June 6, 2023 • 44 mins
On today's episode we discuss what’s happening in the economy right now, and what this mean for all of us. From interest rates and investments, to inflation and indexation plus so much more.
Acknowledgement of Country By Natarsha Bamblett aka Queen Acknowledgements.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hello.
Speaker 2 (00:01):
My name's Santasha Nabananga Bamblet. I'm a proud yr the
Order Kerney Whoalbury and a waddery woman. And before we
get started on She's on the Money podcast, I would
like to acknowledge the traditional custodians of the land of
which this podcast is recorded on a wondery country, acknowledging
the elders, the ancestors and the next generation coming through
(00:23):
as this podcast is about connecting, empowering, knowledge sharing and
the storytelling of you to make a difference for today
and lasting impact for tomorrow.
Speaker 1 (00:33):
Let's get into it.
Speaker 3 (00:34):
She's on the Money. She's on the Money.
Speaker 4 (00:57):
Hello, and welcome to She's on the Money podcast for
millennials who want financial freedom. Hello, Victoria Divine.
Speaker 1 (01:04):
Oh that's so formal of you, because last week, what'd
you call me last week?
Speaker 4 (01:08):
Vicky D No I knew you would calling onto that.
Speaker 1 (01:12):
Yeah, I'm trying to think grudge. If anybody has a
good nickname that I can call beck, that's like not rude,
but also it's not that great.
Speaker 4 (01:19):
Let me know, I'm very keen to see what people
come up.
Speaker 1 (01:22):
Am I really?
Speaker 4 (01:24):
Okay? So vickid Sorry, I'm going to stop doing that.
This is just the last one I want to throw
in there. But today we are talking about the quarterly
market update, which.
Speaker 1 (01:31):
I'd be very excited about it. I'm going to be.
Speaker 4 (01:33):
I'm so excited. So I guess we'll find out what's
on special at the local stom No, no, no, no.
Speaker 1 (01:40):
We are going to be talking about something sadly far
more boring and farther reaching. I mean, it does affect
the cost of things in your basket at Audi, Like
Audi don't even have baskets, so that was a terrible analogy,
but it does affect the cost of food. We are
going to be discussing what's happening in the economy right now,
beck and what's going on in our community. Because I
(02:02):
sat back a couple of weeks ago and one of
my favorite emails to read as an ex financial advisor
are the market update emails. And I'm still subscribed to
all of these. If you are one of the research
houses that still sends me market updates, please don't stop
just because you heard that I wasn't an advisor anymore.
I get a lot out of them, but they are
arguably some of the driest publications on the entire planet, right,
(02:26):
Like we're talking about share prices and what's gone up
and what's gone down, and what CEO has switched with
another CEO and the backgrounds of that CEO and where
they've come from. Like it's honestly, they're dry.
Speaker 4 (02:37):
That's brutal.
Speaker 1 (02:37):
I like it because it's kind of like I already
have that base understanding of what's going on with that company.
But anybody reading it would be like, what is this victorial?
Why are you excited about it? But what I like
about it is that it keeps my finger on the pulse,
Like I know what's going on, I know how it's
going to work, but I figured what we can start
doing on cheese on the money is like a non
boring version of a quarterly market update. I tell you,
(03:00):
like what's been going on in the last few months
when it comes to economics and politics and how it
all kind of impacts the bottom line. So what does
this mean for you? A lot of things. So if
you're a shareholder, it's going to be impacting your share price.
But if you're back and you're not investing yet, it's
going to impact how much your groceries are. It's going
to impact. You know what your community is saying. It's
(03:21):
going to be impacting political decisions that you make. And
I just think all of us need to be more
educated on this. But until now, the content has been
really dry and really boring. And to be honest, I'm
not going to wake up at six am to get
the market updates on ABC News. Love you ABC probably
the wrong demographic that we're speaking to, right, absolutely, well,
(03:42):
I'm interested to see how you make this not boring.
Speaker 4 (03:44):
But it's just going to be the tone of voice.
It's just going to be tone of voice.
Speaker 1 (03:47):
It's just going to be tone of voice, content around
excited about it and what happens when you're excited and
also really confident about something because people believe you.
Speaker 4 (03:56):
Yeah, absolutely, she's going to trojanhorse us everyone.
Speaker 1 (03:59):
It's basically like gas lighting people with tone of voice
into thinking finance and economics is cool.
Speaker 4 (04:04):
So I feel like everyone has been pretty anxious in
the community as interest rates are so much higher, Inflation
is hectic, and we talk about it every week, so we.
Speaker 1 (04:14):
Do we do. I feel like there's a vibe in
the community that is, you know, I love you all.
Please don't take this negatively, but I feel like everyone's
being a little bit negative at the moment, and I
feel like that's being perpetuated by media, and it does
make you feel like trash when every second day we're
hearing that our mortgages are going to cost us more
and it's harder to get into property because the cash
rate has increased again, and it just it feels bad
(04:36):
when we hear the inflation is at seven point one percent,
and then you have a chat with your employer and
they're like, oh, bet, here's it, and I mean, this
hasn't actually happened to you, so disclaimer, but like, oh bet,
you're getting a two percent pay rise and you should
be grateful for that. Like we're all just a little
bit pissed right Like we're not happy about the economic
circumstances at the moment. But I think something that can
help us is understanding it. I'm not saying don't be mad.
(04:59):
You can add absolutely be mad. But what we need
to remember is the economics goes in ebbs and flows.
There are going to be highs in economics and there
are going to be lows in economics, and right now
we're kind of going through a little bit of a low.
It does feel a bit trashy, but there are also
going to be times where the economy is absolutely booming
and you're killing it. I'm killing it, and we're investing
well and we're just having the best time. But at
the moment, we're just in this circumstance where it is
(05:22):
on the downturn. We don't know when it's going to
turn back up. We can listen to a lot of
smart people talk a lot of smart junk about it,
but ultimately nobody can predict the future. We do think
it's going to go up relatively soon, we do think,
and a lot of educated people say that, you know,
the recession is heading for us, but it's probably not
going to be as bad as we're anticipating. But what
(05:42):
does that all mean? And I guess that's why we're
having this conversation today, V.
Speaker 4 (05:46):
When we talk about quarterly market update, I'm wondering what
is a quarter like? How does that work? And what
quarter are we in?
Speaker 1 (05:51):
Good question, So when we say quarterly market update, the
twelve months of the year are broken down into four
segments of three months each, and there's a few different
ways of looking at it. We could either be in
Q two or Q four right now, So we're in
for a calendar year Q two, So quarter two we've
had January, February, March, so that was Q one. April
(06:12):
May and June is Q two. But in terms of
the financial year, which is what we're going to reference
right now, we're in Q four. So Q four is
because the end of financial year here in Australia ends
on the thirtieth of June, and so a lot of businesses,
a lot of economists, we're all working towards this end
of financial year. Also my birthday, so I like to
(06:32):
think that it's really fancy, but it's one of those
things where you might hear Q two or you might
hear Q four. But in the finance world, we're currently
in Q four because the end of financial year is
on June thirty, so we're currently in the midst of that.
And that's why a lot of people right now are
talking about inflation because on the thirtieth of June, that's
when things are going to be locked in. We're talking
(06:52):
about HEX because the CPI and inflation on HEX is
going to be locked in before the end of the
financial year to make sure that the ATO calculates things. Well,
there's a lot of things that are going to be
wrapping up on June thirty, which means our community needs
to be privy to it. But that's why I think
we'll focus on Q four instead.
Speaker 4 (07:10):
Right, Okay, so what is currently happening right now for
our community?
Speaker 1 (07:15):
First things first, let's talk about employment rates. I feel
like Korea is a topic that we need to be
really talking about, and I think it impacts most people
in our community because they are either employed, looking to
be employed, or are planning to be employed in the future.
So employment rates are at record lows. So this is
a good thing. Of three point five percent. This means
that it is a job seekers market. The need for
(07:38):
new staff and employees in areas like hospitality and tourism
and manufacturing and mining, healthcare, social work, trades and services
has increased, which is a really good thing for the
environment as a whole. As you can imagine if we
give as much context here as possible. We went through COVID, right,
and COVID was a period of significant economic downto our
(08:00):
government carried us for a serious period of time that
was really nice, so we didn't feel the brunt of it.
While heaps of us weren't working, but areas like hospitality, tourism, mining,
health yat they were hit really hard by that period
of time and then straight after COVID like they weren't
recovering very quickly, Like how many cafes did we see
(08:20):
closing down? And there weren't that many hostbow jobs going around.
And to be honest, after COVID, people were really apprehensive
about going back to roles that were quite people facing,
so they didn't really want to do them because they
thought that there was a lot of risk. And now
it has been announced by the WHO, So the World
Health Organization has announced that we're no longer in a pandemic,
which is really really cool, and I think that a
(08:42):
lot of us are feeling that pressure release. I don't
think that it was the announcement that felt like the
pressure was releasing. I think we just started getting back
to this new normal, you could say, and now we're
confident enough to take up hospbow jobs and working tourism.
