Equity Rental levels !

The price of housing in Australia is sucking in first buyers  with ever smaller deposits with the result that mortgage repayments are absorbing a greater share of their pay.  If that becomes uncomfortable, they know they can put the home back on the market and make a profit from its new value.

Unfortunately, this is reducing the number of homes available on the rental market and we are now seeing Estate agents culling the numbers allowed to inspect the stock available.  Only those with an impeccable  rental history and the ability to lodge a substantial bond make the cut.

Many low income earners find themselves shut out of this rental market or find themselves restricted to the city perimeter with a lengthy commute.  The cost of fares to and from the city restricts their ability to have a roof over their heads.

During the coronavirus lockdown emergency legislation prevented evictions from rented property because of rent arrears.  This reduced the rental stock available and new tenants are now finding a severe shortage of rental opportunities.  The numbers sleeping rough on Sydney streets is ever increasing.

During the second world war the government imposed rental control.  The families of those serving in the armed forces had tenure until the war ended and the rent was pegged to accord with a serviceman's salary. Often, the return to the buildings owner was less than the council charged for rates.

This arrangement persisted long after the end of the war and the owners of rental property were seriously disadvantaged.  Should this rental drought persist, the government would be likely to again impose rent control and that could have serious consequences.

Interest paid by banks on term deposits is at a historical low.  Buying property - and living off the rent is a good way to invest superannuation money, but the rent needs to equate to the value of the property bought.  That is unlikely to coincide, given the present high value of housing.

The only way housing prices will fall to a level attractive to rental housing would be by an interest  rate surge.  Those with huge mortgage repayments would be forced to sell at a loss and make homes attractive again for investors.

Unfortunately, that is the way the market is headed unless sanity applies to the price of homes, or  wages surge to a high which can accommodate mortgage values, and that would be a profound shock to owners of existing housing.

  It takes a surfeit of buyers to maintain price levels out of kilter with reality  !

Floodplain Development !

Once again the weather bureaus is warning of a storm front that will deliver an unusually high tide, combined with a surge of giant waves that will threaten homes fronting onto Sydney beaches. There is the expectation that sand will be stripped away and home foundations undermined.

Flooding is fast becoming a new hazard with which Sydney homeowners have to contend.  Global warming will deliver a higher sea level and increase the risk of coastal inundation and the lack of new building sites is building pressure to extend housing onto flood plains.

We recently experienced abnormal rain which overfilled Warragamba dam and caused homes in the Hawksbury north of Sydney to flood.  This was financially damaging because victims were forced to replace costly items like carpets, electricals, furniture and bedding.  That incident was described as a one in a hundred years flood.

Councils have the power to refuse building approvals for flood plains but the need for housing in this ever growing city is causing a rethink. Sites that could expect moderate flooding at infrequent intervals are under pressure from developers.

The only alternative is extending the city ever outward and that creates problems with public transport and the provision of costly services.  There is also the impediment of national parks to the north and south, plus the barrier of the Blue Mountains to the west.  We will eventually reach the stage that the only land still available will be the flood plains.

With the right planning, this flood risk can be contained.   It would be essential that adequate escape roads be put in place to allow residents to evacuate in the event of a severe flood, and the size and type of housing would need to be strictly controlled.

There would need to be a complete ban on single story housing on concrete slabs on flood plains.  The living area would need to be elevated above the flood level and the area under the house used to garage cars.  Residents would need to accept that they would experience days of isolation during occasional floods and emergency services would need to be in place to deliver food and medical supplies.

The right type of building would eliminate water damage and the main disadvantage would be temporary isolation until the flood subsided.  There would be the expectation that a building site on a flood plain would be considerably cheaper than in a flood free area.

 The only alternative to that plan would be housing people in tower blocks. Learning to live with water may be a necessity in this twenty-first century.  A mix of the various types of housing can make Sydney  a more vibrant and interesting city - and solve out size problem !

Money Scammers !

 People facing the dilemma of safely investing their superannuation payout when they retire must think the  world is against them. Putting it in a bank on a term deposit is no longer an option because the interest rate offering is at a record low.

The stock market is dangerous territory for the uninitiated and many seek the advice of " investment advisers ", but that can also be far from safe.  A woman named Melissa Craddock gave such advice to sixty of her customers and bilked them of of $ 7.3 million.

The money was spent on a lavish lifestyle and many overseas trips and the investigators now think she may have gained as much as $14 million dollars.  She mysteriously disappeared and recently a human foot in a shoe that washed up on a south coast beach was identified as consistent with her DNA.

This week another " financial adviser " was arrested and taken to Chatswood police station.   This 42 year old man has been charged with eighteen counts of dishonestly obtaining  financial advantage by deception and one count of knowingly dealing with proceeds of crime with the intent to conceal.

