An entity directed by HSN's Rafi Assouline and Rebel Property's Allen Linz has filed plans for an impressive new precinct in Woolloomooloo.

The major mixed-use development would transform a prominent William Street site into a new residential village anchored by affordable housing and a large public park.

The proposal, submitted as a State Significant Development Application, covers 164-172 and 174-194 William Street, a 6,398 sqm site between Forbes Street and Dowling Street on the southern edge of Woolloomooloo.

Designed by fjcstudio in collaboration with Bangawarra, Studio Bright and Tribe Studio Architects, the scheme would deliver 227 apartments across four residential buildings ranging in height up to 18 storeys, alongside retail space, public domain improvements and a new publicly accessible park.

<img alt="Rebel" data-entity-type="file" data-entity-uuid="0eb59b7c-914a-4a5c-b849-3a56749f5e93" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.18.51%E2%80%AFAM.png?VersionId=mxM6EEqeoLjrCiTlCzTKTvzpKuh6kSkH" />

It's another design scheme for Rebel, who took <a href="https://www.apartments.com.au/news/nsw/first-look-rebel-property-group-takes-woolloomooloo-precinct-to-nsw-government">concept plans to the NSW Gov late last year</a>.

The latest plans will be a mix of 167 build-to-sell apartments and 60 affordable apartments, with the affordable housing component representing 15 per cent of the project's gross floor area. The apartment mix includes 12 one-bedroom, 53 two-bedroom, 89 three-bedroom apartments and 13 penthouses, while the affordable housing component would comprise 42 one-bedroom and 18 two-bedroom apartments.

<img alt="Rebel" data-entity-type="file" data-entity-uuid="3b3d4553-8a8c-4af5-aa8c-519ffb1e28c6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.20.12%E2%80%AFAM.png?VersionId=_Yb6ibN7eDnOtQjCNDK2eviORa4qzgv." />

Rebel Property is seeking to take advantage of the NSW Government's infill affordable housing bonus provisions under the Housing SEPP, which provide additional floor space and height in exchange for the delivery of affordable housing for a minimum of 15 years. The planning pathway allows a 30 per cent increase in floor space ratio and building height where 15 per cent of the development is dedicated to affordable housing.

&nbsp;

At the centre of the development is a 1,356 sqm sunlit public park designed to become a new community gathering space at the gateway to Woolloomooloo. The park would be complemented by a network of pedestrian laneways connecting William Street with the surrounding streets, improving permeability through what is currently a largely impermeable block.

<img alt="Rebel" data-entity-type="file" data-entity-uuid="257af931-a393-4007-8c6d-7219796df58d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.20.51%E2%80%AFAM.png?VersionId=KAHy94GrhaReFsWTGDKfy39EDJ8gEEv4" />

The design team says the public domain has been heavily influenced by the site's topography and Aboriginal cultural heritage, drawing on the escarpments, gullies and landscape characteristics that historically defined the area before urbanisation. The landscape design has been developed in partnership with First Nations consultancy Bangawarra.

The project would be delivered across four separate buildings. The William Street East and William Street West buildings, designed by fjcstudio, would contain the majority of the apartments. Melbourne-based Studio Bright has designed the Forbes Street building, while Tribe Studio Architects is responsible for the Dowling Street building.

Rebel had secured approval for the concept plans late last year.

Joel Robinson

First look: HSN, Rebel, advances Woolloomooloo precinct plans

A locally heritage-listed furniture showroom on Water Street is set to become the centrepiece of a new mixed-use residential development as local developer&nbsp;<a href="https://www.apartments.com.au/developers/keylin-group">Keylin</a> seeks approval for <a href="https://www.apartments.com.au/new-apartments/lotus-on-water-street-290-water-street-fortitude-valley-qld-4006">Lotus on Water Street</a>, a 15-storey project on the Fortitude Valley side of Spring Hill.

The proposal spans 290 Water Street and 137-141 Warry Street, combining several properties into a 2,869 sqm site that sits between Fortitude Valley, Spring Hill and the rapidly evolving Victoria Park precinct. Keylin's plans would deliver 132 apartments alongside new retail, hospitality and commercial space, while retaining and repurposing the historic Brunswick Home Furnishers Showroom that fronts Water Street.

Designed by <a href="https://www.apartments.com.au/architects/jackson-teece">Jackson Teece</a>, Lotus on Water Street comprises a 12-storey residential tower rising above a three-storey podium and communal rooftop terrace. The development includes 76 apartments classified as multiple dwellings and a further 56 units proposed as short-term accommodation, designed to be flexibly used as either accommodation or permanent residences. The apartment mix comprises six one-bedroom, 54 two-bedroom and 16 three-bedroom homes.

<img alt="First look: Keylin unveils heritage-led Lotus on Water Street tower in Fortitude Valley" data-entity-type="file" data-entity-uuid="9822bb79-6c49-49c9-95ba-319e8c8d81c3" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/fortitude%20valley%20front.png?VersionId=ioW8zbN4UVebbLetTFuv92t.HkdgfR5e" />

Residents would have access to an extensive rooftop recreation level spanning more than 1,200 sqm of communal open space. Plans include a pool, gym, sauna, infrared sauna, yoga area, library, private dining room, barbecue facilities and landscaped entertainment spaces, making the rooftop the project's largest shared amenity offering.

At street level, the proposal focuses on the adaptive reuse of the heritage buildings along Water Street, where 518 sqm of retail and commercial space is planned across shop, office and food and drink outlet uses. A permeable residential lobby would be positioned between the retained heritage buildings, creating a pedestrian connection between the historic streetscape and the new tower behind.

<img alt="First look: Keylin unveils heritage-led Lotus on Water Street tower in Fortitude Valley" data-entity-type="file" data-entity-uuid="269cf3e0-7d13-48bf-a318-05a00deb5c10" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/fortitude%20valley%20podium.png?VersionId=DLXmTCLsp6GOcLpQ0h.0z7wKCw59EhN_" />

The heritage retention strategy is central to the scheme. The development application notes that the Brunswick Home Furnishers Showroom and adjoining heritage buildings will remain, with only non-significant structures on the site earmarked for removal under a previously issued Heritage Exemption Certificate. Levels one and two of the new podium are recessed behind the heritage façades to maintain their prominence within the streetscape.

Jackson Teece has drawn inspiration from the site's manufacturing history when designing the podium. The planning documents state that the façade incorporates perforated metal screening that references the woven and rattan furniture historically produced on the site. Cascading and climbing plants are integrated throughout the podium to soften the building's presentation and screen parking levels behind. The landscape strategy also informs the project's name, Lotus on Water Street, drawing on the historic Spring Hollow waterholes that once ran through Spring Hill and the blue water lilies associated with Meeanjin, Brisbane's traditional name.