All of that is starting to pick up, which means
that the economy is basically operating above its full capacity
(09:03):
and there's downwards pressure on inflation, which for US is
actually really good. So that cash rate is going to
come down because employment rates are at a record low.
Speaker 4 (09:13):
Okay, So is this amazing news or is there any downside?
Speaker 1 (09:16):
Look, it's pretty good news. At the end of the day.
We actually want unemployment rates to be at a record
low because it basically means more people have more jobs,
and we want more people to be in more employment
because the more people that are working, the more money
is going through our economy, and the more money that
goes through our economy, the healthier we are. Right, So
is it a good thing? Absolutely it is. Beck There's
never going to be a period of time where it's
(09:37):
a zero percent unemployment rate where absolutely everyone in the
economy has a job, and that's okay. But what you
want to see is that on the lower side during
COVID that obviously peaked and that wasn't good, which meant
that we are now in the economic circumstances that we
are in today. Ultimately, we are in this period right
now where inflation is really high. So we know that
(09:59):
inflation is at seven point one percent and everything is
so much more expensive due to inflation. So in regards
to wages and income in the December quarter, in twenty
twenty two the seasonally adjusted WPI, which sounds really fancy
because beck, did you know if you use acronyms, it
actually makes you more intelligent? I have heard, Yeah, I heard.
(10:20):
So it's actually just the wage price index, so it's
not that sexy, but finance bros will throw around the
acronyms to make you feel silly, and then if you
feel silly, you assume they're smarter than you. Right, it's
not the case at all, but the WPI, so the
wage price index actually measures changes in the price of labor,
so whether labour's cheaper or more expensive. And we know
(10:40):
because of the conversations that our community has been having
and I've been having because as you guys know, I've
been renovating house. So this is probably a good example
of WPI being high. It was so expensive to get
trade's because they weren't that many of them, so they
could charge a premium, so the WPI in construction was
much higher. I think a lot of us can understand that,
(11:01):
and that makes a lot of sense. But in the
December quarter twenty twenty two, WPI rose by zero point
eight percent in this quarter and three point three percent
over this year that is actually relatively high the private sector,
so like private businesses rose zero point eight percent and
the public sector rose by zero point seven percent, so
(11:23):
relatively on par Australia's minimum wage for an adult is
currently sitting at twenty one dollars and thirty eight cents
per hour. This is before tax, or eight hundred and
twelve dollars and sixty cents for thirty eight hour work week.
And to I guess put this into a little bit
of context, the wage price index actually defines an adult
(11:44):
as anyone over the age of twenty one, not eighteen,
So it's not taking into consideration those people who are
kind of like just settling into work. It's actually like
the more settled individuals in our community, which is just
interesting to know.
Speaker 4 (11:56):
That is very interesting, And I think this is a
really good time to take it, quick break, absorb everything,
and come back on the other side.
Speaker 1 (12:02):
All right, let's do it.
Speaker 4 (12:03):
Let's do it.
Speaker 1 (12:08):
All right, we are back, Beck, Are you excited about
this topic yet?
Speaker 4 (12:12):
Look, I'm getting there. It's starting to make sense to me,
so I'm slowly getting excited. What is happening in the
economy right now?
Speaker 1 (12:19):
All right, I will answer that question, But how many
people do you think actually gave any care to what
the RBA was doing and what they did in their
meetings each and every single month until maybe like midyear
last year.
Speaker 4 (12:34):
I know I didn't care.
Speaker 1 (12:35):
You still probably don't care, to be honest, I know
you well enough now. But the RBA is the Reserve
Bank of Australia, right and their job is to make
sure that inflation doesn't spiral out of control for us,
to make sure that cash is always accessible and that
they're doing the right thing right. But essentially nobody cared
about it until it was really really impacting our bottom lines.
They were just bobbing along having a good day. Like
(12:57):
they'd probably put their little press releases out and outlets
it'd be like, yeah, cool, thanks, but we have a
busy news day, like we're probably not going to be
able to talk about the RBA, and they're like, yeah, no,
where is no worries. And then when stuff started to
hit the fan, they're putting out their press releases and
every single media outlet's like, oh my god, can you
get the RBA's media release. Let's see what's going like
we are watching it like hawks. I have always watched
(13:19):
it like a hawk because I'm always interested in it.
But now everybody kind of knows that they meet at
around eleven am every day, and you know that there's
going to be an announcement after that, and I just
wait for this, like I'm so excited about it. Right,
But so many people are now waiting on the results
of their monthly meetings with absolutely baited breath to see
how much they have increased interest rates to counter inflation. Right,
(13:39):
and we know that over time this is actually going
to start declining, which is really good. I do foresee
it going up a few more times. I'm really sorry.
It's not just me saying this, like me saying this
because it makes sense to me. But also according to
leading economists in Australia and the Central Bank, inflation is
expected to continue rising before the end of the year
(14:00):
and even further into twenty twenty three before declining back
down to target range. So target range is between two
and three percent. Context, we're currently at seven point one
percent by approximately twenty twenty four, so we'll go back down.
That's the purpose of increasing the cash rate, because that's
what it kind of counters. It's kind of like levers right,
the RBA know that if they pulled the lever of saying,
(14:22):
all right, Beck, we're going to make cash a little
bit more expensive, it's actually going to stunt inflation. And
that's good for us. So as much as it feels
really trash, it's really good for us in the long term.
That they're kind of like putting the brakes on a
little bit and you know, making sure that as an
economy we are going to be okay, and we'll go
back to a more reasonable rate of inflation of between
(14:43):
two and three percent. And ultimately we don't want no inflation.
That would be bad. That would mean that our economy
is not doing well enough, it's not growing. We don't
want too much inflation because look what's happened. We are
now at seven point one percent, and bet everything's so expensive.
It's growing too quickly. Our wages aren't keeping up with it.
The world is an expensive place to live. Our mortgages
(15:04):
are costing us an armoral egg, like, it's not a
good place to live. But at two to three percent,
that's really healthy economic growth. That is a good place
to be to know that wages are going to increase
slowly over time. Our exports are going out nicely, they're
coming in nicely. We've got some good jobs, we've got
good job growth. Everything is doing well. So we don't
want no inflation because that means no growth, but we
(15:27):
want an amount of growth that we can keep up
with because we can't run this fast. Beck like, I
can't keep up with seven percent two to three. Yeah,
that seems like walking pace. I could probably do that.
Oh yeah, does that make sense?
Speaker 4 (15:36):
Yeah, that does make sense.
Speaker 1 (15:37):
So over the twelve months to the March quarter CPI,
so consumer price index rows to seven percent. We know
that already, but that is showing signs that interest rate
rises are flowing into households and actually dampening consumer demand.
So that basically means, as interest rates are increasing in households,
you're starting to make decisions about cutting back on non
(16:00):
discretionary items. So we're not really going to the movies
as much, we're not really buying that many discretionary items,
we're not buying things just because it's fun. We kind
of cut back and go back a bit to the basics.
The figure, so we're now at seven point one percent,
is actually slightly higher than the predicted six point nine percent.
That analysts and economists were predicting beg but lower than
(16:23):
the thirty year high of seven point eight percent from
the December quarter. That's a good thing. Overall prices on
average rows one point four percent over the March quarter alone.
And the Australian Bureau of Statistics also released the monthly
CPI figures, so Consumer Price Index figures for March, which
came in at six point three percent, which is a fall.
(16:44):
So it's dropped away a little bit from the annual
rises of six point eight percent from February and seven
point four percent for January. So this is a good thing.
We're seeing it kind of starting to come back. We
lack this. This is good news. Are you keeping up,
my friend.
Speaker 4 (17:00):
It's a lot to take in, but I think we're
getting there.
Speaker 1 (17:03):
I don't expect you to get it immediately, by the way.
I know that I'm rattling off this stuff, but it's
one of those things where if this isn't your first language,
finance is my first language. This is going to go
straight over your head. Sometimes you just need to literally
go back a little bit and just listen to it again.
If it's not making sense to you, it's going to
be exposure that gets you there. It's not a lack
(17:24):
of education. You've just never had this language. You've just
never been communicated like this. It's like learning French and
you kind of pick up a few words and we're
talking about dogs and cats, and you might understand, Okay,
they're talking about a dog and a cat, because I
absolutely recognize those two words, but the stuff around it
didn't make sense. Context is going to be key here.
So if you didn't understand what I'm talking about thus far,
(17:45):
I get it, sis, I really do. Prior to me
being a financial advisor, I would have been like, I'm
turning this podcast off. It makes us no sense. But
I promise you all of that is going to make
sense once you go, Okay, I'm over it. I do
know what CPI is, Okay, I'm over it. I know
what the Central Bank is. Okay, the RBA makes sense.
Like all of this stuff, it's just about exposure. Yeah,
if you're not getting it, it's not because you're silly.
