A university education and a highly paid job the road to home ownership in Australia for the masses?

The Turnbull Government’s tin ear was on full display in The Sydney Morning  Herald on 21 February 2017:

The Coalition MP tasked with tackling Australia's housing affordability problems has said a "highly paid job" is the "first step" to owning a home.

The federal Victorian MP Michael Sukkar, who is the Assistant Minister to the Treasurer and has been charged with finding solutions to the country's housing affordability woes, also pointed to his own experience in purchasing two properties by the age of 35 as an example to struggling homebuyers. 

"We're also enabling young people to get highly paid jobs which is the first step to buying a house, it's not the only answer but it's the first step," Mr Sukkar told Sky News on Monday night.

"I want to see young people like me, leave university, I was a terrible university student but I left university because the economy was so good, I got a great start and I was able to forge a career," he said.

The Liberal MP for Deakin since September 2013 and Assistant Minister to the Treasurer, 35 year-old Michael Sven Sukkar LLB, BComm (Deakin), LLM (Melb), who apparently walked straight into well-paying employment at PricewaterhouseCoopers after leaving university and eleven years later owns his own home in Blackburn and a residence in Canberra after selling a second investment property in Fitzroy.

Conveniently the Australian taxpayer is assisting Mr. Sukkar with the mortgage on the possibly negatively geared Canberra property by supplying him with $273.00 for every night he stays in his own residence while parliament is sitting – an est. $11,466 for the 2017 calendar year alone.

Even at a stretch, married to a professionally qualified wife with a business partnership in a multinational firm, Michael Sukkar’s economic progress though life is hardly typical of a couple seeking to buy their first home.

However, typically of a member of the Liberal Party he assumes almost everyone can be fortunate enough to have small business owners as parents, a good education and a well-paying job before securing a parliamentary seat with an excellent superannuation plan.

According to They Vote For You during his almost three and a half years in the Australian Parliament Michael Sukkar has voted for:

A same-sex marriage plebiscite

An Australian Building and Construction Commission (ABCC)

An emissions reduction fund

Charging postgraduate research students fees

Decreasing ABC and SBS funding

Decreasing availability of welfare payments

Deregulating undergraduate university fees

Increasing funding for road infrastructure

Increasing indexation of HECS-HELP debts

Increasing or removing the Government debt limit

Increasing scrutiny of unions

Increasing the initial tax rate for working holiday makers to 19%

Increasing the price of subsidised medicine

Privatising government assets

Senate electoral reform

Speeding things along in Parliament (procedural)

Stopping people who arrive by boat from ever coming to Australia

Tighter means testing of family payments

Unconventional gas mining

Regional processing of asylum seekers

Temporary protection visas

And voted against:

Implementing refugee and protection conventions

Increasing scrutiny of asylum seeker management

Suspending the rules to allow a vote to happen (procedural)

Increasing Aboriginal land rights

Increasing funding for university education

Increasing investment in renewable energy

Increasing marine conservation

Increasing protection of Australia's fresh water

Increasing restrictions on gambling

Increasing the age pension

Increasing the diversity of media ownership

Increasing trade unions' powers in the workplace

Increasing transparency of big business by making information public

Letting all MPs or Senators speak in Parliament (procedural)

Letting environmental groups challenge the legality of certain government decisions

Protecting citizens' privacy

Restricting foreign ownership

Stopping tax avoidance or aggressive tax minimisation

The Australian Renewable Energy Agency (ARENA)

Choice reports on life in Australia's private rental market

‘54% of regional renters are +6% more likely to face discrimination than metro renters if they have kids or pets’

Choice, Unsettled: Life in Australia’s private rental market, February 2017:

Australia has traditionally been a nation of homeowners. However, as the dream of the quarter-acre block dwindles, more and more of us are renting. Between 1994-5 and 2013-14 the number of Australian households that rent increased from 25.7% to 31%.  While home ownership offers many advantages, renting is not necessarily bad for consumers or society more broadly. Many advanced economies such as Germany have low levels of home ownership. However, Australia lacks many of the protections these countries afford to renters.

Australian renters live in a unique rental market. Australia relies on small investors supported by generous tax concessions to provide nearly all of its private rental housing. Social housing (made up of public housing provided by the states, community housing provided by not for profit companies and Indigenous community housing providers) makes up less than 4% of the housing market, down from over 5% 15 years ago.

Home ownership rates continue to decline in Australia as investors buy a greater share of the housing supply which subsequently increases pressure on renting and lowers owner occupation. Australia now has lower rates of outright ownership than owning with a mortgage, and investors make up nearly half of our home purchases. Housing is subsidised by the federal government via tax concessions. Home owners face no capital gains tax while investors have a capital gains tax discount of 50% and are able to deduct loses incurred through maintenance and interest payments. Some renters are subsidised through Commonwealth Rent Assistance but it is estimated that owners receive an average of $8000 per annum and investors $4000, while renters receive $1000.

