15 Apr Federal Budget 2019-2020
With the Federal Budget being recently released, there have been a lot of questions on the different aspects of the budget, the benefits that it has and areas that have not been given much attention.
With the areas that were given attention in the budget, it is clear to see that property owners were not the winners of the budget. There was very little relief shown to property in the new federal budget, with many of the positives being geared towards low- and middle-income earners.
The budget has not created any enticement to those looking at entering the property market and has not provided any incentives or relief for those who are already a part of it. The lack of support provided to property owners in the federal budget have left many wondering whether this will have a negative effect on the property market and the rising of house prices once again.
Treasurer Josh Frydenberg announced in the Federal Budget that there will be an investment of over 100 billion dollars into infrastructure in the next 10 years. This money will go towards the building of a fast rail and the improvement of road systems across the country. The boost into the infrastructure will pose many positive benefits including more jobs being created and improved transport systems, however this does not directly impact those purchasing a property. It can assist for those who are able to gain the employment working on the projects -as they will have a good steady income however this is not enough of a benefit overall for property owners.
For the government to achieve their projected forecasts of surplus, they are relying on the economy and property markets to increase. Without showing support to the property market, they are risking this surplus not being achieved. The treasurer made comments that the affordability of housing was key to the governments projections however they are willing to allow the affordability to come through organically with the decrease in house prices rather than give an incentive to those who are looking at entering the market. There has been a decrease in the cost of housing since the last budget was released which is why the government believes this will be achievable. However, with the decrease in housing prices there has also been a significant increase in the cost of everyday living expenses.
Reduce in incentives
Not only is there a lack of incentives and benefits for property owners in the new federal budget, but there are also cuts to the incentives that they were previously entitled to. Property owners currently can claim deductions on land that they own which they are not planning on earning an income from, whilst banking the land in the hope to sell it at a later date for a profit. Under the new budget there will be changes to how this is able to be done and potential for it to decrease.
Property owners will no longer be able to claim deductions on rates and maintenance costs for land that they own which is vacant. This change is said to bring in an additional 50 million dollars’ worth of revenue for the government.
Given the decline in house prices across the country and in particular in the major cities, now would be the perfect time for the government to be trying to inject money into the property market and making it not only more affordable for people to purchase a property but also give them an incentive to do so.
The 2018 proposed Federal Budget does have many benefits throughout it and will significantly help different types of people, the low- and middle-income earners are looking to receive the most relief and assistance through the changes. The Federal Budget is lacking in the way of providing any assistance to those either already in the property market or looking to enter the property market.
The treasurer when reading out the new budget assured that the changes are necessary and are going to be beneficial to all with the changes bringing a surplus to the budget. If this does happen then it will be great, however without the care and consideration being given to the property market it is quite possible that these surplus’ may not ever be seen. More needs to be done to increase and preserve the property market.