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Airbnb launches real-life "Up" house - and it actually floats!

Airbnb is taking its latest listing to the sky - literally. The accommodation provider has announced a partnership that will see the iconic house from Pixar's hit film Up being lifted into the air, balloons and all. In their ongoing quest to redefine hospitality, Airbnb has launched a permanent category called “Icons,” which features partnerships with brands and celebrities that promise unforgettable experiences. Suspended over the New Mexico desert with the aid of a crane, the property looks like an exact replica of the home and contains adorable easter eggs from the film - including the Adventure Book. “Icons take you inside worlds that only existed in your imagination — until now,” Airbnb CEO and co-founder Brian Chesky said in a statement. “As life becomes increasingly digital, we’re focused on bringing more magic into the real world … we’ve created the most extraordinary experiences on Earth." The house offers a stunning view of the desert, which you can enjoy while sitting on replica's of Ellie and Carl's chairs or have breakfast with a view in the kitchen. Alternatively, you could look at the stars while sitting on the front porch - but don't look down because the adventure is out there. Of course there are questions about the logistics of the stay, including plumbing and electricity, but the accommodation giant has assured that the house is “fully functional,” connected to generators and utilities that will be seamlessly managed before and after its flight. Other fantastical listings include a replica of the mansion from the “X-Men ’97” cartoon, a stay at the Ferrari Museum in Italy, and Prince's house that was featured in the legendary film Purple Rain. Check out the <a href="https://www.airbnb.com.au/rooms/1126185893236246260?_set_bev_on_new_domain=1715826165_M2NkZDdkODdhMjcy&source_impression_id=p3_1715826166_A20M4770EGAtl8AV&modal=PHOTO_TOUR_SCROLLABLE" target="_blank" rel="noopener">Up</a> listing here, be warned the sweet listing may make you shed a tear or two. Images: Airbnb

Real Estate

Quiet beach town offering $450k job with free house and car

A picturesque beach town in Western Australia has found a creative way to bring jobs to the area: by offering a range of enticing bonuses. The town of Bremer Bay, south-east of Perth, is desperate for healthcare providers to join the small town and have offered a range of persuasive perks to a doctor who would be willing to leave a big city for the job in the regional location. Bremer Bay is next to the Fitzgerald River National Park and nearly 40 minutes away from the closest town. Currently, they only have one temporary doctor; the next permanent GP is in Albany, almost 200 kilometres away, and the town is looking for the "Swiss army knife of doctors" to step up. According to the job listing on Seek, the successful applicant will be granted a rent-free five-bedroom house and a four-wheel drive, on top of a salary of up to $450,000 a year. "Live rent-free in a scenic location, experiencing the true essence of rural Australia," the advertisement reads. "We offer a competitive 70 per cent of Billings or a generous Salary, based on your preference. In addition, you'll enjoy the convenience of a beautiful new 5-bedroom home and 4X4." Applicants must be registered with the Australian Health Practitioner Regulation Agency and be willing to train as a rural generalist. According to the <a title="Australian Institute of Health and Welfare" href="https://www.aihw.gov.au/reports/rural-remote-australians/rural-and-remote-health" target="_blank" rel="noopener">Australian Institute of Health and Welfare</a>, people living in rural and remote areas have higher rates of hospitalisations, deaths and injury compared to city-dwellers, while also having poorer access to primary health care services. Image credits: Shutterstock

Money & Banking

Yes, Australia’s big supermarkets have been price gouging. But fixing the problem won’t be easy

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/bree-hurst-174985">Bree Hurst</a>, <a href="https://theconversation.com/institutions/queensland-university-of-technology-847">Queensland University of Technology</a>; <a href="https://theconversation.com/profiles/carol-richards-153226">Carol Richards</a>, <a href="https://theconversation.com/institutions/queensland-university-of-technology-847">Queensland University of Technology</a>; <a href="https://theconversation.com/profiles/hope-johnson-125018">Hope Johnson</a>, <a href="https://theconversation.com/institutions/queensland-university-of-technology-847">Queensland University of Technology</a>, and <a href="https://theconversation.com/profiles/rudolf-messner-1373038">Rudolf Messner</a>, <a href="https://theconversation.com/institutions/queensland-university-of-technology-847">Queensland University of Technology</a> A much-awaited report into Coles and Woolworths has found what many customers have long believed – Australia’s big supermarkets engage in price gouging. What <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Supermarket_Prices/SupermarketPrices/Terms_of_Reference">started</a> as a simple Senate inquiry into grocery prices and supermarket power has delivered a lengthy 195-page-long <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Supermarket_Prices/SupermarketPrices/Supermarket_Prices">report</a> spanning supermarket pricing’s impact on customers, food waste, relationships with suppliers, employee wages and conditions, excessive profitability, company mergers and land banking. The report makes some major recommendations, including giving courts the power to break up anti-competitive businesses, and strengthening the Australian Competition and Consumer Commission (ACCC). It also recommends making the Food and Grocery Code of Conduct mandatory for supermarket chains. This code governs how they should deal with suppliers. The government’s recent <a href="https://treasury.gov.au/consultation/c2024-510813">Independent Review of the Food and Grocery Code</a> also recommended making it mandatory for the supermarket giants. But at this point it’s hard to say what, if anything, the recommendations will mean for everyday Australians and the prices they actually pay. <h2>Price gouging isn’t illegal</h2> At the heart of the Senate inquiry was the question of whether Australian supermarkets were price gouging. According to the committee, the answer is a “resounding yes”, despite the evidence presented by supermarkets to the contrary. Price gouging is when businesses exploit a lack of competition by setting prices well above cost price. But the practice is <a href="https://www.accc.gov.au/consumers/pricing/setting-prices-whats-allowed">not explicitly illegal</a>. The committee put forward a number of recommendations that could help reduce price gouging. These include making it an offence to charge excess prices and establishing a new “Commission on Prices and Competition” to examine price setting practices in different sectors. The committee also wants the ACCC to be given enhanced powers to investigate and prosecute unfair trading practices, and to be better funded and resourced. The committee says supermarket claims that price gouging does not exist should mean the giants have nothing to fear under tougher legislation. However, it says: <blockquote> the evidence brought forward by people willing to speak out about the business practices of Coles and Woolworths suggests that maintaining margins and increasing margin growth is occurring at the expense of suppliers, consumers, and best business practices, and without proper justification. </blockquote> <h2>It’s unlikely we’ll see relief anytime soon</h2> Will these recommendations actually deliver any relief on prices? It’s hard to say at this point. The recommendations put forward are comprehensive, but they’re unlikely to result in any short-term change for consumers. At any rate, the Albanese government does not support many of them. In the report’s additional commentary, Labor senators argue that Australian competition law already addresses excessive pricing by prohibiting misleading and deceptive conduct. They also don’t support establishing a new commission to examine prices. Rather, the report calls for a dramatic overhaul of current regulatory settings, which it says are “not appropriate or fit for purpose”. This is not going to be an easy or fast process. <h2>What does the report mean for the Greens’ divestiture bill?</h2> While the inquiry was underway, the Greens <a href="https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;page=0;query=BillId%3As1413%20Recstruct%3Abillhome">introduced a bill</a> which would give courts “divestiture powers”. This means a corporation could be ordered to sell some of its assets to reduce its market power. While the bill lacks support from the major parties, the committee suggested that such divestiture powers should be introduced specifically for the supermarket sector. Where abuse of market power was able to be proven, supermarkets could be forced to sell certain stores. While Australia does not have divestiture powers in this context, some other countries do. In New Zealand, the UK and the US, courts can force corporations that are abusing their market power to sell components of their business. Such powers are very rarely used, but the deterrent they impose can be <a href="https://theconversation.com/its-time-to-give-australian-courts-the-power-to-break-up-big-firms-that-behave-badly-226726">highly influential</a> on corporate behaviour. Labor rejects creating any forms of divestiture power in the report’s additional commentary. But the Coalition isn’t entirely against the idea, noting that it “does not believe the committee has persuasively found that divestiture powers should not be pursued at all” and that “divestiture powers should be targeted to sectors of concern”. <h2>What’s next?</h2> At this stage, the report suggests there’s only one action all political parties agree on at this stage: making the Food and Grocery Code of Conduct mandatory and ensuring its full enforcement. We’re unlikely to see much unity on the other recommendations. In a scathing commentary, the Coalition argues the report represents “a missed opportunity to address some of the structural imbalances in our supermarket sector that are impacting Australia’s growers, farmers, small businesses, and ultimately consumers”. While this is a harsh assessment, the reality is that unless these structural imbalances in our food system are addressed, we’re unlikely to see meaningful change. The report draws on substantial evidence to paint a troubling picture of the food system in Australia – in particular, how growers and consumers are struggling. The task for regulators is working out what mechanisms can be used to address the imbalance of power in the market, in a way that doesn’t force growers or Australian consumers to bear the cost.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/229602/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/bree-hurst-174985">Bree Hurst</a>, Associate Professor, Faculty of Business and Law, QUT, <a href="https://theconversation.com/institutions/queensland-university-of-technology-847">Queensland University of Technology</a>; <a href="https://theconversation.com/profiles/carol-richards-153226">Carol Richards</a>, Professor, <a href="https://theconversation.com/institutions/queensland-university-of-technology-847">Queensland University of Technology</a>; <a href="https://theconversation.com/profiles/hope-johnson-125018">Hope Johnson</a>, ARC DECRA Fellow, <a href="https://theconversation.com/institutions/queensland-university-of-technology-847">Queensland University of Technology</a>, and <a href="https://theconversation.com/profiles/rudolf-messner-1373038">Rudolf Messner</a>, Postdoctoral Research Fellow, <a href="https://theconversation.com/institutions/queensland-university-of-technology-847">Queensland University of Technology</a> Image credit: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/yes-australias-big-supermarkets-have-been-price-gouging-but-fixing-the-problem-wont-be-easy-229602">original article</a>. </div>

Money & Banking

Adorable Collie sells for world record-breaking price

A border collie has been sold for a world record-breaking amount at the Ray White Rockhampton Working Dog Sale and Trial. Helen and James Parker paid $40,000 for Liz, a border collie who they describe as the "whole package". The couple, who run a wagyu cattle farm in Monto, Queensland are keen to welcome the pup who will help them muster cattle as part of the day-to-day running of the farm. "We leave in the morning early, they might do three to four hours mustering in the morning, then we get the cattle to the yard and then in the afternoon we'll walk them away," Helen said. "Our mustering round's about a week, so all day for a week, so some big days and it's hot up here in summer so they need to be able to travel and follow us on a horse and big days in hot conditions so we can't do the job without them." Liz, who was raised by Joe Leven, is the second dog the couple have purchased from Joe, and they say the price was worth it. "We weren't planning on breaking records but we're happy to have her," Helen told 2GB's Ben Fordham. "She's the whole package, she's got breeding behind her, she has all herding ability, natural instinct. I just think she's a great asset to our team." Although Liz is an unusual name for a cattle dog, it is actually a tribute to the late Queen Elizabeth. "Joe named them and there's a bit of a story behind how Liz got her name. She was born the year that Queen Elizabeth passed away, so she's really upheld her name, she's the queen," Helen explained. The Rockhampton Working Dog trial and Sale was a success for Joe and Cabra Glebe Working Dogs, who managed to sell another dog, Jenny for $38,000. Image: Ray White Working dog sale Facebook

