:would be paying somewhere around about a six to a 7% land tax, but
Speaker:that would be sufficient along with.
Speaker:Taxes are monopoly to totally remove income tax.
Speaker:So, you know, imagine two or three people living in your household
Speaker:and no one's paying income tax.
Speaker:We've also got rid of GST.
Speaker:Uh, there's, there's a huge tax shift potential there.
Speaker:And, uh, it's interesting that Singapore who uses elements of this
Speaker:system has pretty much set the default rate for a minimum income taxes.
Speaker:As we see the OACD, um, arguing for now for companies to have a minimum 15%, the
Speaker:so-called Warren buffet rule, um, we'll get onto solutions in a little bit, but
Speaker:I just still want to just sort of, um, get over the threshold of a recognition
Speaker:of the unjustness or unfairness of the capital gain that accrues.
Speaker:So, um, Jackie trad is a politician up here and she got into trouble
Speaker:because she owned a rental property.
Speaker:That was going to be near a change to a train station that will, and gabber, I
Speaker:think, associated with different things.
Speaker:And, and because it hadn't been declared properly, there were
Speaker:issues and people saying, oh, you're getting this windfall gain from this
Speaker:infrastructure that's going to be built.
Speaker:And, you know, you should have disclosed it, short story.
Speaker:And this happens all the time where people buy properties and, and then
Speaker:hospitals, infrastructure, shopping centers, other things that increase
Speaker:the value of that, um, piece of land will crop up as part of our
Speaker:civilization of, of, of the, of the land.
Speaker:And, and that's kind of what leads to these, um, sort of windfall profits
Speaker:is, is the other infrastructure that the community is built around
Speaker:this land that, that might've been sitting there doing nothing.
Speaker:Is that part of the argument.
Speaker:We have a saying that land price takes all the gains.
Speaker:So whether it's an increase in the first home buyers, grant, it's
Speaker:volunteers, planting trees, um, near that train station, it's Banksy doing
Speaker:some graffiti near the train station.
Speaker:It's a new hospital.
Speaker:Uh, all of those things make a location location so much more valuable.
Speaker:Uh, and whilst that is the number one strategy in real estate, um, it's
Speaker:moved from, uh, top of the pops in economics, pre-World war one pre uh,
Speaker:20th century, um, into this world now where, uh, it's barely mentioned.
Speaker:And, uh, we need a superstar economists like Joseph Stiglitz to
Speaker:come to Australia and reminders of this, uh, this historical wisdom of,
Speaker:of, uh, leveling the playing field.
Speaker:Um, I was listening to one of your podcasts and you're talking about the
Speaker:land banking and that there's no incentive for developers to release land, to meet.
Speaker:The demand.
Speaker:Do you want to explain that concept?
Speaker:Yes.
Speaker:Well, gee, so I'm, I'm right on the edge of my seat here.
Speaker:Cause uh, uh, for 10 years I've been trying to do this report and I've just
Speaker:sent it to, um, one of Australia's leading investigative journalists
Speaker:to release this time next week.
Speaker:And it's called the staged releases report, peering
Speaker:behind the land supply curtain.
Speaker:And so everyone would have heard, uh, that housing affordability, you
Speaker:know, it's all reliant on housing supply and uh, it's these planning
Speaker:departments who, uh, hold things up with all this red tape bureaucracy
Speaker:that is, uh, the problem we have.
Speaker:We are in cahoots with a university of new south Wales.
Speaker:We bought some very expensive data to actually see what happens once
Speaker:developers get all this land rezoned.
Speaker:And we looked at, uh, the sales over a 20 odd years and analyze the timing
Speaker:and the size of those, uh, N number of properties released to the market
Speaker:in what's called a staged release.
Speaker:And so if listeners, uh, viewers go and visit a master plan community, make
Speaker:sure you check out the display home and just outside at they'll have a giant big
Speaker:billboard, which will probably say stage 33 over, you know, over in some direction.
Speaker:And maybe there'll be a stage, uh, 35.
Speaker:Um, you know, some of these are up to stage 173.
Speaker:Um, which probably means they've done 500 little, um, uh, teases of
Speaker:land supply that they've released to the market in a certain size.
Speaker:And it's certain timing to maximize their profits.
Speaker:Now government typically has, um, given, uh, all care and no responsibility.
Speaker:They do the rezoning and then no one looks at what actually happens.
Speaker:Well, this report goes into it and find some fascinating, um, data
Speaker:points there that really expose just how powerful, uh, land bankers are.
Speaker:Uh, developers can be.
Speaker:Um, and, uh, you know, a couple of, uh, Queensland based, um, developments
Speaker:that we studied, uh, with Springfield.
Speaker:Um, aura was another one, um, up on, up near Calandra.
Speaker:I think Yarrabilba, might've been the other ones.
Speaker:So, um, yeah, we looked at nine master plan communities.
Speaker:Um, Along the east coast and, uh, yeah, we're, we're really hoping that it, it
Speaker:shines a light on what goes on behind that land supply curtain in terms of, um,
Speaker:um, supply in a way disappearing when, um, affordability could be delivered.
Speaker:So they've got capacity to release this land quicker.
Speaker:They can build the dried.
Speaker:There are drainage that the curb and channeling the infrastructure, if that's
Speaker:not the issue, it's just them deciding to hang on to it and drip feed it out so
Speaker:that, well, if they released more of it a lot quicker, just the price would go down.
Speaker:Is that, is that essentially?
Speaker:Yeah.
Speaker:Yeah.
Speaker:There's certainly problems with the way infrastructure is funding.
Speaker:Um, you know, there are problems with the forward planning, um, of, uh,
Speaker:growth corridors, but Queensland, um, from 2007 has been really
Speaker:vigilant in terms of its, um, its monitoring of these growth corridors.
Speaker:And, um, yeah, there's been all sorts of, uh, all sorts of little developments
Speaker:within planning to actually, um, To get, uh, to get things organized
Speaker:at, at, uh, an appropriate level.
Speaker:I'm just pulling up the report now.
Speaker:So in 2007, um, Queensland government released a housing affordability
Speaker:strategy to ensure that the state's land and housing is on the market quickly.
Speaker:And at the lowest cost by 2017, there was a shaping seq report, um, to, uh, help,
Speaker:uh, best practice regional planning, um, regarding the monitoring of land
Speaker:supply and development in 2018 was the land supply development monitoring
Speaker:reports on a very fancy website.
Speaker:Um, and in 2021, I growth areas monitoring team was established, but
Speaker:if you go through and do a word search on all of these reports, There's a
Speaker:stinging criticism of planning and the need to prepare all this supply.
Speaker:But you know, this growth areas, monitoring team is not as one question
Speaker:on what happens once that rezonings done and how supply might be altered.
