Call to ban ‘toxic’ interest-only home loans

I have often used interest-only loans so object to them being called "toxic".  "Useful" would be my word for them.  But I can see the author's point.  There's too much money sloshing around in the housing market and banning interest-only loans would reduce that.

There is no doubt, however, that councils and developers are not releasing new residential land at a rate that matches the demand.  They are not responding to market signals.  That is primarily due to bureaucracy plus Greenie harassment of any change.

If there is to be loan restrictions, there also needs to be a metaphorical bomb put under councils to release much more residential land than they have been doing.  They are the blockage in the system


FORGET dipping into super, scrapping negative gearing or opening up new supply. If we’re going to restore some sanity to the Australian housing market, the regulator must step in to ban “toxic” interest-only loans, economist Lindsay David has argued.

“It’s definitely the best policy to take artificial and speculative heat out of the market,” he told news.com.au.

According to the founder of property market research firm LF Economics, the much-maligned negative gearing is “only 8 to 10 per cent” of the reason why house prices in Australia are so high.

CoreLogic figures released this week showed home prices in Australia’s capital cities have jumped 3.7 per cent since the start of the year alone, with Sydney leading the charge, increasing by 5.3 per cent.

Earlier this year, Sydney was named the second most unaffordable city in the world second only to Hong Kong by research firm Demographia.

“Over the last 20 years, Australian house prices have risen in real terms by about 131 per cent, in the same time real wages have risen by about 38 per cent, and real rents have only increased by about 20 per cent,” Mr David told Sky News.

“So I disagree that Australia actually has a housing affordability issue, but what we do have is a credit-fuelled housing bubble issue. The easiest way to make house prices more affordable is to limit the amount of debt that gets flooded into the housing market.

“Here in Australia we’ve had this total household credit expansion that has moved in a beautiful straight line at about a 35-degree angle — the only other line I know that grows like that is Bernie Madoff’s Ponzi scheme.”

In a bid to keep the housing market under control, the Australian Prudential Regulation Authority recently introduced a new rule requiring banks to keep growth in investor loans under 10 per cent.

Mr David argues the banks can easily “get around” the growth cap, and argues APRA should instead be thinking about banning interest-only loans, which now make up around 40 per cent of all mortgages. “These loans are very dangerous to the core fundamentals of the Australian economy, they’re toxic to the housing market and they’re toxic to those who buy bank securities,” he said.

He said the solution was not first-home owner grants or other proposed solutions such as accessing superannuation, which would only push up prices further.

“Any new policy that is designed to stimulate demand for housing will stimulate demand for housing,” he said.

“Just get rid of them. Just get rid of everything, let the market work on its own, and let’s try and reduce the risk profile of our banking system one way or another, because it looks like a giant Lehman Brothers waiting to go ‘ker-shmang’.”

He added that the lack of supply argument was “bogus”. “It’s the demand side that’s the big problem — it’s artificial,” he said.

“People aren’t paying this much money for a house because they’re trying to make money on rent. If there was such a supply issue, there wouldn’t be any negatively geared property owners because you would have seen rents go through the roof.”

And while Sydney prices are “insane”, Mr David believes Melbourne is currently in most danger. “In Melbourne, over the last 20 years house prices have risen in real terms by about 214 per cent, whereas rents have only risen by about 12 per cent,” he said.

“That is probably the biggest mismatch you will see of any city in the world pretty much. It’s nearly impossible to see how Melbourne cannot be the largest housing bubble in the country, even versus Sydney despite house prices being absolutely insane here.

“Yes they’re overvalued, yes they’re in a bubble, but nowhere near to the length that Melbourne is. And you look at Perth, Adelaide, Brisbane too, it’s the same story. They’re probably two times the value they should be.

“That’s been fuelled by a massive sum of credit flooding the housing market.”

It comes as all four of the big banks have been sharply hiking interest rates for interest-only loans, with some offering to waive switching fees for customers who move principal and interest repayments.

