1
00:00:09,800 --> 00:00:13,080
Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm

2
00:00:13,160 --> 00:00:16,560
Speaker 1: James Kirkby. Welcome aboard everybody. We're starting the year with

3
00:00:16,600 --> 00:00:20,439
Speaker 1: some pretty strong signals I think for residential property, I

4
00:00:20,480 --> 00:00:22,400
Speaker 1: think we're looking at another good year. So there's the

5
00:00:22,440 --> 00:00:26,599
Speaker 1: market consensus is that we'll see strong house lifts across

6
00:00:26,640 --> 00:00:31,000
Speaker 1: the board, with some variety obviously performance between the different cities.

7
00:00:31,320 --> 00:00:35,720
Speaker 1: But there are some other issues looming. Not rates. You

8
00:00:35,840 --> 00:00:38,159
Speaker 1: know about rates, that's pretty clear. Rates are going to

9
00:00:38,200 --> 00:00:42,120
Speaker 1: go up, but taxes may also go up. And we

10
00:00:42,240 --> 00:00:46,800
Speaker 1: have a capital gainst tax inquiry starting pretty soon in Canberra.

11
00:00:46,800 --> 00:00:49,840
Speaker 1: And I noticed just today, this is the day after

12
00:00:49,880 --> 00:00:53,080
Speaker 1: Australia Day Housing Industry Associations put out a key report

13
00:00:53,120 --> 00:00:55,440
Speaker 1: the smalling around this. They're getting pretty worried and I

14
00:00:55,480 --> 00:00:59,240
Speaker 1: think a lot of stakeholders in property are getting worried

15
00:00:59,520 --> 00:01:04,679
Speaker 1: about the chances of a lift in property released taxes.

16
00:01:05,120 --> 00:01:08,360
Speaker 1: My guest today is someone who's right across property and

17
00:01:08,440 --> 00:01:12,679
Speaker 1: usefully started professionally in the share market, so he has

18
00:01:12,680 --> 00:01:14,800
Speaker 1: that sort of holistic view. It's first time guests on

19
00:01:14,800 --> 00:01:17,679
Speaker 1: the show. It's Peter Eshow how are you, Peter?

20
00:01:18,360 --> 00:01:20,360
Speaker 2: I'm very well, thank you, great to join you. How

21
00:01:20,400 --> 00:01:22,319
Speaker 2: are you lovely to have you on the show.

22
00:01:22,360 --> 00:01:25,119
Speaker 1: And Peter Across is basically these days, would you call

23
00:01:25,280 --> 00:01:27,959
Speaker 1: we describe yourself that I describe you as a property financier.

24
00:01:28,080 --> 00:01:29,520
Speaker 1: That'd be a fair enough way to put it.

25
00:01:29,840 --> 00:01:33,119
Speaker 2: Yeah. Yes, So we've perhaps several businesses, but our main

26
00:01:33,160 --> 00:01:35,920
Speaker 2: focus at the moment is on investment properties and the

27
00:01:36,040 --> 00:01:41,759
Speaker 2: lending around investment properties and lending to property investors. Yeah,

28
00:01:41,800 --> 00:01:45,560
Speaker 2: so we call the self made Australians. That encompasses everybody

29
00:01:45,600 --> 00:01:48,280
Speaker 2: that runs a business. There's more and more self employed

30
00:01:48,280 --> 00:01:51,960
Speaker 2: people today and they don't really necessarily fit into the

31
00:01:51,960 --> 00:01:54,760
Speaker 2: criteria that the big banks like to lend to. But

32
00:01:54,800 --> 00:01:58,280
Speaker 2: then there's also a professional class who have been traditionally

33
00:01:58,520 --> 00:02:02,280
Speaker 2: revising their investments, may have gone into ETFs, maybe doubled

34
00:02:02,320 --> 00:02:04,960
Speaker 2: in some crypto, but property is always on the back

35
00:02:05,000 --> 00:02:07,360
Speaker 2: of their minds and they're kind of unsure of how

36
00:02:07,400 --> 00:02:08,800
Speaker 2: to move or how to play the market.

37
00:02:09,600 --> 00:02:14,480
Speaker 1: So this increasing concern about changes to property related taxes,

38
00:02:14,520 --> 00:02:17,840
Speaker 1: specifically CGT, perhaps negative gearing. They're both mentioned in this

39
00:02:18,639 --> 00:02:22,360
Speaker 1: HI report Housing Industry Association. What do you think yourself?

40
00:02:22,440 --> 00:02:24,360
Speaker 1: Do you think appitally gains tax as a threat.

41
00:02:24,400 --> 00:02:28,160
Speaker 2: Now, I think whenever we talk taxes, it's important to

42
00:02:28,320 --> 00:02:31,400
Speaker 2: set the context and also to have a relative view,

43
00:02:31,560 --> 00:02:33,960
Speaker 2: because at the end of the day, real estate is

44
00:02:33,960 --> 00:02:36,960
Speaker 2: a necessity for a lot of owner occupiers that need

45
00:02:37,000 --> 00:02:40,160
Speaker 2: to live under a roof, and then different governments and

46
00:02:40,240 --> 00:02:43,960
Speaker 2: different regimes will put into place different tax policy depending

47
00:02:43,960 --> 00:02:47,080
Speaker 2: on their fiscal situation to pay the bills, but also

48
00:02:47,280 --> 00:02:53,240
Speaker 2: incentives and what's on the agenda. It looks like politically

49
00:02:53,480 --> 00:02:58,320
Speaker 2: there's a big groundswell against property investors. There's an assumption

50
00:02:58,440 --> 00:03:02,760
Speaker 2: that property investors crowded out the owner occupier and because

51
00:03:02,840 --> 00:03:06,120
Speaker 2: of that, there needs to be an adjustment to incentives

52
00:03:06,160 --> 00:03:08,720
Speaker 2: that are in the market. So capital gains tax when

53
00:03:08,760 --> 00:03:12,359
Speaker 2: we're talking about it, it's not that from my understanding,

54
00:03:12,400 --> 00:03:15,920
Speaker 2: it's not that the entire capital tax regime is on

55
00:03:15,960 --> 00:03:20,800
Speaker 2: the table, but the incentives around discounts to property investors.

56
00:03:21,240 --> 00:03:23,480
Speaker 2: So we have to look at why those discounts are

57
00:03:23,480 --> 00:03:25,120
Speaker 2: there right in the first place.

58
00:03:26,080 --> 00:03:28,400
Speaker 1: The simple argument for Forward is that they are unfair

59
00:03:28,440 --> 00:03:29,799
Speaker 1: and that they were too generous.

60
00:03:30,080 --> 00:03:34,120
Speaker 2: Well, there aren't. From my understanding, there aren't any capital

61
00:03:34,160 --> 00:03:38,200
Speaker 2: gainst tax benefits just to property investors. They're to all investors.

62
00:03:38,520 --> 00:03:40,640
Speaker 2: So if I go and buy PHP shares and I

63
00:03:40,720 --> 00:03:43,480
Speaker 2: hold them for more than a year and I sell them,

64
00:03:43,760 --> 00:03:47,360
Speaker 2: I'm entitled to a capital gainst tax discount. That's my understanding.

