Archive for the ‘Government banking reform’ Category

Property taxes send $30bn to government

Friday, April 20th, 2012

More than $33 billion was added to local and state government coffers over the last year from property related taxes, despite a deterioration in property market conditions. New research from RP Data, property related taxes amassed a healthy 47.3 per cent in tax revenue for state and local governments.  Total property-related tax revenue increased by 4.6 per cent over the year – following a record increase of 14.3 per cent over the 2009-10 financial year.

Despite this, the total value of residential property transactions in 2010-11 fell by 17 per cent compared with the previous financial year. Over the financial year capital city home values fell by 1.4 per cent and transaction volumes for homes were 20 per cent lower than over the previous year.

Considering that since the end of the 2010-11 financial year property values and transaction volumes have continued to fall, I would expect that in order to grow tax revenue state and local governments may be looking to again increase land tax and municipal rates as there is likely to be limited (if any) growth in stamp duty revenue.

Property tax is clearly one of the most important sources of revenue for state and local governments and as a result it is likely that these governments will look to make adjustments to grow revenue. Most notably, we already know that rates have increased over the year and some changes have been made to land tax calculations.

With the soft market conditions over the financial year to date, I expect that state and local governments will begin to look for other ways to compensate the falls in property related taxes. Potentially this means higher rates of stamp duty or charging a greater amount of land tax / municipal rates.

Posted in Budget, Enconomy, Financial goals, Government banking reform, House prices, Wealth | Comments Off

2011 housing down by almost 10pc

Thursday, April 19th, 2012

ABS figures released today confirm a very weak quarter for new housing in December 2011. New residential building work fell by 1.7 per cent in the December 2011 quarter to be down by 7.7 per cent when compared to the year before.  Meanwhile, the value of major alterations and additions work done, which accounts for around 20 per cent of total renovations activity, fell by 2.1 per cent over the quarter. The overall value of work done in total over the 2011 calendar year was down by almost 10 per cent.

Things are just getting worse for both new housing and major alterations and additions activity.  In the December 2011 quarter, seasonally adjusted residential building work done fell for a third consecutive period, declining by 1.8 per cent to an annualised level of $44.5 billion.

The situation is very clear – interest rates are too high, the short term focus on a return to budget surplus badly timed, and housing policy reform

Posted in Budget, Enconomy, Finance News, Government banking reform, House prices, Inflation, Interest rate | Comments Off

Housing shortage continues

Monday, April 4th, 2011

Economists are calling on the federal government to resolve the growing housing shortage problem.

The housing starts are expected to drop by 15 per cent in 2011, wiping out a majority of the short-lived, stimulus driven gains of last year.

The fate of residential building in 2011 has been all but sealed by higher interest rates, continuing tight credit conditions, and a complete lack of progress on policy reform to reduce excessive new housing costs. 

Housing starts have only increased in two of the last ten years. This fact delivers a very poor scorecard on new home and rental market affordability which especially hurts aspiring first home buyers and lower income households.

The housing supply crisis is upon us now and without proper leadership from the federal government it is only going to escalate.

I believe it was now up to the federal government to not impose any new taxes that have an impact on the cost of new housing. However that may fall on deaf ears somehow?

I think the government should be assisting states to remove stamp duties on new homes and removing planning and development bottlenecks.

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Posted in Enconomy, Financial goals, Government banking reform, Inflation, Interest rate, Wealth | No Comments »

New home sales still slow

Wednesday, March 30th, 2011

New home sales in February 2011 failed to materially improve on an encouraging start to the year seen in the thin trading month of January.

The risk was for a weaker result than what we saw for January. Nevertheless, new home sales are running at volumes considerably below those experienced during the stimulus-driven run of 2009 and early 2010, while both local government building approvals and new housing loan approvals are trending down once more.

At the very time when new home conditions need to be continually improving we are faced with compelling evidence of a considerably weaker 2011 compared to last year.

Interest rates are on hold for now and that is a tick in the box for the housing industry, but an upward bias to rates remains in play. The onus is on Federal and state governments to reinvigorate the policy reform process to reduce the excessive costs of new housing.

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Posted in Enconomy, Financial goals, Government banking reform, House prices, Inflation, Interest rate, Wealth | No Comments »

Majors slam proposed govt reforms

Tuesday, March 8th, 2011

Westpac’s chief executive Gail Kelly has slammed the government’s proposed ban on exit fees as “poor public policy”.

In an interview with The Australian, Ms Kelly said the abolition of exit fees would only make it harder for smaller lenders to compete.

Ms Kelly said that while the fee was not “a big matter for us at Westpac”, smaller players would struggle to remain competitive. A statement that I agree with  and it seems the vast majority of those in the industry agree with Ms Kelly’s sentiments.  Exit fees were essential to the competitiveness of smaller lenders and non-bank players.

If the government truly wanted to introduce competition back into the mortgage space, they would make Lender’s Mortgage Insurance portable. I also believe the government needs to abolish stamp duty and the property market would recover quickly.

The big area where an opportunity was lost was in Lender’s Mortgage Insurance. Currently, those borrowers that take out Lender’s Mortgage Insurance often have to pay the fee again when they refinance with another lender. This is a huge deterrent to borrowers switching lenders, but it is a deterrent that doesn’t necessarily have to be in place after all it is an insurance policy to protect the lender so why shouldn’t it be transferrable?

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Posted in Enconomy, Government banking reform, Interest rate | No Comments »

Banking reforms bad news for brokers

Tuesday, December 14th, 2010

Treasurer Wayne Swan’s proposed banking reforms could have negative ramifications for brokers.

It is hard to tell what impact any banking reforms would have on brokers until they are formally introduced, the government’s plan to slash mortgage exit fees could force lenders to recoup these costs elsewhere.

I think there is a good chance the banks may look to recoup their costs from mortgage brokers.

Indeed if exit fees are removed, we could see commissions cut or clawbacks increased.

Like all businesses, banks do need to pass on their costs to customers, but whether the banks just absorb those costs off their profit line or whether they pass them on in some other way is down to the individual bank.

If mortgage broker commissions are cut further we will need to charge the consumer for the service or close up shop.

This is typical of labour governments making changes that suit the end consumer but dam the small business owners. When will they ever learn that it is the small business owners that employ the most people which in turn keeps this country going?

Take the governments paid parental leave scheme, great idea but expecting a small business owner to implement a welfare scheme is not only unreasonable but costly also.

Posted in Bank fees, Government banking reform | No Comments »