The Victorian Government has secured the passage of the Building Legislation and Treasury Legislation (Tax Relief) Amendment Bill 2026, introducing a suite of reforms aimed at improving consumer protection and confidence in the apartment market.

Resilience Insurance, Australia’s leading Latent Defects Insurance (LDI) provider, has welcomed the move.

The LDI elements of the Bill passed with bipartisan support and now moves to the Legislative Council where debate and passage are expected later this month. It represents a significant milestone in the national shift toward stronger, longer-term protection for apartment buyers.&nbsp;

The reform would deliver practical benefits across the housing system. Apartment owners will have stronger protection if major defects emerge, developers and builders will have a clearer quality framework to work within, and the State will reduce the risk of serious building failures becoming a long-term financial and social burden for households, communities and government.&nbsp;

LDI helps support apartment delivery while providing stronger protection for buyers and encouraging better construction outcomes.&nbsp;

Resilience LDI provides apartment owners with 10 years of insurance-backed cover for major structural defects from completion, with direct claim access to the insurer. This means owners are not required to first pursue developers or builders through costly legal action before accessing protection.&nbsp;

Resilience Insurance has been operating in Australia since 2022 and has already insured hundreds of development projects covering many thousands of apartments across Australia.&nbsp;

At approximately 1.8 per cent of build cost, it is a cost-competitive alternative to the traditional two per cent Strata Bond, bond while delivering significantly broader and longer protection.&nbsp;

“The Victorian Lower House vote shows that reforms like this succeed when they are practical, evidence-based and supported by industry," says Corey Nugent, CEO of Resilience Insurance.

"Victoria is moving quickly on a reform that will make a real difference for apartment buyers, while supporting better building outcomes and greater confidence in apartment delivery.

“This is step one. We look forward to the Bill completing its passage through the Legislative Council and to working with government and industry to implement the framework effectively.”&nbsp;

Fast Facts: What is Resilience LDI?&nbsp;

<ul>
	<li>Resilience Latent Defects Insurance (LDI): Covers major structural defects for 10 years from completion.&nbsp;</li>
	<li>Consumer-first: Direct claim access, no need for lengthy legal action.&nbsp;</li>
	<li>Cost advantage: At approximately 1.8% of build cost, LDI is typically priced below the traditional 2% Strata Bond while offering broader protection.&nbsp;</li>
	<li>Market leader: Resilience Insurance is the first approved LDI provider in NSW.</li>
</ul>

The Building Legislation and Treasury Legislation (Tax Relief) Amendment Bill 2026 has passed the Victorian Lower House, putting Victoria on track to become the first state to legislate an industry workable LDI framework as a formal alternative to the Strata Building bond. 

Joel Robinson

10-year Latent Defects Insurance for new apartment buyers set to land in Victoria

Just a few months after acquiring a prime Broadbeach site on the corner of First Avenue and Surf Parade, family-run developer <a href="https://www.apartments.com.au/developers/raptis">Raptis</a> has filed fresh plans for a new apartment development.

Raptis is seeking to deliver a <a href="https://www.apartments.com.au/new-apartments/17-19-first-avenue-broadbeach-qld-4217">29-storey tower with 73 apartments</a> on the 818 sqm site. It will be the developer's seventh project in the suburb, as they are approaching completion of The Sterling on George Avenue.

There will be a pool, barbecue and outdoor dining area, residents lounge and dining, sauna and steam room, gym, and a Yoga and Pilates studio.

<img alt="Raptis" data-entity-type="file" data-entity-uuid="b554da3f-7344-49aa-b1c9-44cf459af0d7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-05%20at%2010.41.45%E2%80%AFAM.png?VersionId=zzjWu1iO1wnuYv4EV4fyOyf5nSXjGYut" />

Raptis Joint Managing Director, Evan Raptis, says they remain&nbsp;committed to developing quality infill sites across the Gold Coast in the lead-up to the 2032 Brisbane Olympics.

"This project continues our long track record of delivery in Broadbeach, and we look forward to bringing another premium development to this thriving precinct."

The announcement follows strong delivery momentum for Raptis, with The Sterling Broadbeach nearing completion and construction well underway on the final stage of the Waterpoint community adjacent to Harbour Town. The developer's continued investment in the Gold Coast reflects confidence in the region's apartment market fundamentals, underpinned by sustained Southeast Queensland population growth.&nbsp;

The outlook for the region is further bolstered by infrastructure investment tied to the Brisbane 2032 Olympic Games, which is expected to drive continued economic and population growth across the SEQ corridor.&nbsp;

Subject to a favourable response from Gold Coast City Council, construction on the new First Avenue tower is targeted to commence before the end of 2026.&nbsp;

Read more:&nbsp;<a href="https://www.apartments.com.au/news/qld/it-s-all-in-the-family-four-decades-later-raptis-continues-to-shape-the-gold-coast-skyline">It’s all in the family: Four decades later, Raptis continues to shape the Gold Coast skyline</a>

Read more: <a href="https://www.apartments.com.au/news/qld/raptis-secures-prime-surf-parade-site-for-next-broadbeach-apartment-development">Raptis secures prime Surf Parade site for next Broadbeach apartment development</a> 
&nbsp;

Gold Coast developer brings seventh Broadbeach project to market, targeting construction commencement before year end

First look: Raptis lodges plans for new 29-storey Broadbeach tower 

Brisbane development veteran Kevin Seymour's Seymour Group is set to deepen its presence on one of Brisbane's most tightly held riverfront addresses, lodging revised plans for a luxury apartment development on Oxlade, just a few doors down from The Oxlade, which it completed in 2024.

The <a href="https://www.apartments.com.au/new-apartments/70-72-oxlade-drive-new-farm-qld-4005">new project at 70-72 Oxlade Drive</a>, directly north of The Oxlade, will have 27 apartments across a seven-storey building&nbsp;overlooking the Brisbane River and Merthyr Park. It's a revision from a 2021-approved design.

Designed by bureau^proberts, the project has evolved from the previously approved 26-apartment scheme, introducing an additional penthouse level while maintaining a low-density, boutique character. The development will comprise 26 three-bedroom apartments and a single four-bedroom penthouse, supported by two basement levels with 86 car spaces and 34 bicycle spaces.

The architectural response is centred around two distinct building forms separated by a landscaped open-air atrium.&nbsp;"This dual composition captures and embraces Brisbane’s subtropical environment whilst breaking down built form and scale," the submission to the Brisbane City Council noted.

