The Rise of the Machines – Why Automation is Different this Time

(Edwin Waters) #21

I live in Perth so I won’t be able to talk at the pub.

I said a JG can’t replace traditional state jobs. Some JG supporters claim that the unemployed could be put to work in jobs like park maintenance, or filling in potholes, or being carers in aged care centres. But actually these can’t be done by a JG because they are not jobs that you can stop and start abruptly or fill with minimum-wage workers.

You wouldn’t classify current work for the dole jobs as being “state jobs” would you? Just looking at this website: you wouldn’t categorise “Community Lunch Clean Up Team” as being a public sector job or “Dog Loving Yard Person”.

Other examples of a JG would be these:

Or a hackerspace.

What do communities need? people are providing services outside of the private/public sector and are working for free. The JG would pay them for providing the services they are currently providing. It doesn’t make sense for people to continue to work for free. Also the JG wouldn’t stop and start, the number of workers would reduce as a result of the private sector recovering and if these services were determined as being public goods then why wouldn’t they become public service jobs after the economy recovered? people don’t stop needing food when the private sector starts hiring people.

As Jesse mentioned, Australia had a policy of full employment. This policy lasted for 30 years so I am unsure as to why a JG wouldn’t be embraced when there is data available for this policy which was between 1945-1975.

The difference between the JG and work for the dole is that the JG isn’t mandatory and would pay $40,000 a year. It has also been proposed to have a means-test basic income provided along side it, paying $20,000. Don’t want to participate in the JG? no problem, you won’t be forced to. You can live on the lower BI payment.

(Jesse Hermans) #22

Yeah we can talk more at the congress on Sunday if you’re attending.

Regarding the problem of some jobs being “switch on/off” relatively quickly, the previous blog post I linked to talks about a “cyclical” and “structural” component of the JG. Modelling has demonstrated that within the JG pool it is estimated little more than 25% of the total job pool will actually fluctuate with the business cycle, with the rest of the job guarantee core being more stable and structural.
This structural core component of the JG can be more adapted to conventional jobs which aren’t subjected to rapid “switch off/on” dynamics, while the more unconventional jobs which are flexible can be reserved for the outer cyclical shell which fluctuates with the business cycle.

All these problems have been discussed with at length and dealt with in the literature over the last 30 years. They are neither new nor insurmountable criticisms.

"The cyclical nature of the jobs suggests that in designing the appropriate Job Guarantee jobs the buffer stock should be split into two components:

  • a core component that represents the ‘average’ buffer stock over the typical business cycle given government policy settings, trend private spending growth, and a mismatch of labor force characteristics and employer preference.

  • a transitory component that fluctuates around the core as private demand ebbs and flows.

The business cycle fluctuations of employment are not nearly as large as people would like to believe. We have estimated that the total fluctuation between peak and trough in the Job Guarantee pool would perhaps be in the range of 25 per cent of the pool.

So there will be a fairly steady core of workers always in the pool. Nothing like from zero in a boom to millions in a recession.

Modelling can provide a guide to the ‘steady-state’ jobs that would be initially offered under the Job Guarantee scheme.

Administrators would then prioritise work allocations from a broad array of community enhancing activities. In this way, it is unlikely that any important function or service would be terminated abruptly, due to a lack of buffer stock workers, when the private demand for labour rises.

Thus, the design and nature of Job Guarantee jobs would reflect the underlying notion of a buffer stock.

This stock would, in turn, have a ‘steady-state’ or core component determined by government macroeconomic policy settings, and a transitory component determined by the vagaries of private spending.

In the short-term, the buffer stock would fluctuate with private sector activity and workers would move between the two sectors as demand changes.

Longer-term changes in the size of the average buffer stock would reflect discrete changes in government policy.

It is in this context that we argued for the existence of a stable core, which might change slowly and predictably as government policy settings change, and which would allow Job Guarantee administrators to more easily allocate workers to jobs.

Many of these core jobs would be more or less permanent. More ephemeral Job Guarantee activities could then be designed to ‘switch on’ when private demand declined below trend.