These tax arrangements distort the Australian housing market, increase competition for limited supply, inflate house prices and unfairly advantage investors over owner-occupiers and lessors over lessees. This has contributed to a shortage of affordable rental housing available to low-income households of 500,000 dwellings due to frustrated prospective owners displacing other renters from available properties.3 These issues contribute significantly to Australia’s rising rate of homelessness……

As property prices have grown faster in the cities and in certain states such as NSW, Vic and WA, more people in those areas have been entering the rental market. As a result, renters in regional areas are more likely to have been renting for over five years (79%) than those in metro areas (64%). Meanwhile more renters in WA (41%), Vic (40%) and NSW (30%), including Sydney or Melbourne (39%) specifically, have been renting for less than five years than those in Qld (24%), SA (22%) or the other states and territories (28%). This suggests that more Australians have entered the rental market only recently in Vic, WA and metro areas, notably Sydney and Melbourne……

Most renters personally pay between $201 and $400 a week (53%), with 30% of renters paying $200 or less and 16% paying over $400. Unsurprisingly this varies considerably based on location, income and other factors. For example, 49% of renters in metro areas personally pay more than $301 a week in rent versus roughly a quarter in regional areas and 42% of renters overall. This rises to 55% for renters in Australia’s two largest cities – Sydney and Melbourne. Meanwhile, in these cities almost three quarters of renters live in households where the total rent is more than $301 a week. This aligns with the Rental Affordability Index data that found the median rent in Sydney in 2016 was $480 per week……

Many regional areas of Australia are more affordable but some also display unaffordable rents, especially for low and moderate income households. East and west coastal zones often display affordability levels similar to capitals…..

Despite recent talk of an over-supply of rental properties, Australia remains a landlord’s market with three quarters of renters believing that competition between applicants is fierce. As a result, prospective renters don’t feel like they can ask for changes and need to simply take what is on offer (62%), and worry that they’ll need to offer more money if they want to secure a place to live (55%). Renters also feel like the amount of information they are required to give for an application is excessive (60%) and unreasonable (46%). This creates concerns over privacy, with some renters (45%) fearing that their information will not be handled in accordance with the law. While renters largely agree that the application process is transparent (39%), 22% do not……

A sizable minority of renters (8%) are currently living in properties they regard as needing urgent repairs. This includes one in ten of those renting a house and 11% of women. People on a rolling lease are more likely to live in a property in need of urgent repairs (14%) than those on fixed-term leases. Renters in NSW (10%) and SA (12%) are more likely to report needing urgent repairs than those in Vic (6%) and NT, Tas and the ACT (2%). Meanwhile, 30% of renters report requiring non-urgent repairs to their property.

Only a quarter of renters report not having ever experienced any problem with their current property. In fact, many renters have experienced quite severe problems. For example, one in five renters have experienced leaking or flooding while the same amount have had mould that reappears or is difficult to remove – which poses a health risk…..

While many renters have experienced problems, not all have received adequate or prompt responses from their agent or landlord. Of all renters, just under a quarter received no response at all to their request for a repair. Meanwhile 21% had to wait over a week to even get a response about an urgent repair and 23% had to wait over a month to get a response for a nonurgent repair. Not only are renters not getting timely responses, but they can also face adverse consequences when they speak up. 11% of renters copped a rent hike after requesting a repair and 10% said that their landlord or agent became angry after they requested a repair. Some renters have even faced eviction for making a complaint (2%), requesting a repair (2%) or for taking their complaint to a third party like a tribunal or a tenants’ rights organisation (2%). Renters also had experiences with landlords that would access the property unannounced (6%) and take photos during inspections without permission (5%). One in ten renters also reported that they had experiences with routine inspections being arranged at times that were inconvenient…..

The experience of renters differs depending on whether they lease directly through a landlord or through a real estate agent. Of the renters who rent through a landlord and currently need repairs to their property, 75% have raised the repair with their landlord. Eighty-four percent of people renting through a real estate agent have raised their need for a repair. People renting through an agent are much more likely to have raised the issue multiple times (62%) than those renting through a landlord (41%). Overall about a fifth of renters received a positive response (all requested repairs have or will be carried out), regardless of renting through an agent or landlord, with 8% and 7% receiving a negative response respectively. Fourteen percent of those renting through an agent did not receive any response after raising a need for repair, while 10% of those renting through a landlord did not receive any response. And of those renting through a landlord, 64% received a mixed response (having some of the requested repairs completed, others not), compared to 56% of those renting through an agent…..

