Australia, the 'Lucky Country' (political propaganda) where there are thousands of square kilometers of spare land but it's become a rip off manufactured by government.
Imagine, your own government creating slavery of its own citizens via inflation creation. This is criminal! Do we see the courts prosecuting these political crimes? NO!
Lowe warns rent caps will make the housing shortage even worse Michael ReadEconomics correspondent Aug 11, 2023 https://www.afr.com/policy/economy/...e-housing-shortage-even-worse-20230811-p5dvtd Imposing rent controls to ease the housing crisis would make the shortage of homes even worse over the long term, outgoing RBA governor Philip Lowe warned on Friday, saying politicians should resist the push for such short-term solutions. As Prime Minister Anthony Albanese prepares to host state and territory leaders on Wednesday to tackle soaring rents and rapidly shrinking housing supply, an unusually blunt Dr Lowe used his final parliamentary appearance to hammer home the point that the only solution to the housing crisis was to build more houses. RBA governor Philip Lowe used his last appearance before a parliamentary committee to again bemoan Australia’s high land prices. Alex Ellinghausen “There’s always a tendency to try and come up with short-term solutions. There aren’t short-term solutions here,” a confident Dr Lowe told MPs as he sat beside successor Michele Bullock. “The solution has to be putting in place a structure that makes the supply side of the housing market more flexible. “And that means zoning and planning deregulation, and it means ... state and local governments being part of the solution.” Dr Lowe called for state governments to deregulate restrictive zoning laws, which he said had pushed up the cost of land to levels not seen almost anywhere else in the world. “This is not something within the gift of the federal government, but it is within the gift of governments broadly,” he said. “Thinking longer term, doing something in that space would make a difference to the quality of life in Australia.” Newly advertised rents have increased 11 per cent per year over the past three years, making housing costs a hot political issue and piling pressure on governments to be seen to act. Caps to hit supply The Greens, led by outspoken Brisbane MP Max Chandler-Mather, have said they will support the Albanese government’s $10 billion Housing Australia Future Fund only on the condition the federal government enacts a two-year rent freeze, which would require the support of the states and territories. Asked by Labor MP Daniel Mulino about the effects of rent controls, Dr Lowe said either giving people more money or capping rents was counterproductive. “In most cases, rent controls reduce incentive to add to supply,” he said. “So it might help in the short run ... but we’ve got to keep a medium-term perspective. Will that add to the supply of rental accommodation over time? My judgment would be that it would not, and it could actually reduce [it]. “It might help in the short run, but create problems in the long run.” Victorian Premier Daniel Andrews is working on a package that would allow landlords to lift rents only once every two years, and potentially impose caps on any rent increase. That proposal resembles laws in the ACT, where landlords are limited to lifting rents once a year by no more than 10 per cent of the rent component of the Canberra consumer price index. “We know there’s no more important issue anywhere in the state right now than housing – that’s why we’re working hard on a housing package and will have more to say in due course,” a Victorian government spokeswoman said after Dr Lowe’s comments. Dr Lowe said one of the factors putting upward pressure on rents was a surge in overseas migration, which had caused population growth to outstrip the construction of new homes. “There’s a big gap there, and when demand is strong and supply is weak, prices go up.” Last meeting next month He said restrictive zoning laws were not only driving up the cost of housing, they were also contributing to Australia’s stagnant productivity performance, which he said was the No.1 medium-term economic issue facing the country. “Because we want a bigger pie. We want more resources, so the government can provide the services. We want rising real wages and rising real asset values. “That will only happen if we get better at doing stuff. At the moment, the situation [is] not very good.” Responding to the criticism, Mr Chandler-Mather said he wasn’t going to take economic advice from someone who said interest rates wouldn’t increase until 2024. “Rents just increased at the fastest rate in 35 years, so the status quo is hardly working. But most importantly, rent caps help renters, and that’s exactly what we need to do right now,” the Greens housing spokesman said.....
