Visitor levy Bill illustrates the commons of local authority infrastructure

Yesterday I happened to turn on a Parliamentary debate on a Bill called the Southland District Council (Stewart Island/Rakiura Visitor Levy) Empowering Bill. The legislation would give the council, whose rating basis is very small, the right to charge visitors up to $5 to pay for the island’s growing tourist infrastructure. It would be expected to raise about $250,000 a year.

I was heartened by this debate. Not only had the Select Committee had a very collegial discussion on it, but there was little opposition in Parliament, other than worrying that other councils might follow suit. I hope they do. Far North District Council could be one.

The infrastructure of roads, sewers, community halls, water, wastewater and stormwater is part of the local commons. It was built by the people and belongs to the people so the people have the right to charge others for the rent of it, no matter how temporary.

Our national built infrastructure of our roads, dams, power stations and electricity network is similarly part of our commons and should never be sold off. The sweat of our nation’s grandfathers is in those dams. The vultures are coming to get it, including the land. Those who would sell it are guilty of treason. And they are coming to Greece right now. Imagine selling off the Parthenon, the cultural commons of the Greeks.


Our land will increase in value with this new community facility

I am excited. We have a wonderful new gym which has been built by Te Wananga O Raukawa, the Maori university on the main road to the beach and I think, because it will attract so many top level basketball and netball games, it will be an asset to the small town of Otaki where we live. On the opening day today we had two top teams playing netball here and that will only be the start.

I am even thinking the value of our own land, less than 1km from the gym, might go up. It will over time and the land values in all the surrounding area will be affected as well, depending on how close they are to this new community amenity (and depending on how many businesses disappear as well). It is a very fine complex, described in the local paper as a world class facility. It came in under budget, on time and without debt, thanks to the great people at the Wananga.

So why should private landowners gain from the increase in land value? Most of us didn’t work to cause it. And those who don’t own property (plenty of renting in our town, plenty of poverty).That is stealing from the public purse. Land value taxes should be imposed so that the public recaptures all this privately accumulated value. That will only happen if rates are levied on land value not capital value and not with 70% of the rates being in fixed charges, as we have now. So we are far from that now and we have adopted the philosophy of user pays. This, because user pays is so convincing, is going to be hard to change.

This happens any time there is a new public facility. Everyone near the the terminal of the Waikanae Railway station benefited when the Paraparaumu line was extended to Waikanae (well it was that part of the cycle – their values didn’t go down while others did). So if a gym raises the value of our land, how much more would the railway coming to our town affect it!!

I just think of all the poor people in our town with no hope of ever owning land. It will widen the gap between rich and poor. And when land prices go up, the banks benefit,the money supply increases and we get inflation. No good for the poor!

We just have substantial challenge how to solve this politically.


What Greece needs is a land backed currency (and so does New Zealand)

I have just been listening to the most informative and important interview by Adrian Wrigley of the Systemic Fiscal Reform Group in Cambridge, UK.  Here it is: http://podcast.3cr.org.au/pod/3CRCast-2012-02-22-19953.mp3

Karl Fitzgerald of Earthsharing Australia interviewed him on the radio station http://3cr.org.au on a programme called The Renegade Economist.

To address the problems of Greece, and for other reasons, Adrian is studying the economic history of Germany during the early 20th Century, and says it is tragic that Economic History has been dropped from economics departments of universities because in history lies a lot of wisdom and knowledge. He describes what happened leading up the period of hyperinflation in 1923 and then what the German government did to solve it. They banned the private reserve bank from issuing currency for profit, formed a new reserve bank which issued paper money backed by mortgages and this stopped hyperinflation really quickly. It was called the Miracle of the Rentenmark. However, (as with Gesell inspired currency in Wørgl Austria some ten years later), the banks quickly stepped in. The Rentenmark was a danger to the status quo. A land backed currency is the big danger for the ruling classes.

However, like the other miracle, Wørgl, it only lasted a very short time. Soon the banks stepped in to have their way.

This is quite a long interview but full of fascinating facts. Well worth the time out of your day. It makes me realise that noone who really cares about monetary reform can turn a blind eye to the fact that the owners of banks will do anything to squash land backed currencies and kill them instantly. It reminded me of a time when I was writing my book and discovered that land tax went out at the same time as the private banks insisted that the NZ government use income tax instead. Before then we were reliant on just excise taxes and land taxes. And since then we have assumed that income tax is normal! Our money system is backed by income tax, not by land. The private banks, creating money for profit, have got that windfall. No wonder they are falling over themselves to lend to farmers.

It also reminded me of the struggle within the complementary currency movement to invent a currency backed by land. Everyone has talked about it, but to my knowledge it has never been done. It remains a dream. Now I can see why.

I hope you enjoy the interview. A lot of history in it. It is great on Greece too.