Half of all renters report having experienced some form of discrimination when looking for a rental property in the last five years. This includes discrimination for having a pet (23%), for receiving government payments (17%), on the basis of age (14%), for having young children (10%) and being a single parent (7%). Discrimination on the basis of race (6%), for needing to use a bond loan (5%), gender (5%), disability (5%) and sexuality (2%) are also experienced, though are less common. Older renters are much less likely to report discrimination. In fact only 20% of renters over 65 reported having experienced discrimination at all. Even renters aged 45-64 were less (43%) likely to report having felt discriminated against. Younger renters under the age of 35 were more likely to say they’ve been discriminated against (55%) – particularly in regard to their age (22%). Men (42%) reported less discrimination than women (56%) overall, though both were as likely to report discrimination based on gender (5%). Location also appears to have an impact, with renters in the NT, Tas and the ACT (41%) less likely to report discrimination and renters in SA (61%) much more likely to.

The impact of income on discrimination is mixed. For example households earning between $70,001 and $100,000 (41%) were less likely to report discrimination, while households earning between $100,001 and $150,000 were more likely to (55%). Fifty-seven percent of households earning less than $35,000 said they had been discriminated against, 62% of households earning $35,001–50,000 and 60% of households earning $50,001–70,000. However, the nature of the discrimination people reported experiencing varied greatly – those on low incomes were much more likely to have faced discrimination for receiving a government payment, for being a single parent, or based on their race or on their disability. Households on higher incomes were more likely to face discrimination for having young kids and having a pet. Renters who have previously had a disagreement with a landlord or agent about bond are the most likely to report discrimination (75%).

Read the full report here.

Call to make Byron Bay rental properties pet friendly - community forum 7 pm 23 November 2016 at RSL

Bliss Communications, media release, 14th November 2016:

Byron Bay To Be First City in Australia To Have Pets Are Welcome Policy

Welfare advocate Karen Justice is leading the way to bring in a Pets Are Welcome Policy to Byron Bay to curb the high number of animals surrendered because of housing restrictions.   

“Sadly 36 percent of cats and dogs that end up in shelters and pounds are there because their owner can’t find pet friendly accommodation,” said Ms Justice.

“The horrifying statistic is 20,000 family pets per year are surrendered to the RSPCA alone because landlords say no to animals,” she said.

“As at July 2016 Australia’s major cities and surrounding suburbs have the following amount of “pets allowed rentals” as compared to total available rentals – Sydney – 2%, Melbourne 1%, Brisbane 8%, Darwin 5%, Perth 4%, Adelaide 4%, and Hobart 12%.”

“Renting in Byron Bay with a pet is almost impossible and in extreme cases people have ended up homeless because they can’t part with their pet.”

“I’m forming a Community Council to try and educate others about the benefits of having pet friendly accommodation.”

“I’m inviting real estate agents, strata management, and local council members to be part of this Community Council to put Byron Bay on the map for making a difference in animal welfare.”

“The Community Council can help re-educate landlords about the benefits of pet friendly accommodation and lobby the NSW Government to introduce strata by laws that welcome pets rather than discourage them.”

“Not allowing pets into homes only leads to dogs and cats unnecessarily being killed and their owners left distraught because they have lost a loved one.”

“I want Byron Bay to show the rest of Australia that it can be done – an across the board Pets Are Welcome Policy – to see a huge drop in animals left at shelters.”

“It’s a bold plan but something has to be done or more and more animals will be killed because a landlord won’t let them into their homes.”

Ms Justice said the benefits of pet friendly accommodation are :

1.     Saving Lives : Allowing pets into homes means owners don’t need to surrender them to shelters and pounds which means less animals are put to sleep.

2.     Health Benefits : There is scientific proof having a pet makes people happy and healthier.

3.     Rental Longevity : Tenants with pets tend to stay in rental properties longer saving landlords time and money rather than face uncertainty of securing another rental property.

Ms Justice believes if one city can do it then the rest of Australia might just follow.

A community forum is being held on Wednesday 23 November 2016 between 7pm and 9pm at Byron Bay RSL 

Facebook allows real estate agents to place online advertisements with undisclosed racial exclusions

ProPublica, 28 October 2016:

Imagine if, during the Jim Crow era, a newspaper offered advertisers the option of placing ads only in copies that went to white readers.

That’s basically what Facebook is doing nowadays.

The ubiquitous social network not only allows advertisers to target users by their interests or background, it also gives advertisers the ability to exclude specific groups it calls “Ethnic Affinities.” Ads that exclude people based on race, gender and other sensitive factors are prohibited by federal law in housing and employment.

Here is a screenshot of a housing ad that we purchased from Facebook’s self-service advertising portal:

The ad we purchased was targeted to Facebook members who were house hunting and excluded anyone with an “affinity” for African-American, Asian-American or Hispanic people. (Here’s the ad itself.)

