Monday, February 11, 2019

How Chinese investors will snap up hundreds of thousands of 'bargain' Australian homes under Bill Shorten's plan to cut negative gearing

Labor's plan to slash negative gearing will result in thousands of Chinese investors  snapping up 'bargain' Australian homes, a property expert claims.

Labor leader Bill Shorten said tax breaks for negative gearing would be restricted to new homes and the discount halved if the ALP wins the federal election.

The existing policy gives housing investors a tax break if they make short-term losses on real estate investments, providing an incentive for property buyers who can thus sustain short-term losses for long-term profits.

A Labor reduction in the tax breaks meant there would be fewer local buyers in the real estate market, and the drop-off in demand could reduce house prices.

However, Douglas Driscoll, chief executive of Starr Partners, said any such price fall would make the local market more attractive to foreign investors. 'Labor's proposal will create opportunities for foreign buyers looking to capitalise on a "softer" market,' he told Daily Mail Australia.

'They are already seeing Australia as a bargain and I'm expecting to see this kind of investment gain further momentum this year.'

Labor is expected to win the upcoming federal election, and anticipation of the negative gearing changes had been cited as a factor in price downturns in the major markets of Sydney and Melbourne in recent months.

With prices dropping off record highs, foreign buyers - principally Chinese - were expected to come into the local market in big numbers.

China's biggest property website Juawi said last month the country's investors were already eyeing off Australia's market as property prices started to slide. Juwai's 2019 outlook report said a 'desire to get a bargain while the market is soft' would drive increased investment in Australian homes this year.

This was combined with China's wealth-per-adult quadrupling over the past six years. Half of all Chinese wealth was invested in property.

'China and India have a burgeoning upper middle class, whose wealth is rapidly growing, and these are the kinds of people looking to invest their assets in attractive overseas property developments,' Mr Driscoll said.

'When you bring something foreign into any ecosystem, it naturally has an impact. More often than not, it's a detrimental impact.'

Mr Driscoll said 400,000 Australian homes were already owned by overseas investors, and that could more than double to more than a million in coming years.

With increasing numbers of properties in foreign hands, and negative gearing changes turning locals away from real estate, it will become harder than ever for first-home buyers to get on the property ladder.

He said a new Labor government would come under pressure to provide housing for younger buyers.

'At the very core of any Government's objectives is the need to ensure that their citizens are healthy, educated and have a roof over their heads,' he said.

'All of a sudden, if a certain group presents a challenge to that idealism of security, then the government needs to put more stringent measures in place.

'New Zealand and Canada, for instance, have really cracked down on foreign property investment, and have instituted some of the biggest foreign-buyer taxes in the world.

'It is a genuine balancing act, as the government need to ensure prudence, but also ensure that we maintain good relations with some of our biggest trading partners on the global stage.'


Union leader's blinkers of unfairness blind her to reality

The "unfair" laws about unions that she criticizes were put in place by the Labor party

Words uttered by Sally McManus on television two years ago, hours after she was confirmed as leader of Australia’s union movement, did more than grab headlines. They have come to define her.

So it is no surprise McManus begins a polemic, commissioned by Melbourne University Publishing and released this week, by focusing on what she told ABC 7.30 host Leigh Sales on March 15, 2017. Asked whether she’d consider distancing the ACTU from the Construction Forestry Mining and Energy Union, a habitual law-breaker, and whether she believed in the rule of law, McManus said: “Yeah, I believe in the rule of law where the law is fair, when the law is right. But when it’s unjust, I don’t think there’s a problem with breaking it.”

McManus devotes more than a third of MUP’s On Fairness to this interview, which introduced her to a national audience.

Two years on, considered reflections from McManus as secretary of the ACTU are instructive when Labor looks set to win the federal election in three months.

Although reduced to representing just 15 per cent of the workforce — and 9 per cent of the private sector, where most people are employed — expectations are high in the McManus camp that Labor with Bill Shorten as PM will rewrite strike laws and others to tip the balance the unions’ way.

McManus embraces her “unjust law” remark, expanding on it with stories from the Tolpuddle Martyrs to the Mudginberri meatworkers. The core of her argument is that when union leaders are asked whether they support the “rule of law” they are being “challenged to abandon and condemn our own history” and “the generations of union members who fought and suffered to give us all the living standards we have today”.