The proposal also incorporates the neighbouring property at 141 Warry Street, currently occupied by a healthcare service. The existing building would remain, with nine dedicated parking spaces allocated within the new development to support its ongoing operation. In total, Lotus on Water Street proposes 117 car spaces, including 110 resident spaces and seven visitor bays, alongside 100 bicycle spaces.

<img alt="First look: Keylin unveils heritage-led Lotus on Water Street tower in Fortitude Valley" data-entity-type="file" data-entity-uuid="70cf07bc-4fd8-4e70-92dd-be8b21c4e4f0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/fortitude%20valley%20site.png?VersionId=txlxrJImM0Sm_vTzHVKh5DDUkyL_CiiA" />

The site sits within the Spring Hill East Precinct of the Spring Hill Neighbourhood Plan and is positioned around 650 metres from both Fortitude Valley Station and Exhibition Station. It is also within walking distance of the King Street precinct, Royal Brisbane and Women's Hospital, Herston Quarter and Victoria Park, which is earmarked to become a major venue precinct ahead of the Brisbane 2032 Olympic and Paralympic Games.

Planning documents describe the location as a key gateway between Spring Hill and Fortitude Valley and highlight the area's increasing importance as new transport infrastructure and Olympic-related investment reshape Brisbane's inner north. The development team argues the project will contribute additional housing supply while activating a section of Water Street that has historically received less investment than other parts of the Valley.

Keylin has become increasingly active across Brisbane and southeast Queensland, assembling sites in strategic inner-city locations. They are currently selling and delivering <a href="https://www.apartments.com.au/new-apartments/oria-spring-hill-447-gregory-terrace-spring-hill-qld-4000">Oria Spring Hill</a>, just over 140 apartments due for completion in 2027.

Keylin plans heritage-led Lotus on Water Street apartment development in Fortitude Valley

Roseville is poised for a wave of new apartment development following the NSW Government's rezoning of land around Roseville Station under its Transport Oriented Development program.

The new planning controls have unlocked significant development potential within walking distance of the station, with a number of sites expected to be amalgamated and redeveloped in the coming years as developers seek to take advantage of the increased density allowances.

One of the more restrained developments in the precinct, and set among the first to be delivered having commenced well before the recent changes, is Hyecorp's Juliet. The boutique apartment project is already well under construction and remains on track to welcome residents by the end of the year, offering a markedly different proposition to many of the larger-scale developments now likely to emerge across the suburb.

[smartcode_project:default project_id=7395 project_image_fid=278194]

<a href="https://www.apartments.com.au/new-apartments/juliet-roseville-64-pacific-highway-roseville-nsw-2069">Juliet</a> will comprise just&nbsp;34 one-, two-, and three-bedroom apartments opposite Roseville Station. For Hyecorp, which has delivered projects across Sydney's Lower North Shore for more than three decades, Roseville presented a rare opportunity to address a growing gap in the market.

"<a href="https://www.apartments.com.au/developments/roseville-nsw-2069">Roseville</a> has long been one of the North Shore's most tightly held and desirable suburbs, offering a unique combination of village charm, established greenery, excellent transport connections, and proximity to some of Sydney's best schools and lifestyle amenities," Hyecorp said.

"We recognised a growing demand from local homeowners seeking to downsize without leaving the community they have built their lives around. The location presented a rare opportunity to create homes that cater specifically to that buyer profile."

[smartcode_project:default project_id=7395 project_image_fid=278196]

The six-level development has been designed by <a href="https://www.apartments.com.au/architects/pbd-architects">PBD Architects</a> as a collection of residences that feel more like homes than apartments. The brief centred generous floorplans, abundant natural light, quality finishes, and strong connections to outdoor space.

PBD Architects drew inspiration from Roseville's established garden suburb character, creating a building that sits comfortably within its surroundings rather than dominating them. The architecture incorporates natural materials, soft forms, layered landscaping, expansive balconies, and generous setbacks to strengthen the connection between residents and the suburb's leafy environment.

"The focus was on designing spacious, house-like residences for discerning owner-occupiers and downsizers who wanted to remain on the North Shore without compromising on comfort, privacy, or design," PBD said.&nbsp;

"Every apartment was to feel considered, timeless, and highly functional."

[smartcode_project:default project_id=7395 project_image_fid=278195]

Inside, residences feature engineered timber flooring, stone kitchen benchtops and splashbacks, integrated Fisher &amp; Paykel appliances, ducted air conditioning, and large outdoor entertaining areas designed to take advantage of district and treetop views.

Residents will also have access to a rooftop barbecue and lounge area, alongside practical amenities including parcel lockers, EV charging capability, bicycle storage, a dog wash bay, and a basement car wash facility.

The majority of purchasers so far have been local owner-occupiers from Roseville, Lindfield, Chatswood, Killara, and the broader Upper North Shore, many of whom are transitioning from larger family homes.

"Buyers are looking for spacious, house-like apartments that allow them to downsize without feeling like they are sacrificing comfort or functionality," Hyecorp noted.

"They value large kitchens, generous living areas, ample storage, quality finishes, secure parking, lift access, and low-maintenance living."

[smartcode_project:default project_id=7395 project_image_fid=278204]

Juliet sits directly opposite Roseville Train Station and within walking distance of Roseville Village, while Chatswood's retail and dining precinct is only minutes away. The development is also surrounded by some of Sydney's most established schools, including Roseville College, Ravenswood, Pymble Ladies' College, and Knox Grammar, as well as nearby parklands and golf courses.

Juliet is currently more than 75 per cent sold ahead of its anticipated completion in late 2026.

[smartcode_project_cta:default project_id=7395]

Juliet to sit quietly amid Roseville apartment boom

Sherpa Property Group has unveiled the third instalment of its Flourish series, securing full approval for the two-tower, $500 million Flourish Soleira development in Palm Beach.

<a href="https://www.apartments.com.au/new-apartments/flourish-soleira-1150-1154-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> will rise from a prominent site in the commercial heart of Palm Beach, the long-time home of Cash Converters and a range of local retailers.

The project will introduce a new retail and dining precinct at ground level, beneath 286 apartments.

[smartcode_project:default project_id=150017 project_image_fid=370959]

“We’re very committed to not only providing affordable residential offerings that are much needed in Palm Beach, but also delivering a vibrant new commercial heart that complements the extraordinary growth of the southern Gold Coast,” Sherpa Property Group founder Christie Leet said.

The development will sit under Sherpa's Flourish brand, which is aimed at providing a pathway into the beachside suburb for locals, first-home buyers and downsizers. In a move designed to assist first-home buyers entering the market, Sherpa has reserved all one and two-bedroom, one-bathroom apartments exclusively for eligible first-home buyers.

