RENTERS go back to the Wet Sarong as Landlords dodge Energy Efficiency Obligations

ASK yourself, do you think these landlords voted for SCOMO?

Ask yourself, do you think these landlords will do anything to improve the energy efficiency of their properties?

Ask yourself will SCOMO do anything for renters?

Ask yourself will you vote for SCOMO, and his lot at the next Election?

Renters go back to the wet sarong as landlords dodge energy efficiency obligations

By political reporter Nour Haydar


A woman looks at the camera inside a living room

PHOTO: Renters like Leanne are limited in how they can minimise their energy use. (Supplied)

RELATED STORY: Why the coal sector is so excited about Australia’s move to ‘clean’ hydrogen

RELATED STORY: Power bill pressures vs emissions vs reliability: Behind the new election battleground

Leanne has tried just about everything to keep cool in her rental apartment during Canberra’s scorching summers.

Key points:

  • Charities want landlords to improve the energy efficiency of their properties
  • Renters are limited in how they can become more energy efficient
  • More than half of Australia’s rental properties are rated poor for energy efficiency

“I’ve tried a number of things, bubble wrap in the windows and aluminium foil but that doesn’t look appealing from the outside,” she said.

“On some of those really hot evenings, I’ve gone to my room with a wet sarong, I’ve wrapped wet towels around my feet.”

Leanne, who didn’t want her surname revealed, is electricity and energy conscious, but sometimes has little choice except to pump on the air conditioner as the afternoon sun sears through her bedroom and living room window.

“There are afternoons where there really is no option but to use the air conditioning [but] the poor insulation in the property means as soon as I turn it off any effect of that is lost,” she said.

For tenants with landlords who are unwilling to make changes, there are obvious steps that can be taken to help avoid higher power bills and reduce your carbon footprint.

Like closing curtains during the hottest part of the day, choosing fans over air conditioners, setting air conditioners at 25 to 27 degrees Celsius on hotter days and sealing gaps and cracks to keep the cool air in.

But small changes like these can only do so much when the overall energy efficiency of a rental property is poor.

Of Australia’s more than 9 million homes, the majority rate below three stars for energy efficiency under the Nationwide House Energy Rating System (NatHERS).

NatHERS data is not the most comprehensive but it does show that the energy performance of older Australian homes is well below that of newer properties.

A zero-star rating means the “building shell does practically nothing to reduce the discomfort of hot or cold weather” while 10 stars indicate the “home may not need any artificial cooling or heating to keep you comfortable”.

Research also shows renter-occupied properties are far less likely to have insulation, rooftop solar and window treatments than owner-occupied homes.

Products designed to reduce energy use

PHOTO: Leanne has used fans, seals and blankets to reduce her energy use. (Supplied)

*Ahead of last month’s Council of Australian Governments (COAG) energy meeting, 40 housing and charity organisations renewed calls for state and federal governments to commit to implementing minimum energy efficiency standards for rental properties.

Director of Better Renting Joel Dignam said such standards would improve the reliability of the national energy grid, reduce pollution and have financial and health benefits.

“What we’ve seen in other countries approaching this is it might say things like you’ve got to have ceiling insulation, you’ve got to seal drafts and have a heater or cooler in the living area,” he said.

“These are changes that home owners will always benefit from doing themselves but the reason they are not happening in old rental properties is because the landlord who is responsible — who would be paying the cost — isn’t getting the benefits.”

Energy ministers instead reaffirmed their support for a plan outlining a “trajectory” towards achieving zero energy and zero carbon buildings — including minimum standards — which will be considered down the track.

The ACT Government has previously pledged to introduce legislation for minimum energy performance requirements in rental properties by 2021.

Victoria is also currently consulting on plans to introduce minimum rental standards, which will be progressively introduced to give landlords time to make changes to their properties.

Heating standards will be introduced first, with the majority of energy consumption in Victorian homes spent on heating.




SMH: LETTERS: Politicians and Developers have Built a House of Cards

IN LETTERS TO THE SMH EDITOR … Commentators air their opinions about what seems to be a never ending SPIN cycle to justify the unjustifiable growth in a Finite World!

MONEY LAUNDERING IN AUSTRALIAN REAL ESTATE … Government ought implement and enforce the Second Tranche of the AML Laws and this predicament would start to resolve overnight!

‘Australia a Place of Choice for Money Laundering due to lack of Regulation’


LABOR had a policy prior to the May 2019 Election … the Morrison Government having exempted the Real Estate Gatekeepers in October 2018 from the Second Tranche of the AML Legislation

Labor to Target Lawyers, Accountants, Real Estate Agents’


Politicians and developers have built a house of cards

December 4, 2019

Leave a comment


Blaming Baby Boomers and planners for high house prices in Sydney is both biased and simplistic (“Not OK, Boomer, to kill housing dream“, December 3).

The Ritz Carlton proposal at Prymont is an example of what's wrong with planning in NSW.

The Ritz Carlton proposal at Prymont is an example of what’s wrong with planning in NSW.

*It ignores the bidding war that is often played out in established suburbs between young locals and cashed up foreign investors.

It does not consider the value adding benefits provided by Baby Boomers who often share their homes with adult offspring and provide no-cost child minding for precious grandchildren.

Meanwhile – at Sydney’s raw suburb edge – land speculators and developers sterilise otherwise productive agricultural land for decades, then release it when the price is right for them.

By the way, planners don’t hinder this process.

As an illustration, between Campbelltown and Appin they have approved new developments before water supply pipes, sewerage and schools are even planned.

No wonder potential home buyers take the more liveable option and stay as tenants, often with their Baby Boomer mums and dads.

– Sharyn Cullis, Oatley


Chris Johnson’s attack on the NSW planning system is one-sided. Often when the planning process is finished and the developer gets an approval for a development, a process of modification applications begins which continues until the approval that was really wanted in the first place is achieved.

This undermines good planning. The beneficiaries of this process are certainly not “future generations”.

– Sue Whyte, Catherine Hill Bay


The Reserve Bank has blamed inefficient planning and zoning laws for adding about $450,000 to the cost of an average Sydney home.

We should blame the politicians who refuse to rezone land around railway stations for higher density development, rather than the planners who enforce land zoning.

