Houses are cheaper

A simple land tax paid on the value of property by the owner would generate enough revenue to get rid of most taxes, including most income taxes and the plethora of goverment agencies that do little more than to protect personal property rights. It will wash away the speculative economic rent generated by just owning the land. It will also force lending institutions to lend for productive purposes in that land. It will also reduce the amount the dormant land just left there to appreciate over time. All busts and booms have their source in this hungry grab for land to generate economic rent. Banks lend for this speculative purpose and when the productive economy can't afford the price (the price drops below lending value) the banks ledgers go into the red and lending dries up. This then in turn affects the entire economy and finnaly the share market.
we always see these busts by examining the share market crashes but few understand the initial source of these incidences. Which have occurred in clock work like fashion for the last 300 years or so.
The entire American continent was founded on land speculation!
so tax away the source of this problem. Ensure all land is put to productive purposes and we all share the benefits.
most the your thoughts above are developed through the prism of accepted modern economic theory which has shown time and time again to not work. Puts wealth in the hands of the few and causes an untamed boom and bust cycle.
and will do again ... soon enough.

^^ Yep.

Great, let's address a looming debt crisis by......encouraging more unsustainable private debt.

A more prudential way to address a faltering economy is to stimulate sustainable investments in knowledge based sectors with cheap government stimulus. That would be too much of a stretch for a government hell bent on protecting it's own arse.

I can not find a industrial land to buy at $2000 per meter is 150 km radius near Brisbane.


en.wikipedia.org/wiki/Cubbie_Station
www.seabreeze.com.au/img/photos/other/16155571.jpghttps://www.seabreeze.com.au/img/photos/other/16155701.jpg' />Not such bad investment after all. After price tag 240mln paid , farm generate $80mln in income every year. Compare those to negative yields on financial markets.





www.dailymail.co.uk/news/article-7725675/How-China-owns-Australia-buying-infrastructure-land-water.html

Could we vote one day for equal rights ? So Australian citizens could buy a land at prices overseas investors could ?

The cash is worth very little FN, what's a good/ low risk liquid investment that will give you a return? There aren't many out there. When we consider the 10 year bond yield (considered to be the risk free rate of return) is now down around 0.78% the market thinks that the next best thing is simply putting it under your mattress.

Hey Bara, if China cannot supply the goods we used to buy from them and there are either shortages; or we buy from different (more expensive) suppliers; then the result will be inflation. I wonder how the central bank will react if it gets to a point where monetary policy dictates they must raise interest rates ..................... and unleash the armageddon you speak of

Are we all getting closer to communism in the purest form ever? Here how it may works. With everybody indebted into mortgage repayments it becomes impossible to repay once rates start rising. Then banks will take ownership of failed loans securities, but they will not be able to sell those properties. The only way will be nationalised such debt and now government could take care of loans and properties. Then government could in return rent and lease those properties back to citizens.We have now situation where loans on homes are much higher the real value- so we could never back to low and realistic prices. On another hand any significant interest rate also means certain suicide for economy. The only reasonable solution seems to be near zero interest for long time to go or switch over to completely new global currency.Like a Cyber Yuan or BitCoin.

The imported inflation spike coming will be ignored by rba as "transitory" paddles. Rates are on a one way trip because global debt is simply unsustainable at anything above inflation. Australia unlike in the gfc is leading the charge this time which is pretty concerning.

The opportunity cost of your capital is conservatively 6% like I said - 1% risk free rate 2% inflation plus at least 3% to 5% currency devaluation.

Yes macro you paint a possible endgame. I've said it before - out of the eventual financial ashes of this fiasco will come radical political change.

evlP, obviously positive gearing is good but it's not about not wanting to positive gear, most people who negative gear simply don't have the capital to positive gear and negative gearing lets more speculators into the market that otherwise couldn't afford to wait till disposal to recognise the losses. The original intention of NG was to let young first home buyers get into a rapidly rising property market sooner rather than later, they live with their mates or mum and dad for a few years to get their krap together and then move in when they settle down, but they got their foot in the door at a much lower price.

Good question FN, I'll do some research.

Well there you go, I thought it was introduced a bit more recently than that Bara. I knew that the way of taxing capital gains changed in the '80s, but had no idea about when the ability to deduct interest expenses for individuals and not businesses kicked off.