Thoughts on the 2026 Commonwealth Budget

Looks like this budget is actually interesting! Here are my initial thoughts.

Transcript

SPEAKER_00 0:00

Welcome back everybody to another episode of Common Christendom. Just wanted to pop a quick episode up here about the Commonwealth budget, which was unveiled uh this week. Um better not to better not to um drag my feet on that because it's more of a news item that's beneficial if it um if it comes out soon, I suppose. So just a quick little episode here. I'm just gonna do a one take, get it out so we can um talk about the budget. Talk about the budget and no more fancy editing. I've been doing too much fancy editing and it's been it's been one, not that fancy, and two, taking up more time than actually doing the talking bit. So I should get back to basics here. But anyway, the budget. Federal budget. What are the big news items that have changing? Well, I know what you're all thinking. The biggest thing that's changed is there's money in the budget for standards Australia to make Australian standards free to access for the public. Hallelujah, hallelujah, because uh it's ridiculous. It's ridiculous. You need to follow the standard to do your work, but then well, well, how what's the standard? I don't know, mate. Give me a couple hundred bucks and maybe I'll give you a PDF if you're lucky. So I'm really glad that um because and that's ridiculous. It's just ridiculous because back in the day, um, you know, if you wanted a particular standard, you'd have to go and buy it as a as a book. And of course, you know, it's not super economical to be printing books and giving them away for free, but now that it's all online, it's it's a it's a small, small, small fraction of the cost of printing out a book is giving you the file. So I think that's really good. Um, and anyone who's in the construction industry like me will agree, I think that um that's good news that we're gonna get standards for free. So that and all jokes aside, I know that's not what anyone was thinking of. The big the big ticket items are the negative gearing, capital gains tax discount, and the uh working Australian tax offset. Um so what are these changes? Well, first of all, um basically these are all essentially policies that Labor has run on before. First of all, in 2016 and then 2019. Um and Jim Chalmers, Dr. Chalmers has been the shadow treasurer both those times, I think. And at least he was shadow treasurer in 2019, so he's really having a few cracks at this one. So, what are these changes? Negative gearing. For the for the in the simplest of terms, if you own a rental property and you're running it at a loss, as in the expenses of running the rental are greater than the rent that the rental brings in, you can add up that difference and that counts as a loss. And what you can do is you can use that as a loss to deduct against not just taxes owed for on your rental or your rental-related expenses, but you can use that to deduct tax against your personal income. So if you uh your personal salary. Um and so this was a very uh this made property an attractive investment for people with high salaries, um, who get their money purely from a salary essentially, people like doctors, people like uh lawyers, dentists, whatever it might be, it's very attractive because if you're paying 45 cents on the dollar, um that's a real that's a real shame. So if you can deduct your losses against your personal income, all of a sudden it kind of makes sense that you might want to own an investment property that doesn't make any money because the tax settings alone are making you money. So that's negative gearing, is deducting losses on your property against personal income. That's gonna be going. Um, and I believe that if you have a property that you've purchased in the past already, and um you are negative gearing it, negatively gearing that property and deducting it against your personal income, you'll be able to continue uh doing that. So it's not gonna affect people who are already doing it, which is a bit contentious for a lot of people. The second thing is the capital gains tax discount, which was a John Howard policy from the uh from the early OOs, or was it 1999, I think. Essentially, what is a capital gain? A capital gain is where you buy something, own it, and then sell it, and sell it for more than you bought it for. And it doesn't matter what it is, it could be a house, it could be a share, it could be um, you know, it could be a collectible, uh, it could be a po it could be a you could have bought um 10, you know, mint conditioned Charizards when you're a kid and now you're selling them for a gain, that's a capital gain. And essentially that gain is taxed at your personal uh marginal tax rate, except the exception was if you had held that asset for more than a year, so if you bought the charizard when you were 17 and you waited till you were 18 or 19, um, if you held it for a year, you would only have to pay tax on half of the gain. So if you bought your Charizard for $100 and you sold it for $200, that that's a $100 gain. Yet if you've held it for a year, you only had to pay tax on $50 of those dollars, the half of the gain. So that's gonna be changing. That's gonna be changing and in a little bit a little bit of an interesting way. Whereas um what is going to happen now, and keep in mind um the uh this has not been passed yet, so the details aren't exactly all 100% together just yet. But um the new method will be um an inflation indexation method. And why does this matter? This matters because it's not really fair, and even the government is going to admit this and have a a law about it, which is kind of funny. If you buy if you buy