1 00:00:09,800 --> 00:00:13,160 Speaker 1: Hello, and welcome to the Australians Money Puzzle podcast. I'm 2 00:00:13,240 --> 00:00:17,040 Speaker 1: James Kirby, Wealth editor at The Australian, and welcome to 3 00:00:17,280 --> 00:00:21,079 Speaker 1: our Budget Special Budget Special Edition, which I do each 4 00:00:21,160 --> 00:00:24,280 Speaker 1: year and have done now for some years with Will 5 00:00:24,520 --> 00:00:26,280 Speaker 1: Hamilton of Hamilton Wealth Partners. 6 00:00:26,280 --> 00:00:28,720 Speaker 2: How are you, Will, I'm very well, James, Thank you. 7 00:00:29,040 --> 00:00:33,160 Speaker 1: I like that we do this forty eight hours after 8 00:00:33,240 --> 00:00:36,519 Speaker 1: the budget because we get to see not just what 9 00:00:36,840 --> 00:00:39,200 Speaker 1: every sort of the knee jerk reaction on the evening 10 00:00:39,280 --> 00:00:41,600 Speaker 1: or the next morning, but we get to see a 11 00:00:41,640 --> 00:00:45,280 Speaker 1: sort of distillation of the analysis of it where everybody 12 00:00:45,360 --> 00:00:48,199 Speaker 1: has a chance to actually sit down and take a 13 00:00:48,240 --> 00:00:50,720 Speaker 1: proper look at it. I think, I mean, we're going 14 00:00:50,760 --> 00:00:53,800 Speaker 1: to talk, folks about what the budget is for investors, 15 00:00:53,920 --> 00:00:56,440 Speaker 1: right and what it means for investors, and don't be 16 00:00:57,840 --> 00:01:02,480 Speaker 1: don't ever be of the opinion I think anyway that 17 00:01:02,520 --> 00:01:06,200 Speaker 1: the budgets don't matter. Every budget matters, and there is 18 00:01:06,480 --> 00:01:10,679 Speaker 1: enormous information inside the budget if you know where to look. 19 00:01:11,040 --> 00:01:13,240 Speaker 1: And people will often say, oh, there's nothing in the budget. 20 00:01:14,920 --> 00:01:17,399 Speaker 1: Not true. Not true this year either, even in the 21 00:01:17,400 --> 00:01:20,320 Speaker 1: way that some things didn't happen is actually news in 22 00:01:20,360 --> 00:01:22,840 Speaker 1: and of itself and explain that as we go into it. 23 00:01:23,120 --> 00:01:26,080 Speaker 1: But first of all, I suppose on the headlines, on 24 00:01:26,200 --> 00:01:29,280 Speaker 1: the big picture, for any investor, people want to know, well, 25 00:01:30,000 --> 00:01:31,880 Speaker 1: what's going on with rates? They were supposed to drop 26 00:01:31,959 --> 00:01:36,759 Speaker 1: now they're drifting. Looking at this budget, which is our 27 00:01:36,800 --> 00:01:40,800 Speaker 1: window into the local economy. Does it suggest the rates 28 00:01:40,800 --> 00:01:43,240 Speaker 1: will still drop or will will they actually move higher? 29 00:01:43,640 --> 00:01:48,200 Speaker 1: And that's linked with inflation. Is it an inflationary budget? 30 00:01:48,280 --> 00:01:52,280 Speaker 1: So question one for Will Hamilton is it an inflationary budget? 31 00:01:53,840 --> 00:01:56,640 Speaker 2: My view is the cost of living support is diametrically 32 00:01:56,640 --> 00:02:02,360 Speaker 2: opposed to inflation control. And I think everyone is focusing 33 00:02:02,480 --> 00:02:04,480 Speaker 2: on the three hundred dollars. 34 00:02:04,720 --> 00:02:06,600 Speaker 1: That's right, that every household is going to get for 35 00:02:06,720 --> 00:02:07,960 Speaker 1: energy bits. 36 00:02:07,600 --> 00:02:10,880 Speaker 2: Correct spread over each quarter, seventy five dollars, And now 37 00:02:10,880 --> 00:02:13,040 Speaker 2: they're saying, you know, if you've got multiple households, it 38 00:02:13,120 --> 00:02:17,960 Speaker 2: could be that there's not enough talk about the tax 39 00:02:18,040 --> 00:02:21,520 Speaker 2: cuts and the tax cuts coming in as well, and 40 00:02:21,600 --> 00:02:24,120 Speaker 2: I think if that is meaningful, their meaningful. I actually 41 00:02:24,120 --> 00:02:27,079 Speaker 2: think the three hundred dollars you spread across four quarters, 42 00:02:28,919 --> 00:02:31,760 Speaker 2: I don't know if it's going to have any meaningful impact, 43 00:02:32,160 --> 00:02:35,000 Speaker 2: but the tax cuts do have a meaningful impact, and 44 00:02:35,639 --> 00:02:38,040 Speaker 2: people are saying it's the equivalent of two rate cuts 45 00:02:38,600 --> 00:02:42,799 Speaker 2: and putting that disposable income into the system. Is it 46 00:02:42,880 --> 00:02:46,160 Speaker 2: saved or is it spent. If it's spent, the inflationary 47 00:02:46,160 --> 00:02:49,560 Speaker 2: impact on that. So I think it's a gamble on inflation. 48 00:02:49,680 --> 00:02:51,720 Speaker 2: I really do. And I think that's what the Eussie 49 00:02:51,720 --> 00:02:52,600 Speaker 2: dollar is telling us. 50 00:02:53,400 --> 00:02:55,360 Speaker 1: Why what's the dollar was telling us? 51 00:02:55,400 --> 00:02:58,600 Speaker 2: The dollars you know, it was mildly strong yesterday, it's 52 00:02:58,600 --> 00:03:01,800 Speaker 2: strengthened a little bit over nigh. We're sitting there around 53 00:03:01,840 --> 00:03:03,920 Speaker 2: sixty seven. I think what they're telling you is, whilst 54 00:03:05,520 --> 00:03:07,400 Speaker 2: we are the figures that came out last night with 55 00:03:07,440 --> 00:03:10,400 Speaker 2: respect to retail sales and CPI and the US people 56 00:03:10,400 --> 00:03:13,800 Speaker 2: are talking about now ninety six percent chance of a 57 00:03:13,919 --> 00:03:16,680 Speaker 2: cut in September, what the Aussie dollar is telling us 58 00:03:16,760 --> 00:03:19,639 Speaker 2: is there's probably very little chance of a cut here 59 00:03:19,639 --> 00:03:23,000 Speaker 2: in Australia. So that's all on the back of inflation. 60 00:03:23,520 --> 00:03:26,160 Speaker 1: Okay, so there's very little chance, according to the markets, 61 00:03:26,160 --> 00:03:29,160 Speaker 1: of a cut in Australia. Frost part second part is 62 00:03:29,480 --> 00:03:33,880 Speaker 1: that there is an attempt for There is a big 63 00:03:33,919 --> 00:03:38,120 Speaker 1: attempt in the budget to support and support all levels 64 00:03:38,160 --> 00:03:41,400 Speaker 1: of society, which is very useful, particularly at the lower end, 65 00:03:41,440 --> 00:03:44,760 Speaker 1: of course, but there's also this very broad Commonwealth Rent 66 00:03:44,800 --> 00:03:49,440 Speaker 1: Assistant Energy Bill support and the government said they're not 67 00:03:49,480 --> 00:03:57,280 Speaker 1: inflationary because technically technically they suspend inflationary pressure. But some 68 00:03:57,760 --> 00:04:03,360 Speaker 1: very top economists, I mean a list of economists are saying, look, 69 00:04:03,720 --> 00:04:08,120 Speaker 1: this may this does not bring down inflation. It simply 70 00:04:08,400 --> 00:04:11,160 Speaker 1: holds it for a period, and the minute those supports 71 00:04:11,160 --> 00:04:13,200 Speaker 1: are over, it goes back up again, or the awkward 72 00:04:13,200 --> 00:04:15,960 Speaker 1: pressure goes back up again. Warwick mckibbon, for instance, former 73 00:04:16,440 --> 00:04:19,440 Speaker 1: RBA board manager, what do you think of that argument? 74 00:04:20,520 --> 00:04:24,400 Speaker 2: And I also think the fact that it's spread over 75 00:04:24,640 --> 00:04:28,360 Speaker 2: the full year or four quarters, I agree on that. 76 00:04:28,440 --> 00:04:31,719 Speaker 2: I think that it's it's more of the fact that 77 00:04:31,760 --> 00:04:35,919 Speaker 2: it's it's going to halt us rather than say that 78 00:04:36,080 --> 00:04:38,960 Speaker 2: coming down. And I think that as the same economists 79 00:04:38,960 --> 00:04:42,240 Speaker 2: are saying, is the RBA will look through this, They 80 00:04:42,240 --> 00:04:45,400 Speaker 2: will fact that on the back of a headline if 81 00:04:45,400 --> 00:04:47,800 Speaker 2: this is how it's artificially it has had an effect, 82 00:04:47,839 --> 00:04:52,279 Speaker 2: which I doubt they will look through this and take 83 00:04:52,279 --> 00:04:53,000 Speaker 2: this into account. 