(18:06):
I promise you are such a smart person. And while
I say this isn't complicated stuff, it genuinely can sometimes
feel like I'm speaking another language. Listen to it. Again,
I promise. And I just wanted to interject there because
I feel like, genuinely sometimes people are like, what the
hell am I an idiot for not understanding this? No, sis,
you're not. You just never spoken French before. How are
(18:29):
you going to know how to speak French if we
don't practice it consistently?
Speaker 4 (18:32):
Exactly?
Speaker 1 (18:32):
All right back on track. The ABS, the Australian Bureau
of Statistics. You guys know, I am obsessed with them.
If I'm not obsessed with them enough, I'm obsessed with
their social media presence. Go follow them on Instagram. I'm
still trying to work out who's running their Instagram because
they are some of the wittiest people in the entire
world far out. I want to be you. I want
to know you. If you work at the ABS and
(18:53):
you know you, let me know. I'll keep it a secret.
I just want to know, like, I'm not going to
try and steal those people from you. I might, like,
promise I won't if you're nice. But in its recent release,
the Australian Bureau of Statistics noted that the most significant
price rises were in a few things gas and other
household fuels. I don't think anyone's going to be surprised
about that, which soared by fourteen point three percent. Fourteen
(19:18):
point three percent more for gas, that is wild geez.
Medical and hospital services they rose by four point two percent.
Tertiary education costs rose by nine point seven percent. Oh wow,
discoo stent. And domestic holiday travel and accommodation is up
by four point seven percent, which personally I found quite
(19:42):
crazy because I assumed that it would be much higher
than that, because obviously, during a period of time black
we've just gone through with COVID, I thought it would
be with so many international workers leaving our country and
so many Australian workers now taking those roles and arguably
demand higher incomes or less hours or like there's just
(20:03):
been a lot of change. I assumed that domestic holiday
travel and accommodation would be higher. But I think because
a lot of these places are just trying to keep
people coming in the door, they haven't raised prices as much,
and I would genuinely predict that in the future that
is going to go up even more because it's still
expensive to like run hotels and run resorts and run
(20:25):
any type of accommodation like that's expensive, and the burden
that they carry of not being in business for such
a long period of time, I believe is still being carried.
So I would not be confused if you know, in
a couple of months the ABS releases data that says
domestic holiday travel and accommodation is much more expensive four
point seven. I was like, do you mean fourteen point seven?
(20:46):
But that's not the case. I did triple check it,
all right. The Reserve Bank have increased their interest rates.
So the cash rate we've talked about inflation obviously at
seven point one percent, but the cash rate that the
Reserve Bank have implemented try and battle that is now
at three point eighty six percent. So the Reserve Bank,
let's see the Reserve Bank. The RBA is the big dogs,
(21:06):
and they have all the money. They lend their money
to other banks, So like NAB and where's pack comback,
they all go to the RBA and they say, hello, sir,
we're a business and we offer mortgages, but we need
your money, so we will pay you a certain amount
of money to borrow your money and then we will
lend it to our consumers. So we'll lend it to
Beck if she wants to buy a house. The RBA
(21:28):
historically was like, yeah, let's make sure that housing is
really affordable. Let's drop the cash rate to one percent.
Banks will like, heck, yeah, that means that if we
are paying one percent to borrow the money from the
RBA to give to our customers, we could probably clip
the ticket by lacker point five percent. So if you
then bet go down the street and say hey, nab
one alone, they'll go, we can give it to you
(21:50):
for one point five percent, because that means that they're
making back the one percent that they're paying the RBA,
and then they're making point five percent on your interest rate,
and you go, that's a good deal. That's cheap money.
Now the RBA is saying, oh, people are borrowing too
much money. Things are getting wild. We need to stop
people spending as much on discretionary items. You know what
we can do. We can tighten up the belts. We
(22:10):
can actually increase our cash rate to three point eight
six percent, which is going to mean Beck she can't
afford brunches easily. That means that Beck's not going to
be contributing to the economy, which is going to slow
down economic growth. So that our inflation rate goes down.
And what that means is that these banks are now going, oh,
we used to be able to borrow money for one
(22:31):
percent from the RBA. Now we have to borrow at
three point eight six percent. We're not actually making money,
so we're going to have to pass that on to
our consumers. So, Beck, if you were able to get
money for one point five percent, now when you go
down to the bank and say, hey, need a home loan,
they're going to say, look, Beck, we borrow money for
three point eight six percent from the RBA. We still
(22:51):
want to make at least that point five percent. So
now when you get a home loan, the average is
looking more like four point two four point three percent.
A few of them are closer to five percent because
those banks still need to make money, they still have
employees that they need to pay, they still have a
debt with the RBA. It's not banks trying to screw
us over. I promise like your bank is not trying
(23:12):
to put you in the worse off position. In fact,
a bank wants money to be as cheap as possible,
because do you know what happens when money is as
cheap as possible? People borrow more of it, and I
promise you if the cash rate was still one percent,
the bank would much prefer to lend you money at
one point five percent. So they're taking that point five.
Then what's going on now, Because even if they're making
(23:33):
point five and the cash rate right now is three
point eight six which means the bank is now saying,
look back the cash rates three point eight six percent,
I'm still going to tack that point five percent on.
So now it's four point three six percent. So technically
they profit margin identical, but you, as a consumer, can
afford less, so you're borrowing less money. So the bank
is actually making less money in this current economy than
(23:56):
they were when cash was really really cheap. So it's
important to remember it's not the bank's trying to get us.
It's actually just the way of the world and it's economics.
It is not the bank trying to absolutely screw you
over and pass it on. If the bank didn't pass
on this three point eight percent cash rate that the
RBA set, they would go bankrupt beck and that's worse
for the economy, and we don't actually want that to happen.
(24:18):
So as much as that hurts and it's not a
fun position to be in. We actually want that because
it tightens the squeeze. It makes sense. It's not forever, though,
so I think it's really important to remember that nobody's
out to get us. They're actually trying to protect us
by putting these rules in force, and that's why the
cash rate is sitting where it is at the moment.
(24:38):
If you want to know more about that. We actually
did drop an entire episode on the third of May
about investing in a high inflation environment, which I would
recommend going back and listening to. But I hope that
makes sense as to why the world isn't trying to
screw us over. I know we're really negative and it
really sucks, but it would be much worse if they
let you keep your one point five percent interest rate.
Speaker 4 (24:57):
Yes, second, really it makes sense. Sor if it sounds
really silly, bit is that a good thing for my
savings account? In that case, why would that be a
silly thing? Beck, I feel like you've put two and
two together. Absolutely, As the cash rate increases, so is
your interest rate on your savings account. So now is
probably the time if you've been looking from high interest
savings account and you listened to content maybe eighteen months ago.
(25:20):
From me, I'd be like, all right, Beck, high interest
savings accounts are dead, Like you're not even going to
get more than one percent. Now, there are savings accounts
that have four point five percent. That's really sexy. So
if you haven't looked at high interest.
Speaker 1 (25:34):
Savings account in a while because you've been worried that,
you know, ah, they're not worth the time, maybe they
are now so it might be worth looking into. So
you are absolutely correct, because what happens over time is
as interest rates increase and you're paying more on your mortgage,
you actually get more return on your savings account. And
the inverse is true. When you have cheap interest rates
and your mortgagees are cheaper, it actually means that you're
(25:56):
not getting such a good savings rate. So you're correct.
Right now is a good time to be re evaluating
your savings account. Your bloody genius, Oh thank you.
Speaker 4 (26:03):
Okay, here we go. I'm learning something. So V I
hear the banks are doing pretty well.
Speaker 1 (26:07):
They are rolling in it, you could say, which is
surprising because everyone's complaining about how much more they're being
charged on their mortgages and We've talked about this before.
That's actually not got a lot to do with the
bank profits. Like, yes, it does in a way, but
at the end of the day, the RBA sets the
cash rate and then that's how much banks are borrowing
money for, so they're just passing it along to you,
(26:29):
so they're not actually making you know, three or four
percent more. And I think a lot of us have
in our heads, oh my gosh, my bank was charging
me one point five and now they're charging me five
percent on my mortgage. They must be rolling in it, right,
That's not actually the case because they're actually having to
borrow the money at more, so they're kind of just
passing that fee to you, so that profit margin is
not coming from there, which I think is important to
(26:51):
preface before I give this number because it's insane. So
the big four banks, so when we say the big
four in Australia, we're talking about A and Z, NAB
and west Pac. They have reported are you ready, They've
reported a combined sixteen billion dollars worth of profit thanks
to raising the cash rate. So as much as they're
(27:12):
passing it along, it's still helping them. This might see
the budget return a surplus according to Motley Fools. Scott
Phillips though, and I've been consuming a fair bit of
his data recently because he's got a partnership with our
friends Chairsey's. And this is not a sponsored mention at all.
