1 00:00:06,280 --> 00:00:09,120 Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:09,200 --> 00:00:19,360 Speaker 1: James Kirkby, Welcome aboard everybody. I'm going to try something 3 00:00:19,400 --> 00:00:22,960 Speaker 1: quite different today. If you're a homeowner, if you are 4 00:00:23,000 --> 00:00:26,800 Speaker 1: an investment property owner, if you drive a car, there 5 00:00:27,040 --> 00:00:31,040 Speaker 1: is now, by now, I mean after the election, there 6 00:00:31,160 --> 00:00:36,479 Speaker 1: is suddenly a smorgas board of incentives and discounts to 7 00:00:36,600 --> 00:00:41,120 Speaker 1: go green in your home or indeed in your transport. 8 00:00:42,040 --> 00:00:45,440 Speaker 1: So solar rooftops have been around for a while, one 9 00:00:45,520 --> 00:00:48,559 Speaker 1: in three of the Australian public help solar panels, and 10 00:00:48,600 --> 00:00:52,520 Speaker 1: I expect that proportion would be considerably higher among our 11 00:00:52,680 --> 00:00:57,120 Speaker 1: listeners now with the new government, they are outlying quite 12 00:00:57,160 --> 00:01:03,400 Speaker 1: a significant federal national scheme about how to improve the 13 00:01:03,480 --> 00:01:08,959 Speaker 1: economic attraction of going solar through batteries with the ultimate 14 00:01:09,000 --> 00:01:12,399 Speaker 1: sort of power arrangement in your home. And also, if 15 00:01:12,400 --> 00:01:16,400 Speaker 1: you didn't know, electric cars are favored over petrol cars 16 00:01:17,120 --> 00:01:19,440 Speaker 1: in the financial system, we will explain all this to 17 00:01:19,480 --> 00:01:22,920 Speaker 1: you in a moment, because seriously interested in this area 18 00:01:23,240 --> 00:01:26,800 Speaker 1: is James Gerard, financial advisor, who is not just a 19 00:01:26,800 --> 00:01:30,520 Speaker 1: financial advisor and a contributor to the Australian, but I 20 00:01:30,560 --> 00:01:33,080 Speaker 1: think I could almost called you a geek on all 21 00:01:33,160 --> 00:01:35,119 Speaker 1: this stuff because you're writing about it for years. 22 00:01:35,160 --> 00:01:38,120 Speaker 2: How are you, James, I'm doing well, James, go easy. 23 00:01:38,160 --> 00:01:40,240 Speaker 2: It's still early on in the show, but I am 24 00:01:40,360 --> 00:01:44,240 Speaker 2: very pro electric electric cars, solid pedals. I've got it all. 25 00:01:44,720 --> 00:01:48,280 Speaker 1: Yeah, it's not that i'm not. It's just that I'm inert. 26 00:01:48,520 --> 00:01:50,680 Speaker 1: I just haven't got around to doing it. It's all 27 00:01:50,720 --> 00:01:53,480 Speaker 1: I want to do it. It's all there. Apparently the roof 28 00:01:53,560 --> 00:01:57,400 Speaker 1: is wired for all this. So we're going to do it, 29 00:01:57,640 --> 00:01:59,920 Speaker 1: and maybe we we'll do it having done this show, 30 00:02:00,000 --> 00:02:02,440 Speaker 1: and I'll finally kind of grasp it all, just like 31 00:02:02,480 --> 00:02:06,320 Speaker 1: the listeners hopefully. So, folks, we've said the first thing 32 00:02:06,400 --> 00:02:10,520 Speaker 1: is that one in three homes have solar panels, and 33 00:02:10,680 --> 00:02:12,520 Speaker 1: you may have them or you may not have them, 34 00:02:13,040 --> 00:02:16,640 Speaker 1: but the government, let's call them the The second that 35 00:02:16,880 --> 00:02:22,639 Speaker 1: Albanesi government part of the election promise was a big 36 00:02:23,280 --> 00:02:27,440 Speaker 1: new scheme to get people to subsidize and discount batteries. 37 00:02:27,480 --> 00:02:30,799 Speaker 1: So James, just, first of all, will you explain about, 38 00:02:30,919 --> 00:02:33,200 Speaker 1: for anyone who has owns their home or owns an 39 00:02:33,200 --> 00:02:35,639 Speaker 1: investment properly how it works. In terms of so far, 40 00:02:36,320 --> 00:02:39,639 Speaker 1: there was a lot of incentive to get solar panels. 41 00:02:39,680 --> 00:02:41,880 Speaker 1: That was the sort of a mark one, and it 42 00:02:41,960 --> 00:02:44,480 Speaker 1: obviously went very well. One in three homes have it 43 00:02:44,520 --> 00:02:48,760 Speaker 1: now and as I understand, the incentives for them and 44 00:02:48,800 --> 00:02:51,040 Speaker 1: them alone have sort of faded, have they in the 45 00:02:51,080 --> 00:02:52,760 Speaker 1: system as more people took them up? 46 00:02:53,440 --> 00:02:57,040 Speaker 2: Correct, solar panels have only been around for twenty to 47 00:02:57,200 --> 00:02:59,120 Speaker 2: twenty five years. If you go back to two thousand 48 00:02:59,160 --> 00:03:02,000 Speaker 2: and one, only one hundred and eighteen households in the 49 00:03:02,000 --> 00:03:04,600 Speaker 2: whole country had solar panels on their roof, the sunniest 50 00:03:04,639 --> 00:03:07,400 Speaker 2: continent on Earth. Yeah, right, yeah, and now there's four 51 00:03:07,440 --> 00:03:10,400 Speaker 2: point one million, as you say, one in three now, 52 00:03:10,520 --> 00:03:14,560 Speaker 2: going back ten fifteen years ago, there were very large 53 00:03:14,880 --> 00:03:18,519 Speaker 2: rebates for electricity that you export back to the grid 54 00:03:18,639 --> 00:03:21,360 Speaker 2: that you've generated from your solar panels. So that made 55 00:03:21,600 --> 00:03:24,360 Speaker 2: it quite profitable to put solar panels in because you 56 00:03:24,400 --> 00:03:27,040 Speaker 2: would not need to consume energy from the grid, but 57 00:03:27,080 --> 00:03:31,200 Speaker 2: you'd actually send energy back and get a decent subsidy 58 00:03:31,240 --> 00:03:34,160 Speaker 2: for that. But these days I've dropped it to almost nothing. 59 00:03:34,240 --> 00:03:37,200 Speaker 2: So the excess power that you're generating from your solar panels, 60 00:03:37,480 --> 00:03:39,640 Speaker 2: it's pretty much wasted sending it back to the grid. 61 00:03:39,720 --> 00:03:41,520 Speaker 2: Could you get in a few cents maybe five or 62 00:03:41,560 --> 00:03:45,560 Speaker 2: ten cents per killer what hour. So that makes batteries 63 00:03:45,960 --> 00:03:49,920 Speaker 2: an interesting proposition where rather than export your excess solar 64 00:03:50,440 --> 00:03:52,440 Speaker 2: electricity that you're generating back to the grid and get 65 00:03:52,480 --> 00:03:54,760 Speaker 2: almost nothing, you can store it and then at nighttime, 66 00:03:54,880 --> 00:03:57,680 Speaker 2: when there's no sun, you can then use that stored 67 00:03:57,760 --> 00:04:00,600 Speaker 2: up energy in the battery and save that. So that's 68 00:04:00,640 --> 00:04:03,760 Speaker 2: been more popular in the past five years. But the 69 00:04:03,800 --> 00:04:06,920 Speaker 2: biggest problem has been the cost of the batteries. They're 70 00:04:06,920 --> 00:04:08,320 Speaker 2: not cheap James yees. 71 00:04:08,400 --> 00:04:11,480 Speaker 1: So very few people have the batteries because up to 72 00:04:11,560 --> 00:04:13,600 Speaker 1: now it's been like you need to be really kind 73 00:04:13,640 --> 00:04:17,240 Speaker 1: of devlot on alternative energy or green energy to have 74 00:04:17,360 --> 00:04:19,800 Speaker 1: on in your home, so most people don't because they 75 00:04:19,880 --> 00:04:23,120 Speaker 1: cost ten to fifteen grand. So explain what the new 76 00:04:23,160 --> 00:04:26,240 Speaker 1: dealer is from the government federally, and it is for 77 00:04:26,320 --> 00:04:28,360 Speaker 1: anyone as they understand what's the offer. 78 00:04:28,720 --> 00:04:32,159 Speaker 2: It is. There's no asset threshold, no income threshold, and 79 00:04:32,200 --> 00:04:35,839 Speaker 2: just jumping back one step slightly on the solar panels. Now, 80 00:04:36,160 --> 00:04:39,360 Speaker 2: from a financial perspective, the payback period is usually sort 81 00:04:39,360 --> 00:04:41,919 Speaker 2: of between five ish years, maybe give or take a 82 00:04:41,920 --> 00:04:43,760 Speaker 2: couple of years, but The problem with batteries that the 83 00:04:43,760 --> 00:04:47,039 Speaker 2: payback period is eight to twelve years on average, and 84 00:04:47,080 --> 00:04:50,280 Speaker 2: that's dissuaded a lot of people from getting those batteries. 