Latest / What the Flux / Investors brace for Capital Gains Tax changes | Atlassian’s AI problem | KPMG ships jobs offshore

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Investors brace for Capital Gains Tax changes | Atlassian’s AI problem | KPMG ships jobs offshore · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm Brett and I'm Justin and it's Monday, the ninth
• 0:09
  Speaker 2: of February.
• 0:09
  Speaker 1: JUSI boy. They say that third time is lucky, but
• 0:12
  Speaker 1: not for Rio, Tinto and Glencore. You spoke about last
• 0:15
  Speaker 1: week how they were thinking about the merger. Now the
• 0:17
  Speaker 1: companies have abandoned the two hundred and sixty billion dollar
• 0:20
  Speaker 1: merger because the price was not right. You don't even
• 0:23
  Speaker 1: try a fourth time, Rio and Blencourt. Nobody is going
• 0:25
  Speaker 1: to believe you.
• 0:26
  Speaker 2: I'm done. I can't listen to it anymore. Flux. Same
• 0:29
  Speaker 2: if you haven't checked your credit score in twenty twenty
• 0:31
  Speaker 2: six yet, now it would be at the time. Your
• 0:33
  Speaker 2: credit scoll moves every single month based on your loan repayments,
• 0:36
  Speaker 2: based on new applications, and a whole range of other
• 0:38
  Speaker 2: things as well. So if you want to know what
• 0:39
  Speaker 2: the banks can see about you, make sure to check
• 0:41
  Speaker 2: out your credit score in the Flux.
• 0:42
  Speaker 1: Out three massive stories today, juzzy boy, Let's do it
• 0:45
  Speaker 1: for our first. The Australian government is eyeing a major
• 0:48
  Speaker 1: shakeup of the capital gains tax discount and investors might
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  Speaker 1: be about to feel the pain.
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  Speaker 2: Property investors you may want to sit down for this one,
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  Speaker 2: so tell me more.
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  Speaker 1: So some background, juzzy boy. Capital gains tax or is
• 1:00
  Speaker 1: the tax you pay on profits from selling assets.
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  Speaker 2: Think shares, think investment properties, or any asset that you
• 1:05
  Speaker 2: have that's gone up in value.
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  Speaker 1: And since nineteen ninety nine, investors have received a flat
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  Speaker 1: fifty percent discount on any gain as long as they
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  Speaker 1: held the asset for more than twelve months.
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  Speaker 2: But now, be man, the federal government's confirmed it's looking
• 1:17
  Speaker 2: at changes to the CGT discount ahead of the May budget.
• 1:20
  Speaker 1: And while nothing is locked in yet, investors are starting
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  Speaker 1: to kind of panic.
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  Speaker 2: Yep. So what are the governments proposing to change is
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  Speaker 2: fifty percent discount too?
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  Speaker 1: Well, there are quite a few options that have been flat,
• 1:30
  Speaker 1: like cutting the fifty percent discount to a thirty three percent.
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  Speaker 2: Or even cutting the discount altogether.
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  Speaker 1: The reason for the change, you ask, Well, the government
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  Speaker 1: claims that it would make housing more affordable, But the.
• 1:39
  Speaker 2: Big question is would it actually contribute to more housing
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  Speaker 2: affordability as the government promises?
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  Speaker 1: Good question, So what's the key learning here?
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  Speaker 2: CGT reform might take a bit of heat out of prices,
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  Speaker 2: but it doesn't solve the housing crisis you see.
• 1:51
  Speaker 1: Winding back the capital gains tax discount is often framed
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  Speaker 1: as a housing affordability silver bullet.
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  Speaker 2: The idea is if it's less appealing for property investors,
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  Speaker 2: then it gives more access to owner occupies into the market.
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  Speaker 2: The most evidence suggests the impact on prices would be
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  Speaker 2: pretty immaterial.
• 2:06
  Speaker 1: According to modeling by economist Chris Richardson, reducing the CGT
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  Speaker 1: discount with likely lower house prices by somewhere in the
• 2:12
  Speaker 1: range of one to four percent.
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  Speaker 2: For context, the median house price in Australia has increased
• 2:16
  Speaker 2: by over thirty nine percent nationally over the last five years.
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  Speaker 2: Alo On the other.
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  Speaker 1: Hand, the government reckons it's losing twenty three billion dollars
• 2:22
  Speaker 1: a year in taxes via the capital gains tax discount, or.
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  Speaker 2: Nearly two hundred and fifty bill over the next ten years.
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  Speaker 1: So it seems like these changes may add more lad
• 2:31
  Speaker 1: to the government's bank account, but may not solve the
• 2:33
  Speaker 1: housing affordability problem.
• 2:35
  Speaker 2: For our second story, at Lassians share price fell five
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  Speaker 2: percent despite double digit growth in revenue, because investors are
• 2:42
  Speaker 2: worried that AI will eat its entire business up for breakfast.
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  Speaker 2: Very nervous time for all that Lassian jazzy boy, what's
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  Speaker 2: the story here? Okay? So Lassian, of course, is the
• 2:49
  Speaker 2: Ossie founded software company behind tools like Gira and Confluence.
• 2:53
  Speaker 1: And more recently behind Trello, the browser company as well
• 2:56
  Speaker 1: and Loom, all of which it acquired over the last
• 2:58
  Speaker 1: nine years.
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  Speaker 2: The goal of all of it Lassian stalls is to
• 3:01
  Speaker 2: help teams plan and track and collaborate on big work projects.
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  Speaker 1: Yeah. At Lastian posted a pretty solid quarter of growth,
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  Speaker 1: but the markets did not agree. Yeah, their revenue rows
• 3:10
  Speaker 1: twenty three percent year on year to one point six
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  Speaker 1: billion US dollars, and they also lifted their full year
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  Speaker 1: revenue guidance. Despite all that, the market was not convinced.