65
00:03:47,400 --> 00:03:49,440
Speaker 2: I'm not a tax expert, but that's the way I

66
00:03:49,560 --> 00:03:52,120
Speaker 2: understand it. It's the same thing if I go and

67
00:03:52,120 --> 00:03:54,400
Speaker 2: buy property, are going by a business, are going by

68
00:03:54,480 --> 00:03:57,360
Speaker 2: any other asset where I make a capital gain. So

69
00:03:57,560 --> 00:04:00,240
Speaker 2: if they are going to change the laws, they may

70
00:04:00,280 --> 00:04:02,840
Speaker 2: have to change the laws to all investors because that

71
00:04:02,880 --> 00:04:07,160
Speaker 2: capital gains tax treatment is for all assets, not necessarily

72
00:04:07,200 --> 00:04:08,160
Speaker 2: for property only.

73
00:04:08,640 --> 00:04:11,480
Speaker 1: That's with CGT too difficult to deal with just for property,

74
00:04:11,480 --> 00:04:13,040
Speaker 1: because I think that's what Tom was one of the

75
00:04:13,040 --> 00:04:14,080
Speaker 1: suggestions from the Greens.

76
00:04:14,120 --> 00:04:17,839
Speaker 2: I think, no, it's not too difficult, but it always

77
00:04:18,040 --> 00:04:21,640
Speaker 2: there's always unintended consequences, And I think one of the

78
00:04:21,760 --> 00:04:25,120
Speaker 2: unintended consequences, just off the top of my head, will

79
00:04:25,160 --> 00:04:27,600
Speaker 2: be people say, well, why should I go and buy property?

80
00:04:27,800 --> 00:04:29,920
Speaker 2: If I go and buy shares, I get the discount,

81
00:04:30,520 --> 00:04:33,520
Speaker 2: and then you'll have less people investing in residential real estate.

82
00:04:33,560 --> 00:04:36,440
Speaker 2: Now that might seem like it's good, but it actually

83
00:04:36,560 --> 00:04:38,560
Speaker 2: isn't because if you go and have a look at

84
00:04:38,560 --> 00:04:42,279
Speaker 2: who buys rentals. It is the investors who buy the

85
00:04:42,320 --> 00:04:45,200
Speaker 2: rentals that put them into the rental market. So if

86
00:04:45,200 --> 00:04:48,520
Speaker 2: we have an issue around housing supply and we take

87
00:04:48,560 --> 00:04:51,960
Speaker 2: away the incentive for investors to go and invest in

88
00:04:52,000 --> 00:04:55,080
Speaker 2: that supply, where will that supply come from?

89
00:04:55,560 --> 00:04:58,320
Speaker 1: I think perhaps I suppose the test case in recent

90
00:04:58,360 --> 00:05:01,720
Speaker 1: times in Australia is DA Victoria, where a lot of

91
00:05:01,800 --> 00:05:05,440
Speaker 1: new taxes were introduced roughly a year ago. And obviously

92
00:05:05,760 --> 00:05:08,440
Speaker 1: we most listeners would know that actually Victoria is the

93
00:05:08,440 --> 00:05:11,880
Speaker 1: weakest state, still the weakest state by any measure to

94
00:05:12,000 --> 00:05:16,400
Speaker 1: house price, rental income. But I was fascinated to see

95
00:05:16,440 --> 00:05:18,960
Speaker 1: that one of those new taxes was the airbnb tax,

96
00:05:18,960 --> 00:05:20,920
Speaker 1: which was a seven and a half percent levey they

97
00:05:20,920 --> 00:05:24,920
Speaker 1: brought in roughly a year ago. And I saw at

98
00:05:25,160 --> 00:05:29,039
Speaker 1: the start of the year that after one year the

99
00:05:29,160 --> 00:05:32,520
Speaker 1: number of short stay properties, which had been growing yearly

100
00:05:33,360 --> 00:05:37,120
Speaker 1: in Victoria was forty three thousands when they brought in

101
00:05:37,200 --> 00:05:39,640
Speaker 1: the new tax, and one year later it is still

102
00:05:39,680 --> 00:05:44,159
Speaker 1: forty three thousand. It is literally unchanged. That area just

103
00:05:44,279 --> 00:05:47,200
Speaker 1: basically stopped in its tracks. Do you think that was

104
00:05:47,839 --> 00:05:52,080
Speaker 1: a response to tax Do you think taxes do actually

105
00:05:52,640 --> 00:05:53,280
Speaker 1: hit like that.

106
00:05:54,600 --> 00:05:57,119
Speaker 2: Yeah, I do. And look, I don't want to sound

107
00:05:57,160 --> 00:06:01,120
Speaker 2: dismissive to the need for health reform. I think it's

108
00:06:01,240 --> 00:06:04,640
Speaker 2: very genuine because as a business owner and as an entrepreneur,

109
00:06:05,240 --> 00:06:07,760
Speaker 2: I want to be operating in a market where my

110
00:06:07,839 --> 00:06:11,880
Speaker 2: employees feel comfortable renting and having housing security. So I

111
00:06:11,880 --> 00:06:14,920
Speaker 2: don't want to be dismissive that those things aren't important.

112
00:06:14,960 --> 00:06:17,640
Speaker 2: And I think it's on the agenda because you have

113
00:06:17,720 --> 00:06:21,360
Speaker 2: a cohort of young people that today feel disenfranchised and

114
00:06:21,440 --> 00:06:25,599
Speaker 2: they feel left out. Where my views differne in solving

115
00:06:25,640 --> 00:06:28,000
Speaker 2: that problem is on the solution, and a lot of

116
00:06:28,000 --> 00:06:33,680
Speaker 2: these solutions have been around punishing the investor or disincentivizing investment,

117
00:06:33,760 --> 00:06:37,120
Speaker 2: where I think what they should do is encourage investment

118
00:06:37,200 --> 00:06:40,480
Speaker 2: because it is the investment that will create supply. If

119
00:06:40,520 --> 00:06:44,040
Speaker 2: I want my weekly rent to go from six hundred

120
00:06:44,080 --> 00:06:46,279
Speaker 2: a week to five hundred a week, I want to

121
00:06:46,320 --> 00:06:48,760
Speaker 2: have as many other alternatives on the market where I

122
00:06:48,800 --> 00:06:52,000
Speaker 2: can move into That way, my landlord is going to

123
00:06:52,040 --> 00:06:54,520
Speaker 2: be desperate to keep me, and the only way that

124
00:06:54,600 --> 00:06:57,800
Speaker 2: happens is when you increase supply. So if you have

125
00:06:57,880 --> 00:07:02,520
Speaker 2: a look since since twenty seventeen, twenty eighteen twenty nineteen

126
00:07:02,560 --> 00:07:06,200
Speaker 2: pre pandemic, when a lot of government policy started to

127
00:07:06,240 --> 00:07:10,600
Speaker 2: target foreign investors were seen as bad, crowding out the market,

128
00:07:10,720 --> 00:07:13,760
Speaker 2: you know, people of a certain race or persuasion. We're

129
00:07:13,840 --> 00:07:17,120
Speaker 2: seen as the reason why our housing market was expensive.

