In a week which should have been a little more exciting, I believe the budget handed down by Wayne Swan was boring and uneventful. The Labor Party leaked more than the proverbial sieve and there were no surprises except they have clung to the First Home Owners Grant a little longer and prolonged the overinflated prices of properties under $500,000.
In terms of real estate we can now be certain, despite the inconsistent reports that we read in newspapers and real estate newsletters that property prices are going nowhere: maybe down, but certainly not up. There is no incentive to purchase property and no incentive to sell property. The budget was a “spend-a-thon” and when considered in terms of the $950 “cash splash” to every tax payer I can’t help but think that money could have been better spent.
The issue of State levied Stamp Duty (around 4% of the purchase price of a home) has still not been dealt with. Why buy property and pay such a massive tax when you can purchase shares and transact so quickly, easily and cheaply? Ignoring Stamp Duty is a lost opportunity for the Rudd Government at a time when stimulating the property market is essential to our recovery.
We have to invest in infrastructure for the long term and also find solutions for now. Solutions for the high cost of accommodation throughout Australia which has been created and fuelled by the obscene amounts of money which banks and other lenders have so readily allowed people to borrow. The budget fails to address the immediate needs for affordable housing and vital infrastructure has been ignored or delayed.
Instead of continuing with the First Home Owners Grant the Government should have worked hard with the States to ensure that essential transport projects were commenced or completed. I have been a supporter of high speed rail links between Sydney and regional cities such as Newcastle and Wollongong and a high speed Metro system for Sydney to reduce the burden on car transport and cut travel times for those who simply cannot afford to live close to the City.
High speed links and cutting edge infrastructure projects would provide choice for people as to where they want to live and more importantly would go a long way toward solving the housing affordability crisis. This would be part of a long lasting solution that would create jobs now and help grow the nation in all areas, including the forgotten Regional cities.
The problem we have in Australia is the failure of the Governments to deliver on infrastructure. They have failed to contain household debt, allowed party politics to influence vital decision making and there is still no solution to winding back the “consumerism” that has created so much debt.