We should also blame the politicians who insist on building more infrastructure in well serviced corridors like that between Sydney and Parramatta, rather than expanding rail coverage in the metropolitan area and building fast rail to surrounding regions.

– Peter Egan, Artarmon


Chris Johnson unsurprisingly proclaims that all those supporting continued development and growth in this city are the real and only planners who can ensure the building blocks for a quality and affordable future.

I have glimpsed a bit of Johnson’s quality future as I witness his advocated growth in places such as Macquarie Park, Epping, Carlingford, Rhodes and so many other suburban precincts. It is a bleak and ugly one.

– James Laukka, Epping


The federal government breaches its international obligations by failing to extend anti-money laundering laws to funds going through trust accounts of real estate agents, lawyers and accountants (“How money launderers distort property prices“, December 3).

EXTRACT: Money laundering crooks are being given too much freedom

Westpac is in hot water for not complying with the first round of these measures, which included the requirement that banks and casinos report suspicious activity to regulators.

The second round was meant to capture other avenues of money laundering including real estate agents, lawyers and accountants. There have been lots of promises over the years that reforms were on the way, but this second round has never materialised. Worryingly, the government has recently indicated we should not expect any meaningful action.

This is despite Australia signing up to these reforms 13 years ago. This is despite the Liberal and Labor Parties claiming to support their implementation.

The failure to extend reporting obligations to real estate agents, lawyers and accountants has left a large hole in our anti-money laundering regime and places us as an international outlier among our peers, including Britain and New Zealand.

There is no obligation for real estate agents to report any suspicious activity.

During the last review of our compliance by the Financial Action Taskforce in 2015, Australia fully complied with only 26 of its 40 obligations. Our next review will be next year and unless the government changes course we will once again be ranked well below our peers.

This is good news for Australians profiting from doing business with crooks keen to clean their money and fund their drugs trade, child exploitation rings and terrorist activities. But it represents a massive failure of Australia’s international obligations.

There is also an economic cost to Australia from money laundering. It distorts markets and increases the cost of doing business.

Markets become distorted because money launderers are spending illegal cash, which isn’t worth as much to them as legal cash is to you and me. To clean their money, they are happy to lose a bit of it along the way.

The money launderers are willing to pay more for an asset than it is worth, or charge less for a service than is profitable. This is the price of cleaning money they can reinvest in their illegal activities. It creates an uneven playing field, where the money launderers win and legitimate businesses lose.

Particular concerns exist about the effect this is having on the perennial Australian barbecue stopper, the housing market.

While home owners are enjoying the pre-Christmas lift in house prices, there is a real question about how much of this is driven by money laundering. AUSTRAC identified that in 2015-16 there was $1 billion of suspect funds flowing from China alone into our housing market. And yet there is no obligation for real estate agents to report any suspicious activity, meaning the real figure could be much higher.

Because our housing market is being used to launder funds it creates a market where people are prepared to pay more for houses than they are worth – housing boom anyone?

The government’s continuing failure to introduce the reforms, even in the face of international criticism and countless reviews calling for change, is a story we have seen repeatedly in Australian public policy.

There are strong vested interests – lawyers, real estate agents and accountants – who unsurprisingly have questioned the need for additional regulation. None of us like paperwork and the changes would involve compliance costs and risks – just ask Westpac.

But all reforms come with opponents – we elect governments to act in the national interest, not in the vested interest.

Adding to the inertia is the government’s broader narrative around reducing red tape, which does not fit with a stronger anti-money laundering narrative. But then again, one must presume that neither does making Australia a destination for child abusers, drug traffickers and terrorists looking to clean their money.

In Westpac’s case, it was serious governance failings that led to the situation where they unwittingly facilitated child abuse. Westpac’s non-compliance was not intentional.

The government does not have the same defence.

As the government weighs up the costs of action versus non-action, it should reflect on how it will explain to the Australian people its failure to act despite the warnings, despite its previous commitments and despite mounting evidence of Australia being used to launder funds.

The Prime Minister was right to hold the chief executive and board of Westpac to account. But he should expect the same level of accountability if he continues to allow Australia to be a facilitator for international crime and corruption. The time for judgment is over, the time for action is now.’

Angela Jackson is an economist at Equity Economics

Brian Hartzer has accepted his fate over Westpac's failures, but what will the government do about the wider problem?

Brian Hartzer has accepted his fate over Westpac’s failures, but what will the government do about the wider problem?CREDIT:LOUIE DOUVIS

This loophole that should have been closed years ago and has a distorting effect on property prices.

I hope they apply the same blowtorch to themselves as they have applied to Westpac.

– Penny Hackett, Willoughby


It is now quite apparent that the continual reduction in the cash rate by the RBA has caused unintended consequences (“RBA feels pressure over home price rise“, December 3).

A big fall in job advertisements and building approvals points to further softness in the jobs market even as house prices surge.

A big fall in job advertisements and building approvals points to further softness in the jobs market even as house prices surge.CREDIT:CRAIG ABRAHAM

The Sydney property market reaction is only the beginning. Consumers have become extremely cautious, business investment has stalled.

There has to be a reset of monetary policy. Any further reduction of interest rates by the RBA will surely be the catalyst for a severe lengthy recession in Australia, if this has not already begun.

– Bruce Clydsdale, Bathurst




Bill increasing Foreign Investor Duty Surcharge passes lower house

NOVEMBER 26 2019

ONE extra percentage point increase in the Foreign Investor Duty Surcharge to 8% will mean little to People of either Ultra High Net Worth or High Net Worth … hardly a deterrant!

SEARCH CAAN WEBSITE to find out more about the millions of Billionaires and Millionaires in China … and the burgeoning Chinese Middle Class!

IT has been well known that the lure for foreigners buying real estate in Australia is that they can gain a ‘Permanent Resident Visa’ ..

AND in August 2019 this was revealed in Domain that overseas potential property buyers were approaching local migration agents in Hong Kong seeking Australian residency ahead of buying homes .

ISN’T it likely that this is happening also in Tasmania? 

Georg Chmiel, executive chairman of, the global platform that markets overseas property to the Chinese market (on the mainland and in Hong Kong).

*“It’s more important to obtain legal residency. Expect to see wealthy Hong Kongers first renting in Sydney or at least waiting until they have obtained their visa before they purchase. That way, they can avoid the foreign buyer tax.


