Brown Couch budget digest

Last night's Federal Budget hasn't given us much to talk about on the Brown Couch today. Here are a few things that others have had to say:

"Inadequate income and unaffordable and unstable housing are two of the biggest drivers of intergenerational disadvantage. Neither of these issues has been addressed substantially, and I suggest young mothers and children will lose out as a result." - Grant Millard, CEO of ANGLICARE Sydney.

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"While the Budget predictably (but unfortunately) failed to reform negative gearing and CGT rules, it thankfully also did not attempt to stoke demand by raising the First Home Owner Grant (widely viewed as a failed policy), or allowing first home buyers to access their super to purchase a home (effectively a FHOG in disguise). My number one wish with any Budget is that it does no harm. So, at least in regards to housing, this Budget passes the test." - Leith van Onselen (aka The Unconventional Economist) who writes for Macrobusiness.

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"For the past two years we have submitted our Convert to Rent housing initiative to Treasury for consideration. It involves grants of up to $21,000 to help landlords convert empty commercial space, shop-top rooms, and run-down homes into affordable rental housing. We argued strongly for $350 million, which would have resulted in 15,000 new affordable rental dwellings. The scheme has been very successful in Canada and the UK. Property, housing and social welfare groups have all voiced support for this policy to convert thousands of empty dwellings into affordable homes. Yet on budget night there was nothing but silence for Australia's 2.4 million rental households." - Senator Scott Ludlum of the Australian Greens.

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"At a time when new home building is in decline in virtually every state and territory, the budget has failed to deliver any new measure to reinvigorate the home building sector, despite the sector's health being absolutely crucial to a healthy domestic economy. Without dedicated housing policy measures and housing supply-side reforms the residential building sector will continue to act as a drag on the macro-economy and the nation's growing housing shortage will continue to place undue pressure on the household budgets of home buyers and renters." - Andrew Harvey, senior economist with the Housing Industry Association.

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"Wayne Swan’s budget might be back in black, but with no new  spending on housing initiatives, the one in ten families who are in housing stress will remain in the red as they try to make the rent or mortgage each week. With no new money invested in social housing in this budget, the system will continue to decline, leaving almost 250,000 households languishing on public housing waiting lists. With no increase in the rate of Commonwealth Rent Assistance, over 450,000 renters in housing stress will have less to spend on food, clothes, transport and the other basics of life. Failure to tackle the negative gearing and Capital Gains Tax breaks that drive up house prices means thousands of young Australians don’t get a fair go in the housing market. Housing is the single biggest household expense. For families to get a fair go, the Government needs to fix our broken housing system." - Sarah Toohey, Campaign Manager with Australians for Affordable Housing.

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"A halving of interest rates in the 1990s kick-started a decade-long love affair with debt, which in turn fuelled a period of unrivalled prosperity for households as they borrowed to buy assets, largely houses, which doubled in value every couple of years. As household's balance sheets grew, they felt rich. But the debt boom has run out of puff. Borrowers reached the limits of their new borrowing capacity about 2007, just before the global financial crisis provided both the motivation and the means - lower interest rates and government stimulus - to save. And they haven't looked back. Australia's household debt-to-income ratio peaked at 156 per cent just before the GFC. It has since shrunk to about 150 per cent as households have begun saving. Treasury maintains in this year's budget estimate that had households not reformed their debt-fuelled ways, and continued to increase their net borrowing at the same pace as between 2002 to 2007, the household debt-to-income ratio would be a whopping 185 per cent. Today, Australians are a nation of aspiring savers, and it is this sense that the government is tapping into with its return to surplus. In Statement 4 of the budget papers - known to overexcited economic journalists as the ''Treasury Sermon'' - Treasury boffins have chosen to extol the virtues of ''building resilience through national saving". Higher household saving will help, in the longer term, to act as a shock absorber for the economy, reducing household's exposure to any sudden fall in asset prices - read house prices. It is in the best interests of everyone that this should happen gradually. Because that buffer may soon be needed. House prices have turned, falling 5 per cent over the past year. The get-rich-quick trick is over. Households no longer feel rich". - Jessica Irvine, columnist with the Sydney Morning Herald.