What the truck is he on about?

Does Turnbull really think that rolling out the debt truck will revive his poll ratings?

MALCOLM Turnbull will use a truck _ the Liberal Party’s debt truck _ to take the fight to Labor over its handling of the economy after his disastrous handling of the “Utegate” affair.

The Opposition Leader said the debt truck, to be launched this morning in Perth, would draw attention to the Rudd Government’s reckless spending on cash handouts and school infrastructure projects.

I mean, really, Malcolm, you can do better than this.

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Oi! – what about the economy?

In all the shenanigans over Utegate, we tend to forget that the economy is on life support and actually needs the attention of all of the people who can help (or are supposed to help). Yep- those in Canberra.

Interest Rates

Some think the next movement will be up, some think that the next movement will be down. But even if the next movement is down – will the banks pass the cut on? We saw what CommBank did a few weeks ago. But in their defence, all they did was make a change to move their margin back into a range similar to the other three.

Credit Cards

As news that credit card balances are finally falling, we have stories that the interest rates are now higher than they were two years ago.

Stamp Duty

And finally, there are reports that stamp duty for housing loans could be abolished under the Henry review.

So while the bozos are going on and on about Utegate – who is looking after the steering wheel for the economy?

Keep your enemies enemies even closer

Reports are now surfacing that Costello has been offered a position on the board of the future fund.

“We are looking very seriously at Costello for the job,” the source said. “He is more than qualified and the nation knows he has economic cred. Politics doesn’t necessarily play a part here, experience does.”

Well that’s one way to neutralise a former treasurer.

Inflation down, rates down?

There is a feeling is that the RBA will not cut the base rate tomorrow even after the latest inflation figures show that there was a 0.3 per cent fall last month.

Yet analysts and investors see little chance of the RBA cutting interest rates again at its monthly policy meeting on Tuesday, with recent commentary from the officials suggesting they were content to wait and assess the impact of past easing. The key cash rate has already been cut by a massive 425 basis points to a record low of 3.0 per cent.

But even if the RBA does cut rates, will the banks pass it on, or will they keep it for their own bonuses?

Expect to Work Longer under a Labor Government

Despite being lauded as a relatively sensible move by economists, the Prime Minister Kevin Rudd is set to have a battle on his hands over his plans to introduce the pension eligibility age from 65 to 67.

The Prime Ministers’ plans to increase the pension eligibility age are in line with similar changes in other nations as average life expectancy rises and our ageing population grows.

However, according to reports in The Australian, The Construction Forestry Mining and Energy Union (CFMEU) have written a “strongly worded” letter to the PM citing their disapproval of the proposed changes.

In their letter to Mr Rudd, CFMEU national secretary John Sutton and AMWU national secretary Dave Oliver warn it is unfair and unrealistic to expect 65-year-olds to work in heavy labour.

The letter, obtained by The Australian, urges the Government to dump the idea and instead wind back tax concessions on superannuation contributions to raise revenue.

Mr Sutton said lifting the pension or superannuation eligibility ages would be electoral poison.

“It’s a bad policy,” Mr Sutton said.

“I strongly anticipate the Left would reject it as a policy. Many in the party would reject it as a policy. As far as I am concerned, it is an industrial issue.”

Mr Sutton said Mr Rudd’s plans had angered his members and would “go down like a lead balloon” in the community.

“You are talking about people who have worked nigh on 50 years and they are now being told it will be compulsory, you will not be able to access the pension until later life. I just think that’s a bridge too far.”

Mr Sutton said the unions would raise the issue at next month’s ACTU national congress and the ALP national conference in July, insisting workers regarded access to the aged pension at the age of 65 “a fundamental right” that ought to be protected by a Labor government.

However, on the issue of the pension age, Mr Rudd was unmoved last night.

“Increasing the pension age is a responsible reform to meet the challenge of an ageing population and the economic impact it will have for all Australians,” Mr Rudd said.

“Australia’s shift in pension age is in line with what is happening all over the world. The United States, Germany, Norway and Denmark are moving to a pension age of 67 years and Britain is moving towards 68 years.”

According to the Australian, ACTU president Sharan Burrow said workers’ bodies were often “broken” long before they turned 65.

“Of course, in the 1991 recession, we lost a lot of people who never came back to work and they were languishing there on disability support pensions until they retired,” Ms Burrow told the Ten Network’s Meet the Press program.

She also said any change to the age at which people could access their superannuation would be counter-productive.