<img alt="First look: Seymour Group returns to Oxlade Drive with revised riverfront apartment plans in New Farm" data-entity-type="file" data-entity-uuid="c12d84d0-bc11-4067-b46f-5bd2d786a34d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/new%20farm%20landscape.png?VersionId=YEPc2k5CAdh6aAPlu4uVpgZadh4MEfRd" />

A defining feature of the design is a deep landscaped void running through the centre of the building, creating what bureau^proberts describes as a "natural ravine" that enhances airflow, daylight penetration and resident amenity. The design report notes that the separation of the two building volumes is intended to maximise natural light, cross-ventilation and outlook while strengthening connections to the surrounding riverfront setting.

Curved balcony edges, integrated planting and extensive landscaping throughout the façade reinforce the subtropical design approach. The building's façade is softened by elevated gardens and planter beds, creating a green edge that complements the established landscape character of Oxlade Drive and neighbouring Merthyr Park.

New Farm has become one of Brisbane's most sought-after suburbs for developers delivering premium downsizer-focused apartments.

GRAYA has been particularly active in the precinct, completing both Chalk and York in recent years, while construction of Moray House, being delivered for Spyre, is now nearing completion. Architect-turned-developer Joe Adsett recently launched <a href="https://www.apartments.com.au/new-apartments/arcilla-new-farm-by-joe-adsett-28-maxwell-street-new-farm-qld-4005">Arcilla on Maxwell Street</a>, an exclusive collection of just nine apartments.

First look: Seymour Group returns to New Farm's Oxlade Drive with riverfront apartment plans

A new residential tower will be the first piece of a broader mixed-use precinct set to reshape a prominent Newcastle West site, with local developer <a href="https://www.apartments.com.au/developers/gwh">GWH</a> bringing its <a href="https://www.apartments.com.au/new-apartments/cambridge-quarter-newcastle-west-12-denison-street-newcastle-west-nsw-2302">Cambridge Quarter</a> vision to market.

The first release, Tempo, will introduce 87 apartments across a 24-storey tower, marking Stage 1 of the residential component of a larger urban regeneration project planned for the western end of Newcastle's city centre, encompassing the former Cambridge Hotel site.

Positioned on Denison Street, Tempo has been designed as the inaugural building within Cambridge Quarter, a precinct that will ultimately combine apartments, retail activation and revitalised public spaces including the revamping of the Cambridge Hotel.

[smartcode_project:default project_id=135876 project_image_fid=368853]

The tower will comprise a mix of one, two and three-bedroom apartments, including layouts with multipurpose rooms, catering to a broad cross-section of owner-occupiers. Apartment sizes range from around 60 sqm to 192 sqm, with a number of residences oriented to capture views across Newcastle Harbour, the city skyline and coastline.

GWH has emphasised liveability in the design, with open-plan layouts extending to generous balconies and terraces. Residents will have a choice of two interior palettes, while specifications include engineered stone benchtops, SMEG appliances, full-height bathroom tiling and secure building access. Premium upgrade packages will also be available.

Multiple rooftop resident retreats will provide communal outdoor space overlooking the harbour and city, offering an elevated amenity layer above the activity of the precinct below.

[smartcode_project:default project_id=135876 project_image_fid=368851]

The broader Cambridge Quarter vision extends beyond the residential tower itself. Ground-level retail activation and landscaped public areas are planned throughout the precinct, creating a walkable neighbourhood environment connected to the surrounding renewal of Newcastle West. The Cambridge Hotel is also earmarked for future redevelopment into a family-friendly hospitality venue integrated with the new precinct.

The project is strategically positioned within walking distance of Newcastle Interchange, providing access to light rail, regional rail services and direct connections to Sydney. Residents will also be close to Honeysuckle, Newcastle Harbour and the city's beaches and coastal walkways.

[smartcode_project:default project_id=135876 project_image_fid=368852]

For GWH, Cambridge Quarter represents one of its most significant Newcastle developments to date. The locally based developer, which has operated in the Hunter region since 1995, describes the project as a new chapter in the ongoing transformation of Newcastle West.

GWH Executive Director Jonathan Craig said the project had been shaped by a focus on creating lasting community connections.

"We take pride in creating places that last. Spaces where people feel connected, comfortable and a genuine sense of belonging," Craig said.

"Cambridge Quarter is something we are truly proud of, a place shaped by local knowledge, built with care and designed to be part of Newcastle's next chapter."

[smartcode_project_cta:default project_id=135876]

GWH unveils first release at landmark Cambridge Quarter precinct in Newcastle West

<a href="https://www.apartments.com.au/developers/ss-projects">S&amp;S Projects</a>,&nbsp;Rainbow Bay's busiest developer,&nbsp;has officially lodged plans for the largest development in its booming local portfolio, seeking approval for a further 88 apartments on Boundary Street.

The proposal&nbsp;at <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">209–213 Boundary Street, Coolangatta</a>,&nbsp;marks the next chapter in the developer's transformation of the southern Gold Coast beachside precinct. It will be its fifth in the area, having already delivered Flow, Awaken and Esprit, while construction continues on the 38-apartment Radia. The new project would rise 57 metres above a consolidated 1,518 sqm site, on the same street as Radia and Esprit.

&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker</a>, the proposed development comprises 88 two and three-bedroom apartments across a contemporary podium-and-tower form that integrates extensive landscaping from street level through to the rooftop.

The tower would be delivered above a basement and multi-level podium accommodating resident and visitor parking, with the residential component commencing from level three. The design incorporates cascading planting throughout the façade, landscaped podium edges, and deep planting zones along the Boundary Street frontage.

<img alt="First look: S&amp;S Projects lodges plans for 88-apartment wellness tower at Coolangatta's Boundary Street" data-entity-type="file" data-entity-uuid="677e6615-b5c0-4b6c-b4f9-efb14fcde1a6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ss%20da%20pers.png?VersionId=YOnPKQm7IFXv0M5H326djEpxk80500Hi" />

A key feature of the development is its expansive rooftop wellness and recreation precinct. Plans reveal a resort-style pool deck, gymnasium, sauna, steam room, hot and cold plunge pools, rooftop terraces, barbecue areas and landscaped relaxation spaces positioned to capture views across the southern Gold Coast coastline.

The rooftop wellness focus builds on the vision S&amp;S Projects first outlined when it acquired the site for $20.25 million last year.

"We are taking every advantage to create a truly unique rooftop wellness experience with a natural feel for residents, offering stone features throughout and an underlying theme that emulates a botanical garden," S&amp;S Projects founder and director Paul Gedoun said at the time.