84 00:04:53,000 --> 00:04:58,040 Speaker 1: They have to, yeah, they have to. So basically does 85 00:04:58,040 --> 00:05:01,760 Speaker 1: some makes sense. It's politically death that you the measure 86 00:05:01,839 --> 00:05:04,839 Speaker 1: of inflation that we all talk about will be affected 87 00:05:05,960 --> 00:05:11,520 Speaker 1: by these But in terms of the market pressures, when 88 00:05:11,839 --> 00:05:14,520 Speaker 1: when when these supports are taken away unless they leave 89 00:05:14,520 --> 00:05:16,720 Speaker 1: them in forever and then the inflation just basically comes 90 00:05:16,720 --> 00:05:19,360 Speaker 1: pouring back outs. 91 00:05:19,360 --> 00:05:21,640 Speaker 2: Like it's reported in The Australian this afternoon that Chris 92 00:05:21,640 --> 00:05:24,960 Speaker 2: Bowen on radio interview yesterday said well we're doing this 93 00:05:25,040 --> 00:05:28,359 Speaker 2: to create a headline in inflation. Well is admitted what 94 00:05:28,360 --> 00:05:30,400 Speaker 2: they're trying to do and the RBA will take that 95 00:05:30,440 --> 00:05:31,039 Speaker 2: into account. 96 00:05:31,600 --> 00:05:34,600 Speaker 1: Yeah, okay, very good. So folks, we're going to talk 97 00:05:34,640 --> 00:05:39,880 Speaker 1: about the about what the investor should know about this 98 00:05:40,279 --> 00:05:45,080 Speaker 1: budget and this new financial leader, which obviously the budget 99 00:05:45,080 --> 00:05:48,680 Speaker 1: papers personage. Now, the big thing, as Will says, the 100 00:05:48,720 --> 00:05:51,480 Speaker 1: biggest thing of all by a mile for investors is 101 00:05:51,920 --> 00:05:55,520 Speaker 1: the tax cuts, and I just everyone should keep it 102 00:05:55,520 --> 00:05:59,320 Speaker 1: in mind that how it works. Basically, the amount you pay, 103 00:05:59,360 --> 00:06:03,560 Speaker 1: by the way, no tax upon. Interestingly, you think this 104 00:06:03,600 --> 00:06:06,960 Speaker 1: doesn't matter, perhaps as an investor, it really does. They're 105 00:06:07,120 --> 00:06:09,680 Speaker 1: eighteen thousand, two hundred a year. The first eighteen thousand, 106 00:06:09,720 --> 00:06:13,360 Speaker 1: two hundred you make per year, there's no tax paid 107 00:06:13,400 --> 00:06:15,840 Speaker 1: on that, and it hasn't changed, even though the other 108 00:06:15,880 --> 00:06:19,279 Speaker 1: bands have changed, and there are tax cuts across the bands. 109 00:06:19,839 --> 00:06:21,839 Speaker 1: What I'm alluding to here with the course is that 110 00:06:21,880 --> 00:06:24,600 Speaker 1: people might start taking money out of super for various 111 00:06:24,600 --> 00:06:26,719 Speaker 1: reasons in the future, and maybe that was one of 112 00:06:26,720 --> 00:06:29,440 Speaker 1: the reasons the government held it at that, just to 113 00:06:29,440 --> 00:06:31,960 Speaker 1: finish on the tax folks. So the starter band for 114 00:06:32,040 --> 00:06:35,640 Speaker 1: tax will be eighteen thousand to forty five thousand, right, 115 00:06:35,680 --> 00:06:38,360 Speaker 1: the rate will be sixteen percent, down from nineteen percent, 116 00:06:38,720 --> 00:06:41,640 Speaker 1: and after that thirty two and a half percent rate 117 00:06:41,640 --> 00:06:45,039 Speaker 1: will drop to thirty for forty five thousand two one 118 00:06:45,160 --> 00:06:48,279 Speaker 1: three five thousand. Okay, have you with me so far? 119 00:06:48,480 --> 00:06:50,840 Speaker 1: The thirty seven percent rate will kick in at one 120 00:06:50,960 --> 00:06:53,119 Speaker 1: hundred and thirty five thousand, used to be one hundred 121 00:06:53,120 --> 00:06:56,520 Speaker 1: and twenty, and the forty five percent rate now cuts 122 00:06:56,560 --> 00:06:59,400 Speaker 1: in at one ninety up from one to eighty to 123 00:06:59,440 --> 00:07:01,320 Speaker 1: which a lot of peop if we would say big deal. 124 00:07:01,480 --> 00:07:03,400 Speaker 1: We thought it was going to be better than that. 125 00:07:03,480 --> 00:07:06,200 Speaker 1: The implicit promise was that the top end would get 126 00:07:06,200 --> 00:07:08,919 Speaker 1: these tax cuts as well, but across the government rearrange 127 00:07:09,000 --> 00:07:12,200 Speaker 1: them a few months ago, and politically that has gone 128 00:07:12,280 --> 00:07:16,080 Speaker 1: down well, and so I think we'll see more of 129 00:07:16,120 --> 00:07:19,760 Speaker 1: this sort of engineering in the future. But basically, the 130 00:07:19,800 --> 00:07:23,000 Speaker 1: new tax cuts are there. Everyone should be aware of them. 131 00:07:23,000 --> 00:07:25,560 Speaker 1: They should be aware of their new tax ability. If 132 00:07:25,600 --> 00:07:28,560 Speaker 1: you like with the new bands, familiar rize yourself with 133 00:07:28,640 --> 00:07:32,280 Speaker 1: those bands. What do you think it means for investors generally? 134 00:07:32,480 --> 00:07:35,920 Speaker 1: Will on the tax cuts? Now put out a survey 135 00:07:36,000 --> 00:07:41,640 Speaker 1: saying that people are more likely to save than spend 136 00:07:42,520 --> 00:07:44,720 Speaker 1: the tax cuts. I thought that was interesting. That would 137 00:07:44,720 --> 00:07:46,360 Speaker 1: also mean investing them. 138 00:07:46,800 --> 00:07:51,920 Speaker 2: Yeah, well that's the case. You will reduce that inflationary impact, 139 00:07:51,920 --> 00:07:54,440 Speaker 2: there's no doubt about that. But no individual with taxable 140 00:07:54,520 --> 00:07:56,520 Speaker 2: income of one hundred and thirty five thousand or lace 141 00:07:56,600 --> 00:07:58,640 Speaker 2: is going to have a natural text right of more 142 00:07:58,680 --> 00:08:03,840 Speaker 2: than thirty It seems to be this magical race that 143 00:08:03,880 --> 00:08:06,160 Speaker 2: the government seems to be aiming everything at. You know, 144 00:08:06,200 --> 00:08:09,360 Speaker 2: we've talked about the proposed to perinuation changes, et cetera. 145 00:08:09,520 --> 00:08:12,200 Speaker 2: So what they're trying to do is look at this 146 00:08:12,400 --> 00:08:16,360 Speaker 2: thirty percent seems to be this rate that they seem 147 00:08:16,400 --> 00:08:18,080 Speaker 2: to be aiming at. I think that seems to be 148 00:08:18,160 --> 00:08:18,680 Speaker 2: the big thing. 149 00:08:18,800 --> 00:08:21,200 Speaker 1: The flat rate as such, if they were to bring 150 00:08:21,200 --> 00:08:23,240 Speaker 1: in a flat rate, and originally the original plan of 151 00:08:23,280 --> 00:08:26,400 Speaker 1: course was that would be larger the group in that, 152 00:08:26,520 --> 00:08:30,680 Speaker 1: but they rearrange things. Okay, interesting, so keep that in mind, folks. 153 00:08:30,960 --> 00:08:33,680 Speaker 1: Now after that, then there is an enormous amount of 154 00:08:33,720 --> 00:08:37,600 Speaker 1: money going into housing. Most of it is social housing 155 00:08:38,240 --> 00:08:42,920 Speaker 1: Commonwealth to rent assistance, but it's an enormous figure. And 156 00:08:42,960 --> 00:08:47,480 Speaker 1: there's also initiatives for the construction industry at various levels. 