For a more comprehensive round up of the week, listen to Stephen’s full report here.

The list of those who feel they have been hurt by Budget 2014 is a long one and is providing many points of focus for the Opposition and the minor parties in the Senate to keep much of the budget legislation in limbo for many months to come. Because many of the more contentious budget initiatives are not timed to be implemented until 1st July 2015 and some not until 2017 for new pension indexation arrangements, the Government is not under great pressure to push legislation through particularly quickly. In short, the Budget and all of the community grumpiness surrounding it, depressing consumer sentiment and probably business sentiment too, may be with us for a protracted period. The RBA is likely to be watching closely and trying to assess the consequences both of how the Budget is likely to impact economic growth prospects if passed as it stands, but also the consequences of a protracted political bun-fight over the passage of the Budget legislation.

In the wake of the Budget and its immediate reception the RBA is probably less confident about economic growth prospects than it was when it published its latest set of economic forecasts in its quarterly Monetary Policy Statement a few days before Budget night. If, as we suspect, the RBA now sees a greater likelihood of sub-trend economic growth lasting longer than it previously thought likely, it implies that the cash rate will remain at 2.50% for an even longer period of time, possibly well in to 2015.

It is still unlikely, however, that the RBA will be tempted to cut the cash rate further, because of one very important reason – the housing investment spending boom is showing no signs of abating and pouring more petrol on the housing fire would be foolhardy. As the dust settles on Budget 2014, it is also likely to become clearer that housing investors were one group in the economy who escaped entirely unscathed from budget cost cutting. What makes this exclusion truly remarkable is that housing investors receive one of the biggest benefits from the Government in tax deductions on their investment, close to $30 billion in 2013-14. Whether intended or not, the Budget has sent a message to housing investors that they remain a protected species.

Continuing Government largesse as well as a decision by the previous Government allowing superannuation investors to borrow to invest in housing and “emergency” low (how else can an official cash rate at 2.50% sitting below the latest 2.9% annual CPI reading be described) borrowing interest rates continue to promote unsustainably high growth in housing investment. The latest housing finance figures for March show the value of investment housing finance commitments up 3.7% in the month and 28.7% compared with March 2013. Owner-occupier housing finance commitments, in contrast, are starting to stabilize, down 0.9% in March and up 7.3% compared with March 2013. First-time homebuyers have largely been priced out of the housing market and their share of owner-occupier commitments is near an all-time low languishing below 13% of total owner-occupier commitments.

The RBA, while not admitting that developments in the housing are becoming disturbing, is starting to warn first-time homebuyers not to go toe-to-toe bidding up house prices against investors and to recognise that house prices can fall, borrowing rates can go up and it is very easy to over-commit in the current market which longer-term can be damaging for those involved and can also undermine the stability of housing lenders too. The RBA, however, does not appear to be about to make its warning tangible by lifting interest rates. Instead it is undermining its warnings by promising a protracted period of interest rate stability.

So, in the wake of the toughest budget in nearly two decades with supposedly everyone being asked to contribute to restoring budget balance, housing investors are left with all of their considerable government assistance intact. The RBA is promising to keep the housing party going with an extended period of very low interest rates. Elevated house prices are starting to make the home market a bit rich for some owner-occupier buyers, but investors face no constraints bidding up house prices even further and on what is effectively considerable government and RBA support.

As the dust settles, one largely unremarked consequence of the turbulent 2014 Budget, is that by omission it added to the perception that housing investors are untouchable and to exuberance in the already overheated investment housing market.