When we showed Facebook’s racial exclusion options to a prominent civil rights lawyer John Relman, he gasped and said, “This is horrifying. This is massively illegal. This is about as blatant a violation of the federal Fair Housing Act as one can find.”

The Fair Housing Act of 1968 makes it illegal "to make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on race, color, religion, sex, handicap, familial status, or national origin.” Violators can face tens of thousands of dollars in fines.

The Civil Rights Act of 1964 also prohibits the “printing or publication of notices or advertisements indicating prohibited preference, limitation, specification or discrimination” in employment recruitment.

Facebook’s business model is based on allowing advertisers to target specific groups — or, apparently to exclude specific groups — using huge reams of personal data the company has collected about its users. Facebook’s microtargeting is particularly helpful for advertisers looking to reach niche audiences, such as swing-state voters concerned about climate change. ProPublica recently offered a tool allowing users to see how Facebook is categorizing them. We found nearly 50,000 unique categories in which Facebook places its users.

Facebook says its policies prohibit advertisers from using the targeting options for discrimination, harassment, disparagement or predatory advertising practices.

“We take a strong stand against advertisers misusing our platform: Our policies prohibit using our targeting options to discriminate, and they require compliance with the law,” said Steve Satterfield, privacy and public policy manager at Facebook. “We take prompt enforcement action when we determine that ads violate our policies."

Satterfield said it’s important for advertisers to have the ability to both include and exclude groups as they test how their marketing performs. For instance, he said, an advertiser “might run one campaign in English that excludes the Hispanic affinity group to see how well the campaign performs against running that ad campaign in Spanish. This is a common practice in the industry.”

He said Facebook began offering the “Ethnic Affinity” categories within the past two years as part of a “multicultural advertising” effort.

Satterfield added that the “Ethnic Affinity” is not the same as race — which Facebook does not ask its members about. Facebook assigns members an “Ethnic Affinity” based on pages and posts they have liked or engaged with on Facebook.

When we asked why “Ethnic Affinity” was included in the “Demographics” category of its ad-targeting tool if it’s not a representation of demographics, Facebook responded that it plans to move “Ethnic Affinity” to another section.

Facebook declined to answer questions about why our housing ad excluding minority groups was approved 15 minutes after we placed the order.

By comparison, consider the advertising controls that the New York Times has put in place to prevent discriminatory housing ads. After the newspaper was successfully sued under the Fair Housing Act in 1989, it agreed to review ads for potentially discriminatory content before accepting them for publication.

Northern Rivers Homeless Forum, Thursday 21 July 2016 at Lennox Head

Australian Federal Election 2016: right-wing propaganda running wild

This scare campaign is looking suspiciously as though it is being made up as the proponents go along.

The Sydney Morning Herald, 23 May 2016:

Research intended for use in a bid to discredit Labor's negative gearing campaign was commissioned after a meeting between Scott Morrison and a close friend and senior figure in Australia's property industry.

But the draft report contains a series of factual errors and makes bold claims of a "resale price cliff" and "social dysfunction" that have alarmed some in the real estate industry to whom it has been circulated.

An email obtained by Fairfax Media shows Greg Paramor, the managing director of property company Folkestone, discussed the need for a study critiqueing Labor's policy with Brian Haratsis, the executive chairman of advisory firm MacroPlan Dimasi. Mr Paramor, who is a friend of Mr Morrison and former president of the Australian Property Council, made the request after his encounter with the Treasurer.

"Greg recently had the opportunity to meet with The Hon. Scott Morrison to discuss negative gearing," the email notes. "As a result of that meeting, Greg agreed to provide a report to the Treasurer – he asked Brian Haratsis to undertake a study on the impact of the proposed negative gearing changes."

The email, sent from an unnamed person inside Mr Paramor's company, was sent to senior industry figures last week.

It also asks for feedback as "the Treasurer is keen to get the report next week".

Entitled "Short Memory: Negative Gearing and Capital Gains Tax: Foundations of the New Australian Housing Model," the attached draft report is also presented with an alternative title: "Shortened Memory".

It claims Labor's policy would remove 205,000 dwellings from the rental housing stock over a decade, adding to housing stress. Asked why removing dwellings from the rental stock would add to housing stress when the dwellings would still be available for use, Mr Haratsis said the phrase was meant to refer to low-income rental dwellings.

Illustration: Ron Tandberg

The draft says Labor's policy would both make housing less affordable and create a "resale price cliff" as large numbers of apartments were sold at a loss. Mr Haratsis explained the apparent contradiction by saying the market was bifurcated and that different parts of it would react differently….

The Treasurer's office denied he had asked for a report to be prepared or that he or his office had received copies.