157 00:08:47,480 --> 00:08:52,280 Speaker 1: I mean the specifically, there's ten billion alone going into 158 00:08:52,679 --> 00:08:55,880 Speaker 1: social housing, and I think I want to just point 159 00:08:55,880 --> 00:08:58,800 Speaker 1: out from an investor's point of view again, will do 160 00:08:58,840 --> 00:09:03,640 Speaker 1: you think that if this housing comes to pass, does 161 00:09:03,679 --> 00:09:06,880 Speaker 1: it take some pressure off the vacancy rateing property which 162 00:09:06,920 --> 00:09:09,839 Speaker 1: is currently one percent in residential property, which is one 163 00:09:09,840 --> 00:09:12,960 Speaker 1: of the reasons people saw investors at least be so 164 00:09:13,080 --> 00:09:16,200 Speaker 1: secure in property because you can rent anything and you 165 00:09:16,200 --> 00:09:17,680 Speaker 1: can get rent increases each year. 166 00:09:17,880 --> 00:09:19,960 Speaker 2: We need to design the houses, we need to get 167 00:09:20,120 --> 00:09:23,080 Speaker 2: planning for the houses. Then we need to build the houses, 168 00:09:23,120 --> 00:09:25,439 Speaker 2: and we need the people. I think they've allowed is 169 00:09:25,480 --> 00:09:30,640 Speaker 2: it seventeen hundred on a migration basis to builders to 170 00:09:30,679 --> 00:09:33,559 Speaker 2: come in, but we need but they're saying that, then 171 00:09:33,600 --> 00:09:36,720 Speaker 2: the master build associations not saying that is enough. So 172 00:09:36,760 --> 00:09:39,800 Speaker 2: we need the people to build the houses and yeah, 173 00:09:39,840 --> 00:09:44,640 Speaker 2: the lag it's fantastic that they're doing this, but it's 174 00:09:44,640 --> 00:09:46,440 Speaker 2: not going to happen. We're not going to wake up 175 00:09:46,440 --> 00:09:47,240 Speaker 2: tomorrow and it's. 176 00:09:47,080 --> 00:09:50,880 Speaker 1: Happened, right. So you think the vacancy rates so are 177 00:09:51,000 --> 00:09:53,360 Speaker 1: going to be where they are super tight for the 178 00:09:53,360 --> 00:09:54,880 Speaker 1: foresee of the future. 179 00:09:55,040 --> 00:09:58,560 Speaker 2: Correact, Yeah, because I said you can design, planning and 180 00:09:58,600 --> 00:10:02,720 Speaker 2: then build. Yes, so you're probably looking three years to 181 00:10:02,760 --> 00:10:03,480 Speaker 2: be optimistic. 182 00:10:03,800 --> 00:10:06,719 Speaker 1: Mm hmm, okay, very interesting, that is. I think that's 183 00:10:06,800 --> 00:10:10,760 Speaker 1: very important folks for property investors to keep that in mind. 184 00:10:11,679 --> 00:10:17,120 Speaker 1: That really for us in property investment, the big dynamics 185 00:10:17,760 --> 00:10:23,760 Speaker 1: were around rates immigration, which of course kept the market 186 00:10:23,800 --> 00:10:27,920 Speaker 1: particularly tight, and the forecast is for immigration to fall, 187 00:10:27,960 --> 00:10:30,960 Speaker 1: and that's an important part part for property investors to 188 00:10:31,040 --> 00:10:34,679 Speaker 1: know that. Look, the signals are that what will change 189 00:10:34,920 --> 00:10:37,880 Speaker 1: will ease vacancy rates going forward, but they will be 190 00:10:38,040 --> 00:10:41,760 Speaker 1: slow and we will have to see how they pan out, 191 00:10:41,800 --> 00:10:46,080 Speaker 1: but there are signals at least that they will that 192 00:10:46,160 --> 00:10:47,880 Speaker 1: the vacancy rate will ease. By that, I mean it 193 00:10:47,920 --> 00:10:50,880 Speaker 1: will increase from its one percent, but it's not going 194 00:10:50,920 --> 00:10:53,840 Speaker 1: to go to five or ten. Sorry, we'll be the 195 00:10:53,840 --> 00:10:54,560 Speaker 1: regular one. 196 00:10:54,720 --> 00:10:57,480 Speaker 2: The big issue and the need to reduce the red 197 00:10:57,520 --> 00:11:00,720 Speaker 2: type so we can get these things built. That's and 198 00:11:00,760 --> 00:11:04,720 Speaker 2: that that then gets down to state governments and local governments. Yeah, 199 00:11:04,720 --> 00:11:05,559 Speaker 2: and that hasn't. 200 00:11:05,280 --> 00:11:11,560 Speaker 1: Been Yes, okay, just before we talk about some individual 201 00:11:11,720 --> 00:11:15,120 Speaker 1: measures that every investor should know, I think we might 202 00:11:15,200 --> 00:11:17,559 Speaker 1: just take a look at on Super. So there was 203 00:11:17,600 --> 00:11:20,120 Speaker 1: a few things that everyone should know on Super. The 204 00:11:20,160 --> 00:11:24,560 Speaker 1: first thing is that your compulsory super moves up, of course, 205 00:11:25,160 --> 00:11:27,120 Speaker 1: to eleven and a half percent in July one, on 206 00:11:27,160 --> 00:11:30,040 Speaker 1: its way to twelve percent a year later. That's important. 207 00:11:30,520 --> 00:11:34,880 Speaker 1: The amount you can contribute into Super is changing. That 208 00:11:35,040 --> 00:11:37,680 Speaker 1: is the amount you can contribute on a pre tax 209 00:11:37,760 --> 00:11:40,360 Speaker 1: basis what they call concession and moves from twenty seven 210 00:11:40,400 --> 00:11:44,240 Speaker 1: thousand now twenty seven five hundred now to thirty thousand 211 00:11:44,320 --> 00:11:47,080 Speaker 1: and July one. But that only brings us back to 212 00:11:47,080 --> 00:11:51,440 Speaker 1: where we were a long time ago. Well, isn't that right? 213 00:11:51,640 --> 00:11:54,440 Speaker 1: You used to be higher than thirty correct. 214 00:11:54,520 --> 00:11:57,840 Speaker 2: I think that listeners have heard me so many times. 215 00:11:57,840 --> 00:12:02,120 Speaker 2: The issue is not a super, it's getting money into Super, 216 00:12:02,400 --> 00:12:04,520 Speaker 2: and it's very difficult to get in soupent on a 217 00:12:04,559 --> 00:12:06,840 Speaker 2: non concessional basis of lifting that from one hundred and 218 00:12:06,840 --> 00:12:12,600 Speaker 2: ten and twenty thousand, so that's the issue. These changes 219 00:12:12,640 --> 00:12:15,040 Speaker 2: were brought in actually by the coalition government. They made 220 00:12:15,080 --> 00:12:18,680 Speaker 2: it harder to get into SUPER, and I think that's 221 00:12:18,760 --> 00:12:20,040 Speaker 2: the biggest issue. 222 00:12:20,480 --> 00:12:24,080 Speaker 1: Yes, And these these increases in the amount you can 223 00:12:24,120 --> 00:12:30,560 Speaker 1: put in, they're not structural. They are index indexing for inflation. 224 00:12:30,679 --> 00:12:35,160 Speaker 1: They are only matching the inflation changes. So in real terms, 225 00:12:35,200 --> 00:12:37,520 Speaker 1: the amount you can put in hasn't changed in any 226 00:12:37,559 --> 00:12:38,520 Speaker 1: significant fashion. 227 00:12:39,080 --> 00:12:42,200 Speaker 2: Correct. And also the transfer balance cap balance cap sorry, 228 00:12:42,280 --> 00:12:43,760 Speaker 2: increases to one point nine million. 229 00:12:44,920 --> 00:12:48,280 Speaker 1: Yes, yeah, it increases to one point nine million. That is, 230 00:12:48,600 --> 00:12:50,920 Speaker 1: that is the amount you can happen Super before you 231 00:12:50,960 --> 00:12:55,559 Speaker 1: pay the first tax band, which is fifteen percent. It's 232 00:12:55,600 --> 00:12:57,240 Speaker 1: hard to keep all this in mind, folks, I know, 233 00:12:57,320 --> 00:12:58,679 Speaker 1: but you need to learn it if you want to 234 00:12:58,679 --> 00:13:03,440 Speaker 1: play the system in Super. You are not taxed on 235 00:13:03,520 --> 00:13:05,920 Speaker 1: your earnings in SUPER when you retire up to one 236 00:13:05,920 --> 00:13:08,560 Speaker 1: point nine million. And then there is a new plan, 237 00:13:08,679 --> 00:13:10,600 Speaker 1: believe it or not, to bring in a second band 238 00:13:10,840 --> 00:13:14,640 Speaker 1: at three million from the first of July twenty twenty five. 239 00:13:15,240 --> 00:13:18,120 Speaker 1: Very controversial for the simple reason that it's not just 240 00:13:18,160 --> 00:13:21,280 Speaker 1: another tax, it's taxed in a different way on realized 241 00:13:21,320 --> 00:13:24,080 Speaker 1: gains it's about to be really kicked around in Parliament. 242 00:13:24,080 --> 00:13:28,040 Speaker 1: Alegraspender has moved in motion today and I think it 243 00:13:28,080 --> 00:13:30,839 Speaker 1: will be It will be debated, but I don't know 244 00:13:30,960 --> 00:13:34,840 Speaker 1: because the Senate signed it off absolutely unchanged. That is 245 00:13:34,880 --> 00:13:38,680 Speaker 1: the Senate inquiry. So what do you think the realistic 246 00:13:38,800 --> 00:13:41,679 Speaker 1: chances are that it will be amended in anty fashion? 