MEANWHILE there is an affordable rental crisis for Tasmanians in Hobart!

Hobart is Australia’s least affordable city to rent, worse than Sydney, Melbourne and Brisbane

Bill increasing Foreign Investor Duty Surcharge passes lower house

Local News

A bill which will increase the surcharge for foreign investors purchasing residential properties in Tasmania has passed the lower house.

The Duties Amendment Bill 2019 will increase the Foreign Investor Duty Surcharge from 7 per cent to 8 per cent, in line with Victoria and New South Wales.

The FIDS for primary production property will remain at 1.5 per cent as announced in the 2019-20 state budget.


Treasurer Peter Gutwein said the government considered the rates to be fair, reasonable and consistent with surcharges in other jurisdictions.

“While the government welcomes foreign investment in Tasmania, it is important to ensure that foreign investors in Tasmania contribute their fair share and that the property market remains accessible to Tasmanians,” Mr Gutwein said.

The increased surcharge rates will apply to transactions entered into on or after April 1, 2020.

Mr Gutwein said the bill amended provisions relating to the definition of a foreign person to ensure the only persons, companies and trusts that are genuinely foreign pay the surcharge.

“[An] amendment will provide retrospective relief from the surcharge to persons who become Australian citizens or permanent residents within six months of incurring the surcharge,” he said.

Labor finance spokesman David O’Byrne said the bill needed to strike the right balance between ensuring fair taxes are levied on investors who are able to afford it and making sure foreign investors are not driven away.

“When we have bills such as this it’s important to think through the consequences,” Mr O’Byrne said.

Greens leader Cassy O’Connor said the state needed to keep an eye on foreign investors, describing Chinese interest in recent years as a “feeding frenzy”.

“We regard this legislation as a sop to the concern over growing foreign ownership in Tasmania, and a pretty weak one at that,” Ms O’Connor said.

“In the North-West region, more than 30 per cent [of agricultural land] is owned by foreign interests.

“It is a matter of public concern.”




7.30 STORM CLOUDS: What is Happening with the Australian Economy


What is happening with the Australian economy?

Posted Mon 18 Nov 2019,

Updated Tue 19 Nov 2019

Expires: Tuesday 15 October

What’s happening to the Australian economy? Despite record low interest rates, low unemployment, booming exports and high government spending, the economy is barely growing.



ALAN KOHLER, REPORTER: There are things going on in the Australian economy now that are not only unprecedented, they are downright weird, not in any textbooks.

As you can see, the economy is barely growing, flirting with recession.

To achieve even this level of insipid growth, the pedal is flat to the board. There is record low interest rates, record levels of debt, booming exports, and huge government spending.

So, there’s plenty of wood and kero going on to the fire but it is not getting hot. In fact, it is cooling and this is not supposed to happen and when the pie isn’t growing much, people miss out.

Now in this series, you won’t just hear from me, but also some key players in the economy and I don’t just mean economists and boffins, I mean you and people like you – the real key players.

It’s a gig economy, and just about everybody’s got a side hustle.




So I’m 26. I’m living at home with mum and dad and I drive an Uber just for the flexibility that it provides and the extra income that I’m able to earn from it.

ALAN KOHLER: You have got a day job, have you?


ALAN KOHLER: What do you do?

JOEL KAITHAVELIL: I work in financial services as an associate advisor.

ALAN KOHLER: So Joel, how long have you been driving Ubers?

JOEL KAITHAVELIL: On and off I’ve been driving for about three years.

ALAN KOHLER: It does sound like as more and more people drive, the money you can make from it is coming down.

JOEL KAITHAVELIL: When I first started I was earning a couple of hundred dollars pretty easily just by doing my four or five hours on the weekend.

Obviously now it’s got a bit harder to match that level of income.

I think it definitely does assist in people’s day-to-day lives. It definitely gives people an ability to catch up on anything that they might have lost in the past couple of years, in terms of perhaps wage growth.

ALAN KOHLER: For millennials like Joel Kaithavelil, and indeed for all of us, the economy is just not normal.

PROF. IAN HARPER, MELBOURNE BUSINESS SCHOOL: We’ve had periods in the past where inflation has been low but growth has been fine.

But for us to have low interest rates, low growth, low inflation all at the same time, while the labour market is strong – that is to say unemployment is also low – that is pretty unusual.

GERARD MINACK, ECONOMIST: Well, arguably it is something that we have almost never seen before.

I mean, people do say it’s dangerous to say this time it is different, but in many respects it is quite different.

ALAN KOHLER: Real household income has been stagnant since the GFC, even though our national output has been rising.

When income is flat, prices don’t go up. So, inflation declines. The Reserve Bank is trying to combat that with record low interest rates but it’s just not working.

When the Reserve Bank meets to decide interest rate movements, Ian Harper is in the room.

He’s agreed to give 7.30 his own personal view on why cutting interest rates towards zero is no longer working.

IAN HARPER: Normally you’d expect what that would do is to encourage people to consume more and to invest more.

Now, neither of those things are happening in the way that they have done in the past.

Precisely why, unless you just sort of wave your hand and say look, it is all about uncertainty, we’re not so sure, there is something in that, we really don’t know the answer to that question.

So what is true is that both here in Australia and elsewhere, economies aren’t responding to easier monetary conditions in the way that was true in the past.

ALAN KOHLER: For the average Australian household, a slowing economy means tightening belts, and sticking to a budget.

(Aleeshia Bartolone playing Ring a Ring o’ Rosy)

ALEESHIA BARTOLONE: I’m Aleeshia Bartolone and I live here in Gosnells, WA with my partner, Paul.

The mortgage for this house was around $330,000 four years ago. A year after we bought the house, we had Lachlan and then a year later, we had Hunter.

It was quite hard at the beginning in our financial situation, having kids so quickly after the mortgage.

With our budget, like when we had the kids and like, money was a bit tight, things that we cut out first would be going out for dinner.

We are not fancy eaters. The kids, you know, half the time they don’t eat what you cook anyway, except the pasta. So pasta is a cheap meal. It is easy, I come from an Italian background.

I am a manager of a cafe in one of the big shopping centres in Perth and Paul works away FIFO (fly-in, fly-out) up in the mines.

