Latest / The Morning Edition / Zoomers, boomers and a federal budget that could fix housing

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Zoomers, boomers and a federal budget that could fix housing · The Morning Edition

• 0:01
  S1: Hi, it's Samantha Selinger Morris here, your host of The
• 0:04
  S1: Morning Edition, and I am recording tonight in Parliament House
• 0:08
  S1: in Canberra, where just a couple of floors away from
• 0:11
  S1: where I'm sitting, treasurer Jim Chalmers has just handed down
• 0:14
  S1: the government's federal budget. And joining me is our senior
• 0:19
  S1: economics correspondent Shane Wright. He's got one of the toughest jobs,
• 0:22
  S1: I reckon, in journalism, explaining the economy to those of
• 0:25
  S1: us who don't necessarily always understand what's happening. Shane, how
• 0:29
  S1: are you feeling?
• 0:30
  S2: Just happy to be here. Where else would I rather be? Samantha?
• 0:34
  S2: I mean, of course.
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  S1: But like, to the point. Are you feeling richer? Are
• 0:37
  S1: you feeling poorer?
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  S2: I'm feeling energized by an interesting budget. Okay. It is
• 0:41
  S2: not a boring budget. So that's the saving grace.
• 0:44
  S1: Well, absolutely. Let's get to that point, because I'm going
• 0:47
  S1: to pin you down here because only two months ago
• 0:50
  S1: you wrote that this budget will be, quote, the most
• 0:52
  S1: important one this century. You had good company. The prime minister,
• 0:56
  S1: Anthony Albanese, said it would deliver, quote, big reform. And
• 0:59
  S1: Treasurer Jim Chalmers said this is, quote, the most important
• 1:02
  S1: and ambitious budget in decades now. Are all of you
• 1:05
  S1: overegging the pudding here, or is this really like, for you,
• 1:09
  S1: the budget equivalent of like a new Kate Bush album?
• 1:11
  S2: Well, nothing will ever be as big as a Kate
• 1:14
  S2: Bush album, but let's let's get that clear. So let's
• 1:17
  S2: put that to one side in terms of what has
• 1:20
  S2: been announced. I still maintain it is the biggest. And this.
• 1:25
  S2: This is qualification. Qualified by saying if it occurs. If
• 1:28
  S2: it all goes through. So I think it's it clearly
• 1:33
  S2: surpasses what Joe Hockey tried to do in 2014 because
• 1:37
  S2: he was only focused on one side of the budget. Um,
• 1:40
  S2: whereas this one has movement on both sides. It is
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  S2: bigger than Wayne Swan's in 2010 because so much of
• 1:47
  S2: that actually never occurred.
• 1:50
  S1: Well, let's get stuck into the nitty gritty because there
• 1:52
  S1: really are three, three groups of people that both the
• 1:55
  S1: Prime Minister and the treasurer said they'd really be focused
• 1:57
  S1: on helping in this budget. And that's young people, the
• 2:01
  S1: working class and Australians trying to get into the housing market.
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  S1: So let's walk through whether they were playing footsies with
• 2:08
  S1: promises or whether they've actually come through for each of
• 2:11
  S1: those groups. So let's start with Australians trying to get
• 2:13
  S1: into the housing market. What sort of measures are they
• 2:17
  S1: planning on introducing and how much would it actually help them?
• 2:20
  S2: Yeah, this is like and this is the area that's
• 2:22
  S2: going to it crosses all three of those areas. And
• 2:25
  S2: it's the one that's going to be the most contentious
• 2:27
  S2: and which is going to create so many interesting headlines
• 2:30
  S2: over the next couple of days, couple of months. These
• 2:33
  S2: are around capital gains tax and the concession that was
• 2:36
  S2: introduced by Peter Costello back in 1999. It's about negative gearing,
• 2:40
  S2: which was introduced by Joe Lyons in the 1930s and
• 2:45
  S2: the taxation of trusts and the way that they get
• 2:49
  S2: used by people with the financial wherewithal to effectively choose
• 2:53
  S2: their tax rates. These three areas, ultimately, some economists will say, well,
• 2:59
  S2: they're not that big a deal in terms of what
• 3:02
  S2: they do. However, the fact that no one has been
• 3:05
  S2: able to change them. Peter Costello wanted to deal with
• 3:08
  S2: trusts back in around 2002, but he got shouted down
• 3:11
  S2: by the National Party at the time. Um, negative gearing.
