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Old 17th Dec 2019, 01:33
  #58 (permalink)  
JustinHeywood
 
Join Date: May 2019
Location: Sydney
Posts: 67
Originally Posted by chuboy View Post
While I have no doubt each state/territory's government has a contribution of some kind, a recession-like environment is not isolated to any particular part of the country. It's nationwide. Federal government policies (particularly in the taxation arena) that encouraged a real estate bubble are to blame for our current environment. Anybody who bought a house pre-2010 is quite wealthy indeed (on paper anyway) so no wonder these policies were never tinkered with. The problem is that the banks were allowed to be very liberal in issuing loans as we saw in the banking RC, anyone who owns a house now can't afford to spend their disposable income on anything other than the mortgage.

This would be fine if it were only a few people here or there who had stretched themselves. But it is in fact widespread and that is why we are seeing the Reserve Bank struggle to stimulate the economy through lowering interest rates. Ordinarily a lower interest rate environment would stimulate borrowing and discourage leaving money sitting in savings accounts, but everyone who can afford a house has already borrowed and they have stopped spending as a result. If you're running a business that's not a good environment to be borrowing money to expand either. At this point a Rudd-style stimulus would probably just go straight into offset accounts and do nothing but feed the banks. It's a hole that Howard started digging at the turn of the millennium, with each successive government happily taking over shovel duty.

The people who are most likely to stimulate organic growth in the economy again are the demonised "renters" who do not have significant debt - they will spend extra money that comes in. Money sitting in a bank account doing nothing is not good for the economy. This is a fact whether it is country's budget or your life savings. Leaving more cash in the bank than you need in the immediate term makes you poorer in the long run. For non-mortgagees to have extra money to spend in shops and services, they either need a stimulus package (which won't happen under a Morrison gov), or a meaningful pay rise (which won't happen in an unstimulated economic environment). So here we are... stagnating as we have done for the last few years.

I could go on a much longer rant, because there's a number of levers the feds could have pulled in the last ten years that would not have left us in this precarious situation. Instead both Labor and the Coalition have spent their time in Canberra yanking each other off with self-interested leadership spills and have achieved a whole lot of nothing (with the exception of legalising same sex marriage).
Much motivated reasoning there, very little evidence. Iíll take a wild stab in the dark. Youíre a Greens supporter who rents.
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