Turnbull federal budget could wipeout Townsville property owners

Image: Cartoonist, Dave Pope

The Turnbull-Morrison federal budget could wipe out many property owners who are hanging on to their investment properties in the Townsville district by the skin of their teeth, enduring sustained cash flow and equity declines over the past 5 years.

Not to mention the property owners (investors and owner-occupiers) whose fate has already been determined, falling victim to the steepest economic and property decline in financial terms in local recorded history.

Many are local residents that have lost their jobs or businesses, foreclosing with the banks or filing for bankruptcy. The highest occurrence of bankruptcy across the entire country has been experienced in Townsville.

Significant numbers of property owners are living from hand to mouth constrained by the debt imbalance. They are incurring losses from which negative gearing and a reliance on taxation refunds are their only salvation.

Despite the Property Council of Australia's (PCA) influence on this budget, the threat at the next election of a more extreme left-wing policy of reducing or eliminating negative gearing, has become a haunting possibility as the country strives for more revenues.

Green and left-wing extremism are likely to swing ordinary voters against the rise of Trumpism and Turnbullism. More anti-business and anti-corporate campaigns like Getup's malicious campaign against Adani coal is an ideology with heavy domestic and international support.

Although a seemingly senseless policy to any economist, a change of government, could be the armageddon for property owners if the Townsville economy continues to dance so far out-of-step with national economic trends and federal fiscal policy makers.

Also, Townsville governance organisations threaten the investment pipeline of the City in the short term, as the Turnbull government has a deep thirst for the "City Deal" mega data deposits from the Internet of Things (IoT) system. Under the contract by Mayor Jenny Hill, the "no data, no deal" is setting Townsville Enterprise up for restructuring or imminent redundancy.

The federal budget announcements targeting big-ticket infrastructure and taxation concessions using superannuation and negative gearing for managed funds to address housing affordability in Sydney and other capital cities is a dumb policy. This is really irresponsible on Townsville North Queensland given the recent and ongoing pain and suffering.

Despite Townsville Enterprise foolishly appealing for more new housing development to meet projected population growth, in other words increasing supply, North Queensland and Townsville districts do not need a housing affordability policy at the forefront of the public agenda when business investment and jobs are what is needed the most.

Instead, a more prudent priority for Townsville district is to seek microeconomic solutions such as the Tax Increment Financing (TIF) scheme, as proposed by the PCA. This is backed up by the Northern Australia Development Facility, with strong and robust relationships, with leading boards and executives of large enterprise both domestically and internationally.

Apart from births, migrations, and immigration, the focus on value-add industries securing property for development in Townsville's Council district, is Townsville's only leverage under the "City Deal" contract, to attract significant federal and state government investment.

The New Residential Land Sales and Supply chart clearly shows the surplus land stocks in Townsville districts.

In his address to the media, the Treasurer Scott Morrison said, "it's not a silver bullet – nor is it intended to be", referring to his federal budget and the media anticipating a fix all budget.

Ironically, this is exactly what this budget is. A silver bullet for property owners being put out of their misery if these measures strike to achieve more housing affordability in a market plagued by asset value declines.

Unemployment rates in Townsville are at 11 percent and the broader economy of regional Australia is hurting from the downturn in mining activity and substantial increases in energy prices.

The centre-point of the budget, being that it addresses housing affordability, could move the sentiments of distressed property owners and buyers to protest and disrupt the political will of what is perceived to be a puppet's play.

This federal budget reaffirms the concerns of local representatives that the Federal and State governments are capital city-centric. They are driven by votes instead of delivering "a fair go for all Australians", which Mr. Turnbull promised in his preamble to this budget.

The Turnbull-Morrison federal budget will go down as the most politically safe budget in coalition history. In fact, many commentators are saying it is a labor policy budget with terms like "centralist budget" and "not traditional liberal".

The Liberals are fully funding social programs such as the National Disability Insurance Scheme (NDIS) and increasing taxes on the banks.

The banks, of course, have already said they will pass on the cost increases to every mortgage holder in the country. As the big four banks have done in recent times, they are well within their rights to act independently to raise their interest rates and fees.

