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$25'000 stimulus package

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Kreme

During isolation my whole neighbourhood was humming with tradies, busy tradies (I think they are still fixing summer storm damage). There's constant knock down rebuilds going on, duplexes replacing single houses. The housing market is buoyant.

I suspect predictions of the demise of trade jobs have been overstated.

 

Same in my suburb, but these are projects that were already underway. Big renovations take months to complete. Coincidentally there was a post on our local fb page today from a builder who has lost his job due to Covid and is desperately seeking work.

 

Let’s look at the data a year from now and see where we are.

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MadMarchMasterchef

 

1. It does nothing for homeless people or low income people.

2. It does nothing for people who rent (including families).

3. It does nothing for public / state housing. The wait lists in some places are more than 10 years long.

4. It does nothing to help people (like a PP noted) who may have disabilities and need renos done to make their homes more accessible eg wheelchair accessible.

 

 

It also puts the cost of basic rennos up for struggling families who actually need things done like their roof fixed or their hot water heater replaced.

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purplekitty

John Hewson@JohnRHewson

 

It seems the Government’s Recovery Strategy is a politically corruptible process with payoffs to the fossil fuel lobbies and the housing/building sector already evident, at the expense of many real and urgent needs/opportunities more clearly in our national interest

 

10:06 AM · Jun 6, 2020

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iwanttosleepin

My friend is getting it. she was buying land and having a home built anyway.. she's already applied for finance so can't change the plans now. so she won't spend more more money.

 

Waste of stimulus.

 

I am about to build a house. I don't meet the criteria both on house value or income . I would have increased our spend. again, no stimulus.

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Murderino

^ I am the same, ready to get contracts going as soon as my land purchase settles in 2 weeks. I have cash for half the build cost and pre-approval for more than half again. I am not spending all of what has been approved so I will not spend more than I planned and instead will borrow less.

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Chaotic Pogo

'privatise the profits, socialise the losses'

 

^I was actually very surprised that for once, they were privatising the costs, by getting private funding to pay 80+ percent of the cost of stimulating the industry. Until I thought about the money being from 'lower' income families they dont care about and trying to convince them to proceed despite the huge risk it May be for them in terms of job security etc.

 

And as mentioned above, the potential for the wealthy, for whom it's less of a risk (assuming savings in the bank) to rort the system as homeowners, as well as have their businesses supported.

 

 

'One rep in my office had 20 jobs fall over in 2 months due to covid. That is one rep in one office, in one region of one state.'

 

^This is why it's so targeted. To stop this. The near term pipeline of work. They decided for projects this size aimed at people having that profile, a $25k carrot would be enough to get them to proceed instead of delay to see what happens. The psychology of loss as a motivation is very well established. Lose that money v proceed during economic uncertainty and a Potential future problem...

 

I agree entirely that public money should support socially appropriate ends such as increased [permantly] welfare benefits and homeless/ low income housing projects. They should have done that 12 months ago when there was 'time' for it to assist an economy that was on a downward spiral. Right now, after the Covid grenade that has turned a spiral into a tornado, there is not enough time to start 'new' projects and they already (temporarily) increased (the very lowest rate) of welfare.

 

I haven't followed the supposed costs but say you have $2B to spend, do you think (as a right wing govt) it's better value to be able to use it to inject $10B, (which is what they think will happen due to the carrot) or to 'give' $2B to people who 'might not spend it' (they already got a raise last week) or for projects that won't keep that pipeline flowing.

 

It's policy on the run. It's inequitable. And it's inevitable from a govt that put having a govt suplus (for political PR points) above having a stable economy with solid foundations that could have weathered the Covid grenade a little more strongly.

 

But other than fork out $10B from the govt to the construction industry, how do you put $10B into it using only $2B of public funds, once the grenade already exploded? Or do you just say, well I will only spend $2B?

 

'It would be a great idea if the eligibility criteria were realistic. $150k renovation to get a $25k stimulus payment? Not even close.'

 

I'm not sure if you are saying the Reno is too expensive (from a previous post I think you are) or that the carrot is not large enough.

 

My reaction, when I heard it, was more 'what could you actually do for $150k, we'd have to spend a lot more than that' and the carrot definitely doesn't work. $25k is not enough to convince me to quickly start a $300k Reno we have vaguely got planned for the future. It's still too hard and my economic uncertainty outweighs my 'fear of loss'.

 

OTOH if I had intended to sign my contract next week, but was wavering, the fear of $25k loss might get me to pull out my pen and spend.

 

‘The stimulus package is aimed at people who weren't planning on renovating, but now will because of the $25k.’

 

No it’s aimed at the people that cancelled 20 projects above and at Murderino and iwantisleepins friend. if they announced it 3 weeks ago, how many of the 20 cancelled might have proceeded? Might some of them come back after all now?

