The new <a href="https://www.apartments.com.au/new-apartments/yarraville-green-42-stephen-street-yarraville-vic-3013">Yarraville Green</a> development in Melbourne's inner west is showing that landscaping can be just as influential as architecture, with buyers responding strongly to the garden-first approach adopted from the outset by developer Excelon Projects and the project's design team.

Excelon appointed Six Degrees Architects and landscape architects SBLA to work collaboratively on the development, with a brief to create "a sustainable, design-led building with a focus on community."

That approach has resonated with buyers. According to Next Chapter Director Tom Hirini, who is leading the sales campaign, the landscaped communal garden has become one of the project's defining features, alongside its boutique scale and European-inspired cluster housing concept.

Local downsizers, right-sizers and established families already living in Yarraville and surrounding suburbs have accounted for the majority of purchasers.

[smartcode_project:default project_id=144913 project_image_fid=297740]

Yarraville Green will comprise 53 homes, including apartments and townhomes, arranged around the shared central garden to maximise connections to the landscaped open space. Parking has been moved underground, allowing the ground plane to be dedicated to greenery, pedestrian movement and communal spaces.

The landscape extends well beyond passive planting. Productive garden beds, a pergola, communal gathering spaces, garden sheds and a pet wash have all been integrated into the masterplan, creating spaces designed to encourage everyday interaction between residents.

[smartcode_project:default project_id=144913 project_image_fid=297741]

The interiors continue Excelon's focus on craftsmanship, incorporating bespoke elements by Melbourne artisans including leadlight detailing by Adadaz, hand-turned timber hardware by Auburn Woodturning and blown-glass lighting by Ruth Allen.

Sustainability has also been embedded throughout the project, with Yarraville Green targeting an average 7-star NatHERS energy rating through passive design principles, rooftop solar servicing common areas and rainwater harvesting for landscape irrigation.

[smartcode_project:default project_id=144913 project_image_fid=297735]

Construction continues to progress at Yarraville Green, with structural works well underway and framing works approaching completion under builder Balmain &amp; Co. The project remains on track for completion in mid-2027.

Apartments at Yarraville Green are currently priced from $625,000, while townhomes start from $1.4 million.

[smartcode_project_cta:default project_id=144913]

Joel Robinson

Garden-led design drives buyer demand at Yarraville Green

National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.

Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.

[smartcode_project:default project_id=145922 project_image_fid=373556]

The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.

Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.

"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.

"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.

"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."

[smartcode_project:default project_id=145922 project_image_fid=373559]

Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.

The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.

[smartcode_project:default project_id=145922 project_image_fid=373583]

Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.

Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.

[smartcode_project:default project_id=145922 project_image_fid=373571]

Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.

Completion of Crest &amp; Walker is slated for late 2028.

[smartcode_project_cta:default project_id=145922]

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 41-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 41-storey tower, which has 229 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

A decade in the making: Residents to move into Chevron One as construction wraps up

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

[smartcode_project:default project_id=150017 project_image_fid=374052]

The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.

Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.

[smartcode_project:default project_id=150017 project_image_fid=372547]

The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.

The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.

[smartcode_project:default project_id=150017 project_image_fid=374054]

Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.

Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.

[smartcode_project:default project_id=150017 project_image_fid=370962]

While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

[smartcode_project:default project_id=146527 project_image_fid=366550]

That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

[smartcode_project_cta:default project_id=150017]

Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

[smartcode_project:default project_id=426 project_image_fid=359199]

The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

[smartcode_project:default project_id=426 project_image_fid=360299]

The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

[smartcode_project:default project_id=426 project_image_fid=360300]

What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Elevated amenity anchors daily life at Aeris, Melrose Park