Speaker:So, um, yeah, I think I'm going to be up for an interesting few weeks, cause
Speaker:this report is probably going to stir the hornet's nest and hopefully, um,
Speaker:get government thinking, you know, incredibly seriously about this promise.
Speaker:We've been told all his supplies gonna make a difference, but look at Springfield
Speaker:43,000 lots have prices gone down at all.
Speaker:Um, it's staggering.
Speaker:When you see the graph, you just can't believe that this has gone on for so long
Speaker:and no one's asked questions about it.
Speaker:Um, so mean if, if Carl Fitzgerald was in charge of society, then if, if
Speaker:a developer benefits from a rezone.
Speaker:Then there should be an obligation perhaps to get cracking with the
Speaker:development and to do the work and to, and then to sell it off.
Speaker:Is that, and not to sit on it is that I can remember my wife's father won a ballot
Speaker:for some land up in north Queensland and they used to be these ballots in
Speaker:the old days where you could just sort of when land, but part of the deal was
Speaker:that you had to undertake certain words.
Speaker:Um, within a certain timeframe, I think, uh, as part of the deal.
Speaker:So a little bit of that philosophy.
Speaker:Well, they have aspects of it.
Speaker:And, um, you know, you've got six years to act on your development approval.
Speaker:I forgot what they call in Queensland, but you know, there are some limitations,
Speaker:but of course, developers have got in there and they get a land tax discount
Speaker:if they hold their land, um, in the development pipeline for a set number of
Speaker:years, you know, it's, it's almost as if government just turns a blind eye to the
Speaker:ever-increasing increase in landfill use.
Speaker:Um, you know, thinking that, uh, the developers doing it hard because they've
Speaker:got to do a couple of months worth of planning paperwork every few years.
Speaker:Right.
Speaker:So while they're in the development phase, I get a discount on land tax.
Speaker:I didn't know that.
Speaker:Yeah.
Speaker:Yeah.
Speaker:So I'm been very lucky to be working with, um, Cameron Marie, Dr.
Speaker:Cameron Murray.
Speaker:Who's one of Queensland's leading progressive economists.
Speaker:Um, yeah.
Speaker:You'll, you'll have to get him onto your podcast somewhere along the way.
Speaker:Cause um, yeah, the two of us have sort of been working in cahoots to try and
Speaker:bring this housing supply story to light.
Speaker:Um, because you know, everyone's talking about housing supply, but the thing I'm
Speaker:actually best known for is, um, measuring.
Speaker:Land and housing.
Speaker:Yes.
Speaker:Please tell that story.
Speaker:Yeah.
Speaker:So, you know, we've got this housing supply crisis.
Speaker:There's probably been 500 press releases over the 18 plus years.
Speaker:I've been working in this job and, um, yeah, government does not measure how
Speaker:many vacant homes there are on a regular basis until the census comes along.
Speaker:And, uh, we get data there that there's some 1.1 million dwellings
Speaker:that were not occupied on census night, but there's nothing in between.
Speaker:And so when developers get to, uh, carry on about they're being
Speaker:recorded, low vacancy levels.
Speaker:So we need more housing supply, but then we, we go.
Speaker:And, um, when we started this in 2007, the real estate Institute of Victoria,
Speaker:we used to get a lot of free press, um, publicizing their vacancy, um, data.
Speaker:And we looked at it and that was like, hang on a minute.
Speaker:This is a voluntary survey conducted by real estate agents
Speaker:who have an incentive to.
Speaker:Uh, downplay the role of vacancies.
Speaker:So, you know, vacancy happens to increase.
Speaker:Ah, I might just miss filling out that survey for the week and this
Speaker:creates, uh, a tightening of the drum.
Speaker:If you like for all the property lobbyists to play, to say, look,
Speaker:there's no, not enough supply.
Speaker:We need to keep, uh, we need to resign some of our mates land out there on
Speaker:the sprawl, come on, which we can then sit on for a little bit longer.
Speaker:Okay.
Speaker:So, and enjoy the resigning.
Speaker:Windfall is it's a beautiful formula.
Speaker:How did you calculate or attempt to calculate this vacancy
Speaker:rate that you didn't trust?
Speaker:Um, the real estate agents to pro to provide?
Speaker:Yeah, well, uh, we did that using, um, water consumption.
Speaker:As a proxy for vacancy.
Speaker:So abnormally low, um, water consumption and, um, yeah, the, uh, I'm just trying
Speaker:to bring this up because, um, yeah, we've got the, um, water bodies providing
Speaker:the data for us and, and we analyze properties that use zero liters of
Speaker:water, um, or, uh, 50 liters of water.
Speaker:And so between those two metrics, we get a top and tail of what
Speaker:potentially might be vacant.
Speaker:And, uh, from that we need, um, we need to, uh, you know, focus on, on
Speaker:why these properties might be vacant.
Speaker:And one of our hypotheses has been that, um, that, uh, they're just sitting
Speaker:on it, waiting for the capital gains.
Speaker:So, um, how did your calculation match up with what the real
Speaker:estate industry had been.
Speaker:Uh, at least three to four times.
Speaker:Ron.
Speaker:Yeah.
Speaker:Yeah.
Speaker:And then it sort of slightly improved after that the REI stopped doing their
Speaker:analysis and, um, Louis Christopher from SQM research, he does a vacancy
Speaker:analysis that scrapes the data on real estate listing websites and quantifies.
Speaker:Anything that's been on the market for more than three weeks is vacant.
Speaker:So that's better, but it still doesn't include all of those properties that
Speaker:might be held by an investor might be, um, in part of a legal quagmire,
Speaker:um, a family estate being split up.
Speaker:None of those are really counted or they're not counted
Speaker:in those vacancy numbers.
Speaker:So, uh, we don't have a true understanding of how much, um, latent supply there is.
Speaker:And when you think that it's costing government, you know, hundreds of
Speaker:thousands of dollars per meter of sprawl, To move roads, you know, all
Speaker:the, uh, headworks infrastructure, all the community services, everything
Speaker:that's required to sprawl, um, costs millions and millions of dollars.
Speaker:And, uh, we we've just turned a blind eye to that in preference
Speaker:for, um, what we know as, uh, the property owning democracy.
Speaker:I think some councils have started charging higher rates.
Speaker:Is that right for vacant properties?
Speaker:They do, but it's only, you know, a couple of hundred bucks extra a quarter.
Speaker:It's not really enough to eat into the, um, eating to the, the, the capital
Speaker:gains that are enjoyed each year.
Speaker:And so, um, recently I was contacted by, uh, Queensland, uh, a courier male
Speaker:journalist who, um, was putting together a report on how 87,000 properties
Speaker:around Brisbane were empty as well.
Speaker:So we're often, um, getting numbers in between that 60 to 90,000,
Speaker:um, sort of property number.
