In this episode, Karl Fitzgerald discusses how we should view and tax windfall profits from land banking.

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. Welcome back to you listener.

This is the iron fist of the velvet glove podcast, a special episode.

Another guest this time, uh, on this occasion, I've got, um, Carl Fitzgerald

with me and, uh, welcome aboard Carl.

Welcome to the podcast.

Yes, Trevor.

I feel like I should have my velvet glove.

Yeah.

So you're down in Victoria and it's cold and you've got a blanket

and you've got gloves in your rug.

Um, I'm in Queensland, it's probably 22 degrees outside, but I've still got a

jumper on that's how soft we are up here.

So good to have you on the podcast and people are wondering, well,

who the hell is Cal Fitzgerald?

We'll call is he's a cyclist and a Renegade economist.

If I was to put it into a sentence, is that right?

The short description car, how, how do you describe yourself?

Um, yeah, well, I wasn't as a mad cyclist until we moved up here,

uh, to the Bush five years ago.

And since then, um, you know, the size of my girth has expanded as, uh, I

replaced cycling with, uh, smashing GOs and thistles and whatever else needs

doing here on, uh, our beautiful 27 8.

Yes, we'll talk about that.

That you're converting it into sort of some sort of community type of

property, but, um, we'll get onto that.

Uh, but basically you've got an interest and an expertise in economics, and

you've got a particular interest in, in land and taxing windfall profits and

the wealth that's created, especially through land and monopoly situations

and how to rearrange our society.

So it's fairer for all.

And, um, just by way of background, then you were running a podcast which was

called Renegade economists, which is still available for people to download.

And I think you got to 601 episode.

I have a 14 years, Carl.

I mean, where's your resilience and your persistence.

I did.

It was pretty, um, epic a year, 14 years on community radio.

That was podcasted as well.

Um, fire the delightful three CR here in Melbourne and, uh, yeah,

without an executive producer and having to churn it out weekly or

then wound it back to monthly.

And, um, yeah, it's just, uh, I don't know.

I needed a break, so this is nice.

This is the first time I've, um, I've done a podcast interview,

uh, since November last year.

So, um, yeah.

Great to be back on air.

Yeah.

Well, you'll just slip back into the saddle and feel

like you've never been away.

So I've done about 350 over seven years.

So I'm on track.

Um, Yeah, I've got a feeling for what you've done.

So, um, so anyway, um, let's talk about the issues that you talked about

in your podcast and, and you've been involved with a group called prosper

Australia and, and your podcast and the stuff you've been doing.

So what is the main theme?

The key idea that you've been chasing and trying to.

Explain and advocate for, cause you're a communicator with a podcast

and you're rolling prosperous trail.

You was as an advocate.

So you've been trying to get the word out about something.

Carl, what is the word you've been trying to get out?

Can I summarize it in 13 words or less?

That is key.

Uh, but essentially we are about rebalancing the so-called level playing

field, so that monopolous who have a natural advantage over anyone trying to

earn a wage or run a business, uh, pay a little bit more for that legal privilege.

And from that, we can use that funding stream to reduce taxes on incomes,

across labor and even capital.

Yep.

So there's a distinction between capital that is productive and

capital, which is just extract.

Unearned wealth is kind of what we're getting at.

Is that rolling?

Yes.

Unearned income is the issue, uh, that, uh, property owners can, um, can make

in their sleep as John Stuart mill said.

So, uh, when, when you have that sort of disparity, you know, w w work is

scrambling to get to work on time and, you know, 8 59, 9 o'clock in the morning,

whereas the monopolist, uh, still ends money, whether they're on the ski slopes

of Whistler or in a hammock in Hawaii.

So that's, you know, that was, uh, uh, a prominent aspect of political

analysis up until world war II.

It really was one of the mainstays of, of, uh, public debate, whether

you're a conservative or a progressive.

So, um, it's all about trying to rekindle, um, this, this loss

knowledge base that's been around for virtually thousands of years, right?

So there was a recognition back then, but it's been lost.

And I can sense that loss as well.

I mean, I'm old fashioned Carl, I attend dinner parties and getting to

arguments and often with people who own multiple rental properties and,

and they will bang on the table about how hard they work in terms of looking

after their properties and, and putting up with tenants who damaged them.

And, and no doubt there is some time involved, but your analysis

is that there's unearned income there that it's, it's profit beyond.

What's actually.

Normal or deserved.

How does this, you know, people would say, well, you know, I

worked hard, I paid the rights.

I pay the interest.

I had the deposit, I saved up my other money.

I worked hard for this property portfolio.

I have, I deserve everything I get from the, from the capital gains that accrue.

So what are you saying?

They just say they deserve a return on their capital for sure.

But it's the locational value that typically is what rises.

Uh, so we should all get a share of that.

And, uh, there should be, um, Lower taxes on, um, company structures and so forth.

So yeah, basically two thirds of the rent you would pay would

reflect the locational value.

And one third would be the rental value.

So, um, ultimately if we were to have our system in place, people

would be paying somewhere around about a six to a 7% land tax, but

that would be sufficient along with.

Taxes are monopoly to totally remove income tax.

So, you know, imagine two or three people living in your household

and no one's paying income tax.

We've also got rid of GST.

Uh, there's, there's a huge tax shift potential there.

And, uh, it's interesting that Singapore who uses elements of this

system has pretty much set the default rate for a minimum income taxes.

As we see the OACD, um, arguing for now for companies to have a minimum 15%, the

so-called Warren buffet rule, um, we'll get onto solutions in a little bit, but

I just still want to just sort of, um, get over the threshold of a recognition

of the unjustness or unfairness of the capital gain that accrues.

So, um, Jackie trad is a politician up here and she got into trouble

because she owned a rental property.

That was going to be near a change to a train station that will, and gabber, I

think, associated with different things.

And, and because it hadn't been declared properly, there were

issues and people saying, oh, you're getting this windfall gain from this

infrastructure that's going to be built.

And, you know, you should have disclosed it, short story.