[smartcode_project:default project_id=150017 project_image_fid=370964]

“Our vision through Flourish is to create a vibrant retail and lifestyle focal point within the Palm Beach centre zone, delivering thriving communities underpinned by lifestyle-rich locations,” Leet said.

“So far, Flourish has been an incredible success, and we hope to carry this momentum as we progress the next two Flourish projects in Palm Beach.”

[smartcode_project:default project_id=150017 project_image_fid=371430]

Located across 1150-1164 Gold Coast Highway and 3 Sixth Avenue, the development will comprise two towers. The northern tower will deliver 154 apartments, while the southern tower will add a further 132 residences, helping address ongoing demand for new apartments in the tightly held coastal suburb.

Flourish Soleira will also feature the most extensive rooftop amenity offering ever delivered in Palm Beach.

The two towers will be connected by a skybridge, with residents gaining access to a rooftop recreation deck featuring a full-width swimming pool, hot and cold plunge pools, wellness spaces, a gymnasium, private dining facilities, massage treatment rooms, barbecue areas, a basketball court, golf simulator, indoor and outdoor dining spaces, sun lounges and extensive landscaping.

LPS Group is expected to start construction later this year.

Sherpa is already well advanced on construction of its debut Flourish project, Flourish Amargo, located just around the corner from Soleira. Meanwhile, Flourish Oasis, positioned opposite Amargo, recently commenced construction and has nearly sold out its collection of 47 apartments.

[smartcode_project_cta:default project_id=150017]

Sherpa unveils $500m mixed-use Palm Beach precinct, Flourish Soleira

Are mortgage holders set to get a reprieve from the RBA in 2026?

Big Four bank NAB believes so. They are now expecting the next move from the RBA to be a cut, rather than a hike, which they had pencilled in for August. They are unsure of the timing of the cut however, they note in their latest&nbsp;NAB Economics RBA Watch.

NAB Chief Economist, Dr Sally Auld, said recent data suggests the economy has lost momentum and the outlook for rates has shifted, noting that the broader economic backdrop has changed since earlier in the year.

“The next move in the cash rate is likely to be down, but the timing is uncertain," Dr Auld said.

"In February, growth was above trend, the economy was operating above capacity and there was uncertainty over the restrictiveness of rates. None of these conditions exist today,” she outlined.

Dr Auld said recent data pointed to softer momentum across the economy while acknowledging that at the same time, uncertainty remains a key feature of the outlook.

“Both Q1 GDP data and the NAB business survey suggest momentum in the economy has slowed, meaning that growth has likely peaked for the cycle. That said, we are cognisant there is still considerable uncertainty around the outlook, both with respect to activity and inflation.”

Dr Auld said inflation risks and labour market outcomes would be important to watch.

“On the prices side, we are still forecasting above target core inflation through to mid-2027. Margins will compress and weaker labour market outcomes are a risk.”

She said tighter financial conditions are expected to weigh on housing and activity.

“Tighter financial conditions will be reflected in a slowing in house price growth and housing credit growth. In summary, we have greater conviction that the next move in rates is down, but less conviction on the timing.”

Mortgage relief? NAB forecasts RBA rate cut, not hike, after softer economic conditions

Budget

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The First Home Saver Account scheme was one of the Rudd government initiatives axed in the Abbott government’s first federal budget.
Under the scheme, First Home Saver Accounts were given concessional tax rates and government co-contributions. Despite offering a concessional tax rate of 15% on interest earned in the accounts and awarding 17% co-contributions on the first $6,000 deposited by savers each year, the scheme failed to attract many savers preparing to purchase their first home.
The scheme’s low take up has been attributed to poor marketing and the regulations attached to the accounts. In order to qualify for the benefits, savers needed to deposit a minimum of $1,000 a year over four years before they could withdraw any money in the account. If the money was not used for a payment on a saver’s first home, it was added to their superannuation account.
Any new accounts created after 13 May will be ineligible for tax concessions or co-contributions. Existing accounts will not receive any co-contributions after 1 July 2014. National tax director of professional services firm BDO Lance Cunningham says that the government has begun winding down the scheme.
“It’s basically been abolished but with a phase out, so that from budget night you won’t be able to open any more new accounts. But for existing accounts, the co-contribution will cease from 1 July 2014.”
Savers who hold existing accounts will be able to receive co-contributions for deposits made in the 2013-14 financial year up until July.
“Be careful, it’s only a budget announcement,” says Cunningham. “But it seems to be fairly clear that if you make contributions before July this year, the co-contributions will be honoured.
“If you haven’t reached the co-contribution cap, which I think is about $6000, you might consider depositing more money in the next month to receive your co-contribution.”
Although co-contributions will end on July 1 this year, tax concessions will continue for another year.
“The tax concessions will still be available up until July 2015,” says Cunningham. “They will still be treated as First Home Saver Accounts, but the concession ceases after that date. After July 2015, they will be treated as any other account.”
Savers who have held their existing accounts for less than the four year period will have to wait until 1 July 2015 to withdraw their savings.
Steven Gunzburg is a 26 year old account manager who holds a First Home Saver Account. He says that though he understands why the scheme is being scrapped, it provided good incentives to save.
"I was contributing the maximum amount, which increased over the past 3 or 4 years, every year." 
"Mainly it was a fantastic way to incentivise people to think about saving from a much earlier age. There’s no way in the world that it’s going to make the vast majority of my deposit, but it helps you get into the right mindset."
Gunzburg opened his account when he was 18 or 19, after his mother explained the benefits of the scheme.
"My mum actually found out about it, explained it to us and I begrudgingly put quite a reasonable amount of my money into the account," he says. But Gunzburg says that the scheme had its downsides.
"Part of the problem with the scheme was that it was so complex and convoluted, it was incredibly hard to understand when and how you could access your money."
When the scheme was announced in 2008, the Rudd government predicted that 750,000 First Home Saver Accounts would be opened over the next four years. However, as of December last year, only 46,000 accounts had opened.
Late last year, <a href="/expert-insights/calls-for-urgent-revision-of-first-home-saver-account-scheme">comparison website RateCity called for changes to the scheme</a>. Chief executive Alex Parsons said that at the time, none of the “big four” banks offered the accounts.
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jrichardson-uRX5hFdKfN

First Home Saver Accounts scrapped: What now?