Speaker:But we, you know, every now and again, out of the.
Speaker:The 15 odd years we've been doing this report.
Speaker:We'd see, um, a suburb on the sprawl where there'd be 64.8% of the suburb vacant.
Speaker:And, uh, this, um, development outside of Frankston north here in Melbourne, um,
Speaker:had, uh, pretty much, uh, let the cat out of the bag by turning the water meters
Speaker:on, in one of these developments before, um, they had actually sold the sites.
Speaker:And so, um, that had me thinking eight, nine years ago.
Speaker:How do we look at all these other vacancies through these giant land banks
Speaker:that, um, you know, you can find data that, uh, CU both Queensland and Victoria
Speaker:have around about 400,000 lots that have been approved or in the approval process,
Speaker:um, to, to feed the, the land banks of the future over the next 15, 18, 20 years.
Speaker:Um, yeah.
Speaker:How did the census data match up with, with vacancy rates
Speaker:and your thoughts on it?
Speaker:Did it match up?
Speaker:It was a reasonable, um, we've got a new report coming out soon that we'll
Speaker:delve further into that, but, um, you know, comparing one census to the
Speaker:other, we were, you know, it was always gonna be an interesting one because
Speaker:a, so many people were home on census night and be we'd brought back two or
Speaker:300,000 ex-pats for, from overseas.
Speaker:Um, but yeah, it was interesting to see that that vacancy rates
Speaker:were actually down a little bit compared to, um, the 20, was it 2015?
Speaker:Um, census.
Speaker:So, um, yeah.
Speaker:In, in your final podcast, um, you declared a bit of a victory in Victoria.
Speaker:Um, uh, some sort of windfall profits tax of some sort and,
Speaker:and, uh, the Calico sisters.
Speaker:There's a story there.
Speaker:I could, could you describe what, what that was.
Speaker:Yes.
Speaker:Well, the Calico sisters, their father had bought a property up near
Speaker:Craigieburn, which is on the edge of Melbourne, um, right off the Hume highway.
Speaker:So a pretty good location.
Speaker:And, uh, yeah, I think they bought it for a couple of hundred thousand
Speaker:dollars in 1974 or something.
Speaker:And, um, they sold it to a stock land, I think for $300 million.
Speaker:Um, so yeah, it was a massive, massive windfall.
Speaker:And, um, we've been looking at, um, the nation's most progressive,
Speaker:um, jurisdiction, uh, camp.
Speaker:And what the act does.
Speaker:There were 75% of that $300,000 minus, you know, 150 odd K um, the purchase price.
Speaker:So, you know, basically three quarters of that 300 K would have gone back
Speaker:to the government to fund, um, the necessary infrastructure, um, to
Speaker:reduce pressure on small business.
Speaker:Um, but, uh, yeah, Victoria, um, nowhere else in the country has, um,
Speaker:any sort of rezoning, windfall gains tax on their books outside of the act.
Speaker:So, yeah, we were, you know, we've always put in our budget submissions
Speaker:to the Victorian government and were pleasantly surprised when they finally
Speaker:took up, uh, the rezoning windfall gains tax and, uh, put a 50% charge on
Speaker:it, but limited it to, um, properties.
Speaker:Outside the current growth boundary around Melbourne.
Speaker:So they basically set it up for the next generation of land
Speaker:bankers, um, to pay a 50% share of the windfall gains they receive.
Speaker:And this, this is sort of the triggering things, our land that
Speaker:gets resigned and, and then is sold.
Speaker:And I have to declare to the state government what the profit was and
Speaker:the state government will take her attacks at that point when they sell it.
Speaker:That's right.
Speaker:And so, um, there were lots of debates about the indexation of that and,
Speaker:um, you know, what sort of incentive there could be to help bring some
Speaker:of that land supply onto the model?
Speaker:Um, but yeah, they, you know, we've got this crazy suburban rail
Speaker:loop happening around Melbourne.
Speaker:Supposedly there's going to cost, you know, hundreds of millions of dollars,
Speaker:but, uh, all the land bankers along that train route have been excused.
Speaker:They're going to be able to make their millions.
Speaker:Um, we're just about to resign west Melbourne and giant precinct there.
Speaker:And all the property owners are going to get this massive, uh, gift there as well.
Speaker:And then, uh, probably the same people are going to whinge about having
Speaker:to pay too much in payroll tax too much, uh, you know, tolls, whatever.
Speaker:It's it's this former protection is, and we have throughout society throughout
Speaker:the Westminster system where, you know, property owners are sacrosanct
Speaker:and, you know, uh, who cares if my kids live at home till they're 27
Speaker:and I have to listen to them shagging through the walls, you know, I'd much
Speaker:rather this system it'd be great.
Speaker:You know, it's ludicrous there.
Speaker:We think this is actually a sound system and, you know, lo and behold, uh, you've
Speaker:had floods up there and Brizzy and Lismore's copped it well, and truly, and
Speaker:you know, the weight of all this mortgage debt we're carrying is reducing our
Speaker:flexibility to be able to deal with the sort of issues that are coming our way.
Speaker:Yes.
Speaker:Um, just briefly, you've been saying a few times we, and you've been sort of lobbying
Speaker:as part of the prosper Australia group.
Speaker:Is that right?
Speaker:Do you want to just describe, I know you've recently left them.
Speaker:You had described what you were doing there and what they do.
Speaker:Well, I've got one more week after 18 years at the beloved prosper Australia.
Speaker:So, um, yeah, prosper is a 130 year old, uh, NGO that advocates on behalf of the
Speaker:teachings of Henry George, who was a famous, uh, classical economist who came
Speaker:to Australia in 1890 and, uh, pretty much inspired the, um, free hold title that
Speaker:underpins, um, the leasehold title, sorry, that underpins Canberra and the act.
Speaker:So, um, he was all about, um, this concept of, uh, incredible progress being
Speaker:accompanied by, um, undeniable poverty.
Speaker:And why did the two go hand in hand?
Speaker:And, um, he was quick to really pick up on what, uh, Adam Smith and David Ricardo
Speaker:had said, um, in coded language, but.
Speaker:An extra step further by saying, look, you know, why on earth do we penalize workers?
Speaker:Why do we penalize traders with all of these tariffs back in those days
Speaker:when it's actually those who stole the land from indigenous people,
Speaker:um, those who control these natural opportunities that make the easy money.
Speaker:And so, uh, you know, we, we, uh, have to protect this land.
Speaker:So why don't the people who own the land, pay the, for the governing of the land.
Speaker:Um, so, um, so prosper you were with them and you, your role was to advocate.
Speaker:So you would lobby, um, different politicians.
Speaker:And meet with them and harangue them and, and do all that sort of stuff.
Speaker:That was what you did for . Well, yes, along the way.
