Bob Day slams Australia’s housing rentiers

By Leith van Onselen

If you get a spare 25 minutes today, you must watch the above maiden parliamentary speech by senator Bob Day, presented on Wednesday.

In the speech, Senator Day tackles two major issues:

  1. Australia’s budding youth unemployment crisis, where he proposes to allow younger workers to ‘opt-out’ of current workplace laws and set their own terms in order to gain work; and
  2. Australia’s housing affordability crisis, where Day is scathing on rent-seeking vested interests – including the property industry and state governments – who have colluded to bestow ridiculously expensive housing on the younger generations.

While Day makes excellent points on both issues, it is the issue of housing policy – starting at around the 10 minute mark in the video above – where he really shines. The below quotes, in particular, are brilliant and highlight just how messed-up Australia’s housing system has become:

The single most important factor affecting housing affordability has been land. In no other area of the economy has the interference of government been so pronounced, so unsuccessful in its implementation and so catastrophic in its effect. The deliberate policy to limit urban growth—that is, limiting the supply of land on the urban fringes of our cities by introducing urban growth boundaries and, at the same time, promoting urban densification—has been a disaster socially, economically and environmentally. And it was all designed for one purpose: to make money. It had nothing to do with the environment, the cost of infrastructure, public transport or any other reason put forward.

Land developers, in cahoots with state government land management agencies, have made billions of dollars and, at the same time, ruined the home ownership prospects of a whole generation of young Australians. If there is one commodity Australia is not short of, it is land. Yet, to buy a block of land on which to build their first home, young couples are forced to camp out overnight by rent-seeking land developers and their state government cronies for the privilege of paying an exorbitant amount of money for a measly one-tenth of an acre of former farmland—land that developers and state governments between them managed to convert from $10,000 a hectare to $1 million a hectare. It leaves all other forms of price gouging in its wake. When challenged about this and asked, ‘Why are you letting this happen?’, a senior state government politician admitted, ‘We need the money.’ It is why politicians are so easily captured and conned by the constant procession of rent-seeking crony capitalists whose job it is is to enrich one group of Australians—themselves—at the expense of another: first homebuyers. Rent seekers are the scourge of business and politics. They tarnish the political process, distort the market and, in the case of land development, distort the entire economy.

The second barrier is the proliferation of federal, state and local government planning and building controls, which add cost, confusion and delay. Let me give you one example. A few years ago I bought a block of land on a very busy main road in one of Australia’s capital cities. I submitted plans to the local shire council to build 12 semidetached home units on the land and, as the zoning allowed for such a development, I did not expect any problems. That was, of course, until I came up against the shire council town planner, who said he would recommend the development for approval subject to the provision of noise attenuation devices across the front of the property. ‘Noise attenuation’ is a fancy name for soundproofing.

I tried to point out to him that there were thousands of kilometres of main roads across the country with many hundreds of thousands of dwellings along them and that it seemed to work in most places without sound attenuation. In any event, I told him that the project was actually geared towards older people, many of whom prefer the noise of traffic and pedestrians. They say they feel safer on a main road than in some quiet backstreet or cul-de-sac. But he was having none of it. He wanted his noise attenuation devices. Naturally, I tried commercial arguments on him, saying that people who did not like noise would not buy them and that the market would sort it out. But, for reasons known only to town planners but obscure to common sense, he rejected all my pleas and I had an acoustic engineer design a front fence to assist with noise attenuation. No sooner had I finished the job than the royal society for the deaf bought the units—all 12 of them. The point in telling that story is not just to mention the addition of unnecessary cost to say that there is no greater insult to the integrity of a human being than for the state to presume that it knows what is best for you.

Australia is lucky to finally have someone in federal parliament who acknowledges that Australia’s unaffordable housing is a problem for the entire nation, not just for those locked-out of home ownership, and has the will to attempt to fix it.

With Day speaking-out, it will be more difficult for our politicians to ignore the issue, which hopefully means that we might finally get some action, albeit begrudgingly.

[email protected]

www.twitter.com/Leithvo

 

Unconventional Economist

Comments

  1. bob day has just recently sold off his $80 million property development company.

    The poacher turns gamekeeper? For some reason, I am skeptical about his motivations

    • This guy is absolutely genuine and Bob Day is an example of someone who is driven to enter political life out of real concern for the community.

      If only there were more like him (and less like Clive Palmer) we would be a better country.

      Having built his development business from the scratch up over more than 30 years he has seen what Planning laws in the country have done and the costs which are being borne by younger Australians seeking their first home.

      He is absolutely right in his comments also.

      • You can’t have everything Lorax…
        At least someone is saying this.

        We can have other people like Dick Smith speak for a lower population (unless we pipe significant amounts of water into arid areas, roads/trains, and mitigate global warming so it’s habitable in 100 years).

      • Statement #1: grass is green.

        Statement #2: the sky is purple.

        Statement 1 is still correct despite statement 2 being wrong.

      • He’s a property developer FFS!

        What do property developers do when they want to develop more property? They spin the line that its all about affordable housing. They all do it. Whenever a developer wants to chop down a forest, or whack up a few hundred houses where there’s no infrastructure, and the entire community is against it, what does the property developer say:

        “We need more affordable housing”

        Do you think for a nanosecond that property developers are interested in affordable housing? Of course they’re not. They want to sell their new development for maximum profit.

        Think people. Think!

      • A green voter imploring others to think….

        I think we’ve reached a Rubicon of expression, like when shoe shiners give stock tips

      • Seriously Lorax, did you miss the part where he sold his developer business.

        He is no longer a developer.

        Once upon a time I used think house prices going up were a good thing, then I realised that they weren’t. Am I and the rest who are like me still evil?

      • “Like when shoe shiners give stock tips.”

        I’d listen to a shoe shiner over most “financial experts” any day of the week!! Although I’ve found if you listen to financial experts (not all, but most) and then do the absolute opposite, you’ll more likely than not do ok.

      • Another self serving politician. Bob Day certainly knows how to play the system for his own economic benefit.

        Who may I ask will benefit by substantially increasing our population?

        Aside from asylum seekers, I can’t see too many new immigrants rushing to our shores if there are fewer and fewer jobs. Wages are not keeping up with inflation and the cost of living in Australia is simply too high.

      • Ha ha. The Greens will save us. Not intentionally, maybe through incompetence.

        There’s a fair argument for a bit of Christianity. The high divorce rate for one. Plus to lessen the need for immigrants.

        Not my cup of tea though. Being a punk is too much fun.

      • Yep lorax, you are spot on.

        Day wants to remove up front infrastructure charges. That is, give new home buyers a capital grant.

        I hope they call it something like “The First Home Owners’ Grant”.

        Previous up front capital grants have made a motza for vendors – so you can imagine what Day’s proposal would do.

        Developers will keep the money, and home buyers will be saddled with the on-going charges.

      • Thanks for that link Lorax.

        Likely going to write him a letter on the weekend and that link will be helpful.

        while we can have our stated intentions, often inconsistencies in our ideology will thwart our attempts at making any real difference.

      • @mig

        Good move in sending that email. If you were as active in contacting members of parliament as commenting here, we probably would have already solved the housing affordability issue 🙂

    • Brilliant. There is good in most people, and it shows more as you get older and nearer the end.

    • Bingo. Yeah ‘sold off’ to his mates and is now set for some hefty kick backs. What a whacker.

      • Because there’s no issue with the housing market in Australia, you sold out to mainstream media for nothing! DH

      • @ Mig

        Huh? You unit.

        What’s Saint Bob’s position on negative gearing?? Let’s see how true to the cause this f*cker really is.

      • @Patrician: just fired off this email, will let you know the response…

        To Whom it may concern,

        I should first like to relate that this is the fist time in about 10 years that I’ve bother contacting a member of our Federal Parliament.

        The gut-wrenching disillusion that ensued from previously dealing with Federal, particularly major party affiliated, politicians was distasteful enough to convince of the futility involved.

        I was starkly taken aback by Senator Day’s impressive maiden speech yesterday, and felt at long last there maybe an honest human being among that crowd — but I’ll leave the adoration there, and await with ebullient expectation Mr Day’s time in Parliament.

        I did have an enquiry, however, if anyone at this address can kindly indulge me: What are Senator Day’s views of restricting Negative Gearing to new builds only?

        Again, I would like this opportunity to congratulate Senator Day on a fine speech, delivered in an amicable and forthright fashion.

        Sincere regards and all the best.

        Yours,

        Miguel de Sousa

      • @ mig

        Well done – you’re not all bad. Keep us posted on any reply.

        Now take your Ritalin and calm down!!

      • Nice letter Mig.

        And stop upsetting Mr Mouse – you know how he gets when you suggest there might be two types of cheese worth eating.

        As for The Lorax – his views on Mr Day are so cynical and jaded that I am going to need a large Pimms No 1 cup to regain focus on the joys of life.

      • Mig, in answer to your question:

        What are Senator Day’s views of restricting Negative Gearing to new builds only?

