WEBVTT - The Budget Special Edition 0:00:09.800 --> 0:00:13.160 Hello, and welcome to the Australians Money Puzzle podcast. I'm 0:00:13.240 --> 0:00:17.040 James Kirby, Wealth editor at The Australian, and welcome to 0:00:17.280 --> 0:00:21.079 our Budget Special Budget Special Edition, which I do each 0:00:21.160 --> 0:00:24.280 year and have done now for some years with Will 0:00:24.520 --> 0:00:26.280 Hamilton of Hamilton Wealth Partners. 0:00:26.280 --> 0:00:28.720 How are you, Will, I'm very well, James, Thank you. 0:00:29.040 --> 0:00:33.160 I like that we do this forty eight hours after 0:00:33.240 --> 0:00:36.519 the budget because we get to see not just what 0:00:36.840 --> 0:00:39.200 every sort of the knee jerk reaction on the evening 0:00:39.280 --> 0:00:41.600 or the next morning, but we get to see a 0:00:41.640 --> 0:00:45.280 sort of distillation of the analysis of it where everybody 0:00:45.360 --> 0:00:48.199 has a chance to actually sit down and take a 0:00:48.240 --> 0:00:50.720 proper look at it. I think, I mean, we're going 0:00:50.760 --> 0:00:53.800 to talk, folks about what the budget is for investors, 0:00:53.920 --> 0:00:56.440 right and what it means for investors, and don't be 0:00:57.840 --> 0:01:02.480 don't ever be of the opinion I think anyway that 0:01:02.520 --> 0:01:06.200 the budgets don't matter. Every budget matters, and there is 0:01:06.480 --> 0:01:10.679 enormous information inside the budget if you know where to look. 0:01:11.040 --> 0:01:13.240 And people will often say, oh, there's nothing in the budget. 0:01:14.920 --> 0:01:17.399 Not true. Not true this year either, even in the 0:01:17.400 --> 0:01:20.320 way that some things didn't happen is actually news in 0:01:20.360 --> 0:01:22.840 and of itself and explain that as we go into it. 0:01:23.120 --> 0:01:26.080 But first of all, I suppose on the headlines, on 0:01:26.200 --> 0:01:29.280 the big picture, for any investor, people want to know, well, 0:01:30.000 --> 0:01:31.880 what's going on with rates? They were supposed to drop 0:01:31.959 --> 0:01:36.759 now they're drifting. Looking at this budget, which is our 0:01:36.800 --> 0:01:40.800 window into the local economy. Does it suggest the rates 0:01:40.800 --> 0:01:43.240 will still drop or will will they actually move higher? 0:01:43.640 --> 0:01:48.200 And that's linked with inflation. Is it an inflationary budget? 0:01:48.280 --> 0:01:52.280 So question one for Will Hamilton is it an inflationary budget? 0:01:53.840 --> 0:01:56.640 My view is the cost of living support is diametrically 0:01:56.640 --> 0:02:02.360 opposed to inflation control. And I think everyone is focusing 0:02:02.480 --> 0:02:04.480 on the three hundred dollars. 0:02:04.720 --> 0:02:06.600 That's right, that every household is going to get for 0:02:06.720 --> 0:02:07.960 energy bits. 0:02:07.600 --> 0:02:10.880 Correct spread over each quarter, seventy five dollars, And now 0:02:10.880 --> 0:02:13.040 they're saying, you know, if you've got multiple households, it 0:02:13.120 --> 0:02:17.960 could be that there's not enough talk about the tax 0:02:18.040 --> 0:02:21.520 cuts and the tax cuts coming in as well, and 0:02:21.600 --> 0:02:24.120 I think if that is meaningful, their meaningful. I actually 0:02:24.120 --> 0:02:27.079 think the three hundred dollars you spread across four quarters, 0:02:28.919 --> 0:02:31.760 I don't know if it's going to have any meaningful impact, 0:02:32.160 --> 0:02:35.000 but the tax cuts do have a meaningful impact, and 0:02:35.639 --> 0:02:38.040 people are saying it's the equivalent of two rate cuts 0:02:38.600 --> 0:02:42.799 and putting that disposable income into the system. Is it 0:02:42.880 --> 0:02:46.160 saved or is it spent. If it's spent, the inflationary 0:02:46.160 --> 0:02:49.560 impact on that. So I think it's a gamble on inflation. 