• 3:15
  S2: The intersection of negative gearing with the capital gains tax concession,
• 3:19
  S2: which Treasury has been belting on every treasurer since about
• 3:25
  S2: 2000 to do something about. They've finally found a treasurer,
• 3:29
  S2: one who's prepared to do it. And two, has is
• 3:33
  S2: part of a government that has a monster majority in
• 3:37
  S2: the Parliament with which to deal with that, and also
• 3:40
  S2: going straight to young people, a growing number of people
• 3:45
  S2: who are just absolutely priced out of the housing market. Now,
• 3:49
  S2: CGT neg gearing trusts they aren't the cause of the
• 3:54
  S2: stupidity that is the Australian property market, but they they
• 3:59
  S2: don't help.
• 4:00
  S1: Well, just I guess walk us through what are the
• 4:02
  S1: changes that the government plans on introducing to the capital
• 4:04
  S1: gains tax, to negative gearing and then to the trusts?
• 4:08
  S2: So negative gearing, negative gearing will continue to exist, but
• 4:12
  S2: you actually have to build.
• 4:14
  S1: But explain to us what it is and then what.
• 4:15
  S2: Negative gearing is. The ability to reduce your taxable income
• 4:19
  S2: with the losses that you accrue on a residential property. Now,
• 4:22
  S2: Australia is the only country in the world that enables
• 4:25
  S2: you to reduce your taxable income by the losses on
• 4:30
  S2: investment properties. If you're in other countries, the loss actually
• 4:34
  S2: only accrues to what's happening on that property, not the
• 4:38
  S2: entire income. Yeah. Um, and people and this is what's
• 4:42
  S2: what happened in 1999, the capital gains tax concession was introduced.
• 4:47
  S2: Peter Costello was assured people this what this will do
• 4:51
  S2: is encourage people to buy shares. They did not know
• 4:54
  S2: they bought property. And there's some beautiful if you like
• 4:56
  S2: you if you like graphs, have a look. Have a
• 4:59
  S2: look in budget paper number one, because there's some great
• 5:01
  S2: graphs from Treasury about what actually happened. People really did
• 5:06
  S2: go into into houses, not even units. They went into
• 5:09
  S2: houses and houses take up a lot of space. Um,
• 5:13
  S2: people want them on big blocks. Yeah. And you can only,
• 5:16
  S2: you limit the number of people that you can have
• 5:18
  S2: in a particular area.
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  S1: And this is really central to the problem, right? Because
• 5:21
  S1: people started buying houses as a means of investment as
• 5:24
  S1: opposed to just shelter. Yeah, exactly. So okay, so tell
• 5:27
  S1: us about the other changes and how this is going
• 5:29
  S1: to realistically help or not help, uh, young Australians or
• 5:32
  S1: Australians trying to get into the housing market.
• 5:35
  S2: So the capital gains tax concession, the 50% concession that
• 5:39
  S2: was introduced by Costello is gone, largely like there's some grandfathering,
• 5:43
  S2: and I'm not going to try and explain the ins
• 5:45
  S2: and outs of grandfathering right now. But going forward, if
• 5:49
  S2: you have a capital gain on an investment property or
• 5:52
  S2: on shares or on your crypto or your Birkin bags,
• 5:57
  S2: and there are some people out there who do that, um,
• 5:59
  S2: you will have to Effectively take into account what inflation
• 6:03
  S2: has done to the value of that, that product since
• 6:08
  S2: you bought it. So this is what how the CGT
• 6:10
  S2: system worked before Costello's change.
• 6:13
  S1: So essentially you're being taxed now on the real gain.
