WEBVTT - My super, my property - What's possible? 0:00:11.240 --> 0:00:14.319 Hello, and welcome to the Australian's Money Puzzled podcast. I'm 0:00:14.400 --> 0:00:18.439 James Kirby, the welth editor at The Australian. Welcome aboard everybody. 0:00:18.760 --> 0:00:22.079 I don't know about you, but it strikes me that 0:00:22.160 --> 0:00:26.119 if I can get money out of my superfund to 0:00:26.200 --> 0:00:32.360 do a Tommy Tuck or some cosmetic surgery, and the 0:00:33.040 --> 0:00:37.559 cosmetic operators will help me fill out the form to 0:00:37.600 --> 0:00:41.640 get my super out early, then I think you should 0:00:41.680 --> 0:00:45.080 be able to use your super for your own property plans. 0:00:45.120 --> 0:00:47.600 Now there's a debate about this. I'm quite aware of 0:00:47.640 --> 0:00:50.040 that debate and I've come down clearly on one side, 0:00:50.080 --> 0:00:54.320 which is unfortunately, I think there's no escape here. The 0:00:54.360 --> 0:00:57.880 tax system is totally loaded in favor of the homeowner 0:00:59.360 --> 0:01:03.440 and then everything has flows from that. And on that 0:01:03.560 --> 0:01:05.759 basis alone, I think if it comes neck and neck 0:01:05.800 --> 0:01:08.760 between super and owning a home, you need to own 0:01:08.760 --> 0:01:12.520 a home in our tax system. And separately, as somebody 0:01:12.560 --> 0:01:16.039 who has had a self managed super fund, I've already 0:01:16.120 --> 0:01:20.399 used my super to buy an investment property, and not 0:01:20.440 --> 0:01:23.760 only that, but I've used it in a fashion that 0:01:24.040 --> 0:01:27.120 is really worth checking out. Not many people do it, 0:01:27.160 --> 0:01:30.240 but you use your you use the super fund in 0:01:30.280 --> 0:01:35.399 a non leverage way, so you're super fund, you the investor, 0:01:35.560 --> 0:01:41.080 the listener do a joint venture with your SMSF, and 0:01:41.319 --> 0:01:46.360 that joint venture buys an investment property the superfund, your 0:01:46.440 --> 0:01:50.400 SMSF simply puts in equity and nothing else, no leverage, 0:01:50.440 --> 0:01:53.520 no loans, pay no cost whatsoever. They just put in 0:01:54.200 --> 0:01:57.800 a piece of equity fifty grand, one hundred grand. And 0:01:57.840 --> 0:02:00.040 then in the future of say ten years time, and 0:02:00.080 --> 0:02:03.560 when you go to sell that property, you simply whatever 0:02:03.640 --> 0:02:07.640 you've made, whatever the superfund has made, you contribute that 0:02:07.680 --> 0:02:10.120 back into your superfund, and you go your own way. 0:02:10.480 --> 0:02:15.400 It's a very interesting principle, and there are bigger plans 0:02:15.440 --> 0:02:18.120 afoot around that, which I'm going to introduce you to 0:02:18.400 --> 0:02:21.400 in a moment. My guest is a person who's actually 0:02:21.400 --> 0:02:24.320 devoted several years to this whole area and has a 0:02:24.360 --> 0:02:26.480 plan I think you to capture our imagination. We're going 0:02:26.480 --> 0:02:30.880 to talk about possibilities between super and property. We're going 0:02:30.960 --> 0:02:33.560 to talk about what he has in mind and also 0:02:33.600 --> 0:02:36.640 answer some questions. It's Simon Jones from Home Super How 0:02:36.680 --> 0:02:39.120 are you, Simon good? Thanks James, Thanks for having me 0:02:39.160 --> 0:02:39.639 on and for. 0:02:39.600 --> 0:02:40.519 Your listeners for cheening it. 0:02:42.400 --> 0:02:44.280 Oh nice to have you on. Nice to have someone 0:02:44.280 --> 0:02:47.800 who's really across this, this whole concept. And before we 0:02:47.840 --> 0:02:50.720 talk about your ideas, let's just talk about what is 0:02:50.760 --> 0:02:54.200 and is impossible. Just now. With SUPER, I want to 0:02:54.200 --> 0:02:57.320 sort of distinguish between what you can do and what 0:02:57.400 --> 0:02:59.240 you might be able to do in the future. And 0:02:59.280 --> 0:03:02.639 I brought up the cousin metic surgery thing there. It's provocative, 0:03:02.680 --> 0:03:05.799 but it's true, it is, and I've done quite a 