The ACTU probably needed a live wire like McManus after a couple of bland male predecessors did little to arrest a slide into irrelevance. McManus is passionate, courageous, even fearless. She is also prone to overstatement and being loose with facts, which she can get away with most of the time because who knows the detail?

No one is asking McManus to renounce historical struggles but can she be serious in comparing the push for strengthening a right to strike in Australia with battling apartheid in South Africa, British rule in India and race segregation in the US? It appears she is.

McManus relates how laws are passed not by “principles” but by governments that “can be unjust and unfair”. “Our anti-strike laws are one of the many manifestations of this fact,” she writes. “Apartheid in South Africa, the dominion of the British Raj over India, and race segregation in the United States of America were entirely ‘legal’ regimes, and governed by laws that restricted the most basic democratic rights and freedoms.” Looks like a comparison. Straight after, McManus adds it’s “no coincidence” Nelson Mandela, Mahatma Gandhi and Martin Luther King Jr were unionists as well. This afterthought says something about their values, but their fights for rights were about much broader inequality and dignity denied.

McManus says there is an accepted right to strike in the West, yet there is one in Australia too. Perhaps the conditions for legal strike action could be reviewed in line with international standards, as well as some restrictions on union organising. But no right to strike existed before 1993: it was a convention with some notable cases of punishment for illegal action. When Labor’s Paul Keating enshrined the right in law, the downside for unions was that it could not be an unqualified right, and surely McManus knows this.

She skirts over how the Rudd-Gillard Labor government overturned John Howard’s Work Choices in 2008 and replaced those laws with ones we still have.

“Our framework of industrial fairness has not recovered,” she writes.

Really? Tell that to one of her ACTU predecessors, enlisted to help Julia Gillard finesse the drafting of those laws. Gillard did not think they were “unjust” when introducing them with some fanfare. Nor did Shorten, later, as Gillard’s workplace minister.

McManus makes some valid points about living costs exceeding general wage rises even if the inflation rate remains low, and about obscene executive salaries. But she ignores much too, including our comparatively high minimum wage, increased last year by more than the CPI; how big companies cannot escape regulation or shaming for bad behaviour; and how small business, the main area for worker exploitation, was always out of union reach.

Skills shortages will push up wages, but enhancing the right to strike is not likely to do much when union representation is so low, except to boost CFMEU power.

McManus is at odds even with ACTU doyen and former Labor PM Bob Hawke, who deregistered the BLF and has made it clear that his party should shun the CFMEU.

McManus’s essay calls for a populist revival of unions when the affluent majority has stopped listening. She blames others for their decline, chiefly big business, the Coalition, the Murdoch press, even Leigh Sales (“how we got to this point can be explained by what happened to me in that black box at the ABC studio”).

Meanwhile, she overlooks how Labor was in office for half of the years since union membership stood at 50 per cent. Apparently it was OK for wage growth to slip during the Accord when the social safety net was promoted as compensation, but not now when almost all of it remains.


Patriots can’t hate Australia's top export, coal

When Samuel Johnson said patriotism was the last refuge of the scoundrel, he was attacking not patriotism but the scoundrels who falsely use it to defend their cause.

Patriotism gets a bad rap in this postmodern world — where so-called elites diss Brits who voted for Brexit to defend their nation’s sovereignty, or where progressive forces don’t see the value of ­borders in Europe, North America or Australia.

But most of us are viscerally patriotic — we want the best for our country, we know that our ­futures and those of our loved ones are inextricably linked to our nation’s ability to endure and flourish. Besides, we love the place and its people.

When a so-called think tank calls itself The Australia Institute, we assume it is on our side. Surely if it was preoccupied with supranational agendas, globalist redistribution or a borderless world it would be called the The UN Institute, The Globalist Forum or Socialist Alliance.

Yet this very same Australia Institute has been conducting meetings in foreign embassies in Canberra, actively lobbying against investment in Australia. It has been advocating against ­foreign investment in this nation in a way that is designed to damage our national economic interests, reduce employment prospects for our citizens and deliver benefits to our trade competitors.

(Bizarrely enough, given the institute’s claimed focus on equity and the environment, its interventions likely would also hinder the aspirations of poor communities on the subcontinent and lead to increased carbon dioxide emissions.)