The report also says Australian governments would need to stump up an extra $3.3 billion per year for social housing and rent assistance should Labor's policy became law, more than the $3.2 billion per year it would raise.

The total economic cost of Labor's policy would be $5 billion per year, a reference Mr Haratsis said has since been removed from the document after acknowledging that it was arrived at by adding up payments without subtracting receipts.

"I am writing this as we go, and there are a number of references that you are looking at that won't be there in the final," he said. "I want to go back and recalculate the numbers."

Prepared in haste with what appears to have been a speech recognition program, the draft at one point refers to Labor's promise to "grandfather" the entitlements of existing investors as a promise to create "ground furthered" properties.

The leaking of the report potentially blunts another avenue of attack on Labor's plan to restrict negative gearing to new properties only and halve the capital gains tax discount to 25 per cent, which has been the subject of a fierce government scare campaign.

Mr Haratsis insisted it was his decision to initiate the report after his meeting with Mr Paramor, that he would fund the work himself and that it was planned for release next week - at which point "I could maybe give it to the Treasurer".

The report critiques organisations such as the Grattan Institute, which engages in "Robin Hood economics" and chooses to "ostracise high income individuals" instead of focusing on tax efficiency.

Short Memory Alternative Title – Shortened Memory by The Guardian

Former Australian Treasurer Joe Hockey's 'gift' to all property owners across the nation

Australian Financial Review, 13 August 2015

The Australian, 19 May 2016:

The current mess was created when former treasurer Joe Hockey caved into pressures to curb Chinese investment in Australian residential property in 2015. In the process, the treasurer was convinced by the Australian Taxation Office to widen the net to cover local residents.

Parliament was being bombarded with tax legislation at the time and the Canberra politicians did not pick up what the ATO had done.

So, fasten your seats belts for a horror commentary.

I was alerted to the position by one of Australia’s top commercial/tax barristers, John Fickling of WA. I am using many of Fickling’s words in describing what is about to happen.

If you purchase a property worth $2m or more on or after July 1 2016, you will be required to withhold 10 per cent of the purchase price and remit it to the ATO UNLESS the vendor is able to provide a special purpose tax resident’s “clearance certificate” from the ATO. It does not matter if the vendors were born in Australia and have lived all their lives in Australia — unless they have that clearance certificate, they are classed as a foreigner and the buyer must send 10 per cent of the purchase price to the tax office.

In case you think I’m kidding, read the ATO’s exact words: “A vendor who sells the following assets is also a relevant foreign resident, even if they are an Australian resident for other tax purposes.

The definition of property is very wide and includes leaseholds but does not include stock exchange investments. A purchaser who does not receive a “clearance certificate” from the vendor and does not send 10 per cent of the purchase price off to the ATO will still be liable to pay that 10 per cent to the ATO plus, almost certainly, will have to pay severe additional penalties and interest. The economics of buying the property will be severely damaged.

Fickling says all real estate agents selling $2m plus properties should be considering how this new regime will impact on their business and what will be the contractual consequences under the different scenarios that could play out.

For example, banks and other financiers may be affected where their secured debt exceeds 90 per cent of the value of the selling price. In a situation where the owner is being forced to sell, the banks will be better to take possession and sell themselves rather than being caught in the “tax clearance” delays.

To be fair, in the vast majority of cases local resident vendors will have no problem obtaining a “clearance certificate”.

However, for locals it might increase their risk of a tax audit and there are clear hazards for property sellers who:

Have not filed tax returns for many years;

Have filed tax returns, which would indicate they could not afford such a property;

Are selling their residential house at the same time as their neighbours to a single developer, which may give rise to a profit making scheme (such that the principal residence capital gains tax exemption may not apply to the value uplift generated by selling the properties together); or

Where the ATO has gathered information that indicates the vendor is in the business of developing property, which means that the principal residence capital gains tax exemption may not apply.

Fickling says in extreme cases action could potentially be taken by the ATO prior to the sale, to freeze the transaction.

Those who see any of the above as dangers might consider selling in a hurry (before July 1), so there might be some property bargains for buyers in coming weeks.

It’s also important to note that the $2m is “hard-coded” into the legislation, so, as property prices increase, more vendors will be caught. Over time, the ATO may shift their audit target identification processes to $2m-plus property vendors and away from other areas.

Additionally, if the vendor has a tax debt, the application for a “clearance certificate” may in some circumstances involve the ATO seeking to recover some or all of that tax debt from the purchaser by way of a garnishee notice.

At this point, it is worth noting that we are giving the Australian Taxation Office another weapon to recover tax legitimately owed and that is a good thing for society.

The great danger is the complexity created and that currently the tax office is badly run and is operating outside the law in key small business areas. It knows it can’t be challenged because of the cost of court cases.