Speaker:Um, there were quite a few other angles, but, um, yeah, I mean, I was the director
Speaker:of research for a number of years as well.
Speaker:Uh, but essentially we would hold events.
Speaker:We would, um, create.
Speaker:News based around, um, innovative, um, data analytics to, uh, reveal these
Speaker:stories of monopoly and, and help shine a light on these unfair advantages
Speaker:that, that property owners, um, enjoy.
Speaker:Um, and yeah, back in, uh, 2012.
Speaker:Made a documentary called real estate for ransom.
Speaker:And in it, we went to one of the master planned communities that inspired
Speaker:this latest stage releases report.
Speaker:And, uh, talked about some of these staged releasing and you know, how crazy I did.
Speaker:We didn't say it, but it was sort of like when you hear the term staged releases
Speaker:for someone of our sort of generation, you kind of think back to, um, the Iran
Speaker:hostage is scandal, um, in 79 80 and how they doctored the release of all
Speaker:of these hostages to coincide with the election and the U S election Reagan,
Speaker:um, made a lot of hay out of that one.
Speaker:And, you know, here we have with a stage releases, the same sort of thing.
Speaker:So, um, yeah, there's always, um, interest from the media when there is
Speaker:a, uh, a logical counter story to the way that, um, that, uh, this sort of one
Speaker:eyed nature of, of, um, property always, uh, you know, property always winning.
Speaker:Um, and, uh, you know, I always liked the question, um, who are
Speaker:property rising property prices.
Speaker:Good for you to always hear it in the media as if it's a great thing.
Speaker:But now after 20 odd years of a housing crisis, we're starting to really see
Speaker:the ramifications on over 55, uh, single women and kids, young kids
Speaker:and divorce, these it's, um, it's just the, yeah, I think we're finally
Speaker:reaching the point where people are understanding to understand that this is.
Speaker:Damaging to our society.
Speaker:And even the people who are benefiting from benefiting from it.
Speaker:I E baby boomers mostly are starting to comprehend that, um, yes, your average
Speaker:young person, um, cannot afford to buy a house in the same way that the boomer
Speaker:could when they were in their twenties.
Speaker:And the statistics are just playing to see if you look at the median house of
Speaker:house price and the median wage, and look at the multiple, it's just obvious that,
Speaker:um, the numbers don't stack up for people.
Speaker:So people it's just starting to turn in the last, literally 12
Speaker:months, maybe Carl, where they're starting to go, you know what?
Speaker:This is a problem for Australian society, the great Australian dream,
Speaker:and having that, that sort of, uh, valuation increase in being happy about.
Speaker:And, you know, the courier mail and the newspapers will produce
Speaker:reports every six months.
Speaker:You know, the Brisbane suburbs that have increased most and, you know,
Speaker:look it up and you'll see that your suburbs increase the most and you
Speaker:feel happy about it or whatever.
Speaker:And yeah, I think people are starting to recognize that this is a genuine problem.
Speaker:And, uh, I know, uh, Alan Kohler I'll give this example, Alan Kohler, um,
Speaker:ABC finance guy looked at a property that was like seven kilometers from
Speaker:the Sydney CBD of a certain standard.
Speaker:And then he went online to look in New York for a property, the same distance
Speaker:from New York CBD, same sort of property.
Speaker:And it was half the price.
Speaker:Yeah.
Speaker:Well, they also pay a lot more in property taxes over there.
Speaker:And so this is, you know, if we can talk a little bit about solutions, this is.
Speaker:The, the reality we need to, um, grasp is, you know, we can either pay current
Speaker:prices to, um, the banking system, to the previous owner, or we can channel
Speaker:some of those payments away from, um, the banking system and towards
Speaker:essentially to giving ourselves a tax cut.
Speaker:And that's what would happen if we had, um, a much higher reliance on land
Speaker:taxes, rather than a stamp duties, B payroll, C income tax, you know, um,
Speaker:the company taxes and, uh, yeah, in 2013 I released a report called the
Speaker:total resource rents of Australia.
Speaker:And, um, you'd think, you know, we're here to protect this land and, and
Speaker:govern it and look after it, you'd think you'd know the total value
Speaker:of all of our natural endowment.
Speaker:Well, um, there's very few economists on the planet who have actually done that
Speaker:sort of work to calculate how valuable all of our natural resources are and how much
Speaker:do they actually increase in value each.
Speaker:So by doing that, I could see that, um, if we had, um, a resource rent on
Speaker:our minors, for example, if we had, uh, some sort of licensing fee on our water
Speaker:licenses, um, we had, uh, Cybersquatting fees to deters cybersquatters.
Speaker:Um, we had a share of the satellite orbit rents that, um, are enjoyed by
Speaker:all the telecommunications companies.
Speaker:Um, if there was something, you know, we replaced a company taxes for, um,
Speaker:TV and radio stations, and again, they had a licensing fee based on the value
Speaker:of their, their, um, particular, um, monopolization of that part of the earth.
Speaker:Um, they wouldn't have to borrow so much money to buy that asset up from.
Speaker:But they would know that have this ongoing fee that they had to pay that
Speaker:would rise in value if, uh, some sort of technological development came along.
Speaker:So, um, it's, it's staggering that we don't actually have, uh, futurist
Speaker:departments within treasury who are looking at what the, the next, um,
Speaker:Aspect of privatizing the earth is and preparing the public financing system
Speaker:to defend the community from these rent seekers who come in and bribe
Speaker:their way into the corridors of power.
Speaker:And then, uh, uh, clean up with barely anyone noticing, um, you know, if
Speaker:groups like prosper and the Australia Institute and, and people like cam
Speaker:Mary, uh, you know, and various other academics, don't talk about it.
Speaker:Um, yeah, it should be the bedrock of democratic understanding.
Speaker:So we can actually evolve, um, beyond just voting every four years.
Speaker:But how.
Speaker:Um, as say an, a share in the value of these resources, um, that's equal
Speaker:across the board, across generations.
Speaker:And from that, uh, you know, we can reduce this reliance on debt and, um,
Speaker:the insecurities that are precarious housing situation, um, delivers.
Speaker:And, you know, we have little, little, uh, um, examples of this around the world.
Speaker:And one of them, um, is what a Republican governor did in, um,
Speaker:Alaska in 1974, he set up the Alaska permanent trust fund and, um, scraped
Speaker:off a share of oil rents every year.
Speaker:And now that's upwards of 40 odd trillion dollars.
Speaker:Um, similar thing happens in Norway and, uh, you know, that's only been around for.
Speaker:Barely 30 years.
Speaker:And again, it's, it's probably over 40, $50 trillion.
Speaker:And, uh, in Alaska, everyone gets a roundabout $2,000 a year.
