Podcast: Conflicts of interest … and opinions

There’s been considerable speculation about NSW Strata Commissioner John Minns this week after the revelation on an ABC news report last week that he has retained a significant holding in a property management company, albeit through a family trust.

Is it a serious problem for the man tasked with overseeing strata management (among other things), especially in the wake of the Netstrata scandal?

Or is it just an unfortunate embarrassment at a time when NSW Fair Trading has just launched new legislation intended to boost transparency and combat conflicts of interest? We give that a good kickaround in the playground.

We also look at the new legislation in Victoria which imposes a 7.5 per cent levy on short-term holiday rentals and allows apartment blocks and local councils to curb Airbnb and the like. (We can’t help having a good chortle at Airbnb’s typically left-field response).

And we have a serious disagreement on whether the reduction in student visas is going to help ease the housing crisis or is just a knee-jerk response to the dog-whistle politics of racists.

That’s all in this week’s Flat Chat Wrap.

Transcript in full

Jimmy  00:00

So that was a bit of a shock. On Friday night on the ABC News, when we saw John Minns being challenged about having declared his ownership of a large property group.

Sue  00:12

Oh, that’s right, that was a shock, wasn’t it? Yeah, it was.

Jimmy  00:16

So he’s trata and Property Services Commissioner, and he was confronted by Linton Besser, who you remember, is the one who spoke to Steven Brell from net strata. And yeah, he was asked,  do you have a holding in this company called IPG and and John Minns said, Yes, he did, and he said it had all been declared. And I think Linton Besser said, Well, no, you said you sold them and you haven’t. So anyway, we could talk about that. So I don’t want to get too deeply into that. And there’s a new law coming in in Victoria, which is going to maybe, maybe put a crimp on Airbnb, which has basically, some would say, has ripped the heart out of Melbourne.

Sue  01:11

Not that they would be overdramatic, of course,

Jimmy  01:15

And the whole question of cutting back on the number of students who get visas next year for our universities, and the effect that will have on apartments. Lot to talk about. I’m Jimmy Thomson. I write the Flat Chat column for the Australian Financial Review,

Sue  01:30

And I’m Sue Williams, and I write about property for domain the Sydney when he herald the age in the AFR.

Jimmy  01:34

And this it the Flat Chat Wrap. So as we were saying about John Minns, I mean, he was obviously taken by surprise at the question, but basically said yes, he had holdings in IPG.

Sue  02:03

And then you kind of think, well, is that a conflict of interest as a Strata Commissioner, having investments in a property company?

Jimmy  02:10

Yes. I mean, the thing is, people seem to have forgotten the history of John Minns when he came in as Property Services Commissioner, a lot of people felt he was a bit too closely tied to the real estate industry from which he had come and obviously, as a major shareholder in this company, IPG, I mean, that was his background. And I think at that point he told the government that he was selling out of or he was disconnecting himself from IPG. And what, what has since transpired is that his family trust still owns about three quarters of a million dollars worth of shares in the company.

Sue  02:49

All right, so Family Trust, so it’s a bit arm’s length, really.

Jimmy  02:52

Well, is it, though, but, and how does it? There’s two things here: what’s the fact of the matter, and what’s the public perception? Which are two different issues, really. So anyway, what we forget is that back in the day when the last but one Liberal Fair Trading minister, Eleni Petinos, was in power, now, if you remember, there was a bit of a controversy. In fact, David Chandler resigned. Whatever he said, the reason was, at the time, the real reason was because he was being encouraged to meet with developers who turned out to be as dodgy as developers get, at least one of them running off to hide in Lebanon to avoid paying their bills and facing possibly criminal charges. But at the same time, it was announced that there had been a restructuring of Property Services, and the Property Services Commissioner was no longer required. So John Minns had been shown the door already in that sort of reshuffle of the liberal Fair Trading Customer Services Department, and that looked dodgy because he was there a bit under sufferance from some of his former colleagues in real estate. They didn’t really like kind of the kind of things he was talking about, and he was talking about transparency and accountability and things like that. Anyway, he un-resigned around about the same time that David Chandler withdrew his resignation and came back in and then was made Strata Commissioner as well as Property Services Commissioner by the new labor government. Right?