130
00:07:17,560 --> 00:07:19,800
Speaker 2: If you go and have a look at supply, since then,

131
00:07:19,920 --> 00:07:22,400
Speaker 2: it has fallen off a cliff and it hasn't recovered.

132
00:07:22,840 --> 00:07:24,960
Speaker 2: So as a young country, as a country with a

133
00:07:25,000 --> 00:07:28,160
Speaker 2: limited population but big housing needs, we have to ask

134
00:07:28,240 --> 00:07:32,480
Speaker 2: ourselves how will we build more supply to address the

135
00:07:32,680 --> 00:07:35,520
Speaker 2: issue that is out there. That's a very serious issue

136
00:07:35,560 --> 00:07:40,200
Speaker 2: around housing certainty, and the government isn't the solution because

137
00:07:40,200 --> 00:07:42,680
Speaker 2: if it was, we would be seeing housing supply come

138
00:07:42,680 --> 00:07:47,280
Speaker 2: into the market. The current government campaigned on increasing housing supply.

139
00:07:47,960 --> 00:07:50,760
Speaker 2: The current state governments have campaigns around that, but they

140
00:07:50,800 --> 00:07:54,440
Speaker 2: haven't delivered. And so when you put taxes into place,

141
00:07:54,520 --> 00:07:58,000
Speaker 2: it creates sentiment issues. And what happens is investors have

142
00:07:58,040 --> 00:08:00,280
Speaker 2: a choice. I don't need to invest in Victory story.

143
00:08:00,440 --> 00:08:03,560
Speaker 2: I can go into Brisbane, Perth Adelaide and they're the

144
00:08:03,560 --> 00:08:06,680
Speaker 2: markets that have done really well. So capital is quite

145
00:08:06,680 --> 00:08:10,360
Speaker 2: efficient and investors today have access to all types of

146
00:08:10,400 --> 00:08:14,040
Speaker 2: information including AI and when you put into place a

147
00:08:14,160 --> 00:08:17,560
Speaker 2: tax regime that's complicated. We know that investors move.

148
00:08:18,120 --> 00:08:20,640
Speaker 1: Okay, terrific. It's clear to me that you did start

149
00:08:20,680 --> 00:08:23,960
Speaker 1: as an analyst and that is for the obvious distillation

150
00:08:24,120 --> 00:08:26,640
Speaker 1: of that very interesting. I think one of the things

151
00:08:26,640 --> 00:08:27,960
Speaker 1: I want to talk to you about in the next

152
00:08:27,960 --> 00:08:31,160
Speaker 1: segment is actually their market and how property now looks

153
00:08:31,280 --> 00:08:33,760
Speaker 1: against shares, how it looks against for the year ahead

154
00:08:33,960 --> 00:08:47,959
Speaker 1: with at the moment. Hello, welcome back to The Australian's

155
00:08:48,000 --> 00:08:50,880
Speaker 1: Money Puzzle podcast. I'm James Kirby talking to Peter Esher,

156
00:08:51,640 --> 00:08:55,280
Speaker 1: who was properly financier, a very familiar and across the

157
00:08:55,320 --> 00:08:58,600
Speaker 1: residential market, but usefully also across all markets, and how

158
00:08:58,600 --> 00:09:01,120
Speaker 1: the background was upon a time so actually as an

159
00:09:01,120 --> 00:09:05,120
Speaker 1: equities analyst and then later in morning Star etc. Peter,

160
00:09:06,040 --> 00:09:09,120
Speaker 1: as I speak to you the markets, that is the

161
00:09:09,160 --> 00:09:13,400
Speaker 1: share markets at ten percent last year on the A six,

162
00:09:13,880 --> 00:09:18,560
Speaker 1: even better on US markets, it's easy years of easy

163
00:09:18,600 --> 00:09:22,960
Speaker 1: money for share investors, even better for Gold, I mean Gold,

164
00:09:23,280 --> 00:09:25,480
Speaker 1: as I talked to you, hit five thousand US last

165
00:09:25,559 --> 00:09:28,880
Speaker 1: night and that is a major milestone. How do you

166
00:09:29,000 --> 00:09:34,520
Speaker 1: see our residential property with all its toil and taxes,

167
00:09:34,760 --> 00:09:37,160
Speaker 1: and it's a lot more work than just owning a

168
00:09:37,280 --> 00:09:39,880
Speaker 1: listed investment. How do you see it stacking up against

169
00:09:39,880 --> 00:09:41,920
Speaker 1: listed investments now? In terms of value?

170
00:09:42,240 --> 00:09:47,920
Speaker 2: I think we are used to pricing everything in dollars. Right.

171
00:09:47,960 --> 00:09:49,800
Speaker 2: If I go out there and I buy account of

172
00:09:49,880 --> 00:09:52,719
Speaker 2: kirka cost me for Australian dollars, so I'm swapping for

173
00:09:52,840 --> 00:09:55,480
Speaker 2: Australian dollars for that count of coke used to be

174
00:09:55,520 --> 00:09:58,120
Speaker 2: a dollar fifty, but it's gone up. When we talk

175
00:09:58,160 --> 00:10:01,280
Speaker 2: about residential real estate, we're also pricing it in dollars,

176
00:10:01,600 --> 00:10:04,600
Speaker 2: and I think if we really want to know where

177
00:10:04,640 --> 00:10:07,319
Speaker 2: the price of something is trending, we need to price

178
00:10:07,400 --> 00:10:10,360
Speaker 2: it in different types of assets. So I think if

179
00:10:10,360 --> 00:10:12,600
Speaker 2: you have a look at Australian residential real estate in

180
00:10:12,760 --> 00:10:16,280
Speaker 2: US dollar terms, it is quite low because the Aussie

181
00:10:16,320 --> 00:10:20,520
Speaker 2: dollar's gone from parody or slightly above parody fifteen years

182
00:10:20,520 --> 00:10:25,160
Speaker 2: ago to you know, sixty seventy cents now, So Australian

183
00:10:25,160 --> 00:10:28,600
Speaker 2: dollars have been buying less assets, and so these Aussie

184
00:10:28,640 --> 00:10:31,240
Speaker 2: assets are actually not as expensive as we think they

185
00:10:31,280 --> 00:10:33,880
Speaker 2: are in US dollar terms. But even if you don't

186
00:10:33,880 --> 00:10:36,000
Speaker 2: buy that, even if you say, yeah, well, I earn

187
00:10:36,040 --> 00:10:38,720
Speaker 2: Australian dollars. I don't care about US dollars, right, Why

188
00:10:38,720 --> 00:10:41,640
Speaker 2: should I care about you? I'm an Australian earning Austrainan dolls.