        Bob Day’s submission to Senate committee on affordable housing:

        While influential bodies like the Productivity Commission and the Reserve Bank focused their attention on demand drivers like capital gains tax treatment, negative gearing, interest rates, readily accessible finance, first home buyers’ grants and high immigration rates, few were looking at the real source of the affordability problem – land supply for new housing stock.

        In other words, lets not do anything about the demand side, its all a supply side problem, and while we’re at it lets “substantially increase our population” as well.

        Sorry mate, but he’s a fraud, and he comes with a lot of God-bothering socially conservative baggage that I’m sure you would find distasteful.

    • Takes a thief to know one. Who gives a rat’s @se about “motivations” when somebody is speaking the truth. It even adds to his credibility that he knows from the inside how the game is rigged for the benefit of the rent seeking parasites of the cancerous FIRE sector to the disadvantage of a whole generation who are being ripped off blind for something as basic as housing.

    • No – Bob Day is absolutely doing this for the right reasons. If you knew more about him you’d soon agree.

    • What Bob Day says about housing is so right that scoundrels will not be able to contradict it. Instead the scoundrels will attack him for other unrelated “defects”. They will attack him for previously being a property developer, and they will attack him for being a Christian. They might also attack him for being old, white and lousy at reverse parking.

      • They might also complain when developers put houses on a lot with the intent to provide housing to people at marginal cost. Outrageous! Their definition of eyesore is something that was build at any time since they bought their house in 1970. Developers are not to problem, just the type of developers who game the market and the system who created them, obviously someone saying how it has been perverted for profit doesn’t fit that mould.
        In fact it is the common man who objects to any change in the built environment at all, that plagues our country and is as bad if not worse than any developer. Guess what? life goes on after you bought your property.

      • Now we have The Claw, who has been spruiking property and talking up the “housing shortage” for as long as I can remember, telling us all what a top bloke Bob Day is.

        If that doesn’t wake you up, what will?

  2. Because we live in Australia, I fear they (vested interests) will simply attack his other policies to discredit his Affordable Housing policy. It’s the kind of logic you have to love about this place.

    The MSM will lap it up, feed on a new carcass, and the circus will roll on.

  3. Hear hear, and he also gave a rousing defence of traditional conservatism as opposed to the current neocon malignant cancer.

  4. With deteriorating job quality and longevity – who – in their right mind – would want to buy a deprecating consumable [RE] in this highly speculative market enviroment.

    skippy… makes tulip mania look rational in comparison.

    • Never seen anyone use deprecating in place of depreciating so I thesaurus’d it and there you go! Interchangeable!

      Skippy: land, over time, will not be a depreciating asset. No one’s making more land (at least last time I checked).

      • Not everyone wants to live in high rise or in a unit.

        You also can’t grow food on that basis.

        Food needs land.

      • How much of Holland’s surface area is arable?
        How much of Australia’s surface area is arable?

        Want to tone down the attitude a fraction?

        I mean, feel free not to, but you can then take further lack of response simply as a non-engagement.

      • Christian Dominionist are a scary bunch. That said the land is not the issue but the building on top of it, that should have been clear.

        Next the main issue is the war on wages and how that reflects on the 25 – 20 year mortgage, compounded by productivity whippings and mobile workforce social policy’s.

        skippy… in what reality is reduced wages, tax breaks to the top quintile, and near abolishing of due diligence on credit underwriting a coherent sociopolitical anything….

      • Mig – Noord or Zuid Holland?

        Basically the whole of the Netherlands is a river delta from the Rhine, Meuse and Scheldt. Fertile soils, plenty of water.

        So yeah they can grow a lot.

        90% of Australia you’re flat out raising 5 head of cattle per km2

      • Ok Mig. You’re smarter/know more/are more clever/are a great bloke/etc.

        Does that make you feel better?

        Cheers 🙂

      • Not true that no one’s making more land. The Netherlands has a long history of creating new land from the sea. We have even created a new province Flevoland.

        I find it a bit ridiculous to suggest that a country as vast as Australia has a shortage of land. The problem is that unlike the Dutch, Australians have not made good use of the land. Australian cities are poorly planned and organised when it comes to public transport and high density living. We have sprawling suburbs that are soulless and depressing. Our bicycle paths are a disgrace.

        Land can be a depreciating asset during recessions, depressions and world wars and environmental disasters. Land can depreciate for many years. The Herengracht index clearly shows that house prices in Amsterdam declined substantially from 1736 to 1815. The price record in 1736 was NOT broken until 2008.

        Land in Australia has become a big fat juicy Ponzi scheme.

      • @Charles Ponzi. I agree the idea Australia is out of land is an outrageous conceit. Water is a problem, one we could solve in a jiffy with solar evaporation if we put our minds to it. Probably an easier task than claiming land from the sea as the Dutch have done for centuries.

        Further, the meme that cities are consuming valuable arable land is equally misguided. Fruit and veg growers have a keen eye for transport costs and improve soils just beyond city limits. Please also note residential is a better and higher use for land than intense vegetables growing. $500k for 450 m2 of serviced land tops any grower use by a giant margin.

      • @david. I never said we were running out of land (though, technically, if the population continues forever, then, we will). I simply said that no one is making more of it. (Leaving aside the reference to reclaiming coastal canal country like the Dutch which it seems to me doesn’t scale terribly well. But I will probably be wrong on that too.)

        Agree re: smart technology solutions could solve a lot of problems. Lots of water in the Ord.

        The concept that farmers can keep moving to meet city limits is an interesting one.

        I’d suggest there might be limits to that model.

      • Arable land Netherlands 31% v Australia 6%

        Ok.
        Surface area:

        Australia: 7,692,024 km²

        Netherlands:41,526 km²

        (7.6e6 * 0.06) = 461, 521 km2

        (4e4* 0.32) = 13,288 km2

        So Australia STILL HAS 40x the arable land and yet NETHERLANDS is the 2nd biggest producer?

        What’s wrong with this picture? And like I said, you can grow UP — hydroponics…

      • Hi Mig,

        Arable land doesn’t go to the quality of the land – basically it’s if its been used to a grow a crop (any crop) in the past 5 years its included.

        Sorghum – Australia’s third largest crop – is used as fodder to feed cattle.

        Sheep / wheat / fodder crop rotation means that all of that land is included as arable.The wheat part might be rotated once every two, three, four years.

        Australian soils on the whole are stuffed. I grew up on the Liverpool Plains – its probably the best inland black soil region in Australia and even there you can’t grow much and suffers from long drought periods.

        As you asked – What’s wrong with this picture? Well soil quailty and rainfall are the two biggies – when was the last time ANY part of the Netherlands was declared in drought??

        Netherlands has a shedload of both great soil (being a river delta) and rainfall. It’s able to concentrate its farming on niche high value products (flowers being one of the main ones) whereas Australia with crap soil basically has to “grow” at least one in every three crops, then slash it and plow just to get some nitrogen into the soil.

        Sorry mate – I usually like most of the points – but in this one you’re talking out of your hat.

      • @Swissy: Except that, as I pointed out several times, the Dutch GROW UP, using hydroponics….

        Holland

        Over the years, hydroponic technology has been growing to meet varying needs throughout the world. Some countries, like Holland, are immediately recognized for producing some of the best hydroponic crops and technology put to extensive use both within the country and far beyond.

        Its like no one bothers to read what I wrote and just enjoys bashing “the guy who thinks he’s soooo smart”….]

        http://generalhydroponics.com/site/index.php/resources/learning_center/a_world_ahead_the_leaders_in_hydroponic_technology/

        Bluey always goes on about Tall Poppy, and the rest of you — even the non-Australians for crying out loud — justify it…

      • Australia, and its culture != Holland (nor Europe in general, as I am sure you appreciate). (Look at cycling).

        I don’t enjoy bashing anyone. Or being bashed. Its infantile, facile and pointless.

        (Much like the Melbourne Football Club’s MM behaviour.)

      • Yes Migtronix, we use hydroponics as well for lettuce, strawberries and tomatoes (to name a few) in Australia for the local market.

        Some crops are well suited to that form of farming – others not so. I haven’t seen too many combo harversters in a glass house taking down the latest hydroponic wheat crop.

        Australia concentrates on grain crops because our climate of short intense rainfall with long sunny periods works well for grain crops. Also “surprise” we are long way away from the people who want to eat our products and grain has a hell of a lot longer shelf life then your average lettuce.

        Australia’s climate and distance from market is a major competitive disadvantage in the type of ag products the Netherlands specialise in – mainly cool weather crops that benefit from glasshouses to prevent frost. In Australia, we would need to air con our indoor hydroponic setups to get the same ideal growing conditions.

      • In Australia, we would need to air con our indoor hydroponic setups to get the same ideal growing conditions.

        OH FFS!! Are you saying they never grew grains in Holland?????

        EDIT: and what about fisheries? Do you have any idea how much seafood we export ALL OVER THE WORLD??

        What about frozen veggies? It’s like you guys DON’T WANT to think outside the “we’ve always done it this way” box, then you wonder why your culture doesn’t reward innovators?!?!?