something for $100, and if it goes up to $110 purely because the money is inflating, as in purely because the the dollar is becoming worth less, which it does every year, then that's not really fair because that's not a real gain. You're you know, your Charizard may have gone from $100 to $110, yet the buying power, as in how much goods, how many goods or how much services you're able to buy with that money stays the same. Essentially it's the price is gone up, but the value stays the same. That's um due to inflation. So it's not really fair if you are getting taxed from uh if you're getting taxed of gains that aren't really gains. And so that was what the discount was about. Instead of instead of deciding what the um inflation rate was and um and excluding that from the tax, they just said, okay, we'll give you a discount. We'll give you a discount of 50% and that should cover it. Turns out that's a lot. Turns out that's a lot, a lot. And so what happened was we already had negative gearing previous to $90.99, but negative gearing combined with the 50% capital gains discount meant that all of a sudden buying an asset that you had that you would get a discount on the sale of, plus being able to negatively gear the income from that asset meant that property became a very attractive, very, very attractive investment vehicle for a lot of people, especially people with high salaries who got their money from a salary. Um so these are the changes. Obviously, Australian stands being the most important lol. Um so are these bold changes? Yes, very much, very much so. Um we kind of got previewed, we kind of got them previewed previously, like there was talk, there was leaks, like we kind of knew that this is what they were going to do, yet don't let that take away from the fact that these are probably the you know most radical, radical is maybe not the best word, but the most bold changes to our tax system um in a long, long time. So what is the idea behind it and what will be the effect of these policies? It's purely housing related, the is the motivation, is at least the motivation they're trying to sell to the public, to the media. Um Albo has said on the news that they've been focusing on supply, supply, supply, but it hasn't been enough. Which is funny, because I am a cynic I'm pretty cynical with politics. I kind of believe that, you know, they they no one nobody believed that that was nobody really believed that supply was going to fix the issue. But I think it's just gotten to a point now where to not do anything else would be politically suicidal, despite every politician not wanting to do anything about it for many different reasons, it would be politically politically suicidal to to not do anything else. So if you've got if you've been online, you're gonna have heard a lot of polarizing views about what the effect of this will be, whether it will achieve its goals. So I think instead of saying, is this I've seen I've seen things like this is bad for young people, this is good for young people, this is these are also broad and vague terms that uh you know is it good for young people or bad for young people? Depends on the young person, right? So let's just kind of distill it down to one parameter so we can uh assess it um effectively rather than being vague about it. Okay, when people say good for young people, we're talking that what they really mean is it is it good for the prospects of young people to purchase a property to live in? So for them for people to and what they're saying is is this gonna make a getting into a property more affordable? Um and the answer to how you do that is to lower the price of the property. Um there's that and and that's the only realistic thing to do. There is this idea that you know we could have the we could have the price of the property stay the same, yet you through lots of productivity, we make it easier to get money, and then young people will be able to buy houses. That's not going to happen. It's technically it's there's no there's no, you know, there's no ironclad laws of economics as well. You couldn't do that, but that's probably not going to happen. It's just it's just it's just too difficult, especially in this environment where people are already so discouraged, people are already so checked out, productivity's not going up uh anytime soon. Anytime soon. And I don't and the AI thing at worst it's a red herring, and at best it's inconclusive as to whether that's going to be the AI dream that we were rather the productivity dream that we were all hoping. So will these policies this is what we should just so because what they say when they say good for young people is is it making it easier for them to purchase a property? And because the only way to make it easier to purchase a property is for the price of the property to go down, let's distill it down to this parameter, which is will this put upward pressure or downward pressure on property prices? Let's use that, let's use that as our assessment. So a combination of a restriction of negative gearing, restriction of the capital gains discount, um will that put upward or downward pressure on property prices? Um and the answer I think is we don't know, I guess. And but really it will put downward pressure on property prices. Um if you can have if there's if there's any sensible thing to predict is that no, how it would not have upward pressure on property prices, yet it would have downward pressure on property prices. Because what um what does this why and why does why will it have downward pressure on property prices? Well, it's kind of simple, and I think in economics we make a little bit too much of going on about supply and demand, supply and