Costello answers RBA’s household debt figures
Federal Treasurer Peter Costello has responded to today’s Reserve Bank findings that Australians are paying out more of their income on mortgages than ever before.
Mr Costello says that compared to the late 1980s the net wealth of Australian households has increased by 185 per cent .
He says household wealth should be compared to household savings.
He says the ratio of assets to debt is 6:1.
But Shadow Treasurer Mark Latham has urged the Federal Government to take action to encourage savings and quell rising house prices.
Mr Latham says it is up to the Government to encourage sustainable spending behaviour.
“We’ve got to listen carefully to what the Reserve Bank is saying – it’s no good just jawboning the bank about interest rates,” he said.
“You’ve got to respond to their concerns, take policy action that smoothes out the housing cycle, that builds a new savings culture.
“If that’s the case and the Government does it quickly, we may avoid some high interest rate rises next year.”” That would be nice”
Redwing
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Hi redwing,
Not being an economist myself and finding the subject dead boring… How does the government steer people towards saving??
If they raise interest rates the ‘deep in debt’ won’t have any money left to save (be paying off their mortgages and plastic)
If (in NSW) they reduce stamp duty people will just buy more houses or the purchase price will go up as sellers will know people will pay!!
Can you help me understand how the govt. could possibly get people to save[?][?]
scamp
How the government can get people to save!
I was once told a long while back (who knows how true it is) that in Japan your first $10 000 in a savings account attracted “no” government fees to “encourage saving”, good for the economy too. and that once your “Superannuation” hit a certain level you could borrow against it for a property .
A Government Thinking like that would be nice [
]Australians are paying more out of there ‘take home’ pay on a mortgage than ever before- talk to your Great granpa, we’re a Double Income family nation with the middle class supporting all.
talking of “Superannuation”- whats so Super about it it ? mine’s going backwards, i could get a better return putting it in the bank!! and i don’t even get the satisfaction of spending my “lost” money..
My 2c anyway scampush
Redwing
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Hi Redwing:
I was once told a long while back (who knows how true it is) that in Japan your first $10 000 in a savings account attracted “no” government fees to “encourage saving”, good for the economy too.Weren’t part of the GST reforms a removal of FID & BAD taxes. The main enemy of savings are bank fees. Anyone for re-regulating the banks?!
and that once your “Superannuation” hit a certain level you could borrow against it for a property .I oppose this. The effect of this would be similar to an interest rate cut, ie increasing the amount of finance that people can access.
As the amount of easy money available increases faster than available housing stock, the result is higher house prices. Affordability would NOT improve in most areas.
Also people with large amounts of super tend to be full-time workers in well-paid jobs, and particularly public servants. Thus low income people would be locked out of the housing market even more than they are today.
Another problem with expanding credit through super is a bigger price bubble, the greater possibility of a crash and negative equity (as was seen in the UK in the early 90s). Hardly good for your retirement savings!
Raiding your super for property also unbalances your portfolio, but putting too much into one asset class.
Using super for housing is popular politics, but I don’t think it does much good, especially for lower income people.
Regards, Peter
peterp,
thanks for the valid points- possibly why property in Japan is expensive.
Still not happy about losing Some of my money in Super though. What is the Superannuation guarantee levy “really” whats guaranteed about it??
apart from the companies making $$
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][]“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
]
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