85 00:04:50,600 --> 00:04:54,120 Speaker 2: But what the Albanesi Labor government have proposed is that 86 00:04:54,520 --> 00:04:57,520 Speaker 2: they'll rebate you thirty percent of the cost of the 87 00:04:57,880 --> 00:05:00,520 Speaker 2: battery system that you put in at home cost between 88 00:05:00,520 --> 00:05:03,880 Speaker 2: ten and fifteen thousand dollars. Your installation costs will drop 89 00:05:03,880 --> 00:05:07,240 Speaker 2: between three thousand to four thousand, five hundred. But it 90 00:05:07,279 --> 00:05:10,080 Speaker 2: gets better because you can stack depending on which state 91 00:05:10,160 --> 00:05:13,039 Speaker 2: or territory that you live in, the state based incentives 92 00:05:13,040 --> 00:05:15,440 Speaker 2: to get batteries as well. So I know that in 93 00:05:15,480 --> 00:05:18,760 Speaker 2: Western Australia they're offering thousands of dollars if you put 94 00:05:18,800 --> 00:05:22,000 Speaker 2: batteries in, and most states offer something there. So it's 95 00:05:22,040 --> 00:05:24,719 Speaker 2: actually two different incentives. You got the state in the 96 00:05:24,720 --> 00:05:28,560 Speaker 2: federal which means that if your battery system costs fifteen thousand, 97 00:05:28,760 --> 00:05:31,479 Speaker 2: after you stack those rebates depending where you live, but 98 00:05:31,520 --> 00:05:33,560 Speaker 2: it's probably going to be about half that actual cost, 99 00:05:33,560 --> 00:05:35,240 Speaker 2: about seven and a half thousand. 100 00:05:35,160 --> 00:05:37,880 Speaker 1: Okay, So the essence of the deal is combined with 101 00:05:38,240 --> 00:05:42,599 Speaker 1: whatever your state deal is. The batteries folks that used 102 00:05:42,600 --> 00:05:45,560 Speaker 1: to cost ten to fifteen thousand, which is a fair 103 00:05:45,680 --> 00:05:50,159 Speaker 1: bit to pay. That is cut in half effectively, at 104 00:05:50,240 --> 00:05:53,680 Speaker 1: least's cut thirty percent by the federal deal And then 105 00:05:53,720 --> 00:05:56,760 Speaker 1: as you see, if you put in the whatever your 106 00:05:56,800 --> 00:06:00,160 Speaker 1: state dealer as well, then you could find that it 107 00:06:00,200 --> 00:06:02,920 Speaker 1: is actually cut in half. Yeah, okay, so that sounds 108 00:06:02,960 --> 00:06:06,520 Speaker 1: pretty good. Now. When you did this exercise, and it 109 00:06:06,600 --> 00:06:08,400 Speaker 1: was very well done, and you did this piece in 110 00:06:08,400 --> 00:06:10,880 Speaker 1: the Australian and it was quite obvious that you knew 111 00:06:10,920 --> 00:06:13,720 Speaker 1: your stuff thoroughly. You were saying various things like, the 112 00:06:13,760 --> 00:06:17,599 Speaker 1: average household uses twenty killer what hours of electricity per 113 00:06:17,680 --> 00:06:20,919 Speaker 1: day and pays two five hundred per year based on 114 00:06:21,000 --> 00:06:26,080 Speaker 1: the average price of electricity. But if you opted for 115 00:06:26,680 --> 00:06:30,080 Speaker 1: time abuse billing rates that can exceed fifty cents per 116 00:06:30,160 --> 00:06:32,960 Speaker 1: killer what hour and peak times. Okay, but if you 117 00:06:32,960 --> 00:06:35,440 Speaker 1: put a battery in, then you say, and you reduce 118 00:06:35,520 --> 00:06:39,599 Speaker 1: the reliance on your grid by fifty percent, then the 119 00:06:39,720 --> 00:06:43,520 Speaker 1: ten kilo what hours or that basically the hours attributed 120 00:06:43,560 --> 00:06:47,880 Speaker 1: to the battery, that you'll save one thousand to fifteen 121 00:06:47,960 --> 00:06:50,920 Speaker 1: hundred a year for the average household. So people say 122 00:06:50,920 --> 00:06:53,160 Speaker 1: to themselves, okay, I'm looking at this battery and now 123 00:06:53,279 --> 00:06:55,320 Speaker 1: cost half. I'm hoping it's going to cost me half 124 00:06:55,320 --> 00:06:57,440 Speaker 1: of what it used to cost that I thought it 125 00:06:57,480 --> 00:06:59,440 Speaker 1: was going to cost if by going to the federal scheme. 126 00:07:00,200 --> 00:07:02,080 Speaker 1: Do you know when it starts and what's the mechanics 127 00:07:02,120 --> 00:07:02,440 Speaker 1: of it. 128 00:07:03,200 --> 00:07:05,960 Speaker 2: I don't know when it starts, but I feel the 129 00:07:05,960 --> 00:07:09,880 Speaker 2: mechanics of it will be that the battery installer will 130 00:07:10,040 --> 00:07:11,920 Speaker 2: take it off the price, so you won't have to 131 00:07:11,920 --> 00:07:14,560 Speaker 2: pay the full ten to fifteen. You'll pay the discounted 132 00:07:14,880 --> 00:07:18,280 Speaker 2: amount and installer will go seek the reimbursement from the 133 00:07:18,320 --> 00:07:19,200 Speaker 2: federal government. 134 00:07:19,360 --> 00:07:21,120 Speaker 1: Oh I see, So you don't even have to get 135 00:07:21,120 --> 00:07:24,040 Speaker 1: into that. The price in the shop will reflect this scheme. Okay, 136 00:07:24,040 --> 00:07:26,160 Speaker 1: and we'll come back on when it starts as soon 137 00:07:26,240 --> 00:07:29,760 Speaker 1: as we can, all right now, Looking at the response 138 00:07:30,480 --> 00:07:34,360 Speaker 1: to this piece and this piece of information in the Australian, 139 00:07:34,400 --> 00:07:36,520 Speaker 1: at least, I think we must have an awful lot 140 00:07:36,560 --> 00:07:38,840 Speaker 1: of engineers. That's all I can say on the books 141 00:07:38,920 --> 00:07:41,679 Speaker 1: as subscribers in the Australian, because when you do these pieces, 142 00:07:41,680 --> 00:07:44,160 Speaker 1: boy oh boy, did they get in deep and talk 143 00:07:44,200 --> 00:07:48,080 Speaker 1: about what you're talking about, and clearly they have real 144 00:07:48,080 --> 00:07:53,680 Speaker 1: world experience of these both this technology, green technology and 145 00:07:53,800 --> 00:07:59,440 Speaker 1: the economics of them. So you met out basically here 146 00:07:59,520 --> 00:08:04,160 Speaker 1: that all things considered under this new scheme, if you 147 00:08:04,200 --> 00:08:07,000 Speaker 1: have solar panels and you get a battery discounted from 148 00:08:07,000 --> 00:08:11,160 Speaker 1: the government, etc. That it should end up basically line ball. 149 00:08:11,200 --> 00:08:13,840 Speaker 1: You won't loser and make much money on it. Is 150 00:08:13,840 --> 00:08:17,560 Speaker 1: that a fair assessment to fight your conclusion was it 151 00:08:17,600 --> 00:08:18,520 Speaker 1: is when you. 152 00:08:18,440 --> 00:08:23,600 Speaker 2: Take everything into consideration. On the surface, it looks good that, okay, 153 00:08:23,680 --> 00:08:27,160 Speaker 2: you use the solar panels during the day for electricity, 154 00:08:27,360 --> 00:08:29,840 Speaker 2: you use the battery at night with the stored energy, 155 00:08:30,160 --> 00:08:32,319 Speaker 2: where electricity costs can be quite high, being the peak 156 00:08:32,360 --> 00:08:35,880 Speaker 2: period at nighttime. But when you have a think about everything, 157 00:08:35,960 --> 00:08:37,880 Speaker 2: so one thing to notice that the useful life of 158 00:08:37,920 --> 00:08:40,559 Speaker 2: a battery is the guarantee period about ten years on 159 00:08:40,600 --> 00:08:44,000 Speaker 2: most battery manufacturers, and at that point they say that 160 00:08:44,040 --> 00:08:46,840 Speaker 2: you still should have about seventy percent capacity, and then 161 00:08:47,360 --> 00:08:50,400 Speaker 2: researching the battery should last about fifteen years, maybe a 162 00:08:50,400 --> 00:08:53,120 Speaker 2: little bit longer than that. So if you're getting one 163 00:08:53,120 --> 00:08:55,880 Speaker 2: thousand to fifteen hundred dollars a year benefit, and if 164 00:08:55,920 --> 00:08:58,400 Speaker 2: you just work off that ten year period, you're going 165 00:08:58,440 --> 00:09:00,680 Speaker 2: to pay back the battery after like five for six years, 166 00:09:00,720 --> 00:09:02,280 Speaker 2: and then you'll get a couple of years of net 167 00:09:02,320 --> 00:09:06,240 Speaker 2: benefit until the battery dies basically. But the other thing 168 00:09:06,240 --> 00:09:09,199 Speaker 2: you need to consider is the opportunity costs that seven 169 00:09:09,200 --> 00:09:11,280 Speaker 2: and a half thousand dollars that you spent on your 170 00:09:11,320 --> 00:09:13,920 Speaker 2: home battery. You could have put that into an ETIR 171 00:09:13,960 --> 00:09:16,040 Speaker 2: for you could have paid down your mortgage. 