These activities would not be used to deliver outputs that might be required on an ongoing basis, but would still advance community welfare.

For example, Job Guarantee jobs in a particular region might be used to provide regular shopping or gardening services for the frail aged, to support the desire of many older persons to remain in their own homes.

It would not be sensible to make the provision of these services transitory or variable, and they would thus be provided from the core buffer.

Clearly, these services could be reassigned to become ‘mainline public sector’ work if a political shift in thinking occurred.

The structure of these jobs and the remuneration paid would however not be altered as a consequence of this political shift. Other ‘off-the-shelf’ projects would be undertaken or completed only when the Job Guarantee pool expanded sufficiently."

(Jesse Hermans) #23


"Another example of how we considered the buffer stock nature of the Job Guarantee is a Report my research group in Australia issued in 2008 following a detailed study that involved a large national survey of local governments in Australia. We sought to develop an inventory of jobs that satisfy several principles (see below).

These jobs would be accessible to the lowest skilled workers, generate benefits by way of meeting unmet demand for community development, personal care and/or environmental care services and more.

We sought detailed information from local governments on the type of jobs they could supervise that satisfied these criteria, including supervision and capital equipment costs and other relevant factors.

The Final Report (released December 1, 2008) – Creating effective local labour markets: a new framework for regional employment policy – developed a new framework for the design of regional employment policy.

It emphasises increased public sector infrastructure spending, the implementation of a National Skills Development framework and the introduction of a national Job Guarantee.

So similar aims to the Marshall Plan for America proposed by CAP. But our Report was not a blog post – it was, rather, 300 pages long and the result of 3-years of research.

It was funded by the Australian government and an industry partner Jobs Australia through one of the competitive funding schemes that operate in Australia (along the lines of the ESRC in the UK or the NSF in the US).

While some of the institutional detail is designed to talk to Australian readers, the general principles outlined in that Report (and also in many other academic papers by myself and my MMT colleagues) is applicable anywhere.

That Report specifically considered implementation issues that would arise with a Job Guarantee.

We noted that the design and implementation choices of any public policy can significantly determine its impact, the devil being in the detail. As such we sought to enunciate a clear implementation model that was intended to address concerns that people might raise in the context of a Job Guarantee.

Relevant here was the issue of ‘real jobs’.

We noted that some of the theoretically necessary design features of the Job Guarantee system are considered by some to undermine the likelihood that ‘quality work’ will be performed under the scheme.

The justification for creating a Job Guarantee job is to provide work which is accessible to the most disadvantaged unemployed workers.

But it is also intended that the work performed delivers a ‘net social benefit’ or enables ‘greater utilisation of an individual’s capacity’.

If these criteria were used to determine the existence of supposedly ‘real jobs’ in the private and public sector, many would be abandoned.

But the existence of socially harmful and degrading jobs in these sectors does not preclude the possibility of them also occurring under a Job Guarantee, so the question of how the value of these jobs will be determined is legitimate.

Whereas market-driven services are supplied according to how much people are prepared to pay for them, and public services generally respond to usage levels, Job Guarantee work is not intended to increase or decrease in response to changing demand for the Job Guarantee work itself, but to accommodate falling and rising private sector demand for labour.

This appears to disengage the work performed under the Job Guarantee from standard ways of estimating its value.

If it transpired that performing this work made little difference to the overall well-being of the community, not only would it seem a waste of public resources that could have been more beneficially expended elsewhere, but those engaged in performing the work could become demoralised because their skills and energy were not being better utilised.

Equally, while the value of the work to the community does not determine whether Job Guarantee jobs are created or destroyed, this does not preclude the possibility that the work could be of great public benefit, although five additional theoretical parameters for the scheme could potentially reduce the scope of the Job Guarantee to deliver valued services.

The five parameters we considered were:

1. Non-rival nature of the jobs:

To serve its countercyclical function efficiently, the Job Guarantee system must not displace employment in the private or public sectors, which precludes it from delivering services which either the market or the state currently deem worthy of delivery.

