Domain/Nine has a new excuse for the property bubble. Nine.
This is a small portion of the tens of billions of dollars of proceeds of crime that need to be laundered each year – including the $12 billion annually spent on illicit drugs such as cocaine. The vast majority is channelled into houses, apartments and commercial properties, said financial crime watchdog AUSTRAC.
“The logical economic consequence of an unequal market means that if a person like you and I was competing next to a person who had illicit proceeds of crime, then it’s an unfair situation,” he said.
Current AUSTRAC boss Brendan Thomas was more direct in a speech last month, saying Australians competing against drug dealers and money launderers to buy a home was definitely jacking up prices.
“Tens of billions” is not much in Australian property which turns over about $600bn per annum.
We should be implementing the Paris-based Financial Action Taskforce (FATF) “Tranche 2” anti-money laundering (AML) legislation targeting non-financial assets (particularly property).
These have been staved off for seventeen years by real estate interests.
But it is what this failure says about property generally as a policy issue that is far more important.
High prices are deliberate. From money laundering to tax breaks to immigration to crooked polies and pointless conversations in property-dependent media. It’s all on purpose.
Take Alan Kohler in the last few days.
I don’t think difficult decisions are being made with housing.
At the moment, taxes of various sorts represent somewhere between 30% and 40% of the cost of the cost of a dwelling which, as I pointed out to the assembled experts, is the sort of tax you put on something you want to discourage, like smoking and gambling, not encourage.
When governments want to encourage something they provide tax incentives, like accelerated depreciation or R&D tax breaks. Housing does have tax breaks – a capital gains tax discount and negative gearing – but they apply to all assets, including existing housing, so it doesn’t specifically encourage new supply.
If we can’t take negative gearing off existing housing investments for political reasons (because Labor lost in 2016 and 2019 with that as its policy) then let’s give an extra tax break for new housing: what about allowing twice the negative gearing deduction for new dwellings, and making new houses capital gains tax free? I mean, it’s a crisis isn’t it?
The crisis is real, but the discussion of it is fake. Even for Kohler, whose excellent message never mentioned immigration, the central pillar of the system.
Likewise, most younger generations whinge while avoiding breaking any eggs. Everybody is all care and no responsibility. All symbolism and no substance.
The only reason the property bubble has not burst is that there is nobody to burst it.
