On the NBN

Wayne Cusack writes: Re. “NBN sell-off wouldn’t even pay for construction” (yesterday). The problem is that they would be selling off a monopoly. Essentially as they did with Telstra. And it is likely that, unless legislation prevents it, that Telstra would be first in line to buy it.

On negative gearing

Michael Dwyer writes: Re. “What the hell is negative gearing, anyway?” (yesterday). Negative gearing has spawned an industry, with property spruikers selling the idea to people who are in the lower income bracket (definitely not with taxable income over $80,000). In many cases the investment is in an apartment building. A rent guarantee (usually well in excess of market rent) for five years is provided as a sweetener.

Returns are calculated allowing for rent inflation, and capital gain. Expenses are normally understated.
Most of these investors will receive nothing on their investment, and will be much the poorer for having been persuaded to take up the investment. The main beneficiaries are those who market the proposition, and the builders. Commission is very generous.

A handyman could reduce the maintenance costs, but his time should be factored into the costs. I shudder to think of the situation of those who were persuaded to invest in apartments in buildings with flammable cladding.

Peter Fray

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