The Independent Review Panel’s final report into local councils was released in October 2013 and recommended amalgamations of councils among other things. In September 2014 Premier New South Wales (NSW) Premier Mike Baird, announced his Fit for the Future package that included funding of up to $1bn including cash incentives as sweeteners to merge.

It included: $258 million to assist councils who decide to merge and make the changes needed to provide better services to communities ($153m for Sydney councils and $105m for regional councils) and $13 million to support councilors who “lead the transition to a new council”; Cheaper finance for councils to build and maintain the facilities that communities need, saving them up to $600m; Up to $100 million savings through reductions in red tape and duplication; And improvements to the local government system, including the laws that govern it, the way the State works with councils and the support that councils receive.  

The cheaper finance portion would only be beneficial if a council borrowed money from the NSW government of which it would probably receive a dividend meaning the $600m would most likely be covered by other councils and not the state government. President of Local Government NSW, Cr Keith Rhoades said “While there are many aspects of this reform package that councils agree with, the NSW Local Government sector also universally opposed the recommendation in the final report of the Independent Local Government Review Panel about rural councils having their responsibilities and regulatory powers stripped back. We will continue to oppose the Government on this issue should they persist in paring back rural councils. Rural communities deserve the same level and quality of council services as their city counterparts – another fact.” 

Fit for the Future had the Independent Pricing and Regulatory Tribunal (IPART) assess whether councils were financially viable alone or whether they should merge with neighbouring councils. On the 20th of October this year IPART found that more than two-thirds of Sydney councils were unfit, as well as more than half of the regional councils. Only 52 of 139 proposals were accepted that were submitted by 144 local councils, including four merger proposals covering nine current councils. Most councils that wanted to continue to operate alone passed the financial criteria but not on “scale or capacity”, and the report found that amalgamations could deliver $2bn in savings over the next 20 years. Lord Mayor Clover Moore was quick to reject the finding and said: “To say the City is somehow unfit in the face of this strong evidence to the contrary makes a mockery of the entire review process, and throws into question all decisions made as a result.” The chairman of IPART interestingly is Peter Boxall, he was also a commissioner for the Abbott government’s Commission of Audit (COA).

An Upper House inquiry was set up to examine Mr Bard’s amalgamation push and it found yesterday that the process was flawed from the beginning, and that IPART was actually the wrong organisation for the job. “While IPART has significant capacity to analyse the finances of local government, it does not have the demonstrated skills or capacity to assess the overall ‘fitness’ of councils as democratically responsible local governments,” the report said. It also said that: “The scale and capacity criterion was a flawed criterion … and accordingly assessments of councils’ fitness based on this threshold capacity are not well-founded.” Committee member Peter Primrose, said that IPART’s findings were limited by the terms of reference. “It was a set-up from beginning to end” he said. “I don’t blame IPART. I blame the terms of reference which were handed to them by the Premier. “They had to find this illusory thing on the basis of this nonsense called scale and capacity.” The first of the 17 recommendations is “that the Premier and NSW Government withdraw the statements that 71 per cent of councils in metropolitan Sydney and 56 per cent of regional councils are unfit”. 

It also found that the Baird government should commit to no forced amalgamations of NSW councils unless they were bankrupt or otherwise unable to service their communities. Randwick council informed its residents that the NSW Government has made it clear that doing nothing is not an option. Randwick Mayor, Ted Seng said: “Randwick City Council already has a balanced budget and remains debt-free. Council is operating well and providing high quality services and facilities for our community,” And that “Unfortunately, despite Council’s excellent financial and asset management position, the NSW Government wants us to respond to the Independent Local Government Review Panel’s recommendations for ‘scale and capacity’.

It appears that the ‘scale and capacity’ part of the terms of reference, was almost a ruse to sneak forced amalgamations in. Randwick Mayor Mr Seng, also said that: “The Independent Review Panel’s final report released in October 2013 recommends an amalgamation with City of Sydney, Woollahra, Waverley and Botany councils – building a ‘global city’ with more than 500,000 residents. We don’t support the creation of a global city as we value our Randwick identity, local representation and existing quality services.”

I think we need to be celebrating our communities and their uniqueness and diversity not shunting them all into one basket under the banner of economics, the market or even efficiency. You cannot foster the innovation that this country is crying out for out of this ideology.

Councils have until the 18th of November to make a final submission to the NSW government.