• 6:16
  S2: The inflation adjusted gain, and it'll be at your at
• 6:20
  S2: your marginal tax rate. But there's a little wrinkle in
• 6:22
  S2: that in which they've said, right, we there is a
• 6:25
  S2: minimum tax rate of 30%. Now that's really important. And
• 6:30
  S2: it's connected to what is happening in trusts, where a
• 6:33
  S2: minimum tax rate of 30% has also been set for trusts,
• 6:38
  S2: discretionary trusts, which are used by people. There are legitimate
• 6:41
  S2: ways to make sure that you can pass on, particularly
• 6:44
  S2: in the farming sector. I want to pass on this
• 6:46
  S2: to my my kids that people put these things into trusts. Uh,
• 6:51
  S2: but there are more creative people who use them to
• 6:53
  S2: minimise the tax that they pay and their kids pay
• 6:57
  S2: or things like that.
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  S1: And how does so how does, how does changing or
• 7:00
  S1: how does introducing this tax on on the trusts. How
• 7:03
  S1: does that help Australians to get into the housing market?
• 7:07
  S2: It's this is it's not in the housing market. It's
• 7:10
  S2: not even intergenerational equity. It is equity. It is equality
• 7:15
  S2: between income. Now I'll explain it this way. If you
• 7:20
  S2: and I, we're wage slaves. We get taxed. And the
• 7:25
  S2: average tax rate for wage and salary earner in this
• 7:28
  S2: country is about 30%. Remember that number, 30% is really important.
• 7:33
  S2: If you invest in capital, the tax rate becomes lower.
• 7:39
  S2: And this is what the argument is, especially from tax
• 7:43
  S2: experts who are effectively argue there shouldn't be a difference
• 7:47
  S2: between a real difference between the tax rates. If you
• 7:51
  S2: are earning income from sweat or from your ingrained ability
• 7:56
  S2: to pick an increase in the value of Birkin bags.
• 8:00
  S1: And essentially, this is. This is kind of cuts to
• 8:02
  S1: the heart, I guess, of what Anthony Albanese has been
• 8:05
  S1: saying he wants to do, which is realign the budget, right,
• 8:08
  S1: realign the tax system so it's fairer. So and this
• 8:11
  S1: is really tipping it more equally I guess, to to
• 8:14
  S1: workers as it is to say investors, at least in
• 8:17
  S1: this taxing way.
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  S2: That is they're upfront about it. And Chalmers is upfront
• 8:20
  S2: through it, through the budget papers, that that's largely what
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  S2: you're getting at. And there is a large amount of
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  S2: tax literature saying, right. Why would why is there a
• 8:29
  S2: difference between income earned that way between working and between investing?
• 8:35
  S1: I mean, essentially it was just favouring rich people. Yeah.
• 8:38
  S2: Yeah. Because they are the ones who have the money
• 8:39
  S2: to invest and to buy things. Exactly. That's part of
• 8:41
  S2: the argument. There are legitimate arguments, don't get me wrong.
• 8:44
  S2: There are legitimate arguments that there should be lower taxes
• 8:47
  S2: to encourage, uh, like in entrepreneurial abilities. Yeah. And there
• 8:53
  S2: are carve outs here, particularly around startups and venture capital.
• 8:56
  S1: Yes.
• 8:57
  S2: Which is a recognition that in some cases you do
• 9:01
  S2: want to give people that incentive to do something?
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  S1: But housing gets really shot us in the foot. Because
• 9:06
  S1: you've written just recently about how many capital cities in
• 9:09
  S1: our country, I think now the median house price is
• 9:12
  S1: $1 million. And you were saying this is really quite horrible.
• 9:15
  S1: But just to focus on the housing, because Treasurer Jim Chalmers,
• 9:19
  S1: every year on budget night, he comes down the press
• 9:22
  S1: gallery where we work and he visits the offices. And,
• 9:24
  S1: you know, he fields questions. And tonight he defended the
• 9:28
  S1: figure of, you know, he says that there's an additional
• 9:30
  S1: 75,000 homes that he says that the changes that we've
• 9:34
  S1: just been discussing, these tax changes they will provide over
• 9:37
  S1: the next decade, these extra 75,000 homes. Now, not to
• 9:40
  S1: sound too critical, but my first thought was, is 75,000 homes. Like,
• 9:44
  S1: is it is that enough? Because of course, there are
• 9:46
  S1: millions of Australians dreaming of owning a home right now, right?