Family & Pets

Becoming a landlord while still renting? ‘Rentvesting’ promises a foot on the property ladder, but watch your step

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/james-graham-1264059">James Graham</a>, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a> As home ownership moves further out of reach for many Australians, “rentvesting” is being touted as a lifesaver. Rentvesting is the practice of renting one property to live in yourself, while simultaneously purchasing an investment property somewhere cheaper and leasing it out. Ideally, “rentvestors” get to enjoy the capital gains on an investment property while living where they actually want to live, allowing them to cash in and upsize to their dream home later. It might seem like a savvy way to game the property market. But what are the risks of such an investment strategy? And how might broad adoption of this behaviour affect housing affordability in Australia? <h2>A rising tide lifts all boats differently</h2> The aim of the rentvesting game is to buy cheap property now, ride the expected capital gains, and move into a more desirable home down the track. The hope is that by climbing the first rung of the property ladder early, the whole thing won’t be pulled up out of reach. The first problem with this strategy, however, is that capital gains on housing are not always and everywhere equal. Generally, the cheapest properties available to rentvestors will be houses in the regions or apartments in the city. But both regional housing and apartment properties <a href="https://www.abc.net.au/news/2024-02-20/house-apartment-price-gap-widens-record-high-property-market/103484076">tend to appreciate more slowly</a> than the inner-city houses rentvestors might hope to live in one day. They might get a foot on the property ladder, but the rungs themselves are slowly drifting apart. Would-be rentvestors should also be aware that investments by “out-of-town” buyers tend to generate <a href="https://academic.oup.com/rfs/article-abstract/29/2/486/1902789">much lower returns</a> – both capital gains and rental yields – than investments by locals. Out-of-towners don’t know the local market trends, don’t know which neighbourhoods to avoid, and aren’t able to monitor their investments as effectively from afar. Avoiding the regions by investing in city apartments presents its own difficulties. Large, unexpected maintenance bills and poor strata management are <a href="https://www.abc.net.au/news/2024-03-21/a-world-of-hidden-charges:-strata-company-insiders/103617944">common complaints</a>. <h2>Different costs lead to different returns</h2> Perhaps the potential rentvestor should invest in something more straightforward instead, like stocks. After all, the return on equities in Australia has <a href="https://academic.oup.com/qje/article/134/3/1225/5435538">outperformed housing</a> in recent decades. However, it is much easier to borrow to invest in property than it is to borrow to invest in the stock market. And leverage is the investor’s secret weapon. For example, if house prices were to appreciate at 10% per year, then using a mortgage and a A$100,000 deposit on a $1 million property would earn you a 100% return on equity before costs. But while both investors and homeowners would earn that same basic return, their costs could be very different. For starters, property investors face capital gains tax on the proceeds of property sales, <a href="https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/eligibility-for-main-residence-exemption">unlike those selling their primary residence</a>. Banks also typically charge <a href="https://www.rba.gov.au/chart-pack/interest-rates.html">higher interest rates</a> on mortgages to investors than to homeowners. At times, the Australian Prudential Regulation Authority has also imposed caps on bank lending against investment properties, making it more difficult to find mortgage financing in the first place. Highly leveraged properties require mortgage insurance, too. Investors may need to take out larger insurance policies against the properties themselves, reflecting the higher risks associated with investment properties. Then, you also have to throw in property management fees, council rates, strata management fees and regular and unexpected maintenance costs. <h2>Negative gearing offers little benefit</h2> What about negative gearing? Property investors that generate losses on their property can deduct these costs against the tax bill on their other income. But negative gearing disproportionately benefits high-income earners with large tax bills. The <a href="https://www.abs.gov.au/statistics/labour/earnings-and-working-conditions/personal-income-australia/latest-release">median Australian individual income</a> is around $55,00, which generates a tax bill of about $8,000 – not a lot from which investment property losses can be deducted. The bigger picture is that while negative gearing helps defray the regular costs of managing a property, it doesn’t do anything to change expected capital gains. At the end of the spreadsheet tally, an investment property could end up earning rentvestors significantly less than they could have gained by simply buying their first home. <h2>Effects on housing affordability</h2> Rentvesting is new enough that its prevalence and influence awaits formal academic study. But economists might speculate about its implications for the housing market more broadly. The simplest analysis suggests that a rentvestor occupies one rental property while supplying an additional rental property to the market. If, instead, they had bought a home, they would vacate a rental property while removing another property from the market. In this case, even rentvesting en masse would have zero net effect on the housing market. But a more nuanced perspective might consider where rentvestors are renting and where they are investing. Perhaps they are most likely to rent properties in the already-crowded inner city, but purchase investment properties in regional areas where other first home buyers would like to live. This would increase demand for rentals in the city and reduce the supply of owner-occupier properties in the regions, worsening the affordability of both. Of course, if these rentvestors all eventually move up the property ladder – selling in the region and purchasing in the city – this effect would be reversed. From that longer-term perspective, rentvestors would ultimately have little effect. <h2>We still need more houses</h2> Rentvesting is not a panacea for Australia’s housing market woes. Potential investors should weigh the benefits of property investment against its substantial costs and risks. Additionally, they need to carefully consider the obvious alternative: simply buying their first home up-front. We have good reason to be wary of yet another get-rich-quick scheme involving the housing market. But initial considerations suggest that for the market overall, rentvestor behaviour is no worse than someone simply buying their first home, which we would otherwise encourage. Rather than criticising those seeking a way though our housing market morass, we might instead redouble our efforts to increase the supply of housing.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/229116/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/james-graham-1264059">James Graham</a>, Lecturer in Economics, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/becoming-a-landlord-while-still-renting-rentvesting-promises-a-foot-on-the-property-ladder-but-watch-your-step-229116">original article</a>. </div>

Money & Banking

"You will be a massive failure": Steve Price unleashes on Kyle Sandilands

The feud between Steve Price and Kyle Sandilands has taken a new turn, as Price unleashed on Sandilands over the launch of The Kyle and Jackie O Show in Melbourne. The Project panel were discussing the show's first episode in the Victorian capital which was met with a mixed reception, given the use of coarse language. Price took the discussion to the next level as he made it clear he is not a fan of the KIISFM show or its host. “Kyle, last time I mentioned you on this program I called you a grubby buffoon. That was a compliment in hindsight,” Price said on Monday night's episode of The Project. “That garbage you put to air this morning, sexualised rubbish, toxic, nobody should listen to it and you will be a massive failure in Melbourne.” Price continued his tirade, accusing Sandilands of sending him a “threatening message” last November after his “grubby buffoon” comments, and he dared the KIIS FM star to “do it again”. He ended the spray by saying, “I do note that you didn’t have the guts to sit down and do an interview with me to talk about your new radio show, perhaps because you’ve got the intellect of a cumquat”. Sandilands responded to Price's comments live on air on Tuesday morning, taking aim at the co-host and the show at large. “[The Project] is no good,” he said about the Channel 10 program. “It’s a piece of s**t”. “No one watches it, and they don’t like us.” As for Price's claims, Sandilands accused the fellow broadcaster of being “fake”, and claimed that Price sent a revealing note to his manager last month. The note allegedly said, “I’m very aware Kyle and I have had some interesting whacks at each other over the years but as we know, it’s all part of the game.” “See, I’m right, it is feigned outrage,” Sandilands said. “Does he mean what he says or is he just full of s**t?” Kyle and Jackie O tried to call Price on Tuesday morning to address their ongoing feud, but he didn’t answer. Image credits: The Project / Instagram

Stamp duty is holding us back from moving homes – we’ve worked out how much

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/nick-garvin-1453835">Nick Garvin</a>, <a href="https://theconversation.com/institutions/macquarie-university-1174">Macquarie University</a> If just one state of Australia, New South Wales, scrapped its stamp duty on real-estate transactions, about 100,000 more Australians would move homes each year, according to our <a href="https://e61.in/wp-content/uploads/2024/02/Stamp-duty-effects-on-purchases-and-moves.pdf">best estimates</a>. Stamp duty is an unquestioned part of buying a home in Australia – you put your details in an online mortgage calculator, and stamp duty is automatically deducted from the amount you have to contribute. It’s easy to overlook how much more affordable a home would be without it. That means it’s also easy to overlook how much more Australians would buy and move if stamp duty wasn’t there. The 2010 Henry Tax Review found stamp duty was <a href="https://treasury.gov.au/sites/default/files/2019-10/afts_final_report_part_2_vol_1_consolidated.pdf">inequitable</a>. It taxes most the people who most need to or want to move. The review reported: "Ideally, there would be no role for any stamp duties, including conveyancing stamp duties, in a modern Australian tax system. Recognising the revenue needs of the States, the removal of stamp duty should be achieved through a switch to more efficient taxes, such as those levied on broad consumption or land bases." But does stamp duty actually stop anyone moving? It’s a claim more often made than assessed, which is what our team at the <a href="https://e61.in/wp-content/uploads/2024/02/Stamp-duty-effects-on-purchases-and-moves.pdf">e61 Institute</a> set out to do. We used real-estate transaction data and a natural experiment. <h2>What happened when Queensland hiked stamp duty</h2> In 2011, Queensland hiked stamp duty for most buyers by removing some concessions for owner-occupiers at short notice. For owner-occupiers it increased stamp duty by about one percentage point, lifting the average rate from 1.26% of the purchase price to 2.27%. What we found gives us the best estimate to date of what stamp duty does to home purchases. A one percentage point increase in stamp duty causes the number of home purchases to decline by 7.2%. The number of moves (changes of address) falls by about as much. The effect appears to be indiscriminate. Purchases of houses fell about as much as purchases of apartments, and purchases in cities fell about as much as purchases in regions. Moves between suburbs and moves interstate dropped by similar rates. With NSW stamp duty currently averaging about <a href="https://conveyancing.com.au/need-to-know/stamp-duty-nsw">3.5%</a> of the purchase price, our estimates suggest there would be about 25% more purchases and moves by home owners if it were scrapped completely. That’s 100,000 moves. Victoria’s higher rate of stamp duty, about <a href="https://www.sro.vic.gov.au/rates-taxes-duties-and-levies/general-land-transfer-duty-property-current-rates">4.2%</a>, means if it was scrapped there would be about 30% more purchases. That’s another 90,000 moves. <h2>Even low headline rates have big effects</h2> The big effect from small-looking headline rates ought not to be surprising. When someone buys a home, they typically front up much less cash than the purchase price. While stamp duty seems low as a percentage of the purchase price, it is high as a percentage of the cash the buyer needs to find. Here’s an example. If stamp duty is 4% of the purchase price, and a purchaser pays $800,000 for a property with a mortgage deposit of $160,000, the $32,000 stamp duty adds 20%, not 4%, to what’s needed. If the deposit takes five years to save, stamp duty makes it six. A similar thing happens when an owner-occupier changes address. If the buyer sells a fully owned home for $700,000 and buys a new home for $800,000, the upgrade ought to cost them $100,000. A 4% stamp duty lifts that to $132,000. Averaged across all Australian cities, stamp duty costs about <a href="https://e61.in/wp-content/uploads/2024/02/Stepped-on-by-Stamp-Duty.pdf">five months</a> of after-tax earnings. In Sydney and Melbourne, it’s six. <h2>Stamp duty has bracket creep</h2> This cost has steadily climbed from around <a href="https://e61.in/wp-content/uploads/2024/02/Stepped-on-by-Stamp-Duty.pdf">six weeks</a> of total earnings in the 1990s. It has happened because home prices have climbed faster than incomes and because stamp duty has brackets, meaning more buyers have been pushed into higher ones. Replacing the stamp duty revenue that states have come to rely on would not be easy, but a switch would almost certainly help the economy function better. The more that people are able to move, the more they will move to jobs to which they are better suited, boosting productivity. The more that people downsize when they want to, the more housing will be made available for others. Our findings suggest the costs are far from trivial, making a switch away from stamp duty worthwhile, even if it is disruptive and takes time.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/225773/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/nick-garvin-1453835">Nick Garvin</a>, Adjunct Fellow, Department of Economics, <a href="https://theconversation.com/institutions/macquarie-university-1174">Macquarie University</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/stamp-duty-is-holding-us-back-from-moving-homes-weve-worked-out-how-much-225773">original article</a>. </div>