      • Mig

        I said – In Australia, we would need to air con our indoor hydroponic setups to get the same ideal growing conditions.

        You said – OH FFS!! Are you saying they never grew grains in Holland?????

        How do you get that from my sentence???? Seriously you go off on random tangents then start talking about fisheries instead of addressing the points I’ve made. Yes they grow wheat and barley in the Netherlands – not huge amounts and mainly used to feed their dairy cattle.

        What I do know is this – on my mother’s side they’ve been farmers in central west and northern NSW since the 1800’s. On my Dad’s side they’ve been farmers in northern NSW since they came here in 1960 and before that in Noord Brabant in the NETHERLANDS since records were kept.

        Fair dinkum, we already do frozen vegetables in Australia. You make it sound like this farming caper is dead easy and if only we’d innovate and think outside the square we’d be producing a gazillion fresh vegetables for export.

        So lets go out to Bourke, plonk down some greenhouses and a hydroponic set up and see how you go. That’s classed as agricultural land so you should have no problems growing everything and anything right??? Just that average high in winter is 18C and in summer its 37C so everything cooks – so now you need to either temperature control or go full shade and provide artificial UV lighting. So your power bill makes it uneconomical. And you need to pay for the water cause the average annual rainfall of under 400mm isn’t enough, plus all the fertiliser and nutrients you need to buy for the hydro set up.

        Or maybe the business case for that type of farming just didn’t stack up no matter how much outside the square innovative thinking you did because it was a dumb idea in the first place!!!!!

      • I have no farming experience whatsoever so I’m certainly not saying I know more than you but on the face of it Holland “punches above its weight”, there must be a reason.

        Also Victoria and Tasmânia are much cooler and much bigger than Holland so….

      • No, instead you slap links up and use numbers to slap people down or “but but but hydroponics! but but build up!”

        Victoria, and the SE of Australia, are the most bushfire prone parts of the globe. For 3-4 months of the year, they don’t make for great agriculture, without significants amount of water.

        Listen to Australian farmers. Because, you know, they know what the fk they’re talking about.

      • Mig said – “but on the face of it Holland “punches above its weight”, there must be a reason”

        What – other than the climate, the river delta geography, the highly fertile soils and the rainfall that I talked about???? Sheesh, how many more reasons do you want???

        Well there’s also the fact they’re a member of a trading bloc that has a market of 500 million people, no more than 24 hrs away by road (or river) transport, in Rotterdam they have the largest and busiest port in Europe….

        And then you go
        “Also Victoria and Tasmânia are much cooler and much bigger than Holland so….”

        No they’re not colder. They have bushfires, they have these pesky things called forests and mountains all over them…..so…..your point is what exactly?

      • There are river deltas in Africa and Asia and south America that are a lot fertile than Holland and yet Holland is the world’s SECOND LARGEST producer. Asia has a lot more people/customers. Logic doesn’t add up, Holland is doing more than sheer luck believe me!

        Have another cry marshy it’s just a discussion…

      • The point about fisheries was that we export perishables all over the world without a problem. I used to get California oranges before the drought. Distance isn’t an issue any more if you have product people want at a price they’re prepared to pay. Ask the Dutch….

        EDIT BTW we should all be able to reason about policy and the world around us w/o having hands on experience, it’s what makes us (well some of us) intellectually curious creatures.
        I’m not one of these people who think farmers don’t what they’re doing, I just think they don’t have the right support from policy and banking. I’m willing to bet when they come across a new technology they’d be interested in using, that they get no help from government or funding from banks. Maybe just maybe if more people reasoned more broadly they’d have an appreciation for what we can collectively achieve…

      • Nile delta, in the tropics, Ganges, Amazon all in the tropics. Ganges is also prone to mass flooding and cyclones that wipe out the infrastructure and kill a lot of people every 30-40 years.

        Heaven forbid – it just can’t be the unique combination of fertile soils, flat land, temperate cool climate with good rainfall. A dyke, irrigation infrastructure built up over 800 years, the closeness to a significant market population with minimal trade barriers. The significant IP created in having cheeses known by the town they’re from like Edam, Gouda, Leerdammer. That when people see a tulip they think of the Netherlands. That people pay $30 for a handful of fresh cut flowers.

        No to Mig it MUST be something else.

        OK Mig you got me. I’ll tell you the truth – it was all due to some IT guy who wrote a programme optimising the water flow between the dykes and irrigation canals. That’s the real reason.

        “EDIT BTW we should all be able to reason about policy and the world around us w/o having hands on experience,”
        I agree – but it helps if you also listen to reason.

      • Seriously??? Then why is USA #1 producer? Why didn’t Holland ALWAYS have second spot??

        My God….

        btw for centuries, CENTURIES the Nile Delta fed Europe and the middle east. Centuries. It’s not because of lack of fertile soil they don’t now. It’s politics. Surprise!

        EEDIT all those you things mentioned COUPLED with a population and political environment that embraces technology and actively support food producers is the reason, historical perspectives are only part, and not the modern part, of the story.

        But, please, ignore everything I say and keep farming the same way your family did in 1800. Should work out super well…

      • So humour me, why did your paternal family move to Australia??

        They’d been farming in the best soils in the world since records began, they must have been loaded with money for jam! Why move to shitty soils, tyranny of distance and inclimate weather in the 60s???

      • The Netherlands is a tiny country; its presence on the list is to the high value of flowers and live plants (the Netherlands supply two-thirds of the global total) and vegetables (the Netherlands is a leading supplier of tomatoes and chilies).

        And technology doesn’t help that at all..

        http://www.investopedia.com/financial-edge/0712/top-agricultural-producing-countries.aspx

        The Netherlands is responsible for 22% of the world’s potato exports.
        The Netherlands has the second highest private R&D investment rate (as % of GDP) in agri-food in Europe

        Oh! Wait!
        http://www.hollandtrade.com/sector-information/agriculture-and-food/?bstnum=4909

        Australia, like Holland, has a tiny population and produces far more than it consumes internally, Australia could be doing a lot better.

      • Mig – addressing your points (although why I bother I don’t know)

        The Nile Delta isn’t all that fertile now. The building of the Aswan dam means that they are losing all their sediment to the plains. They also now have massive salinity problems.

        The Dutch (like most other countries) moved from small local land holdings to large corporate run enterprises generating economy of scale. This is a relatively recent occurrence in the past 50 years. Egypt has not – there are land restrictions on how much one can own. Egypt has to use a lot of its land to grow food to feed its people – Netherlands can use a lot of its land to grow flowers. Price of wheat $260 a ton, Price of a tulip……

        “But, please, ignore everything I say and keep farming the same way your family did in 1800. Should work out super well…”

        Yeah – I’ll just hitch the team of bullock cows to the wooden plow and get cracking….because its not like Australian farmers have done nothing to innovate. From the stump jump plow, to merino sheep breeding, mechanical shearing, the combine harvester, pick lady apples….

        No I’ll ignore you cause you have no effing idea what you’re talking about. But keep going with the child like insults….

        Oh that’s right you did

        “So humour me, why did your paternal family move to Australia??

        They’d been farming in the best soils in the world since records began, they must have been loaded with money for jam! Why move to shitty soils, tyranny of distance and inclimate weather in the 60s???”

        Ok I’ll humour you.

        Firstly comparative advantage doesn’t equal supernormal profits. Many ag products are a classic example of a homogenous good.

        Secondly – there was this little thing called WWII followed by the cold war. You may have heard of it.

      • And the very first point made under Key Aspects and Strengths from your Holland trade link

        •The Dutch agricultural sector benefits from Holland’s mild climate, flat and fertile soil and favourable geographical location at the heart of Europe.

      • Dude everything you wrote about Egypt supports my thesis that the problem is mostly political – it could all be rehabilitated tomorrow.

        Portugal doesn’t produce the most port anymore, it’s not because the land turned to sh#t the politics/rent seeking did.

        Those Australian innovations are going back decades, your still not getting it.

      • World War II, the Dutch public authorities implemented a policy aimed at reducing economic and social disparities among farmers, especially across regions. This interventionist and systematic policy was applied without opposition from 1950 to the mid-1980s. It successively made use of different tools and was remarkably coherent : funding was distributed well among research, education, widespread training, modernisation, the development of rural land and support for food industry.

        Glad I could help

        http://www.agter.asso.fr/article267_fr.html

      • Wow – the sheer depths of arrogance you have!

        So you can solve Egypt’s agricultural and salinity problems tomorrow. Quick Mig get on a plane and get over to Cairo – you’re wasted here.
        Its all political – so you should solve it in a jiffy and be back in time for dinner.

        Meanwhile back in the real world.

        Netherlands had the crap bombed out of, most of its infrastructure destroyed and had endured a famine that killed over 20 thousand. So yeah after WWII they concentrated on improving farming. Heard of the Marshall Plan? You pretty much described it.