Once again for Townsville North Queensland, the people are being asked to pull up the smelly socks of bad government leadership. Meanwhile, a liberal government slips into their fresh uncharacteristically labor-like federal budget cotton socks to attract votes from the capital cities and the left-wing media establishment driven by ratings and polls.

Even financial and taxation professionals are labeling the budget as a "good strong budget" as there are no additional personal or small to medium size enterprise (SME) tax increases announced. Superannuation by and large has been untouched. 

Just as the people have grown to expect smoke and mirrors from a political funding announcement, the Turnbull-Morrison duo is being socially responsible and hitting the big end of town just like the Labor opposition policies were proposed to target.

By design or coincidentally, it is likely Bill Shorten has been taken out of play in this budget. Not only in policy terms. But it is effectively the "Bill Shorten execution budget".

Shorten's electability, not just as an opposition leader but Labor candidate in the seat of Maribynong, has taken a direct hit with 127 hectares of defense land in his own electorate in Victoria being made available for 6000 new affordable homes under this budget.

Is Mr. Shorten's political career finished? Mr. Turnbull would hope so, if the cold shoulder he gave him in front of the media the morning of the budget announcement is any indication.

Putting the political undertones aside, what if Sydney, Melbourne or Brisbane had an unemployment rate of 11 percent with a median house price of $337,000 for houses, and $272,000 for units? Would the federal budget be focused on housing affordability? Absolutely not!

The House and Unit Prices chart below demonstrates the decline of values and stable affordability environment in Townsville districts. 

Economic stimulation with tax breaks, grants, and infrastructure investment spending in the regions would be high on the agenda. But not this politically and socially sensitive government.

Its focus is on self-preservation. Obviously seeking to secure the next election with capital city and regional Victoria and New South Wales voters, who are set to benefit from the new $20 billion rail corridor from Melbourne to Brisbane.

With a consolation prize of relatively minor funding, allocated to repairs and maintenance to the Bruce Highway and disaster relief from cyclone Debbie, nothing positive from a Townsville perspective can be said about this budget.

When we look at the median property price for rentals in Townsville, it makes the federal budget's focus on affordable housing look like a joke.

For example, a three bedroom house in Townsville is currently being rented for $290 per week. This is a decrease in the housing price of 6.5% in the last 12 months, with the housing price already starting from a low base and dropping consistently from nearly $400 per week in 2012.

Considering the massive uncertainty in the superannuation sector over recent budgets, the mobile and rental accommodation being so affordable in regional Australia, the elderly are anticipated to snap up the $300,000 per person superannuation top-up option in this budget.

Once again in a Sydney context, this policy might make sense. But in Townsville, adding more supply to an already distressed housing market is like igniting high octane fuel in a fire of despair.

Unless local governments and marketing experts in Townsville and North Queensland target the elderly in the capital city markets by offering comparable or upsize value strategies such as a clean, affordable and healthy tree-change lifestyle, this budget measure is more likely to be detrimental to Townsville's property market.

The likely result is more housing supply as our elderly residents will seek to cash in. This breeds more unhappy owners because the further downward pressure will be put on median house prices.

In addition this budget also, the federal government will establish the housing finance corporation (HFC). From July 2018, the HFC will offer long-term, low-cost finance to community affordable housing providers. Investors are assured to get rental payments from the government with direct deductions from welfare payments transacted to investors.

It's the $1 billion National Housing Infrastructure Facility (NHIF) that is of particular concern in the hands of an inept local government being charged with developing business cases, to win funding and then administering the funds through community housing contractors.

Desperate for new home developments that attract increased revenues, council rates and economic stimulation, the NHIF program in Townsville will have Mayor Jenny Hill and Townsville Enterprise salivating at the mouth.

However, this social housing initiative will be disastrous for incumbent property owners in Townsville based on the accumulated evidence from the NRAS (National Rental Affordability Scheme). The now abolished Labor government NRAS program was a disaster back in 2013, its legacy is still being felt across the City.

Then, NRAS was the catalyst for the sustained fall in rental prices and subsequent fall in sale prices across the City. This combined with softer global commodity prices and carbon tax policies, Townsville's property economy has been impacted by catastrophic losses ever since.

Furthermore, affordable housing investors are being offered a possible 60% discount on capital gains if they build new housing projects with the condition of pricing the accommodation below market prices to low-income tenants managed by a community housing provider.

