I've been meaning to write about this 'package' for a few days now but just haven't had the time. The government has decided to spend $4 billion on a bailout for the commercial property sector. I haven't gone over the fine print or legal details but I don't need to -- It's a mistake.
- I smell a bubble!
With the collapse of the financial and household sectors it makes perfect sense that the commercial property industry will suffer as well. With hundreds of thousands of "suits" now out of work and companies failing left, right and center, there's a hellofalot of office space suddenly vacant! Add to that the fact that commercial property bubble has been fueled by the same reserve bank induced debt-binge that has affected every other sector and its collapse is INEVITABLE! All this subsidy will do is delay this event from happening!
But no, the government feels that this industry is too "important" to go broke. In effect, they have agreed to transfer wealth or income from some other area of the economy straight into the pockets of the bankers -- as if they needed any more! The taxpayers will lose precisely as much as these bankers will gain. As another consequence, other industries (the more productive ones) will now be that much smaller than they normally would have been. This inefficient money-grab, the forced diversion of labour and capital from more efficient industries into this inefficient, artificially-inflated sector, will result in less wealth generated for our nation and a lower (average) standard of living.
Luckily, Malcolm Turnbull has (accidentally?) decided to fight this package. In his words:
"I have to say I don't think its prospects are very promising from our point of view," he told Fran Kelly on Radio National Breakfast.
"Let's see what they finally present but as it's been presented by the Government, the Government has misrepresented it.
"It's simply about Mr Rudd wanting to use our taxes to help refinance borrowings on existing buildings to prop up asset values."
Whatever his motives may be, lets hope he's successful in blocking this theft.
