by Alan Thornhill
Labor has targeted tax breaks enjoyed by Australians on high incomes, in the Federal budget revisions that it announced today.
The Opposition Leader, Bill Shorten, the Shadow Treasurer, Chris Bowen and Shadow Finance Minister, Tony Burke, said these would include negative gearing and capital gains tax concessions on property purchases.
They said they were advancing a budgdet repair plan “which is fair.”
But many will not agree.
In a joint statement the three Labor leaders said: “Labor has been announcing budget repair measures over the last two years to improve the budget and support our investments in schools and Medicare.
“Today we are announcing a $10.1 billion improvement to previously-announced budget measures, as a result of 2016-17 Budget update.
“This includes boosts to our negative gearing and capital gains reforms, and VET-FEE HELP loan caps.
“Labor’s announced savings from these measures now total $122 billion over the medium term,” they added.
Then they said: “Labor is today announcing a further $6.1 billion in budget improvements through measures that better target the Private Health Insurance (PHI) rebate, reduce wasteful spending and better target family payments.
These measures have been designed to limit the impact on the household budgets of low and middle income families.
They saiid the savings would include:-
*$3.0 billion from better targeting the PHI rebate over the medium term, by continuing the Government’s 2016-17 threshold freeze and removing the rebate from natural therapies.
*Reforming Industry Growth Centres, saving $0.5 billion over the medium term.
*Re-directing DFAT spending to other budget priorities, including the abolition of the Innovation Xchange which focussed on purchasing bean bags. This saves $0.4 billion over the medium term.
by Alan Thornhill
Home building approvals continued to rise in April, with medium and high density projects still dominating the scene.
The Bureau of Statistics reported today that in trend terms the total number of home building approvals rose by 1.2 per cent during the month.
This was the fifth straight monthly rise on this indicator.
However, on trend figures, approvals to build private sector houses rose by just 0.2 per cent during the month.
On seasonally adjusted comparisons, the rise in total approvals was even bigger, at 3 per cent.
And approvals for medium and high density projects rose by 8.7 per cent.
The Bureau also reported that home building approvals in the ACT rose by 6.7 per cent in April.
Approvals also rose by 2.9 per cent in Queensland, 2.2 per cent in South Australia, 1.9 per cent in Tasmania and 1.4 per cent in NSW.
But there were falls in the Northern Territory and WA on trend comparisons.
by Alan Thornhill
Home building approvals rose 1.2 per cent in April, on trend figures the Bureau of Statistics published today.
These figures – which are among the bright spots in the Australian economy – followed four previous months of rises.
The Bureau said that dwellings approvals had increased by 6.7 per cent in the Australian Capital Territory in April.
There had also been a 2.9 per cent rise in Queensland, a 2.2 per cent rise in South Australia, a 1.9 per cent rise in Tasmania and a 1.4 per cent rise in NSW.
But there were also falls of 15.2 per cent in the Northern Territory and 0.1 per cent in WA.
Approvals in Victoria were flat during the month.
The Bureau also said that in seasonally adjusted terms, dwelling approvals increased 3.0 per cent, in April, driven by private sector dwellings excluding houses which rose 8.7 per cent.
Private sector house approvals fell 2.3 per cent in seasonally adjusted terms.
The value of total building approved rose 1.1 per cent in April, in trend terms, and has risen for three months. The value of residential building rose 1.6 per cent while non-residential building was flat, the Bureau said.
by Alan Thornhill
Tax breaks which favour investors have pushed Australian home prices to record – and unaffordable – levels, according to bodies representing families on low to moderate incomes.
These include the Australian Council of Social Security.
Its chief executive officer, Dr Cassandra Goldie, says its time to “get serious” about reforming negative gearing and capital gains tax breaks, which unfairly favour the rich.
Speaking on behalf of A national alliance of community housing and welfare groups, which is urging swift and deep reforms, Dr Goldie said: “Australia is in the midst of a housing crisis…”
She said:“Tax settings that encourage speculative investment and inflate house prices – like negative gearing and the capital gains tax discount – must be addressed in a new national strategy to address housing affordability.”
“These unfair tax concessions cost the federal budget more than $7 billion every year,” Dr Goldie said.
Over half of these tax breaks go to investors in the top 10 per cent of income earners, she added.
The alliance is made up of Homelessness Australia , National Shelter, the Community Housing Industry Association and the Australian Council of Social Service .
It is asking all Australians to sign a petition calling for tax reforms that put ordinary people ahead of the interests of investors.
Dr Goldie said: “People who negatively gear claim an average loss of $8,722 per year.
“This means funding for essential services such as education, health and dedicated housing for low income families are reduced.
“Spending savings should be redirected to improve affordability, including a tax rebate for new affordable housing, and significantly increased investment in public and community housing,” she added.
