Home Insulation Test Results

One in four homes inspected after the Federal Government's botched home insulation scheme had varying levels of safety risk and did not meet national building safety standards.
To quote Alison Rehn of the Daily Telegraph, "the disastrous $2.45 billion pink batts program" was axed 12 months ago following the deaths of four installers, many reported injuries, 205 house fires, and scores of complaints about shonky installations and dodgy operators.
Some 58,000 houses had foil insulation fitted. Because of the higher perceived hazard risk with this material, the Government committed to inspect every foil-fitted house, and of the 44,000 inspected so far nearly a third have had the insulation removed, and half of the rest needed safety switches installed.
About 1,100,000 homes had non-foil products installed, perceived to be less of a hazard. However of the 141,000 homes fitted with non-foil insulation products that were targeted for safety inspections, 34,000 (24%) did not comply with standards. The paper doesn't explain why the Government proposed only to inspect little more than ten percent of the houses with non-foil insulation. Perhaps now that the results are in, showing that 24% of those inspected are defective, they will reconsider, and should consider testing all the remaining 83,000 homes!
A number of legal claims are in the offing. One also wonders if anything is being done to compensate the poor honest businesses who stocked up on insulation material only to have the demand slashed by the cancellation of the program.
Alison's word, "disastrous", is certainly appropriate.

Incentives Hurt Housing Market

A stimulating article on the back page of the Australian on Monday 11 April by David Uren starts by saying "Demand for homes is falling and the supply is rising." Interesting items in the article include: "First home buyer grants, variable rate mortgages and capital gains tax concessions all served to destabilise housing markets." "The Australian housing market is in a worse state than is widely understood. Demand is falling, supply is rising, and the monthly turnover is drifting lower." "There were a record 260,000 properties advertised for sale in the four weeks to 3 April, 24.1% more than a year ago when the market was booming." Monthly sales peaked in May 2010 at 37,500, and by December 2010 were down to 27,500. That translates to over nine months supply of houses on the market. Later David argues: "Australia's property investors are driven by capital gain, not by rental yield. With the increasing weakness in the capital gain outlook, investors are deserting the market." The point about variable rate mortgages is interesting. "People are encouraged to enter the market during periods of low interest rates without fully appreciating the interest rate risk they are taking on."

Residents dismayed by High Rise plan

Residents around Whiteside Ave North Ryde protested in the streets last Sunday about a proposal to develop a site opposite the Optus building to take 270 units in an area currently restricted to two storeys.

The proposal is to build five structures ranging from three to eleven stories! Of course the developer is hoping to use the Labor government's Part 3A powers to approve this.

Victor Dominello, State Liberal MP for Ryde, said that if the Liberals win government at the election this Saturday, one of the first tasks will be to review all outstanding applications submitted under Part 3A.

Barangaroo Remediation

Extracted from 7 News, by Caris Bizzaca:
NSW Premier Kristina Keneally is under siege from the Opposition, Greens and action groups who say the government has undermined a court case by exempting Sydney's Barangaroo site from environmental laws.
Planning minister Tony Kelly on Wednesday gazetted an order that effectively excises Barangaroo from his department's own planning laws for managing contamination, just days before the government goes into caretaker mode ahead of the state election.
The Sydney Harbour site is at the centre of a case in the Land and Environment Court being pursued by Australians for Sustainable Development (AfSD), a group concerned about contaminated subsoil.
Opposition spokesperson for planning Brad Hazzard said on Thursday it was an "abuse of process".
"The signature on the planning document may be Tony Kelly's but Kristina Keneally's fingerprints are all over it," he said in a statement.
"In September, Ms Keneally confirmed that she was, 'taking direct responsibility and control of Barangaroo' - so there's no ducking that this rotten act is all hers.
"This is an abuse of process and Kristina Keneally is in it up to her eyeballs showing that NSW Labor has no respect for the rule of law and the NSW community."
But Ms Keneally denied she was behind the order.
"This is a planning decision," she said while campaigning in Sydney.
"I am not the minister for planning."
Ms Keneally, who assumed ministerial responsibility for the $6 billion project last September, said she heard about Mr Kelly's action on Wednesday and spoke with him on Thursday morning.
She defended Mr Kelly saying he had simply made a "technical clarification".

Property as an Asset

A really interesting article in The Economist 5th March starts by saying "Property is widely seen as a safe asset. It is arguably the most dangerous of all."
The article, by Andrew Palmer, includes some interesting thoughts:
People buy property for various reasons, but dominant amongst those motives is financial gain. This mixture of motives can be toxic for financial stability. If housing were like any other consumer good, rising prices should dampen demand. But with property, higher prices are seen as a signal to buy. What happens if prices start to drop?
The value of any particular home is set by the latest local transactions. One absurd bid can push up prices for lots of people living nearby. But has it changed the intrinsic value of those properties?
An analysis shows that in America for the past 30 years renting was better financially than buying (but only if the renter meticulously saves the difference between the rent and what a mortgage would be costing).

John McGrath Hates Underquoting

John McGrath's blog of 12 April 2010, responding to a question about underquoting, says:

"Hey Sonja, I agree, it's a pet hate of mine too. Guides should reflect the Agent's opinion and the Vendor's expectation. I hope it wasn’t a sale connected with our firm but if it was please let me know so I can look at it right away. John McGrath."

John, you should check out the 14 Allerton sale last month. Quote price $900,000, sale price $1,117,000, 24% over guide! Yet a comparable house next door sold a year ago for $1,116,000 so luckily for Wayne this one sold below market price.

While you are at it, John, check out all the other recent Wayne Vaughan sales:

8 Dennistone Rd Eastwood 20% over guide.
17 Railway Ave Eastwood 19% over guide.
55 Eastview Ave N Ryde 19% over guide.
74 Ray Road Epping 14% over guide.
24 Angus Avenue Epping 12% over guide.

He almost got 1/17 Pinner Close N Epping right, only 9% over guide.

Wayne is in good company though, Betty Ockerlander of Better Homes clocked up:

41 Stanley Rd Epping 18% over guide.
30 Surrey St Epping 17% over guide.
28 Cecil St Dennistone E 16% over guide.

Come on, OFT, protect the buyers. Let's see some prosecutions to stamp out this pernicious practice. Unfortunately the maximum fine is only $22,000, which is less than the commission, but the OFT can take away the licence of repeat offenders.

Wayne is now being investigated by OFT, so will have to be careful not to sell any of his present under-quoted listings for the correct market price, or he could lose his licence. An interesting problem for an agent, trying to persuade buyers to settle below market price!

Fair Trading disqualifies agents

Two central coast real estate agents have had their licenses revoked by NSW Fair Trading.
Kevin Barnes and Nicole Mars were disqualified from practising as estate agents for 10 and six years respectively, after the duo were found to have obtained $500,000 profit in a property sale.
Fair Trading took action against the pair after a compliant came through from Housing NSW concerning the sale of a property at 1-3 Walmsley Road, Ourimbah.
Fair Trading deputy commissioner Steve Griffin said Fair Trading would continue to take decisive action when real estate agents and businesses acted inappropriately in putting their own interests before that of their clients.
Nice to see Fair Trading showing teeth! There is a great need for this in the real estate industry!

McGrath Underquoting Again

No doubt the large crowd at the auction of 4 Allerton Road Beecroft were surprised when the advertised price of "Guide over $900,000" resulted in an auction with 69 bids! The first wildly optimistic bid was for $875,000. Bidding then leapt away in $25,000 steps until finally a realistic market sale price of $1,117,000 was reached, 25% above the McGrath Guide Price.

A newly listing vendor says that they went with McGrath because they explained to her that this is their technique. Once people have paid to do building and pest inspections for a property that seems to be a bargain, they will come to the auction and might continue bidding way beyond the limit they had set themselves. Great policy for the vendors, but unkind to the poor buyers who spend their money with no prospect of buying the property.

It is actually also against the law. Trouble is, the Fair Trading Minister's people typically fine the agency $2,200 which is seen as just a trivial tax on a sale which realises commission of $24,000 or more. Apparently the maximum fine is $22,000, so still just matching commission. So the only real threat is loss of licence, which penalty should be applied for repeat offenders!

It's amusing that in 2008, when McGrath was fined for this, John McGrath's response was "I'm obviously disappointed. We've had a great reputation for the exact opposite of this," and no doubt smiled as he said "I think the only thing we're guilty of is achieving a good price for our vendors." Or to put it another way, "Bugger the Buyers". But it's not a fair comment anyway, because a nearly identical property next door sold nearly a year ago for $1,116,000, so the McGrath sale price was at best market value.

Read more: http://www.news.com.au/business/real-estate-agents-busted-for-low-quotes/story-e6frfm1i-1111116430288#ixzz1GFhh9Skd

Back on the Gas

On the front page of the Northern District Times this week is an article about an independent petrol station starting up again on the corner of Blaxland and Lovell Roads in Eastwood. The demise of independent petrol stations has been a sad result of Coles and Woolworth discounting, and it is a real pleasure to see a movement to open some of them up again.

Property Choice Keeping Prices Down

An article in today's Sydney Morning Herald says "prices remain under pressure as discounting increases to secure sales".
Auctioneer Damien Cooley is quoted as saying, "The majority of sellers are becoming a lot more realistic about what their home is worth".

EcoTransit Sydney Forum Sunday 6 March

EcoTransit Sydney are hosting a community forum at which Liberal, Labor and Greens transport spokespeople will explain their policies on expanding rail services in NW Sydney, and in particular on delivering the long promised North West Rail Link.
Sunday 6 March at 7pm, in the Pennant Hills Community Centre, corner of Yarrara and Ramsay Roads, Pennant Hills.
Come along, listen to the speakers, and have your say.

Rail link key in state's growth

This article by Brian Robins is from the SMH, March 3, 2011.