        Immediately after the war, there was mass rationing – even clogs were rationed. There were severe housing shortages. In the 1950s, there was mass emigration, especially to Canada, Australia and New Zealand. Government-encouraged emigration efforts to reduce population density prompted some 500,000 Dutch people to leave the country after the war.

        More recent inventions – Well I could talk about the GM modified wheats, the selective breeding programme to get PETA off the back regards to mulesing. The protein injection for sheep to make the fleece fall off instead of shearing.

        You’re not helping – you just spout 2 minute google searches and think you know it all. I don’t come on here talking rubbish on IT programming then jump from straw man argument to the next when called out on it.

      • Alright I know nothing and targeted government policies have no effect and having a virtual then a hot religious war blow up around you had no effect on Egypt, like WWII had on Holland.

      • From what I could find easy care sheep seems to be a NZ innovation but whatever, you seem to think I’m blaming the farmers, I’m not I’m blaming politics *cough* houses and holes.

        I don’t doubt what our farmers are capable of if given the support so I don’t understand what your issue is.

        And yes Egypts problems are political or have you had your head buried in the sand?

        BTW when did I ever say I could fix Egypts, or anyone’s politics? I just identified the cause, so nice strawman yourself there. See we can all throw stones in glasshouses, I’m just aware I’m doing it…

      • Lastly I’ll that although I have no, and never claimed to have, farming experience I have watched landline and similar ag shows religiously since I was 16 so I’m not a complete ignoramus on the subject either. On the Dutch the only reason I even knew this was because I had a conversation with some Dutch mates years ago and it blew my mind that such a tiny little country could export so much fresh produce. They told me about the soils but they also told about all the technology they imploy

      • I never said Egypt’s agricultural problems were political – you said that. You brought up other river deltas in a “but look over there – those river deltas are more fertile then the Netherlands” moment (they aren’t as productive – and I told you why).

        Oh and the Portugal port problem you mentioned:
        “Portugal doesn’t produce the most port anymore, it’s not because the land turned to sh#t the politics/rent seeking did.”

        Well actually Portugal is the only place where you can make port. Euro protected designation of origin guidelines and all. We have to call it Tawny in Australia now. Its rent seeking Jim, just not as Mig knows it.

        So your argument as to why Australia doesn’t do as well as the Netherlands in agricultural exports is due to Australian politics (emphasis) on houses and holes.
        Not everything can be blamed on that. This is one of them.

      • Yes I know the designation, like champagne or your Bols. Fortified wine then….

        OK Swift fine I’m wrong. Maybe we should just stop doing agriculture then? After all farmers aren’t the national heros they used to be, now they’re more of a joke that get bailed out every 3 years for drought or flood or fires or cyclones or banks..
        .

        And yes the problems with Egypt like India are political

      • If by that you mean interaction “in the real world” no, I choose not to, I prefer virtual.

        If you mean actively, yes I was responding to swift as I ran around the lake

      • “After all farmers aren’t the national heros they used to be, now they’re more of a joke that get bailed out every 3 years for drought or flood or fires or cyclones or banks..
        .”

        This comment is completely out of touch with reality and renders all previous comments without credibility.

      • What???? Swift spent 3 days convincing me Australia sux to farm and when I acknowledge it is when im bad?? Jeepers the logical flaws are huge!

        I know a couple who sold up their 2 dairy farms that had been in the family for over 100 years, to the Chinese.

        Good! stupid Chinese they don’t know how much it sux to farm Australia.

        Good riddance, we’ve lost so many other industries why not ag? Besides it will all be done by robots sooon

      • Mig – I never said Australia suxs to farm – I tried to explain why the tech in Dutch farming (hydroponics, glasshouses etc) isn’t practical for the vast bulk of Australia.

        If you want to make a case around how our monetary policy and exchange rate are hurting farming in Australia – I’d be all ears and backing you to the hilt!

        I respect your passion on many issues and its great that you take an interest in farming and rural life – far few urban folk do.

      • Swift spent 3 days convincing me Australia sux to farm and when I acknowledge it is when im bad?? Jeepers the logical flaws are huge!

        Just… Wow.

    • Guess what Tulip Mania was powered by??

      Agents began buying and selling futures contracts on the price of tulips. Eventually, tulip options were traded allowing people to trade in fractions of a bulb. This helped poorer investors get around a “denomination” problem; a poor investor couldn’t
      afford a whole bulb but could afford a fraction of one.
      At the peak of “tulip mania” a single rare bulb cost 10 times the average workman’s annual wage!!!!! [That DOES sound familiar!!!!]
      Some took out loans and second mortgages and began selling other assets, e.g., land [BWAHAHAHAHA clearly not Aussies!], to invest in tulips.The price of bulbs nd contracts in bulbs began to increase dramatically. A wealthy merchant could invest $1000 in bulbs and then resell them shortly for $20,000. This buying frenzy began to drive the market. Diaries indicate that many buyers of futures contracts never even saw a bulb and some didn’t even know what a bulb was!

      http://faculty.ses.wsu.edu/rayb/420/Case%20study_%20tulip%20mania.pdf

      We learn nothing! The bankers make sure of that…

      • “We learn nothing.”

        We’ve learnt that we’re slaves to our “animal spirits” and we’re doomed to repeat the sins of the past over and over again. Also, when people say “but this time it’s different” then it’s probably time to think about selling risky assets.

      • The bankers created the crisis while rewarding themselves with obscene salaries and bonuses. The global debt crisis did not happen by accident.

        Once the economic crisis can no longer be delayed, our global leaders will divert attention from themselves and the fraudulent banking system by starting another World War.

        We should be watching events in The Ukraine with an open mind. Truth is the first casualty of war. We should be questioning everything we receive in the media from all sides. We should not allow ourselves to be manipulated into fighting another war.

        Who is it that benefits from war? Who is making money from selling military weapons? Who is funding the military? Who is benefitting from rampant inflation in house prices? Who will benefit from a sudden increase in immigration to Australia? Who will benefit from lower wages? Who is benefitting from emergency low interest rates?

        The problem is that people do not think for themselves but act like sheep.

      • Tell me more about these tulip bulbs, they sound like a winner, I want in….:roll:

        I had to listen to my brother-in-law at the weekend spout more bile about how they want to use their super to invest in some gov’ property scheme (as a friend of theirs said you cannot lose) and you get paid $1000 per annum by the government.

        I responded sarcastically by saying that I think it was a great idea to risk your future retirement funds for the sake of getting $1000 guaranteed by the government.

        Seriously………..F*cking morons! 💡

    • @swifty — to add to your info, a lot of cattle stations are in very, very remote parts of Australia that may not be particularly arable.

      Talking to a local sheep farmer who runs a lot of sheep up in the table lands around Armidale etc, that land is not terribly wet, and hasn’t been for a long time.

      • tmarsh – the world bank figures for arable land is what is currently under cropping or temporarily fallow. I would say at best we could convert an additional 10% of what is “agricultural land” (ie pasture for stock) into arable land giving around 15% total arable.

        The netherlands you could pretty much convert all of its ag land into intensive market gardening if you wanted.

        My uncle runs a sheep farm at Tingha and the old man has cattle near Tamworth – if there’s one certainty in life it’s a farmer complaining about the weather!

      • 🙂

        We had about 300mm in the Northern Rivers in that downpour and I was lamenting the lack of sun for some cycling and also to kick the fruit trees etc along now I want more rain! 🙂

  5. Senator Day points out only one issue worth noting, but as the representative of Family First, that’s where any good ends. Family First destroys any notion of separation of Church and State.

    • The separation of belief system, thoughts and actions is an impossibility anyhow…

      For every individual, in every situation, it’s not an issue of “IF belief/bias”, but of “What belief/bias”.

    • Thank you surfless.

      Voting for Bob Day because you like his housing policy is like voting for Clive Palmer because he’s against the GP co-payment. Sure, you might agree with one policy position, but its the rest of the crap that comes with the package you have to worry about.

  6. I think he shone more in the first half, where he actually provided some ideas on how to solve a real problem. The second half was more of an attack on those who’ve created the problem, but didn’t touch on any solutions…

    As he pointed out, there is a $400 gap between weekly welfare payments and minimum wage, which is ridiculous. Individuals should be able to choose the conditions under which they are employed, including wages.

    • which is ridiculous

      Absolutely! And I remember I was affected by this once, I had to WORK FOR FREE because they couldn’t pay me less than award and I didn’t have the commercial experience for them to justify it. So I WORKED FOR FREE for 2 months — tell me how great that is again?

      • Sounds like a grad dilemma??

        It’s SO hard for grads to get “the required minimum experience” theses days…..it was hard enough for me, and I’m 33, and now run my own business…

        But grads are having a hard time of it these days (I’m thinking mainly of engineering grads).

      • @burb yup, back in the day. First out I tried working for myself, got screwed on 2 contracts and decided I needed to know more about business before trying again. But even though I had actual production code out in the world, because I hadn’t had a boss I wasn’t considered commercially tested.

        Guess what happened when they finally started paying me? I worked long enough to have the money to get the hell out of Australia!