Debt

<html><body>
GUEST OBSERVATION
 
After two decades equating budget surpluses with good economic management, it might seem convenient that the federal government has <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/speeches/speech-australian-chamber-commerce-and-industry-canberra">changed its fiscal strategy</a> just before the budget to focus on jobs over keeping the deficit in check.
But it’s the right move. The world has changed in ways that make government spending more necessary and government debt more sustainable than ever.
Debt talk still dominates <a href="https://www.afr.com/policy/economy/budget-must-chart-course-to-eliminate-debt-and-deficit-20200929-p5605q">newspaper headlines</a> and many of Treasurer Josh Frydenberg’s <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/transcripts/interview-karl-stefanovic-today-show-1">media appearances</a>. But it shouldn’t. Here’s why.
We are in the middle of a major economic shock
The COVID-19 recession is the biggest economic shock since the Great Depression. GDP <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">fell 6.3%</a> in the year to June, the worst annual result since 1929.
The federal government should use its balance sheet to spread the costs of such a large shock over time. The alternative would be to leave those who lost their jobs or businesses in poverty.
The government’s emergency response saved businesses and jobs from going under in the short term. Now, as we emerge from the crisis into the recovery phase, large-scale stimulus is needed to boost demand and create new jobs.
Debt has never been cheaper
It has never been cheaper for governments to borrow. As the next chart shows, the interest rate on 10-year Australian Government Bonds is less than 1%. If inflation stays above 1%, as the Reserve Bank and Treasury expect, the “real” interest rate the federal government pays on the bond will be negative. That is, it will effectively be paid to borrow.
<hr>
<img src="https://images.theconversation.com/files/361517/original/file-20201005-20-1oqmgxs.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="Yields on 10 Year Australian Government Bonds."> Author provided
<hr>
These very low interest costs change the dynamics of managing debt we accrue now. Investments that boost future growth – including spending to reduce unemployment and close the output gap – will pay for themselves.
This is the fiscal “free lunch” spoken about by the former chief economist of the International Monetary Fund, <a href="https://www.aeaweb.org/articles?id=10.1257/aer.109.4.1197">Olivier Blanchard</a>, and the deputy governor of the Reserve Bank of Australia, <a href="https://www.rba.gov.au/speeches/2020/sp-dg-2020-09-22">Guy Debelle</a>.
Extra stimulus won’t spook financial markets
To get the unemployment rate below 5% by the end of 2022, the <a href="https://theconversation.com/now-well-need-100-120-billion-why-the-budget-has-to-spend-big-to-avoid-scarring-145489">Grattan Institute</a> estimates a further A$100 billion to A$120 billion of fiscal stimulus is needed on top of what governments have already announced.
This is unlikely to cause financial markets to break a sweat. Even if gross debt was to nudge 50% of GDP in the next few years, it would still be far below that of most other developed nations before the COVID crisis. At the end of 2018-19, the gross public debt in the UK was 85% of GDP, in the US 103%, and in Japan more than 200%. All have borrowed substantially more since then at very low rates.
There’s also no risk that significant government spending will cause wages or inflation to rise dramatically. In fact, Australia has the opposite problem. Wages were stagnant before the crisis and are forecast to remain so for years. Inflation has been persistently below the Reserve Bank’s inflation target and is forecast to remain so for years.
We can manage debt without austerity
Frydenberg has signalled that, as employment recovers, the government’s fiscal strategy will shift to stabilising and then reducing debt as a share of GDP. Although his stated threshold of “well under 6% unemployment” is <a href="https://theconversation.com/frydenberg-is-setting-his-budget-ambition-dangerously-low-146855">not ambitious enough</a>, the idea makes sense.
The good news is that with interest rates on government borrowing so low, debt as a share of GDP can be reduced without pursuing austerity in the form of deficit reduction.
The interest rate is one of three factors that affect the size of debt relative to GDP. The other two are the budget balance (the incremental contribution to debt) and nominal GDP growth, which depends on economic activity and inflation.
Even if interest rates were a little higher than now (say, 1.5%), the government can reduce debt relative to GDP even while continuing to run large deficits, provided that nominal GDP growth returns to a moderate level (say, 4.5%, as it was before the pandemic).
The next chart shows that under these circumstances the government can run deficits of up to $50 billion and still reduce debt as a share of GDP.
<hr>
<a href="https://images.theconversation.com/files/361518/original/file-20201005-24-r8s4ta.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/361518/original/file-20201005-24-r8s4ta.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="Gross debt-to-GDP projections based on different budget deficit scenarios."></a> Author provided
<hr>
Different rates of GDP growth would change this story, as the next chart shows. With an even higher nominal growth rate, debt would shrink even faster relative to GDP. In a scenario of prolonged low growth, debt would increase relative to GDP a little, but remain very modest.
<hr>
<img src="https://images.theconversation.com/files/361519/original/file-20201005-14-1f2z9na.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="Gross debt-to-GDP projections based on different GDP growth scenarios"> Author provided
<hr>
The government can do things to boost nominal growth in areas such as tax reform, education and skills, workforce participation, energy and climate policy, and land-use planning. The Reserve Bank should also do more by boosting inflation, which would support nominal growth.
Don’t scrimp on stimulus
There are many <a href="https://insidestory.org.au/the-biggest-bang-for-the-stimulus-buck/">urgent and valuable priorities</a> for government spending right now, such as permanently raising JobSeeker, boosting child-care support and building more social housing.
More debt might impose a small cost over a very long time. But the cost of insufficient stimulus and a prolonged recession would be vastly bigger.
The choice is simple. We should not let debt panic distract us from making it.<img src="https://counter.theconversation.com/content/147369/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/danielle-wood-147710">Danielle Wood</a>, Chief executive officer, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a> and <a href="https://theconversation.com/profiles/tom-crowley-1041697">Tom Crowley</a>, Associate, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a>
This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/dont-worry-about-the-debt-we-need-more-stimulus-to-avoid-a-prolonged-recession-147369">original article</a>.
</body></html>