I just really like it. But he's doing the market
update on the Chasea's Instagram and I'm just vibing it, Like, Scott,
(27:34):
if you want to come over and do one for
She's on the money, Like, I just think it's really
good content. Or we could send the community over to
the Chasea's Instagram and I guess they could get it
there without us having to talk to Scott pos we
could be one or the other. I mean, it would
be nice to talk to him at some point, but
I think it's really really interesting just I guess having
these conversations and what it means. And that's why I
prefaced it back, because I was like, look, they've you know, combined,
(27:57):
they've got sixteen billion dollars worth of and a lot
of people might have jumped to the conclusion that, oh
my god, that's because the rates have increased and you know,
they're absolutely raiming us, and like, yeah, nah, Like there's
a balance there, because if I just told you that,
you would have been like, yeah, because interest rates went
from one and a half up to like four and
a half. Well yeah, but they're also having to borrow
money at a higher percentage, so not all of that
(28:20):
is profit right, so.
Speaker 4 (28:21):
They're kind of like making this every single year.
Speaker 1 (28:24):
They're about yeah, like they are bank every year, which
is why, honestly, when it goes back to it, it's
why so many people in the Australian share market like
owning banks, like people like going and buying blue chip
stocks in the Australian share market, which are things like banks,
because they're tried and they're true, and they're tested, and
they're relatively boring, but they have consistent returns and they
(28:47):
pay out dividends, which is like paying out the profit
to shareholders, and ultimately shareholders really like that. And I
really like that. Yes, that's why I earned some banks
like portfolio. That sounds it pretty sweet.
Speaker 4 (28:59):
I'm assuming we're happy about the banks reporting healthy profits.
Speaker 1 (29:03):
We want that because it's a sign of a really
good economy. It means that the banks are doing really well.
We should be concerned when banks aren't churning a good
profit and at the end of the day, like, yes,
we don't want the banks to get rich rich, Like
the economy is really important, you know, community is really important.
But I think stepping away from that conversation about equality
(29:23):
and equity and all of that, because obviously a lot
of people are going to be quite opinionated. Beck they
can go, oh my god, but they should be passing
this on ra rah. They most often are, They're passing
that profit onto shareholders. So each and every single year
when they report a profit, or maybe it's every six months,
it depends on their reporting criteria, they pass it along
to shareholders, and they might reinvest some of that profit
(29:45):
back into building the business, but a lot of the
time it just goes directly to shareholders. And the reason
for that is the banks are already relatively well established
and they don't need to, you know, reinvest significant amounts
of their profit back into their business to grow it
again because they are already there back right.
Speaker 4 (30:01):
I see, Okay, So I just want to talk about
the budget really quickly because right now I don't actually.
Speaker 1 (30:06):
Sell sexy So yeah, like, what does what do you mean?
You don't know? Didn't you on Tuesday Night? Like a
couple of weeks ago, sit in front of the TV
with wine and you were like, well, sub balbo, what's
going on? And then you were like watching it like
the AFL Grand Final?
Speaker 4 (30:21):
Did people do that anywhere in the world?
Speaker 1 (30:23):
I did that?
Speaker 3 (30:24):
You did? That's so sweet.
Speaker 1 (30:26):
Yeah. My husband wasn't that impressed. He's recently got a
new PlayStation five and he would have preferred, absolutely, like
to play the golf game that he go, yeah, look
anything else, Like I thought a golf game was pretty bland,
but like he's been playing this golf game and yeah,
he kept asking me, can we gne that on you?
You can just read the report like, no, sir, this
is so exciting I need to yell at the TV
a little bit longer. Yeah, it's like my sport. I
(30:48):
really like it. I think it tells you a lot
about the government's priorities. It was interesting because obviously the
Albanezy government has prioritized cost of living relief, which I
think is really sexy. So we're looking at things like
housing and healthcare and clean energy measures and the budget.
Not everybody is happy about the budget. I think a
lot of people have seen it as a bit of
(31:08):
give and take like. I've heard a lot of comments
of people being like, oh my gosh, they're investing in this,
but that's taken away from X. That's not how the
budget works. You know, budget gets allocated in line with
priorities of the government but also the community and taking
lots of different factors into consideration. They're not looking at
it and going, oh, should we allocate to Beck or
Victoria like, they're not comparing the two. They're looking at
(31:31):
that situation and how much funding it would need and
then looking at the total budget and what they can allocate.
They're not kind of, you know, looking at it going
let's take away from Beck like. And I think a
lot of people when the budget comes out feel really attacked.
And that's not necessarily what's happening, but it's to their own.
We can all have our own opinions. But essentially, the
(31:51):
Albanese government has said that they're going to deliver get
this quote, a stronger economy and a fairer society. Ah,
I mean whatever. That just feels very political and I'm
very much of well, put your money where your mouth is, mate,
we walk the walk. I don't care about the talk, like,
just show me what you're going to do. So let's
talk about the budget a little bit more deeply. Do
you want to do that or is that too boring? Ah?
Speaker 4 (32:13):
Look, I actually want to know.
Speaker 1 (32:15):
It probably will be boring, but I really want to know.
Let's like pull out some headlines that I think we
should converse about. What do you recompects that. So recipients
of the Commonwealth Rent Assistant, So the CRA, which is
an existing program which about one point one million low
income Australians are eligible for, they're going to receive more
financial support. I think that's really important. So the CRA
(32:37):
payment is actually going to increase by fifteen percent, and
in a world where our inflation rate is sitting at
seven percent, like, that's probably pretty welcome. Yeah, definitely, So
that's good. The government's also going to reward small business owners.
They've got a number of different financial measures that they're
going to introduce. So the instant Asset Right of threshold
is going to be temporarily increased to twenty one thousand
(33:00):
dollars from the first of July from this year. So
that means that if you have a small business which
get this peck. I think you'll laugh at this if
you have an annual turnover of less than ten million dollars,
you're a small business, Like, so.
Speaker 4 (33:13):
What what that's literally everyone?
Speaker 1 (33:15):
Well, I just thought that small business would end it
like a million, but it doesn't. It ends at ten
million dollars, So twiggle room. Yeah, right, Like imagine being
like I'm a small business owner and you're earning like
nine million.
Speaker 4 (33:26):
Dollars Like what wow?
Speaker 1 (33:28):
Anyway, unrelatable. But they will be able to instantly deduct
the entire cost for certain assets that cost less than
twenty thousand dollars, which are first used between the first
of June twenty twenty three and the thirtieth of June
twenty twenty four. So the twenty thousand dollars threshold applies
to each asset. So small businesses can take advantage of
this measure to buy multiple assets, which is kind of good. Beck,
(33:50):
and I guess to put that into a little bit
of perspective for you, Like, let's say you have a
beauty business and you want to start doing laser Like
this will increase my revenue, right, Like having a laser machine.
If you buy that, you're going to get an instant
asset right off on that. So like the tax comes
back to you. So it's actually relatively sexy and can
be for a lot of businesses worth up to like
(34:11):
thirty percent of the value of that item. So that's
actually very good. So it's not like, oh yeah, instant
asset right off when you're kind of like, well, what
does that mean. It means that, like you can write
off the tax on that item. It doesn't mean you
get that whole item for free, but like you can
write off that tax and it's going to put you
in a better financial position. So instead of, you know,
as a business owner, we pay thirty percent on tax
(34:34):
as a general kind of blanket rule. Obviously, there's lots
to it, and you need to talk to your account
and if you're going to you know, take this on,
but it's important to understand the instant asset right off
means you are kind of, let's call it, like, in
a very basic way, getting a really big discount on
an asset that you need to purchase for your business
to grow.
Speaker 4 (34:51):
Gotcha, And you can purchase as many of those under
twenty thousand dollars assets.
Speaker 1 (34:57):
Yeah, which is kind of sexy. I mean, OK, there
are a lot of people in our community who aren't
so excited about the instant asset right off because this
year they're scrapping the instant asset right off for cars.
So a lot of small business says, yeah, so it's
not completely scrapped, but it goes back down to that
twenty thousand dollar mark, Whereas right now you can ride
(35:18):
off a car for up to fifty nine thousand dollars
each financial year. So that's going to be, you know,
scrapped on the thirtieth of June. So I mean, you're
probably not always looking at carsales dot com dot U.
I'm not either, huh. But it's just an interesting thing
to talk about because at the moment, lots of cars
are hard to come by because it's in the lead
up to June thirty, and lots of small business owners
(35:40):
are kind of like snapping up the SUV they've always
wanted to buy, or like snapping up a car for
their business because their accountant has called them and said, hey, Beck, like,
if you were planning on buying a car, now would
be a great time because if you buy it after
the first of July, like you're not going to get
basically sixty thousand dollars tax, right off, it's going to
drop back down to twenty and obviously that's pretty attractive.
(36:02):
So lots of cars are off the market. So I
don't know what you'd call him, my brother in law.
Like my sister's partner's currently looking for a car, let's
call him brother in law. He's probably not rather alike,
but sorry, Alex, like they're not married, but that's okay,
Like I'm manifesting and manifesting anyway. They were looking for
an amok, which is like a big training car, not
one left in the country. Really not why you can't
(36:25):
get it before June thirty. It's just interesting to see
how those things work because you wouldn't think about it.
But if you've been looking for a family car and
you just can't seem to find one, my friends, that's
because all the small business owners have already gotten on it.
