# The Federal Budget Reality Check with Economist Leith van Onselen

An episode of [Straight Talk with Mark Bouris](https://invisiblenetwork.ai/podcast/1572546872), 20 May 2026, 56 min.

Audio: https://p.podderapp.com/2544644999/traffic.omny.fm/d/clips/2fb3740d-3436-44af-8cc0-a91900716aa5/1c4759f0-81fc-4f35-85d1-b305004fc1e8/0f2baaef-0323-4714-9072-b4500079b0cc/audio.mp3?utm_source=Podcast&in_playlist=573776d2-4dbd-4f2f-a825-b305004fc1ef

Leith van Onselen is one of Australia's most credible economists and a straight-talking critic of government policy. In this episode, we dissect the Albanese government's latest budget and its real impact on inflation, housing affordability, and living standards. Leith explains why this isn't tax reform but simply a tax grab, how immigration policy is driving the housing crisis, and why Australia's productivity growth ranks among the worst in the OECD. We explore the disconnect between headline GDP figures and per capita reality, the expansion of the government-funded sector, and what this means for future generations. We get into: • Why the budget won't help with inflation or interest rates • How immigration policy is crush-loading housing and infrastructure • The productivity crisis dragging down living standards • Government sector expansion crowding out private enterprise • Capital gains tax changes that could kill startup innovation • Bracket creep silently increasing everyone's tax burden • The 30% minimum CGT targeting self-funded retirees Join my exclusive Mentored+ community: https://mentored.com.au/become-a-member/ Subscribe to the Mentored newsletter here: https://mentored.com.au/newsletter See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: Leithan Ust and welcome back, mate, Yeah you can that Mark.
[0:03] Speaker 2: Thanks having me back on.
[0:04] Speaker 1: But really busy week or so.
[0:06] Speaker 3: Of course, the budget was last week and by now,
[0:09] Speaker 3: what's good about doing this interview for me anyway right
[0:11] Speaker 3: now is I've sort of started to absorb and sort
[0:16] Speaker 3: of think through the budget a lot more, both from
[0:18] Speaker 3: lots of points of views, not at the least which
[0:21] Speaker 3: is my own personal point of view, but also you know,
[0:23] Speaker 3: the points of view of the community that listens to
[0:26] Speaker 3: me and to some extent listeners to you too. We've
[0:28] Speaker 3: got slightly different communities, but nonetheless, but let me just
[0:31] Speaker 3: start off right from very beginning.
[0:33] Speaker 1: The thing that really bothers a lot of people these days.
[0:36] Speaker 3: Is interest rates, and they're meant to bother people because
[0:39] Speaker 3: that's exactly what the reserve banks mandate is is to
[0:43] Speaker 3: change our behavior through increasing interest rates. And interest rates
[0:49] Speaker 3: and inflation more importantly, are sensitive to fiscal policy.
[0:53] Speaker 1: Last week's budget is a piece of fiscal policy.
[0:57] Speaker 3: Maybe what do you you see that budget as doing
[1:02] Speaker 3: relative to inflation?
[1:05] Speaker 4: Yeah, so I don't think that budget on its own
[1:07] Speaker 4: is going to really change the trajectory that we're on beforehand.
[1:09] Speaker 4: So unfortunately, you know, we we if we go if
[1:12] Speaker 4: we step back a few months, right, So, before the
[1:14] Speaker 4: war and the mentales kicked off, at the end of February,
[1:16] Speaker 4: we had obviously higher inflation than what the RBA wanted,
[1:20] Speaker 4: So core inflation.
[1:21] Speaker 1: Was above the target three point eight and three points trimmed.
[1:25] Speaker 4: Yeah, spot on, So you know, it was above the target,
[1:27] Speaker 4: and the RBA obviously responded by doing the first rate hike. Right,
[1:30] Speaker 4: So we went into this this Middle aged crisis with
[1:33] Speaker 4: you know, above target inflation, and let's be honest, a
[1:37] Speaker 4: lot of that high inflation has been caused by excessive
[1:40] Speaker 4: government spending. So we've got basically the federal government running
[1:43] Speaker 4: a wartime expansionary budget, you know, pretty much the biggest
[1:48] Speaker 4: budget we've had since the height of the pandemic can
[1:51] Speaker 4: also going back to the Second World Wars as a
[1:53] Speaker 4: share of the economy. So they're obviously spinning way too much.
[1:56] Speaker 4: And and this budget to me, doesn't really change that, right,
[2:00] Speaker 4: not really cutting back. I mean, obviously there's some talk
[2:02] Speaker 4: about cutting. The ndis spinning going forward, which is good.
[2:05] Speaker 4: I don't know how they're going to reach their targets
[2:07] Speaker 4: because we've just had double digit annual growth in the NDIS,
[2:10] Speaker 4: and they want to get it down to two percent
[2:12] Speaker 4: annual growth for the end of the decade and then
[2:14] Speaker 4: five percent after that.
[2:15] Speaker 2: I don't think that's really.
[2:16] Speaker 4: Achievable, and a lot of that will actually involve shifting
[2:19] Speaker 4: costs elsewhere, so they want to sort of move autism
[2:21] Speaker 4: out of the NDIS. That'll just go into other programs, right,
[2:24] Speaker 4: So we spent somewhere else. But you know, overall, the
[2:28] Speaker 4: budget's not really doesn't well to me at least, doesn't
[2:31] Speaker 4: seem to be doing much to actually contract government spending
[2:34] Speaker 4: and therefore it's not going to contract that much from
[2:37] Speaker 4: agriga demand and then therefore take pressure off interest rates.
[2:40] Speaker 4: So mate, I personally think we're just we're going to
[2:42] Speaker 4: be stuck in this sort of you know, stag inflationary
[2:44] Speaker 4: environment for a while. Obviously we've got the global oil
[2:47] Speaker 4: shop now and now start to get the second round
[2:48] Speaker 4: impacts of that. So we've got the initial inflationary shock
[2:51] Speaker 4: from the higher fuel prices, and then now we're seeing
[2:54] Speaker 4: the second round. And you're obviously in the property you know,
[2:57] Speaker 4: you obviously know a lot about the property sector. Well,
[2:59] Speaker 4: a lot of developers now talking about rising input costs
[3:02] Speaker 4: on cement bricks, would timber. All sorts of things now
[3:08] Speaker 4: starting to feed into that process. And you know, the
[3:12] Speaker 4: RBA Governor Michelle Bullock is very concerned now about the
[3:14] Speaker 4: second round impacts from the inflation, whereby businesses stuck into
[3:19] Speaker 4: those higher costs from the fuel than they start passing
[3:21] Speaker 4: them on. And in fact, the latest business surveys showed
[3:24] Speaker 4: that input costs have searched and final prices, which is
[3:28] Speaker 4: their cost that they pass on the consumers, have not
[3:30] Speaker 4: yet searched. So I think we're now going to get
[3:32] Speaker 4: that second round impact from the high fuel prices, which
[3:35] Speaker 4: is just going to feed a second round inflation impact.
[3:37] Speaker 4: So unfortunately, it's a perfect stime, mate, We've got excessive governments,
[3:41] Speaker 4: meaning still on top of you know, fuel shocks and
[3:44] Speaker 4: now second round impacts from from those fuel shocks. Unfortunately,
[3:48] Speaker 4: it's just going to it's a bit of a nightmare
[3:50] Speaker 4: for the Reserve Bank.
[3:52] Speaker 3: So at least and maybe a little bit later, we'll
[3:55] Speaker 3: if you have time, if we've got time, we'll actually
[3:58] Speaker 3: visit some of the more are sides of the budget.
[4:03] Speaker 3: Let's just look at it though from a fiscal point
[4:05] Speaker 3: of view, fiscal policy point of view. Just to let
[4:07] Speaker 3: the audience understand, Zervank runs monetary policy, try to control
[4:10] Speaker 3: inflation and unemployment or employment full employment by virtue of
[4:15] Speaker 3: using interest rates up or down, but they're stuck with inflation.
[4:21] Speaker 3: The fiscal policy is a government's game where they can
[4:24] Speaker 3: sort of look at things like stand living in our country,
[4:29] Speaker 3: maybe help growth, you know, help our prosperity at the
[4:33] Speaker 3: same time not ignoring welfare because you know, you don't
[4:35] Speaker 3: want people to be sort of sliding off and going downhill.
[4:39] Speaker 1: But these two have to work together.
[4:41] Speaker 3: Maybe you could explain to us, as an economist, explain
[4:43] Speaker 3: to us the audience the sort of general view around
[4:49] Speaker 3: fiscal policy, how it should be done in an ideological way.
[4:53] Speaker 3: And I don't mean from a labour point of view
[4:55] Speaker 3: or a liberal point of view, but what is a country?
[4:57] Speaker 1: What are the people looking for? What do we expect?
[5:00] Speaker 3: I know you haven't done a survey, but as an economist,
[5:02] Speaker 3: what do people expect from a federal budget, from federal
[5:06] Speaker 3: fiscal policy in terms of all the other aspects as
[5:10] Speaker 3: opposed to these little ideological things like you know, rich
[5:14] Speaker 3: people should be paying more tax on their property gains.
[5:16] Speaker 4: Well for me personally, There's two things. First of all,
[5:20] Speaker 4: you want no governments to spend money properly, right, so
[5:23] Speaker 4: you know this is why they matter. So basically, the
[5:25] Speaker 4: federal budget accounts for about one quarter of national spending, right,
[5:29] Speaker 4: so we should care about it.
[5:30] Speaker 2: Right.
[5:31] Speaker 4: So basically, you know, and obviously that one quarter of
[5:33] Speaker 4: spending is primarily.
[5:35] Speaker 2: Raised through taxes. They tax us workers, businesses, et cetera.
[5:38] Speaker 4: And then they spend that money, which is about a
[5:41] Speaker 4: quarter of the nation spending, right, so it does matter.
[5:44] Speaker 4: So the first thing we should want is that that
[5:45] Speaker 4: money is spent as you know, as well targeted and
[5:49] Speaker 4: spent as efficiently as possible, which I don't think we're getting.
[5:52] Speaker 4: And the second second thing from an economic point of
[5:54] Speaker 4: view is you want the government to spend. You know,
[6:00] Speaker 4: you wanted spending to a ligne with the economic cycle.
[6:02] Speaker 4: So at the moment, obviously we've got inflation above target, etc.
