Blog - Commercial

10 May 2017


The 2017 Budget announced last night by Treasurer Scot Morrison proposed significant changes and a big surprise for the major banks.

Breaking the ‘all government debt is bad’ mantra that has bedevilled Australian economic debates is a good thing. Good debt can be used to develop the country efficiently, provide economic stimulus and overcome productivity roadblocks. The prospect of major (and much needed) infrastructure spending is a good one for business confidence and the long-term efficiencies that can be achieved.

It is disappointing that most of the projects will take some time to eventuate when the case for current economic stimulus seems clear. Nonetheless, many in the business community are still concerned about overall levels of debt – it is a difficult balancing act.

The housing affordability measures are very modest and are unlikely bring about any real improvement in Sydney and Melbourne.

The major tax impost on the big four banks was quite unexpected. It will be interesting to see how this plays out as it is passed on to the bank’s customers – particularly those with home mortgages. The fact that bank stocks fell by $14B yesterday is also worthy of note, particularly because these stocks feature prominently in super fund investments. The longer-term effect will be the important thing and it will be unfortunate if it impacts on much-needed investment and business confidence.

Overall there was some good news for future capital works and a more sensible approach to the categorisation of government debt, reflecting a more mature consideration of government financing.

For the government, it has the added attraction of being politically expedient. It will be difficult for the Opposition to respond effectively.

As always, the devil will be in the detail.

Date: 10 May 2017 Author: Eric Lundberg

About the author:

Eric Lundberg

Eric has over 30 years experience in commercial property, and has been at the forefront of the transformation of the Sydney city fringe market, dealing with the disruptive new knowledge-based industries. Eric’s deep market knowledge, broad connections, dedication and perseverance combine to provide clients' with the best creative property solutions.

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