• 3:18
  Speaker 1: Shares slid about five percent last week.
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  Speaker 2: And why was that?
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  Speaker 1: Well, many vessels are very worried that AI could eat
• 3:24
  Speaker 1: into traditional software businesses and be.
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  Speaker 2: Man when you zoom out. At Lastian's had a pretty
• 3:29
  Speaker 2: tough year. It shares it down nearly seventy percent over
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  Speaker 2: the past twelve months.
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  Speaker 1: So to show some confidence, the founders have paused their
• 3:35
  Speaker 1: long running share sale plans.
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  Speaker 2: But that doesn't help their employees, whose employee shares are
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  Speaker 2: really out of the money.
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  Speaker 1: At the moment, So what's the key learning here?
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  Speaker 2: Equity looks generous when a stock is flying, but it
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  Speaker 2: can be pretty brutal when it's not.
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  Speaker 1: In the tech industry, a chunk of employee pay is
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  Speaker 1: sometimes delivered through shares or options instead of cash.
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  Speaker 2: The trade off is simple. As an employee, you receive
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  Speaker 2: a lower salary today, but potentially bigger upside in the
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  Speaker 2: future through equity.
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  Speaker 1: Let's say employees anti share options with a strike price
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  Speaker 1: of one hundred and fifty bucks. That means they only
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  Speaker 1: start making money if the share price rises above one
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  Speaker 1: hundred and fifty bucks.
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  Speaker 2: So if the shares are trading at ninety five dollars,
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  Speaker 2: those options are out of the money.
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  Speaker 1: You'd be paying one hundred and fifty bucks for something
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  Speaker 1: worth ninety five bucks on the market.
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  Speaker 2: Now, if you flip it and the shares rise to
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  Speaker 2: two hundred bucks, those same options suddenly have real value.
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  Speaker 1: But that only works if the share price rises above
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  Speaker 1: the options strike price.
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  Speaker 2: So when employees' shares are no longer in the money,
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  Speaker 2: the equity is worth little or nothing, and it means
• 4:27
  Speaker 2: they've given up bigger pay packets for nothing and be man.
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  Speaker 2: This can really hurt employee morale and can make employee
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  Speaker 2: attention harder as well. So without Lassian shares down seventy
• 4:35
  Speaker 2: percent over the past year, it means that employees who
• 4:38
  Speaker 2: traded cash salaries for equity are really feeling the pain.
• 4:41
  Speaker 1: For our third and final story, KPMG in Australia is
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  Speaker 1: planning to outsource three quarters of its executive assistant positions overseas.
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  Speaker 1: Be man no surprises, as we've seen other consulting firms
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  Speaker 1: do it as well. So what is the story here.
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  Speaker 1: So KPMG is considered one of the big four consulting
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  Speaker 1: firms next to PwC, Deloitte and Ey.
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  Speaker 2: They've got over nine thousandmployees working across one hundred and
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  Speaker 2: thirty eight countries.
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  Speaker 1: That is quite a lot of people.
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  Speaker 2: Yeah, but last year the Australian government cut funding for
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  Speaker 2: public service consulting and KPMG Australia got hit hat.
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  Speaker 1: Instead of bringing in over three hundred million bucks like
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  Speaker 1: previous years, KPMG took in a much more humble one
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  Speaker 1: hundred and six million dollars.
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  Speaker 2: But here's a kicker. More clients are also expecting consultants
• 5:19
  Speaker 2: to use AI and even charge less for their work.
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  Speaker 1: So KPMG is really filling the squeeze from all sides.
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  Speaker 2: In fact, they reported a twenty per cent drop in
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  Speaker 2: their advisory business revenue the last financial year.
• 5:30
  Speaker 1: So now KPMG has made the call to move two
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  Speaker 1: hundred executive assistant jobs about two thirds of their current
• 5:35
  Speaker 1: EA roles to the Philippines where average.
• 5:37
  Speaker 2: Rages are much lower compared to Australia, and.
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  Speaker 1: They reckon this move will save them about seventeen million
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  Speaker 1: dollars in annual salaries.
• 5:43
  Speaker 2: So what is the key learning here?
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  Speaker 1: In industries like consulting and services generally, where business models
• 5:48
  Speaker 1: and near identical competition tends to get dialed way up.
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  Speaker 2: In Australia alone, the big four aren't just competing against
• 5:54
  Speaker 2: each other, they're fighting for work with three thousand, four
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  Speaker 2: hundred consulting firms, so there's constant pressure to improve price
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  Speaker 2: margins and services deliverability.
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  Speaker 1: Get this one. Almost ten years ago, KPMG's competitor EY
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  Speaker 1: made the move to work with offshore executive assistance.
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  Speaker 2: So when they see it working for EY, the savings
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  Speaker 2: go from a nice to have to why haven't we
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  Speaker 2: done this yet?
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  Speaker 1: Especially when stakeholders are knocking on boardroom doors of demanding
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  Speaker 1: cost cuts.
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  Speaker 2: Flux am, did your credits go go up this month?
• 6:21
  Speaker 2: Did you go down this month? Or did it not
• 6:23
  Speaker 2: move well? You can find it all out in the
• 6:25
  Speaker 2: Flux app where we can show you what the banks
• 6:27
  Speaker 2: see about you. Because if you want to know more
• 6:28
  Speaker 2: about your credits, will make sure to download the Flex
• 6:30
  Speaker 2: app and check it out.
• 6:31
  Speaker 1: Thanks for listening and we'll see you on or Wednesday