Speaker:It does vary, but, um, that money is most welcomed when it comes to paying
Speaker:off any short-term debts or catching up on, on a bit of dental work or something
Speaker:like that to help, um, people get ahead.
Speaker:So how did that get through in Alaska, but we couldn't get the Rudd sorta.
Speaker:Windfall resource texts through how come we failed.
Speaker:Yeah.
Speaker:Well, I was involved in that debate and it was horrifying to say how poli
Speaker:labor was advised in terms of its.
Speaker:You know, they came out with an asset against them sort of concept rather
Speaker:than trying to get the business council of Australia on board, by reducing
Speaker:company, Texas by four or 5%, rather than the piddly 2% that they offered.
Speaker:Um, and so they, there were left exposed and, uh, who would have thought Gina
Speaker:Rinehart, um, stumbling up onto the back of a truck and yelling at ax.
Speaker:The techs would become a rallying cry for, um, all these tradies, uh, brought
Speaker:up on, um, you know, the, uh, essential dietary fiber that, uh, the mood
Speaker:ocracy provides, um, Rupert Murdoch's media, um, brainwashing sort of thing.
Speaker:And, uh, you know, as good as Ken Henry is as an economist, um, they didn't have that
Speaker:sort of framing side of things together.
Speaker:And, um, You know, we then fast forward to the bill short and
Speaker:federal election a few years ago.
Speaker:And, um, again, it was us and them, and there was no sort of nuance on how to
Speaker:bring people along with, um, you know, this necessary reform and what we're
Speaker:going to do to actually plicate these vested interests along the way that
Speaker:isn't actually going to make it worse.
Speaker:Yeah.
Speaker:So maybe it's it's, it is a us against them scenario, but the us should have
Speaker:included the industrial capitalists who are productive in our community
Speaker:and emphasizing that there, there was a really small group of basically
Speaker:miners and rather than us being poor everyday working Australians versus
Speaker:business in general sort of thing.
Speaker:So, yeah.
Speaker:Yep.
Speaker:Murdoch and, um, you know, I guess it comes down to ice.
Speaker:Again, my dinner party arguments with people.
Speaker:Cow is, um, people are convinced that billionaires earn their
Speaker:wealth, good luck to them.
Speaker:They've taken the risk.
Speaker:They've worked hard, things have fallen into place.
Speaker:And that, that it's theirs to keep all this wealth.
Speaker:And, um, there is this idea that, that billionaires earn their billions.
Speaker:Is, is it true?
Speaker:Do they own their billions?
Speaker:Well, uh, some do and you know, companies that have some, you
Speaker:know, pure entrepreneurial genius, we love to support that.
Speaker:You know, that's part of what Henry George and prosper Australia, um,
Speaker:seriously support and, you know, look at the Atlassian, um, boys, um, cannon
Speaker:Brooks and Scott Farquhar there.
Speaker:Um, obviously amazing coders, really smart individuals, but they were also
Speaker:there at just the right time weren't they had perfect timing and, uh, a lot
Speaker:of their wealth is based off, um, this orig, you know, the publicly developed
Speaker:infrastructure that came out of, uh, us military, um, and, uh, relies on, you
Speaker:know, the sanctity of business contracts that are enforced through the public
Speaker:court system that then feeds up into, um, uh, the share market and the IPO,
Speaker:um, scenario that also is backed up by a system of, um, public, uh, uh, laws.
Speaker:And so.
Speaker:There's an aspect there where sure they should and good money, they've
Speaker:developed great products, but there's also, um, uh, a lot of confidence
Speaker:in protection guaranteed for those business activities because of what,
Speaker:um, the public legal system does all the way through patents and
Speaker:trademarks and copyrights and so forth.
Speaker:And so there is a way that we could have a better valuations of those services,
Speaker:um, of the benefits they receive and they paid something back for that.
Speaker:Um, but you know, I'm, I'm pleased.
Speaker:I haven't heard sure they've bought ridiculously overpriced real estate
Speaker:and they probably have a big real estate, um, sort of investment stream
Speaker:through one of their private trusts.
Speaker:Um, but you'd like to think there would be, um, uh, Entrepreneurs out
Speaker:there who recognize this unearned income and shied away from it
Speaker:because of its its unethical basis.
Speaker:Um, you know, it really is, um, a subtle form of, um, of slavery.
Speaker:If you like the system we have, where we were up to debt and our
Speaker:eyeballs, and we've got no time to think because we're working our
Speaker:brains out and, um, yeah, people, uh, really can't think long-term anymore.
Speaker:That critical lens is gone.
Speaker:And that's part of the reason why podcasts have been so popular is because we're able
Speaker:to bring some of these forgotten skills back to the public imagination and, uh,
Speaker:yeah, breathe in on all this history.
Speaker:That's out.
Speaker:Um, I think the Romans used to do a thing where successful generals,
Speaker:who would be riding the chariot back into Rome and everyone would be
Speaker:throwing confetti at them or whatever.
Speaker:Um, there'd be a guy whose job was to stand behind the successful
Speaker:general and whisper into his ear.
Speaker:Remember, you are butter, man.
Speaker:Just to sort of keep the ego in check quickly, billionaires
Speaker:need somebody similar.
Speaker:Cause I, I would imagine the surrounded by yes.
Speaker:And then he tells me how wonderful they are.
Speaker:So, uh, yeah.
Speaker:That's so, um, so yeah, so there's, there's this sort of a windfall profits
Speaker:in, in land we talked about earlier and there's also windfall profits in.
Speaker:In, in monopoly, industrial sort of businesses or tech companies, I mean,
Speaker:a lot of tech sort of startup stuff.
Speaker:The idea is to be the biggest player in that sector that you are so big, that you
Speaker:then can repel any potential competition.
Speaker:And it's, um, a lot of the super profits come from being so big that
Speaker:nobody else can enter the market.
Speaker:You know, like Uber's idea was to get in first to be the.
Speaker:Uh, company that dominated the market and it would be too
Speaker:expensive for others to come in.
Speaker:So, um, that's part of our civilization.
Speaker:Our commons is, is a recognition that that sort of monopoly is a climb on the
Speaker:comments and needs to be accounted for.
Speaker:Yeah.
Speaker:And one of the classic examples is when Adam, um, apple bought Motorola
Speaker:and everyone thought it was a hugely overpriced, uh, two and a half
Speaker:billion dollars, something like that.
Speaker:And, um, yeah, a couple of months later, the word got out well, what they really
Speaker:bought was Motorola's, uh, uh, uh, Thickets that established around all sorts
Speaker:of mobile phone and electronic processes.
Speaker:And so it was, uh, a form of, uh, market protection and, uh, you know,
Speaker:telling this story always takes me back to when I went to interview, uh,
Speaker:my old professor, John free Ben and I happened to walk past a brand new
Speaker:auditorium near his spanking new office.
