TREASURER Wayne Swan has declared economic strength goes hand in hand with fairness in Australian society.
A strong economy and disciplined fiscal policy was vital to encourage a fairer community that supported the most vulnerable, Mr Swan said, addressing a welfare group in Melbourne.
“With this budget, we have shown that you can balance the books, invest to keep the economy strong, and build big social reforms all at the same time,” he told the ACOSS post-budget lunch on Monday.
But Opposition Leader Tony Abbott told his party faithful in Brisbane that the treasurer’s forecast $1.5 billion surplus in 2012/13 was nothing to boast about.
“The government is going to borrow more between now and June 30 than the size of Wayne Swan’s claimed micro-surplus,” Mr Abbott said in an address to the Queensland division of the LNP.
Opposition housing spokeswoman Marise Payne said there was nothing in the budget to boost housing supply and affordability or reduce the risk of homelessness.
Rents were rising faster than inflation, and the Labor government was also about to impose a carbon tax that would increase the cost of building an average home by at least $5200, after compensation, Senator Payne said in a statement.
“The government appears to be relying on the Reserve Bank to improve housing affordability,” Senator Payne said.
“However, they are ignoring the two million people renting in the private market who don’t benefit from interest rate cuts.”
Reserve Bank of Australia (RBA) deputy governor Philip Lowe told a conference in Melbourne that slow home building was the “biggest surprise” in the bank’s overestimation of economic growth in 2011.
“We had expected dwelling approvals to pick up gradually over 2011, but this pick-up did not eventuate,” Dr Lowe said in an address to the ADC Future Summit.
He blamed a return to more traditional savings and borrowing behaviour by households, which was rippling through the economy.
“This has made developers, financiers and households less willing to commit to new construction despite rising rental yields, lower prices relative to income and ongoing growth in population,” Dr Lowe said.
Improving fundamentals should generate a pick-up in home building at some point, but recent indicators do not suggest this is imminent, he said.
New data shows an unexpected rise in new home loans in March, with growth of 0.3 per cent to 39,143 mortgages, after falls in the preceding two months.
The data, which preceded this month’s 50-basis-point cash rate cut by the RBA and rate cuts of 33 basis points on average by lenders, shows there were around 2000 fewer loans per month than there would have been if pre-global financial crisis, long-term trends had continued.
“More is needed in terms of further rate cuts, and also housing supply reform, by state and federal governments,” Housing Industry Association senior economist Andrew Harvey said.
RBC Capital Markets strategist Michael Turner said the 100 basis points of cuts in the cash rate since November may prove “too little, too late” to stop a contraction of around five per cent in residential construction in 2012. – AAP