Commonwealth Bank last week raised its interest-only rate for investors by 26 basis points to 5.94 per cent per annum, and for owner-occupiers by 25 basis points to 5.47 per cent. The same day, ANZ raised its interest-only investor rate by 11 basis points to 5.96 per cent, and its owner-occupier rate by 20 basis points to 5.25 per cent.

It came a week after NAB and Westpac jacked up rates. Westpac increased its interest-only investor rate by 28 basis points to 5.96 per cent, and its owner-occupier rate by 8 basis points to 5.49 per cent. NAB increased its interest-only investor rate by 25 basis points to 5.90 per cent, and its owner-occupier rate by 7 basis points to 5.42 per cent.

Despite the official cash rate remaining on hold at its historic low of 1.5 per cent, banks have been raising rates out of cycle with the Reserve Bank to protect their profit margins as funding costs rise.

Late last year, the final report from a two-year parliamentary inquiry into housing affordability came back with no recommendations, drawing strong criticism from Labor and the Greens.

The committee argued against changes to negative gearing and capital gains tax discounts, a position shared by the federal government. Prime Minister Malcolm Turnbull and Treasurer Scott Morrison have blamed soaring house prices on a lack of supply.

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Where’s the due diligence on renewables?

James Delingpole

You know that lovely warm glow you get on a summer’s evening when it’s still 42 degrees outside and you’re reaching into your fridge for your first restorative tinny when suddenly the lights go out and your air-con too?

Of course you do, especially if you live in South Australia, where, thanks to ambitious ‘green’ energy targets, power outages like this have become the new normal.

‘No worries!’ you say. ‘I accept that personal discomfort, inconvenience and mild danger are but a small price to pay to save the planet from global warming. Only a dinosaur would expect to go on being able to use electricity as and when he wants it. I for one welcome the bright new age of darkness, clean energy and government rationing!’

Except you don’t, do you? If you’re anything like all the commonsense Aussies I met last time I visited, you’ll be absolutely bloody livid: ‘We’re Australia, the lucky country, not some third world backwater. We invented commercial refrigeration. We’re sitting on top of a continent’s worth of cheap energy. What kind of eco-fascist madness is this?’

The madness is the result of the global warming scare which has dominated Western policymaking for the last four decades. Some countries are starting to get over it – notably Donald Trump’s United States –but in Australia it continues to exert a grip tighter than the bite of a ravenous saltie.

Climate change lunacy has affected everything from your right to clear trees off your property (often you can’t: they’ve been designated a carbon sink) to where you can’t build your waterfront home (junk science paranoia about rising sea levels) to how many millions of dollars you waste on desalination plants (for the permanent drought that never came).

Most damaging of all are Australia’s renewable energy targets. In South Australia they stand at 50 per cent (by 2025), in Queensland 50 per cent (by 2030) – rightly described as ‘bonkers mad’ by deputy PM Barnaby Joyce, in Victoria 40 per cent (by 2025). Even under the Liberal federal government, the national target is 23 per cent by 2020. All of these are doomed to fail –even the national one would require the impossible feat of a 50 per cent increase in Australia’s renewable energy (mainly solar and wind) within three years. Meanwhile, the havoc they have already wreaked is considerable.

South Australia has been the hardest hit so far by the great renewables disaster. No doubt it sounded good when premier Jay Weatherill and Energy Minister Tom Koutsantonis first began evangelising about their world-beating clean energy targets. The consequence, though, has been blackouts, job losses and economic chaos caused by rocketing power prices and intermittent supply.

But instead of apologising, the Australian Energy Market Operator (AEMO) is asking customers to take it on the chin. In a process euphemistically known as ‘load shedding’, the AEMO can order customers’ power supplies to be switched off in times of extreme stress so as to prevent wider system failure.

Why is this happening now in a developed nation in the 21st century? The simple answer is that renewables, apart from being two or three times more expensive than fossil fuels, are intermittent, unreliable and unpredictable.