0:03:05.840 --> 0:03:08.200 bit of work on that, but a journalism work, I mean, 0:03:08.240 --> 0:03:10.639 I haven't done some cosmetic work, not as yet. 0:03:12.400 --> 0:03:15.240 It's an interesting leading because, as you're right, there is 0:03:15.280 --> 0:03:19.919 some different ways you can withdraw your SUPER and one 0:03:19.960 --> 0:03:22.840 of those SUPER and housing has been interlinked for quite 0:03:22.840 --> 0:03:25.840 some time. And one of those early release mechanisms is 0:03:26.080 --> 0:03:28.760 in the event of financial hardship, and that's if the 0:03:28.800 --> 0:03:32.120 bank is looking to foreclose on your home or a 0:03:32.120 --> 0:03:35.560 local council for non payment of rates, and as a 0:03:35.600 --> 0:03:38.880 last resort, you can essentially break the glass and withdraw 0:03:38.920 --> 0:03:42.080 those funds. That part I've had some experience with, unfortunately, 0:03:42.160 --> 0:03:44.560 helping some mums and dads and those in trouble with 0:03:44.720 --> 0:03:48.600 financial hardships. Unfortunately, in that circumstance, you would think someone's 0:03:48.640 --> 0:03:51.640 punished enough with the threat of losing their home, But 0:03:51.840 --> 0:03:55.440 government imposes a twenty two percent withdrawal tax on that. 0:03:56.040 --> 0:03:59.480 And we could argue whether tummy tucks are a necessity 0:03:59.480 --> 0:04:02.240 in life, but for me, living in your own home 0:04:02.360 --> 0:04:05.760 certainly is. So I've been advocating for the removal of 0:04:05.800 --> 0:04:08.560 that twenty two percent tax. And we also found a 0:04:08.560 --> 0:04:11.000 bit of a void and we built an online calculator 0:04:11.440 --> 0:04:14.400 linked to our website to help people understand some of 0:04:14.560 --> 0:04:17.840 the pros and cons of using a super last resort. 0:04:17.880 --> 0:04:20.560 Just about that twenty two percent that you pay if 0:04:20.560 --> 0:04:23.120 you take super out, Does that apply right if you 0:04:23.160 --> 0:04:24.400 were a one week from retirement? 0:04:24.400 --> 0:04:27.039 What it still apply does unfortunately? Yes? 0:04:27.200 --> 0:04:29.680 Yeah, right, okay, very interesting just to kind of fill 0:04:29.680 --> 0:04:32.360 in the landscape. First of all, for people just now, 0:04:32.360 --> 0:04:34.320 there's very few things you can do. Assignment says it's 0:04:34.360 --> 0:04:38.039 financial hardship, which oddly this some of the cosmetic treatments 0:04:38.040 --> 0:04:40.320 fall under, and that's where money is coming out the 0:04:40.320 --> 0:04:42.760 back door of supers. Very hard to take money out 0:04:42.760 --> 0:04:45.400 to buy property, especially if you are in the convention 0:04:45.480 --> 0:04:48.599 of the Big super Fund. There is plans afoot. That is, 0:04:48.640 --> 0:04:51.120 at least the Coalition has a plan which would allow 0:04:51.160 --> 0:04:54.080 people to take fifty thousand up to fifty thousand dollars 0:04:54.080 --> 0:04:58.120 out of SUPER of any fond to put into their home. 0:04:58.200 --> 0:05:00.760 That's a plan that's there at the moment. And in 0:05:00.839 --> 0:05:03.640 terms of what you can do, there's very little, but 0:05:03.680 --> 0:05:06.040 there is there is a plan. There is at least 0:05:06.040 --> 0:05:09.039 a scheme existing. It exists, it runs since the days 0:05:09.040 --> 0:05:11.159 of the Morrison government. It's called the First Home super 0:05:11.200 --> 0:05:15.880 Server Scheme FHSS. It's terribly elaborate and complex scheme. Some 0:05:15.920 --> 0:05:18.240 listeners have used it so where you can kind of 0:05:18.279 --> 0:05:23.800 quarantine your contributions to SUPER into a bucket basically, which 0:05:23.839 --> 0:05:27.000 you can then use to put towards your first home. 0:05:27.480 --> 0:05:31.400 It's quite elaborate, it's quite niche. But that's all. Is 0:05:31.440 --> 0:05:33.240 that all that's out there so far? Assigmon, Have I 0:05:33.279 --> 0:05:34.280 missed anything. 