[6:06] Speaker 4: And the government's running an expansiory fiscal policy when really
[6:10] Speaker 4: it should be, and it's working at cross purposes with
[6:12] Speaker 4: the Reserve Bank. So one of my buddies, tarryck Brooker,
[6:15] Speaker 4: is an economists. He actually coined the term burnout economics.
[6:19] Speaker 4: And we've got a bit of a burnout economy at
[6:20] Speaker 4: the moment, where by the Reserve Bank's got its foot
[6:22] Speaker 4: planted on the break, hiking interest rates, trying to slow
[6:26] Speaker 4: the economy down, and you've got the government. So I'm
[6:28] Speaker 4: blaming the federal governments also the states as well. The
[6:30] Speaker 4: States are also spending big, but we've got governments based
[6:33] Speaker 4: in the foot plant and on an accelerator, so they're
[6:35] Speaker 4: working at cross purposes of the RBA, which means the
[6:37] Speaker 4: RBA has got to.
[6:38] Speaker 2: High, creates harder, etcetera.
[6:39] Speaker 4: So for me personally, and I guess an economic point
[6:42] Speaker 4: of view, you want a governments to spend our money
[6:45] Speaker 4: properly because again, the federal budget is twenty five percent
[6:49] Speaker 4: of economic spending and once you had the states it's
[6:51] Speaker 4: about forty percent. And b you want the governments to
[6:55] Speaker 4: be working hand in hand with the Reserve Bank, trying
[6:58] Speaker 4: to boost the economy when it's needed, you know, ie recession,
[7:03] Speaker 4: and slow the economy when you have times like this.
[7:05] Speaker 4: But unfortunately, our governments are working at cross purposes with
[7:08] Speaker 4: the Reserve Bank.
[7:09] Speaker 3: So if the government was spending the money properly, and
[7:12] Speaker 3: I think you mean that in two parts, how much
[7:15] Speaker 3: they spend relative to how much they raise and the
[7:18] Speaker 3: government's revenuers taxes our money, but.
[7:21] Speaker 1: Also where they spend the money. And efficiency is spending efficiency.
[7:27] Speaker 3: Yes, when you say the government current government spending is expansionary,
[7:31] Speaker 3: what do you mean by that? Like, it's what do
[7:33] Speaker 3: you mean expensary? It's going to increase demand and therefore
[7:36] Speaker 3: increase prices, therefore increase infation.
[7:39] Speaker 2: Yeah.
[7:40] Speaker 4: So basically, so you have agrig command, right, that's the
[7:42] Speaker 4: total demand in the economy, and at the moment we've
[7:45] Speaker 4: got agrig demand running ahead of supply. So that's basically
[7:49] Speaker 4: the capacity of the economy to cope with that demand.
[7:52] Speaker 4: And because we've got low prodctivity Belieth and.
[7:54] Speaker 1: You mean agrig demand for goods and services.
[7:57] Speaker 4: Yes, just overall economic activity, spending is running above what
[8:02] Speaker 4: the economy's capacity is to accommodate that spending. And when
[8:05] Speaker 4: you get that, you get too much demand pushing up
[8:07] Speaker 4: against again supply, you get high higher prices, which is
[8:10] Speaker 4: basically what we've got right, And part of that is
[8:13] Speaker 4: not just a spending story. It's also a productivity story,
[8:16] Speaker 4: which we can get into as well. Unfortunately Australia, as
[8:19] Speaker 4: productivity growth in the last decade, if you look at
[8:21] Speaker 4: the OECD, we've been amongst the very poorest in the OECD.
[8:25] Speaker 4: And because we've got very low, poor productivity growth, we've
[8:29] Speaker 4: also had very poor growth in household disposed income. So
[8:32] Speaker 4: again our growth in household sposed incomes, which is sort
[8:35] Speaker 4: of the best single measure I guess for living standards,
[8:38] Speaker 4: it's actually been amongst the porous in the OECD as well.
[8:41] Speaker 4: So we have this economy that has a very slow
[8:43] Speaker 4: speed limit on growth, so the RBA thing puts it
[8:46] Speaker 4: about two percent, and yet we've got the government which
[8:50] Speaker 4: is pumping demand through success is spending, which is pushing
[8:53] Speaker 4: us above that speed limit. And that's one of the
[8:56] Speaker 4: reasons why we have this inflationary problem.
[8:59] Speaker 3: Why would government do that? I mean, they're not stupid.
[9:02] Speaker 3: I mean maybe they're but generally speak less, make the
[9:05] Speaker 3: presumption that they're not stupid. Is this an ideological thing?
[9:09] Speaker 3: Why would they do that?
[9:10] Speaker 2: Yeah? I mean, good question.
[9:12] Speaker 4: I mean that they certainly shouldn't be doing that, but
[9:14] Speaker 4: obviously they have, you know, things they want to spend
[9:18] Speaker 4: their money on, and.
[9:19] Speaker 1: Our money, our money, borrow our money.
[9:21] Speaker 2: Yeah, absolutely, mate.
[9:22] Speaker 4: It's twenty five percent of roughly know, the economies demand
[9:28] Speaker 4: is generated by the federal budget, so and forty percent
[9:32] Speaker 4: once you had the states thereabouts. So you know, this
[9:34] Speaker 4: is we're talking big bucks here, and every dollar of
[9:37] Speaker 4: that's spending by the federal government, not including what they borrow,
[9:41] Speaker 4: so they borrow a bit as well, but every dollar
[9:43] Speaker 4: that's going to be raised by tax review and that
[9:45] Speaker 4: comes from obviously households and businesses and that sort of thing.
[9:48] Speaker 4: So which is why we should all care because ultimately
[9:51] Speaker 4: it's our money that the government's spending. And i'd argue,
[9:55] Speaker 4: I mean, I argue that they're not spending that particularly
[9:56] Speaker 4: well in a.
[9:57] Speaker 2: Lot of areas.
[9:58] Speaker 4: There's a lot of waste across indis the green infrastructure,
[10:04] Speaker 4: all this sort of stuff, or a lot of this
[10:07] Speaker 4: so called green projects, and that are also incredibly wasteful.
[10:11] Speaker 4: With the snowy hydro two point zero, but there's a
[10:13] Speaker 4: whole bunch of them. We've blown billions of dollars on
[10:16] Speaker 4: green hydrogen, which was never feasible in.
[10:18] Speaker 2: The first place. You just look right across the board.
[10:20] Speaker 2: There's a lot of waste.
[10:22] Speaker 4: And we've also have way too many bureaucrats. The growth
[10:25] Speaker 4: in the bureaucracy across the state and federal government has
[10:27] Speaker 4: just been excessive as well.
[10:29] Speaker 2: And if you.
[10:30] Speaker 4: Actually look at the productivity in the government funded sector,
[10:33] Speaker 4: so it's not actually just public service. They call it
[10:35] Speaker 4: the non market sector, which is basically the public service
[10:38] Speaker 4: plus healthcare and social systems, which is driven by the
[10:41] Speaker 4: NDIS at the moment, and the education sector. The proactivity
[10:45] Speaker 4: growth in that sector is basically back where it was
[10:48] Speaker 4: about twenty five years ago. So it's gotten so bad,
[10:50] Speaker 4: and that's one of the reasons why why the economy
[10:53] Speaker 4: has such poor proctivity growth, because we've had this bloating
[10:56] Speaker 4: in this non market sector that is crowding out the
[10:58] Speaker 4: private sector or the markets sector, which actually is growing
[11:03] Speaker 4: in productivity terms, and that's dragging down the nation's overall
[11:06] Speaker 4: productivity growth. It's one of the reasons why we have
[11:08] Speaker 4: amongst the poorest productivity growth in the OECD and then
[11:11] Speaker 4: amongst the poorest real per capital houseold disposed income growth
[11:16] Speaker 4: over the last decade. So unfortunately, it's not a great equation.
[11:20] Speaker 1: So when you talk about.
[11:23] Speaker 3: Let's call it the government or the non market sector
[11:25] Speaker 3: expanding and growing, and as I understand, it has probably
[11:29] Speaker 3: grown more over the last couple of years, and it
[11:32] Speaker 3: ever has in its history as a percentage. And then
[11:35] Speaker 3: you talk about the markets part of the economy, that's
[11:38] Speaker 3: the private part of the economy, private businesses, et cetera.
[11:43] Speaker 3: Is the private part of the economy. Is that shrinking
[11:47] Speaker 3: or is it just a lot a much lower percentage
[11:52] Speaker 3: of the total because the public sector has grown much more.
[11:55] Speaker 1: How's that working?
[11:56] Speaker 4: Yeah, so in the light since about start in twenty
[11:59] Speaker 4: twenty three, about two thirds of the job growth has
[12:02] Speaker 4: been this non market sector. So the market sector is growing,
[12:05] Speaker 4: it's just growing at an incredibly slow rate. And it's
[12:09] Speaker 4: I mean, I guess once once you'd probably adjust for
[12:12] Speaker 4: you know, inflation, that sort of thing. It's probably barely growing,
[12:15] Speaker 4: but it's having so the share of the economy that
[12:18] Speaker 4: has now been taken up with this government funded sector,
[12:22] Speaker 4: the non market sector continues to expand as a share.
[12:26] Speaker 4: And so at the moment, the non market sector accounts
[12:29] Speaker 4: for about thirty one and a half percent of total jobs,
[12:32] Speaker 4: and if you went back, say a decade, it was
[12:34] Speaker 4: about probably think it was about twenty seven percent. So
[12:36] Speaker 4: it keeps growing its share of the economy. And it's
[12:38] Speaker 4: actually this non market sector of the government funded sector
[12:42] Speaker 4: has encountered for us I said about two thirds of
[12:44] Speaker 4: the job growth since it started twenty twenty three and
[12:47] Speaker 4: actually most of and the majority of the job's growth
[12:49] Speaker 4: into the pandemic.
[12:50] Speaker 2: So you know, unfortunately that's not a.
[12:54] Speaker 4: Great story from a productivity viewpoint, where when labor protiuity
[12:59] Speaker 4: growth in that has fallen sharply, it's now tracking back
[13:02] Speaker 4: where it was about twenty to twenty five years ago.
[13:04] Speaker 4: So that is one of the reasons why Australia's proactivity
[13:08] Speaker 4: growth is lagged so poorly. It's not the only one,
[13:10] Speaker 4: but it's certainly one of them.