Meanwhile, the legislation is yet another blow being aimed at Chinese and other Asian investors in property. These blows have come separately and each one has had reasonable motivations. But, in combination, they could inflict severe damage to the apartment and other parts of the residential property market.

Chinese and other Asian investors face a Hobson’s choice. They will not enjoy getting a tax clearance but nor will they appreciate the buyer of their property taking 10 per cent off the purchase price.

And if the tax office treats locals illegally, what might they do to foreigners?

Australia desperately needs greater independent supervision of the tax office.

In case readers imagine that high property prices are confined to large metropolitan areas a quick look at realestate.com.au will dispel that view – within the NSW Northern Rivers there are currently 7 properties in Yamba and environs with a sale value of $2 million and over, 4 in the Grafton area, 6 in Kyogle, 9 in the Lismore region, 35 in the Ballina district, 78 in the Byron Bay greater region and 46 in the Tweed local government area.

Federal Election 2016: Malcolm Bligh Turnbull and housing affordability

On 4 May 2016 this on-air exchange occurred between ABC 774 Radio presenter Jon Faine and Prime Minister Malcolm Bligh Turnbull:

JON FAINE: " Yeh but my question was specifically about the intergenerational aspects of it. It’s  [negative gearing] creating conflict with effectively the kids of your and my generation, who can't get into the market and they're saying oh for goodness sake you baby boomers, you just want everything and you're locking us out.”

MALCOLM TURNBULL: "Are your kids locked out of the housing market?"

JON FAINE: "Yes"

MALCOLM TRUNBULL: "Well you should shell out for them, you should support them, a wealthy man like you"

JON FAINE: "That's what they say" [laughing]

MALCOLM TURNBULL: "Exactly. There you go. See you've got the solution in your own hands”

JON FAINE: “That’s hardly national policy”

MALCOLM TURNBULL: You can provide a bit of inter-generational equity in the Faine family"

There is a reason why Turnbull can be so casually dismissive of concerns about home ownership and housing affordability and, it can be found in his privileged background.

Domain.com.au:

Title records show that Mr Turnbull was a law student at Sydney University when he spent $17,000 on a worker’s semi on Newtown’s Wells Street. At the time he was far from a struggling student kicking around the backstreets of the inner west. He was already a Point Piper resident, with corporate records showing he lived in the Longworth Avenue apartment owned by his late father, hotel broker Bruce Turnbull.

That Newtown investment property was likely Mr Turnbull’s first windfall from the Sydney property market. He sold it in 1981 for $68,000, quadrupling in value over the three years.

The year after his Newtown purchase title records show the Rhodes scholar (or “student” according to the property transfer) bought a terrace on Redfern’s Great

Long before Malcolm Turnbull ascended to the highest political office in the country and took the keys to his official Sydney residence Kirribilli House, he had already amassed a fortune – much of it from Sydney’s property market.

The 29th prime minister has come a long way from his 1978 first-home purchase in Newtown, to his $50 million-plus trophy waterfront home in Point Piper.

Privately educated Malcolm Turnbull was 23 or 24 years old, son of a successful property speculator and a recent university graduate, when he purchased his first property in 1978.

By the end of 1982 this now married practicing lawyer was a member of the Liberal Party, had inherited an est. $2 million in assets, become a grazier and acquired a second investment property – all the while residing in a Point Piper flat owned by his father.

Five years later he was an investment banker at Whitlam Turnbull & Co. Ltd.

By the time he entered parliament as the Member for Wentworth in 2004 he was reputedly worth $133 million.

Turnbull’s fortune continues to grow.

This is a man who has never known Struggle Street. 

Something you may have missed in this month's news cycle

Before he entered federal parliament in 2004 Australian Prime Minister Malcolm Bligh Turnbull was Chairman and Managing Director of Goldman Sachs Australia from 1997 to 2001 and a Partner in Goldman Sachs and Co from 1998 to 2001.

In 2009 it was reported that Goldman Sachs made a confidential settlement on his behalf in the matter of the HIH collapse.

To this day he still invests with Goldman Sachs and, this month that investment bank paid US$5.06 billion in civil penalties for serious misconduct which contributed to the Global Financial Crisis (GFC) of 2008. 

Department of Justice

Office of Public Affairs

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FOR IMMEDIATE RELEASE

Monday, April 11, 2016

Goldman Sachs Agrees to Pay More than $5 Billion in Connection with Its Sale of Residential Mortgage Backed Securities

The Justice Department, along with federal and state partners, announced today a $5.06 billion settlement with Goldman Sachs related to Goldman’s conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007.  The resolution announced today requires Goldman to pay $2.385 billion in a civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and also requires the bank to provide $1.8 billion in other relief, including relief to underwater homeowners, distressed borrowers and affected communities, in the form of loan forgiveness and financing for affordable housing.  Goldman will also pay $875 million to resolve claims by other federal entities and state claims.  Investors, including federally-insured financial institutions, suffered billions of dollars in losses from investing in RMBS issued and underwritten by Goldman between 2005 and 2007. 

