Source – Loan Market 07.05.19

Who do I vote for? A quick guide to the Federal Election

With the federal election fast approaching, there is one thing on everyone’s mind as we head to the polls on May 18… who do I vote for? With policy back-flips, leadership spills, impending tax breaks and tax increases, it’s almost impossible to get a clear idea of who is doing what, for who and when.

Un-muddling political waters is tough when you are trying to decide who to vote for and which policies will impact you the most. There are policy divides between the two main parties, pros and cons for each, that will certainly affect how you secure money in the future, property investment and small to medium businesses – all fundamental areas that will impact our everyday lives.

So, I’ve answered some of the burning questions my customers are asking me, plus added a pros and cons breakdown for the major parties. Keep reading on to make sense of what the election could mean for you!

What will happen in the broking industry, will there still be mortgage brokers?

Yes, of course! The broking industry has definitely been through a whirlwind on the back of the Royal Commission and adding the federal election into the mix makes it all the more spicy!

I’m confident I can offer you great customer service no matter who is elected, but the reality is that the parties aren’t seeing eye-to-eye on the industry;

Under the Coalition, mortgage brokers will continue to be paid the same with upfront and trail commissions, i.e. your chosen bank pays me a sum upon settlement and then some across the life of the loan.  This will continue to motivate brokers to develop their relationships with customers throughout the life of the loan for repricing, product switches, security substitutions and managing customer enquiries, questions, complaints about the bank and everything in between. Remember you can reach out to me at any time.

Labor has taken a harder stance on brokers as the scapegoat of the royal commission, banning trail and introducing a 1.1% cap on upfront commissions. This is a quick fix and a short-term cash flow benefit for brokers, but what does it mean for you?

Banning trail will have a big impact on competition in the lending landscape, especially on small lenders, as many rely on mortgage brokers to sell their products. In a dwindling lending market, the amount of competitive offerings for customers will decrease and they may not get the best possible home loan for them.

What about the financial services sector, will I still be able to get a loan?

No bank wants to be the first to get in trouble from regulators, so they have and will continue to impose stricter lending standards on home loan applications, making it harder for Aussies, like you, to access home loans.

I see my role as a mortgage broker as pivotal in ensuring that you and my customers are able to navigate through the strenuous process of securing a home loan.

The Coalition continues it’s fight with the big banks and financial misconduct, enhancing the responsibility and funding of industry regulators to better protect consumers.

Labor will tax the big banks and introduce a $160 million per year banking fairness fund and they will double the amount of financial advisors that are accessible for Aussies.

With the housing market declining – is now the time to invest?

Housing prices continue to drop across Australia, impacting homeowners, renters and investors. In the Coalition’s federal budget, there are no changes to negative gearing or the capital gains tax – two key incentives for property buyers.

But there is a gap. To improve property prices, we need more investors. Investors are key to the revival of the housing market, and the Coalition’s lack of incentive for Australian’s to get into the property market could further hurt house prices.

In its defence, the Coalition is pledging a $100 billion investment into transport infrastructure which will create new investment opportunities in areas with improved roads and public transport.

Now to Labor’s position on housing… Labor’s proposed changes will limit negative gearing to new investments only and will halve the capital gains tax discount. This is one of the hottest topics leading up to the election with Citibank Australia claiming that Labor’s policy could “accelerate the cyclical weaknesses in housing prices”, similar to what we saw when negative gearing was abolished in 1985. So, why the change?

Labor claims that the current arrangement benefits high-income earners and prevents first home buyers from entering the property market. Labor’s‘ plan for housing affordability’ will limit the tax breaks for investors, and drive investments away from established urban areas and into new housing developments. Some predict this will increase housing supply, and create more jobs in growing communities, while others predict a crash

Will a change in government affect small business?

Small to medium businesses are the bedrock of our communities so an important question for every business owner (and Australian) when leading up to an election is how changes could affect our smallest businesses!

Changes in federal policies can have a big impact on small business and thankfully, there is some confidence as we head to the polls as both parties have pledged their undying support for small Australian businesses, with intentions to create more jobs and boost the economy.

Loan Market Group Executive Chairman, Sam White had this to say about how government can effect family businesses; “As the owner of a 100% family owned business for 25 years, I can appreciate the effect that a federal election can have on a growing family business. It can be an uncertain time, and it’s important that before you go to the polls you understand which policies will benefit you, and your long business term goals” .

Both parties will provide tax breaks to small businesses with the reduction of the corporate tax rate, and increase the instant asset write off. business owners, you will be able to invest in the equipment that you need and claim the write off (as long as the asset is under $30,000), saving businesses those precious $$$ to spend elsewhere – normally investing back into our communities

The Coalition will also introduce two funds to support small to medium Australian businesses:

$2 billion Australian Business Securitisation Fund

$100 million Australian Business Growth Fund

Labor’s appeal for small business’ is the introduction of a permanent ‘Australian’ investment Guarantee, which will allow the immediate deduction of new investments assets above $20k. This gives business owners more room to invest, increase their business spending and grow.

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As you can see, there are pros and cons for each policy from both political parties. Before heading to the polls on May 18, take extra time to weigh up your options and decide which policies will work best for you. It’s a big decision, but rest assured, we are all in the same boat!