Sunday, December 21

gipsland holiday

Malacoutta and looking out from the jetty which was situated just below our unit.
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Gipsland holiday

We recently took a short holiday to the Gippsland Region in Victoria which is unique for its wilderness, rainforests, beaches, and rich farm land. We stopped off overnight at Bairnsdale, the western gateway to the Lakes and Wilderness region and then went on to stay at Gypsey Point which is only about 15km from the delightful small town of Mallacoota, built on one of the many inlets and home to a thriving abalone industry. The area is surrounded by national parks, with tall forests, ferns, cool clear waters, secluded beaches and quiet rivers. Our accommodation was set within what is a national park. The first picture was taken from the balcony of our unit and next is a picure of a kangaroo with baby joey whose family were frequent vistors. Fishing was obviously particually good as pelicans were in abundance and there was abundant bird life including flocks of rainbow lorikeets and galahs seen above feeding.
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Monday, December 8

IOU’s back in fashion.

California is the 8th largest ranking economy in the world and is about roughly the same size as Australia. I noticed its Governor Arnold Schwarzenegger recently warned about the likelihood of having to issue warrants (IOU’s) to temporarily satisfy amounts due to contractors for landscaping, carpet cleaning, construction and food services as cash reserves dwindle.

IOU’s were once popular measures to tide you over some difficult times but it then involved trifling amounts generally borrowed out of the Petty Cash tin. It reminds me of a time in the early eighties when I attended a conference is the south of England on behalf of my employer. Having a young family and lacking in financial resources I was delighted to be able to substitute one Business class air fare (because of the long journey) entitlement at no additional cost for 2 economy fares which enabled us to travel and enjoy a holiday afterwards. We found a suitable minder for our young children and left her with some initial money on the basis the balances would be settled when we returned.

But there must have been a misunderstanding since our minder tried valiantly to mange on that initial amount until such time it was realized the children were either going to starve to death or emergency funds would have to be sought; in this case a well orchested raid was made on the contents of the Petty Cash Tin at work. The children were all very relieved when we returned and I hurriedly made good the IOU in case my reputation, already tarnished as a ' skin flint’, become too firmly established.

The trip itself was one of the more memorable and as it turned out we did have a blissful holiday. I was rather busy beforehand and my preparation for the conference itself left a lot to be desired. Bear in mind at that time in the early eighties presentations were rather limited and even basics like power point presentations were unknown. So I was only armed with a hastily procured large map of Australia with few coloured pins for locations and butcher paper on which to scribble a few forlorn facts to my large audience. My concern was heightened to near panic when I was asked by the Communication Manager what technical assistance I needed. Some of the other presentations from other countries were stunning and I soon felt rather foolish. There was nothing left but to grin and bear it.

Fortunately I had heard a half decent joke about Aussies getting lost in a hotel the night before which provided an ideal opener and to my immense relief was greeted with hoots of laughter. I didn’t think many people would be so interested on the business side after that (I had been tipped off a few from the UK were interested in emigrating) and so I abandoned my previous presentation material and confined most of the session to vague discussions about Aussies, Ausssieland, business and all about the country in general combined with some questions and answers.
Nobody seemed to notice the presentation wasn’t about what it was supposed to be.

The rest of the stay was wonderful, scuttling around the south of England in a little Fiat I had borrowed from one of the UK divisions on the off touristy season whilst soaking up some of the best scenerary imaginable in a very pleasant autumn season.

Monday, December 1

More urgent land releases needed for Aussie market.

It was interesting to read an article today by Housing Industry Association‘s Chief Economist, Harley Dale which echoes my own thoughts about the need for more land release in Australia if we want to achieve desirable house price affordability. The conclusion reached by Dale for the Australian housing market is it cannot ultimately benefit from the current falling interest rates and a tripling of grants unless more land is released. The past evidence for this conclusion can be found in the compelling statistics which show a rapid increase in land values arising from restrictive land release polices and burgeoning planning delays.

Tomorrow I think we will see our Reserve Bank of Australia make another large interest cut and I am betting on a 100 basis rate cut to add cumulatively to the 200 basic points already announced which has benefited borrowers with corresponding lower home mortgage rates. Concurrent to these official rate cuts the Federal government doubled the first home owner grant paid to recipients for first time home buyers for any existing properties amounting to $14,000, and a tripling to $21,000 for first new home buyers. The cash incentives are part of the government’s $10.4 billion economic stimulus package underpinning a welcome jump in new houses of 6.7 per cent for October.

Harley Dale said “Both new home sales and building approvals fell sharply over the first nine months of 2008. It will be a long road back, but it is hoped that an improvement in new home sales in October could mark the beginning of a stabilization followed by improvement in leading housing indicators over 2009,” Harley Dale then said. “The unfortunate and avoidable caveat is that any housing recovery that emerges over 2009 will be constrained by a lack of readily available land, planning delays, and the excessive cost of state and local government taxation on new homes”

Personally I think the highest level of dissatisfaction must be reserved for successive administrations over our country areas which gave little thought to new land releases to encourage a much higher proportion of migrant (up to 150,000 to 180,000 people arrive each year largely made up of the skilled migrants) intake to settle in the country rather than our overcrowded cites by investing in infrastructure and incentives for planned land development with co ordinated business regionalization

Australia is one of the most highly urbanized countries in the world. This situation is not sustainable.

Conservatism has prevented us from implementing the bold new initiatives which would immediately make land more affordable by addressing the lack of supply and give sensible consideration to relief from excessive imposts. Hence both residential and rural land in Australia is over valued and subject to unwieldy beurocracies who impose unnecessary restrictions and impose revenue targeted imposts.

In the longer term subsidies for first home buyers will simply increase a demand for land without a corresponding increase in supply. Hence Federal initiatives in consultation with existing state governments and their local councils need to implement policies which the remove self imposed supply restraints, eliminate bureaucratic restrictions and reduce the tax imposts if we are to avoid future rapid real land price escalation.

If you restrict anything so it underlying supply can never meet an underlying demand then the inevitable consequence must be a rise in real prices due to the operation of the price mechanism. It is clear that this purely relates to the land cost as the actual cost of building material and labor has remained constant in real terms over the past 30 years.

I do not imply the desirability of unrestricted releases of large landholdings or that you even need to own it, (since you could lease it) but rather I am drawing attention to the fact that in Australia our long term lack of affordability for housing has as it’s nemesis the self imposed artificial supply restraint on land acquisition with its labyrinth of unnecessary restrictions and unrelated revenue generating imposts.