• 9:50
  S2: Yep. 75,000. Outwardly, doesn't sound a lot. It's about 1%
• 9:55
  S2: of the ownership market. However, he didn't mention what else
• 9:59
  S2: is going on. Like like there's a $2 billion fund
• 10:03
  S2: that's going to give councils and utilities organizations the chance
• 10:08
  S2: to put in the infrastructure to build more homes. The
• 10:10
  S2: estimate from that is another 65,000. There are other programs,
• 10:14
  S2: like the 100,000 homes for first home buyers. That's in
• 10:17
  S2: addition to this. During his press conference, he actually said
• 10:21
  S2: that once you pull in all these things, price growth
• 10:25
  S2: for homes will fall, will slow by 2% or about $19,000. Now,
• 10:33
  S2: if you're a first home buyer, where the first. What
• 10:36
  S2: is it? I think the. It takes now a first
• 10:38
  S2: home buyer about almost 12 years to save for their deposit.
• 10:42
  S2: If I go back 20 years, it was seven and
• 10:44
  S2: a half years. Wow. These are some of the these
• 10:46
  S2: are some of the things that have gotten.
• 10:47
  S1: This is a big deal. I mean.
• 10:48
  S2: It's.
• 10:49
  S1: Make or break.
• 10:49
  S2: Yeah. And it's better than like the crazy systems that
• 10:53
  S2: we've put in place, like the Howard government said. Right.
• 10:55
  S2: We'll give you a, a bonus, like a first home
• 10:58
  S2: buyers bonus, which are just immediately capitalized into the selling price.
• 11:02
  S2: So this is okay. And you don't hear like the
• 11:07
  S2: number of MPs who've said we need slower house price growth. Look, yeah,
• 11:12
  S2: I've got one hand and yeah, I'm going to.
• 11:14
  S1: Remove.
• 11:15
  S2: Remove all of the fingers to count them all who've
• 11:17
  S2: said that. So that is so just looking at the
• 11:20
  S2: one number as opposed to what it might do to prices. Yeah.
• 11:23
  S2: Price growth, which is what has literally killed the aspirations
• 11:29
  S2: of every millennial, every Zoomer who've looked at the housing
• 11:32
  S2: market and gone, how the hell am I going to
• 11:35
  S2: get into how the hell am I going to get
• 11:37
  S2: a home?
• 11:37
  S1: So 0 to 10 millennials, Gen Z's, how happy should
• 11:41
  S1: they be by these changes in terms of it enabling
• 11:43
  S1: them to actually achieve this dream that for so long
• 11:46
  S1: they've they've thought, you know, so many have thought it's
• 11:48
  S1: over for me. I just won't be able to get
• 11:50
  S1: into the housing market.
• 11:50
  S2: Oh, they should be happy. But it's not as if
• 11:52
  S2: there's going to be this rush of every millennial out
• 11:55
  S2: the door saying, you beauty, give me a give me
• 11:57
  S2: the keys, because the average house price is still 850,000. Yes,
• 12:02
  S2: the average new mortgage in Sydney is close is about
• 12:06
  S2: three quarters of $1 million like it is. This is.
• 12:11
  S2: We dug ourselves into this problem.
• 12:13
  S1: We did. Shane.
• 12:14
  S2: And it is going to take a long time to
• 12:17
  S2: find our way out of that hole.
• 12:19
  S1: Well, tell us about renters then. What are these changes
• 12:21
  S1: in particular to capital gains tax and negative gearing mean
• 12:24
  S1: for them?
• 12:24
  S2: Yeah. This is interesting because you've had this pushback from
• 12:27
  S2: the real estate industry, and particularly from investors who might
• 12:33
  S2: have more than 2 or 3 homes saying, oh, this
• 12:36
  S2: is outrageous. I'm going to sell up. Who are they
• 12:39
  S2: going to sell to? Are they going to sell to
• 12:41
  S2: the renter who can't get into the market? The house
• 12:44
  S2: doesn't disappear. If and this is part of the problem
• 12:48
  S2: with the arguments being pushed, saying this is end of
• 12:51
  S2: days for renters. Look, and there is some analysis saying
• 12:54
  S2: that you might see about 1 or 2, maybe 1
• 12:56
  S2: to 2% increase in rents. However, you. There's also this
• 13:03
  S2: argument that house prices will fall like 2 to 4%.