The north-west rail link is the most worthwhile public transport project the state government should pursue, since it has the greatest economic spinoff, research has found. Modelling by the Centre for International Economics, on behalf of the Property Council of Australia, used the multi-criteria approach adopted by Infrastructure Australia, the federal body which has refused to fund most projects nominated by the state due to inadequate assessment and planning.

''Our recent survey of Sydney residents showed just 3 per cent felt we have a good road network and only 32 per cent gave a tick to our public transport system,'' the executive director of the Property Council, Glenn Byers, said. ''It's no surprise the north-west rail link is the highest ranked public transport project in testing its economic upside and strategic importance to Sydney's growth.''

The survey, which ranked a series of transport projects across 16 criteria and then assessed them in terms of which would give the greatest economic fillip to the state's economy, found that taking freight heading to the Botany port off the roads and putting it onto rail would have the greatest single economic impact.

''Collectively, these projects would deliver a $5.8 billion boost to the economy, representing a 1.1 per cent growth in real gross state product,'' Mr Byers said.

By 2020, the projects would help boost employment by creating 5700 jobs and boosting exports by 3.5 per cent, in real terms, the study found. ''The transport projects lead to a larger NSW economy that produces more, exports more and employs more,'' the study found. ''The projects also lead to greater investment in NSW and lower prices for NSW consumers.''

The state government should establish a portfolio of Infrastructure, Planning and Transport, along with an independent infrastructure and planning commission and an independent body similar to Infrastructure Australia to assess, prioritise and help deliver large projects. Taking freight bound for Port Botany off the road involves upgrades to road and rail links in Moorebank, Ingleburn, Minto and Eastern Creek.

The most expensive project would be the M4 East and tunnel to Port Botany, at $9.1 billion, followed by the Western Express, city relief line and Harbour rail link at $8.5 billion. The onus of these projects would be especially acute, since they would be largely funded out of the state budget, with only limited alternative funding prospects, the study found. Similarly, helping improve the position of the Epping-Parramatta rail link in the study was the promise of sizeable federal funding, 80 per cent of the total, it noted.

This story was found at: http://www.smh.com.au/nsw/state-election-2011/rail-link-key-in-states-growth-20110302-1bey2.html

M2 upgrade contract should be cancelled

John Goldberg had this letter published in the Northern District Times on 5 Jan. It is worth repeating now the state election is nearing, and with the EcoTransit Forum taking place on Sunday 6th at the Pennant Hills Community Centre at 7pm.


"Understandable attempts by the Transurban interests to talk up the “benefits” of the M2 upgrade in terms of travel time savings have little credibility (“M2 rubbishes ‘no benefit claim’”. NDT 15 December). The claims of travel time savings are part of a derisible economic analysis prepared by a Transurban consultant with the clear aim of justifying the project.


"The claims have been shown to be spurious by the author in a paper to be published shortly in the refereed Proceedings of the 2010 Australasian Transport Research Forum based on the author’s research at the University of Sydney. The results already reported in the Sydney Morning Herald (7/10/2010) show that Transurban overstated the savings by a factor of four times. This result means that the savings are worth far less than the cost of the project over its concession lifetime.

"Why then proceed with this uneconomic project which will be of minimal benefit to road users? The real reason lies in the need for Transurban to generate increased cash flow. In 2010, the total expenses of Transurban exceeded its total earnings by $234.60 million, and its group debt is over $7 billion and keeps rising. Yet Transurban continues to assert group profitability.

"Increased revenue is to be obtained by taking advantage of induced traffic. This will have the effect of increasing congestion, reducing travel time savings but it is likely to increase revenue. These hopes have been publicly expressed by Mr C.J.Lynch the CEO of the Transurban Group(The Australian, 15-16/5/2010) while the possibility of induced traffic has been marginalised, not unexpectedly, in the EIS published by Transurban and endorsed by the RTA.

"The M2 upgrade affair generally demonstrates that transport planning in a major Australian city cannot be reliably carried out by incompetent agencies such as the RTA using deception and community manipulation disguised as consultation. There is no substance in this M2 upgrade project which would support Kristina Keneally’s2009 claim, clearly influenced by the RTA, that the M2 upgrade project was “critical” infrastructure and one of “state significance”.


"The incoming government should therefore invoke the doctrine of executive necessity and cancel the contract for this essentially fraudulent project and also undertake serious reform of the RTA."

CBA cuts loan rate

The CBA has launched a fee-free standard mortgage at a rate of just 7.24%! Currently Westpac charges 7.86%, ANZ 7.8%, and NAB 7.67%.
Long live competition!

Australians struggle to enter property market

The following is extracted from today's Real Estate Business:

Australia’s housing affordability problem shows no sign of abating, according to recent figures.
Data from the Australian Bureau of Statistics found residential construction work done fell by 1.1 per cent in the December 2010 quarter.
New residential building work done fell by 1.7 per cent in the December 2010 quarter, following the 5.2 per cent decline in the September 2010 quarter.
On a more positive note, work done on major alterations and additions is again growing, turning in a 2.5 per cent increase for the December 2010 quarter to be up by 6.3 per cent over 2010.
Housing Industry Association senior economist Andrew Harvey said renovations continue to be popular as Australians increasingly look to improve their existing homes rather than face the mounting transaction costs, such as stamp duties, that they will incur if they trade-up to another property.
“Unfortunately Australia’s high property transactions costs do not help the problem of Australia’s undersupply of housing, nor the affordability problems faced by both prospective home owners and those in the market for rental property,” Mr Harvey said.
“Recently the OECD found that Australia has the fourth highest transactions cost on property in the developed world and this situation causes major inefficiencies in terms of locking owners into their existing properties.
"Australian governments need to turn their attention to removing stamp duties on new homes so as to better encourage annual levels of new home building that will help ease the pressure on prospective home owners, particularly young Australians who are really struggling to enter the housing market."

Main Roads Bonds to fund infrastructure.

Here is an interesting comment in the Daily Telegraph, by Richard Talbot, Fmr NRMA Director & RTA surveyor of Sydney, and now leader of the new political party TheGreys:

"The RTA has been cash strapped now for nearly 2 decades which is why the only new roads we've seen built in NSW have been toll roads. The next NSW Govt should re-introduce government-guaranteed Main Roads bonds like we used to have to provide a long overdue injection into road funding. Borrowing from the public to build major public infrastructure such as roads and rail lines is good for the economy and provides lots of jobs, not to mention the good feeling commuters get from seeing something is actually being done to solve our transport problem."

NSW Labour's last splurge?

According to SMH today, the Rozelle Residents Action Group is alarmed at the bulk and scale of the proposed residential and retail development on the Woolooware waterfront Victoria Road site. But thanks to the Labour government's "Project of State Significance" legislation, the minister can approve the development because it is worth a lot of money.

The developer has asked the planning department to declare the new project as a "Project of State Significance" so that the minister can approve it despite local objections. The new project is worth about $200 million, almost twice the estimated cost of the project that was rejected last year. Is that adequate justification for now approving it?

Given that the Liberal party have vowed to terminate this PSS rule and restore planning rights to local authorities, it seems most unethical that Labour's minister should approve the project so close to an election which will throw his party out of office and rescind that planning law!

North West Rail Link - EcoTransit Community Forum

With the NSW election due very soon, everyone needs to know how the various political parties stand on the North West Rail Link issue. It is therefore good to hear that EcoTransit is organising a forum to allow all those parties to explain their policies.
Come along to the forum on Sunday 6 March at 7pm, at the Pennant Hills Community Centre (corner of Yarrara and Ramsay Roads, Pennant Hills).

New Legislation will impact Buyers

This post is taken straight from Real Estate Business:
The National Consumer Credit Protection Act has come under scrutiny, with industry pundits arguing the new laws will negatively impact both buyers and sellers.
RE/MAX WA managing director Geoff Baldwin is concerned that the newly introduced NCCP Act will negatively impact any borrower over the age of 35, and could potentially impact those who are selling to upgrade.
“Effectively the new responsible lending obligations on banks and brokers depict that a borrower should have the capacity to repay the loan in full at retirement age without selling their owner occupied property,” Mr Baldwin said.
“These changes mean that a borrower aged, say 55 can no longer take out a loan over 30 years but will be restricted to a much shorter term unless they can demonstrate that they will have superannuation or other assets they can sell to finalise the loan at retirement.”
According to Mr Baldwin, the impact that these legislative changes could have to the property market has been totally underestimated.
“There has been little or no public education or communication to ensure people are aware of how they may be affected,” he said.
“Obviously this would mean much higher repayments and in many cases it will disqualify people and exclude them from the market."

NSW Labour At It Again

In the dying days of their disastrous and discredited government, the NSW labour government is making a final gift to the developers, approving the immediate construction of a new cruise ship terminal at White Bay.

Apparently this decision has been made before community consultation is complete. Obviously the objective is to allow work to progress before the election, making it more difficult for the new government to cancel it. Or rather, to increase the cost of such cancellation to the taxpayer if consultation concludes the move is wrong.

Objections have come from the City of Sydney and Leichhardt councils and the National Trust, all of whom argued that the cruise ships should continue to dock at Barangaroo.

The biggest operator of cruise ships, Carnival Cruises, said the present cruise ship berth at Barangaroo is the ideal location because it allows passengers direct access into the city on foot, encouraging them to spend money in the city. The White Bay berth will require fleets of busses running shuttle services down Victoria Road every time a ship docks, with a planned 170 ships this year alone, and many on those ships will not want to queue for busses and so will stay in air conditioned comfort on the ship.

"The move from Barangaroo was always a political, government, decision. We always said we wanted to stay at Barangaroo," said Carnival's chief executive.

But the developers of Barangaroo are not concerned about traffic on Victoria Road, or the effect of such changes on the cruise ship traffic, or the loss of trade to Sydney retailers. And it seems the wishes of those developers count for more than any others when the state government is about to be sacked.