And this happens all the time where people buy properties and, and then

hospitals, infrastructure, shopping centers, other things that increase

the value of that, um, piece of land will crop up as part of our

civilization of, of, of the, of the land.

And, and that's kind of what leads to these, um, sort of windfall profits

is, is the other infrastructure that the community is built around

this land that, that might've been sitting there doing nothing.

Is that part of the argument.

We have a saying that land price takes all the gains.

So whether it's an increase in the first home buyers, grant, it's

volunteers, planting trees, um, near that train station, it's Banksy doing

some graffiti near the train station.

It's a new hospital.

Uh, all of those things make a location location so much more valuable.

Uh, and whilst that is the number one strategy in real estate, um, it's

moved from, uh, top of the pops in economics, pre-World war one pre uh,

20th century, um, into this world now where, uh, it's barely mentioned.

And, uh, we need a superstar economists like Joseph Stiglitz to

come to Australia and reminders of this, uh, this historical wisdom of,

of, uh, leveling the playing field.

Um, I was listening to one of your podcasts and you're talking about the

land banking and that there's no incentive for developers to release land, to meet.

The demand.

Do you want to explain that concept?

Yes.

Well, gee, so I'm, I'm right on the edge of my seat here.

Cause uh, uh, for 10 years I've been trying to do this report and I've just

sent it to, um, one of Australia's leading investigative journalists

to release this time next week.

And it's called the staged releases report, peering

behind the land supply curtain.

And so everyone would have heard, uh, that housing affordability, you

know, it's all reliant on housing supply and uh, it's these planning

departments who, uh, hold things up with all this red tape bureaucracy

that is, uh, the problem we have.

We are in cahoots with a university of new south Wales.

We bought some very expensive data to actually see what happens once

developers get all this land rezoned.

And we looked at, uh, the sales over a 20 odd years and analyze the timing

and the size of those, uh, N number of properties released to the market

in what's called a staged release.

And so if listeners, uh, viewers go and visit a master plan community, make

sure you check out the display home and just outside at they'll have a giant big

billboard, which will probably say stage 33 over, you know, over in some direction.

And maybe there'll be a stage, uh, 35.

Um, you know, some of these are up to stage 173.

Um, which probably means they've done 500 little, um, uh, teases of

land supply that they've released to the market in a certain size.

And it's certain timing to maximize their profits.

Now government typically has, um, given, uh, all care and no responsibility.

They do the rezoning and then no one looks at what actually happens.

Well, this report goes into it and find some fascinating, um, data

points there that really expose just how powerful, uh, land bankers are.

Uh, developers can be.

Um, and, uh, you know, a couple of, uh, Queensland based, um, developments

that we studied, uh, with Springfield.

Um, aura was another one, um, up on, up near Calandra.

I think Yarrabilba, might've been the other ones.

So, um, yeah, we looked at nine master plan communities.

Um, Along the east coast and, uh, yeah, we're, we're really hoping that it, it

shines a light on what goes on behind that land supply curtain in terms of, um,

um, supply in a way disappearing when, um, affordability could be delivered.

So they've got capacity to release this land quicker.

They can build the dried.

There are drainage that the curb and channeling the infrastructure, if that's

not the issue, it's just them deciding to hang on to it and drip feed it out so

that, well, if they released more of it a lot quicker, just the price would go down.

Is that, is that essentially?

Yeah.

Yeah.

There's certainly problems with the way infrastructure is funding.

Um, you know, there are problems with the forward planning, um, of, uh,

growth corridors, but Queensland, um, from 2007 has been really

vigilant in terms of its, um, its monitoring of these growth corridors.

And, um, yeah, there's been all sorts of, uh, all sorts of little developments

within planning to actually, um, To get, uh, to get things organized

at, at, uh, an appropriate level.

I'm just pulling up the report now.

So in 2007, um, Queensland government released a housing affordability

strategy to ensure that the state's land and housing is on the market quickly.

And at the lowest cost by 2017, there was a shaping seq report, um, to, uh, help,

uh, best practice regional planning, um, regarding the monitoring of land

supply and development in 2018 was the land supply development monitoring

reports on a very fancy website.

Um, and in 2021, I growth areas monitoring team was established, but

if you go through and do a word search on all of these reports, There's a

stinging criticism of planning and the need to prepare all this supply.

But you know, this growth areas, monitoring team is not as one question

on what happens once that rezonings done and how supply might be altered.

So, um, yeah, I think I'm going to be up for an interesting few weeks, cause

this report is probably going to stir the hornet's nest and hopefully, um,

get government thinking, you know, incredibly seriously about this promise.

We've been told all his supplies gonna make a difference, but look at Springfield

43,000 lots have prices gone down at all.

Um, it's staggering.

When you see the graph, you just can't believe that this has gone on for so long

and no one's asked questions about it.

Um, so mean if, if Carl Fitzgerald was in charge of society, then if, if

a developer benefits from a rezone.

Then there should be an obligation perhaps to get cracking with the

development and to do the work and to, and then to sell it off.

Is that, and not to sit on it is that I can remember my wife's father won a ballot

for some land up in north Queensland and they used to be these ballots in

the old days where you could just sort of when land, but part of the deal was

that you had to undertake certain words.

Um, within a certain timeframe, I think, uh, as part of the deal.

So a little bit of that philosophy.

Well, they have aspects of it.

And, um, you know, you've got six years to act on your development approval.

I forgot what they call in Queensland, but you know, there are some limitations,

but of course, developers have got in there and they get a land tax discount

if they hold their land, um, in the development pipeline for a set number of

years, you know, it's, it's almost as if government just turns a blind eye to the

ever-increasing increase in landfill use.

Um, you know, thinking that, uh, the developers doing it hard because they've

got to do a couple of months worth of planning paperwork every few years.

Right.

So while they're in the development phase, I get a discount on land tax.

I didn't know that.

Yeah.

Yeah.

So I'm been very lucky to be working with, um, Cameron Marie, Dr.

Cameron Murray.

Who's one of Queensland's leading progressive economists.

Um, yeah.

