Badgerys Creek tenants get marched out of Tribunal – and out of special provisions for long-term tenants

So the mystery of the Federal Government's 'Commonwealth tenancy dispute legislation' is becoming clearer. Aside from Defence Housing tenants, there are also dozens of tenants of the Department of Infrastructure and Regional Development at Badgerys Creek.

And we understand that as many as 30-40 Badgerys Creek tenancies are now subject to termination applications in the Federal Circuit Court. The matters will be before the Court this Friday.

We also understand that all these tenancies have been on foot for more than 20 years. This would ordinarily mean that section 94 of the Residential Tenancies Act 2010 (NSW) applies, which provides that if the Tribunal terminates the tenancy, the tenant must get at least three months from the date of termination to the date for possession.

Now, the Federal Circuit Court (Commonwealth Tenancy Disputes) Instrument 2015 says that in these Commonwealth tenancy disputes the applicable law is still the Residential Tenancies Act 2010 (NSW)... except the Federal Circuit Court can set a date for possession as it thinks appropriate (cl 8(2)).

This displaces the usual requirement that 20+ year tenancies get at least three months to the date of possession. It is open to the Federal Circuit Court to terminate the tenancies and give orders for immediate possession.

When the legislation was before the Joint Parliamentary Committee on Human Rights, the Attorney-General, Senator George Brandis, stated to the Committee:

I understand that concerns have been raised about application of the protections that exist for lessees under state and territory law. It is important to note that state and territory law will continue to govern tenancy arrangements where the Commonwealth is a lessor. This includes protection about unlawful and unjust eviction. This position is intended to be clarified through legislative instruments made under proposed paragraph 10AA(3)(b) of the Bill.

The intention of the Bill is not to remove any of these important protections, but simply to introduce a new option for resolving Commonwealth tenancy disputes in a low-cost and easily accessible forum where jurisdictional arguments would not require consideration.

In fact, the Federal Government has not only bumped these tenants out of the NSW Civil and Administrative Tribunal into the less accessible and more costly forum of the Federal Circuit Court, it has also bumped them out of the modest protection afforded by section 94 to long-term tenants.

No Land Tax paying to push how to vote cards

A Brown Couch reader alerts us to No Land Tax's latest campaign ploy: offering to pay people to push its how to vote cards on election day.

No Land Tax is paying pushers $330 for ten hours work on election day, with bonuses on offer if candidates get over certain proportions of the vote for a booth.

The pushers are being recruited through a website that does not include any campaign banners, logos or materials, and that only identifies No Land Tax in the 'authorised by' print at the bottom of the page.

Paying bonuses for votes is a real worry. In any case, it appears a lot of money is being spent trying to get No Land Tax elected. 

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So why are the property owners behind No Land Tax spending so much money on their election campaign if, as they claim, they just pass on the cost of land tax to tenants, in the form of higher rents?

It's because they cannot really pass it on. That's why they campaign against it.

It's not just No Land Tax who claims that land tax gets passed on to others. The Real Estate Institute of NSW, which is also against land tax, says so too. As REI President Malcolm Gunning recently said:

"If you are wondering why your coffee has increased in price, or your restaurant bill is more expensive, don't point the finger at the owner," Mr Gunning said....

"Let there be no mistake, the people who pay land tax are not the landlord, are not the tenant, but are NSW consumers paying increased prices for their coffee and other consumables."

Let there be no mistake: this is bull.

The fact is that land tax comes out of the land owner's pocket. It really cannot be passed on to tenants and other consumers.

This is because land tax must be paid every year, regardless of whether the property is let or not. This encourages landlords to let the property (because they've got a land tax bill to pay) and to meet the market. If they try instead to hold out for a higher rent, that's so much longer the premises won't be let and rent not paid – and all the while the land tax liability accrues.

Contrast the Goods and Services Tax, which can be – and is – passed on to consumers. This is because GST must be paid only when a sale is finally made. This means vendors can hold out for a higher price that passes on the cost of the tax – the GST takes no skin off their nose while they hold out.

Note that both No Land Tax and the REI support extending the GST. So much for their concern about consumers and what they pay for coffee or meals – or housing.

No Land Tax and the REI claim they are passing land tax onto you precisely because they cannot really pass it onto you.

They say they pass it on in order to get you angry about land tax – angry enough to harangue your MP about it and to support their own campaigns to abolish it. These campaigns are waged for their own vested interests – not yours.