Speaker 4 (36:37):
I think this is probably like a tax question, but
one for the taxman. I should say a tax woman.
If you tax persons, I'm sorry, I should say a
tax person. So if it's under twenty thousand dollars, I'm
assuming because it has to be like new from the
first of July. You can't get a secondhand car I'm
assuming is that right?
Speaker 1 (36:53):
You need to talk to the taxman, because I think
it depends on that, yeah, or the person or whatever
we're doing. Like, I'm just trying to do the right thing.
I'm just trying to answer the question exactly the same.
Oh my gosh, I just doing my best, okay, and
so even it's my best should be enough, like, oh
if I talk to the tax people, Yes, it depends
because I think that there's a lot of semantics in
(37:13):
it about you know, how old it is and what
that means and how that works. Because I have bought
a car before in our business and been able to
write it. Often it was secondhand, and I'm very big
as an advocate I suppose of buying secondhand cars because
like brand new cars lose a lot of their value.
And I'm you know, I'm a money gal. So I
think have a chat with your accountant and they can
give you the specifics. Obviously this is not a tax
(37:35):
planning episode. I just think it fits into this conversation nicely.
And as you guys know, I love a bit of context,
like I love being able to go, oh, did you
know this? This and this? And there's no I'm a
rocks left. I have no intention of ever buying an ammarok,
but I feel smart at knowing that you know, yeah, same.
We're going to stop talking about the tax side of
things very shortly because I actually am planning to do
(37:55):
an entire tax planning episode really soon, because it's coming
up to tax time and I want to make sure
that we're in the best possible position.
Speaker 2 (38:01):
Beck.
Speaker 1 (38:02):
Yes, small to medium sized businesses, so obviously medium are
going to be more than ten million dollars worth of turnover.
Wild congratulations. But these businesses and I like this are
going to be encouraged to buy energy efficient fridges, electric
cooling systems, batteries and other assets that to quote, support
electrification and more efficient use of energy. Very good. So
(38:24):
companies with a turnover of less than fifty million dollars
unrelatable content will be able to deduct an additional twenty
percent of the cost of depreciating assets that are eligible
under the Small Business Energy Incentive measure. That's a mouthful.
Speaker 4 (38:39):
That is a mouthful.
Speaker 1 (38:40):
What is a depreciating asset.
Speaker 4 (38:43):
An asset that you buy and then immediately it loses value?
Speaker 1 (38:47):
Amazing and that happens over time. Check it out. Are
youshes on the money?
Speaker 4 (38:51):
Oh my goodness to me, I could pretty much just
take over from this point.
Speaker 1 (38:54):
But I think it's important to talk about that, right
because when we talk about instant asset ride offs, that
means that you're claiming one hundred percent of that depreciation
in one financial year. If you do that, you can't
claim it over subsequent years. But each and every single year,
your asset will decrease in value and at some point
it kind of becomes zero and you can no longer
(39:15):
claim it because it's not endless, and that asset essentially
isn't worth much anymore. Right, So it's important to understand
that over time. If you, as a business buy an
air conditioner, it's a two thousand dollar air conditioner. Next year,
technically to the business it might be worth eighteen hundred dollars,
and the year after that and the year after that
just decreases and decreases, and then it might be worth
absolutely nothing because it's a thirty year old air conditioner.
(39:37):
You know, no one's going to pay full price for that,
So the taxman builds that in because otherwise, if your
assets didn't depreciate over time, beck you'd end up buying
a two thousand dollar air conditioner, and then that adds
two thousand dollars to the value of your business. And
then in a couple of years you might buy a
few more things, and then you have this business that's
valued at like, you know, one hundred thousand dollars when
(39:59):
you I don't actually have one hundred thousand dollars worth
of assets you could recover. Does that make sense? So,
like I couldn't sell those things for one hundred grand.
So the taxman's like, let's just be reasonable about this
and actually claim what you're losing on those assets, which
is quite helpful.
Speaker 4 (40:14):
Yes, okay, that is helpful and very kind.
Speaker 1 (40:17):
You should just call the tax people kind. Okay, weird. Look,
I love the tax people. Let's leave it there. Ok.
Let's leave it just in case they come for us.
All right, Let's move on from small businesses. So base
rates of supportive payments, so things like job seeker and
Youth Allowance and the Partnered Parenting payment and OZ study
is going to rise by forty dollars a fortnite from
(40:38):
the twentieth of September. So there's been a bit of,
like I guess, backlash from that because forty bucks beec
it's not really going to get you much. Yeah, I
feel like on job seeker or youth allowance or your
parent or like you're doing or study, like forty bucks,
what's that going to get you nowadays? Literally? Not that much?
Speaker 4 (40:56):
Not that much.
Speaker 1 (40:56):
Like I feel like nowadays, you go to the supermarket
with a fifty dollars crisp note and you're like, that's
so much money, and then you get like two things
and you're like, where did this money go? So I
feel like that was a bit low. Obviously there's lots
of like maths and analysis behind this, and they feel
like that's sufficient, but there's obviously a fair bit of
backlash because they do deserve more. Like if you're in
(41:17):
that situation, forty bucks in a rising inflation environment not
going to do all that much. Mats not enough exactly.
So the government will spend three billion dollars on direct
bill relief, So that's quite sexy, co funded with state
governments to eligible households including pensioners, senior healthcare card holders,
and family Tax Benefit A and B recipients. So the
(41:39):
government claims more than five million households are going to
have up to five hundred dollars deducted from their power
bill next financial year. Oh that's a big deal. I
think that's pretty good, especially for people who, you know,
if you're a pensioner or you have a senior healthcare
card holder, like you're going to need that type of relief,
And I'm sure that that will take a bit of
pressure off, Like energy these days is so expensive, and
(42:02):
we already know that, Like, let's be honest, let's stereotype
for a hot second here, My nanna never turns her
heater on like she wants to be warm all the time.
I swear only one room in her house is ever heated.
And they're already so careful about these things. So I
think that that might take a little bit of pressure
off the people who you know, aren't doing incredibly financially
but still deserve to have that relief because look, honestly,
(42:24):
it's a basic human rash. Yeah, all right. Next up,
we have single parents. They're going to be able to
claim the single parenting payment until their youngest child turns fourteen,
whereas the old age used to be eight years old.
So that's a significant jump in age, and I think
that that will be really helpful, and they plan to
triple the bulk billing incentive that GPS receive, meaning it
(42:47):
there'll be more common consultation types which doctors can choose
to bulk bill for, which I think is really sexy.
I ried doctors and I've been having this conversation recently,
and they're like, look, that's not actually going to do
as much as you think it is. And I think,
you know, let's take all of that with a grain
of salt. I think that the government stepping in to
kind of triple the bulk billing incentive is good, but
(43:07):
there's obviously a lot of other pressures on doctors to
be able to bulk bill and actually be able to
afford it, because they're paying like rent, and they're paying
you know, their nurses, and they're paying everything else, and
they're in the firing line for the cost of living
crisis as much as we are. And I'm not saying
that they're not doing well financially, like if you're a doctor,
you probably have a relatively good income. As a stereotyping thing,
(43:28):
but I think it's worthy of mention because I think
a lot of gps are going to go v like,
that's not going to fix it, like everything's not going
to go back to being bulk billed. But that's our
government trying to take a little bit of pressure off
that system, so hopefully things can be a bit easier
for the people who need it to be easier. And
I think that that's, yeah, probably a good place to
leave it, my friend, sounds pretty good. You reckon, Let's
(43:53):
go absorb it.
Speaker 4 (43:53):
And see you guys soon, See you.
Speaker 1 (43:55):
Guys next week. The advice shared on She's on the
Money is general in nature and does not consider your
individual circumstances. She's on the Money exists purely for educational
purposes and should not be relied upon to make an
investment or financial decision. If you do choose to buy
(44:17):
a financial product, read the PDS TMD and obtain appropriate
financial advice tailored towards your needs. Victoria Divine and She's
on the Money are authorized representatives of Money. Shepper Pty
Ltd ABN three two one six four nine two seven
seven zero eight AFSL four five one two eight nine
Hello.
Speaker 2 (00:01):
My name's Santasha Nabananga Bamblet. I'm a proud yr the
Order Kerney Whoalbury and a waddery woman. And before we
get started on She's on the Money podcast, I would
like to acknowledge the traditional custodians of the land of
which this podcast is recorded on a wondery country, acknowledging
the elders, the ancestors and the next generation coming through
(00:23):
as this podcast is about connecting, empowering, knowledge sharing and
the storytelling of you to make a difference for today
and lasting impact for tomorrow.
Speaker 1 (00:33):
Let's get into it.
Speaker 3 (00:34):
She's on the Money. She's on the Money.
Speaker 4 (00:57):
Hello, and welcome to She's on the Money podcast for
millennials who want financial freedom. Hello, Victoria Divine.
Speaker 1 (01:04):
Oh that's so formal of you, because last week, what'd
you call me last week?
Speaker 4 (01:08):
Vicky D No I knew you would calling onto that.