247 00:13:41,720 --> 00:13:44,880 Speaker 2: Will I said that it wouldn't be changed, then I 248 00:13:44,920 --> 00:13:47,719 Speaker 2: was hoping it more. Yeah, when I heard about the 249 00:13:47,760 --> 00:13:50,120 Speaker 2: Senate inquiry, that they would see common sense and then 250 00:13:50,120 --> 00:13:52,680 Speaker 2: we wouldn't be texting unrealized gains. I think that is 251 00:13:52,720 --> 00:13:54,319 Speaker 2: just unconscionable. I really do. 252 00:13:54,679 --> 00:14:00,000 Speaker 1: And just explain why, because someone who isn't very familiar 253 00:14:00,120 --> 00:14:03,079 Speaker 1: with tax and investments might say, hey, listen, someone's got 254 00:14:03,080 --> 00:14:07,080 Speaker 1: three million in super what's their problem and why are they? 255 00:14:07,720 --> 00:14:09,760 Speaker 1: You know, what's wrong with them? That this new tax? 256 00:14:09,800 --> 00:14:10,400 Speaker 1: What's wrong with it? 257 00:14:10,480 --> 00:14:12,640 Speaker 2: Yeah? I think everyone's been concentrating on property, but I 258 00:14:12,679 --> 00:14:15,800 Speaker 2: think Robert god Libson's really talked about private equity and 259 00:14:15,800 --> 00:14:18,160 Speaker 2: I think that's probably a really good example. You've got 260 00:14:18,559 --> 00:14:23,480 Speaker 2: a liquid growth investment in there, so it's growth without 261 00:14:23,480 --> 00:14:27,600 Speaker 2: returning income, and the value of that goes from three 262 00:14:27,680 --> 00:14:31,400 Speaker 2: million two let's say four million, but you're going to 263 00:14:31,400 --> 00:14:34,880 Speaker 2: get taxed. That's thirty percent on that if you're three 264 00:14:34,920 --> 00:14:38,000 Speaker 2: hundred thousand without any cash flow from it. But you 265 00:14:38,080 --> 00:14:41,160 Speaker 2: have to find that cash flow pay that tax, by 266 00:14:41,160 --> 00:14:45,080 Speaker 2: the way. But when backwards you don't get a refund, 267 00:14:45,120 --> 00:14:47,920 Speaker 2: you get it only a credit. And that's it's just 268 00:14:48,360 --> 00:14:51,240 Speaker 2: when I think everyone needs to pay taxes. I think, 269 00:14:51,280 --> 00:14:54,320 Speaker 2: and in life everything needs to be fair. But this 270 00:14:54,520 --> 00:14:55,480 Speaker 2: just is not fair. 271 00:14:55,720 --> 00:14:58,920 Speaker 1: So it's not fair because it's on unrealized paper gains. 272 00:14:59,000 --> 00:15:02,360 Speaker 1: It's on paper gains, right. So to make it simple, 273 00:15:03,760 --> 00:15:07,480 Speaker 1: if I invested in a company with my super and 274 00:15:07,520 --> 00:15:10,040 Speaker 1: it was a great little company, and I loved everybody 275 00:15:10,080 --> 00:15:13,200 Speaker 1: in it, and I thought that we're brilliant. The thing is, 276 00:15:13,640 --> 00:15:15,520 Speaker 1: and if they went up in value each year, though 277 00:15:15,560 --> 00:15:17,560 Speaker 1: I couldn't get any money out, I'd be taxed on 278 00:15:17,600 --> 00:15:21,600 Speaker 1: the amount of value increase that they are managing. Okay, 279 00:15:21,760 --> 00:15:24,200 Speaker 1: And that's completely that's just out the window in terms 280 00:15:24,240 --> 00:15:26,120 Speaker 1: of how the tax system works. So we've never seen 281 00:15:26,120 --> 00:15:26,680 Speaker 1: that before. 282 00:15:27,320 --> 00:15:29,600 Speaker 2: And I think in investment we all would agree that 283 00:15:30,200 --> 00:15:32,960 Speaker 2: profit is not a profit until it's realized. Yeah, but 284 00:15:32,960 --> 00:15:36,040 Speaker 2: they're telling you, well, hey, guys. Every year we're going 285 00:15:36,080 --> 00:15:38,960 Speaker 2: to we want you to revalue your asset, and your 286 00:15:39,160 --> 00:15:40,800 Speaker 2: unrealized game will be taxed. 287 00:15:41,720 --> 00:15:46,000 Speaker 1: I wonder will though that's an interesting angle. The numbers 288 00:15:46,000 --> 00:15:50,480 Speaker 1: suggest there isn't much investment in private enterprise and startups 289 00:15:50,480 --> 00:15:53,160 Speaker 1: by so managed super funds. It's all in property. I 290 00:15:53,160 --> 00:15:55,320 Speaker 1: think it's in property. It's really going to pinch. 291 00:15:56,160 --> 00:15:58,400 Speaker 2: Yes, but I think we're robbed. God Libsin's coming on 292 00:15:58,440 --> 00:16:02,640 Speaker 2: this angle. It's vibate. Equity and startups have a broad 293 00:16:02,680 --> 00:16:05,680 Speaker 2: effect because they're growth and that's what the economy needs. 294 00:16:05,960 --> 00:16:10,040 Speaker 2: And if you're starting the economy yes of growth, that 295 00:16:10,080 --> 00:16:12,480 Speaker 2: has far far reaching consequences. 296 00:16:12,680 --> 00:16:15,600 Speaker 1: It chokes off incentives, which is which is the problem 297 00:16:15,600 --> 00:16:18,520 Speaker 1: that's all across this budget. I think people are saying, 298 00:16:19,040 --> 00:16:22,560 Speaker 1: there's no incentives. There's an incentive to go on the pension, 299 00:16:23,360 --> 00:16:26,320 Speaker 1: there's an incentive, there's an incentive you know for this 300 00:16:26,400 --> 00:16:29,320 Speaker 1: and that, But but they're not incentives as such. They 301 00:16:29,320 --> 00:16:34,080 Speaker 1: are incentives to to take part in social welfare, which 302 00:16:34,120 --> 00:16:35,640 Speaker 1: is miles away from what we're talking about. 303 00:16:35,680 --> 00:16:39,880 Speaker 2: Investor incentives aspiration that they're absolutely choking at and I 304 00:16:39,920 --> 00:16:41,400 Speaker 2: think that's the problem. 305 00:16:41,400 --> 00:16:45,640 Speaker 1: Okay, Also, look folks to cover off on on Super. 306 00:16:46,520 --> 00:16:48,400 Speaker 1: The other thing that has come in is, of course 307 00:16:48,480 --> 00:16:51,440 Speaker 1: parental leave. If you're talking about this for so long 308 00:16:51,480 --> 00:16:54,280 Speaker 1: that you might think it's already done, it's not. It's 309 00:16:54,280 --> 00:16:59,320 Speaker 1: finally confirmed. And how it works is that the superannuation 310 00:17:00,080 --> 00:17:03,880 Speaker 1: will be paid on parental leave, government funded parental leave 311 00:17:03,920 --> 00:17:09,960 Speaker 1: for twenty six weeks and it begins, it actually doesn't 312 00:17:09,960 --> 00:17:12,760 Speaker 1: begin to July one, two, two five for all the headlines, 313 00:17:12,800 --> 00:17:16,560 Speaker 1: but in any event, there it is coming through. That's 314 00:17:16,600 --> 00:17:19,480 Speaker 1: another piece of news on Super. Okay, that's a bit 315 00:17:19,480 --> 00:17:22,280 Speaker 1: to digest. We'll, we'll, we'll, we'll let everybody have a 316 00:17:22,320 --> 00:17:25,040 Speaker 1: break and we'll be back to you with some very 317 00:17:25,040 --> 00:17:28,160 Speaker 1: interesting parts of the budget that probably haven't been aired 318 00:17:28,440 --> 00:17:33,959 Speaker 1: as much and you might find very interesting. Hello, welcome 319 00:17:33,960 --> 00:17:38,560 Speaker 1: back to the Australians Budget Special. I'm James Kirkby, the 320 00:17:38,600 --> 00:17:41,080 Speaker 1: Wealth editor at The Australian. I'm talking to Will Hamilton 321 00:17:41,119 --> 00:17:44,320 Speaker 1: of Hamilton Wealth Partners and we are doing our budget 322 00:17:44,320 --> 00:17:49,360 Speaker 1: special which we do each year. Okay, Will, here's some random, 323 00:17:49,880 --> 00:17:54,640 Speaker 1: random thoughts and observations on the budget that are really unusual. 