“Back in the black” Wayne, otherwise it’s the sack!

“Back in the black” Wayne, otherwise it’s the sack!

.

Welcome to your Virtual Realty News tenth Federal Budget edition – although yet again we were not invited to Canberra for the lock – down (funny that). The budget announcement conveniently blames the past and paints a rosy future. An abundance of spin on the positives, yet no mention of the negatives and sadly, there are plenty. Here is my reasoning which goes back to the election and the Rudd/Gillard government’s four budgets which get worse. The Government completely ignored Australia’s slowing growth, rising dollar to dominate budget preferring to take a totally opposite view.

The biggest problem facing the Rudd/Gillard Government is that it panicked during the global financial crisis, believing that the Australian economy was terminally ill. Less than twelve months later in 2009, Australia experienced just the one quarter of negative growth. The debt had to be paid back much sooner than expected so having a budget in surplus is not something that Labor has experienced. Simply put: the Government spent too much and is now hopelessly struggling to pay back its (our) debt.  Wayne Swan can’t say which year Labor achieved its last surplus. Wayne the answer is 1989 – 90. Of course the summer of disasters hit the budget, says PM although the Government failed to list the billions lost in waste schemes such as Pink Batts and BER blow outs in the budget.  Past – Treasurer Peter Costello wrote  An economy to die for – surely Swan could manage a better budget? “The budget has no coherence, no strategy, and no conviction.”

BUY PRINT

In his 2010 Federal Budget, Wayne Swan predicted a $40.8 billion deficit where in 2011 it came in at $49.4 billion. In 362 day’s time, Swan now has to deliver a budget deficit of $26.8 billion otherwise no chance of returning to a budget surplus in 2012/13. To achieve this Swan is banking on no more natural disasters here or abroad, the Australian dollar not getting any higher, a return of strong tax receipts by individuals and companies and a stronger real estate market. Also, reign in the out of control spending on asylum seekers and of course delivering that other debacle called a Carbon Tax.

As Alan Kohler wrote Budget 2011: Australia on a wing and a prayer “In other words, it’s a wing and a prayer budget – keep spending, let the deficit blow out, and predict with a straight face that the commodities boom will bail us out eventually.” Aside from that blunt assessment interest rates will have to rise, warns Reserve Bank of Australia as confidence in economy falling as Wayne Swan claims Government can make ‘substantial savings’. Although already, we are seeing Australian’s struggling to save due to the daily increase in cost of living.

Source: The Australian- order Bill Leak’s print

Let’s have a peek at the Sydney property market to see what’s happening and why it is being echoed across Australia. Budget and rates rise flagged to pinch households although we should be thankful that Wayne Swan’s budget left Negative Gearing alone. The latest house price data from the Australian Bureau of Statistics confirms that most city markets slowed in the March quarter. Prices are falling – some suburbs still hot where Sydney house prices fell by 1.8 per cent during the quarter and the annual increase now sits at 0.8 per cent. It is most obvious that the Gillard Government simply does not understand housing affordability which is why it was completely ignored in the Federal Budget.

Forget the Gillard Government’s obsession with mining tax revenues, the largest employer in Australia remains the real estate industry. When the property markets are moving forward so is the economy so the Auction action graph clearly indicates just how much the property markets are contracting (not a bad thing for property prices). Nevertheless, a terminally ill indication for the economy given tax revenues for the State Government are collapsing.  Total value revenue was $430.9 million same time last year and $162.4 million last week.

Australia has waved goodbye to the Global Financial Crisis yet the latest data from Australian Property Monitors (APM) indicates that property prices are in decline across Australia.

SYDNEY MARCH QUARTER RESULTS

Source: Domain Property Monitors

  • House prices fell in the March quarter by -0.4 per cent after recording growth of +1.1 per cent in the December quarter.
  • Unit prices fell by -0.7 per cent over the quarter following a flat result in December.
  • Sydney median house price is now $643,713 and the median price is $448,585
  • Annual house price growth sits at +2.0 per cent and unit price growth is at +2.1 per cent, both trending downwards.

BUDGET OVERVIEW

.

Wayne Swan admits China is key to returning to surplus a disgraceful summation directed at the ability of Australian business that is not mining reliant. Granted, a record $76 billion worth of spending in the booming resources sector where these decisions have absolutely no calibration with Wayne Swan policy. Wayne Swan is hedged into the Australian dollar remaining steady although Aussie dollar could hit $US1.70 by 2014, predicts money guru Savvas Savouri.