Sue  04:35

 I guess the most important thing is to get confidence back into apartments. And with a big housing crisis, we need lots of lots of new apartments  and we need people to live in them,. And I think we’ve got a lot more confidence now in the construction of those apartments because of work David Chandler’s has done, and he’s just left now, hasn’t he,. So see you next time, David, I think you’ll probably pop up again in some other guise.

Jimmy  04:59

He’s going to be hanging around as a consultant.

Sue  05:02

Yeah, now, which would be good but now we need to have confidence in the process of, you know, running a strata really, and that’s really critically important now, because lots of people who’ve never lived in strata before say, Well, you know, the apartments look great, and I’d quite like to live in one, but I’m always worried about the Owners Corporation and how it all works, especially buying off the plan apartments, yeah. And this is where the deals all that kind of stuff.

Jimmy  05:29

And this is where the strata management industry comes in, because they’ve been sideswiped over the Netstrata thing, where it’s become quite clear that in some cases, some strata managers are more interested in keeping the developers happy than they are in keeping the people who actually pay their wages, which is the owners of the apartments. And so the government had brought in just a couple of weeks ago, they brought in a couple of proposed laws just the beginning, they say just the beginning, but requiring strata managers to be more transparent in their dealings and to declare conflicts of interest. Which brings us to John Minns. There’s two issues, really, was there a conflict of interest in him having ownership through a family trust in a property management firm? And had he misled his employers, which is customer services in New South Wales.

Sue  06:25

So they’re all looking into it now. I think aren’t they.

Jimmy  06:27

I got a communication from Fair Trading this morning saying that they’d passed the matter on to customer services, and the customer services secretary is the one who’s effectively a John Minns employer. And this is something else that we should bear in mind. John Minns is not a political animal. He is a senior civil servant, so we’re kind of hanging out there waiting for, I mean, John Minns seemed quite genuinely surprised and open and saying, yes, he’d had this ownership, but that had all been declared, and his employers were happy with that. Okay, that’s one thing. Does this undermine his credibility, which is a whole other issue. And credibility has got more to do with the eye of the beholder than it does is the pub test really?

Sue  07:19

Yeah, rather than whether it passes.

Jimmy  07:21

And I would have to say, if you were to take a vote in your average apartment owning drinkers pub, they would say, doesn’t look good, does it? Absolutely. I know there’s a lot more to this story that’s still to come out, but, I mean, we know we’ve met John Minns, we’ve spoken to John Minns. He seems like a decent guy.

Sue  07:42

Oh, he is absolutely and I’m sure this has caught him unawares,

Jimmy  07:48

but that’s not enough, you know, sure, for a lot of people. So we’ll see what comes out of that.

Sue  07:54

Yep, we’ll be keeping an eye on that and keeping everyone up to date.

Jimmy  07:57

We will, and I expect to get a response from the customer services department sometime the next couple of days, and that will be on the flat chat website. Okay, great. All right, when we come back, we’re going to talk about Airbnb and the new changes in the laws that are proposed in Victoria that’s after this, And we’re back big changes to Airbnb in Victoria.

Sue  08:25

Yeah, they seem to have taken the the lead, really, from New South Wales. I mean, New South Wales, we still have an inquiry into Airbnb, aren’t we? And its effect on are we a housing shortage?  I think so. It’s somebody sitting in a room somewhere, for ages and ages, Googling, No results yet, but the Victorian Government seems to have been much more proactive and really taken a lead on it.

Jimmy  08:47

The policy up until now has been, “come on down”. Airbnb, hey, take over all our apartments. And the stories, the horror stories we’ve heard from Melbourne, you know about some apartment blocks having more than 50% of holiday rentals in them.