demand. Um but in this case, I think you can really can pull out the supply and demand graph and draw the lines and say, okay, this is pretty conclusive. Not having negative gearing being available in the future will make property less desirable to prospective investors. Removing the capital gains tax discount for an inflation index model is going to make but you're gonna be paying more tax on it essentially, is going to make property less desirable for investors. Um that's the long or the short of it. There's no there's no other way, there's no other way to put it. And yes, the negative the tax capital gains tax changes are changing the laws around capital gains tax for all assets, not just property. But really, the thing that made property attractive in the first place was, you know, it was the sort of one one plus one equals three effect of the negative gearing plus the capital gains tax discount. So this is surely going to have downward pressure on property prices. Now, when I say downward pressure, do I mean that it's gonna push them? Is it gonna actually make properties cheaper overnight? Probably not. What downward pressure means is that this thing, I mean, it does what it says in the packet. If if more things, you know, if inflation, for example, if people getting new loans are upward pressure on property prices, then if the upward pressure exceeds the downward pressure, then that means that the price will increase slower, you know, because of the downward pressure. Yet if the downward pressure exceeds the upward pressure, prices start falling. So in that sense, of course it's going to have downward pressure on property prices. It's um it's just it's just a no-brainer. Now, what's not a no-brainer is the idea of how will this affect rents. And I know, and this is this is this is one of the greatest urban myths, and the one of the greatest uh one of the greatest spells that has ever been cast over mankind is that some really intelligent people who are more intelligent than me actually think that how will this affect rents is a different question entirely. People think that what's it gonna do to property prices is one thing, and what's it gonna do to rents is another thing. And we really need to get this idea about our out of our head that these two things move independently. They don't. They simply don't. Rents and property prices are intrinsically married together, and while there can be some lags and some level of disconnect, they move roughly together. So I've heard some people say this is going to be bad for rents, as in the prices of rent the the price of rent is going to go up while the property price goes down, essentially. This is completely nonsensical. This is completely nonsensical. And the first nonsensical idea is the idea that if you discourage investment that the uh that the supply of rentals will go down. This is one of the most asinine things I potentially have heard anybody with an IQ over of a hundred say. Um it just it just is willfully willfully ignorant, it I think, because we have this because they just magically in their brain, you know, suppose that renters just disappear, like that the house disappears. You know, if an investor doesn't buy four existing townhouses, what happens to the townhouses? Do they blow up? Does a bomb drop out of the sky and remove those four townhouses from existence? No. No, that doesn't happen at all. Property doesn't if an investor sells a property, it doesn't disappear. He sells it to somebody. He sells it to somebody. And so this is why you um supply of rentals going down doesn't mean anything. It doesn't mean anything for rentals because what happens to that renter? If if the if a let's take a real let's take a really visceral example of let's say the landlord wants to sell up, so he he goes to his his property, knocks on the door, and says, Hey tenant, uh, I'm looking to sell up actually. Do you want to buy this house? And they say, sure, I'll buy the house. And so they go to the bank, get a loan, buy the house off their landlord, and now they own the house. The supply of rentals has gone down. This is so bad. How is the how is how are these tenants going to find somewhere to live? They're gonna be homeless. But of course, no, they're not gonna be homeless because they're the ones who bought the house. And what I'm trying to say is that when when a first when when a not necessarily a first home buyer, but when an owner-occupier buys a house off an investor, a renter disappears. The house does not disappear, the renter disappears into thin air, because that renter has become an owner-occupier. So any any time it's a it's and this is an ironclad rule of logic, there's any time an investor sells to an owner-occupier, uh and a renter disappears. A rental disappears, but a renter disappears as well in a one-to-one correlation. So I think the idea that rents are going to go up, property price is going to go down, and look, it's not to say that there can't be any sort of lag, there can't be any sort of slight disconnection, you know, depending on the area, depending on this, that, and the other. But in general, even if they're to even if they've got a little bit of play, like they're tied together with a short string, it's still a short string. Property prices going up pulls rents up, property prices going down, pulls rents down. It's just it's just a i it's just a logical fallacy to say otherwise. So I I've heard people say this, but the the idea that rents are going to go up is is also just incorrect. And it's also doubly incorrect because in our country at least, people are desperate to own a property. It's like our number one thing, our most famous film uh most the most famous Australian