j.ballantyne1990-6AQqhLzZaK

We need more stimulus to avoid a prolonged recession

<html><body>
GUEST OBSERVATION
 
Overwhelmingly, the 50 leading Australian economists surveyed by the Economic Society of Australia and The Conversation ahead of Thursday’s <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/update-economic-and-fiscal-outlook">economic statement</a> want the government to keep spending to support the economy — even if it means a substantial increase in debt.
The question is the third asked in the <a href="https://theconversation.com/au/topics/esa-conversation-national-economic-poll-87063">Economic Society-Conversation monthly poll</a>, which builds on a series of polls conducted by the society since 2015.
The economists polled were selected for their preeminence in the fields of microeconomics, macroeconomics, economic modelling and public policy. Among them are former and current government advisers and a former and current member of the Reserve Bank board.
Each was asked whether they agreed, disagreed, or strongly agreed or strongly disagreed with this proposition:
Governments should provide ongoing fiscal support to boost aggregate demand during the economic crisis and recovery, even if it means a substantial increase in public debt.
Only three of the 50 economists polled disagreed with the proposition, none of them “strongly”.
It is one of the starkest results in the survey’s five-year history.
<img src="https://images.theconversation.com/files/348556/original/file-20200721-17-1h8kcyj.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="50 economists respond: Govs should provide ongoing fiscal support to boost aggregate demand during the economic crisis and recovery, even if it means a substantial increase in public debt. Strongly agree: 66%, Agree: 22%, Uncertain: 6%, Disagree: 6%">The Conversation, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a>
Of the 50 economists polled, 44 supported the proposition, 33 of them “strongly”.
Of the remaining six, three were uncertain, and provided well-argued accounts of their reasoning which are published in full along the responses of each of the other participants at the bottom of of this article.
Debt now, concern later
Rachel Ong of Curtin University said the amount of public debt that has accumulated during the COVID-19 crisis was at a historical high and had to be repaid at some point. But she said governments had to be careful about removing support until the economy was clearly on a trajectory of recovery.
Nigel Stapledon of the University of NSW said while some level of on-going support was needed, at some point the cost would be larger than the benefit. Some sectors, including universities, will have to permanently adjust to lower incomes.
The economists who strongly agreed said that if not enough support was provided or if it was withdrawn too early, the resulting recession would itself make the debt that had been run up less sustainable (Fabrizio Carmignani, Griffith Business).
Financial markets are keen to lend
Beth Webster of Swinburne University argued the only real limit to government spending was high and damaging inflation.
If the government was worried about debt, it could finance its spending in other ways, by borrowing from the Reserve Bank (which could itself create money and “monetise” the debt).
Sue Richardson from the University of Adelaide agreed, using a technical term to argue that the was economy was “so far inside its production possibility frontier” (producing so much less than it was capable of) and inflation was so dormant, that there was a case for creating money.
Saul Eslake said that wasn’t necessary. Even with the hundreds of billions committed, financial markets appeared to be comfortable with the debt and keen to lend.
Debt is how we do things
Reserve Bank board member Ian Harper said the Commonwealth could borrow for 30 years at about 1%. “Can we expect the economy to grow faster than 1% per annum in nominal terms over a 30-year horizon?” he asked rhetorically. “I would have thought that’s a shoo-in,” he answered. If so, then the debt would be easily serviced.
Consulting economist Rana Roy pointed out that public debt was “not an anomaly”. It was an enduring and defining feature of the modern economy, providing an enduring and defining asset class, sovereign bonds, which were in high demand.
Of the three economists who opposed the proposition, Tony Makin of Griffith supported “supply side” measures such as <a href="https://theconversation.com/bowing-out-gracefully-how-theyll-wind-down-and-better-target-jobkeeper-143011">JobKeeper</a> that would keep firms in business but opposed “demand side” measures to boost consumer spending, saying they would ultimately prove counterproductive.
Escalating public debt would induce capital inflow, drive up the dollar and make Australian businesses less competitive. Although interest rates are at present low, they would increase when the debt had to be refinanced.
Doubts for differing reasons
Paul Fritjers of the London School of Economics said he would normally support running up government debt for the sake of the economy, but could not support it being run up to support an economy the government itself had run down.
The government should wean the population off of its “irrational fears” and letting “normal economic life return”.
Although strongly argued, these views were more weakly held than those of the majority.
<img src="https://images.theconversation.com/files/348557/original/file-20200721-23-a3clr6.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="Previous responses weighted by confidence: Strongly agree: 70.4%, Agree: 21.7%, Uncertain: 3.5%, Disagree: 4.4%">The Conversation, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a>
Participants were asked to rate the confidence with which they held their opinions on a scale of 1 to 10.
When adjusted for these ratings, the proportion prepared to countenance a substantial increase in public debt climbed from 88% to 92.1%.
The proportion opposing it fell from 6% to 4.6%.
Tommorrow’s <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/update-economic-and-fiscal-outlook">economic statement</a> will be the last budget and economic update before the budget itself on <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/2020-21-budget-announcement">October 6</a>.<img src="https://counter.theconversation.com/content/143089/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/peter-martin-682709">Peter Martin</a>, Visiting Fellow, <a href="https://theconversation.com/institutions/crawford-school-of-public-policy-australian-national-university-3292">Crawford School of Public Policy, Australian National University</a>
This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/should-the-government-keep-running-up-debt-to-get-us-out-of-the-crisis-overwhelmingly-economists-say-yes-143089">original article</a>.
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Should the government keep running up debt? Economists say yes