Sue  09:03

How’d you feel if you bought an apartment in one of those buildings and in areas

Jimmy  09:07

Where it was kind of when they were built, I’m talking about Docklands, it was going to be the jewel in the crown down there. This is where apartment living will be at its very best, in Victoria. So they build these apartments. Then along comes Airbnb, and it’s apartment living at its very worst, because you don’t know who’s going to be staying in the apartment next to you. They don’t they don’t care about the rules. They don’t care about the bylaws. And one horror story I heard from a strata manager there was that a football supporters group had discovered that there was a lot of Airbnb flats in one building, and they thought, why don’t we all book into that building? Because we’re down for the weekend for some big football match, AFL, match. And when they get there, they discover that there’s no common area, there’s no common room, there’s no social of course, because there wouldn’t be, because it’s not a hotel. Mm. Yeah, so they just take over the lobby, and they’re having this huge party that goes on all weekend. Oh my god. And residents are trying to get into their own flats and having to push their way through all these drunken football supporters.

Sue  10:13

And if they’d have stayed in a hotel, there would have been security, there would have been proper areas where they could have

Jimmy  10:18

been a bar,

Sue  10:21

Ohh, my God, can you even countenance that, really?

Jimmy  10:25

So this new law that’s coming in is going to impose a 7.5% Airbnb tax, which is what they’re calling it’s not just Airbnb, it’s all short term holiday letting. And they’re hoping, they were hoping that that was going to raise, I think, $75 million that they could put into affordable housing. Now it there’s pulled it back to 60 million.

Sue  10:51

So that’s a 7.5 levy that the owners of the apartments who put them on Airbnb or stays or similar thing pays.

Jimmy  11:00

So, so that’s going to put up the cost of your Airbnb by 7.5% which, it’s not huge, but it does introduce even just a psychological barrier for a lot of apartments that are just on the fringes. I mean, is it worth having residential rental, or is it worth the hassle? There is a hassle involved in running an Airbnb. So they reckon that one of the things that they’ve done in the changing this proposed law is that it will not apply to owner occupiers, right? So what does that mean?

Sue  11:40

Oh, so that’s if somebody has an apartment and they let out one room on Airbnb, so they’re still resident there, yeah.

Jimmy  11:47

Or does it mean somebody who spends seven months of the year in their apartment and five months traipsing around Europe?

Sue  11:55

Oh, I see. Oh, because it’s still their principal place. Of more sense, wouldn’t it, but you’re quite right that the second could come into it too.

Jimmy  12:03

And does it count somebody who spends five nights in their apartment during the week when they’re at work, and then goes off at the weekend and rents it out on Airbnb and they stay with their mom and dad or with their boyfriend or girlfriend?

Sue  12:17

We know somebody who did that. They used to stay on their boat whenever they shop bookings, yes, stay on their little boat, yeah. And so they’d make money that way,

Jimmy  12:26

So the principal place of residence definition is never addressed in these things, and probably should be. But look, they reckon they’re gonna make 60 million of this. And if somebody wants to do the maths on what that means in 7.5% revenue. Yeah, somebody else can do that. It’s going to make a difference. One of the other proposals in Victoria is that local councils will be able to decide on whether they want Airbnb in their area, and on what basis and apartment blocks will be able to decide whether or not they want to have Airbnbs in their in their building. That would be a good thing, wouldn’t it? Yeah, that could make a big difference. Now, can you guess what Airbnbs response to this has been?

Sue  13:12

Well, they to things from really lateral. They do sometimes they do just never, really quite can predict what they’re going to say their response has been.

Jimmy  13:22

This is from Airbnb, that this is awful because it will be different legislation in different areas, and they should have one rule for everybody, because it will be too confusing and there’s too much red tape with one council has one set of rules and the other council Has the other set of rules.

Sue  13:40

Confusing for who? Yeah, exactly. I mean, most people who’ve got a property they’re letting out on Airbnb probably only come under one council. They might have one, they might have 234, exactly. They let out in one area, no.