[13:12] Speaker 3: So when we look at let's call it gross GUDP growth,
[13:15] Speaker 3: which is sort of mentioned earlier on the RBA is
[13:18] Speaker 3: tracking it around saying around two point two, two point one,
[13:20] Speaker 3: whatever the percentage is. And of course you know that's
[13:24] Speaker 3: one way we measure government's activity. We will say, look,
[13:28] Speaker 3: you know GDP was great, You've done a good job man.
[13:32] Speaker 3: It's one measure, one measure of how well the governments
[13:36] Speaker 3: from a financial point of view, is measuring the managing
[13:39] Speaker 3: the country's economy. Where does immigration fit into that and
[13:44] Speaker 3: how is immigration The large numbers in immigration historically large
[13:49] Speaker 3: numbers in immigration, how do they fit into GDP.
[13:52] Speaker 4: Yes, so obviously if you import more people, that's more
[13:56] Speaker 4: inputs in the economy. You're going to get more outputs.
[13:57] Speaker 4: But so unfortunately for US two decades so, we've been
[14:01] Speaker 4: running this very high migration for about twenty years, kicked
[14:04] Speaker 4: off from the mid two thousands and ever since then
[14:06] Speaker 4: it's been very high and that has actually driven the
[14:08] Speaker 4: majority of Australia's overall GDP growth, and our per capita
[14:12] Speaker 4: growth has been appalling. It's actually fallen that the growth
[14:16] Speaker 4: in per capita GDP, which is actually what should matter
[14:19] Speaker 4: for living standards, has actually been falling for that twenty
[14:22] Speaker 4: year period. And so you know, for example, in the
[14:26] Speaker 4: most recent year, from my memory says me correct, immigration
[14:32] Speaker 4: was about one point one percent of the population, right,
[14:35] Speaker 4: so when you look at the overall GDP in Australia,
[14:37] Speaker 4: you've got to deduct that straight off to get your
[14:40] Speaker 4: per capita measure. And over the last sort of several
[14:44] Speaker 4: years we've we actually had growth the last quarter, but
[14:47] Speaker 4: we actually had I think it was like eight out
[14:49] Speaker 4: of twelve quarters. We've actually gone backwards in per capita
[14:52] Speaker 4: GDP and that just tells you that the growth that
[14:56] Speaker 4: Australia's experience over certainly since the pandemic, has been put
[14:59] Speaker 4: on through population growth, and I'd argue that's actually through
[15:04] Speaker 4: population growth through immigration, but also government spending by this
[15:07] Speaker 4: expansion non market sector. So if you actually look a
[15:10] Speaker 4: look at you, I guess per capita growth in the
[15:14] Speaker 4: private economy, it's been absolutely appalling. So unfortunately, our economy
[15:18] Speaker 4: has become uber reliant on high population growth through immigration
[15:23] Speaker 4: as well as as well as this expansion of the
[15:26] Speaker 4: non market government funded economy, which obviously is not very
[15:31] Speaker 4: good for living standards, but it does make the GDP
[15:33] Speaker 4: look better.
[15:34] Speaker 3: So if I look at those two propositions then and
[15:38] Speaker 3: it might be unfair, but let me know what you
[15:40] Speaker 3: think those two propositions. That is, building the employment numbers
[15:46] Speaker 3: up by offering more jobs both the federal and the state,
[15:49] Speaker 3: which means unemployment number looks pretty healthy at four point
[15:52] Speaker 3: two or four point three whatever.
[15:53] Speaker 1: Is at the moment.
[15:55] Speaker 3: So everyone goes, wow, I've got a job, and the
[15:57] Speaker 3: Australian unemployment number looks great, and you know, treasurers go
[16:01] Speaker 3: up and stand up in front of the public and say, look,
[16:03] Speaker 3: we've got a really good unemployment. If you look at
[16:05] Speaker 3: that one aspect, that's government offering jobs. Two, government allowing
[16:11] Speaker 3: immigration to continue on at a fast rate. That has
[16:14] Speaker 3: been in the last twenty years, but nonetheless it has
[16:16] Speaker 3: been we do take a lot of people in relatively speaking,
[16:20] Speaker 3: but we're taking many more than we have had in
[16:21] Speaker 3: the past, which somehow makes the headline GDP number look
[16:26] Speaker 3: fair enough, whether it's to two percent, But when you
[16:30] Speaker 3: do it on a per capita basis, we're going backwards.
[16:33] Speaker 1: Is it a from a fiscal point policy point of view?
[16:37] Speaker 3: Is it a fair thing to say that governments can
[16:40] Speaker 3: manipulate measures of how the economy is going by playing
[16:46] Speaker 3: games with us letting more people in the country and
[16:49] Speaker 3: employing more people. And I'm not saying that this is
[16:51] Speaker 3: what their intention is. It looks a bit that way,
[16:54] Speaker 3: but I'm not saying that. But how would you look
[16:56] Speaker 3: at that as an economist?
[16:58] Speaker 4: Yeah, one hundred percent, mate. So the federal government, so
[17:02] Speaker 4: we'll take the immigration thing first, right, So the federal
[17:04] Speaker 4: government loves big migration, right, and it loves it for
[17:07] Speaker 4: two main reasons. So the federal government collects about eighty
[17:10] Speaker 4: percent of the nation's tax revenue, so it is the
[17:14] Speaker 4: major beneficiary from running a big immigration program because it
[17:18] Speaker 4: imports hundreds of thousands of people every year. Most of
[17:20] Speaker 4: those people obviously work, they pay personal income taxes. Personal
[17:24] Speaker 4: income taxes go to the federal government. You also get
[17:26] Speaker 4: a little bit more company tax revenue from you know,
[17:29] Speaker 4: sort of consumer facing firms, that sort of thing, banks, whatever,
[17:31] Speaker 4: you've got to lend, lend to these people, so you.
[17:34] Speaker 2: Get a little bit more company tax.
[17:35] Speaker 4: So the federal government collects all the bounty from immigration,
[17:39] Speaker 4: primarily again through personal income taxes, but the cost of
[17:42] Speaker 4: that immigration then gets deferred onto other areas of the economy. So,
[17:45] Speaker 4: for example, the state governments typically lose because the state
[17:48] Speaker 4: governments have got to the fund the infrastructure. We're talking schools, hospitals, roads,
[17:54] Speaker 4: public transfit, all that sort of thing, and as a result,
[17:57] Speaker 4: the state governments lose, as individuals often lose as well
[18:02] Speaker 4: because the state governments. And you obviously live in Sydney, right,
[18:05] Speaker 4: So if you go back to Sydney at the turn
[18:07] Speaker 4: of the center, I think you had about two toll
[18:08] Speaker 4: roads and Sydney's population was about four million people. You
[18:12] Speaker 4: now added one and a half million people since then
[18:14] Speaker 4: to accommodate all those people. Because Sydney was already built out,
[18:18] Speaker 4: they've had to build toll roads everywhere, right, and they've
[18:20] Speaker 4: privatized them. So now you can't drive around Sydney with
[18:23] Speaker 4: that transurban putting the hand in your pocket and fleecing
[18:26] Speaker 4: you for tolls. And that was those tolls were built
[18:29] Speaker 4: to keep up with the immigration foisted upon Sydney by
[18:32] Speaker 4: the federal government effectively. And the other reason why the
[18:36] Speaker 4: federal government loves big migration is because it obviously pumps
[18:39] Speaker 4: up the GDP, right, so there's nothing a politician hates
[18:41] Speaker 4: more than having to front the camera.
[18:43] Speaker 2: And you know, had overall.
[18:45] Speaker 4: GDP's gone backwards and we're in recession. But Australia's basically
[18:49] Speaker 4: avoided a recession outside of COVID since the early nineties
[18:54] Speaker 4: by running a very high migration program that is way
[18:57] Speaker 4: bigger than just about every other country in the World's
[19:00] Speaker 4: basically boosted artificially boosted our headline GDP figures, even though
[19:04] Speaker 4: our per capita growth has been a poorly So we've
[19:06] Speaker 4: basically grown the economic pie by importing way more people
[19:10] Speaker 4: than the just about anywhere else, but everyone sliced the
[19:13] Speaker 4: pie hasn't improved. And that's effectively the mechanism that the
[19:17] Speaker 4: federal government uses a it boosts the federal budget by
[19:20] Speaker 4: bringing in all these extra people the cost of deferred elsewhere,
[19:23] Speaker 4: and it also makes the economy look better than it is.
[19:25] Speaker 4: And that's basically why the federal government does that. Obviously,
[19:29] Speaker 4: we've got this you know, this NDS wide elephant, which
[19:32] Speaker 4: is driving a lot of that non market sector job
[19:34] Speaker 4: So the government has boosted the number of bureaucrats quite
[19:37] Speaker 4: a lot, but the bigger boost to the jobs has
[19:42] Speaker 4: actually been through the NDIS. There has been you know,
[19:45] Speaker 4: the single biggest job booster since the pandemic has been
[19:48] Speaker 4: through the NIAS and because because that program has expanded
[19:52] Speaker 4: so aggressively, that's been one of the main drivers of
[19:55] Speaker 4: why Australia has had such strong job growth. And it's
[19:58] Speaker 4: also arguably the single biggest reason why Australia's unemployment rates
[20:03] Speaker 4: are four point three percent, and it's you know, five
[20:05] Speaker 4: percent in New Zealand and over five percent in Canada
[20:08] Speaker 4: and hiring these other places around the world. We our
[20:11] Speaker 4: labor markets meet artificially supported by this huge government spending.
[20:16] Speaker 4: You know, a lot of that is through the NDIS,
[20:19] Speaker 4: and that's made the labor market look better than it
[20:21] Speaker 4: naturally is. So we do we have a bit of
[20:23] Speaker 4: a false economy at the moment mark whereby running a
[20:26] Speaker 4: huge immigration program and then also got this big government spending,
[20:30] Speaker 4: so whereas a private sector economy, the per capita and
[20:34] Speaker 4: private sector economies are actually very weak.
[20:36] Speaker 1: What would you have liked to see in the budget then?
[20:39] Speaker 3: In relation to those two factors, that is, what government
[20:44] Speaker 3: spends by neural and how much they spend relative to
[20:46] Speaker 3: how much they take in, and what should they have done?