On August the 28th Australia Post (AustPost) applied to the Australian Competition Consumer Commission (ACCC) to increase not only the price of a stamp from seventy cents to one dollar but business mail pricing of up to 48% from January the 4th. This is on top of price hikes of 5-9% for Print Post, which is used to post publications such as newspapers, magazines and catalogues, let alone bulk mail price rises of 2.8-5% this month as a CPI increase. There was wide spread industry concern that AustPost would use the 42% stamp price increase as an excuse for business mail rises next year, it seems they had good reason to be concerned.

AustPost wants small pre-sort mail, being the category most used for bulk mail and is 38% of mail volume, to rise 37.5% for the regular service and 48.5% for the priority service. They also want to raise Print Post again by 15% for the priority service under 125gm and 13% for the rest, with the regular small service up 13% and the rest at 11%. A couple of days later the Print Industry Association of Australia (PIAA) launched a planned and researched national campaign to win political support for AustPost reforms. PIAA CEO Jason Allen, said “The price increase issues are a major concern and they are the tip of an iceberg threatening the future viability of the entire mailing industry and all the associated sectors whose economic livelihoods are under threat by Post’s blindsiding tactics,” and that “Post has consistently failed to consult and to make an economic and social business case substantiating its actions. It has failed to highlight any improvements and benefits that businesses would be expected to provide their clients with accompanying any price increase. We believe it has failed to meet the criteria of the Australian Government’s Cost Benefit Analysis. It has avoided quantifying the impacts of its actions across the community and failed to provide economic and social evaluation in monetary terms of its proposed actions.”

Mr Allen believes that it is the duty of the Parliament to hold AustPost to account and that his campaign is geared to do this “From the end of this week politicians around the country will be receiving our report on the Economic Contribution of the Australian Mailing Industry and our plea to pull this monopolistic, national service provider into line and into compliance. Members of Parliament need to understand the consequences of Posts actions on the employment of as many as 150,000 people who contribute $14.1 billion in Gross Value Added to the Australian economy not just the 30,000 people Australia Post employs,” he said.

Subsequent meetings over the first couple of weeks of September were held with printers and mail-houses in Sydney and Melbourne, and they have thrown their support behind the campaign. Mr Allen also said they would be making a substantial industry submission to the ACCC for the Thursday 15th October 2015 deadline. On the 17th September the AustPost newsroom announced that they would establish a new industry working group to support the implementation of letters regulatory reform and consider other strategic issues facing the postal sector. The group, is to be chaired by former Victorian Senator Helen Kroger, and will include representatives from the printing industry, mail houses, licensed post office (LPO) network and employee unions. This was actually a recommendation from a Senate inquiry from a year ago into the LPO network, wanting the establishment of a strategy group of industry stakeholders. The inquiry also recommended restoring the ACCC oversight of business mail price changes and an independent review of AustPost’s community service obligations.

Interestingly Ms Kroger is the former wife of Michael Kroger who is currently the Liberal Party state President of Victoria. In 2012 Ms Kroger was bumped from first place on the Senate ticket by Mitch Fifield, who was recently made Minister for communications taking over from the current Prime Minister, Malcolm Turnbull. In January this year when Mr Turnbull was communications MP, he made it clear that AustPost was not establishing the government’s digital shopfront. He conceded his e-government plans “undermines the economics of my other responsibility – Australia Post” but that this was inevitable because “the letters business doesn’t have a great future”.

AustPost obviously wants to position its self as digital innovators with the AustPost Digital Mailbox cloud storage launched in October 2012, and to focus on parcel deliveries with its acquisition of Star Track Express couriers in December 2012. Many found it curious when they decided to move away from the famous red and white logo for blue and white when they rebranded its parcel division and the Star Track fleet last year. AustPost also launched an iphone app in 2012 called Australia Post Postcards, allowing you to send images from your phone as postcards anywhere in the world. “Australia Post is continually looking for ways to make our products and services a helpful part of our customers’ lives both physically and digitally,” said Catriona Larritt, the former Australia Post’s General Manager Post Digital, at the time. It has come out this year though that the app has many problems such as long delays for the cards to arrive or them not arriving at all.