172 00:09:16,120 --> 00:09:18,760 Speaker 1: Yeah, you could have invested it as swear. Yeah, and 173 00:09:18,800 --> 00:09:20,959 Speaker 1: you're allowing for that, are you in your calculation that 174 00:09:21,040 --> 00:09:23,679 Speaker 1: it works out more or less line born idea? 175 00:09:23,800 --> 00:09:25,760 Speaker 2: So when you take into account that what could I've 176 00:09:26,040 --> 00:09:28,120 Speaker 2: used that seven and a half thousand dollars for to 177 00:09:28,240 --> 00:09:33,000 Speaker 2: earn interests, dividends, reduce my mortgage repayments, then it becomes 178 00:09:33,160 --> 00:09:35,480 Speaker 2: pretty much line bare in the numbers that I did 179 00:09:35,480 --> 00:09:40,520 Speaker 2: for the average household. So still it wasn't financially fantastic 180 00:09:40,679 --> 00:09:42,559 Speaker 2: in terms of the outcome if you were to install 181 00:09:42,720 --> 00:09:45,240 Speaker 2: a battery. It's not as compelling as what SOLA is, 182 00:09:45,320 --> 00:09:48,680 Speaker 2: even after the new incentive by the Labor government of 183 00:09:48,679 --> 00:09:49,800 Speaker 2: the thirty percent discount. 184 00:09:50,240 --> 00:09:52,680 Speaker 1: Just to clarify what you're saying is that if you 185 00:09:52,679 --> 00:09:55,640 Speaker 1: put the money into batteries, you will get your money 186 00:09:55,640 --> 00:09:58,600 Speaker 1: back basically cost neutral over a long period of time, 187 00:09:59,120 --> 00:10:02,520 Speaker 1: and you're allowing for the fact in that calculation that 188 00:10:02,640 --> 00:10:05,439 Speaker 1: allows the opportunity cost that you might have done what 189 00:10:05,480 --> 00:10:07,480 Speaker 1: you might have done with the money if you'd put 190 00:10:07,520 --> 00:10:12,440 Speaker 1: it in the market. Are ever so skeptical readers through 191 00:10:12,480 --> 00:10:16,040 Speaker 1: a few more darts at you, James the correspondent who 192 00:10:16,040 --> 00:10:18,600 Speaker 1: said the whole thing is a walk scam. We won't 193 00:10:18,640 --> 00:10:22,520 Speaker 1: put them to one side, but let's talk about some 194 00:10:22,559 --> 00:10:27,080 Speaker 1: of the sort of pragmatic critiques that were thrown at you. 195 00:10:27,160 --> 00:10:33,000 Speaker 1: One was that you underestimated the decline of the batteries. 196 00:10:33,160 --> 00:10:34,559 Speaker 1: Is there a fact that you allow for that? And 197 00:10:34,679 --> 00:10:35,920 Speaker 1: is there any chance they'll get better? 198 00:10:37,280 --> 00:10:40,840 Speaker 2: I did allow for that, But what I counted on 199 00:10:41,000 --> 00:10:44,000 Speaker 2: was the fact that the manufacturers offer factory warranties that 200 00:10:44,240 --> 00:10:46,520 Speaker 2: the battery is not performing after most of them have 201 00:10:46,520 --> 00:10:48,800 Speaker 2: between seven and ten years, But say like Tesla, their 202 00:10:48,840 --> 00:10:51,520 Speaker 2: power walls are ten year warranties that if it fails 203 00:10:51,520 --> 00:10:54,560 Speaker 2: within that period you get a new battery. So you 204 00:10:54,600 --> 00:10:57,280 Speaker 2: can expect seven to ten years of good working life 205 00:10:57,360 --> 00:10:59,560 Speaker 2: of the battery. And if you get in one thousand 206 00:10:59,600 --> 00:11:02,240 Speaker 2: dollars you benefit with simple mass and it costs you 207 00:11:02,360 --> 00:11:05,959 Speaker 2: seven thousand If that battery lives beyond seven years. You're 208 00:11:06,000 --> 00:11:09,000 Speaker 2: into positive territory before you take into account that opportunity 209 00:11:09,040 --> 00:11:10,480 Speaker 2: cost of what you could have done with the money. 210 00:11:10,960 --> 00:11:13,120 Speaker 1: So in a way, really the reward is that you've 211 00:11:13,120 --> 00:11:18,120 Speaker 1: gone green. Number one. Number two, you have become more 212 00:11:18,160 --> 00:11:21,800 Speaker 1: independent within the system. Is that true? Have you become 213 00:11:21,800 --> 00:11:25,720 Speaker 1: more independent? If you have your own battery and panels. 214 00:11:25,800 --> 00:11:29,120 Speaker 2: You are more independent because you have your own source 215 00:11:29,160 --> 00:11:32,440 Speaker 2: of energy there, independent of what's happening with the grid. 216 00:11:32,640 --> 00:11:35,079 Speaker 1: So if the energy prices shoot up and there's nothing 217 00:11:35,120 --> 00:11:37,560 Speaker 1: to say, they won't. I mean, we see for Oracs 218 00:11:37,600 --> 00:11:40,560 Speaker 1: talking about closing down a fertilizer factory in Queensland this 219 00:11:40,600 --> 00:11:43,680 Speaker 1: week because the gas prices. So let's just say prices 220 00:11:43,720 --> 00:11:45,839 Speaker 1: shoot up or there's a power cut for some reason 221 00:11:46,080 --> 00:11:48,320 Speaker 1: and mega heat wave. Would you be able to power 222 00:11:48,360 --> 00:11:49,240 Speaker 1: your house? Basically? 223 00:11:50,120 --> 00:11:52,559 Speaker 2: Yeah, that's right, So you have that ability to to 224 00:11:52,600 --> 00:11:55,600 Speaker 2: be able to do that. And just one thing which 225 00:11:55,640 --> 00:11:57,800 Speaker 2: is as an extension which may happen in the future, 226 00:11:57,920 --> 00:12:01,200 Speaker 2: is that you may be able to power your house 227 00:12:01,360 --> 00:12:05,120 Speaker 2: from your electric vehicle because very interestingly, the batteries in 228 00:12:05,200 --> 00:12:09,400 Speaker 2: electric vehicles between five to ten times bigger than the 229 00:12:09,520 --> 00:12:11,720 Speaker 2: electric battery that you would stick in your garage or 230 00:12:11,760 --> 00:12:15,440 Speaker 2: next to your house. Do you mean more capacity, the 231 00:12:15,480 --> 00:12:19,120 Speaker 2: more capacity? Yeah, yeah, So my electric vehicle, for example, 232 00:12:19,200 --> 00:12:23,720 Speaker 2: has a seventy killer what hour battery, whereas the average 233 00:12:24,120 --> 00:12:26,720 Speaker 2: Tesla power will has something like a ten to thirteen 234 00:12:27,040 --> 00:12:28,439 Speaker 2: killer what hour capacity. 235 00:12:28,840 --> 00:12:32,320 Speaker 1: Right, one of the Chinese manufacturers has come up with 236 00:12:32,400 --> 00:12:35,760 Speaker 1: the same. Is it like a charging can be done 237 00:12:35,760 --> 00:12:38,000 Speaker 1: in a couple of hours rather than overnight. So this 238 00:12:38,040 --> 00:12:39,920 Speaker 1: whole thing is changing very quickly. But this has always 239 00:12:39,920 --> 00:12:41,760 Speaker 1: been a thing. If you buy, do you buy too 240 00:12:41,760 --> 00:12:43,959 Speaker 1: early because the technology could be much better next year. 241 00:12:44,080 --> 00:12:45,640 Speaker 1: We do with that in a moment. Just one last 242 00:12:45,640 --> 00:12:48,720 Speaker 1: thing on the batteries. What about disposing them? 243 00:12:49,120 --> 00:12:51,040 Speaker 2: Well, that's an issue, isn't it. Because you have this 244 00:12:51,360 --> 00:12:54,880 Speaker 2: massive battery that is now not really doing anything as 245 00:12:54,920 --> 00:12:57,480 Speaker 2: past its useful life, it needs to be disposed of. 246 00:12:58,080 --> 00:13:01,160 Speaker 2: I didn't take that into account in terms of I 247 00:13:01,160 --> 00:13:02,599 Speaker 2: don't think there'll be a large cost to it. I 248 00:13:02,600 --> 00:13:04,480 Speaker 2: think if you get a new battery, the installer will 249 00:13:04,520 --> 00:13:06,920 Speaker 2: remove it. But there is a cost to the environment 250 00:13:06,960 --> 00:13:08,600 Speaker 2: there too. I'm not sure how much of the battery 251 00:13:08,600 --> 00:13:11,640 Speaker 2: you can recycle, and the carbon emissions linked to that 252 00:13:11,720 --> 00:13:14,400 Speaker 2: process as well. Yeah, so there's two arguments to go 253 00:13:14,480 --> 00:13:17,280 Speaker 2: for batteries and solar. One is that the pure financials 254 00:13:17,280 --> 00:13:19,240 Speaker 2: that you just do a spreadsheet, You go, Okay, it's 255 00:13:19,240 --> 00:13:21,600 Speaker 2: going to cost me x it's going to take why 256 00:13:21,720 --> 00:13:24,120 Speaker 2: number of years to get a net benefit that works 257 00:13:24,120 --> 00:13:25,680 Speaker 2: for me. I'll put the solar in because I know 258 00:13:25,760 --> 00:13:27,839 Speaker 2: that in four or five years I'll be in the 259 00:13:27,880 --> 00:13:30,760 Speaker 2: black on that. With the battery, it's less compelling, but 260 00:13:31,280 --> 00:13:34,240 Speaker 2: there is a slight benefit with it. The other reason 261 00:13:34,280 --> 00:13:35,920 Speaker 2: why people put in battery in solar is that the 262 00:13:35,920 --> 00:13:39,520 Speaker 2: feel good factor, that environmental factor, which is definitely there 263 00:13:39,520 --> 00:13:41,360 Speaker 2: with the solar, but probably a little bit less so 264 00:13:41,400 --> 00:13:44,080 Speaker 2: with the battery. Given that it's not something that can 265 00:13:44,120 --> 00:13:45,960 Speaker 2: stay on your roof like the solars for twenty five 266 00:13:46,040 --> 00:13:48,640 Speaker 2: thirty years, they have a much more limited life, about 267 00:13:48,640 --> 00:13:49,760 Speaker 2: half the life of the solar. 