[20:50] Speaker 3: What would you have liked to see them to be
[20:52] Speaker 3: done in relation to immigration policy?
[20:55] Speaker 4: Well, I'll do immigration first, as I started that before. Unfortunately,
[20:59] Speaker 4: the federal budget actually revised up immigration. So every single
[21:02] Speaker 4: budget that the Albanese government's had since they got elected
[21:05] Speaker 4: is undershot. So they've come out with fore cast immigration
[21:08] Speaker 4: and they've overshot it. And since in their first I
[21:11] Speaker 4: think it's three point three and one quarter years since
[21:15] Speaker 4: they came to office, that's all we've.
[21:16] Speaker 2: Got data for.
[21:18] Speaker 4: We've had about one point three million net overseas migrants
[21:21] Speaker 4: lean on that period, which is astonishingly high. That's like
[21:25] Speaker 4: I'm trying to remember how many per day. It's yeah,
[21:28] Speaker 4: it's an enormous mat It's like one one hundred and
[21:31] Speaker 4: fifty net overseas migrants per day.
[21:33] Speaker 1: I think it is Wow.
[21:34] Speaker 4: It's a huge number, basically double the previous two governments
[21:39] Speaker 4: per day, almost double. And unfortunately this federal budget that
[21:44] Speaker 4: came out last week actually upgraded net overseas migration by
[21:47] Speaker 4: fifty five thousand, so about thirty five thousand this financial
[21:50] Speaker 4: year and twenty five twenty thousand next financial year. So
[21:54] Speaker 4: unfortunately they have lost control of migration, and that is
[21:57] Speaker 4: the fundamental it's a primary reason why we have a
[22:00] Speaker 4: rental crisis in this country, because we've had this massive
[22:03] Speaker 4: surge in people who need housing, and you feel it
[22:06] Speaker 4: first through the rental market because most migrantcy come to Australia,
[22:09] Speaker 4: they rent before they buy, right, so almost all we'll rent,
[22:13] Speaker 4: and we've had this huge crash in the rental banksy
[22:15] Speaker 4: rate because the supply side of the housing market, the
[22:18] Speaker 4: construction side, is completely bottleneck. To the moment, we've had
[22:21] Speaker 4: a forty percent increasing costs since the pandemic. Costs are
[22:23] Speaker 4: now rising again because of this oil this energy shock.
[22:28] Speaker 4: Obviously we've got much high interest rates. So during the
[22:31] Speaker 4: second half last decade we had that big high rise
[22:34] Speaker 4: apartment building boom, the cash rate was one half percent.
[22:37] Speaker 4: Now it's four point three five percent, likely to go
[22:39] Speaker 4: to four point six or four point eighty five by
[22:41] Speaker 4: the end of the year. So that's obviously constrained on construction.
[22:44] Speaker 4: We've got labor shortages, all these sorts of things. So
[22:47] Speaker 4: the government's basically pumped in huge amounts of people into
[22:51] Speaker 4: a supply constrictor market that's driven up rents. According to Fatality,
[22:56] Speaker 4: the medium advertised rent nationally is increased by fifty percent
[23:00] Speaker 4: now since the end of twenty nineteen. That's added over
[23:02] Speaker 4: eleven thousand dollars per year to the cost of renting
[23:05] Speaker 4: the meeting home if you use totalities figures, So it's
[23:08] Speaker 4: a huge hit. So yeah, I would have loved to
[23:11] Speaker 4: have seen the government actually tighten up the migration system considerably.
[23:16] Speaker 4: Canada has actually done that. Mark So Canada, which also
[23:19] Speaker 4: has left of center labor type government, they've caught the
[23:23] Speaker 4: liberals over there, but especially the labor equivalent. Canada experienced
[23:27] Speaker 4: a massive explosion immigration post pandemic and a similar surge
[23:31] Speaker 4: in rents, and all the similar problems that we've got
[23:34] Speaker 4: to Australia. But unlike Australia, the Canadian Liberal government in
[23:39] Speaker 4: mid twenty twenty four actually did a three year population
[23:42] Speaker 4: freeze and they've actually slashed temporary migration, so they've sent
[23:46] Speaker 4: a lot of temporary migrants home. They've also cut the
[23:47] Speaker 4: purlm mirgant intake by twenty percent and Canada recorder its
[23:50] Speaker 4: first population declined since the Second World War last year
[23:53] Speaker 4: had actually lost twenty five thousand people. And guess what,
[23:56] Speaker 4: Canada's had nineteen consecutive months of falling rents because it's
[24:00] Speaker 4: taking the pressure off housing. Now, that is a template
[24:02] Speaker 4: that Australia should be doing something like that, but unfortunately
[24:05] Speaker 4: the government doesn't mean he will will do that. And
[24:08] Speaker 4: on the budget side, my biggest gripe with the budget
[24:13] Speaker 4: is that the federal governments found all these different ways
[24:16] Speaker 4: to raise tax Right, We've got the capital gains tax,
[24:18] Speaker 4: negative gearing taxes on trus and some of that is justified,
[24:22] Speaker 4: some of it not, which I'm sure we'll get into,
[24:24] Speaker 4: but my issue with it is that they didn't use
[24:27] Speaker 4: that extra money which they're raising to then index say
[24:31] Speaker 4: marginal taxcals to inflation.
[24:33] Speaker 2: Because Australia.
[24:36] Speaker 4: Australia is one of the most reliant economies in the
[24:39] Speaker 4: world on personal income taxes, so fifty two percent of
[24:42] Speaker 4: the federal budgets tax renew comes from personal income taxes.
[24:46] Speaker 2: And despite the fact that we've us.
[24:49] Speaker 4: As Australians as a whole, we've experienced about six percent
[24:52] Speaker 4: decline in real wages since the pandemic, so we've all
[24:55] Speaker 4: gone backwards on average lunch or just for inflation. We're
[24:58] Speaker 4: all paying much higher taxes because our nominal wage growth
[25:02] Speaker 4: that's wage growth that hasn't kept up with inflation, but
[25:05] Speaker 4: our wages have gone up, has pushed us into higher
[25:07] Speaker 4: tax brackets. And every year we're paying higher and higher
[25:10] Speaker 4: average tax rates. And the absurdity of it was I
[25:14] Speaker 4: did some analysis last week in a market. This shows
[25:16] Speaker 4: you the absurdity of the personal income tax system. The
[25:19] Speaker 4: median full time salary now in Australia is just over
[25:22] Speaker 4: one hundred thousand dollars. It's about one hundred thousand, whereas
[25:25] Speaker 4: the top malet of tax rate kicks in one hundred
[25:27] Speaker 4: and ninety, so you only need to earn one point
[25:29] Speaker 4: nine times a median full time salary in Australia to
[25:32] Speaker 4: pay the top mative tax rate. And if you extrapolate
[25:35] Speaker 4: the federal budgets figures over the next three years, in
[25:38] Speaker 4: three years time, roughly the median full time salary is
[25:42] Speaker 4: going to be over one hundred and eight thousand, and
[25:45] Speaker 4: by that stage you only have to earn one point
[25:47] Speaker 4: seventy five times a median to pay the top marti
[25:49] Speaker 4: of tax rate. Now, if the government doesn't fix this situation,
[25:52] Speaker 4: we're going to have this situation whereby average tax rates
[25:54] Speaker 4: rise every single year despite the fact that once you're
[25:59] Speaker 4: just inflation, we're experiencing any wage growth. And in fact,
[26:02] Speaker 4: the Reserve Bank of Australia forecasts that by twenty twenty
[26:05] Speaker 4: eight Australians are going to basically over the next several years,
[26:09] Speaker 4: we're going to experience zero real wage growth. So we're
[26:11] Speaker 4: going to go back backward for the next year or
[26:14] Speaker 4: so because wages an't going to keep up inflation. Then
[26:16] Speaker 4: we're going to catch it up a bit. But despite that,
[26:19] Speaker 4: we're going to keep paying these high and high every
[26:20] Speaker 4: tax rates. So what I would have loved to have
[26:22] Speaker 4: seen the government do is actually index those tax scales
[26:26] Speaker 4: by at least the midpoint of the RBA's band, so
[26:29] Speaker 4: index and by two point five percent every year, and
[26:32] Speaker 4: that way the government wouldn't experience this forever rising you know,
[26:37] Speaker 4: tax revenue from personally contextas because the government doesn't have
[26:40] Speaker 4: to do anything at the moment, they can do nothing
[26:41] Speaker 4: and just let inflation push us all into higher tax brackets.
[26:44] Speaker 4: And the federal budget actually forecasts that the federal government's
[26:48] Speaker 4: tax take from personally income taxes will rise from fifty
[26:51] Speaker 4: two percent this year to fifty four and a half
[26:54] Speaker 4: percent in about three years, oh sorry, by by twenty thirty,
[26:58] Speaker 4: So they are forecasting more and more tax taken. I
[27:02] Speaker 4: think the annoys me about it is they if you
[27:05] Speaker 4: give the government more spending and you have no cap
[27:07] Speaker 4: on what they can raise off you, they're just going
[27:10] Speaker 4: to spend it and waste it.
[27:11] Speaker 2: Whereas if you.
[27:12] Speaker 4: Actually index the tax scales to two and a half percent,
[27:16] Speaker 4: which is the midpoint of the Reserve Bank's target band,
[27:19] Speaker 4: they wouldn't experience this ever rising personal income taxes every
[27:22] Speaker 4: single year, and they'd have to actually have to budget
[27:24] Speaker 4: better and how they spend their money. And that's the
[27:28] Speaker 4: thing that annoys me about it, because they can literally
[27:29] Speaker 4: do nothing every year while our incomes go backwards because
[27:32] Speaker 4: it doesn't think they don't keep up with inflation, they
[27:35] Speaker 4: still collect more and more taxes office every single year,
[27:38] Speaker 4: and that to me is the biggest single fallion on
[27:41] Speaker 4: this budget. It was a tax grab, not tax reform.
[27:44] Speaker 4: And what they should have done is actually use the
[27:46] Speaker 4: extra revenue from closing these loopholes using that quote unquote
[27:51] Speaker 4: to then lower taxes on workers, because the workers are
[27:55] Speaker 4: the ones who can absolutely ham it.