0:05:34.400 --> 0:05:37.120 That is any incentive? Yes, to help people save and 0:05:37.120 --> 0:05:40.280 a tax effective mechanism really, but you know, it really 0:05:40.320 --> 0:05:44.520 does depend. You mentioned the self managed circumstance there, and 0:05:44.560 --> 0:05:47.920 whilst this does not apply to everyone, a self managed fund, 0:05:48.080 --> 0:05:50.440 as you know, can buy an investment property. It can 0:05:50.520 --> 0:05:53.640 also buy business real property. So for someone who's self 0:05:53.680 --> 0:05:57.080 employed and they might be say a mechanic, and they 0:05:57.120 --> 0:05:59.400 wish to buy the commercial property in which they operate, 0:05:59.760 --> 0:06:02.880 that it allowable. But there's also there also is some 0:06:03.000 --> 0:06:06.320 quirky ones where they may need to live on site 0:06:06.360 --> 0:06:09.719 to actually operate the business. So there is actually some 0:06:09.800 --> 0:06:14.159 circumstances where someone can essentially buy a property that's obviously 0:06:14.360 --> 0:06:17.800 commercial there is a residence allowed. So there is all 0:06:17.839 --> 0:06:19.560 sorts of quirky and wonderful ways. 0:06:19.600 --> 0:06:23.120 And oh that'll be like an olive farm or something. 0:06:23.640 --> 0:06:26.200 Well depends again, I'm not going to say any specific 0:06:26.240 --> 0:06:27.560 can get myself in strife, but it. 0:06:27.600 --> 0:06:29.040 Will be an obvious one. If you bought a farm 0:06:29.080 --> 0:06:31.240 and house on it, would that be the sort of 0:06:31.279 --> 0:06:32.640 thing where it might be possible. 0:06:32.680 --> 0:06:35.320 That's pretty Sometimes the house is quarantine depending it could 0:06:35.320 --> 0:06:37.400 be a security measure where you need to be on site, 0:06:37.520 --> 0:06:40.720 or various other circumstances. But look, bits they are few 0:06:40.720 --> 0:06:44.560 and far between. But previously you mentioned about doing a 0:06:44.640 --> 0:06:48.040 joint venture with your fund and liking it to what 0:06:48.080 --> 0:06:51.440 the proposed fifty thousand as you mentioned by the LNP, 0:06:52.200 --> 0:06:54.600 and in that where you suggested you put the funds 0:06:54.600 --> 0:06:58.080 back into super We argue that it should never leave 0:06:58.160 --> 0:07:00.520 you should you should be able to do those joint ventures. 0:07:00.839 --> 0:07:03.200 But just to clarify for the listener, before we talk 0:07:03.240 --> 0:07:06.560 about what you're planning, just tell us about that how 0:07:06.600 --> 0:07:09.600 that works. So someone with an SMSF, how they can 0:07:09.720 --> 0:07:14.200 actually use equity funds from the SMSF to buy a 0:07:14.240 --> 0:07:17.600 property and the individual through a joint venture with the 0:07:17.640 --> 0:07:21.240 SMSF can actually do everything else, pet stamp duty, have 0:07:21.360 --> 0:07:22.280 the loan, et cetera. 0:07:23.240 --> 0:07:27.640 Yeah, correct, depending on again lenders and circumstances, because the 0:07:27.800 --> 0:07:31.280 fund's assets should not be charged and held under a mortgage. 0:07:31.440 --> 0:07:34.040 But there is circumstances where correct, there can be a 0:07:34.080 --> 0:07:37.800 joint venture with the fund and that's not extraordinary. There's 0:07:37.840 --> 0:07:40.160 the circumstances out there. It just gets a little bit 0:07:40.160 --> 0:07:43.440 complicated though when it is a residence in the current form. 0:07:43.960 --> 0:07:46.560 So just ensuring there's no financial benefits to the member 0:07:46.640 --> 0:07:48.560 he is not or he or shea are paying the 0:07:48.760 --> 0:07:49.400 market rent. 0:07:50.400 --> 0:07:53.800 Yes, you cannot stay a single night in that place 0:07:53.880 --> 0:07:58.160 if you own it in that arrangement because it's strictly 0:07:58.160 --> 0:08:00.480 for super return, isn't it? 0:08:01.480 --> 0:08:04.840 No, there is some carve outs with respect to repairs, 0:08:05.120 --> 0:08:08.200 or if it is a holiday home that's say independently 0:08:08.240 --> 0:08:11.320 managed and you are only staying for a for a week, 0:08:11.400 --> 0:08:13.520 and if it's peak peering, you might still have to 0:08:13.560 --> 0:08:16.960 pay full freight. So there is some circumstances, and it's 0:08:17.360 --> 0:08:21.720 highly dependent on circumstances and ensuring that the fund obtains 0:08:21.760 --> 0:08:24.800 commercial returns no matter who is in the property. So 0:08:25.240 --> 0:08:28.600 there is some quirks, and that's where often trustees can 0:08:28.600 --> 0:08:31.040 get themselves into strife if they just overstep that mark 0:08:31.160 --> 0:08:34.400 or not do everything to satisfy the regulations. 