MARK Latham might be Federal Labor’s head-kicking attack dog but at least the thinking he does out loud sparks the occasional policy debate.
MARK Latham might be Federal Labor’s head-kicking attack dog but at least the thinking he does out loud sparks the occasional policy debate.
It’s a strategy an awful lot of politicians – both in power and opposition – would do well to emulate.
Mr Latham’s latest offering is on nest eggs for our youth.
This is an increasingly emotive issue that has been driven by the housing boom, which the doomsayers would have us believe is rapidly changing the Great Australian Dream from home ownership to eternal serfdom.
Mr Latham suggests that the Federal Government put aside a modest sum (with families contributing on a tax-protected basis) for our children’s futures.
His offering allowed this to grow to the princely sum of $10,000 by the time they were 18, which would then be accessible for activities deemed sensible such as education, a deposit on a home or even starting a small business.
My first reaction to this is to see another misdirection of resources.
As usual, governments – and the wannabes in the opposition – usually think in reverse. They tax you to the hilt then offer you a tax break or a subsidy for doing what you would have done if they’d let you keep the money in the first place.
Of course Mr Latham’s not thinking of Mr and Mrs Average, who have contracted a lifestyle-threatening disease called bracket-creep.
He’s thinking of the Battler family (getting back to Labor’s lost roots), and wants taxpayers whose children are already missing out on the benefits of their parents’ labour to fund assistance for even less well-off people.
Phew, at least we have a traditional Labor policy here, that’s a relief to some extent.
The real issue here is how this would help young people.
Only if Labor is planning to make university an up-front cost does this make sense as an option for using the money for tertiary education.
As for starting a small business, is this really a good idea? Can anyone actually start anything at any age, let alone 18, for just $10,000? That will be one for the white shoe brigade to capitalise on.
Then we get to property.
There is a lot of hype about this issue because many young (and not so young) people feel they are missing the boat when it comes to property and the huge capital gains to be made from housing investment.
This is a historic adjustment as Australia’s population growth and wealth starts to overwhelm the natural open spaces we had for expansion. No other Western country has our levels of home ownership, so it is quite likely we are seeing a shift to a market where many more people rent.
This is not entirely bad. Many financial advisers recommend this anyway and renting better suits many younger people whose careers increasingly involve flexibility in location.
And just how $10,000 is going to help them any more than the First Home Buyers grant beats me – in that case, I reckon the agents just added $7,000 to the price.
People just have to stop panicking about property prices, it only fuels more ill-considered purchases which in turn drive bad policy.
Owning a property is not a stairway to mountainous wealth, as many people are going to discover with further interest rates rises.
Only its capital gains tax-free status makes it anywhere near the winner it has been lately. But I doubt even Mr Latham would touch that sacred cow.