The proposal seeks a 57-metre building height, representing a 50 per cent uplift on the site's mapped 38-metre height limit. Planning documents argue the additional height is consistent with recently approved and emerging towers in the immediate Boundary Street and Rainbow Bay precinct.

Urbis, acting as planning consultant, said the development would provide "88 dwellings, comprising a mix of two and three-bedroom apartments, contributing to housing choice and supply within an established medium to high-rise coastal urban neighbourhood."

The scheme has undergone extensive pre-lodgement consultation with the City of Gold Coast, with the design refined following feedback relating to architectural expression, landscaping, traffic access and podium treatment.

<img alt="S&amp;S" data-entity-type="file" data-entity-uuid="0a2d70fd-62ac-4b83-97c6-b798fc1243dd" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-05%20at%209.16.31%E2%80%AFAM.png?VersionId=yHmghUwKM3IVGpBktQU1mE.0Lpf3WimG" />

The architectural team is led by Brisbane-based Cottee Parker, one of Australia's most active residential design studios, with landscape architecture by Dunn + Moran. The consultant team also includes ADG Engineers, Windtech and Acoustic Works.

S&amp;S Projects has become one of the most influential private developers operating on the southern Gold Coast. Since entering Rainbow Bay in 2022, the company has assembled a portfolio exceeding $1 billion in end value, establishing itself as a key player in the area's evolution into a premium apartment destination. Pezet Matheson will again handle the sales for S&amp;S.

Coolangatta is entering another wave of apartment development, following the delivery of several prominent residential projects in recent years.

John Kearney's Immerse Projects will launch&nbsp;<a href="https://www.apartments.com.au/new-apartments/kaiya-kirra-beach-5-haig-street-coolangatta-qld-4225">Kaiya on Haig Street</a>&nbsp;soon, meanwhile, Palm Beach-based Sherpa Property Group is preparing to bring its debut Coolangatta development, <a href="https://www.apartments.com.au/new-apartments/flourish-viver-87-griffith-street-coolangatta-qld-4225">Flourish Viveré</a>, to market later this year, subject to approvals.

First look: S&S Projects proposes 88-apartment wellness tower at Coolangatta's Boundary Street

Budget

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<img src="https://counter.theconversation.edu.au/content/75060/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
As the federal budget approaches, the government is grappling with ways to enhance housing affordability, including reforming the current 50 percent capital gains tax (CGT) deduction on property investment.
The Economics Society of Australia (ESA) Monash Forum polled economists on this proposition:
"Capital gains tax deductions for housing investment should be removed because they overstimulate the housing market, contributing to rising house prices."
This is a deliberately more extreme measure than the proposal reportedly being considered by the federal government, which is to cut the current discount to 25 percent. But we wanted to assess more generally the effect of capital gains taxes on the housing market.
The poll found 44.4 percent of economists agreed with a statement that the tax deduction should be removed entirely (22.2 percent agreeing and 22.2 percent strongly agreeing). But 40.7 percent disagreed with the statement (22.2 percent disagreeing and 18.5 percent strongly disagreeing); while 14.8 percent of respondents were uncertain.
<a href="https://www.propertyobserver.com.au/images/2017/03/24/Screen%20Shot%202017-03-24%20at%209.10.49%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/24/Screen%20Shot%202017-03-24%20at%209.10.49%20AM.png" alt="">
While some economists support the current role of the CGT discount to avoid taxing the capital gains that arise as a result of inflation increasing house prices, as opposed to the valuation in the land or property due to development (Saul Eslake, Rodney Maddock, Nigel Stapledon and Doug McTaggart), others believe the tax should also apply to the gains as a result of inflation (Kevin Davis and Margaret Nowak).
Many argued the principle of the CGT discount is not a bad policy, however the level of the discount is generous and is open for abuse.
They also pointed out that changes in one type of tax will distort the economy, especially if it is only targeted to one type of asset, in this case property. Instead some economists suggested the approach should be a holistic reform to fix tax inefficiencies, and tax treatment should be equal between all forms of investment and saving.
Most of the economists agreed housing affordability policies should be focused mainly on housing supply and housing market constraints (as well as transport and infrastructure) to solve the crisis. Other policies such as shared-ownership schemes and government-backed bonds are also being considered.
<h2>Capital gains tax</h2>
The capital gains tax (CGT) is calculated at the effective marginal tax rate of the investor, on the capital gains made at the time of sale of the asset. Investors who hold an asset for longer than 12 months receive a 50 percent discount on the CGT liability, at the time of sale. For superannuation funds, the discount rate is 33.3 percent.
Owner-occupiers are fully exempt from capital gains tax on the sale of their primary residence.
Some of the options reportedly being considered by the federal government include decreasing the CGT concession to 25 percent, decreasing it to 40% discount (as recommended in the Henry Tax Review) only for property investments, or some other reduction in the CGT discount for property investments.
Another option is completely removing the concession if the property is sold in the initial investment years; and phasing the discount in after the investment has been held for some specified number of years.
<h2>The economists’ arguments for and against</h2>
Economists who supported removing capital gains tax deductions for housing investment said the discount provides incentives to over-invest in property rather than other assets that provide income. So by eliminating or reducing the CGT discount, the cost of capital will increase and buyers will reduce their demand for property, resulting in lower, more affordable house prices.
Those who agreed with the statement argue any change in the CGT discount to address property speculation should also be accompanied by reforming negative gearing. They argue that eliminating the CGT discount for property only would push residential investors towards cheaper properties or towards investing in other assets that maintain the CGT discount. 
Most studies find no evidence of capital gains advantages being a main incentive for investors holding residential property. However it appears to be a small factor in the intention of investing in residential property.
Click to enlarge
<img src="https://www.urban.com.au/images/2017/03/24/Screen%20Shot%202017-03-24%20at%209.13.22%20AM.png" alt="">
<a href="https://www.propertyobserver.com.au/images/2017/03/24/Screen%20Shot%202017-03-24%20at%209.14.00%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/24/Screen%20Shot%202017-03-24%20at%209.14.00%20AM.png" alt="">
Those against the statement argue the timing may not be right as the housing cycle is currently at its peak, and the double digit house price appreciation rates are only seen in the inner-ring suburbs of metropolitan cities and only for houses and not apartments.
Economists would expect to see only a short-term drop in house prices if the CGT deductions are eliminated, as investors switch away from property and into other assets. So the remaining residential investors in the market would purchase cheaper properties, potentially still crowding out first-home buyers.
They would also hold the property for a longer period. In the medium to long-term, the reduction in residential investment would impact on the new and existing supply of housing, resulting in housing shortage and rising house prices.
Maria Yanotti is lecturer of Economics and Finance Tasmanian School of Business &amp; Economics, University of Tasmania and author for The Conversation.
She can be contacted <a href="https://theconversation.com/profiles/maria-yanotti-349557" target="_blank">here.</a>
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jchancellor-FAypfDUnLy

