Wednesday, 14 April 2021

Eastlakes Reserve renamed to the Jack Mundy Reserve

With the passing of that great Australian hero Jack Mundey last year Bayside Council graciously accepted my suggestion to rename Easetlakes Reserve in his honour.

Had it not been for Jack and his leadership, and the Buildings Labourers Federation placing a "Green Ban" on that area there would be a mass of apartment buildings rather than a park. It would be difficult to imagine Eastlakes without Eastlakes Reserve.

I had the great honour of talking with Judy Mundey, Jacks wife, about the "Green Bans" that rescued so much of Sydney's heritage and environment including Eastlakes Reserve. Her recollection of this pivotal time in our local history is fascinating. Have a listen.




Replacing stamp duty with a yearly property tax - What does it mean?

The NSW Treasurer has been for many months floating the idea of abolishing stamp duty on the purchase of properties and replacing the one of stamp duty with a yearly property tax. Many people are attracted to the idea. 


They think they will not have to fund that huge stamp duty payment when they buy a home. My parliamentary colleague, Anoulack Chanthivong, Member for Macquarie Fields analysed the effect of this policy charge in a speech to the NSW Parliament. It is worth reading. He calls it "the snake oil salesman’s pitch" His speech is below.


Mr ANOULACK CHANTHIVONG (Macquarie Fields) (18:12:58): Every so often in political life, we get the odd economic snake oil salesman spruiking their political ideas as the public policy panacea for all our ills. The snake oil salesman promises "jobs boost by the hundreds and thousands, skyrocketing economic growth by the billions and savings in the many thousands for people doing it tough". But with careful analysis and an evidence‑based argument, the snake oil salesman's pitch does not deliver magical economic unicorns; it can actually be harmful. 


The Treasurer's proposed snake oil property tax panacea will replace a one‑off tax with one that never ends. Somehow getting rid of stamp duty will solve all our property market ills. The Treasurer might be a Gordon Gekko, high‑flying corporate lawyer, but I question his slick economics marketing of replacing a one‑off progressive tax with a never‑ending regressive land tax. The Treasurer, and Premier aspirant, has been recently making big media statements about his reform vision. 


Let me remind the House of the Treasurer's recent reform accomplishments. He could not even deliver the Fire and Emergency Services Levy—a proposal only a fraction in difficulty and complexity—when it had been handed to him on a platter and he has proposed an increase to the GST on food and the cost of living. 


The Treasurer is an A‑grade policy spruiker but a D‑grade policy deliverer. 


Property prices do not go up or down because stamp duty exists or is taken away and replaced with a never‑ending annual land tax. To suggest they do is at best deception and at worst just plain absurd. 


Any good economist knows—and I am but a mere humble working‑class economist from Macquarie Fields—that property prices are reflective of demand and supply factors, namely, the ease in accessing credit, the price of credit, people's current and future expectations of their employment and income and property stock supply and the timing of that supply and population growth. 


A 2020 study by the Australian National University and University of Canberra modelling the impact of the Australian Capital Territory's stamp duty reform to a land tax system produced the following findings: House prices increased by 9 per cent; units increased by 4 per cent; housing sales decreased by 6 to 7 per cent; unit sales decreased by 23 per cent to 24 per cent; and potential new home owners used the illusory stamp duty savings to bid up property prices. 


Using the above facts, let us run through a scenario: A young aspiring couple wants to buy a home in Leppington which has an expected value of $800,000 and unimproved land value of $500,000. 


The couple will pay an estimated $31,000 in stamp duty. Under the new snake oil, never‑ending annual land tax market conditions, the expected property increases by 9 per cent, or about $72,000, meaning the winning bid for the property is now $872,000. 

The snake oil, never‑ending annual land tax is equal to $500 plus 0.3 per cent of $500,000 or about $2,000 per year, increasing every year the couple lives in that house. 


CoreLogic property data shows that the length of home ownership continues to rise, with home owners in some suburbs holding onto their property for more than 20 years. In some parts of south‑west Sydney on former greenfield estates like Leppington, properties are held for greater than or equal to 15 years. 


So the expected land tax is $2,000 times 15 years, which equals $30,000. That does not include any annual compounding interest on land value or rate increases. This is the end result: Under the Treasurer's magical, snake oil, never‑ending land tax, the home owner pays $72,000 more to purchase their property, plus a $30,000 tax bill on their home. 


The Treasurer has potentially cost them up to $102,000 under this scheme. No matter your linguistic abilities, that is a lot of money in anyone's language. The never‑ending annual land tax would be more than $30,000 if the property is kept for more than 15 years. 


