The Budget Breakdown
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What insights do Alan and James share about the federal budget?
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Hello, I'm Alan Collar, Editor-at-Large of Intelligent Investor and Finance Presenter and Columnist for the ABC. And I'm James Thompson, Senior Chanticleer Columnist at the Australian Financial Review. And we are The Money Cafe. And James, you're still in Canberra after the lockup?
I am in Canberra, yes. A long day on Tuesday, but we survived and plenty of reaction, positive and negative. Some of the... Some of the stuff's been wild.
Yes. Oh, yeah. Look, I didn't go to the lock-up because I had to do stuff on the ABC News, which obviously gets broadcast at 7pm before the budget comes out, so I had to do my analysis of the budget before I read it, which, you know, I think that's a good way to go.
Well, there were so many leaks, I guess it was possible.
Well, in fact, I searched the budget in vain for stuff that hadn't been leaked. And I couldn't really find much, if anything.
Yeah, there was probably some of the stuff around the tax loss relief for businesses was a little bit unexpected. But yeah, it's... Well, it was, you know, I don't quite know why we do a lockup if everything's going to be leaked in the three weeks before.
I know.
It's a strange and unique Australian thing.
Well, anyway, I thought the piece you wrote while you were in the lockup was great. If I can quote from the first paragraph, shareholders are being whacked to give customers a bit of hope. And I thought that was pithy and great. Thank you. Well done, James. Maybe you should just give us a bit of a burst on explaining that.
Well, yeah. I mean, I think the sort of general idea here is if you've ever been to an ASX AGM, you'll know that the audience is usually made up of older, wealthier shareholders, and they are being hit through the combination of changes to capital gains tax, negative gearing, and the taxation of trusts. And this is designed to, in the words of treasurer Jim Chalmers, to make it easier for first home buyers to get in the market by ensuring they have less competition from investors and generally trying to tilt, equalize, level the playing field, I guess, in terms of the taxation of income and capital. Does it do all that? I guess that remains to be seen. Are there wrinkles with it? Yes. I think the application of the CGT changes and the negative gearing changes to property is good.
Perhaps the application of those changes to invest other asset classes like equities and certainly early stage capital is a worry. And there's this general question of how much intergenerational fairness is created when you grandfather all these rules. Because in one way, as several critics have pointed out in the last couple of weeks, and particularly in response to the budget, you could see this as an older generation pulling the ladder up behind them. 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.
So what I said on the news in my preview was that to deal with housing affordability requires two things, economics and psychology. The economics is simply supply and demand. You need to more or less flood the market with new houses.
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Chapters
6 chapters
1
What insights do Alan and James share about the federal budget?
0:00–9:15
2
How do tax changes affect businesses and individuals?
9:15–18:12
3
What are the implications of interest rate hikes on the economy?
18:12–26:56
4
How is CSL performing in the current market?
26:56–39:57
5
What questions do listeners have about AI's impact on jobs?
39:57–44:32
6
How do changes in capital gains tax influence investment decisions?
44:32–44:54