Speaker 1 (01:12):
Yeah, I'm trying to think grudge. If anybody has a
good nickname that I can call beck, that's like not rude,
but also it's not that great.
Speaker 4 (01:19):
Let me know, I'm very keen to see what people
come up.
Speaker 1 (01:22):
Am I really?
Speaker 4 (01:24):
Okay? So vickid Sorry, I'm going to stop doing that.
This is just the last one I want to throw
in there. But today we are talking about the quarterly
market update, which.
Speaker 1 (01:31):
I'd be very excited about it. I'm going to be.
Speaker 4 (01:33):
I'm so excited. So I guess we'll find out what's
on special at the local stom No, no, no, no.
Speaker 1 (01:40):
We are going to be talking about something sadly far
more boring and farther reaching. I mean, it does affect
the cost of things in your basket at Audi, Like
Audi don't even have baskets, so that was a terrible analogy,
but it does affect the cost of food. We are
going to be discussing what's happening in the economy right now,
beck and what's going on in our community. Because I
(02:02):
sat back a couple of weeks ago and one of
my favorite emails to read as an ex financial advisor
are the market update emails. And I'm still subscribed to
all of these. If you are one of the research
houses that still sends me market updates, please don't stop
just because you heard that I wasn't an advisor anymore.
I get a lot out of them, but they are
arguably some of the driest publications on the entire planet, right,
(02:26):
Like we're talking about share prices and what's gone up
and what's gone down, and what CEO has switched with
another CEO and the backgrounds of that CEO and where
they've come from. Like it's honestly, they're dry.
Speaker 4 (02:37):
That's brutal.
Speaker 1 (02:37):
I like it because it's kind of like I already
have that base understanding of what's going on with that company.
But anybody reading it would be like, what is this victorial?
Why are you excited about it? But what I like
about it is that it keeps my finger on the pulse,
Like I know what's going on, I know how it's
going to work, but I figured what we can start
doing on cheese on the money is like a non
boring version of a quarterly market update. I tell you,
(03:00):
like what's been going on in the last few months
when it comes to economics and politics and how it
all kind of impacts the bottom line. So what does
this mean for you? A lot of things. So if
you're a shareholder, it's going to be impacting your share price.
But if you're back and you're not investing yet, it's
going to impact how much your groceries are. It's going
to impact. You know what your community is saying. It's
(03:21):
going to be impacting political decisions that you make. And
I just think all of us need to be more
educated on this. But until now, the content has been
really dry and really boring. And to be honest, I'm
not going to wake up at six am to get
the market updates on ABC News. Love you ABC probably
the wrong demographic that we're speaking to, right, absolutely, well,
(03:42):
I'm interested to see how you make this not boring.
Speaker 4 (03:44):
But it's just going to be the tone of voice.
It's just going to be tone of voice.
Speaker 1 (03:47):
It's just going to be tone of voice, content around
excited about it and what happens when you're excited and
also really confident about something because people believe you.
Speaker 4 (03:56):
Yeah, absolutely, she's going to trojanhorse us everyone.
Speaker 1 (03:59):
It's basically like gas lighting people with tone of voice
into thinking finance and economics is cool.
Speaker 4 (04:04):
So I feel like everyone has been pretty anxious in
the community as interest rates are so much higher, Inflation
is hectic, and we talk about it every week, so we.
Speaker 1 (04:14):
Do we do. I feel like there's a vibe in
the community that is, you know, I love you all.
Please don't take this negatively, but I feel like everyone's
being a little bit negative at the moment, and I
feel like that's being perpetuated by media, and it does
make you feel like trash when every second day we're
hearing that our mortgages are going to cost us more
and it's harder to get into property because the cash
rate has increased again, and it just it feels bad
(04:36):
when we hear the inflation is at seven point one percent,
and then you have a chat with your employer and
they're like, oh, bet, here's it, and I mean, this
hasn't actually happened to you, so disclaimer, but like, oh bet,
you're getting a two percent pay rise and you should
be grateful for that. Like we're all just a little
bit pissed right Like we're not happy about the economic
circumstances at the moment. But I think something that can
help us is understanding it. I'm not saying don't be mad.
(04:59):
You can add absolutely be mad. But what we need
to remember is the economics goes in ebbs and flows.
There are going to be highs in economics and there
are going to be lows in economics, and right now
we're kind of going through a little bit of a low.
It does feel a bit trashy, but there are also
going to be times where the economy is absolutely booming
and you're killing it. I'm killing it, and we're investing
well and we're just having the best time. But at
the moment, we're just in this circumstance where it is
(05:22):
on the downturn. We don't know when it's going to
turn back up. We can listen to a lot of
smart people talk a lot of smart junk about it,
but ultimately nobody can predict the future. We do think
it's going to go up relatively soon, we do think,
and a lot of educated people say that, you know,
the recession is heading for us, but it's probably not
going to be as bad as we're anticipating. But what
(05:42):
does that all mean? And I guess that's why we're
having this conversation today, V.
Speaker 4 (05:46):
When we talk about quarterly market update, I'm wondering what
is a quarter like? How does that work? And what
quarter are we in?
Speaker 1 (05:51):
Good question, So when we say quarterly market update, the
twelve months of the year are broken down into four
segments of three months each, and there's a few different
ways of looking at it. We could either be in
Q two or Q four right now, So we're in
for a calendar year Q two, So quarter two we've
had January, February, March, so that was Q one. April
(06:12):
May and June is Q two. But in terms of
the financial year, which is what we're going to reference
right now, we're in Q four. So Q four is
because the end of financial year here in Australia ends
on the thirtieth of June, and so a lot of businesses,
a lot of economists, we're all working towards this end
of financial year. Also my birthday, so I like to
(06:32):
think that it's really fancy, but it's one of those
things where you might hear Q two or you might
hear Q four. But in the finance world, we're currently
in Q four because the end of financial year is
on June thirty, so we're currently in the midst of that.
And that's why a lot of people right now are
talking about inflation because on the thirtieth of June, that's
when things are going to be locked in. We're talking
(06:52):
about HEX because the CPI and inflation on HEX is
going to be locked in before the end of the
financial year to make sure that the ATO calculates things. Well,
there's a lot of things that are going to be
wrapping up on June thirty, which means our community needs
to be privy to it. But that's why I think
we'll focus on Q four instead.
Speaker 4 (07:10):
Right, Okay, so what is currently happening right now for
our community?
Speaker 1 (07:15):
First things first, let's talk about employment rates. I feel
like Korea is a topic that we need to be
really talking about, and I think it impacts most people
in our community because they are either employed, looking to
be employed, or are planning to be employed in the future.
So employment rates are at record lows. So this is
a good thing. Of three point five percent. This means
that it is a job seekers market. The need for
(07:38):
new staff and employees in areas like hospitality and tourism
and manufacturing and mining, healthcare, social work, trades and services
has increased, which is a really good thing for the
environment as a whole. As you can imagine if we
give as much context here as possible. We went through COVID, right,
and COVID was a period of significant economic downto our
(08:00):
government carried us for a serious period of time that
was really nice, so we didn't feel the brunt of it.
While heaps of us weren't working, but areas like hospitality, tourism, mining,
health yat they were hit really hard by that period
of time and then straight after COVID like they weren't
recovering very quickly, Like how many cafes did we see
(08:20):
closing down? And there weren't that many hostbow jobs going around.
And to be honest, after COVID, people were really apprehensive
about going back to roles that were quite people facing,
so they didn't really want to do them because they
thought that there was a lot of risk. And now
it has been announced by the WHO, So the World
Health Organization has announced that we're no longer in a pandemic,
which is really really cool, and I think that a
(08:42):
lot of us are feeling that pressure release. I don't
think that it was the announcement that felt like the
pressure was releasing. I think we just started getting back
to this new normal, you could say, and now we're
confident enough to take up hospbow jobs and working tourism.
All of that is starting to pick up, which means
that the economy is basically operating above its full capacity
(09:03):
and there's downwards pressure on inflation, which for US is
actually really good. So that cash rate is going to
come down because employment rates are at a record low.
Speaker 4 (09:13):
Okay, So is this amazing news or is there any downside?
Speaker 1 (09:16):
Look, it's pretty good news. At the end of the day.
We actually want unemployment rates to be at a record
low because it basically means more people have more jobs,
and we want more people to be in more employment
because the more people that are working, the more money
is going through our economy, and the more money that
goes through our economy, the healthier we are. Right, So
is it a good thing? Absolutely it is. Beck There's
never going to be a period of time where it's
(09:37):
a zero percent unemployment rate where absolutely everyone in the
economy has a job, and that's okay. But what you
want to see is that on the lower side during
COVID that obviously peaked and that wasn't good, which meant
that we are now in the economic circumstances that we
are in today. Ultimately, we are in this period right
now where inflation is really high. So we know that
(09:59):
inflation is at seven point one percent and everything is
so much more expensive due to inflation. So in regards
to wages and income in the December quarter, in twenty
twenty two the seasonally adjusted WPI, which sounds really fancy
because beck, did you know if you use acronyms, it
actually makes you more intelligent? I have heard, Yeah, I heard.