[27:57] Speaker 3: So are you saying, Leath that the extra money that
[28:00] Speaker 3: the gun is going to raise from all the changes
[28:02] Speaker 3: is basically just going to be spent, I think, but
[28:06] Speaker 3: nothing is going to come back to workers or whoever
[28:08] Speaker 3: by changing the point at which the higher tax brackets
[28:12] Speaker 3: start to kick in relative to your wages.
[28:14] Speaker 4: Yeah, it's what's going to get worse because it's not
[28:16] Speaker 4: just it's not just the people in the top rate,
[28:18] Speaker 4: it's it happens right across the tax ban, across the board.
[28:20] Speaker 2: Yeah.
[28:20] Speaker 4: Yeah, yeah, because every single year, even if you don't
[28:23] Speaker 4: necessarily move into a higher tax bracket because you're still
[28:26] Speaker 4: stuck between, your average tax rate still goes up because
[28:29] Speaker 4: a higher share of your earnings gets at that higher
[28:32] Speaker 4: rate that you're on. So every single year our average
[28:35] Speaker 4: tax rates go up despite the fact that our real
[28:38] Speaker 4: wages if you just the wage price in next from
[28:41] Speaker 4: the ABS with inflation, it's the following up about six
[28:44] Speaker 4: percent since.
[28:45] Speaker 3: The tax reform. So this is not tax reform, it's
[28:49] Speaker 3: extra tax. So do you say that would you say
[28:52] Speaker 3: that this the narrative that's been pushed around in relation
[28:57] Speaker 3: to by the government in relation to this budget is
[29:03] Speaker 3: dishonest because I mean, they're not stupid people. They know
[29:05] Speaker 3: exactly all the stuff that you know.
[29:07] Speaker 2: They know.
[29:08] Speaker 3: If they don't know, Treasure would have told them. They
[29:11] Speaker 3: go out and say that this is a tax reform
[29:14] Speaker 3: budget and it's great for Australia, et cetera. And we're
[29:17] Speaker 3: going to lower rents, and we've got a Treasury paper
[29:19] Speaker 3: that says rents are only going to go by two
[29:21] Speaker 3: dollars a month or a week, and then we're going
[29:25] Speaker 3: to make more houses available for younger people, et cetera.
[29:29] Speaker 1: Is it therefore dishonest a little bit?
[29:31] Speaker 4: So Look, I'll be honest, I personally don't care that
[29:34] Speaker 4: they've done the CGT and the negative gearing on established housing.
[29:39] Speaker 4: So my personal view is if you reduce demand for
[29:43] Speaker 4: property investors into the established market, you're not going to
[29:46] Speaker 4: really impact supply pretty much at all, but reduced yeah yeah, yeah,
[29:51] Speaker 4: but you will reduce some demand obviously, and that will
[29:53] Speaker 4: help to lower prices at the margin. And if you
[29:56] Speaker 4: actually look at the mortgage I've actually got a great chart.
[30:00] Speaker 4: So it's basically it compares mortgage mortgage finance commitments through
[30:05] Speaker 4: investors versus first home buyers, and they're basically the polar opposite, right,
[30:09] Speaker 4: So when investor mortgage demand goes up, first home buyers
[30:12] Speaker 4: goes down, and that tells you that that investors tend
[30:14] Speaker 4: to crowd out first home buyers. So if you do
[30:17] Speaker 4: reduce that investor demand, but you're going to get more
[30:19] Speaker 4: first home buyers in the market, you can get slightly
[30:21] Speaker 4: lower prices, you're going to increase the homeownership rate.
[30:23] Speaker 2: A little bit.
[30:24] Speaker 4: That's all fine, But at the same time, the government
[30:27] Speaker 4: has ramped up immigration, which is which hurts first home
[30:30] Speaker 4: buyers because first home buyers typically rent before they buy.
[30:34] Speaker 4: So if you're pushing up rents because of the high immigration,
[30:36] Speaker 4: well it packs some longer to save a deposit. And
[30:39] Speaker 4: also high immigration does put some upward pressure on house prices.
[30:42] Speaker 4: There's more of an impact on rents, but does do
[30:44] Speaker 4: a little bit, So it's a double whammy for first
[30:46] Speaker 4: home buyers. Secondly, if they want to talk about intergenerational
[30:49] Speaker 4: equity and that sort of thing, well, obviously, young people
[30:53] Speaker 4: who need to buy homes, they're weight and salary editors,
[30:55] Speaker 4: and they're getting more and more of their their income
[30:59] Speaker 4: taking every year by bracket creep right, which makes it
[31:02] Speaker 4: harder to purchase housing, makes it harder to leave. In general,
[31:05] Speaker 4: the government's done nothing about that, and they're going to
[31:08] Speaker 4: continue to tax the debuggery. And thirdly, if you want
[31:11] Speaker 4: to fix intergenerational equity, well you don't want to. You
[31:16] Speaker 4: don't want to put young people into more debt, more
[31:19] Speaker 4: public debt. So now if you go back to sort
[31:22] Speaker 4: of the start of the century, if you ever averaged
[31:26] Speaker 4: out the federal or the federal and state debt per capita,
[31:30] Speaker 4: it was a couple thousand bucks ahead. Now it's tens
[31:32] Speaker 4: one thousand dollars ahead, right because because both states and
[31:36] Speaker 4: federal governments have run up so much debt. Now that
[31:39] Speaker 4: just means if you're born today, you're born negative tens
[31:43] Speaker 4: of thousands of dollars in debt because the decisions that
[31:46] Speaker 4: people who came before you made, like the government's before
[31:49] Speaker 4: you made. So if you actually want to improve intergenerational equity,
[31:53] Speaker 4: well it might be a good idea if the government
[31:55] Speaker 4: actually spends our money a little bit better and doesn't
[31:57] Speaker 4: run up this big debt tab, because then that'll hurt
[31:59] Speaker 4: young people. So you know that there's a few facts here. Yes,
[32:02] Speaker 4: they I don't really care about the negative geary and
[32:05] Speaker 4: capital gains tax changes on established housing. I think that's
[32:08] Speaker 4: good at the margin. There's a whole lot of stuff.
[32:10] Speaker 2: That's not good.
[32:11] Speaker 4: But they've given up those small gains for running a
[32:15] Speaker 4: much high immigration program than they should, penalizing wage and
[32:19] Speaker 4: salary earners through bracket crete, which the federally, as I said,
[32:22] Speaker 4: the federal budget itself forecasts higher tax collections from personal
[32:27] Speaker 4: income taxes ahead, so they're going to squeeze its harder.
[32:30] Speaker 4: And then also by spinning too much and running up
[32:32] Speaker 4: this commonwealth debt as well as state debt separately, which
[32:37] Speaker 4: also is a which is basically stealing our future generations,
[32:41] Speaker 4: so that those are yeah, yeah, sorry sorry. So those
[32:45] Speaker 4: are basically my three big issues from an intergenerational perspective.
[32:49] Speaker 3: At least, So maybe we could just have a look
[32:51] Speaker 3: at this point. And I think it's an important point.
[32:54] Speaker 3: You raised the fact that this budget did not look
[32:57] Speaker 3: at the adjusting tax when the higher tax rate kick
[33:03] Speaker 3: in four varies for anybody. And they do talk about
[33:07] Speaker 3: intergenerational inequity, and as I've said earlier, I mean, you know,
[33:11] Speaker 3: Costello talked about an intergeneration equity in the two thousands period,
[33:14] Speaker 3: and one of the things that he said, in order
[33:16] Speaker 3: to make sure we don't have intergenerational equity is to
[33:18] Speaker 3: make sure that we have fiscal restraint. In other words,
[33:21] Speaker 3: we don't spend more than we raise. And when we
[33:24] Speaker 3: spend more than we raise, we raise money from two places,
[33:26] Speaker 3: that's taxes and debt. The government borrows money. And Costello's
[33:30] Speaker 3: thesis or hypothesis was that we should not leave debt
[33:35] Speaker 3: to our children and grandchildren, et cetera, because that is
[33:38] Speaker 3: actual one form of intergenerational equity. Given where we're at
[33:42] Speaker 3: the moment in terms of national debt, and I forget
[33:45] Speaker 3: state debt for the moment that gets out as a
[33:47] Speaker 3: national bit the national debt number only. Do you think
[33:50] Speaker 3: that that's a fair argument for this government to run
[33:54] Speaker 3: and their narrative is that this budget has directed it
[33:57] Speaker 3: intergenerational and equity and write into generational inequity.
[34:02] Speaker 1: Do you think it's a fair narrative?
[34:04] Speaker 2: No, no, no, no, I don't for those you know,
[34:07] Speaker 2: for those two reasons.
[34:08] Speaker 4: Obviously, the government continues to run up debt. So I
[34:11] Speaker 4: think I think Chris Richardson on last week and he
[34:14] Speaker 4: reckons net debt the commonwealth level is about six hundred
[34:17] Speaker 4: billion dollars. There's another figures have gone out there saying's
[34:20] Speaker 4: about a trillion, but he used the term six hundred billion,
[34:23] Speaker 4: and he's a lot smarter than me on pudget issues.
[34:24] Speaker 4: I'm not going to contradict that, but that alone would
[34:28] Speaker 4: be about twenty two thousand dollars per head. I think
[34:31] Speaker 4: it is per per capita. Again, you know, if we
[34:34] Speaker 4: go back to the start of the century or early
[34:38] Speaker 4: in the century, we had almost no government debt, so
[34:44] Speaker 4: right from the start. Now, once you're born into Australia,
[34:46] Speaker 4: you're born with this. You know, twenty thousand plus dollars
[34:50] Speaker 4: of debt gone on Chris Richardson figures. And secondly, obviously
[34:54] Speaker 4: we've got you know, personal income taxes now are taking
[34:57] Speaker 4: a higher and highest share of the federal budget and
[34:59] Speaker 4: higher high and hire a share of our wages. So
[35:02] Speaker 4: the government is basically taxes to death as well. And
[35:04] Speaker 4: that's only look at the personal income tax side, not
[35:06] Speaker 4: across all the taxes across pretty much everywhere across the economy.
[35:10] Speaker 4: So I'd argue that, yeah, the government can't make that
[35:14] Speaker 4: argument because its debt is growing and it's a It's
[35:18] Speaker 4: not at an internationally high level, but it's at a
[35:20] Speaker 4: Obviously the trajectory is bad as well as it's taking
[35:24] Speaker 4: more and more of our incomes every year through taxation.