The Australia Institute’s chief target is coal, which just happened to have been confirmed this week as the ­nation’s top export. We have overtaken Indonesia as the world’s largest coal exporter and the ­industry usually trails only iron ore as our most valuable export. Buoyant prices boosted coal ­exports above $66 billion last year — a record that tipped iron ore from the top spot.

The coal industry directly ­employs about 40,000 people in well-paid jobs sustaining families, communities and other businesses, primarily in Queensland and NSW. Coal-fired electricity generation still accounts for more than two-thirds of the nation’s power.

It is worth repeating this crucial fact: about 70 per cent of the nation’s electricity comes from coal. This is an industry that not only underpins our nation’s prosperity, filling state and federal government coffers with tens of billions of dollars of revenue, but also one that is absolutely central to every facet of our daily lives. Yet The Australia Institute is setting it up as public enemy No 1.

Although employment numbers in coalmining have declined by up to 20,000 over the past ­decade, The Australia Institute wants the job shrinkage to continue. One of its key criticisms of Adani’s proposed Carmichael coalmine in Queensland’s Galilee Basin is that it won’t generate as many jobs as the proponents suggest and that it won’t be commercially viable. After exhausting environmental objections over air, land, groundwater and ocean consequences — not to mention indigenous heritage ­options — these anti-capitalist obstructers are willing to use commercial arguments against capital investment.

These malleable and inventive objections to development are nothing new in the environmental movement — more than two decades ago I helped expose how green activism encouraged the concoction of “secret women’s business” to block the Hindmarsh Island bridge — but there was a ­recent development involving The Australia Institute that seems a bridge too far.

It came through Joe Kelly’s ­exclusive report in last week’s The Weekend Australian. “The Australia Institute left-wing think tank met officials at the Chinese ­embassy to urge them not to back a new clean-coal plant in Australia,” Kelly reported, “warning it would result in the same political and community hostility experienced by the Adani project.”

Think about that: an institute bearing our nation’s name ­actively lobbies foreign governments to dissuade investment in this nation, hoping to eliminate employment opportunities for our citizens, revenue for our governments and prosperity for our ­nation. And we wonder why there is a crisis of confidence in Western liberal democracies.

As Kelly reported, on top of the China embassy meeting last month, The Australia Institute has held talks with at least five other embassies and high commissions over the past six months. The institute’s executive director is Ben Oquist, a one-time chief of staff to former Greens leaders Bob Brown and Christine Milne.

He defends The Australia Institute’s activities as being in the national interest. “Being Canberra-based, it is not unusual for ­embassy staff to seek briefings from Australia Institute researchers on their economic and policy research in relation to projects ­involving their governments,” Oquist said in response to my queries. “Examples include Galilee Basin thermal coal development, the previous (South Australian) state government’s nuclear waste dump proposals and how Australia will implement the Paris Agreement.

“There is international interest in the ever-changing climate and energy policies in Australia, ­including the financial, economic and social risks of gas and coal ­investment and the growing role of cheaper, cleaner renewable electricity … Our research can add considerably to the understanding of risks, costs and benefits of the projects and policies.

“All of The Australia Institute’s research is focused on the nat­ional interest: making Australia a more just, equitable and sustainable place.”

This is a difficult argument to sustain, given that the only way an assault on coal could possibly benefit Australia would be if global carbon dioxide emissions were cut enough to reduce the expected ­effects of global warming. But global carbon emissions are increasing each year by about double our annual national emissions.

Besides, if Australia exported less coal, other countries with lower grade resources, such as ­Indonesia, would fill the gap, producing even more emissions. (This claim was made by Malcolm Turnbull in 2016 when he was prime minister — “arguably it would increase (emissions) ­because our coal, by and large, is cleaner than the coal in many other countries” — and even an ABC Fact Check endorsed it.)

Regardless, The Australia Institute is out to block the Adani mine and prevent the construction of new high-­efficiency, low-emissions, coal-fired power generation in Australia.

We have a national crisis in energy affordability and ­reliability, and The Australia Institute is subverting efforts to find solutions, preferring to pursue the same ideological crusade for renewable energy ­investment that created the mess.