 

 

TLDR it's crap and inequitable. Recessions always are. Yet it might still prop up the building industry for a few more months and not doing it would be even more socially damaging. Another govt might have had 'shovel ready' public and more equitable projects to accelerate/ bring forward. This one don't. That's who they are. And they think they already did prop up childcare system.

My view is that there could be better policies but as with JobKeeper, delay is worse than being sub-optimal. I wish Julia Gillard was running the show (despite her deals done to cut welfare). I prefer they roll this one out, crap or not, than sit on their hands until it truly is too late

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can'tstayaway

My view is that there could be better policies but as with JobKeeper, delay is worse than being sub-optimal.

I think it’s a poorly planned policy but I agree with this sentiment. It’s better than the government not doing anything.

 

I have actually been thinking that Australia has the chance to avoid a technical recession (2 quarters of negative growth). The stimulus payments may have been just in time to support spending and ‘economic growth’. Supermarkets, Hardly Normal and JB’s all recorded huge sales during this period which will count towards the GDP figures.

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Romeo Void
Posted (edited)

I think it’s a poorly planned policy but I agree with this sentiment. It’s better than the government not doing anything.

 

I have actually been thinking that Australia has the chance to avoid a technical recession (2 quarters of negative growth). The stimulus payments may have been just in time to support spending and ‘economic growth’. Supermarkets, Hardly Normal and JB’s all recorded huge sales during this period which will count towards the GDP figures.

I heard something on ABC last night. The last 2 negative growth quarters we've experienced over the last decade were revised up quite considerably in the following months. So there's a very good chance .3 could be revised up into positive.

 

eta not that I understand why that matters much in the face of unemployment and under employment etc. It's just numbers on paper to me.

Edited by Romeo Void

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Holly298

I started work in 1990, in real estate sales, interest rates were 17% and we were lucky to get 1 buyer a month to inspect a home, on Saturday I had 2 open houses, being a long weekend plus the announcement of the recession my owners were worried, enquires were quite strong during the week so I was hoping for not bad numbers but even I was surprised- the first one had 26 buyers, the 2nd 19, both in the $1 million price range and most young couples, only 1 or 2 neighbors but most were genuine buyers or ones just starting to look so if this is what this recession is going to look like I’ll take this any day if the week!

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Cimbom

I started work in 1990, in real estate sales, interest rates were 17% and we were lucky to get 1 buyer a month to inspect a home, on Saturday I had 2 open houses, being a long weekend plus the announcement of the recession my owners were worried, enquires were quite strong during the week so I was hoping for not bad numbers but even I was surprised- the first one had 26 buyers, the 2nd 19, both in the $1 million price range and most young couples, only 1 or 2 neighbors but most were genuine buyers or ones just starting to look so if this is what this recession is going to look like I’ll take this any day if the week!

The housing market is not the economy though. I know it’s hard to separate the two because we don’t have much else going for us outside of digging rocks out of the ground. I personally think it’s very scary how much the government is desperate to keep propping up the sector and the possible ramifications when they are no longer available to keep doing it.

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born.a.girl

I started work in 1990, in real estate sales, interest rates were 17% and we were lucky to get 1 buyer a month to inspect a home, on Saturday I had 2 open houses, being a long weekend plus the announcement of the recession my owners were worried, enquires were quite strong during the week so I was hoping for not bad numbers but even I was surprised- the first one had 26 buyers, the 2nd 19, both in the $1 million price range and most young couples, only 1 or 2 neighbors but most were genuine buyers or ones just starting to look so if this is what this recession is going to look like I’ll take this any day if the week!

 

 

What you're talking about in the early nineties, started in the late eighties though. The early nineties were the recovery period! Interest rates dropped 7% from 1989 to 1993.

 

THAT is the scary time, once the initial damage is done.

 

Unemployment is currently 6%. In 1990 it was 12%.

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born.a.girl

I heard something on ABC last night. The last 2 negative growth quarters we've experienced over the last decade were revised up quite considerably in the following months. So there's a very good chance .3 could be revised up into positive.

 

eta not that I understand why that matters much in the face of unemployment and under employment etc. It's just numbers on paper to me.

 

 

Negative growth = increasing unemployment = more negative growth = more unemployment ... In a nutshell.

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Holly298

 

 

 

What you're talking about in the early nineties, started in the late eighties though. The early nineties were the recovery period! Interest rates dropped 7% from 1989 to 1993.

 

THAT is the scary time, once the initial damage is done.

 

Unemployment is currently 6%. In 1990 it was 12%.