[35:28] Speaker 4: So yeah, I don't agree with that premise.
[35:30] Speaker 3: One of the interest generational inequities is that young people
[35:32] Speaker 3: can't afford to buy a house or apartment or dwelling.
[35:37] Speaker 3: What are the sort of things that economists would like
[35:40] Speaker 3: to see in a government budget in terms of policy
[35:45] Speaker 3: that could have potentially address that.
[35:49] Speaker 4: Okay, so I'm not your typical economists on this, so
[35:52] Speaker 4: it's a lot of economists don't probably won't agree with
[35:55] Speaker 4: on this. But first of all, I mean, the government
[35:56] Speaker 4: needs to run an immigration program that is below the
[36:00] Speaker 4: nation's capacity to build houses in infrastructure. So for the
[36:03] Speaker 4: last twenty years we haven't done that. We've obviously run
[36:06] Speaker 4: an incredibly strong immigration program. It's pretty much crush loaded everything.
[36:10] Speaker 4: So it's crush loaded infrastructure, it's crush loaded housing. We
[36:13] Speaker 4: haven't built enough housing to keep up. I think that's
[36:15] Speaker 4: pretty self evident. So the first best solution is to
[36:18] Speaker 4: not do that and the slow immigration to make sure
[36:21] Speaker 4: that your immigration program is a lot better targeted towards
[36:25] Speaker 4: genuine high skills, not this sort of volume approach. So
[36:28] Speaker 4: my view on immigration is the government's running a sort
[36:30] Speaker 4: of quantity over quality program, and we should be running
[36:34] Speaker 4: a quality over quantity program. And some of that does
[36:36] Speaker 4: also include ensuring that a higher share of the migrants
[36:40] Speaker 4: that you get actually work in construction, because at the moment,
[36:44] Speaker 4: a tiny share of migrants that we bring into Australia
[36:49] Speaker 4: now actually work in trades working construction. So as a result,
[36:52] Speaker 4: they're adding more to demand for infrastructure, demand for housing
[36:55] Speaker 4: than they're actually adding to supply. So that'd be the
[36:59] Speaker 4: first thing you fix that. There's always the arguments around
[37:02] Speaker 4: planning and all those sorts of things, but the federal
[37:05] Speaker 4: government does it can't do a lot about that. It
[37:07] Speaker 4: could bring in some financial incentives for the states to
[37:10] Speaker 4: sort of streamline regulations and that sort of thing. There's
[37:14] Speaker 4: that stuff obviously, the tax policy settings. I think, as
[37:18] Speaker 4: I said before, I don't I don't disagree with with
[37:22] Speaker 4: with treating I guess investors into established housing a little
[37:27] Speaker 4: bit more harshly than they were previously. That should reduce
[37:30] Speaker 4: some investor demand and obviously help first home buyers a bit.
[37:34] Speaker 4: But again it's really just tinkered at the margins, like
[37:37] Speaker 4: that sort of a band aid. It's not fixing the
[37:38] Speaker 4: underline issues. So yeah, the main thing, the number one thing,
[37:43] Speaker 4: would be to run a significantly smaller and better target
[37:45] Speaker 4: immigration program. That should be number one. Number two, you,
[37:49] Speaker 4: I wouldn't mind seeing the federal government actually provide some
[37:52] Speaker 4: incentive payments to the states a little bit like they
[37:54] Speaker 4: used to do with the competition payments for the states
[37:56] Speaker 4: to actually you know, speed up or get rid of
[38:01] Speaker 4: red tape and that sort of thing in the building sector,
[38:03] Speaker 4: not just the building sector, in other sectors across the
[38:05] Speaker 4: economy as well, because honestly, mate, I think Australia is
[38:08] Speaker 4: drowning in red and green tape at the moment, and
[38:10] Speaker 4: it seems that governments always want to add more regulators
[38:13] Speaker 4: and things. So I've just seen it with the energy system.
[38:15] Speaker 4: The government is now adding a new energy regulator on
[38:18] Speaker 4: top of all the energy regulators were already got now
[38:20] Speaker 4: for you know, solar batteries and this sort of stuff. Well,
[38:23] Speaker 4: I don't think we need more regulators in this country.
[38:25] Speaker 4: We probably need less, but we need the regulators. We've
[38:27] Speaker 4: got to actually you know, streamline regulation and make it
[38:31] Speaker 4: easier to do business in this country. But we always
[38:33] Speaker 4: seem to add more and more layers every single year,
[38:35] Speaker 4: which just makes it even harder to do business, whether
[38:38] Speaker 4: that's building or infrastructure all this other stuffs.
[38:40] Speaker 1: But what is that though? I mean, I don't understand.
[38:43] Speaker 3: I mean, you might have a better concept of this,
[38:44] Speaker 3: but why do you think we're adding more people to
[38:49] Speaker 3: answer to that instead of making it as a growth
[38:53] Speaker 3: style place.
[38:54] Speaker 1: I mean, what is the deal?
[38:55] Speaker 2: Yeah?
[38:55] Speaker 4: Well, I mean, you know, I think part of it
[38:57] Speaker 4: is once you start employing more and more bureaucrats, which
[39:02] Speaker 4: are done at both levels, well at both state and
[39:04] Speaker 4: federal levels government.
[39:06] Speaker 2: The bureaucrats then need to justify their jobs, so they're
[39:09] Speaker 2: so in order to justify their.
[39:10] Speaker 4: Jobs, they create regulations and that sort of thing, And unfortunately,
[39:14] Speaker 4: I think, you know, too many of our politicians, especially
[39:17] Speaker 4: at the federal level, but also state and bureaucrats have
[39:20] Speaker 4: never worked in the private sector, right, They never tried
[39:22] Speaker 4: to start a business they so as a result they
[39:26] Speaker 4: have a warped view of how the economy works. And
[39:29] Speaker 4: I think also having the federal government actually located in
[39:31] Speaker 4: Canberra probably doesn't help, because it's because Canberra is an
[39:33] Speaker 4: absolute bubble away from pretty much detached from the rest
[39:37] Speaker 4: of Australia. So yeah, looks it is certainly a disease
[39:41] Speaker 4: we've got here where the government just seems to add
[39:44] Speaker 4: more and more regulations every single year across all areas
[39:47] Speaker 4: of the economy, and ultimately that just ends up stifling,
[39:51] Speaker 4: stifling the private sector, which ultimately is what grows the economy. Right,
[39:54] Speaker 4: the government should be trying to grow the pie, not
[39:56] Speaker 4: trying to redistribute the pie, and it seems to be
[39:59] Speaker 4: that the government's just more more interested in how to
[40:02] Speaker 4: shuffle the deck chairs on the Titanic rather than making
[40:05] Speaker 4: sure the economy actually floats.
[40:07] Speaker 3: So just on stimulating the economy relative without I mean
[40:13] Speaker 3: sort of private sector without sort of I don't mean
[40:16] Speaker 3: trying to create inflation or agrougod demand just stimulating people
[40:21] Speaker 3: to stay in business, for people open up business. Can
[40:24] Speaker 3: we just talk about the couple of games tax for
[40:26] Speaker 3: a moment. There's been a lot of chat around town,
[40:29] Speaker 3: particularly here in Sydney about small or startups, and there's
[40:36] Speaker 3: been a lot of memes around it. Now having Anthony
[40:38] Speaker 3: Alberniezy become your partner, but he doesn't turn up to
[40:42] Speaker 3: your partner until you sell the business how to profit
[40:44] Speaker 3: He's not going to one of the memes I saw,
[40:46] Speaker 3: he said he's not going to help you at any
[40:47] Speaker 3: stage during the game, but he's going to put his
[40:50] Speaker 3: hand out for forty seven percent when you eventually sell
[40:52] Speaker 3: and make a profit. What do you think about that
[40:54] Speaker 3: part of the couple of games tax discussion relative to
[40:59] Speaker 3: business startups?
[41:00] Speaker 2: Yeah, yeah, absolutely.
[41:01] Speaker 4: I think it's a massive risk and the last thing
[41:04] Speaker 4: that you want to do when you have business investment
[41:07] Speaker 4: at a historical low versus a relative to GDP, Like
[41:10] Speaker 4: we've got very poor business investment in the country.
[41:12] Speaker 2: That's another reason why I've got you know, poor proactivity growth.
[41:16] Speaker 4: But the last thing you want to do is stop
[41:17] Speaker 4: people from having a go right like you want you
[41:19] Speaker 4: want people to go you know, what, I'm going to
[41:22] Speaker 4: take a risk and I'm going to try and start
[41:24] Speaker 4: So I've got an idea, and I'm going to try
[41:26] Speaker 4: and start up a new business, no matter what it is,
[41:28] Speaker 4: because often you know, and I've been there, I know
[41:30] Speaker 4: you've been there. But when you when you start up
[41:33] Speaker 4: these things, you take a massive hit to your salary.
[41:36] Speaker 4: I've never employed other people, but if you did, you
[41:39] Speaker 4: obviously you know you often can't afford to pay the
[41:43] Speaker 4: market rate, so you try and pay them through equity
[41:46] Speaker 4: or whatever. So you know, you you you basically give
[41:50] Speaker 4: up a lot, right, and you often start off with
[41:52] Speaker 4: a business valuation of zero, and you work your butt off.
[41:56] Speaker 4: It often takes takes a toll on your family's riibly stressful.
[42:00] Speaker 4: You work harder than you ever have before, but you
[42:02] Speaker 4: earn less than your work previously because you're taking a
[42:05] Speaker 4: risk in you know, there's a growth phase and that
[42:06] Speaker 4: sort of thing. You The last thing you want to
[42:08] Speaker 4: do is stop people from having to go and doing that.
[42:12] Speaker 4: And I think one of the biggest risks from these
[42:13] Speaker 4: capital gain tax changes is you actually are actually going
[42:16] Speaker 4: to stifle entrepreneurs and you're also going to stifle venture capitalists.
[42:21] Speaker 4: So venture capitalists, Well, while they bother investing in Australia.
[42:24] Speaker 4: If you've got these sorts of rules, when we've got
[42:25] Speaker 4: one of the highest capital gains tax you know, regimes
[42:28] Speaker 4: in the world, you just go and invest somewhere else.
[42:30] Speaker 4: So ultimately, I think that's one of the biggest risks
[42:32] Speaker 4: from this budget.
[42:33] Speaker 2: Now.