We suggest you get angry instead about their attempts to dupe you, and that you tell your MP and other candidates that you support taking action against housing speculation. Tell them that you support a reformed land tax.       

No Land Tax to ride donkey vote?

No Land Tax has nabbed first position on the ballot sheet – and thus the prospect of picking up the donkey vote – for the upper house in the NSW State election. This is fitting, as the party is devoted to free rides for land owners.

Considering that it faked photos of party members on its website, No Land Tax has also done well to find a candidate for every lower house seat.

Mind you, about 70 per cent of No Land Tax candidates don't actually live in the electorates they are contesting.

Nearly all of them comes from Sydney – and many come from a few big property families.
 
For example, James Ruben is Party President and number 4 on No Land Tax's upper house ticket; his mother, Susanne Gervay, is standing for No Land Tax in the seat of Vaucluse, and no fewer than four other members of the Ruben-Gervay families are candidates for No Land Tax. No fewer than five members of the Cacciotti family are standing for election for No Land Tax, in seats as far afield from their ancestral home in Balmain as Cootamundra. Similarly, the Lopreiato family is fielding no fewer than five candidates, the Di Cosmo family no fewer than four, the Arduca family no fewer than three, and the Marra family no fewer than three.

Going by surnames, it appears that about 40 per cent of No Land Tax candidates are related to at least one other No Land Tax candidate.

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Let's look at some more land tax numbers – this time from No Land Tax's campaign website.

We've previously discussed Land Tax's claims about the basic economic effects of land tax (they're wrong – land tax promotes productive investment and economic growth) and housing affordability (they're wrong – land tax makes housing more affordable). This time we'll look at their claims about land tax revenues.

No Land Tax says:

Every year Land Tax goes up.
Next year it will increase by 4.7%.
Over the next 4 years it will increase by a whopping 20%.

These figures are... quite correct (they're consistent with the forward estimates in the NSW State Budget papers). What's missing is the context.

As the Budget papers also show, total State taxes next year will increase by 5.6 per cent, and over the next four years will increase by a 'whopping' 23 per cent.

So on present settings, land tax payers will be getting off more lightly over the next four years, relative to other taxpayers.

We say, of course, that land tax should be doing more of the lifting, not less – particularly through reforms that broaden the base to include land used for owner-occupation and primary industry, and change the rate structure. These reforms would also discourage speculation and make housing more affordable and secure.

No Land Tax, on the other hand, say that property owners should be relieved of paying even a small bit of the value that accrues, unearned, to them – and that everyone else should pay more GST instead.

You really would be a donkey if you voted for that.

NSW Coalition promises social housing fund

The NSW State Coalition Government has announced that if re-elected it will create a new fund for the development of new social housing and affordable housing.

 
Premier Baird and FACS Minister Upton indicate that 'up to $1 billion' would be made available through the fund, which the Government has linked to its electricity privatisation program. The NSW Council of Social Service and Infrastructure Partnerships Australia have entered into a Memorandum of Understanding with the State Government in relation to the fund.

The Coalition Government's interest in increasing funding for social housing and affordable housing is welcome. It acknowledges that present funding levels for social housing in New South Wales are too low to meet the needs of the community. As we said in our submission on the State Government's social housing discussion paper, what it calls the 'present funding envelope' is a starvation ration that cannot sustain present operations, much less grow the sector in line with community need.

It also acknowledges that social and affordable housing is 'infrastructure'; that is, something that helps the community function productively. Social and affordable housing can give people a bit of stability and hence the opportunity to get into education, training and work; and can put workers in places where they are needed.

The link to electricity privatisation is controversial. As we've discussed previously, State Governments need to get their money from somewhere. They can get money by negotiating grants from the Federal Government; from their own power of taxation; from selling things like electricity assets; from borrowing (which is really another sort of sale – that is, the sale of a promise to pay back more, which is something State Government's are in a powerful position to promise, because they can tax).

The NSW State Government can use any of these means of getting more money to better fund social and affordable housing. Parties opposed to the sale of electricity assets can and should commit to more funding for social housing and affordable housing.

Defence Housing tenants get marched out of Tribunal

[UPDATE: this blog post is the subject of a correction.]

A curious development in New South Wales tenancy law, courtesy of the Federal Government: it appears that tenants of Defence Housing Australia in New South Wales no longer have access to the NSW Civil and Administrative Tribunal for resolution of tenancy disputes. Instead, they'll now have to go to the Federal Circuit Court of Australia.