Households may abandon insurance as premiums soar Mark Ludlow Queensland bureau chief Aug 14, 2023 https://www.afr.com/companies/finan...on-insurance-as-premiums-soar-20230811-p5dvus Some households may choose to abandon home insurance altogether as premiums soared 28 per cent in the past year and up to 50 per cent in high-risk areas such as flood zones, according to a new report. Amid a slowing economy and 12 interest rate hikes in the past year, the report by the Actuaries Institute to be released on Monday found almost one in eight households – or 1.24 million dwellings – were facing “affordability stress”. Home insurance premiums in flood-prone regions surged by 50 per cent in the past year. Glenn Hunt Rising building costs – exacerbated by the pandemic, the war in Ukraine and inflation – higher natural peril premiums in response to recent severe weather events in recent years, and the tendency for reinsurers to pass on extra costs, contributed to the median home insurance premium increasing to $1894 a year. The average home insurance premium was even higher at $2234 a year, a 46 per cent increase on 2022. Report co-author Sharanjit Paddam said he expected home insurance premiums to keep rising as climate change resulted in natural disasters occurring more regularly. premiums became more prohibitive, he expected more people to abandon insurance altogether. “This is the largest increase in home insurance premiums I have ever seen over the last two decades,” Mr Paddam said. “Based on science, we expect these home insurance affordability pressures are likely to continue to worsen due to climate change. If we don’t take policy action now, we can expect to have more people abandoning home insurance.” Cyclone risk The research report found the hardest-hit households were in the flood-prone Northern Rivers region of NSW, as well as North Queensland and Western Australia where cyclone risk was high. An estimated 171,000 households across Australia were deemed to be under “extreme affordability pressure”, with riverine flood risk contributing more than half of their home insurance premiums. The researchers estimated the total flood premium for these 171,000 households, if they were fully insured, would be $1.5 billion a year, or an average $8800 per household. It found low-income households were exposed to higher flood risk than their higher socio-economic counterparts. North Queensland is no stranger to tropical cyclones such as Yasi in 2011. Craig Abraham The report, by Finity Consulting’s Climate Analytics Practice, is based on technical assumptions, including an assumption that all homes buy insurance. It noted that some households may already not be insured because it’s too expensive, or some may exclude flood cover to reduce their premiums. The report also looked at the impact of the federal government’s $10 billion cyclone reinsurance pool which started in July last year. It found if all households rated as cyclone-exposed purchased insurance it would reduce total cyclone premiums by $370 million (26 per cent), and total flood premiums by $230 million (9 per cent). However, for 87 per cent of homes in Australia, the cyclone pool is expected to have little or no impact on premiums. Insurance pools A second report for the Actuaries Institute recommended governments consider a range of options including a possible insurance or reinsurance pool for homes impacted by riverine flood risk. The 2022 floods in southern Queensland and northern NSW resulted in an insurance bill of $6 billion – the most expensive natural disaster on record in Australia. The report found most households in exposed regions were paying more than 50 per cent of their premiums to cover the flood risk component. The report’s lead author, Evelyn Chow, head of portfolio management for Swiss Re, said risk reduction was the only way to address affordability stress. “If the government was to give consideration to an insurance pool, any future model would need to consider the fact that flood risk is highly localised in Australia among a relatively small number of households with significant exposure,” Ms Chow said. Actuaries Institute chief executive Elayne Grace said a replacement of insurance taxes, such as stamp duty or emergency services levies, with more efficient revenues would be another option to consider.
Not only are natural disasters a cause for insurance premium increases, but the rising prices of dwellings.
Wealth Personal Finance Divorce Opinion How the financial toll of divorce gets uglier through the years The most detrimental financial consequences of separation occur many years into the future, especially as retirement looms. That’s why choosing the right life partner can be your best financial decision. Tim Mackay Contributor Aug 15, 2023 https://www.afr.com/wealth/personal...gets-uglier-through-the-years-20230812-p5dvy8 In July 2023 Astrid Buffett was overheard complaining about the price of a $4 cup of coffee, arguing she “could get a pound of coffee” for the same price elsewhere. What is striking is that she complained at a “summer camp for billionaires” and she is married to Warren Buffett. We’re all familiar with the wisdom, success and longevity of this billionaire investor. Yet when probed about his most important decision, Buffett ignores investing and money – he says it’s all about who you marry. “Marry the right person. I’m serious about that. It will make more difference in your life. It will change your aspirations, all kinds of things.” Research reveals an inverse relationship between how much you spend on a wedding (including the engagement ring) and a marriage’s longevity. Empirical research work from Carnegie Mellon University in Pittsburgh echoes Buffet’s view – it discovered supportive spouses are “more likely to give them the chance to succeed”. Buffett aptly puts it this way: “You want to associate with people who are the kind of person you’d like to be. You’ll move in that direction.” Thus, Astrid Buffet’s frugality, reminiscent of her husband’s, is hardly surprising. Other billionaire couples have made headlines for more sombre reasons. Names like Gates, Bezos, Murdoch, Forrest, Cannon-Brookes, Douglass, and Neilson spring to mind. No one knows the real story behind these breakups apart from those involved. But regardless of the wealth involved, there are important financial lessons about separation. A rising number of older Australians are choosing to part ways (“grey divorce”), often to the detriment of their financial wellbeing. An increasing number of Baby Boomers find themselves navigating singlehood and financially restarting. Regardless of the reasons or the ethical debates, it’s crucial to understand the financial implications. For most of us who are not billionaires, the most detrimental financial consequences of separation occur many years into the future, especially as retirement looms. The immediate financial impact is obvious – assets typically are divided 50:50, factoring in children and separation