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GUEST OBSERVATION
Treasurer Joe Hockey’s first budget creates a clear path almost to a surplus. Our children will pay much less for current spending. Real political courage was required to get this far.
But the budget also creates problems for the future that will drag on economic growth and hurt the less fortunate. Over the next few years the Abbott government will have to make even tougher choices that both keep the budget in balance and do more to promote economic growth and fairness.
Even in four years' time the budget does not quite balance – and <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-05-08/daley-our-bloated-budget-needs-to-hit-the-treadmill/5437904" target="_blank">it should already be balanced</a> given that the economy is not doing too badly. Some of the choices, particularly the timing of the deficit levy and increases in infrastructure spending, seem almost designed to avoid claiming a surplus. The budget ducks the possibility of under-delivering on a surplus, but only by under-promising.
Bracket creep does most of the work of budget repair. Fixed income-tax thresholds and wage inflation will take personal income tax from 11% to 12% of GDP. This is worth about $18 billion in today’s terms. Income tax has not been at these levels since the GST came in.
<img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/48422/width668/7xmtbdzr-1400030990.jpg" alt="">
Real spending reductions and a few tax increases also help to reduce the budget deficit. New decisions will improve the budget bottom line by about $10.5 billion in 2016-17.
It will be the sharpest sustained slowdown in spending since the “recession we had to have” of 1990. Commonwealth spending on health will shrink as a proportion of GDP for the first time in a long while.
<img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/48423/width668/9prfznpk-1400031054.jpg" alt="">
The Treasurer promised the burden would be shared across the community. The budget is clearly designed around this principle, which is likely to make the package <a href="https://grattan.edu.au/publications/news-and-opinion/post/fixing-our-budget-emergency-means-making-the-case-for-change/" target="_blank">easier to sell</a>. Patients, students, families, pensioners, the unemployed and high earners will each contribute $1 billion to $2 billion fairly directly to the bottom line. However, the <a href="https://theconversation.com/age-pension-reform-needed-for-a-fair-sustainable-welfare-system-22313" target="_blank">largest line item in the budget, the Age Pension</a>, will continue to consume more of the Commonwealth budget and national resources, despite some minor tinkering.
<img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/48425/width668/3h3mg82d-1400031107.jpg" alt="">
False economies in the budget
Unfortunately, many of the things helping the budget to surplus will drag on economic growth and well-being.
Co-payments for medical services and pharmaceuticals are likely to lead to more sickness that far outweighs any budget savings. Similar co-payments elsewhere have led to people seeing the doctor less. Some didn’t really need to see a GP, but far more <a href="https://theconversation.com/federal-budget-2014-health-experts-react-26577" target="_blank">missed out on valuable treatment</a>.
The budget also unilaterally tears up the Commonwealth’s promises to help states with the growth in hospital spending. In effect, the Commonwealth has told the states they will have to absorb most of the <a href="https://grattan.edu.au/publications/reports/post/budget-pressures-on-australian-governments-2014/" target="_blank">coming cost increases in health</a> as new and more expensive treatments keep proliferating and the population ages. This doesn’t solve the budget problem, just transfers it to another level of government.
The budget’s reliance on bracket creep is also likely to discourage workforce participation, particularly among women thinking about returning to work who often <a href="https://grattan.edu.au/publications/news-and-opinion/post/to-lift-economic-growth-we-must-cut-the-cost-of-childcare/" target="_blank">take home very little of what they earn</a>. By 2017-18 – after the deficit levy is due to expire – middle-income earners will pay an extra 1.8% of their incomes - $744 a year – in tax. Some will lose family payments on top of that.
Similarly, although bush economists might be attracted by “work for the dole” schemes, and these are likely to reduce claims for unemployment benefits, the evidence shows that these schemes <a href="https://theconversation.com/work-for-the-dole-doesnt-work-but-here-is-what-does-22492" target="_blank">hinder people finding proper long-term jobs</a>. Combined with uncapped university fees and charging real interest for student loans, which may start to deter people from going to university, this budget could reduce how much Australia’s workforce produces in the long term.
The government’s controversial Paid Parental Leave Scheme remains in the budget, although you would need a microscope to find it buried in the budget papers as an “other” variation from the November economic statement. The best one can hope is that it never eventuates – and if the company tax changes that were to part-fund the scheme don’t happen, then the budget will get a collective boost of $4 billion a year. That money could be put to better use making childcare more affordable.
The budget’s main claim to economic responsibility is its new infrastructure spending, about $3 billion in 2016-17. That is smaller than you might think if you listened to the announced package, which conflates spending over a number of years, as well as already announced spending. And the claimed economic benefits may be much smaller than assumed.
Not one of the material projects getting new money from the government is <a href="https://www.infrastructureaustralia.gov.au/coag/files/2013/2013_IA_COAG_Report_National_Infrastructure_Plan_LR.pdf" target="_blank">rated by Infrastructure Australia as “ready to proceed”</a> – indeed not one even falls into their “on the threshold” category. Many are not even rated as projects with “real potential”.
The rigorous independent cost-benefit analysis of projects simply hasn’t been done. Given past experience, we should be sceptical about accepting politicians’ claims that their instincts are a good substitute.
So this budget may reduce the deficit, but it reinforces the need for much better quality policy in future to encourage economic growth and well-being. Better unemployment, health and transport infrastructure policies will be needed. The big reforms, as identified in Grattan Institute’s <a href="https://grattan.edu.au/publications/reports/post/balancing-budgets-tough-choices-we-need/" target="_blank">Balancing Budgets</a> report, will involve tightening superannuation tax concessions and pension eligibility and abolishing negative gearing so that the tax burden is shared more fairly across the community and it becomes easier for our children to buy houses. These measures will all create space to reduce income tax and relieve the burden on low and middle-income earners.
The government has made one courageous decision in this budget: those born in 1965 will need to work until 70 to collect an Age Pension. This is the kind of measure that will both repair the budget in the long term and encourage economic growth. Future budgets will need more of this kind of courage if they are both to sustain the deficit reduction of this year’s budget and ensure long-run economic growth and well-being.
John Daley is chief executive officer at <a href="https://grattan.edu.au/" target="_blank" style="line-height: 1.3em;">Grattan Institute</a>.
Cassie McGannon is fellow, Australian Perspectives at <a href="https://grattan.edu.au/" style="line-height: 1.3em;">Grattan Institute</a>.
Grattan Institute began with a $15 million endowment from each of the federal and Victorian governments. In order to safeguard its independence, Grattan Institute’s board controls this endowment. The funds are invested and Grattan uses the income to pursue its activities.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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jake-cSmGT7VXVf