If the sun isn’t shining (which it doesn’t, at night, not even in Australia) or the wind isn’t blowing, then the power needs to come from more conventional sources like coal and gas. The more renewables in the energy mix – 40 per cent of South Australia’s energy capacity is now wind – the more inherently unstable the grid becomes.

Hence the great blackout of September last year: a storm forced a shut down of wind power to prevent surges; this in turn crashed the entire local grid.

All this man-made chaos might be excusable if it served any useful purpose. It doesn’t.

Increasingly, it is becoming apparent that renewables are one of the great, truly bad ideas of the last 100 years: a boon for troughing rent-seekers, virtue-signalling pollies and posturing greenies but terrible for the rest of us poor saps who have to subsidise them; disastrous for the environment (all those birds and bats sliced and diced); utterly ineffectual in ‘combatting climate change’ (Australia produces less than two per cent of the world’s greenhouse gases).

So what’s to be done? What’s painfully clear is that – with rare exceptions like Cory Bernardi and One Nation’s Malcolm Roberts – Australia’s politicians have no appetite for reining in the problem, for fear of suffering the same fate as Tony Abbott, whose political demise was partly wrought by the Green Blob. It doesn’t help that most of the media – especially the ABC –is so heavily in thrall to eco-zealotry and refuses to question the (fake) green ‘consensus’.

That means people who believe in regaining the cheap, reliable energy Australia used to have before the green madness took hold have a fight on their hands. One way they might yet win is through the courts via judicial review. What, after all, is the most basic requirement taxpayers ought to expect from their governments? Due diligence on public expenditure.

This is going to be one of the tactics of Cool Futures Funds Management – a contrarian Aussie hedge fund of which I’m an enthusiastic supporter because it is, as far as I know, the first financial institution to try to profit by holding the Green Blob’s dodgy dealings to account.

It has approached the government with a low-cost, shovel-ready, clean-coal technology solution which could solve all Australia’s baseload energy supply problems. But because this solution involves fossil fuel, it will inevitably be resisted heavily by the greens and their useful idiots in government and business. And that’s where the courts may have to adjudicate.

Australians deserve better than to be held to ransom by the duff ideology of a few eco-zealots. If governments can’t provide their voters with something as basic as reliable energy, then they must be held to account for their negligence.

South Australia is a warning the rest of the country should heed before it’s too late. And the answer to your problems, my Aussie friends, is most definitely not blowing in the wind. It’s right there, underneath your feet.

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Urfa Masood to be Victoria's first female Muslim magistrate

Will sharia principles creep into her verdicts?

Victoria has appointed its first Muslim woman to the bench.

Attorney-General Martin Pakula on Tuesday morning announced the appointment of Urfa Masood to the Magistrates' Court of Victoria.

Ms Masood, who is of Sri Lankan background, will be the first Muslim woman to sit on the bench of any Victorian court.

Ms Masood started practising criminal law in 2003 and has worked for the Victorian Aboriginal Legal Service and the Australian Tax Office. She has worked cases in the Magistrates', County, Children's, Family and Federal Courts.

In 2012 she became an adjunct lecturer at the College of Law, where she teaches advocacy.

Mr Pakula congratulated Ms Masood on her new position, saying she brought to the role extensive experience in criminal and family law.

"Ms Masood has extensive experience in criminal law, child protection and family law, as well as with the Victorian Aboriginal Legal Service, which will prove invaluable in her role as a magistrate," he said.

Annette Vickery, deputy chief executive of the Victorian Aboriginal Legal Service, said it was important to have magistrates with an understanding of the issues facing Aboriginal communities.

"The Aboriginal Legal Service has long been recognised as a development ground for exceptional legal talent and we congratulate one of our previous staff members on her appointment to the bench," she said.

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University introduces 'trigger warnings' to courses - to warn students of distressing content

Monash University has become the first in Australia to introduce a policy of trigger warnings.