268 00:13:49,920 --> 00:13:52,000 Speaker 1: I see. So the panels last much longer, do they? 269 00:13:52,720 --> 00:13:55,360 Speaker 2: They do? Yeah, they've lasted quite a long time, even 270 00:13:55,400 --> 00:13:57,880 Speaker 2: in our rugged Australian conditions. 271 00:13:57,920 --> 00:14:02,520 Speaker 1: Interesting. Okay, we've just covered the new deal if you like, 272 00:14:02,640 --> 00:14:06,400 Speaker 1: on clean energy for your home. Next we will deal 273 00:14:06,440 --> 00:14:11,640 Speaker 1: with the tax bias basically towards electric cars. That you 274 00:14:11,760 --> 00:14:22,040 Speaker 1: may not be aware of back in the moment. Hello 275 00:14:22,120 --> 00:14:25,040 Speaker 1: and welcome back to the Australians Money Puzzle podcast. I'm 276 00:14:25,120 --> 00:14:30,400 Speaker 1: James Kirby with James Girard, financial Advisor dot com dot au, 277 00:14:30,680 --> 00:14:36,479 Speaker 1: regular on the show and a keen clean energy devotee 278 00:14:36,480 --> 00:14:39,320 Speaker 1: with an electric car. We won't say what brand. You've 279 00:14:39,320 --> 00:14:40,840 Speaker 1: been fairly happy with it, though. 280 00:14:41,240 --> 00:14:44,200 Speaker 2: Very very happy with it. I've always been a petro 281 00:14:44,320 --> 00:14:46,720 Speaker 2: head by my whole life. You're a car guy, very 282 00:14:46,800 --> 00:14:49,440 Speaker 2: much a car guy, and I stayed away from EV's 283 00:14:49,440 --> 00:14:51,960 Speaker 2: for a very long time. I turned my nose at them, James, 284 00:14:51,960 --> 00:14:55,520 Speaker 2: But in the past couple of years, I'm a convertee 285 00:14:55,520 --> 00:14:56,640 Speaker 2: to electric vehicles. 286 00:14:56,800 --> 00:15:01,080 Speaker 1: Yeah, okay, So we mentioned in the first part of 287 00:15:01,120 --> 00:15:04,960 Speaker 1: the show, folks that on top of the inducements for 288 00:15:05,080 --> 00:15:09,080 Speaker 1: both the solar panels and the battery that would be 289 00:15:09,200 --> 00:15:12,240 Speaker 1: underneath that and getting that entire sort of enterprise going 290 00:15:12,280 --> 00:15:15,960 Speaker 1: in your home, which is now available from the new government, 291 00:15:16,800 --> 00:15:22,240 Speaker 1: there is also ideal on electric cars now. To be precise, 292 00:15:22,440 --> 00:15:27,480 Speaker 1: the deal is that there is outstanding tax benefits if 293 00:15:27,520 --> 00:15:31,040 Speaker 1: you lease the car. And before we actually get into it, James, 294 00:15:31,080 --> 00:15:34,760 Speaker 1: I would have thought that an electric car is the 295 00:15:34,760 --> 00:15:37,000 Speaker 1: best way to deal with them is to lease them 296 00:15:37,040 --> 00:15:39,920 Speaker 1: because the technology is changing so fast. We mentioned about 297 00:15:39,960 --> 00:15:43,480 Speaker 1: how one of the China based car companies announced recently 298 00:15:43,520 --> 00:15:45,680 Speaker 1: that it could charge car in an hour or two 299 00:15:46,000 --> 00:15:49,320 Speaker 1: compared to what is the standard eight to ten hours. 300 00:15:49,640 --> 00:15:52,200 Speaker 1: And there's always this question about the secondhand value of 301 00:15:52,240 --> 00:15:55,080 Speaker 1: electric cars. So what's your first response to that that 302 00:15:55,080 --> 00:15:57,200 Speaker 1: it's better to lease one than buy one. 303 00:15:57,240 --> 00:15:59,440 Speaker 2: Ten years ago, you buy a Tesla, it would cost 304 00:15:59,480 --> 00:16:02,000 Speaker 2: you one hundred thousand dollars or more. It was more 305 00:16:02,040 --> 00:16:05,040 Speaker 2: seen as like a flexis status symbol, whereas today the 306 00:16:05,080 --> 00:16:08,480 Speaker 2: electric vehicles, there's a whole rafter, these Chinese electric vehicles 307 00:16:08,480 --> 00:16:11,480 Speaker 2: that are coming in at comparable prices to the internal 308 00:16:11,520 --> 00:16:16,000 Speaker 2: combustion engine equivalent, which means that even after ten years, 309 00:16:16,040 --> 00:16:19,120 Speaker 2: when the battery dies or is dying, you can almost 310 00:16:19,160 --> 00:16:22,240 Speaker 2: throw away the electric vehicle and just go buy another one, 311 00:16:22,400 --> 00:16:24,400 Speaker 2: or you can replace the battery. It costs between ten 312 00:16:24,400 --> 00:16:26,760 Speaker 2: and fifteen thousand for the average electric vehicle battery to 313 00:16:26,800 --> 00:16:29,760 Speaker 2: be replaced. But it's a lot more compelling now to 314 00:16:29,760 --> 00:16:32,320 Speaker 2: buy an electric vehicle because the technology has got better 315 00:16:32,360 --> 00:16:35,040 Speaker 2: and the prices have come down substantially. 316 00:16:35,440 --> 00:16:39,000 Speaker 1: And the big changes the charging time, is that right? 317 00:16:40,040 --> 00:16:44,160 Speaker 2: That's correct. The charging time has come down quite a bit, 318 00:16:44,480 --> 00:16:46,840 Speaker 2: so it will take hours to charge the electric vehicles 319 00:16:46,880 --> 00:16:50,280 Speaker 2: going back five years, whereas now they've got these capacities there. 320 00:16:50,280 --> 00:16:52,360 Speaker 2: But I would put a cavea there. It depends on 321 00:16:52,400 --> 00:16:55,400 Speaker 2: the infrastructure on where you live, because I live in 322 00:16:55,440 --> 00:16:58,320 Speaker 2: metropolitan Sydney and there's very few places where I can 323 00:16:58,360 --> 00:17:02,800 Speaker 2: actually use the capabilit of my electric vehicle to maximize 324 00:17:02,840 --> 00:17:05,360 Speaker 2: the charge in time. So if I go to the fastest, 325 00:17:05,440 --> 00:17:07,960 Speaker 2: most powerful charger that I can find, I can charge 326 00:17:07,960 --> 00:17:11,240 Speaker 2: my electric vehicle in thirty minutes. But there's only a handful, 327 00:17:11,320 --> 00:17:12,760 Speaker 2: so we're talking like two or three of these and 328 00:17:12,800 --> 00:17:14,840 Speaker 2: the whole of Sydney. And if you go there you 329 00:17:14,880 --> 00:17:16,479 Speaker 2: have to wait a while as well, becau there's other 330 00:17:16,480 --> 00:17:19,240 Speaker 2: people for the same idea to charge there. So even 331 00:17:19,280 --> 00:17:22,520 Speaker 2: though you can charge them fast, in reality you can't 332 00:17:22,600 --> 00:17:24,919 Speaker 2: because there's nowhere to go charge them really quickly. 333 00:17:25,160 --> 00:17:29,600 Speaker 1: The infrastructure isn't there yet. And on the leasing, if 334 00:17:29,600 --> 00:17:31,879 Speaker 1: you're thinking of electric you should lease not buy. Is 335 00:17:31,920 --> 00:17:33,720 Speaker 1: that still the case, because it seems to be underminded 336 00:17:33,720 --> 00:17:35,040 Speaker 1: a bit by what you said there. 337 00:17:35,080 --> 00:17:37,920 Speaker 2: A second to go, it is still better to lease 338 00:17:38,040 --> 00:17:41,520 Speaker 2: rather than to buy. There's this thing called an ovated lease. 