Month: June 2004

It was a busy weekend, so it was good to slump in front of the TV news on Monday night. In Sydney.

I had been helping my daughter buy a car. She had trawled several internet sites and listed the possible cars according to price, make, model, kilometrage, suburb, picture, and half a dozen other elements in the advertisements. She had clipped a few newspaper ads, though they had less detail.

At the tailend of the news came the finance. Job ads were up, according to the ABC’s finance reporter, quoting the ANZ job advertisement index.

The unemployment rate rises and falls and the ANZ job advertisement index usually shows trends a couple of months in advance. But, unknowingly, it is showing another more profound change – again well in advance.

For several years now, the index has measured both newspaper and internet job advertisements. The trend is unmistakable. The number of newspaper ads are falling as a proportion of total job ads, and in some places falling in absolute numbers despite the increase in the labour force.

The most recent figures show 100,700 jobs advertised on the internet per week compared to just 21,413 in newspapers. It was a record for internet job advertisements – a record that seems to be broken with each new month’s figures. A year ago the internet jobs were around 65,000 a week.
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The Canberra property market has been ensnared in the legal system on two counts in the past week: tax treatment and the anti-gazumping legislation.

First to tax.

It would be difficult to devise a more expensive, cumbersome, time-consuming and unsatisfactory system of dispute resolution than the English-Australian legal system.

A week ago a Canberra couple’s taxation matter was resolved in the High Court – eight years after they put in the tax return.

It was not a difficult case. The facts and issues could be explained in half an hour. The couple borrowed some money to buy an investment house and a house for themselves. Each house had, say, a $200,000 mortgage on it. The interest on the investment house mortgage was tax deductible. The interest on the residence mortgage was not. All the bank cared about was that the total debt never exceeded the $400,000 and the total interest on that was paid each year. Let’s say the interest was 10 per cent, for ease of explaining what the couple did. In the first year, they paid $40,000 to the bank – the notional total interest. But they told the bank to apply all of that money to paying off the capital on the residential loan while allowing the investment loan to blow out. So in Year Two the investment loan outstanding was $240,000 and the residential loan $160,000. At the end of five years, the residential loan would be cut to zero, but the investment loan would have blown out to $400,000. In Year One their tax deduction was just $20,000 (only the interest on investment loan). By Year Five, however, their tax deduction was $40,000 because according to the bank all the $400,000 owing was on the investment property.
Continue reading “2004_06_june_forum for saturday property tax”

Not much can be done about housing affordability, but something could be done about fairness in property tax.

Labor cannot make much out of housing affordability, even though the Government said this week it intended to do nothing.

The Government was responding to the report by the Productivity Commission that it commissioned in August last year.

It rejected changes to capital gains tax and negative gearing that, combined with high marginal income tax rates, the commission pointed to as major drivers of the surge in house prices since 1996.

Labor cannot do much about this because it, too, has rejected changes to those taxes for fear of a backlash by aspirational voters. Further, the commission got stuck into state and territory governments over stamp duty and all of those governments are Labor and all have presided over increases in those duties.

Any attempt by Labor to appeal to people shut out of the housing market will be met with the obvious response that Labor presided over hideously high interest rates in the 1980s and is therefore not in a position to talk.

In all, it is not a bad result: both sides of politics agreeing to do nothing about a so-called crisis. It is not a bad result because when governments do something they almost invariably make it worse or cause a whole range of other unforeseen adverse consequences.
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You had better watch out for yourself. And watch what you eat.

The law of negligence continues to turn in Australia. It is turning away from insisting people and corporations look after others to a regime of greater personal responsibility to look after yourself.

Mind you, no-one is out there screaming about judge-made law or about unelected judges usurping the rule of law and the elected Parliament. But in the past four or five years the judges have quietly gone about the business of changing the law.

This week the High Court held that a licensed club was not liable to woman who got massively drunk and got hit by a car while wandering in the middle of the road on her way home.

The reason for the silence about judges making law is because most people would think the ruling made good sense. You only get screams about judges making law from people who disagree with the result, as distinct from the way the result was achieved.

But unelected judges do make law, and they make it in a social context. Some judges deny this. They say they merely apply the law. They say they never respond to cries in the media and elsewhere about events in the world. But how else do you explain the changing direction of the Titanic of the common law in recent times?
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