Michael Marquette’s “View from the Bridge” this week looks at whether Federal Government policy requires spending or investment to ensure a brighter economic future for us all. You can either read the article or listen to the podcast.
I have watched the Federal and State Government’s handling of the property sector and can’t help but feel enormous disappointment. The First Home Owner’s Grant has created more problems than it has solved and we still have a shortage of housing. We have a critical shortage of affordable housing throughout the country and I have grave concern about the level of debt that Australian households are carrying.
The First Home Owner’s Grant (FHOG) is about to end and I am delighted. It has been responsible for artificially inflating prices (for the short term) and has been the chosen vehicle to hold up property prices by the Government. It has in no way encouraged true property investment or helped to increase the number of properties built to ease supply issues. It has simply created a price bubble and encouraged spending – it’s one thing to spend and another to invest.
If we look at the economic mess that the world has found itself in it is impossible to deny that uncontrolled “consumerism” was right at the heart of the problem. Companies encouraged and in many cases preyed upon the desires of consumers who simply couldn’t afford to repay loans by offering all sorts of “buy now, pay later” schemes. Banks around the World financed millions of transactions that they should not have in their race for ever more profit – we now know what happened with many of them.
So at the start of September I have to ask the question – Has the Government done anything to change the way that Australians spend money? The answer is a huge no. Every policy decision that I have seen has resulted in plenty of spending but little investment. The Government’s “$900 cash splash” was clearly a stop gap measure whereby they crossed their fingers and hoped that the World would correct itself – this is simply not good enough.
Instead of putting policy in place to encourage investment for the long term our Government has taken the easy and wrong road of encouraging careless spending and further debt. The property sector is not in better shape than it was when considering the long term as affordability and supply issues have simply been put aside.
If the Government had invested in public transport (like high speed trains) to allow people to live in more affordable areas, the economy would be in better shape for the future. They haven’t and it should come as no shock that budgets are being pushed to breaking point as more and more money is required to simply accommodate and survive. Think very carefully before you buy in future – should you be spending or investing?