Changes help the budget but not the economy

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Nothing in the federal budget directly impacts on real estate, notwithstanding tinkering with NRAS and First Home Saver Accounts.
But indirectly the consequences will be considerable – some good and some bad.
The first point is that there are no changes to negative gearing tax benefits. The government realises this would hurt rather than help the nation.
It seems that every year before budget time there is an attack on negative gearing from people who see only their vested interest or political viewpoint – and fail to think through the consequences.
So the only potential nasty for the real estate industry has failed to occur, yet again.
Indirectly, the biggest impact on property markets nationwide will come from the dent to confidence. The overall perception about this budget is likely to be negative. The changes will hurt a lot of households and cause belt-tightening.
Despite what the government claims, the burden is not evenly spread. The mining industry gets special treatment and the most vulnerable take the biggest hit.
Confidence is also damaged by the betrayal of trust that is sadly so common in politics. The public is fed up with broken promises and they’ve just been whacked again.
Even more frustrating is that political leaders lack the integrity to admit they’ve been deceitful. They compound dishonesty with further dishonesty.
How refreshing it would be to see a politician respond to a direct question with a direct answer. Treasurer Joe Hockey looked weak and shifty under the blowtorch applied by ABC TV presenter Sarah Ferguson. Why not just admit that election promises were broken and move on?
Shadow Treasurer Chris Bowen was no better when questioned about which elements of this budget the Opposition will seek to vote down. I thought Ferguson decimated both Hockey and Bowen, by insisting on honest responses to direct questions.
So, a major dent to public confidence, and that doesn’t help the real estate industry.
Nor will the dramatic trimming of the public service, with greatest impact on Canberra, a market that is already struggling.
On the other hand, the industry will be boosted by the spending on transport infrastructure – if the undertakings are honoured. That’s the biggest “if” in politics.
Spending on new transport infrastructure is the biggest game-changer in residential real estate. If Badgerys Creek goes ahead, and the road and rail upgrades are implemented as suggested, there will be massive consequences for real estate. So too if the $11 billion WestConnex project starts construction next year, as indicated by Hockey in his budget speech.
There’s a long list of transport infrastructure projects as part of a $40 billion budget package, with strategic projects across most of the states and territories. But will they be delivered? And, if so, when?
Right now, I wouldn’t believe federal politicians (on either side of politics) if they told me today was Thursday.
You can contact Terry via <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email</a> or on <a href="https://www.twitter.com/hotspotting" target="_blank">Twitter</a>.
Photo courtesy of Carmello Fernando/Flickr/<a href="https://creativecommons.org/licenses/by/2.0/" target="_blank">Creative Commons</a>.
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The budget was another exercise in political dishonesty

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In his first budget Treasurer Joe Hockey has taken the axe to a range of measures designed to assist SMEs while sticking to the government’s promise to lower the company tax rate.
The government will abolish key business programs including Commercialisation Australia, Enterprise Solutions and the Innovation Investment Fund and will redirect the savings into other budget areas and the establishment of an Entrepreneurs Investment Program. 
“We know that for some in the community this budget will not be easy,” Hockey said in his budget speech.   
“I say to the business community we need you to help out.  Rather than corporate welfare, the government’s focus will be on strengthening the overall business environment, so that enterprise, large and small, can create more jobs in Australia.”
Hockey claims despite the cuts the government will improve business opportunities by sticking to its promise to lower the company tax rate to 28.5%.   
He says the 1.5% cut will help 800,000 businesses although the budget does not contain any provision for the company tax cut.  
The key budget measures that will impact SMEs are:
<ul>
<li>Cutting the company tax rate to 28.5%;</li>
<li>Scrapping schemes to support apprentices and instead providing a loan program;</li>
<li>Scrapping Commercialisation Australia, Enterprise Solutions and other assistance schemes and replacing them with the Entrepreneurs Investment Program; </li>
<li>Extending unfair contract provisions to small business;</li>
<li>Abolishing the Small Business Commissioner to be replaced by a Small Business Ombudsman with more far ranging powers;</li>
<li>Wage subsidy program of up to $10,000 for businesses which employ older workers;</li>
</ul>
The budget also:
<ul>
<li>Links increases in pensions to inflation;</li>
<li>Reduces the income threshold for Family Tax Benefit Part B to $100,000;</li>
<li>Freezes pay for one year for politicians, judges and senior public servants;</li>
<li>Allows direct financial assistance for students studying diploma and sub bachelor degree courses;</li>
<li>Switches unemployed people under the age of 25 from Newstart to Youth Allowance; </li>
<li>Provides for a $20 billion Medical Research Future Fund;</li>
</ul>
The budget confirmed measures previously reported including:
<ul>
<li>A debt levy for high income earners;</li>
<li>A Paid Parental Leave scheme with a cap of $100,000;</li>
<li>A higher level of fuel excise tax;</li>
<li>Increase in the pension age to 70 by 2035;</li>
<li>The abolition of 70 government agencies;</li>
</ul>
“Doing nothing is not an option. The days of borrow and spend have come to an end,” Hockey said in his speech.
But the Opposition branded the budget a “broken promises budget” before it was even released.
"This is a budget of broken promises and twisted priorities," Opposition Leader Bill Shorten said.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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Hockey warns it’s not easy as he slashes business assistance but cuts company tax: Budget 2014

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News that the Abbott government will abandon the fifth tranche of the National Rental Affordability Scheme (NRAS) has brought mixed reactions from the housing industry.
The scheme provides tax free incentives to developers and investors providing approved housing to the rental market at 20% below market value. According to the government, there are no current funds allocated for any future rounds of NRAS, with all money that was allocated to the fifth round returned to the budget and redistributed elsewhere. The <a href="/expert-insights/national-rental-affordability-scheme-nras-fifth-round-will-not-proceed-2014-budget">2014 budget papers suggest</a> scrapping the scheme will result in savings of $235 million over three years, and will reportedly could contribute $1 billion to revenue savings over the program's life.
Developers who have already received NRAS approval for their projects will continue to receive payments for up to ten years so long as their eligibility requirements are met and their constructions proceed according to the pre-arranged timelines. 
However, the Department of Social Services will be withdrawing financial support for projects where “insufficient progress” has been made in the dwellings’ construction. Investors are still able to invest in NRAS properties, as some 18,000 dwellings are still to be delivered. This yet to be completed apartment in Sydney’s Harris Park is currently advertised by Onyx (pictured below), a property investment advice company that markets NRAS approved dwellings.
<img src="/images/2014/05/14/NRAS%20ad.JPG" alt="">
Investors who own completed NRAS approved properties will this year receive $10,661 from the government. All applications for NRAS’s fifth round of approvals, which closed in August last year, have been abandoned and will not be approved.
The Housing Industry Association (HIA) has described the abandonment the final round of the National Rental Affordability Scheme as disappointing.
"The scheme has resulted in thousands of affordable homes for low and moderate income households, increased Australia’s housing stock and generated countless jobs the process,” said Graham Wolfe, the HIA chief executive. 
Prior to the budget announcements, HIA's chief economist Harley Dale told the Financial Review that the scheme had delivered affordable housing for thousands of Australians. “It’s been a good scheme that has helped boost low-cost rental accommodation, and we would like to see it continue,” he said.
The Urban Development Institute of Australia (UDIA) described the move as a “major disappointment.” “Since its establishment in 2008, NRAS has delivered 14,575 new homes for low and moderate income households, and was on track to provide 23,884 more,” said UDIA’s national president Cameron Shephard.
However, the Real Estate Institute of Australia has welcomed the Abbott lead government’s decision, with president Peter Bushby calling the action “one REIA supports”. 
In February, SQM Research managing director Louis Christopher told Property Observer while the scheme needed to be adjusted to keep out "dodgy developers" and improve transparency, "the NRAS is a good idea, and we’re supporters of it."
The NRAS was launched by the Labor government in 2008 as a partnership between the Commonwealth and state and territory governments.
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No future for NRAS as fifth round is scrapped in 2014 budget