Beecroft Cheltenham Civic Trust AGM

The BCCT Annual General meeting is due to be held on Monday 7 March at the Cheltenham Recreation Club.

A new constitution is being proposed with some significant changes. For instance "Membership shall lapse if the subscription is unpaid six months after it is due" is to be changed to lapsing after three months. Given the need to optimise the political power of the voice of the Trust, why would the committee propose deliberately to disenfranchise people in this way?

The influence yielded by the trust is largely determined by membership, and would therefore be greater if this rule was changed to read: "A member shall lose the right to vote at the AGM if the subscription is unpaid for six months after it is due." In other words, the Trust should be claiming to represent anyone who ever paid a membership fee!

What should alarm the local residents most is that there has been no explanation of this or other changes proposed. If these issues concern you, then join the trust, come to the AGM, and have your say!

M2 Kirkham Bridge Usage Restrictions

There is another nasty rumour going around, that during the period of widening the spans of the Kirkham road bridge over the M2, between Murray Farm Road and Kirkham Street, the single lane left open will be restricted to light vehicles only! No buses for the school kids, and no fire engines!

One hopes therefore that the M2 Project will be devoting significant planning effort into minimising the duration of the span widening activity. It is preposterous to claim it will coincidentally take exactly the same duration as the overall project.

Indeed competent project planning would want this span widening to be completed very early to allow better access for the work gangs widening the road under the bridge. As soon as that work is finished, full two lane access without weight limits should be restored immediately. Obviously this will benefit the community as well as the project.

Meanwhile, what arrangements have been put in place to fight fires in the houses and bushland around Murray Farm Road during the (hopefully very short) period that the fire engines from Beecroft Fire Station are unable to use the bridge?

Insurance in Flood Prone Areas

There’s an interesting letter in SMH on Tuesday, “Without a payout, landlords are left in the lurch too”.
Ten years ago the writer bought a house in Graceville, Brisbane, as an investment, without being told that it was in a flood prone area. "We have since discovered the real estate agent is not bound to disclose this information." It continues “On further investigation we have discovered there were protests about our develoment in 1998, which were dismissed by Brisbane City Council." The developers, of course, would build happily if the Council okayed the land.
The problem is, of course, that the Wivenhoe dam was meant to handle flood water and prevent Brisbane flooding ever again. So the Council arguably were right not to put "flood prone" on the relevant 147 certificates for those properties. It appears that Wivenhoe was not utilised to its optimum in controlling the flood water, and it may turn out that the developers were justified in building there. It will be interesting to see what the inquest into all this finds.

Qld Flood Levy Proposal

This post is taken off the http://www.crikey.com.au web site.
A flood levy to pay for the cost of the catastrophic Queensland floods would be lazy policy from a fiscally lazy government. There’s something faintly absurd about a government with a budget loaded with superfluous spending and the lowest debt levels in the developed world insisting that it needs a new tax to pay for the impact of natural disasters — especially when this government itself has been arguing that climate change will cause more extreme weather and preaches “adaptation” to Pacific Island states.
It also suggests this is a government that feels more comfortable playing on voters’ sympathies for the victims of the floods than about making the case for cutting spending in politically sensitive areas.
Slapping a one-off levy on voters and telling them it’s for the floods is clearly more politically palatable than telling voters they’ve gotten used to levels of government spending that aren’t sustainable in the face of an ageing population.

How to cut your Home Mortgage Rate

Nick Gardner wrote in the Sunday Telegraph about how to trick banks into reducing your mortgage rate. Just tell them you are switching to another lender. Apparently Westpac refuses to release paperwork to solicitors for ten days, while the files are referred to the bank's Retention Unit. This secret group is tasked to offer deals to customers to persuade them to stay with the bank, on condition that the home owner doesn't disclose the details of the deal to others.
Nick says "banks have a lot of discretion in setting the rates that they offer you."
As Nick says, this means the banks are punishing loyal borrowers who continue placidly to pay whatever rate they are offered.
Dean Rushton, a broker of Loan Market Group, says "Loyalty does not pay, and not everybody is a very good negotiator, so get your broker to haggle on your behalf.

State Infrastructure Requirements

Given the horrendous damage already inflicted to the state roads and railways in northern NSW, one hopes that the State and Federal government will not be signing off on any more pet 'local' projects. For instance the $500 million proposed for the Epping Parramatta railway needs to be held back until the full extent of infrastructure repairs has been fully assessed. Just a pity that the M2 Widening can't be put on hold and that money re-allocated to where it is going to be desperately needed.

State Silver Sale "A Dud"

Damning articles in the Daily Telegraph and elsewhere are beginning to expose the appalling rip-off of state taxpayers by the Keneally government with the electricity sale. No wonder she closed down parliament early to prevent debate!

Perhaps the best comment was by Andrew Clennell, "Talk about burning the villages on the way out. Kristina Keneally and Eric Roozendaal's appearances at the power inquiry revealed one critical thing: This sale is a dog."

Kirkham Bridge to be used as a Truck Park?

The latest rumour is that Transurban wishes to close one lane of the Beecroft bridge over the M2 to use it as a park for construction equipment - nothing to do with the stated reason, of widening the bridge spans!

This was never mentioned in any of the documentation submitted before the project started.

The road belongs to Hornsby Shire, not to the RTA or Transurban, and the Shire needs to ensure that the rights of access to the road by local residents are maintained as far as possible. Transurban should have to justify closing any of the bridge for any part of the 22 months of the project, and must be forbidden to use the closed lane just as a construction car park!

Thoughts on Epping Bus Ramp Removal

In my post on 6 Jan, I quoted from a letter by John Goldberg, including how Transurban is relying on increased induced traffic on the widened M2 to raise cash flow. Of course for that same reason Transurban has a powerful incentive to get people out of the buses and onto the road.
I confess that I don't know what toll a bus pays to use the M2 from the north west to Epping, but I am sure displacing those commuting passengers into cars and making them drive all the way into the city will significantly increase Transurban's cash flow.
This is where the NSW government and the RTA should be applying brakes and checks on the project to apply an integrated transport solution to north west Sydney's desperate traffic problems.

Funding NSW Flood Damage Repairs

Given the awful events up north in the last few days, one assumes that the NSW government will no longer pursue the commitment of $520 million of state funds to the Epping to Paramatta rail link! Suddenly there are much more urgent needs for that and more funding to be spent rebuilding our damaged state!
It seems a shame that the $550 million funding being provided to widen 21 km of the M2 cannot be reallocated somehow to the same purpose. With roads damaged and destroyed over a large part of northern NSW and Queensland, it seems such a waste to be widening a short stretch of motorway in a project that has been widely labelled unnecessary and unjustiable.

Federal Government now selling NSW Silver!

According to the SMH, the federal Transport Minister, Anthony Albanese, and Kristina Keneally will sign a contract for the Epping to Parramatta train line before the state election, even though Mr Albanese must know Kristina will be turfed out of office in that election! The contract will be worded so that the $2.1 billion federal funding cannot be re-allocated to suit the wishes of the NSW electorate! So much for democracy!
Barry O'Farrell says the state needs the north-west rail link much more urgently than the E/P train. Surely if the electorate agrees with him, Kristina should not with a clear conscience be able to over-rule that majority view.
Mr Albanese is quoted as saying "this federal Labour government doesn't renegotiate our commitments; we deliver on them." Surely then he shouldn't be negotiating now with the failed NSW Labour government, but should wait until the taxpayers have voted. Then he can negotiate in good faith with the real NSW government.
The SMH says that the matter might be irrelevant. The NSW state will be expected to provide $520 million at the start of the project, but the federal government's contribution of $2.1 billion won't be required until 2014. By then the federal governments could also have changed hands. But in the meantime NSW taxpayers will be up for however much of our money the state manages to spend before Mr O'Farrell cancels the project.

M2 Travel Time Savings Overstated

There is a powerful letter in the Northern District Times this week, questioning the whole concept of the M2 widening project. The letter is from John Goldberg, a highly qualified and experienced traffic engineer.

"The claims of travel time savings are part of a derisible economic analysis, prepared by a Transurban consultant with the clear aim of justifying the project. The claims have been shown to be spurious by (Mr Goldberg) in a paper to be published shortly. Transurban has overstated the savings by a factor of four. This means the savings are worth far less than the cost of the project over its concession lifetime."

Mr Goldberg argues that the project is only going ahead because Transurban needs to generate increased cash flow to service their huge group debt of more than $7 billion. Transurban believes the increased cash flow will mainly come from induced traffic, which will of course increase congestion and reduce the travel time savings.

Mr Goldberg says, "The M2 upgrade affair generally demonstrates that transport planning in a major city cannot be reliably carried out by agencies such as the RTA using community manipulation disguised as consultation."

However that is slightly unfair. The problem with this specific project is that, as the letter reminds readers, Kristina Keneally originally approved the project as "critical infrastructure" back in 2009, thereby removing most of the planning checks and balances that should be applied to such a disruptive and questionable project. If the project had been reviewed in the way the original M2 build was reviewed, many of the serious deficiencies in the new widening project might have been excised from the plan. Just one example is the project's intent to remove the excellent Epping Bus Ramp, which was a mandatory part of the original approval for the M2 back in the 1990's. Of course it was the RTA that persuaded Kristina to sign that infamous ruling.

Mr Goldberg suggests that the incoming government should invoke the doctrine of executive necessity and cancel the contract for this project, and undertake serious reform of the RTA.

M2 Widening Access to Chilworth Reserve

This is an extract from a most helpful response from the Transurban information line, M2Enquiries@leicon.com.au, about the plans for access to the construction camp to be built under the viaducts in Chilworth Reserve.

"Thank you for your enquiry regarding the M2 Upgrade project.