0:08:34.960 --> 0:08:38.360 Okay, but the reason listeners that I'm trawling through this, 0:08:38.720 --> 0:08:42.920 I'm basically showing and trying to demonstrate to you that 0:08:43.920 --> 0:08:46.599 under law, if you like are under the arrangements we 0:08:46.679 --> 0:08:52.800 have in super there is the possibility already to use 0:08:53.320 --> 0:08:58.360 cer superfund not just my property, but that you, an 0:08:58.400 --> 0:09:02.559 individual investor in country with your SMSF, can buy property 0:09:02.679 --> 0:09:05.680 together and the SMSF can put in the equity and 0:09:05.720 --> 0:09:09.080 you do everything else, and then at the end of 0:09:09.080 --> 0:09:12.080 the arrangement, you sell and the super fund gets what 0:09:12.120 --> 0:09:16.559 it's entitled to. Something not dissimilar to the home equity 0:09:16.600 --> 0:09:19.439 shared scheme, which is just basically looks like it's going 0:09:19.480 --> 0:09:22.120 to get proved through Parliament this week, and that would 0:09:22.160 --> 0:09:24.800 be where the government, for instance, shares with you and 0:09:24.880 --> 0:09:27.160 they can take up to forty percent of a property 0:09:27.160 --> 0:09:28.880 and you can take the rest and then in five 0:09:29.000 --> 0:09:31.480 or ten years time when you sell, you split the proceeds. 0:09:31.600 --> 0:09:34.320 I'm just basically lanning these things out, Simon, so that 0:09:34.360 --> 0:09:36.920 we can give people will have some context to what 0:09:36.920 --> 0:09:38.599 we're going to talk about next. And I should have 0:09:38.640 --> 0:09:43.319 said also Simon's background is in advice at all, at 0:09:43.400 --> 0:09:46.280 various levels over the years, at fairly high levels in 0:09:46.559 --> 0:09:49.920 the financial advice sector. Okay, we'll be back in a 0:09:49.920 --> 0:09:55.120 moment and we're going to talk about the possibility about 0:09:55.160 --> 0:09:59.240 how you and your superfund, any superfund, a big superfund, 0:10:00.679 --> 0:10:15.880 buy a home together. Back in the morning. Hello, welcome 0:10:15.880 --> 0:10:18.600 back to the Australians Money Puzzle. I'm James Kirby and 0:10:18.640 --> 0:10:24.120 I'm talking to Simon Jones from Home Super Okay, Simon, elevator, pitch, 0:10:25.640 --> 0:10:27.599 tell me what you've tell me, what you've planned in 0:10:27.640 --> 0:10:30.320 the simplest terms that at its very best, if it 0:10:30.360 --> 0:10:31.680 came to pass, how would it work? 0:10:33.080 --> 0:10:37.760 You can buy your home with less debt? As and 0:10:37.840 --> 0:10:41.680 more security. Utilizing your super fund as a co investment partner, 0:10:41.800 --> 0:10:45.760 so a shared equity arrangement whereby your fund takes an 0:10:45.760 --> 0:10:48.520 equity stake, you don't need as much money to buy 0:10:48.520 --> 0:10:53.000 the property and there's less obviously less opportunity going back 0:10:53.040 --> 0:10:54.520 to the bank and more to your fund. 0:10:55.000 --> 0:10:57.840 That's the elevator pitch. Okay, very good. And the fund 0:10:57.880 --> 0:10:59.760 can be any fund. It could be any of the 0:10:59.760 --> 0:11:03.760 big funds if they sign up to the idea. Okay, Now, 0:11:04.080 --> 0:11:07.240 I would have thought I know a fair bit about 0:11:07.240 --> 0:11:10.800 super but it's like a language, isn't it. It's endlessly 0:11:11.320 --> 0:11:14.679 full of surprises and contradictions. I would have thought that 0:11:14.840 --> 0:11:17.600 it was impossible to do that. But you've had some 0:11:17.679 --> 0:11:20.640 legal among other things, you've had some legal direction, if 0:11:20.640 --> 0:11:23.959 you like, from on your board. You have an advisor 0:11:24.320 --> 0:11:29.319 who's also a partner at Minternesson and she has established 0:11:29.960 --> 0:11:35.720 that there is no legal there's no current legal blockade 0:11:35.840 --> 0:11:36.680 to what you're planning. 