• 13:08
  S2: So you've got an offset. They're saying the person who
• 13:12
  S2: who's a renter wants to buy, which is a large
• 13:14
  S2: proportion of them, might now have a better chance of
• 13:18
  S2: transitioning from renter to home buyer.
• 13:21
  S1: So if they can make that leap, then and if
• 13:23
  S1: they can't, they're stuck buying. And I think Treasury has
• 13:25
  S1: said about $2 per week for a household paying the
• 13:28
  S1: median amount is what rent they think will.
• 13:30
  S2: Yeah. And there's and there's a large number of programs.
• 13:32
  S2: We are really in the middle of. It's a. This
• 13:35
  S2: government and the states, particularly, particularly Victoria and New South Wales,
• 13:38
  S2: are throwing a lot at trying to get housing built
• 13:42
  S2: in the right places, like around transit centres like railway
• 13:45
  S2: stations and getting, say, the superannuation sector, getting more investors
• 13:51
  S2: in there, which is how the rest of the world
• 13:54
  S2: like where you don't have huge amounts of public construction,
• 13:58
  S2: you have companies or non non-profits investing in housing. We
• 14:03
  S2: have left it to private individuals to supply it. So
• 14:06
  S2: we have like it's almost 10% of the population is
• 14:10
  S2: a landlord. You cannot go to another country and find
• 14:13
  S2: that sort of proportion. And it's because we've said housing
• 14:16
  S2: should be in rather than being shelter.
• 14:19
  S1: Yeah, it's an investment.
• 14:20
  S2: It's an investment. And with making an investment, there are consequences,
• 14:23
  S2: which are is part of the reason this government is
• 14:26
  S2: trying to deal with it tonight.
• 14:27
  S1: Well, tell us about the working class then. Because the
• 14:29
  S1: government also was sort of saying in the lead up
• 14:31
  S1: to this budget, well, we're going to be helping the
• 14:33
  S1: working class. So how much is there in the budget
• 14:35
  S1: for them? There's an income tax to start off with, right.
• 14:38
  S1: An income tax cut.
• 14:39
  S2: Right. So when you talk about working class you're talking
• 14:42
  S2: about working people all the way up, I think. So
• 14:46
  S2: the working age tax office offset 13 million people will
• 14:50
  S2: eventually get that. So.
• 14:52
  S1: And how much of an offset is that.
• 14:54
  S2: It's $250 which will not be paid until 2028.
• 14:58
  S1: Right.
• 14:59
  S2: However so we've got the first income tax cut, it's
• 15:04
  S2: worth $5 a week, which kicks in from July 1st.
• 15:07
  S1: Now that's for everybody.
• 15:09
  S2: That's for everybody, because they're reducing the bottom tax rate
• 15:12
  S2: from 16 to $0.15. And there's also the standard tax deduction,
• 15:17
  S2: which is estimated to be worth for most people 3
• 15:22
  S2: to $400 plus. And there's a large package of productivity
• 15:27
  S2: measures in tonight's budget. So there's actually an estimate that
• 15:31
  S2: the standard tax deduction will save Australians about $380 million
• 15:36
  S2: in better economic activity. Out comes it costs the budget
• 15:42
  S2: because people, as many people say, like people your accountant promises. Yep.
• 15:47
  S2: I'll look after you. Standard tax deduction. Bang. Don't have
• 15:51
  S2: to go to an accountant. There's a large proportion of
• 15:53
  S2: people who will be better off going, not not just
• 15:56
  S2: in the fact they're not collecting receipts in shoeboxes, but
• 15:59
  S2: because they don't have to spend time.
• 16:00
  S1: Of course.
• 16:01
  S2: 45 minutes talking to an accountant. And don't get me wrong,
• 16:06
  S2: I like accounting. Some of my best friends are accountants.
• 16:08
  S1: Yes, I'm sure, I'm sure.