"The northern access to the compound site at Devlins creek that you are refering to (near the Pennant Hills golf course) is going to be used to access the Devlins Creek compound site during the M2 upgrade. However, this access track does not give access to the southern side of the compound. Access on the southern side near Allerton Road is currently being assessed.

"The old access road between the M2 and the golf course fence only allows access in - it does not allow access out of the compound area.

"The existing informal access off Orchard Road has a corridor of Blue Gums, and the potential impacts surrounding this area of vegetation is currently being considered.

"Pedestrian access under the viaduct at Devlins Creek will be maintained where feasible, but from time to time potential short term closures may be required for safety reasons. Sinage and written notice of closures will be given prior to any closures taking place."

Building in Flood Affected Areas

One of the most thought provoking articles on the Queensland floods was by Bernadette George in the SMH yesterday. She asks how did those people get planning permission for low-set houses on known flood-prone land!
She urges that the planners responsible for building in those areas should stipulate standards such as "floor levels to be at least two metres above ground level."
As she says, "Many older-style houses up on stilts are taking the current floods in their stride." And on the front page of today's SMH you see a Rockhampton family standing up to their knees in flood water, outside their house which was built on a brick plinth so the living areas are high above the flood water. Obviously their builders planned ahead, but the local planning councils in the area don't seem to have had the same common sense.
One contributing factor to the present flooding is the enormous amount of tree clearing over the decades, which has reduced nature's ability to absorb, retain, and restrict the effects of heavy rain.
As Bernadette says, "Nature is just doing what is entirely predictable." Town planners should be doing the same.

More NSW Taxpayer Silver being sold off

According to the Sydney Morning Herald today, the state government will sell large chunks of public land around Royal North Shore Hospital!
Doctors say the plans would make it impossible to meet the demands of a growing population.
The chairman of the hospital's medical staff committee said this could affect NSW patients for the next 30 years.
A submission by Whilloughby Council argues that the sale is ill-considered and that planned high-rise commercial developments could get in the way of helicopters taking patients to the hospital.
One wonders at the motives of the NSW government, continuing to sell off state assets in the dying months of their lamentable rule. They need to remember they are effectively tenants nearing the end of their lease, and the taxpayers are the real owners of these assets. A tenant does not have the right to sell bits of the house before vacating!

New Blog on Local Issues

It's good to see that the Beecroft Cheltenham Civic Trust has started a blog, to enable them more rapidly to report on major issues affecting Beecroft and Cheltenham residents.
The blog's address is BCCT2119.blogspot.com, if you want to be kept informed on issues like the M2 Widening Project and the Hornsby Shire Housing Strategy, I suggest you become a follower of their blog.

Selling the family silver continued

For a great read, go to:

http://www.dailytelegraph.com.au/news/nsw-act/eric-roozendaal-flees-his-dud-power-deal/comments-e6freuzi-1225971781002

78 comments all with one recurring theme - condemning the labour state government for shamelessly selling off taxpayer assets in the dying days of their time in power!

About the most charitable comment was this one:
"Since parliament will not meet again until after the election, why do election conventions not apply here. Election conventions ensure that no major decision is made that will bind the next government. Even though the election has not yet been called, the convention should apply." Surely that convention should also have applied to the recent signing of the contract for the M2 Widening Project.

Three months ago this blog posted a letter from Richard Talbot on this topic, and it seems everything he forecast is coming to pass.

Kirkham Bridge Update

According to the BCCT, Transurban does plan to close the Kirkham Road bridge over the M2! The closure would be "at least six months", but a lot of Beecroft and Cheltenham residents are doubtful about that promise, remembering what happened with the Copeland Road bridge across the railway. What is most worrying is the statement "Hornsby Council has been unsuccessful in their attempt to get the operators to establish alternatives". There should be no discussion on this, the approved plan calls for single lane working, why are the authorities seemingly powerless to enforce that plan?
Closure could happen as soon as January 2011, and it has been suggested that the required "public consultation" will be initiated late in December with submissions closing early in January. Democracy? Come on Kristina, you signed off on this project when you were Planning Minister, now enforce what you signed off on!
Meanwhile everybody should be writing to their MP, State and National, to the RTA, and to Transurban and anyone else, to make clear our concern at what would be a gross abuse of democracy.

No Mandate to Sell Electricity

Taxpayers are suddenly waking up to the fact that one of our biggest remaining assets has been quietly sold off! Presumably the money will be used to pork barrel before the election in a last ditch attempt to sway the more gullible members of the electorate!

Empty Nesters

The number of couples living without children at home is about to outstrip those with kids, for the first time in a very long time. The Australian Bureau of Statistics report showing this says the ageing population and increasing number of empty nesters will contribute to a steep rise in households without children.

Swan's Bank Reforms

Perhaps the best comment on the long-awaited bank reforms was by Terry McCrann in the daily telegraph. "It takes a very special kind of stupid to craft something that is both pointless and destructive."

Better Homes Realty

In November Better Homes was advertising a property in Cheltenham Road for $700,000 prior to auction, but after it was passed in they increased the price to a more realistic $875,000. I thought that method of conning would-be buyers into paying for building surveys was actually against the law?

Sales Agreements

In October I reported on a McGrath exclusive sales agreement that requires vendors to give thirty days notice of terminating the agreement. What the vendor telling me this didn't know was that, once you give that notice, McGrath remove the sign from outside the property and take the listing off the internet! Meanwhile the agency agreement is still in force and the owner can't risk signing up with anyone else!

PS Soon after posting the above, McGrath sent the vendor a letter releasing him from the agency agreement, but including the phrase "if the property is purchased by somebody that has been introduced by McGrath (agency name) during the period (dates of the original contract) or within the next 90 days commencing (date of this letter) a commission fee of (commission in the contract) will be payable on completion of the sale."
Taken to its extreme, this allows McGrath to claim the full commission if anybody who entered their office over this entire seven month period ever buys the property at any time into the distant future!
The only redeeming feature is that the paragraph does not specify to whom the commission is to be paid, so the vendor would meet this 'obligation' by paying commission to the agency that negotiates the sale!
Even without that flaw in the wording, I am assured that this sort of open ended 'payment for nothing' clause would never be enforced by a court, but it has caused deep distress to the vendor.

Rates on Hold this Month

The Reserve Bank has left the official cash rate on hold at 4.75%. Given the dramatic fall in value of house sales that followed the unexpected rise in November, this is good news indeed for owners of houses in Australia.

Green Offset in Hornsby Shire Planning

Greens Councilor Andrew Martin of Hornsby Shire Council writes an interesting letter for the Monthly Chronicle, on the topic of Green Offsets used by the Council when assessing Development Applications. He is concerned that several established areas of Blue Gum High Forrest have been "offset" for relatively small sums, $10,000 or $20,000, which of course are trivial in relation to the enhanced value of the development once the trees are removed.
Under the Green Offset policy, the DA is approved on the understanding that the removed Blue Gum will be replaced with perhaps four sapplings in another area. But Clr Martin points out that the result is a gradual removal of vegetation from building plots into existing already vegetated reserves, which will adversely change the character and quality of our suburbs forever.

Questions about M2 Financing

Here is an interesting comment off the internet, relating to the recently announced new financing for the M2 Widening project:
“Out of $740 million of new loans given by banks to Transurban, $465m are only for refinancing old M2 debt, leaving just $275 m for a project which costs $550 m to build. Where will the other $275 m come from? Transurban already sits on a mountain of debt which is continuously being rolled over (or should we say tolled over), but not paid back."

National Broadband Network Justification "weak"

An international study finds that the benefits claimed for the NBN have been "grossly overstated". Evidence to support claims made for fibre-to-the-home networks was "surprisingly weak". The study says, "All else equal, faster is better. But faster technologies don't always triumph, witness passenger hovercraft, maglev trains, and supersonic airliners."
South Korea is cited as the world leader in providing fibre to homes, and national productivity dropped from 7.6% to 3.8% since their program was begun. The study finds this drop in productivity might have been partly because of "the massive increase in online gaming, facilitated by the high speed broadband."
When launching the NBN, Kevin Rudd predicted 78% of productivity gains. The basis for this appears to be a paper from Australia's Communications Department referring to gains of 59% to 78%, available from all forms of new technology, from biotechnology to containers, not just fibre broadband. Rather selective use of statistics, Kevin!

Kirkham Bridge - Transurban Position

Apparently the RTA and Transurban have advised that they don't have authority to demolish the Kirkham road bridge, their present approval covers single lane working over the bridge during the span extensions. It seems they are considering options, including demolition as a way to speed up the work, but would need extensive community consultation and a major planning approval process, before they could take up that option.

M2 Upgrade Conditions of Approval

This document, signed on 21 October 2010 by NSW Department of Planning, is available on the net at http://www.hillsm2upgrade.com.au/files/101021_M2%20Upgrade_Conditions%20of%20Approval.pdf.

It talks at length about the project's effect on waterways and wildlife, but makes no mention at all of disruption to the lifestyles of the people who use the Kirkham Road bridge over the M2 between Kirkham Road and Beecroft Road. Obviously if the bridge is completely closed even for a few days that would seriously inconvenience school kids who walk to and from school, and commuters who walk from home to the railway and bus stations in Beecroft.

One would like to think that the lack of information indicates that there is no intent to interrupt access to that road bridge. So why the rumours?

Section 5, "Community Information, Consultation and Involvement", requires the project to establish and maintain a website for provision of electronic information associated with the project. This will include a copy of each current strategy, plan, program or other document required under this approval.

A telephone number is to be provided on which complaints and enquiries about construction and operation activities may be registered, along with a postal address and an email address. These shall be published in a newspaper circulating in the local area prior to the commencement of construction and prior to the commencement of project operations. The details shall also be on the website mentioned in Section 5. So far as I can tell none of this has yet happened, so work cannot yet commence.