[42:33] Speaker 4: I'm a little bit hardened by the fact that I
[42:35] Speaker 4: went through some of the budget fact sheet on the
[42:38] Speaker 4: capital gains tax and the negative gearing. There was a
[42:40] Speaker 4: paragraph in there saying that they're going to consult with
[42:43] Speaker 4: the startup business, the venture capitalists, that sort of thing,
[42:46] Speaker 4: and there has been true sure Charmers and Claire O'Neil,
[42:50] Speaker 4: the Housing Minister, was quite in the media the last
[42:53] Speaker 4: few days saying that they're going to consult on that
[42:56] Speaker 4: and the rules aren't finalized, etc. But I'm really hoping
[42:59] Speaker 4: that the federal government carves out startups and venture capital
[43:04] Speaker 4: and that sort of thing from these rules because it's
[43:06] Speaker 4: the last thing we want, mate, Like, the last thing
[43:08] Speaker 4: you want to do is to stop people from having
[43:09] Speaker 4: to go, because if you do that, you're going to
[43:11] Speaker 4: ultimately stiffle productivity, growth, stiffle new business creation. Staff for
[43:16] Speaker 4: the economy and that's ultimately going to lead to lower
[43:18] Speaker 4: living standards. And also I mean that the government probably
[43:20] Speaker 4: end up collecting lower tacks anyway because a business that's
[43:23] Speaker 4: not started or creating the first place where you can't
[43:25] Speaker 4: tax it right, So that that was my biggest fear
[43:29] Speaker 4: with these capital gains tax rules is actually the impact
[43:33] Speaker 4: on new startups. And I think they've yeah, I really
[43:36] Speaker 4: hope they.
[43:37] Speaker 1: There's a lot of chat. There's a lot of Australians who.
[43:41] Speaker 3: Set the business up here in Australia, but in order
[43:43] Speaker 3: to raise money they've had to go off to San
[43:45] Speaker 3: Francisco to raise money. You know, they're in Silicon Valley
[43:49] Speaker 3: because that's where all the capital is or that's what
[43:51] Speaker 3: all the big vcs are.
[43:53] Speaker 1: Well, we've got them here too, but the really big ones.
[43:56] Speaker 3: Who probably are as tough on those people raising money
[43:59] Speaker 3: that they go over the United States. But the chat
[44:03] Speaker 3: over there and the means that are coming out from
[44:05] Speaker 3: over there at the moment, because I sort of follow
[44:07] Speaker 3: this stuff is about flipping out of Australia in terms
[44:10] Speaker 3: of ownership. Flip your business into the US because the
[44:14] Speaker 3: tax rate a couple of games in the US is
[44:16] Speaker 3: only fifteen percent relative to here is forty will be
[44:20] Speaker 3: forty seven percent, issuing yourself for quite a lot of money,
[44:23] Speaker 3: which is, by the way, the assumption that all startups make.
[44:26] Speaker 3: Otherwise that would be business in the first place. They
[44:28] Speaker 3: are ambitious and they believe in themselves, and they're just
[44:32] Speaker 3: going to go overseas, which we're going to have a
[44:34] Speaker 3: brain drain, but we're also going to start, you know,
[44:37] Speaker 3: redomiciling our intellect into other countries. I just think that's
[44:41] Speaker 3: bad economic policy, if not just bad policy generally.
[44:45] Speaker 1: Would you reflect on that?
[44:48] Speaker 2: Yeah? Absolutely, mate.
[44:49] Speaker 4: That Again, it's the last thing you want, the last
[44:51] Speaker 4: thing you want to do, is to stop new business creation,
[44:53] Speaker 4: to stop you know, entrepreneurs from having to go because
[44:57] Speaker 4: you know, let's be honest, these rules were around, you know,
[45:01] Speaker 4: a decade or so ago. We may not have got
[45:03] Speaker 4: a lession, we may not have got canvor who are
[45:07] Speaker 4: like great Australian success stories.
[45:08] Speaker 2: I'm not saying we.
[45:09] Speaker 4: May have got those things, but you know, you're basically
[45:11] Speaker 4: less than the chance of having those sorts of companies.
[45:13] Speaker 4: But not even them, like they're obviously the big ones
[45:15] Speaker 4: that we know about, right, they're the huge success stories.
[45:18] Speaker 4: But there are a lot of you know, medium sized
[45:19] Speaker 4: success stories which most of us have never heard about.
[45:22] Speaker 4: Like just you know, I met people all the time
[45:24] Speaker 4: who were successful in business, but they're just not publicly known, right,
[45:28] Speaker 4: But a lot of those people or businesses start from somewhere,
[45:32] Speaker 4: and you don't want to stop people from having to
[45:35] Speaker 4: go because, let's be honest, when you start a business,
[45:38] Speaker 4: you know that there's a good chance it's not going
[45:40] Speaker 4: to succeed.
[45:40] Speaker 2: But you're sort of believing yourself a lot of that.
[45:45] Speaker 1: I'm serious.
[45:46] Speaker 4: Yeah, it's very stressful, it is. It's incredibly strong. I
[45:50] Speaker 4: was there, like I was never in the stage of
[45:51] Speaker 4: getting divorced. But when I started macro business, I was
[45:54] Speaker 4: working at Gold and Zachs getting a very good salary
[45:57] Speaker 4: and I quit that and I took like a two
[45:59] Speaker 4: third it's maybe not even be three quarter pay cut,
[46:03] Speaker 4: and I was working out in my bedroom and I
[46:05] Speaker 4: reckon I was working three times as hard and it
[46:06] Speaker 4: was incredibly stressful.
[46:08] Speaker 2: It was a most.
[46:09] Speaker 4: Stressful year of my life. And it took a couple
[46:12] Speaker 4: of years to for my salary to sort of catch
[46:13] Speaker 4: up to where it was. Basically three years to get
[46:16] Speaker 4: back to even where I was to get close to it,
[46:19] Speaker 4: so you know, you do the last thing you want
[46:22] Speaker 4: to do is stop that stop. Well, not everyone's going
[46:26] Speaker 4: to not do it, but you're on a lesson the
[46:28] Speaker 4: chance of people giving the crack right, and these rules
[46:32] Speaker 4: will unfortunately just encourage people to go and work for
[46:34] Speaker 4: the government, safe job whatever, steady income or large corporation whatever,
[46:40] Speaker 4: Whereas you want people to actually step out and become
[46:42] Speaker 4: the next canvas or the next the next big thing,
[46:45] Speaker 4: or even just a good middle sized business which none
[46:48] Speaker 4: of us have ever heard of, but it's very profitable.
[46:51] Speaker 2: You know.
[46:52] Speaker 4: There's lots of those across the economy as well.
[46:53] Speaker 1: You know, but also we probably if I got brought
[46:56] Speaker 1: it out a little bit more. I mean, you want
[46:58] Speaker 1: people to do it.
[46:59] Speaker 3: I did in the Wizard days, took the banks on
[47:01] Speaker 3: and reduced the interest rate that people had to pay
[47:03] Speaker 3: on their mortgages and made it more competitive, which allowed
[47:06] Speaker 3: more people to get into the homes or even better,
[47:09] Speaker 3: even more relevant people who are out there now trying
[47:12] Speaker 3: to build health tech solutions to dementia or whatever it is.
[47:17] Speaker 3: And let's say they kick a goal, they don't want
[47:20] Speaker 3: to have to be paying a ridiculous amount of income tax.
[47:23] Speaker 3: You've got to incentivize them somehow with a couple of
[47:26] Speaker 3: games tax discounts that were previously variable.
[47:29] Speaker 1: That type of thing is important for.
[47:32] Speaker 3: The benefit of Australia because all Australian are going to
[47:35] Speaker 3: get the benefit of that.
[47:36] Speaker 1: I mean, every Australian got the benefit of.
[47:38] Speaker 3: What Wizard Aussie rams what we did, you know, and
[47:41] Speaker 3: not everybody went with us, but twenty percent of the
[47:43] Speaker 3: population did. And probably we could say twenty percent of
[47:45] Speaker 3: the population end up being able afforded by a home
[47:47] Speaker 3: which they may not may never have been able to
[47:49] Speaker 3: afford if we had to come into the game and
[47:51] Speaker 3: we benefited from as a couple of games tax discounts,
[47:54] Speaker 3: all of us or all of us three players. I
[47:59] Speaker 3: just see this as unfair and I actually be talk
[48:01] Speaker 3: about in the generational inequity. That just means that that
[48:04] Speaker 3: opportunity is not now not available unless they changes legislation,
[48:07] Speaker 3: but is not available to the young people who are
[48:08] Speaker 3: going to come up with the idea that I came
[48:10] Speaker 3: up with thirty years ago.
[48:13] Speaker 4: That's not that's right, because yeah, can I co add
[48:16] Speaker 4: to that, So so obviously you know someone my ag
[48:18] Speaker 4: you're right. I'm forty eight, I'm assuming, yeah, Stune a
[48:22] Speaker 4: bit older, but you know we're sort of has been front.
[48:26] Speaker 2: Yeah yeah.
[48:26] Speaker 4: So these rules, you know, impact the people who are
[48:29] Speaker 4: coming up now, right, So it's bad for them. But
[48:32] Speaker 4: you know to your point, mate, I mean you said
[48:34] Speaker 4: that yourself and Rams and the others, you know, twenty
[48:36] Speaker 4: percent of people use you. Well, it's actually one hundred
[48:40] Speaker 4: percent of Morning Child has benefit from me because you
[48:43] Speaker 4: put competitive downward pressure on CBA, NAB and all these
[48:46] Speaker 4: other guys. So even if people took loans through them,
[48:48] Speaker 4: if you know, if Wizard and Rams and the others
[48:51] Speaker 4: hadn't come up, they would have charged more on those mortgages.
[48:54] Speaker 4: So you're the competitive pressure that you applied actually lowered
[48:57] Speaker 4: mortgage costs for everybody.
[48:59] Speaker 2: And that's the sort of thing you want.
[49:00] Speaker 4: You don't want people not having to go and starting
[49:03] Speaker 4: up businesses, which can then pressure the big boys, right,
[49:07] Speaker 4: you know, someone comes up and can and can do
[49:09] Speaker 4: it better than the established players. You want people to
[49:12] Speaker 4: have a crack at that, because even if customers don't
[49:15] Speaker 4: end up using those people will then force the big
[49:18] Speaker 4: boys of town, the beginning of town then offer better deals.