You'll, you'll have to get him onto your podcast somewhere along the way.

Cause um, yeah, the two of us have sort of been working in cahoots to try and

bring this housing supply story to light.

Um, because you know, everyone's talking about housing supply, but the thing I'm

actually best known for is, um, measuring.

Land and housing.

Yes.

Please tell that story.

Yeah.

So, you know, we've got this housing supply crisis.

There's probably been 500 press releases over the 18 plus years.

I've been working in this job and, um, yeah, government does not measure how

many vacant homes there are on a regular basis until the census comes along.

And, uh, we get data there that there's some 1.1 million dwellings

that were not occupied on census night, but there's nothing in between.

And so when developers get to, uh, carry on about they're being

recorded, low vacancy levels.

So we need more housing supply, but then we, we go.

And, um, when we started this in 2007, the real estate Institute of Victoria,

we used to get a lot of free press, um, publicizing their vacancy, um, data.

And we looked at it and that was like, hang on a minute.

This is a voluntary survey conducted by real estate agents

who have an incentive to.

Uh, downplay the role of vacancies.

So, you know, vacancy happens to increase.

Ah, I might just miss filling out that survey for the week and this

creates, uh, a tightening of the drum.

If you like for all the property lobbyists to play, to say, look,

there's no, not enough supply.

We need to keep, uh, we need to resign some of our mates land out there on

the sprawl, come on, which we can then sit on for a little bit longer.

Okay.

So, and enjoy the resigning.

Windfall is it's a beautiful formula.

How did you calculate or attempt to calculate this vacancy

rate that you didn't trust?

Um, the real estate agents to pro to provide?

Yeah, well, uh, we did that using, um, water consumption.

As a proxy for vacancy.

So abnormally low, um, water consumption and, um, yeah, the, uh, I'm just trying

to bring this up because, um, yeah, we've got the, um, water bodies providing

the data for us and, and we analyze properties that use zero liters of

water, um, or, uh, 50 liters of water.

And so between those two metrics, we get a top and tail of what

potentially might be vacant.

And, uh, from that we need, um, we need to, uh, you know, focus on, on

why these properties might be vacant.

And one of our hypotheses has been that, um, that, uh, they're just sitting

on it, waiting for the capital gains.

So, um, how did your calculation match up with what the real

estate industry had been.

Uh, at least three to four times.

Ron.

Yeah.

Yeah.

And then it sort of slightly improved after that the REI stopped doing their

analysis and, um, Louis Christopher from SQM research, he does a vacancy

analysis that scrapes the data on real estate listing websites and quantifies.

Anything that's been on the market for more than three weeks is vacant.

So that's better, but it still doesn't include all of those properties that

might be held by an investor might be, um, in part of a legal quagmire,

um, a family estate being split up.

None of those are really counted or they're not counted

in those vacancy numbers.

So, uh, we don't have a true understanding of how much, um, latent supply there is.

And when you think that it's costing government, you know, hundreds of

thousands of dollars per meter of sprawl, To move roads, you know, all

the, uh, headworks infrastructure, all the community services, everything

that's required to sprawl, um, costs millions and millions of dollars.

And, uh, we we've just turned a blind eye to that in preference

for, um, what we know as, uh, the property owning democracy.

I think some councils have started charging higher rates.

Is that right for vacant properties?

They do, but it's only, you know, a couple of hundred bucks extra a quarter.

It's not really enough to eat into the, um, eating to the, the, the capital

gains that are enjoyed each year.

And so, um, recently I was contacted by, uh, Queensland, uh, a courier male

journalist who, um, was putting together a report on how 87,000 properties

around Brisbane were empty as well.

So we're often, um, getting numbers in between that 60 to 90,000,

um, sort of property number.

But we, you know, every now and again, out of the.

The 15 odd years we've been doing this report.

We'd see, um, a suburb on the sprawl where there'd be 64.8% of the suburb vacant.

And, uh, this, um, development outside of Frankston north here in Melbourne, um,

had, uh, pretty much, uh, let the cat out of the bag by turning the water meters

on, in one of these developments before, um, they had actually sold the sites.

And so, um, that had me thinking eight, nine years ago.

How do we look at all these other vacancies through these giant land banks

that, um, you know, you can find data that, uh, CU both Queensland and Victoria

have around about 400,000 lots that have been approved or in the approval process,

um, to, to feed the, the land banks of the future over the next 15, 18, 20 years.

Um, yeah.

How did the census data match up with, with vacancy rates

and your thoughts on it?

Did it match up?

It was a reasonable, um, we've got a new report coming out soon that we'll

delve further into that, but, um, you know, comparing one census to the

other, we were, you know, it was always gonna be an interesting one because

a, so many people were home on census night and be we'd brought back two or

300,000 ex-pats for, from overseas.

Um, but yeah, it was interesting to see that that vacancy rates

were actually down a little bit compared to, um, the 20, was it 2015?

Um, census.

So, um, yeah.

In, in your final podcast, um, you declared a bit of a victory in Victoria.

Um, uh, some sort of windfall profits tax of some sort and,

and, uh, the Calico sisters.

There's a story there.

I could, could you describe what, what that was.

Yes.

Well, the Calico sisters, their father had bought a property up near

Craigieburn, which is on the edge of Melbourne, um, right off the Hume highway.

So a pretty good location.

And, uh, yeah, I think they bought it for a couple of hundred thousand

dollars in 1974 or something.

And, um, they sold it to a stock land, I think for $300 million.

Um, so yeah, it was a massive, massive windfall.

And, um, we've been looking at, um, the nation's most progressive,

um, jurisdiction, uh, camp.

And what the act does.

There were 75% of that $300,000 minus, you know, 150 odd K um, the purchase price.

So, you know, basically three quarters of that 300 K would have gone back

to the government to fund, um, the necessary infrastructure, um, to

reduce pressure on small business.

Um, but, uh, yeah, Victoria, um, nowhere else in the country has, um,

any sort of rezoning, windfall gains tax on their books outside of the act.

