Government spending has long been acknowledged as an important factor in local economies, but what can this mean for home owners and investors?
The purpose of government spending is to raise demand and increase consumption of goods or services, leading to a better economy. Infrastructure is the most classic example; where roads or hospitals are built, pulling in workers who spend their wages on local businesses, in turn leading to a fiscal caffeine hit for the local economy.
Sydney’s Harbour Bridge was the result of such a program. Built in the midst of the Great Depression of the 1930s in an effort to reduce unemployment and stimulate the Sydney economy, it is now considered a definitive icon of Sydney and Australia as a whole. Not even to mention its use as a road over the harbour.
More recently, we are beginning to see this same effect in Townsville. The Defence White Paper, released near the end of last month outline a massive 20 year plan for the development of key military resources in the Townsville area. The upgrades expecting to inject over $1 billion into the area, a massive boost!
Over the next decade, Townsville defence is expected to receive $50 million in the upgrade of the Lavarack Barracks. This is the first step in preparing the area for an influx of military personnel, who will all be a contributing force to the local economy. Adding on to this, the RAAF Base will also be receiving $100 million, to develop its capabilities in terms of new aircraft.
These shorter term developments will contribute to a greater population, in turn leading to growth in the local economy, including the housing market. In the longer term though, defence offers fantastic educative services which help to contribute skilled workers in the development of the economy. Given that most of the jobs in Townsville are skilled & service based, we would expect a small boom in the development of the economy, as more workers with specialised skills for the area are introduced.
Coming off the back of the retention of around 550 workers from Clive Palmers Refinery, a new door has opened for those current Townsvilliens, helping develop this new infrastructure. The skills required are in many ways similar, and as Tracey Lines (The Townsville Enterprise General Manager of Economic Development) has suggested, there will be a serious push for local developers to be given a part of the project, meaning those same workers will be able to move into a similar market.
Wherever in Australia you have your investments, for many property investors government spending often turns out to be a boon, both for their personal wealth and the local regions as a whole. If your property with McCarthy Group is in Townsville, we advise to hold on for as long as you can. With these new upgrades, the future is looking up in terms of house and rental prices.
For those with property in other great areas of Australia, we suggest that now is a great time to be looking at the Townsville market.