Section 5.4, Community Consultation, requires the project to prepare and implement a Community Communication Strategy for the project. The specification for this document is extensive, and so far as this blog can determine no such document has yet been published. So again presumably work cannot yet commence.

Section 6.3 requires a major Project Management Plan for the widening of the Norfolk tunnels. If there was a plan to demolish the Kirkham Road Bridge, which would be even more disruptive than widening the tunnels, then that must surely have been mentioned in great detail in this document. One therefore is forced to assume that no such plan exists.

As soon as any more information is uncovered, this blog will post it.

Australian Home Price reports

An article by Nick Gardner in the Sunday Telegraph says that property investors are being advised to hold off from putting money into Australian homes, given low yields and limited prospects for capital gain. He quotes Shane Oliver of AMP Capital as saying commercial property is a better bet than residential.

If home owners and investors lose faith in the housing market, then there could be a surge in properties being offered for sale. Indeed arguably this is already under way. Ray White Beecroft, tracking statistics in the Beecroft and Cheltenham areas, notes there are more properties listed for sale in the area than at any time in the last two years. The last dramatic rise in listings was in October 2008, at the peak of the Global Financial Crisis, when many people had to offload investments to pay margin calls and other debts.

But rents are going up dramatically, and as Ray White Development Marketing Group explained in the recent RWB Investment Seminar, an investment property becomes more attractive to the individual investor in these conditions, getting tax relief on interest and negative gearing on the income. Finance the property on an Interest Only mortgage, and use income to pay off your household debts.

The article finishes on an optimistic note. "The situation is less of a problem for buyers looking for a home, with experts saying that as long as buyers choose a property that they will be happy to live in for a few years, they will have time to ride out any fluctuations in house prices, and should not be put off buying."

Kirkham Bridge Roadworks Plans

The Northern District Times had an article on 31 October saying the Murray Farm/Kirkham Road bridge over the M2 in Beecroft "may be reduced to one lane of traffic for 20 months while it is lengthened" as part of the M2 widening.
Transurban and the RTA confirmed to the newspaper that this is one of the options being considered for when the project begins in January 2011, but the decision has not been finalised and a variety of measures are being considered. The residents of Beecroft and Cheltenham are entitled to know what the other options are. The latest report, from the BCCT, implied that they have heard the bridge might be demolished and not replaced for "at least six months".
Does it make any sense at all to be starting a Half a Billion Dollar project when such factors have not yet been decided? Before the NSW government signed the contract authorising this work to begin, the local residents should have been given full and open facts about their intentions, and where those intentions are not yet firm, the government, and the RTA, should have listed all possible options. And that list must be exclusive, so the contractor can't come up later with a new cheaper but more destructive, option. Nor should the contractor be able to charge the taxpayer for selecting a more expensive but less disruptive option.
An RTA spokesman apparently said "The impact of the proposed bridge closure on local traffic is still being assessed." This blogger can find no word on this in the earlier RTA and M2 Project documentation.
The spokesman went on, "Consultation with residents has not yet started and will be carried out before any decision is made."
The statements available so far are ambiguous, and could be read as meaning work on the bridge won't start for six months, and might be limited to minor lane closures. But the actual wording was that "it will be at least six months before a replacement bridge is constructed."

Kirkham Bridge

The M2 Upgrade Environmental Assessment document issued by the NSW Roads and Traffic Authority says under the heading "Adjacent road network - Activities undertaken within the adjacent road network are listed in Table 53", and that table shows
"Kirkham Street/Kirkham Street Lengthening of bridge spans over M2 Motorway." Clearly that does not cover demolishing the bridge, so presumably that reading of the RTA statements must be incorrect. But what are the RTA's plans as they affect residents of Beecroft and Cheltenham?

M2 Project intentions for Kirkham Road Bridge

Dear Fellow Resident,
This is an extract from an information sheet from the BCCT:

Beecroft-Cheltenham Civic Trust President Michael Stove’s media release below, raises real concerns about the integrity of our suburbs. The loss of the bridge across the M2 Tollway, linking Murray Farm Road and Beecroft Road, as below, is unacceptable. The Trust has contacted Greg Smith SC MP, NSW Member for Epping, to lead our representations to the appropriate NSW Minister, to reduce the huge impediment that the M2 augmentation will place upon our suburbs.

The attached photo has been sent to local media. I will keep you posted!

Regards,

Colin Johnston
Secretary, Beecroft-Cheltenham Civic Trust

This is the media release by Mr Stove:

Bridge demolition will divide Beecroft

Michael Stove the President of the Beecroft-Cheltenham Civic Trust said residents were very concerned by Transurban’s intended demolition of the Murray Farm Road Bridge, ahead of the widening of its M2 Tollway.

“Transurban has not provided residents with detailed information” Mr Stove said at a weekend gathering of concerned residents and local Councillors at the bridge.

Transurban’s media message is the M2 project ‘aims to provide efficient and integrated transport for the community of Sydney’s North-West’,” Mr Stove quoted. “Murray Farm Road bridge is a key link in Beecroft – its demolition is not transport integration”, Mr Stove said.

He added: “Beecroft will be a suburb divided. How do our students get to local schools, our elderly get to doctors and chemists? There will be no local link from Beecroft Road to the Murray Farm Road area of Beecroft.”

“Our community has to put up with M2 construction, with loss of greenspace and local amenity. It is unacceptable that Beecroft residents will also be cut off from shops, services, friends and neighbours by Transurban’s ill-considered bridge demolition.” Mr Stove also noted: “Transurban advises The start of major work is expected to commence in late 2010 and is expected to take approximately two years to complete. It will be at least 6 months before a replacement bridge is constructed.”

Mr Stove commented that there is an engineering solution which should be pursued by Transurban, instead of subjecting our residents to months of inconvenience.

Contact:
Michael Stove:
President, Beecroft-Cheltenham Civic Trust
0401 991 927

Sales Soft

Interest rate rises sent a tremor through the property market yesterday with softer auction clearance rates reported. Clearance rates were 54.6%, down on the 57.5% last weekend.

Buyers Fooled by Low Quotes

Posing as a potential buyer, a Sunday Telegraph reporter phoned 85 real estate agents and asked for a price guide on a property. Almost one in three of those agents turned out to have significantly underquoted.
The NSW Minister for Fair Trading responded "A blitz on under-quoting and dummy bidding earlier this year uncovered no evidence of under-estimating prices." One wonders how the OFT failed to find any evidence at all, when the Telegraph found one in three agents doing it.
She also said "The onus should be on the buyer to do their price research instead of relying on real estate agents." Thanks Virginia. All the buyer wants is that the agent be required to tell something approaching the truth, isn't that the definition of Fair Trading?
The problem is the conflict under which the agent operates. If he underquotes to the owner, he won't get the listing. So the agent puts an optimistic price on the agency agreement, just to get that precious listing, and then starts "conditioning" the vendor to accept less.
Meanwhile the agent quotes below the likely price to prospective buyers, to persuade them to invest in a building survey before going to the auction. Having made that investment, buyers are more likely to bid up rather than throw away that initial expense.
There is an easy answer for this. Vendors have to display the contract at the sale property during Opens. Why not also require them to display the Sales Agreement?

Commonwealth Bank Ups the Ante

In a move almost forcing a government response, the Commonwealth Bank followed the RBA's announcement of a .25% rate rise with an immediate .45% rise! The banks say they have to do this because of the cost for them to borrow money, but then they declare huge profits so it's hard to accept their argument.

There is much debate between the politicians on how to prevent this, but no action. Wayne Swan said last month that he was "looking at tougher powers to increase banking competition".

Banks are not like retail shops. Bank customers can't just walk into the shop next door when the shop they normally use raises its prices. Bank customers own mortgage for many years and moving to another bank involves large fees that are difficult to quantify in advance. There is no point moving your account unless you can be sure the other bank is going to keep their rates lower for long enough to cover those moving fees.

Surely the simplest solution is just to forbid banks from charging more than the actual cost of doing the paperwork when mortgage holders move their accounts elsewhere. Then a bank would have to try to retain its customers, instead of just milking them.

Interest Rates Up

Rather against expectations, Reserve Bank increased interest rates today. It will be interesting to see how this affects house prices.

"Solar Flare-up will burn Every Pocket"

According to the Sun-Herald, NSW households will pay an extra $600 on their electricity bill over six years to cover the $2 billion cost of the Kineally government's failure to cancel the solar power scheme when concerns were first raised.

Apparently so far the government has refused to admit when it first became aware of the problem, although Country Energy was telling officials in May that the target had already been breached. The government "dithered until August" before holding its review, which only reported last week. There seems to have been no reason why the 60c tariff could not have been cut back then, or at least a sunset clause could have been put on the duration for which the 60c tariff would be paid. Instead because the government did nothing for five months, NSW taxpayers are now saddled with this enormous and quite unnecessary problem in addition to all the unavoidable factors that are forcing up energy costs.

And lots of honest and respectable businesses are likely to be forced into bankruptcy by their inability to sell the stocks of solar panels they built up, in good faith, to meet the government's promulgated solar panel program.

I am all for green policies, but this one seems to have done as much harm as the Federal government's aborted home insulation program. The cost of paying the excessive tariff is likely to delay investment in the cheaper and cleaner generating plants that NSW desperately needs.

Banning "Offers Over" Property Advertising

The Minister for Consumer Affairs in Victoria intends to ban the use of ‘price plus' in real estate advertisements, to protect consumers against agents underquoting property prices.

Rather than banning the practice, they should just make such adverts legally enforceable. If an agent advertises "Offers over $700,000", then the owner should not be able to refuse an offer of $701,000. Perhaps the law could allow the vendor a week or so delay while the agent tries to attract higher offers, but if none is received then the property should have to go to that first bidder.

