Hands up if you like high interest rates.
No takers? Just checking.
The RBA Board doesn’t either. One group in their bad books – east coast Treasurers.
The Board’s ultra polite view – ‘budget outcomes may also have an impact on demand.’ Michael Read summarised this more robustly using S&P Global data in last week’s Financial Review:
‘The spending binge means the states’ collective debt bill could hit $800 billion in 2028, up from just $266 billion in 2019…’
So, bar WA and SA.
Large collective deficits and bulging infrastructure spending? Check.
Daft tax hikes that reduce all project investment? Check.
Failure to acknowledge retirement living and purpose-built student accommodation benefits. Check.
Cabinet level ignorance that foreign investment is desperately needed to build key city assets and meet our 1.2 million homes target by 2029?
Checkity check check.
The NSW Budget went full pantomime villain. NSW included a welcome record spend on social housing, only to hide it in the shadow of a $6.38 billion cost hike for the property sector. Doesn’t quite fit with the new housing investment mantra. Doh.
As NSW Executive Director Katie Stevenson said: ‘It’s a massive cost for property owners and developers facing a once-in-a-generation housing supply and affordability crisis, a critical shortage of industrial land and low vacancy rates, and a … challenging cost environment.’
A similar story in Queensland where the Budget slugged investors using international funding, despite the desperate need for international money to help build Queensland’s housing right now.
QLD Executive Director Jess Caire took a Hippocratic tone: “These companies are the cure to our sick housing system, but this new tax will make the illness terminal.”
In a partial pivot, the Victorian Government had the good sense not to include any new taxes on property. Modest credit to them, caveated by their prior tax misdemeanours.
As Cath Evans our Victorian Executive Director said, ‘the uncompetitive tax status quo will only preserve the hostile investment environment in Victoria that is driving capital to find – and very literally build – a home somewhere else’.
It does get better as you head West.
In South Australia our Executive Director Bruce Djite framed the Budget thus – ‘up one-nil at half-time’ as it awaited the Housing Roadmap which was announced at our event yesterday.
He welcomed the government’s roadmap but said now “the rubber must truly hit the road”.
And finally, Western Australia. A special mention of its $500 million investment to unlock strategic industrial areas and $1.1 billion investment for housing and homelessness amidst the context of, as our WA Executive Director Nicola Brischetto puts it, ‘the urgent demand for more skilled workers to help build the homes we need.’
East of Broken Hill, high taxing and spending budgets have become a deeply unproductive addiction AND inflationary.
Even the Reserve Bank agrees. More on this in the coming month.
Next week, better planning of our cities starts 1 July 2025…