I wasn’t eligible for maternity leave through my actual workplace.

Paul changed jobs pretty quickly as well, since moving here. Then he went into the mines, which again, is still a casual position, has been for the last three and a half years.

First, when we bought the property, they did want $355,000. We got it down to $338,000. We had it valued by an real estate agent only a couple of months ago and he said the highest we would get is around $280,000.

So it has dropped quite a lot. There is always going to be peaks and troughs. We’re in the trough but I think it will start to pick up again. It has to.

ALAN KOHLER: There’s a nervousness about the housing market, job security and wages that’s playing out across the country.

What is your view about the current state of the economy? What is your data showing?

MATT COMYN, CEO COMMONWEALTH BANK: From late last year, we started to see a slowdown.

The housing market, as the house prices fell, I think certainly consumer confidence was starting to take a hit during that period.

We saw a slowdown in consumption.

Wage and income growth has been low for some period of time but, of course, what the Australian economy needs is a pick-up in income growth. We can see that. We can see the importance of that.

ALAN KOHLER: Every hour about 80,000 Australians will use a Commonwealth Bank credit card. This means the bank and its CEO, Matt Comyn, know what Australians are spending.

MATT COMYN: We combine that with Google searches where in the next minute 60,000 Google searches will occur and we bring all of that together and what we saw is across a number of different areas, we saw that post the tax cuts actually, our customers increased their spending by 28 per cent.

And housing, of course, has remained resilient. I think in a couple of other areas, or categories, sentiment has weakened and we think it’s the combination of both the global backdrop, particularly the US-China trade war I think is weighing on sentiment.

I do think that having the impact of multiple rate cuts, the official cash rate coming down in pretty quick succession has also weighed on sentiment.

GERARD MINACK: That is now a worse trend than we saw even in the early 1990s recession.

We’ve had a sneaky little recession in disposable income over the last six or seven years.

ANDREW MCDONALD, SHOEMAKER: I’m Andrew McDonald. I’m a shoe maker and I have been making shoes for 30 years now.

I think at the moment business is going through a soft patch, or a rocky patch. I think the first thing that is on people’s minds is the possibility of a recession.

I’d say that the drop off this month has been about 30 per cent. People are reluctant to spend money on things that they may see as not necessary.

I have been in the Strand Arcade for eight years now. I think it is affecting all businesses in retail.

I have quite close contact to the community of retailers here in the Strand Arcade and they are all saying the same thing whether it is Nino, who runs the restaurant, it’s Alan, who does the repairs – we’re all affected in some way and they are basically saying the same thing – that sales are down. People are not spending money.

I think there is a sense of collective nervousness. Retailers are feeling uncertain. I don’t think they know what’s happening.

ALAN KOHLER: That is small business but what about the top end of town?

Even in a downturn, Australians will always shell out for some products even if they are on a budget, and one of them is soft drink.

This Coca-Cola Amatil warehouse in Melbourne supplies the fizz for Victoria and Tasmania.

Leading up to Christmas, it sends out a quarter of million cases every day. The company invests about $300 million in Australia each year on factories, warehouses and trucks but even with that, growth is hard to come by.

ALISON WATKINS, GROUP MANAGING DIRECTOR, COCO-COLA AMATIL: I think it is pretty challenging for any of us to be finding growth at the moment.

We’re still growing but it’s pretty hard won growth, I would say.

If we look at the stats, it tells us that a lot of households are in real terms at least, worse off than they were, say, 10 years ago and I think that people are just not seeing, as they look forward, any reasons for that to change.

ALAN KOHLER: Do you think that the rate cuts that the Reserve Bank has been making this year have had the perverse effect of scaring people?

ALISON WATKINS: I think there is an element of that and this sort of sense of battening down the hatches, I think, it does reinforce from the consumer point of view that, boy, things are looking a little bit, you know, a little bit dire.

ALAN KOHLER: For millennials like Joel Kaithavelil, what we’re seeing in the economy means the great Australian dream of owning your own home may always be just that – a dream.

JOEL KAITHAVELIL: Goals such as buying a house, or buying an apartment would be something that’s a bit daunting to people of my generation, I guess.

I think there are times when I almost feel as if it’s, you know, a lifetime away or it is going to take quite a long time for me to get there but you are always hearing news about property prices going high and property prices going low. So, I think when there is a lot of confusion about what’s going to happen, I think it’s a bit, yeah, it is a bit scary at times.

ALAN KOHLER: The Australian economy seems to be stuck in low gear, no matter what we do.


ALAN KOHLER: One reason is the amount of debt we’re in and we’ll take a look at that tomorrow night.


What is happening with the Australian economy?

7.30 Report





Australia’s income depression deepens

The collapse in Australia’s household incomes has been well documented on Macro Business …

This image has an empty alt attribute; its file name is file-20190529-126280-ux7t2a.jpg

Photo: The Conversation

Australia’s income depression deepens

By Unconventional Economist in Australian Economy

November 19, 2019 | 16 comments

The collapse in Australia’s household incomes has been well documented on this site, including:

1. Real Average compensation per employee, which has fallen 2.9% since March 2012:

2. Quarterly real per capita household disposable income, which has fallen by 1.6% in the seven years to June 2017:

Today, I want to turn to the annual State Accounts, which were released last Friday by the ABS, and shows that nominal gross household income per capita rose by just 1.1% in the year to June 2019, which was a deterioration on the prior year and way below the early-1990s recession:

Annual growth in nominal gross household income per capita has averaged 4.0% growth since 1992, which highlights just how much things have changed.

When adjusted for capital city CPI, the situation is obviously much worse, with real gross household income per capita falling by 0.5% and sliding for four consecutive years:

In fact, as shown below, real gross household income per capita is lower today than it was in June 2012 – down 2.0% over the past six years:

*The situation is no better at the state level, with all mainland states except QLD experiencing falling real gross household income per capita:

*This is yet more evidence of the income recession afflicting Australia’s household sector. And it is broad-based and long-lasting. Indeed, as H&H pointed last week, it about to overhaul the US Great Depression experience:

That’s what happens when scum runs your country.

Photo: The Conversation

Recent Posts

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.




