Outlook for economy not good

[Petals]

 

http://www.theage.com.au/federal-politics/political-news/capital-investment-economic-outlook-slips-from-bleak-to-recessionary-20150528-ghbxls.html Article in the Age newspaper today. Not surprised, this gov seems to do nothing to stimulate recovery, all they want to do is cut cut cut.

[flag of convenience]

Long on the cards and WA is beginning to feel the downturn probably most. Office vacancies in the CBD are 94 vacancy levels. Housing rentals up some 50% on a year earlier. House price adjustments well in place in the northern mining centres. Slight downturns in the Perth property markets but one can't help but think prices are way over inflated and some heavy adjustment needed. Unemployment is up and savings in many organisations has started to be in place come the financial new year in July.

[Parley]

http://www.theage.com.au/federal-politics/political-news/capital-investment-economic-outlook-slips-from-bleak-to-recessionary-20150528-ghbxls.html Article in the Age newspaper today. Not surprised, this gov seems to do nothing to stimulate recovery, all they want to do is cut cut cut.

 

did you read the recent budget ?

[Petals]

Yep well aware of what is in the budget,nothing for innovation and research. We will fall behind, Libs have home building mentality that started with the Howard Government.

[Parley]

Surprised you don't seem aware of all the initiatives for small business which is where a lot of new employment will come from

Reduced tax rate for small business (a welcome cut) and immediate tax deductions for new assets up to 20K.

 

The budget has been very well received and coalition are now level or ahead in the polls, so not sure how you have got this attitude tbh.

[flag of convenience]

did you read the recent budget ?

 

You mean the furthering of rorts for tradies?

[flag of convenience]

Surprised you don't seem aware of all the initiatives for small business which is where a lot of new employment will come from

Reduced tax rate for small business (a welcome cut) and immediate tax deductions for new assets up to 20K.

 

The budget has been very well received and coalition are now level or ahead in the polls, so not sure how you have got this attitude tbh.

 

Of course it was well received. It reached its target audience and will further the crisis deficit that seems to have not been such a crisis after all. Does nothing to address the issues impacting on this country. Over inflated housing. Youth unemployment. Too many visa's being issues and no idea how or what to replace the ever declining mining resources.

[flag of convenience]

Yep well aware of what is in the budget,nothing for innovation and research. We will fall behind, Libs have home building mentality that started with the Howard Government.

 

Exactly. Nothing innovative in that budget. An attempt to buy votes from a section of the community in introducing something impossible to police and open to even more rorts. Are we too never remain the stupid country? Nothing in this budget to suggest other wise.

[VERYSTORMY]

Surprised you don't seem aware of all the initiatives for small business which is where a lot of new employment will come from

Reduced tax rate for small business (a welcome cut) and immediate tax deductions for new assets up to 20K.

 

The budget has been very well received and coalition are now level or ahead in the polls, so not sure how you have got this attitude tbh.

 

The budget is going to cause a massive headache later in the year. Tradies have sadly listened to Abott and gone and spent. But, I will bet many don't really understand how the tax back works. If and a big if, one has paid 20k in tax, then gone and bought a new 20k ute, they will get back between 25-40% of 20k, depending on their tax band. Most will be in the lower band. So, will get only about 25%. That also assumes they have paid 20k in tax. Most won't.

[Guest Mikimoto]

did you read the recent budget ?

 

Yes, $15b cut from families.

[Parley]

What it means is where previously you could only depreciate the asset over 5 years you can do it immediately now.

It is,a great win for people already planning on purchasing assets or considering it.

[WeegieDave]

A recession is due.. No doubt about it. In some ways it might not be a bad thing. Will hopefully scrub out the greed culture that has engrained intself into WA during the boom years and will hopefully bring back some normaility. Everyone wants to charge big bucks for everything in Perth and are still trying to do so despite the changing economy.

Not great for people like me who bought a house just over a year ago during the peak but I'm not planning on moving anytime soon so will hopefully ride it out.