339 00:17:41,520 --> 00:17:43,640 Speaker 2: It's been around for ages. It's where you can salary 340 00:17:43,640 --> 00:17:47,240 Speaker 2: package a vehicle. And the way that most of the 341 00:17:47,280 --> 00:17:49,719 Speaker 2: financing companies would do it is that part of your 342 00:17:49,760 --> 00:17:52,600 Speaker 2: pre tax income goes towards the finance cost and the 343 00:17:52,640 --> 00:17:54,320 Speaker 2: operating cost of the car, and then part of your 344 00:17:54,320 --> 00:17:56,879 Speaker 2: post tax income goes towards it. So it was a 345 00:17:57,000 --> 00:18:01,280 Speaker 2: somewhat beneficial arrangement. But then a few years ago the 346 00:18:01,320 --> 00:18:04,280 Speaker 2: government said, all right, if you buy an electric vehicle 347 00:18:04,440 --> 00:18:07,080 Speaker 2: and you buy it below the luxury car tax threshold, 348 00:18:07,119 --> 00:18:09,479 Speaker 2: which is at the moment about ninety one thousand dollars, 349 00:18:09,920 --> 00:18:11,520 Speaker 2: you don't need to worry about this part of your 350 00:18:11,520 --> 00:18:13,359 Speaker 2: pre tax part of your post tax to pay for 351 00:18:13,400 --> 00:18:13,680 Speaker 2: this thing. 352 00:18:13,720 --> 00:18:14,200 Speaker 1: Every month. 353 00:18:14,480 --> 00:18:16,359 Speaker 2: Doesn't matter what you earn. You can use all of 354 00:18:16,359 --> 00:18:19,480 Speaker 2: your pre tax income to pay for the financing costs 355 00:18:19,480 --> 00:18:22,040 Speaker 2: of the car, pay for the operate in tires, insurance. 356 00:18:22,359 --> 00:18:27,919 Speaker 1: The entire costs is one hundred percent tax deductible, and 357 00:18:27,960 --> 00:18:31,400 Speaker 1: it used to only be half deductible. Is that roughly right? 358 00:18:31,840 --> 00:18:34,720 Speaker 2: Roughly like that? Today it works out to be one 359 00:18:34,760 --> 00:18:37,720 Speaker 2: of the best tax brakes going around, particularly for people 360 00:18:37,720 --> 00:18:40,439 Speaker 2: on that forty seven percent tax bracket to use that 361 00:18:40,560 --> 00:18:43,120 Speaker 2: pre tax income because remembering that people on the forty 362 00:18:43,160 --> 00:18:46,520 Speaker 2: seven percent tax bracket, every extra dollar they make in 363 00:18:46,600 --> 00:18:49,239 Speaker 2: gross salary, they're only getting fifty three cents in their 364 00:18:49,280 --> 00:18:52,040 Speaker 2: bank account. So the ability to use one dollar in 365 00:18:52,080 --> 00:18:55,359 Speaker 2: every dollar for this vehicle is fantastic. And that's why 366 00:18:56,000 --> 00:18:58,520 Speaker 2: the takeup of these novated leases to buy these electric 367 00:18:58,560 --> 00:19:00,359 Speaker 2: vehicles has just gone through the roof and the government 368 00:19:00,400 --> 00:19:03,040 Speaker 2: really underestimated how many people actually go for this. 369 00:19:03,640 --> 00:19:05,359 Speaker 1: Well we do, didn't we, James, because we said it 370 00:19:05,400 --> 00:19:07,400 Speaker 1: several times. We said that on this show. We said 371 00:19:07,400 --> 00:19:09,639 Speaker 1: it regularly wherever we were, this is going to go 372 00:19:09,720 --> 00:19:14,240 Speaker 1: like hotcakes, because it meant that we're always saying, you know, 373 00:19:14,280 --> 00:19:17,120 Speaker 1: for in terms of the salary earner, you know, there's 374 00:19:17,240 --> 00:19:19,240 Speaker 1: very little in the way tax breaks, like really, there's 375 00:19:19,240 --> 00:19:23,240 Speaker 1: put your money into super are there's borrow to buy 376 00:19:23,240 --> 00:19:27,679 Speaker 1: a house, investment property or perhaps investment package, but borrowed 377 00:19:27,680 --> 00:19:30,440 Speaker 1: to do that. Not everybody wants to do those things, 378 00:19:30,480 --> 00:19:33,280 Speaker 1: and after that it's slim pickings. But here was this 379 00:19:33,400 --> 00:19:39,120 Speaker 1: sort of barely advertised change in leasing, where to lease 380 00:19:39,119 --> 00:19:41,360 Speaker 1: an electric car became fully tax offset for the fat 381 00:19:41,440 --> 00:19:45,840 Speaker 1: salary earner, and it previously on the Petrick cars was not. 382 00:19:46,080 --> 00:19:49,240 Speaker 1: It was roughly half and half. So yes, it went 383 00:19:49,320 --> 00:19:51,680 Speaker 1: like a rocketer. And the leasing companies have been having 384 00:19:51,680 --> 00:19:54,159 Speaker 1: a bowl. And the electric car companies, a lot of 385 00:19:54,200 --> 00:19:56,320 Speaker 1: them are selling like this, and even the electric uts, 386 00:19:56,359 --> 00:19:59,800 Speaker 1: as I understand, that's what really drove them. So all 387 00:19:59,800 --> 00:20:04,560 Speaker 1: the people going around in those BYD Shark electric utes, 388 00:20:05,359 --> 00:20:07,200 Speaker 1: they would be most of them unnovated leases. 389 00:20:07,240 --> 00:20:10,520 Speaker 2: You reckon, I would hazard a guess and say absolutely 390 00:20:10,600 --> 00:20:13,680 Speaker 2: the majority would be on these novated leases. It costs 391 00:20:13,680 --> 00:20:16,159 Speaker 2: the government about half a billion dollars a year in 392 00:20:16,200 --> 00:20:19,600 Speaker 2: foregone taxes with these concessions on these electric vehicles by 393 00:20:19,600 --> 00:20:22,440 Speaker 2: this salary packaging. One thing that is important to note, though, 394 00:20:22,560 --> 00:20:26,520 Speaker 2: is that very recently the scheme stopped. If you buy 395 00:20:26,600 --> 00:20:29,920 Speaker 2: one of those plug in hybrids like the BYD Shark, 396 00:20:29,920 --> 00:20:32,400 Speaker 2: which is that electric ute, so no longer can that 397 00:20:32,440 --> 00:20:35,280 Speaker 2: benefit from these rules. It needs to be a pure 398 00:20:35,480 --> 00:20:39,320 Speaker 2: electric only, no more part electric part motor engine to 399 00:20:39,400 --> 00:20:40,600 Speaker 2: qualify for this scheme. 400 00:20:40,680 --> 00:20:43,680 Speaker 1: Now, okay, so I hope that's clear of folks. This 401 00:20:43,800 --> 00:20:45,200 Speaker 1: whole thing about thenovated lease. 402 00:20:45,280 --> 00:20:45,720 Speaker 2: The tax. 403 00:20:46,960 --> 00:20:50,200 Speaker 1: Attraction of it is for a purely electric car. Plug 404 00:20:50,240 --> 00:20:53,040 Speaker 1: in hybrids had been included, but they're no excluded. Is 405 00:20:53,040 --> 00:20:56,720 Speaker 1: that it? And that's why there was an incredibly sharks 406 00:20:57,200 --> 00:21:00,560 Speaker 1: spike and sales in all those hybrid plugin wasn't there 407 00:21:00,920 --> 00:21:02,440 Speaker 1: but just before they cut it off. 408 00:21:02,880 --> 00:21:05,960 Speaker 2: That's right. And leading up to the federal election, I 409 00:21:05,960 --> 00:21:08,040 Speaker 2: felt that Liberals shot themselves in the foot a little 410 00:21:08,040 --> 00:21:10,320 Speaker 2: bit because they proposed to get rid of this. They 411 00:21:10,359 --> 00:21:12,439 Speaker 2: did half a billion dollars a year of tax breaks 412 00:21:12,440 --> 00:21:15,320 Speaker 2: for electric vehicle owners, and one of the Liberal senates 413 00:21:15,359 --> 00:21:17,960 Speaker 2: has also proposed a road user charge, which is a 414 00:21:17,960 --> 00:21:21,399 Speaker 2: whole separate discussion around whether it's fair that electric vehicle 415 00:21:21,480 --> 00:21:23,919 Speaker 2: users are not paying the fuel excise. Yes, but so 416 00:21:24,080 --> 00:21:27,199 Speaker 2: really they're not contributing to road maintenance costs, and so 417 00:21:27,359 --> 00:21:30,960 Speaker 2: is it fair to charge them something Victorian government tried 418 00:21:31,000 --> 00:21:33,439 Speaker 2: to but then the High Court I think it was 419 00:21:33,520 --> 00:21:36,159 Speaker 2: said states can't charge that, only the federal government. So 420 00:21:36,160 --> 00:21:38,880 Speaker 2: it's actually sitting with Anthony Alberinezi to decide whether he's 421 00:21:38,920 --> 00:21:43,000 Speaker 2: going to levy electric users on a road charge. 422 00:21:43,200 --> 00:21:45,880 Speaker 1: Well, he will, of course, I reckon sooner or later. 