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This
letter was published in The Australian Financial Review
on 4 July
2007:
Rudd
on track on affordable housing
In seeking to torpedo Kevin
Rudd’s proposal for an inquiry into housing affordability by
calling for greater supply of land on the urban fringe, Prime
Minister John Howard makes the same mistake as the Institute for
Public Affairs and controversial American urban planner Wendell
Cox.
In a recent study, The
Tragedy of Planning: Losing the Great Australian Dream, the
IPA’s Alan Moran approvingly cites American cities St Louis,
Atlanta, Pittsburgh, Dallas, Houston, Fort Worth, San Antonio and
El Paso, for having less urban regulation on their city
fringes.
On the basis that
inadequate social infrastructure on the urban fringe seems often to
lead to higher crime rates, I consulted the FBI list of 8197
crime-rated US cities to investigate this approving citation.
Cox’s home city of St Louis topped the list, having approximately
four times the national crime rate. Its murder rate was actually
5.5 times the national rate. High crime rates were also experienced
in Atlanta, Pittsburgh, Dallas Houston and Fort Worth. San Antonio
was above average in only four of the seven categories, Austin in
only three and El Paso was below average in all categories except
for rape.
I doubt that Howard is
advocating higher crime rates to make housing more affordable, but
the statistics do make the case that the IPA and Cox are mistaken
about creating greater urban sprawl as a means of remedying our
unaffordable housing.
The real answer to greater
housing affordability is as simple as it is politically
unpalatable.
We need to capture a
greater proportion of our publicly generated annual land values to
the public purse instead of letting them be privately capitalised
into higher and higher land prices.
Australia’s various real
estate institutes, which resist higher rates and land taxes, and
presumably applaud our high levels of income tax, need to disclose
on which side of the question they stand on the mindless escalation
of land values.
To be even-handed, it
should be said that the Australian Labor Party does not have a
proud history on the matter. Our new study, Unlocking the Riches
of Oz, shows that the upward escalation of Australia’s land
prices really set in when the Whitlam government chose in the early
1970s to fund a major part of local government, which had
previously funded itself, out of federal taxation.
Bryan Kavanagh
Director, Land Values
Research Group
Melbourne, Vic.
To which letter Wendell Cox
weblogged The Heartland Institute as follows on 4th of
July:-
Housing
Affordability: Avoiding the Issue in Australia
Published by wcox July 4th, 2007
in Urban
Policy.
The desperation of the
anti-suburban interests knows no end. Their mantra? “Say anything,
just don’t let people live where they like.”
First they tried to show
that cities were expanding so rapidly that agricultural production
was threatened. Had they looked at the data they would have known
that much land has been retired not by urban expansion but rather
by rapidly improving productivity. Then they moved to obesity,
trying to claim that suburbanization was the cause, while ignoring
the obvious answer — eating too much too often. Now, perhaps the
ultimate is a claim in the 5 July 2007 Australian Financial Review
by Bryan Kavanagh of the Land Values Research Group that
suburbanization increases crime rates.
This is not the first time
that the debate over Australia’s ruined housing affordability has
been based upon a profound misunderstanding of American urban
geography. Like a well known bank researcher who could not tell the
difference between a central city (Australian term, “local
authority”) and a metropolitan area, Kavanagh claims that
suburbanization has given St. Louis the highest crime rate in the
nation. Sprawl, he says, is the reason.
There is no doubt that the
city of St. Louis has a high crime rate (as do all of the more
dense US central cities). But, in the United States, far lower
crime rates are found in the sprawling suburbs that surround the
central cities (in St. Louis metropolitan area, barely 12 percent
of the population live in the city of St. Louis). In fact, there
are few places with lower crime rates than American suburbs. If one
were to engage in serious research on the matter, a clear
relationship would be shown between lower crime rates and
suburbanization (sprawl) in the United States.
Should we be surprised
inane arguments are concocted out of thin air? No, not at all. The
anti-suburban forces have embarked upon an ideological crusade.
They do not care a whit about what happens when their policies
drive housing prices through the roof. For them, all that matters
is aesthetics. The result is that the price of housing, including
interest, has been increased over the last 10 years by the
equivalent of as much as 10 years household income in Australian
urban areas.
Regrettably, there are
powerful interests intent on ignoring this reality, while offering
all manner of placebos that divert attention from the cause of the
problem — land rationing under overly urban planning
processes.
All of this cannot but make
Australia a weaker, less attractive economy in the longer
run.
The
Reality:
US central city violent crime rates were nearly 3.5 times those of
the “sprawling” suburbs in 2005. See: Violent Crime
Rates in Cities, Suburbs & Metropolitan Areas:
2005.
[OK – so that’s Wendell
…]
____________________________________________
[… and this is me, the
‘powerful interest’, again]
So, there’s some sort of
barrier around your central cities; most US criminals live
within the central city, and very few venture in from the
poverty-stricken or more desperate places in the outer suburbs?
Gotcha, Wendell! Gee! That must make crime-solving
pretty easy in the US!
But, me, a suburbs-hater?
Why, I’ve lived in suburban Glen Waverley for the last 34 years and
love its people, its places, and lorikeets which sweep through
daily. I don't even mind the noise of the possums on our roof
most nights.
No, Wendell – I’m
not anti-suburban. What I’ve suggested is that if we
increase land value capture of publicly generated land
values and decrease taxes on productivity, there will be
less of what valuers (or appraisers) call ‘rent’ to be privately
capitalised into ever higher and higher land prices. You
close your mind to the fact that greater emphasis on
geo-spatial revenues would keep the lid on these escalating land
prices - whatever the supply of land?
Also, the continuing drift
to capital cities and their outer ’burbs from regional areas seems
to me to be mainly because the big city is where the jobs
are, because that’s also where the tax advantages have
been - you know, ‘location, location, location’, and all that,
Wendell?. The ’burbs of the big city aint necessarily
where all people living there want to
be, as you have claimed. A tax shift to land
values might even arrest the drift to urban agglomeration and
reinvigorate our regional cities. That’s a bad thing,
Wendell?!
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