This is NRAS rebadged! All be it with a 40% less capital write-off, but with a more favourable incentive to control rental cash flow directly from welfare payments or employer direct contributions.

NRAS created a false economy and drove free market prices down just as the combined housing affordability initiatives are now likely to do.

The NHIF is based on the UK model aiming to assist local governments to develop new homes and apartment blocks. For Townsville North Queensland, the combined measures of NFIC and NFC are unfavorable with property prices already falling substantially over the past 4-5 years. NRAS Mark II is what this federal budget is delivering.

But that is not all, a separate Trust is being established by the federal government to encourage both foreign and domestic investors to invest in affordable housing in Australia. 

On one hand, foreign investors leaving properties vacant are being penalised $5,000 in capital gains in this budget, while on the other hand, the government opens up a larger pie for taxation write offs by directing their attention to public housing infrastructure.

In principle, this is a smart measure if it were applied to foreign investors directing their capital into regional manufacturing and new enterprise initiatives that create "value-add" to Townsville's enterprise infrastructure. 

Knowing the influence of Townsville's infamous property development moguls with land to burn (as shown in the New Residental Land Sales and Supply chart above), and a local council habitually grovelling for new subdivision applications, the depth and intensity of the housing affordability measures in the federal budget are bewildering.

To drive the nail in the coffin even further, property owners who claim travel expenses on their tax returns for inspecting, maintaining or collecting rent on their rental properties will no longer be allowed after July 2017.

Consider the fact that over 40% of Townsville's total housing supply are rental properties owned by investors, many travel to Townsville to check on their properties.

With current property yields declining and debt-to-equity ratios increasing, the federal budget is indirectly targeting the 3rd largest contributor to industry output in Townsville's $30 billion economy, this being the "Rental, Hiring and Real Estate" sector at 9.4% (Source: REMPLAN: Dec 2016). This is an industry contributing $2.8 billion per annum to the Townsville economy.

Under prudent management rationale, this budget would normally bring opposition kicking and screaming. But not a whisper from the incumbent Labor representatives in all local, state and federal seats across the Townsville districts.

Patricia O'Callaghan, Townsville Enterprise (TEL) CEO, confirmed in a statement to the Townsville Bulletin that the budget did not address any of the priority initiatives outlined by TEL in their pre-budget wish list. Yet she praised the Smart City Deal initiative and pledged to work with the federal government. 

The property owners and investors of Townsville North Queensland have been left with more questions than answers from this federal budget. With this fresh analysis undertaken by TREN, the property owners and stakeholders of Townsville North Queensland can forge a conclusive understanding of the impact from the federal budget on local real estate investors and owner-occupiers. 

Do you have an opinion about the federal budget? The TREN community wants to hear your story.

High profile politician buys Townsville shopping complex

Image: Mr Dutton and wife Kirilly Dutton 

Australia's federal Immigration Minister, the Hon. Peter Dutton has purchased a multi-purpose retail, medical, consulting and office space complex in the Edison Plaza shopping centre at Wulguru, just off the Flinders Highway south-west of Townsville.

The suburb has been earmarked by TREN as one of the hotspot locations in Townsville with its proximity to the army base, university, Cluden Park horse racing, commercial retail including Bunnings, Woolworths and variety stores, heavy industry transportation facilities, the Stuart correctional centre and the proposed 25,000 resident development of Elliott Springs.

Image: Edison Plaza Wulguru

The Edison Plaza complex is adjacent to the Wulguru State School. The commercial property is reportedly netting approximately $104,000 per annum with a current vacancy of approximately 10 percent. Fully tenanted, the complex has a nominal net yield of approximately $140,000 per annum.

The property was marketed and sold by Elders commercial agent, Glenn Adair with a 752m2 floor area on nearly 1 acre of land. The Edison Plaza complex includes eleven tenancies with 52 onsite car parks and drive-through access.

Image: Google Maps, Wulguru, Townsville

This investment brings the couple's property portfolio to five properties across Queensland and the Australian Capital Territory with the most audacious being the property at the Gold Coast's Palm Beach for $2.3 million.

