"AUSTRALIA is in the midst of an unsustainable housing bubble that could burst at any time", says economist Edward Chancellor to The Australian. "the Australian economy is yet to emerge from the global financial crisis, despite the widespread belief it has escaped the worst of it ahead of the rest of the world."  He attributed Australia's "luck" to a comparative lack of competition among local banks, enabling them to avoid much of the reckless lending that occurred in the US, as well as the commodities recovery led by China. "My view is Australia had a private sector credit boom just like the US and the UK and it had a real estate boom," he said. "The problem is the bubble and that hasn't gone away. Given the great growth in private sector credit and the vulnerability of the housing market . . . Australia is not out of the woods. It hasn't even entered the woods."

Chancellor correctly identifies the link between the unlimited creation of private credit by bank monopoly and asset bubbles. This has also been stressed out before by American Georgist economist Michael Hudson and British Georgist thinker James Robertson. What chancellor calls a 'housing bubble' though, is in reality a 'LAND bubble', due to rising land values as the West Australian reported earlier.

Buyers, beware! Australia will eventually get its bust. This is the worst timing for buying real estate.

The West-Australian reports Kevin Rudd is planning to introduce a new federal 'resource tax' on top of the already existing state royalties. These taxes would be used to "deliver company tax cuts, reduce red tape on small business and slash paperwork." We would like to hope that the coming Henry Tax Review could introduce a georgist 'paradigm shift': to shift taxes away from small businesses and jobs, onto natural resources. That we want to encourage. However, Rudd's real motives sound rather worrying: