THE MONEY OR THE BOX?

THE MONEY OR THE BOX?

Just a few weeks ago property market analysts were forecasting that there would be no rate increases in 2007 and even a strong possibility that rates could fall. A few weeks on, the dollar climbs up over US80 cents and now the pundits are tipping a 50 per cent chance of a rate hike next month and better still an 80 per cent chance of a rise in May once the March quarter inflation results are released. It should be remembered that once the football season commences, market analysts tend to become absorbed with footy tipping competitions – so tipping markets over winter months are contagious for some. It would be fair to say however, that the current assessments do indicate that March quarter inflation will push the annual rate higher.

No doubt the head tellers at The Reserve Bank would be keeping a very close eye on clearance rates with Mosman/Neutral Bay/ Cammeray and Cremorne this week posting a very impressive 85 per cent. Whilst these areas continue to post above average results, the same can’t be said for others that are well below 50 per cent with home prices continuing to fall. Our property market in 2007 is easily the strongest we have seen in years and with Easter approaching, and because properties are selling within days, stock levels for many agents are low. It will be interesting to see the stock levels post–Easter which again, should be a strong market for both apartments and houses.

With the state election this weekend, it is a close tie as to which party is the most incompetent. It would be much easier if the respective parties tossed a coin! Confidence levels in either party are at an all time low. Whatever the result, the future for NSW looks pretty pathetic in so far as infrastructures are concerned and you can be guaranteed that we will see no relief in taxes for quite some time. This sparked heated debate when Peter Costello claimed that NSW should dump commercial stamp duty worth $800 million a year. He also said “If the states want to take 100 per cent of the GST, then the states can abolish 100 per cent of the taxes that it was introduced to get rid of.”

Finally we get some clarity, as this was the precise platform that Australians voted on when GST was introduced in 2000. As the states continue to double dip, it was interesting to see the federal opposition duck this topic of conversation. So it was back to Morrie “I’m sorry” who said “If the Federal Treasurer ends the GST fraud and gives the people of NSW back their money then I won’t only reduce taxes, I’ll slash them.” Poor Morrie – another brain explosion! It is not about slashing them, it’s about abolishing them! Even funnier was the claim by the State Government that it pays $13 billion in taxes (no Morrie, the residents of NSW pay the GST) the government then gets $10 billion back. Now if Peter Costello gave an extra $3 billion to our grossly incompetent state government, we would then have to see taxes slashed and/or abolished. The difference previously, was that Bobby “Dazzler” Carr would never allow the debate to force him into a corner. However, with Morrie he keeps brushing his teeth with his ‘hush puppies’.

Now if Canberra does not pass on the extra $3 billion (and it’s not likely to, based on the formula applied by the Commonwealth Grants Commission) this is what we have to look forward to.

Enter Michael “Cost–ya Plenty”, who revealed that the bulk of Labor’s $1.6 billion in election promises (otherwise known as vote buying) won’t be spent until the year leading into the 2011 election.

An article appeared in The Daily Telegraph this week, titled “Iemma’s lay–by promises”. “Releasing their election promises costings yesterday, validated by NSW Treasury, a spokesman for Mr Costa confirmed that of the $840 million in recurrent spending on services, $245 million will not be spent until 2009–2010 and $335 million until 2010–2011 – taking it past the life of the next government”. Well well, that certainly gives this entire election campaign a new perspective.

No doubt the excitement of Saturday’s result will be earth shattering !! It won’t be cause for celebration, rather one to drown sorrows. Cheers ^__^

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