“This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail,” said Acting Associate Attorney General Stuart F. Delery.  “This $5 billion settlement includes a $1.8 billion commitment to help repair the damage to homeowners and communities that Goldman acknowledges resulted from its conduct, and it makes clear that no institution may inflict this type of harm on investors and the American public without serious consequences.” 

“Today’s settlement is another example of the department’s resolve to hold accountable those whose illegal conduct resulted in the financial crisis of 2008,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Viewed in conjunction with the previous multibillion-dollar recoveries that the department has obtained for similar conduct, this settlement demonstrates the pervasiveness of the banking industry’s fraudulent practices in selling RMBS, and the power of the Financial Institutions Reform, Recovery and Enforcement Act as a tool for combatting this type of wrongdoing.”

“Today’s settlement is yet another acknowledgment by one of our leading financial institutions that it did not live up to the representations it made to investors about the products it was selling,” said U.S. Attorney Benjamin B. Wagner of the Eastern District of California.  “Goldman’s conduct in exploiting the RMBS market contributed to an international financial crisis that people across the country, including many in the Eastern District of California, continue to struggle to recover from.  I am gratified that this office has developed investigations, first against JPMorgan Chase and now against Goldman Sachs, that have led to significant civil settlements that hold bad actors in this market accountable.  The results obtained by this office and other members of the RMBS Working Group continue to send a message to Wall Street that we remain committed to pursuing those responsible for the financial crisis.”

The $2.385 billion civil monetary penalty resolves claims under FIRREA, which authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud.  The settlement expressly preserves the government’s ability to bring criminal charges against Goldman, and does not release any individuals from potential criminal or civil liability.  In addition, as part of the settlement, Goldman agreed to fully cooperate with any ongoing investigations related to the conduct covered by the agreement.

Of the $875 million Goldman has agreed to pay to settle claims by various other federal and state entities: Goldman will pay $575 million to settle claims by the National Credit Union Administration, $37.5 million to settle claims by the Federal Home Loan Bank of Des Moines as successor to the Federal Home Loan Bank of Seattle, $37.5 million to settle claims by the Federal Home Loan Bank of Chicago, $190 million to settle claims by the state of New York, $25 million to settle claims by the state of Illinois and $10 million to settle claims by the state of California.

Goldman will pay out the remaining $1.8 billion in the form of relief to aid consumers harmed by its unlawful conduct.  $1.52 billion of that relief will be paid out pursuant to an agreement with the United States that Goldman will provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country, as well as financing for affordable rental and for-sale housing throughout the country.  This agreement represents the largest commitment in any RMBS agreement to provide financing for affordable housing—a crucial need following the turmoil of the financial crisis.  $280 million will be paid out by Goldman pursuant to an agreement separately negotiated with the state of New York.

The settlement includes a statement of facts to which Goldman has agreed.  That statement of facts describes how Goldman made false and misleading representations to prospective investors about the characteristics of the loans it securitized and the ways in which Goldman would protect investors in its RMBS from harm (the quotes in the following paragraphs are from that agreed-upon statement of facts, unless otherwise noted):