Mr Dutton is an ex-police officer mainly working in the drug squad for Queensland Police. He was elected to federal parliament in 2001 as the member for Dickson, a suburb north of Brisbane. He famously unseated then Australian Democrats Leader turned Labour Party member and MP, Cheryl Kernot.

In his maiden speech to parliament, Mr Dutton said; "As a police officer, I have seen the best and the worst that society has to offer. I have seen the wonderful, kind nature of people willing to offer any assistance to those in their worst hour, and I have seen the sickening behaviour displayed by people who, frankly, barely justify their existence in our sometimes over-tolerant society."

Described by a former flatmate that "not everyone loves him, that's for sure". He is also described as being smart, charming, funny, astute, duplicious and articulate.

The Edison Plaza property was a sale by private treaty for $1.1 million and was on the market for nearly a year and a half. Mr Dutton and his wife Kirilly paid $760,000.

The couple has two sons, Tom and Harry, and daughter, Rebecca. The couple reside in their family home at Camp Mountain, north of Brisbane and are not expected to relocate to Townsville, North Queensland.

Townsville at War with "Getup" extremists moving on Townsville

GetUp staff and National Director, Paul Oosting
Image: Thanks to The Mercury

Extremist environmental campaign organiser, Getup, their associates the Australian Conservation Foundation and corporate backers, such as businessman Geoff Cousins, have taken up a war footing against North Queensland businesses and citizens with the placement of advertisements for three field coordinators on the ground in regional Queensland.

The aim of the political lobbyists is to manipulate the minds of "constituents" in the region. Backed by global media and the extreme left movements, while shifting the focus away from their diminishing support for climate change and unvetted asylum seeker policy, they have 100 percent directed their resources onto the higher profile and socially sensitive Great Barrier Reef, a key pillar in their national political agenda.

But really their sights are fixed on the destruction of the Adani coal mining companies, the Carmichael mine, and any organisation or representative in favour of the projects such as the Mayor of Townsville, Jenny Hill, Queensland Premier, Anastacia Palaszczuk, Prime Minister Malcolm Turnbull and the Pauline Hansen's One Nation Party.

Queensland MPs, Premier Anastasia Palaszczuk, Adani CEO and Mayor Jenny Hill announce Townsville as Adani coal mine headquarters
Image: Thanks to ABC (Port of Townsville)

All of whom have backed the projects and the $1 billion low-interest loan through the Northern Australia development fund.

Responding to the community's call to take urgent action on creating jobs, the bipartisan political approach is seeking to cut serious crime, such as the wasteful deaths of two innocent grandmothers, and improving the lifestyle assets of the community and build new water infrastructure.

The Sydney Morning Herald (SMH) reported this week that "The power and reach of the Adani Group are legendary in India. But the group's subsidiaries have also faced allegations of involvement in fraud and corruption, environmental destruction and labour exploitation."

SMH reporters Nick McKenzie, Richard Baker and Peter Ker commented that "A recent ABC investigation into the conglomerate focused on ongoing investigations by Indian authorities, widely reported by the Indian media, into alleged money laundering and tax fraud by Adani subsidiaries." The investigative trio then went on to say, however, that "The federal resources minister described the ABC report as "fake news" and said the allegations were untested."

The primary aim and conditions on the $1 billion funding are to be invested in a major rail infrastructure corridor from the mine site to Abbott Point, south of Townsville.

In this new and disturbing announcement by Getup to deploy three field organisers to the region, their aggressive nature and covert tactics of the campaign have become apparent. 

Targeting their own members, lobbyists, funding institutions and courts, now they are directing resources towards "constituents", the people, who are mostly unaware of the extreme left lobby organisation and the coercive pressure campaign being brought upon the 200,000 citizens of the City.

By and large after failing in the political and legal arena, Getup is going to attempt to wake up the electorate with protest, propaganda and further promiscuity, asking the voters of Townsville and every marginal seat in Australia to vote in favour of the Great Barrier Reef over "dirty coal", or cause politicians and the Adani company to back down.

On a national election level, the green vote from the capital city seats of Melbourne, Adelaide and Hobart are powerful. Yet the source of program paralysis under the Rudd and Gillard governments.