      • Are you retarded? I learnt NOTHING, I’ve been coding since I was 11. What I did was work for free until they couldn’t justify it anymore because other people wanted to pinch me.

      • It’s SO hard for grads to get “the required minimum experience” theses days…..it was hard enough for me, and I’m 33, and now run my own business…

        But grads are having a hard time of it these days (I’m thinking mainly of engineering grads).

        That’s because businesses can now import experienced workers at grad wages on 457 visas.

        The abrogation of responsibility to society by private industry and the Governments it has sponsored over the last couple of decades, is staggering.

      • So I WORKED FOR FREE for 2 months

        As opposed to now, where you get paid to do no work, because there is no way you can be productive with the amount of time you spend here.

        If I was your employer I’d be frickin’ spewing if I knew how much time you waste here.

        10,000 posts a day, and no wiser!

      • Lorax Lorax Lorax, I don’t have bosses any more I have clients. A large part of that is so I don’t have to deal with complete wankers like you who do f#ck all and piss and moan at their employeees — never paying them enough to be able to buy a house…

        2014-09-05 23:44:10,533 INFO http-thread-pool-8080(3) [ARVReport] – {“Empty”:”0.0″,”Occupied”:”27″,”AwaitingTransfer”:”0″,”Reserved”:”2″,”Reason”:”null”,”Comments”:”null”} — ICU
        2014-09-05 23:44:10,533 INFO http-thread-pool-8080(3) [ARVReport] – {“Empty”:”0.0″,”Occupied”:”11″,”AwaitingTransfer”:”0″,”Reserved”:”5″,”Reason”:”null”,”Comments”:”null”}- HDU

        That Lorax is the output of a realtime occupancy listing service — this job used to be done by the Patient Access Nurse 4 times a day, meaning it was always stale except for 4 times a day. But more than that, if the PAN made a mistake and the occupancy was listed below a threshold, it costs the unit $100K in funding for that day. Guess how many times in the 365 days they got that wrong? It was more that 10.

        Can you do the MATHS Lorax???? It means with this hocky little automated service I save the unit > $1 million pa. Guess what they pay me? About an fifth of that…..

        You were in business right Lorax? Tell me, is it worth to pay me $200k, even if I spent so much time on MB, to save them more that $1000K a year????

        IDIOT

    • That ‘choice’ becomes easier when you’re not running record high rates of immigration.

      The concept if a living wage is a very civilized notion, and a cornerstone of ‘why’ we collaborate as people. History however shows business has a very poor record of offering it

      • If you’re low skilled you generally don’t have a lot (if any) bargaining power. So what you really mean is so employers can pick the wages and conditions, because that is what young people will face.

      • “If you’re low skilled you generally don’t have a lot (if any) bargaining power.”

        @RobW – Which is why the opportunity to gain experience, even on wages lower than minimum wage, is worthwhile over the long term. It’s an opportunity to gain skills without needing to volunteer for unpaid work.

      • Which is why the opportunity to gain experience, even on wages lower than minimum wage, is worthwhile over the long term. It’s an opportunity to gain skills without needing to volunteer for unpaid work.
        Again, gaining skills is important but, the assumption seems to be that paid jobs will magically appear once skills are acquired. That isn’t how capitalism works mate – it never has and it never will. You need to think this through a bit more as your solution wont solve the unemployment and underemployment problems and will lead to new ones.

      • Bullion. All good in theory.

        The problem is — and in regional areas it’s very real — employers will push downward pressure on wages of experienced employees.

        How does offering $16 cash on public holidays to a 30 year old sound. Take it or leave it.

        Again, they have no bargaining power.

        What you’re talking about is great where there are jobs. I.e. #jobs approaches the # of seekers (or vice versa).

        Again, not an economist, so I am probably wrong.

    • The minimum wage is determined by the cost of living, the biggest of which is housing. It is a reflection of a choice by a society that anyone who is working should be at least be able to afford food, accommodation and clothing. Research have shown time and time again that unemployment doesn’t go up when the minimum wage is increased. The increase shows up in the price of the good and services instead.

      A better place to target reform should be the penalty rate. If you restrict it only to overtime and remove the weekend penalty, it will encourage employers to hire new people for the weekend. The ghost of ‘Work No Choice’ will not go away easily though.

      • Can you expand on the last point?

        e.g. Hospitality where everyone on Sunday is time x 1.5 (or whatever the prevailing rate is). Doesn’t matter who is working.

  7. NEW ZEALAND NATIONAL (LIBERAL / REPUBLICAN) PARTY SOARS IN LATEST FAIRFAX POLL … GENERAL ELECTION 20 SEPTEMBER …

    National soars without Collins – poll | Fairfax New Zealand

    http://www.stuff.co.nz/national/politics/polls/10461903/National-soars-without-Collins-poll

    Two weeks out from the election National’s popularity has soared after the dumping of justice minister Judith Collins, putting John Key on course for a thumping victory on the evidence of a new Stuff.co.nz/Ipsos poll.

    The survey, taken over the five days starting with Collins’ resignation on Saturday, saw National surge to 54.2 per cent, up 3.4, while Labour fell.

    If that level of support was mirrored on election day it would give National a 15-seat majority over all the other parties combined, even before taking into account support parties like ACT and UnitedFuture.

    The shift to conservative values … with the young too … | Hugh Pavletich | Scoop News

    http://www.scoop.co.nz/stories/AK1409/S00005/the-shift-to-conservative-values-with-the-young-too.htm

  8. +1000

    “Yet, to buy a block of land on which to build their first home, young couples are forced to camp out overnight by rent-seeking land developers and their state government cronies for the privilege of paying an exorbitant amount of money for a measly one-tenth of an acre of former farmland—land that developers and state governments between them managed to convert from $10,000 a hectare to $1 million a hectare. It leaves all other forms of price gouging in its wake. When challenged about this and asked, ‘Why are you letting this happen?’, a senior state government politician admitted, ‘We need the money.’ It is why politicians are so easily captured and conned by the constant procession of rent-seeking crony capitalists whose job it is is to enrich one group of Australians—themselves—at the expense of another: first homebuyers. Rent seekers are the scourge of business and politics. They tarnish the political process, distort the market and, in the case of land development, distort the entire economy.’

    • ‘Why are you letting this happen?’ … a senior state government politician admitted, ‘We need the money.’

      I despise the willful stupidity of this world.

      “We need the money”.. ?

      It’s only electronic digits.

      Australian Constitution, s115

      A State shall not coin money, nor make anything but gold and silver coin a legal tender in payment of debts.

  9. Nice speech on the supply side issues in housing affordability. Zero detail on how the Senate can fix it. Zero acknowlegement of the obvious demand side drivers.

    What legislation does Bob propose to pass/support in the Senate to increase the supply of serviced residential land?

    • That’s because Bob Day is only concerned about the supply side.

      He is a property developer who advocates “substantially increasing our population”. Why? Because he can sell more houses.

      He has no interest in the demand side (NG, CGT concessions, population pressures) because he wants more demand.

      Wake up people!

      http://www.nationbuild.com/nb-immigration.php

      • How heinous……! Wanting to sell stuff at honest margins, employing Australians to make it; why is this any different to any other way an economy grows, which is by making stuff honestly and competitively?

        Behind every economic rent-gouging scam is a Baptists and Bootleggers effect, and hysterical neo-pagan Gaia-theocrats are the “Baptists” to the urban land rentier “Bootleggers”.

  10. Day’s position is far too ideological for my liking. He wants to believe that government interference (artificial barriers to entry) are the reason for unemployment and unaffordable housing – because that suits his preconceived ideology. Everyone has an ideology, not saying there is anything wrong with that, but it should be taken into account at least.
    Is the main problem in the labour and housing market really government interference on the supply side? Its arguable.
    – If unemployment was a supply side problem wouldn’t standard economics say that high unemployment should be coupled with high inflation and low real wages growth?
    – If housing affordability was purely a supply side problem – no question it is important – how does Day explain historically low rental yields? Remember that the cost of housing is the actual or imputed rent. Low rental yields suggest that the real problem is an artificially low required return on housing as an investment – ie. its a demand problem. The way to solve that would be to raise the after tax cost of capital for housing investment – ie remove the tax rorts. Alternatively the government could cap rents through below market public housing – would Day support that? Probably not.

    • If you were in business you’d know that OH&S makes it a ridiculous hassle for small business to hire.. And the added overhead on top of basic wages feeds into the nations uncompetitive costs..

      The nanny state is answerable only to ……. the insurance industry rent seekers!

      • Am in business.
        And I know that the greatest impediment to employing more staff is a lack of demand for the product the business is selling.
        OHS, red tape blah blah blah is trivial by comparison.

    • If housing affordability was purely a supply side problem – no question it is important – how does Day explain historically low rental yields?

      Bob Day is a smart guy. He probably understands how all income streams tend to be valued against the so-called “risk free” return of government bonds. Low interest rates world-wide explain why shares, bonds and houses are highly valued relative to their yield.