0:11:36.720 --> 0:11:40.440 Is that how it sits correct? And once again it's 0:11:40.480 --> 0:11:43.800 all about it depends. It depends on the circumstance of 0:11:43.920 --> 0:11:47.760 the deal. And with respect to ours, the individual must 0:11:47.760 --> 0:11:50.880 be approved to buy the home on their own outright 0:11:50.960 --> 0:11:54.520 with a bank before we even get involved, because otherwise 0:11:54.559 --> 0:11:57.800 we would be providing financial assistance and giving a member 0:11:57.800 --> 0:12:00.840 an opportunity that they wouldn't normally have. So that's a 0:12:00.840 --> 0:12:03.920 crucial that's a crucial hurdle number one that we address 0:12:03.960 --> 0:12:08.120 at the outset. So again just ensuring that if they're 0:12:08.160 --> 0:12:10.520 eligible to borrow six hundred thousand, we know now the 0:12:11.320 --> 0:12:14.560 average mortgage is about six forty and the average first 0:12:14.600 --> 0:12:16.959 time buyers thirty five years of age. So if they're 0:12:17.000 --> 0:12:19.840 borrowing six hundred thousand, they've been approved for that amount, 0:12:20.120 --> 0:12:23.520 and they've got their deposit and twenty percent deposit, we 0:12:23.559 --> 0:12:26.680 can then look at utilizing some of their super to 0:12:26.720 --> 0:12:30.079 bring that six hundred thousand dollars down to an amount 0:12:30.320 --> 0:12:34.560 depending on their balance, and invest that prudently in the property. 0:12:34.800 --> 0:12:36.880 So we're not providing as a said, we're not providing 0:12:36.880 --> 0:12:40.360 that leg up. It's just another avenue of finance utilizing 0:12:40.440 --> 0:12:43.720 equity instead of just all debt and deposit. 0:12:44.880 --> 0:12:47.360 And then for the customer here, what it means is 0:12:47.400 --> 0:12:49.839 that their mortgage is smaller. 0:12:50.840 --> 0:12:55.160 Correct correct, and their serviceability buffer is essentially also increased. 0:12:55.679 --> 0:12:57.920 Not only that, mostly when they're buying their first property 0:12:58.240 --> 0:13:02.040 will lend. Two thirds of these are bought jointly, and 0:13:02.360 --> 0:13:04.880 you might be considering there with your mortgage broker, the bank, 0:13:05.000 --> 0:13:07.280 or relying in bed do we fix or do we 0:13:07.360 --> 0:13:09.840 leave it variable? And this also offers a little bit 0:13:09.840 --> 0:13:12.040 of a hedge against that because, as I said, to 0:13:12.120 --> 0:13:15.760 be to utilize this product, you must have your finance 0:13:15.840 --> 0:13:18.520 approved at six hundred thousand, and the banks have obviously 0:13:18.640 --> 0:13:21.000 used their buffer on top of that. So we've pulled 0:13:21.000 --> 0:13:24.520 that back even further and provided an additional buffer. And 0:13:24.600 --> 0:13:28.120 the equity from the fund going in obviously does not 0:13:28.200 --> 0:13:31.200 affect interest rate variations for the debt component. 0:13:32.360 --> 0:13:37.520 Okay, now, folks, part of the logic here and the 0:13:37.520 --> 0:13:41.080 imperatives behind this idea is there so many people of 0:13:41.120 --> 0:13:44.640 course now are retiring with the mortgage. If you think 0:13:44.640 --> 0:13:48.320 about it back not that long ago, say ten years ago, 0:13:48.480 --> 0:13:51.439 so a what a quarter of lumpsom withdraws were used 0:13:51.480 --> 0:13:55.040 to pay off a mortgage. By two seventeen that had 0:13:55.040 --> 0:13:58.480 gone to thirty percent, and now it's climbing higher and higher, 0:13:58.480 --> 0:14:01.520 where something like slim majority of do you know the 0:14:01.559 --> 0:14:04.400 number assignment is it something like half of all retirees 0:14:04.440 --> 0:14:06.640 now as they approach retirement, they still have a mortgage 0:14:06.640 --> 0:14:07.680 you need to pay off something. 