So, yeah, we were, you know, we've always put in our budget submissions

to the Victorian government and were pleasantly surprised when they finally

took up, uh, the rezoning windfall gains tax and, uh, put a 50% charge on

it, but limited it to, um, properties.

Outside the current growth boundary around Melbourne.

So they basically set it up for the next generation of land

bankers, um, to pay a 50% share of the windfall gains they receive.

And this, this is sort of the triggering things, our land that

gets resigned and, and then is sold.

And I have to declare to the state government what the profit was and

the state government will take her attacks at that point when they sell it.

That's right.

And so, um, there were lots of debates about the indexation of that and,

um, you know, what sort of incentive there could be to help bring some

of that land supply onto the model?

Um, but yeah, they, you know, we've got this crazy suburban rail

loop happening around Melbourne.

Supposedly there's going to cost, you know, hundreds of millions of dollars,

but, uh, all the land bankers along that train route have been excused.

They're going to be able to make their millions.

Um, we're just about to resign west Melbourne and giant precinct there.

And all the property owners are going to get this massive, uh, gift there as well.

And then, uh, probably the same people are going to whinge about having

to pay too much in payroll tax too much, uh, you know, tolls, whatever.

It's it's this former protection is, and we have throughout society throughout

the Westminster system where, you know, property owners are sacrosanct

and, you know, uh, who cares if my kids live at home till they're 27

and I have to listen to them shagging through the walls, you know, I'd much

rather this system it'd be great.

You know, it's ludicrous there.

We think this is actually a sound system and, you know, lo and behold, uh, you've

had floods up there and Brizzy and Lismore's copped it well, and truly, and

you know, the weight of all this mortgage debt we're carrying is reducing our

flexibility to be able to deal with the sort of issues that are coming our way.

Yes.

Um, just briefly, you've been saying a few times we, and you've been sort of lobbying

as part of the prosper Australia group.

Is that right?

Do you want to just describe, I know you've recently left them.

You had described what you were doing there and what they do.

Well, I've got one more week after 18 years at the beloved prosper Australia.

So, um, yeah, prosper is a 130 year old, uh, NGO that advocates on behalf of the

teachings of Henry George, who was a famous, uh, classical economist who came

to Australia in 1890 and, uh, pretty much inspired the, um, free hold title that

underpins, um, the leasehold title, sorry, that underpins Canberra and the act.

So, um, he was all about, um, this concept of, uh, incredible progress being

accompanied by, um, undeniable poverty.

And why did the two go hand in hand?

And, um, he was quick to really pick up on what, uh, Adam Smith and David Ricardo

had said, um, in coded language, but.

An extra step further by saying, look, you know, why on earth do we penalize workers?

Why do we penalize traders with all of these tariffs back in those days

when it's actually those who stole the land from indigenous people,

um, those who control these natural opportunities that make the easy money.

And so, uh, you know, we, we, uh, have to protect this land.

So why don't the people who own the land, pay the, for the governing of the land.

Um, so, um, so prosper you were with them and you, your role was to advocate.

So you would lobby, um, different politicians.

And meet with them and harangue them and, and do all that sort of stuff.

That was what you did for . Well, yes, along the way.

Um, there were quite a few other angles, but, um, yeah, I mean, I was the director

of research for a number of years as well.

Uh, but essentially we would hold events.

We would, um, create.

News based around, um, innovative, um, data analytics to, uh, reveal these

stories of monopoly and, and help shine a light on these unfair advantages

that, that property owners, um, enjoy.

Um, and yeah, back in, uh, 2012.

Made a documentary called real estate for ransom.

And in it, we went to one of the master planned communities that inspired

this latest stage releases report.

And, uh, talked about some of these staged releasing and you know, how crazy I did.

We didn't say it, but it was sort of like when you hear the term staged releases

for someone of our sort of generation, you kind of think back to, um, the Iran

hostage is scandal, um, in 79 80 and how they doctored the release of all

of these hostages to coincide with the election and the U S election Reagan,

um, made a lot of hay out of that one.

And, you know, here we have with a stage releases, the same sort of thing.

So, um, yeah, there's always, um, interest from the media when there is

a, uh, a logical counter story to the way that, um, that, uh, this sort of one

eyed nature of, of, um, property always, uh, you know, property always winning.

Um, and, uh, you know, I always liked the question, um, who are

property rising property prices.

Good for you to always hear it in the media as if it's a great thing.

But now after 20 odd years of a housing crisis, we're starting to really see

the ramifications on over 55, uh, single women and kids, young kids

and divorce, these it's, um, it's just the, yeah, I think we're finally

reaching the point where people are understanding to understand that this is.

Damaging to our society.

And even the people who are benefiting from benefiting from it.

I E baby boomers mostly are starting to comprehend that, um, yes, your average

young person, um, cannot afford to buy a house in the same way that the boomer

could when they were in their twenties.

And the statistics are just playing to see if you look at the median house of

house price and the median wage, and look at the multiple, it's just obvious that,

um, the numbers don't stack up for people.

So people it's just starting to turn in the last, literally 12

months, maybe Carl, where they're starting to go, you know what?

This is a problem for Australian society, the great Australian dream,

and having that, that sort of, uh, valuation increase in being happy about.

And, you know, the courier mail and the newspapers will produce

reports every six months.

You know, the Brisbane suburbs that have increased most and, you know,

look it up and you'll see that your suburbs increase the most and you

feel happy about it or whatever.

And yeah, I think people are starting to recognize that this is a genuine problem.

And, uh, I know, uh, Alan Kohler I'll give this example, Alan Kohler, um,

ABC finance guy looked at a property that was like seven kilometers from

the Sydney CBD of a certain standard.

And then he went online to look in New York for a property, the same distance

from New York CBD, same sort of property.

And it was half the price.

Yeah.

Well, they also pay a lot more in property taxes over there.

And so this is, you know, if we can talk a little bit about solutions, this is.

The, the reality we need to, um, grasp is, you know, we can either pay current

prices to, um, the banking system, to the previous owner, or we can channel

some of those payments away from, um, the banking system and towards

essentially to giving ourselves a tax cut.