“You need people to mix income in work, in retirement incomes, flexible, part-time work. All of those choices should be there as people get towards that retirement era,” she said.

Of course, what all of this fails to take into account is the recent “transistion to retirement” changes which were introduced under the Howard Government a couple of years ago.

The transition to retirement rules allow (depending on certain eligibility criteria) individuals the opportunity to begin to access their superannuation retirement savings from the age of 55. This may be received in the form of an income stream while still participating in the workforce.

Furthermore, given the increasing life expectancy and growing proportion of elderly versus working younger people is it really such an outrageous move to increase the pension eligibility age by two years?

To me this is just another signal that for people who are currently in the thirties or forties now, it would be optimistic to think that there will be any any meaningful financial support in terms of a Government pension by the time they reach retirement age. In other words, get ready to fend for yourselves. Then again wasn’t that what compulsory Superannuation was all about in the first place?

“This rally is all bull” says Alan Kohler

Alan Kohler at the Business Spectator writes:

The stockmarket rally is now being driven by the same force that set up the excesses that led to the bust in the first place – an abundance of liquidity.

The world is awash with government money, both central bank “quantitative easing” (money printing) and budgetary stimulus, and this is, in turn, driving a re-run of the hedge fund speculation that popped the market in 2007.

What do you think? Is there more turbulence ahead? Or is the worst behind us now?

Read Alan’s complete article at http://www.businessspectator.com.au

Property and Investing, is it anyone’s Guess?

Buying and investing in real estate.

It was once the conversation of choice for latte sipping Sydneysiders a decade ago, comparing notes on which suburbs were the next to “take off,” and in Queensland the same thing. Which next waterfront tower to buy an investment apartment? Likewise in Melbourne’s Southbank, and especially in the mining boom times of WA where house prices were escalating in value threefold per annum.

All this has changed in the space of the last ten years.

Two or three years ago, those that we may consider to be reasonably well-off, such as home-owners with an investment property, were being encouraged to use the equity in their primary dwelling, as well as any equity in their investment property, to use as funds for further investments.

In 2005 to 2007, when the stock market was growing at a staggering rate, it seemed like a no-brainer. Who would want to miss out on such incredible returns?

Investors that used their equity to invest in shares were then encouraged to borrow against the value of those shares, to wait for it, buy more shares.

Of course, the rest is history and it all turned to custard.

Now we are seeing properties in once affluent suburbs being significantly discounted as the once “well-off” are now having to sell-up to meet repayments on loans for share portfolios that are now worth a fraction of their original market value.

Prior to 30 June 2007, the Howard government also relaxed Superannuation contribution limits – effectively allowing people to contribute up to one million dollars to superannuation before this date.

This strategy was actively promoted by the Howard Govt and financial advisers as a way to pay less tax and save for future retirement. I wouldn’t like to be one of those people now.

Funny how Peter Costello, the World’s Greatest Treasurer hasn’t been asked to comment since about this “brilliant strategy”.

Depending on who you listen to, house prices are about to collapse by some 20 – 30% as predicted by Professor Steve Keens, or now is actually a really great time to buy with interest rates at record lows at house prices pretty much stable or declining slightly.

Of course the real estate industry will always say “now is a great time to buy (or sell)” and their latest survey touts this once again.

“House Prices to Drop to 2002 Levels!”

It’s the best time in seven years for first home buyers to get into the property market, the survey says.

A combination of static house prices and low interest rates have improved housing prices, according to the Housing Industry Association-Commonwealth Bank housing affordability index.

The index for first home buyers rose 22.3 index points in the March quarter to 175.8 points.

“This took housing affordability to levels not seen since 2002,” said the report, published today.
The index was 69.9 points higher than in the March quarter of 2008, an improvement of 66 per cent.

‘Never a better time to own’

HIA chief executive Chris Lamont said despite the current economic conditions, “there has never been a better time to enter home ownership”.

Mr Lamont said the boost to the first home owner grant, when combined with significant builder discounts on house and land packages, had increased the number of people entering the new home market.

“The grant has been highly successful in creating and securing jobs in the residential construction sector,” Mr Lamont said.

“It is also assisting in boosting the supply of housing which we know to be grossly short of the nation’s
requirements.”

But is now really a good time to buy property? Sure low interest rates are attractive, but they will inevitably rise again. Have we seen the bottom of the housing market in terms of prices, or once the FHOG lapses will prices fall further…?

Is it just anyone’s guess??

Was Steve Keens a nutter to sell his Sydney apartment..?? (hint: yes.)