NOTE, ARTICLE No: 5.
This article is the fourth article, of a group of articles, about Australia and the housing problems cause and remedy discussions. We are reposting these articles to show you, what we believe is the cause of the rental shortage in Australia. You see, the Australian Social Security System fails to help the farmers, because of the assets test, and fails and punishes the small rental investors, because of the ASSETS TEST, that is the only reason I can see, why today there are not enough rental properties on the market. .
Welcome to article,
We believe that there are two things in life that we must have, one is food and the other is a house to live in. So, a good government must make sure that everybody, can afford these two things. But there are times when it does not work out that way. So, we are looking for
a social security system, where everybody gets a minimum payment, which
is equal to the minimum pension or unemployment benefit, and also help those that cannot afford to rent a house. Anyhow, hereunder I am reposting an article that I wrote a few years ago about the social security system.
Dear readers, we
believe that the Australian Social Security System must be equal for everybody,
but it is not, as we have said in our previous articles, which had something to
do with the Australian social security system, starting with, Farming Today Is
Still a Risky Business, then, Australian Social
Security, then, The Australian
Parties, then, Australia can do
better than this, and then, The Assets Test
Dilemma, now in these articles we were talking about how the Australian Social
Security System works and helps people. So, we have found that the Australian
social security system, is good but not perfect, since some people cannot
receive it for one reason or another; therefore, the social security system
needs to be changed, to fix these unforeseen failures to help. Australia cannot
claim to have a good social security system, when it fails to deliver help to
those that need help.
Having said that,
now we need to come up with an answer for this
social problem, because, the Australian Social Security system, must be equal
for everybody. We believe that everybody in the community must be given a
minimum of help, when they need help. So, we are going to write and suggest our
views, hoping that somebody important reads them and does something about it.
Now, what we want
to write here is not going to be popular, because it criticises the existing
social security system, since it says that it is not good enough, they need to
avoid what is happening to the farmers, so, they must put in place a better
system, where people in need are helped. So, let us imagine and talk about a
social security system that can guaranty that.
----------------------------
Talking about the
ideal social security setup.
What we are writing hereunder is an idealistic way for the social security system to adapt, if they can. But it is unlikely that this system can be approved now, because Australia cannot afford it.
We believe that all legal citizen that are unemployed or don’t have any income, must be granted from the government an amount of money that is equal to the minimum government unemployment benefit or pension, it would be like receiving a small wage from the government. Now, we believe that this is what is needed in Australia, and we believe that one day can be done, if we can organise ourselves to achieve that, after all Australia is supposed to be a rich country.
The people that can
benefit from the change.
The people that
will benefit from this change, are those people that today don’t receive any
payment from the government, and those people that don’t receive enough, so,
they are forced to live below the poor threshold. In this case the poor
threshold is set, as equal to the minimum government pension that today is
about, $900 per fortnight for a single person, or $700 each for a couple. This
is the minimum of money that people need to live, and we believe that it must
be equal for everyone.
As things stand today, there are people that must live with less than the minimum government pension, because of the anomalies in the system. One of those anomalies is caused from the assets test, where the pensioners receive a smaller pension, the rest of their earnings is supposed to come from their assets, which are supposed to earn about 7.8 %; but most of the rental properties, can only earn about 2%, as we have shown you in our previous article, The Assets Test Dilemma, where a house valued at $650,000 did only make $8500 in a year, which is about 1.3%. So, we believe that the assets test on rental properties must be set according to what they can earn, if the government believes that we need mums and dads to invest in rental properties and keep the Australian real estate market going.
My views are that
the assets test on rental properties, must be set at a level, where it is
possible for the owners, to earn at least as much as they loose from the
pension. Now my views are that the assets test on rental properties should be
one third of what they are now, so that the pensioners will lose one dollar per
thousand, instead of three dollars per thousand. But even this might not be
enough, you see if you have a property valued at one million dollars, you
cannot receive any pension. The question here is; will this property earn the
owner about $24,000 per year net. I don’t think so. This is why today there are not enough rental properties on the market.
-----------------------------
The property
owners’ other problems.
As we
have seen in this article and our previous articles, to own a rental property is a problem and
not a benefit, because people lose their pension or unemployment benefits, so,
to own a second property is not the way we should plan for better retirement,
since the assets test reduces the pension payments to more than what you can
earn from those properties.
But there are more
negative things in owning a rental property, the worst of all is the land-tax.
The land-tax in Queensland is $1.7 per thousand, this means that if you have
land valued it one million dollars, every year you must pay $17,000 to the
government just because you own this land. They don’t give you anything at all,
you just must pay, because they need the money.
Some people still
believe in owning properties, because their price go up all the time, so, they think
that they are better off having properties, you see, they don’t realize that
there is this gain tax that will take away all their earnings and more, let me
give you this example.
You own a rental
house that you have bought several years ago for $250,000, which was the right
market price, today you must sell the rental house, because you need to move to
another town, where houses are about the same value, so, you think that it will
be easy; you sell the house for $650,000 and you buy another one about the same
price. But that is not going to happen, because the $400,000 dollars that you
have gained is taxable. This is called the gain tax, which may well be around
$100,000, it is hard to be more specific. So, in this case you may lose
$100,000 dollars because of the gain tax.
The figures in this
article, might not be correct, but they are close enough to what they are
supposed to be for showing our views.
This is all I can say today; this setup is not fair for anybody that owns properties, because those properties in the assets test, cannot earn half the money that they will receive from the government pensions or other benefits if they had no properties. So, for them it would have been better to have no properties; since the assets test affects the pension and other benefit adversely.
So, people are
discouraged to own properties and to save for rainy day, because there is no
benefit to own them, since they are going to lose and not to gain. Here we are
asking that the scale in the assets test for properties, be set in
a way that gives the property owners a chance to earn at least as much money as
they lose, from the government benefit. It is not fair that people lose money
because they have worked hard, and they are running a rental service to the community.
From what we have said above, you can clearly see, that the reason why there are not enough rental properties on the market is because, the ASSETS TEST needs to be abolished, or set at a much lower level, so that it would not stop the people from investing on rental properties.
Anyhow, this is all what I can think about today. I believe that at least I have pointed out what in my views needs adjustment. Because we believe that, the Australian social security system must be equal for everybody.
This is all for this article, see you in our next article, Australia Rental Affordability Issues.
To see more and the original article click on this link, The Australian Social Security Must Be Equal
------------------------
NOTE. This article above, is the link to the following article, Australia rental issues. This article is also the fifth article of a group of articles that we want to publish. The aim of these articles is to demonstrate that, the Australian Social Security System fails to help those that need their help. And we believe that it must be equal for everyone. The greatest problem is created by the assets test anomalies, so, the ASSETS TEST must be abolished or adjusted, so that those anomalies are eliminated. Because this is one of the reasons why, there are not enough rental properties on the market. But the greatest problem is that the politicians do not see it that way, and want to make laws that would stop anybody to invest in rental properties, so let me explain.
For me there are three main things that the government can do, to come out of this rental crisis: give more rent assistance to the low income earners, abolish the assets test on affordable rental properties and low other levies, so that the small investors can keep renting at affordable price, and stop foreign ownership on rental properties, that is pushing real estate prices up, and the rental market must follow to go up, because the properties cost more.
Some politician believe that the government should build, affordable rental units to solve this rental crisis, but for the government, to build an infinite number of affordable rental units, is not practical, because it will cost the tax payers several times more than helping the present rental set up, as we have suggested above.
To read all the blogs of this selected group click on this link, http://menfranco.blogspot.com,
----------------------------------
No comments:
Post a Comment