The planned obsolescence of the public interest

In positive news, the Turnbull government has implicitly acknowledged the challenge rent-seekersprovide to public revenues. After decades of tax reviews, Treasury is finally modelling the effect of Land Taxes on the macroeconomy. It's akin to recognising the best parenting methods, but never understanding the lifetime benefits. The three major post-GFC tax reviews (the UK Mirlees report, the NZ Tax Working Group and the Henry Review) have all recognised the importance of harnessing economic rents as an essential element in a future tax system, but no major modelling work has been undertaken.

Turnbull's recent advocacy of Land Value Capture as a means to finance sorely needed infrastructure is another positive step. Publicly financed infrastructure currently operates as a crude form of welfare for property developers, lubricating wealth inequality amidst the housing crisis. A growing number are recognising this leakage as a cost to government.

Former New York Mayor Bloomberg grasped the economic potentials by reaching out from his local government role to finance the extension of the state run No.7 train line to the Hudson Yards. The added amenity of the train extension was projected to deliver $30 billion in additional property taxes over the next 30 years. Infrastructure bonds were sold to the market with repayment via the increase in land values. This is world best practice at least cost. NSW and Victoria have effectively cut off this potential via rate capping whilst struggling to finance infrastructure. Instead we are told to accept second best, with 'asset recycling' a code for further privatisation.

Local government has been silenced whilst State and Federal government's play pass-the-parcel in the great land game. We can only hope budget deficits, ineffective taxes and privatisations are not part of the planned obsolescence of the public interest.