But critics have blasted the move as a bid to implement a politically correct agenda under the pretence of protecting the wellbeing of students.

In the Melbourne university's pilot program, 15 course outlines contain warnings that the content could cause emotional distress to students, the ABC reports.

It involves academics reviewing the course's content and highlight any 'emotionally confronting material' related to sexual assault, violence, domestic abuse, child abuse, eating disorders, self-harm, suicide, pornography, abortion, kidnapping, hate speech, animal cruelty and animal deaths, including abbatoirs.

The university insists political correctness was not a factor in the introduction of the policy, which was the culmination of years of campaigning by the Student Association.

But critics insist it is conceding to the demands of students who want to avoid ideas they do not agree with – and is a reflection of what is happening on campuses across the United States.

Student Association president Matilda Grey insists the warnings are not there so students can withdraw themselves from challenging situations – but so they can prepare themselves for the material they will study.

She added the current generation of students are simply more aware of the traumatising experiences their classmates may have endured, such as sexual assault.

'We're not suggesting that they should be faced with difficult, discomforting topics at all,' she said.

Rather, it will allow those who may suffer anxiety or panic attacks from distressing content to prepare themselves and manage their response, she said.

Chris Berg, from the Institute of Public Affairs, is critical of the move and says it is harmful to education.

'We've seen how this has played out in the US and it can turn into a censorious, highly politically correct [culture] and highly harmful to the mission of education that universities exist for,' he told the ABC.

And Marguerite Johnson, an associate professor at Newcastle University, considers herself progressive and regularly warns her students ahead of explicit material.

However, she disagrees with the idea of university officials deciding when warnings are to be issued – and thinks Monash sets the bar far too low.

'The world is emotionally distressing and I find it quite absurd that the universities may see themselves as the guardians of emotionally distressing situations,' she added.

She also believes the warnings are a stepping stone to censorship and could lead to the application of warnings on specific works.

For example, the works of Roman poet Ovid, Virginia Woolf and F. Scott Fitzgerald have often been objected to by American students for their depiction of sexual violence.

Professor Johnson also noted that analysing texts that might disturb students can be for the betterment of society, citing the example of Australia's reform of sexual assault laws.

She said it was only because young feminist students in the 1970s saw the way women were represented in rape cases that they went on to become lawyers and advocated for the change in legislation.

'If they hadn't experienced the horrors of reading the materials as students, how would they know what to fight against, how would they know what to kick against?'

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The Leftist reliance on censorship

JENNIFER ORIEL

After a long winter of stultifying centrism, Australia has regained its two-party system. The left’s ­political persecution of artist Bill Leak and his untimely death have shocked the Liberal Party into resurrecting its founding principle of freedom. Labor has responded to the Prime Minister’s plea for freedom by revealing its intent to censor the people and the free press.

In the fashion of 21st-century totalitarians, the left is using race and human rights as rhetorical weapons against liberty and civil society. The Liberal Party is ­emerging once more as the party of freedom, fairness and democracy. It begs the question: what’s left of the left?

In the midst of World War II, sociologist Robert Nisbet warned that we would not be able to detect the return of totalitarianism by searching for political absolutism in the form of an autocratic state. Rather, the rise of totalitarianism would become apparent by the gradual encroachment of the state into all areas of life traditionally assigned to society: family, friendships and secular faith.

The object of totalitarian ­contempt is civil society because the ties that bind us in friendship, family and faith also effect our ­independence from the state. The animating principle of civil society is free speech and we learn to master it by exercising public reason. As a result, the most distinctive feature of liberal democratic states is the protection of free speech and public reason from state coercion and control.

The Western left seems capable of discerning the totalitarian threat, but only when it comes dressed like an enemy. Thus, its members might criticise Turkish President Recep Tayyip Erdogan for suppressing free speech, or Vladimir Putin for punishing dissidents, but celebrate the silencing of fellow citizens deemed politically incorrect by state censors.