Agents like to use the "offers over" method of price advertising because if you put a fixed price people usually bid under it. You might list the property for $750,000, and potential buyers think they know where they stand, but then may choose not to bid because they can't go as high as the listed price. However the vendor might be happy to accept anything over $700,000. How can the agent explain this to potential buyers if "offers over" are not permitted?

To advertise "Offers over $700,000" when the owner has stated that nothing under say $730,000 will be accepted is clearly deceptive and needs to be stopped. But I see nothing wrong with advertising that property as "Offers over $730,000" with hopes that a bidding auction can be started ending at or above the $750,000 the owner really wanted.

Keneally acts to bring down electricity costs

Kristina Keneally says she will cut electricity bills by delaying infrastructure. Smacks of the NSW government's policy for roads and rail! Now we are to be exposed to power cuts as well as jammed roads and packed trains.

Apparently Energy Australia has given in to government pressure and agreed to defer spending. Why not? They will be able to charge more next year for doing the same work more urgently.

It seems the government's long term plan is to do nothing and prepare to blame the Liberal government next year for both increased electricity bills and power cuts. And of course in the same paper the government brags of having made a surplus because of increased house sales and tax revenue (sales tax and the new ad valorem tax). Is it fair to say you have made a profit by not spending on essentials?

NSW Solar Panel Scheme slashed

In a blog on 7 October I forecast that the NSW government would have to cut the 60c tariff they had set on solar panel systems on people's houses. And indeed today they have done so, effective midnight yesterday!

To put it nicely, this will throw the solar industry into turmoil.

Just as with the sudden cancellation of the Federal government's much reviled home insulation program, this sudden brake on solar panels is going to hurt a lot of people who have invested in the equipment and supplies involved in the scheme. With the home insulation, many entrepreneurs had stockpiled warehouses full of batts, and were left with unsellable stock. Now, solar panel stockists are going to be left with warehouses full of unsellable panels. And part of that problem is that the cost of panels is going down all the time, so those stocks will become increasingly unsellable.

Given the hazards associated with the insulation scheme one can sympathise with the decision to make an immediate cut. But this decision about solar panels could surely have been done a bit more sympethetically, perhaps phasing down the 60c tariff progressively? But most importantly the NSW government should never have allowed the 60c tariff to apply in perpetuity! In yesterday's announcement they confirm the high tariff will continue to be paid, apparently indefinitely!

It just seems strange that a scheme reported in the papers as being so obviously flawed was allowed to continue for nearly a month without any transition phase, and is now suddenly dropped.

Population Big Enough

A poll published by the Australian National University finds that the majority of Australians believe the country has enough people already. "Australians would prefer natural growth to increased immigration."
The report found that "Concerns were mainly about infrastructure and the economy, rather than cultural diversity." The report listed house prices, road congestion, and overcrowding in cities as the driver for those concerns.

NBN Takeup 11% in Tasmania

An article in The Australian reports that telcos will be provided with $3Billion ($300 per customer) to lure households into connecting up into the National Broadband Network. Results in the first trial, in Tasmania, suggest it might take even more than this!
The NBN project originally planned to run the new fibre cable to the street outside each house, with a total budget of $43 Billion. Now, recognising that many (most?) homes wouldn't pay to connect across their front lawn to the road, the NBN is proposing to wire up to the house. It is not clear whether their budget includes the cost of remediating pavements, drives and gardens in each of the 10,000,000 houses involved.
But that still leaves a large cost in wiring and equipment inside the house, to access the new network. The latest proposal is that telcos will contribute $300 towards that, but of course that extra money had to be paid for by the Federal Government.
In Tasmania apparently about 50% of households consented to having the connection provided, but only 11% have subscribed to the new high speed (and high price) services that will be available.
Mr Turnbull recently called the NBN "reckless and imprudent".

Councils lapping up your rates

The Daily Telegraph today has an excellent report on where your rates go - and most of the money doesn't go to benefit the ratepayer. The average household pays $998 every year. Of this the report claims $820 goes on bureaucrats and workers. Of course the councils also tax the public with special rate rises, parking fees, fines, and user charges, so there should be lots of money available for the ratepayers. But no, the latest Department of Local Government data shows, per person, $30 goes to health and environment, $83 on recreation, $65 on community services.

The key point in the report is that councils could merge to reduce costs and share services. But which public servant wants to volunteer to become unemployed? Oh no, wait, they wouldn't be sacked, but they would be put on the temporarily unassigned roster and have nothing to do all day, instead of feeling important managing their swollen departments.

Genia McCaffrey recently told the NSW Councils they need to modernise. "You can do it yourself or have it thrust on you," she said, hopefully prophetically.

Gillard Plan to Cut Electricity Bills

The latest scheme by the Federal Government is to make the electricity retailers replace old electrical appliances in all our homes. The proposal is that the retailers be banned from passing the costs on to consumers in higher electricity bills, though I cannot imagine the retails agreeing to that - or at least if they agree it will be because they have worked out how to pass on the costs, which would of course be enormous. And of course the consequence of the activity would be to reduce demand for electricity, which will guarantee the retailers oppose the plan. Rather smacks of Rudd's proposal to tax the miners, relying on the miners generosity and public spiritedness. It will be interesting to see how the proposal survives what can be expected to be a major advertising campaign by the electricity retailers.

Apparently the proposal was received in July, but not released until after the election. The report in the Daily Telegraph explains this delay as:
"Sources said the Federal Government had refused to release the report during the election campaign for fear of igniting debate with the Coalition over family electricity bills."

M2 Upgrade Concerns raised in NSW Parliament

Greg Smith, Liberal member of NSW parliament for Epping, raised the community's concerns about the M2 Upgrade in Parliament last Friday. Summarising his excellent speach, why put the community through so much disruption and inconvenience, and indirectly tax road users to the tune of $550M, for an upgrade that will be rendered obsolete by the North West Rail Link?

M2 Upgrade - Bus performance indicators

Extract from Hansard 19 October.
Ms CATE FAEHRMANN (Greens): I direct my question without notice to the Minister for Transport. Why did the Government take no action to ensure that performance indicators were included for the M2 expansion that required an increase in bus services and bus patronage rates?
The Hon. JOHN ROBERTSON: I will take that question on notice.

Over-regulation of the NSW Real Estate Industry

Another quote from the REINSW website:

The State Government recently introduced the Residential Tenancies Act 2010 (uncommenced as at October 2010), a highly prescriptive piece of legislation with 227 sections. When you consider that equivalent Acts in the ACT and Western Australia have 120 sections, it is clear that real estate professionals in NSW are over-regulated.

(And elsewhere in the REINSW website)

The property industry is one of the most heavily regulated by NSW Fair Trading. There are 236 sections in the Property, Stock and Business Agents Act 2002, compared to just 130 in the legislation governing car dealers.

The government claims it is protecting the interests of consumers. But how can real estate professionals be expected to deliver tailored service in a highly prescriptive regulatory environment?

That’s why REINSW, in its Real Agency policy, is calling for the relaxation of inhibitive regulation.

Rather than trying to control the many processes of our complex industry, the government should focus instead on the desired outcome – the delivery of a high quality service, with an adequate safety net in the form of mandatory professional indemnity insurance.

Rental Situation in NSW

The following is an extract from the blog of Tim McKibbin, CEO of REINSW, the Real Estate Institute of NSW.

NSW rental vacancies stuck in 'Groundhog Day'

As rental vacancies fell in most parts of Sydney in August, it is clear that NSW continues to face an accommodation crisis for frontline workers.

REINSW believes that this will be a major NSW election issue in 2011.

The overall rental vacancy rate in Sydney fell 0.1% to 1.5% for August 2010, with falls also recorded in the city’s inner and middle suburbs.

What we are seeing are only marginal changes in the rental vacancy rate month to month, with no long-term recover in sight.

It is clear that the trend points towards a continuing crisis in rental accommodation, which is certain to start seriously affecting our frontline industries including teachers, fire, health, ambulance and police.

Exclusive Sales Agency Agreements

The Real Estate Industry of New South Wales provides a standard sales agreement that is used by most real estate agencies. This standard 'REINSW Sales Inspection Report and Auction Agency Agreement' form provides for an exclusive sales agency agreement, usually for 90 days. If the property is to be put to auction, the agreement may also stipulate an intended auction date but the auction date does not influence the duration of the exclusive contract.

Under this agreement the vendor can terminate the agreement immediately after the 90 days.

McGrath use their own form, which is subtly but very significantly different. Their exclusive period is for 90 days after the auction. Typically the auction might be six weeks into the contract, so McGrath sign vendors up for well over five months.

Under McGrath's special contract, a vendor wishing to get out of the contract earlier has to give 30 days notice in writing AFTER the first 90 days are over. So the very first time a vendor can get out of a McGrath exclusive agency agreement is after four months.

Aussies keen to crack property market

Belinda Luc of Real Estate Business reports:
More than half of Australia's renters are struggling to get into the property market, new research has found.
According to the Bankwest/Mortgage and Finance Association Home Finance (MFAA) Home Finance Index, just 19 per cent of renters are happy to keep renting in a bid to maintain their lifestyle, while the rest are keen to crack the property market.
Bankwest Retail chief executive Vittoria Shortt said rising rents were the reason so many Australians wanted to buy.
“There has been a strong shift in the desire of first time buyers to get onto the property ladder since the March Bankwest/MFAA Home Finance Index,” Ms Shortt said.
“First time buyers also changing their expectations, and are prepared to make trade-offs to enter the property market, like looking further away from the city centre or for a smaller property."

Ad Valorem NSW State Tax hitting home sales

The NSW government quietly imposed a new tax on home sales in July, called the "ad valorem" tax. Already the tax, applicable on all sales above $500,000 (so on all sales in Beecroft and Cheltenham) has affected 13,000 property purchases, adding an average of $1,150 to each purchase.

