LAND VALUATIONS

Southland Times, Issue 20834, 24 July 1929, Page 4

LAND VALUATIONS

The old valuation farce is being presented to the public again. This time it is introduced with the declaration:

The persistency with which the Farmers' Union deprecates the argument that land is worth only what it will return in production is, perhaps, not surprising when one realizes the attractiveness of a speculative value to • the man in possession. •'

Behind this is a profound triviality, and declaration of a doctrine which actually docs nothing more than open the way to a question, because after one has announced in a deep, pontifical voice that land is worth only what it will return in production, the seeker of realities will ask: “And how does one arrive at the return in production that a given piece of land will yield?” In that question we have revealed the hollowness of this magnificently sententious utterance on which the valuation reformers base their case. The return in production from a piece of land depends on many things, and among them is the capacity of the owner to farm it. No man yet has purchased a farm believing he will make a loss in operating it, which means that the price he is prepared to give represents his idea of the capital outlay he can afford in order to secure for himself, through the application of his energy and

farming knowledge to the land, an adequate return. He may make a mistake in his calculations, he may think prices will not fall, that 'wages will not go higher, that weather conditions will not be abnormally inimical, or he may credit himself with more knowledge of farming than he actually possesses. If these errors arc serious enough they will inflict on him serious losses, but his failure does not prove that the price he paid for the land was too high; it docs prove that the price was too high for him in the circumstances. It is in this way that these pundits would fix valuations on the basis of average prices over a period of normal years; but for what is this valuation to be used? Is it to be the assessment on which taxes and rates are paid? If that be so, the only effect of lowering valuations will be to upset the financial arrangements of many local authorities, and bring about increases in the rates in order to bring the local bodies’ revenue back to its normal level. The value put on land by the possessor of it, in no way increases the cost of production. By this we mean that if the taxation assessment remain constant, fluctuations in the owners' idea of the value of his property will not affect the cost of his farming operations. A farmer who suddenly decides that he will raise his selling price £5OO has not increased the actual cost of his farming operations. That cost is fixed by the price given for the land and the rates paid on it. It is sound advice to any prospective purchaser of land that, in fixing the price he is prepared to give, he should take into account the trend of the market and the margin separating it from what may be termed the norm, but the valuations on which taxation, general and local, is based fall into an entirely different category, and it is the confusing of the two that leads to so much nonsense being written on this subject.