Jimmy  13:56

Confusing for the consumer, maybe like the person who’s coming from WA going, oh, there’s a different set of rules in this little town

Sue  14:07

looking at an individual property when it would be available to rent. That’s all they look at. They don’t look at, you know, government regulations. So

Jimmy  14:15

my response to their response is, okay. So we’ve got two problems here, potentially, one of them is complete lack of affordable housing for people and people who live in apartments having their lives ruined by holiday lets. And on the other hand, it’s got a little bit more confusing for the Airbnb hosts. Are these equivalent? Do you think in any way, shape or form? No, absolutely. I quite look forward to Airbnbs responses to these things, because they’re so stupid.

Sue  14:47

On the other hand, they can be quite genius really, because you think, How can anybody possibly oppose this? And then they come up with a way.

Jimmy  14:56

Yeah, but they’re so sneaky. They’re the sneakiest people. I remember when they did a survey  of tenants, right, apartment tenants or house tenants. And they said, Do you like Airbnb? And these people, like normal people, went, Oh yeah, it’s quite good. When you go on holiday to Barcelona or wherever you can go. You can go and stay somewhere more cheaply in the local area. So they then announced, through the tenants union that the majority of tenants in Australia and in Sydney wanted Airbnb and the tenant union eventually had to go, no, no, we do not want you moving in and kicking us out of our homes. They would have been horrified. Yeah, why didn’t you ask that question? So they’re pretty sneaky.

Sue  15:40

Yeah, absolutely. I was talking to a friend the other day, and his mum’s in an aged care place, and she’s made friends with somebody else there, and the other woman only moved out because she’d lived in the same apartment building for years and years and years. She knew everybody there. She felt really secure and safe, and she always planned to spend a whole rest of her life in that apartment building. But sadly, holiday lets kind of came in so many owners, new owners put their apartments on holiday. She never knew who was going to be in the apartment next door or the apartment upstairs, and she suddenly started feeling really insecure and really worried, and felt her safety was under threat, right? So, you know, it’s just, it has a huge impact on people’s lives. I mean, you know, there might be young families with kids and they’re worried about strangers coming in. Might be older people

Jimmy  16:29

Who’s in the pool with your kids, folks

Sue  16:33

and you say, Airbnb, a genius at coming up with headlines, Jimmy,

Jimmy  16:37

I’m just asking the appropriate questions, right?

Sue  16:40

But, you know, it’s just not nice. I mean, we live in an apartment building which doesn’t allow short term lets. And it’s fantastic, you know, you know the faces around, yeah? And it’s, it’s great. It makes a huge difference. It’s your home, after all, absolutely the place that you’re meant to feel safe in a sanctuary, yeah?

Jimmy  16:58

And it’s interesting that this week you were talking to somebody up in the Tweed area.

Sue  17:04

Yeah, I was doing a story about the Tweed, which has become the newest area in Australia, where  the  median house price is over $1 million right? And, I mean, if anyone knows the Tweed, which is just on the border of New South Wales and Queensland, it was always a kind of really quiet little place full of old shacks, holiday shacks, right? A real retirees favorite. But now the price has gone up to the median house price over a million dollars, and that’s lots of people going there during covid and after covid, and people choosing whether they want to live in the Gold Coast. But it’s too expensive on the Gold Coast, because prices just went crazy up there. Yeah, so they go down to Tweed, which is only, you know, five minutes down the road. So that’s really pushed prices up. And I talked to the mayor there, Chris Cherry, and she said they’ve got a real problem with there’s just no affordable housing left, and lots of the locals are having to leave, or their kids, you know, who they always hoped would buy a house nearby? Yeah, they’re having to go elsewhere because they just can’t afford it. And it’s, it’s, it’s really, really difficult. And she was saying, one of the terrible things for her is that there’s now about 1400 houses in the tweed Shire, which are let out on short term holiday platforms, right? And she was saying, even if half of those came back into the residential housing lot, that would make a huge difference, right? Because people just can’t afford to rent there. They can’t afford to buy there, and it’s become really a difficult situation. Just Airbnb, I guess, is pushing up a lot of properties. And I mean, Faye, New South Wales, certain councils can impose bans like Byron Bay. Yeah, they have. They’ve kind of nominated a holiday area, haven’t they, where people can actually rent out on Airbnb, and then further out, they have limits on how many days, yeah, a year, yeah, or nights. So you can do that. But she said they’re really hoping, waiting for the results of this New South Wales inquiry, and they’re hoping it gives local councils more powers to regulate short term holiday lettings, because it makes a huge difference in a place like tweed, where people do go on holiday, all