189
00:10:42,000 --> 00:10:44,440
Speaker 2: If you have a look at let's take Sydney median

190
00:10:44,480 --> 00:10:47,120
Speaker 2: house prices and we have a look at a price

191
00:10:47,160 --> 00:10:50,520
Speaker 2: today that's one six one point seven whatever it is, right,

192
00:10:50,559 --> 00:10:54,240
Speaker 2: if we price that in gold, how many ounces of

193
00:10:54,240 --> 00:10:56,679
Speaker 2: gold I need to buy an average Sydney house. It's

194
00:10:56,720 --> 00:10:59,439
Speaker 2: gone from about five hundred and seventy five ounces ten

195
00:10:59,520 --> 00:11:03,160
Speaker 2: years ago to about two hundred and fifty ounces. So

196
00:11:03,400 --> 00:11:07,679
Speaker 2: the house that in Sydney's gets all the headlines and

197
00:11:07,760 --> 00:11:10,559
Speaker 2: gets all the rage bait on social media because it's

198
00:11:10,600 --> 00:11:14,200
Speaker 2: gone out. There's actually halved in gold. So why is

199
00:11:14,240 --> 00:11:17,880
Speaker 2: that important. It's important because assets don't just move it

200
00:11:18,120 --> 00:11:23,200
Speaker 2: by themselves in isolation. Assets move in trends. And the

201
00:11:23,280 --> 00:11:26,160
Speaker 2: trend around the world over the past twenty years, ever

202
00:11:26,200 --> 00:11:30,800
Speaker 2: since two thousand and nine has been currency debasement. Governments

203
00:11:30,840 --> 00:11:34,240
Speaker 2: are printing more and more money, and that ounce of

204
00:11:34,240 --> 00:11:37,360
Speaker 2: gold that's today five thousand dollars is the same ounce

205
00:11:37,400 --> 00:11:41,200
Speaker 2: of gold that twenty years ago was eight hundred dollars.

206
00:11:41,280 --> 00:11:44,640
Speaker 2: That ounce of gold hasn't changed, it's the money that's changed.

207
00:11:45,240 --> 00:11:47,880
Speaker 2: And it's the same thing with residential real estate. Prices

208
00:11:47,920 --> 00:11:50,840
Speaker 2: have been rising, but that Media and Sydney house is

209
00:11:50,880 --> 00:11:53,560
Speaker 2: probably thirty or forty years old. Ten years ago, it

210
00:11:53,600 --> 00:11:55,560
Speaker 2: was the same block of land, the same house. The

211
00:11:55,559 --> 00:11:59,320
Speaker 2: furnishings are probably deteriorated or improved a little bit. But

212
00:11:59,400 --> 00:12:03,400
Speaker 2: the concept is that money is debasing, and because money

213
00:12:03,440 --> 00:12:06,880
Speaker 2: is debasing, we are seeing an acceleration in assets, and

214
00:12:06,960 --> 00:12:10,960
Speaker 2: the rarest assets will move the most. Gold is rare.

215
00:12:11,400 --> 00:12:16,199
Speaker 2: Silver is somewhat less rare. Cryptocurrencies, to an extent, are rare.

216
00:12:16,480 --> 00:12:19,960
Speaker 2: Residential real estate is also rare because you can't build

217
00:12:20,000 --> 00:12:23,479
Speaker 2: a house wherever you want, and you can't just replicate

218
00:12:23,520 --> 00:12:27,280
Speaker 2: the bricks and mortar very quickly. So that's the way

219
00:12:27,360 --> 00:12:30,200
Speaker 2: I view residential real estate. You can look at the price,

220
00:12:30,320 --> 00:12:33,439
Speaker 2: but you also need to look at you know, relative

221
00:12:33,480 --> 00:12:36,560
Speaker 2: and I don't think housing is expensive today if you

222
00:12:36,640 --> 00:12:39,400
Speaker 2: have a look at it in gold. Now we can

223
00:12:39,440 --> 00:12:42,160
Speaker 2: talk about what that means, but that's just a concept

224
00:12:42,200 --> 00:12:43,480
Speaker 2: that I think is important.

225
00:12:43,559 --> 00:12:46,840
Speaker 1: It's a fascinating concept. Do you think what's driving gold?

226
00:12:47,400 --> 00:12:49,600
Speaker 1: If we take it that the debasement theory is the

227
00:12:49,600 --> 00:12:53,960
Speaker 1: most compelling theory. Do you think that what is driving gold,

228
00:12:54,240 --> 00:12:57,760
Speaker 1: they will drive investment presidentially read state as well.

229
00:12:58,760 --> 00:13:01,760
Speaker 2: I think, Look, the honest answer is I don't know

230
00:13:01,800 --> 00:13:05,079
Speaker 2: what is driving gold, but I can probably hypothesize. There's

231
00:13:05,120 --> 00:13:08,600
Speaker 2: a couple of things. I think Ever since the Ukraine War,

232
00:13:09,000 --> 00:13:12,959
Speaker 2: the Biden administration came out and froze Russian assets very quickly,

233
00:13:13,480 --> 00:13:16,080
Speaker 2: and so what happened is that there was a big

234
00:13:16,320 --> 00:13:20,000
Speaker 2: shock to global wealth in that my assets can be

235
00:13:20,080 --> 00:13:22,440
Speaker 2: seized and if it's sitting in the banking system or

236
00:13:22,440 --> 00:13:25,559
Speaker 2: if it's sitting in real estate, how safe really are

237
00:13:25,600 --> 00:13:28,520
Speaker 2: my assets? Right? So it starts at the top a

238
00:13:28,559 --> 00:13:32,000
Speaker 2: lot of large wealthy investors. Whether they're doing the right

239
00:13:32,000 --> 00:13:34,360
Speaker 2: thing or not, that's not up to me. But it's

240
00:13:34,400 --> 00:13:37,120
Speaker 2: just a signal that they thought, Okay, we need to

241
00:13:37,200 --> 00:13:40,559
Speaker 2: move out of the financial system and into an asset

242
00:13:41,760 --> 00:13:44,200
Speaker 2: that has the ability. And you know, it's no accident

243
00:13:44,240 --> 00:13:47,160
Speaker 2: that we saw bitcoin and crypto takeoff around that time too.