Speaker:And it was called the center for market design.
Speaker:Right.
Speaker:And he told me it was for PhD students to study how to erect a monopoly.
Speaker:Well, you didn't tell me that, but that was the impression I got, but
Speaker:basically how do I a rector, a fence around your particular business?
Speaker:So, um, you've faces a little competition as possible.
Speaker:So, um, you know, we've really picked the eyes out of where we were going
Speaker:in terms of, um, a future where, you know, All of these gadgets.
Speaker:We have, you know, in the fifties and sixties, the white goods revolution,
Speaker:everyone thought, you know, you'd have all this leisure time at your fingertips, but,
Speaker:uh, whilst incredible productivity has been enhanced from that side of things.
Speaker:Uh, uh, the F you know, Rockefeller apparently was a really strong
Speaker:supporter of, uh, feminism because he, he recognized that having two income
Speaker:earners within a household would mean that the land rent, uh, the locational
Speaker:value of, uh, someone living in, in a Brisbane would go up and there'd be
Speaker:more profits there for the wealthy.
Speaker:So, um, because two incomes could pay a higher price purchase price.
Speaker:Yeah.
Speaker:And there hasn't really been delineated that, you know, it
Speaker:used to be one income per house.
Speaker:Um, and you do that multiple of incomes to, to household values.
Speaker:But as that.
Speaker:That share of the workload has, has become more equal.
Speaker:Um, yeah, it's, it seems like, um, that's sort of been totally
Speaker:understated in, in the way, um, housing affordability is discussed.
Speaker:Um, we always hear about negative gearing and capital gains tax, 90, 99.
Speaker:Um, the big cuts that, uh, Peter Costello, um, put through, uh, as, as
Speaker:driving, um, this, this, uh, incredible windfall that property owners make.
Speaker:But yeah, there, there are plenty of other aspects that also add to it,
Speaker:but of course that's alongside the liberalization and the banking system
Speaker:where we're major players, um, to, to how, uh, we're in this situation now that, so
Speaker:Kyle you've got a degree in economics.
Speaker:Yes.
Speaker:Yup.
Speaker:Yup.
Speaker:I'm getting the feeling as we both are admirers of, um,
Speaker:of professor Michael Hudson.
Speaker:And, uh, you know, I'm, I've been reading a lot of economics stuff lately.
Speaker:I like reading Yanis Varoufakis and just other ones.
Speaker:And it seems the more you read, the more these people are saying that economists
Speaker:traditionally, the sort of economics that's taught at university, um, the way
Speaker:money is described and how the monetary system works is completely wrong.
Speaker:And the training that our economists are getting at university.
Speaker:Seems to be way off the mark.
Speaker:Do you look back on what you were taught at university?
Speaker:And think my God, I was misled badly.
Speaker:Yeah, well that, that was the primary purpose of me interviewing John Freeborn
Speaker:was to get to that story because in the first semester we were told, you
Speaker:know, output equals labor plus capital.
Speaker:And in one of the last lessons of my undergraduate degree was, uh, sorry,
Speaker:output doesn't equal labor and capital.
Speaker:And we can't tell you why.
Speaker:And, uh, you know, 10 years later, I discovered Henry George and
Speaker:read this incredible book called the corruption of economics by
Speaker:Mason Gaffney and Fred Harrison.
Speaker:And it went through this period, um, that, and, and talked about, you know,
Speaker:the, the, the sense of revolution that was coming, um, with Henry jaw.
Speaker:Um, out and about, you know, really breaking down the economic story.
Speaker:So the everyday person could understand it.
Speaker:Um, and, uh, yeah, they were like, heck we need a diversion plan to come up here.
Speaker:So, um, they figured out that let's get rid of land and hide it in capital is
Speaker:if capital already owns the earth and only concentrate on labor and capital
Speaker:is the two major factors of production.
Speaker:And so, um, the, the influence of land and, um, the ever-present, uh,
Speaker:property bubbles seem to wipe out, uh, economies around the world about
Speaker:every 18 years or so, um, is, is pretty much hidden in the background.
Speaker:And, uh, we're left with, um, this seemingly ever more complex mathematical,
Speaker:um, formulas that, uh, we just, uh, We, you know, people finish their economics
Speaker:degree going well, what the hell?
Speaker:What, what uses is doesn't tell me anything about the real world.
Speaker:Um, but I used to love getting people, uh, thinking as I'd be podcasting and, you
Speaker:know, from a conference somewhere around Australia or somewhere overseas, and you
Speaker:can just basically walk the streets once you understand the story and see, oh, yep.
Speaker:Here's the hipster suburb.
Speaker:Um, I, uh, there's a new infrastructure going past there,
Speaker:out to the next sort of, uh, wow.
Speaker:Is that where all the cool graffiti is and where all the
Speaker:good music venues are out there?
Speaker:Ah, God, I bet you that's where all the property investors are.
Speaker:And you know, now they're doing that from their phone using, um,
Speaker:Uh, software packages, algorithms that plug in the latest demographic
Speaker:trends, uh, local employment rates, new infrastructure plans, uh, you
Speaker:know, rezoning capacities that they've got so many metrics coming in.
Speaker:Um, and then from this stage releases report, we're imagining, they've also
Speaker:got the days on market, the age of stock, um, the auction clearance rates, the, um,
Speaker:first home buyers, uh, lending conditions.
Speaker:All of these factors would feed in to what they're doing and give,
Speaker:um, a hotspot for where to invest.
Speaker:And, um, one of the great tragedies, uh, Yeah.
Speaker:I decided to keep positive in my last podcast show, uh,
Speaker:for the Renegade economists.
Speaker:Um, but yeah, we had this rezoning windfall gains tax legislation go
Speaker:through, but, um, it was only in the last few days we recognize that tacked
Speaker:onto the back end of that legislation was a giant handout to wall street.
Speaker:So we've got this whole phenomena of housing supply and then
Speaker:there's no housing supply.
Speaker:We need more capital, we need more investment.
Speaker:We need more big money.
Speaker:And so wall street, post GFC decided we've already locked up the mortgage market.
Speaker:Why don't we design a form of securitization to
Speaker:corporatize the rental market.
Speaker:So that's, what's been happening in the Northern hemisphere and,
Speaker:uh, Scoma went over to England and came back or breathless
Speaker:about this concept called build.
Speaker:Yep.
Speaker:And so build to rent is, um, is big capital coming in and, uh,
Speaker:basically, uh, setting up PropTech so you can rent from your landlord.
Speaker:And, um, you know, there's some advantages to that, but there's also apparently quite
Speaker:a few examples of data scraping going on and sort of a bit of eavesdropping
Speaker:through those apps where there.
Speaker:Pretty much figuring out what your financial situation is and, uh,
Speaker:starting to, um, move towards a system where rents will be based on, you
Speaker:know, your fullest capacity to pay.