Jimmy  19:17

Right, when we come back, we are going to look at the new rules on student allocations and visas and the effect that will have on apartment living across Australia that’s after this. So the government has decided to cut back on the number of foreign students who can come and study in Australia.

Sue  19:41

I hate this. I mean, I just think it’s kind of follows this anti migrant feeling we’re getting in Australia, certainly from Peter Dutton, and you know, it comes from the States, really, from Donald Trump and the ridiculous things he says about migrants, without any evidence whatsoever to back it up. Up, you know, like there’s been a spate of crimes committed by migrants, which absolutely hasn’t they’ve all the surveys, not all the evidence, is that migrants are much more law abiding than the regular people. And I, I fear that that’s coming into Australia now. And I know that we’ve got a housing crisis. I know we have an affordability crisis, but surely there are better ways to do it than limit the number of students coming in, especially when our economy relies, and has relied for many years on the export of iron ore to China for their for their development industry. Sorry, I’m going on you are a bit but, but now they’re going to use less iron ore, so we so we need to build up other industries. And our education industry has been fantastic. It’s a real money earner for us, yes, and what a healthy industry is, yeah, but

Jimmy  20:51

so these people have to live somewhere, these students have to live somewhere. And that is, that’s what makes it a political issue. Firstly, that basically, you know, “foreign students are stealing your your cheap apartments”. But there’s also, in reality, those 60,000 fewer students who are coming here. That’s how many apartments. Well, you know, when they all get crammed into the dodgy apartments in the city, but let’s say they’re gonna occupy six of them are going to occupy one apartment, right? So that’s 10,000 apartments. I mean, that’s significant. That is putting pressure on rents, but I can’t help availability,

Sue  21:33

It’s really throwing the baby out with the bathwater, though.

Jimmy  21:36

Well, what’s the other solution?

Sue  21:39

Well, we’re managing to cope?

Jimmy  21:41

Well, not really are we?

Sue  21:42

No, that’s the point. But how many of those apartments that are freed up are going to be affordable for, you know, or use for social housing? The only way is to build more apartments, or to make sure those apartments that have nobody living in them, that that we regulate to say, No, you’ve got to let them out. So an empty house?

Jimmy  22:02

Tax, yeah, absolutely. An empty apartment. Tax, an empty house as well.

Sue  22:07

Tax, I think that needs to come in. It has come into other cities around the world and is operating quite effectively. Okay, also, we need to cut back on holiday lets, and we need to increase the benefits to households of accepting overseas students. I mean, we’ve known people who’ve taken in overseas students because it helps to pay their mortgage if they actually got an extra payment from the government to help them, what an investment that would be in the future as well.

Jimmy  22:35

So you’re talking about people who’ve got a spare bedroom, that’s right, and they get somebody who comes to the country to study, and they want to stay somewhere that’s okay. And they also, obviously, the benefit of staying with a family would be, they would be improving their English, their English. I mean, there’s, I

Sue  22:55

would really help people trying to pay their mortgages as well, if there were much better schemes to allow them to do that.

Jimmy  23:00

So what you really need, but you know, the problem is that people would be exploited sometimes really horribly. There has to be an agency involved absolutely that protects the both the students and the homeowners, the homeowners, and I don’t think the government’s going to be in the business of setting anything like that up. Well,

Sue  23:21

it’s a real show universities could

Jimmy  23:23

Yeah. Well, that’s right, yeah, because they’ll be making a lot more money from these students, so they should be taking more responsibility for how these students are housed.