244
00:13:47,559 --> 00:13:50,640
Speaker 2: But gold, you know, a gold bar can be transported

245
00:13:50,679 --> 00:13:53,840
Speaker 2: across borders without a banking system or a crypto rail

246
00:13:54,080 --> 00:13:57,439
Speaker 2: in and out in the middle, and I think that's

247
00:13:57,480 --> 00:14:00,120
Speaker 2: what's happening to gold. I think there's also central for

248
00:14:00,200 --> 00:14:03,840
Speaker 2: banks diversifying. There's you know, obviously a trade wall between

249
00:14:03,880 --> 00:14:08,640
Speaker 2: the East and the West. But overlaying all of these reasons,

250
00:14:08,760 --> 00:14:12,120
Speaker 2: we don't know which reason is more important. You've got leverage,

251
00:14:12,400 --> 00:14:14,240
Speaker 2: and you have a lot of traders that are now

252
00:14:14,320 --> 00:14:17,439
Speaker 2: leveraging positions. They're going in, they move out of crypto,

253
00:14:17,520 --> 00:14:20,920
Speaker 2: they're moving into this, and I think that explains the

254
00:14:21,040 --> 00:14:25,600
Speaker 2: rapid increases, the exponential increases, and it's very dangerous because

255
00:14:25,640 --> 00:14:29,720
Speaker 2: the more leverage in a market that isn't liquid, particularly silver,

256
00:14:30,280 --> 00:14:32,120
Speaker 2: you're going to get a big spike up, but a

257
00:14:32,120 --> 00:14:35,560
Speaker 2: big spike down too. So I think that explains why

258
00:14:35,600 --> 00:14:39,120
Speaker 2: we've seen such parabolic moves in a in a medal

259
00:14:39,560 --> 00:14:43,040
Speaker 2: or in an asset class that has fundamental reasons, but

260
00:14:43,320 --> 00:14:43,960
Speaker 2: it's popping.

261
00:14:44,480 --> 00:14:47,560
Speaker 1: So for the diversified investor who's looking at gold and

262
00:14:47,600 --> 00:14:51,040
Speaker 1: looking at residential property and looking at chairs, looking at everything,

263
00:14:51,120 --> 00:14:54,400
Speaker 1: private equity, private credit, whatever you've got, and trying to

264
00:14:54,400 --> 00:14:59,280
Speaker 1: have that balance. Do you classify residential property as a

265
00:14:59,320 --> 00:15:02,480
Speaker 1: hard acid basically as a non listed asset that fits

266
00:15:02,480 --> 00:15:04,320
Speaker 1: in the same category as good.

267
00:15:05,200 --> 00:15:07,400
Speaker 2: Yeah, it's in the same category as me. But the

268
00:15:07,480 --> 00:15:10,400
Speaker 2: reason why I like it more is because it gives

269
00:15:10,400 --> 00:15:12,880
Speaker 2: me an income. If I go and put money in

270
00:15:12,960 --> 00:15:16,760
Speaker 2: gold doesn't generate me any income, right, so it doesn't

271
00:15:16,800 --> 00:15:19,840
Speaker 2: have a utility. In fact, that probably costs me because

272
00:15:19,840 --> 00:15:22,040
Speaker 2: I have to go and store it somewhere, or if

273
00:15:22,080 --> 00:15:24,760
Speaker 2: I store it at home, I'm paranoid over being robbed,

274
00:15:24,800 --> 00:15:27,600
Speaker 2: So it has an actual cost to it. If I

275
00:15:27,640 --> 00:15:29,960
Speaker 2: go and buy residential real estate, then I buy the

276
00:15:30,040 --> 00:15:32,120
Speaker 2: right real estate in the right market. And I do

277
00:15:32,160 --> 00:15:36,160
Speaker 2: think sensibly that real estate becomes a home for someone,

278
00:15:36,320 --> 00:15:38,760
Speaker 2: and so first of all, there's a social benefit that

279
00:15:38,920 --> 00:15:41,920
Speaker 2: is really important because that person gets to live somewhere

280
00:15:41,960 --> 00:15:45,200
Speaker 2: and has housing security. That person will pay for that.

281
00:15:45,200 --> 00:15:47,720
Speaker 2: That gives me an income stream, and then I can

282
00:15:47,840 --> 00:15:50,320
Speaker 2: use that income stream to go and gear that house.

283
00:15:50,960 --> 00:15:53,920
Speaker 2: And so my one hundred thousand dollars investment can turn

284
00:15:53,960 --> 00:15:57,040
Speaker 2: into a five hundred thousand dollars investment because of gearing.

285
00:15:57,080 --> 00:15:59,760
Speaker 2: Now I can go and gear gold. But because I

286
00:15:59,760 --> 00:16:03,680
Speaker 2: don't have income, I'm successed succeptible to more risk because

287
00:16:03,720 --> 00:16:06,640
Speaker 2: I'm funding that gearing out of my pocket. I don't

288
00:16:06,640 --> 00:16:10,000
Speaker 2: have the income, so I'm purely speculating on capital gain,

289
00:16:10,360 --> 00:16:13,320
Speaker 2: whereas if I've gone by an residential piece of real estate,

290
00:16:13,440 --> 00:16:16,800
Speaker 2: that income stream allows me to give with more certainty

291
00:16:17,360 --> 00:16:20,160
Speaker 2: because the income our received can go towards paying off

292
00:16:20,160 --> 00:16:20,520
Speaker 2: the debt.

293
00:16:20,720 --> 00:16:22,360
Speaker 1: It's interesting, I'm going to do. I'm going to do

294
00:16:22,400 --> 00:16:26,000
Speaker 1: a hell of a segue here, folks, but it's logical.

295
00:16:26,480 --> 00:16:29,040
Speaker 1: One of the things that's coming through talking to you,

296
00:16:29,080 --> 00:16:33,960
Speaker 1: Peter is confidence in the investors in residential with the

297
00:16:34,000 --> 00:16:36,840
Speaker 1: state in Australia who have been blowing hot and cold,

298
00:16:37,320 --> 00:16:39,120
Speaker 1: and we're actually out of the market for a while

299
00:16:39,160 --> 00:16:42,280
Speaker 1: and really came back in last year, but in terms

300
00:16:42,320 --> 00:16:46,120
Speaker 1: of signals that there may be more action on the

301
00:16:46,160 --> 00:16:49,800
Speaker 1: investment layer and residential property. Backing into your border concept

302
00:16:49,920 --> 00:16:51,840
Speaker 1: of the chase you know for hard assets and the

303
00:16:52,560 --> 00:16:57,800
Speaker 1: concern over the basements generally of feed currencies. I noticed

304
00:16:58,080 --> 00:17:02,240
Speaker 1: just this morning that it's super funds, which are key

305
00:17:02,600 --> 00:17:05,440
Speaker 1: investors in the property market. They had been left high

306
00:17:05,480 --> 00:17:08,359
Speaker 1: and dry for some years. For seven years actually, the

307
00:17:08,440 --> 00:17:12,600
Speaker 1: banks had pulled out of self managed super fund investing,

308
00:17:12,600 --> 00:17:16,240
Speaker 1: which is largely property investing, and when they gear it

309
00:17:16,320 --> 00:17:19,719
Speaker 1: is very much for property. Up until now that's been

310
00:17:19,760 --> 00:17:22,160
Speaker 1: almost for the Since two seventeen, there's been no where

311
00:17:22,200 --> 00:17:24,919
Speaker 1: to lend except now on banks. Interesting to see AMP

312
00:17:25,080 --> 00:17:28,840
Speaker 1: Bank come back in this week with an announcement from

313
00:17:28,880 --> 00:17:32,679
Speaker 1: their chief O'Malley that they're coming back into SMSF lending.