0:02:49.680 --> 0:02:51.720 I really do. And I think that's what the Eussie 0:02:51.720 --> 0:02:52.600 dollar is telling us. 0:02:53.400 --> 0:02:55.360 Why what's the dollar was telling us? 0:02:55.400 --> 0:02:58.600 The dollars you know, it was mildly strong yesterday, it's 0:02:58.600 --> 0:03:01.800 strengthened a little bit over nigh. We're sitting there around 0:03:01.840 --> 0:03:03.920 sixty seven. I think what they're telling you is, whilst 0:03:05.520 --> 0:03:07.400 we are the figures that came out last night with 0:03:07.440 --> 0:03:10.400 respect to retail sales and CPI and the US people 0:03:10.400 --> 0:03:13.800 are talking about now ninety six percent chance of a 0:03:13.919 --> 0:03:16.680 cut in September, what the Aussie dollar is telling us 0:03:16.760 --> 0:03:19.639 is there's probably very little chance of a cut here 0:03:19.639 --> 0:03:23.000 in Australia. So that's all on the back of inflation. 0:03:23.520 --> 0:03:26.160 Okay, so there's very little chance, according to the markets, 0:03:26.160 --> 0:03:29.160 of a cut in Australia. Frost part second part is 0:03:29.480 --> 0:03:33.880 that there is an attempt for There is a big 0:03:33.919 --> 0:03:38.120 attempt in the budget to support and support all levels 0:03:38.160 --> 0:03:41.400 of society, which is very useful, particularly at the lower end, 0:03:41.440 --> 0:03:44.760 of course, but there's also this very broad Commonwealth Rent 0:03:44.800 --> 0:03:49.440 Assistant Energy Bill support and the government said they're not 0:03:49.480 --> 0:03:57.280 inflationary because technically technically they suspend inflationary pressure. But some 0:03:57.760 --> 0:04:03.360 very top economists, I mean a list of economists are saying, look, 0:04:03.720 --> 0:04:08.120 this may this does not bring down inflation. It simply 0:04:08.400 --> 0:04:11.160 holds it for a period, and the minute those supports 0:04:11.160 --> 0:04:13.200 are over, it goes back up again, or the awkward 0:04:13.200 --> 0:04:15.960 pressure goes back up again. Warwick mckibbon, for instance, former 0:04:16.440 --> 0:04:19.440 RBA board manager, what do you think of that argument? 0:04:20.520 --> 0:04:24.400 And I also think the fact that it's spread over 0:04:24.640 --> 0:04:28.360 the full year or four quarters, I agree on that. 0:04:28.440 --> 0:04:31.719 I think that it's it's more of the fact that 0:04:31.760 --> 0:04:35.919 it's it's going to halt us rather than say that 0:04:36.080 --> 0:04:38.960 coming down. And I think that as the same economists 0:04:38.960 --> 0:04:42.240 are saying, is the RBA will look through this, They 0:04:42.240 --> 0:04:45.400 will fact that on the back of a headline if 0:04:45.400 --> 0:04:47.800 this is how it's artificially it has had an effect, 0:04:47.839 --> 0:04:52.279 which I doubt they will look through this and take 0:04:52.279 --> 0:04:53.000 this into account. 0:04:53.000 --> 0:04:58.040 They have to, yeah, they have to. So basically does 0:04:58.040 --> 0:05:01.760 some makes sense. It's politically death that you the measure 0:05:01.839 --> 0:05:04.839 of inflation that we all talk about will be affected 0:05:05.960 --> 0:05:11.520 by these But in terms of the market pressures, when 0:05:11.839 --> 0:05:14.520 when when these supports are taken away unless they leave 0:05:14.520 --> 0:05:16.720 them in forever and then the inflation just basically comes 0:05:16.720 --> 0:05:19.360 pouring back outs. 0:05:19.360 --> 0:05:21.640 Like it's reported in The Australian this afternoon that Chris 0:05:21.640 --> 0:05:24.960 Bowen on radio interview yesterday said well we're doing this 0:05:25.040 --> 0:05:28.359 to create a headline in inflation. Well is admitted what 0:05:28.360 --> 0:05:30.400 they're trying to do and the RBA will take that 0:05:30.440 --> 0:05:31.039 into account. 