Monday, February 06, 2006

Politician Logic...

Are our politicians educated in any way? Or do they make these calls just to get their name in the paper and to show their electorate they might actually be doing something?

Have a read about the latest idea from a politician (Queenslander no less):
THE Federal Government is under pressure from its own ranks to more than double the first homeowner's grant.

Queensland Liberal MP Steven Ciobo said the grant, introduced at the same time as the GST to boost home ownership, should be increased from $7000 to $15,000.

Mr Ciobo, a member of a coalition group lobbying for tax reform, said the grant's eligibility criteria should also be tightened to ensure it does not go to wealthy people to buy multi million dollar homes.

"It is the great Australian dream to own your own home, but unfortunately for some it is not within reach," Mr Ciobo said.

"Prices have gone through the roof over the past five or six years placing home ownership out of reach for many first home buyers.

"The $7000 grant now available to first-home owners does not provide enough assistance, particularly now when Australian real estate is among the most expensive in the world."

Mr Ciobo said almost one in 10 Australians spent a third of their pay on rent and were not able to put money aside to buy their own home.

"Increasing the home buyer's grant to $15,000 will help tens of thousand of people exit the rent trap to buy their own place."

If you are not able to put away money after paying rent you cannot afford a mortgage. Sure people would like to buy a house but if you cannot afford to save money after paying rent, you definitely do not have enough to cover a mortgage.

Nevermind the effect of giving people free money will have on the housing market. When the first homebuyer grant came in, the building industry added $7,000 to the price of new homes almost instantly and established home values also made the $7,000 jump quite quickly. As soon as there is increased demand, prices will rise, it is simple economic theory.

Where does it end? After the $15,000 grant has been in place for a while and been absorbed into existing prices we are all back to square one.

Call to double homebuyer grant - Top stories - NEWS.com.au

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