In the modern West, the most popular and effective rhetorical device to erode free speech has been race. Communists used class as a weapon to depict state censorship of dissenters as victory for the proletariat. In the 21st century, the left uses race as a weapon to shame and silence dissenters from the PC party line.

State censorship of dissidents is marketed as victory for state-designated minority groups. In the West, however, these ­minority groups are rarely genuine political minorities. Under ­affirmative action laws, they are given superior rights to other ­citizens. They are usually numerical ­minorities granted a range of ­unearned privileges under law.

As a woman, I am one of the fake minorities singled out for special privileges under discrimination law and I have come to resent it. I believe in formal equality, not inequality and I dislike intensely any attempt to create hostility between people on the basis of biological traits. As history shows, a ruling class often comprises a numerical minority awarded political, legal and economic privileges that are denied other citizens. It is the meaning of systemic inequality and a reliable predictor of social unrest.

The Liberal Party seeks equality for all Australians under law. It wants to restore speech equality by reforming section 18C so that every citizen enjoys an equal right to freedom of thought and speech without fear of persecution by common slanderers, or the state. The Labor Party champions speech inequality by defending 18C. Under Labor, the people and the press are denied the right to speak freely.

Those who insist on free speech are often targeted for abuse by false accusers wielding the rhetorical weapon of race. As we saw in the persecution of Bill Leak by Islamist and PC censors, and the three-year-long case against QUT students, section 18C empowers a type of fraud. In its current form, the Racial Discrimination Act enables what I would call race fraud; the use of race to deceive/defraud Australians by means of false accusation and political persecution. The beneficiaries of race fraud include vexatious claimants, ambulance-chasing lawyers, race-baiting activists and establishment backers of 18C.

Section 18C is big business, as legal affairs editor Chris Merritt has revealed. Since 2010, respondents in race discrimination complaints handled by the AHRC have paid almost $1 million to avoid going to court. The complainant in the QUT case, Cindy Prior, sought $250,000 in damages from students over Facebook posts. Some of the biggest payouts have come from government ­departments, which means that once again, the taxpayer is funding the harmful PC industry.

Race Discrimination Commissioner Tim Soutphommasane invited people online to complain about Leak’s cartoon. Soutphommasane was appointed in 2013 by then Labor attorney-general Mark Dreyfus. During a panel hosted by the Jewish Community Council of Victoria last week, Dreyfus outlined plans that could result in the application of 18C to a growing list of protected attributes.

According to Merritt, Dreyfus indicated that: “A Labor government hoped to consolidate all federal anti-discrimination legislation and would consider … a general standard for the type of speech that would attract liability.” Dreyfus plans on “consolidating the five anti-discrimination statutes when we are next in government” and establishing “a standard about speech generally”.

When last in office, Labor launched the most totalitarian ­assault on freedom of speech I have seen in the 21st century West. The Green-Left’s attack on free speech and the independent media was categorically anti-democratic. Combined with a ­proposed meta-regulator of the media, Labor’s human rights and anti-discrimination bill would have ushered in state control of free speech under the guise of social justice. The bill created a raft of new protected attributes including immigrant status, nationality or citizenship, and social origin. They would have been protected from “unfavourable treatment”, defined as “conduct that offends, insults or intimidates”.

Labor’s doomed bill was supported by the AHRC. The Liberal Party warned it would reverse the onus of proof, thereby destroying the presumption of innocence in Australian law. However, AHRC President Gillian Triggs contended that shifting the onus of proof to the accused was needed because complainants were “vulnerable”.

The ethos of Australian equality and mateship is protected by formal equality. We should seek a state where speech equality is guaranteed by ensuring all Australians can speak freely without fear of political persecution under 18C.

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Posted by John J. Ray (M.A.; Ph.D.).    For a daily critique of Leftist activities,  see DISSECTING LEFTISM.  To keep up with attacks on free speech see Tongue Tied. Also, don't forget your daily roundup  of pro-environment but anti-Greenie  news and commentary at GREENIE WATCH .  Email me  here