Money & Banking

Our housing system is broken and the poorest Australians are being hardest hit

<div class="theconversation-article-body"> <a href="https://theconversation.com/profiles/rachel-ong-viforj-113482">Rachel Ong ViforJ</a>, <a href="https://theconversation.com/institutions/curtin-university-873">Curtin University</a> Just when we think the price of rentals could not get any worse, this week’s <a href="https://www.anglicare.asn.au/publications/2023-rental-affordability-snapshot/">Rental Affordability Snapshot</a> by Anglicare has revealed low-income Australians are facing a housing crisis like never before. In fact, if you rely on the <a href="https://www.servicesaustralia.gov.au/youth-allowance">Youth Allowance</a>, there is not a single rental property across Australia you can afford this week. <h2>How did rental affordability get this bad?</h2> Several post-COVID factors have been blamed, including our preference for <a href="https://www.rba.gov.au/publications/bulletin/2023/jun/new-insights-into-the-rental-market.html">more space, the return of international migrants</a>, and <a href="https://www.corelogic.com.au/news-research/news/2023/could-the-peak-in-interest-rates-signal-an-end-to-rising-rents">rising interest rates</a>. However, the rental affordability crisis pre-dates COVID. Affordability has been steadily declining for decades, as successive governments have failed to make shelter more affordable for low-to-moderate income Australians. <h2>The market is getting squeezed at both ends</h2> At the lower end of the rental sector, the growth in the supply of social housing persistently lags behind demand, trending at under <a href="https://povertyandinequality.acoss.org.au/data/annual-growth-rates-social-housing-stock-and-population-2011-2020/">one-third</a> the rate of population growth. <hr /> <iframe id="OA0cS" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/OA0cS/" width="100%" height="400px" frameborder="0"></iframe> <hr /> This has forced growing numbers of low-income Australians to seek shelter in the private rental sector, where they face intense competition from higher-income renters. At the upper end, more and more aspiring home buyers are getting <a href="https://www.tandfonline.com/doi/full/10.1080/03085147.2021.2003086">locked out</a> of home ownership. A recent <a href="https://www.ahuri.edu.au/sites/default/files/documents/2024-02/AHURI-Final-Report-416-Affordable-private-rental-supply-and-demand-short-term-disruption.pdf">study</a> found more households with higher incomes are now renting. Households earning <a href="https://www.ahuri.edu.au/sites/default/files/documents/2024-02/AHURI-Final-Report-416-Affordable-private-rental-supply-and-demand-short-term-disruption.pdf">$140,000</a> a year or more (in 2021 dollars) accounted for just 8% of private renters in 1996. By 2021, this tripled to 24%. No doubt, this crowds out lower-income households who are now facing a shortage of affordable homes to rent. <h2>Why current policies are not working</h2> Worsening affordability in the private rental sector highlights a housing system that is broken. Current policies just aren’t working. While current policies focus on supply, more work is needed including fixing <a href="https://theconversation.com/governments-are-pouring-money-into-housing-but-materials-land-and-labour-are-still-in-short-supply-205471">labour shortages</a> and providing greater <a href="https://theconversation.com/people-want-and-need-more-housing-choice-its-about-time-governments-stood-up-to-deliver-it-122390">stock diversity</a>. The planning system plays a critical role and <a href="https://theconversation.com/confusing-and-not-delivering-enough-developers-and-councils-want-new-affordable-housing-rules-139762">zoning rules</a> can be reformed to support the supply of more affordable options. However, the housing affordability challenge is not solely a supply problem. There is also a need to respond to the <a href="https://theconversation.com/home-prices-are-climbing-alright-but-not-for-the-reason-you-might-think-158776">super-charged demand</a> in the property market. An overheated market will undoubtedly place intense pressure on the rental sector because aspiring first home buyers are forced to rent for longer, as house prices soar at a rate unmatched by their wages. Yet, governments continue to resist calls for winding back the <a href="https://www.abc.net.au/news/2024-02-15/ken-henry-australias-tax-system-in-worse-position-after-15-years/103465044">generous tax concessions</a> enjoyed by multi-property owners. The main help available to low-income private renters - the Commonwealth Rent Assistance scheme - is <a href="https://theconversation.com/1-billion-per-year-or-less-could-halve-rental-housing-stress-146397">poorly targeted</a> with nearly one in five low-income renters who are in rental stress deemed ineligible, while another one in four receive it despite not being in rental stress. <h2>Can affordable housing occur naturally?</h2> Some commentators support the theory of <a href="https://www.ahuri.edu.au/sites/default/files/documents/2022-09/Executive-Summary-FR387-Filtering-as-a-source-of-low-income-housing-in-Australia-conceptualisation-and-testing.pdf">filtering</a> - a market-based process by which the supply of new dwellings in more expensive segments creates additional supply of dwellings for low-income households as high-income earners vacate their former dwellings. Proponents of filtering argue building more housing anywhere - even in wealthier ends of the property market - will eventually improve affordability across the board because lower priced housing will trickle down to the poorest households. However, the persistent affordability crisis low-income households face and the rise in homelessness are crucial signs filtering <a href="https://cloud.3dissue.com/122325/122578/143598/WhyNewSupplyisnotExpandingHousingOptionsfortheHomeless/html5/index.html?page=1&noflash">does not work well</a> and <a href="https://www.ahuri.edu.au/sites/default/files/documents/2022-09/AHURI-Final-Report-387-Filtering-as-a-source-of-low-income-housing-in-Australia-conceptualisation-and-testing.pdf">cannot be relied upon</a> to produce lower cost housing. <h2>Location, location, location</h2> Location does matter, if we expect building new housing to work for low-income individuals. What is needed is a steady increase of affordable, quality housing in areas offering low-income renters the same access to jobs and amenities as higher-income households. The <a href="https://treasury.gov.au/housing-policy/accord#:%7E:text=The%20Accord%20includes%20an%20initial,5%20years%20from%20mid%E2%80%912024.">National Housing Accord</a> aims to deliver 1.2 million new dwellings over five years from mid-2024. But it must ensure these are “well-located” for people who need affordable housing, as suggested in the accord. Recent <a href="https://www.tandfonline.com/doi/full/10.1080/02673037.2023.229051">modelling</a> shows unaffordable housing and poor neighbourhoods both negatively affect mental health, reinforcing the need to provide both affordable and well-located housing. <h2>The upcoming budget</h2> While the <a href="https://www.dss.gov.au/sites/default/files/documents/05_2023/payments-cra_budget_fact_sheet_fa_0.pdf">15% increase</a> in the maximum rent assistance rate was welcomed in the last budget, the program is long overdue for a major restructure to target those in rental stress. Also, tax concessions on second properties should be wound back to reduce competition for those struggling to buy their first home. This would eventually help ease affordability pressures on low-income renters as more higher-income renters <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/1467-8454.12335">shift into homeownership</a>. The potential negative impacts on rental supply can be mitigated by careful design of tax and other changes that guard against market destabilisation concerns. Overall, housing affordability solutions have to be multi-faceted. The housing system is badly broken and meaningful repair cannot be achieved unless policymakers are willing to confront both supply and demand challenges.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/228511/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/rachel-ong-viforj-113482">Rachel Ong ViforJ</a>, ARC Future Fellow & Professor of Economics, <a href="https://theconversation.com/institutions/curtin-university-873">Curtin University</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/our-housing-system-is-broken-and-the-poorest-australians-are-being-hardest-hit-228511">original article</a>. </div>

Money & Banking

World's most expensive house up for sale

A French chateau, once owned by a member of the Rothschild family and, later on, the King of Morocco, has gone up for sale with a £363 million (AU$699) price tag. Chateau d’Armainvilliers located at Seine-et-Marne, 48km east of the Eiffel Tower, is the world's most expensive home. Built upon the foundations of a 12th century castle, the sprawling mansion boasts 1,000 hectares of land, 100 rooms across 2,500 square metres of living space, a private lake, and plenty of sequoia trees - the largest trees in the world. Ignace Meuwissen, a self-acclaimed "real estate advisor to the global elite" described the property as a display of "opulence and grandeur". "It is the most expensive castle in France and perhaps in the world. The price of €425million is justified by the property itself but also by the 1,000 hectare land which offers numerous possibilities," he told Paris Match magazine. "An investor could build thousands of apartments there if he wanted." The chateau was first bought by the Rothschild banking empird in the late 19th century, before King Hassan II of Morocco bought it in the 1980s. He then made the chateau more fit for a king, adding a hammam spa, a beauty and hairdressing salon, and a fully-equipped medical and dental facility. The Moroccan King also added a basement level, which has a network of tunnels, kitchens, cold rooms, storage spaces and staff quarters. The lucky owner will also find Moroccan mosaics and wall tiles decorating the home, and for any avid equestrians, the home also has a stable big enough for 50 horses. However, some luxury property agents have expressed their doubts on whether the property would sell with its nine-figure sum, with one saying it was an "unrealistic" price tag. "It doesn’t make sense, it’s absurd Properties of this type could sell for 20-25 million, or even 30 million if we really fall in love with them. I’m not even sure that Vaux-le-Vicomte (a Baroque French château), which has no marketing plans, would sell at this price," one agent told French real estate publication Le Figaro Immobilier. Others were unsure whether the changes made by the King in the 1980s would suit modern tastes. Images: Whisper Auctions