The actual recession started in the end of 1990, my point being how different my experience was working in the same industry during both recessions , now and 30 years ago, I started in Jan 1990 with 17% interest rates in a bad market that got worse once the recession started , our market this year was going through a mini boom

Until lockdown started so hopefully it won’t be as bad as predicted if this weekend was anything to go by (this is in Sydney)

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Cimbom

 

 

 

What you're talking about in the early nineties, started in the late eighties though. The early nineties were the recovery period! Interest rates dropped 7% from 1989 to 1993.

 

THAT is the scary time, once the initial damage is done.

 

Unemployment is currently 6%. In 1990 it was 12%.

 

Not really. Unemployment now is heavily masked by Jobkeeper and before the virus, by the heavy casualisation of the workforce which wasn’t around back then. This is now even impacting sectors which were viewed as secure, good jobs back then. The underemployment rate is now 13.6%. You just need to have worked one hour in the previous week to count as employed.

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born.a.girl

The actual recession started in the end of 1990, my point being how different my experience was working in the same industry during both recessions , now and 30 years ago, I started in Jan 1990 with 17% interest rates in a bad market that got worse once the recession started , our market this year was going through a mini boom

Until lockdown started so hopefully it won’t be as bad as predicted if this weekend was anything to go by (this is in Sydney)

 

 

 

The lead in to the 90s recession was very different from this one, the causes different,and so the consequences will be different in different industries. I'm very familiar with 17% interest rates having owned since mid 80s.

 

My point is this recession has not yet started.

 

 

I started my business mid 1989 and I can tell you people were talking gloom and doom at that point. It all took time to come about for all sections of the economy. Recessions don't come and go that quickly - that's their danger.

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born.a.girl

Not really. Unemployment now is heavily masked by Jobkeeper and before the virus, by the heavy casualisation of the workforce which wasn’t around back then. This is now even impacting sectors which were viewed as secure, good jobs back then. The underemployment rate is now 13.6%. You just need to have worked one hour in the previous week to count as employed.

 

 

That's my point, jobkeeper is masking unemployment rates. Once jobkeeper goes, our unemployment rate will go up. That's why 'right now' is not a good indication of what's to come.

 

Jobkeeper is meaning many employers are able to top up to a salary whereas without it, they'd have to be laid off.

 

 

Jobkeeper IS actually money, and it's going potentially to two members of a household, even if neither are being topped up.

 

It's also potentially being received by people whose partner has not lost income - yet.

 

Although it's masking unemployment, it IS actually also working to prop up the economy.

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Cimbom

Yep I’m just saying that with the current labour market (even before the virus), underemployment rates are a better indicator of the economy than unemployment rates.

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born.a.girl

Yep I’m just saying that with the current labour market (even before the virus), underemployment rates are a better indicator of the economy than unemployment rates.

 

Oh I absolutely agree with that. Another to support your point is that I don't think there was the level of blatant wage theft then, that there is now. People on visas (thinking of Seven 11) paid and required to hand part of their pay back.

 

In fact my daughter (both she and partner hospitality/large event management stuff) applied for and received jobseeker, then was told she might qualify for jobkeeper. Given her employer's record I suggested to my daughter that it was better the devil she knew. That's neither here nor there in the figures, but is very representative of what some people are having to put up with.

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Fillama

It will be interesting to see what other states introduce as their stimulus. In WA they have released a state grant of $20k for building, so that gives first home buyers $55k worth of grants and second home buyers $45k.

 

I do wonder how the residential established real estate market will cope over the next few months as so many clients who were considering buying established have now swung to building to make the most of the massive grants.

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can'tstayaway

I heard something on ABC last night.

 

DH saw a segment on the ABC and commented “hey, the ABC said the same thing you’ve been saying”. I may have muttered some passive aggressive comments under my breath about not a bad guess for a simpleton woman...

 

Re comparison to the ‘recession we had to have’, our economy is different going into this, compared to the 80’s. The policy approach is also very different. Just look at how much money a conservative government is throwing at it. They are not sticking to any political ideology at the expense of the economy (and therefore people).

 

Our underlying economy, government and society is stable. We are in a good position to be able to rebound in comparison to the rest of the world. Even if we manage to avoid a technical recession, it doesn’t take away from the pain so many people are feeling and would have suffered even without the pandemic. The government should use this opportunity to address all those tricky issues that they previously might not have. Funding renewables. Looking at how to address our carbon emissions. There are just so many areas for government spending that the voting public might be more willing to accept now than they were previously.

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WaitForMe

Under/un-employment hasn't had a chance to really happen yet.

 

Larger employers are generally slow moving beasts. They can drop and pick up contractors, casuals and managed service providers fairly quickly, but its when they work out their budget for a financial year that things start to really hit, and those decisions stick around for at least a full year.

 

Then the many companies they use feel the pain, which then make similar decisions, and around and around it goes.

 

And then theres China.

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