Capital gains tax concession is too generous

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GUEST OBSERVER
The proposed housing affordability package in the May budget will target people relying on social housing as well as those trying to break into the market, Treasurer Scott Morrison has said.
Morrison said housing would be a very strong focus of the budget and he stressed the rental side.
“It won’t just deal with the challenges faced by first home-owners,” he said. “You have got to remember that over 30% of Australians actually live in homes that are rented, and when people are finding it hard to get into the housing market that puts a lot more pressure on the rental market.”
Noting that the number of people on low incomes in rental stress had gone up, Morrison said: “I am as much concerned about someone who is on a low income struggling with their rent as I am with someone who I know wants to get on the home-ownership market themselves. They are both important challenges for Australians.”
Morrison renewed his criticism of “one of the most disgraceful failures of public spending” – the National Affordable Housing Agreement. This was “a one-way cash ATM to the states which asks for nothing in return.
"We are handing over A$1.3 billion every year and the number of people on public housing waiting lists has gone up. The number of social housing dwellings which are owned by the state governments has gone down. We have basically shelled out billions and billions and billions for a program that isn’t achieving anything,” he told Sky. These were matters that would be addressed in the budget.
“We have to spend that money better. We don’t necessarily need to spend less on that. It is a very important issue,” he said.
He was frustrated as treasurer that while serious money was spent on a lot of problems, “the debate is so often that you need to spend more here. No, just spend what you are spending really well and more effectively and get the outcomes that we are accountable for.”
He said social housing often got overlooked in the debate, and he was “quite passionate” about it.
The Victorian government at the weekend announced relief from stamp duty for first home-buyers purchasing properties below $600,000. Investment properties would not be eligible. 
There will be a concession, applied on a sliding scale, for properties between $600,000 and $750,000. The exemption and concession applies to both new and established properties and the state government says it will help 25,000 Victorians with first homes.
Morrison also highlighted the problem of flat wages growth and the consequences that brought.
“Whether it is the NDIS [National Disability Insurance Scheme], whether it is schools, whether it is hospitals, whether it is Medicare – at a time when wages growth is admittedly and regrettably flat, Australians – particularly hard-working Australians on middle incomes – rely more and more and depend more and more on these services,” he said.
“And so the budget does need to signal, and the government has been signalling this, the need to ensure that people can feel confident about the support for those services.”
He made it clear that any improvement in commodity prices or wages growth would be used for budget repair rather than for new spending.
With an eye to the imperative that the budget must be convincing to the ratings agencies, Morrison said: “We have to deal with the political environment that we work in. You can’t just go out there and announce a whole range of things which you don’t have a reasonable prospect of being able to implement.”
He said Labor seemed “to be engaged in a very cynical process of sabotaging the budget to try and crash the AAA rating”.
“They won’t engage in getting spending under control, they want to see the nation’s welfare bill be higher. They want to tax people more to pay for a higher welfare bill.”
Michelle Grattan is professorial fellow, University of Canberra, and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/michelle-grattan-20316" target="_blank">here</a>.
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Scott Morrison says budget will remember the renters

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GUEST OBSERVER
We are not convinced that giving the largest banks in Australia $7.4 billion over the next ten years is good for the budget. – Opposition Leader Bill Shorten, leaders’ debate speech, May 29, 2016.
Opposition Leader Bill Shorten’s line of attack during the leaders’ debate focused squarely on the Coalition’s long-term plan to cut the company tax rate from 30 percent to 25 percent.
Twice during the debate Shorten said the proposed tax cuts equated to giving A$7.4 billion over ten years to Australia’s big four banks (National Australia Bank, the Commonwealth Bank, ANZ and Westpac).
Is that right?
Checking the source
When asked for a source to support that assertion, a Labor spokeswoman referred The Conversation to modelling conducted by think-tank The Australia Institute.
The Labor spokeswoman said:
"Bill was emphasising the clear point of contrast in this election campaign, which is that Malcolm Turnbull wants to spend $50 billion giving huge companies a tax cut while Labor wants to invest in schools, Medicare and growing good jobs."
The Australia Institute modelling
In a press release, The Australia Institute said that for their economic modelling:
"The value of company tax provisions was derived from 2015 full year annual reports for the big four banks. That figure summed to $11,123 million. That figure was projected forward to 2026-27 to give the no-change scenario."
To arrive at the figure of $7.4 billion, The Australia Institute modelling assumed bank profit would increase in line with nominal Gross Domestic Product. Under this assumption, the amount of tax payable would also increase in line with nominal GDP. This would give nominal increases of:
<ul>
<li>2.5 percent in 2015-16;</li>
<li>4.25 percent in 2016-17; and</li>
<li>5 percent in 2017-18 and subsequent years.</li>
</ul>
As the think tank noted in its press release, the company tax cuts would not affect the big banks until 2024-25. That’s when the 30 percent company tax rate will fall to 27 percent for all companies with further reductions of 1 percent per year, hitting 25% in 2026-27.
The Australia Institute calculated the following results:
<a href="/images/2016/05/31/image-20160530-7713-8cr5ue.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/31/image-20160530-7713-8cr5ue.png" alt="">
A reasonable guesstimate – but not a fact
On these calculations, the “$7.4 billion over the next ten years” claim is not a fact. But it’s also not an unreasonable guesstimate – although it is, of course, really over the three years from 2024-25 through 2026-27. There is no advantage to the big banks over the first seven of the next ten years.
According to the Australian Taxation Office, the four big banks paid a total of $9.5 billion in company tax in the 2013-14 financial year.
The government has proposed increasing the turnover threshold below which the rate of company tax payable is 27.5 percent, from $10 million in 2016-17 to $1 billion in 2022-23.
The government’s proposed policy says that the company tax rate for all companies (including the four big banks) with turnover exceeding $1 billion will fall from 30 percent to 27 percent in 2024-25, and then by a further one percentage point in 2025-26 and another percentage point (to 25 percent) in 2026-27.
So, on that basis, The Australia Institute’s maths checks out.
A grain of salt
As with all economic modelling, this modelling and any claims based on it should be taken with a large grain of salt.
Any assumption about the banks’ profit growth over the next ten years is entirely arbitrary, and I have no idea whether it is at all justified. Only time will tell.
If the banks' profits grew by only 2 percent per annum over this period, then the benefit to them from the cut in the company tax rate proposed by the Coalition would be “only” $4.8 billion; if they grew by 10% per annum the benefit to them would be $12 billion (over the three years from 2024-25 to 2026-27).
Verdict
Shorten’s statement relies on modelling assumptions made by The Australia Institute think-tank about bank profit growth. It is not a statement of fact but rather a guesstimate. It is not an unreasonable guesstimate, but depends entirely on whether the think tank’s assumptions about bank profit growth come true or not.  
 <a href="https://theconversation.com/profiles/saul-eslake-665" rel="author">Saul Eslake</a> is vice-chancellor’s fellow, University of Tasmania and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/saul-eslake-665" target="_blank">here</a>.
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Will Australia's largest banks get a $7.4 billion benefit from tax cuts over next decade? Saul Eslake 