0:05:31.600 --> 0:05:34.600 Yeah, okay, very good. So folks, we're going to talk 0:05:34.640 --> 0:05:39.880 about the about what the investor should know about this 0:05:40.279 --> 0:05:45.080 budget and this new financial leader, which obviously the budget 0:05:45.080 --> 0:05:48.680 papers personage. Now, the big thing, as Will says, the 0:05:48.720 --> 0:05:51.480 biggest thing of all by a mile for investors is 0:05:51.920 --> 0:05:55.520 the tax cuts, and I just everyone should keep it 0:05:55.520 --> 0:05:59.320 in mind that how it works. Basically, the amount you pay, 0:05:59.360 --> 0:06:03.560 by the way, no tax upon. Interestingly, you think this 0:06:03.600 --> 0:06:06.960 doesn't matter, perhaps as an investor, it really does. They're 0:06:07.120 --> 0:06:09.680 eighteen thousand, two hundred a year. The first eighteen thousand, 0:06:09.720 --> 0:06:13.360 two hundred you make per year, there's no tax paid 0:06:13.400 --> 0:06:15.840 on that, and it hasn't changed, even though the other 0:06:15.880 --> 0:06:19.279 bands have changed, and there are tax cuts across the bands. 0:06:19.839 --> 0:06:21.839 What I'm alluding to here with the course is that 0:06:21.880 --> 0:06:24.600 people might start taking money out of super for various 0:06:24.600 --> 0:06:26.719 reasons in the future, and maybe that was one of 0:06:26.720 --> 0:06:29.440 the reasons the government held it at that, just to 0:06:29.440 --> 0:06:31.960 finish on the tax folks. So the starter band for 0:06:32.040 --> 0:06:35.640 tax will be eighteen thousand to forty five thousand, right, 0:06:35.680 --> 0:06:38.360 the rate will be sixteen percent, down from nineteen percent, 0:06:38.720 --> 0:06:41.640 and after that thirty two and a half percent rate 0:06:41.640 --> 0:06:45.039 will drop to thirty for forty five thousand two one 0:06:45.160 --> 0:06:48.279 three five thousand. Okay, have you with me so far? 0:06:48.480 --> 0:06:50.840 The thirty seven percent rate will kick in at one 0:06:50.960 --> 0:06:53.119 hundred and thirty five thousand, used to be one hundred 0:06:53.120 --> 0:06:56.520 and twenty, and the forty five percent rate now cuts 0:06:56.560 --> 0:06:59.400 in at one ninety up from one to eighty to 0:06:59.440 --> 0:07:01.320 which a lot of peop if we would say big deal. 0:07:01.480 --> 0:07:03.400 We thought it was going to be better than that. 0:07:03.480 --> 0:07:06.200 The implicit promise was that the top end would get 0:07:06.200 --> 0:07:08.919 these tax cuts as well, but across the government rearrange 0:07:09.000 --> 0:07:12.200 them a few months ago, and politically that has gone 0:07:12.280 --> 0:07:16.080 down well, and so I think we'll see more of 0:07:16.120 --> 0:07:19.760 this sort of engineering in the future. But basically, the 0:07:19.800 --> 0:07:23.000 new tax cuts are there. Everyone should be aware of them. 0:07:23.000 --> 0:07:25.560 They should be aware of their new tax ability. If 0:07:25.600 --> 0:07:28.560 you like with the new bands, familiar rize yourself with 0:07:28.640 --> 0:07:32.280 those bands. What do you think it means for investors generally? 0:07:32.480 --> 0:07:35.920 Will on the tax cuts? Now put out a survey 0:07:36.000 --> 0:07:41.640 saying that people are more likely to save than spend 0:07:42.520 --> 0:07:44.720 the tax cuts. I thought that was interesting. That would 0:07:44.720 --> 0:07:46.360 also mean investing them. 0:07:46.800 --> 0:07:51.920 Yeah, well that's the case. You will reduce that inflationary impact, 0:07:51.920 --> 0:07:54.440 there's no doubt about that. But no individual with taxable 0:07:54.520 --> 0:07:56.520 income of one hundred and thirty five thousand or lace 0:07:56.600 --> 0:07:58.640 is going to have a natural text right of more 0:07:58.680 --> 0:08:03.840 than thirty It seems to be this magical race that 0:08:03.880 --> 0:08:06.160 the government seems to be aiming everything at. You know, 0:08:06.200 --> 0:08:09.360 we've talked about the proposed to perinuation changes, et cetera. 0:08:09.520 --> 0:08:12.200 So what they're trying to do is look at this 0:08:12.400 --> 0:08:16.360 thirty percent seems to be this rate that they seem 0:08:16.400 --> 0:08:18.080 to be aiming at. I think that seems to be 0:08:18.160 --> 0:08:18.680 the big thing. 0:08:18.800 --> 0:08:21.200 The flat rate as such, if they were to bring 0:08:21.200 --> 0:08:23.240 in a flat rate, and originally the original plan of 0:08:23.280 --> 0:08:26.400 course was that would be larger the group in that, 0:08:26.520 --> 0:08:30.680 but they rearrange things. Okay, interesting, so keep that in mind, folks. 