423 00:21:46,200 --> 00:21:49,359 Speaker 1: He's probably just trying to get these initial schemes to 424 00:21:49,440 --> 00:21:52,240 Speaker 1: work first, because you can't have the situation wherever you 425 00:21:52,280 --> 00:21:54,000 Speaker 1: get to the future where half are on electric and 426 00:21:54,040 --> 00:21:56,720 Speaker 1: half are on petrol, and the petrol are paying for 427 00:21:56,760 --> 00:21:58,919 Speaker 1: one hundred percent of the road costs. So I mean 428 00:21:59,000 --> 00:22:02,760 Speaker 1: that you would think that that isn't fair at debate 429 00:22:02,840 --> 00:22:07,119 Speaker 1: perhaps for another show. Okay, I thought that was great, James, 430 00:22:07,200 --> 00:22:11,040 Speaker 1: really really interesting informative. I hope for everybody that has, 431 00:22:11,200 --> 00:22:14,080 Speaker 1: as I say, a property interest or a car interest, 432 00:22:14,080 --> 00:22:16,600 Speaker 1: which I imagine is about ninety nine point nine percent 433 00:22:16,840 --> 00:22:22,679 Speaker 1: of our listeners. We'll be back in a moment with 434 00:22:22,720 --> 00:22:36,879 Speaker 1: some really good questions. Hello and welcome back to the 435 00:22:36,920 --> 00:22:43,639 Speaker 1: Australians Money Puzzle podcast. James Kirby here with James Girard. 436 00:22:43,800 --> 00:22:47,280 Speaker 1: We are discussing the new deals if you like, that 437 00:22:47,359 --> 00:22:49,800 Speaker 1: are out there for you with the new government. We 438 00:22:49,840 --> 00:22:51,760 Speaker 1: did mention the first part of the show about the 439 00:22:51,800 --> 00:22:54,640 Speaker 1: new deal with the batteries and the big discounset will 440 00:22:54,680 --> 00:22:57,679 Speaker 1: be available if you already have a solar panel and 441 00:22:57,760 --> 00:23:00,720 Speaker 1: you want to get a battery in there. There is 442 00:23:00,800 --> 00:23:04,119 Speaker 1: quite a generous and incentive and discount scheme coming down 443 00:23:04,200 --> 00:23:06,600 Speaker 1: the line, which you can mix with your local state 444 00:23:06,720 --> 00:23:09,560 Speaker 1: schemes and cut the price in half. Basically as to 445 00:23:09,600 --> 00:23:12,159 Speaker 1: when it starts, the only reason we fudged on that 446 00:23:12,320 --> 00:23:14,520 Speaker 1: was because there is no start date, so it has 447 00:23:14,600 --> 00:23:16,840 Speaker 1: to go to Parliament obviously in a few weeks when 448 00:23:16,880 --> 00:23:20,560 Speaker 1: parliament resumes. But if it's the case that the structure 449 00:23:20,600 --> 00:23:23,760 Speaker 1: of the Parliament is basically that Labor has to negotiate 450 00:23:23,800 --> 00:23:26,640 Speaker 1: with the Greens to get things through the Senate, then 451 00:23:26,680 --> 00:23:30,120 Speaker 1: you would imagine even by the standards of the Greens 452 00:23:30,240 --> 00:23:33,920 Speaker 1: holding up things to get a variation on a deal 453 00:23:34,080 --> 00:23:37,800 Speaker 1: that one that one at least would go through relatively easily, 454 00:23:38,200 --> 00:23:43,919 Speaker 1: it being absolute heartland stuff for the Greens. Okay, now, James, 455 00:23:43,920 --> 00:23:46,280 Speaker 1: before we go to those questions, I should have asked you, 456 00:23:46,400 --> 00:23:49,560 Speaker 1: number one, do you have solar panels on the roof 457 00:23:49,560 --> 00:23:50,159 Speaker 1: of your house? 458 00:23:51,119 --> 00:23:53,760 Speaker 2: I do you do? I put them in about five 459 00:23:53,920 --> 00:23:56,760 Speaker 2: years ago. At that point in time, I had bought 460 00:23:56,800 --> 00:23:58,879 Speaker 2: the family home with my wife that we intended to 461 00:23:58,880 --> 00:24:01,560 Speaker 2: stay in for twenty years or so to raise our 462 00:24:01,560 --> 00:24:04,919 Speaker 2: three children, and I thought, okay, after I'd done the spreadsheet, 463 00:24:05,080 --> 00:24:07,480 Speaker 2: it made sense to put in the solar panels because 464 00:24:07,720 --> 00:24:09,520 Speaker 2: post five years I'll be in the black. 465 00:24:10,320 --> 00:24:12,080 Speaker 1: And how's that going great. 466 00:24:12,400 --> 00:24:15,000 Speaker 2: The only thing I'd make as an observation is that 467 00:24:16,280 --> 00:24:19,000 Speaker 2: this is gooden all scientific, but the tilt of the 468 00:24:19,080 --> 00:24:23,120 Speaker 2: Earth relative to the Sun is either higher or lower 469 00:24:23,119 --> 00:24:26,400 Speaker 2: in different parts of the year, which basically means that 470 00:24:26,760 --> 00:24:30,639 Speaker 2: the solar panels generate less in the winter times and 471 00:24:30,720 --> 00:24:34,160 Speaker 2: more in the summer times. And I didn't really factor 472 00:24:34,200 --> 00:24:37,000 Speaker 2: that in. I wouldn't get as much power generated during 473 00:24:37,040 --> 00:24:39,520 Speaker 2: winter from the solar panels. But outside of that, it's 474 00:24:39,520 --> 00:24:42,560 Speaker 2: been fantastic. I've been very happy with it. You can 475 00:24:42,600 --> 00:24:44,960 Speaker 2: be really nerdy if you want that. You have these 476 00:24:45,000 --> 00:24:47,400 Speaker 2: apps where it shows you how much you're generating right now, 477 00:24:47,440 --> 00:24:49,320 Speaker 2: and you go, oh, it's sunny, we're generating a lot. 478 00:24:49,359 --> 00:24:51,399 Speaker 2: Quick turn on the washing machine, and then you can 479 00:24:51,480 --> 00:24:53,680 Speaker 2: see throughout the week how much you've saved it as well. 480 00:24:53,920 --> 00:24:54,680 Speaker 2: It's quite cool. 481 00:24:55,280 --> 00:24:59,120 Speaker 1: My brother in law is a professor in Ireland and 482 00:24:59,160 --> 00:25:01,840 Speaker 1: he is big thing is alternative energy. I mean, he's 483 00:25:02,200 --> 00:25:06,800 Speaker 1: this is his area and he has solar panels. But 484 00:25:06,960 --> 00:25:10,959 Speaker 1: boy or boy, because they have such a sun is solo. 485 00:25:11,520 --> 00:25:13,320 Speaker 1: It's not on the roof of the house. It's he 486 00:25:13,560 --> 00:25:14,879 Speaker 1: lives on a kind of a what you might call 487 00:25:14,920 --> 00:25:17,640 Speaker 1: a small almost like a farm and he just has 488 00:25:17,680 --> 00:25:21,639 Speaker 1: this extraordinary thing on solar panels, but they're separate to 489 00:25:21,720 --> 00:25:23,240 Speaker 1: the house, like you go over to a part and 490 00:25:23,280 --> 00:25:25,520 Speaker 1: it's in the field and it's just sitting there. The 491 00:25:25,600 --> 00:25:28,280 Speaker 1: thing about the half the size botennis court very impressive 492 00:25:28,800 --> 00:25:31,520 Speaker 1: and that works. But yes, as you say, it depends 493 00:25:31,520 --> 00:25:34,080 Speaker 1: on where you are how much sun you get. Unfortunately, 494 00:25:34,080 --> 00:25:37,920 Speaker 1: it's a consistent and I'm sure everybody understands that that's 495 00:25:38,359 --> 00:25:40,040 Speaker 1: there's too much of it in summer and not enough 496 00:25:40,080 --> 00:25:41,919 Speaker 1: of it in midwinter. Like now, how is that what 497 00:25:41,920 --> 00:25:42,359 Speaker 1: you're saying. 498 00:25:43,000 --> 00:25:46,040 Speaker 2: Yes, the weather, but also the tilt of the earth 499 00:25:46,160 --> 00:25:48,840 Speaker 2: is different in summer in winter. That affects how much 500 00:25:49,240 --> 00:25:51,560 Speaker 2: absorption or whatever the technical term is that the solar 501 00:25:51,560 --> 00:25:53,840 Speaker 2: panels make from the sun, right, so they're less efficient 502 00:25:53,880 --> 00:25:55,560 Speaker 2: in winter, is what I'm trying to articulate. 503 00:25:56,040 --> 00:25:57,919 Speaker 1: Okay, do you have an electric car? 504 00:25:58,720 --> 00:26:02,359 Speaker 2: I do. That was usually for financial reasons. I was 505 00:26:02,359 --> 00:26:05,159 Speaker 2: one of the first to jump into that electric vehicle 506 00:26:05,520 --> 00:26:08,880 Speaker 2: discount buildnovatedly seen scheme thing when it came into force 507 00:26:08,920 --> 00:26:10,320 Speaker 2: a couple of years ago. 508 00:26:10,600 --> 00:26:12,719 Speaker 1: Yes, I remember we were both excited about it, and 509 00:26:13,000 --> 00:26:17,800 Speaker 1: you did it and I didn't. I tell me, but 510 00:26:17,840 --> 00:26:19,600 Speaker 1: do you also have a Petroc carr in the house. 