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The Green Building Council of Australia (GBCA) have said that funds to drive the national cities agenda, investment in 'urban forests' and a recommitment to the Clean Energy Finance Corporation (CEFC) are the winners for Australia's sustainable built environment agency.
They were left disappointed however that there was no new funding for carbon abatement.
The Turnbull Government has promised to plant 20 million native trees by 2020, with an additional $20 million allocated in the 2017 budget bringing the total investment to $70 million.
Romilly Madew, GBCA's chief executive offer says that the investment in urban forests is important, but suggests they'd like to see the development of a national green infrastructure policy.
"We’d like to see the development of a national green infrastructure policy that goes further than being just about trees, and include boosting biodiversity, enhancing the public domain, and building more resilient cities.”
The GBCA also welcome the Turnbull Government's commitment to retaining the CEFC and the Australian Renewable Energy Agency (ARENA).
“The $1 billion Clean Energy Innovation Fund to assist emerging clean energy technologies provides a much-needed investment injection and greater certainty for the industry.”
The Turnbull Government has shown that it is taking a whole-of-government approach to cities, which is shown by the budget's allocation of $4.6 million to expand the Cities Taskforce.
“Cities are squarely in the government’s sights, and industry is looking forward to working towards a large-scale city-building strategy,” Romilly says.
Treasurer Scott Morrison allocated $50 billion for "critical infrastructure" in his first Budget to reduce congestions, improve safety and better connect Australian products to domestic and international markets.
“We are pleased to see a renewed national focus on Australian cities, with more than $3.4 billion allocated to urban rail projects," Madew said.
"However, this critical infrastructure must meet best practice benchmarks for sustainability. 
"Only then will Australian taxpayers know they’ve invested in infrastructure that is resilient and that delivers the best value for decades to come”.
The GBCA were disappointed with the fact there was no new funding for carbon abatement.
“As well as driving productivity and economic growth, our cities also provide significant opportunities for reducing carbon emissions."
"It is disappointing that the Budget announces no new funding to assist Australia to reach its international commitments for emissions reductions and to transition to a low-carbon economy."
“The built environment represents significant opportunities for emissions reductions at relatively low cost, but there are no new incentives or support for the property and construction industry, or any other industry for that matter, to make the most of these opportunities.
 
 
 
 
 
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The GBCA happy with urban forest investment

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Whilst there has been so much commentary this week on the Federal Budget, I thought we could talk about a different type of Budget - one that’s just as important to property developers as the Budget is to the politicians.
Budgeting well for your building or construction works is crucial to the success (or not) of your development. 
Property developing can throw many different challenges at you but one thing I have learnt in this industry is there is always a solution to a problem. The trick is to understand what possible problems may arise and preparing yourself for them. This comes with experience but sometimes things don’t always go to plan and as a project manager it’s our responsibility to make sure a development is completed as efficiently as possible.
When pricing a development and running feasibilities, it is important to understand that your building estimate is an organic creature. By this I mean the building estimate you start with will nearly always be different to the one you end with.  It will evolve throughout the process as you obtain more and more details.  Once you have all the fine details, the building estimate can be finalised and a fixed price builder’s contract issued. 
When architecturally designing our villas, we follow this process:
<ol>
<li>Once the site has been secured, a Concept and Yield Plan is designed – this shows the number of units we can get onto a site and the size of each, but not much more detail.</li>
<li>After we are happy with the Concept Plan and we’ve received a Detailed Contour Survey and Geotech Report, then we progress to the more detailed Development Application (DA) plans. These include enough information to satisfy council requirements.</li>
<li>When the DA Consent is received, we finalise Construction Certificate (CC) plans – these include more detail, including engineering detail for the stormwater drainage and slab design.</li>
</ol>
Before a Concept Plan is available, the starting point in assessing the development potential is our construction estimate.  This is based on similar projects that we have recently completed and includes any allowances for differences in the sites.
The builder is asked to run their first quote based on the Concept Plan.  This is still a ‘loose’ estimate as there is not enough detail on the Concept Plan for the builder to give a finite cost.  The build estimate we have at this stage will tell us whether we are tracking within budget.  If not, we can make the necessary changes required, perhaps reducing the size of the units working with both our builder and architect to design the right dwellings for our project to be successful.
Once the Concept Plan is approved, the architect will proceed to full DA plans.  Using the information received on the Contour Survey and soil test results, there is much more detail added to the plans.  Our builder will then price the DA plans and we will review the costs against our initial estimates and make sure they are within our range for the project to be successful. At this stage we still do not have the final build cost but we will be getting closer to the expected outcome.  Once approved by our client, the DA plans are finalised and the DA is lodged with council.
During the DA process, council may request some changes to the plans, so it is important to understand we are still ‘evolving’ at this stage. Then once approved, we need to review the Conditions of the DA Consent before we have more detail to finalise the build costs.
Next we move to preparation of the CC plans.  Engineers will be briefed and a stormwater drainage and engineered slab design or footings for the foundations will be produced. More detail is added to the CC plans, finalising levels and double checking schedules. 
Before we lodge the CC plans with our private certifier we will have our builder issue a third costing. It is this costing that will give us the final build costs...well almost.  We still need to have the CC approved and ensure there are no further revisions to the plans required.  
After we have the CC stamped plans, our builder will issue their final tender and the building contract. This will be a fixed price contract; however, there may still be a few items that will be ‘provisional’. They are usually some site works, removal of fill and retaining walls.  The builder may mark these items as provisional as they won’t know until works proceed exactly what the cost is. For instance, if rock is hit during the site cut, this will increase the site costs. If the site cut differs slightly to the plans, this may impact on the height of retaining walls.  So these ‘provisional’ items will be charged at actual cost whether it is lower or higher.
So you can see how the build budget must evolve through the development process and until your development is completed, you really won’t know the exact cost.  It’s important you allow a contingency amount for any variations that may arise along the way. 
As a developer, you will embark on a challenging journey from start to finish and the development budget is a very important part of your work. If you don’t have experience, then consider using the help of an experienced project manager to guide you along the way.
And always take the time to have builder’s estimates updated at each stage of your development planning process to avoid any nasty surprises. 
Jo Chivers is chief executive officer of property development project managers <a href="https://www.propertybloom.com.au/about" target="_blank">Property Bloom</a>.
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Building a better Budget: Jo Chivers