When the home owner does move, they are just as likely to pay a new snake oil, never‑ending annual land tax on their next home for the rest of their life. 


No doubt there will be interjections that this is an optional scheme. Let me also say that the fact that it is an optional scheme makes it an adverse selection one—that is, those who can least afford it or are in a tighter financial situation will opt for the land tax because they have been sold a stamp duty savings pup. Those who can most afford it will pay the stamp duty and not have to worry about a tax bill arriving in their letterbox every year. 


The Treasurer's snake oil annual land tax is in effect a double taxation system in higher property prices and an increasing never‑ending land tax. Double the property tax and higher property prices? No, thank you. 


Time does not permit me to say more about this snake oil, never‑ending land tax, but I will make further factual‑based arguments to reinforce the old aphorism of "anything that is too good to be true usually is". 

Tuesday, 29 September 2020

Bayside Massive Rate Increase - Disgraceful

I am outraged at the Liberal and Independent councillors on Bayside Council who a couple of weeks ago voted to increase residential rates in the former Botany Bay Council area by up to 51 per cent from 1 July next year. The council, under the pretence of harmonisation of council rates across the amalgamated council area, determined a massive increase in rates to residents in my electorate. 

All eight Liberal and Independent councillors voted in favour of this plan, which will see rates increase on average by between 28 per cent and 51 per cent from 1 July 2021. All seven Labor councillors voted against it. 

The Liberals did this during a devastating pandemic and the worst recession since the Great Depression. When the airlines and universities—which support the employment of many of my constituents—are laying off thousands of workers, as are many other employers across my electorate, I will name those Liberal councillors who represent residents in my electorate. Mascot residents are being slugged by the vote of councillor Michael Nagi and Eastlakes residents are being slugged by the vote of councillor Paul Sedrak. 

Their vote for this increase is on the public record and they will be accountable for it. The Bayside Council amalgamation has been an abject failure. The amalgamation was forced upon the residents of the former City of Botany Bay, despite 90 per cent of residents voting against it at a plebiscite. 

Complaints of poor customer service and a reduction in service standards flood my office. Councillors and staff meet for hours in secret under the pretence of briefings, with no public scrutiny of the information conveyed to councillors. When the Minister for Local Government, warned the council that its committees were not permitted to meet in secret, the council abandoned its committee meetings. 

For weeks councillors were locked away with an unresponsive bureaucracy. They were away from pesky, prying, public eyes, being housetrained with various financial models, all designed to get them on board for a massive rate increase. Fortunately, the Labor councillors were not buying it. 

 The Liberal councillors who want to impose this huge increase on my constituents are the same Bayside Liberals who shot to infamy in 2018 when at a Liberal Party branch meeting they started brawling in the streets of Bayside. A number of attendees were charged with assault occasioning actual bodily harm and assaulting police in the execution of their duty. 

Not only did the Liberals give us a council that our community did not want, the same Liberals who just two years ago were brawling in the streets of the local government area are now voting to increase residents' rates by 51 per cent. No wonder the Premier does not want the Liberals endorsing candidates at the next local government elections. 

If others are like the brawlers from Bayside, I do not blame her. I am loath to blame the legislation at this point. Other amalgamated councils seem to have managed the process. The good, conservative burghers who govern the northern beaches were able to manage a rate harmonisation with the merger of three councils without these extreme increases. 

I am also conscious of the Auditor‑General's report to Parliament and the briefings I received in relation to the council's financial management and procedures, including rates. Voting to increase taxes during a pandemic and a recession at a time of crisis and massive unemployment is outrageous. 

The councillor who represents Mascot in my electorate, Councillor Michael Nagi, to justify his vote told the council, "It's less than a dollar a week", "What does it cost, a cup of coffee?" Councillor Barlow said, "I am just saying it's $4 a week". Those councillors should look Qantas workers in the eye and tell them the same thing. 

I am told that councillors led by councillor Christina Curry and Scott Morrissey have lodged a rescission motion that will be considered next month. That gives the opportunity for those Liberal councillors to reconsider the significance of what they wish to impose on my community. Councillor Michael Nagi and Councillor Paul Sedrak can utilise the time and do something really novel: consult with the people of Mascot and Eastlakes, an area that they do not live in or ever visit. They can look them in the eye and say to these struggling people of my electorate, "Your massive increase is only the price of a cup of coffee."

Sunday, 17 May 2020

Vale George Lundy

Our community has lost one of the most outstanding human being I have had the honour to meet, and it was a privilege to...