324 00:17:54,920 --> 00:17:56,840 Speaker 1: I just wanted to talk to about first of all, 325 00:17:58,400 --> 00:18:02,840 Speaker 1: talking about social welfare or helping people. The three hundred 326 00:18:03,040 --> 00:18:05,720 Speaker 1: dollar energy rebate, of course, that goes to every house 327 00:18:05,760 --> 00:18:08,240 Speaker 1: in the country. That would include every single person on 328 00:18:08,280 --> 00:18:12,439 Speaker 1: the rich list, that would include all the billionaires, Anthony Pratt, 329 00:18:12,560 --> 00:18:15,600 Speaker 1: Gina Reinhardt. They'll all get their three hundred dollars rebate, 330 00:18:15,600 --> 00:18:20,040 Speaker 1: which would seem daft, but obviously giving them the benefit 331 00:18:20,119 --> 00:18:22,040 Speaker 1: of the doubt, it's just they sound. It sounds like 332 00:18:22,040 --> 00:18:25,000 Speaker 1: it would be very difficult to administer it in a 333 00:18:25,600 --> 00:18:28,240 Speaker 1: in a more precise fashion. But the other caught my 334 00:18:28,320 --> 00:18:34,760 Speaker 1: eye was the tax credits for the miners, seven billion 335 00:18:34,840 --> 00:18:40,080 Speaker 1: dollars into tax credits for critical minerals lithium and nickel 336 00:18:40,119 --> 00:18:43,800 Speaker 1: in particular, and the shares immediately moved on this. So 337 00:18:43,840 --> 00:18:47,840 Speaker 1: we have we have the government through the prism of 338 00:18:48,000 --> 00:18:50,640 Speaker 1: made in Australia and protecting things and all that sort 339 00:18:50,640 --> 00:18:54,200 Speaker 1: of thing. But they're picking winners. Is that from an 340 00:18:54,200 --> 00:18:56,280 Speaker 1: investor point of view? What do you think of a 341 00:18:56,359 --> 00:19:00,600 Speaker 1: government picking winners and apportioning billions of dollars into areas 342 00:19:00,880 --> 00:19:03,320 Speaker 1: like the quantum computing as well, which of course is 343 00:19:03,320 --> 00:19:05,160 Speaker 1: a spectacular example of it. 344 00:19:05,600 --> 00:19:07,600 Speaker 2: I don't think governments have a good track record in 345 00:19:07,640 --> 00:19:12,440 Speaker 2: picking winners, and I think pumping money into things where 346 00:19:12,560 --> 00:19:17,359 Speaker 2: I think private enterprise otherwise I think has played a 347 00:19:17,359 --> 00:19:21,360 Speaker 2: far better role and a far more efficient role, and 348 00:19:21,520 --> 00:19:27,200 Speaker 2: they've taken the risk on I think that there's over 349 00:19:27,240 --> 00:19:31,040 Speaker 2: the over history, there's plenty of reasons we can sort 350 00:19:31,040 --> 00:19:33,000 Speaker 2: of bring up things where they've made a mistake. Now 351 00:19:34,160 --> 00:19:36,560 Speaker 2: I don't agree with that at all. 352 00:19:37,400 --> 00:19:40,439 Speaker 1: Sorry, you don't agree with with the provision of picking 353 00:19:40,560 --> 00:19:42,600 Speaker 1: a sector and giving it special treatment, No. 354 00:19:42,680 --> 00:19:45,400 Speaker 2: I don't. But on the other hand, I do see 355 00:19:45,400 --> 00:19:51,040 Speaker 2: what I know why they've picked critical, critical minerals in particular. 356 00:19:51,600 --> 00:19:53,639 Speaker 2: There is a defense reason around a lot of this, 357 00:19:55,520 --> 00:19:59,600 Speaker 2: and especially with Orcus and with the agreements we've got 358 00:19:59,640 --> 00:20:02,880 Speaker 2: with you Outed States. There are some agreements there that 359 00:20:02,880 --> 00:20:08,440 Speaker 2: that's the reasons why, uh, certain minerals have you got 360 00:20:08,480 --> 00:20:09,240 Speaker 2: benefits there. 361 00:20:09,359 --> 00:20:12,000 Speaker 1: But I mean the US themselves are doing it, aren't 362 00:20:12,000 --> 00:20:14,760 Speaker 1: They will to be fair then that's the ultimate free market. 363 00:20:14,760 --> 00:20:16,600 Speaker 1: But they're actually doing it too. So there is an 364 00:20:16,640 --> 00:20:21,040 Speaker 1: element of national security here on this way. But at 365 00:20:21,080 --> 00:20:23,240 Speaker 1: the end of the day, you're giving special treatment to 366 00:20:23,400 --> 00:20:27,040 Speaker 1: stock market, this to the companies, and hey, uh, is 367 00:20:27,080 --> 00:20:30,720 Speaker 1: it any surprise that there was immediate action on the 368 00:20:30,800 --> 00:20:35,680 Speaker 1: market this week, folks. On those stocks that we're getting 369 00:20:36,080 --> 00:20:40,520 Speaker 1: government help, I'll name them. So of course it's at 370 00:20:40,520 --> 00:20:43,320 Speaker 1: the margins because they're so big, like BHP or West Farmers, 371 00:20:44,160 --> 00:20:47,639 Speaker 1: Pilbur Minerals will get money. But as you get smaller, 372 00:20:47,880 --> 00:20:51,840 Speaker 1: linetown Resources, et cetera, as the companies get smaller, they 373 00:20:51,880 --> 00:20:55,800 Speaker 1: are more directly pumped, if you like, by by this, 374 00:20:56,320 --> 00:20:59,359 Speaker 1: by this move by the government. Okay, Now I wanted 375 00:20:59,400 --> 00:21:02,879 Speaker 1: to talk quickly about a couple of things that didn't happen. 376 00:21:03,760 --> 00:21:08,240 Speaker 1: Often in a budget there is news in what didn't happen. 377 00:21:09,200 --> 00:21:10,840 Speaker 1: And if you remember, at the start of the show, 378 00:21:10,880 --> 00:21:14,480 Speaker 1: we was talking about inflation and we were mentioning how 379 00:21:15,040 --> 00:21:20,400 Speaker 1: the inflation indexing has changed some things already in the budget. 380 00:21:20,440 --> 00:21:23,840 Speaker 1: For instance, you'll be able to put in thirty thousand 381 00:21:24,080 --> 00:21:28,440 Speaker 1: pre tax into your super because of inflation, because it's 382 00:21:28,480 --> 00:21:31,200 Speaker 1: been adjusted up from twenty seven and a half. Now 383 00:21:31,200 --> 00:21:35,520 Speaker 1: here's the thing the government, it's entirely random how they index. 384 00:21:35,560 --> 00:21:39,119 Speaker 1: They can index whatever they want. There's no rules, and 385 00:21:39,160 --> 00:21:41,800 Speaker 1: the index one thing and they don't index the other. 386 00:21:42,960 --> 00:21:46,320 Speaker 1: So for instance, there's two interesting things for older Australians. 387 00:21:48,200 --> 00:21:53,159 Speaker 1: Deeming is the mechanics by which you can access the 388 00:21:53,200 --> 00:21:55,720 Speaker 1: pension or how much you get in the pension. A 389 00:21:55,800 --> 00:21:59,400 Speaker 1: part pension is deeming, and what deeming is is how 390 00:21:59,400 --> 00:22:02,480 Speaker 1: the government makes a deemed assessment of how much you've 391 00:22:02,480 --> 00:22:06,760 Speaker 1: made on your investments. They apply that and it is 392 00:22:06,920 --> 00:22:11,080 Speaker 1: then will dictate your access to to to the pension. 393 00:22:11,119 --> 00:22:13,480 Speaker 1: It might reduice it would it would reduce it. For instance, 394 00:22:13,480 --> 00:22:15,200 Speaker 1: the top rates two and a half to the quarter 395 00:22:15,240 --> 00:22:18,960 Speaker 1: percent to a quarter, yeah, to in a quarter. The 396 00:22:19,200 --> 00:22:21,280 Speaker 1: bank built cash rate in the r b A is 397 00:22:21,280 --> 00:22:24,560 Speaker 1: four point three five. This this rate was screaming to 398 00:22:24,560 --> 00:22:28,080 Speaker 1: to be raised. I talked to the Association of Independent 399 00:22:28,119 --> 00:22:31,440 Speaker 1: Retirees Wayne strad Quist on Monday. He said, we have us, 400 00:22:31,680 --> 00:22:34,440 Speaker 1: we have we assume it's going up, and it didn't move. 401 00:22:35,240 --> 00:22:41,800 Speaker 1: It didn't move. So what does that mean for investors? Well, 402 00:22:41,880 --> 00:22:46,119 Speaker 1: could you explain why what why it's a curiosity, but 403 00:22:46,119 --> 00:22:48,440 Speaker 1: also why it's useful in some ways. 404 00:22:48,640 --> 00:22:51,800 Speaker 2: Well, so it's the government's assumed return on your on 405 00:22:51,840 --> 00:22:55,800 Speaker 2: your investments and you've just talked about Yeah, the resksk 406 00:22:55,840 --> 00:23:02,000 Speaker 2: fray right, So people only need to take into account 407 00:23:02,000 --> 00:23:04,439 Speaker 2: two point twenty five is the deeming as opposed to 408 00:23:04,440 --> 00:23:08,159 Speaker 2: what they're actually returning, so it's got a positive effect 409 00:23:08,200 --> 00:23:11,560 Speaker 2: for so I've heard five hundred thousand pensioners. 