The Grattan Institute has release a report entitled “A place to call home”, which calls for the establishment of a $20 billion social housing future fund. Below is the blog post explaining the proposal followed by my response: Australia has a housing crisis. Australians are spending more of their incomes on housing than in the
The Australian Budget has a history of running small deficits and surpluses with occasional blowouts. Contemporary history has seen General Government net debt to GDP approach 20% under Labor in 1995 and the Coalition in 2017. In between, a Coalition government under Prime Minister John Howard and Treasurer Peter Costello ran surpluses sufficient to pay net debt down to zero during Australia’s mining boom.
Ratings agencies have adjusted the sovereign credit rating over time to reflect this ebbing and flowing of debt. In 1975, Standard and Poors rated Australia AAA. By 1989 the rating had dropped two notches to AA. It was subsequently upgraded again to AAA as the Howard Government operated consecutive surpluses.
The major vulnerability for the Australian Budget is the external imbalance in an economy that runs persistent current account deficits. Because Australian banks borrow so much money in international markets largely to fund domestic mortgages they are constantly at risk of international liquidity shocks.
The Australian Budget steps in with public guarantees to the banking system when this happens. Thus, although the Australian Budget has relatively low debt-to-GDP metrics, credit rating agencies demand that they remain that way to preserve the AAA rating as a backstop to bank borrowing.
Australian politics insists that Australia sustain budget surpluses ostensibly because it is equated with good economic management. In truth, the surplus is simply a figment of the property bubble at the heart of the Australian economy that requires the support of the tax-payer to persist. The Australian Budget is the key stone in the Australian credit arch.
In recent years the Australian Budget has deteriorated as the structure of the economy has left is denuded of growth sources. As the mining booms passed and the enormous household debt (186% of GDP) stalled consumption and investment, fiscal deficits became a key component in GDP growth.
As well, the disintegration of Australian political integrity associated with the end of the mining boom period doomed the Budget to successive regimes of neglect.
This very obviously undermined its role in the above system exposing Australia to deeper adjustments during future periods of global stress.
MacroBusiness covers all apposite data and wider analysis of these issues daily.
With home ownership rates falling, especially among younger and poorer cohorts, CoreLogic’s head of Australian research, Eliza Owen, has raised concern that the retirement system is unprepared for a future where a large proportion of Australians rent: “[If you consider] policies that preserved high values of homes in order to secure Australian wealth, you have to
Labor leader Anthony Albanese has shelved plans to sell the NBN to Telstra and has instead promised to spend $2.4 billion to boost the fibre rollout to an additional 1.5 million households by 2025: Of the 1.5 million additional premises which will have faster access to fibre, almost half, or 660,000 homes and businesses, will
Analysis of corporate disclosures published in The Australian shows that more than 400 listed companies in many sectors received $3.7 billion in JobKeeper payments: The extent of the payments reached into every part of the economy with names such as gas producer Beach Energy ($7.6m), jobs website Seek ($17.2m), gambling machine manufacturer Aristocrat Leisure ($16.1m),
May’s Victorian Budget implemented a new windfall gains tax for properties whose value is boosted by a council rezoning. This tax will apply to properties where the value is boosted by more than $100,000, with a 50% tax on windfalls above $500,000. The clearest indication that this windfall tax is good policy has come from
The Guardian has published “secret figures” revealing how the Coalition’s cut-down NBN tech was three times more expensive than forecast and ended up costing almost as much as the full-fibre plan: The previously redacted 2013 figures detailing the estimated cost of the Coalition’s alternative model – relying on trouble-plagued pay-TV cables and fibre-to-the-node technology –
The Australian’s Judith Sloan believes that NSW’s proposed stamp duty reforms have little chance of seeing the light of day and will soon be scrapped: It [stamp duty reform] ain’t going to happen in NSW any time soon – or anywhere else in Australia, for that matter. It’s just too expensive, the effects are too
A week ago, The Age published an article claiming Victoria’s hospital system is “buckling under the strain of coronavirus”: Figures in the department’s annual report and others point to a health system under severe stress, with patients waiting months – and sometimes years – for vital services… Australian Medical Association state president Roderick McRae predicted pressure
The Real Estate Institute of Australia (REIA) has entered the stamp duty debate, calling on governments to replace the tax with a broadened and expanded GST: Replacing stamp duty with an expanded GST would be the best way to cut the upfront costs that make housing purchases unaffordable for young people, the country’s peak body
NSW Premier Dominic Perrottet has admitted that his plan to replace stamp duty with land taxes is dead without the federal government providing funding assistance to facilitate reform: Mr Perrottet said federal tax policy settings punished states that tried to overhaul their own arrangements. Existing arrangements would “completely penalise” NSW residents if his government embarked
The great JobKeeper rort has been exposed again with developer AV Jennings banking $4.3 million in wage subsidies despite its annual profit soaring by 107%: The ASX-listed company has confirmed it will not repay JobKeeper, despite booking $27.7 million in profits since dipping into the taxpayer purse between April and September last year… But its
NSW Premier Dominic Perrottet had argued strongly for stamp duty to be replaced by a broad-based land tax in his previous role as the state’s treasurer. Perrottet reaffirmed his commitment to tax reform in his first press conference after replacing former premier Gladys Berejiklian. However, Treasurer Matt Kean has distanced himself from the proposal, instead