Speaker:So with this, um, build to rent legislation, they gave wall
Speaker:street, um, a 50% discount on their land taxes, but didn't put any.
Speaker:Um, uh, affordability thresholds in place to ensure that it's each
Speaker:property, you know, each developments at least 90% occupied that, you know,
Speaker:um, there is, uh, some affordable housing within that development.
Speaker:None of those metrics we'll put in there.
Speaker:So it's sort of all faith in the market.
Speaker:And as we've seen with this reliance on, on housing supply, just like we saw
Speaker:with the reliance on another form of supply side, thinking that was known
Speaker:as trickle down economics, um, really it it's generally set up to, uh, hold
Speaker:advantage for those in the know, um, for the top end of town, rather than
Speaker:providing a bit of balance so that we all get some returns from this public policy.
Speaker:So, so in the Northern hemisphere, sort of big corporates are getting into
Speaker:owning residential property to rent.
Speaker:Yeah, what's happening and then getting a bunch of it together and
Speaker:then securitizing that and on selling it and refashioning it and molding it.
Speaker:But, but that hasn't happened yet here as it hasn't yet here.
Speaker:Um, uh, there's a company called Blackstone capital and Stephen Schwarzman,
Speaker:um, uh, uh, paraded through the country in about 2018 and had a full page ads in all
Speaker:the major papers, talking about Blackstone and, uh, left the country saying, look,
Speaker:uh, yeah, just the way things are set up.
Speaker:There's no way we could make this work.
Speaker:And, uh, this was from a guy who's earning $800 million a year.
Speaker:Right.
Speaker:Why couldn't it work?
Speaker:Why couldn't they make it work here?
Speaker:Well, because of their progressive land tax rate.
Speaker:So the more, the more land they would own, the higher that land
Speaker:tax bracket they would be in.
Speaker:And from that, um, there would a be some pressure on them to put those properties
Speaker:on the market at the market price rather than at the monopolist price.
Speaker:So, um, yeah, you know, during the GFC, during the COVID crisis during lockdown,
Speaker:uh, As a thousands and thousands of properties that would just pulled from
Speaker:the rental Mack and then left vacant, um, to put a price floor in place to
Speaker:ensure that rents really didn't, um, plummet and, uh, apartment prices
Speaker:in the CBDs, uh, here, um, uh, fall.
Speaker:So that's where a lantex comes in.
Speaker:It, it keeps the property market honest.
Speaker:It ensures that, um, there's some economic day-to-day economic reasoning
Speaker:behind the use of that resource, rather than this long-term power
Speaker:play to orchestrate the supplies.
Speaker:So profits are maximized, right?
Speaker:And it kicks in at a level that a big corporation like that
Speaker:would have felt the pain of it.
Speaker:Whereas it doesn't kick in.
Speaker:Well, as you said, land developers get a.
Speaker:And amnesty while they're in the development stage, so, okay.
Speaker:That'll make sense.
Speaker:Yeah.
Speaker:Yeah.
Speaker:It's a sad, it's a sad story.
Speaker:Uh, dear.
Speaker:So Carl, um, w we'll sort of head towards the finish line here, so
Speaker:you've got this report coming out.
Speaker:That's hopefully you'll get some traction and you'll be interviewed
Speaker:and you know, you're going to appear on Q and a and things like that,
Speaker:perhaps leaving fingers crossed, but maybe you're going to do, uh, what's.
Speaker:What's your plan after that?
Speaker:Is that the answer?
Speaker:What's your, what are you doing now?
Speaker:Well, uh, my wife and I, um, bought this property up, uh, near mom's
Speaker:Brie in central Victoria near.
Speaker:Um, Castlemaine sort of region, hoping to establish what's
Speaker:called a community land trust.
Speaker:And this is, um, a system where the rising value of location is kept within
Speaker:the community to pay off the debts of, of establishing, um, the site.
Speaker:And then, yeah, we'll have this surplus, if you like that, we can invest in our
Speaker:own, um, social venture here on the land, um, whilst, uh, enabling, um,
Speaker:steady, secure, uh, and affordable.
Speaker:So, you know, I imagine two thirds of your mortgage or rental payment, going back to
Speaker:a community, um, of people you're, you're involved in and, uh, acting responsibly
Speaker:to pay off debts and then using that money for good things, your community needs.
Speaker:So this is a housing model that has been, um, very popular overseas.
Speaker:And the UK has gone from two to 400 plus CLTs, um, post global financial
Speaker:crisis in America during the GFC, um, CLTs had a foreclosure rate that
Speaker:was 94% lower than the wider market.
Speaker:And so it's a lot more stable because it removes that speculative
Speaker:component from housing and actually provides affordable support.
Speaker:Rather than, um, supply the highest possible cost.
Speaker:So, uh, yeah, I'm in the process of establishing a new board, um,
Speaker:our, uh, our NGO's, uh, called grounded, grounded land advocacy.
Speaker:So, um, yeah, I'm very lucky to have some of the leading academics in the
Speaker:country involved in that some great advocates and, uh, yeah, very, uh, uh,
Speaker:useful and important philanthropists.
Speaker:So it doesn't involve, uh, people making a donation of land.
Speaker:They own to a trust which has rules then about the ongoing use of the land.
Speaker:Is that what it's, is it philanthropic donation and then rules about
Speaker:use and eventual profit sharing?
Speaker:Is that yeah.
Speaker:Involves somebody being a philanthropist.
Speaker:And giving you something in the beginning.
Speaker:Is that, is that not always, I mean, council has a lot of surplus
Speaker:land, so we're working with some councils to identify that and
Speaker:marry them up with ethical finance.
Speaker:Um, the plan is to know how to make this work.
Speaker:Um, yeah, but, uh, essentially what it is is that the trust will own the land
Speaker:and the resident will own the house.
Speaker:So you only have to borrow 30, maybe 40% of your typical mortgage for
Speaker:the improvements for the building.
Speaker:And then, um, you pay, um, either a yearly Landlease or a, a resale
Speaker:formula when you leave, um, the community, um, later on down the track.
Speaker:So by doing that, um, yeah, the, the pressures of, of, uh, meeting a typical
Speaker:market rent, uh, much, much lower.
Speaker:And, you know, the beauty of living in an intentional community
Speaker:is usually there'll be someone who's, um, you know, a great cook.
Speaker:Another person is into bulk buying or someone who's perhaps a, a bit of an
Speaker:architect or a draftsman, and there'll be a, hopefully a financial plan.
Speaker:Who can help everyone get their finances in order.
Speaker:And so my dream is, you know, to help, uh, you know, kids in their, their
Speaker:mid twenties to mid thirties who lose that last decade, um, of rentals to
Speaker:be part of a CLT where their rental stream goes towards, uh, uh, funding,
Speaker:the small business opportunities for them to, uh, to get going.