410 00:23:11,680 --> 00:23:14,159 Speaker 1: Yeah, so basically you're going to be off on this. 411 00:23:14,280 --> 00:23:18,040 Speaker 1: It'll be better off because it was in the natural 412 00:23:18,119 --> 00:23:20,639 Speaker 1: order of things, it should have gone up and it 413 00:23:20,640 --> 00:23:23,199 Speaker 1: should be considerably higher than that. But they've left it 414 00:23:23,240 --> 00:23:26,080 Speaker 1: alone for one more year. So keep that in minded 415 00:23:26,160 --> 00:23:29,920 Speaker 1: for older Australians. And similarly, similarly, in a very similar 416 00:23:29,960 --> 00:23:33,880 Speaker 1: sort of non event that turns out to be news 417 00:23:33,880 --> 00:23:37,760 Speaker 1: because it didn't happen. The government's reverse mortgage scheme, the 418 00:23:37,760 --> 00:23:41,159 Speaker 1: wome Ekery Access scheme. The lending rate on that is 419 00:23:41,280 --> 00:23:45,160 Speaker 1: three point ninety five percent and in the commercial market 420 00:23:45,160 --> 00:23:47,040 Speaker 1: all the rates are about eight or nine and they 421 00:23:47,040 --> 00:23:49,280 Speaker 1: didn't move that either. Do you think they just forgot 422 00:23:49,280 --> 00:23:49,800 Speaker 1: to move it? 423 00:23:49,880 --> 00:23:52,480 Speaker 2: Will Well, I just need to remind people that we're 424 00:23:52,480 --> 00:23:55,000 Speaker 2: going to add with the next twelve months as there's 425 00:23:55,000 --> 00:23:57,480 Speaker 2: going to be an election. And I said the two 426 00:23:57,640 --> 00:24:01,159 Speaker 2: hundred thousand people have been positively acted from the daming rate, 427 00:24:01,280 --> 00:24:03,360 Speaker 2: let alone those that you just mentioned as well. 428 00:24:03,520 --> 00:24:06,360 Speaker 1: Yeah, so look, what can I say, folks, It's there 429 00:24:06,480 --> 00:24:10,640 Speaker 1: to be used. As I say, it's always worth reading 430 00:24:11,000 --> 00:24:15,960 Speaker 1: budget and budget coverage because opportunities arise right left and center. 431 00:24:16,720 --> 00:24:19,760 Speaker 1: If I knew across them that there are some of 432 00:24:19,800 --> 00:24:22,479 Speaker 1: the some of the some of the bigger issues in 433 00:24:22,520 --> 00:24:26,800 Speaker 1: the budget in terms of how the government played this. 434 00:24:27,440 --> 00:24:31,199 Speaker 1: But what would you like to have seen? Will? That 435 00:24:31,560 --> 00:24:32,080 Speaker 1: wasn't there? 436 00:24:32,520 --> 00:24:34,720 Speaker 2: I suppose the biggest thing is I for me was this. 437 00:24:35,320 --> 00:24:37,640 Speaker 2: I think the biggest issue out there at a federal 438 00:24:37,720 --> 00:24:41,800 Speaker 2: level is this unrealized capital gains. And I was and 439 00:24:41,840 --> 00:24:44,560 Speaker 2: there were just wasn't a mention of that three million level. 440 00:24:45,119 --> 00:24:46,960 Speaker 2: So I think when it comes to super was it's 441 00:24:47,000 --> 00:24:50,440 Speaker 2: about what wasn't discussed And as you rightly said, amendments 442 00:24:50,440 --> 00:24:52,640 Speaker 2: and then you put forward in the last twenty four 443 00:24:52,640 --> 00:24:54,880 Speaker 2: hours by the tials. 444 00:24:54,640 --> 00:24:58,680 Speaker 1: By the tials, Yeah, they're hoping to get amendments. So 445 00:24:58,720 --> 00:25:02,240 Speaker 1: specifically folks for trying to get in terms of amendments, 446 00:25:02,840 --> 00:25:05,639 Speaker 1: And as Will says, it's it's important. It's not so 447 00:25:05,760 --> 00:25:09,199 Speaker 1: much that it's a particular tax on super at a 448 00:25:09,200 --> 00:25:12,120 Speaker 1: particular level. It's the nature of the tax that if 449 00:25:12,160 --> 00:25:18,160 Speaker 1: you start taxing paper gains, where does it stop. How 450 00:25:18,160 --> 00:25:20,719 Speaker 1: would we invest or make any plans long term? This 451 00:25:20,760 --> 00:25:23,720 Speaker 1: is the argument against it. So the two two key amendments, 452 00:25:23,880 --> 00:25:28,240 Speaker 1: as I understand alec Rispender has pushed for em Parliament today, 453 00:25:29,000 --> 00:25:33,280 Speaker 1: is that it is not only on realized gains. And 454 00:25:33,320 --> 00:25:36,400 Speaker 1: the second one is that it's indexed. Because funnily enough, 455 00:25:36,440 --> 00:25:38,440 Speaker 1: as I said, as I said in a minute ago, 456 00:25:38,480 --> 00:25:41,359 Speaker 1: the index whatever they like and it don't index other things, 457 00:25:41,359 --> 00:25:43,439 Speaker 1: and that they plan not to index this new tax. 458 00:25:44,080 --> 00:25:48,960 Speaker 1: What have you heard of any alternative mechanism that you 459 00:25:49,040 --> 00:25:54,440 Speaker 1: could introduce this new supertax that doesn't involve on realized gains? 460 00:25:54,640 --> 00:25:59,439 Speaker 2: Will Now, I think that there was well flagged what 461 00:25:59,560 --> 00:26:03,639 Speaker 2: was coming in. And it's amazing how when it was 462 00:26:03,680 --> 00:26:07,359 Speaker 2: brought in the number of our clients that have said, okay, 463 00:26:07,400 --> 00:26:10,080 Speaker 2: we'll accept it. It's only fair, you know, we've had 464 00:26:10,080 --> 00:26:14,160 Speaker 2: it so good for so long. But when the fine 465 00:26:14,160 --> 00:26:20,200 Speaker 2: print was seen it should be a thirty percent above 466 00:26:20,240 --> 00:26:23,240 Speaker 2: that level on realized gains like it is on everything 467 00:26:23,240 --> 00:26:27,240 Speaker 2: else within in companies, on your own personal taxation, et cetera. 468 00:26:27,280 --> 00:26:30,920 Speaker 2: As anyway, and then to index it. You're right because 469 00:26:31,320 --> 00:26:34,000 Speaker 2: you know, what's three million? I think Alan chris Bender said, 470 00:26:34,000 --> 00:26:36,600 Speaker 2: what's three million going to be worth in twenty sixty four? 471 00:26:37,080 --> 00:26:38,399 Speaker 2: I think they were the very words. 472 00:26:38,200 --> 00:26:41,960 Speaker 1: Year yes, right, or even five years time. Yeah, sure 473 00:26:42,160 --> 00:26:46,119 Speaker 1: of course. And the other I suppose absurdity here is 474 00:26:46,160 --> 00:26:52,440 Speaker 1: that the lower band super tax being fifteen percent. Ah, 475 00:26:52,760 --> 00:26:56,800 Speaker 1: it's not indexed. Is indexed, I'm sorry, it is index 476 00:26:57,200 --> 00:27:01,080 Speaker 1: So it's just going to swell year and get bigger 477 00:27:01,080 --> 00:27:02,560 Speaker 1: and bigger. So already got from one point six. 478 00:27:04,359 --> 00:27:06,200 Speaker 2: Yeah, I've had a view on this that what's happening 479 00:27:06,240 --> 00:27:07,480 Speaker 2: is they're going to let that just get to the 480 00:27:07,480 --> 00:27:09,360 Speaker 2: three million level and then you're going to have zero 481 00:27:09,440 --> 00:27:10,000 Speaker 2: and thirty. 482 00:27:09,760 --> 00:27:12,200 Speaker 1: Percent, right, yes, I see, and then you'll. 483 00:27:12,080 --> 00:27:14,480 Speaker 2: Then start seeing a being indexed after that. I think 484 00:27:14,520 --> 00:27:17,119 Speaker 2: that's probably what the long term game game is. 485 00:27:17,200 --> 00:27:21,240 Speaker 1: Okay, all right, yeah, yeah, it's a real curiosity. We'll see, 486 00:27:21,640 --> 00:27:25,080 Speaker 1: as I understand from a parliamentary voting point of view, 487 00:27:25,480 --> 00:27:28,960 Speaker 1: that's going to be very hard to stop this, and 488 00:27:29,000 --> 00:27:33,360 Speaker 1: the Senate committee that examined it signed it off unchallenged 489 00:27:33,400 --> 00:27:39,680 Speaker 1: without any amendments. There is some the teals David Pocock 490 00:27:39,800 --> 00:27:44,120 Speaker 1: is it's apparently he's important. It's not clear of where 491 00:27:44,119 --> 00:27:46,800 Speaker 1: he's coming from. It's clear where a legal spender at 492 00:27:46,880 --> 00:27:49,199 Speaker 1: least is coming from, and perhaps some other teals so 493 00:27:49,240 --> 00:27:53,400 Speaker 1: that will play out in the days ahead. Okay, very interesting. 