0:08:30.960 --> 0:08:33.680 Now after that, then there is an enormous amount of 0:08:33.720 --> 0:08:37.600 money going into housing. Most of it is social housing 0:08:38.240 --> 0:08:42.920 Commonwealth to rent assistance, but it's an enormous figure. And 0:08:42.960 --> 0:08:47.480 there's also initiatives for the construction industry at various levels. 0:08:47.480 --> 0:08:52.280 I mean the specifically, there's ten billion alone going into 0:08:52.679 --> 0:08:55.880 social housing, and I think I want to just point 0:08:55.880 --> 0:08:58.800 out from an investor's point of view again, will do 0:08:58.840 --> 0:09:03.640 you think that if this housing comes to pass, does 0:09:03.679 --> 0:09:06.880 it take some pressure off the vacancy rateing property which 0:09:06.920 --> 0:09:09.839 is currently one percent in residential property, which is one 0:09:09.840 --> 0:09:12.960 of the reasons people saw investors at least be so 0:09:13.080 --> 0:09:16.200 secure in property because you can rent anything and you 0:09:16.200 --> 0:09:17.680 can get rent increases each year. 0:09:17.880 --> 0:09:19.960 We need to design the houses, we need to get 0:09:20.120 --> 0:09:23.080 planning for the houses. Then we need to build the houses, 0:09:23.120 --> 0:09:25.439 and we need the people. I think they've allowed is 0:09:25.480 --> 0:09:30.640 it seventeen hundred on a migration basis to builders to 0:09:30.679 --> 0:09:33.559 come in, but we need but they're saying that, then 0:09:33.600 --> 0:09:36.720 the master build associations not saying that is enough. So 0:09:36.760 --> 0:09:39.800 we need the people to build the houses and yeah, 0:09:39.840 --> 0:09:44.640 the lag it's fantastic that they're doing this, but it's 0:09:44.640 --> 0:09:46.440 not going to happen. We're not going to wake up 0:09:46.440 --> 0:09:47.240 tomorrow and it's. 0:09:47.080 --> 0:09:50.880 Happened, right. So you think the vacancy rates so are 0:09:51.000 --> 0:09:53.360 going to be where they are super tight for the 0:09:53.360 --> 0:09:54.880 foresee of the future. 0:09:55.040 --> 0:09:58.560 Correact, Yeah, because I said you can design, planning and 0:09:58.600 --> 0:10:02.720 then build. Yes, so you're probably looking three years to 0:10:02.760 --> 0:10:03.480 be optimistic. 0:10:03.800 --> 0:10:06.719 Mm hmm, okay, very interesting, that is. I think that's 0:10:06.800 --> 0:10:10.760 very important folks for property investors to keep that in mind. 0:10:11.679 --> 0:10:17.120 That really for us in property investment, the big dynamics 0:10:17.760 --> 0:10:23.760 were around rates immigration, which of course kept the market 0:10:23.800 --> 0:10:27.920 particularly tight, and the forecast is for immigration to fall, 0:10:27.960 --> 0:10:30.960 and that's an important part part for property investors to 0:10:31.040 --> 0:10:34.679 know that. Look, the signals are that what will change 0:10:34.920 --> 0:10:37.880 will ease vacancy rates going forward, but they will be 0:10:38.040 --> 0:10:41.760 slow and we will have to see how they pan out, 0:10:41.800 --> 0:10:46.080 but there are signals at least that they will that 0:10:46.160 --> 0:10:47.880 the vacancy rate will ease. By that, I mean it 0:10:47.920 --> 0:10:50.880 will increase from its one percent, but it's not going 0:10:50.920 --> 0:10:53.840 to go to five or ten. Sorry, we'll be the 0:10:53.840 --> 0:10:54.560 regular one. 0:10:54.720 --> 0:10:57.480 The big issue and the need to reduce the red 0:10:57.520 --> 0:11:00.720 type so we can get these things built. That's and 0:11:00.760 --> 0:11:04.720 that that then gets down to state governments and local governments. Yeah, 0:11:04.720 --> 0:11:05.559 and that hasn't. 0:11:05.280 --> 0:11:11.560 Been Yes, okay, just before we talk about some individual 0:11:11.720 --> 0:11:15.120 measures that every investor should know, I think we might 0:11:15.200 --> 0:11:17.559 just take a look at on Super. So there was 0:11:17.600 --> 0:11:20.120 a few things that everyone should know on Super. The 0:11:20.160 --> 0:11:24.560 first thing is that your compulsory super moves up, of course, 0:11:25.160 --> 0:11:27.120 to eleven and a half percent in July one, on 0:11:27.160 --> 0:11:30.040 its way to twelve percent a year later. That's important. 