Real Estate

If you squat in a vacant property, does the law give you the house for free? Well, sort of

<a href="https://theconversation.com/profiles/cathy-sherry-466">Cathy Sherry</a>, <a href="https://theconversation.com/institutions/macquarie-university-1174">Macquarie University</a> Nothing excites law students like the idea of a free house. Or alternatively, enrages them. It depends on their politics. As a result, academics condemned to teaching property law find it hard to resist the “<a href="https://classic.austlii.edu.au/au/journals/MelbULawRw/2011/28.html">doctrine of adverse possession</a>”. The fact that a person can change the locks on someone else’s house, wait 12 years, and claim it as their own, makes students light up in a way that the Strata Schemes Management Act never will. The idea of “squatters’ rights” has received a lot of media attention recently amid the grim reality of the Australian housing market. It fuels commentators such as Jordan van den Berg, who <a href="https://www.instagram.com/purplepingers/">critiques bad landlords</a> on social media. Casting back to his days as a law student, <a href="https://www.sbs.com.au/news/the-feed/article/jordan-was-fed-up-with-australias-empty-houses-his-proposal-has-led-to-death-threats/stx6rv6fl">he’s promoting</a> the doctrine of adverse possession as a way of making use of vacant properties. As interesting as the doctrine is, it has little relevance in modern Australia. While it is necessary to limit the time someone has to bring legal proceedings to recover land – typically 12 or 15 years, depending on which state you’re in – most people don’t need that long to notice someone else is living in their house. If a family member is occupying a home that someone else has inherited or a tenant refuses to vacate at the end of a lease, owners tend to bring actions to recover their land pronto. So where did this doctrine come from, and what has it meant in practice? <h2>Free house fetching millions</h2> In unusual circumstances, people can lose track of their own land. Just before the second world war, Henry Downie moved out of his house in the Sydney suburb of Ashbury. Downie died a decade later, but his will was never administered. At the time of his death, a Mrs Grimes rented the house and did so for a further 50 years. Downie’s next of kin did not realise they had inherited the house or that they were Grimes’s landlord. Grimes died in 1998 and Bill Gertos, a property developer, saw the house was vacant. He changed the locks, did some repairs, then leased the house and paid the rates for the next 17 years. He then made an application under <a href="https://classic.austlii.edu.au/au/legis/nsw/consol_act/rpa1900178/s45d.html">NSW property laws</a> to become the registered proprietor. At this point, Downie’s next of kin became aware they may have been entitled to the property and disputed Gertos’s claim. The <a href="https://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2018/1629.html">court held</a> Gertos had been “in possession” of the property since the late 1990s. The next of kin had a legal right to eject him, but they had failed to do so within the statutory time limit of 12 years. Gertos had the best claim to the house. He <a href="https://www.domain.com.au/6-malleny-street-ashbury-nsw-2193-2015821514">promptly sold it</a> for A$1.4 million. Outrageous as this may seem, the law encourages caring for land. If you fail to take responsibility for your land, and someone else does, you can lose it. <h2>An old English tradition</h2> Gertos’s jackpot was unusual, and adverse possession has always been more relevant in a country like England. First, for much of English history, many people did not have documentary title (deeds) to their land. People were illiterate, parchment was expensive, and documents could disappear in a puff of smoke in a house fire. The law often had to rely on people’s physical possession of land as proof of ownership. Second, as a result of feudalism, vast swathes of England were owned by the aristocracy. They and their 20th-century successors in title, often local councils, had a habit of forgetting they owned five suburbs in London. In the post second world war housing crisis, thousands of families, and later young people and students, <a href="https://www.bbc.co.uk/sounds/play/b017cfv4">squatted in vacant houses</a> owned by public and private landlords who lacked the means or motivation to maintain them. <h2>A sign of the times</h2> In contrast, in Australia, for most of our settler history, governments of all political persuasions actively prevented the emergence of a landed class. But now, courtesy of tax policies that <a href="https://www.quarterlyessay.com.au/essay/2023/11/the-great-divide">encourage investment</a> in residential real estate, we have a landlord class of Baby Boomer and Gen X investors. That has caused housing market stress as younger people cannot make the natural transition from being renters to homeowners. They are outbid by older, wealthier buyers whose tax benefits from negative gearing increase with every dollar they borrow to buy an investment property. Money flowing into the market then means that landlords’ greatest benefit is capital gain rather than income, and thanks to John Howard, investors pay <a href="https://theconversation.com/stranger-than-fiction-who-labors-capital-gains-tax-changes-will-really-hurt-109657">no tax</a> on half of that gain. Finally, an almost exclusive reliance by government on the <a href="https://australiainstitute.org.au/post/for-more-affordable-housing-we-need-more-public-housing/">private sector</a> to provide new homes – which it will only do if it is making a profit – has left many people in deep housing stress. While squatters in Australia are likely to find themselves swiftly subject to court orders for ejection, van den Berg’s rallying cry indicates just how inequitable the housing market has become. Baby Boomers and Gen X should be on notice – young people want their housing back. <img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/227556/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/cathy-sherry-466">Cathy Sherry</a>, Professor in Law, <a href="https://theconversation.com/institutions/macquarie-university-1174">Macquarie University</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/if-you-squat-in-a-vacant-property-does-the-law-give-you-the-house-for-free-well-sort-of-227556">original article</a>.

Legal

Loyalty programs may limit competition, and they could be pushing prices up for everyone

<a href="https://theconversation.com/profiles/alexandru-nichifor-1342216">Alexandru Nichifor</a>, <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> and <a href="https://theconversation.com/profiles/scott-duke-kominers-1494057">Scott Duke Kominers</a>, <a href="https://theconversation.com/institutions/harvard-university-1306">Harvard University</a> Loyalty programs enable firms to offer significantly lower prices to some of their customers. You’d think this would encourage strong competition. But that isn’t always what actually happens. <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4377561">New research</a> shows that paradoxically, by changing the way companies target customers, loyalty programs can sometimes reduce price competition. The research also points to solutions. <h2>A win-win proposition?</h2> Joining a loyalty program is supposed to be a win-win. You – the customer – get to enjoy perks and discounts, while the company gains useful commercial insights and builds brand allegiance. For example, a hotel chain loyalty program might reward travellers for frequent stays, with points redeemable for future bookings, upgrades or other benefits. The hotel chain, in turn, records and analyses how you spend money and encourages you to stay with them again. Such programs are commonplace across many industries – appearing everywhere from travel and accommodation to supermarket or petrol retailing. But they are increasingly coming under scrutiny. In 2019, the Australian Competition and Consumer Commission (ACCC) <a href="https://www.accc.gov.au/about-us/publications/customer-loyalty-schemes-final-report">cautioned</a> consumers about the sheer volume of personal data collected when participating in a loyalty program, and what companies can do with it. Hidden costs – such as having to pay a redemption fee on rewards or losing benefits when points expire – are another way these schemes can harm consumers. But a larger question – how loyalty programs impact consumers overall – remains difficult to settle, because their effect on competitiveness is unclear. As the ACCC’s <a href="https://www.accc.gov.au/about-us/publications/customer-loyalty-schemes-final-report">final report</a> notes, on the one hand: "Loyalty schemes can have pro-competitive effects and intensify competition between rivals leading to competing loyalty discounts and lower prices for consumers." But on the other hand: "Loyalty schemes can also reduce the flexibility of consumers’ buying patterns and responsiveness to competing offers, which may reduce competition." <h2>How a two-speed price system can hurt everyone</h2> A new economic theory research <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4377561">working paper</a>, coauthored by one of us (Kominers), suggests that on competitive grounds alone, loyalty programs can sometimes harm all consumers – both ordinary shoppers and the program’s own members. It’s easy to see how the ordinary shopper can be worse off. Since a firm’s loyalty program enables it to offer discounted prices to its members, the firm can raise the base prices it offers to everyone else. Those not participating in the program pay more than they otherwise would have, and the firm can respond by saying “join our program!” instead of having to lower its price. But sometimes, even the program’s own members can end up worse off. When a given customer’s loyalty status is not visible to a firm’s competitors – as is the case in many loyalty programs today – it’s hard for those competitors to identify them and entice them to switch. The main way to compete for those customers becomes to lower the base price for everyone, but this means missing out on the high base margins achieved through the existence of your own loyalty program – remember, having a loyalty program means you can charge non-members more. It’s often more profitable for firms to just maintain high base prices. This, in turn, reduces overall price competition for loyal customers, so firms can raise prices for them, too. <h2>What’s the solution?</h2> Despite these effects on competition, loyalty programs still offer benefits for consumers and an opportunity for brands to form closer relationships with them. So, how do we preserve these benefits while enabling price competition? The research suggests an answer: making a customer’s loyalty status verifiable, transparent and portable across firms. This would make it possible for firms to tailor offers for their competitors’ loyal customers. This is already happening in the market for retail electricity. While there aren’t loyalty programs there per se, a consumer’s energy consumption profile, which could be used by a competitor to calibrate a personalised offer, is known only to their current electricity supplier. To address this, in 2015, the Victorian government launched a <a href="https://compare.energy.vic.gov.au">program</a> encouraging households to compare energy offers. This process involved first revealing a customer’s energy consumption profile to the market, and then asking retailers to compete via personalised offers. By opening information that might have otherwise been hidden to the broader market, this approach enabled firms to compete for each other’s top customers, in a way that could be emulated for loyalty programs. Such systems in the private sector could build upon “<a href="https://thepointsguy.com/guide/airline-status-matches-challenges/">status match</a>” policies at airlines. These allow direct transfer of loyalty status, but currently rely on a lengthy, individual-level verification process. For example, a design paradigm known as “<a href="https://hbr.org/2022/05/what-is-web3">Web3</a>” – where customer transactions and loyalty statuses are recorded on public, shared blockchain ledgers – offers a way to make loyalty transparent across the market. This would enable an enhanced, decentralised version of status match: a firm could use blockchain records to verifiably identify who its competitors’ loyal customers are, and directly incentivise them to switch. Both startups and established firms have experimented with building such systems. <h2>What next?</h2> New academic research helps us model and better understand when loyalty programs could be weakening supply side competition and undermining consumer welfare. A neat universal solution may prove elusive. But targeted government or industry interventions – centred on increasing the transparency of a customer’s loyalty status and letting them move it between firms – could help level the playing field between firms and consumers.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/220669/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/alexandru-nichifor-1342216">Alexandru Nichifor</a>, Associate Professor, Faculty of Business and Economics, University of Melbourne, <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> and <a href="https://theconversation.com/profiles/scott-duke-kominers-1494057">Scott Duke Kominers</a>, Sarofim-Rock Professor of Business Administration, <a href="https://theconversation.com/institutions/harvard-university-1306">Harvard University</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/loyalty-programs-may-limit-competition-and-they-could-be-pushing-prices-up-for-everyone-220669">original article</a>.