[49:21] Speaker 4: And you know this is again, the biggest risk from
[49:24] Speaker 4: these capital gains tax changes. And look, I am somewhat
[49:28] Speaker 4: hopeful that the government's going to backtrack on this because
[49:31] Speaker 4: I think the pushback has been big enough and the
[49:33] Speaker 4: fact that they've at least flagged that they're going to
[49:35] Speaker 4: consult et cetera. I think they will end up, I'm
[49:38] Speaker 4: hoping carving out startups, et cetera from it, which if
[49:41] Speaker 4: they do, that's great.
[49:42] Speaker 3: Is there anything else that you would like to call
[49:44] Speaker 3: out and from this budget that we haven't covered off
[49:46] Speaker 3: because you're the economists and I'm not and what else?
[49:50] Speaker 2: Yeah?
[49:50] Speaker 4: So yeah, So I think also the thirty percent minimum
[49:53] Speaker 4: CGT is a bit of bits coming as well. So
[49:57] Speaker 4: that was clearly target itself under retirees. So the reason
[50:01] Speaker 4: why I think is a bit scummy is if because
[50:03] Speaker 4: because it doesn't apply if you're on a part pension.
[50:06] Speaker 4: So if you receive some sort of government benefit, you're
[50:08] Speaker 4: excluded from those rules. But if you're someone who's just
[50:10] Speaker 4: above the part pension levels, you're not a uber rich retiree,
[50:14] Speaker 4: but you're self funded. Basically, you know, if you're a
[50:18] Speaker 4: self phone retiring, you've got a shared portfolio and you
[50:21] Speaker 4: want to sell some of that portfolio every year to
[50:24] Speaker 4: help fund your retirement. Now, if you sell and you're
[50:28] Speaker 4: not working, right, So if you sell under forty five
[50:30] Speaker 4: thousand dollars worth of that portfolio, you'll pay you know,
[50:35] Speaker 4: about a sixteen percent capital gains tax because you're under
[50:38] Speaker 4: the thirty percent threshold. So thirty percent threshold kicks in
[50:41] Speaker 4: at forty five k. So you know that there would
[50:44] Speaker 4: be a lot of self phune or retirees you just
[50:46] Speaker 4: want to sell off parcels of shares every year to
[50:49] Speaker 4: help fund their retirement. But under these rules, they now
[50:51] Speaker 4: help me charge the minimum thirty percent tax rate. Wow,
[50:54] Speaker 4: which I think is a bit scummy.
[50:55] Speaker 1: That's as one, Yeah, it is, it is.
[50:59] Speaker 4: And look that that wasn't communicated. So before the budget
[51:02] Speaker 4: night we all pretty much in the week late up,
[51:04] Speaker 4: we pretty much knew what the rules is going to be.
[51:06] Speaker 4: But that thirty percent minimum capital gains tax I thought
[51:10] Speaker 4: was a bit scummy, And that was clearly designed just
[51:12] Speaker 4: to have a go at the cell phone of retirees.
[51:15] Speaker 4: And it just means that again, if you're self phone retiring,
[51:18] Speaker 4: you want to sell off twenty grand of shares every
[51:20] Speaker 4: year to help funder your retirement. We're now you going
[51:22] Speaker 4: to tax at thirty percent on that rather than your marginals.
[51:25] Speaker 4: That's very unfair, it is. Yeah, they has sort of
[51:28] Speaker 4: come out when they're not looking.
[51:29] Speaker 3: And these are people to pay the taxes their whole lives,
[51:31] Speaker 3: people who, as you say, aren't rich, they're just they've
[51:34] Speaker 3: got enough, They've accumulated enough, They've probably made a whole
[51:36] Speaker 3: lot of sacrifices to get to that point. These people
[51:40] Speaker 3: probably don't vote for the right party either. So, I mean,
[51:44] Speaker 3: how much of this is Do you think he is
[51:45] Speaker 3: vote driven? Like in terms of research?
[51:48] Speaker 4: Yeah, yeah, I mean I think so. I think there
[51:50] Speaker 4: it was obviously groundswell to make the tax rules fairer
[51:53] Speaker 4: and that sort of thing. And again with residential property,
[51:55] Speaker 4: you know the negative gear in on established hous and stuff.
[51:58] Speaker 2: I get it.
[51:59] Speaker 4: But there's just a few little, few little quirks like
[52:02] Speaker 4: this one, which I think is a bit dodgy. And
[52:03] Speaker 4: there's also highpothetical cases whereby if you're if you're a
[52:07] Speaker 4: couple and you're saving up for a home and you
[52:10] Speaker 4: say two people modest incomes, you know, you could have
[52:14] Speaker 4: two people earning forty five ish thousand dollars whatever a
[52:18] Speaker 4: year or just under that, and they're you know, but
[52:20] Speaker 4: they have a dream of buying home eventually like it,
[52:22] Speaker 4: maybe even just a small apartment or something, and they
[52:25] Speaker 4: have a shared portfolio while they're hoping to buy in
[52:28] Speaker 4: ten years time or something, and they're putting money in
[52:29] Speaker 4: the share market. Well, now if they sell, they're going
[52:31] Speaker 4: to be charging more than thirty percent, which I think
[52:35] Speaker 4: is also a bit dodgy. Now, some people say, oh,
[52:37] Speaker 4: you can use one of those first home home by
[52:39] Speaker 4: savings accounts or whatever, but it's not the point. I
[52:42] Speaker 4: don't know why they've just brought in a thirty percent
[52:44] Speaker 4: minimum tax rate on capital gains when they could have
[52:48] Speaker 4: just left it at your marginal tax rate, which I
[52:51] Speaker 4: think would have been fairer.
[52:52] Speaker 3: You're right, I don't think it's enough been talked about this.
[52:56] Speaker 3: From now on, the lowest amount of tax to pay
[53:00] Speaker 3: on the caprial gains is thirty percent.
[53:03] Speaker 4: Yeah, but it is on the real gain, right, so
[53:05] Speaker 4: it'd be the inflation adjusted gain. So yeah, you've got
[53:07] Speaker 4: a net out inflation.
[53:08] Speaker 3: But even so, inflation is not that high, So, like
[53:11] Speaker 3: you know, over a short period of time, it is
[53:13] Speaker 3: probably still going to be nearly going to be it's
[53:17] Speaker 3: going to be quite high. So as opposed to I
[53:20] Speaker 3: think what you're saying is that that income, just that
[53:22] Speaker 3: gain should just be added to my income. And if
[53:24] Speaker 3: I'm on one of the low rates of tax, so
[53:27] Speaker 3: I'm sort of down in the seventeen percent bracket or
[53:29] Speaker 3: the twenty percent bracket, I should really be paying twenty
[53:32] Speaker 3: percent tax.
[53:33] Speaker 2: No more.
[53:34] Speaker 3: I shouldn't be getting penalised because of absolute capital game.
[53:36] Speaker 3: Before we used to get a discount when we made
[53:38] Speaker 3: a capri gan. Now we're going to get penalized on
[53:40] Speaker 3: this rule when we make a capital gain. If we
[53:43] Speaker 3: are in the lower tax bracket already, which means we're
[53:45] Speaker 3: not a high income person, we're probably a battler doing
[53:49] Speaker 3: it tough. And by the way, self under retires the
[53:52] Speaker 3: very people we should be encouraging because they have less
[53:55] Speaker 3: drag on the economy because we're not paying him a pension,
[53:58] Speaker 3: they're not getting anything. I mean, you should encouraging those people.
[54:01] Speaker 3: Are actually holding them up and putting them on our
[54:03] Speaker 3: shoulders seeing how wonderful they are relative to the you know,
[54:06] Speaker 3: the dragon fiscal policy in the country.
[54:10] Speaker 2: Yeah. Absolutely.
[54:10] Speaker 4: And the thing that is, it does make being in
[54:12] Speaker 4: that part pension range. I think it's I think it's
[54:14] Speaker 4: currently about if you've got under one point two million
[54:17] Speaker 4: dollars of assets, I think you still qualify for part pension.
[54:19] Speaker 2: That's what it was a few years ago.
[54:20] Speaker 4: Might have changed, so my data mightn't be quite a
[54:23] Speaker 4: totally up to date, but it makes that very valuable
[54:25] Speaker 4: because if you if you receive a government payment of
[54:28] Speaker 4: some sort like a part pension, you don't qualify for
[54:31] Speaker 4: that thirty percent.
[54:33] Speaker 2: That's my reading of the rules.
[54:34] Speaker 4: So it means that if you're if you've got to
[54:35] Speaker 4: say one point one million dollars of assets, and you're
[54:37] Speaker 4: getting in a small part pension where you can sell
[54:39] Speaker 4: your shares off and pay your marginal tax rate without
[54:42] Speaker 4: the thirty percent minimum. So it doesn't mean that you
[54:45] Speaker 4: have this big effective marginal tax rate kicking in once
[54:47] Speaker 4: you go off that part pension level, and.
[54:50] Speaker 3: It could be over over the one point one million
[54:52] Speaker 3: or whatever the number is, by a dollar, and all
[54:55] Speaker 3: of a sudden you're penalize for no real logical reason.
[55:00] Speaker 2: Least.
[55:00] Speaker 3: Look, there's been fantastic by the way, I'm I'm going
[55:02] Speaker 3: to take that up with the media myself. Thanks very
[55:06] Speaker 3: much for your honesty, like as usual yours. Your views
[55:09] Speaker 3: on these things are obviously well accepted by most Australians,
[55:13] Speaker 3: particularly myself, but you're you're honesty in the way you've
[55:17] Speaker 3: broken this down and I feel like I'm listening to
[55:20] Speaker 3: you on Saturday afternoons on two GB with Luke. Yeah,
[55:25] Speaker 3: and actually, you know, I don't know who else listens
[55:28] Speaker 3: to it, but I listened to it and which where
[55:30] Speaker 3: I got the idea about talking to you again, because
[55:32] Speaker 3: I just like the sort of frankness and the practical
[55:35] Speaker 3: stuff and the simplicity in terms of the way you
[55:40] Speaker 3: explain things. And I think I really want to thank
[55:42] Speaker 3: you for it. It's been great, fantastic. I've enjoyed it mate.
[55:45] Speaker 2: Yeah, thanks marketing Ton

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