And that's what would happen if we had, um, a much higher reliance on land

taxes, rather than a stamp duties, B payroll, C income tax, you know, um,

the company taxes and, uh, yeah, in 2013 I released a report called the

total resource rents of Australia.

And, um, you'd think, you know, we're here to protect this land and, and

govern it and look after it, you'd think you'd know the total value

of all of our natural endowment.

Well, um, there's very few economists on the planet who have actually done that

sort of work to calculate how valuable all of our natural resources are and how much

do they actually increase in value each.

So by doing that, I could see that, um, if we had, um, a resource rent on

our minors, for example, if we had, uh, some sort of licensing fee on our water

licenses, um, we had, uh, Cybersquatting fees to deters cybersquatters.

Um, we had a share of the satellite orbit rents that, um, are enjoyed by

all the telecommunications companies.

Um, if there was something, you know, we replaced a company taxes for, um,

TV and radio stations, and again, they had a licensing fee based on the value

of their, their, um, particular, um, monopolization of that part of the earth.

Um, they wouldn't have to borrow so much money to buy that asset up from.

But they would know that have this ongoing fee that they had to pay that

would rise in value if, uh, some sort of technological development came along.

So, um, it's, it's staggering that we don't actually have, uh, futurist

departments within treasury who are looking at what the, the next, um,

Aspect of privatizing the earth is and preparing the public financing system

to defend the community from these rent seekers who come in and bribe

their way into the corridors of power.

And then, uh, uh, clean up with barely anyone noticing, um, you know, if

groups like prosper and the Australia Institute and, and people like cam

Mary, uh, you know, and various other academics, don't talk about it.

Um, yeah, it should be the bedrock of democratic understanding.

So we can actually evolve, um, beyond just voting every four years.

But how.

Um, as say an, a share in the value of these resources, um, that's equal

across the board, across generations.

And from that, uh, you know, we can reduce this reliance on debt and, um,

the insecurities that are precarious housing situation, um, delivers.

And, you know, we have little, little, uh, um, examples of this around the world.

And one of them, um, is what a Republican governor did in, um,

Alaska in 1974, he set up the Alaska permanent trust fund and, um, scraped

off a share of oil rents every year.

And now that's upwards of 40 odd trillion dollars.

Um, similar thing happens in Norway and, uh, you know, that's only been around for.

Barely 30 years.

And again, it's, it's probably over 40, $50 trillion.

And, uh, in Alaska, everyone gets a roundabout $2,000 a year.

It does vary, but, um, that money is most welcomed when it comes to paying

off any short-term debts or catching up on, on a bit of dental work or something

like that to help, um, people get ahead.

So how did that get through in Alaska, but we couldn't get the Rudd sorta.

Windfall resource texts through how come we failed.

Yeah.

Well, I was involved in that debate and it was horrifying to say how poli

labor was advised in terms of its.

You know, they came out with an asset against them sort of concept rather

than trying to get the business council of Australia on board, by reducing

company, Texas by four or 5%, rather than the piddly 2% that they offered.

Um, and so they, there were left exposed and, uh, who would have thought Gina

Rinehart, um, stumbling up onto the back of a truck and yelling at ax.

The techs would become a rallying cry for, um, all these tradies, uh, brought

up on, um, you know, the, uh, essential dietary fiber that, uh, the mood

ocracy provides, um, Rupert Murdoch's media, um, brainwashing sort of thing.

And, uh, you know, as good as Ken Henry is as an economist, um, they didn't have that

sort of framing side of things together.

And, um, You know, we then fast forward to the bill short and

federal election a few years ago.

And, um, again, it was us and them, and there was no sort of nuance on how to

bring people along with, um, you know, this necessary reform and what we're

going to do to actually plicate these vested interests along the way that

isn't actually going to make it worse.

Yeah.

So maybe it's it's, it is a us against them scenario, but the us should have

included the industrial capitalists who are productive in our community

and emphasizing that there, there was a really small group of basically

miners and rather than us being poor everyday working Australians versus

business in general sort of thing.

So, yeah.

Yep.

Murdoch and, um, you know, I guess it comes down to ice.

Again, my dinner party arguments with people.

Cow is, um, people are convinced that billionaires earn their

wealth, good luck to them.

They've taken the risk.

They've worked hard, things have fallen into place.

And that, that it's theirs to keep all this wealth.

And, um, there is this idea that, that billionaires earn their billions.

Is, is it true?

Do they own their billions?

Well, uh, some do and you know, companies that have some, you

know, pure entrepreneurial genius, we love to support that.

You know, that's part of what Henry George and prosper Australia, um,

seriously support and, you know, look at the Atlassian, um, boys, um, cannon

Brooks and Scott Farquhar there.

Um, obviously amazing coders, really smart individuals, but they were also

there at just the right time weren't they had perfect timing and, uh, a lot

of their wealth is based off, um, this orig, you know, the publicly developed

infrastructure that came out of, uh, us military, um, and, uh, relies on, you

know, the sanctity of business contracts that are enforced through the public

court system that then feeds up into, um, uh, the share market and the IPO,

um, scenario that also is backed up by a system of, um, public, uh, uh, laws.

And so.

There's an aspect there where sure they should and good money, they've

developed great products, but there's also, um, uh, a lot of confidence

in protection guaranteed for those business activities because of what,

um, the public legal system does all the way through patents and

trademarks and copyrights and so forth.

And so there is a way that we could have a better valuations of those services,

um, of the benefits they receive and they paid something back for that.

Um, but you know, I'm, I'm pleased.

I haven't heard sure they've bought ridiculously overpriced real estate

and they probably have a big real estate, um, sort of investment stream

through one of their private trusts.

Um, but you'd like to think there would be, um, uh, Entrepreneurs out

there who recognize this unearned income and shied away from it

because of its its unethical basis.

Um, you know, it really is, um, a subtle form of, um, of slavery.