      If you really want to know what he thinks you could try asking him. He might even turn up here.

      • Falling discount rates is a demand side story not a supply side one. Surely Day wouldn’t suggest that.

        Likewise perhaps he could explain why rents as a share of household income haven’t exploded anywhere near as much as prices as a multiple of household income – as they surely should if supply was the major problem.

      • Bob Day is a property developer who advocates “substantially increasing our population”. Why? Because he can sell more houses.

        Bob Day is a senator who advocates getting a job and a house for every Australian family. He knows about housing supply problems because he USED TO BE a developer.

      • Likewise perhaps he could explain why rents as a share of household income haven’t exploded anywhere near as much as prices as a multiple of household income – as they surely should if supply was the major problem.

        No. That is wrong. No reasonable person would expect rents as a share of household income to increase in a similar fashion to prices as a multiple of household income.
        Only a desperate shortage-denier would claim such nonsense.

      • One of the answers to Sweeper’s question, is that first home buyers now will take 25 years to pay the mortgage off, versus 10 years as was the norm when median multiples were closer to 3. This is the case regardless of low interest rates now versus high interest rates “then” (if they were – this is not necessarily the case at all). In fact in US cities where the median multiple is 3 and now that interest rates are low to try and stimulate the economy, they are paying off mortgages in an average of 7 years.

        But rent cannot be higher than the maximum that a household can pay in a given week.

        A disconnect between share prices and earnings is evidence of a bubble in the share market, and a disconnect between house prices and rents, is evidence of a bubble in house prices.

        Bear in mind that credit is almost irrelevant to housing affordability and “pricing out” of some proportion of the population, which is decided by “supply”, period. There are plenty of countries in the world with median multiples of over 10, no credit at all for most of the population, and homes being bought only from years of very hard work and savings, and family assistance. And 50% of the population priced out of the formal housing market altogether.

      • Bob Day is a senator who advocates getting a job and a house for every Australian family. He knows about housing supply problems because he USED TO BE a developer.

        Does that mean Clive Palmer is an MP who knows about mining because he used to be a miner?

        He’s there to lobby for his industry. Pure and simple.

      • Does that mean Clive Palmer is an MP who knows about mining because he used to be a miner?

        I would expect that Clive Palmer would know about mining if he used to be a miner. What a strange question. Sometimes I think I am posting to a bunch of 1st graders here.

      • Yeah well, this 1st grader will not lie down and accept the view of a property investor who spends his days roaming the intertubes spruiking a housing shortage.

        How many investment properties do you have Claw? Come on, let us all know.

      • My exposure to the property market is a share of a house that cost $330,000. I would be delighted to see prices and rents fall back to historical norms. Hence my interest in solving the shortage problem.

      • “Desperate shortage denier” hahaha. I don’t even really care that much. If the problem was on the supply side it would be bloody obvious and we wouldn’t be debating it. Thats all i’m saying, nobody would be talking interest rates, bubbles, tax rorts etc. etc.
        Have a think about your model for a second:
        If the the run up in house prices has been supply driven and not driven by investor demand, that would imply that housing investors have been willing to pay the same rental multiple for houses – agree?
        So assume this is the case, the rental multiple is fixed.
        If the govenment chokes supply in the face of strong consumption demand for housing, the consumption price of housing (rent/imputed rent) has to increase as a share of disposable household income. Lets say as a share of disposable income it doubles.
        If the rental multiple is fixed, then house prices as a multiple of disposable household income have to double as well.
        In summary, in a supply constrained market, rents do the adjusting, rental multpiles are fixed and changes in rents as a share of disposable income and prices as a multiple of disposable income are joint at the hip.
        The only way you can have a situation where house prices as a multiple of household incomes triple while rents as a share of household income barely move, is if housing investors are prepared to pay a higher rental multiple for houses.
        That is a demand problem.

      • Sweeper, The housing situation is clearly the result of both supply and demand. Only a moron would try to isolate it to one or the other. BOTH are factors.
        In Sydney the situation is dire. Rents have gone as high as they can go and prices have gone as high as they can go.
        What used to rent for 1/3 a normal wage now rents for 1/2 a normal wage. What used to sell for 3 times income at 13.5% interest now sells for 9 times income at 6% interest. They are both maxed out in their own way. Identical rises? no. Both maxed out? yes.
        House PE ratios have risen. A demand issue? yes.
        Rent for dogboxes have risen. A supply issue? yes.
        Is price set by supply and demand? yes.
        Is price set by supply only and not demand? no.
        Is price set by demand only and not supply? no.
        Is price set by supply and demand? yes.
        Does that mean that both supply and demand are important? yes.
        Is it OK to parrot dogma about demand and ignore supply? no.
        Is it OK to parrot dogma about supply and ignore demand? no.

  11. Go Bob. May the momentum of your Maiden Speech continue into action – You’ll be judged in time on your actions and outcomes, not your words, and I wish you all the best.

  12. As it says in the video title… this was his ‘Maiden Speech’ first day in school.

    Politics inevitably corrupts so lets keep track of this guys progress to see if he actually holds the same line and achieves any of his ‘goals’…

    How long will it take for the ‘system’ to wear him down and buy him off???

    Lets hope at least he gets one reform through before all the moralistic bluster gets watered down!

  13. “there is no greater insult to the integrity of a human being than for the state to presume that it knows what is best for you.”

    Hear hear!

    And yes, that was John Stone in the gallery.

  14. At the risk of playing Devil’s Advocate, I don’t agree with this analysis.

    It is wrong for the same reason that so much economic analysis in Australia is wrong: it fails to account for the effects of constitutional political economy.

    The question one should ask is not, “Why is land so expensive in and around the State and Territory capital cities?”

    The questions one should ask are:

    a) “Why is an increasing proportion of Australia’s population squeezed into the State and Territory capital cities?”

    b) “Why are cities like Newcastle or Mackay or Townsville not vast metropolises?” and

    c) “Why does the proportion of the population in and around the capitals increase even as the population increases (contrary to the ‘critical mass’ hypothesis of city formation)?”

    The answer lies in Australia’s system of “elective dictatorship”.

    Under the Westminster system – with its generally supine Legislature – the Cabinet has vast discretion to disburse economic rents to the Ministers’ favourites. Combined with the psychological phenomenon of “presenteeism” (he tendency of human beings to look more favourably upon – and to reward – those who are physically present) this creates a powerful centripetal force drawing people in towards the “Fountainhead of Rents”, the Cabinet. Proximity to Cabinet is a “positional good”. You simply cannot increase its supply, even in principle.

    This phenomenon has been known to historians – if not economists – for centuries. It is the reason that Courtiers had to remain at Court. Absence from Court was a death sentence.

    With the evolution of Absolute Monarchy into the Elective Dictatorship of the modern Westminster system, this effect has not gone away. Court has simply been replaced by Cabinet. Ministers reward those modern-day courtiers – the “primary rent-seekers” – who are physically proximate. The elevated incomes of the primary rent-seekers draws in a second circle of “secondary rent-seekers”, who in turn draw in further circles, the ripple of rents radiating outwards from the “fountainhead”.

    At some distance from the centre there is a circle of equilibrium (like the Heliopause around the Sun with the flow of rents corresponding to the solar wind) at which the costs of approaching the fountainhead exceed the benefits. This is the capital city urban boundary. Beyond it lies the geographic equivalent of inter-stellar space.

    Reducing costs at this boundary may push the “Metropause” outward slightly, but only by drawing in more people from smaller towns far beyond it. (In addition, any relaxation in pressure will encourage the Rulers at the centre to import more people from beyond the borders of the country.)

    Increasing supply at the Metropause may provide some temporary relief. But don’t expect it to last.

    • There was a massive difference, monarchs needed the aristocratic class to support warfare.

      Today they gin up money for nothing and buy all the support they need with it.

      Great post Stephen..

    • great post.

      Obviously I’m a committed supply side guy. You fix shortages with supply….it’s that simple.

      That said you need to identify that commodity that is truly under supplied and it may not be the first thing you think of.

      in answer to your question:
      Why are cities like Newcastle or Mackay or Townsville not vast metropolises?

      I suspect what missing is teir1 educational opportunities. the absence of these makes it difficult to attract top notch talent and this feeds a degenerative loop.

      • And why are there no “teir1 educational opportunities” in such places??

        Because the capital city Cabinet Ministers regard it as a self-evident truth that all such “teir1 educational opportunities” should be located in . . . . the capital city!

        The Fountainhead of Rents.

      • University of Newcastle actually does very well, especially considering size of population supporting it, and that it hasn’t been around that long.

        JCU also seems to be pretty good, but no personal experience.

      • James Cook University was founded in 1970 under the Bjelke-Petersen government, perhaps the last government anywhere in Australia to have a genuine policy of de-centralisation.

      • Actually I’m talking about primary schools and High schools.
        There are very few High schools out side the greater Sydney area where the majority of kids go on to university.