This means that Job Guarantee services will address needs that are currently not profitable for the private sector to meet (because they are public goods or because potential recipients of the services cannot afford them) and which the state currently considers of such low priority as to not warrant addressing.

This does not preclude Job Guarantee services from meeting considerable unmet need in relation to the natural and social environment and among the least powerful sections of society, particularly if the system is well-engaged at the local grass-roots level, where the market and the state generally are not.

The Job Guarantee model would recognise sensitivity to local need and local control is crucial to identifying worthwhile and under-performed work

2. The Buffer Stock principle:

The Job Guarantee’s countercyclical function also requires that it does not retain workers when the private sector requires them and can induce them with an appropriate job offer to accept employment.

The operation of the Job Guarantee requires that the Government offers a fixed wage job at the effective minimum wage and never seeks to compete with market wages for workers.

The Job Guarantee is a buffer stock at all times.

If the relative attraction of the Job Guarantee work was its greater security, a sufficiently streamlined entry/exit design (that enabled immediate re-entry to the Job Guarantee) will lower resistance to accepting offers of private sector employment by eliminating risk attached to the job not working out.

The successful transition from the Job Guarantee into private sector employment would be enhanced because the workers would maintain work-related physical and mental stamina, social skills, means of transportation, and the like, capacities which are often lost during long spells of unemployment.

This would further reduce the perceived risk of the scheme.

If the relative attraction of the Job Guarantee work was that it required less effort, this would be mitigated by the degree to which Job Guarantee work achieved the standards of effort and professionalism of the private and public sectors.

These standards are not solely achieved within these sectors by either punishing sub-standard performance (for example, demoting or sacking bad workers), or rewarding above-standard performance (for example, promoting good workers).

Although the Job Guarantee’s fixed-wage and the objective of eliminating unemployment limits recourse to these strategies, it does not totally preclude them, nor does it preclude recourse to other sources of motivation used in other spheres of collective human endeavour such as sport, education, families, and voluntary associations.

If the relative attraction of Job Guarantee work is that it is better managed, safer, more dignified or more satisfying than private sector employment, the solution may be that private sector employers raise their standards in these areas.

3. The expectation of continuance:

The provision of new services that meet significant needs may raise an expectation of continuance. If the withdrawal of a highly valued Job Guarantee service threatened a public backlash, governments would be under pressure to continue the service, perhaps as a mainstream public service, which would permanently reduce private sector access to those workers.

Some Job Guarantee jobs will always need to be undertaken to eliminate unemployment because the private sector cannot do it alone.

Those Job Guarantee services that have the greatest demand for continuity, such as new forms of support for the aged and disabled, would need to be prioritised for retention over services (such as public works) that can be discontinued without significant loss of amenity.

4. The lowest common denominator principle:

Since the scheme is intended to offer all persons of working age a job to eliminate their unemployment or underemployment, there is a presumption that Job Guarantee jobs would need to be kept simple to accommodate the ‘lowest common denominator’ of skill level.

Were this so, many workers would find Job Guarantee work unchallenging and many of their skills would remain underemployed.

This issue has been successfully addressed in the past by labour market program providers by assigning different roles and responsibilities to people within a given work group, according to need and ability.

This simply requires that jobs are designed with a range of options and that supervisors possess the skills to allocate work according to worker needs and capabilities.

Job Guarantee jobs have an advantage in this regard in that they are not dependent on achieving a given level of productivity, thus allowing them to be tailored to accommodate special needs, such as those of people recovering from mental illness.

This would best be undertaken through collaborative job design with the individual, their health professionals and family. New forms of workplace support work are also potential Job Guarantee jobs.

In many respects, the flexible potential for the Job Guarantee to offer diverse employment experiences has fewer limitations than existing sources of employment.

5. No substitutability with other public employment:

Some socially useful services which address important social and economic objectives may already be partially met through permanent public sector employment.

Expansion of these services through the Job Guarantee creates a tension between those employed under public sector conditions and those employed under Job Guarantee conditions.