These marching orders come in the form of the Federal Circuit Court (Commonwealth Tenancy Disputes) Instrument 2015, made last week by Federal Attorney-General Senator George Brandis, under new section 10AA(3) of the Federal Circuit Court of Australia Act 1999 (Cth), as amended last month by the Federal Courts Legislation Amendment Act 2015 (Cth).

The legislation gives the Federal Circuit Court jurisdiction over tenancy disputes where one party is the Commonwealth – which appears to include Defence Housing Australia.

The instrument deals specifically with residential tenancy disputes involving the Commonwealth in New South Wales, and provides that a party must not make an application to NCAT, but instead go to the Federal Circuit Court. The Court will apply the Residential Tenancies Act 2010 (NSW) in determining the dispute.

Our concern is that because the Federal Circuit Court is more formal and costly than NCAT, Commonwealth tenants – particularly Defence Housing tenants – will have less access to justice.

We do not know why the Federal Government has taken this course; nor do we know whether other States will be affected by similar instruments in the future (the present instrument specifies New South Wales). We're also trying to think of Commonwealth agencies other than DHA that enter into residential tenancy agreements – if you can think of one, please let us know.

In any event, as they affect access to justice for the several thousand DHA tenants in New South Wales, these changes should be reconsidered.

Two ways of making housing affordability worse

In the space of one week, we've heard two housing policy suggestions – one from each side of politics – that would make affordability problems worse.

NSW State Opposition Leader Luke Foley has suggested changing the rules regarding stamp duty, so that first home buyers could pay the duty in installments over some years.

When you think about how stamp duty actually works, this isn't a good idea.

Under the law, it is the buyer of a property who liable to pay stamp duty. However, because of the prospect of this cost, prospective buyers will tend to keep back some of the money they might otherwise put to buying the property (ie 'I could go as far as $x, but I know I'll have to pay stamp duty of $y, so I'll just go to $x-y"). This means that while the buyer actually pays it, the burden of stamp duty falls on vendors. It also means that some would-be transactions end up not taking place at all.

There's good and bad to this; on balance, more bad than good (it is a bit of a break on speculation, but it is also a break on people transacting for good reasons like household change and workplace change, because each time they move they get hit with a cost).

The problem with Mr Foley's suggestion is what it does to the thinking of prospective first home buyers. Instead of limiting themselves to '$x-y', they can bid further (to '$x')... and hope that increased wages or some other future gain will pay those stamp duty installments when they become due further down the track.

The result: first home buyers are worse off. They pay more to the vendors, and the burden of stamp duty currently borne by vendors gets shifted to buyers.

This isn't the reform that first home buyers, or anyone else affected by stamp duty, needs. It would be better to abolish it altogether and, so that all those dollars ('$y') previously held for stamp duty don't just go straight into higher house prices, broaden the base of land tax.

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The other way housing affordability could be worsened is to allow people to access their super funds for money for housing, as suggested by the Federal Treasurer, Joe Hockey, last week.

Just a moment's thought is enough to see what the effect of this would be: just so much more money to throw – or, more precisely, to lever up and throw – at housing. There's no improvement in affordability: just higher prices, additional encouragement to speculators, and a further shift of wealth from young households to older households.

To be fair, the Treasurer has merely said that he is 'prepared to look at' the idea, it being something that gets pitched to him from time to time by various interests – most recently, the Real Estate Institute of Australia. But as a Treasurer who has declared himself to be most concerned about 'intergenerational theft', he should be knocking it straight back.

Cuts to community services

We support the call made today by the Councils of Social Services for the Federal Government to reverse funding cuts to much-needed community services.

From their media release:

Councils of Social Service  across Australia have today joined forces to call on the Federal Government to urgently reverse the damaging cuts to community services so that they can continue to support the country's most vulnerable.

The Federal Government has identified up to $1 billion in "savings measures" from community services that include:

• $270 million over four years to Department of Social Services;
• foreshadowed cut of $197 million to Department of Health;
• $500 million in cuts to Aboriginal and Torres Strait Islander community services;
• additional cuts to legal services including Legal Aid and community legal services.

The Councils of Social Service across Australia are calling on the Federal Government to:

• Stop these funding cuts and determine, in partnership with the community service sector, adequate funding levels to meet community need and maximise social and economic participation for everyone.
• Extend current funding for organisations that have not yet been able to finalise new Government funding offers.
• Adopt the recommendations of the Productivity Commission to improve government contracting with community organisations.