Ok that's probably the difference in our thinking here, I wasn't using the strict tax definition of "Carrying on a business"
Because you are trying to say property in general loses money, when it doesn't. To weigh up whether an asset class is a viable investment you need to look at how it would perform debt free, a debt free property is a perfectly sound investment. It is then up to individuals whether they want to add debt based on their own judgement of the risks and rewards.
Its like me saying the aussie share market has lost money for 13 years, because based on a 100% loan at 8% the annual dividends don't cover the interest charges. the fact is that statement is false because a) the dividends have increased almost every year and even if you took a 100% loan it would be positive now, b) the fact that I'm judging whether it is profitable based on debt is the wrong way to look at it.
you keep mentioning "after" inflation, as if the a neg geared properties income needs to outpace inflation to become positively geared, when inflation actually increases the rental yield while the repayments to the bank stay the same. Also Inflation is one of the reasons property investment is preferred to cash, as inflation decreases the value of cash, your property investment will maintain its value and the income will increase with inflation, so you position is maintained.
most people will wait till their non deductable debt is cleared though.
no doubt they have been, but so what? Don't you think interest only loans are used in all sorts of businesses, the vast majority of business loans are interest only, the idea
High house prices, and land prices in general, destroy productivity, make it very difficult to compete against imports, and leaves the economy vulnerable to shocks.
In the news today there is mention that SA Water could be sold for $13 billion. Now, it makes a profit of $362 million a year and is supposedly able to be sold for $13 billion, representing a yield of 2.8%. I don't think so! Far more likely is that if sold then we'll see an increase in profit (easy since it's a natural monopoly) to around the $1 billion a year mark. That represents effectively a tax (and a privately collected one at that) on every business in SA which uses water or which employs someone who uses water. For practical purposes that's every single business in the area served by mains water who will end up with higher costs and become less competitive as a result.
It's not hard to see why practically every business which actually needs to compete and which doesn't have a huge natural advantage in its' favour (eg WA iron ore mines have a natural advantage due to easy accessibility of the ore) is struggling or closing altogether.
I can't see this ending well. How does an economy with little apart from mining, expensive housing and expensive water / gas / electricity and where very few businesses are competitive actually function? I just can't see how that's going to work in the longer term. We already have high costs and we're doing just about everything possible to push them even higher.
Considering the land of ultra free capitalism, the USA, doesn't have any privatised airports, and Australia has hocked pretty much all of them and we're now faced with some of the highest fees in the world. Jetstar culled their Darwin hub expansion because the private owners got too greedy.
If a Government owned asset is reasonably efficiently run, provides enough cashflow to maintain and expand as required, then I don't see how selling it to the private sector benefits us. As you say, it just adds a pervasive tax kept by the private sector. Considering the lack of apprentices since most of the state utilities were privatised it's not been good for the economy. We're stuck with some of the highest electricity / gas / water / rent costs in the OECD.
Our restrictive land zoning, urban growth boundaries, extremely slow processes to bring new supply to market all make what should be a relatively cheap input some of the most expensive land there is.
I fear we'll have to have our Greek economic slap down to reset things. Even if by some miracle new land supply comes to market at affordable pricing it will decimate the value of existing stock, which will wipeout a lot of retirement savings and probably cause a banking Armageddon since the gang of 4 and regionals are all really just glorified building societies.
We seem to have chosen economic suicide by doing our best to have the most expensive land in the world. I suppose we'll console ourselves by continually selling existing properties too each other at ever higher prices and feeling like we're rich. Anyone think we can double household debt again over the next 13 years and keep the economy roaring along??
... Much the same happened in SA ...
It's hard to see any real solutions to this one.
Once you've sold the water pipes, dams, pump stations and so on (SA Water in this example) to someone and given them what amounts to a privately owned right to tax consumers then they aren't going to hand it back without one hell of a fight that's for sure. Same goes for airports, power and so on.
It says rather a lot that an old power station that was decommissioned in New Zealand was subsequently shipped to Victoria and reassembled. The equipment dates from the 1960's and is an outright fuel guzzler. Much the same happened in SA, although theirs was cobbled together from various old plants from several countries and all put together in SA. A nice "new" power plant that's already rusty - says it all really. It's a fuel guzzler as is the one in Vic and that's why nobody else wants it.
As a country, I just don't see how it's going to all work. Expensive real estate, high wages, installing machinery that's obsolete, private "taxation" and so on. It's all making Australia an extremely uncompetitive place in which to do business.
We seem to have chosen economic suicide by doing our best to have the most expensive land in the world. I suppose we'll console ourselves by continually selling existing properties too each other at ever higher prices and feeling like we're rich. Anyone think we can double household debt again over the next 13 years and keep the economy roaring along??
It says rather a lot that an old power station that was decommissioned in New Zealand was subsequently shipped to Victoria and reassembled. The equipment dates from the 1960's and is an outright fuel guzzler. Much the same happened in SA, although theirs was cobbled together from various old plants from several countries and all put together in SA. A nice "new" power plant that's already rusty - says it all really. It's a fuel guzzler as is the one in Vic and that's why nobody else wants it.
Actually we've already moved past that point of flipping to each other - it's all about the Chinese appetite to 'diversify' to a 'safe' country. From what I can tell, it's pretty much exclusively Chinese buyers, particularly new developments, in the big capitals. Throw in some stupid government incentives/grants for foreign buyers and the usual NG farce for the locals and we have the perfect storm brewing.....
Which plant is that?
I think you are confusing business owners with business managers, shareholders are definitely part owners of the underlying businesses in the companies they own shares in. Shareholders own the businesses, management is employed by the shareholders to run the businesses.
If you don't think the bhp shareholders own bhp's businesses assets, who does?
Stakeholder may refer to:
Stakeholder (corporate), an accountant, group, organization, member or system who affects or can be affected by an organization's actions.
Stakeholder, an entity that can be affected by the results of that in which they are said to be stakeholders, i.e., that in which they have a stake.
Project stakeholder, a person, group or organization with an interest in a project
Stakeholder theory, a theory that identifies and models the groups which are stakeholders of a corporation or project
Stakeholder analysis, the process of identifying those affected by a project or event
Stakeholder (law), a third party who temporarily holds money or property while its owner is still being determined
Considering the land of ultra free capitalism, the USA, doesn't have any privatised airports, and Australia has hocked pretty much all of them and we're now faced with some of the highest fees in the world. Jetstar culled their Darwin hub expansion because the private owners got too greedy.
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