0:14:08.720 --> 0:14:11.920 Correct. I think it's between fifty five and sixty four. 0:14:12.200 --> 0:14:14.280 The average balance is about two hundred and thirty odd 0:14:14.400 --> 0:14:17.280 thousand and what the funds speaking with some funds that 0:14:17.400 --> 0:14:20.200 the apro figures are around thirty percent of all lump 0:14:20.200 --> 0:14:23.440 Some withdrawals are going to repay mortgages. So that's not 0:14:23.520 --> 0:14:26.120 the intent of super And some funds we've been speaking 0:14:26.120 --> 0:14:28.280 with they said the numbers actually closer to forty percent 0:14:28.480 --> 0:14:28.880 for them. 0:14:29.440 --> 0:14:31.600 So your yeah, I love your point. Your point is 0:14:31.640 --> 0:14:34.880 that for all this talk that you can't touch your 0:14:34.920 --> 0:14:38.240 house with super, if one in three people when they 0:14:38.280 --> 0:14:42.040 get finally get there some super and retire, they get 0:14:42.040 --> 0:14:44.360 a lump sum, and one in three people turn around 0:14:44.360 --> 0:14:48.160 and spend it on their home having accumulated debt all 0:14:48.200 --> 0:14:51.320 their life. Yeah. Correct, This is the macro picture you're 0:14:51.320 --> 0:14:55.880 putting in now, just to try and see how this 0:14:56.000 --> 0:14:59.520 might really work. Has any super fund signed up with 0:14:59.560 --> 0:15:01.160 you yet to do this. 0:15:02.040 --> 0:15:05.040 No, now, a couple of signed NDAs, and they're very interested. 0:15:05.160 --> 0:15:07.880 But like with most super funds, they're very, very slow 0:15:07.960 --> 0:15:10.760 and prudent. And this obviously is on their radar now 0:15:11.120 --> 0:15:14.160 and the Treasury's paper in I believe it was twenty twenty, 0:15:14.480 --> 0:15:18.480 Federal Treasury did a report on retirement and retirement income 0:15:18.600 --> 0:15:21.080 and found the vast majority of retirees who are owned 0:15:21.080 --> 0:15:23.480 their home. We're in a much stronger financial position and 0:15:23.920 --> 0:15:26.120 we've known that for some time, but it's been great 0:15:26.160 --> 0:15:30.320 to have Federal Treasury confirm that in their studies. So yeah, exactly, 0:15:30.400 --> 0:15:33.000 we're looking to do a front end essentially arrangement rather 0:15:33.040 --> 0:15:34.960 than leaving it to the back end and where it's 0:15:34.960 --> 0:15:38.360 not the intent of Super whatsoever. And it's interesting now 0:15:38.360 --> 0:15:42.560 that banks are using SUPER for that serviceability test and 0:15:42.640 --> 0:15:47.440 for elder Australians to borrow money, utilizing SUPER essentially as 0:15:47.480 --> 0:15:50.480 part of the credit assessment and not even really as 0:15:50.480 --> 0:15:53.120 a backstop anymore. For those that are sixty years of 0:15:53.120 --> 0:15:55.560 age who are looking to borrow funds, some of the 0:15:55.560 --> 0:15:58.520 banks are very happy to use as the repayment plan. 0:15:58.840 --> 0:16:01.240 And that's an interest one because as we know, the 0:16:01.240 --> 0:16:04.560 Big four have essentially exited the funds management space. I 0:16:04.600 --> 0:16:07.160 think the last one left is Beta in their platform 0:16:07.200 --> 0:16:10.200 with Westpac, but they're still essentially getting their hands on 0:16:10.640 --> 0:16:13.560 Super in lump sums to repay that debt. 0:16:13.680 --> 0:16:15.680 To repay the debt. That's right, and they know it's there. 