Speaker:And, you know, of course in that mix, you'd have the, the age split.
Speaker:So where there may well be, um, you know, over 50 years
Speaker:over 55, uh, involved as well.
Speaker:So, um, yeah, you know, there's so much, you know, we have this show in Australia
Speaker:called neighbors, but, um, so, so few of us actually know our neighbors.
Speaker:Yep.
Speaker:Um, but where do you do get to know them and figure out what they're good
Speaker:at and what you're good at and how you can work together to make things happen?
Speaker:Um, you know, you wonder why there, isn't more of this going on.
Speaker:And when you look at the way the, the housing economic side of things
Speaker:set up, the, the whole, uh, planning legislation, the financing, you know,
Speaker:there's, there's a lot of hurdles put in place to kind of keep channeling people
Speaker:into this, uh, you know, master planned community kind of system, um, that the big
Speaker:developers have rather than, um, seeing housing as a fundamental human right.
Speaker:And, um, setting up all of the, the legislation to support, um, uh, that
Speaker:primary obligation, the government should have to their citizens.
Speaker:One of the silver linings of the whole COVID pandemic has been, the white
Speaker:people have, um, looked a fresh at their lifestyles and what was just assumed
Speaker:to always be there's no other option.
Speaker:I must live in the suburbs and I must commute for over an hour each way into
Speaker:the city and do the same on the way back.
Speaker:People have stopped and looked and gone well for start, you know, they were
Speaker:forced to stay at home and then they thought T I actually quite like this.
Speaker:And then they managed to, you know, keep it up where they
Speaker:can get two or three days.
Speaker:And then really people are starting to examine, how can I make it five days?
Speaker:How can I actually get out of this permanently?
Speaker:So maybe your timing is good in a sense, the pandemic is.
Speaker:I think, um, for people thinking about the possibilities and that there are other
Speaker:options otherwise of living out there.
Speaker:So yeah.
Speaker:Yeah.
Speaker:The blinkers have come down for a little while and you know, where we'd like
Speaker:to think that somewhere along the way, the, um, the cards would fall on the
Speaker:community's side at the table, but, uh, uh, one of the things I've I've do,
Speaker:you know, I kind of kind of call it.
Speaker:Um, grand final day for land economists is when the national accounts are
Speaker:released in, um, late October and, uh, the system, a national accounts,
Speaker:the abs 5, 2 0 4 tables, 61 is the one that values Australia's land.
Speaker:And we're one of only two or three countries in the world.
Speaker:That separate the land from the buildings.
Speaker:And, you know, this is so fundamental to understanding this unearned income aspect.
Speaker:And, uh, I did the numbers.
Speaker:I put the op-ed out there saying, wow, uh, 20, 20, 20, the financial
Speaker:year, 20, 20, 21, I was estimating that we would actually surpass, um,
Speaker:2017 where, uh, land prices increased by $683.5 billion in a single year.
Speaker:And I was like, Well, as a total, it increased by 683 billion.
Speaker:I think it was around about a 7 billion, a trillion dollars in total there.
Speaker:Um, and I said, well, that financial year it's going to be
Speaker:worth about $700 billion increase.
Speaker:Well, it turned out with all of the, um, job seeker and job keeper payments,
Speaker:and then, um, home builder, uh, that I was a full $1 trillion short of what
Speaker:actually happened straight in land prices increased by $1.7 trillion and not one
Speaker:news agency picked up our press release.
Speaker:Yes.
Speaker:Yep.
Speaker:Yep.
Speaker:Like killed me.
Speaker:Yeah.
Speaker:Yeah.
Speaker:Okay.
Speaker:All right.
Speaker:Well, that's been great cow.
Speaker:That's been a really good sort of, uh, overview of, of land and
Speaker:property and monopoly and, and some solutions mixed in amongst there.
Speaker:And for a guy who's been out of podcasting for a few months, you've slipped back
Speaker:into the saddle as if you were never away.
Speaker:So I really appreciate it.
Speaker:And if you've got any more scoops or you just, um, have, uh, an itch that
Speaker:you need to scratch and get behind the microphone, um, just give me a buzz.
Speaker:You're welcome back at any time.
Speaker:Yeah.
Speaker:Well, I'd love to give you an update in another year to see how we're
Speaker:grounded is going and see how many, um, working, um, community groups will
Speaker:have helped get up and over the line.
Speaker:Cause that's really our aim.
Speaker:There's a lot of interesting groups around who are trying to
Speaker:get some form of community led housing up as an alternative.
Speaker:You know that there have been a few groups, uh, trying to, trying to help
Speaker:them, but we're hoping within the community land trust space, we can make
Speaker:a difference so that, um, you know, often you hear these community groups
Speaker:having a five or 10 years worth of meetings and not owning any land and
Speaker:just watching their deposit gap, keep expanding and just pulling their hair.
Speaker:So, um, hopefully we can, um, work together as a bit of a network to,
Speaker:um, marry up all the people, trying to do good things, um, from various
Speaker:perspectives and get some economies of scale moving forward so that, uh,
Speaker:people can have hope, um, in, in life.
Speaker:Again, it feels like there's, uh, a lot of frustration out there.
Speaker:And, um, I, you know, when you think of how much financial pain we all
Speaker:have, um, paying our weekly rents their mortgages, um, just to get to channel
Speaker:some of that pain into a 20, 30 minutes a week, studying some of these plastic,
Speaker:uh, economic stories and principles.
Speaker:Really understanding the rules of economic engagement.
Speaker:Um, it would make life easier and we'd be able to hold our public representatives
Speaker:to account, uh, more easily, uh, yeah.
Speaker:Great to see Eddie.
Speaker:Oh, bead finally getting done again with more and more pressure.
Speaker:You know, one of the Archer rent seekers, uh, across water, across lacing, across
Speaker:mining, across land, he had the playbook from Annapolis and he got busted.
Speaker:So they don't all get away with it.
Speaker:Yeah.
Speaker:So where do people go if they want to keep track of what
Speaker:you're doing with this venture?
Speaker:What's a website or Facebook.
Speaker:What's what, where should they look to keep track of what you're doing?
Speaker:It's old, totally fresh.
Speaker:So it's going to be, um, grounded.org dot a.
Speaker:And, uh, at a sharing on Twitter, I'm on LinkedIn, Carl Fitzgerald, and, uh,
Speaker:yeah, generally around and about, uh, I'll still be riding our PIDs, um, here,
Speaker:there, and everywhere, and trying to get, um, more people to recognize that,
Speaker:you know, another world is possible.
Speaker:'cause when you, Carl, I'm going to end this recording now
Speaker:and thank you for your time.
Speaker:Thanks Carl.
