University reforms “unfair to students”

From a speech by Professor Stephen Parker

They emerged as a budget measure, but they won’t save the tax-payer money in any real sense.

A fundamental feature of HECS is that the Government forwards all the money upfront to the University. So if fees go up by more than the cuts, the Commonwealth shells out more from day one. Default will rise. More students will work overseas – legitimately, this is not evasion – and so only through some arcane aspect of accounting standards can this even look as if it is a savings measure.

This isn’t a savings measure: it is ideology in search of a problem.

But it gets worse. Bizarrely there is no guarantee that a single cent of the extra money will go into the student’s course: it could go into research, infrastructure, paying for past follies or current cock-ups. It’s tempting, believe me, I make them too, but it’s wrong.

The internal equity aspect of the policy design is laughable: why should the second poorest quartile of students subsidise the lowest quartile?

Australia out of the top 10 on the corruption index

For the first time, Australia is not in the top 10 cleanest countries in Transparency International’s corruption perception index. It’s not surprising that Australia has slipped. Barely a day goes by without newspaper reports of corruption – in political parties, trade unions, sports bodies, companies.

http://www.theage.com.au/comment/australias-slide-into-corruption-must-be-stopped-20141204-11zso4.html

With nearly all member of parliament rorting the property market with negative gearing and capital gains exemptions, while keeping the rorts in place and destroying our economy in the process – is it any wonder? Not to mention all the public pork money for infrastructure projects, healthcare and education which is funnelled into private hands – like Tony Abbott’s medical research fund, designed solely to sift taxpayer money to big pharma in the US.

Report on foreign money laundering into Australian property released – will the government act?

The Parliamentary committee on foreign investment into property has released it’s report. It contains many good recommendations, and none really bad ones, which means there’s about a 0% chance it will be implemented by the government – all members of which are enjoying embezzled Chinese money flowing into their property portfolios.

Let’s just see what happens shall we?

MB: Australian Housing Bubble Summary

The RBA refuses to implement macroprudential regulations, the FIRB is unwilling to enforce foreign investment rules, APRA allows the Big Four banks to use generous, opaque and manipulated internal ratings based models to determine wafer-thin capital buffers, ASIC declines to investigate serious allegations of subprime fraud, unfettered self-managed super fund property investment is booming, and government will not consider reregulation of the banking and financial sector or reduce leverage-inducing tax expenditures.

As noted in our forensic investigation of the banking and real estate markets – Bubble Economics: Australian Land Speculation 1830-2013 – the Australian economics profession has never managed to identify any growing asset bubble or predict the subsequent economic fallout. There is no evidence economists warned about or even noticed the real estate bubbles in the 1830s, 1880s, 1920s, mid-1970s and the late 1980s, or the stock market bubbles of the 1920s, 1987 and the Dot-Com.

Not only does the mainstream economics profession have a 100 per cent failure rate in forecasting, but economists across the board expend significant effort into denying bubbles exist, as was the case with the Dot-Com bubble, and the numerous housing bubbles in international jurisdictions. If elite Harvard/MIT/Chicago economists not only missed the largest housing bubble in US history, but also denied there was one, what hope do Australian economists have?

As history patently reveals, the answer is ‘exactly none’. Ignorance and/or denial are standard fare, and we should not expect anything different. Treasurer Hockey may wish to review his position, for the easy and lazy analytical path is actually being trodden by those economists and policymakers claiming that high housing prices are caused by a mythical shortage.

Confronting the real causes would require our compromised legislature to proactively respond, instead of rigging government and market outcomes to benefit the growing power, profit and authority of the horde of private monopolists, usurers, speculators, rent seekers, free riders, financial robber barons, control frauds, inheritors and the indolent rich.

Hockey’s comments should come as no surprise, for he owns a home and four investment properties, and is involved in a family real estate agency. His home in Canberra, purchased for a bargain basement price of $320,000 in 1997, is now worth an estimated $1.5 million, having increased in price by 369 per cent in nominal terms.

There is an obvious incentive to oppose any analysis and/or policy that could potentially reduce the mountain of unearned wealth and income flowing from surging land prices (economic rents). The conservatively estimated $300 million in real estate owned by the federal politburo means this bias is widely shared by all in parliament.

In conclusion, there is no housing shortage as is commonly claimed, though a temporary shortage did emerge during the GFC. Australia is a mirror image of other countries where high housing prices were also blamed on a shortage, always revealed, in hindsight, to be a chimera.