Downgrading the wages and conditions of the public sector workers would be inequitable.

This issue can be addressed by quarantining this existing public sector employment and associated conditions while the incumbent workers continue their employment in these jobs.

Once these workers retire or take up other positions, these jobs will revert to Job Guarantee pay and conditions.

The general principle is that no person would be individually disadvantaged by the introduction of the Job Guarantee. This is not the same as saying a class of jobs might be restructured into Job Guarantee jobs over time.

We identified hundreds of thousands of suitable jobs across three broad labour intensity and wage to non-wage cost categories.

The scale of the jobs we identified was large relative to the size of Australia’s unemployment problem. A similar exercise in, say, the US, would identify millions of jobs."

(UBI + LVT = 42 🔰‏) #24

Some have noted that Job Guarantee in the realisation of the automated age, is anti-automation-sounding.

Even if you disagree with that, there is another potential allegation to deal with.

“Job Guarantee is anti-free-markets”.

Of course this allegation can be alleged against any state program.

Nevertheless, no matter the idea, it could play out like:

“Why are our taxes supporting your jobs and your UBI and your ((insert state program))?”

“My robots can do those JG jobs for cheaper and more efficiently than your people!”

And this wouldn’t be so bad in the past, but we have cryptocurrency now.

“well i’m taking my toys and going home, Im trading in Bitcoin now so you cant tax me”.

And then the state either regulates (or attempts to regulate) cryptocurrencies more or it moves taxation onto activity without legs ie. Land Values.

So if the endgame is LVT, why not aim/fast-track to the endgame and move all or a much larger % of tax onto LVT, and encourage more work, trade and business whilst there are more jobs than there will be further down the line and concurrently solving the housing problems faster?

(Jesse Hermans) #25

It’s less anti-free market than the current policy we have of enforcing minimum wages by intrusive de jure regulation - it’s all relative in a political sense given our economy and population are not “free market purist”. This program allows us to stop telling the private sector how to conduct their operations by providing workers with an alternative option as a safety net.
Effectively there will be less bureaucracy, red tape and micromanagement needed on the private sector if the wage floor (which is demanded by most of the Australian public) be implemented through this indirect mechanism. More to the point, it’s nonsensical to say providing these jobs is somehow to the detriment of taxpayers. Taxes will not be paying for this program, money creation (in effect through deficits) will via functional finance like it was in the post war period.
If anything this program will also benefit taxpayers and the wider public (in addition to the unemployed/underemployed), since they’ll now be getting useful public goods and services whereas before they were paying below poverty line income support to force the unemployed to search for jobs which didn’t exist. Involuntary unemployment and underemployment is one of the most expensive economic policies a government can impose on society and “taxpayers”.

If the private sector was going to do these jobs (which we are proposing for the JG), then they would already be doing them. The basic issue (in economics) with public goods and services is the free rider problem and positive externalities. The reason the private sector isn’t providing these jobs (even via automation) which JG workers will be doing, is because there is no profit in it despite the social benefit. Most of it is being partially covered by volunteers in the not-for-profit and charity sectors and even then there is nowhere near enough labour power to provide the level of service coverage these organisations are trying to cover.

This is blatantly false. People need AUD to pay their AUD taxes because the government demands it, and as you’ve pointed out land taxes make this very crucial. More importantly, no one is actually using Bitcoins as a unit of account.
To understand why crypto-currency is inherently limited I recommend having a read of this:

An argument for LVT is not an argument against an employer of last resort program. If anything our platform of shifting the tax base to economic rents will make the Job Guarantee program much more manageable since it will reduce unemployment and thus the reliance on the program. If it works completely, hardly anyone will need the JG program and it will be a relatively small and niche thing, probably for those on the fringes of the labour market like refugees, people with disabilities, indigenous Australians in remote communities etc. Something not worth losing sleep over.

(UBI + LVT = 42 🔰‏) #26

They’re not doing them because there is no money in it.
if there is money in it, then they would do them.
This is the argument from the anti-statists anyways.