(10:20):
So it's actually just the wage price index, so it's
not that sexy, but finance bros will throw around the
acronyms to make you feel silly, and then if you
feel silly, you assume they're smarter than you. Right, it's
not the case at all, but the WPI, so the
wage price index actually measures changes in the price of labor,
so whether labour's cheaper or more expensive. And we know
(10:40):
because of the conversations that our community has been having
and I've been having because as you guys know, I've
been renovating house. So this is probably a good example
of WPI being high. It was so expensive to get
trade's because they weren't that many of them, so they
could charge a premium, so the WPI in construction was
much higher. I think a lot of us can understand that,
(11:01):
and that makes a lot of sense. But in the
December quarter twenty twenty two, WPI rose by zero point
eight percent in this quarter and three point three percent
over this year that is actually relatively high the private sector,
so like private businesses rose zero point eight percent and
the public sector rose by zero point seven percent, so
(11:23):
relatively on par Australia's minimum wage for an adult is
currently sitting at twenty one dollars and thirty eight cents
per hour. This is before tax, or eight hundred and
twelve dollars and sixty cents for thirty eight hour work week.
And to I guess put this into a little bit
of context, the wage price index actually defines an adult
(11:44):
as anyone over the age of twenty one, not eighteen,
So it's not taking into consideration those people who are
kind of like just settling into work. It's actually like
the more settled individuals in our community, which is just
interesting to know.
Speaker 4 (11:56):
That is very interesting, And I think this is a
really good time to take it, quick break, absorb everything,
and come back on the other side.
Speaker 1 (12:02):
All right, let's do it.
Speaker 4 (12:03):
Let's do it.
Speaker 1 (12:08):
All right, we are back, Beck, Are you excited about
this topic yet?
Speaker 4 (12:12):
Look, I'm getting there. It's starting to make sense to me,
so I'm slowly getting excited. What is happening in the
economy right now?
Speaker 1 (12:19):
All right, I will answer that question, But how many
people do you think actually gave any care to what
the RBA was doing and what they did in their
meetings each and every single month until maybe like midyear
last year.
Speaker 4 (12:34):
I know I didn't care.
Speaker 1 (12:35):
You still probably don't care, to be honest, I know
you well enough now. But the RBA is the Reserve
Bank of Australia, right and their job is to make
sure that inflation doesn't spiral out of control for us,
to make sure that cash is always accessible and that
they're doing the right thing right. But essentially nobody cared
about it until it was really really impacting our bottom lines.
They were just bobbing along having a good day. Like
(12:57):
they'd probably put their little press releases out and outlets
it'd be like, yeah, cool, thanks, but we have a
busy news day, like we're probably not going to be
able to talk about the RBA, and they're like, yeah, no,
where is no worries. And then when stuff started to
hit the fan, they're putting out their press releases and
every single media outlet's like, oh my god, can you
get the RBA's media release. Let's see what's going like
we are watching it like hawks. I have always watched
(13:19):
it like a hawk because I'm always interested in it.
But now everybody kind of knows that they meet at
around eleven am every day, and you know that there's
going to be an announcement after that, and I just
wait for this, like I'm so excited about it. Right,
But so many people are now waiting on the results
of their monthly meetings with absolutely baited breath to see
how much they have increased interest rates to counter inflation. Right,
(13:39):
and we know that over time this is actually going
to start declining, which is really good. I do foresee
it going up a few more times. I'm really sorry.
It's not just me saying this, like me saying this
because it makes sense to me. But also according to
leading economists in Australia and the Central Bank, inflation is
expected to continue rising before the end of the year
(14:00):
and even further into twenty twenty three before declining back
down to target range. So target range is between two
and three percent. Context, we're currently at seven point one
percent by approximately twenty twenty four, so we'll go back down.
That's the purpose of increasing the cash rate, because that's
what it kind of counters. It's kind of like levers right,
the RBA know that if they pulled the lever of saying,
(14:22):
all right, Beck, we're going to make cash a little
bit more expensive, it's actually going to stunt inflation. And
that's good for us. So as much as it feels
really trash, it's really good for us in the long term.
That they're kind of like putting the brakes on a
little bit and you know, making sure that as an
economy we are going to be okay, and we'll go
back to a more reasonable rate of inflation of between
(14:43):
two and three percent. And ultimately we don't want no inflation.
That would be bad. That would mean that our economy
is not doing well enough, it's not growing. We don't
want too much inflation because look what's happened. We are
now at seven point one percent, and bet everything's so expensive.
It's growing too quickly. Our wages aren't keeping up with it.
The world is an expensive place to live. Our mortgages
(15:04):
are costing us an armoral egg, like, it's not a
good place to live. But at two to three percent,
that's really healthy economic growth. That is a good place
to be to know that wages are going to increase
slowly over time. Our exports are going out nicely, they're
coming in nicely. We've got some good jobs, we've got
good job growth. Everything is doing well. So we don't
want no inflation because that means no growth, but we
(15:27):
want an amount of growth that we can keep up
with because we can't run this fast. Beck like, I
can't keep up with seven percent two to three. Yeah,
that seems like walking pace. I could probably do that.
Oh yeah, does that make sense?
Speaker 4 (15:36):
Yeah, that does make sense.
Speaker 1 (15:37):
So over the twelve months to the March quarter CPI,
so consumer price index rows to seven percent. We know
that already, but that is showing signs that interest rate
rises are flowing into households and actually dampening consumer demand.
So that basically means, as interest rates are increasing in households,
you're starting to make decisions about cutting back on non
(16:00):
discretionary items. So we're not really going to the movies
as much, we're not really buying that many discretionary items,
we're not buying things just because it's fun. We kind
of cut back and go back a bit to the basics.
The figure, so we're now at seven point one percent,
is actually slightly higher than the predicted six point nine percent.
That analysts and economists were predicting beg but lower than
(16:23):
the thirty year high of seven point eight percent from
the December quarter. That's a good thing. Overall prices on
average rows one point four percent over the March quarter alone.
And the Australian Bureau of Statistics also released the monthly
CPI figures, so Consumer Price Index figures for March, which
came in at six point three percent, which is a fall.
(16:44):
So it's dropped away a little bit from the annual
rises of six point eight percent from February and seven
point four percent for January. So this is a good thing.
We're seeing it kind of starting to come back. We
lack this. This is good news. Are you keeping up,
my friend.
Speaker 4 (17:00):
It's a lot to take in, but I think we're
getting there.
Speaker 1 (17:03):
I don't expect you to get it immediately, by the way.
I know that I'm rattling off this stuff, but it's
one of those things where if this isn't your first language,
finance is my first language. This is going to go
straight over your head. Sometimes you just need to literally
go back a little bit and just listen to it again.
If it's not making sense to you, it's going to
be exposure that gets you there. It's not a lack
(17:24):
of education. You've just never had this language. You've just
never been communicated like this. It's like learning French and
you kind of pick up a few words and we're
talking about dogs and cats, and you might understand, Okay,
they're talking about a dog and a cat, because I
absolutely recognize those two words, but the stuff around it
didn't make sense. Context is going to be key here.
So if you didn't understand what I'm talking about thus far,
(17:45):
I get it, sis, I really do. Prior to me
being a financial advisor, I would have been like, I'm
turning this podcast off. It makes us no sense. But
I promise you all of that is going to make
sense once you go, Okay, I'm over it. I do
know what CPI is, Okay, I'm over it. I know
what the Central Bank is. Okay, the RBA makes sense.
Like all of this stuff, it's just about exposure. Yeah,
if you're not getting it, it's not because you're silly.
(18:06):
I promise you are such a smart person. And while
I say this isn't complicated stuff, it genuinely can sometimes
feel like I'm speaking another language. Listen to it. Again,
I promise. And I just wanted to interject there because
I feel like, genuinely sometimes people are like, what the
hell am I an idiot for not understanding this? No, sis,
you're not. You just never spoken French before. How are
(18:29):
you going to know how to speak French if we
don't practice it consistently?
Speaker 4 (18:32):
Exactly?
Speaker 1 (18:32):
All right back on track. The ABS, the Australian Bureau
of Statistics. You guys know, I am obsessed with them.
If I'm not obsessed with them enough, I'm obsessed with
their social media presence. Go follow them on Instagram. I'm
still trying to work out who's running their Instagram because
they are some of the wittiest people in the entire
world far out. I want to be you. I want
to know you. If you work at the ABS and
(18:53):
you know you, let me know. I'll keep it a secret.
I just want to know, like, I'm not going to
try and steal those people from you. I might, like,
promise I won't if you're nice. But in its recent release,
the Australian Bureau of Statistics noted that the most significant
price rises were in a few things gas and other
household fuels. I don't think anyone's going to be surprised
about that, which soared by fourteen point three percent. Fourteen
(19:18):
point three percent more for gas, that is wild geez.
Medical and hospital services they rose by four point two percent.