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First home buyers saving for a deposit have lost an incentive with the abolition of the First Home Savers Account (FHSA) scheme in the federal budget, the Real Estate Institute of Australia (REIA) president, Peter Bushby says. 
It has created greater concern as the cessation of Government co-contributions for existing account holders will hurt those relying on them to bolster their savings.
“We would like to have seen the scheme reviewed and improved rather than simply thrown on the scrap heap because of an initial low uptake.”
“With home ownership in Australia declining and first home buyers finding it increasing difficult to enter the housing market, this will not help the situation.”
Bushby noted "by contrast" the government has indicated that the National Rental Affordability Scheme (NRAS) would be reviewed, "an action REIA supports”.
“With budget forecasts of moderate growth, a slight increase in unemployment and inflation well within the RBA’s target zone, interest rates should remain low for some time and that is good news for home owners and prospective buyers,” concluded Bushby. 
The REIA had previously compiled a 10-point wishlist for<a href="/expert-insights/investing/the-reias-10-point-wishlist-for-the-federal-budget"> what it hoped to see in the federal budget</a>.
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jchancellor-FAypfDUnLy

FHSA scheme needed review not scrapping: REIA

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OK, let's see how short I can keep this post, rather than duplicate some excellent summaries of last night's budget which have already been well covered elsewhere.
In short, what I was expecting to see was tax levies to fund some hefty infrastructure spending, and that didn't prove to be wildly wide of the mark.
The budget now forecasts the deficit to be shifted back to surplus over the coming few years ahead, ongoing steady economic growth and a moderate rise in unemployment.
One of the big reasons for the expected infrastructure spend is explained by this chart of actual versus expected mining capital expenditure from the ABS:
<div><img src="https://www.abs.gov.au/ausstats/abs@.nsf/be4aa82cd8cf7f07ca2570d60018da27/1ecf42b5ec12e8bcca2573460014f2df/Body/1.3B92!OpenElement&amp;FieldElemFormat=gif" alt="Chart: Financial year actual and expected expenditure- Mining Capital Expenditure" width="400" height="155"></div>
<div>Source: ABS</div>
Note how mining investment is expected to fall by a punchy 25% this year from around $100 billion to $75 billion, a fall of about $25 billion in just one financial year.
That's a fairly hefty hole in economic activity which needs to be plugged.
And Hockey's budget has delivered, creating an $11.6 billion infrastructure growth package  to boost total infrastructure investment by Commonwealth, state and local governments as well as the private sector, to over $125 billion by 2019-20.
This is expected to see trucks moving in a matter of months.
<a href="https://www.macrobusiness.com.au/wp-content/uploads/2014/05/M140513AA.pdf" target="_blank">Commsec</a>:
"The Infrastructure Growth Package provides an additional $11.6 billion for infrastructure. This will bring the government’s investment to $50 billion by 2019-20 which, combined with State and private sector funding, will catalyse over $125 billion of additional infrastructure investment nationwide. 
"The government has committed an additional $3.7 billion to upgrade national highways and other key roads and is delivering vital infrastructure through the Western Sydney. 
"The Badgerys Creek airport development is expected to create 35,000 jobs by 2035, increasing to 60,000 jobs over time. By 2060, the new airport has the potential to drive an increase in Australia’s economic output to almost $24 billion."
There's some big stuff in here for roads, rail and ports, so transport and construction stocks are some to look at in the month ahead (particularly for me, since I am entering the infamous Sydney Morning Herald shares race later today).
Western Sydney will be a huge beneficiary of the budget with the Connex project, a second airport and a huge expenditure on road upgrades.
As to how it will all be paid for, there are plenty of cutbacks to welfare which will be unpopular, to foreign aid which will be ignored and to medical benefits (possible a negative for some healthcare stocks, particularly PRY which benefits from government revenue streams).
Most notably tax payers who earn $180,000 will now pay an extra two cents in the dollar on their top marginal rate bringing the top rate to an eye-watering 48.5%.
I doubt this will do much to discourage top-bracket taxpayers from looking towards negatively gearing investment property as a means of reducing their tax bill, the negative gearing rules of course once again remaining utterly unmentioned in the budget.
You can visit <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) or Pete's <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blog</a>.
His new book '<a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>' is out now.
Photo courtesy of Flickr/<a href="https://creativecommons.org/licenses/by/2.0/" target="_blank">Creative Commons</a>.
An original version of this article stated the mining investment figures in millions instead of billions.
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pwargent-M4siyDbqQY