• 16:09
  S2: So that's so that we're coming back to tax. So
• 16:12
  S2: that kicks in from the coming financial year. Okay. There's
• 16:16
  S2: another tax cut that starts on July 1st, 2027. And
• 16:20
  S2: the the Watteau, the working age tax offset kicks in
• 16:25
  S2: for that financial year. The surprise tonight was the fact
• 16:29
  S2: that that is going to be ongoing. There was speculation
• 16:32
  S2: that this would be just a one off. It's now
• 16:35
  S2: been built into the budget. Um and look, I for
• 16:39
  S2: the last eight months I've been saying there'd be a
• 16:41
  S2: tax cut announced in this budget. There's a tick for
• 16:44
  S2: me because that's what's occurred. I would put money that
• 16:47
  S2: that working age tax offset gets increased over the next
• 16:51
  S2: two years somewhere really particularly in the run up to
• 16:53
  S2: the next election.
• 16:55
  S1: Okay. Now we do have to address all of the
• 16:57
  S1: investors out there, all the people that are thinking, dear Lord,
• 17:01
  S1: I've worked really hard. I've got a fair amount of money.
• 17:03
  S1: So have the rich been robbed in this budget, or
• 17:06
  S1: is it something more along the lines of what our
• 17:08
  S1: colleague Peter Hartcher has written this evening, which is that
• 17:11
  S1: it's not so much robbing the rich as it is
• 17:13
  S1: robbing mum and dad to pay son and daughter.
• 17:16
  S2: How dare. How could I contradict Peter Hartcher? But he.
• 17:19
  S2: But he's right. Um. Yes. We know that the fifth
• 17:24
  S2: largest lender in this country is the bank of Mum
• 17:26
  S2: and Dad, and it's because one they've. They've been able
• 17:31
  S2: to benefit from the tax advantages that have flowed to them.
• 17:34
  S2: That's pushed up property prices.
• 17:36
  S1: In through capital gains and through capital gains and.
• 17:38
  S2: Such. Yeah. Um, and the demographic tailwinds that the, the
• 17:43
  S2: boomer generation really enjoyed and good luck to them because
• 17:48
  S2: like where they started from and where like, they have
• 17:52
  S2: bent and shaped the tax system to, to their, to
• 17:56
  S2: their gain, which every generation wants to do.
• 17:59
  S1: Yeah. But does everyone do it in the same way
• 18:01
  S1: that the boomers, have they been as successful as the boomers.
• 18:03
  S2: Are, no one's been as successful as the boomers.
• 18:05
  S1: Why? Why is that shame?
• 18:07
  S2: Because it's such a large bulge of them.
• 18:10
  S1: I was just at a large cohort.
• 18:11
  S2: So like, we haven't seen such a large generational cohort
• 18:16
  S2: as the boomers. And I think there was some analysis
• 18:19
  S2: in the budget, just in terms of the number of
• 18:22
  S2: working age people that the budget is relying on. Peak boomer,
• 18:27
  S2: it was about 5.6 taxpayers to everyone who's requiring financial
• 18:34
  S2: support as the boomers die. And then and Xers start
• 18:38
  S2: moving into aged care. It's falling down to 2.2, 2.4.
• 18:43
  S1: Okay. So tell me if I'm reading some punishment for
• 18:45
  S1: the boomers in this budget, in this one particular measure,
• 18:48
  S1: because the government's removing the discount on private health insurance
• 18:51
  S1: rebate for people over 65. This is going to save
• 18:54
  S1: the government $6 billion. So their bills are going to
• 18:57
  S1: increase by about $240 a year. Is this punishing the boomers?
• 19:01
  S2: It is like there's no like the government. Mark Butler,
• 19:06
  S2: who made this announcement a couple of weeks ago, trying
• 19:08
  S2: to couch it as like, why would why would you
• 19:11
  S2: offer this incentive? It's not it's not an incentive. Give.
• 19:15
  S2: You are giving older people a discount on their their
• 19:18
  S2: health insurance when they are the biggest users of health insurance.
• 19:21
  S1: Who brought this in? Shane.