Money & Banking

"Out-of-touch" Project stars slammed over clash with renter advocate

Social media users have slammed The Project hosts, following their recent interview with a renter advocate who encourages Aussies struggling with the housing crisis to squat in empty homes. Jordan van den Berg, founder of the S*** Rentals website shared a video over the weekend outside a rundown house in Chadstone, Melbourne, saying: “Are you sick of rich people hoarding empty houses during a housing crisis? I know I am." “Here’s how you can do something about it.” He then encouraged people to submit information on empty homes in their suburbs via a form on his website, which he plans to promote on his socials so those struggling to find a home could squat in them. “Fun fact – squatting in Australia is not necessarily illegal, which is the best type of legal, especially if the front door doesn’t actually lock," he said. On Monday, he appeared on The Project to talk about his controversial plans, and was grilled by the show's hosts. “I know we’re in a pretty serious housing crisis, but do you really think encouraging people to squat in private properties is the way to fix it?" asked co-host Sarah Harris. “Let me answer your question by asking you a question. Do you think it’s right we have thousands of vacant, abandoned homes while we have people living on the street?” van de Berg replied. Harris said she didn’t and asked whether the solving the housing crisis should be focused on policy instead. Later in the interview, panellist Steve Price casted his doubts on whether there actually were a lot of vacant homes, but van de Berg replied that he'd received over 300 submissions from Aussies about empty homes in their suburbs. van de Berg also said that desperate people are even squatting in abandoned properties, and added: “If someone needs a house, they can reach out to me and I’ll send them [details about] an empty home." Harris was shocked that people would “basically camp out in abandoned houses with no power" which van den Berg argued that “camping out inside” was likely better than sleeping on the streets or in a park. Co-host Waleed Aly then asked whether van de Berg was encouraging people to break the law, but he pointed out that squatting – done properly – isn’t technically illegal. The interview has been slammed on social media, with Writer and comedian John Delmenico posting on X: “Watching the rich out-of-touch panel on the Project realise in real time that not everyone is rich is so bizarre. "Especially the part where Pingers has to explain that being in a house is safer than sleeping on the street. How do they host the news with no connection to reality?” Others agreed mocking the panellists’ shock that “shelter without electricity is better than no shelter with no electricity”. “She was laughing at the fact that ppl would camp out in abandoned houses with no power/water, until he put her in her place by reminding her they’re better off camping under shelter than outside. Mic drop moment," one wrote. “Homelessness exists … it’s quite a big problem actually," another added. However, a few others agreed with the Project hosts. “Encouraging people to squat, who does he think he is?" one wrote. “He thinks he’s doing a good thing, but he’s given absolutely no critical thought to the implications of encouraging people to take over ‘empty homes’," another added. Leo Patterson Ross, chief executive of the Tenants Union of NSW, said that van den Berg was “drawing attention to issues that government should be acting on”. “In the middle of a housing crisis with growing levels of homelessness, we should be looking to ensure homes are not left vacant,” Patterson Ross said. “If a person leaves a property unattended and empty for 12 years, then I think many of us would agree it seems fair that the community can reclaim usage to provide a home, whether that be individuals or government.” Image: The Project

Legal

Stay or go? Most older Australians want to retire where they are, but renters don’t always get a choice

<a href="https://theconversation.com/profiles/christopher-phelps-378137">Christopher Phelps</a>, <a href="https://theconversation.com/institutions/curtin-university-873">Curtin University</a>; <a href="https://theconversation.com/profiles/rachel-ong-viforj-113482">Rachel Ong ViforJ</a>, <a href="https://theconversation.com/institutions/curtin-university-873">Curtin University</a>, and <a href="https://theconversation.com/profiles/william-clark-1488932">William Clark</a>, <a href="https://theconversation.com/institutions/university-of-california-los-angeles-1301">University of California, Los Angeles</a> As Australia’s population gets older, more people are confronted with a choice: retire where they are or seek new horizons elsewhere. Choosing to grow old in your existing home or neighbourhood is known as “ageing in place”. It enables older people to stay connected to their community and maintain familiarity with their surroundings. For many, the decision to “age in place” will be tied to their connection to the family home. But for many, secure and affordable housing is increasingly <a href="https://theconversation.com/ageing-in-a-housing-crisis-growing-numbers-of-older-australians-are-facing-a-bleak-future-209237">beyond reach</a>. This choice may then be impeded by a lack of suitable accommodation in their current or desired neighbourhoods. Our recently published <a href="https://doi.org/10.1177/01640275231209683">study</a> asks what motivates older homeowners and renters to age in place or relocate, and what factors disrupt these preferences. It suggests older renters are often not given a fair choice. <h2>Most older Australians want to age in place</h2> Having the option to age in place enables older people to retain autonomy over their lifestyles and identity, promoting emotional wellbeing. Using 20 years of data from the government-funded Household, Income and Labour Dynamics in Australia (HILDA) survey, we tracked the preferences of Australians aged 55 and over. Encouragingly, most older Australians are already where they want to be. Two-thirds (67%) of respondents strongly preferred to stay in their current neighbourhood, and an additional one-fifth (19%) had a moderate preference to stay. Only 6% showed a moderate or strong desire to leave. Ageing in place is then the natural choice for a vast majority of older Australians. <iframe id="s3LTM" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/s3LTM/1/" width="100%" height="400px" frameborder="0"></iframe> Our study highlights several motivations for people to stay put as they retire. For homeowners, family ties matter. Owners with children residing nearby were around one and a half times more likely to have a higher preference to stay. Older owners might then have a reason to call on their substantial <a href="https://theconversation.com/the-housing-wealth-gap-between-older-and-younger-australians-has-widened-alarmingly-in-the-past-30-years-heres-why-197027">housing wealth</a> and keep their children nearby via the <a href="https://360info.org/how-to-help-the-young-buy-a-home/">“bank of mum and dad”</a>. For renters, how long they stay is important. Those renting their home for 10 years or more were 1.7 times more likely to have a higher preference to stay than short-term renters. <h2>Renters face the most disruption</h2> The survey enabled us to follow where older people lived a year after they provided their preferences. This helped us gauge how often they turned their desires into reality. The chart below indicates that private renters face greater obstacles to ageing in place. Around one in 10 private renters that desired to age in place were disrupted – they wanted to stay in their neighbourhood but didn’t. This suggests they moved out of their neighbourhood involuntarily. Only 2% of homeowners and social renters experienced the same disruption. However, for those in these tenures that did not desire to age in place, involuntary immobility was a greater concern. Only 15% of those that wanted to leave succeeded, leaving the vast majority “stuck in place”. <iframe id="IlliV" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/IlliV/1/" width="100%" height="400px" frameborder="0"></iframe> The private rental market is the least secure of tenures, and so private tenants are often exposed to involuntary moves. Australia’s private rental system is lightly regulated compared to many other countries, creating tenure insecurity concerns. On the other hand, social renters were particularly susceptible to involuntary immobility. Social housing is scarce in Australia and subject to <a href="https://theconversation.com/its-soul-destroying-how-people-on-a-housing-wait-list-of-175-000-describe-their-years-of-waiting-210705">lengthy waiting lists</a>. A neighbourhood move often requires transferring to the less affordable and less secure private rental housing. Even after considering financial status, social renters were four times as likely to be stuck as compared to private renters. Social tenants are strongly deterred from moving in the current system. <h2>How can we support older Australians’ preferences?</h2> Our study exposes some barriers in the housing system that hinder people from being able to age in place, or move when they want to. Clearly, older renters enjoy fewer protections against disruptions to their preferences to age in place than older owners. For private renters, tenure insecurity in the <a href="https://theconversation.com/insecure-renting-ages-you-faster-than-owning-a-home-unemployment-or-obesity-better-housing-policy-can-change-this-216364">private rental sector</a> is a key reform priority. This can be achieved through stronger regulation that improves tenants’ rights. For example, more states could adopt <a href="https://theconversation.com/how-5-key-tenancy-reforms-are-affecting-renters-and-landlords-around-australia-187779?utm_source=twitter&utm_medium=bylinetwitterbutton">recent regulatory rental reforms</a> that support the rights of pet owners and protect against no-grounds evictions. Large numbers of older private renters also face severe <a href="https://www.oldertenants.org.au/publications/ageing-in-a-housing-crisis-older-peoples-housing-insecurity-homelessness-in-australia">rental stress</a>, which may force them to move from their preferred neighbourhood. <a href="https://theconversation.com/1-billion-per-year-or-less-could-halve-rental-housing-stress-146397">Commonwealth rent assistance reform</a> would alleviate some of this stress through an increase in rates and better targeting. An increase in the supply of social housing would play an important role in improving both tenure security and housing affordability. Older social renters enjoy fewer obstacles to ageing in place than older private renters. However, if social renters want to move into the private rental market to relocate, they face difficulty securing accommodation. This will likely discourage moves as it would require sacrificing the tenure security offered by social housing. However, policy initiatives that improve the <a href="https://www.ahuri.edu.au/sites/default/files/migration/documents/PES-358-Lessons-from-public-housing-urban-renewal-evaluation.pdf">quality of the public housing stock</a> can reduce feelings of being stuck. As <a href="https://www.aihw.gov.au/reports/australias-welfare/home-ownership-and-housing-tenure">homeownership rates decline</a> both among young people and those nearing retirement, we can expect the population of older renters to grow. Overall, our findings support a strong case for policy reform in the rental sectors to address the needs and preferences of older renters.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/218024/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/christopher-phelps-378137">Christopher Phelps</a>, Research Fellow, School of Accounting, Economics and Finance, <a href="https://theconversation.com/institutions/curtin-university-873">Curtin University</a>; <a href="https://theconversation.com/profiles/rachel-ong-viforj-113482">Rachel Ong ViforJ</a>, ARC Future Fellow & Professor of Economics, <a href="https://theconversation.com/institutions/curtin-university-873">Curtin University</a>, and <a href="https://theconversation.com/profiles/william-clark-1488932">William Clark</a>, Research Professor of Geography, <a href="https://theconversation.com/institutions/university-of-california-los-angeles-1301">University of California, Los Angeles</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/stay-or-go-most-older-australians-want-to-retire-where-they-are-but-renters-dont-always-get-a-choice-218024">original article</a>.