film. The castle, a man's home is his castle. It's about him trying to keep his family home because it's his pride and joy. That's so ingrained in our culture. So to say that people would prefer to rent than to buy is just uh is also is also asinine. I mean, everyone wants to own, nobody wants to rent. People don't want to people don't want to rent anything. Like I heard someone the other day um talk about he was a professional um tradesman and he was uh renting at a warehouse somewhere here in Brisbane to store because he does a lot of big he does a lot of big projects. So he's renting a warehouse Um Uh so that he can store materials there for his different jobs around the city. And he was saying that he is renting the warehouse, but he hates that because he hates quite he wants to buy it, he doesn't want to rent it, because quote unquote, he hates dead money. And I'm thinking, I guess that's a fine enough phrase in certain contexts, but you know, there's in in that sense, there's plenty of, there's definitely plenty of reason that you'd want to rent a warehouse instead of owning it. You know, it's not like you're worried about putting nails in the wall to hang up the family photo if it's a warehouse you're using for storage, you know, and you know, you don't have to worry about it flooding and having to fix it, don't have to worry about maintenance, you can just end the end the le if you if you you know if work slows down and you don't need that storage anymore, you could just end the lease, like it wouldn't be a problem. So like even when it comes to things like using a warehouse as a storage area, Australians are saying, I would not want to rent, I want to buy. So we've got this very, very buyer-sided mindset. So the idea that you know there are people who only want to rent and rentals going away will be bad for them is just not true because it most, if not all, almost all renters are want to be want to be owners. So basically, I think that means that a lot of people would be willing to pay a premium to own the house rather than to rent it. So really the reason rentals can't go up, stay up so much as long as property prices go down, because you know the rent is the rent is high, but if the property price goes down enough, all of a sudden it becomes cheaper to own it with a loan than it does to rent it. And nobody that I know wants to would rather rent, especially if renting was more expensive than owning. So the the these two values will have some sort of correlation always, property prices and rents, as long as we've got this attitude in Australia. They move in tandem, they don't move on their own, you know, rents aren't going to spike because of this policy. Um another point I have heard on the uh internet and etc. is this idea of the injustice of the grandfathering of it. Uh the the idea that people who bought the the property before the budget will be able to still get the discount on the capital gain, they'll still be able to negative gear. And I really understand that, and I really do empathize with that, because it does feel like a kick in the teeth, doesn't it? That things are going so poor for young people bore born into the wrong time to buy, um like and all of a sudden they're changing the laws, but they're only changing the laws for you. They're not changing it for the for the for the grandfathers who have grandfathered in to the old system. That seems like a great injustice. But the reason I say but is it sounds injust and probably it isn't a little bit but I don't think it's gonna matter that much. The grandfathering aspect, I don't think it's gonna matter that much. Because anyone who understands anything about how property investors actually invest, or at least how, you know, property investors with a lot of properties invest. You know, because there's a lot of mum and dads who might have, you know, instead of instead of, you know, taking out equity to build build a pool, you know, they took out equity and bought an investment property and they still have it, and you know, they don't really, you know, care too much about it. They don't really think too much about it. That's just something they did and they have, you know, one investment property, whatever it might be. But um I read a great book, which was probably one of the most important books I ever read, not because I used any of the uh not because I used any of the principles or any of the strategies, but because it made me understand how these things work. It was a book called uh Property Australian Property Finance Made Symbol by Conrad Bobelik, uh, who is a um unfortunately stereotypical uh Eastern European um property investor from Melbourne. Um and it talked about how how you actually do it. And you need to keep laddering up. Like the idea is that you use the equity in your family home to secure a loan for another property. And this is what investors do, they use something on the loans called in the interest-only loan. And what happens with the interest-only loan is that it does what it says on the packet. Instead of basically, you know, on a normal loan, which is called principal and interest, is where you have 30 years to pay it off, and every month or whatever, every week, how whatever you have signed up to pay your mortgage, every week you pay a big payment to the bank. Some of that is interest, and some some of that is paying the interest, some of that is paying off the original loan of your property. So by 30 years you've paid the interest, but you've also paid off the principal as in you don't owe any more. In an interest-only loan, you only pay the interest. You pay the interest and the amount that you owe stays the same. So if you get a $500,000 loan