No, sadly this blog is not about the Olympics or any other high-profile sporting event. Rather, it is all about the shenanigans what will now consume the hearts and minds of both politicians and the media in the coming months.
On 9 May 2017, the head of the government’s counting department, chief number man ScoMo, delivered his annual Budget.
Unlike 2016, the Budget that still has certain sections of the community up in arms – particularly with respect to some of the superannuation changes – the 2017 budget was relatively benign, particularly in the superannuation space.
There were plenty of ‘big ticket’ announcements in this year’s Budget including a large allocation of funds ($75bn) to infrastructure spending, and more cash for schools in the form of “Gonski v2.0’, but at the same time there was some negative news particularly around plans to recover tertiary education debts earlier and more quickly. Increasing the Medicare levy to 2½% in 2019, and the removal of some tax concessions for both foreign and Australian residents that invest in residential real estate.
As promised, the Budget included measures designed to address housing affordability but sadly it might be a case of too little, too late.
Housing affordability is something that needs to be addressed if Australians are to be able to fulfil the great Australian dream of owning their own home. But housing affordability is not just about restricting foreign ownership and limiting tax concessions for investors – it is also about ensuring there is sufficient land available for cost effective development.
How the affordability question will work out is a work in progress. As they say, ‘watch this space’.
Two initiatives announced in the Budget bring housing affordability and superannuation together.
Firstly, the government announced a measure that will allow first home buyers to save for a deposit by making voluntary contributions to super, and then be able to withdraw these contributions, plus investment earnings when they want to buy their first home. At least this will enable savings to accrue in a tax effective environment.
The second super-housing announcement is targeted at older Australians.
When a person over the age of 65, who has lived in their home for at least 10 years, wishes to sell and downsize, they will be able to contribute up to $300,000 of the sale proceeds to super without having to meet the work test that applies to people between 65 and 74, and without being constrained by the contribution caps.
For some, the ability to get extra money into super will be welcome news. However, for many, including those who are receiving a part or a full age pension, freeing up some cash by downsizing the family home may actually result in the loss of part or all of the age pension.
Clearly, these ‘super-housing’ announcements are welcome news. However, they may not be beneficial to everyone.
Like all announcements made by governments of all persuasions, we need to wait until we see the legislation and then it needs to be analysed to ensure the measures actually provide real and tangible benefit to those who may be seeking to take advantage of them.
But until then, expect to endure weeks or months of political posturing as each side of the parliament and their vested interests beat their chests and tell us what is best for us.
Be in informed and open minded. Join the conversation by making your comments in the ‘comments’ box below.2