No, I'm not suggesting that. I made an error in assuming that the value of the property would be the base amount used to calculate the additional tax liability. Thanks for pointing it out, and not being a knob about it.
I guess there is a balance to be struck, between accepting that people will want to stay in their homes, and enabling them to do that.
Preserving inheritence by providing welfare is not something I would support at all.
If people genuinely want to stay in their homes, then I think the government should provide some kind of guarantee to a lender of a reverse mortgage, on the condition that the lender is the irrefutable and indisputable senior creditor.
In the case of your 80yo, a reverse mortgage of $5000 per year over 20 years would work out to be about $174K in today's money at the centennial birthday. $30,000 per year would be just over a $1M.
I don't want to kick people out of their homes, but I don't want that to be an excuse for me subsidising their children's inheritance through my taxes. Because the alternative to self funding is death taxes, and I for one am not a fan.
------------------------------ " ... which is that all-too-familiar dynamic in Irish life where people tell lies, cover them up and create all sorts of collateral damage, sometimes spread out over decades, and never take responsibility." - Alan Glynn
I'm not sure that markets should be particularly worried about the unemployment rate 'shocker'. Certainly households shouldn't be -- many analysts don't even view the recent lift as reliable, given the sample rotation, survey changes and the fact that the data is very volatile anyway. But let's just say the figures are right -- even then, panic merchants should quieten down.
To see this, you have to think about the broader picture for the Australian labour market. Have a sense of perspective. The fact is, we are witnessing a transition phase. A move away from the pre-GFC period from 2003-2008 which was characterised by a number of booms -- a global growth boom, credit boom, housing booms, a consumption boom etc. That period was not the norm or the benchmark for comparison and I get the sense that policymakers and many commentators have forgotten this.
From the ashes of that credit-induced orgy, our labour market is trying to find its new equilibrium. That is, find a rate of employment growth and unemployment consistent with sustainable demand and a healthy economy. It's quite clear that in the build-up to the GFC, the global economy was not healthy; our economy was not healthy. As a result, those unemployment rates we saw around 4 per cent to 5 per cent can't be viewed as rates consistent with sustainable growth. They were the product of a policy-induced fiction.
The problem that we have today is that no one knows what the new 'natural' unemployment rate is. That recent unemployment outcomes have been whipped around by changes in participation makes it harder to define. Participation has been volatile and there are changes going on here that no one understands.
For instance, the spike in unemployment last week was largely the result of only a small lift in participation. If participation had been constant (that is, unchanged over the month), the unemployment rate could still be around 6 per cent. Similarly, it is these changes in participation that make all fear surrounding a 12-year-high unemployment rate completely disingenuous.
Twelve years ago, the participation rate was at 63.3 per cent. If that same rate held today, under the same conditions that we have today (i.e. no major job-shedding), then the unemployment rate would likely be between 4 per cent and five per cent. On the flipside, if we had a participation rate that held at its 2010 peak (65.8 per cent), then the unemployment rate today could be closer to 7.5 per cent.
So what's the 'normal' participation rate? No one knows. The drivers of labour force participation are extremely complex. The argument that the decline in the rate since 2010 is attributable solely to discouraged workers is useless -- by that logic the labour market is actually extremely healthy relative to 12 years ago, because participation is much higher.
Demographic changes (the ageing population, fertility rates), tax policy, welfare policy, childcare costs, house prices, changes in the structure of the economy -- all of these things and more affect the decisions of individuals to supply their labour to the market. There are even trends within trends.
Take the recent decline in labour-force participation from the 2010 peak. This has been almost entirely driven by men and, more specifically, unmarried men. We can rule out a discouraged worker effect, because this recent fall is actually a continuation of a trend decline in evidence since the 1970s. In the late '70s to early '80s, male participation was at a peak at around 80 per cent. Today its 71 per cent -- and that's split between married (83 per cent to 75 per cent) and unmarried (73 per cent to 64 per cent) men. The only reason unmarried men seem to be the drivers of the fall since the 2010 peak is because participation for married men appears to have stabilised at around 75 per cent.
Social factors are very obviously driving this change. As female participation rates have increased sharply, men no longer have the pressure of being the sole provider. This provides greater flexibility for men to opt of the labour market -- if just for a time -- to pursue interests like travel, retraining for a new job, volunteering, looking after the kids or just taking time out, for whatever reason.
Obviously these are not just options for men, but I am talking in the context of the male/female participation convergence. People choose to do these things, and increasingly they can because they either have the wealth or the dual income to do so. We are travelling overseas in record numbers; wealth is at a record.
All of this serves to highlight a fundamental truth: moves in the unemployment rate and participation which are not driven by job-shedding are usually harmless. Seen in this context, a temporary lift in the unemployment rate is of little consequence -- the unemployment rate is still historically low and jobs growth is robust -- and set to surge following the spike in construction, business conditions and confidence.
Where the participation rate settles is anyone's guess, but it is pointless fretting over the unemployment rate until trends in participation become clearer. Given Australia's ageing population problem, we should hope that participation rises -- the worse result is unemployment falling on the back of falling participation. Not because that would indicate a weak economy, but because we need more workers to replace baby boomers as they retire. It should be unanimous: unemployment is not the problem of today or tomorrow -- finding sufficient workers is.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
Youth unemployment has leapt to a 15-year high in Victoria, with the Premier's electorate hit the hardest by the worsening crisis.
An analysis of youth unemployment data reveals that the situation has deteriorated in 12 of the state's 17 regions in the past year.
Thousands of young Victorians from all backgrounds are finding themselves caught up in a spiral of unemployment, and the situation is particularly dire in socially disadvantaged suburbs of greater Melbourne and rural areas.
The region of Warrnambool and South-West, Geelong, Melbourne's north-west and Hume are some of the most difficult areas to find work for 15 to 24-year-olds.
Brotherhood of St Laurence executive director Tony Nicholson warned that Victoria was "hurtling towards a social disaster".
"In a short time youth unemployment will be a significant handbrake on the economy.
"We are facing a situation where in a few years unemployment rates of more than 25 per cent won't be uncommon."
Policy makers had been sitting on their hands for decades and failed to recognise the dramatic changes to the economy, he said.
"The economy has changed from a closed economy, that was a lot more manufacturing based, to a more service-based, knowledge-based and competitive economy."
The average Victorian youth unemployment rate for the year to July 2014 was 13.8 per cent, up from 12.3 per cent from the same period a year earlier. Victoria is the third worst Australian state for youth unemployment after Tasmania and South Australia.
Many young Victorians are unsuccessfully applying for hundreds of jobs, and are being turned down because they are told they do not have enough experience.
Job advertisements continued to rise in August, continuing a trend at odds with the unemployment rate.
The index, complied by ANZ, rose 1.5 per cent in August. So far over 2014, it has risen 8 per cent.
Unemployment, by contrast, was 6.4 per cent in July, up from 6 per cent at the start of the year.
Internet job ads – representing 95 per cent of the index – rose 1.4 per cent. Newspaper job ads rose 1.8 per cent after two months of declines.
"Recent trends in job advertising are consistent with a gradual turnaround in the labour market," said ANZ chief economist Warren Hogan.
ANZ job ads are up 8% over the year to date, while the other key labour market condition 'cross-checks' have also generally continued to improve recently.
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