An argument for LVT is not an argument against an employer of last resort program. If anything our platform of shifting the tax base to economic rents will make the Job Guarantee program much more manageable since it will reduce unemployment and thus the reliance on the program.

I wasn’t using it as argument against last resort jobs.
I was specifically asking why not fast track the LVT, creating more private jobs, by moving more income tax onto LVT and hence encouraging business both local and attracting from abroad, this is the argument from Single Taxers, and thus there is less need for JG (at least in the short term) because tax envmnt is incentivising more job creation whilst more are available to be created. So im arguing for the more Single Tax position here.

(Jesse Hermans) #27

The public goods and services which JG workers would provide can be potentially performed by Not-For-Profit private NGOs/charity providers under a wage rebate scheme. This sort of model would be trailed with many others under the policy.

However there is no rational why the government should be providing free/subsidised workers for for-profit private sector industries, that would be corporate welfare, anti-free market and ripe for corruption and cronyism. It would also be a waste of public funds since more money would be required to meet necessary private profit margins, whereas under a public and not-for-profit private program this would not be necessary.

What do you mean by “fast track”? I don’t understand how having a Job Guarantee makes the implementation of a LVT “slower” or less imperative, or how this actually makes sense in the context of running a government. The parliament drafts up, debates and passes lots of legislation every year. It’s not like having a JG policy somehow detracts from the implementation or prioritisation of LVT. There is no mutual exclusivity or inherent conflict here.

(UBI + LVT = 42 🔰‏) #28

Regardless of what the JG looks like, why not attract more business by decreasing Income Tax and raising the decrease from more LVT? At the moment we are replacing some other state taxes with a 1.5% LVT, but why not go further and decrease income tax by a significant amount and raise that amount from LVT instead? This is what Single Taxers say, and gets both sides attracted.

(Jesse Hermans) #29

I completely agree! What is not mentioned in the policy is the federal government will be pressured to cost shift responsibilities onto state governments, who will increase their LVT to compensate to reduce vertical fiscal imbalance.

I am happy to support a higher LVT, although you will need to convince others in the party. 1.5% in my view is a good start and a transition arrangement to show the public what sort of prosperity and equality can be achieved through such a tax shift. But I do want to see it go higher in future years when we achieve political representation and influence.
In my view if land prices are higher than the cost of an average new car, the LVT is not high enough. Higher than that is possible but unnecessary and runs a risk of negative land prices. Not even worth considering until we actually get a LVT that high to begin with.

The other issue here from what I can see is we aren’t trying to scare the pants off other people in the party who may be a bit sceptical, or potential homeowner voters with large mortgages which would see massive losses in home equity under higher land tax. So while we are a party of radicals there probably still are some (internal and external) political limitations…

(Jesse Hermans) #30

We will also hopefully be branching out beyond LVT this year in terms of raising revenue from economic rents. Other sources of rent for revenue for consideration can be found in the TRRA:

(UBI + LVT = 42 🔰‏) #31

perhaps a forecasting schedule of transitioning to higher LVT can be drawn up to give parties that would be effected an idea of what it’d look like in terms of LVT and Income tax over a 5 or 10 year period.
This could attract more people to the platform before the next election. Given that Prosper recommends 6% perhaps that can be a goal in X years, 12% in Y etc or something of the like.

(John August) #32

Something I recited on my radio show. I first heard it in one of David Bollier’s works.

(Shannon Smith) #33

This is not something new, it is not something unknown. It is not something that we don’t know how to solve either.

Jobs go. Other jobs take their place.

For instance, we don’t cry about all of those chimney sweeps that are out of work. The need for them has gone.

The important thing is to have an industry to automate. The important thing is not to let an industry die (like the auto industry) because in doing so, you lose ALL of the benefit that comes from automation.

(Shannon Smith) #34

Actually, if you want to understand where it came from, where it is today and where it is going, this is the interview you should watch.

(UBI + LVT = 42 🔰‏) #35


I am happy to support a higher LVT, although you will need to convince others in the party. 1.5% in my view is a good start and a transition arrangement to show the public what sort of prosperity and equality can be achieved through such a tax shift. But I do want to see it go higher in future years when we achieve political representation and influence.