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New figures released from the ABS show new home lending plunged in the month of April by $935.5 million.
In the same month, Australians wiped a record $1.55 billion off debt accruing interest on their credit cards – the highest drop on record.
HOUSING 
The ABS lending indicator statistics released today show that new lending dropped by 4.80 per cent, month-on-month, with the total value of new lending down by $935.5 million compared to March 2020, according to the seasonally adjusted data. Of this, a $720.9 million drop was from new owner-occupier loans. 
Refinancing, however, picked up pace – the number of external refinances increased by 11.20 per cent in the month of April, and 26.96 per cent, year-on-year, according to the seasonally adjusted figures.
<table border="0" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td rowspan="2" nowrap>
Value of new loans
</td>
<td>
% change 
</td>
<td>
% change 
</td>
</tr>
<tr>
<td>
Mar 2020 – Apr 2020
</td>
<td>
Apr 2019 – Apr 2020
</td>
</tr>
<tr>
<td nowrap>
Total housing
</td>
<td nowrap>
-4.80%
</td>
<td valign="bottom" nowrap>
11.24%
</td>
</tr>
<tr>
<td nowrap>
Owner occupiers
</td>
<td nowrap>
-5.00%
</td>
<td nowrap>
14.75%
</td>
</tr>
<tr>
<td nowrap>
Investors
</td>
<td nowrap>
-4.23%
</td>
<td nowrap>
2.38%
</td>
</tr>
</tbody></table>
Notes: Seasonally adjusted figures. Figures exclude refinancing.
Source: ABS lending indicator statistics for April 2020, released 10 June 2020.
<table border="0" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td rowspan="2">
Number of owner-occupier loans
</td>
<td>
% change 
</td>
<td>
% change 
</td>
</tr>
<tr>
<td>
Mar 2020 – Apr 2020
</td>
<td>
Apr 2019 – Apr 2020
</td>
</tr>
<tr>
<td nowrap>
First home buyers
</td>
<td nowrap>
-3.75%
</td>
<td nowrap>
15.56%
</td>
</tr>
<tr>
<td nowrap>
Refinancers
</td>
<td nowrap>
11.20%
</td>
<td nowrap>
26.96%
</td>
</tr>
</tbody></table>
Notes: Based on the number of new loans to owner occupiers using seasonally adjusted figures.
Source: ABS lending indicator statistics for April 2020, released 10 June 2020.
CREDIT CARDS
Statistics released yesterday from the RBA show that outstanding debt accruing interest dropped by $1.55 billion or 5.76 per cent. The highest monthly drop on record. 
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<table border="0" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="bottom" nowrap>
TOTAL
</td>
<td>
Apr-20
</td>
<td>
Mar 2020 vs Apr 2020
</td>
<td>
Apr 19 vs Apr 2020
</td>
</tr>
<tr>
<td valign="bottom" nowrap>
Number of accounts
</td>
<td valign="bottom" nowrap>
13.50 million
</td>
<td valign="bottom" nowrap>
-136,817
-1.00%
</td>
<td valign="bottom" nowrap>
-1.09 million
-7.48%
</td>
</tr>
<tr>
<td valign="bottom" nowrap>
Total balances accruing interest
</td>
<td valign="bottom" nowrap>
$25.43 billion
</td>
<td valign="bottom" nowrap>
-$1.55 billion
-5.76%
</td>
<td valign="bottom" nowrap>
-$4.10 billion
-13.87%
</td>
</tr>
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<td valign="bottom" nowrap>
Total value of purchases
</td>
<td valign="bottom" nowrap>
$14.72 billion
</td>
<td valign="bottom" nowrap>
-$6.43 billion
-30.42%
</td>
<td valign="bottom" nowrap>
-$7.22 billion
-32.92%
</td>
</tr>
<tr>
<td valign="bottom" nowrap>
Total value of cash advance
</td>
<td valign="bottom" nowrap>
$307.44 million
</td>
<td valign="bottom" nowrap>
-$199.54 million
-39.36%
</td>
<td valign="bottom" nowrap>
-$287.76 million
-48.35%
</td>
</tr>
</tbody></table>
</div>
Notes: excludes commercial cards, using original data from the RBA. Data released 9 June 2020. 
RateCity.com.au research director, Sally Tindall, said a lot of Australians spent their lockdown refinancing their mortgages and getting on top of their debt.
“Australians spent the month of April getting their finances in order, scaling back spending and knocking down their debt, with the biggest monthly drop in debt accruing interest on record,” she said.  
“The early access to superannuation program is likely to be a factor in this record busting drop, giving some Australians an opportunity to wipe clean their credit cards that was, in their mind, too good to refuse.
“Refinance activity has also taken off during lockdown. We expect this to continue to gain pace with many homeowners looking to sure up their finances. 
“In relation to mortgages, today’s drop is likely to be the beginning of a long road ahead for the home lending market.  
“In April alone, nearly one billion dollars of new lending was ripped out of the property market, as the country went into lockdown; the biggest monthly drop in new lending since October 2015, in dollar terms,” she said.
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Aussies hunker down on debt in lockdown

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Wayne Byres, chairman of the Australian Prudential Regulation Authority (APRA), has said financial stability risks from very cheap debt overload and high-cost housing were still present in the economy.
Amid signs of a property recovery in the Melbourne and Sydney property markets, Byres said the market was at an "interesting juncture".
"The downward adjustment in prices has occurred in an orderly fashion and been positive for stability," he said in a speech in Melbourne.
"However, it is worth remembering that the original risks we were concerned about in 2014 - high prices, high debt, low interest rates and subdued income growth - have not gone away, and in some cases increased."
He noted the downward adjustment in prices has occurred in an orderly fashion and been positive for stability.
"It would be unhelpful if recent (and prospective) interest rate reductions led to a resurgence in speculative activity," he said. 
Byres said he did not want banks to cut their credit standards as a way to fire up loan growth.
"When it comes to the supply of credit, it would therefore be unwise for lending standards to be allowed to erode again as a means of generating lending growth. And on the demand side, it would be unhelpful if recent (and prospective) interest rate reductions led to a resurgence in speculative activity," he said.
"Financial stability doesn’t happen by chance," he noted.
Earlier this month, CoreLogic reported Melbourne house prices rose 1.3 per cent in August, while Sydney prices rose 1.5 per cent. National housing prices were up 0.8 per cent in the same month, the first increase since October 2017.
Byres' speech also noted the squeeze on bank profits.
It arose from low interest rates as lenders offset the decline in their lending rates through their deposit portfolios.
Byres said smaller banks, which have a higher reliance on deposit funding, could feel the hit on their profits "more forcefully" than large banks.
He indicated it could affect competition in the market.
"All four Australian major banks enjoy AA credit ratings, and ready access to funding; very few European banks (without explicit government support) enjoy similar ratings
"In 2018, a decade after the crisis, the four Australian majors were ranked in the top 35 banks in the world by market capitalisation.
"Europe, despite a much larger banking system and population, only had four banks in the top 35.
"The return on equity (RoE) of the Australian major banks has certainly declined but has not fallen below 10 per cent, even during the GFC, and is now in the order of 12 per cent; for large global European banks, RoE was negative at the height of the crisis, and has struggled to get much above 5 per cent since then."
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APRA's Wayne Byres warns of high debt and rising property prices