[akiralx]

If and a big if, one has paid 20k in tax, then gone and bought a new 20k ute, they will get back between 25-40% of 20k, depending on their tax band. Most will be in the lower band. So, will get only about 25%. That also assumes they have paid 20k in tax. Most won't.

 

My wife does run a genuine small business which makes a reasonable profit (tops up her part time job) - but not enough turnover/profit for the ATO to recognise it apparently. So the temptation is to not bother them with the income from it...

[VERYSTORMY]

What it means is where previously you could only depreciate the asset over 5 years you can do it immediately now.

It is,a great win for people already planning on purchasing assets or considering it.

 

But, the average tradiie - to who, this has been sold, will be thinking "I can go and buy 20k of stuff and get it all back. I met one yesterday who has just gone and bought a ute on a credit card thinking he will get it back. Was not happy when I explained it to him.

 

The bigger companies will know how it works, but, they have planned expenditure that is not going to be that influenced by it. Those that do take advantage are just as likely to buy imported goods. The chance of many taking on new staff as a result is very slim, particularly given business confidence is negative.

[Parley]

But, the average tradiie - to who, this has been sold, will be thinking "I can go and buy 20k of stuff and get it all back. I met one yesterday who has just gone and bought a ute on a credit card thinking he will get it back. Was not happy when I explained it to him.

 

The bigger companies will know how it works, but, they have planned expenditure that is not going to be that influenced by it. Those that do take advantage are just as likely to buy imported goods. The chance of many taking on new staff as a result is very slim, particularly given business confidence is negative.

 

The drop in the small business tax rate by 1.5% is what will hopefully mean more staff being employed.

[VERYSTORMY]

The drop in the small business tax rate by 1.5% is what will hopefully mean more staff being employed.

 

I don't think so. It might stop some redundancies. But, the broader economy is struggling too much. Personall debt is now (finally) starting to worry economists. There has been a huge property bubble develop in Melbourne and Sydney based mainly on overseas investors - mainly Chinese. But, as Chinas economy is now starting to seriously stutter this is going to cause massive issues in the same way as it has for resources in WA.

 

Australia made a decision to put its economic future in the hands of the Chinese future. All eggs in one basket. Big mistake. No country is immune to economic downturns.

 

The he pop of the Chinese bubble is starting and of no surprise to those of us who have lived there like myself.

 

the government can cut rates to zero. The reserve bank can cut interest to zero. It is irrelevant as it is all tied to how the Chinese economy stands or falls. And it is starting to fall.

 

I lived in China prior to moving to oz and it was massively worrying then to see that it was an economy built on nothing but debt.

[Parley]

Mind you people have been saying that about China for at least a few years now, going on about their ghost cities etc.

 

But their economy continues to grow by 7% or so a year. The government seems to be able to intervene to keep bubbling along.

 

Not saying it can't happen, but we've been hearing doom and gloom stories for years.

 

Meanwhile the ASX is up 80 points today.

[flag of convenience]

A recession is due.. No doubt about it. In some ways it might not be a bad thing. Will hopefully scrub out the greed culture that has engrained intself into WA during the boom years and will hopefully bring back some normaility. Everyone wants to charge big bucks for everything in Perth and are still trying to do so despite the changing economy.

Not great for people like me who bought a house just over a year ago during the peak but I'm not planning on moving anytime soon so will hopefully ride it out.

 

It is certainly needed and hopefully clear the decks to enable rebuilding the country from the awful mess we have found ourselves in from as you say and I often, the greed that flew from the boom. If you bought for the long term you may recover losses but it will be very long term. But no doubt it will be painful to see one's asset decline.I suspect the unravelling will take a few more years and 2017 is being mentioned as the probable housing readjustment period. From there I expect a long period of no growth even slight falls depending on economic activity here in WA and if workers are needed in any number or not.