0:11:30.520 --> 0:11:34.880 The amount you can contribute into Super is changing. That 0:11:35.040 --> 0:11:37.680 is the amount you can contribute on a pre tax 0:11:37.760 --> 0:11:40.360 basis what they call concession and moves from twenty seven 0:11:40.400 --> 0:11:44.240 thousand now twenty seven five hundred now to thirty thousand 0:11:44.320 --> 0:11:47.080 and July one. But that only brings us back to 0:11:47.080 --> 0:11:51.440 where we were a long time ago. Well, isn't that right? 0:11:51.640 --> 0:11:54.440 You used to be higher than thirty correct. 0:11:54.520 --> 0:11:57.840 I think that listeners have heard me so many times. 0:11:57.840 --> 0:12:02.120 The issue is not a super, it's getting money into Super, 0:12:02.400 --> 0:12:04.520 and it's very difficult to get in soupent on a 0:12:04.559 --> 0:12:06.840 non concessional basis of lifting that from one hundred and 0:12:06.840 --> 0:12:12.600 ten and twenty thousand, so that's the issue. These changes 0:12:12.640 --> 0:12:15.040 were brought in actually by the coalition government. They made 0:12:15.080 --> 0:12:18.680 it harder to get into SUPER, and I think that's 0:12:18.760 --> 0:12:20.040 the biggest issue. 0:12:20.480 --> 0:12:24.080 Yes, And these these increases in the amount you can 0:12:24.120 --> 0:12:30.560 put in, they're not structural. They are index indexing for inflation. 0:12:30.679 --> 0:12:35.160 They are only matching the inflation changes. So in real terms, 0:12:35.200 --> 0:12:37.520 the amount you can put in hasn't changed in any 0:12:37.559 --> 0:12:38.520 significant fashion. 0:12:39.080 --> 0:12:42.200 Correct. And also the transfer balance cap balance cap sorry, 0:12:42.280 --> 0:12:43.760 increases to one point nine million. 0:12:44.920 --> 0:12:48.280 Yes, yeah, it increases to one point nine million. That is, 0:12:48.600 --> 0:12:50.920 that is the amount you can happen Super before you 0:12:50.960 --> 0:12:55.559 pay the first tax band, which is fifteen percent. It's 0:12:55.600 --> 0:12:57.240 hard to keep all this in mind, folks, I know, 0:12:57.320 --> 0:12:58.679 but you need to learn it if you want to 0:12:58.679 --> 0:13:03.440 play the system in Super. You are not taxed on 0:13:03.520 --> 0:13:05.920 your earnings in SUPER when you retire up to one 0:13:05.920 --> 0:13:08.560 point nine million. And then there is a new plan, 0:13:08.679 --> 0:13:10.600 believe it or not, to bring in a second band 0:13:10.840 --> 0:13:14.640 at three million from the first of July twenty twenty five. 0:13:15.240 --> 0:13:18.120 Very controversial for the simple reason that it's not just 0:13:18.160 --> 0:13:21.280 another tax, it's taxed in a different way on realized 0:13:21.320 --> 0:13:24.080 gains it's about to be really kicked around in Parliament. 0:13:24.080 --> 0:13:28.040 Alegraspender has moved in motion today and I think it 0:13:28.080 --> 0:13:30.839 will be It will be debated, but I don't know 0:13:30.960 --> 0:13:34.840 because the Senate signed it off absolutely unchanged. That is 0:13:34.880 --> 0:13:38.680 the Senate inquiry. So what do you think the realistic 0:13:38.800 --> 0:13:41.679 chances are that it will be amended in anty fashion? 