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<h1>
<a href="https://theconversation.com/profiles/mark-mcgovern-168" target="_blank" style="font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12.16px;">Mark McGovern</a>, <a href="http://theconversation.com/institutions/queensland-university-of-technology-847" target="_blank">Queensland University of Technology</a>
</h1>
The Queensland state government is <a href="https://www.qtc.com.au/annual-reports/annual-report-2016-17/" target="_blank">paying a higher interest rate</a> than most Queenslanders are on their mortgages. To make matters worse, debt is <a href="https://www.researchgate.net/publication/265852954_Subprime_agriculture_and_Australia" target="_blank">becoming problematic in rural areas</a> with incomes and asset values down, and debts, unemployment and underemployment up.
Without improved state government debt arrangements, and policies to alleviate stressed industries and communities, Queenslanders’ income and wealth will suffer.
A destructive dynamic is at work in government, rural and urban debts. As debt servicing bites, consumption falls, stressing businesses and their employees. Public and private interest payments crowd out jobs and business investment.
The interest rate on Queensland government debt is currently 5.2% per annum, compared to <a href="https://www.canstar.com.au/compare/home-loans/?amount=350000&amp;profile=Buying+Next+Home+350k&amp;purpose=Buying+Next+Home&amp;repayment_type=P%2BI&amp;state=NSW&amp;Loan+Type=Variable&amp;provider_link=Yes%2C+only+show+results+with+links" target="_blank">mortgage rates</a> between 3% and 4%.
Interest rates fluctuate markedly from year to year. Today the <a href="https://www.rba.gov.au/statistics/cash-rate/" target="_blank">Reserve Bank of Australia cash rate is 1.5% pa</a> yet the Queensland government in 2013-14 was paying the same 5.2% pa when the RBA cash rate was 3% pa. Failure to capture lower market rates is evident in the state’s finances.
<h2>Government debt</h2>
The Queensland government sells bonds to cover its borrowing. For example, it could sell a ten-year bond for A$1,000 (the face value) that pays out 5% pa every six months. The Queensland Treasury makes interest payments every six months and pays back the A$1,000 after ten years.
However, bonds are traded in markets and can be bought and sold for more or less than the face value. If interest rates in the wider economy are lower than what the bond pays or if perceived risks are low, a bond may trade for more than the face value, say A$1,100.
Looking at <a href="https://www.qtc.com.au/annual-reports/annual-report-2016-17/" target="_blank">Queensland Treasury Corporation data</a> we can see that total debts held by the State of Queensland had a face value of A$89.2 billion but a market value for A$98.5 billion at the end of June 2017. This was A$9.3 billion more than face value.
Also evident is that total debt peaked in 2014-15, but <a href="https://www.sunshinecoastdaily.com.au/news/leaders-trip-over-debt-campaign-unfolds/3253743/" target="_blank">no one seems to have noticed</a>.
<iframe style="border: none;" src="https://datawrapper.dwcdn.net/10id6/3/" frameborder="0" width="100%" height="400"></iframe>
Examining the breakdown between Queensland departments such as Treasury and the government-owned corporations that supply electricity, water and the like, the rise in Queensland general government debt was relatively smooth between 2007 and 2015. Changes in government had no significant effects on the trend in general government debt.
This rise appears driven by a <a href="https://s3.budget.qld.gov.au/budget/papers/2/4-Revenue.pdf" target="_blank">shortfall in government revenue</a>, poor policies and the global financial crisis. A lack of critical information about government debt compounded these problems.
As discussed by the <a href="https://publications.qld.gov.au/dataset/rural-debt-and-drought-taskforce-report/resource/fea23ad0-e069-4484-91ce-d1d762decc48" target="_blank">rural debt and drought taskforce</a>, relatively small rural debts also appear to be manageable. Much bigger challenges lie in the big cities because of the sheer size and the recentness of much debt.
<h2>Refinancing Queensland?</h2>
Relatively small steps can have big effects in the current situation.
The first step for the new government is to provide better transparency about the state of government debt with Treasury publishing better analysis and fuller accounts. This will help lead to more sustainable state finances, and to tackle problems in both rural and urban areas.
Although large Queensland government debts appear relatively manageable, this is providing that net government revenues can be maintained.
There are several potential policy initiatives but we only have space to consider one. Suppose the Queensland government set a target of transitioning to raise one-third of its funds from directly selling non-transferable bonds (that can’t be bought or sold) to Queenslanders. This was a regular practice before financial liberalisation in the 1980s. If done again well, it could be a win-win outcome.
Much like a term deposit, Queenslanders could buy five-year bonds with an interest rate of, say, 3% pa. This would reward Queensland savers with better returns than they could get in a savings account and keep money within the state. It would have saved the government the significant sum of A$620 million if used for a third of government bonds in 2016-17.
<img src="https://counter.theconversation.com/content/87586/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">Interest payments should be one focus for the incoming government as it works with insight to improve its management of debts and their effects. Gains from some fresh thinking could be considerable.
<a href="https://theconversation.com/profiles/mark-mcgovern-168" target="_blank">Mark McGovern</a>, Visiting Fellow, QUT Business School, Economics and Finance, <a href="http://theconversation.com/institutions/queensland-university-of-technology-847" target="_blank">Queensland University of Technology</a>
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/the-queensland-government-is-paying-more-for-its-debt-than-the-average-mortgage-holder-87586" target="_blank">original article</a>.
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The Queensland government is paying more for its debt than the average mortgage holder