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Executive Chairman of Raine &amp; Horne Angus Raine believes Super Tuesday is a watershed for real estate and the Federal Government will leave negative gearing and the capital gains tax discount in place when it announces the 2016/17 Budget tonight.
He said Super Tuesday could prove a major watershed for the Australian economy, currency and investment markets such as residential real estate, with federal budget and interest rate announcements both set to be made today, adding there is a strong precedent for a May move, with the RBA adjusting monetary policy 7 times at its May meeting since the year 2000.<a href="#_edn1" title="" style="line-height: 1.3em;"> </a>
“With the burgeoning threat of deflation hovering above the economy, the chance of an interest rate cut is firming with investment markets, although my view is that the RBA will wait a little longer before trimming the cash rate to see what happens with the budget tonight, inflation and any impact on the property market,” he said.
"On the fiscal policy front I am confident the Federal Government won’t touch negative gearing or the capital gains tax discount.
“If the government pared back negative gearing and the capital gains discount, it would create a massive rush on residential real estate, with investors trying to beat the changes.
“As a real estate firm, this will create more demand for residential property, as investors attempt to lock in assets under the current taxation laws, but ultimately it won’t address affordability issues as it will likely create some short-term price inflation. There’s also a very good chance rents will rise too.
“In 2007, when the government changed the superannuation contribution laws, we saw many bumper auction days before the changes came into effect, with investors and self-managed super funds leading the charge to beat the changes.
“Real estate investment is a favoured asset class by millions of Australian voters because it is deemed safer than shares and easier to understand than bonds, so it would be a brave decision to fiddle with negative gearing and the capital gains tax discount.”
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Super Tuesday is a watershed for real estate: Angus Raine

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
When the Committee for Economic Development of Australia (CEDA) recently released its recommendations on how the government should balance the budget, it prefaced it with the statement “No economic problem in Australia is graver than the persistence of large budget deficits”. But precisely the opposite is true.
To understand why, it’s necessary to explain the economic work of David Alan Aschauer. Work that appears to have been ignored in the current discussion about budget deficits.
Aschauer investigated the effects of government spending on infrastructure in increasing of the rate of return on private investment and hence on the volume of investment in the private sector. His work has been accepted by an extremely wide range of economists. It is not new. His most-quoted article was published in 1989.
Moreover, Aschauer is a neoclassical economist; that is he belongs to what is currently the dominant school of economics. Since 1989 there have been many articles published by Aschauer and his followers.
Aschauer himself summed up his work in the following quote:
“On neoclassical grounds expansions of public investment spending should have a larger stimulative effect on private output than equal-sized increases in private consumption expenditure. Specifically, public investment is argued to induce an increase in the rate of return to private capital and, thereby, to stimulate private investment expenditure.
The empirical analysis indicates that movements in public investment bring forth movements in private-sector output which are four to seven times as large as the public sector outlays.”
Of course, there can be, and have been, arguments about the size of the effects that Aschauer estimated in his empirical work. The general tenor of these is that the figure is more likely to be closer to the lower end of Aschauer’s range than the top.
But when researchers at UNSW made estimates for Australia, they arrived at a figure they described as “very similar to Aschauer’s (1989) findings for the United States". They concluded that “public capital plays an important role in private production, a role which may often be overlooked”.
This provided evidence, they believed, of the positive relationship between public capital and productivity in the private sector in Australia in the 30 years before they wrote their article.
Both Aschauer and the Australian researchers Glenn Otto and Graham Voss used aggregate data – data for the whole public capital sector and for productivity in the private sector as a whole.
Their striking and important results do not remove the need for governments to pick public investment projects that are more likely to increase private sector productivity. The models they and Aschauer have used are too simple to give convincing answers to the question, which requires the use of much more sophisticated models. However, they do cast doubts on the likelihood of politically motivated public investment projects contributing anything to long-term growth in Australia. And they were not writing in an election year.
Current discussions about budget deficits largely ignore the work of Aschauer and are much poorer as a result.
If some attention had been paid to this work the gloom and doom of CEDA’s recent report would have been greatly reduced.
John Nevile is visiting emeritus professor, UNSW Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/john-nevile-139716" target="_blank">here</a>.
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Balancing the budget mantra overlooks benefits of infrastructure spending