494 00:27:53,800 --> 00:27:56,880 Speaker 1: Uh anything you think that we didn't cover their will 495 00:27:56,920 --> 00:27:58,720 Speaker 1: for investors in the budget. I know it was a 496 00:27:58,800 --> 00:28:01,800 Speaker 1: very technical session, folks, but that's the nature of it. 497 00:28:02,040 --> 00:28:04,879 Speaker 2: Yeah, for small businesses, they get the they're extending the 498 00:28:04,880 --> 00:28:08,760 Speaker 2: twenty thousand dollars instant right off for small business. Again, 499 00:28:08,800 --> 00:28:12,680 Speaker 2: I think that's important. I didn't expect that, and I thought, 500 00:28:12,720 --> 00:28:14,280 Speaker 2: you know, I'm pleased to see that they're doing that, 501 00:28:15,080 --> 00:28:17,280 Speaker 2: of course, you know, and so it's up. It's for 502 00:28:17,359 --> 00:28:19,720 Speaker 2: businesses that have a turnover of less than ten million dollars. 503 00:28:20,000 --> 00:28:21,800 Speaker 2: And the other thing, which actually I think is fair, 504 00:28:21,920 --> 00:28:26,440 Speaker 2: which was pre announced, and that text relief. So yes, 505 00:28:27,280 --> 00:28:33,800 Speaker 2: the lower of CPI or what the average average wage increases, 506 00:28:33,960 --> 00:28:36,360 Speaker 2: and I do think that is actually a fair thing 507 00:28:36,400 --> 00:28:39,920 Speaker 2: to do. But again the government's calling this cost of 508 00:28:39,960 --> 00:28:42,920 Speaker 2: reliving relief. Doesn't change what you actually pay you back, 509 00:28:43,320 --> 00:28:45,000 Speaker 2: So it's not cost a living, it's not cost of 510 00:28:45,040 --> 00:28:47,600 Speaker 2: living relief. It's just that's a matter of fairness. 511 00:28:47,720 --> 00:28:51,120 Speaker 1: I don't think the reason I didn't actually even mention 512 00:28:51,200 --> 00:28:54,720 Speaker 1: the heck's there in that list was it's not any 513 00:28:54,920 --> 00:28:58,959 Speaker 1: restructuring of hects in any substantial degree. I know we've 514 00:28:59,000 --> 00:29:01,760 Speaker 1: got a lot of headlines because it was leaked in advance, 515 00:29:01,800 --> 00:29:05,640 Speaker 1: but really this is only the smallest variation in how 516 00:29:05,720 --> 00:29:10,840 Speaker 1: you apply indexation. I hope nobody's under the illusion that 517 00:29:10,840 --> 00:29:13,080 Speaker 1: they've made major changes to HEX, because I don't think 518 00:29:13,120 --> 00:29:16,440 Speaker 1: they have. And actually the Minister justin Claire, he said 519 00:29:16,760 --> 00:29:19,920 Speaker 1: when they announced it's that Sunday afternoon that he said 520 00:29:19,920 --> 00:29:22,120 Speaker 1: there would be more about HEX coming down the line. 521 00:29:22,200 --> 00:29:26,320 Speaker 1: But I don't see another thing actually, So it's a folks. 522 00:29:26,560 --> 00:29:28,600 Speaker 1: All you can say is that you know there'll be 523 00:29:28,640 --> 00:29:32,920 Speaker 1: a slightly fair there'll be a fairer method of indexing 524 00:29:33,440 --> 00:29:36,080 Speaker 1: HEX for inflation, which should have been there all the time, 525 00:29:36,200 --> 00:29:42,000 Speaker 1: but I would be careful not to say that it's 526 00:29:42,040 --> 00:29:45,640 Speaker 1: been greatly improved in any fashion. Okay, all right, we'll 527 00:29:45,680 --> 00:29:47,720 Speaker 1: take a short break. We've got some questions which you 528 00:29:47,840 --> 00:29:50,560 Speaker 1: do want to deal with. Though it's a special show. 529 00:29:51,960 --> 00:29:53,920 Speaker 1: People love the questions, so we'll be back to you 530 00:29:53,920 --> 00:30:04,520 Speaker 1: in a moment. Hello, welcome back to the Australians Money 531 00:30:04,520 --> 00:30:07,920 Speaker 1: Puzzle podcast. I'm James Kirby, the will editor at The Australian, 532 00:30:07,960 --> 00:30:11,200 Speaker 1: and we have been talking about the budget and if 533 00:30:11,200 --> 00:30:14,800 Speaker 1: you are now utterly sort of weighed down and swamped 534 00:30:14,800 --> 00:30:17,440 Speaker 1: with budget detail, we'll give you some light relief with 535 00:30:18,440 --> 00:30:21,680 Speaker 1: our weekly segment where we deal with the listeners questions. 536 00:30:21,720 --> 00:30:23,520 Speaker 1: And there's some great questions, so I just want to 537 00:30:23,760 --> 00:30:29,280 Speaker 1: put them to Will. Ben says in a recent podcast, 538 00:30:30,160 --> 00:30:33,120 Speaker 1: your guest was looking for government support for people who 539 00:30:33,200 --> 00:30:36,120 Speaker 1: retired at sixty in the budget. Get me the world's 540 00:30:36,160 --> 00:30:39,240 Speaker 1: smallest violin, He says, I think the last thing we 541 00:30:39,240 --> 00:30:44,719 Speaker 1: should be doing is incentivizing people to retire at sixty. Well, 542 00:30:45,080 --> 00:30:47,920 Speaker 1: Ben and all the Bens out there, I did make 543 00:30:47,960 --> 00:30:51,120 Speaker 1: the point that the incentives and the budget tend to be, 544 00:30:51,240 --> 00:30:55,080 Speaker 1: you know, to take up more social welfare, and the 545 00:30:55,120 --> 00:31:00,600 Speaker 1: incentives to invest are missing, and in fact, as Will says, 546 00:31:00,640 --> 00:31:03,760 Speaker 1: there's active disincentive built into the plans for the new 547 00:31:03,840 --> 00:31:06,080 Speaker 1: super tax. So thank you for that, Ben. I thing 548 00:31:06,160 --> 00:31:09,160 Speaker 1: to add to that one, Will, it's. 549 00:31:09,000 --> 00:31:11,520 Speaker 2: A brave government that goes out there to increase the 550 00:31:11,560 --> 00:31:14,800 Speaker 2: retirement age, especially in France. 551 00:31:15,360 --> 00:31:21,720 Speaker 1: Yeah, yeah, absolutely, yes, indeed. Okay, Steve asks, do you 552 00:31:21,760 --> 00:31:23,200 Speaker 1: want toy? Can you see those questions? 553 00:31:23,240 --> 00:31:28,959 Speaker 2: Will would? Yeah? Yeah, So Steve, perhaps the most crucial 554 00:31:29,000 --> 00:31:32,320 Speaker 2: component of anyone's investment strategy is the performance of our 555 00:31:32,360 --> 00:31:35,800 Speaker 2: super fund. Because these funds are so big and so diverse. 556 00:31:36,800 --> 00:31:39,880 Speaker 2: Is it a situation similar to a broad market ETF 557 00:31:40,040 --> 00:31:42,280 Speaker 2: or managed fund where in a normal year, the best 558 00:31:42,320 --> 00:31:45,240 Speaker 2: result one could hope for would be a return somewhere 559 00:31:45,240 --> 00:31:47,920 Speaker 2: around the return of the market, or would it be 560 00:31:47,960 --> 00:31:51,600 Speaker 2: a fair fair target to aspire to In reviewing one's 561 00:31:51,600 --> 00:31:56,480 Speaker 2: super performance, it's not about just the market, you know, 562 00:31:56,760 --> 00:32:00,880 Speaker 2: the super funds. These super funds invest in inequities, develop 563 00:32:00,920 --> 00:32:06,200 Speaker 2: market equities, emerging market equities, private equity, diversified credit, direct 564 00:32:06,240 --> 00:32:13,000 Speaker 2: property bonds, cash, defensive alternatives. So it's about a blended benchmark, 565 00:32:13,160 --> 00:32:15,400 Speaker 2: so that each one of these asset classes has a 566 00:32:15,400 --> 00:32:20,960 Speaker 2: benchmark or several benchmarket benchmarks within those components, and so 567 00:32:21,000 --> 00:32:25,400 Speaker 2: it's about the blended benchmark all the basket of investments 568 00:32:25,440 --> 00:32:26,400 Speaker 2: that it has. 569 00:32:26,720 --> 00:32:31,280 Speaker 1: Well, I suppose also keep an eye on what you know, 570 00:32:32,040 --> 00:32:35,600 Speaker 1: super big super is achieving. They're doing about eight percent 571 00:32:35,640 --> 00:32:38,560 Speaker 1: a year in recent times. The big funds the best funds, 572 00:32:39,120 --> 00:32:42,240 Speaker 1: and in a way you want to you you would 573 00:32:42,360 --> 00:32:44,640 Speaker 1: like to see that you match that, and you might 574 00:32:44,680 --> 00:32:47,280 Speaker 1: allow for