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<img src="https://counter.theconversation.edu.au/content/75857/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The current debate about housing muddles two separate issues: the affordability of housing, and the risk in the banking system of any significant fall in house prices. Clearly, they are both important issues and the link between them is the potential for a lot of home owners to overreach in their finances, to not be able to repay their loans, and so to bring down their banks.
When you look at the data (in three charts) on mortgage stress, the systemic risk of people not being able to repay their home loans appears small. Data from the Australian Prudential Regulation Authority (APRA) reveals the average balance on housing loans has barely trended upwards over the last five years (see our first chart below).
This was during a period when house prices have risen quite strongly. In effect, this means that, on average, people have more equity in their houses to stand behind their borrowings.
This is not just true for the average but also if you look at investor loans or for low documentation (loc-doc) loans (these are aimed at those who cannot provide the usual required paperwork, for example self-employed people). The same trends emerge. It’s not clear from this that people are taking on excessive risk – and certainly not recently.
<a href="https://www.propertyobserver.com.au/images/2017/04/10/v1.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/10/v1.jpg" width="600" height="432">
Source: ABS6416.0 and APRA Quarterly ADI Property Exposures
Even for new loans you get the same basic picture. The chart below shows the loan to valuation ratios for new loans. What is clear is that for most new loans people are borrowing between 60% and 80% of the value of their houses.
The proportion of people who have very high exposure to a fall in house prices – those with loan to valuation ratios above 90% – has been declining over time. Once again, the basic picture is one of prudent households, rather than a community of people gambling on house price rises.
<a href="https://www.propertyobserver.com.au/images/2017/04/10/v2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/10/v2.jpg" width="600" height="432">
Source: APRA Quarterly ADI Property Exposures
A lot of the confusion about housing arises because people make inappropriate comparisons. One common mistake is to compare the amount of housing debt with national income. This is highly misleading.
A more correct comparison is between your income and the amount of your income needed to service your loan. At a national level, this means we should look at the size of national income and the amount of income needed to service the debt (not the amount of debt).
An alternative that the Reserve Bank uses is to compare the amount of debt people have with the amount of assets they hold. As we can see in the chart below, the value of household liabilities has been increasing but the total value of assets held by households appears to have been rising faster. Again, there is no clear case that the household sector has borrowed excessively.
<a href="https://www.propertyobserver.com.au/images/2017/04/10/v3.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/10/v3.jpg" width="600" height="432">
Source: Reserve Bank of Australia
None of this is to deny that house prices can fall, or that some people are finding it very hard to buy somewhere to live in Sydney. Houses are much cheaper in other parts of Australia and property prices have even been falling recently in some regions.
Rodney Maddock is a Vice Chancellor's Fellow at Victoria University and Adjunct Professor of Economics, Monash University and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/rodney-maddock-107543" target="_blank">here</a>.
 
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jchancellor-FAypfDUnLy

Mortgage stress isn't as bad as you might think: Rodney Maddock

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The real estate franchise business LJ Hooker is facing a December debt refinancing requirement, according to the Australian Financial Review's Street Talk column.
It comes after shelving plans for a $400 million float earlier this year.
The Street Talk column suggested the franchise business has around $60 million in obligations with a refinance due at the end of 2016.
A spokeswoman advised the company founded in 1928 by the legendary Sir Leslie Hooker was reviewing "a variety of capital management options to deliver its growth plans." 
It was in July last year that Janusz Hooker, the grandson of Sir Leslie, cemented his control of the business as a number of well-known shareholders sold out.
Among them were its former chairman Greg Paramor, former Leighton chief Wal King, developer and yachtsman Syd Fisher and RAMS founder, John Kinghorn.
In October, last year there was a pre-initial public offering cash call of around $20 million. 
There was also talk of a joint venture with Barry Plant.
Street Talk advised today there were whispers about Janusz Hooker and whether he will relocate to Singapore.
LJH advised Property Observer there were major factual issues with the story, including the claim that it owed any debt this year.
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LJ Hooker reviewing capital management options