• 19:22
  S2: John Howard at the time when the great generation, the
• 19:27
  S2: greatest generation. So the pre world war, World War two,
• 19:31
  S2: pre World War II generation. We're moving into their later years.
• 19:35
  S2: That government did have a lot of money and look
• 19:39
  S2: and they really focused it on the boomer population who
• 19:42
  S2: were their electoral base. The problem is the boomers are dying.
• 19:47
  S2: There is no they've moved into aged care and the
• 19:50
  S2: cost of aged care continues to explode. We have to look.
• 19:53
  S2: And the way that we were trying to deal look
• 19:56
  S2: after people in aged care was was an abomination. And
• 20:01
  S2: there's just not. There are not enough millennials, Zoom, Zoomers
• 20:04
  S2: or Xers to pay for what boomers deserve, which is
• 20:09
  S2: good care.
• 20:10
  S1: Okay. And so if the rich haven't exactly been robbed
• 20:12
  S1: in this budget, and it's more, you know, the moms
• 20:14
  S1: and dads who are being robbed to help their sons
• 20:17
  S1: and daughters. Is there anything else in the budget that's
• 20:19
  S1: sort of that in which that manifests, you know, that
• 20:21
  S1: mom and dad are being robbed. Like, are they are
• 20:24
  S1: they coming out worse from this budget? These moms and dads.
• 20:28
  S2: Some of them, some of them are like, it's interesting.
• 20:30
  S2: There's so many grandfathering elements around, say CGT, negative gearing.
• 20:35
  S2: If you build a new home, you can still negatively
• 20:39
  S2: gear that. Yes.
• 20:41
  S1: It's existing stock, which you can.
• 20:42
  S2: It's existing stock which is part of the problem. It
• 20:45
  S2: has been always the problem ever since Joe Lyons introduced this,
• 20:48
  S2: is that about 85% of negatively geared properties exist already.
• 20:55
  S2: So the people who are buying them are competing against
• 20:58
  S2: first home buyers largely. But I think there was some
• 21:00
  S2: analysis tonight showing that from Treasury showing a third of
• 21:03
  S2: all landlords are subsidized for the entire time they hold
• 21:11
  S2: their asset.
• 21:12
  S1: And does this change any of that?
• 21:14
  S2: This will change. This really does change the the financials
• 21:18
  S2: around negatively gearing. Okay. So there's nothing like about half
• 21:23
  S2: the population is still positively geared.
• 21:25
  S1: Yes.
• 21:25
  S2: But so we're talking about those who negatively gear and
• 21:28
  S2: those who are they are using the tax system to
• 21:32
  S2: reduce their taxable income, subsidize their life choices, and then
• 21:36
  S2: get this great capital gain further down the track.
• 21:39
  S1: Now, I wanted to ask you, Shane, just about the
• 21:41
  S1: overarching framing, I guess, of this budget, because we know
• 21:44
  S1: that Jim Chalmers and Anthony Albanese, when they when they
• 21:48
  S1: were basically flagging that they were going to roll back,
• 21:51
  S1: you know, negative gearing and capital gains tax. Obviously, this
• 21:54
  S1: is the the plans that really did in Bill shorten.
• 21:57
  S1: He essentially lost. He lost an election over it essentially. Yeah.
• 22:02
  S1: He lost the Unlosable. Yeah. He lost the Unlosable election,
• 22:05
  S1: I believe. And I think the way that they've sort
• 22:07
  S1: of pitched this is, you know, very much, um, this
• 22:10
  S1: is going to be about intergenerational change. And I think
• 22:13
  S1: that's how they're trying to get support for it, I guess.
• 22:16
  S1: So how far do the changes that we've discussed in
• 22:19
  S1: the budget or whatever else is in there? How far
• 22:21
  S1: do they go to really accomplishing this? Like, does this
• 22:24
  S1: really realign the tax system? I know our colleague Jack
• 22:27
  S1: Maley has written it's an attempt at realignment from old
• 22:30
  S1: to young, from wealthy to wage earners. How much does
• 22:33
  S1: it accomplish that?
• 22:34
  S2: Well, unless you were going to seize the everyone's wealth,
• 22:40
  S2: there's only so much, so many ways you can do it.