        This is very different to rural areas in say Germany. I could name many smallish towns that have fantastic school systems often better than their city counterparts especially in primary education. Even in China there are rural educational centers of excellence, maybe not up to the standards of Shanghai schools but not that far behind, look at some of the recent PISA test scores

        Yet in NSW, all you need know is the post code and you’ll also know the outcome for at least 90% of the kids, the other 10% might get a clue and convince their parents to move to the city. Providing good education at primary and even secondary levels is just not that difficult. Lets be honest education is the corner stone of any modern societies economic growth so if we want to enable growth outside of the Sydney basin it must start with great rural / coastal schools.

      • Germany has a robustly federal system (the Lander governments appoint – and may remove – their representatives in the Bundesrat), and it has proportional representation in the Bundestag, reducing the power of the major parties and increasing the power of the Legislature relative to the Executive.

        The centripetal effect is not as great.

      • Germany is a loose federation around 150 years old of fiercely independent states each with over 1000 years of their own history and institutions. Comparison with Australia is pretty meaningless.

    • I dont think that’s the way to see it. It is for example quite remarkable to see the extent to which the Americans, the ultimate capitalists, have managed to build private infrastructure and public services throughout their country. Wherever you go, hundreds of miles from the nearest large town, you can find first rate schools with excellent teachers, local authorities that actually deliver and are not busting with management talk and impaired response, large malls full of outlets out in the middle of nowhere,

      Why dont we have them here when the country is superficially so similar? The answer is our federal system which frankly does not work but which the public supports sso deeply. The last time it was attacked in any meaningful way was by the Whitlam government and look what happened to them.

      The problem is the Feds starve and have always starved the States of infrastructure funds. The States are monolithic and self important and spend almost everything with in the State capitals. Local government is so weak that it is has no local tax base to speak of. Hence – States in which almost everything is poured into the capitals.
      And even there the infrastructure is dysfunctional – look at Melbourne still trying to join together half a dozen freeways that go from nowhere to nowhere and which were planned in the sixties.

      Anyway, local governments got sick of having no money so they decided to bully it out of developers who passed it on with a 1.8 multiplier to the consumer. And whoopee, what do we have, half million dollar houses on the periphery, million plus housing near the centre and regional towns that are emptying instead of filling.

      • Wherever you go, hundreds of miles from the nearest large town, you can find first rate schools with excellent teachers, local authorities that actually deliver and are not busting with management talk and impaired response, large malls full of outlets out in the middle of nowhere,

        I imagine many Americans would disagree with that assessment.

      • I should have said “West Coast USA” because that’s the only region I have observed in detail at first hand. Nevertheless – there has got to be a reason why all those small and medium size towns exist right across the USA, and public and private investment has got to be it.

      • I should have said “West Coast USA” because that’s the only region I have observed in detail at first hand.

        So socialist hippie America, then ? 😀

      • The United States is a great counter-example.

        The United States has a system genuine separation-of-powers, both at the federal level and in the States.

        In the Federal Government, members of the Legislature are constitutionally prohibited from being members of the Executive, and the same applies in the States (although on a different constitutional footing).

        The net effect is that the Executive doesn’t have the same power of discretion as it does under the Westminster system of “elective dictatorship”. The centripetal effect doesn’t operate.

      • With schooling in America there are huge variations from county to county. For instance
        Dallas Independent schools are for the most part dreadful
        HOWEVER
        Collin County (Plano/Frisco) schools (less then 10 mile north of Dallas) are among the best in the country. Because schools are funded at the county level (typically about 1% house/land valuation tax) these new newer areas often have higher average valuations and therefore more revenue per pupil to toss about.

        Interestingly because of this local funding focus you have a special Tax in Texas called the Robin-Hood tax whereby rich school districts must fund poorer school districts, but I digress my point was that even a relatively new town (Plano was mainly built in the late 1990’s) can have world class public schools compare this with the dysfunction of many schools in far western Sydney and then for a real eye opener look at the education statistics for even our largest regional/coastal towns.

        Maybe the recent shift to create new private schools even in regional areas will deliver change but I’m not holding my breadth (From what I’ve been told one school that’s worth keeping an eye on is Bishop Druitt in Coffs Harbour. If this new model can take off then maybe there is hope for regional NSW schooling.

      • Steve I dont follow why separation of powers should result in decentralization, Surely the executive is more likely to be centrally located in US system and the congressmen less likely to be able to redirect funding etc to counties??

        What we see in Australian States is more like what we see in countries like Austria or Philippines, where everything gets sucked into the vortex of the capital

        Smithy – sure my main experience is in Oregon and Alaska, with a couple of months in California. But the “hippie socialist” thesis doesnt explain why there are all those outlet malls scattered in open fields along the #Interstate 5

      • Steve I dont follow why separation of powers should result in decentralization, Surely the executive is more likely to be centrally located in US system and the congressmen less likely to be able to redirect funding etc to counties??

        The all-powerful Executive under the Westminster system (“elective dictatorship”) is a far more potent collector and distributor of economic rents than either the (relatively weak) Executive or any single congressman or State representative under separation of powers.

        The effect may be seen in the locations of the Executive. State capitals are typically not the principal cities. Or to put it around the other way, with a relatively weak Executive State capitals have not been able to draw in the population to turn themselves into the principal cities.

      • I dont know about this Stephen. I am not seeing why a strong executive should necessarily want to pump resources etc into a single location. I am thinking of the example of Kenya where the President has almost been a dictator and where the first two presidents pumped an embarrassing amount of money into their respective tribal homelands

        In support for your thesis – the Commonwealth government is very weak by international standards and Canberra isn’t much of a town. However, that usually applies to the capital of any large confederation.

  15. Economic commentators predictably claim housing price inflation is caused by ‘fundamental’ factors, for instance, a housing shortage, high population growth, demographic change, falling nominal interest rates, a low rate of inflation, regulated land supply and foreign investment, but the real causes are debt-financed speculation and a taxation system rewarding speculators.

    • It’s both.

      With the demand side so hyperboosted via lax and nearly unlimited credit, tax laws encouraging a vast number of investors – who also feed at the same trough of unlimited credit, the various FHB cash grants, SMSF going into property, and of course the more recent inflow of hot foreign money, it doesn’t take much of a restriction on supply to send prices through the roof.


  16. 1. Australia’s budding youth unemployment crisis, where he proposes to allow younger workers to ‘opt-out’ of current workplace laws and set their own terms in order to gain work; and

    2. Australia’s housing affordability crisis, where Day is scathing on rent-seeking vested interests – including the property industry and state governments – who have colluded to bestow ridiculously expensive housing on the younger generations.

    Bob Day appears to be suffering from some cognitive dissonance.

    On the one hand he wants to make housing cheaper.

    On the other hand, he wants to drive wages into the ground and establish a permanent underclass of low-paid workers.

    I daresay Bob Day, like all conservatives, longs for the good old days of a landed gentry watching over their peasants, massive levels of inequality and practically zero class mobility.

    • You should watch the speech as your characterisation is unfair.

      What is the basis in the speech for your comments about drive wages into the ground and permanent under class?

      And the bit about landed gentry and zero class mobility?

      • You should watch the speech as your characterisation is unfair.

        I’ll try to watch it later. Been snowboarding all day and forgot my headphones to be able to watch it on a lift.

        In fairness, I’m quoting the summary of his position put forward above by Leith.

        What is the basis in the speech for your comments about drive wages into the ground and permanent under class?

        Eliminating the minimum wage and, according to a Lorax posting above, increasing immigration.

        Both of these will be used, as they have historically, to suppress wages and further reduce workers’ ability to bargain.

        And the bit about landed gentry and zero class mobility?

        Seems to be what conservatives are constantly fighting for. Minimise wages, remove workers rights, dismantle public services and regulations, etc.

      • You should watch the speech as your characterisation is unfair.

        I’ve watched the speech and my opinion hasn’t changed markedly.

        He may well genuinely believe that allowing people to opt-out of the industrial relations system will let them find employment. Heck, it probably will allow them to find employment.

        But the wider impact will be devastating to our quality of life.

        He can not be naive or stupid enough not to realise that it’s just the camel’s nose in the tent, and that concessions will be used almost immediately to force everyone on low wages to opt-out as well so they can be paid even less. Which will inevitably filter upwards and bring down just about every working stiff’s wages.

        On top of that, he’s either ignorant of, or ignoring, the simple fact that within a generation or two nearly all of those unskilled, low-wage jobs will be done by robots or computers. So we’ll have succeeded in facilitating a comprehensive suppression of lower- and middle-class incomes for nought but the further increase in business profits.

        So my opinion remains the same. He seeks to drive wages into the dirt and establish the same sort of entrenched generational poverty cycle that exists in America.

        I also had to roll my eyes at his little jibe at progressives and conservatives at the end. Firstly, because most of the basic rights and laws we have today are the result of progressive politics (obviously Bob’s idea of “progressive”, much like his idea of “Christianity” and “family” ends at the point where it matches his ideology), and secondly, because of his comment about how conservatives hang around throughout the fads and know what works and what doesn’t – ignoring that the problem is they see no need to fix the things that don’t work because it benefits them personally not to.