In 2013 Ms Larritt said that if the Digital Mailbox was successful, it would accelerate the decline of its letters business and that it was a question she was often asked. “The answer is yes, it’s clear that if we’re successful, over the next couple of years we’ll accelerate the decline of letters.” And “That obviously will have a material economic impact on Australia Post, but we made a decision as a business that this was happening anyway and we may as well cannibalise our own business rather than have someone else do it to us. That was a hard decision organisationally.” But Ms Larritt also said that there were billions of letters still sent, so for the next three to five years it would be about ramping up the migration to the Digital Mailbox and “providing a multi-channel communications offer”.

In April this year AustPost launched its new Apple watch app that enables customers to view delivery information and track their parcels on an Apple Watch. “The new Apple Watch app is the latest in a series of digital innovations Australia Post has been working on to provide easy to use experiences for customers who want greater flexibility in management delivery services,” Andrew Walduck, executive general manager, information & digital technology at Australia Post, said in a statement. Also in April it was revealed that AustPost’s state of the art sorting machines had misdirected an estimated 40,000 parcels each day. And in May this year it had a meltdown in its computer system leaving millions of online bill payments frozen meaning companies were unable to receive customer payments for a week.

A week ago they came out with a campaign to help small businesses reach international as well as local audiences through e-commerce. And as of yesterday, Mr Walduck will now head the new ‘trusted e-commerce solutions’ division. AusPost CEO Ahmed Fahour, said of the move “We are increasingly clear that trusted services opportunities within e-commerce, which we have been deliberately and carefully investing in over the past four years, are core to our future business”

Physical business mail such as direct mail still has its role in marketing and advertising, variable data printing is a great example of this. This technique is favoured for elections, charities and business. It is clear Mr Fahour has heavily invested in digital and parcels and wants to take AustPost in that direction now, he is not interested in letters or bulk mail. Wanting something and their being successful are two completely different things as we have seen with the numerous digital glitches quoted above. AustPost admitted in 2013 that they cannibalised their own business which has brought about an even faster decline in letters. Let’s also not forget the fact that these price hikes affect 150,000 people who contribute $14.1b in gross value added to the economy not just the 30,000 that Mr Fahour employs. In business it’s generally best to nail down what you are good at before you branch into other areas, and they are struggling with logistics which should be their core market. In my own personal experience their parcel division leaves a lot to be desired and is a common joke between my customers and other suppliers. I’m also not sure about their return on investment (ROI) with their Apple app either. A very small segment will own them and will they care enough to download it to track parcels considering their web version of this also leaves a lot to be desired?

Digital marketing embraces traditional such as print and billboards and uses these channels to direct you to online offerings. Magazines, as well as catalogues are also still popular and viable, which I think is at least partly due to only being able to read so much with artificial light. This is also why I think books will survive.

Until we live in the offline world Tron style, the digital world and the physical offline world should be complimentary.

The Chinese-Australia fair trade agreement (ChAFTA) began negotiations in May 2005 with the agreement formally signed on the 17^th July 2015, by Australian Minister for Trade and Investment, Andrew Robb and the Chinese Commerce Minister, Gao Hucheng. The ceremony was witnessed by Australian Prime Minister, Tony Abbott who described the signing as a “momentous day” for the Australian-China relationship.

“It will change our countries for the better, it will change our region for the better, it will change our world for the better,” Mr Abbott said.

He paid tribute to Chinese President, Xi Jinping whom he described as a “shrewd” negotiator and “friend of Australia”.

He further toasted the deal by saying: “I trust that today our Chinese friends will enjoy the fine beef and the good wine that will soon be more readily enjoyed by their countrymen.”

Last year was a busy year for the Abbott government, which also signed off on the Korea-Australia free trade agreement (KAFTA) and the Japan-Australia Economic Partnership Agreement (JAEPA). According to a Department of Foreign Affairs and Trade (DFAT) report titled, Economic benefits of Australia’s North Asia free trade agreements, it will create lots of new jobs. It has estimated that between 2016 and 2035 the FTAs will lead to 178,000 jobs, at an average of 9,000 per year.

Mr Robb also enthused the three FTAs job creation, saying that: “Given what’s going on in the region, the extraordinary explosion of people going into the middle class, this is a landmark set of agreements, and it will see literally billions of dollars, thousands, hundreds of thousands of jobs, and will underpin a lot of our prosperity in the years ahead.”

The report also forecast an additional GDP increase between 2016 and 2035 of $24.4 billion and a boost in real consumption of $46.3 billion, equating to an increase in household consumption of nearly $4,500. This has been questioned by the Australian Fair Trade and Investment Network (AFTINET).