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<img src="https://counter.theconversation.edu.au/content/64367/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
A new study shows two million Australians are experiencing high financial stress which prevents them from coping in difficult situations, for example, in paying unexpected expenses such as a big mobile phone bill or the fridge breaking down.
Adults face these sorts of scenarios frequently. When they arise, people usually turn to savings, a credit card, or a friend or family member to help out.
Our report, Financial Resilience in Australia, funded by the National Australia Bank, quantifies the amount of Australians: experiencing problems paying debts; meeting the costs of living; and accessing appropriate, affordable and acceptable financial products and services.
It also shows some Australians have trouble accessing social support in times of crisis and may have low levels of financial knowledge.
Our research measured financial resilience by the four key resources that support it: personal economic resources (such as savings), financial products and services (such as insurance), financial knowledge and behaviour (including financial literacy), and social capital (having social support in times of crisis, including friends and families).
Many Australians simply don’t have the resources to bounce back. For example, around:
<ul>
<li>One in two adults have limited to no savings</li>
<li>One in two only have a “basic understanding” of financial products and services</li>
<li>One in ten have unmet need for credit and/or insurance</li>
<li>One in five have limited or no social connections</li>
<li>One in 30 stated they needed but did not have access to any form of government or community support.</li>
</ul>
This has implications for the short and long-term impact on individuals and their families.
<h2>Who is most at risk?</h2>
Our research found secure housing, steady income, education, being employed and good mental health are strongly associated with financial resilience.
On average, financial resilience is significantly lower among people who are homeless, living in social housing, are short-term renters or live in student accommodation.
Financial resilience increases with the level of education and, unsurprisingly, people with very low personal incomes fare poorly.
Employment status is a key marker. People who are unemployed, underemployed, not in the labour force and those who only work odd jobs are more likely than their full-time employed counterparts to have lower levels of financial resilience.
People with a serious mental illness are significantly more likely to be in severe or high financial stress, are less likely to be financially secure and fare worse on each of the individual resource groups than people without mental illness.
The gender split in financial resilience is fairly even overall. However, the four components of financial resilience are influenced by gender. Women have lower general levels of economic resources than men, but men have lower levels of social capital than women.
People who were born overseas in a non-English speaking country have lower levels of resilience than those who were born in Australia. Finally, the influence of age on financial resilience varies and is often affected by other factors.
One in four study participants reported difficulties accessing financial services. The barriers are varied, but include cost, trust, poor and inadequate services, and (for a few) language, disability and discrimination.
This underscores the importance of making financial information, products and services more user-friendly and accessible. This will ensure these resources are available and accessible to everyone who needs and wants them in society.
The factors influencing financial security are not surprising. People who own their own homes, have a university-level education and have a personal yearly income of more than A$100,000, for example, have higher levels of financial resilience. However, only 35.7% of Australians are financially secure.
The prevailing attitude around financial problems is that individuals are solely responsible for their situation. Our research challenges this ideas as it shows multiple aspects to financial resilience, some out of the individual’s control.
The below shows how interlocked the different components of financial resilience are and when pieces of the puzzle are removed, the most vulnerable people are at risk.
<a href="/images/2016/08/29/image-20160826-11150-bc398a.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/08/29/image-20160826-11150-bc398a.jpg" alt="" width="754" height="407">
<h4>
The jigsaw of financial resilience. The Centre for Social Impact, Author provided
</h4>
At the moment social sector leaders are lobbying the government to scrap proposed budget cuts that will reduce the amount of certain welfare payments. Our research shows these same people have the least resilience to bounce back if they were to lose some financial support.
This is an example of how the government needs to play a more active role in understanding financial resilience and where support is needed. By understanding the often interrelated elements of financial resilience, tipping points and who is most at risk, prevention and intervention can be better tailored.
Rebecca Reeve is senior research fellow, Centre for Social Impact, UNSW Australia and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/rebecca-reeve-97205" target="_blank">here</a>.
Kirsty Muir is professor of Social Policy / Research Director, Centre for Social Impact, UNSW Australia and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/kristy-muir-158422" target="_blank">here</a>.
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Two million Aussies are experiencing high financial stress

