The SA Politics Thread

[Waewick]

prices are sticky, I agree

but our land tax regime is still a drag on our economy and it does impact investment in the state.

It will be interesting to see what the Liberals have on offer, but I highly doubt we will get much detail, given no political party in my living memory has ever given that much information out prior to an election bar a few things.

[Aidan]

well it wasn't as much as I would have hoped.

it will help businesses, land tax directly impacts the costs of housing allotments, apartments and commercial buildings.

Hopefully this flows through to the end user or at least slows the rate of cost increases.

it really isn't "terrible" news, it just isn't as fantastic as it was made out to be.

It really is terrible news. Land tax directly impacts on the cost of land by making it cheaper because the combined leasing and tax cost that businesses are willing to pay stays the same. Also it discourages the speculation which can push the price of land up more.

[Waewick]

well it wasn't as much as I would have hoped.

it will help businesses, land tax directly impacts the costs of housing allotments, apartments and commercial buildings.

Hopefully this flows through to the end user or at least slows the rate of cost increases.

it really isn't "terrible" news, it just isn't as fantastic as it was made out to be.

It really is terrible news. Land tax directly impacts on the cost of land by making it cheaper because the combined leasing and tax cost that businesses are willing to pay stays the same. Also it discourages the speculation which can push the price of land up more.

you speak of speculation like it is a bad thing, increasing the liquidity of property is a good thing.

I'd even argue in this environment, where tenants have the upper hand, it will have little or no effect on land values.

[monotonehell]

you speak of speculation like it is a bad thing, increasing the liquidity of property is a good thing.

Not always. In fact liquidity well above asset value leads to things like the USA's housing crash.

[Waewick]

you speak of speculation like it is a bad thing, increasing the liquidity of property is a good thing.

Not always. In fact liquidity well above asset value leads to things like the USA's housing crash.

very true, but we don't have the lending practices of the USA

[Aidan]

well it wasn't as much as I would have hoped.

it will help businesses, land tax directly impacts the costs of housing allotments, apartments and commercial buildings.

Hopefully this flows through to the end user or at least slows the rate of cost increases.

it really isn't "terrible" news, it just isn't as fantastic as it was made out to be.

It really is terrible news. Land tax directly impacts on the cost of land by making it cheaper because the combined leasing and tax cost that businesses are willing to pay stays the same. Also it discourages the speculation which can push the price of land up more.

you speak of speculation like it is a bad thing, increasing the liquidity of property is a good thing.

I'd even argue in this environment, where tenants have the upper hand, it will have little or no effect on land values.

Speculation has good and bad effects, and I agree that having some speculation is desirable. But it's bad effect of pushing up land prices (increasing business expenses) is real, though not currently a big problem in SA at the moment (partly because of the land tax, partly because of the economic cycle).

Anyway, my point is that land taxes are set by supply and demand. There's not much scope for changing the supply, so it makes sense to keep the prices low by taxing the demand. No other tax has as little economic impact (though the PRRT comes close).

[fabricator]

Although that's very important, there are plenty of other things they can do. Investing in infrastructure is the most important one.

Infrastructure needs taxpayer money, and a lot of it. If you haven't got it you'll have to borrow and if the economy is in a downturn you won't pay it off soon. I think it would be best to spend less and wait, give business incentives, tighten our belts and work hard.

Despite many past governments underinvesting in infrastructure, Abboott's entirely to blame for any downturn. Rudd had much unluckier timing, but he kept the Aussie economy growing. Abbott has the ability to stimulate the economy, even if he chooses not to.

How can Abbott be to blame as he's only been in for a short time? Are you blaming him while in opposition?

Yes I for one do blame him while in he's opposition, as soon as it became obvious he could win the election, what he said mattered.
His almost daily bleating about huge government debt (other counties around the world have vaster bigger debts than us and are doing fine), and how projects x y and z are a waste of money is going to have a negative effect on the economy.
It was all BS, as debt levels have spiralled up at a faster rate with him in charge, go read the previous federal budgets and the recent news stories for proof.

Simple it's called "Market Sentiment", very common effect in the share market.
Business don't like change, it makes their plans uncertain, and a change of Federal Government is one of the biggest changes there is.
So what happens ? Business stop hiring, don't buy new equipment, etc in the lead-up to an election, especially when the two parties have vastly different policies.

Because Abbott cannot shut up and continues to sprout negative news about everything and everyone, people feel depressed. Now the industry, businesses and the share market are all run by human beings.
What about consumers ? Probably going to stop retail spending because Abbott might can the industry they work in, or stuff with their wages.

