Ideas@TheCentre brings you ammunition for conversations around the table. 3 short articles from CIS researchers emailed every Friday on the issues of the week.
The latest idea to fix high housing costs is a tax on empty homes, which will supposedly encourage people to rent out (or sell) unoccupied properties. This is inspired by the recent plan by Vancouver to slap a fine of around $A10,125 annual tax on supposedly vacant properties. And there is a similar fine per day if you lie to Vancouver’s housing police.
Vancouver provides exemptions galore, which would likely be replicated in Australia: for renovations, properties subject to a court order or probate, where ownership changed during the year, where strata rules restrict rentals, and many more. But you have to provide detailed evidence to obtain an exemption. So some of the best minds in Vancouver are likely focussed on avoiding the tax, rather than doing anything useful.
And for rental properties, the property must be “rented for a total of 180 days of the year, in periods of at least 30 consecutive days.” This implies that a dwelling will probably be taxed even if it is rented for most of the year, except for two or three days every month. This will potentially hit many AirBnB landlords. If Australia imposes the vacancy tax, we might avoid these absurdities, but don’t count on it.
In any case, will it work in Australia? As at the 2011 Census night (the latest year available), 6.5% of properties in Sydney were vacant: and many of them would be unoccupied because of holidays, or for the same reasons Vancouver gives an exemption. This means the problem is not substantial, and the vacancy tax won’t raise much money.
A tax with an onerous bureaucracy and substantial paperwork requirements, creating lots of avoidance activity, and raising not much money. Perhaps we should put the Vancouver vacancy tax with some other Canadian imports we could do without, like Celine Dion or Justin Bieber.
The Federal Government has asked the Productivity Commission to spend 12 months figuring out how to make Australia more productive.
If the government or the commission wanted to enhance their own productivity, they could get to work on the to-do list left by Gary Banks, the last head of the Commission, in 2012.
Instead, the Commission says “The slowdown in Australia’s capacity to ‘do more with the same’ is puzzling because scientific and technological knowledge advanced rapidly after the early 2000s…” giving us the internet and apps and social media.
Perhaps no-one at the PC has spent hours updating their Facebook page or watching YouTube clips of cats playing drums — or they might know the internet can empower procrastination as much as productivity. In fact, the real puzzle is why Australia’s productivity growth isn’t even lower.
Consider. It took six years to approve one new coal mine and dozens of mines are caught up in this regulatory nightmare. Modelling in 2014 found reducing these delays by just one year would add $160 billion to national output over a decade and create 69,000 jobs.
Billions have been wasted on unnecessary desalination plants that have been mothballed. Billions more on the construction of wind turbines, even though they are one of the most expensive and unreliable ways of reducing greenhouse gas emissions.
Still more has been wasted building a fixed broadband network which is rapidly being made redundant by technological advances in wireless broadband.
Ever more is spent on education per student while their performance plummets against international benchmarks. Asian competitors spend half as much as we do on health but have the same life expectancy.
Extortion and thuggery increase the cost of construction by up to 30 percent but the cop won’t be on the beat for two years and has one arm tied behind his back. Stamp duties, planning controls and regulation have pushed up the cost of housing.
And this is just scratching the surface of government mandated waste and inefficiency. If the boffins and pollies thought about this for 12 minutes, let alone 12 months, they would realise that in almost every case government intervention is the problem; it’s high time they were part of the solution.
Anybody doubting the ludicrous level of government meddling in business need look no further than the Workplace Gender Equality Agency. This taxpayer-funded generator of needless red tape requires businesses with more than 100 employees to complete annual paperwork delving into gender ratios and salaries. It then publicly ‘names and shames’ companies that don’t complete that paperwork (including mine, as noted in recent media).
My company does not discriminate for race, age, sex or religion. If someone has a good attitude, is not afraid of work and willing to learn, they’re a starter in our view. Let me say too, this is not a particularly profound or enlightened perspective — it is just common sense and good for business.
But we do discriminate against time-wasting bureaucracies. The WGEA is a prime example of unnecessary government intrusion, and my business has much more productive endeavours to pursue than filling out paperwork for government agencies like the WGEA. We are challenged enough to make our business better, to give customers a better experience and to operate efficiently without distractions like this.
While politicians and economists lament the declining productivity in our economy, it is exactly this red tape and the imposts of these bureaucracies that tax the efforts of enterprise. If the government was serious about tackling productivity it would get out of our way — it would abolish the WGEA and the abundance of other regulations that hinder us.
I want the best outcomes for my business and believe that good performance should be encouraged and rewarded, irrespective of sex. We are conscious of HR shortcomings, appreciate the challenges and work to overcome them.
I would like to add, that as a dad to 3 girls I am a huge advocate for the success of women, and have long been pleased to see the increasing number of non-taxpayer funded advocates for the success of women — which further emphasises this is an area the government does not need to participate in.
Being ‘named and shamed’ by the WGEA is a badge of honour, and we should encourage (and celebrate) others to get on board the civil disobedience wagon.
Sam Kennard is Managing Director of Kennards Self Storage and a member of the CIS Board.