314
00:17:32,720 --> 00:17:34,560
Speaker 1: I'm just one. I don't want to make too much

315
00:17:34,560 --> 00:17:39,080
Speaker 1: of this, but I'm wondering would you see that as

316
00:17:39,760 --> 00:17:42,680
Speaker 1: a vote of confidence in that theory that the investors

317
00:17:42,720 --> 00:17:44,040
Speaker 1: are rolling back into property.

318
00:17:44,440 --> 00:17:47,240
Speaker 2: I think there's a couple of signals with Amp's move.

319
00:17:47,359 --> 00:17:50,320
Speaker 2: First of all, signals that the retail banking market is

320
00:17:50,359 --> 00:17:54,040
Speaker 2: an extremely competitive space and so you need to develop

321
00:17:54,160 --> 00:17:58,240
Speaker 2: niche offerings in order to have a competitive advantage. Because

322
00:17:58,280 --> 00:18:02,240
Speaker 2: the big banks have the distribution, they've got pricing, and

323
00:18:02,280 --> 00:18:05,400
Speaker 2: there's a broking market that generates about seventy to eighty

324
00:18:05,440 --> 00:18:08,120
Speaker 2: percent of volume, right, so you have about twenty three

325
00:18:08,160 --> 00:18:11,000
Speaker 2: thousand brokers that are writing the majority of the volume.

326
00:18:11,480 --> 00:18:14,160
Speaker 2: So for a challenge of brand like AMP, they need

327
00:18:14,240 --> 00:18:17,919
Speaker 2: to have certain niches that they can focus on. And

328
00:18:18,000 --> 00:18:20,760
Speaker 2: because of the way that credit law is written in

329
00:18:20,800 --> 00:18:24,960
Speaker 2: Australia around NUBCP, there's only certain things you can do,

330
00:18:25,359 --> 00:18:27,439
Speaker 2: so it makes sense for them to come into this

331
00:18:27,520 --> 00:18:31,160
Speaker 2: space that's growing, which is basically an investment space. It's

332
00:18:31,160 --> 00:18:33,199
Speaker 2: a space that, as you said, is dominated by the

333
00:18:33,280 --> 00:18:35,919
Speaker 2: second team names and they bring with them a brand,

334
00:18:36,119 --> 00:18:39,480
Speaker 2: they bring with the momentum that they've been building in banking,

335
00:18:40,240 --> 00:18:44,480
Speaker 2: and they have the ability to genuinely innovate here because

336
00:18:44,560 --> 00:18:48,119
Speaker 2: a lot of a lot of the SMSF product is

337
00:18:48,200 --> 00:18:51,320
Speaker 2: quite vanilla in nature, and so what they can do

338
00:18:51,359 --> 00:18:53,920
Speaker 2: is come and say, hey, mister investor, bring your SMSF

339
00:18:54,320 --> 00:18:57,320
Speaker 2: property to us. But we're also a brand that is

340
00:18:57,359 --> 00:19:01,080
Speaker 2: known for investments, and maybe in the future we diversify that.

341
00:19:01,200 --> 00:19:04,720
Speaker 2: So from a strategy perspective, I think it has very

342
00:19:04,720 --> 00:19:07,800
Speaker 2: good merit. They just need to execute on it. In

343
00:19:07,880 --> 00:19:12,359
Speaker 2: terms of SMSF lending and SMSF property investors, as a

344
00:19:12,400 --> 00:19:16,640
Speaker 2: property investor, as an SMSF trustee, I mean, you don't

345
00:19:16,680 --> 00:19:19,359
Speaker 2: necessarily want to have overexposure to shares. You know. The

346
00:19:19,359 --> 00:19:21,960
Speaker 2: reason why you go self managed is because you don't

347
00:19:22,000 --> 00:19:25,919
Speaker 2: want the legacy system that has been over financialised into shares.

348
00:19:26,640 --> 00:19:29,840
Speaker 2: And so it makes natural sense to allow people to

349
00:19:29,840 --> 00:19:32,239
Speaker 2: go and buy property because if they retire, when they

350
00:19:32,280 --> 00:19:35,080
Speaker 2: hit retirement phase and they now are in a different

351
00:19:35,119 --> 00:19:38,439
Speaker 2: tax rasion, they may actually want to do different things

352
00:19:38,480 --> 00:19:42,399
Speaker 2: with that property. So yeah, it's a growing space and

353
00:19:42,440 --> 00:19:44,000
Speaker 2: I think it's a smart move by AMP.

354
00:19:45,119 --> 00:19:47,960
Speaker 1: It certainly says to me that this whole what would

355
00:19:47,960 --> 00:19:51,960
Speaker 1: you say that sms investors, we have money listening to

356
00:19:52,040 --> 00:19:55,000
Speaker 1: the show, They have been very limited in their property

357
00:19:55,480 --> 00:19:58,840
Speaker 1: options because the bank's pulled out. And to see AMP

358
00:19:59,040 --> 00:20:01,760
Speaker 1: come back into the markets, re enter the market that

359
00:20:01,800 --> 00:20:06,080
Speaker 1: they actually formally withdrew from seven you go seven years ago,

360
00:20:06,160 --> 00:20:10,200
Speaker 1: tells to me that the risk around SMSF lending is finished.

361
00:20:10,320 --> 00:20:12,040
Speaker 1: I mean, if a bank basically signs up to go

362
00:20:12,080 --> 00:20:14,080
Speaker 1: back in, then they know that it's not that area

363
00:20:14,200 --> 00:20:15,600
Speaker 1: is not going to be closed down by the government.

364
00:20:16,440 --> 00:20:19,159
Speaker 2: There's definitely balance shoot risk. I think the way that

365
00:20:19,200 --> 00:20:22,119
Speaker 2: the lenders have mitigated over the past few years is

366
00:20:22,200 --> 00:20:26,680
Speaker 2: limiting exposure increasing servicing, so you know, they have more

367
00:20:26,760 --> 00:20:29,359
Speaker 2: five or six hundred thousand dollar loans as opposed to

368
00:20:29,400 --> 00:20:31,399
Speaker 2: one point five or two million dollar loans in our

369
00:20:31,440 --> 00:20:36,440
Speaker 2: owner occupied market. Yeah, so that's that's kind of really important.

370
00:20:36,840 --> 00:20:40,280
Speaker 2: One of the things that I think SMSF lending to

371
00:20:40,359 --> 00:20:42,760
Speaker 2: property investors is seen as risky, but I think the

372
00:20:42,920 --> 00:20:46,879
Speaker 2: even bigger risk that goes unreported is the smsfs that

373
00:20:46,920 --> 00:20:49,680
Speaker 2: have gone into private credit. I think that's where there's

374
00:20:49,720 --> 00:20:52,399
Speaker 2: systemic risk because when I buy a property, we know

375
00:20:52,520 --> 00:20:57,200
Speaker 2: that property exists, there's title, there's rental income, and there's

376
00:20:57,520 --> 00:21:00,159
Speaker 2: a debt. When you go into private credit, a lot

377
00:21:00,240 --> 00:21:03,399
Speaker 2: of these SMSF investors have been lured into private credit

378
00:21:03,480 --> 00:21:07,240
Speaker 2: and they have absolutely no idea where their money goes.