I'll give some examples, the car industry know they get no assistance any more, and we know what's happening to them.
How about the construction industry, no more metro rail projects, changed priorities on road projects, public sector layoffs mean less chance of contract to build/renew offices etc.
Any of the green energy sector is good as dead, everything from solar to wind turbine towers to CO2 reduction fixes for industry. To make things worse, the insulation enquiry, which is pointless as we already know what happened.
Anything else that supplies the public sector, stationary, printers, IT stuff, food etc.

You cannot simply turn the entire country upside down, and not have a negative effect.
Part of good government is simply saying that things are going well, as saying things are going to shit makes bad things happen.

[Waewick]

yet GPD beat expectations

[monotonehell]

yet GPD beat expectations

If you look at the figure for the whole quarter Sep-Dec it appears to have risen. But if you look at the detail, where the Devil is, month by month and sector by sector, you can see that confidence is falling across the period as Abbott's statements have slowly been revealed.

[Waewick]

yet GPD beat expectations

If you look at the figure for the whole quarter Sep-Dec it appears to have risen. But if you look at the detail, where the Devil is, month by month and sector by sector, you can see that confidence is falling across the period as Abbott's statements have slowly been revealed.

yep.

business investment is down, Business confidence was up in January, haven't heard the results of feb yet.

going to be interesting to see what Abbott has planned (yes if anything)

[Ho Really]

Aidan, re GFC read: How Australia weathered the global financial crisis while Europe failed.

The Liberals at the time wanted to spend less than what Rudd did. In my opinion it would have served the same purpose and kept us in a better position.

Cheers

[monotonehell]

yet GPD beat expectations

If you look at the figure for the whole quarter Sep-Dec it appears to have risen. But if you look at the detail, where the Devil is, month by month and sector by sector, you can see that confidence is falling across the period as Abbott's statements have slowly been revealed.

yep.

business investment is down, Business confidence was up in January, haven't heard the results of feb yet.

going to be interesting to see what Abbott has planned (yes if anything)

LOL yes. I should amend what I said above. There is correlation between Abbott's actions and the downward trend, however we can't show causation. There's a school of thought that politicians have negligible effect on the economy - the "Two Lever" hypothesis. The levers being fiscal policy and monetary policy, although I'm not sure that this old macroeconomic hypothesis still applies with contemporary things like the RBA independent and the new media cycle.

[Aidan]

Aidan, re GFC read: How Australia weathered the global financial crisis while Europe failed.

A self serving piece from one of Peter Costello's advisors, long on rhetoric but short on facts. Australia's low debt may have given Rudd the confidence to act, but there's no proof of that. As long as out debt's in our own currency, we can always afford as big a stimulus as we need. Always - no matter how big or small our debt is. And government debt levels are very seldom a factor in private sector spending decisions, and never a major factor.

The Liberals at the time wanted to spend less than what Rudd did. In my opinion it would have served the same purpose and kept us in a better position.

Then your opinion is wrong. A healthy economy depends totally on money spent. When the GFC hit, the private sector started spending less. Businesses spent less because they saw less chance of making a profit on buying new equipment or employing a large workforce. Households spent less because with businesses cutting back, people were less secure about their future income. And demand for our exports fell. Even the Chinese were spending less on our ore, though that was due to lower commodity prices rather than lower volumes.

When the private sector spends less, the government has to spend more to keep us out of recession. And when the government spends more, business confidence returns. Why is that so hard to understand?

[jk1237]

Liberal supporters really need to grow a brain in regards to govt debt. The utter bullshit the Abbott govt has spun in making people believe that govt debt is bad is moronic. Its like telling every home owner with a mortgage that you are bad because you are in debt. Its like telling every business who takes out a loan is wrong because they are in debt. There is nothing wrong with debt, its only a problem when you cant afford the repayments, and our country has no issue in its debt repayments, because our debt is fairly low.

Everyone, including individuals, businesses and govts cant pay for everything they need with cash right now. There are always times when you need to spend money on stuff and you will need to take a loan. In terms of borrowing for public infrastructure, this is seen as an investment.

We could live in a world where there is no borrowing, only buy a house when you have enough savings, or never buy a car unless you have savings, but you may as well live under a rock (because by the time you have savings your too old), which is where this fed govt is taking us.

And its economics 101 that when there is a downtown, govts implement expansive fiscal policy (ie govt spending) to try and stimulate the economy, to compliment monetary policy

[Waewick]

When the private sector spends less, the government has to spend more to keep us out of recession. And when the government spends more, business confidence returns. Why is that so hard to understand?

Aidan I think we all get the point, you love your theoretical economics.