Rate cut reaction exposes how Government remains clueless about property

A sign of just how far the gap has widened between the Government’s view of the financial position of its citizens and the realities of life was on full display this week. According to many financial commentators, the RBA was pressured and bullied into cutting the cash rate this week. With a Federal election date looming, the current sitting Government desperately needs a good news story to spin. They got their wish with a minor 25 basis point cut, being the first reduction to the cash rate in nearly five years.

Aussie home-owners have been shouldering the burden of higher rates for a long period, the result of crazy and wasteful cash splashes during COVID that pumped up everything in sight. This was the previous Government’s way of managing the unknown reaction to COVID. Interestingly, every report posted regarding that period reflects global Governments’ overreaction on so many metrics. As a result, those in the hamster wheel have been running overtime to keep surviving as inflation went into overdrive. There is no question that our political system is broken. The best minds are not attracted to the positions and instead it’s a cut-throat environment where name-calling and mud-slinging take centre stage over inspiration, vision, sound decision-making and emotional intelligence.

Treasurer Jim Chalmers urged landlords to take this week’s measly rate cut into consideration when setting rental asking prices. This is just a flooring notion and it beggars belief that our supposed main man in finance is even suggesting such lunacy. According to the ABS, since Labor has taken Government, health costs are up 12.9%, petrol is up 14.7%, food is up 16.7%, insurance is up 18.5%, building costs are up 31.1%, mortgage repayments are up anywhere from $14,000p.a to in excess of $50,000p.a depending on the size of your loan, and land taxes have doubled for most investors. Meanwhile, rental growth has risen 14%, which doesn’t even scratch the surface to make holding an investment property viable anymore. So what we have is a situation where investors are financially squeezed due to rising costs and excessive taxes but at the same time rents have soared and squeezed that sector of the market. It’s an absolute mess with no vision, no inspiration and no clarity of thought coming from anywhere in Government.

Jim Chalmers thinks landlords who have been absolutely smashed with explosive costs should pass on their good fortune of a 25 basis point rate cut – saving them an average of $180 per month – to tenants. It’s so hard to comprehend how out of touch Government is with the reality of real costs that people are living with right now. Renters have been hammered, landlords are being financially asphyxiated and all the while the Government seems hell bent on verbally bashing the big bad landlord. These are hardworking Aussies who, in the vast majority of cases, fought hard to save some pennies to buy an investment property that may be part of their super and may be handed to their children at some point. They did so to try and get marginally ahead in a country that is so heavily taxed that the route to being called the ‘lucky country’ is now the very thin end of the wedge.

It’s time real reform was considered with regard to our housing situation and our reliance on taxing people at every turn. Let’s have some game-changing thought that provides a platform for investors and renters to find balance in any area they choose to live or invest. Our political system is fractured with too much red tape, too many taxes and too many people clipping tickets unnecessarily on the way through to get anything meaningful done. If we don’t shift our thinking soon, we resign our kids to being shackled to a system that has them grinding out 100-hour work weeks to feed the machine that doesn’t serve them but enslaves them.