Infrastructure budget delivers for Western Sydney

bkeane-XQ2u7CA6bB

"An array of spending cuts at the poorest": Budget 2014

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<h3>1. Deficit</h3>
It should come as no surprise this year’s budget will deliver a deficit.
The government has used the lead-up to the budget to lay the blame for the shape of the country’s finances with the previous government, warning the electorate that immediate sacrifices are needed for <a href="https://www.smartcompany.com.au/legal/politics/41701-abbott-reveals-budget-plan-no-changes-to-age-pension-for-three-years" target="_blank">long-term gain</a>.
The most recent estimates place the expected deficit in the arena of $47 billion, with future budgets also expected to show the government’s accounts in the red until at least 2019-20.
Hockey has <a href="https://www.smartcompany.com.au/legal/politics/41665-hockey-s-budget-roadmap-industry-assistance-age-pension-and-welfare-payments-on-treasurer-s-hit-list">said in pre-budget speeches</a> that the government will aim to reduce real spending growth by 1.75% over the next five years to turn things around.
<h3>2. A debt levy of some kind</h3>
The government’s so-called debt levy has gone through a number of guises since it was <a href="https://www.smartcompany.com.au/growth/economy/41721-how-the-government-s-debt-tax-targeting-top-earners-will-hit-your-business" target="_blank">first leaked</a>, but cabinet has signed off on the tax increase, so we know it is coming.
The government looks likely to impose a 2% increase on the highest income tax rate, which will <a href="https://www.smartcompany.com.au/legal/politics/41840-budget-2014-debt-levy-could-hit-650-000-australians-abbott-prepares-10-billion-infrastructure-fund">affect around 650,000 taxpayers on incomes above $180,000</a>.
Unsurprisingly, the debt levy is one of the more controversial measures to be included in the budget, with accusations the government has broken pre-election promises not to change existing taxes or introduce new taxes being hurled at the government, even from within its own ranks.
Hockey and Prime Minister Abbott have both said the levy will be temporary, but as most people know, once a tax is introduced it is very difficult to undo.
<h3>3. Less money for corporate welfare</h3>
In one of the more recent pre-budget leaks, the government has said it will <a href="https://www.smartcompany.com.au/federal-budget-2014/41892-budget-2014-10-billion-cut-to-industry-assistance-asic-corporate-registry-to-be-privatised">reduce the amount of money available to struggling companies by $10 billion</a>.
Hockey flagged the move a <a href="https://www.smartcompany.com.au/legal/politics/41665-hockey-s-budget-roadmap-industry-assistance-age-pension-and-welfare-payments-on-treasurer-s-hit-list">few weeks ago</a>, using a speech about the economy to outline the government’s position when it comes to corporate welfare. However, there is little information about what shape the cuts will take at this stage.
Hockey said on the weekend “those who depend heavily on government support will not necessarily receive the same support into the future”. 
“Business has a responsibility to manage itself in the same way we expect (others to do so), other than those most vulnerable in the community,” he said.
<h3>4. A raise in the retirement age</h3>
Australians will need to start preparing to work for longer, with the government <a href="https://www.smartcompany.com.au/legal/politics/41533-are-you-ready-to-work-until-you-re-70-hockey-flags-plans-to-raise-retirement-age" target="_blank">set to raise the retirement age to 70 within coming decades</a>.
While Prime Minister Abbott has <a href="https://www.smartcompany.com.au/legal/politics/41701-abbott-reveals-budget-plan-no-changes-to-age-pension-for-three-years" target="_blank">ruled out</a> making changes to the eligibility or indexation of the age pension for the next three years, the government is widely tipped to proceed with plans to change the age at which Aussie workers can retire.
“With four or five seniors on the pension, the number of workers per retiree dropping from five to three by 2050, and more than 1000 people becoming eligible for the age pension every single week, long-term reform is essential and unavoidable,” said Abbott recently.
<h3>5. Paid parental leave</h3>
Voters can also expect to see Abbott’s paid parental leave in the budget, although in a scaled-back form.
The scheme, first proposed by the Coalition when it was in opposition, is expected to cost $5.5 billion each year, with the aim of encouraging more Australian women to return to work after having children.
The eligibility threshold for the scheme was originally set at $150,000, but faced with growing concerns about the affordability of the scheme from opposition parties and within his own party ranks, <a href="https://www.smartcompany.com.au/growth/economy/41720-what-will-abbott-s-scaled-back-paid-parental-leave-scheme-look-like-a-smartcompany-q-a" target="_blank">Abbott has cut the threshold to $100,000</a>.
The scheme will continue to pay six months of 26 weeks parental leave based on the recipient’s full-time salary, but the maximum payouts from the scheme will now be capped at $50,000 instead of $75,000.
This article continues on the next page. Please click below.
<hr class="system-pagebreak">
<h3>6. Extending unfair contract protections for small business</h3>
Small Business Minister Bruce Billson has advocated for the extension of unfair contract protections for small business for some time and small business owners can expect to see this policy in tonight’s budget.
The policy would grant small business the same unfair contract protections currently available to consumers under the Australian Consumer Law.
Billson <a href="https://www.smartcompany.com.au/people/industrial-relations/30184-coalition-s-unfair-contract-provisions-move-could-lead-to-uncertainty-for-small-business--legal-expert-warns" target="_blank">previously said</a>  he finds small businesses often have to negotiate with big business on a take it or leave it basis under standard form contracts which place a disproportionate burden on one party over the other.
“What happens with standard form contracts is businesses use them irrespective of the scale or legal status of the person they are contracting with, consumers have certain protections but small businesses have no more power to negotiate and no access to those unfair contract provisions,” he said.
<h3>7. A higher level of fuel excise</h3>
In a bid to improve the budget’s bottom line, the government will use the budget to increase petrol tax by reintroducing the twice-yearly practice of indexing fuel excise in line with inflation.
It’s been 13 years since the fuel excise was indexed to inflation and in that time motorists have paid 38.1 cents per litre in fuel excise. According to news reports, unfreezing the indexation will add up to three cents a litre in the first year.
It’s bad news for small businesses, which will be faced with rising costs and therefore tougher competitions from the big end of town.
Peter Strong, executive director of the Council of Small Business of Australia, <a href="https://www.smartcompany.com.au/growth/economy/41868-government-s-petrol-tax-hike-to-slug-small-business?utm_source=SmartCompany&amp;utm_campaign=0bed38ffe7-Friday_9_May_201409_05_2014&amp;utm_medium=email&amp;utm_term=0_234118efee-0bed38ffe7-93985385">previously said</a> it’s important for small business owners to start planning for the change now.
“The costs of goods will go up everywhere because the cost of transport is going up,” said Strong. “If you’re in a business where you’re using your car a lot, you’re going to have to think about what this means.”
<h3>8. Cash for infrastructure</h3>
Hockey said this week that a higher level of fuel excise will <a href="https://www.smartcompany.com.au/federal-budget-2014/41892-budget-2014-10-billion-cut-to-industry-assistance-asic-corporate-registry-to-be-privatised" target="_blank">help fund a massive investment in roads</a>, worth a total $82 billion.
The government plans to commit $40 billion to its roads package, with the remaining $42 billion to come from state governments and the private sector.
“If we are going to make any changes to fuel excise, it will go into roads, and we are laying out a plan for the biggest increase in road expenditure in Australian history,” said Hockey.
However, at least some of the government’s contribution will come from re-announcing projects earmarked by the previous Labor government, and opposition infrastructure spokesperson Anthony Albanese has raised concerns the spending will come at the expense of investment in public transport.
<h3>9. Privatisation of the ASIC register</h3>
Media reports have put the number of government agencies to be abolished, merged or sold in this year’s budget at somewhere between 50 and 70.
One agency which appears to be in the confirmed table is Australian Securities and Investments Commission’s corporate register, which the government <a href="https://www.smartcompany.com.au/federal-budget-2014/41892-budget-2014-10-billion-cut-to-industry-assistance-asic-corporate-registry-to-be-privatised">will seek to privatise</a>.
As <a href="https://www.smartcompany.com.au/legal/41549-privatisation-of-asic-corporate-registry-on-the-table" target="_blank">previously reported</a>, the register is estimated to generate more than $625 million in revenue and has annual costs of around $140 million.
<h3>10. Health co-payments and welfare cuts</h3>
The introduction of co-payments for GP visits and cuts to welfare payments have been <a href="https://www.smartcompany.com.au/legal/politics/41665-hockey-s-budget-roadmap-industry-assistance-age-pension-and-welfare-payments-on-treasurer-s-hit-list" target="_blank">expected for some time</a>.
While the introduction of a GP co-payment may not appear to have an obvious impact on small businesses, SmartCompany blogger Bri Williams says there are some <a href="https://www.smartcompany.com.au/people/41875-a-behavioural-perspective-on-the-budget-s-6-gp-fee">important behavioural and business lessons to take from the policy</a>.
This article first appeared on <a href="https://www.SmartCompany.com.au" target="_blank">SmartCompany</a>.
Picture courtesy of Flickr/<a href="https://creativecommons.org/licenses/by/2.0/" target="_blank">Creative Commons</a>.
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ekeating-PWvazjYE25