Posted by Ron Hoenig MP on Saturday, May 16, 2020

Thursday, 16 April 2020

Advice for landlords responding to rent reduction requests

When should this letter be used?

·       All landlords must be prepared to negotiate rent payments with tenants who are impacted by the Coronavirus (COVID-19) pandemic. This means where:
o   One or more rent-paying members of a household have lost or reduced income due to COVID-19 business closures or stand-downs; or
o   One or more rent-paying members of a household have had to stop working or reduce work hours due to illness with COVID-19 or due to COVID-19 carer responsibilities for household or family members; and
o   The matters above result in a reduction in the household income inclusive of any government assistance of 25% or more.  
·        Tenants can formally request a rent review on the basis that they are affected by COVID-19.
·        Tenants who have lost income due to COVID 19 should make a genuine attempt to negotiate with the landlord to reduce rent to whatever level they can afford.   Landlords should engage meaningfully and in good faith.
·        A landlord will only be able to give a termination notice or apply for an eviction after the interim 60-day stop, if they have tried to negotiate a rent reduction with the tenant in good faith and if seeking a termination is fair and reasonable in the circumstances of the specific case.
·        You can use the attached template letter to respond to a tenant’s initial request to waive or reduce rent payments.
·        Landlords are entitled to request basic supporting documents from the tenant to support the claim that a tenant is impacted by COVID-19, for example:
o    proof of job termination/stand-down or loss of work hours
o    proof of Government income support
o    proof of prior tenant income.
·        Landlords are encouraged to approach their financial institutions to seek a mortgage freeze or reduced repayments as part of the negotiation discussions (see more information below).
·        Make sure you keep evidence documenting your financial arrangements, and communication you’ve had with your lender to waive or reduce your repayments.
·        All agreements with the tenant should be in writing, making a note of whether the arrears will be waived or repaid once the tenant resumes their normal employment.

What should the letter to your tenant include?

Your financial situation
We encourage you to be open and honest about your financial situation with your tenant, including whether you rely on the rental income to cover mortgage repayments or other expenses. 
Your conversations with your lender
Landlords are encouraged to approach their financial institutions to seek a mortgage freeze or reduced repayments. In your response to your tenant, outline the result of conversations you’ve had with your lender about waiving or reducing your own mortgage repayments.
Rent payment that you would be able to accept
A tenant who is COVID-19 impacted but also receives work income and Commonwealth support is expected to continue to make a reasonable contribution to rent in line with what they can reasonably afford. If you are able to accept a reduced or waived rent payment for a temporary period until your tenant resumes normal employment arrangements, including through repayment deferrals genuinely sought from your bank or through other means, clearly outline the revised offer in your response, including reasons.
Clarify rent waived or propose a post-COVID-19 repayment plan
Clarify whether the rent payment loss (arrears) will be waived or repaid under a repayment plan once the COVID-19 emergency is over or the tenant resumes employment.
  
Template letter

Your Name
Your Address

Date
Tenant Name
Their Address

Response to request to negotiate rent payments due to COVID-19

Dear [Mr/Mrs/Ms Tenant’s name]
Thank you for contacting me about your [weekly/fortnightly/monthly] rent payments for [property address].

I understand your financial circumstances have changed due to COVID-19, resulting in an impact on your income of 25% or more. I would therefore like to discuss your request to reduce your rent repayments to [$xxx] per [week/month/fortnight] until your normal employment resumes.

[Please provide documentation to support your claim that your household income has reduced due to COVID-19, and provide evidence of any Government income support you may be receiving. Documents could include proof of job termination/ stand-down, proof of Government income support, proof of prior income.]

I propose [outline your proposal i.e. acceptance of their suggested reduced or waived rent payments, or another solution] for a period of [insert period, minimum of six weeks].

[If rent payments can be reduced or waived, please clarify whether the payments will be waived or subject to repayment in the future.]

I look forward to your response.

Kind Regards,
Your Name and Signature
Your Phone Number
Your Email Address


Example situation
Ms Smith’s tenant has had his salary reduced by 25% as a result of business closures following the COVID-19 public health orders. Ms Smith’s tenant has lived in the property for a number of years, and has suggested a rent reduction of 25% per week until his normal employment resumes.
Ms Smith is retired but has a number of properties from which she earns her income. She is therefore in a position where she can accept a temporary reduction in rent payments until her tenant’s usual employment resumes.
Example letter
Ms Smith
111 First St, Woolgoolga NSW

Monday, 6 April 2020

Mr Bird
222 Muffin Lane, Woolgoolga NSW

Response to your request to negotiate rent payments due to COVID-19

Dear Mr Bird
Thank you for contacting me about your weekly rent payments for 222 Muffin Lane.