and you do interest only for five years, you will pay only the interest. At the end of five years, you still owe $500,000, if that makes sense. Now, why would you want to do this, you might ask? Well, the reason you want to do this is the capital gains tax discount, uh, among other things. Negative gearing and the capital gains tax discount. So what you can do is if you have an interest only, is you can rent it out and you might and you'll probably be able to make a loss and deduct that against your personal income, which is already a W. It's already a W. But if you hold it, and let's let's not even think of this as an as a sense in the sense of laddering up and getting many properties. If you only do this once, let's say you own the own the investment property, you own it for five years, um, you rent it out at a small loss, deduct it against your income, five years interest only. So you your loan was five hundred thousand. At the end of five hundred, uh, at the end of five years, you owe still five hundred thousand, but after five years, your property's gone up in value by whatever it might be, fifty thousand dollars. Hallelujah. Let's sell the property. Uh let's sell the property for $50,000 more. Let's let's just forget the idea of a down payment for the simplicity of the uh example. You sell it for $550,000, $500,000 goes to the bank to pay off the loan, $50,000 goes into your pocket. So you've earned and you've earned $50,000 for owning the house for five years and doing nothing. Um that $50,000, oh, you've got to pay tax on it. Oh, that sucks. 45 cents on the dollar, that's gonna be I'm only gonna have like $25,000 left. That's not very good. But because of the discount, all of a sudden, oh, I've only got to pay tax on half of that. That's so good. That's so good, and you're gonna earn a lot more money. So that and and so what you need to do is you need to be able to sell the property for more than you bought it for. But here's the but here's the thing. Many property investors, instead of selling that house, they use that equity in the in the original investment property, that $50,000, they take that equity out and they use that $50,000 to get a loan for a third house, one that they live in, one investment, and a third house. And then they you keep repeating this. You keep repeating this and borrowing against the equity to get more houses. But the thing is that the idea when people when people when you buy a house, when you want to buy a house, when you want when you're demanding in that sense, the demand itself actually pushes the price of the properties up. So when ever if there's a lot of people doing this, the better, because the more investors who want to buy houses, the more the price goes up, which means the more the investors can take out to buy more houses, which pushes the price up, which means there's more equity for them to take out money, buy more houses, push the equity up, take out money, and you get where I'm going with this. So the whole the whole uh sort of carousel of investing is relying on the price continuing to go up, and it's it's relying on more people wanting to buy more properties. So, why will the grandfathering not really be that big of a deal, in my opinion? It's because you don't stop people from negative gearing and capital gaining, but to get a capital gain, you have to sell it to somebody. So even if you are grandfathered in, you're still gonna get a huge capital gain, but you've got to be able to sell that property to someone to get the gain. And that person is much less likely to be an investor because an investor is less likely to buy it if he's not going to be able to do the same thing. So what's a good example, what's a good analogy of this? It's like it's like if you see someone doing a Ponzi scheme. What's a Ponzi scheme you might ask? A Ponzi scheme is basically a financial scam. Well, let's say I go to um my mum and say, I've got a business, do you want to invest a thousand dollars? And basically I say she says, Yes, I take the thousand dollars, and then basically I go to my friend Bob and say, Bob, do you I've got a business idea, do you want to invest a thousand dollars? He says, sure. So I take Bob's thousand dollars, and then basically I go back to my mum and say, Oh, here's your thousand dollars back, and I've even made you a hundred dollars more. And I take a hundred dollars of Bob's money and give it to my mum. And then my mum's like, Wow, this business is amazing. I earned a hundred dollars. And so my mum tells her friend, Kimmy, I'm just making these up, Kimmy, this was so good. Like, this business earned me a hundred extra dollars in like a week, you should do it too. And Kimmy says, Oh yeah, I'll give you a thousand dollars. Then all of a sudden my mum says, you know what? Don't give me the thousand dollars back. Here, take my thousand dollars back, take my hundred dollars back. I want to keep investing. This is so amazing. And obviously, I'm not doing any more investing, I'm using the deposits of other people to pay the other people. That's what a Ponzi scheme is. So the grandfathering aspect of the um of the changes to the tax is kind of like saying to me, the Ponzi scheme er, hey, you can continue the Ponzi scheme, but you just can't take on any more deposits. You can keep your existing customers. All of a sudden I'm like, hmm, well, that's not my Ponzi scheme's finished, I'm done. Because what is a Ponzi scheme? A Ponzi scheme, I rely on bringing in new people in order to be able to pay the old people. So if you're telling me I'm able I'm able to continue, but I can't take more deposits, it doesn't matter. The scheme is done. So basically, the grandfathering might not matter because