If you like the system we have, where we were up to debt and our

eyeballs, and we've got no time to think because we're working our

brains out and, um, yeah, people, uh, really can't think long-term anymore.

That critical lens is gone.

And that's part of the reason why podcasts have been so popular is because we're able

to bring some of these forgotten skills back to the public imagination and, uh,

yeah, breathe in on all this history.

That's out.

Um, I think the Romans used to do a thing where successful generals,

who would be riding the chariot back into Rome and everyone would be

throwing confetti at them or whatever.

Um, there'd be a guy whose job was to stand behind the successful

general and whisper into his ear.

Remember, you are butter, man.

Just to sort of keep the ego in check quickly, billionaires

need somebody similar.

Cause I, I would imagine the surrounded by yes.

And then he tells me how wonderful they are.

So, uh, yeah.

That's so, um, so yeah, so there's, there's this sort of a windfall profits

in, in land we talked about earlier and there's also windfall profits in.

In, in monopoly, industrial sort of businesses or tech companies, I mean,

a lot of tech sort of startup stuff.

The idea is to be the biggest player in that sector that you are so big, that you

then can repel any potential competition.

And it's, um, a lot of the super profits come from being so big that

nobody else can enter the market.

You know, like Uber's idea was to get in first to be the.

Uh, company that dominated the market and it would be too

expensive for others to come in.

So, um, that's part of our civilization.

Our commons is, is a recognition that that sort of monopoly is a climb on the

comments and needs to be accounted for.

Yeah.

And one of the classic examples is when Adam, um, apple bought Motorola

and everyone thought it was a hugely overpriced, uh, two and a half

billion dollars, something like that.

And, um, yeah, a couple of months later, the word got out well, what they really

bought was Motorola's, uh, uh, uh, Thickets that established around all sorts

of mobile phone and electronic processes.

And so it was, uh, a form of, uh, market protection and, uh, you know,

telling this story always takes me back to when I went to interview, uh,

my old professor, John free Ben and I happened to walk past a brand new

auditorium near his spanking new office.

And it was called the center for market design.

Right.

And he told me it was for PhD students to study how to erect a monopoly.

Well, you didn't tell me that, but that was the impression I got, but

basically how do I a rector, a fence around your particular business?

So, um, you've faces a little competition as possible.

So, um, you know, we've really picked the eyes out of where we were going

in terms of, um, a future where, you know, All of these gadgets.

We have, you know, in the fifties and sixties, the white goods revolution,

everyone thought, you know, you'd have all this leisure time at your fingertips, but,

uh, whilst incredible productivity has been enhanced from that side of things.

Uh, uh, the F you know, Rockefeller apparently was a really strong

supporter of, uh, feminism because he, he recognized that having two income

earners within a household would mean that the land rent, uh, the locational

value of, uh, someone living in, in a Brisbane would go up and there'd be

more profits there for the wealthy.

So, um, because two incomes could pay a higher price purchase price.

Yeah.

And there hasn't really been delineated that, you know, it

used to be one income per house.

Um, and you do that multiple of incomes to, to household values.

But as that.

That share of the workload has, has become more equal.

Um, yeah, it's, it seems like, um, that's sort of been totally

understated in, in the way, um, housing affordability is discussed.

Um, we always hear about negative gearing and capital gains tax, 90, 99.

Um, the big cuts that, uh, Peter Costello, um, put through, uh, as, as

driving, um, this, this, uh, incredible windfall that property owners make.

But yeah, there, there are plenty of other aspects that also add to it,

but of course that's alongside the liberalization and the banking system

where we're major players, um, to, to how, uh, we're in this situation now that, so

Kyle you've got a degree in economics.

Yes.

Yup.

Yup.

I'm getting the feeling as we both are admirers of, um,

of professor Michael Hudson.

And, uh, you know, I'm, I've been reading a lot of economics stuff lately.

I like reading Yanis Varoufakis and just other ones.

And it seems the more you read, the more these people are saying that economists

traditionally, the sort of economics that's taught at university, um, the way

money is described and how the monetary system works is completely wrong.

And the training that our economists are getting at university.

Seems to be way off the mark.

Do you look back on what you were taught at university?

And think my God, I was misled badly.

Yeah, well that, that was the primary purpose of me interviewing John Freeborn

was to get to that story because in the first semester we were told, you

know, output equals labor plus capital.

And in one of the last lessons of my undergraduate degree was, uh, sorry,

output doesn't equal labor and capital.

And we can't tell you why.

And, uh, you know, 10 years later, I discovered Henry George and

read this incredible book called the corruption of economics by

Mason Gaffney and Fred Harrison.

And it went through this period, um, that, and, and talked about, you know,

the, the, the sense of revolution that was coming, um, with Henry jaw.

Um, out and about, you know, really breaking down the economic story.

So the everyday person could understand it.

Um, and, uh, yeah, they were like, heck we need a diversion plan to come up here.

So, um, they figured out that let's get rid of land and hide it in capital is

if capital already owns the earth and only concentrate on labor and capital

is the two major factors of production.

And so, um, the, the influence of land and, um, the ever-present, uh,

property bubbles seem to wipe out, uh, economies around the world about

every 18 years or so, um, is, is pretty much hidden in the background.

And, uh, we're left with, um, this seemingly ever more complex mathematical,

um, formulas that, uh, we just, uh, We, you know, people finish their economics

degree going well, what the hell?

What, what uses is doesn't tell me anything about the real world.

Um, but I used to love getting people, uh, thinking as I'd be podcasting and, you

know, from a conference somewhere around Australia or somewhere overseas, and you

can just basically walk the streets once you understand the story and see, oh, yep.

Here's the hipster suburb.

Um, I, uh, there's a new infrastructure going past there,

out to the next sort of, uh, wow.

Is that where all the cool graffiti is and where all the

good music venues are out there?

Ah, God, I bet you that's where all the property investors are.

And you know, now they're doing that from their phone using, um,

Uh, software packages, algorithms that plug in the latest demographic

trends, uh, local employment rates, new infrastructure plans, uh, you

know, rezoning capacities that they've got so many metrics coming in.

