The HIA Economists have reviewed both the federal and state budgets.

Read on for their thoughts on the the Federal Budget. I will post another blog shortly on the HIA view of the State budget.

An Overview recognises that the 2014-15 Federal Budget sets out a clear and credible path to get the budget back to a position of balance and then surplus. In this regard the budget is a positive for business confidence and hopefully in due course, business investment.

There is no denying that this is a ‘tight’ budget. There will be some negative impact on economic growth. The budget relies heavily on spending cuts to achieve its targets. Consumer confidence will almost certainly be damaged by this budget.

Firstly, the budget is sufficiently ‘tight’ that any modest prospect of the Reserve Bank of Australia starting to raise interest rates from late in 2014 has effectively been quashed. There is now also a higher chance that the first increases to interest rates may not occur until later in 2015.

Secondly, while fiscal policy has been tightened, the extent of this tightening is relatively modest.

Specific Budget Measures Related To Residential Construction

Many of the new measures included in the Federal Budget for 2014-15 that will have wide impacts will be covered extensively in the mainstream media. These measures include welfare changes, the reduction in the company tax rate and the Budget Repair Levy.

Cessation of National Rental Affordability Scheme (NRAS)

The federal government will not be proceeding with Round 5 of the National Rental Affordability Scheme. Funding for incentives from earlier rounds that are uncontracted or not used within agreed timeframes will be returned to the Budget. Funding for tenanted NRAS properties is not affected.

Cessation of the First Home Saver Account Scheme

Due to lower than forecast take-up rates the program will be discontinued. The government will cease making contributions from 1 July 2014 and tax concessions and the income and asset test exemptions for government benefits associated with these accounts will cease from 1 July 2015. Accounts will be converted to regular savings accounts by the financial institutions in which they are held.