What’s on your budget – take a quick look at what you get from a pre-election cash splash
A budget was submitted yesterday aimed at relieving pressure on living expenses to ensure the Morrison administration’s re-election. This means for you and, of course, for the housing market.
The plunge caused by soaring iron ore and coal prices allowed the government to develop a pre-election budget packed with spending, but without major reforms.
The Morrison administration has fallen behind polls to date by quelling pressure on households due to rising fuel prices, paying low- and middle-income earners cash, and increasing defense and cyber spending. I hope to secure a new term. safety.
Fuel tax cut
As was often reported earlier, the fuel tax was temporarily cut in half and the price of gasoline was reduced by 22.1 cents per liter.
Oil prices have skyrocketed in recent weeks as the conflict between Russia and Ukraine progressed. This means that rising gasoline prices have pushed up household costs.
Fuel tax cuts are set to last for six months and should be kept in mind when voters go to vote.
Federal Finance Minister Josh Frydenberg will give a budget speech to the National Press Club at the Parliament Building in Canberra on March 30, 2022. (Photo by Martin Olman / Getty Images)
Cash boost for low and middle income earners
Approximately 6 million Australians (pensioners and welfare recipients) receive a one-time $ 250 living payment that is delivered “within a few weeks.”
In addition, more than 10 million low- and middle-income earners will receive a one-time $ 420 tax credit starting July 1.
This means that those who have already received a Low and Middle Income Tax Offset (LMITO) will receive up to $ 1500 and boost many households if they file a 2021/22 tax return after July 1st. ..
First home buyer
When it comes to the housing market, the biggest effect of the budget is the housing guarantee system, which is expanded to 50,000 locations a year and helps to buy homes with a small deposit.
Given that deposit hurdles are the biggest barrier for first-time homebuyers, this measure helps some, but in terms of a strong action plan to deal with affordable Australian homes. From … it’s missing.
50,000 places a year also fall short of current demand from young Australians who are eager to own their own home.
In addition, there are further restrictions on the price limit for eligible real estate purchases. This is especially true for Sydney, Hobart and Canberra.
With Tuesday’s budget, more support for first home buyers was announced.Photo: NCA NewsWire / Luis Enrique Askui
The budget will make an additional $ 17.9 billion commitment to infrastructure projects, bringing the total investment pipeline for 10 years to a record $ 120 billion.
This investment package reemphasizes the nature of the budget’s election pitch, as local projects receive record funding. The initiative for voters in the Northern Territory, the New South Wales Hunter Region, and key regions of central Queensland is one of the more expensive features.
The regional renaissance is clear across the set of indicators tracked by realestate.com.au and PropTrack. Many take advantage of their ability to work in remote areas, at relatively affordable housing, and with more space and greater lifestyle comfort.
Upgrading infrastructure and service provisioning to regional centers is an important part of sustainable regional population growth. New road and rail projects are spending $ 18 billion, many in rural areas, and this boost is some way to support them.
When done correctly, infrastructure investment supports employment growth, increases fertility and provides long-term economic benefits.
But as always, it’s not a silver bullet. Current pipelines have delays and raw material constraints.
This budget includes $ 9.9 billion for cyber warfare and intelligence initiative REDSPICE (or resilience-effect-defense-space-intelligence-cyber-enabler).
A fluid world comes to mind here.
Changes in geopolitical tides are putting pressure on the world order, and fragmentation of geopolitical architecture is accelerating existing trends towards eliminating globalization and changing strategic alliances.
Relations between Australia and China continue to deteriorate, and Australia’s “largest ever” investment in cybersecurity is no coincidence.
It ensures that Australia can keep up with the cyber capabilities of other countries as economic and political relations change.
Small and medium-sized enterprises
The focus here is on training, skill improvement and technological progress.
For small businesses, there is a $ 120 tax credit for every $ 100 spent training employees. In addition, for investments up to $ 100,000, there is a 120% tax offset for anything that supports digital upgrades (such as new laptops), cloud computing, cybersecurity, or digital capture.
And now for the budget losers …
A long-term solution to affordable housing
The front and back of the same coin. Record high home prices mean that the hurdles for homeownership deposits are higher than ever for first-time homebuyers.
The home guarantee system is at least aware of this issue and helps some people step into the door, but the budget has little more.
Since last year, the financial situation has become severe and the average interest rate on new mortgages has risen. The average mortgage rate has risen for the first time since the pandemic rate fell in November last year.
Affordable housing prices will worsen in the next 12-18 months, as interest rates rise and repayments will probably be higher later this year.
There is a continuous lack of steps to take affordability seriously in Australia, so there is a lack of steps to increase housing supply.
Australia has an inherent comparative advantage when it comes to renewable energies such as wind and solar. Australia is abundant. This is sadly abused.
There is a terrible budget shortage in one important area, which is climate change.
Australia has also had zero climate change in some respects in recent years. It’s a big hole, triggered by the devastating floods on the east coast, the wildfires two years ago, and the many delicate ecosystems.
The incidence of extreme weather events is projected to increase as the Earth warms.
We are at the pinnacle of unsustainable economic and environmental losses and social impacts from maintaining the status quo.
Small spending is reserved for items such as tax cuts on technologies that may reduce emissions. There is nothing to face the devastating challenges of electric vehicles, renewable energy uptake, or climate change. The opportunity I missed.
An aerial photograph of the flooded Lismore taken on February 28, 2022. (Photo by Andrew Sibley / Getty Images)
The budget will provide an additional $ 2.8 billion for skills and trade apprenticeships, but what is lacking is adaptation to our rapidly changing job and skill shortages unless a national skills agreement is finalized. is.
This is especially true as a result of the pandemic’s innovative heritage. Not only has this accelerated the transition to remote work, but it has also accelerated the pace of digital adoption and technology deployment.
As this turmoil accelerates, the structural changes in the labor market that have been underway for several years will also accelerate, re-strengthening the technical skills gap that Australia faces for the foreseeable future.
R & D incentives beyond tax incentives, facilitating skilled migration, investing in intensive education, retraining and improving skills are better suited to the modern workforce and have the potential to address talent gaps.
In addition, enterprises need to provide the foundation for improving investment, innovation and adoption of new infrastructure.
Childcare is expensive and subsidy changes do not cover enough families. This is a problem facing increasing living costs, forcing some parents to spend more working hours.
Costs, among other obstacles, serve to establish a gender role.
The budget includes paid parental leave boosts, and eligible parents are eligible for up to 20 weeks.
Designed to make vacations more flexible, this policy is not sufficient to require mothers and fathers to make specific assignments. This acts as an impediment, as the majority of women earn less than men.
Flexibility is good, but it should come at the expense of closing the gender gap and improving the balance of women’s income, workforce participation, and retirement pensions after retirement. It will not be. All of these are important issues that the budget has overlooked.
In addition, the 20-week vacation is well below the OECD average of 53 weeks for mothers and 8 weeks for fathers.
Cash payments to low- and middle-income earners can add to existing inflationary pressures.
Cash distribution is by no means a breakthrough for the economy, but cash distribution can increase demand, put additional pressure on prices in margins, and counteract measures taken to mitigate rising living costs. There is sex.
This is even more true if interest rates rise later this year to counter inflationary pressures.