It said the studies authors, were: “consultants which produced wildly optimistic estimates of benefits for the Australia-US FTA (AUSFTA) which did not eventuate.” Ten years on it’s still unclear as to what benefits the AUSFTA has had for Australia, or even America.

The Australian Council of Trade Unions (ACTU) is worried about how the deal will affect local jobs and unemployment levels. There is the ChAFTA and there is a memorandum of understanding (MOU) document, about an Investment and Facilitation Agreement (IFA), that was signed before the formal signing. An IFA is a project to be established between the Department of Immigration and Border Protection (DIBP), or its equivalent, and a project company.

A project company’s eligibility for an IFA requirements are:

1. (a) A single Chinese enterprise owns 50% or more of the project company; or, where no single enterprise owns 50% or more of the project company, a Chinese enterprise holds a substantial interest in the project company;
2. (b) There is a proposed infrastructure development project (“the project”) by the project company with an expected capital expenditure of $A150 million over the term of the project;
3. (c) The project is related to infrastructure development within the food and agribusiness; resources and energy; transport; telecommunications; power supply and generation; environment; or tourism sectors;
4. (d) The project company is registered as a business in Australia;
5. (e) The project company agrees to comply with all Australian laws and regulations, including applicable Australian workplace law, work safety law and relevant Australian licensing, regulation and certification standards; and
6. (f) The China International Contractors Association (CHINCA) and the Department of Foreign Affairs and Trade of Australia (DFAT) have recommended the project and the project company meet the criteria in paragraphs 2(a) through 2(e).

Section four, covers the areas of negotiation for DIPB and the project company, which includes:

4. (a) The occupations covered by the IFA project agreement;
5. (b) English language proficiency requirements;
6. (c) Qualifications and experience requirements; and
7. (d) Calculation of the terms and conditions of the Temporary Skilled Migration Income Threshold (TSMIT).
8. The project company may be asked to provide additional information by DIBP in respect of its requests for concessions in the above areas. Other than the areas referred to in paragraphs 4(a) through 4(d), the grant of visas will be subject to meeting all other Australian nomination and visa requirements.

Interestingly the ChAFTA Myths versus realities ‘fact sheets’ released by DFAT, only mentioned option 2. (b), most likely because it fits in with the infrastructure narrative. The “concessions” also aren’t mentioned but imply that the project company can negotiate a private contract with DIPB, to import Chinese workers on projects in lower skilled occupations. Though workers under the 457 visa scheme are required to be paid above TSMIT and possess a certain amount of English ability, this also looks like it can be negotiated under the IFA.

In paragraph six it states – There will be no requirement for labour market testing to enter into an IFA. The IFA is valid for four years from the date of execution and with the possibility of an extension.

In the actual ChAFTA itself, in Article 10.4: Grant of Temporary Entry, it states – In respect of the specific commitments on temporary entry in this Chapter, unless otherwise specified in Annex 10-A, neither Party shall:

3. (a) Impose or maintain any limitations on the total number of visas to be granted to natural persons of the other Party; or
4. (b) require labour market testing, economic needs testing or other procedures of similar effect as a condition for temporary entry.

Here is the ChAFTA side letter between Mr Robb and Mr Gao after the formal signing of ChAFTA, it provides more detail and states:

Australia will remove the requirement for mandatory skills assessment for the following ten occupations on the date of entry into force of the Agreement. And that the aim is to further reduce occupations or eliminate the requirement within five years.

Automotive Electrician [321111]

Cabinetmaker [394111]

Carpenter [331212]

Carpenter and Joiner [331211]

Diesel Motor Mechanic [321212]

Electrician (General) [341111]

Electrician (Special Class) [341112]

Joiner [331213]

Motor Mechanic (General) [321211]

Motorcycle Mechanic [321213]

Alan Hicks of the Electrical Trade Union (ETU) said that the Government’s decision to remove the mandatory skills assessment for Chinese workers in ten occupations was a disgrace.

“For the Federal Government to come out and waive that under a free trade agreement, without any consultation with unions or employers, is an absolute disgrace,” he said.

“It’s going to create significant workplace dangers, not only just for electricians, but all those people who use electricity.”

