STABILISATION OF LAND VALUES

Otago Daily Times, Issue 21827, 14 December 1932, Page 8

STABILISATION OF LAND VALUES

. TO THE EDITOR. Sir,— Several letters have appeared in your columns of late on the subject of the unduly high values of land, which, the writers correctly affirm, is the principal cause of the farmers’ difficulties at the present time. These writers are wrong, however, in blaming the farmers in general for forcing the price of land up. The force of competition under our present system of land sales has been responsible. New Zealand is a country of but limited extent, and the demand for land is ah ways greater than the supply. Did not the Government set a bad example immediately after the war in its purchase of land for soldier settlements? The result of its transactions is plainly seen to-day,— a heavy writing down of rents and capital values, which loss must approach a million or more; abandoned farms, and the amalgamation of two or more under one owneri?and has not yet come down to its real productive value, mainly owning to Government intervention, which to a certain extent this is justifiable, for were the price to flop suddenly it would mean the ruin of many people, mortgagees as well as landholders. Whether it does so or not we may yet be sure that when prices rise again the same process of competitive bidding and speculation will go on once more to the detriment of a. future generation. What, then, can be done to prevent this undesirable state of affairs. _ ihe only remedy is regulation of the price ot land I propose that no freehold land should be sold at a higher price than the Government valuation, and in the case 0 f leaseholds no such thing as " goodwill, so called, should be permitted. Were any such- premiums allowed in land transactions they should go to the State and not to the private individual. , Let us examine a typical case of the movement of land valued from' the beginning. Farmer A takes up a block ot good virgin land in the early days at a price of £2 per acre. By cultivation, fencing, and draining ho improves me holding to the extent of £6 per acre. J.o this increase he is legitimately entitled as the product of his own hard toil. In the course of years improved roads are formed, a township springs up with school, post office, and other amenities; more settlers arrive looking for land! and Farmer A, who wishes to retire, is otteied £l2 an acre for his land. No one can grudge him his profit when the system is that of selling to the highest bidder. Farmer B, who succeeds him, does wen enough, with low overhead costs and improved prices for farm produce. Before long a railway is built into the district, and immediately land jumps up in value. B sells out to C at £l6 an acre, taking the profit on the enhanced value of the land to himself, while the railway has a struggle to pay its way. Profitable fanning is not now so easy, and the Government,' to assist settlers, grants free carriuge t>f lime on the railways and reduced freight .on certain lines of produce. G immediately capitalises this by adding another pound to the value of his land. After some years of fairly hard fanning a boom occurs, and C sells out at £-5 an acre leaving a considerable mortgage on the land. D, the next man, is purely a speculator, and after a couple of years succeeds in selling out at £3O an acie. The aftermath inevitably iollows, and finds E unable to pay bis way. Likewise 0 and D are equally embarrassed in getting no interest on the money they left on "the land. . The same process occurs in the cities, only to a very much worse degree. Admittedly competition between traders tor a central site is much fiercer and, perhaps, more justifiable as the town grows in size and importance, but there is a vast disparity between £5 for a section and £IOOO for a foot 70 years later. Hime profits pass into private pockets, and only a proportion of them come back to the Government in the form of taxation for the benefit of the people who are paying for all these enhanced values. Consider, on the other hand, the state of affairs if the land laws had been so framed that no profit could be taken by individuals from the sale of land. The Government valuation would then be the original price paid by the first settler plus the value of improvements he had effected. The farmer would have no incentive to sell his land for a profit; but, with enhanced values for produce, brought about by better transport, increased population, and other causes, when a sale did occur, competition would no doubt raise the price somewhat, and this profit the Government would pocket. A substantial fund would thus be created for public

works, without borrowing or taxation. But the most essential thing, farming, wsiuld be on a profitable basis. Farmers would be prosperous, and every other section of the community with them. Likewise, in tlio cities land values would be controlled to a reasonable level, and the Government and the City Council would principally benefit from all deals in real estate. There would be no burden of high rates and excessive rents. We should be a tax-free, debt-free country. What a roseate picture we can conjure up of the ideal State —but ’tis only a dream! The damage is already done. Yet it is not 100 late to prevent the country from going from bad to worse. Land prices must bo fixed at the Government valuation, and that must necessarily be on a conservative productive basis. Now is the time to get the job done before the process of inflated buying commences again. Many people will suffer, but it is better that we should cut our losses than be burdened with them for all time. To alter the present land laws will be a difficult matter, but I recommend it to the earnest consideration of the Farmers’ Union, Crown Tenants’ Association, and chambers of commerce.—l am, etc.. Countryman.