I understand your financial circumstances have changed due to COVID-19 and would therefore like to discuss your request to reduce your rent repayments by 25% per week until your normal employment resumes.

Please provide documentation to support your claim that your household income has reduced due to COVID-19, and evidence of any Government support you may be receiving. Documents could be proof of lost employment / stand-down / loss of work hours or reasons for not being able to work due to COVID-19 illness, proof of Government income support, and proof of prior income.

Subject to you providing the above documentation, I am able to accept your suggested reduction in rent payments for an initial period of six weeks. Your new weekly rent payment will therefore be $250. You will not be required to repay the 25% reduction once your normal rent payments resume.

Please update me in six weeks on your employment and financial situation, and in the meantime please let me know should you have any queries.

Kind Regards,
Ms Smith
smith@email.com.au
0444 555 666
Advice for landlords approaching their financial institution for mortgage repayment waiver or reduction

When should this letter be used?

·       As detailed above, all landlords must be prepared to negotiate rent payments with tenants experiencing financial hardship due to the Coronavirus (COVID-19) pandemic.
·       Landlords are encouraged to approach their financial institutions to seek a mortgage freeze or reduced repayments as part of the negotiation discussions with their tenant/s.

What should the letter include?
Your financial situation
You should be open and honest about your financial status with your financial institution. If you rely on the income from your rental property to pay for the mortgage in part or full, and are negotiating with your tenant about rent payment, this should be outlined and evidenced in your request.
Mortgage waiver or reduced payment you are seeking
A tenant who is unable to meet their rental obligations due to COVID-19 but also receives work income and Commonwealth support is expected to continue to make a reasonable contribution to the rent. Depending on the rental amount your tenant has put forward and your other financial circumstances, you should detail the mortgage amount you are able to pay until you or your tenant resumes normal employment arrangements.
Clarify rent waived or propose a post-COVID-19 repayment plan
Clarify whether your rental payment losses (arrears) will be waived or repaid under a repayment plan with your tenant once the COVID-19 emergency is over or the tenant resumes employment.

  
Template letter

Your Name
Your Address

Date
Financial institution name
Their Address

Request to negotiate mortgage payment waiver or reduction due to COVID-19

Dear [Sir/Madam]
[I am/We are] contacting you about my/our [weekly/fortnightly/monthly] mortgage repayments for [property address].

[My/Our] financial circumstances have changed significantly due to COVID-19 because of [include details of lost employment, reduced work hours, and/or tenant request for rental reduction or waiver, and reasons for income reduction]. My/Our household income per week is now [outline what your income is and include any Government payments received].

Please find attached documentation outlining [my/our] previous and current financial situation.

Because of this, [I/we] would like to discuss the possibility of reducing or waiving our mortgage repayments to [$xxx] for the next [month/fortnight].

[We/I] look forward to discussing this matter further with you.

Kind Regards,
Your Name and Signature
Your Phone Number
Your Email Address

  
Example situation
Ms Smith’s tenant has had his salary reduced by 25% as a result of business closures following the COVID-19 public health orders. Ms Smith’s tenant has lived in the property for a number of years, and has suggested a rent reduction of 25% per week until his normal employment resumes.
Ms Smith has had her hospitality business income reduced by 50% as a result of the COVID-19 public health orders and relies on the rental income she receives to repay the mortgage on her property. She therefore approaches her financial institution to request a mortgage repayment reduction or waiver.

Example letter
Ms Smith
111 First St, Woolgoolga NSW

Monday, 6 April 2020

Financial Institution A
Financial Institution Street, Sydney, NSW

Request to negotiate mortgage repayment waiver or reduction due to COVID-19

Dear Sir/Madam
I am contacting you about my fortnightly mortgage repayments for 222 Muffin Lane, Woolgoolga NSW.

My financial circumstances have changed significantly due to COVID-19 because my hospitality business income has reduced by 50%. My tenant is now also requesting a rent reduction of 25% a week due to the impact of COVID-19 on their financial circumstances.  My household income per week is now $XX.

Please find attached documentation outlining my previous and current financial situation.

Because of this, I would like to discuss the possibility of waiving my mortgage repayments or reducing it to $500 for the next month.

I look forward to discussing this matter further with you.

Kind Regards,
Ms Smith
smith@email.com.au
0444 555 666