Watch Alan Kohler’s four-part special on the economy on 7.30, Monday to Thursday this week.


Household debt has Australians living in house of cards

7.30 By Alan Kohler and Liz Hobday

18 NOVEMBER 2019

Playing cards in the shape of a house.

PHOTO: Housing has fuelled Australia’s record household debt. (ABC News: Alistair Kroie)RELATED STORY: Australia’s household debt is the second highest in the world — and it’s changing how we live

RELATED STORY: What will you pocket from the RBA rate cut?

RELATED STORY: ‘How’d you go broke? Slow and then very fast’: Economists warn on debt

When it comes to household debt, Australians are world record holders.

Key points:

  • Australian household debt is close to 200 per cent of income
  • Most of that is tied up in mortgages
  • Commonwealth Bank CEO Matt Comyn says despite the debt, there is no need for concern while interest rates remain low

“We’ve got household debt to income on just a touch under 200 per cent, and that in my view is a massive macro risk,” Gerard Minack, economist and principal at Minack Associates, told 7.30.

“Why are Australians so in debt? Because we went out and bought houses.

“Not built houses, went out and bought them and pushed the prices up to among the most expensive in the world.

“It is literally a house of cards.”

He has his fingers crossed that we do not head into recession in the next 10 years.

The million-dollar mortgage

Steve and Bev Jones pose for a photo with their children in front of a grey two storey house

PHOTO: Steve and Bev Jones borrowed heavily to buy the house they wanted. (ABC News: Jason Om)

Steve and Bev Jones live on Sydney’s north shore, less than 10 kilometres from downtown Sydney.

They have three children and while they do not regard themselves as “well off”, they are happy to admit they are comfortable.

It is their mortgage that sets them apart.

“We have about a $1 million mortgage,” Ms Jones told 7.30.

“We went into it eyes wide open, knowing what we were taking on.

“It’s not great, but we wanted to own our own home, so it is what it is.”

Australia’s debt problem

Australia's debt problem

Australia has one of the world’s biggest household debt burdens, and analysts warn it may weigh our economy down for years to come.

While Mr Jones works full-time in finance, Ms Jones runs a consultancy part-time from home.

When she had her youngest child, who is now 14 months old, she did not take any time off work

“I worked all the way through my pregnancy and then I worked every day thereafter so I didn’t take a break,” she said.

“I think it would be very hard having to go back to a normal part-time or full-time job. And I think that would be difficult for our family to do that.

“But I’m not going to lose the house over going back to work full-time or part-time or whatever.”

They have about 25 years left on their mortgage but they are trying to pay it off faster than that.

The decision they made has been all about spending time with their children as they grow up.

They moved close to the city to reduce commuting time — and that has meant higher house prices and the mortgage that comes with it.

“I think we still make a lot of choices. It’s not like we can afford everything,” Ms Jones said.

“We still need to have choice but I feel like we can have the things in life we want to have for our children and for our family and we have a way of funding that.”

Passing on the rate cuts

Matt Comyn sitting in a large corporate office

PHOTO: CBA’s Matt Comyn says customers are not being short-changed despite not receiving the full RBA rate cuts. (ABC News)

The head of Australia’s biggest bank, the Commonwealth Bank, accepts that Australia’s household debt is high, but he is not too worried by it.

“We’re seeing an average loan-to-value ratio of about 50 per cent,” Matt Comyn told 7.30.

That means that loans are on average half the estimated value of the property.

From the bank’s point of view that means that if the borrower can’t repay, the bank can still sell the house and recover its money.

“So we don’t have any concerns in the context of the overall health of that debt and the customers being able to repay that,” Mr Comyn said.

“If you look at serviceability of that debt, both at an individual level as well as the overall system, we’re seeing more than three quarters of our customers are well ahead of their repayments.

“Obviously that’s contingent on interest rates remaining low, which I think under any scenario, interest rates are going to remain very low for the foreseeable future.”

Some argue rates would be even lower if the banks passed on official RBA interest rate cuts in full.

The last 15 changes to the RBA cash rate have all been cuts, and it now sits at a record low of 0.75 per cent.

But there is a growing gap between the average bank mortgage rate and the official cash rate.

Since 2006 the difference between the standard variable rate offered by the major banks and the cash rate has increased from just under 2 per cent to close to 4 per cent.

The Government has accused the banks of profiteering and appointed the Competition and Consumer Commission (ACCC) to investigate.

But Mr Comyn insists the story is more complex than it appears and he is looking forward to using the ACCC inquiry to get that message out.

He said the official cash rate was not the source of all the money the bank lends, but rather it accessed it from many different places including deposits and overseas money markets.

And he pointed out banks also have depositors, many of whom rely on income from term deposits, which are also affected by interest rate cuts.

“Where the cash rate’s fallen by 75 basis points, term deposits have only come down about 20 basis points,” Mr Comyn said.

“So for us, it’s all about trying to balance various stakeholder groups.”

‘Better hope we don’t have another recession’

Head shot of economist Gerard Minack in front of a black background

PHOTO: Gerard Minack says a series of small corrections to the housing market would be the best possible outcome. (ABC News)

So with household debt already at record levels, and already-high house prices looking like they are about to head north again, what is the solution?

“Ultimately, now, the best way is a slow and steady decline in house prices relative to income,” Mr Minack said.

“I guess a benign scenario would be perhaps small little corrections, not unlike what we’ve had.

“I think we would be pretty lucky to get away with that, because these house prices are now at such a high level.

“So you better have your fingers crossed and hope we don’t have another recession for the next 10 years because that’s how long it’s going to take.

“If we do have a recession in that interim period, wow, housing is really a risk.”

Watch Alan Kohler’s four-part special on the economy on 7.30, Monday to Thursday this week.

VIDEO: Australians have bet the house on rising property prices, as explained in July. (ABC News)

Steve and Bev Jones pose for a photo with their children in front of a grey two storey house




AUSSIES Still Dream of a HOUSE with a Backyard!

A PERTH STUDY revealed 79% of people would prefer a separate dwelling

MEANWHILE cashed-up foreign buyers are buying up ‘house and land packages’ in Sydney’s south-west and north-west …. from their own state-based developer companies

PERHAPS this too is adding to ‘ … the suburban dream runs deep in the Australian cultural psyche. Australia is not alone in this. As a result of widespread preference for suburban living, globally we are not in the age of urbanisation but rather the age of suburbanisation.