• 22:42
  S1: So absent Robin Hood, literally.
• 22:44
  S2: Yeah. Or Ned Kelly given let's see, we're in Australia.
• 22:47
  S2: We may as well go go with the local. That's right. Yep.
• 22:51
  S2: Um that the options are relatively limited in terms of
• 22:56
  S2: the tax system. Because at the end of the day
• 22:59
  S2: we just need to build a hell of a lot
• 23:01
  S2: more homes.
• 23:03
  S1: So how much in the budget is is supporting that
• 23:06
  S1: other than what we've discussed actually providing we're talking about billions.
• 23:10
  S2: There are this government.
• 23:11
  S1: Enough billions because, you know, often they put these large
• 23:14
  S1: figures in budgets, but then, you know, in a you know.
• 23:17
  S2: Well, this is why you aren't you aren't on the
• 23:18
  S2: reserve Bank board. Samantha. Correct. I know it's surprising to
• 23:22
  S2: bring this up, but if we know that there are
• 23:25
  S2: some capacity constraints at the moment, because so much is
• 23:28
  S2: going on trying to get homes built. Yes. The war
• 23:32
  S2: in Iran is just yeah, sprinkles more than sprinkles on top.
• 23:37
  S2: It's pushing up the cost that builders are facing. Anyone
• 23:41
  S2: who's got anything to do with a plastic, like think
• 23:44
  S2: of a sewer pipe. As much as people might not
• 23:46
  S2: want to think too much of that early morning, I'm.
• 23:49
  S1: I'm glad we have sewage.
• 23:50
  S2: Yeah. Sewage, sewage pipes, sewer pipes. They are going up
• 23:53
  S2: in price because the hydrocarbons that you make them have
• 23:57
  S2: gone up in price. So you've got that aspect, but
• 23:59
  S2: you're trying to build a lot all at once because
• 24:03
  S2: we this government is spending literally tens of billions, while
• 24:07
  S2: the states in the states are also doing something similar
• 24:10
  S2: because they've woken up to the fact. One of the reasons,
• 24:13
  S2: one of the reasons we saw the Pharaoh result just
• 24:16
  S2: a few days ago is that people are damn angry.
• 24:19
  S2: They are angry at what life is delivering them, and
• 24:22
  S2: they are absolutely within their rights to be angry because
• 24:25
  S2: they've been stuffed around.
• 24:26
  S1: Like reaching a breaking point.
• 24:28
  S2: Angry beyond that. Yeah. And you can, you can argue, right.
• 24:33
  S2: We must do something for older Australians who are particularly angry. Um,
• 24:37
  S2: and regional Australians or, and they're like, to be blunt,
• 24:41
  S2: they're a smaller cohort than the millions of millennials and
• 24:46
  S2: zoomers who are going, how the hell do I get
• 24:48
  S2: a house? And ultimately you have to make a choice.
• 24:51
  S2: What's more important, investment returns or a, a, a roof
• 24:56
  S2: over your head? Yeah. And like, I like, I write
• 25:00
  S2: extensively about this. As you know, Samantha, we have got
• 25:02
  S2: to the point that couples are putting off having children
• 25:05
  S2: because of the price of housing now. And you can
• 25:08
  S2: see that in the fertility rates. You can see that
• 25:10
  S2: in the surveys that keep coming through now. And that's
• 25:13
  S2: a terrible situation. That is a terrible situation where we're
• 25:17
  S2: telling young people, right, you've got a choice. You can
• 25:21
  S2: you can negatively geared gear or you can have kids.
• 25:26
  S2: You can't have both.
• 25:27
  S1: Yeah.
• 25:28
  S2: That's where they've got to.
• 25:29
  S1: Well, Shane, I love spending at night discussing this with you.
• 25:32
  S1: So thanks so much for your time.
• 25:33
  S2: Very happy to be here with you.
• 25:38
  S1: Today's episode was produced by Kai Wong with technical assistance
• 25:42
  S1: by Debbie Harrington. Our executive producer is Tammy Mills, and
• 25:46
  S1: our podcasts are overseen by Lisa Muxworthy and Tom McKendrick.
• 25:51
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• 25:57
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