To bolster the national electricity market, the government is now considering 10 submissions to provide extra dispatchable power that would be underwritten by a minimum price. At least one proposal involves high-efficiency, low-emissions coal generation and others focus on gas-fired plants and stored hydro.

Clearly taxpayers would gain most from whichever plant provides the greatest reliability and quantity of power closest to existing transmission infrastructure. But I have a feeling The Australia Institute might opt for stored hydro, come hell or high water (pardon the pun).

With these crucial policy and economic decisions playing out in an election year, many in the media/political class continue to proselytise for renewables. ABC’s Media Watch this week criticised Queensland and NSW media for positive stories about the possible benefits, including jobs, from coal-related investment.

We have a taxpayer-funded national broadcaster that routinely amplifies The Australia Institute’s efforts to sabotage investment in our natural resources yet mocks commercial media that can see a positive angle on enterprise and employment.

As if this were not bad enough, the NSW Land and Environment Court has now rejected a new Hunter Valley coalmine based on climate change imperatives.

The move, widely hailed by green groups, heralds a new level of global climate activism enforced through our courts.

Judge Brian Preston decided he need to reject the mine because in order “to meet generally agreed climate targets” we needed a “rapid and deep ­decrease” in emissions. The case against the mine was run by the Environmental Defenders Office NSW, which is funded by the state government. Taxpayers’ money used to deliberately attack our No 1 export. We have truly lost our way.


We need an overhaul of early childhood education

"Overhaul" = more money. They all want more money.  No idea where it might come from, though

As kids return to school, the media is awash with parenting news and advice, shaming parents to do more to give their child any sort of advantage.

As The Economist’s headline says, “It’s a never-ending task.”

But what works in this race to get ahead, the article asks?

The answer: focus on the infants. What happens in the early childhood years matters most, say scientists. This is when the human brain is most “plastic”, when it is building capacity for the years ahead.

Yet Australian studies show, consistently, that, while Australian parents are working as long and hard at parenting as anywhere else in the world, Australian governments lack commitment to the provision of education services in the early childhood years. Embarrassingly, Australia is fifth from the bottom of the 36 OECD nations – the richest nations in the world – in its spending on early childhood education.

Unfortunately, NSW is typical of the poor state of preschool education across the nation. Experts say children should have 600 hours of preschooling in their backpacks prior to entry to formal schooling, the equivalent of 15 hours per week over a year. Yet, the proportion of three-year-olds in Australia with preschooling is below the OECD average, at a meagre 70 per cent.

We do better for four-year-olds, with 85 per cent attendance, but this is still below the OECD average.

Australia has never fully developed an early childhood education sector. A Productivity Commission report finds that, for NSW, government takes direct responsibility for barely 10 per cent of all preschools. Sure, private and community preschool providers receive direct government funding, as do parents via the childcare rebate. But this handover to non-government providers ducks responsibility for many things in this most-important of education sectors.

The answer: focus on the infants. What happens in the early childhood years matters most.

One neglect concerns qualifications and employment conditions. The Productivity Commission says for NSW, only 15 per cent of contact staff in childcare centres and preschools have bachelor degrees. Would this low ratio be tolerated in schools or universities? A consequence of poor qualifications is that pay rates in the early childhood sector are dismal. Often, graduates can’t get appointments as graduates and don’t stay long in the lowly-paid jobs on offer. These are filled readily by women eager to get a job locally, such is the location pattern of childcare centres and preschools. A consequence is more than 90 per cent of the sector’s workers are women. Once again, when working conditions are driven down by inadequate regulation and poor government support, women pick up the jobs.

Then there is the problem of access to preschooling by the kids who need early childhood education the most. The Productivity Commission tells us that three out of every 10 kids classified as ‘vulnerable or disadvantaged’ in NSW arrive at school without any preschool experience. The problem is acute in the poorer suburbs of our cities and in the regions, including many parts of the Hunter.

Yet if we were serious about giving people a fair go in Australia, we would be providing more than the average level of early childhood services to disadvantaged and vulnerable kids, not less.

If it is the early childhood years that make the difference, why is it those who need preschooling the most are the ones who are missing out?

Years ago, I asked a retiring music teacher what sort of education disadvantaged children should be given? The same as what is served up to rich kids, she said. I’m sure she’d give the same answer today.


 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

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