[VERYSTORMY]

Be very careful about Chinese data. It is often propaganda. A couple of years ago was s classic odd mistake. China released data that it had increased exports to South Korea by 10%. The same day, South Korea released data showing Chinese imports had fallen 10%!

 

The government is China is finding it is increasingly difficult to manage its economy. A huge amount of borrowing is carried out by black funds that are in the shadows. Interestingly these are some of the biggest lenders in to the Oz economy.

 

The local population has no concept of lending / borrowing or risk. To them, there is zero risk as in the past there are no lessons of capitalism to learn from. So they borrow.

 

When i was living in China I was horrified to find that most of my staff had credit cards with $50k limits that were blown out and would just take another credit card to make the repayments. This is going on and on. I now know people with 40 maxed out credit cards and don't see an issue. They will just get another. The average Chinese person now has debt beyond what they could pay not just in their life but several generations. All of this though will have to be repaid and even the Chinese government are worried.

 

The proprty bubble is stalling / bursting there rapidly.

[flag of convenience]

Mind you people have been saying that about China for at least a few years now, going on about their ghost cities etc.

 

But their economy continues to grow by 7% or so a year. The government seems to be able to intervene to keep bubbling along.

 

Not saying it can't happen, but we've been hearing doom and gloom stories for years.

 

Meanwhile the ASX is up 80 points today.

 

I don't recall the boom going bust in previous times of doom and gloom scenarios. Which by the way didn't come about due largely to government intervention in the way of stimulus. No such luck this time. WA coming out in debt with threats to its credit rating after the biggest so called boom in its history or the most nationally impacting one says a lot. Sydney running on speculators housing Ponzi where buyers of actual homes to live in are making up only something to the nature of 16% of the market from memory suggests a very worrying economy.

[Paul1Perth]

The budget is going to cause a massive headache later in the year. Tradies have sadly listened to Abott and gone and spent. But, I will bet many don't really understand how the tax back works. If and a big if, one has paid 20k in tax, then gone and bought a new 20k ute, they will get back between 25-40% of 20k, depending on their tax band. Most will be in the lower band. So, will get only about 25%. That also assumes they have paid 20k in tax. Most won't.

 

If anyone knows how tax rules work VS it's tradies. I think you are seriously underestimating how much they earn too. There's a big difference between what they actually make and what they declare to the taxman. My son's a sparkie, bought himself a XR6 Turbo Ute as soon as he could and the tax rebates he used to get meant is was a better deal than my company car.

[flag of convenience]

If anyone knows how tax rules work VS it's tradies. I think you are seriously underestimating how much they earn too. There's a big difference between what they actually make and what they declare to the taxman. My son's a sparkie, bought himself a XR6 Turbo Ute as soon as he could and the tax rebates he used to get meant is was a better deal than my company car.

 

I think few awake folk would underestimate what tradies earn nor the government induced policy that allow them greater rorts. As I said we remain the dumb country.

[Paul1Perth]

Another thread that's going to turn into a doom and gloom, especially about Perth thread. Honestly there is a downturn and I'm sure it's hurting some people. Not really noticed any difference in peoples outlook. It still comes across as fairly upbeat to me. Perth is still busy at nights, I was out Tuesday to watch Nickelback with my youngest, pubs and bars were busy on the way to the arena, lots of people out enjoying themselves, good crowd at the concert. Ears are just recovering.

 

Maybe they are all deluded and spending the last few dollars before going into hibernation for the next couple of years.:wink:

[Paul1Perth]

I think few awake folk would underestimate what tradies earn nor the government induced policy that allow them greater rorts. As I said we remain the dumb country.

 

Yep, I've noticed a few complaints from you about what tradies are earning and how you think they should be brought down a peg or two flag.

[flag of convenience]

Brings to mind the edition of Q & A on ABC TV the other night questioning Hockey after his budget. I can't think of a single question that wasn't of self interest. Nothing about the larger term impact on the nation.