costs. What’s less immediately obvious is the dismantling of an established, efficient household supported by two incomes (or one income where partner B’s input and support allows partner A’s income to thrive). It is split into two new households with two new retirement goals, destroying the accumulated economies of scale. Duplicate households Consider Justin and Sophie. Before separating, they own a $3.5 million home, mortgage-free, with a combined $2.5 million in super (total assets $6 million). With $2.5 million in super to support annual expenses of $150,000, they are set for a comfortable retirement. Post-separation, they split the $5.9 million (after $100,000 separation costs) and move forward to create and support the life they each deserve. Each has $2.95 million. Keen to stay close to their children, they each invest in a smaller house costing $2 million. The proceeds from selling the old home were $1.7 million each (after costs), so the shortfall comes from their super (or they could take a new mortgage). Total property costs have risen from $3.5 million to $4 million (2 x $2 million) and their combined retirement savings have dwindled by $600,000. Their annual expenses will drop from $150,000, but not by half. Running two duplicate households while striving to maintain a similar lifestyle is costly, so annual expenses fall to $90,000 each ($180,000 combined). Before separation, $2.5 million in super adequately sustained their joint retirement (a 6 per cent initial drawdown rate). Post-separation, it’s doubtful whether $950,000 can sustain $90,000 annually (a 9.5 per cent initial drawdown rate) through a long retirement. To ensure their retirement funds last, a more modest living standard becomes inevitable, either by downgrading their property or curtailing annual expenses. Or they delay their retirement. The crux is that while separations might seem like a linear division, the long-term repercussions are amplified. Sophie and Justin, despite their impressive $6 million total assets, highlight how financially taxing separation can be. While billionaire families splitting up may not struggle through retirement, the hidden and protracted financial challenges post-separation for the rest of the population can be overwhelming. Revisiting Astrid Buffett’s coffee anecdote, another study from Emory University in Atlanta, Georgia, reinforces her frugal stance. Its research revealed an inverse relationship between how much you spend on a wedding (including the engagement ring) and a marriage’s longevity. So, if a young family member contemplates an extravagant wedding, it may be prudent to pause for reflection.
‘Waterfall effect’: Recession looms as more businesses face collapse By Sarah Danckert August 16, 2023 https://www.smh.com.au/business/the...businesses-face-collapse-20230816-p5dwvi.html Australia is expected to tip into a recession in the next 12 months, driving up the rate of insolvencies in businesses as they struggle to cope with increasing costs. Up to 70 per cent of insolvency practitioners, lawyers, managers and corporate debt restructuring specialists believe there will be a recession over the next 12 months. As many as 90 per cent of the insolvency sector experts surveyed believe the economy will tip into a recession in the next two years. Higher rent, power costs and other inflationary concerns could send more businesses to the wall in the next 12 months.Credit: Ben Symons The figures come from an annual survey conducted by KordaMentha and Turnaround Management Association (TMA) of 115 professionals linked to the restructuring sector. The survey also found that sentiment about the economy was now worse than it had been for the five years it has been running. The TMA covers the advisory groups that usually work on larger corporate collapses and the law firms and debt market professionals that assist them. Increased interest rates and ongoing concerns about costs – such as building materials, rents, transport and power costs – are driving the dour outlook for the economy, according to the survey. Another concern is the increased enforcement activity of the Australian Taxation Office, which provided a two-year grace period to businesses that had failed to pay their taxes during the COVID pandemic. Corporate insolvencies jumped 62 per cent in the year to June to the highest level since 2018-2019. According to figures released by the corporate watchdog, 7943 companies appointed administrators, liquidators or receivers in 2022-2023. There are also growing signs that company directors, particularly small business leaders, are going broke. A separate report from the Australian Financial Security Authority found that personal bankruptcies had dramatically increased in May, jumping to 1031 from 769 the month prior. “The [Australian Tax Office] have been proactively reducing their arrears for some time now, and we expect this trend to continue and the ATO to be more proactive in the market,” said Sebastian Hams, a restructuring partner at KordaMentha. Part of the change in outlook has been caused by increased interest rates, the survey found, but there is also the overhang of COVID where many businesses received support from the government and the ATO amnesty. As a result, turnaround specialists surveyed believe many businesses are not prepared for such a severe economic downturn. ‘Construction was the first industry to be affected, unable to pass on rising costs due to fixed-price contracts. We are now seeing other industries affected [...] It’s trickling through the economy.’ KordaMentha’s James Wagg “During and post COVID we had supply chain issues, which affected costs for manufacturing,” said James Wagg, KordaMentha executive director of performance improvement. “Now rising interest rates and inflation with resulting cost increases are causing a drop in discretionary spending and profitability. So many borrowers have been forced to the secondary, more expensive money market,” Wagg said. Against this backdrop, relatively healthy businesses are shrinking their business or winding back their growth aspirations. Several thousand staff have already lost their jobs in Australia’s nascent start-up scene following a series of collapses of the profitless, growth-driven businesses including food-focused delivery services Milkrun (since resurrected by Woolworths) and Providoor. Those collapses followed a run of corporate failures in the economically battered building sector, hitting companies including Porter Davis, Mahercorp and Toplace. Wagg said the tightening of the economic outlook was causing a waterfall effect for businesses. “Construction was the first industry to be affected, unable to pass on rising costs due to fixed-price contracts. We are now seeing other industries affected, like retail impacted by increased cost of living and reduced consumer spending. “The next are likely to be services industries such as health as government funding fails to keep up with increasing costs. It’s trickling through the economy.”