0:13:41.720 --> 0:13:44.880 Will I said that it wouldn't be changed, then I 0:13:44.920 --> 0:13:47.719 was hoping it more. Yeah, when I heard about the 0:13:47.760 --> 0:13:50.120 Senate inquiry, that they would see common sense and then 0:13:50.120 --> 0:13:52.680 we wouldn't be texting unrealized gains. I think that is 0:13:52.720 --> 0:13:54.319 just unconscionable. I really do. 0:13:54.679 --> 0:14:00.000 And just explain why, because someone who isn't very familiar 0:14:00.120 --> 0:14:03.079 with tax and investments might say, hey, listen, someone's got 0:14:03.080 --> 0:14:07.080 three million in super what's their problem and why are they? 0:14:07.720 --> 0:14:09.760 You know, what's wrong with them? That this new tax? 0:14:09.800 --> 0:14:10.400 What's wrong with it? 0:14:10.480 --> 0:14:12.640 Yeah? I think everyone's been concentrating on property, but I 0:14:12.679 --> 0:14:15.800 think Robert god Libson's really talked about private equity and 0:14:15.800 --> 0:14:18.160 I think that's probably a really good example. You've got 0:14:18.559 --> 0:14:23.480 a liquid growth investment in there, so it's growth without 0:14:23.480 --> 0:14:27.600 returning income, and the value of that goes from three 0:14:27.680 --> 0:14:31.400 million two let's say four million, but you're going to 0:14:31.400 --> 0:14:34.880 get taxed. That's thirty percent on that if you're three 0:14:34.920 --> 0:14:38.000 hundred thousand without any cash flow from it. But you 0:14:38.080 --> 0:14:41.160 have to find that cash flow pay that tax, by 0:14:41.160 --> 0:14:45.080 the way. But when backwards you don't get a refund, 0:14:45.120 --> 0:14:47.920 you get it only a credit. And that's it's just 0:14:48.360 --> 0:14:51.240 when I think everyone needs to pay taxes. I think, 0:14:51.280 --> 0:14:54.320 and in life everything needs to be fair. But this 0:14:54.520 --> 0:14:55.480 just is not fair. 0:14:55.720 --> 0:14:58.920 So it's not fair because it's on unrealized paper gains. 0:14:59.000 --> 0:15:02.360 It's on paper gains, right. So to make it simple, 0:15:03.760 --> 0:15:07.480 if I invested in a company with my super and 0:15:07.520 --> 0:15:10.040 it was a great little company, and I loved everybody 0:15:10.080 --> 0:15:13.200 in it, and I thought that we're brilliant. The thing is, 0:15:13.640 --> 0:15:15.520 and if they went up in value each year, though 0:15:15.560 --> 0:15:17.560 I couldn't get any money out, I'd be taxed on 0:15:17.600 --> 0:15:21.600 the amount of value increase that they are managing. Okay, 0:15:21.760 --> 0:15:24.200 And that's completely that's just out the window in terms 0:15:24.240 --> 0:15:26.120 of how the tax system works. So we've never seen 0:15:26.120 --> 0:15:26.680 that before. 0:15:27.320 --> 0:15:29.600 And I think in investment we all would agree that 0:15:30.200 --> 0:15:32.960 profit is not a profit until it's realized. Yeah, but 0:15:32.960 --> 0:15:36.040 they're telling you, well, hey, guys. Every year we're going 0:15:36.080 --> 0:15:38.960 to we want you to revalue your asset, and your 0:15:39.160 --> 0:15:40.800 unrealized game will be taxed. 0:15:41.720 --> 0:15:46.000 I wonder will though that's an interesting angle. The numbers 0:15:46.000 --> 0:15:50.480 suggest there isn't much investment in private enterprise and startups 0:15:50.480 --> 0:15:53.160 by so managed super funds. It's all in property. I 0:15:53.160 --> 0:15:55.320 think it's in property. It's really going to pinch. 0:15:56.160 --> 0:15:58.400 Yes, but I think we're robbed. God Libsin's coming on 0:15:58.440 --> 0:16:02.640 this angle. It's vibate. Equity and startups have a broad 0:16:02.680 --> 0:16:05.680 effect because they're growth and that's what the economy needs. 0:16:05.960 --> 0:16:10.040 And if you're starting the economy yes of growth, that 0:16:10.080 --> 0:16:12.480 has far far reaching consequences. 0:16:12.680 --> 0:16:15.600 It chokes off incentives, which is which is the problem 0:16:15.600 --> 0:16:18.520 that's all across this budget. I think people are saying, 0:16:19.040 --> 0:16:22.560 there's no incentives. There's an incentive to go on the pension, 0:16:23.360 --> 0:16:26.320 there's an incentive, there's an incentive you know for this 0:16:26.400 --> 0:16:29.320 and that, But but they're not incentives as such. They 0:16:29.320 --> 0:16:34.080 are incentives to to take part in social welfare, which 0:16:34.120 --> 0:16:35.640 is miles away from what we're talking about. 