Retirement Income

Australia's oldest person bids farewell to iconic beach house

In a heartwarming tale that speaks to the enduring love for cherished places and the passing of generational torches, Marija Ruljancich, Australia's oldest person, has bid farewell to her beloved holiday retreat. The Sorrento pile, nestled on Victoria’s Mornington Peninsula, has found new hands, marking the end of an era and the dawn of a promising new chapter. Marija, who reached the remarkable milestone of 110 years in 2023, has been the guardian of this beachside haven for countless years. With its origins tracing back to 1960, when it was designed by the esteemed architect Daryl Jackson AO for local businessman Robert Riley, the house has stood as a testament to timeless design and cherished memories. The sale of this iconic property has not only captured the attention of locals but also stirred the hearts of many across the nation. Despite its undisclosed transaction sum, it's understood that the sale falls within the property's estimated range, a fitting exchange for a home steeped in history and affection. What truly warms the soul is the buyer's commitment to honouring the legacy of Riley House. With plans to restore the dwelling to its original glory, there's a palpable sense of joy and relief within Marija's family. The Melbourne-based buyer, driven by a passion for preserving architectural heritage, sees beyond the bricks and mortar; they envision a continuation of the house's story, enriched by their own memories and experiences. As Liz Jensen of Kay & Burton Portsea recounts the emotional journey of the sale, it's evident that this isn't merely a transaction; it's a celebration of life, love, and the power of preservation. "Congratulations to Australia’s oldest living person," Liz wrote on Instagram, "as today she successfully sells her long-held and much loved Sorrento mid century beachside family holiday home designed by Architect Daryl Jackson AO." The buyer's dedication to retaining even the smallest details, such as the built-in speaker nestled within the dining room cupboard, speaks volumes about their reverence for the past and their vision for the future. Amid whispers of demolishing the home, the decision to uphold its structure stands as a testament to the enduring spirit of community and connection. For those who walked through its halls during inspections, the house isn't just a property; it's a repository of memories, a canvas upon which stories of old Sorrento are painted with every creaking floorboard and whispering breeze. For Marija and her family, and for all those who have been touched by its charm, the legacy lives on – a timeless reminder of the beauty found in preserving the past while embracing the promise of tomorrow. Images: Instagram | Kay & Burton Portsea

Real Estate

Think $5.50 is too much for a flat white? Actually it’s too cheap, and our world-famous cafes are paying the price

<a href="https://theconversation.com/profiles/emma-felton-143029">Emma Felton</a>, <a href="https://theconversation.com/institutions/university-of-south-australia-1180">University of South Australia</a> Even in a stubborn cost-of-living crisis, it seems there’s one luxury most Australians <a href="https://www.comparethemarket.com.au/news/what-australians-wont-give-up-cost-of-living-crisis-report/">won’t sacrifice</a> – their daily cup of coffee. Coffee sales have largely <a href="https://www.statista.com/statistics/866543/australia-domestic-consumption-of-coffee/">remained stable</a>, even as financial pressures have bitten over the past few years. So too have prices. Though many of us became upset when prices began to creep up last year, they’ve since largely settled in the range between $4.00 and $5.50 for a basic drink. But this could soon have to change. By international standards, Australian coffee prices are low. No one wants to pay more for essentials, least of all right now. But our independent cafes are struggling. By not valuing coffee properly, we risk losing the <a href="https://bizcup.com.au/australian-coffee-culture/">internationally renowned</a> coffee culture we’ve worked so hard to create, and the phenomenal quality of cup we enjoy. <h2>Coffee is relatively cheap in Australia</h2> Our recent survey of Australian capital cities found the average price of a small takeaway flat white at speciality venues is A$4.78. But in <a href="https://pabloandrustys.com.au/blogs/drinkbettercoffee/global-coffee-prices">some international capitals</a>, it’s almost double this, even after adjusting for local <a href="https://www.investopedia.com/updates/purchasing-power-parity-ppp/">purchasing power parity</a>. <iframe id="gaplH" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/gaplH/" width="100%" height="400px" frameborder="0"></iframe> In London, a small flat white costs about A$6.96. Singapore, A$8.42. In Athens, as much as A$9.95. <h2>The cafe business is getting harder</h2> Over the past few decades, coffee prices haven’t kept pace with input costs. In the early 2000s, after wages, food costs, utilities and rent, many cafes <a href="https://www.coffeecommune.com.au/blog-why-are-cafes-so-expensive/">earned healthy profit margins</a> as high as 20%. The <a href="https://www.ibisworld.com/au/industry/cafes-coffee-shops/2015/">most recent data from IBISWorld</a> show that while Australian cafe net profits have recovered from a drop in 2020, at 7.6%, they remain much lower than the Australian <a href="https://www.money.com.au/research/australian-business-statistics">average business profit margin of 13.3%</a>. For an independent owner operating a cafe with the <a href="https://www.ibisworld.com/au/industry/cafes-coffee-shops/2015/">average turnover of A$300,000</a>, this would amount to a meagre A$22,800 annual net profit after all the bills are paid. <h2>What goes into a cup?</h2> Just looking at the cost of raw inputs – milk, beans, a cup and a lid – might make the margin seem lucrative. But they don’t paint the whole picture. <figure class="align-center "><img src="https://images.theconversation.com/files/584949/original/file-20240328-24-rlngpk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px" srcset="https://images.theconversation.com/files/584949/original/file-20240328-24-rlngpk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/584949/original/file-20240328-24-rlngpk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/584949/original/file-20240328-24-rlngpk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/584949/original/file-20240328-24-rlngpk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/584949/original/file-20240328-24-rlngpk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/584949/original/file-20240328-24-rlngpk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" alt="A takeaway coffee cup showing the price inputs, with wages and operation costs making up over 65% of the cost of a coffee" /><figcaption>Chart: The Conversation. <a class="source" href="https://pabloandrustys.com.au/blogs/drinkbettercoffee/whats-in-the-cost-of-coffee">Data: Pablo and Rusty's Coffee Roasters</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></figcaption></figure> Over the past few years, renting the building, keeping the lights on and paying staff have all become <a href="https://www.reuters.com/business/ground-down-australia-coffee-shops-an-early-inflation-casualty-2023-07-10/">much bigger factors</a> in the equation for coffee shop owners, and many of these pressures aren’t easing. 1. Green coffee price Increasingly <a href="https://www.aa.com.tr/en/environment/brewing-crisis-how-climate-change-is-reshaping-coffee-production/3113886">subject to the effects</a> of climate change, the baseline commodity price of green (unroasted) coffee is <a href="https://perfectdailygrind.com/2024/02/demand-for-robusta-prices-record-high/">going up</a>. Arabica – the higher quality bean you’re most likely drinking at specialty cafes – is a more expensive raw product. Despite levelling off from post-pandemic highs, its price is still trending up. In 2018, it <a href="https://www.statista.com/statistics/675807/average-prices-arabica-and-robusta-coffee-worldwide/">sold</a> for US$2.93 per kilogram, which is projected to increase to US$4.38 dollars in 2025. Robusta coffee is cheaper, and is the type <a href="https://www.lavazza.com.au/en/coffee-secrets/difference-type-arabica-robusta-coffee">typically used to make instant coffee</a>. But serious drought in Vietnam has just pushed the price of robusta to an <a href="https://www.barchart.com/story/news/25094367/coffee-rallies-with-robusta-at-a-record-high-on-shrinking-coffee-output-in-vietnam">all-time high</a>, putting pressure on the cost of coffee more broadly. 2. Milk prices The price of fresh milk has risen by <a href="https://cdn-prod.dairyaustralia.com.au/-/media/project/dairy-australia-sites/national-home/resources/reports/situation-and-outlook/situation-and-outlook-report-march-2024.pdf?rev=b0222df4b01b40d0ae36cf8ac7b01bc0">more than 20%</a> over the past two years, and remains at a peak. This has put sustained cost pressure on the production of our <a href="https://gitnux.org/australian-coffee-consumption-statistics/#:%7E:text=Coffee%20is%20a%20beloved%20beverage,approximately%206%20billion%20cups%20annually.">most popular drink orders</a>: cappuccinos and flat whites. 3. Wages and utilities Over the past year, Australian wages have grown at their <a href="https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/real-wages-growth-back">fastest rate</a> since 2009, which is welcome news for cafe staff, but tough on operators in a sector with low margins. Electricity prices remain elevated after significant inflation, but could <a href="https://www.sbs.com.au/news/article/heres-how-much-your-energy-bills-might-go-down-by-and-when/k8g00jheg">begin to fall mid-year</a>. <h2>Specialty vs. commodity coffee: why price expectations create an industry divide</h2> One of the key factors keeping prices low in Australia is consumer expectation. For many people coffee is a fundamental part of everyday life, a marker of livability. Unlike wine or other alcohol, coffee is not considered a luxury or even a treat, where one might expect to pay a little more, or reduce consumption when times are economically tough. We anchor on familiar prices. <iframe id="oDbah" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/oDbah/" width="100%" height="400px" frameborder="0"></iframe> Because of this, it really hurts cafe owners to put their prices up. In touch with their customer base almost every day, they’re acutely aware of how much inflation can hurt. But in Australia, a huge proportion of coffee companies are also passionate about creating a world-class product by only using “<a href="https://medium.com/@samandsunrise/why-is-specialty-coffee-so-expensive-6cf298935e4b#:%7E:text=Specialty%20Shops%20Feature%20High%20Grade%20Coffees&text=Their%20coffees%20are%20hand%2Dpicked,even%20on%20the%20same%20tree.">specialty coffee</a>”. Ranked at least 80 on a quality scale, specialty beans cost significant more than commodity grade, but their production offers better working conditions for farmers and encourages more sustainable growing practices. Although not commensurate with the wine industry, there are similarities. Single origin, high quality beans are often sourced from one farm and demand higher prices than commodity grade coffee, where cheaper sourced beans are often combined in a blend. Running a specialty cafe can also mean roasting your own beans, which requires a big investment in expertise and equipment. It’s an obvious example of doing the right thing by your suppliers and customers. But specialty cafes face much higher operating costs, and when they’re next to a commodity-grade competitor, customers are typically unwillingly to pay the difference. <h2>Approach price rises with curiosity, not defensiveness</h2> When cafe owners put up their prices, we often rush to accuse them of selfishness or profiteering. But they’re often just trying to survive. Given the quality of our coffee and its global reputation, it shouldn’t surprise us if we’re soon asked to pay a little bit more for our daily brew. If we are, we should afford the people who create one of our most important “<a href="https://theconversation.com/how-cafes-bars-gyms-barbershops-and-other-third-places-create-our-social-fabric-135530">third spaces</a>” kindness and curiosity as to why. <img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/226015/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/emma-felton-143029">Emma Felton</a>, Adjunct Senior Researcher, <a href="https://theconversation.com/institutions/university-of-south-australia-1180">University of South Australia</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/think-5-50-is-too-much-for-a-flat-white-actually-its-too-cheap-and-our-world-famous-cafes-are-paying-the-price-226015">original article</a>.