MAKE your objections known to your local MPs! Too much competition from those laundering ‘black money’ in Aussie Real Estate!

-Scomo Government exempted the Real Estate Gatekeepers from Anti-Money Laundering Laws (AML L) in October 2018!



Aussies still dream of a house with backyard

By Unconventional Economist in Australian Property

November 18, 2019 | 11 comments

Earlier this month, a cabal of Big Australia shills claimed that Aussies no longer want to live in a detached house with a backyard, and are instead choosing high density living and renting:

Danni Hunter, Victorian chief executive of the Urban Development Institute of Australia… said density would “grow stronger … and that’s really good for the diversity of our cities, our suburbs and our population. People want to live in apartments. People want to downsize to townhouses,” she said.

Image may contain: sky and outdoor

CAAN Photo: Godzillas of Meadowbank

“Density in particular is making some really great changes to the way we live and is helping people come together in a community sense.”

[Bernard Salt] said many young people had “different values” and few wanted large homes with a mortgage in any case.

“The homogeneity of Australian society has shifted from mum, dad, four kids to the cosmopolitan diverse community we have today,” he said. “They want greater flexibility, greater fluidity, and the idea of an early life commitment to a mortgage … just doesn’t sit with the vast majority of the millennial generation.”

Image may contain: 1 person, suit and outdoor

Bernard. Salt.

*Today, this myth has been comprehensively destroyed by academics from the University of Western Australia:

Around the world, the vast majority of people are flocking to cities not to dwell in their centres but to live in the new suburbs expanding their outer limits. Reflecting this, from 2000 to 2015, the expansion of urbanised land worldwide outpaced urban population growth.

The result is unprecedented urban sprawl…

We love our leafy suburbs

The “Australian dream” of owning your own home is often automatically associated with a detached house on a block of land. It’s seen as a mark of having “made it”.

For instance, study in Perth found that, if they had the money, 79% of people would prefer a separate dwelling and 13% a semi-detached option.

*Only 7% preferred flats, units or apartments.

Evidently, the suburban dream runs deep in the Australian cultural psyche. Australia is not alone in this. As a result of widespread preference for suburban living, globally we are not in the age of urbanisation but rather the age of suburbanisation.

recent survey from New Zealand came to an identical result:

The Nexus Planning & Research survey of 1,008 people aged 18 and over shows 49% consider a backyard essential when buying a home, and another 42% think one would be nice to have.

“It’s interesting to see that people consider having a backyard much more important than living close to work, public transport, parks or schools,” says Westpac’s Robert Hill.

“Owning a home with a nice backyard has traditionally been central to the Kiwi dream, and the recent rise in house prices and increase in apartments doesn’t seem to have dented that.”

So, if given the choice, the overwhelming majority of people in Australia (and New Zealand) would prefer to live in a detached house with a backyard than a townhouse or apartment.

*The problem is, high density living is no longer a choice, but rather has been forced upon Australians via the federal government’s mass immigration policy.

The situation is particularly dire in Sydney, which is Australia’s immigration capital. According to projections from the Urban Taskforce, apartments will make up half of Sydney’s dwellings mid-century, whereas only one quarter of Sydney dwellings will be detached houses:

That’s the death of The Australian Dream right there. And this is celebrated by the Big Australia boosters, who continue to gaslight the population into believing it’s in our best interests.

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith is an economist and has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

This image has an empty alt attribute; its file name is WKirXc5z




Australia Talks: Renters and home owners see the world through different eyes


The biggest difference between Australian renters and home owners is around feeling confident of being able to remain in their communities.

52% renters harbour a fear of being forced out due to expense

only 19% of owners worried about the same thing

across all respondents, 22 per cent were “spending more than I can afford on housing”

45% renters feeling financially overstretched by their weekly rent

young people are over-represented in the ranks both of renters and anxious people

-78% of renters home ownership is not a realistic option for most young Australians

WHY is this so?

BECAUSE … meanwhile black money is awash in Australian Real Estate because the Real Estate Gatekeepers have been excluded from the Anti-Money Laundering Laws (October 2018)

temporary Visa holders can gain a ‘Permanent Resident Visa’ after they buy our real estate!

SEARCH CAAN WEBSITE to find more about Visa manipulation … the large number of Visas on offer … the FIRB ruling allowing developers to sell 100% of ‘new homes’ to foreigners … the May 2017 Budget Regulation


Australia Talks: Renters and home owners see the world through different eyes

By Annabel Crabb

14 NOVEMBER 2019

The iconic family board game, Monopoly.

PHOTO: It seems Australia is a game of Monopoly: home owners are winning. (Flickr: John Morgan)

EXTERNAL LINK: Use the Australia Talks interactive tool to see how Australians really think

RELATED STORY: Many Aussies say hard work will get you out of poverty. Suzanna says they’re wrong

RELATED STORY: Three years ago, Miriam was $100k in debt. Here’s how she got out

RELATED STORY: There’s only one kind of Australian not losing sleep over our nation’s problems

As property prices bolted away in the last decade, it’s no secret that a growing proportion of Australians began to come to terms with the likelihood that they would remain renters for ever.

In the Monopoly game of life, their objective isn’t to buy Mayfair and stack it with hotels; it’s to live where their resources and community ties permit, while hoping Chance doesn’t deal them a nasty surprise.

But what the Australia Talks National Survey reveals is that the answer to the question “Do you rent or own?” is predictive of much, much more than whether the respondent feels free to put in picture hooks at whim.

In fact, renters and owners feel differently from each other across a range of issues: some obvious, and some more surprising.

The home ownership divide

The biggest difference between renters and home owners is around feeling confident of being able to remain in their communities.

*When asked whether they feared they might be forced out of their area because it was getting too expensive to live there, more than half of renters — 52 per cent — confirmed that this was a fear they harboured.

*But only 19 per cent of owners worried about the same thing.

Interestingly, this was not about income. Across all respondents, the fear of having to move for economic reasons was fairly consistent across all income groups; among the poorest Australians, living on up to $599 a week, fear of having to move was felt by 26 per cent. Among the top wage bracket — more than $3,000 a week — the fear was still palpably present, at 16 per cent.