0:16:35.680 --> 0:16:39.880 Investor incentives aspiration that they're absolutely choking at and I 0:16:39.920 --> 0:16:41.400 think that's the problem. 0:16:41.400 --> 0:16:45.640 Okay, Also, look folks to cover off on on Super. 0:16:46.520 --> 0:16:48.400 The other thing that has come in is, of course 0:16:48.480 --> 0:16:51.440 parental leave. If you're talking about this for so long 0:16:51.480 --> 0:16:54.280 that you might think it's already done, it's not. It's 0:16:54.280 --> 0:16:59.320 finally confirmed. And how it works is that the superannuation 0:17:00.080 --> 0:17:03.880 will be paid on parental leave, government funded parental leave 0:17:03.920 --> 0:17:09.960 for twenty six weeks and it begins, it actually doesn't 0:17:09.960 --> 0:17:12.760 begin to July one, two, two five for all the headlines, 0:17:12.800 --> 0:17:16.560 but in any event, there it is coming through. That's 0:17:16.600 --> 0:17:19.480 another piece of news on Super. Okay, that's a bit 0:17:19.480 --> 0:17:22.280 to digest. We'll, we'll, we'll, we'll let everybody have a 0:17:22.320 --> 0:17:25.040 break and we'll be back to you with some very 0:17:25.040 --> 0:17:28.160 interesting parts of the budget that probably haven't been aired 0:17:28.440 --> 0:17:33.959 as much and you might find very interesting. Hello, welcome 0:17:33.960 --> 0:17:38.560 back to the Australians Budget Special. I'm James Kirkby, the 0:17:38.600 --> 0:17:41.080 Wealth editor at The Australian. I'm talking to Will Hamilton 0:17:41.119 --> 0:17:44.320 of Hamilton Wealth Partners and we are doing our budget 0:17:44.320 --> 0:17:49.360 special which we do each year. Okay, Will, here's some random, 0:17:49.880 --> 0:17:54.640 random thoughts and observations on the budget that are really unusual. 0:17:54.920 --> 0:17:56.840 I just wanted to talk to about first of all, 0:17:58.400 --> 0:18:02.840 talking about social welfare or helping people. The three hundred 0:18:03.040 --> 0:18:05.720 dollar energy rebate, of course, that goes to every house 0:18:05.760 --> 0:18:08.240 in the country. That would include every single person on 0:18:08.280 --> 0:18:12.439 the rich list, that would include all the billionaires, Anthony Pratt, 0:18:12.560 --> 0:18:15.600 Gina Reinhardt. They'll all get their three hundred dollars rebate, 0:18:15.600 --> 0:18:20.040 which would seem daft, but obviously giving them the benefit 0:18:20.119 --> 0:18:22.040 of the doubt, it's just they sound. It sounds like 0:18:22.040 --> 0:18:25.000 it would be very difficult to administer it in a 0:18:25.600 --> 0:18:28.240 in a more precise fashion. But the other caught my 0:18:28.320 --> 0:18:34.760 eye was the tax credits for the miners, seven billion 0:18:34.840 --> 0:18:40.080 dollars into tax credits for critical minerals lithium and nickel 0:18:40.119 --> 0:18:43.800 in particular, and the shares immediately moved on this. So 0:18:43.840 --> 0:18:47.840 we have we have the government through the prism of 0:18:48.000 --> 0:18:50.640 made in Australia and protecting things and all that sort 0:18:50.640 --> 0:18:54.200 of thing. But they're picking winners. Is that from an 0:18:54.200 --> 0:18:56.280 investor point of view? What do you think of a 0:18:56.359 --> 0:19:00.600 government picking winners and apportioning billions of dollars into areas 0:19:00.880 --> 0:19:03.320 like the quantum computing as well, which of course is 0:19:03.320 --> 0:19:05.160 a spectacular example of it. 0:19:05.600 --> 0:19:07.600 I don't think governments have a good track record in 0:19:07.640 --> 0:19:12.440 picking winners, and I think pumping money into things where 0:19:12.560 --> 0:19:17.359 I think private enterprise otherwise I think has played a 0:19:17.359 --> 0:19:21.360 far better role and a far more efficient role, and 0:19:21.520 --> 0:19:27.200 they've taken the risk on I think that there's over 0:19:27.240 --> 0:19:31.040 the over history, there's plenty of reasons we can sort 0:19:31.040 --> 0:19:33.000 of bring up things where they've made a mistake. Now 0:19:34.160 --> 0:19:36.560 I don't agree with that at all. 0:19:37.400 --> 0:19:40.439 Sorry, you don't agree with with the provision of picking 0:19:40.560 --> 0:19:42.600 a sector and giving it special treatment, No. 0:19:42.680 --> 0:19:45.400 I don't. But on the other hand, I do see 0:19:45.400 --> 0:19:51.040 what I know why they've picked critical, critical minerals in particular. 