Money & Banking

Qantas announces major price hike

Qantas customers have been warned that they will see a significant increase in price to the airline’s domestic club lounges from next month. For the first time in seven years, the airline will charge Qantas Club membership holders 17 per cent more to access their lounges, with price changes set to be made from April 18. The increase coincides with Qantas' plans to renovate 24 of their domestic lounges over the next year, with the carrier spending an estimated $100 million on renovations. This means that annual fees for new members will increase from $699 to $828, including the $129 joining fee. For current members looking to renew, their annual fees will rise from $540 to $629. “This is the first time the Qantas Club membership fees have increased in seven years and will help cover cost increases passed on from a range of suppliers over that time. This follows a reduction in the membership fees for several years during the pandemic,” a spokesperson told news.com.au. They added that these changes will not affect Qantas Frequent Flyers members who will continue to receive complimentary access to the Club through Points Club Plus or their Gold, Platinum or Platinum One status. Members can also avoid the price hike if they renew their membership before April 18. Image: Getty

Money & Banking

Elevating tradition: La Traviata at the Sydney Opera House

Opera Australia is set to enchant audiences as it opens its highly anticipated 2024 season with the Sydney premiere of Sarah Giles’ acclaimed production of Verdi’s timeless masterpiece, La Traviata. The curtains will rise on January 2nd at the iconic Joan Sutherland Theatre in the Sydney Opera House, promising an unforgettable journey into the world of love, sacrifice and redemption. Hailed as "an absolute triumph" by The AU Review and described as "audaciously new" by InReview, this co-production by Opera Queensland, State Opera South Australia and West Australian Opera promises to deliver the quintessential glamour of La Traviata while offering a fresh, female perspective. Director Sarah Giles skilfully brings the inner turmoil of Violetta to the forefront, shedding light on the harsh realities and heartaches of her life as a courtesan. Enhancing the narrative, Charles Davis' masterful set design delves into Violetta's public and private spheres, while his costumes brilliantly capture the opulent world of lavish parties and extravagance synonymous with La Traviata. For the first time, the award-winning conductor Jessica Cottis will take the baton, leading the Opera Australia Orchestra and the celebrated Opera Australia Chorus through Verdi's emotionally stirring score. Audiences can anticipate spine-tingling renditions of iconic pieces such as the lively "Brindisi" and the achingly beautiful "Sempre libera". Taking centre stage as Violetta, Australian soprano Samantha Clarke, fresh from a string of successful debuts in prestigious venues worldwide, including Carnegie Hall and the Sydney Symphony Orchestra, is set to mesmerise audiences with her poignant portrayal. Joining her are the talented Australian-Chinese tenor Kang Wang, reprising the role of Alfredo, and New Zealand baritone Phillip Rhodes, making his Opera Australia debut as Giorgio Germont. As the season progresses, rising Australian soprano Sophie Salvesani will step into the shoes of Violetta, a role she previously captivated audiences with in 2022. Alongside her, Australian tenor Tomas Dalton returns as Alfredo, while baritone Luke Gabbedy, fresh from his acclaimed performance in OA's five-star production of the Ring Cycle in Brisbane, graces the stage as Giorgio Germont. Prepare to be swept away by the passion, drama, and timeless melodies of La Traviata, as Opera Australia invites you to experience this unforgettable journey of love and sacrifice, reimagined for a new era. Don't miss your chance to witness this exquisite production at the Sydney Opera House, from January 2nd to March 16th, 2024. For more information, <a href="https://www.sydneyoperahouse.com/opera-australia/2024-season/la-traviata" target="_blank" rel="noopener">click here</a>.

Art

What is negative gearing and what is it doing to housing affordability?

<a href="https://theconversation.com/profiles/michelle-cull-340911">Michelle Cull</a>, <a href="https://theconversation.com/institutions/western-sydney-university-1092">Western Sydney University</a> Australia’s housing crisis is putting the <a href="https://www.mortgagechoice.com.au/guides/what-is-the-great-australian-dream/">Australian dream</a> to own one’s home out of reach for many. But it’s not just <a href="https://www.aihw.gov.au/reports/australias-welfare/home-ownership-and-housing-tenure">home ownership</a> that has been affected. Rental affordability has also become a serious issue. This has reignited the debate about negative gearing; whether or not it is fair and whether it holds the key to fixing the housing crisis. <h2>What is negative gearing?</h2> <a href="https://treasury.gov.au/review/tax-white-paper/negative-gearing">Negative gearing</a> refers to using borrowed money to invest in an asset so it results in a loss which can be claimed as a tax deduction against other income. For example, a property investment is negatively geared if the net rental income received is lower than the mortgage interest. The loss is then offset against other income, such as wages and salaries, which reduces the amount of income tax payable. Negative gearing is commonly used for property investments but also applies to other investments (such as shares). Investments can also be positively geared when net income from the investment is more than the interest on borrowings. The attractiveness of negative gearing in Australia is mainly due to its ability to reduce the amount of income tax. For this reason, it can be more beneficial to individuals who are on higher marginal tax rates. However, capital gains tax must be paid on any gain when the asset is sold. <h2>How does negative gearing work?</h2> Let’s look at a simple example of negative gearing. Say an investment property was rented to tenants at A$500 a week ($26,000 a year), and associated expenses (such as agent fees, rates, mortgage interest, maintenance) were $40,000 for the year. This leaves a shortfall of $14,000. The property owner can deduct the $14,000 from their taxable income to reduce their liability. For example if they received $100,000 from wages, they would pay tax on only $86,000 (saving $4,550 in income tax). Individuals on higher incomes and therefore higher marginal tax rates would receive larger tax deductions (for example, someone earning over $180,001 would pay $6,300 less tax). While negative gearing an investment property can reduce tax while it is being rented, it can also result in a large <a href="https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/what-is-capital-gains-tax">capital gains tax</a> bill once the property is sold (even though capital gains tax is halved for assets held for more than 12 months). For example, if the cost base for a property purchased ten years ago was $400,000 and it sells for $900,000 today, capital gains tax would be calculated on half of the $500,000 difference. At a marginal rate of 45%, the tax bill would be $112,500. <h2>How widespread is it in Australia?</h2> According to the <a href="https://data.gov.au/data/dataset/taxation-statistics-2020-21">Australian Taxation Office</a>, about 2.25 million individual tax payers (21% of all individual tax payers) claimed deductions against rental income for a total 3.25 million properties in 2020-21 financial year. Of these, 47% negatively geared their properties, claiming a net rental loss. This is equivalent to just less than 10% of all taxpayers. Investors with fewer properties were more likely to be using negative gearing with over 71% of property investors having only one investment property. <hr /> <iframe id="Wv9lV" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/Wv9lV/" width="100%" height="400px" frameborder="0"></iframe> <hr /> The largest group of property investors (524,220) had one investment property and a total annual taxable income between $50,001 and $100,000. The chart above shows the proportion of property investors by age group. From 2016-2017 to 2020-2021, the total net rental income on property investments in Australia went from a loss of $3.3 billion to a gain of $3.1 billion (as you can see from the chart below). For the same period, the proportion of investors negatively gearing their properties dropped from 58% to 47%, as lower interest rates reduced losses. <hr /> <iframe id="fXnoe" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/fXnoe/" width="100%" height="400px" frameborder="0"></iframe> <hr /> Negative gearing is also becoming less attractive with the government’s recent changes to <a href="https://treasury.gov.au/tax-cuts">tax brackets and marginal tax rates</a>. According to a study conducted by <a href="https://www.pexa.com.au/staticly-media/2023/03/Whitepaper-2-Private-renting-in-Australia-a-broken-system_compressed-sm-1679450145.pdf">LongView and PEXA</a>, 60% of property investors would be financially better off if they instead put their money into a superannuation fund. <h2>When was it introduced?</h2> Negative gearing has been allowed under tax laws since 1936. It was thought it would encourage investment in housing and increase supply. However, debate around its impact on housing affordability led the government to partially abolish it in 1985 by not allowing rental property losses to reduce tax on other sources of income. There was a shortage of housing and rents rose during the two years it was abolished. As a result, in 1987, negative gearing was reinstated and capital gains tax legislation was introduced. <h2>Is it used in other countries?</h2> Canada, Germany, Japan and Norway use negative gearing. In Finland, France and the United States, rental losses can offset future rental income only. In the US, <a href="https://www.irs.gov/publications/p936#en_US_2023_publink1000229891">home owners are entitled</a> to claim a tax deduction for mortgage interest on their own home. The use and benefit of negative gearing depends upon all aspects of a country’s tax system. So although it may be attractive in countries with high marginal tax rates, other taxes such as capital gains tax, land tax and stamp duties may reduce its appeal. <h2>Negative gearing’s impact on housing affordability</h2> Many factors affect the cost of housing, including interest rates, inflation, employment, the overall taxation system and population growth, making housing affordability a complex issue. <a href="https://www.smh.com.au/politics/federal/nz-kills-tax-loophole-on-property-to-slow-soaring-house-prices-20210323-p57d9s.html">In New Zealand, negative gearing is being phased out</a> due to its impact on housing prices. However, unlike Australia, New Zealand does not have capital gains tax, making negative gearing more popular and more likely to impact housing prices. In addition to phasing out negative gearing, the New Zealand government <a href="https://www.hud.govt.nz/our-work/public-housing-plan/">increased the supply of public housing</a> and <a href="https://www.abc.net.au/news/2023-09-25/nz-auckland-house-supply-experiment-results-in-dramatic-change/102846126">relaxed zoning regulations</a> to provide more affordable housing. In Australia, however, there are concerns abolishing negative gearing will cause rents to rise, as they did in the 1980s. More innovative approaches to housing affordability are needed to ensure ample supply of property for first home buyers and tenants. Some consideration could be given to allowing first home buyers to claim a tax deduction for mortgage interest, increasing capital gains tax, limiting the number or type of investment properties held, capping rent increases, or more infrastructure investment from the government for first home buyers and social housing. One or more of these measures would be a step in the right direction. Negative gearing on its own is not the answer to housing affordability. The whole system needs an overhaul, with a combination of measures needed to adequately address affordability, for now and for future generations. Taking no action will put home ownership out of reach for even more Australians.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/223823/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/michelle-cull-340911">Michelle Cull</a>, Associate professor, <a href="https://theconversation.com/institutions/western-sydney-university-1092">Western Sydney University</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/what-is-negative-gearing-and-what-is-it-doing-to-housing-affordability-223823">original article</a>.