0:16:15.680 --> 0:16:17.840 Of course, it's on their books. One of the things 0:16:17.880 --> 0:16:20.600 I think reading, and I have to freely admit, folks, 0:16:20.600 --> 0:16:24.160 I don't regularly read the Australian Superannuation Law bulletin, but 0:16:24.280 --> 0:16:26.680 if I could speed read, maybe i'd read it. But 0:16:26.960 --> 0:16:30.480 I have been pointed to a piece in this by Simon, 0:16:30.520 --> 0:16:32.720 and it's by Ruth Stranger, who is, as I say, 0:16:32.720 --> 0:16:34.920 a partner at Minter Ellison, a specialist in this area, 0:16:34.920 --> 0:16:38.280 an advisor also to his operation Home super. Tell me 0:16:38.320 --> 0:16:40.600 if I'm wrong here, Simon, but it seems to me 0:16:40.680 --> 0:16:42.280 when you get through the whole thing and she comes 0:16:42.280 --> 0:16:45.080 to a conclusive what she says is there appears to 0:16:45.120 --> 0:16:48.120 be no blockage in law to what you are planning, 0:16:48.600 --> 0:16:52.120 but unfortunately the nature of the arrangements at the moment 0:16:52.200 --> 0:16:54.120 means that you can't get a sort of a binding 0:16:54.200 --> 0:16:57.280 ruling before you start, so it has to be sort 0:16:57.280 --> 0:16:59.680 of tested in real life. And that might be what's 0:17:00.240 --> 0:17:03.880 making the super funds slow. Would that be? I may 0:17:03.960 --> 0:17:04.679 under a tracker. 0:17:05.119 --> 0:17:07.840 Yeah, that's a fair point. But with most innovation in 0:17:08.040 --> 0:17:11.720 super with large funds, it is essentially that chicken and 0:17:11.760 --> 0:17:14.920 egg sort of scenario. Unfortunately, because OPRA do not have 0:17:15.040 --> 0:17:17.320 and this is no fault of the regulator, it's policy, 0:17:17.359 --> 0:17:19.720 and I actually really do feel for the opera staff 0:17:19.720 --> 0:17:22.800 in some of these circumstances. So there's no real window 0:17:22.880 --> 0:17:24.680 or avenue for the funds to say, hey, look, we're 0:17:24.720 --> 0:17:27.240 testing this product, what do you think. And speaking to 0:17:27.280 --> 0:17:31.280 another gentleman recently that built a retirement income product where 0:17:31.320 --> 0:17:33.399 he had a battle with for the regulator for quite 0:17:33.400 --> 0:17:37.000 some time a number of years before they essentially stopped 0:17:37.000 --> 0:17:39.720 any action towards him because they then said, okay, this 0:17:39.840 --> 0:17:42.640 is a fair product. We understand it now. So you can, 0:17:43.119 --> 0:17:45.280 on one hand, you can get frustrated, but on the 0:17:45.320 --> 0:17:47.840 other the whole point really is to innovate. It's not 0:17:47.920 --> 0:17:50.280 up to regulator's or the government to innovate. That's an 0:17:50.280 --> 0:17:52.880 interesting one. So yes, it would be helpful. And our 0:17:52.920 --> 0:17:56.280 discussions with OPRA, yes, they pressed us on all manner 0:17:56.320 --> 0:17:59.720 of issues from liquidity diversification and how it will all work, 0:18:00.040 --> 0:18:01.960 and couldn't find anything wrong with it, and their last 0:18:02.000 --> 0:18:03.840 space of advice was, look, we'll just keep an eye 0:18:03.840 --> 0:18:06.720 on you. So for some of the funds. They understand 0:18:06.760 --> 0:18:09.480 how that works. Were approached by a quite a large 0:18:09.520 --> 0:18:11.919 fund just recently after Ruth string Is Peace in that 0:18:12.080 --> 0:18:14.879 law bullsm so it provided them with some confidence and 0:18:14.920 --> 0:18:18.399 they understand that process with apro. But it is, as 0:18:18.440 --> 0:18:21.000 I said, it's an interesting space in that regard where 0:18:21.280 --> 0:18:22.200 there's no avenue. 0:18:23.080 --> 0:18:25.720 So there you are, folks. How about that that you 0:18:25.720 --> 0:18:30.080 could use your own super fund to put in equity 0:18:30.280 --> 0:18:34.880 in your own home, and that your super fund basically 0:18:34.960 --> 0:18:42.400 gets to diversify, It gets into a pretty conservative, reliable 0:18:42.560 --> 0:18:44.920 stream of investment compared to some of the stuff they're 0:18:44.960 --> 0:18:48.760 doing overseas and private equity at the moment, and you 0:18:48.840 --> 0:18:51.880 get to have less of a mortgage. I like the idea. 0:18:51.960 --> 0:18:55.400 I'd love to see it come into play. I will 0:18:55.440 --> 0:18:58.720 say to you, Simon, if you try to create something new, 0:18:58.840 --> 0:19:00.320 it can take a long time, but it can really 0:19:00.320 --> 0:19:02.560 pay off. I'm thinking