James Thomson

They've grandfathered and locked in all the very advantageous tax treatment of their investments, and now younger investors going forward won't be able to access that same very advantageous tax treatment.

So...

I think there's a few wrinkles, but Alan, it's remarkable the number of people who said to me in the budget lockup, I wonder what Alan Cole will think of the changes around housing.

Because there is a sense here that housing as an investment, the government is saying we don't want housing to be as profitable as an investment as it has been.

And you dig into the budget papers, the government's also bravely saying, we're happy to see house prices go backwards, which is something I don't think we've seen a government say in a very long time.

Does the change in psychology, is it going to make a meaningful difference, do you think?

That's the hard bit, isn't it?

Yeah, that's a good way of thinking about it and it's probably only –

Using that lens, it's probably only in 10 years that we'll see how some of these changes around CGT, negative gearing, and particularly the taxation of trusts, how big their impact is.

Those will take a while to ramp up.

Right.

Which says the budget is gently stimulatory, which is probably something that Michelle Bullock at the Reserve Bank isn't thrilled about, but I guess she might say it could have been worse too.

Yeah.

And it's interesting that I've been thinking a little bit about this since budget night.

On Tuesday night in America, we had a rather hot inflation print, 3.8%.

Inflation there has just been nowhere near the 2% target since basically 2020 or the latter stages of 2020.

There's now a 35% chance of a rate hike where we'd been conditioned through the combination of gently falling inflation and the arrival of Kevin Walsh as the new Fed governor to expect rate cuts.

So, you know, a lot of this is premised on a fairly rosy – a lot of the budget assumptions are premised on a fairly rosy economic outlook, which says that the Australia FAMUS is open relatively soon.

You know, there is a downside estimate there where, you know, the government's modeled oil going to $200 US a barrel.

But it just strikes me, Alan, that the RBA, Treasury, most investment banks, basically everybody still, you know, three months into this war or the best part of three months into this war still thinks this is all going to be done, you know, next week.