511 00:26:20,200 --> 00:26:23,800 Speaker 2: I do. I think for the average Australian metropolitan family, 512 00:26:23,960 --> 00:26:28,320 Speaker 2: so where average mom and dad, three kids, we find 513 00:26:28,359 --> 00:26:32,800 Speaker 2: it necessary to have a hybrid or a petrol vehicle. 514 00:26:32,800 --> 00:26:35,199 Speaker 2: We have a hybrid as the family vehicle. That the 515 00:26:35,200 --> 00:26:38,360 Speaker 2: big seven seater that we can drive four hours from 516 00:26:38,400 --> 00:26:41,000 Speaker 2: Sydney and not have to worry about charging. Right, that's 517 00:26:41,000 --> 00:26:43,080 Speaker 2: the one that can go the longer distances. But it's 518 00:26:43,119 --> 00:26:46,760 Speaker 2: been fantastic having this little zippy electric vehicle to drop 519 00:26:46,800 --> 00:26:49,919 Speaker 2: the kids off, get me into the city. And the 520 00:26:49,960 --> 00:26:52,800 Speaker 2: maintenance costs it are much lower than petrol and diesel 521 00:26:52,880 --> 00:26:56,520 Speaker 2: engines because there's less fluids inside of the vehicle there. 522 00:26:56,600 --> 00:26:59,560 Speaker 2: So it's really just changing tires and then changing brakes 523 00:26:59,560 --> 00:27:02,159 Speaker 2: in frequent and that's it really with the electric vehicle 524 00:27:02,160 --> 00:27:02,880 Speaker 2: to maintain. 525 00:27:03,040 --> 00:27:06,119 Speaker 1: Yeah, and I'm all off for one of those very soon, okay. 526 00:27:06,240 --> 00:27:08,800 Speaker 1: And what about the battery? Is the offering from the 527 00:27:08,840 --> 00:27:12,719 Speaker 1: Albinezi administration sufficient to get you to put your hand 528 00:27:12,800 --> 00:27:14,080 Speaker 1: in your pocket and buy a battery? 529 00:27:14,640 --> 00:27:16,960 Speaker 2: I think it will get me over the line, even 530 00:27:17,000 --> 00:27:20,000 Speaker 2: though my analysis was that it was quite marginal. There 531 00:27:20,080 --> 00:27:24,000 Speaker 2: are forums where they teach you how to best manage 532 00:27:24,040 --> 00:27:26,879 Speaker 2: the life of the battery, to not top it up 533 00:27:27,000 --> 00:27:29,520 Speaker 2: a certain way, discharge it a certain way, so you 534 00:27:29,600 --> 00:27:32,040 Speaker 2: can prolong the life of the battery if you look 535 00:27:32,080 --> 00:27:34,520 Speaker 2: after it. And if I can get my battery fifteen 536 00:27:34,600 --> 00:27:36,680 Speaker 2: years or a little bit more, there'll be a decent 537 00:27:36,720 --> 00:27:37,280 Speaker 2: benefit there. 538 00:27:37,320 --> 00:27:40,680 Speaker 1: Okay, okay. Questions folks, which are not on this issue, 539 00:27:40,920 --> 00:27:44,080 Speaker 1: but perhaps we'd have some coming down the line. And also, 540 00:27:44,119 --> 00:27:46,680 Speaker 1: by the way, before I got to questions, as I said, 541 00:27:46,760 --> 00:27:49,440 Speaker 1: I encourage people, and I encourage them again. If you've 542 00:27:49,440 --> 00:27:51,360 Speaker 1: got to send in a question, feel free to send 543 00:27:51,359 --> 00:27:53,320 Speaker 1: in more than one. All the thing I ask you 544 00:27:53,440 --> 00:27:54,399 Speaker 1: is keep them short. 545 00:27:54,440 --> 00:27:54,840 Speaker 2: That's all. 546 00:27:55,240 --> 00:28:00,480 Speaker 1: Okay. Now a question you can see the one from Anthony, 547 00:28:00,560 --> 00:28:00,879 Speaker 1: can you? 548 00:28:01,160 --> 00:28:01,800 Speaker 2: I can? Yes? 549 00:28:01,880 --> 00:28:02,720 Speaker 1: Do you want to read that one? 550 00:28:03,760 --> 00:28:05,879 Speaker 2: Wondering if you could address the question of whether demon 551 00:28:05,960 --> 00:28:08,400 Speaker 2: rates will remain frozen or revert back to the higher 552 00:28:08,480 --> 00:28:11,080 Speaker 2: rates that reflect current inflation slash interest rates? 553 00:28:11,160 --> 00:28:14,040 Speaker 1: Okay, very good question, Anthony. Just for context here, folks, 554 00:28:14,800 --> 00:28:16,600 Speaker 1: if you don't know what they are, then you probably 555 00:28:16,640 --> 00:28:18,919 Speaker 1: don't care about them, And if you know what they are, 556 00:28:18,920 --> 00:28:20,240 Speaker 1: you really care about them. A lot, a lot of 557 00:28:20,240 --> 00:28:23,159 Speaker 1: things in finance like this, the deming rating. When you 558 00:28:23,200 --> 00:28:28,640 Speaker 1: get pension, they don't track everything you do. What they 559 00:28:28,720 --> 00:28:32,520 Speaker 1: do is they deem, right, they assume how much you make. 560 00:28:32,560 --> 00:28:34,960 Speaker 1: So if you have one hundred thousand sitting on the 561 00:28:35,000 --> 00:28:39,560 Speaker 1: side beyond your pension, they deem that you make a 562 00:28:39,560 --> 00:28:41,480 Speaker 1: certain rate on that. And the rate at the moment 563 00:28:41,520 --> 00:28:45,160 Speaker 1: is two point twenty five percent. Now it's important because 564 00:28:45,480 --> 00:28:48,200 Speaker 1: that's a benchmark rate and could be used, for instance, 565 00:28:48,200 --> 00:28:50,800 Speaker 1: with this new super tax. One of the alternative ideas, 566 00:28:51,080 --> 00:28:56,080 Speaker 1: rather than the daft, silly, ridiculous idea of taxing on 567 00:28:56,240 --> 00:29:01,040 Speaker 1: realized games, is to create a deming arrangement where they 568 00:29:01,080 --> 00:29:03,960 Speaker 1: would deem or assume how much you make each year 569 00:29:04,000 --> 00:29:06,720 Speaker 1: in your super As Jeff Wilson said on the show 570 00:29:06,720 --> 00:29:10,520 Speaker 1: a few weeks ago, anything is better than what they're 571 00:29:10,560 --> 00:29:13,960 Speaker 1: suggesting right now, And as we speak, that is what's 572 00:29:14,000 --> 00:29:16,440 Speaker 1: coming down the line in any event, So that's deeming. 573 00:29:16,840 --> 00:29:20,680 Speaker 1: So the thing about the deeming rate is that it's 574 00:29:20,680 --> 00:29:23,120 Speaker 1: two point two five percent, and as we all know, 575 00:29:23,320 --> 00:29:27,080 Speaker 1: that is really really low, and it's supposed to be 576 00:29:27,080 --> 00:29:30,920 Speaker 1: benchmarked against the cash rate, to be precisely official cash 577 00:29:31,000 --> 00:29:33,800 Speaker 1: rate as put through by the Reserve Bank. Now, what 578 00:29:33,840 --> 00:29:37,280 Speaker 1: happened was a few years ago during the COVID emergency, 579 00:29:37,760 --> 00:29:41,440 Speaker 1: the government of the day they left deeming very low 580 00:29:41,800 --> 00:29:45,400 Speaker 1: and it didn't reflect inflation or the current rates. And 581 00:29:45,440 --> 00:29:49,640 Speaker 1: then each regime successive regime have left it alone to 582 00:29:49,680 --> 00:29:52,280 Speaker 1: the point that it hasn't been changed for years and years. 583 00:29:53,200 --> 00:29:57,200 Speaker 1: So the academic answer to your question is, yes, they'll 584 00:29:57,200 --> 00:29:59,600 Speaker 1: reflect rates pretty soon, and to do so, they'll have 585 00:29:59,600 --> 00:30:04,120 Speaker 1: to go to match the RBA rate. But the realistic 586 00:30:04,200 --> 00:30:07,520 Speaker 1: answer is that politically, I think they've now left it 587 00:30:07,760 --> 00:30:10,640 Speaker 1: unchanged for so long that it's become a bit of 588 00:30:10,640 --> 00:30:12,720 Speaker 1: a sacred cow. Really, I think they'd be afraid to 589 00:30:12,720 --> 00:30:15,920 Speaker 1: touch it like faire to touch negative gearing affect, to 590 00:30:15,920 --> 00:30:18,000 Speaker 1: touch capital against tax. What do you think? 