some fee difference if you were exclusively in 575 00:32:47,320 --> 00:32:50,720 Speaker 1: ETFs by that I mean, the ETFs pay charge you lespies, 576 00:32:51,160 --> 00:32:54,200 Speaker 1: but that's in terms of a target to aspire to 577 00:32:54,600 --> 00:32:57,600 Speaker 1: in reviewing your performance. That's the thanks Steve. And also 578 00:32:58,640 --> 00:33:00,520 Speaker 1: you can also go on my super of course, so 579 00:33:00,640 --> 00:33:03,160 Speaker 1: you can go on the ATO website and see how 580 00:33:03,200 --> 00:33:05,800 Speaker 1: the super funds perform against each other. And though that 581 00:33:05,960 --> 00:33:10,120 Speaker 1: is an exercise which is imperfect, it is marvelous that 582 00:33:10,160 --> 00:33:12,280 Speaker 1: it actually exists. And for many years there was nothing 583 00:33:12,320 --> 00:33:14,800 Speaker 1: at all to be in a way to compare one 584 00:33:14,840 --> 00:33:17,680 Speaker 1: super fund to another. So that's very useful, I hope. 585 00:33:17,760 --> 00:33:21,200 Speaker 1: And remember, folks, this is always information. It's not advice, 586 00:33:22,120 --> 00:33:23,960 Speaker 1: but I think it's safe to say to someone like 587 00:33:24,000 --> 00:33:26,920 Speaker 1: Steve that you should have been able to measure a 588 00:33:27,000 --> 00:33:31,640 Speaker 1: super performance or targets quite easily. Now with that, with 589 00:33:31,800 --> 00:33:35,120 Speaker 1: the ability to look at the heat maps, et cetera 590 00:33:35,640 --> 00:33:38,040 Speaker 1: on super and you get the public figures from the 591 00:33:38,040 --> 00:33:42,560 Speaker 1: big funds, and you get ETF returns quite easily as well. 592 00:33:42,680 --> 00:33:46,800 Speaker 1: All right, final question from Martin. If you had two 593 00:33:46,920 --> 00:33:50,240 Speaker 1: options to give five thousand dollars to an eighteen year 594 00:33:50,280 --> 00:33:54,760 Speaker 1: old living at home and studying, what would be your choice. 595 00:33:55,240 --> 00:33:59,200 Speaker 1: Pay it into HEX or pay it into SUPER or 596 00:33:59,200 --> 00:34:02,520 Speaker 1: that's such a great question, especially that we are all 597 00:34:02,640 --> 00:34:06,640 Speaker 1: alert to HEX all of a sudden, because well, the 598 00:34:06,680 --> 00:34:10,400 Speaker 1: average HEX bill is twenty six thousand dollars. The average 599 00:34:10,440 --> 00:34:12,799 Speaker 1: HEX bill is twenty six thousand dollars, and lots and 600 00:34:12,840 --> 00:34:15,080 Speaker 1: lots of our listeners would have HEX bills of fifty 601 00:34:15,360 --> 00:34:19,600 Speaker 1: seventy one hundred thousand dollars. I ask people all the 602 00:34:19,640 --> 00:34:22,520 Speaker 1: time when I meet them monster hexill, especially younger people, 603 00:34:22,719 --> 00:34:26,759 Speaker 1: and it's it's really quite serious what their bills are 604 00:34:26,760 --> 00:34:33,320 Speaker 1: are becoming. So will million dollar question, what does a 605 00:34:33,840 --> 00:34:35,440 Speaker 1: person in Martin's position do? 606 00:34:36,600 --> 00:34:41,000 Speaker 2: Normally, I would be saying supers could always put it 607 00:34:41,000 --> 00:34:43,160 Speaker 2: into super IF for the long term. But I think 608 00:34:43,320 --> 00:34:46,040 Speaker 2: one of the things that has changed with HEX in 609 00:34:46,120 --> 00:34:51,080 Speaker 2: the last five years or so is this restricts in 610 00:34:51,080 --> 00:34:54,800 Speaker 2: individuals your balance, restricts in individual's ability to borrow. 611 00:34:54,880 --> 00:34:57,359 Speaker 1: Oh yeah, in the bank, at the bank from a mortgage, Yes, 612 00:34:57,480 --> 00:34:58,400 Speaker 1: of course, correct. 613 00:34:58,640 --> 00:35:02,600 Speaker 2: So I I think that's in fairness to the fact 614 00:35:02,600 --> 00:35:08,600 Speaker 2: that this individual is eighteen and the in ten years 615 00:35:08,680 --> 00:35:13,319 Speaker 2: time will definitely want to have purchased a property and 616 00:35:13,440 --> 00:35:15,879 Speaker 2: this is going to have a negative effect on their 617 00:35:15,880 --> 00:35:18,359 Speaker 2: borrowing ability. I think that's something you need to take 618 00:35:18,360 --> 00:35:19,200 Speaker 2: into a camp as well. 619 00:35:19,320 --> 00:35:21,440 Speaker 1: Sounds like you go awfully close to saying HEX over 620 00:35:21,560 --> 00:35:26,719 Speaker 1: super you are. Yeah, yeah, very interesting, and it's a 621 00:35:26,880 --> 00:35:30,359 Speaker 1: killer point, I think folks that will have just made that. 622 00:35:30,880 --> 00:35:32,719 Speaker 1: People say, oh, it doesn't matter, you know, it's on hex. 623 00:35:32,760 --> 00:35:36,439 Speaker 1: It's okay. There's no interest on that. Yeah, yeah, sure, 624 00:35:36,440 --> 00:35:39,359 Speaker 1: but there's an inflation indexing on it. And they say, yeah, yeah, 625 00:35:39,400 --> 00:35:41,920 Speaker 1: but it's okay. You know, it doesn't really get in 626 00:35:41,920 --> 00:35:45,200 Speaker 1: the way of other things. It does is a success 627 00:35:45,360 --> 00:35:47,400 Speaker 1: when you go to the bank. Let me tell you 628 00:35:47,440 --> 00:35:50,520 Speaker 1: something interesting. Well, on the show, I said once or 629 00:35:50,520 --> 00:35:57,480 Speaker 1: twice Appra demanded the banks include the assessment of HEX 630 00:35:57,920 --> 00:36:00,920 Speaker 1: your HEX bill in their assessment of your ability to 631 00:36:01,000 --> 00:36:03,239 Speaker 1: take a home loan. And APRA came on to me 632 00:36:03,600 --> 00:36:06,640 Speaker 1: and said, you have to correct that. It's not true. 633 00:36:07,080 --> 00:36:12,480 Speaker 1: We expect, we expect the banks, we don't demand the banks. 634 00:36:12,680 --> 00:36:14,879 Speaker 1: And I will leave with that our listeners to make 635 00:36:15,040 --> 00:36:18,440 Speaker 1: this semantic difference there, because it's very important to OPRA, 636 00:36:18,920 --> 00:36:21,960 Speaker 1: all right, So you know what I'm saying. In any event, folks, 637 00:36:21,960 --> 00:36:24,239 Speaker 1: HEX has become terribly important, So keep an eye on 638 00:36:24,280 --> 00:36:26,960 Speaker 1: it if you can pay it back due. And it's interesting. 639 00:36:27,000 --> 00:36:31,239 Speaker 1: I thought Will's answer very very interesting. Shows that X 640 00:36:31,280 --> 00:36:34,440 Speaker 1: has become the bills have become bigger and their impact 641 00:36:34,440 --> 00:36:37,200 Speaker 1: has become wider because they affect your ability to get 642 00:36:37,200 --> 00:36:39,520 Speaker 1: a mortgage. If you learned one thing from the show 643 00:36:39,560 --> 00:36:42,080 Speaker 1: today that would be well worth taking home with you. 644 00:36:43,040 --> 00:36:45,800 Speaker 1: Thanks very much, Will. Terrific to have you as always 645 00:36:45,800 --> 00:36:48,080 Speaker 1: on the Budget show. I don't know how many times 646 00:36:48,120 --> 00:36:53,359 Speaker 1: have we done it, three or four or five. Well, 647 00:36:53,400 --> 00:36:56,000 Speaker 1: thank you very much and I hope you have me. 648 00:36:56,400 --> 00:36:59,480 Speaker 1: You'll be with me the next time and terrific as always. 649 00:36:59,520 --> 00:37:03,160 Speaker 1: That was Will Hamilton of Hamilton Wealth Partners. Okay, folks, 650 00:37:03,320 --> 00:37:05,320 Speaker 1: believe it or not, I have a shortage of questions. 651 00:37:05,400 --> 00:37:07,680 Speaker 1: I had too many for too long, and now I 652 00:37:07,840 --> 00:37:11,600 Speaker 1: have the capacity to answer more. Send them in. Surely 653 00:37:11,600 --> 00:37:15,319 Speaker 1: there's questions on what we just covered the architecture of 654 00:37:15,400 --> 00:37:17,920 Speaker 1: the tax system as we know it from the Budget. 655 00:37:18,120 --> 00:37:21,160 Speaker 1: Here's the email the Money Puzzle at the Australian dot 656 00:37:21,160 --> 00:37:22,879 Speaker 1: com dot au. Talk to you soon.