*But it’s the home ownership divide that most strongly dictated sentiments.

Would you be happier with more money?
Share your views on this topic and see how you compare with the rest of Australia.

The second clearest difference between renters and owners is the extent to which they feel financially stretched.

*Across all respondents, 22 per cent of Australians felt that they were “spending more than I can afford on housing”.

*But among renters, the proportion feeling financially overstretched by their weekly rent stood much higher, at 45 per cent.

And, for all the bronto-mortgages generated across Australia by the housing boom, only 14 per cent of home owners reported feeling seriously over-stretched.

EMBED: Comparing the views of renters and home owners

Renting on the rise

The Australian Bureau of Statistics reports that over the 25 years to the most recent national Census, the proportion of Australians who own their own home outright has fallen, while the ranks of tenants and mortgagors have expanded.

*In the 1991 Census, 41.1 per cent of Australians owned their homes unencumbered by obligations to a financial institution; by 2016, that proportion had fallen to 31 per cent.

*Renters were only 26.9 per cent of the population in 1991, but that rose to 30.9 per cent over the subsequent quarter of a century.

*And the fastest-growing group — people who co-own their homes with the bank — swelled from 27.5 per cent to 34.5 per cent.

Back to the renter vs home owner data.

Some of the differences in responses are clearly related to the already established increased rates of financial insecurity among renters.

Across all respondents, 60 per cent said they felt they could handle a major unexpected expense.

But among renters, only 42 per cent shared this confidence to any degree, while among home owners, 67 per cent felt prepared for a financial shock.

But other differences were less explicable by circumstance of accommodation.

Renters are more anxious

The Australia Talks National Survey shows renters are more anxious than home owners. When asked about their anxiety levels, 7 per cent of tenants said they “always” felt anxious, while 30 per cent said they “frequently” felt that way.

Among home owners, however only 3 per cent always felt anxious, and 18 per cent frequently.

*An important note of context is that young people are over-represented in the ranks both of renters and anxious people; home ownership tends to increase with age, and anxiety decreases, according to the Australia Talks data.

Annabel’s insights in your inbox
Join Annabel Crabb each week as she takes you through the most intriguing and surprising results from the Australia Talks National Survey.

On a range of other factors, there are pronounced differences of opinion between the home-owning and home-renting communities.

Renters were more likely, for instance, to disapprove of the Australian media. While 54 per cent of owners agreed that the media “generally do a good job” of keeping the population informed, only 40 per cent of renters felt the same way.

Renters were more likely to support the legalisation of marijuana, and to worry about the time they spent on social media.

*While owners — perhaps because of their statistical under-representation in some of the other worry factors — had a rosier view of life in Australia; 74 per cent felt this country was the most liveable in the world, while only 60 per cent of renters felt the same way.

So, is owning a home achievable?

Most significantly, this optimism gap extended strongly to the future of the housing sector itself.

*When asked whether home ownership remains a realistic option for most young Australians, 78 per cent of renters — the vast majority — answered that it doesn’t.

Only 56 per cent of home owners shared their bleak outlook; possibly, they were thinking of the children listed in their wills.

The Australia Talks National Survey asked 54,000 Australians about their lives and what keeps them up at night. Use our interactive tool to see the results and how their answers compare with yours — available in English, simplified Chinese, Arabic and Vietnamese.

*Then, tune in at 8.30pm on November 18, as Annabel Crabb hosts a live TV event with some of Australia’s best-loved celebrities exploring the key findings of the Australia Talks National Survey.




AGED PENSION: “an economically costly inheritance preservation scheme”: a harsh generalisation!

Andrew Fisher and Alfred Deakin, the prime ministers who oversaw one of the world’s first age pension schemes, would be horrified to see what it has become: an economically costly inheritance preservation scheme. Picture: iStock

Photo: The Australian: Paying very wealthy pensioners is hardly prudent: CAAN: A harsh generalisation!

ABOUT this article from Macro Business on Adam Creighton’s ‘Paying very wealthy Pensioners is hardly Prudent’ ….

THERE are two groups of ‘Baby Boomers’ … the wealth Boomers and Boomers … who may only own the ‘family home’ ….

ALERT! If this were to come in it will erode what is left for Gens X Y and Z! Having lost out to:

-1.6 Million Visa Workers in Australia

-lowest wages growth for 60 years

When you read this sort of stuff it brings to mind the following …

blaming people and punishing them because the place where they live happens to increase in value

ignores the fact a vast majority of the people attacked in the article worked hard, paid their (full) taxes, bought and paid off a mortgage in a location they liked (30 years +), and could afford a house that suited them

does not mention they often paid a lot more interest on their mortgage for many years than current owners (17.5%); were on very modest wages and put up with a lower standard of living for a lot of those years

.the official Reserve Bank cash rate peaked at a punishing 17.5 per cent in January 1990

reverse mortgages, they are not popular for good reasons, yet another way for others to make money whilst reducing home ownership and provide opportunities for investors

Further cutting the AGED PENSION based on an assets test including the family home will:

encourage more creative accounting

-encourage more schemes that will seek to avoid the impact of yet another tax, where it has been done elsewhere houses are left unfinished and/or maintained to deliberately suppress their value

WHAT happens when the asset value declines for whatever reason?

What about this article ignoring the fact that a home is shelter, a place to live, not primarily a financial instrument

What about doing something about the housing market, like addressing the inflation of house prices including doing more than tokenism in response to foreign buyers taking a share of our domestic housing stock

addressing the demand foreign buyers have (driving demand and prices) beyond a series of levies and taxes; that evidence has failed to indicate they have influence on foreigners decision to buy as they continue to do so because they want to buy in Australia and are prepared to pay

AS for years ahead the article does not dive deep into the reality of retirement created by compulsory superannuation introduced over 30 years ago

The fact is less and less retirees will qualify for the full aged pension let alone a part pension

However another issue mentioned in passing may indicate the author is aware we could be facing an even more concerning crisis:

-for more than 7 years the vast majority of Australian workers have had little or no increases in their wages beyond the cost of living, many not even keeping up with inflation

-this has had an effect on their Super, it too has failed to grow so their retirement savings are more likely to be inadequate

-those low paid workers retiring on very modest super and don’t happen to own a home are in the future far more likely to fall below the poverty line and into homelessness; those at the biggest risk being single elderly women …. but hey who cares about them? It seems nobody …

THESE ISSUES could have more serious consequences for the Budget bottom line, and subsequent social and political ramifications than not giving the top end of town and the top tax bracket a break

INSTEAD what about addressing some real issues like:

-New Zealand … why should foreigners own our domestic housing?