10 things to expect from the federal budget

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GUEST OBSERVATION
The great Australian dream to own a house has long been underwritten by the great Australian housing subsidy. Whether you are a <a href="https://www.housing.nsw.gov.au/Living+in+Public+Housing/" target="_blank">public</a> or <a href="https://www.communityhousing.org.au/" target="_blank">social</a> housing tenant, a private renter or a homeowner, chances are your house was subsidised through a <a href="https://www.housing.nsw.gov.au/Living+in+Public+Housing/Rent+and+Other+Charges/" target="_blank">rental subsidy</a>, <a href="https://www.firsthome.gov.au/" target="_blank">housing grant</a> or <a href="https://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/Investments,-including-rental-properties/Rental-properties-2012-13/?page=16" target="_blank">taxation credit</a>. On budget night there will be housing winners and losers, but it’s worth remembering we all live in subsidised housing.
Public housing subsidies
<a href="https://www.ncoa.gov.au/" target="_blank">The National Commission of Audit</a> urged the Commonwealth to limit its involvement in public and social housing by providing rent assistance to income support recipients.
If treasurer Joe Hockey followed through with these recommendations public housing tenants would have to pay market rent for their housing after receiving rent assistance. This would undermine the central purpose of public housing as a form of affordable housing tenure that provides very low-income people with housing at below market rates, often as a percentage of their income.
Providing rent assistance to people to contribute to market rate rental properties would be bad news for housing equity. The frail and elderly, those with carer responsibilities or complex medical needs, or very low-income Australians in public or social housing would be hit hardest.
Private housing subsidies
Private housing subsidies are like chocolate, we know that we should use them in moderation but we just cannot cut back. We often pretend they are not subsidies at all. AMP’s <a href="https://m.afr.com/p/national/big_talk_small_acts_on_bn_budget_AkRrPW2xaygUjpIodRK8IK" target="_blank">chief economist</a> Shane Oliver says “changes to negative gearing or the CGT exemption on the family home would be seen as ‘unAustralian’”.
<a href="https://grattan.edu.au/" target="_blank">Grattan Institute</a> data suggests that more than 90% of private housing subsidies go to property owners over private renters (see figure below). This includes the roughly A$30 billion capital gains tax benefit for owner-occupiers and the A$7 billion negative gearing benefit for landlords each year.
<img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/48230/width668/rycjyqqy-1399860931.jpg" alt="">
Report: Renovating Housing Policy Grattan Institute
Often taxation concessions – the <a href="https://www.dss.gov.au/our-responsibilities/housing-support/programs-services/national-rental-affordability-scheme" target="_blank">National Rental Affordability Scheme</a> (NRAS) excluded – do not generate new housing stock. They all, with the addition of the first homebuyers grant, drive up property prices. This is good for homeowners and developers. It is bad for first homebuyers and private renters. The removal of housing subsidies that operate below or offset market rents would be catastrophic for the most disadvantaged people in Australian cities.
While the Commission of Audit was largely <a href="https://www.smh.com.au/federal-politics/political-opinion/tax-the-flaw-at-the-heart-of-the-national-commission-of-audit-20140501-zr2oy" target="_blank">silent</a> on private housing taxation subsidies, under its recommendations <a href="https://tunswblog.blogspot.com.au/2014/05/what-commission-of-audit-says-about" target="_blank">NRAS would go too</a>. NRAS was designed to encourage private investors to provide affordable rental housing. Associate Professor <a href="https://theconversation.com/rental-affordability-scheme-fears-are-misplaced-24338" target="_blank">Michael Darcy</a> argues:
"NRAS is also a tax benefit, but it provides a fixed rebate of around A$10,000 a year for ten years. Investors can claim the rebate so long as a property is rented through an approved non-profit housing manager at 20% below the market rate. Potential tenants are means tested. In this way NRAS sought to keep investors in the affordable sector for the longer term."
Post-budget affordable housing?
The forecast is grim for housing affordability in many Australian cities. According to <a href="/expert-insights/buying/sydney-now-has-170-suburbs-with-1-million-median-house-price-apm">Australian Property Monitors</a>, of Sydney’s approximately 600 suburbs 170 now have A$1 million median house prices. This constitutes an increase of about 47 suburbs in six months.
In Melbourne “<a href="/expert-insights/buying/investors-up-first-home-buyers-down-in-the-melbourne-market">the numbers of first home buyers have shrunk to record lows</a> ” as more first home buyers remain in rental accommodation or live with family members.
There is scope for innovation with public, non-government and private sector housing models and taxation policy. The National Rental Affordability Scheme is certainly not perfect, but at least it provides additional housing stock that operates below market rates.
As the details of the budget come in, the great Australian housing subsidies will be revealed. But Hockey has indicated he will take most of the <a href="https://www.smh.com.au/federal-politics/political-opinion/tax-the-flaw-at-the-heart-of-the-national-commission-of-audit-20140501-zr2oy" target="_blank">tax reforms to the next election</a>. Any move toward greater housing equity would require a significant recalibration of public and private housing subsidies and taxation reforms.
When housing subsidies are revealed on budget night, remember, we will always need housing options that operate outside the market for the poorest and most disadvantaged Australians.
Dallas Rogers is Research Fellow - Urban Research Centre at University of Western Sydney.<a href="https://theconversation.com/institutions/university-of-western-sydney"></a>
Dallas Rogers does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>. 
Photo courtesy of Steve Davidson/Flickr/<a href="https://creativecommons.org/licenses/by/2.0/" target="_blank">Creative Commons</a>.
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