Mr Hicks said China’s statistics of workplace deaths was of genuine concern to Australians. “Australia leads the way in electrical safety. We’ve got some of the best electrical workers in the world. A lot of countries aspire to have the same level of safety standards that we do,” he said.

“We’ve got a licence system right across the country — no matter which state or territory you work in, you’ve got to be licensed to carry out the work — and those sorts of systems aren’t in place in other countries like China.

Mr Hick’s also said that “And China has a woeful workplace health and safety record. They have over 70,000 workplace deaths a year, so we are genuinely concerned.”

There is also a ChAFTA DFAT fact sheet that says:

In order to better facilitate the temporary entry of workers associated with trade and investment, Australia and China will also increase cooperation in the areas of skills recognition and licensing, including through encouraging the streamlining of relevant licensing procedures and improving access to skills assessments.

Besides the Abbott government’s ideologies being against the work of the unions, it’s unclear as to why industries relating to the ten different occupations including employers, weren’t consulted. In the ChAFTA Myths versus realities document, it tackles untrained Chinese electrician worries, but it doesn’t mention doing away with the mandatory skills assessments, or mention the total amount of visa’s on offer.

The ChAFTA agreement also enables an executive arm of government power that goes against the parliament’s 457 visa bill in 2013, where employers, are expected to conduct labour market testing.

The side letter about skills and assessment and licensing, between Mr Gao and Mr Robb is clear:

I have the further honour to confirm that my Government shares this understanding and that your letter and this letter in reply shall constitute an integral part of the Agreement.

What any of this means in the long term, in regards to state and federal industrial laws remains to be seen. But it does look like an overreach by the Abbott government in regards to executive power. The Minister for Immigration and Border Protection, Peter Dutton, deciding matters without anyone else’s input, is concerning. It also has the faint scent of Work Choices, an unpopular set of federal industrial laws brought about by former Prime Minister, John Howard in 2006.

Taking the power away from workers, over employers in your own country is one thing but taking on China’s is another. The IFA seems to enable these features, and how this will impact on local employment in Australia, also remains to be seen.

Either way, training needs to be involved, and concessions made solely by Mr Dutton, is not enough to allay justifiable fears from the unions and Australian’s looking for jobs in the areas of:

Food and Agribusiness; Resources and Energy; Transport; Telecommunications; Power supply and generation; Environment and the Tourism sectors.

The other question is, if it’s just a matter of training Chinese workers in Australian regulations etc; who is providing this training and how long does it take? And lastly, is there options for Australian’s who have the skills but don’t speak Mandarin and so on?

Inequality and the divide between the rich and the poor has become a buzzword of sorts in recent years, with the likes of Occupy Wall Street (OWS) and even multinational corporation owner Rupert Murdoch using it in a Group of twenty (G20) Washington speech for the International Monetary Fund (IMF) in 2014. The host of the 2014 G20 and Australian Prime Minister Tony Abbott has been loathe to even mention the word. Hugh Jorgensen, a research associate at the G20 Studies Centre in the Lowy Institute for International Policy, made the point that “inequality” was hardly mentioned in official G20 reports while Australia was in the chair.  “Of the 60-plus official meetings that have taken place under Australia’s 2014 G20 presidency, a grand total of one has managed to produce a final communique or meeting report that mentions the word ‘inequality’. To be fair, it does mention it twice: the 10-11 September declaration of G20 Labour and Employment Ministers first notes that ‘tackling inequality (is a priority) for all our economies’ and then designates it as an issue for future employment working-group discussions,” Mr Jorgensen wrote. “Yet on a purely public relations basis, the absence of more explicit references to inequality thus far seems to be oddly out of step with global momentum around the issue.” What Mr Abbott has said on it is: “in the end, we have to be a productive and competitive society and greater inequality might be inevitable.”

It is well known that Mr Abbott is a big fan of former United Kingdom (UK) Prime Minister Margaret Thatcher and has adopted many of her ideologies. One of these being the concept of trickle-down economics, this was also a central policy for former American (USA) President Ronald Reagan. I have previously written about the trickle down concept here. It is also starting to become known that the concept has failed and has created inequality and has actually negated economic growth. The Organisation for Economic Cooperation and Development (OECD) reported last December that the UK economy lost nearly ten percent of growth between 1990 and 2000 due to the rise of inequality. The OECD also reported ten percent less growth in New Zealand and Mexico, nine percent less in Finland and Norway and between six and seven percent less in the USA, Italy and Sweden. At the World Economic Forum (WEF) in January this year, Oxfam warned that the combined wealth of the richest one percent will overtake that of the other ninety-nine percent of people in 2016 if the current trend of rising inequality is left unchecked.