379
00:21:07,280 --> 00:21:10,240
Speaker 2: And private credit has grown because the big banks have

380
00:21:10,440 --> 00:21:12,920
Speaker 2: gotten out of it. There's a reason why the big

381
00:21:12,920 --> 00:21:15,680
Speaker 2: banks have gotten out of private credit because at risky,

382
00:21:15,720 --> 00:21:19,320
Speaker 2: at debt, and so for an SMSF investor who is

383
00:21:19,359 --> 00:21:25,040
Speaker 2: self directed, not not experienced and balance shape risk or

384
00:21:25,080 --> 00:21:28,719
Speaker 2: prudential risk to go into private credit, I think that's

385
00:21:28,800 --> 00:21:31,359
Speaker 2: what the biggest risk is, not SMSF lending.

386
00:21:31,720 --> 00:21:33,960
Speaker 1: Interesting. We will take short break whill we come back.

387
00:21:33,960 --> 00:21:36,800
Speaker 1: I'm going to tell you something very interesting about private credit, folks.

388
00:21:36,840 --> 00:21:39,440
Speaker 1: That's just happened. And we have the first back to

389
00:21:39,520 --> 00:21:42,359
Speaker 1: corresponding and some questions for the first show of the

390
00:21:42,440 --> 00:21:44,800
Speaker 1: year with the questions back from listeners. Okay, back in

391
00:21:44,880 --> 00:21:56,959
Speaker 1: the moment. Hello, welcome back to The Australian's Money Puzzle.

392
00:21:57,200 --> 00:22:01,159
Speaker 1: I'm James Kirby talking to Peter Esher, who is very

393
00:22:01,240 --> 00:22:06,720
Speaker 1: usefully across both listed markets and property markets as a guest.

394
00:22:07,040 --> 00:22:10,160
Speaker 1: And Peter, you were just talking about private credit and

395
00:22:10,160 --> 00:22:12,720
Speaker 1: that you thought perhaps the concern is not so much

396
00:22:13,320 --> 00:22:17,320
Speaker 1: smsfs with the properties that they know. Also well every

397
00:22:17,359 --> 00:22:21,560
Speaker 1: block of every inch of they have a strong umbilical

398
00:22:21,600 --> 00:22:24,879
Speaker 1: link with any properties they have. But an SMSF may

399
00:22:24,920 --> 00:22:27,560
Speaker 1: have no clue whatsoever about the private equity funder private

400
00:22:27,560 --> 00:22:30,000
Speaker 1: credit fund sorry it might be doing with their money.

401
00:22:30,200 --> 00:22:33,120
Speaker 1: And just as I'm talking to you, the black Rock,

402
00:22:33,200 --> 00:22:35,439
Speaker 1: one of the biggest private debt funds in the world,

403
00:22:35,440 --> 00:22:38,520
Speaker 1: announced and nineteen percent markdown in one of its biggest

404
00:22:38,640 --> 00:22:43,040
Speaker 1: funds this week, with basically black Rock itself then getting

405
00:22:43,080 --> 00:22:45,040
Speaker 1: sold off by up to fourteen percent. This is the

406
00:22:45,080 --> 00:22:48,840
Speaker 1: biggest financial group in the world. Just to echo what

407
00:22:48,960 --> 00:22:51,159
Speaker 1: Peter is saying, we may come back to that in

408
00:22:51,280 --> 00:22:54,520
Speaker 1: later shows. Okay, Peter, I have a couple of questions

409
00:22:54,800 --> 00:22:59,200
Speaker 1: which I thought you'd enjoy answering. One is from Andrew. Hi, Andrew,

410
00:22:59,200 --> 00:23:01,720
Speaker 1: a happy New Year. I have a four themes, says Andrew,

411
00:23:01,720 --> 00:23:03,600
Speaker 1: I would like to see explore on the show this year.

412
00:23:04,359 --> 00:23:07,360
Speaker 1: Are any of these changes possible or likely we'll try

413
00:23:07,400 --> 00:23:09,600
Speaker 1: and get through this briefly because he's got four things.

414
00:23:09,680 --> 00:23:13,520
Speaker 1: One raising GST extremely difficult. I would have thought, what

415
00:23:13,560 --> 00:23:14,280
Speaker 1: do you think, Peter.

416
00:23:15,720 --> 00:23:19,040
Speaker 2: Above my pay grad and understand tax policy. I did

417
00:23:19,040 --> 00:23:21,560
Speaker 2: study accounting, but there's a reason why I didn't go

418
00:23:21,640 --> 00:23:23,080
Speaker 2: into it. So I'm not sure enough.

419
00:23:23,400 --> 00:23:26,520
Speaker 1: Yeah, perfectly happy with someone who says I don't know. Okay.

420
00:23:26,920 --> 00:23:31,520
Speaker 1: Second question, death tax, Now that is an interesting one, Andrew,

421
00:23:31,600 --> 00:23:35,560
Speaker 1: because though we don't officially have an inheritence tax or

422
00:23:35,560 --> 00:23:38,920
Speaker 1: death tax, most people would know that. Of course, there

423
00:23:38,920 --> 00:23:41,000
Speaker 1: are many people who will find themselves getting a de

424
00:23:41,160 --> 00:23:46,040
Speaker 1: facto inheritence tax with SMSFS or super when their estate

425
00:23:46,119 --> 00:23:49,439
Speaker 1: will be taxed on the basis of the way that

426
00:23:49,440 --> 00:23:51,760
Speaker 1: they contributed to their funds over the years. And we've

427
00:23:51,760 --> 00:23:53,600
Speaker 1: had a lot of coverage of that and a lot

428
00:23:53,600 --> 00:23:55,720
Speaker 1: of interest in it when we covered it in the Australian.

429
00:23:56,040 --> 00:23:58,320
Speaker 1: Just as an extra snippet on this. In the new

430
00:23:58,480 --> 00:24:01,119
Speaker 1: super tax, which is just going through the system at

431
00:24:01,119 --> 00:24:04,440
Speaker 1: the moment, in the revised rules for it, the government

432
00:24:04,520 --> 00:24:09,959
Speaker 1: have actually they've changed a tiny aspect of that whereby

433
00:24:10,680 --> 00:24:13,720
Speaker 1: estates will pay more than they were paying under the

434
00:24:13,760 --> 00:24:16,639
Speaker 1: pre Christmas if you like original white paper on it.

435
00:24:17,040 --> 00:24:20,920
Speaker 1: So I do see death taxes as basically low hanging fruit,

436
00:24:21,000 --> 00:24:24,320
Speaker 1: and I do see some signals that this government is

437
00:24:24,359 --> 00:24:27,679
Speaker 1: prepared to wait in there when they can. What do

438
00:24:27,680 --> 00:24:28,440
Speaker 1: you think of that one, Peter?