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Will this budget mark the inception of a new deal for Australian cities? And will it herald a new dawn for Australian local democracy?
Addressing the Australian Public Service in the Great Hall of Parliament on April 20, Prime Minister Malcolm Turnbull chose to emphasise that “smart cities” would be the engine room of innovation and growth in Australia’s new economy to be delivered through the concept of “City Deals”.
Turnbull said:
The “City Deal” approach used in the United Kingdom has been instrumental in the renaissance of Manchester and Glasgow, and we believe there are many elements that can be applied in Australia.
<h4>Turnbull’s address to the Australian Public Service.</h4>
But what is the value proposition underpinning the “City Deal”? And can it be applied here in Australia?
<h2>The value proposition</h2>
The value proposition has historical, democratic and economic foundations.
Historically, it builds on the role of iconic cities in the advance of civilisations. For example, the following quotation from Mel Sirotkin’s evocative work perfectly captures the central role of Manchester as the engine room of the Industrial Revolution:
During the Industrial Revolution Greater Manchester seized the initiative to become the world’s ﬁrst modern industrial metropolis. It is home to the nation’s ﬁrst public library, the birthplace of modern chemistry, and the professional football league. It is where Dalton developed atomic theory and Rutherford split the atom. Inevitably it is also where the rainproof mackintosh was invented.
Democratically, it forms the next logical stage in the UK’s constitutional reform program, which began under Tony Blair in 1997. Blair delivered Scotland’s parliament and assemblies for Northern Ireland and Wales, but the English voted “no” to English assemblies on the basis that this would be too much government to bear.
The argument for delivering devolution through existing rather than new institutions – in this case city regions – has proved far more palatable.
However, it is the economic credentials of the “City Deal” that prove most powerful. The Cameron government believes that larger local government units such as city regions led by elected mayors with new powers will help spread prosperity. This is based on evidence – such as from the independent RSA City Growth Commission – that the areas with the fastest growth and innovation around the world tend to have:
<ul>
<li>
large populations;
</li>
<li>
good connectivity;
</li>
<li>
high skill levels;
</li>
<li>
good infrastructure (including housing);
</li>
<li>
strong higher education institutions; and
</li>
<li>
empowered local leadership.
</li>
</ul>
The powers that the UK government is devolving to city regions are therefore focused mainly in areas such as transport, business support, infrastructure development and training.
A further economic argument for devolution to cities is that they provide a concentration of population and need. These in turn provide a potential focal point for innovation to foster economic development and improve service delivery and effectiveness.
In part, the argument is that necessity will be the mother of innovation. But there are also arguments that the greater scale of a city region provides fertile conditions for economic development. There is likely to be a greater pool of talent, experience and resources to draw upon.
Working across a larger area can promote more effective services. In many cases outcomes are likely to be better if several services are connected together. That applies, for example, to health and social care, to the various educational, health and social services that engage with families in trouble, and to the various bodies that can help prevent re-offending.
The argument for devolution to cities in England is mostly not about democracy, and more about economic competitiveness and service effectiveness.
<h2>What’s been achieved so far?</h2>
The way the deals have been negotiated reinforces the sense that this is about efficiency more than democracy. Deals have been cut within Whitehall in a top-down approach with various city regions according to their ambition and political clarity.
In most cases, an elected mayor has been added to the mix to provide a fig leaf of democratic legitimacy. But many of the deals have been criticised as a stitch-up between city and national elites with little input from citizens and little prospect of citizen control.
On the other hand, the ad-hoc approach of doing the deals city by city, region by region, means that progress has been rapid. Substantial devolution is occurring.
Although some worry about creating an unequal governance framework, others argue it’s about doing what works for different cities. The pragmatic patchwork program has been deliberately designed such that no two city regions must necessarily have the same deal and level of devolution.
The Greater Manchester City Deal is by far the most advanced but only started this month. So, in truth, it’s too early to say how the deals will work in practice.
<h2>How do City Deals translate to Australia?</h2>
It is easy to see why the “City Deal” concept resonates with the Turnbull agenda. The image of the Australian city region as a centripetal catalyst to economic growth is both in keeping with the gravity of international evidence and the demographic changes articulated in the 2015 Intergenerational Report. This forecast a range of significant productivity problems arising from shifts in demography, workforce and participation.
It also provides a living laboratory for Turnbull’s National Innovation and Science Agenda and, in particular, the work of Data 61 and the Digital Transformation Office.
Most tangibly, it provides an opportunity for Turnbull to connect the government’s agenda to the everyday lives of Australians. This is something the polls suggest he has been unable to achieve so far.
<h2>What would need to change make it happen?</h2>
There are maximalist and minimalist versions of the “City Deal”. The minimalist version would be simply to negotiate a series of Commonwealth-funded programs with states and territories to lubricate the innovation agenda in Australian cities. The maximalist version, required to emulate the UK “City Deal”, would require constitutional change.
Devolution UK-style involves the transfer of power to a lower level, in this case to a local city or city region administration. However, unlike its European and North American counterparts, Australia’s political elite still has a strange, unfathomable disdain for local government – which is not shared by its citizenry.
Most significantly, devolution is not in the gift of Commonwealth government, as local government is a creature of state and (to a lesser extent) territory government. Changing federal powers requires constitutional change.
As Turnbull himself admits:
"It requires a firm commitment to collaboration. Success is dependent on federal, state and local governments agreeing on a set of long‐term goals for cities and the investments, policies and regulatory settings to achieve them."
Is it likely that state governments would cede authority over the jewel in their crown – the state capital? It would be like turkeys voting for Christmas.
The smart money is on the minimalist version even though Australia’s future economic prospects require the courage and ambition of the maximalist version.
Mark Evans is professor of Governance and Director of the Institute for Governance and Policy Analysis and NATSEM, University of Canberra and can be contacted <a href="https://theconversation.com/profiles/mark-evans-97204" target="_blank">here</a>.
Gerry Stoker is fellow and Centenary Professor, Institute for Governance and Policy Analysis, University of Canberra and can be contacted <a href="https://theconversation.com/profiles/gerry-stoker-155351" target="_blank">here</a>.
Both are authors for The Conversation.
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Will Budget 2016 deliver a new deal for Australian cities?