of someone like green Talk well 0:19:02.680 --> 0:19:05.720 back in all I don't know the nineteen nineties who 0:19:05.760 --> 0:19:08.760 spent years and years trying to get the first exchange 0:19:08.760 --> 0:19:11.800 treaded fund off the ground in Australia, which was the 0:19:11.840 --> 0:19:16.119 Gold Exchange Treated Fund, and of course years now on 0:19:16.160 --> 0:19:19.880 the rich list and it's the FSA are a household 0:19:19.880 --> 0:19:22.239 of things, so best of luck with it and I 0:19:22.280 --> 0:19:24.440 hope that you get to breakthrough soon. What would be 0:19:24.440 --> 0:19:25.960 the best thing that could happen to you next? 0:19:27.040 --> 0:19:28.840 The best thing would be for a fund to take 0:19:28.880 --> 0:19:31.200 it up and help us do some initial full investments 0:19:31.240 --> 0:19:33.720 and break the ice. Essentially, I don't see that being 0:19:33.720 --> 0:19:36.800 too far off. But yeah, look, we're not essentially inventing 0:19:36.840 --> 0:19:39.439 something here that people don't want to use it. The 0:19:39.480 --> 0:19:42.639 idea really has come from Australians and we've just listened 0:19:42.640 --> 0:19:44.880 and worked out a prudent way to do it. It's 0:19:44.880 --> 0:19:46.920 interesting how do you get paid as a super fund 0:19:47.000 --> 0:19:49.400 or as a manager or as home super and being 0:19:49.400 --> 0:19:51.480 in the industry for a long time, there's plenty of 0:19:51.560 --> 0:19:54.119 meat on the bone. So actual return to us was 0:19:54.160 --> 0:19:56.399 the last thing I worked out and how we actually 0:19:56.400 --> 0:19:59.320 get paid. I do appreciate some comparisons to others in 0:19:59.320 --> 0:20:01.119 the market that have done really well, but no, the 0:20:01.160 --> 0:20:03.640 real driver here really is, as I said, just building 0:20:03.680 --> 0:20:07.320 something that Australians really want and deserve. In my opinion 0:20:07.640 --> 0:20:11.119 and interesting discussion, they're about other avenues and around the world. 0:20:11.600 --> 0:20:14.280 In the US, you can take up to fifty thousand 0:20:14.280 --> 0:20:16.920 from your four oh one K plan, but it must 0:20:16.960 --> 0:20:20.720 be in the form of a loan, and roughly just 0:20:20.760 --> 0:20:24.199 over thirty percent of the US home buyers do that, 0:20:24.760 --> 0:20:28.080 and it's actually even more convoluted. It's more restrictive. They 0:20:28.119 --> 0:20:30.439 do get to pay a slightly lower rate than they 0:20:30.480 --> 0:20:33.120 would with the bank, so they can essentially plot pay 0:20:33.160 --> 0:20:36.359 the Fed reserves rate rather than the bank's rates, but 0:20:36.680 --> 0:20:39.439 it is very convoluted. If they misrepayments, they're in all 0:20:39.480 --> 0:20:41.720 sorts of strife with the irs and the like. So 0:20:42.000 --> 0:20:44.359 we did research around the world, and yes, there's other 0:20:44.440 --> 0:20:46.199 avenues and some other countries that are a little bit 0:20:46.240 --> 0:20:49.040 more liberal on this we've taken up. We've still taken 0:20:49.080 --> 0:20:51.919 a really prudent approach to make sure that the fund 0:20:51.960 --> 0:20:54.520 gets a commercial return and that the member does not 0:20:54.840 --> 0:20:57.840 essentially have that. And people might think of when I 0:20:57.880 --> 0:21:00.560 say have that sort of financial assist and some people 0:21:00.600 --> 0:21:02.840 might say, well, they're paying back less of the line, 0:21:02.840 --> 0:21:05.680 So there's a there's financial assystems there. But I must 0:21:05.680 --> 0:21:08.480 put the caveat on that you no longer own one 0:21:08.520 --> 0:21:11.080 hundred percent of your home. You may only earn eighty 0:21:11.080 --> 0:21:15.119 percent and your fun owns twenty percent, so that's essentially 0:21:15.200 --> 0:21:16.280 the trade off as well. 0:21:16.320 --> 0:21:18.600 Okay, very good, Well I wish you look stick around 0:21:18.640 --> 0:21:27.960 and we'll do some questions here. Hello, welcome back to 0:21:27.960 --> 0:21:31.119