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<img src="/images/2016/03/30/Holdencapital_banner.jpg" alt="" width="646" height="136">
SPONSORED POST
This is a question faced by many developers as they find themselves inevitably stepping up to larger projects and the consequential demand on their equity resources. The answers are complex and can vary depending on many variables but let’s take a look at what each option offers
Firstly, lets be clear on the differences between debt and equity. Debt comes in many forms but essentially, it comprises funds that are lent at a proscribed interest rate which in a project scenario are usually but not always, capitalized as a cost of the project. Debt is typically but again not always, secured by a registered charge over the security property together with sponsor guarantees and in the final wash up, the lender’s repayment of capital, interest and fees take priority over those of the sponsor when apportioning the proceeds of sale. Clearly it is important to negotiate the best possible terms when committing to a debt position but at the end of the day, the golden rule tends to apply, he who has the gold, makes the rules.
Equity on the other hand is usually defined as the capital contribution provided by the sponsor of the project and any related parties. Equity can take the form of cash, services provided and any improvement in value derived from the revaluation of an asset as a consequence of a rezoning or similar.
Sponsor structures can take many different forms but for the purposes of this article we will treat partnerships the same as single traders (as do lenders), while Joint Ventures provide a structured arrangement enabling parties with differing skills and or capabilities to come together to undertake a project and share in the resulting profits. 
The manner in which debt and equity can be sourced and applied is almost limitless but lets take a look at the typical options available to a developer and consider the benefits.
The Debt Options:
Firstly, you need to be aware that the state of the market will often determine what is actually available. Simplistically, in a rising market, access to both debt and equity is typically more readily available and pricing is competitive. Traditional debt providers such as the banks and major funds chasing market share, will consider higher Loan to Cost/Value ratios, more competitive terms such as lower presale requirements and keenly priced interest margins and fees.
Alternatives such as mezzanine funding also become more prevalent in rising markets with participants providing funds to top up the capital stack in a project. Typically filling the gap between senior debt at say 75-80 percent up to 90-95 percent of the total project cost, the cost of Mezzanine can range from 20-25 percent p.a. but as the market gets hotter and depending on the level of risk, pricing can fall to as little as 14 percent.
While these funds may seem attractive, they are often accompanied by very tight and restrictive terms, which can result in the sponsor losing control of the project to the advantage of the mezzanine lender. Sponsors need to be aware that a Mezzanine partner is really just another lender albeit with more to lose that the senior debt provider and when the going gets tough, you potentially have two masters to satisfy rather than just one and neither is likely to have the same agenda as you.
A key point to remember is that in a rising market Mezzanine Lenders are attracted to a share of the upside and negotiate accordingly. In a falling market they will seek to cap their exposure and prioritise their returns at your expense. Conversely, you as the developer are looking to maximise the blue sky in the project or protect your downside as the case maybe.
“Stretch senior” debt is another option that is usually seen in stronger markets with some specialist lenders prepared to exceed the usual Major bank construction loan LCR’s of between 70-80 percent by lending up to 90 percent+ of LCR in return for a margin that reflects the associated risk, which might be some 3-4% above that charged by the banks, depending on their assessment of the project and sponsor risks.
In a falling or credit constrained market as we are currently experiencing, the traditional lenders tighten their terms and we see LCR’s firm to between 65-75% and the application of stricter presale requirements, typically with a minimum of 100% debt cover as a condition precedent. 
Joint Ventures:
The attraction of Joint Ventures is that they provide a multitude of structures that can be tailored to the developers needs and typically provide access to capital and expanded skill sets in return for a share of both the profit and the risk.
Like debt, Joint Venture funds are easier to secure in a rising market but even more importantly than with debt, the secret here is to find the right partner. While negotiating the right terms and a soundly drafted JV Agreement are critical (we will deal with this in a future article), the most important consideration is finding a partner who not only has complementary skills and capabilities to work with their own but also has the same goals and values in terms of their decision-making processes. This is a more challenging exercise that selecting the right debt or mezzanine partner but has the potential to be far more rewarding. 
The classic JV structure where the parties are equal in their contributions and profit entitlements are rare with most comprising of a party with the ideas/opportunities and the other with the capital and resources to make it happen or a similar permutation. As a result, in a rising market Joint Venture partners with capital are attracted by an increased share of the upside and negotiate accordingly, while in a falling market they will seek to cap their exposure and prioritise their returns at the expense of their partner or the lender. Conversely, the initiating developer is also self motivated and looking to give away as little as possible in their project which usually results in an increased downside in the event that they do not perform their obligations and for newcomers this inevitably ends in tears as they over estimate their own capabilities.
So, the question as regards more debt as opposed to equity is not simply one of cost. More importantly it is one of understanding your capabilities to deliver and being able to deal with the consequences if unforeseen forces result in a less than optimum outcome.
In the case of “more debt”, the developer needs to be aware that losing control to the lenders has a proportionally higher risk in terms of the financial consequences both in terms of the project and their personal fortunes. On the other hand the Joint Venture can reduce the downside risks from a capital exposure perspective but comes at the cost of having to give away a substantial portion of the projected profit.
So, there is no right or wrong answer here, the key question an under capitalized developer needs to ask themselves is what option best fits my situation, what is the downside if events outside my control mean that the project fails and can I live with the consequences of my decision?
 
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arrange construction finance and invest in projects through their equity fund, Queen Street INVEST. To discuss your project finance requirement please call (07) 3171 4200 or visit HoldenCAPITAL <a href="https://www.holdencapital.com.au/" target="_blank">here</a>.
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Risk and Reward – Does more debt solve your problems or do you need a JV Partner? HoldenCAPITAL

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The global bond fund giant PIMCO has suggested that falling interest rates and rising house prices had the potential to drive a more irrational response with a 'herd mentality' that assumed continued capital price appreciation.
Based on the fear of missing out, PIMCO portfolio manager Aaditya Thakur said there was a risk that people build unrealistic and unsustainable expectations that house prices could continue to rise given prevailing conditions.  
"If you think about why people lever up its because they expect further income or price appreciation or a combination of both, but if they are extrapolating from past history, it might not be a true reflection of future productivity of the asset," she told The Australian Financial Review after issuance of her co-authored report.
PIMCO noted Australian household debt to net worth had increased from below 15 per cent in the early 90s to a peak to almost 30 per cent in 2009 - and now remained above 25%. 
PIMCO, which manages $US1.6 trillion of assets globally and $35 billion in Australia, completed the research paper to understand the drivers of household borrowing decisions.
The fund's thesis is of a "new neutral" which suggested Australian interest rates would be held lower for longer by a number of factors.
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Australians being "irrationally exuberant" by borrowing too much to invest in housing, exposed the economy to financial shocks, global bond fund giant PIMCO tipped.
The PIMCO researchers found that Australians' decision to borrow was driven by falling interest rates and rising house prices – not economic fundamentals that reflect the health of the economy like employment.
The world's biggest bond investor said Australians appeared to be "trigger happy" about debt – responding far quicker than others to changes in interest rates and asset prices. 
PIMCO says they start borrowing more after only six months of increases in house prices compared with a year in the US.
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