Over the same period, the NSW property market has fallen 2.07%, the worst quarterly fall since the GFC! Residex Chief Executive John Edwards says "this Government is crucifying the property market." There are many experts talking about a crash in house prices, and one wonders if Kristina's new tax could be a trigger for this. The Liberal Party has promised to abolish the tax when they win power in March 2011, but will the damage already be done?

You have to question the logic of such new taxation on the Government's house sale cash cow. On the average Beecroft / Cheltenham house, Stamp Duty is about $35,000, so the new Keneally tax is adding about 3% to revenue, which is only marginally above the lost revenue from the drop in sales. If house prices start to fall, there could be a cascading general loss of confidence as people see their equity, and their prospect of capital gains, plunging.

Housing Market "flat".

According to the Australian Bureau of Statistics, the value of investment housing commitments fell by 3.9 per cent in August 2010, seasonally adjusted.
Real Estate Institute of Australia president David Airey said while investment housing had been "the bright spark" of housing finance earlier this year, this is no longer the case.
"We are seeing the cumulative effect of six increases in official rates between October last year and May this year and concerns about further increases in the months ahead, particularly from first home buyers and investors" Mr Airey said.

Apartments with Balconies but no car spaces?

On 4 October I reported how one developer was seeking permission to cut the cost of apartments by deleting the requirement for car parking for residents or visitors. Now the City of Sydney is taking the opposite path, imposing new standards that must force up the cost of new apartments. Their new draft development control plan will require new apartments to have balconies!
The developers responded unenthusiastically. Aaron Gadiel of Urban Taskforce said "last month the City of Sydney published its 562 page draft of a 'simplified' local environmental plan. That plan would be the most complicated planning regulation that any council has come up with. Now the council has developed an additional 873 page DCP."
He concluded his remarks by saying "with this kind of complexity, no wonder so many developers have been forced interstate."

Housing shortage to worsen

This is a direct extract from Real Estate Business that you can find at http://www.rebonline.com.au/:
According to the Housing Industry Association's (HIA) National Outlook report, housing starts are forecast to decline by a further 4 per cent as federal stimulus for housing construction starts to wind back.
"The fact remains we are not building enough homes to match demand, and going forward our national housing shortage is expected to worsen," HIA chief economist Dr Harley Dale said.
"Renewed weakness in new home starts in 2011 would mean there were only two years in ten when starts have risen. That is an appalling result, which highlights the challenge Australia faces in addressing a large and growing housing shortage that will place considerable further pressure on rental markets."
The report found that by calendar year, housing starts are forecast to increase by 24 per cent in 2010 to a level of 171,442, before dropping by 9.5 per cent in 2011 to a level of 155,155.
"Stimulus measures drove a short-lived recovery in new home building and helped Australia avoid a recession. However, if we want to address Australia's housing shortage then the Federal Government needs to lead from the front on a range of policy areas including further investment in skills and training, reform of the tax system, an end to excessive regulation, increased land supply, reduced planning delays, and ensuring greater competition in the banking sector so there's adequate finance for development," Mr Dale said.

"Bigger Australia Certain"

A report by the Centre for Independent Studies examined 36 different scenarios and found that the population of Australia would increase under all of them except when migration was cancelled, births forbidden, and people not allowed to grow older. Not a surprising conclusion. Did their scenarios not include plague, nuclear war, of armageddon?
The report concludes that "even if" migration were cut in half, to 70,000 a year, the population will still reach 29,000,000 by 2050. The study seems to say "well, that's it mate, just put up with overcrowding."
But my take on that report is that it seems to make cutting migration an absolute imperative! If home grown population increase is so huge, and our infrastructure so stretched, then why are we considering letting anyone else in from outside?
There's an interesting article in the Economist reporting that the number of people in each household in America is increasing, as the economy encourages families to stay together longer. In Sydney, with its high house prices and the large houses that we are building, this trend is likely to happen here, so fewer houses would be needed to house whatever population we end up with.

Trust needs to speak out now

An interesting letter in the Northern District Times, by Lesley Goldberg, commented on the failure of the Beecroft Cheltenham Civic Trust to speak out actively in defence of the Beecroft Shopping Village, against the Hornsby Shire Council and NSW government plan to rezone it for five story mixed development. Richard Talbot, who resigned from the Trust in protest, described the BCCT committee as a "council cheer squad".

Domestic Solar Installations Cost Blowout

If you want to install solar panels and take advantage of the NSW government's Clean Energy enterprise, you probably need to hurry. It looks like it's going the way of the home insulation scheme! Another great Green Plan but equally ill-administered and financially unviable.

The domestic solar scheme allows households to install panels on their roofs then sell electricity from those roof panels back to the state at a very attractive price, then draw back coal-fired mains electricity at a third of that price! Apparently the scheme is one of the most generous in the world. The trick is that the system is funded by the power generator utilities, not by the state, which means that other uses of electricity will find their bills going up to pay for it

According to the Daily Telegraph new solar connections are being made nine times faster than expected. One suspects that outrage from consumers when they see their bills will lead the NSW government to can this scheme too.

This smacks of the funding scheme that is planned for the M2 Upgrade, where the contractor, Transurban, will be funding the construction and recouping his costs from increased road tolls. In theory it's cash-neutral for the NSW government, like they intended the Cross City and Lane Cove Tunnel projects to be. It would be nice to see the contract for the M2 upgrade and find out what liabilities will accrue to the tax payer if things don't go as planned.

Big Drop in Home Lending

The Daily Telegraph reports that "the traditional spring surge of new home buyers has failed to materialise, raising fresh doubts over the predicted revival of Sydney's wilting property market. The number of new mortgages actually fell 0.3%, compared to 10% spring increases seen in other years.
Compared to September 2009, new mortgage sales declined by 20%.
These figures released on Monday just might have influenced the Reserve Bank in their decision to leave interest rates on hold for another month.

RBA leaves Rates on Hold

Slightly against the expectations, the RBA has left interest rates on hold this month. It remains to be seen whether the banks will follow the treasurer's directive to comply!

The apartments we had to have but nobody wants

A damning indictment of the move to high rise apartments is to be found in the Sydney Morning Herald of October 2-3, page 9. "Even free furniture is not tempting buyers."
Apparently after destroying the character of much of once-beautiful Ku-ring-gai to meet the government's insistence on provision of masses of new apartments, the only flaw in the government's plan is that many of those new apartments remain empty! The expected rush of baby boomers wanting to downsize from their empty nests to smaller premises without the hastle of a garden has just not materialised.
One commentator reports that sales have mostly been to "overseas buyers looking for investment." Such buyers mostly just want to park money in Australian real estate, and often aren't very worried if the property can't be rented. An apartment can be left empty without drawing objections from neighbours, whereas an empty house needs at least to have the garden tended. And of course putting a tenant into a small apartment invites damage and loss of value, because tenants aren't as caring as those who rent a house.
It is interesting to go back through the history of the Ku-ring-gai government-forced development. An article by Sue Wellings in The Age, 14 December 2009, predicted exactly what the SMH now reports. She wrote a well reasoned explanation of why she thought the demand just was not there for the apartments the government says we have to have.
So is that what will happen to Beecroft Shopping Village? Is Hornsby Shire going to destroy our lovely village atmosphere by building multi-storey dwellings, only to find that they can't find people to live in them?
Great policy!

Does public transport mean you don't need a car?

Greg Woodhams, NSW vice president of the Planning Institute of Australia, believes apartments in inner and middle ring suburbs don't need to have all the parking spaces usually mandated by councils, if they have good public transport available. But good public transport just means people will leave their cars at home and go to work by bus or train. It doesn't mean they won't want to have cars. People use cars to go out at night, to go shopping, and to go away for the weekends. Good public transport to work is not sufficient.
Consequently, if Greg has his way, the local streets will be jammed full of resident's cars during the day as well as at night.
Residents of Beecroft and Cheltenham are already well aware of this problem. Every day floods of cars arrive to park in Hannah Street and other streets within walking distance of the station, anywhere where parking is not restricted. Yes, Beecroft has excellent public transport, buses as well as the train, but still people need cars. The problem is that the local residents, many of them elderly, therefore need to park within the shopping village because the streets around are choked with commuter cars all day long. If Hornsby Shire Council allows the village redevelopment to go ahead without increased parking spaces to cope with the extra residents, then the village will die because locals won't be able to drive in, do their shopping, and drive home. At present the signs are that the redevelopment will significantly reduce available parking, not increase it.

Apartments without garages

Oakstand Property Group has applied to Woollahra Council to build apartments with no provision for car parking! "Let all the new residents park on the street, the locals won't mind," is their justification.
The reason is that providing car parking adds some $70,000 to the cost of the unit, and of course buyers will be delighted with the cheaper price of the apartments. The developer says the new cheaper apartments "will walk out the door." If only one could assume the buyers will walk, and not bring cars to clog the local streets!
One can only hope that Woollahra Council recognises their responsibility to the existing residents in and around the proposed new development! Parking in the area is already a nightmare, and if allowed this new scheme would have disastrous effects for many years to come. This prospective windfall for developers needs to be stamped on at once!
Residents of Beecroft and Cheltenham have already expressed grave concerns about Hornsby Shire's proposal to rezone the Beecroft Shopping Village with no obvious adequate provision for car parking. The planning documents provided showed one level of underground car parking for each new five storey mixed use block, with between three and four levels of apartments and one to two levels of shops and offices. That clearly implies shoppers will have no parking provided as part of the new developments.

M2 Upgrade Controversy Heating Up

The Transurban/RTA's ''road user cost-benefit analysis'' estimated widening the M2 would increase average vehicle speed by 40 km/h in typical stop-start conditions.

But Dr John Goldberg - a former principal scientist with the CSIRO's National Measurement Laboratory, now at the University of Sydney - recently tabled an analysis (which has been peer-reviewed) that disagrees. John predicts that widening the tollway from four lanes to six gives only a 50 per cent chance of the average traffic speed increasing by more than 10 km/h.