-deciding owning a lot of homes is not such good thing, how many is enough, that is why should the Budget subsidise ‘an investors 3rd or 4th property?

-the Second Tranche of the AML legislation, now that would have a positive influence on the Budget bottom line and not be such an attack on those getting old

-doing something about exploitative pay day lenders, like the AML matter the reports are done, the recommendations are there, but nothing is happening … what could it be that is stopping them?


Aged Pension: “an economically costly inheritance preservation scheme”

By Unconventional Economist in Australian budget

November 12, 2019 |  comments

The Australian’s Adam Creighton has continued his war against the Aged Pension’s largesse towards wealthy retirees, labelling it “an economically costly inheritance preservation scheme”:

Last week figures emerged showing about 255,000 pensioners lived in homes worth more than $1m, costing taxpayers an estimated $6.3bn a year — enough to reduce the top marginal tax rate dramatically, for instance. The Australian National University report found almost 30,000 pensioners were in homes worth more than $2m. The biggest asset most people own is excluded from the eligibility test for the Age Pension.

No one begrudges success but the government needs to prioritise who receives scarce tax dollars. The 707 pensioners in Perth’s Dalkeith (median dwelling value $1.5m) or 429 in Sydney’s Vaucluse (median $2.7m) should be lower down the list than families struggling to buy a home facing marginal tax rates of 39c in the dollar.

These well-off people have about triple the wealth of the median household. Pensioners are allowed to have financial assets up to $864,000 before they lose the part-pension, and the array of medical and transport discounts that goes with it.

The biggest red herring is that people would have to move out of their homes if their net wealth were counted in the eligibility test for the Age Pension. That is nonsense, however rhetorically convenient. Financial products called reverse mortgages exist that allow retirees with significant equity in their homes to remain there in comfort without drawing on taxpayers…

The Henry tax review sensibly recommended starting to withdraw Age Pension payments once recipients’ principal residence exceeded $1.2m in value. The Commission of Audit suggested $750,000. Every dispassionate analysis comes to the same conclusion. It’s hard not to.

Perhaps the silliest argument against including the principal residence is that retirees can’t help it if the values rose. Oh, what a burden…

We’ve ended up with a system that taxes labour income at high rates while asset speculation is taxed lightly or not at all.

Adam Creighton is right of course. It’s ridiculous that younger Australians facing the prospect of never owning a home (or being enslaved in mortgage debt) are being called upon to pay ever-rising taxes to subsidise retirees that are far better-off financially than they will ever be.

The policy solution that MB advocates is to:

  1. Including one’s principal place of residence in the assets test for the Aged Pension at some point in the future (e.g. 1 July 2022), thus allowing current retirees and prospective retirees adequate time to make arrangements; and
  2. Significantly raising the overall pension asset test threshold as well as the base rate.

Under this solution, house-rich pensioners choosing to remain in place could continue to receive an income stream as they do now under the Aged Pension via the Pension Loans Scheme (the federal government’s official reverse mortgage scheme), but with less drain on the Budget and on younger taxpayers. But they would similarly be incentivised to move as the family home would no longer be a tax free shelter.

Poorer retirees that do not own a dwelling would also be made better-off via the increase in the overall assets test (thus allowing greater financial assets to be held without cutting-off access to the pension), as well as the increase in the base rate.

It’s a solution that would greatly improve equity and ensure that Australia’s welfare system is better targeted towards those in genuine need.

It would also ensure that the pension system evolves alongside the structural reduction in home ownership rates, by making the system more neutral towards property ownership and financial assets.

Younger people should be particularly anxious to end this inheritance protection racket, especially those who won’t inherit much at all. Picture: iStock

Photo: The Australian




Insiders: Morrison’s FHB deposit subsidy to lift property prices

Quote … ‘The Coalition also admitted that the policy was developed by the property lobby‘ …

Of course … no surprises there …

Before entering politics Scomo wrote the policy for the deve-loper lobby, the Property Council of Australia … the PCA is in ‘the box seat’ … looks like it is running the show!

Insiders: Morrison’s FHB deposit subsidy to lift property prices

By Unconventional Economist in Australian Property

November 12, 2019 | 4 comments

Various property insiders agree that the Morrison Government’s first home buyer (FHB) deposit subsidy is likely to raise property values when it is introduced in January, thereby eroding housing affordability:

SQM Research real estate analyst Louis Christopher said the Morrison government’s free LMI for 10,000 first-time annual buyers would “marginally” increase prices from January…

“Past first home buyer schemes have tended to only benefit people who used them at the very start, because the remainder of people had to pay a price over and above the value of the grant”…

Richard Wakelin, founder of buyers’ agent Wakelin Property Advisory, said last week the first home loan deposit scheme would inject “extra stimulus” into the housing market…

Perversely, the stimulatory impact of the scheme may force first home buyers to pay thousands more for property than they save in LMI,” he said.

*Supporting property values, not affordability, was the stated intent when Prime Minister Scott Morrison announced the scheme a week prior to the federal election:

“We want to see more first-home buyers in the market, absolutely, and we don’t want to see people’s house prices go down” – Prime Minister Scott Morrison, 13 May 2019.


*The Coalition also admitted that the policy was developed by the property lobby: *

Mr Morrison rejected suggestions the plan announced on Sunday, and quickly matched by Labor was a taxpayer-funded subsidy and said it won’t lead to an increased risk of purchasers getting into financial trouble.

“It enables them to open the door and actually turn the key on their first house,” Mr Morrison said.

“In a couple of years they will undoubtedly refinance and they will go through that process again. The equity in their home will build and they’re up, up and away. That’s where we want to get them to”…

Asked what modelling had been done, Mr Frydenberg said the government “had spoken to people in the sector.”

*Basically, Scott Morrison wants to sacrifice FHBs to boost the profits of his property industry mates.*