0:19:51.600 --> 0:19:53.639 There is a defense reason around a lot of this, 0:19:55.520 --> 0:19:59.600 and especially with Orcus and with the agreements we've got 0:19:59.640 --> 0:20:02.880 with you Outed States. There are some agreements there that 0:20:02.880 --> 0:20:08.440 that's the reasons why, uh, certain minerals have you got 0:20:08.480 --> 0:20:09.240 benefits there. 0:20:09.359 --> 0:20:12.000 But I mean the US themselves are doing it, aren't 0:20:12.000 --> 0:20:14.760 They will to be fair then that's the ultimate free market. 0:20:14.760 --> 0:20:16.600 But they're actually doing it too. So there is an 0:20:16.640 --> 0:20:21.040 element of national security here on this way. But at 0:20:21.080 --> 0:20:23.240 the end of the day, you're giving special treatment to 0:20:23.400 --> 0:20:27.040 stock market, this to the companies, and hey, uh, is 0:20:27.080 --> 0:20:30.720 it any surprise that there was immediate action on the 0:20:30.800 --> 0:20:35.680 market this week, folks. On those stocks that we're getting 0:20:36.080 --> 0:20:40.520 government help, I'll name them. So of course it's at 0:20:40.520 --> 0:20:43.320 the margins because they're so big, like BHP or West Farmers, 0:20:44.160 --> 0:20:47.639 Pilbur Minerals will get money. But as you get smaller, 0:20:47.880 --> 0:20:51.840 linetown Resources, et cetera, as the companies get smaller, they 0:20:51.880 --> 0:20:55.800 are more directly pumped, if you like, by by this, 0:20:56.320 --> 0:20:59.359 by this move by the government. Okay, Now I wanted 0:20:59.400 --> 0:21:02.879 to talk quickly about a couple of things that didn't happen. 0:21:03.760 --> 0:21:08.240 Often in a budget there is news in what didn't happen. 0:21:09.200 --> 0:21:10.840 And if you remember, at the start of the show, 0:21:10.880 --> 0:21:14.480 we was talking about inflation and we were mentioning how 0:21:15.040 --> 0:21:20.400 the inflation indexing has changed some things already in the budget. 0:21:20.440 --> 0:21:23.840 For instance, you'll be able to put in thirty thousand 0:21:24.080 --> 0:21:28.440 pre tax into your super because of inflation, because it's 0:21:28.480 --> 0:21:31.200 been adjusted up from twenty seven and a half. Now 0:21:31.200 --> 0:21:35.520 here's the thing the government, it's entirely random how they index. 0:21:35.560 --> 0:21:39.119 They can index whatever they want. There's no rules, and 0:21:39.160 --> 0:21:41.800 the index one thing and they don't index the other. 0:21:42.960 --> 0:21:46.320 So for instance, there's two interesting things for older Australians. 0:21:48.200 --> 0:21:53.159 Deeming is the mechanics by which you can access the 0:21:53.200 --> 0:21:55.720 pension or how much you get in the pension. A 0:21:55.800 --> 0:21:59.400 part pension is deeming, and what deeming is is how 0:21:59.400 --> 0:22:02.480 the government makes a deemed assessment of how much you've 0:22:02.480 --> 0:22:06.760 made on your investments. They apply that and it is 0:22:06.920 --> 0:22:11.080 then will dictate your access to to to the pension. 0:22:11.119 --> 0:22:13.480 It might reduice it would it would reduce it. For instance, 0:22:13.480 --> 0:22:15.200 the top rates two and a half to the quarter 0:22:15.240 --> 0:22:18.960 percent to a quarter, yeah, to in a quarter. The 0:22:19.200 --> 0:22:21.280 bank built cash rate in the r b A is 0:22:21.280 --> 0:22:24.560 four point three five. This this rate was screaming to 0:22:24.560 --> 0:22:28.080 to be raised. I talked to the Association of Independent 0:22:28.119 --> 0:22:31.440 Retirees Wayne strad Quist on Monday. He said, we have us, 0:22:31.680 --> 0:22:34.440 we have we assume it's going up, and it didn't move. 0:22:35.240 --> 0:22:41.800