Households are being hit and when the Aussie dollar climbs they will all go to online shopping where they don’t have to pay GST on their overseas purchases.  Our retail market will then collapse Myer, DJ’s see glimmer of hope in retail sales. The Government failed to address in the Federal Budget – tax online shoppers, save jobs. Those with mortgages should be budgeting for a rate rise or two, three and four. Directors cool on carbon price and broadband which are neck and neck in the dumber and dumber policy announcements in Australia’s political history.

Finally, electricians fear set-box installation flop think Pink Batts. When it was announced that Australia was moving to digital, the Aussie dollar was at $0.68 cents.  It is now coasting near US$1.08 cents. Television prices have halved and Julia Gillard just acquired $300 million plus of useless set – top boxes that could never be sold given the Aussie dollar’s rise and rise.

Can Wayne Swan reduce the deficit to $26.8 billion by the next Federal Budget?  Of course he can (as sure as deposed Premier of NSW, Kristina Keneally, will be the next NSW Premier!!!   Work experience does not always apply to elected politicians, especially when it comes to understanding economics.

Cheers ^__^

This week’s sales Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate, Cammeray real estate Click Here

7 Responses to ““Back in the black” Wayne, otherwise it’s the sack!”

  • Ann says:

    If the $A hits $1.70 or even $1.50, the crowds buying clothes, electronics etc will disappear at the shopping centres and form at the Post Office as they collect their items.

  • Ann says:

    Cant believe Bob Hawke was PM last time Labor delivered a surplus federally. Its seems so long ago. From memory that was the same year interest rates hit 18%.

  • Gordon says:

    Perhaps it’s not so much that the govt panicked at the GFC, rather that they saw it as a glorious opportunity to blow Costello’s $20Bn surplus and a whole lot more. And they’re still at it with the inane STBox fiasco.

    There’s a common thread running through all this vast waste – most of it has been handed to highly unionised industries. This seems to cover two really important policy priorities: paying off the sector which installed Gillard and Swan, and boosting union donations to the ALP.

    We do seem to have the finest politicians that money (and power) can buy. . .

  • Hotly Spiced says:

    It’s great that today Tony Abbott called for an early election. Of course Gillard and her unofficial deputy, Bob Brown, rejected this call. Long may Abbott keep up the pressure because there is no way this Government will ever deliver a surplus, especially while their focus is on continuing to hand out depreciating toys.

  • Ann says:

    If I came home with this report card – my dear Father would have belted me, unless my Mother beat him.

    • Labor is borrowing $135 million every day.

    • Net government debt will climb to a record $107 billion in 2011/12. That’s more than $4700 for every Australian

    • By 2014/15 Labor will be spending $7.5 billion a year or around $20 million a day on interest payments.

    • The 2010/11 budget deficit has soared to $49.4 billion – the second largest since WWII and $8.6 billion worse than forecast in last year’s Budget.

    • The forecast deficit in 2011/12 has blown out by $9.6 billion to $22.6 billion.

    • Labor has turned a $20 billion surplus into a $50 billion deficit. The last nine Labor Budgets have between them now posted cumulative deficits of almost $230 billion.

    • Last Labor Surplus was in 1989 under Bob Hawke.

    • Labor’s Budget hits Australian families and businesses with $6 billion in new and higher taxes.

    • The Budget strips $2 billion from families by freezing for three years the indexation of key family payments and income thresholds. All families receiving Family Tax Benefits will have some benefits stripped from them.

    • At the same time, the cost of offshore asylum seeker management has blown out by a further $1.75 billion, while Labor is cutting $2.7 billion from Australia’s defence budget.

    • Instead of ending the uncertainty surrounding Labor’s Carbon Tax, the Budget fails to give details on how it will impact living costs and jobs. But it does provide $13.7 million for a taxpayer-funded advertising campaign to sell Labor’s new tax.

    • If you ran your company like Swan runs the country, you would be broke, in receivership and all your employees would be looking for a job

  • I can’t help but think that the continuing downturn in the property market is not solely due to the GFC and post GFC economic climate, but the incessant barrage of ‘media horror’ combined with estate agents continuing to auction property.. (a great thing to do when there is plenty of competition), price pitching at the low end of an often very ‘generous’ 10% range, expecting competition and surprise… not getting much, then convincing vendors to take lower prices…. quite simple really.. I think…

  • Kylie Emans says:

    When I heard about the new set top box scheme I thought here we go again another bungle where my hard earned taxes go down the drain. All I know is if these politicians had to run a business in Sydney for a week they would be going back to the security of their cushy jobs filled with allowance paid travel,lunches and lifetime superannuation within 24hrs!

Leave a Reply

Your email address will not be published. Required fields are marked *