the real gain to be made is in the selling, or is it at least in the potential of selling? Sometimes the threat's better than the execution, but the real gain is in the selling, and so if there are no more, the government is basically saying you can continue to do this, but there's no more investors for you to sell to. So in that sense, does it really matter? A little bit, 100% a little bit, but in the end, I I just don't think that the grandfathering, that sounds unfair, I just don't think it's gonna make that much of a difference. I think that the policy will have its intended effect in the in the direction it wants to push prices, probab probably with or without the grandfathering. So that this wasn't all essentially uh of the policies. There were some negative sides to the policies, which I'll talk about briefly. And first of all, I should talk about the idea that the negative gearing and capital gains 50% discount will still be available if you are purchasing a new like essentially if you're building a property. If you're building a new property, you will still be able to negative gear and capital gains discount. And I think this is great because um building a new house contributes something to the to the economy. Uh, you take an empty plot of land and put a house on it, that that land is now worth more because there's a house on it that you can live on. So you're adding something to the economy. Buying an existing property does not add anything to the economy. You are just simply the we are all it's all the same. We you know, the thing that was there before is still there, nothing has been added. You know, if you build a new property or renovate a property, you're adding. So I think to this to that end, it's a good idea because you do want to move the government has been talking about encouraging supply. And I think that that would encourage supply. Um, because if you're building a house, you're adding a house. So I think that's good. And originally this is why these laws were brought in. They were saying we want to encourage people to build new houses. Well, shock and horror. If you if you allow these policies for existing houses, is that gonna make people want to build more houses and take on that risk? Or or buy existing houses? Whoop-de-doo, it was buy existing houses. Because buying building a house is risky, you know, it's a financial risk. There's uh friction, transactional uh friction between you and the builder and the contractor and the council. And there's so much more risk. What if the builder goes bust? What if costs go up, materials, so much more risk in building a house than buying an existing one? So shock and horror, people bought existing ones. But now it may now it might actually have a chance of achieving what the original policy was set out to do, but didn't. So I think that's good. The negatives I think is the capital gains tax uh is is applied to everything. I think this is not good. I think this is not good. For all of it, I essentially I kind of agree with actually capital gains essentially like speculating on assets doesn't really do anything to the economy. And it's not to say it's like necessarily unethical. Um, you know, like I'm speculating I've made different episodes in the past, I'm currently speculating on gold and silver bars in the vault. Um it's it's uh I'm not and I'm upfront about saying that's pure speculation, that's not adding anything to the economy. Um at the same time, like no one needs to live in a gold bar. So I suppose in that sense that you know um my speculation isn't you know pushing people to become homeless, so there's there's that part of it. But um, and you know, buying buying shares and selling them for a profit, that's also just pure speculation. Um you're not adding anything to the economy. You are buying something that already exists and selling it for a profit. So like to say that people are disappointed that there'll be a great tax on shares, I think that's I think it's just part of the game. And I think if we've come to the point where no one can get ahead ever, like young people cannot get ahead unless they speculate on assets, that means we're already in a bad spot to begin with. So if it's the end of the world that shares now like are being taxed on capital gains, that's not good. That's not good. I think it's really not but they're really that much of a big deal. And I'm gonna get I'm gonna get taxed on my bullion. Unless I'm grandfathered in. I should check that. Maybe that'd be good for me. I and but that that's fine, because it's speculation, and we don't really want to encourage things that are not producing to the economy, but just dragging on the economy. And this is, I think, the broader theme is that the biggest disappointment was there was no resource tax. There was no resource tax. Um, and that's the broader theme. I think we've got this in our head, we've got this sort of old style idea of businesses versus workers or capital versus labour. And if you go back to the 2019 election, it's actually like a blast from the past because Jim Chalmers is going around saying, oh LNP or whatever, they're only for the top end of town, la la la. And like it's just a blast from the past because that was the old model. Jim Chalmers in 2019 was pitching to, you know, old blokes in high viz shirts um who are sort of lower um income compared to the vast you know, uh lower income in the grand scheme of things. That's not the way it is anymore. That's not really the way it is anymore. It's more the demographics have changed. It's been seven, what seven or eight years since 2019. Um, a lot of older people are are no longer with us. Um it's this sort of idea of the generational