In Australia, fears of a housing bubble, particularly in New South Wales (NSW) have been bandied about in the main stream media for a while now, but there has been genuine concerns recently that NSW is at least in bubble territory. The Governor of the Reserve Bank of Australia, Glenn Stevens said in February this year that affordable housing has become a “major” social issue. And just last week he was quoted as saying “Yes I am concerned about Sydney, some of what’s happening is crazy.” Treasury Secretary, John Fraser has also recently raised concerns about the amount of money being poured into the housing market with such low interest rates. “When you look at the housing price bubble evidence, it’s unequivocally the case in Sydney. Unequivocally,” Mr Fraser told a Senate committee. He also said “Frankly, whatever the data says, just casual observation can tell you it’s the case.” And that “It does worry me that the historically low level of interest rates are encouraging people to perhaps over invest in housing,” Mr Fraser said.

The Australian Institute (TAI) released their research in March this year on inequality in the housing market titled The great Australian lock out. It found amongst other things that house prices have increased faster than incomes. Incomes are fifty-seven percent higher than a decade ago but house prices have risen by sixty-nine percent. Australia has the second most expensive property market of advanced economies when measured against incomes and rent. Interestingly only Norway is more expensive and they’re having their own problems with rising house prices and fears of a housing bubble at the moment.

The TAI research also found that home ownership rates have declined for all age groups and that all age groups are renting more and holding mortgages for longer. Nineteen percent fewer Australian’s own their houses outright in 2012 than they did in 2002. This includes ten percent from lower income households, a large decrease as only a quarter owned homes to begin with. Middle class households saw a similar trend with ownership falling by ten percent and those with mortgages falling by nine percent. This reflected a drop of around a quarter of 2002 percentage levels for mortgages and a third for home ownership.

When TAI examined age groups and home ownership they found that the largest decline in outright home ownership was for those aged 40 – 69 year olds with an average drop of sixteen percent. The proportion of people with mortgages later in life increased in 50 – 59 year olds with a drop of fourteen percent. It’s also worth noting that fifteen percent of retirees continue to rent, and Household, Income and Labor Dynamics in Australia (HILDA) data shows that seventeen percent of retired women are more likely to rent compared to twelve percent of men. The number of older women who rent increased by three percent over the ten year period while the proportion of older men renting dropped by two percent. This also raises concerns of a potential gender gap amongst older Australians.

Another paper from TAI titled Income and wealth inequality in Australia found that a single home owner on the pension is sixty-seven percent above the Henderson poverty line, while a single renter is only fourteen percent. A home owning couple on the pension are fifty-four percent above the line, while a couple who rent are only sixteen percent above.

The HILDA data also shows that eighty-one percent of investors are high income earners and that the majority already own their family home. Lending to property investors and existing home owners has also soared. Lending to housing investors In 1994 was $15bn and was roughly equal to the lending of first home buyers. It increased in 2014 to around $120bn. Government policies heavily favour investors and existing home owners and they receive ninety percent of the benefits from policies, with renters receiving hardly benefits at all. In effect the wealthy are not only contributing to pricing others out of the market but they are also the ones benefiting the most from government policies.

For example, the negative gearing policy, it allows investors to deduct losses occurred on their investment property from their taxable income. It also reduced government tax revenue by an estimated $6bn in 2014-2015. Negative gearing also has the effect of increasing the prices of houses. The majority of investors buy established properties, placing pressure on house prices and pushing them up while also pushing out would-be first home owners. This results in a redistribution of wealth towards those who own real estate and those that don’t.

The Capital Gains Tax (CGT) policy is another concern as it’s a fairly light taxation applied to capital gains on investment properties. Investors who have held a property for more than twelve months are entitled to a fifty percent discount on any taxes levied on capital gains when they sell. This can encourage investors into strategies that make losses in the short term but that generate long term capital gains. Homeowners also benefit from the CGT policy through the tax system with the family home exempt, making owner-occupied housing one of the most tax advantageous forms of assets. Government spending on home owners, primarily through tax concessions is $36bn per year. The Murray Financial System Inquiry report came out in December last year and specifically argued that the federal government needs to rein in the favorable tax treatment of investors as it “tends to encourage leveraged and speculative investment in housing.”