Um, and then from this stage releases report, we're imagining, they've also

got the days on market, the age of stock, um, the auction clearance rates, the, um,

first home buyers, uh, lending conditions.

All of these factors would feed in to what they're doing and give,

um, a hotspot for where to invest.

And, um, one of the great tragedies, uh, Yeah.

I decided to keep positive in my last podcast show, uh,

for the Renegade economists.

Um, but yeah, we had this rezoning windfall gains tax legislation go

through, but, um, it was only in the last few days we recognize that tacked

onto the back end of that legislation was a giant handout to wall street.

So we've got this whole phenomena of housing supply and then

there's no housing supply.

We need more capital, we need more investment.

We need more big money.

And so wall street, post GFC decided we've already locked up the mortgage market.

Why don't we design a form of securitization to

corporatize the rental market.

So that's, what's been happening in the Northern hemisphere and,

uh, Scoma went over to England and came back or breathless

about this concept called build.

Yep.

And so build to rent is, um, is big capital coming in and, uh,

basically, uh, setting up PropTech so you can rent from your landlord.

And, um, you know, there's some advantages to that, but there's also apparently quite

a few examples of data scraping going on and sort of a bit of eavesdropping

through those apps where there.

Pretty much figuring out what your financial situation is and, uh,

starting to, um, move towards a system where rents will be based on, you

know, your fullest capacity to pay.

So with this, um, build to rent legislation, they gave wall

street, um, a 50% discount on their land taxes, but didn't put any.

Um, uh, affordability thresholds in place to ensure that it's each

property, you know, each developments at least 90% occupied that, you know,

um, there is, uh, some affordable housing within that development.

None of those metrics we'll put in there.

So it's sort of all faith in the market.

And as we've seen with this reliance on, on housing supply, just like we saw

with the reliance on another form of supply side, thinking that was known

as trickle down economics, um, really it it's generally set up to, uh, hold

advantage for those in the know, um, for the top end of town, rather than

providing a bit of balance so that we all get some returns from this public policy.

So, so in the Northern hemisphere, sort of big corporates are getting into

owning residential property to rent.

Yeah, what's happening and then getting a bunch of it together and

then securitizing that and on selling it and refashioning it and molding it.

But, but that hasn't happened yet here as it hasn't yet here.

Um, uh, there's a company called Blackstone capital and Stephen Schwarzman,

um, uh, uh, paraded through the country in about 2018 and had a full page ads in all

the major papers, talking about Blackstone and, uh, left the country saying, look,

uh, yeah, just the way things are set up.

There's no way we could make this work.

And, uh, this was from a guy who's earning $800 million a year.

Right.

Why couldn't it work?

Why couldn't they make it work here?

Well, because of their progressive land tax rate.

So the more, the more land they would own, the higher that land

tax bracket they would be in.

And from that, um, there would a be some pressure on them to put those properties

on the market at the market price rather than at the monopolist price.

So, um, yeah, you know, during the GFC, during the COVID crisis during lockdown,

uh, As a thousands and thousands of properties that would just pulled from

the rental Mack and then left vacant, um, to put a price floor in place to

ensure that rents really didn't, um, plummet and, uh, apartment prices

in the CBDs, uh, here, um, uh, fall.

So that's where a lantex comes in.

It, it keeps the property market honest.

It ensures that, um, there's some economic day-to-day economic reasoning

behind the use of that resource, rather than this long-term power

play to orchestrate the supplies.

So profits are maximized, right?

And it kicks in at a level that a big corporation like that

would have felt the pain of it.

Whereas it doesn't kick in.

Well, as you said, land developers get a.

And amnesty while they're in the development stage, so, okay.

That'll make sense.

Yeah.

Yeah.

It's a sad, it's a sad story.

Uh, dear.

So Carl, um, w we'll sort of head towards the finish line here, so

you've got this report coming out.

That's hopefully you'll get some traction and you'll be interviewed

and you know, you're going to appear on Q and a and things like that,

perhaps leaving fingers crossed, but maybe you're going to do, uh, what's.

What's your plan after that?

Is that the answer?

What's your, what are you doing now?

Well, uh, my wife and I, um, bought this property up, uh, near mom's

Brie in central Victoria near.

Um, Castlemaine sort of region, hoping to establish what's

called a community land trust.

And this is, um, a system where the rising value of location is kept within

the community to pay off the debts of, of establishing, um, the site.

And then, yeah, we'll have this surplus, if you like that, we can invest in our

own, um, social venture here on the land, um, whilst, uh, enabling, um,

steady, secure, uh, and affordable.

So, you know, I imagine two thirds of your mortgage or rental payment, going back to

a community, um, of people you're, you're involved in and, uh, acting responsibly

to pay off debts and then using that money for good things, your community needs.

So this is a housing model that has been, um, very popular overseas.

And the UK has gone from two to 400 plus CLTs, um, post global financial

crisis in America during the GFC, um, CLTs had a foreclosure rate that

was 94% lower than the wider market.

And so it's a lot more stable because it removes that speculative

component from housing and actually provides affordable support.

Rather than, um, supply the highest possible cost.

So, uh, yeah, I'm in the process of establishing a new board, um,

our, uh, our NGO's, uh, called grounded, grounded land advocacy.

So, um, yeah, I'm very lucky to have some of the leading academics in the

country involved in that some great advocates and, uh, yeah, very, uh, uh,

useful and important philanthropists.

So it doesn't involve, uh, people making a donation of land.

They own to a trust which has rules then about the ongoing use of the land.

Is that what it's, is it philanthropic donation and then rules about

use and eventual profit sharing?

Is that yeah.

Involves somebody being a philanthropist.

And giving you something in the beginning.

Is that, is that not always, I mean, council has a lot of surplus

land, so we're working with some councils to identify that and

marry them up with ethical finance.

Um, the plan is to know how to make this work.

Um, yeah, but, uh, essentially what it is is that the trust will own the land

and the resident will own the house.

So you only have to borrow 30, maybe 40% of your typical mortgage for

the improvements for the building.