Money & Banking

Worried about price gouging? For banks, there’s a simple solution

<a href="https://theconversation.com/profiles/peter-martin-682709">Peter Martin</a>, <a href="https://theconversation.com/institutions/crawford-school-of-public-policy-australian-national-university-3292">Crawford School of Public Policy, Australian National University</a> Does it feel like you’re being charged more for all sorts of things these days, from <a href="https://theconversation.com/supermarkets-airlines-and-power-companies-are-charging-exploitative-prices-despite-reaping-record-profits-222755#:%7E:text=According%20to%20the%20inquiry%2C%20the,dairy%20products%20and%20breakfast%20cereals.&text=Farmers%20recently%20accused%20supermarkets%20of%20making%20too%20much%20profit%20from%20their%20crops.">groceries</a> to <a href="https://theconversation.com/see-when-australias-biggest-banks-stopped-paying-proper-interest-on-your-savings-and-what-you-can-do-about-it-200265">banking</a>? Turns out, you’re right. While we might be more likely to remember prices that go up than prices that go down, the very best evidence – assembled by Australia’s <a href="https://treasury.gov.au/sites/default/files/2023-11/competition-review-mergers-background-note.pdf">Treasury</a>, the federal government’s lead economic adviser – says your suspicions are right. We really are being charged more than we used to be two decades ago. Coupled with the latest profit reports from Australia’s biggest supermarkets and banks, including Tuesday’s half-year results from Coles, it suggests we are contributing more to company profits than we used to. <h2>Climbing price markups</h2> The Treasury estimates show in the 13 years between 2003-04 and 2016-17, the average price markup – the difference between the cost of a product and its selling price – across all Australian industries climbed 6%. That’s extra profit, taken from your wallet, going to the people selling you things. Those Treasury estimates are contained in a background paper prepared for the competition <a href="https://treasury.gov.au/review/competition-review-2023">inquiry</a> being undertaken by a panel including Productivity Commission chair Danielle Wood, former Competition and Consumer Commission chief Rod Sims, and business leader David Gonski. At the same time, the average share of each industry held by its biggest four firms edged up from 41% to 43%. Profit margins are also higher here than in more competitive markets overseas. This is true in banking, where the big four have taken over St George, BankWest, and the Bank of Melbourne – and are about to take over <a href="https://www.accc.gov.au/media-release/australian-competition-tribunal-authorises-anz%E2%80%99s-proposed-acquisition-of-suncorp-bank">Suncorp</a>. It’s also true in supermarkets, where the big two, Woolworths and Coles, have taken over or seen off Franklins, Bi-Lo and Safeway. <h2>Bigger profit margins than overseas</h2> Coles supermarkets reported earnings <a href="https://www.investopedia.com/terms/e/ebitda.asp#:%7E:text=EBITDA%2C%20or%20earnings%20before%20interest,generated%20by%20the%20company's%20operations.">before adjustments</a> of <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02777616-3A637432">A$1.73 billion</a> on sales of $19.778 billion in the half year to December – a profit margin of 8.7%. Last week, Woolworths supermarkets reported earnings of <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02774826-2A1506104">$2.45 billion</a> on sales of $25.648 billion – a margin of 9.6%. By way of comparison, the dominant UK supermarket group, Sainsbury’s, has a profit margin of <a href="https://stockanalysis.com/quote/lon/SBRY/statistics/">6.13%</a>. In banking, the Commonwealth Bank has just reported a return on equity (profit as a proportion of shareholders’ funds) of <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02772167-2A1504649">13.8%</a>. National Australia Bank reported <a href="https://www.nab.com.au/content/dam/nab/documents/reports/corporate/2023-full-year-results.pdf">12.9%</a>. While on a par with the big banks overseas, those recent returns are a good deal higher than CommBank’s <a href="https://www.commbank.com.au/content/dam/commbank-assets/about-us/2021-08/2021-annual-report_spreads.pdf">11.5%</a> and NAB’s <a href="https://www.nab.com.au/content/dam/nab/documents/reports/corporate/2021-full-year-results-management-discussion-and-analysis.pdf">10.7%</a> reported two years ago. <h2>Little hope for groceries</h2> For supermarkets, there’s not a lot the government can do, apart from launching an <a href="https://www.accc.gov.au/inquiries-and-consultations/supermarkets-inquiry-2024-25">inquiry</a>, and perhaps giving Australian authorities the power to <a href="https://www.afr.com/policy/economy/break-up-firms-that-abuse-market-power-says-former-competition-tsar-20230709-p5dmtq">break up</a> firms that abuse their market power. But Prime Minister Anthony Albanese has said he isn’t keen on giving Australian authorities the sort of powers available to authorities in the United States and the United Kingdom, saying (incongruously) Australia is “<a href="https://www.pm.gov.au/media/radio-interview-abc-radio-brisbane-mornings">not the old Soviet Union</a>”. And doing anything short of that would be unlikely to have much effect. Australia’s two supermarket giants have invested a fortune in high-tech <a href="https://theconversation.com/coles-and-woolworths-are-moving-to-robot-warehouses-and-on-demand-labour-as-home-deliveries-soar-166556">warehouses and distribution systems</a>, which new rivals would be hard-pressed to match. <h2>Hope for more competitive banking</h2> But for banks it’s altogether different. Richard Denniss of the Australia Institute has come up with the idea, and it’s a beauty. It’s for the government to provide a low-cost banking service – expanding on services it already offers. The costs would be so low, other banks might decide to add features and resell them in the same way as resellers sell <a href="https://www.whistleout.com.au/MobilePhones/Guides/Telstra-network-coverage-vs-ALDI-Woolworths-Belong-Boost">mobile phone</a> and <a href="https://www.nbnco.com.au/residential/service-providers">NBN</a> services. The primary function of any bank is to provide a numbered account into which Australians can deposit and withdraw funds. The Australian Tax Office does this already, at an incredibly low cost. The tax office gives every working Australian a <a href="https://www.ato.gov.au/individuals-and-families/tax-file-number">tax file number</a>. Employers deposit money into these accounts, and – should the tax office owe a refund – taxpayers withdraw them. Some taxpayers ensure their tax is <a href="https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/in-detail/income/refund-of-over-withheld-withholding-how-to-apply">overpaid</a>, so they withdraw later. Denniss describes it as a bank account with the world’s clumsiest interface. <h2>The government could offer bank loans</h2> It wouldn’t be much of a stretch from improving that interface to offering government loans. In fact, government loans are already provided in some circumstances: such as to retirees with home equity through the <a href="https://www.dss.gov.au/our-responsibilities/seniors/benefits-payments/home-equity-access-scheme">home equity access scheme</a>, and to Centrelink recipients through <a href="https://www.servicesaustralia.gov.au/centrelink-online-account-help-apply-for-advance-payment">advance payments</a>. It woudn’t be much more of stretch to provide loans more broadly, at an incredibly low administrative cost. The government already lends against the <a href="https://www.servicesaustralia.gov.au/who-can-get-loan-under-home-equity-access-scheme">value of homes</a>. Back in the days when the federal government owned the <a href="https://www.commbank.com.au/about-us/our-company/history.html">Commonwealth Bank</a>, it had to cover the high costs of running bricks and mortar branches. Freed from those costs, the government could now offer a low-cost, technology-enabled basic banking service that would tempt us away from the big four banks – unless they offered better value. Of course it would cost money, although a lot of it has already been spent setting up the system of tax file numbers and accounts. And of course the banks would hate the idea. That would be the point. But doing what we can to stop Australians being overcharged is important, not only for wage earners but also for businesses. The <a href="https://treasury.gov.au/review/competition-review-2023">competition inquiry</a> the government has launched is a good start. It shouldn’t be frightened about where it might lead.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/223821/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/peter-martin-682709">Peter Martin</a>, Visiting Fellow, <a href="https://theconversation.com/institutions/crawford-school-of-public-policy-australian-national-university-3292">Crawford School of Public Policy, Australian National University</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/worried-about-price-gouging-for-banks-theres-a-simple-solution-223821">original article</a>.

Money & Banking

"Pretty brutal": Peter Garrett slams Taylor Swift for price gouging tickets

Peter Garrett has taken aim at Taylor Swift, calling out her extrationate ticket prices for a place at the Eras Tour. The Midnight Oil frontman joined 107.1 SAFM’s Bec & Soda radio show on Friday when he was informed that he was co-host Mark “Soda” Soderstrom’s favourite artist, or in other words, “his Taylor Swift.” Garrett didn't take too kindly to the comparison, and launched into a rant about the price of Swift's concert tickets. “I’m not price gouging like Taylor, to be blunt,” he began. The radio hosts reminisced about attending a Midnight Oil concert in 1985 when tickets were just $15.90, compared to Swifts forking out hundreds of dollars for the highly anticipated Eras Tour. Tickets for Swift’s Australian tour ranged from $79.90 for G-reserve tickets to $379.90 for A-reserve ticket, while also offering fans multiple VIP packages, reaching an eye-watering $1249.90 for a single ticket. Some diehard fans were quick to complain about the lack of added value in the packages, which included premium seats with add-ons such as a tote bags, collectable pins, stickers and postcards. Garrett continued, “I wouldn’t begrudge anyone’s success, that’s the first thing to say." "She’s obviously touching a chord with masses of people, particularly people of a certain age group who have experienced growing up at a certain time, and what she’s singing and talking about is really ringing true with them.” However, he also said that “the dollar end of it having looked at it from a distance, having been in this business forever, is pretty brutal.” Garrett continued to share his disapproval of Swift's Australian domination, complaining about how five of her albums dominated the ARIA charts, booting Aussie artists off the ladder. “She is so pervasive, she has become such a phenomenon, that she is displacing artists left right and centre. In our ARIA top 100 chart – that’s the Australian record industry chart – I think at one point in the last week or two, we only had three Australian artists in that top 100,” Garrett said. “Not good enough! And that’s not me crying about it, I’ve had an incredible run. But I think about the younger artists coming through and it’s extremely hard for them now.” Image credits: Getty Images

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