07/11/2006 - 21:00

Canal Rocks saga calls into question lobbying practices

07/11/2006 - 21:00


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It is with a great deal of caution that I wade in to comment on the current Corruption and Crime Commission matter relating to the proposed Canal Rocks development at Smiths Beach in the Shire of Busselton.

It is with a great deal of caution that I wade in to comment on the current Corruption and Crime Commission matter relating to the proposed Canal Rocks development at Smiths Beach in the Shire of Busselton.

Whether or not anyone has broken any laws is not up to me to decide, but it has put the spotlight on a number of the practices of former premier Brian Burke, who until now has developed a kind of invincible reputation for fixing gnarly political problems.

Personally I’ve been surprised. Not only by the fact that his political antenna remains so well attuned that he could legitimately overcome previously intractable issues, but also that so many current politicians seemed happy to deal with him.

Mr Burke, it appears, has presented his own case as well as he had those of his clients.

Largely, his case is that as premier he was young, naïve and made silly mistakes. It is an argument that has worked well, it seems.

A victim of the times – for WA Inc did not just involve Mr Burke – he paid a high price for a small error and, since rehabilitated, he has simply got on with earning a living using the skills he knows best. At least, that’s his story.

That would be fair enough if, as a high paid consultant and so-called lobbyist of last resort, he simply applied his skills to cracking tough nuts, such as the assault on trading hours which allegedly threatened the very existence of our protected smaller retailers.

Whether you liked that campaign or any of the myriad others he and partner Julian Grill lay claim to, including Canal Rocks, Mr Burke has a right to be paid for any fight.

However, it all gets a bit harder to justify when the fighting fund vehicle you were involved in establishing to fight the nasties of Woolies and Coles, suddenly plays an integral part in assisting a property developer battle local interest groups.

Then there was the other intriguing piece of news that Mr Burke and former Liberal senator and powerbroker Noel Crichton-Browne were working together on the Canal Rocks project.

You have to wonder what former colleagues of these gentlemen think of that?

In the CCC this week, Mr Burke raised the argument that his use of the retail trading linked Independent Action Group to channel funding associated with Canal Rocks was a legitimate way of keep political donations secret, just as the 500 Club raises money anonymously for the Liberal Party.

It’s a fair point. Why should anyone putting money into any vehicle that is clearly aimed at influencing policy be protected when direct donors are not?

But Mr Burke is the master of this kind of debate, and despite the political deftness of this comparison, I doubt many will be distracted from thinking that his approach is markedly different from how we all thought such protection was intended to be used.

No matter whether it’s the playground or the political battlefield, there’s always someone who goes too far.

Perhaps this episode will prompt a review of lobbying practices, and maybe create a more transparent process of accountability for those who spend money to influence our governments.

This has been a very damaging exercise for Mr Burke and those associated with him – both clients and his friends in the Labor party.


Mortgage growth charges past CPI

When mortgages attached to Western Australian land jump more than 20 per cent in a year to $55 billion, it does make you wonder if the system is working?

Some would argue that the growth in the property market is just a function of demand and right now, due to land shortages – if you can believe that in WA – and the booming economy, the experts reckon Perth prices are somewhere near Sydney’s.

Unfortunately, that demand is distorted by our tax system which rewards people for buying land in two specific ways.

Firstly, a residential home is free from capital gains tax. This is a huge incentive for all and sundry to pump their economic resources into their home, buying the best block they can and then cramming as much value-adding construction as they can on it.

Secondly, negative gearing motivates those with one property and a half decent income (plenty of those in WA) to invest in something that they know will lose money for the entire period of its ownership; and even when they do sell it for a gain, it’s likely that gain will be taxed well below their income tax level.

No wonder we are all piling into property.

The problems with this are multiple.

For starters, capital - $55 billion to be exact - is tied up in land when it could be used elsewhere.

Then there is the issue of equity and the economy.

A lot of high income property investors are squeezing out the middle-to-low-income earners who simply want a place to live.

Ironically, the sustainability of this economy which fuels the investment dollars the high income earners have to spend, is directly correlated to the number of middle-to-low income earners we can get here to do all the work.

There is also the issue of motivation.

Those who become rich through property tend to think that’s what life is all about.

I’ll bet we all know someone who has gone into property or real estate to make their fortune in the past two years.

Finally, there is the risk of the fallout from having – and I am going to sound like a financial planner here – all our eggs in one basket.

If something happens to jolt the economy, having a lot of people with a lot of debt - $55 billion to be exact – is a high risk place for an economy to be.

In just under 10 years, this debt has grown from around $20 billion.

Two and half times is well and truly ahead of anything CPI would be responsible for.

It can only mean that people are betting it’s going to get even better.

What worries me is that, with numerous people (such as the federal treasurer) calling the boom at its peak and housing becoming more expensive than Sydney,  people are still punting their economic futures on property.


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