She said governments must do all that they can to ensure everyone pays their fair share of tax to enable us to fund our services properly into the future and to help end the housing crisis that is pushing people into financial hardship.
“By signing the Vote Home petition, Australians can call on party leaders to change unfair tax concessions and unlock affordable housing for all ,” Dr Goldie added.
However her campaign has little immediate chance of success.
The government argues that negative gearing is necessary to produce the supply of homes that Australia needs and the opposition is prepared to accept only limited changes to it.
by Alan Thornhill
The Prime Minister, Malcolm Turnbull, told voters tonight that growth is necessary for Australia.
He said that is fundamental.
And – taking care to appear Prime Ministerial – Mr Turnbull said his government had a plan to achieve growth that would produce new jobs and prosperity.
The Opposition Leader, Bill Shorten, responded by saying that fairness is needed for growth.
And he said the government’s plan to give big foreign companies $50 billion worth of tax cuts over the next 10 years is not fair.
He said a well educated population, with access to good health care, is essential.
The two leaders were speaking in the second of their debates in the current election campaign, leading to national elections on July 2.
Tonight’s debate was the first to be televised publicly.
The first was carried only on pay television.
Although both leaders were criticised tonight for not giving enough detail about their policies, both would probably be reasonably happy with their performances.
Both managed to avoid embarrassing mistakes.
And both stuck to carefully considered strategies.
Mr Turnbull sought to re-assure those who share his philosophies and to convince doubters that voting for a reckless spending Labor government on July 2 would be just too risky.
And Mr Shorten, who realises that he is less well known than his rival, took care to present himself as a moderate responsible leader, who will advance thoroughly thought out policies, in this campaign which still has five weeks to run.
by Alan Thornhill
The $A was holding tenaciously late today to gains it made after the Reserve bank revealed that some board members were reluctant to cut rates on May 3.
This was confirmed when the bank released the minutes of its board meeting today.
Currency traders responded by pushing up the $A by about half a US cent to 73.39US cents.
And by 5pm today, the $A was still selling at 73.54US cents.
The bank admitted, in its minutes, that board members “had discussed the merits” of a cut in the bank’s marker interest rates, at the May 3 meeting.
That rate was cut from 2 to 1.75 per cent.
The decision was based on a report that the Australian Bureau of Statistics had published the previous week, noting that consumer prices had actually fallen in the first three months of this year.
by Alan Thornhill
Australian shoppers are spending more and saving less, according to the Reserve Bank.
The bank made this observation in the May Economic statement, which it published today.
Its main purpose, in publishing this month’s statement, was to explain why the bank cut its marker interest rate by 25 basis points last Tuesday, to a new low of 1.75 per cent.
The bank confirmed, in its statement, that its board had been thinking of cutting this rate, for some time.
It peaked – at 17 per cent – in the late 1980s.
But the bank is expecting much quieter times, in the period ahead.
It noted that wage growth had been “modest.”
It said:“ This implies a further gradual decline in the household saving ratio over the forecast period.”
The bank also said:”The amount of residential construction work still in the pipeline is substantial and has continued to increase.”
“This points to further strong growth in dwelling investment, albeit at a gradually declining rate consistent with the decline in building approvals since last year.”
“ In established housing markets, conditions have stabilised over the past six months or so.”
“ Housing prices have grown moderately over 2016 to date, following a small decline at the end of 2015.”
“ Housing credit growth has eased a little over recent months to be around 7 per cent in six-month-ended annualised terms in early 2016.”
“ This follows increases in mortgage rates and the strengthening of banks’ non-price lending terms in response to supervisory actions.”
“In above average and business credit growth has picked up over the past year or so.”
“ Nevertheless, indicators of investment intentions suggest that non-mining business investment is likely to remain subdued for a time, although it is expected to gradually pick up later in the forecast period as overall demand strengthens.”
“ Mining investment is expected to continue to fall as projects are progressively completed,” the bank said.
by Alan Thornhill
The number of home building approvals rose by 0.6 per cent in March, on trend figures the Bureau of Statistics published today.
This was the fourth consecutive monthly rise on this measure.
The ACT was the stand-out performer, with an 18.9 per cent rise in approvals for the month.
But there was also a 1.1 per cent rise in WA, a 0.8 per cent rise in Queensland and a 0.2 per cent rise in Victoria, on trend figures.
However there were falls of 18.1 per cent in the Northern Territory, 1.5 per cent in Tasmania, 0.3 per cent in NSW and 0.1 per cent in South Australia.
Weathercoast by Alan Thornhill
A novel on the murder of seven young Anglican Christian Brothers in the Solomon Islands.
Available now on the iTunes store.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
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