Singapores land tax went as high as 16%.

So say we increased the LVT by 1.5% every year up to 15% in 10 years.
Effectively achieving Prosper’s recommended 6% in 4 years.


How much income tax could that do away with?

(Jesse Hermans) #36

I’m not sure whether that’s 16% of the annualised land rent (earnings) or 16% of the capitalised land price.
The problem with suggesting a specific rate is firstly the exact amount of annualised land rent (earnings) isn’t actually known. It’s calculated backwards from the actual land value. Annualised land rent is estimated to capitalise into a market value of 20 times earnings, meaning a $100k plot has an annualised land rent yield of ~$5k p.a. (about 5%). Meaning the highest amount such a property could ever pay in LVT would be 100% of $5k p.a. (or 5% of the $100k value).

Secondly the actual land value isn’t known either - rather it is assumed that the land value is the land price. The problem is land prices are not necessarily land values. Land prices include an additional speculative component which is a capitalisation of expected future capital gains in the land price. This speculative component disappears once land speculation becomes unprofitable due to a high enough land tax.

So when someone say “a tax rate of 16%”, they need to first specify 16% of the asset price or 16% of the earnings that the asset can potentially yield?

In this regard, this is why specifying and calculating the amount of revenue raised from a land tax increase (as opposed to a tax swap) is difficult. Here is an example:

The starting price of a plot of land is $100k, there is no LVT, and there is no speculative addition to the land price, so the amount of annual land rent in private hands = $5k p.a.
A LVT of 10% of the Land Price is imposed. The following calculations can be done to determine the new land price (.P), the amount of land tax actually paid (T) and the amount of land rent left in the landowner’s hands (.R):

Before tax:
R = 0.05P = $5000
After tax:
R = 5000 - 0.1P
Solve for P:
R = 5000 - 0.1P = 0.05P
0.15P = 5000
P = 5000/0.15
P = $33.333k
R’ = $1.666k
T = $3.333k

Note the actual tax raised does not equal $10k p.a (10% of $100k, because the tax made the price of land fall and thus the amount of tax paid fall. The tax only raised about $3.3k, which is 2/3 of the actual annual land rent.
To tax 90% of the annual land rent (P = $10k), the tax rate (X) on the capitalised land price would need to be:

P = 5000/(0.05 + X) = 10 000
X = 45%
T = $4500

As you can probably tell from this maths function, driving the land price down to $0 is practically impossible using this method since the function is asymptotic. P => 0 as X => infinity.
For this land price to go to $1:

P = 5000/(0.05 + X) = 1
X = 4999.95%
T = $4999.95

(Jesse Hermans) #37

So what was the point of all those calculations?
Basically it is fundamentally difficult to estimate how high a land tax rate will need to be in order to raise a certain amount of revenue. This is especially the case when land prices are higher than actual land values due to speculation, and when cutting taxes on production result in boosting land values which increases the amount which can be raised from land tax.
The tax rates we have used in the PPAU policy are somewhat reliable given these sort of numbers have been crunched by the Parliamentary Budget Office, and thus stand up to public scrutiny at least.

However when we talk about phasing in a higher land tax, what actually find is land prices falls immediately before the land tax has even been increased. The mere announcement that it will be raised causes the land price to fall as the market capitalised in the future tax increases. This leads to potential issues with negative equity which the transition is supposed to prevent.

So to answer your question:

The answer is I don’t know, but theory suggests all of it.

(Jesse Hermans) #38

Note, a formula can be used to determine the tax rate on capitalised land price (.C) converted to a tax on the total annual land rent (Tr):

Tr = C/(0.05+C)

Thus a 16% rate of land tax on the land price (or value) would be equivalent to 0.16/0.21 = 76.19% of the annual land rent.

(Andrew Downing) #39

I have three questions about LVT.

