Totally agree, and am puzzled why the RBA is aiding and abetting the now confirmed ALP policy of increasing wages and therefore inflation must rise and maybe above the 2- 3% average target set by RBA. Westpac economist Bill Evans claims RBA should drop interest rates now but I'm thinking he wrong, as they may rise after ALP starts its inflationary spending spree. Bill Evans is calling for a rate drop when it could not benefit borrowers for long enough assuming banks would pass on the full drop. I agree with RBA to keep rates at current levels or at least until a few months into an ALP Government and then re-examine direction.
I'll further suggest we are already in the start an ALP led recession which may only stop at election time if the LNP wins government with a clear majority. The ALP policy announcements have in a strange way assisted the RBA over last 12 months by scaring investors and developers into slowing down and stopping all new development projects until the results of the Federal election but in so doing their policy has been hitting State government Stamp Duty income. On the flip side of Federal ALP policy might be to accelerate spending on many of their pet projects and naturally social housing projects in marginal seats to help cement more ALP voters in currently held LNP seats. This may give some developers a way out of their developments and good for construction-related suppliers and human resources. Everyone will need to adapt to the new regime and plan for a long time without LNP at the helm.
I argue that any Federal Govt should not tamper with negative gearing or CGT as this reduces States capacity to benefit from increased stamp duties income. I'd go further and suggest the elimination of the tax on inflation /CGT would help the free movement of property assets between potential Aussie owners and would benefit the states further by more than the Feds will earn from the tax. Getting rid of the CGT would encourage "flipping" which benefits the States and it also increases supply by people wanting to cash out their properties or move assets to another location.
More selling leads to more turnover and more State Revenue, whereas higher CGT leads to decreased turnover velocity as more people hang on until death.
WBC Price at posting:
$27.02 Sentiment: Buy Disclosure: Held
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