From May, 2017 to March 2020, he took funds from twelve people meant for share holding in a wealth fund and transferred them into his personal bank account.   This same crime   involved  another eleven complainants with the loss ranging from $40,000 to$355,000.   One case involved an 86 year old woman he had defrauded.

This deceit will earn him a stint in prison, but his clients face the loss of a comfortable retirement  and may have to apply for the aged pension.   He is cooperating with the police but it is unlikely that any of this money will be recovered.

Fortunately, the vast majority of financial advisers are honest people who give sound advice and many of their clients have little experience in dealing with money matters.  It is not only lump sum superannuation payouts they need to invest.  They may be selling a home they bought decades ago when property was cheap - and now the median house price in Sydney is topping a million dollars.

It pays to be wary of accepting advice that promises an extravagant return.  Investments that pay above a moderate interest are few and far between in the present circumstances and it is safer to invest with an institution that has capital backing - like a bank - than to invest with an individual.

It is also probable that a multi branch investment service will have probity insurance to cover the misplacement of funds, and that is a field worth enquiry when masking a selection. It is also wise to keep that old piece of logic in mind that applies to all money matters.   " If it sounds too good to be true, it probably is ! "

Danger for Australia !

 The United  Nations law of the sea grants an exclusive economic zone where the borders of a country meet the ocean, and once again that is in dispute in the South China sea. Specifically it is the area around Scarborough Reef  that is suffering armed aggression.

China has claimed sovereignty over the entire South China sea on the basis of an old map.  This claim was subjected to an enquiry by the world body - and rejected.  Unfortunately, China has seen fit to ignore the ruling of what the rest of the world acknowledges as the " Umpires Decision " and has blatantly created islands from a number of rocky outcrops and fortified them into naval and air bases.

Scarborough Reef is part of the Philippines economic zone and its fishing boats have got good and reliable catches there for centuries.  Philippine fishing boats are now being harassed by a vast flotilla of Chinese boats, many of which are armed and supported by Chinese naval vessels.

China is claiming the South China sea as its own exclusive fishing ground despite a number of surrounding countries having a claim on their territorial waters.  The South China sea is an international waterway and serves as a route for the world of commerce.  It is a vital connection, serving both the world export and import trade.

The Philippine fishing fleet consists of small boats often manned by family groups and they suffer a disadvantage against the more numerous and bigger Chinese fleet.  Many of the Chinese boats are armed and are threatening to fire on the  Philippine fishermen unless they leave the area.

So far, China has made no move to interfere with commercial traffic through the South China sea but it does challenge naval ships and particularly units of the United States navy.  There have been numerous incidents of near collisions and Chinese military aircraft have flown close to ships and planes passing through the area.

The Philippines is a poor country and its defence force could not sustain a fire fight with the Chinese navy. It seems inevitable that eventually there will be a serious incident between USS ships passing through the area and Chinese aggression and the outcome of that will affect Australia.  The bulk of both our export and import trade passes through the South China sea.

In particular, we are vulnerable to any disruption of tanker traffic because our oil refineries have been closing  in favour of the lower cost of the big refineries in Asia.  We are an oil producing country but both our transport and defence capacity would be harmed if military action stopped that traffic flow which we could not replace internally.

The fact that a United Nations ruling is being ignored and a neighbour is under threat is a clear warning that this flash point is hotting up !

Legalising Flood Plain Harvesting.

 The subject of what is called " Flood plain harvesting "  is an issue up for debate in the New South Wales parliament and the licensing proposed seems to run foul of existing laws which deem it illegal.  It is evident that this is widespread in many parts of the state and many farmers see it as a means of regulating their water supply.

When rain falls from the sky the farmer gets a good crop and lush pasture, but the law prevents the capture of that water.  If water is to be retained by the building of a dam or creation of a small lake, that must have government approval because it will stop the run off water feeding into the inland river system.

Taking water from those rivers is another licensed activity and we have too many people taking too much water in many parts of the state, resulting in fish kills when water flow is deprived of oxygen levels.   This is of great concern when the flow of a river services several states.

It is also illegal to construct channels or or dig drains to direct the flow of excess water to where it will be useful for farming, and this is a form of " harvesting "  that seems about to change.   In 1995 the government capped the amount of run off water permitted to be taken in this way because of the detrimental effect on town water supplies.

Now the state Water Minister is proposing to allow this type of flood plain harvesting under license as a way of measuring the amount of water taken.  This measure is being opposed by both Labor and the crossbench who claim the government is acting in bad faith by allowing debate on an issue that has not had legal advice tabled.

There is concern that this new measure may open old wounds.  When the land was initially farmed in New South Wales there were no laws covering water harvesting and many farmers created dams and ponds on their land.  The government tends to turn a blind eye to activity that happened before water conservation legislation was enacted and now this unlicensed work may come under the microscope.