A spokesman for Transurban responded that the reference to 40 km/h in the company's analysis was a ''standard speed, used for all road projects assessed in NSW''. Doesn't sound like rigorous scientific methodology!

Doubts about National Broadband Network

Carlos Slim, who became the richest man in the world by monopolising Mexico's phone market, has savaged the Labour government's proposal to spend $43 billion on a national broadband network (NBN). He isn't knocking the need for a high speed national network, but questions the cost, and the viability of adopting today's technology at a time when technology is advancing so fast. He believes any network should, for instance, include a good WiFi element.
Another issue that is being talked about but not clarified is whether the quoted price for the NBN is a total price, including remediation work to streets and property after the installers have done their work.

Migration dropping, babies booming.

Bureau of Statistics figures show annual population growth has slowed from 2.2% to 1.8%. Over the year to March, 241,400 people migrated to Australia, compared to 320,300 in the same period last year. However in the same period a record 303,500 babies were born in Australia, up 3.1% over last year. and the number of deaths falling. Overall the annual growth in population remains well above the long term average, concentrated in WA (2.3%) and Queensland (2.2%) with NSW expanding by just 1.6%.
An economist at CommSec, Savanth Sebastian, commented on how this will affect Australia. "More people means greater demand for houses, roads, schools, hospitals, and a raft of retail goods." More challenges for Kristina!

Public Delighted by Barangaroo?

Developers of the Barangaroo project say the public is delighted by the plan. But really, could anyone want this??

Opposition to the Barangaroo Lend Lease proposal

Reading the newsletter of the Barangaroo Action Group, I found a number of excellent arguments against the proposal, including this one:

1 - A single developer undertaking the whole development results in lack of competition and places in the hands of one corporate entity the timeframes for the construction, which will be dictated by that one entity’s commercial interests. As such, residents and city workers will be living in a construction site for up to 15 to 20 years, while an unacceptable high density development spreads over the whole site, much as Lend Lease’s Jacksons Landing project has done.

The same argument could be used against the proposed commercial upgrade of the M2. If Transurban is allowed to manage this $550M project, what guarantees will the NSW government have, and what penalties will be available, to enforce timescales and standards?

Regarding the proposed huge hotel in Barangaroo, Lend Lease promise that it will remain a hotel, but such promises are seldom kept - like the divided carriageway of the M2 over Clilworth Reserve, which Transurban now intends to fill in as part of the widening project. A number of news articles have implied that Lend Lease anticipates the hotel failing when they will seek approval to convert the building into prime appartments, making another obscene profit.

Selling the family silver

This interesting letter was in the Sun Herald:

Dear Sir

Another community-owned icon is about to bite the dust. Queensland Rail National is to be sold-off; Commonwealth Bank, Qantas, State Bank, GIO, NRMA Insurance - we once owned them all & they were substantial publicly-owned assets performing a vital honest broker role for our community.
No doubt our electricity & water infrastructure, schools & hospitals will one by one come under attack from the same lobbyists & corporate opportunists who make mega bucks out of spruiking such deals.
These community assets have been built up over generations of Australians who have fought wars to protect our way of life & they'd be rolling in their graves to see what's become of such icons.
Selling out Australia's future for a few silver coins is not in Australia's best interests.

Yours sincerely

Richard Talbot

House Price Statistics

An interesting article in the Northern District Times explains the differences between figures used by people predicting a house price crash, and those expecting stability and even continuing growth.
Jeremy Grantham, a US investment banker, says Australian property is a time bomb, alleging the house price ratio compared to disposable income is 7.5 times, around double what it should be.
Rismark disputes this, blaming foreign hedge funds for shorting Australian bank shares in anticipation of a housing bubble bursting. Rismark calculates the house price ratio as 4.6, by using all properties in Australia, not just the cities. Of course, this really reflects the fact that most people don't want to live in rural areas despite cheap housing.
The deputy governor of the Reserve Bank, Ric Battellino, supported Rismark's view, agreeing that city house prices are "quite elevated" but if you look across the whole country prices are not that different to thos in other countries. He says that house prices in Australian cities are not high relative to the incomes in the cities.

Owner-builder Training Changes

People in NSW wanting to build or renovate their own house will from next month have to undertake a course taking at least a week and costing $800 or more. The course includes a 700 page manual. At present about 1000 permits are awarded each month, after an online training course taking four hours. The number of people taking the new course is probably going to be significantly less!

M2 Widening Benefits Challenged

John Goldberg, a former principal scientist at the CSIRO and now at University of Sydney has questioned the validity of statistics used to justify the $550M project to widen the M2 through Beecroft and Cheltenham.
Mr Goldberg told the Sydney Morning Herald that he had studied all the traffic densities and the corresponding speeds and concludes that it would be a break-even proposition to get more than 10 km/h increase in average speeds. Transurban have claimed a 40 km/h increase, an estimate that Mr Goldberg says is "wildly out".
He also challenges their estimates for cost-benefit ratios for travel times, accidents, and vehicle operating costs. The company's analysis concluded "the project is economically worthwhile with benefits for the community being estimated to be 3.4 times greater than the costs." Mr Goldberg has reached very different conclusions. He believes the benefits will be only 0.27 times the cost, far below the threshold required for major road projects under the state's environmental laws.
Of course the NSW government and RTA are probably not unduly perturbed about the cost benefit of the project, because Transurban will be funding the work themselves and recovering the cost by increased tolls on road users, a rather neat way of new indirect taxation.
Meanwhile the residents of Beecroft and Cheltenham stand to have two years of massive construction work, and lose much of the delights of the Chilworth Reserve when the present quite tasteful two flyovers are replaced with a ten lane monster highway.

Housing Sales Up

According to Alison Bell of the Daily Telegraph, home and mortgage sales jumped 11% in August as homebuyer confidence strenghened and mortgage delinquencies stabilised.
As expected, the Reserve Bank kept interest rates steady this month. However banks are incurring extra costs borrowing money from abroad so individual bank mortgage rates might rise anyway.

Levels of Household Debt

There's an interesting article by Jonathan Chancellor about how the level of household debt in Australia has risen from 50% of household disposable income in 1980 to 150% now. One wonders to what extent this is just a shift in our outlook on life, with people now comfortable to borrow freely.
A good sign is that the number of repossession actions lodged in the NSW Supreme Court is well down on the last few years.
Deutsche Bank feels that concerns about Australian house prices are ebbing, suggesting a steady moderation in price pressures.

"Prices up, vendors selling at a loss"

That eye-catching headline is from today's Sydney Morning Herald. The article by Jonathan Chancellor gives examples of recent sales where properties have gone for well below the earlier purchase price. One such property sold for $1.25M after being bought in 2007 for $1,635,500, a 23% price fall over the last three years. The successful selling agent explains that this was because the original purchaser overpaid when he bought it. I wonder how many recent first-home-buyers are wondering about their futures.

From the same edition of the SMH, this article by Simon Johanson discusses the nature of growing Sydney house prices under the headline "Property apocalyptics predict bubble trouble", and talks around the prospect for a collapse. Simon makes the point I mentioned in my last blog, that "no one wants a sharp plunge in house prices". Any politician putting forward plans deliberately to drive prices down could find very few supporters. But then, nobody wanted the collapse that hit America two years ago.

Home Affordability

In SMH's daily "Decision 2010" columns there is an article on home affordability.
It makes the point how Kevin Rudd's doubling of the first home owner grant boosted house prices, with the average loan during Rudd's truncated time in office rising from $230,000 to $290,000. The problem with this, of course, is that now the grant boost has been removed, those house prices must slip back, leaving new home buyers stressed by increasing interest rates and facing negative equity.
No matter, Tanya Plibersek says, the grant kept builders in work. But if that was the only objective, the grant should have been restricted to new construction, and not used just to boost the prices of existing homes.
The report makes the point that "about 70% of Australia's 9 million or so dwellings are owner occupied, so increased housing affordability is not really the priority of the majority". Indeed most home owners would be very upset by any plan which proposed very swiftly to reduce house prices, if it involved them getting less money when they sell their homes. 70% of voters would say "by all means cut sales and land taxes, but don't threaten the sale value of my asset!"

RTA backs down on Motorway Extension

According to the SMH today, the Roads and Traffic Authority "has been forced to back away from a plan to build a four-lane extension of the M5 motorway through Sydney's inner west, after state and federal ministers indicated they would not support the project".

The NSW state Roads Minister David Borger said the government had heeded the community's call: "I queried the benefits of proposals that appeared to carve through suburbs for the sake of route convenience instead of securing new more direct routes to hubs of economic activity like the airport and the port."

That observation puts one in mind of the ten lane carriageway the RTA is planning to drive through Chilworth Reserve in Beecroft, and the proposed tunnel under Pennant Hills Road joining the eastern end of the M7 to the southern end of the F3, both for the sake of route convenience. What Sydney clearly needs is a direct route road built to conduct traffic from the NW corner of the M7 directly onto the F3 further north, taking all the interstate traffic completely away from Sydney. It seems inevitable that such a road will be built eventually, so why spend all this money on short term paliatives, the building of which involve huge inconvenience and disruption to the local residents?

One piece of good news is that the M5 expansion had been shortlisted as a "nationally significant priority project" yet has been varied by public pressure. The M2 widening project was also listed, by Kristina Keneally in her previous position in the State government, but clearly politicians will respond if the people protest enough.

Back in May Kristina "personally deleted" the proposed extension of the F6 motorway from the government's transport plan, because the state doesn't have the money." (Sub-text - the State government seems to have fluffed several submissions to Federal government for funding, so money we should have received went to the other states.)

The reason the M2 widening project is still going ahead is because State is granting Transurban a licence to do the work at their cost, in return for being allowed to charge increased tolls for an extended period. Let's hope Transurban doesn't run out of money half way through the construction phase!