• Goldman told investors in offering documents that “[l]oans in the securitized pools were originated generally in accordance with the loan originator’s underwriting guidelines,” other than possible situations where “when the originator identified ‘compensating factors’ at the time of origination.”  But Goldman has today acknowledged that, “Goldman received information indicating that, for certain loan pools, significant percentages of the loans reviewed did not conform to the representations made to investors about the pools of loans to be securitized.”
• Specifically, Goldman has now acknowledged that, even when the results of its due diligence on samples of loans from those pools “indicated that the unsampled portions of the pools likely contained additional loans with credit exceptions, Goldman typically did not . . . identify and eliminate any additional loans with credit exceptions.”  Goldman has acknowledged that it “failed to do this even when the samples included significant numbers of loans with credit exceptions.” 
• Goldman’s Mortgage Capital Committee, which included senior mortgage department personnel and employees from Goldman’s credit and legal departments, was required to approve every RMBS issued by Goldman.  Goldman has now acknowledged that “[t]he Mortgage Capital Committee typically received . . . summaries of Goldman’s due diligence results for certain of the loan pools backing the securitization,” but that “[d]espite the high numbers of loans that Goldman had dropped from the loan pools, the Mortgage Capital Committee approved every RMBS that was presented to it between December 2005 and 2007.”  As one example, in early 2007, Goldman approved and issued a subprime RMBS backed by loans originated by New Century Mortgage Corporation, after Goldman’s due diligence process found that one of the loan pools to be securitized included loans originated with “[e]xtremely aggressive underwriting,” and where Goldman dropped 25 percent of the loans from the due diligence sample on that pool without reviewing the unsampled 70 percent of the pool to determine whether those loans had similar problems.
• Goldman has acknowledged that, for one August 2006 RMBS, the due diligence results for some of the loan pools resulted in an “unusually high” percentage of loans with credit and compliance defects.  The Mortgage Capital Committee was presented with a summary of these results and asked “How do we know that we caught everything?”  One transaction manager responded “we don’t.”  Another transaction manager responded, “Depends on what you mean by everything?  Because of the limited sampling . . . we don’t catch everything . . .”  Goldman has now acknowledged that the Mortgage Capital Committee approved this RMBS for securitization without requiring any further due diligence.   
• Goldman made detailed representations to investors about its “counterparty qualification process” for vetting loan originators, and told investors and one rating agency that Goldman would engage in ongoing monitoring of loan sellers.  Goldman has now acknowledged, however, that it “received certain negative information regarding the originators’ business practices” and that much of this information was not disclosed to investors. 
• For example, Goldman has now acknowledged that in late 2006 it conducted an internal analysis of the underwriting guidelines of Fremont Investment & Loan (an originator), which found many of Fremont’s guidelines to be “off market” or “at the aggressive end of market standards.”  Instead of disclosing its view of Fremont’s underwriting, Goldman has acknowledged that it “[u]ndertook a significant marketing effort” to tell investors about what Goldman called Fremont’s “commitment to loan quality over volume” and “significant enhancements to Fremont underwriting guidelines.”  Fremont was shut down by federal regulators within several months of these statements.
• In another example, Goldman was aware in early-mid 2006 of certain issues with Countrywide Financial Corporation’s origination process, including a pattern of non-responsiveness and inability to provide sufficient staff to handle the numerous loan pools Countrywide was selling.  In April 2006, while Goldman was preparing an RMBS backed by Countrywide loans for securitization, a Goldman mortgage department manager circulated a “very bullish” equity research report that recommended the purchase of Countrywide stock.  Goldman’s head of due diligence, who had just overseen the due diligence on six Countrywide pools, responded “If they only knew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .”
• Meanwhile, as Goldman has acknowledged in this statement of facts, “[Around the end of 2006], Goldman employees observed signs of uncertainty in the residential mortgage market [and] by March 2007, Goldman had largely halted new purchases of subprime loan pools.”  

Assistant U.S. Attorneys Colleen Kennedy and Kelli Taylor of the Eastern District of California investigated Goldman’s conduct in connection with RMBS, with the support of the Federal Housing Finance Agency’s Office of the Inspector General (FHFA-OIG) and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).

“Goldman Sachs had a fiduciary responsibility to investors, which they blatantly side stepped,” said Deputy Inspector General for Investigation Rene Febles of FHFA-OIG.  “They knowingly put investors at risk and in so doing contributed significantly to the financial crisis.  The losses caused by this irresponsible behavior deeply affected not only financial institutions but also taxpayers and one can only hope that Goldman Sachs has learned the difference between risk and deceit.  Two Federal Home Loan Banks suffered significant losses so we are pleased to see both entities receive a portion of this settlement.  We will continue to work with our law enforcement partners to hold those accountable who have engaged in misconduct.”

“Goldman took $10 billion in TARP bailout funds knowing that it had fraudulently misrepresented to investors the quality of residential mortgages bundled into mortgage backed securities,” said Special Inspector General Christy Goldsmith Romero for TARP.  “Many of these toxic securities were traded in a taxpayer funded bailout program that was designed to unlock frozen credit markets during the crisis.  While crisis investigations take time, SIGTARP is committed to working with our law enforcement partners to protect taxpayers and bring accountability and justice.”

The settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered tens of billions of dollars on behalf of American consumers and investors for claims against large financial institutions arising from misconduct related to the financial crisis.  The RMBS Working Group brings together attorneys, investigators, analysts and staff from multiple state and federal agencies, including the Department of Justice, U.S. Attorneys’ Offices, the FBI, the U.S. Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, SIGTARP, the Federal Reserve Board’s OIG, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network and multiple state Attorneys General offices around the country.  The RMBS Working Group is led by Director Joshua Wilkenfeld and five co-chairs: Principal Deputy Assistant Attorney General Mizer, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Director Andrew Ceresney of the SEC’s Division of Enforcement, U.S. Attorney John Walsh of the District of Colorado and New York Attorney General Eric Schneiderman.  This settlement is the fifth multibillion-dollar RMBS settlement announced by the working group.

Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at www.StopFraud.gov.