439
00:24:29,440 --> 00:24:31,959
Speaker 2: Yeah, I think all taxes are on the table. I

440
00:24:32,000 --> 00:24:37,480
Speaker 2: think fiscal debt has risen and governments are going to

441
00:24:37,520 --> 00:24:40,679
Speaker 2: be looking at any way they can to plug based

442
00:24:40,680 --> 00:24:45,000
Speaker 2: fiscal gaps. So I think your death taxes, your reduction

443
00:24:45,080 --> 00:24:48,880
Speaker 2: of investor incentives. But there's going to be a snapback

444
00:24:49,400 --> 00:24:53,159
Speaker 2: because every time you impose a tax, it isn't necessarily

445
00:24:53,200 --> 00:24:55,240
Speaker 2: the people who you think are going to pay for

446
00:24:55,320 --> 00:24:58,080
Speaker 2: it that pay for it. So yeah, I think all

447
00:24:58,119 --> 00:24:59,200
Speaker 2: taxes are on the table.

448
00:25:00,240 --> 00:25:02,679
Speaker 1: Andrew also put forward the notion of a removal of

449
00:25:02,760 --> 00:25:06,400
Speaker 1: the CGT discount for property. Well, Peter, earlier in the show,

450
00:25:06,520 --> 00:25:12,240
Speaker 1: Andrew said he thought they wouldn't drop CGT or reframe

451
00:25:12,280 --> 00:25:15,840
Speaker 1: it entirely, but they might tinker with the discount. Is

452
00:25:15,880 --> 00:25:17,200
Speaker 1: that what you were suggesting, Peter?

453
00:25:18,480 --> 00:25:21,840
Speaker 2: Yeah? Look, I think if they do, there's going to

454
00:25:21,880 --> 00:25:25,080
Speaker 2: be a big impact on housing supply, and they have

455
00:25:25,200 --> 00:25:27,680
Speaker 2: to cut loopholes. For example, if you and I James

456
00:25:27,720 --> 00:25:30,679
Speaker 2: set up a company. In that company buys a house

457
00:25:31,240 --> 00:25:33,600
Speaker 2: and we sell our shares in the company as opposed

458
00:25:33,640 --> 00:25:36,880
Speaker 2: to selling the house. Do we get the CGT discount?

459
00:25:37,119 --> 00:25:39,439
Speaker 2: You know, we're not selling a house, we're selling shares

460
00:25:39,480 --> 00:25:42,160
Speaker 2: and shares are exempts, so then it's a publicly traded

461
00:25:42,520 --> 00:25:45,800
Speaker 2: Then what happens to businesses and there's it's a minefield.

462
00:25:45,840 --> 00:25:49,040
Speaker 2: So it sounds easy in principle that they can just

463
00:25:49,200 --> 00:25:52,560
Speaker 2: make a property related but in practice it's messy.

464
00:25:52,920 --> 00:25:55,320
Speaker 1: That's a very interesting point. Okay, And the last part

465
00:25:55,320 --> 00:25:58,520
Speaker 1: of Andrew suggested a removal of negative gearing is that

466
00:25:58,680 --> 00:26:01,640
Speaker 1: on the card. I think they'll go for CGT over

467
00:26:01,640 --> 00:26:05,920
Speaker 1: negative gearing. That's my hunch. Politically, what do you think, Peter, Yeah.

468
00:26:05,760 --> 00:26:08,160
Speaker 2: I think if there are any moves on negative gearing

469
00:26:08,440 --> 00:26:10,800
Speaker 2: that what we did see from the Labor government pre

470
00:26:11,000 --> 00:26:15,120
Speaker 2: last election around negative gearing policy was they did consider

471
00:26:15,200 --> 00:26:18,040
Speaker 2: making it just on brand new property. So they come

472
00:26:18,080 --> 00:26:20,680
Speaker 2: in and they say, look, we understand negative gearing is

473
00:26:20,720 --> 00:26:23,560
Speaker 2: there to encourage new supply, and what we want to

474
00:26:23,600 --> 00:26:26,840
Speaker 2: do is ensure that incentive remains there if you are

475
00:26:26,880 --> 00:26:30,240
Speaker 2: buying brand new and because people will have an incentive

476
00:26:30,280 --> 00:26:33,800
Speaker 2: to buy brand new, it'll encourage more supply and more building.

477
00:26:33,800 --> 00:26:37,600
Speaker 2: They could sell it in that way, they'll grandfather it in.

478
00:26:37,960 --> 00:26:40,480
Speaker 2: So I think everyone that has a property doesn't need

479
00:26:40,520 --> 00:26:43,600
Speaker 2: to sell, and from a certain date any additional property

480
00:26:43,680 --> 00:26:46,000
Speaker 2: will only be for brand new. I think at some

481
00:26:46,080 --> 00:26:47,280
Speaker 2: point we will see that.

482
00:26:47,400 --> 00:26:50,560
Speaker 1: Right, which was what they had. There was an election attempt,

483
00:26:50,600 --> 00:26:51,680
Speaker 1: wasn't it. Once upon a time.

484
00:26:52,320 --> 00:26:54,880
Speaker 2: It was an attempt, but nobody wanted to go near

485
00:26:54,960 --> 00:26:58,359
Speaker 2: it because they thought any changes to tax policy is

486
00:26:58,400 --> 00:27:02,280
Speaker 2: too dangerous. And labor learned its lesson last time, when

487
00:27:02,480 --> 00:27:05,520
Speaker 2: you know Bill Shorten election, they did push through a

488
00:27:05,560 --> 00:27:08,840
Speaker 2: lot of policy, and this time they thought, well, why bother,

489
00:27:08,960 --> 00:27:10,680
Speaker 2: let's go policy live. Yes.

490
00:27:10,880 --> 00:27:13,439
Speaker 1: Yeah, and obviously he didn't he will. He lost an

491
00:27:13,440 --> 00:27:16,840
Speaker 1: election with those policies, which were an integral part of why.

492
00:27:16,720 --> 00:27:17,000
Speaker 2: He did it.

493
00:27:17,119 --> 00:27:19,359
Speaker 1: Is okay, very good. We're running out of time, folks,

494
00:27:19,400 --> 00:27:21,920
Speaker 1: so we'll come back to lots of questions. Please keep

495
00:27:21,960 --> 00:27:24,600
Speaker 1: sending them in. Thank you very much, Peter Esher. That

496
00:27:24,680 --> 00:27:26,159
Speaker 1: was great, lovely to have you on. We'll have you

497
00:27:26,200 --> 00:27:26,639
Speaker 1: on again.

498
00:27:26,880 --> 00:27:28,320
Speaker 2: Thank you very much, thanks for having me.

499
00:27:29,080 --> 00:27:32,440
Speaker 1: That was Peter Esher of the flex Doc Group, which

500
00:27:32,480 --> 00:27:36,560
Speaker 1: is a property financing operation run by Peter and keep

501
00:27:36,640 --> 00:27:39,960
Speaker 1: the emails coming their money puzzle at the Australian dot

502
00:27:40,000 --> 00:27:42,080
Speaker 1: com dot au Talk to you soon.

503
00:28:01,480 --> 00:28:01,520
Speaker 2: A