591 00:30:18,560 --> 00:30:20,520 Speaker 2: I agree. I think I will upset a lot of 592 00:30:20,560 --> 00:30:23,240 Speaker 2: retirees who are getting in Centralink benefits if they change 593 00:30:23,240 --> 00:30:24,800 Speaker 2: the deming rate, and I think it will be an 594 00:30:24,800 --> 00:30:28,520 Speaker 2: issue that just fizzles out naturally because the Reserve Bank 595 00:30:28,680 --> 00:30:32,000 Speaker 2: will likely reduce the cash rate by three quarters of 596 00:30:32,000 --> 00:30:34,240 Speaker 2: a percent or one percent over the next twelve months, 597 00:30:34,440 --> 00:30:37,360 Speaker 2: which moves the official cash rate closer to the higher 598 00:30:37,440 --> 00:30:39,400 Speaker 2: end of the demon rate, which is two point twenty five. 599 00:30:40,120 --> 00:30:42,920 Speaker 1: Yeah, mostly closer to three, and the deming rate is 600 00:30:42,920 --> 00:30:45,720 Speaker 1: two point two five, so the sort of the gap 601 00:30:45,920 --> 00:30:49,960 Speaker 1: narrows and so the issue becomes less important. Okay, Anthony, 602 00:30:50,200 --> 00:30:52,760 Speaker 1: I assume that's useful for you. Thanks very much for 603 00:30:52,880 --> 00:30:57,440 Speaker 1: the question. And the final question is from Andrew. I'm 604 00:30:57,520 --> 00:31:02,520 Speaker 1: curious if the benefits of the place of residence still 605 00:31:02,560 --> 00:31:06,280 Speaker 1: exist once you retire. For example, can someone who's retired 606 00:31:06,360 --> 00:31:09,800 Speaker 1: in their seventies travel for a few years while renting 607 00:31:09,800 --> 00:31:15,280 Speaker 1: out their principal place of residence? Okay, folks, that is 608 00:31:15,520 --> 00:31:19,880 Speaker 1: obviously something you declare for tax being what you say 609 00:31:19,960 --> 00:31:22,320 Speaker 1: is your home to the tax office. Will there be 610 00:31:22,360 --> 00:31:26,080 Speaker 1: no impact on their future capital gains due to the 611 00:31:26,120 --> 00:31:29,840 Speaker 1: six year rule? So he's saying, Andrew's asking, if I retire, 612 00:31:30,960 --> 00:31:33,160 Speaker 1: can I roll around the world from one, you know, 613 00:31:33,360 --> 00:31:37,040 Speaker 1: luxury resort to another renting out my home principal place 614 00:31:37,120 --> 00:31:40,600 Speaker 1: of residence, and is there any impact on future capital gains? 615 00:31:41,200 --> 00:31:43,000 Speaker 1: There's this thing called the six year rule. Could you 616 00:31:43,040 --> 00:31:45,760 Speaker 1: explain what could you explain the whole thing? First of all, 617 00:31:45,880 --> 00:31:49,600 Speaker 1: so what he's driving at and whether you can actually 618 00:31:49,600 --> 00:31:52,120 Speaker 1: head off for six years rent out your house to 619 00:31:52,280 --> 00:31:56,240 Speaker 1: someone and it doesn't affect your CGT. I reckon that's unlikely. 620 00:31:56,560 --> 00:31:59,680 Speaker 2: It's one of the oddities of the Australian taxation system 621 00:31:59,760 --> 00:32:02,760 Speaker 2: that you can move out of your home and as 622 00:32:02,760 --> 00:32:05,720 Speaker 2: long as you don't live or call another place your 623 00:32:05,800 --> 00:32:08,720 Speaker 2: home that you own, you can rent your former home 624 00:32:08,760 --> 00:32:10,520 Speaker 2: for six years, move back into it, or sell it 625 00:32:10,560 --> 00:32:12,800 Speaker 2: and there's no capital gains tax. I'm not really sure 626 00:32:12,840 --> 00:32:17,080 Speaker 2: why that's the case, but anyway, it's there. Interestingly, there 627 00:32:17,120 --> 00:32:21,240 Speaker 2: is no age or income requirement around it, so Andrew 628 00:32:21,400 --> 00:32:25,480 Speaker 2: can be retired, he can rent out his home, go traveling, 629 00:32:25,600 --> 00:32:28,560 Speaker 2: as you say, declare the rental income in a tax return, 630 00:32:28,640 --> 00:32:31,520 Speaker 2: and as long as he resumes residency in that home 631 00:32:31,640 --> 00:32:34,280 Speaker 2: or he sells it within that six year period, he 632 00:32:34,360 --> 00:32:38,280 Speaker 2: has no capital gains tax implications. And I have seen 633 00:32:38,360 --> 00:32:41,280 Speaker 2: cases where people have been out of the country for 634 00:32:41,480 --> 00:32:45,280 Speaker 2: prolonged periods of time beyond six years, and they've come 635 00:32:45,320 --> 00:32:48,400 Speaker 2: back to Australia saying year five and they've resumed residency 636 00:32:48,440 --> 00:32:50,960 Speaker 2: because I thought, Okay, we're done with our overseas travels. 637 00:32:51,000 --> 00:32:53,400 Speaker 2: But then six months or a year later, they sort 638 00:32:53,400 --> 00:32:55,240 Speaker 2: of get itchy feet and they decide to go off 639 00:32:55,280 --> 00:32:59,160 Speaker 2: overseas again, and they do, and that resets the principal 640 00:32:59,160 --> 00:33:02,440 Speaker 2: place of residence six former residence exempua for another six years, 641 00:33:02,480 --> 00:33:03,760 Speaker 2: so you can use it for more than once. 642 00:33:05,560 --> 00:33:08,480 Speaker 1: Well that's a good tip, thank you very much. Okay, 643 00:33:08,800 --> 00:33:14,920 Speaker 1: And what about just generally if you capitally you have 644 00:33:14,920 --> 00:33:17,920 Speaker 1: a house for thirty years, but there was a short period, 645 00:33:17,960 --> 00:33:20,880 Speaker 1: you know, three months, six months that you rented it out. 646 00:33:20,960 --> 00:33:22,840 Speaker 1: Did they comment pretty hard and fast on. 647 00:33:22,760 --> 00:33:27,800 Speaker 2: That they do. And the government with their interconnected data 648 00:33:27,840 --> 00:33:31,239 Speaker 2: sharing between departments, they're more and more picking these up. 649 00:33:31,280 --> 00:33:35,000 Speaker 2: The tax office is with various state government and federal 650 00:33:35,000 --> 00:33:38,240 Speaker 2: government agencies. So what you need to do is declare 651 00:33:38,640 --> 00:33:41,280 Speaker 2: it in your tax return if you will use this 652 00:33:41,360 --> 00:33:43,959 Speaker 2: is a simple example. If you rented out your property 653 00:33:44,000 --> 00:33:46,600 Speaker 2: for one year and you owned it for ten years 654 00:33:46,640 --> 00:33:49,360 Speaker 2: in total, when you look at what you bought it 655 00:33:49,360 --> 00:33:51,920 Speaker 2: for versus what it's worth when you sell it, ten 656 00:33:51,960 --> 00:33:54,800 Speaker 2: percent of that increase in value will be an accessible 657 00:33:55,000 --> 00:33:57,960 Speaker 2: capital gains event that you need to declare in your 658 00:33:58,000 --> 00:33:58,640 Speaker 2: tax return. 659 00:33:59,440 --> 00:34:03,120 Speaker 1: Right. Interesting, well worth knowing that. Thanks Andrew and Anthony 660 00:34:03,160 --> 00:34:05,600 Speaker 1: and everybody else. I didn't get to cover many questions 661 00:34:05,600 --> 00:34:08,000 Speaker 1: this week, but we will keep them coming send us. 662 00:34:08,000 --> 00:34:09,680 Speaker 1: I say send two at a time if you want 663 00:34:09,680 --> 00:34:11,920 Speaker 1: with three at a time. As long as they make 664 00:34:12,000 --> 00:34:16,440 Speaker 1: sense and they're shortish, then they have a strong chance 665 00:34:16,520 --> 00:34:19,200 Speaker 1: of being covered as well as they were covered today 666 00:34:19,200 --> 00:34:20,120 Speaker 1: by James Gerard. 667 00:34:20,440 --> 00:34:23,480 Speaker 2: Thanks a lot, James, my pleasure, Thanks as always, James, 668 00:34:23,480 --> 00:34:27,120 Speaker 2: and no EV sponsorship from my side, but I'm a 669 00:34:27,120 --> 00:34:28,880 Speaker 2: big fan of them, so over on go by yourself 670 00:34:28,920 --> 00:34:29,720 Speaker 2: at an EV car. 671 00:34:30,160 --> 00:34:32,200 Speaker 1: Yes, well, one thing, as you said in the show, 672 00:34:32,360 --> 00:34:34,920 Speaker 1: around that time we were both talking of getting one, it 673 00:34:35,040 --> 00:34:38,040 Speaker 1: was very little to choose from. There was Tesla's and 674 00:34:38,080 --> 00:34:40,280 Speaker 1: I noticed like in the three or four years since 675 00:34:40,680 --> 00:34:45,440 Speaker 1: the range has just flourished, which is great, Very good folks. 676 00:34:45,600 --> 00:34:49,240 Speaker 1: On a Thursday, we will be talking to mister Gold. 677 00:34:49,800 --> 00:34:54,279 Speaker 1: Mister Gold himself, Jordan Elizo, who is a specialist all 678 00:34:54,320 --> 00:34:57,680 Speaker 1: his life in gold on gold knows everything you ever 679 00:34:57,719 --> 00:35:00,560 Speaker 1: needed to know about gold. Gold being the hottest, the 680 00:35:00,719 --> 00:35:04,640 Speaker 1: hardest investment pocket so far this year. So look forward 681 00:35:04,640 --> 00:35:09,600 Speaker 1: to that. Keep those emails coming the money Puzzle at 682 00:35:09,600 --> 00:35:12,520 Speaker 1: the Australian dot com dot au Talk to you soon.