Parliamentary Budget Office (PBO) analysis has found JobKeeper payments worth $38 billion went to businesses that did not suffer sustained downturns below threshold levels. This was from a sample of $72 billion of JobKeeper spending examined by the PBO, meaning 53% of taxpayer subsidies were paid to firms that did not meet turnover thresholds. Of
The Age has published a detailed report on how Victoria’s hospital system is “buckling under the strain of coronavirus”: Figures in the department’s annual report and others point to a health system under severe stress, with patients waiting months – and sometimes years – for vital services… Australian Medical Association state president Roderick McRae predicted
The fleecing of taxpayers by senior executives of Australia’s government agencies and authorities has well and truly jumped the shark. As reported in The AFR today, executives working for Australia Post and NBN Co were paid bonuses of $295.9 million in the 2020 and 2021 financial years, according to their latest annual reports. The revelation
Three years ago, Western Australia’s per capita share of goods and services tax (GST) was lifted from $0.34 in the dollar to $0.47. The increase earned a strong rebuke from then Treasurer Ben Wyatt, who labelled the increase “another slap in the face to the good people of Western Australia” which for “the sixth year
An entire generation of Aussies are set to inherit an average $320,000 each over the next 15 years as their baby boomer parents die, according to a new report published at News.com.au: Baby Boomers are expected to pass on a whopping $3.5 trillion to their kids in the next 15 years… There are an estimated
Ex-RBA head of research turned chief economist at the Centre for Independent Studies, Peter Tulip, has penned an article in Fairfax blaming a lack of supply for Australia’s housing affordability woes: Many submissions to the federal housing inquiry now underway argue for removal of tax concessions like negative gearing and the capital gains discount. This
The Auditor-General has released a report which shows that the federal government spent $60.2 billion via its GrantsConnect program between December 2017 and June 2021. A total of 108,206 grants were allocated over this period, and 42% were awarded via a non-competitive tender process. The report also shows that 27% of grants that were earmarked
The latest JobKeeper rort floating around the media relates to elite private schools, which somehow managed to score millions of dollars of JobKeeper dollars without ever ‘shutting down’ and recording big operating surpluses: Seven hundred Australian private schools shared more than $750m in JobKeeper, despite most posting multimillion-dollar surpluses, new data shows. One school, St
According to The AFR, The NSW Government has “pumped” another $183 million into social housing to accelerate development of more than 1400 new homes as part of its COVID-19 economic recovery strategy: “The package boosts construction, accelerates over 1400 new social and affordable homes and supports an extra 990 households through rent assistance, including in
The Greens have promised to fight for 1 million publicly owned, affordable homes to be built over 20 years if they hold the balance of power after the next federal election: Greens leader Adam Bandt… said that with so many people locked out of the housing market “we urgently need the government to act and
The pandemic has brought to light the university sector’s ‘dirty little secret’; namely, its reliance on staff with insecure work contracts. Around 70% of the sector’s staff are on such contracts, either part-time or casual, while the underpayment of staff is widespread. The Fair Work Ombudsman (FWO) has investigated 14 universities over potential underpayment of
Callum Foote and Michael West have made explosive allegations that the business lobby pressured the federal government not to amend JobKeeper when it was discovered by Treasury three months in that billions was being paid to companies with neutral or rising turnover. Accordingly, the federal government kept the fiscal tap wide open, showering businesses with
Treasury officials have confirmed that the Morrison Government’s $4 billion JobMaker wage subsidy is a failure. Only 5,278 jobs had been ‘created’ by mid-2020, 99% below initial expectations that 450,000 jobs would be created by the end of 2021: Treasury documents from the middle of this year reveal that just 5,278 people had been hired
Top economists, former Treasury officials and ex-politicians are warning that “Australia is fast approaching a fiscal nightmare” because the nation’s tax system isn’t ‘fit for purpose’: The tax on $100,000 goes to the heart of one of the problems. If you are on a salary of this amount, you will end up paying almost $23,000
The AFR’s Joe Aston has continued his assault against the Morrison Government’s JobKeeper waste, this time rubbishing the Australian Treasury’s paper defending JobKeeper overpayments. Aston claims that the actual level of ‘waste’ is closer to $40 billion, not the $27 billion claimed by Treasury: All of the major newspapers dutifully reported that between April and
The unprecedented boom in the New South Wales property market has driven stamp duty receipts to a fresh all-time high, according to data from Office of State Revenue. In the year to August 2021, stamp duty receipts surged 60% to a record high $8.8 billion: Average stamp duty has also risen to a record high
Earlier this year, the Parliamentary Budget Office (PBO) revealed that a whopping $13 billion (over 13% of the $98 billion wage subsidy) was handed to nearly 200,000 companies that received JobKeeper payments but whose profits rose: Yesterday, the Australian Treasury released a paper defending these overpayments on the grounds that doing so would have stifled the
For years MB has lamented how Australia’s public service has been stripped raw by decades of government outsourcing, waves of senior redundancies, and a preference for governments to seek advice from paid consultants. The end result is that the “frank and fearless advice” that the public service was once renowned for has vanished, replaced by