        The final thing I wanted to highlight is his grossly dishonest statement that “people get outraged” (and by “people” here he clearly means those filthy progressives) about people being exploited in the workplace, but don’t get “outraged” about things like drug abuse, teen pregnancy, and the like. Well, Bob, yes, they do. The reason you ignore their outrage is because the solutions to those problems don’t fit your ideology (see above about conservatives “knowing” what works and what doesn’t, but refusing not to fix the things that don’t because it doesn’t suit them).

        My opinion of Bob Day remains as low as it ever was. Even a blind squirrel finds an acorn once in a while, restricted land use is his acorn.

      • Well sometimes we have to be grateful for acorns.

        You at least you give him a plus for his position on land restrictions and the first user pays all approach to the costs of land development. That is great because a lot of people (like Lorax) just go nuts because he is/was a developer.

        As for the issue about people opting out of minimum wages and awards I thought it was reasonably clear that he was talking about people seeking training and not about turning the country into a dark and satanic mill.

        It would not be difficult to limit the option to people seeking training or apprenticeships.

        Whether trade training or apprenticeships are unnecessarily long and are more about creating a barrier to entry than a genuine skill requirement is another thing.

        Tradesmen will take on apprentices only when it is worthwhile to do so. Training people to the point where there are productive and profitable is expensive – and the most expensive bit is the loss of the trainers productive time while they are delivering training.

        How does an apprentice who is not qualified undercut the wages of qualified tradesman? Without the qualification they cannot perform trade work without supervision which is a major restriction.

        I think the biggest flaw in Mr Day’s plan is not that he proposes allowing young people seeking an entry position to accept very low wages but that a lot of people do not start apprenticeships because the apprentice wages are already very low and they will sooner to do something else that pays better now even if the prospects for future earning increases are poor.

        If we are serious about boosting the number of young people learning trades it is likely that the government will need to pay qualified tradesmen to take on apprentices – in a sense pay them as trainers. By paying them and creating an incentive to become a trainer / master.

        As to whether the trade students who are accepted for training should get paid for being trained it may depend on how far into their training they are. In the early stages probably not and like all student they may need a part time job or Austudy to get by. In later stages when they actually have some skills and are productive then they might warrant being paid.

        Of course if no one applies for apprenticeship positions in such a system the government may need to consider topping up whatever pay the trainer tradesmen believe is reasonable to pay the students – possibly as part of HECS – with the money to be repaid from future earnings.

        Ultimately, the problem may simply be that the investment cost of the training is too much risk for both small business tradespeople and apprentices to bear.

        In the olden days apprentices were indentured for a reason – and that was to ensure that the master could get recover the cost of the investment in training.

        Having removed the indenture (servitude model) the economic model of trade training was undermined and it is not surprising it is struggling.

        As with university degrees the government should fund the training and recover some or all of it from future earnings using the HECS system.

        Structured along these lines – there is little risk that the entire history of industrial relations and minimum wage protections will collapse.

        It is worth keeping in mind that anyone who goes to university is studying for years and usually does not get paid a cent for the time they spend studying.

        The reality is that until you have a sufficient level of knowledge about the area you want to work in you are not worth much and that applies to trades.

        Perhaps I am reading too much into what Mr Day was getting at but it seemed to me in this general direction.

        Trade training is broken and has been for a long time.

      • As for the issue about people opting out of minimum wages and awards I thought it was reasonably clear that he was talking about people seeking training and not about turning the country into a dark and satanic mill.

        It would not be difficult to limit the option to people seeking training or apprenticeships.

        It seems pretty clear to me from the subtext of his argument that he thinks it should apply to a lot more than “people seeking training or apprenticeships”. That’s just the “think of the children” argument to get it through the door.

        As with university degrees the government should fund the training and recover some or all of it from future earnings using the HECS system.

        Yes, agreed, this would be the “proper” and “safe” way to do it.

        Structured along these lines – there is little risk that the entire history of industrial relations and minimum wage protections will collapse.

        It’s not so much about it collapsing, as it being under constant attack from parties like the Coalition. In the last thirty years they have successfully removed or corrupted nearly all industrial relations advancements made since WW2, and consequently wage share has dropped and people have ramped up debt to replace it.

        We know what happens when this is taken further. America has shown us.

        We know how to do it properly, as well. America also showed us that in the post-WW2 decades.

        Which merely makes the claim about conservatives knowing what works, and what doesn’t even more hypocritical.

        Perhaps I am reading too much into what Mr Day was getting at but it seemed to me in this general direction.

        I think you are reading way too much into his implementation intentions. From what I’ve seen and heard just from that video, he would never support the idea of extending a HECS-like system to cover a trades education. That would be just more Government interference in the market.

      • Yes – by the end of my comment I sensed I was over projecting and you are probably right that Mr Day may think that the only solution to a broken training model is for trainees to absorb all of the cost rather than accept a role for government to mediate a market that does not work in the absence of old school indenture agreements.

        I might follow Mig’s lead and write him a letter and see if he responds.

      • “But the wider impact will be devastating to our quality of life.”

        What quality of life do you have now with high unemployment and what quality of life do you have when you have to spend every cent you earn paying off large mortgages over 30 + years…no money to buy cars.,.there goes the car industry…no money to be clothes there goes the retailers and small businesses…no money to go to restaurants…there goes the cafes/restaurants…

      • What quality of life do you have now with high unemployment and what quality of life do you have when you have to spend every cent you earn paying off large mortgages over 30 + years…no money to buy cars.,.there goes the car industry…no money to be clothes there goes the retailers and small businesses…no money to go to restaurants…there goes the cafes/restaurants…

        So the solution is to make everyone poorer by driving wages into the dirt by removing what few worker protections and rights remain, and allowing an immigration free for all, right ?

    • It’s all just ideology dressed up as insight. It wouldn’t matter how flexible wages were or how liberal zoning regulation was, any market flaw in Days mind would have to be due to government supply side interference.
      Sorry to say I don’t share the overwhelming majorities support here of Day. Politics desperately needs to be more evidence based. Alan Greenspanites should be writing fantasy novels not influencing policy.

  17. Bob Day’s business was/is as a home builder selling building contracts for homes to be built on the owners own land.
    He needs land for his clients to build on.
    He sees the harm excessive land prices are doing.
    He is no late comer to this issue and I don’t see him as an evil hypocrite developer far from it.
    Hi speech is a ripper.

    • In Bob Day’s world the supply side is everything…

      While influential bodies like the Productivity Commission and the Reserve Bank focused their attention on demand drivers like capital gains tax treatment, negative gearing, interest rates, readily accessible finance, first home buyers’ grants and high immigration rates, few were looking at the real source of the affordability problem – land supply for new housing stock.

      Why? Because he is a property developer who advocates “substantially increasing our population”. He has no interest whatsoever in dampening demand.

      • According to his quote Bob Day believes there is an affordability problem that can be solved by supplying sufficient land for extra houses.
        If what you say is true about him wanting a much higher population, then it is quite reasonable for him to want many extra houses provided so that the extra people he wants can pay a fair price and live in a decent (albeit high population) society.
        In that case Bob Day would not want to dampen demand. His aim is a lot more cheap houses. He wants a bigger and fairer society.
        Your aim might be to choke housing supply and screw the poorest Australians. You want a smaller and unfairer society. Does that explain the difference.

      • What?! Don’t put words in my mouth.

        I don’t want to choke housing supply. While I’m not convinced that a housing shortage is the root cause of high house prices, I’m more than happy for more houses to be built.

        Lets give it a try, and if it doesn’t work we’ll know for sure that its demand factors that are driving up prices.

  18. Three minutes in you know what Bob Day’s measure of success is: Owning some investment properties and sending your kids to private schools. Watch it yourself.

    I ask you, do you really want to vote for a politician who sees joining the specufestor class as a measure of success?

    I can’t believe how many people have been taken in by this guy.

    • There’s nothing wrong with owning ips. As long as you’re not doing it just to get capital gains and basically steal. Like in the old days.

      I’d rather Bob Day and his small government ilk than big government that is inevitably corrupted. And going to private school might be favourable to some in that they don’t want their kids minds poluted with chardonnay socialist shit.

      If the big government wasn’t there in the first place would they be able to be in cahoots with the developers?

      Anyway who gives a shit. Lib or Lab always win.

      • I’d rather Bob Day and his small government ilk than big government that is inevitably corrupted.

        They don’t want small Government, they want privatised Government-by-proxy.

        That way the peasants have even less ability to influence society than they do now.

    • While I don’t agree with Bob Day’s push for higher immigration, I applaud him for being the only politician who is standing up and talking about the housing bubble, and the reasons for it. No other politician comes even close to doing what Bob Day is doing.

      And I don’t think he’s trying to feather his own nest. He’s made his money, and financially, he’s set for life. Good on him for now speaking up for those priced out of home ownership!

  19. Pity it takes someone from the populist far right to tell the housing situation like it is. This country is a major worry