In many cases, low channelling simply diverted surface rain water to a naturally occurring low part of the property, resulting in the creation of a pond that holds water for farm use.  In the majority of cases, that work would not be permitted today and it seems inevitable that if water harvesting becomes licensed there will be pressure for this old work to be discontinued.

In many cases, water diversion can be as simple as ploughing a shallow furrow to direct the water flow to where a natural hollow will create a storage pond.  It is predicted that Australia will become a drier country as a result of global warming and how we store our water will become a critical issue in the future.

It is imperative that the parliament sorts out the legal issues before a legislative change comes into effect. 

The " Risk " Factor !

 Journalism is becoming a risky occupation in some parts of the world.  What a journalist writes is usually about events in the country they cover and if he or she is critical of the government in office  it is not unusual to face physical retaliation.

Such was the experience of Roman Protasevich who was a passenger on  a Ryanair plane travelling from Athens to Lithuania.  It seems that Protasevich had very adverse things to say about the president of Belarus and while his plane was crossing that country it received an urgent report that there was a bomb aboard.  Under the international convention, it was ordered to land immediately and the nearest airport was at Minsk, the capital of Belarus.

It seems that bomb alert was personally ordered by the Belarus president and he reinforced  his demand by sending one of his Soviet era MIG-29 fighter jets to ensure that the passenger plane complied.  The moment it was on the ground, Belarus police boarded the plane and arrested Roman Protasevich.

It seems that this 26 year old journalist worked for  a Poland based news service and his report on street demonstrations earned him the ire of the president.  Passengers on the Ryanair plane reported that he had his head in his hands and he was extremely distressed when he learned of the diversion to Minsk. He was heard to say  "  I will get the death penalty there ".

Of course, a search of the plane revealed no explosives and it was quite clear that the diversion was carried out on the instructions from the Belarus president. Belarus was closely aligned with Russia during the years of the cold war and President Lukashenko has been in power since  1994.  He is clinging to power and about 35,000 citizens are in detention for widespread discontent according to human rights groups.

No doubt the western world will protest at this abuse of international airline policy but Belarus remains in Russian orbit and Lukashenko has the protection of Vladimir Putin, who is known to send GRU assassin teams into other parts of the world to silence critics,.

At least this is a timely warning to news gatherers from across the world. When international travel fully resumes they would be wise to heed the actual route that their intended airline proposes to fly.  Even tourists can find their exit from a visited country delayed if they become involved in a spat between the great powers.

What happens to Roman Protasevich will be followed with great interest.  No doubt he will face a mock trial on the basis of some trumped up charge but the publicity surrounding the legality of his capture will probably save him from the death penalty.

It is quite clear that the news we read or watch on television comes to us at great personal risk to the journalists that gather it in many parts of the world.

Changing Voting Patterns !

It is obvious that the Upper Hunter by-election loss is a continuation of the  misery affecting the Australian Labor party in recent times, and the next Federal election could possibly be held later this year. Labor seems to have lost the voter affinity which once saw it regularly hold state and Federal office.

In Upper Hunter the Labor vote retreated 2.8% from the last election and this did not result in a gain in the vote for the sitting government party.  In fact, the Conservative vote dropped by a corresponding 2.6%and the winners were a mix of independents and the lesser special interest parties. The New South Wales Liberal government was vulnerable because it is fast becoming a  minority as scandal and innuendo strip it of a numbers majority.

Upper Hunter was sent to the polls because a Labor politician accused the sitting National seat-holder of a sex crime which still has to face its day in court. Enough of the voting public thought their member to be vindicated to vote into office another National candidate

 Clearly, the big loser is the labor leader in New South Wales who has held office for ten years.  Jodi McKay has failed to make headway against the Liberal/National coalition and will face a slate of candidates eager to replace her as leader.

It is the government that holds the purse strings and being in opposition is a long, hard grind to sell an alternative policy. The ideal of good government is to have an opposition snapping at the heels of the party in office and at all times being ready to govern when the opportunity offered.

The problem is that political parties comprise factions and it is rare to combine those factions to present a rock solid agenda to the voters.   In many cases a faction will oppose a part of their party dogma with more ferocity than they show to the party in power, resulting in many voters choosing the cross bench parties in preference to the traditional two party divide.

That drift away from traditional politics is not confined to Australia and in some other parts of the world it contributes short lived governments which pass little legislation.  A mass of squabbling minor parties hold the balance of power and this makes consensus impossible.

We are fast moving into confrontation with China and our interests will be best served by a spirit of cooperation between the states and Federal governments.  We will have to develop new markets and that would be hindered by petty jealousies and state rivalry.  Cooperation reduces costs and allows Australia to present a united front overseas.

Let us hope that the replacement for Jodi McKay is a moderate who will put Australia's interest first and before party politics.    It could eventually be a matter of survival.