Queensland is a different proposition with two country politicians, one regional and one ex-liberal candidate controlling the balance of power in the Queensland parliament, meanwhile, Getup's political campaign so far against Adani has failed. 

Image: Getup website advertisement

At least that is what one would think given the federal court rulings upholding the approvals for the mine. But Getup doesnt get it!

They said they are; "developing, refining and implementing a community campaign that engages volunteers and shifts the minds of constituents around the Great Barrier Reef and Galilee Basin coal mines", including "getting members out for regular field tactics; including events, stunts, community stalls and letterboxing." as shown on their campaign's website.

Image: Getup website advertisement

As rampant unemployment and bankruptcies have traumatised the population of the largest population centre in North Queensland with 25,000 people exiting the City due to a jobs recession, the anticipated pain and suffering of its people are expected to continue on the actions of the Getup executive team led by National Director, Paul Oosting.

This time, instead of the unemployment being caused by unintended economic consequences from declining commodity prices and the Global Financial Crisis, the citizens' continued pain could be attributed to the irresponsible and malicious actions of an extreme political lobbyist group seeking to acquire more power and control on global cultures, and centres of western democratic power.

Getup, formed by Jeremy Heimans and David Madden as a politically left movement to ambush and cajole the two-house majority government of Prime Minister John Howard in August 2005. They cut their teeth obstructing political parties, even at the expense of their own integrity, opposing the Gillard government's carbon tax which most ordinary people thought was favourable to their own environmental agenda, reducing carbon emmisions.

Since then they have developed the most powerful environmental political lobby organisation in Australia using military-style tactics to disrupt opposition supply, sabotage their assets and manipulate the media.

They use unfounded and time-discredited science and "fake news" to maintain the bleeding hearts of over 1 million followers and win more cultural and social support to "maximise their power". The point of political leverage is the May 2018 State election and the 11 marginal seats in Queensland.

Despite the favourable arguments put forward for the Adani coal mine and recently proposed coal-fired power station to be built in North Queensland, supporting sustainable industry and employment opportunities, the upcoming 2018 election could hinge on less than 1000 votes to bring the usually left-leaning Labour Party into coalition, should they regain power beside a kindred green movement.

Getup's Miriam Lyons said; "For example, it would take just 532 votes to change the outcome of the seat of Forde in Queensland."

The fully paid position description of Getup's Field Coordinator, astonishingly similar to the structure of a military operative, will be located on the ground in Townsville. The audacious and very calculated outline of the type of individual they aim to attract is described in their job advertisement.

Image: Getup website advertisement

Back in 2015 west of Casino in New south Wales, Getup creative director Simon Duncan-Watt was allegedly captured trespassing by a security camera installed by the mine site operator.

In an unrelated matter, Metgasco said: "security camera equipment at three sites was damaged last weekend." Metgasco alleged an intruder visited a number of well sites, removed batteries and memory cards from the cameras and disabled the equipment." (Scott Harlum, Northern Star).

Getup's operatives admitted, "I undertook these actions as I feared that no government agency was out to protect the public and landowners."

Brendan Pearson, CEO of the Minerals Council of Australia said; "the anti-mine campaign amounts to 'futile grandstanding' that will only delay job and business opportunities for thousands of Australians."

From a real estate perspective, the threat to economic recovery and negative attention directed toward Townsville due to the green agenda, even though rebuffed by the federal government and the Townsville Bulletin's Editor in favour of Adani and a new coal powered station, could cause further uncertainty and damage to the increasing confidence in the business community.

For the majority of Townsville and regional Queensland communities seeking a favourable change in their economic prospects from the god-gifted coal resources and associated mining infrastructure projects in their backyard, which have already received unprecedented environmental scrutiny and approvals, the Getup campaign along with the discredited green and extreme left movement could be facing the final nail in the coffin of an ideology already failing and losing influence.

As late as 2016, Getup in their own submission lobbied to have all political donations over $500 made public and all foreign donations to political parties to be banned, then for the inquiry to learn that Getup had themselves accepted $300,000 in foreign donations.

This most disruptive and insensitive campaign to cripple Townsville's and regional Queensland's hopes for a better future by an undemocratic political non-profit organisation, with a dodgy financial and moral past, has become very personal to lots of locals, their families and thousands of their sympathisers.