  1. Retirees. Our current income tax centric system means that people can aim to pay off their housing loans etc., such that in retirement they just need sufficient savings to fund basic living expenses. Under LVT, they’d have to have sufficient savings to fund the sort of income that can pay LVT on top of living expenses, presumably equivalent to the sort of income they had while working full time.
    How’s that going to work?

  2. Debt jubilee. LVT is expected to significantly devalue land (overall a good thing), but for someone with a 90% of property value loan, a 50% land price drop caused by our policy would be devastating. A proposed solution is a debt jubilee, where the government basically just marks down a lot of housing loans proportionally to the associated land value drop caused by introduction of LVT (understanding that under MMT, that wouldn’t really cost the currency issuing government anything - just the banks lose some future interest income). How do you do this with incremental LVT increases? If people know a debt jubilee is coming in proportion to land value, they’d just move money around to maximize their jubilee situation.
    How can this be worked fairly?

  3. Land as tax trap. What happens if you get stuck holding land that you don’t want, but that nobody else wants either? Can you just give it back to the government to avoid being forced to pay tax on a property that has no apparent value? What if has no value because you ruined it through pollution?

(Jesse Hermans) #40

Firstly Andrew, what about the pensioners who don’t own their own home and are forced to rent? In this country we largely leave them to the dogs.
My vision is to see an Australia where it is of minimal difference to your financial circumstances whether you retired with or without owning a home.
We must also ensure we don’t drag home owning pensioners to the level of tenant pensioners, but instead raise up the living standards of tenant pensioners to match of those of homeowners.
Doing this is simple. Universal Basic Pensions. We boost the BI much more significantly for pensioners (people who actually need BI the most given they can’t work) to help cover their land tax liabilities (or their rent) with the additional revenue from a higher LVT. The alternative is land value tax free thresholds, but I do personally not support this because it leaves tenant pensioners in the dirt. I would also combined this policy with abolishing compulsory super.
Beyond this, the existing measure of allowing indefinite deferrals of LVT until death or transfer of the property in my view is a fair compromise. If the deferrals exceed property equity the government can take the loss.
While we want to incentivise allocation efficiency, we must also remember that forcing elderly people out of their homes has its own high social costs which we should avoid.
In addition to this I would expand subsidies and funding towards retirement villages to ensure that pensioners are no longer reliant on using their estate to get access to such facilities and services. Retirement villages would not be exempt from LVT, but they could receive reimbursement subsidies to offset it.

Agreed. In fact I have been cooking up an idea where such a mechanism can be used to roll out LVT on a property by property basis with no losers.

For example when the land market in Melbourne and Sydney eventually tanks and people enter negative equity. We could have the government offer to write down/off their mortgage, in exchange for turning their property into leasehold title where an annual LVT of x% is due every year. This way everyone would win. The government rolls out more LVT, homeowners escape negative equity and the banks escape a non-performing loan. This would not cause inflation despite the money creation, since you would be eliminating private debt instead of increasing the amount of bank deposits. Additionally that property’s price would permenantly stay low due to the LVT, and the homeowner would be able to afford their LVT payments better compared to their previous mortgage repayments.
This is also more politically feasible and attractive since people won’t think of it as the government just handing out free money to everyone. There would be a fair exchange in this process. Also the banks would like it. You could even go as far making this policy available indefinitely so anyone at anytime can swap their mortgage for a leasehold title. If you make the offer attractive enough you would see people uptake it voluntarily under normal circumstances.

Yeah you should be able to hand over your land title to the land title office if you want. It’s the same procedure for people who default on rates. Eventually if things progress far enough the council takes over and auctions off the property. In this scenario the council or titles office would take over and presumably leave the title for sale at some token amount e.g. $1 until someone comes along and buys the title. Once they buy the title they would be expected to pay the current level of LVT based on the land value. If the land value is literally $1, then they practically won’t be paying LVT.
The only issue here will be if demolition costs exceed the land value. In which case the government can choose to either do the demolition itself in order to attract buyers, or leave the property as is until a buy believes the land value exceeds the demolition costs and is willing to buy the property.