Sue  23:32

And I think that’s been a big thing. Yeah.

Jimmy  23:33

James just reminded me of a story from years ago. There was an apartment block. A lot of the apartments had been let out to University of New South Wales, and it just so happened that the Fair Trading Minister of that time owned an apartment so that he or she could qualify for technically living in that constituency, but the residents of the apartment block were having terrible problems with the Students here because they treated it like a frat house, you know, like they had, you know, it was a small apartment block, and they had most of the apartments in the building, and they were just running riot, and the Fair Trading Minister wouldn’t do anything about it, because it would have exposed him or her as not living in their constituency.

Sue  24:18

Wow, yeah, me, yeah.

Jimmy  24:20

So the best laid plans of mice and men. I thought the government was going to say to the universities, yeah, you can have more students if you build accommodation for them,

Sue  24:31

but that would be fair too, yeah. And, I mean, it’s interesting, the student accommodation sector is really strong. It’s providing really strong returns for investors, yeah? So, I mean, a lot of people don’t realize that you can invest in student housing, and they kind of think it might be precarious. Well, it will be precarious if the government keeps cutting caps on and imposing caps. I think

Jimmy  24:52

this is a one off. I think the government, they just want to take the sting out of the that element of the. A housing availability question and say, Okay, we’ve dealt with that. The next couple of years, the numbers will go back up again for sure.

Sue  25:08

Oh, I hope so. But by then, we might have lost our shine for overseas students. Well,

Jimmy  25:12

the choices, apparently, after Australia, are Canada and the USA, where they “love immigrants” in the USA, or

Sue  25:22

we shall see we will resolve the election. What? How that will happen? But, um, yeah. I mean, why wouldn’t you want to come and study in Australia as well? But you know, one of the big things about education that lots of inquiries have found is that people who come here to be educated, you know, they’re usually highly educated and well educated. They have good English, that kind of thing, yeah. And so they create real bonds with Australia. And then when we have skill shortages, they’re often very willing to come back, yeah. And that’s a real bonus for us, really.

Jimmy  25:53

But one of the problems has been the kind of bogus schools, you know, teaching things like nail polishing and, well, you know where there’s always, I don’t know if it’s still the case, but it always used to be that one of the preferred professions for people to get visas to come and work here was hairdressers.

Sue  26:12

That’s right, yeah. And in fact, nearly all the hairdressers I’ve ever had have come from overseas. I’ve very rarely ever had an Australian hairdresser. I’ve

Jimmy  26:21

never had an Australian hairdresser,

Sue  26:24

maybe Australia. I mean, look, I’d hate to be a hairdresser to be honest. Yeah, maybe we’ve got more sense. I don’t know. I don’t know. But journalists also were, were chosen professionals. They were

Jimmy  26:36

briefly learned that lesson. Yes, as they say, you know, Isn’t it a shame that all the people who know how to fix all the problems in the world are too busy driving taxis and cutting hair?

Sue  26:49

Well, yeah, because that was a news story the other day about some incredibly highly skilled migrants we have in Australia, and we they’re treated so badly, and it takes them so long to re qualify under Australian regulations that many of them are just driving Ubers and yeah, you know, delivering food to people when they’re kind of surgeons, and yeah, people that we really could do with Yeah.

Jimmy  27:12

And on that note, we have gone way over time. We hope you’ve enjoyed listening to this mega podcast this week, and keep an eye on the flat chat website, flatchat.com.au to find out what’s happening with the strata Commissioner. If anything, thanks for listening. We’ll talk to you again soon. Bye, bye.  Thanks for listening to the flat chat rap podcast. You’ll find links to the stories and other references on our website, flatchat.com.au, and if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify, or your favorite pod catcher. Just search for flat chat, wrap with a W. Click on Subscribe, and you’ll get this podcast every week without even trying. Thanks again. Talk to you again next week. You.