Tuesday, March 24, 2009

Axe it.

The $7000 to $14,000 bonus part of the grant is due to end in the middle of this year anyway.

Both Steve Keen and Christopher Joye agree that it should go.

That has to mean something.

The bonus adds an extra $1.5 billion per year to the cost of the existing grant.

Joye's rather nifty solution - convert the bonus and then the grant itself into loans that never have to be repaid... until the house is sold.

That way over time the annual cost to the budget will become zero.

(IRONY ALERT!) I suppose its okay for the taxes of renters to assist better-off folks to buy homes, but surely they should share in the payoff when the better-off folks move in to even better homes.


Anonymous said...

Piss on the barbie - my steak's cooked.


Anonymous said...

As counter-intuitive as it seems, the Labor Party could remove the FHO Bribe and a number of speculative elements of the tax system, and still come out smelling like roses.

Have just read the article by Steve Keen, well written, logical, factual. All Labor need do is wind back tax breaks and grants, stop encouraging so much debt with tax concessions aimed at investors, let the property bubble deflate and point the finger of blame at the systemic tax mess left by the Liberals.

Remove the tax lurks, homes will become cheaper. FHO win and tax revenue will not be wasted on millionaires and billionaires (in the words of the 2008 Senate enquiry into Housing Affordability).

Simple, isn't it?

Marek said...

Anon, now doing that would take real courage!

It does look like there will be some changes to the system but i can't imagine that any of them will be major, and I can't foresee the govt scrapping it.

Didn't find Keens arguments to convincing, and sub-prime lite is such a throw away line. As Joye points out "Keen offers no analysis of how debt levels, serviceability (fine), default rates (low) and house prices (hardly changed) all interrelate".

There is plenty of this "house price are going fall USA style" out there but has anyone seem any convincing articles(not press releases by real estate agents)that that won't happen?

mshaw2001 said...

The government is in a difficult position - they know houses are overpriced, they know the prices will come down or be inflated away. They also know that if house price deflation gets going in a big way it will be a disaster for the economy, particularly banks. The increase in the first home buyers grant was a desperate bid to create a soft landing and it's effectiveness requires all concerned to play along. Even if the hole system stinks you still can't make a sudden radical change to the system and survive - it has to be gradual, one fix at a time.

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