And then, um, you pay, um, either a yearly Landlease or a, a resale

formula when you leave, um, the community, um, later on down the track.

So by doing that, um, yeah, the, the pressures of, of, uh, meeting a typical

market rent, uh, much, much lower.

And, you know, the beauty of living in an intentional community

is usually there'll be someone who's, um, you know, a great cook.

Another person is into bulk buying or someone who's perhaps a, a bit of an

architect or a draftsman, and there'll be a, hopefully a financial plan.

Who can help everyone get their finances in order.

And so my dream is, you know, to help, uh, you know, kids in their, their

mid twenties to mid thirties who lose that last decade, um, of rentals to

be part of a CLT where their rental stream goes towards, uh, uh, funding,

the small business opportunities for them to, uh, to get going.

And, you know, of course in that mix, you'd have the, the age split.

So where there may well be, um, you know, over 50 years

over 55, uh, involved as well.

So, um, yeah, you know, there's so much, you know, we have this show in Australia

called neighbors, but, um, so, so few of us actually know our neighbors.

Yep.

Um, but where do you do get to know them and figure out what they're good

at and what you're good at and how you can work together to make things happen?

Um, you know, you wonder why there, isn't more of this going on.

And when you look at the way the, the housing economic side of things

set up, the, the whole, uh, planning legislation, the financing, you know,

there's, there's a lot of hurdles put in place to kind of keep channeling people

into this, uh, you know, master planned community kind of system, um, that the big

developers have rather than, um, seeing housing as a fundamental human right.

And, um, setting up all of the, the legislation to support, um, uh, that

primary obligation, the government should have to their citizens.

One of the silver linings of the whole COVID pandemic has been, the white

people have, um, looked a fresh at their lifestyles and what was just assumed

to always be there's no other option.

I must live in the suburbs and I must commute for over an hour each way into

the city and do the same on the way back.

People have stopped and looked and gone well for start, you know, they were

forced to stay at home and then they thought T I actually quite like this.

And then they managed to, you know, keep it up where they

can get two or three days.

And then really people are starting to examine, how can I make it five days?

How can I actually get out of this permanently?

So maybe your timing is good in a sense, the pandemic is.

I think, um, for people thinking about the possibilities and that there are other

options otherwise of living out there.

So yeah.

Yeah.

The blinkers have come down for a little while and you know, where we'd like

to think that somewhere along the way, the, um, the cards would fall on the

community's side at the table, but, uh, uh, one of the things I've I've do,

you know, I kind of kind of call it.

Um, grand final day for land economists is when the national accounts are

released in, um, late October and, uh, the system, a national accounts,

the abs 5, 2 0 4 tables, 61 is the one that values Australia's land.

And we're one of only two or three countries in the world.

That separate the land from the buildings.

And, you know, this is so fundamental to understanding this unearned income aspect.

And, uh, I did the numbers.

I put the op-ed out there saying, wow, uh, 20, 20, 20, the financial

year, 20, 20, 21, I was estimating that we would actually surpass, um,

2017 where, uh, land prices increased by $683.5 billion in a single year.

And I was like, Well, as a total, it increased by 683 billion.

I think it was around about a 7 billion, a trillion dollars in total there.

Um, and I said, well, that financial year it's going to be

worth about $700 billion increase.

Well, it turned out with all of the, um, job seeker and job keeper payments,

and then, um, home builder, uh, that I was a full $1 trillion short of what

actually happened straight in land prices increased by $1.7 trillion and not one

news agency picked up our press release.

Yes.

Yep.

Yep.

Like killed me.

Yeah.

Yeah.

Okay.

All right.

Well, that's been great cow.

That's been a really good sort of, uh, overview of, of land and

property and monopoly and, and some solutions mixed in amongst there.

And for a guy who's been out of podcasting for a few months, you've slipped back

into the saddle as if you were never away.

So I really appreciate it.

And if you've got any more scoops or you just, um, have, uh, an itch that

you need to scratch and get behind the microphone, um, just give me a buzz.

You're welcome back at any time.

Yeah.

Well, I'd love to give you an update in another year to see how we're

grounded is going and see how many, um, working, um, community groups will

have helped get up and over the line.

Cause that's really our aim.

There's a lot of interesting groups around who are trying to

get some form of community led housing up as an alternative.

You know that there have been a few groups, uh, trying to, trying to help

them, but we're hoping within the community land trust space, we can make

a difference so that, um, you know, often you hear these community groups

having a five or 10 years worth of meetings and not owning any land and

just watching their deposit gap, keep expanding and just pulling their hair.

So, um, hopefully we can, um, work together as a bit of a network to,

um, marry up all the people, trying to do good things, um, from various

perspectives and get some economies of scale moving forward so that, uh,

people can have hope, um, in, in life.

Again, it feels like there's, uh, a lot of frustration out there.

And, um, I, you know, when you think of how much financial pain we all

have, um, paying our weekly rents their mortgages, um, just to get to channel

some of that pain into a 20, 30 minutes a week, studying some of these plastic,

uh, economic stories and principles.

Really understanding the rules of economic engagement.

Um, it would make life easier and we'd be able to hold our public representatives

to account, uh, more easily, uh, yeah.

Great to see Eddie.

Oh, bead finally getting done again with more and more pressure.

You know, one of the Archer rent seekers, uh, across water, across lacing, across

mining, across land, he had the playbook from Annapolis and he got busted.

So they don't all get away with it.

Yeah.

So where do people go if they want to keep track of what

you're doing with this venture?

What's a website or Facebook.

What's what, where should they look to keep track of what you're doing?

It's old, totally fresh.

So it's going to be, um, grounded.org dot a.

And, uh, at a sharing on Twitter, I'm on LinkedIn, Carl Fitzgerald, and, uh,

yeah, generally around and about, uh, I'll still be riding our PIDs, um, here,

there, and everywhere, and trying to get, um, more people to recognize that,

you know, another world is possible.

'cause when you, Carl, I'm going to end this recording now

and thank you for your time.

Thanks Carl.