Australia's land price conundrum

In fact, Wakefield wrote the collection of a public land tax into his scheme, presumably as a sop to the authorities. You see, any land tax, were it ever to be employed, could never have been substantial, because anything more than a sop would act to reduce land values below the "sufficient price".  So let's not kid ourselves here. If we really want lower land prices, we levy higher rates and land taxes – and cut all other taxes concomitantly.  The higher rates and land taxes, the lower the land prices will be.  Simple.

But we can't extend rates and land taxes, because that will adversely affect banks and the other bigrentiers, and they're more important than most people - especially those who are willing to act like slaves for the sake of a mortgage.

Perhaps US Treasury Secretary Hank Paulson had his priorities right then: banks and big rent-seekers first, all others second, when he rang the Australian treasurer Wayne Swan at 6:30 on the morning of 10 January 2008 to tell him "Look .... if we can avoid a meltdown in house prices, then we might be able to see a way through this."

America couldn't do it, but ever since that conversation with Hank ('Wakefield'?) Paulson, Australian governments of both persuasions have done everything they could do to keep our bubble in land prices inflated as per Big Brother's request—remember? $1000 grants to all, the pink batts scheme, the building education revolution, continuing to offer tax incentives to negative-gearers of real estate—and the rest of the Australian economy has descended into limbo accordingly.

Ain't much chance of recovery, either, until we allow our land price bubble to deflate – although, ironically, the Property Council of Australia advised last week “property is one of the few industries standing ready to jump in and keep the economy growing.”  [Sigh!!]