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A million dollars is a lot of money. But that is the budget needed by a typical family to own a reasonable home in a major city like Sydney that is fairly close to work (usually the CBD), notes property expert John McGrath in his recent Switzer blog.
While agreeing that it’s difficult for many young people to get into the market from a standing start, he argues that as our markets grow in value, so does the wealth of about seven out of 10 Australians because that’s how a major proportion own a home either outright or with a mortgage. 
But back to the million dollar budget. New research published by independent data analysts CoreLogic RPData shows the number of suburbs across Australia with a median property price above $1 million has risen by 31% in the past year alone. There were 406 suburbs nationwide with a median value above $1 million at the end of 2014. Now there’s 530.
He also notes that the number of million dollar suburbs rose by about the same amount nationally (31 percent) as it did in the capital cities combined (31 percent) and in our regional areas (33 percent). 
And no prizes for guessing which cities had the lion’s share of new million dollar suburbs — Sydney and Melbourne by a country mile. 
Breaking down the numbers into state figures, New South Wales experienced a 32.7% bump in the number of $1 million suburbs but it was Victoria leading the way with 46.7 percent. 
Among the rest: 15.4% in Queensland; -7.7 percent in South Australia; -9.5 percent in Western Australia; and no change in Tasmania, the Northern Territory and the Australian Capital Territory. 
Putting New South Wales and Victoria together, these two states now account for 85 percent of all $1 million suburbs nationwide. 
CoreLogic RPData also put together a list of the Top 10 most expensive suburbs nationally for houses and apartments as of the end of 2015. 
The median prices for the Top 10 house suburbs ranged from around $3.3 million in Whale Beach on Sydney’s Northern Beaches up to $6.3 million in Centennial Park in Sydney’s Eastern Suburbs. 
The median prices for the Top 10 apartment suburbs ranged from around $1.2 million in North Ryde in Sydney’s Northern Districts to $2.2 million in Point Piper in Sydney’s Eastern Suburbs.
Top 10 Most Expensive Suburbs – Houses 
1. Centennial Park, Sydney 
2. Point Piper, Sydney 
3. Darling Point, Sydney 
4. Vaucluse, Sydney 
5. Bellevue Hill, Sydney 
6. Tamarama, Sydney
7. Dover Heights, Sydney 
8. Peppermint Grove, Perth 
9. Double Bay, Sydney 
10. Whale Beach, Sydney 
Top 10 Most Expensive Suburbs – Apartments 
1. Point Piper, Sydney 
2. Darling Point, Sydney 
3. The Rocks, Sydney 
4. Cabarita, Sydney 
5. Millers Point, Sydney 
6. Cremorne Point, Sydney 
7. Huntleys Cove, Sydney 
8. Balmain East, Sydney
9. Tamarama, Sydney 
10. North Ryde, Sydney
Of course, a million dollar median means the middle price, so there’s an equal number of homes valued below $1 million as there are above $1 million. But obviously, a suburb with a $1 million median is going to have more expensive housing all round. 
McGrath says it is still better to buy above a suburb’s median because that means getting a superior product to what is ‘the typical home’ for the area. 
A property that is 10-20 percent above the median price is going to have better features, providing a better lifestyle and more than likely better capital growth over the long term, he notes.
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Million dollar suburbs? Still makes sense to buy above the median price: John McGrath

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GUEST OBSERVER
ME’s ninth biannual Household Financial Comfort Report shows the gap in financial comfort between younger and older generations has widened significantly since the first survey in 2011.
While the comfort of ‘builders’ (aged 75+) and ‘baby boomers’ (aged 50-74) has improved by 16% to 6.38 and 14% to 5.85, respectively since October 2011, the comfort of ‘Gen Y’ (aged 18-34) and ‘Gen X’ (aged 35-49) has remained broadly unchanged over the same period, up only 2% to 5.56 and 3% to 5.16, respectively.
Digging deeper, the Report indicates ownership of assets including property, superannuation, shares and managed funds, is largely fuelling the divergence.
The recent gains in the macroeconomic and financial environment including significant rises in property and equity values, has disproportionately lifted the financial comfort of older generations who tend to have higher levels of asset ownership or investments.
The findings add to recent policy debates around housing ownership and affordability, and the generosity of superannuation tax concessions for wealthier Australians..
They highlight the importance of housing and superannuation as important wealth generators with both contributing to higher levels of financial comfort. They suggest that wealthier Australians may be better able to manage any windback to super tax concessions, while remaining at a relatively high level of financial comfort.
The disparity in financial comfort between generations is largely due to older generations enjoying substantial improvements in their investments and income primarily through real estate and superannuation.
Gen X and Y have smaller investments and continue to struggle with property ownership, so have benefited to a much lesser extent.
Younger generations are more likely to rent, reflecting the increased difficulty when it comes to getting on the property ladder. He said the issue is exacerbated for the younger generations as prices and rents have grown faster than incomes, particularly in capital cities.
Overall ME’s Household Financial Comfort Index rose 3% to 5.59 out of 10 in the 6 months to December 2015, equivalent to about 65% of Australian households reporting mid-to-high financial comfort. This result reverses half of the fall from the previous 6 months and is the second highest financial comfort result recorded since ME started the survey in late 2011 (about 3% above the historical average of 5.45).
The overall rise in the Household Financial Comfort Index was largely driven by an 8% increase in comfort with ‘ability to cope with a financial emergency (loss of income for 3 months)’, arguably boosted by the strengthening of the labour market and in particular, strong job gains and a significant fall in unemployed persons over the past year or so.
Those stating ‘it would be easy to get a job within two months’ increased 2 points to 40% of the workforce during the six months to December 2015, while those reporting ‘it would be difficult’ decreased 3 points to 53%. J
ob security increased 2 points to 73% and insecurity fell 1 point to 25% (see Report pages 20-21). Modest increases in income also contributed to the improvements in ‘ability to cope with a financial emergency (loss of income for 3 months)’.
The proportion of households reporting annual income gains, increased by 4 points in the past six months to 38%, compared to the proportion who reported lower income, fell 2 points to 24%, with a further 38% reported unchanged household income.
Improved employment and income also contributed to increases in both comfort with cash savings (up 3% to 5.06) and across a range of savings indicators including an increase in the proportion of households saving each month, up 3 points to 50% in December 2015, versus spending all of their income and no more, down 3 points to 41% (see Report pages 25, 27).
Stand-out states:
The effects of a weakening mining industry are showing in WA, the only state where financial comfort deteriorated (down a further 2%) to a record low of 5.11 in December 2015 – the lowest household financial comfort by far across Australia. In contrast, South Australia/Northern Territory recorded the greatest gains in household financial comfort (up 14% to 5.57).
A regional/metro divide remained prevalent, with households living in metropolitan areas reporting higher levels of financial comfort (up 4% to 5.72) in December 2015, compared to households living in regional areas (up 2% to 5.29) in December 2015. Melbourne is the stand-out city, with the highest level of financial comfort (up 4% to 5.92), followed by Sydney (up 3% to 5.81).
On the other hand, Perth fell 8% to 5.12 – the lowest of all capital cities.
Self-employed:
After a very big rise of 18%, self-employed persons (typically, sole proprietors and small business owners) are the most comfortable segment of the workforce reporting financial comfort of 5.91 in December 2015. Recent policy announcements may be a contributing factor – in addition to labour market improvements and some signs of a pick up in business conditions (see Report page 15).
Household differences:
Couples with children – both older and younger in age – reported significant improvements – up 7% to 5.85 and up 6% to 5.55, respectively. In contrast, singles and couples with no children reported the biggest drop. Households were most comfortable with their ability to ‘manage their current living expenses’ (6.52 out of 10) and ‘level of debt’ (6.29 out of 10).
 
Jeff Oughton is ME’s consulting economist and can be contacted <a href="https://www.mebank.com.au/?gclid=CPu_uvLW5soCFQF-vQodaiAF9w" target="_blank">here</a>.
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