cliff. A lot of young people are now voting. A lot of people, uh, you know, people born in 2007 can vote. Like that that's crazy. Um and so this is this is old news. This whole capitalist labor thing, it's old news. Appealing to like the you know, Korea tradey silver hair, you know, watching television on a Friday night and it's high vis or whatever. This is old news. We need to be focusing on the guts of it, which is taxing things heavily that don't contribute to the economy, and taxing things lightly that contribute it to the economy, and that's why it was really annoying they didn't have a resource tax, there was no gas tax that we were all hoping for. Because what are some of the biggest things that people are doing today that are not contributing to the economy? It is, first of all, it is buying existing properties and selling them for for a gain. And sorry, share so shot sorry, crypto bros and gold bugs alike and share people buying shares and selling them for a profit. That's also unproductive. Um, and the bit one of the biggest ones is taking resources that already existed and selling them. Now, yes, when you take gas out of the ground, um, you add value because gas that is in the ground is less valuable than gas in a gas bottle. But basically, the mining companies are they call them super profits, which I think is just like a really left-coated, silly way to put it, because I think it turns a lot of right-wing people off. But essentially, is not only are uh mining companies um making money on taking the gas out of the ground and putting it in a bottle, which is fair enough, but they're just absorbing the uh they are just absorbing the natural resource rent, is what it's technically called. They're absorbing the value from the gas that was existed in the ground time immemorial, and taking that profit for themselves. And I'm not annoyed at people taking profit for themselves, but the idea that this is adding necessarily to the economy is completely completely untrue. And it's and it's also true that gas companies aren't paying a lot of tax in the first place. Now, you might this sounds a little oh Jesse, you're you know, this is grievance and you know it sounds communist or whatever, but really what what is more ethical? We are having people who are taking Australia's resources that were put here by God and taking that value for themselves, and we're not taxing that. But who are we taxing? We are taxing workers, you know, people like you and me who go to work for 40 hours and do real work, most of us do real work, okay, and earn that money fair and square. And you're you're saying those people are the ones who we're gonna need to really tax to fund our public services. You're taking business owners who start a business, take on a lot of risk, employ people, and create a product or service for the community. You're saying to those people, we need to really tax you. We need to really take that money, but to people who are holding properties that already existed, stopping people from buying homes, we're telling people who are pulling rocks out of the ground, put there by God and absorbing that profit. We're telling those people, we don't need to tax you guys. It's all good. See, I think this is a fundamental reversal of how you actually want it to be. And this is why I think one of the really negative things is that the capital gains tax discount will no longer apply to people selling businesses. And I think that I think that the one on shares is just because you didn't really start that business or create that business. But I honestly think if you start a business and it does really well and it's got a great product, and you want to sell it and retire, you know, I think there's something to be said for passing that business on to the next generation or whatnot, but this is not the discussion for today. I think you should be able to sell that business and keep all that money because you took the risk to create it. If you start a business, you are taking on that risk, and it would have been way easier for you to buy an existing property and just wait for the price to go up. So not only have you taken that risk, you've actually forgot the easy thing of property investing and started this great business, and now the government is saying, thank you for taking that risk and making our society better, it's time to pay up. So I think the capital gains on businesses, at least businesses that you've started, I think is really also very unjust. I think that productive versus unproductive is the new lands. Rent seeking is the technical term for it, not uh that kind of also doesn't have the greatest optics on it, but that's the technical economical term. It's gonna be rent-seeking versus real productivity. That's gonna be the new lands. That's where we're gonna need to shift our focus. We need to we need and we're so we're so so reliant on taxes from the productive economy that's not even funny. We rely so heavily on wages, on taxing personal incomes. And like it that it's incredible, and like you know, there's so many more tax breaks if you own a business. Like if you own a small business, basically everything's a tax write-off. But in that sense, I don't think that's really unjust because though businesses are taking on their own risk, so you should they should be rewarded for that. Whereas if you're an employee, you aren't taking on so much risk, you're really more in you're you're getting more assurity, you know what I mean. So I think it's kind of more just that businesses get a little bit of a tax write-off, whereas workers have to pay a little bit more. But even then, compared to compared to business owning and working, rent seeking is just so