Renters on the other hand receive very little government support. Rent assistance is available to those on welfare benefits, such as Newstart, a recent review however has found that it hasn’t kept pace with the growth in rent prices. For example, rent assistance increased by forty percent between 2001 and 2013, yet median rents for those who receive it increased by between sixty-five and one hundred percent. In regards to housing stability for renters this is quite low with residential tenancy rules heavily favouring land lords.

The 11th Annual Demographia International Housing Affordability Survey 2015 found that housing in Australia was “severely unaffordable”, while Sydney (the capital city of NSW) was rated the 3rd least affordable market across eighty-six major markets in nine countries.

In NSW stamp duty for a property that’s worth over $1m is set at $40,490 plus $5.50 for every $100 by which the value exceeds $1m. The latest figures from the NSW Office of State Revenue show that in May the government raked in a record $518m from residential transactions to bring the total so far for 2014-15 to $5.1bn. NSW Premier Mike Baird says that the state government has increased housing supply but according to Bill Randolph, the director of the City Futures research centre at the University of NSW, increasing supply is not the whole answer. “House prices are determined in the market as a whole and new housing is only about 2 per cent additions per year,” Professor Randolph said. “So you would need to flood the market with new supply to do anything about house prices.” And that “There’s been several authoritative reports internationally that show there’s no clear supply side mechanism by which you could produce enough to reduce house prices significantly,” he said. A spokesman for Mr Baird, said in the year to April, there were 55,666 dwellings approved in NSW – the strongest result since May 1995. Out of last years windfall tax receipts, including $4.7bn in stamp duty, only $83m was allocated to an infrastructure fund to support new housing in NSW.

New research for 2015 property intention recently conducted by Roy Morgan Research, shows that over the next year that out of 309,520 Sydney property intenders (seventy-one percent) are planning to buy an established home or apartment. And that half as many (thirty-eight percent) want to build or buy a new home.

Housing inequality needs to be looked at holistically, the policies, the supply side of things and where things are headed for renters, in particular lower and middle income households, and older Australians renting in their retirement. The government has a few narratives going at the moment but the one they appear to be pushing is that ending the negative gearing policy will push rent prices up in Sydney. Even though this was discounted recently on the Q&A program by John Daley, the Chief executive of the Grattan Institute. He asked the Treasurer of Australia, Joe Hockey why he hadn’t abolished negative gearing. He replied that when former Prime Minister, Bob Hawke did it in the 1980s “you saw a surge in rents and those people who were paying rents are usually – not always, but usually – people that can’t afford in many cases to buy their own homes”. Mr Daley replied that it was absolutely true that rents went up fast in Sydney, “which might have been there wasn’t a lot of housing being built in Sydney in the couple of years previously”. “But look beyond Sydney and rents were dead – barely moved in Brisbane, didn’t go up very far in Melbourne, didn’t go up very far in Adelaide. They did go up very fast in Perth which makes you suspect very strongly that the race memory we have of abolish negative gearing, that rents will go up, is a race memory built on Sydney.” Mr Daley then succinctly said rents shouldn’t go up because “by definition what happens at the auction is that the investor doesn’t win the auction but someone who wants to live in the house does. Net impact, there is one less renter and there is one less rental property. Net impact on the rental market, zero.”

Palming it off as a state and land issue is irresponsible and if things are left as they are the housing bubble will burst and fester. Inequality in all of its forms is the byproduct of the trickle down concept, the idea that generous tax concessions and what the wealthy spend on, will trickle down a few treats to the rest of us even sounds absurd. How does investing in classical cars or jewelry for example benefit the rest of us? We need investors but it needs to be reined in so that we don’t see what has happened in the UK, happen here. Granted we don’t have the complexities of being a tax haven that they have, but at the moment the average price for London housing is over £500,000 which works out to be just over $1m Australian dollars. The median price for a Sydney property this year is $914,056, a rise of 3.6 percent over the quarter, and sixteen percent over the year. We live in a global economy and wouldn’t it be prudent to have a genuine discussion with the UK and even Norway to find solutions for housing inequality, and not cherry picked aspects of it repeated ad nauseum by main stream media for political advantage? We are only just starting to see what inequality does to the global economy, and it means less economic growth, which is bad for everyone including the wealthy.