profitable that's not funny, and those who can do it should do it. Um because it's so profitable. But I think that's what needs to happen in the future. We I need to focus our tax on rent seeking versus product productivity. And I think that the government has, to a very, very small extent, um, stepped into that direction. And it's the the policy that I mentioned pre briefly at the start was the working Australians tax office offset, rather, working Australians tax offset, Watto, start with the guy from Star Wars with the big nose. Watto is and I think they market it so badly too. Like, this is so he comes out on budget nine and he says it's a tax offset of it's $250 back in the pocket of Australian workers. That sounds so grabby, bro. Like that sounds so that sounds like a bribe. Like, and I think a lot of smart, together with it people are gonna point to that and say, that's just a bribe. That's such a political bribe. He marketed it so poorly. Yeah, I think it's a step in the right direction. I think the way he should have marketed it is how I've heard some people put it. Essentially, what it is, it's a $250 instant write-off on your tax liabilities at tax time. So basically they count all your, you know, they count all your tax liabilities at the end of the year, and then they just minus $250. That's what it is. And people say, oh, it's basically three bucks a week. I'm like, yeah, it is about three bucks a week. But the thing is, um I think it's I think it's a good idea because I've heard a lot of people put it this way, is essentially you're taking the essentially you're taking the tax-free threshold from about eighteen thousand dollars to about nineteen to twenty thousand dollars. That's how that's about how it works out. I think you should have marketed it like that. And obviously if even if they don't change it exactly like that, I think saying, hey, we're basically changing the tax free threshold to 19,000 up from 18,000, but only this is the thing, only for people who are workers who earn money through income. So I think that's actually a step in the right direction. Because you know, business owners already have a lot of tax related perks, so I think that's fine, but uh salary earners. don't have a lot of those. So I think the idea that we should raise the the uh tax-free threshold for salary earners, I think is good because you know people who do this tax offset isn't available to people who are making all of their money through property or gas or whatever it might be or shares. So I think this is a step in the right direction of recognizing that hey these people are adding to the economy so we should reward that. Where and a step in the right direction of saying hey rent seeking isn't adding anything to the economy so we should discourage it. So I think it is a small small small step in the right direction. I wanted the gas tax like everybody else um but it wasn't to be yet it was a little bit too radical I think potentially in the future I would say that there's definitely room for it in the future I think people are realizing that things have to change and that we need to be bold and so like I'm not totally out of love with the with this budget. And it's not to say that I'm a Labor fan it's not to say that I'm a Jim Chalmers fan but purely on these economical policies I think it's a step in the right direction. Or is it hmm if you are not I want to say if you're not a great conspiracy theorist if you're just a normal television watcher and you watch Channel 9 news and that's all you watch turn the video off because this part of the episode is only for conspiracy theorists okay now that only the real ones are here is it a step in the right direction or is something else going on? There's something else going on I've been preaching to people and it seems like preaching because it's kind of like you know like I really do think that the big property downturn is very soon. I think it's very soon I think that one negative way of looking at these policies is essentially that it's going to push prices down a little bit the investors are going to say I'm out I don't want anything to do with this and they're gonna sell all of the properties to homeowners who are going to purchase a property just in time for the biggest property downturn of ever so I think in one sense the the you know the the you know normie in me says that these policies are a step in the right direction but the skeptic the conspiracy theorist in me think is thinking to myself is this really the great this could could this be the great rug pull? Like could this be just first home buyers cashing out investors just in time for the crash? Maybe it could be maybe it could be in any case I think it's probably a bad time to own a property. It's definitely a bad time to own investment properties with debt because I think uh that's going to be the thing that causes the real trouble. Because at the end of the day if you buy a house you like and you could afford to make the payments doesn't matter how much negative equity you have as long as you can make the payments you can live in it. Hey it'd be pretty sucky to know that you could afford a more expensive property but you got in at the wrong time that'd be pretty sucky but at least you can still live in the house that you like. So don't buy a house unless you like it is the end of the episode. But thank you for listening to my little budget reaction. It wasn't super detailed but I hope uh I hope this was informative for a lot of people if you disagree with me let me know um and we can talk about it in the next episode or something like that. But anyway um thank you so much for listening and I'll see you in the next one. Good night.