Tertiary education costs rose by nine point seven percent. Oh wow,
discoo stent. And domestic holiday travel and accommodation is up
by four point seven percent, which personally I found quite
(19:42):
crazy because I assumed that it would be much higher
than that, because obviously, during a period of time black
we've just gone through with COVID, I thought it would
be with so many international workers leaving our country and
so many Australian workers now taking those roles and arguably
demand higher incomes or less hours or like there's just
(20:03):
been a lot of change. I assumed that domestic holiday
travel and accommodation would be higher. But I think because
a lot of these places are just trying to keep
people coming in the door, they haven't raised prices as much,
and I would genuinely predict that in the future that
is going to go up even more because it's still
expensive to like run hotels and run resorts and run
(20:25):
any type of accommodation like that's expensive, and the burden
that they carry of not being in business for such
a long period of time, I believe is still being carried.
So I would not be confused if you know, in
a couple of months the ABS releases data that says
domestic holiday travel and accommodation is much more expensive four
point seven. I was like, do you mean fourteen point seven?
(20:46):
But that's not the case. I did triple check it,
all right. The Reserve Bank have increased their interest rates.
So the cash rate we've talked about inflation obviously at
seven point one percent, but the cash rate that the
Reserve Bank have implemented try and battle that is now
at three point eighty six percent. So the Reserve Bank,
let's see the Reserve Bank. The RBA is the big dogs,
(21:06):
and they have all the money. They lend their money
to other banks, So like NAB and where's pack comback,
they all go to the RBA and they say, hello, sir,
we're a business and we offer mortgages, but we need
your money, so we will pay you a certain amount
of money to borrow your money and then we will
lend it to our consumers. So we'll lend it to
Beck if she wants to buy a house. The RBA
(21:28):
historically was like, yeah, let's make sure that housing is
really affordable. Let's drop the cash rate to one percent.
Banks will like, heck, yeah, that means that if we
are paying one percent to borrow the money from the
RBA to give to our customers, we could probably clip
the ticket by lacker point five percent. So if you
then bet go down the street and say hey, nab
one alone, they'll go, we can give it to you
(21:50):
for one point five percent, because that means that they're
making back the one percent that they're paying the RBA,
and then they're making point five percent on your interest rate,
and you go, that's a good deal. That's cheap money.
Now the RBA is saying, oh, people are borrowing too
much money. Things are getting wild. We need to stop
people spending as much on discretionary items. You know what
we can do. We can tighten up the belts. We
(22:10):
can actually increase our cash rate to three point eight
six percent, which is going to mean Beck she can't
afford brunches easily. That means that Beck's not going to
be contributing to the economy, which is going to slow
down economic growth. So that our inflation rate goes down.
And what that means is that these banks are now going, oh,
we used to be able to borrow money for one
(22:31):
percent from the RBA. Now we have to borrow at
three point eight six percent. We're not actually making money,
so we're going to have to pass that on to
our consumers. So, Beck, if you were able to get
money for one point five percent, now when you go
down to the bank and say, hey, need a home loan,
they're going to say, look, Beck, we borrow money for
three point eight six percent from the RBA. We still
(22:51):
want to make at least that point five percent. So
now when you get a home loan, the average is
looking more like four point two four point three percent.
A few of them are closer to five percent because
those banks still need to make money, they still have
employees that they need to pay, they still have a
debt with the RBA. It's not banks trying to screw
us over. I promise like your bank is not trying
(23:12):
to put you in the worse off position. In fact,
a bank wants money to be as cheap as possible,
because do you know what happens when money is as
cheap as possible? People borrow more of it, and I
promise you if the cash rate was still one percent,
the bank would much prefer to lend you money at
one point five percent. So they're taking that point five.
Then what's going on now, Because even if they're making
(23:33):
point five and the cash rate right now is three
point eight six which means the bank is now saying,
look back the cash rates three point eight six percent,
I'm still going to tack that point five percent on.
So now it's four point three six percent. So technically
they profit margin identical, but you, as a consumer, can
afford less, so you're borrowing less money. So the bank
is actually making less money in this current economy than
(23:56):
they were when cash was really really cheap. So it's
important to remember it's not the bank's trying to get us.
It's actually just the way of the world and it's economics.
It is not the bank trying to absolutely screw you
over and pass it on. If the bank didn't pass
on this three point eight percent cash rate that the
RBA set, they would go bankrupt beck and that's worse
for the economy, and we don't actually want that to happen.
(24:18):
So as much as that hurts and it's not a
fun position to be in. We actually want that because
it tightens the squeeze. It makes sense. It's not forever, though,
so I think it's really important to remember that nobody's
out to get us. They're actually trying to protect us
by putting these rules in force, and that's why the
cash rate is sitting where it is at the moment.
(24:38):
If you want to know more about that. We actually
did drop an entire episode on the third of May
about investing in a high inflation environment, which I would
recommend going back and listening to. But I hope that
makes sense as to why the world isn't trying to
screw us over. I know we're really negative and it
really sucks, but it would be much worse if they
let you keep your one point five percent interest rate.
Speaker 4 (24:57):
Yes, second, really it makes sense. Sor if it sounds
really silly, bit is that a good thing for my
savings account? In that case, why would that be a
silly thing? Beck, I feel like you've put two and
two together. Absolutely, As the cash rate increases, so is
your interest rate on your savings account. So now is
probably the time if you've been looking from high interest
savings account and you listened to content maybe eighteen months ago.
(25:20):
From me, I'd be like, all right, Beck, high interest
savings accounts are dead, Like you're not even going to
get more than one percent. Now, there are savings accounts
that have four point five percent. That's really sexy. So
if you haven't looked at high interest.
Speaker 1 (25:34):
Savings account in a while because you've been worried that,
you know, ah, they're not worth the time, maybe they
are now so it might be worth looking into. So
you are absolutely correct, because what happens over time is
as interest rates increase and you're paying more on your mortgage,
you actually get more return on your savings account. And
the inverse is true. When you have cheap interest rates
and your mortgagees are cheaper, it actually means that you're
(25:56):
not getting such a good savings rate. So you're correct.
Right now is a good time to be re evaluating
your savings account. Your bloody genius, Oh thank you.
Speaker 4 (26:03):
Okay, here we go. I'm learning something. So V I
hear the banks are doing pretty well.
Speaker 1 (26:07):
They are rolling in it, you could say, which is
surprising because everyone's complaining about how much more they're being
charged on their mortgages and We've talked about this before.
That's actually not got a lot to do with the
bank profits. Like, yes, it does in a way, but
at the end of the day, the RBA sets the
cash rate and then that's how much banks are borrowing
money for, so they're just passing it along to you,
(26:29):
so they're not actually making you know, three or four
percent more. And I think a lot of us have
in our heads, oh my gosh, my bank was charging
me one point five and now they're charging me five
percent on my mortgage. They must be rolling in it, right,
That's not actually the case because they're actually having to
borrow the money at more, so they're kind of just
passing that fee to you, so that profit margin is
not coming from there, which I think is important to
(26:51):
preface before I give this number because it's insane. So
the big four banks, so when we say the big
four in Australia, we're talking about A and Z, NAB
and west Pac. They have reported are you ready, They've
reported a combined sixteen billion dollars worth of profit thanks
to raising the cash rate. So as much as they're
(27:12):
passing it along, it's still helping them. This might see
the budget return a surplus according to Motley Fools. Scott
Phillips though, and I've been consuming a fair bit of
his data recently because he's got a partnership with our
friends Chairsey's. And this is not a sponsored mention at all.
I just really like it. But he's doing the market
update on the Chasea's Instagram and I'm just vibing it, Like, Scott,
(27:34):
if you want to come over and do one for
She's on the money, Like, I just think it's really
good content. Or we could send the community over to
the Chasea's Instagram and I guess they could get it
there without us having to talk to Scott pos we
could be one or the other. I mean, it would
be nice to talk to him at some point, but
I think it's really really interesting just I guess having
these conversations and what it means. And that's why I
prefaced it back, because I was like, look, they've you know, combined,
(27:57):
they've got sixteen billion dollars worth of and a lot
of people might have jumped to the conclusion that, oh
my god, that's because the rates have increased and you know,
they're absolutely raiming us, and like, yeah, nah, Like there's
a balance there, because if I just told you that,
you would have been like, yeah, because interest rates went
from one and a half up to like four and
a half. Well yeah, but they're also having to borrow
money at a higher percentage, so not all of that
(28:20):
is profit right, so.
Speaker 4 (28:21):
They're kind of like making this every single year.
Speaker 1 (28:24):
They're about yeah, like they are bank every year, which
is why, honestly, when it goes back to it, it's
why so many people in the Australian share market like
owning banks, like people like going and buying blue chip
stocks in the Australian share market, which are things like banks,
because they're tried and they're true, and they're tested, and
they're relatively boring, but they have consistent returns and they
(28:47):
pay out dividends, which is like paying out the profit
to shareholders, and ultimately shareholders really like that. And I
really like that. Yes, that's why I earned some banks
like portfolio. That sounds it pretty sweet.
Speaker 4 (28:59):
I'm assuming we're happy about the banks reporting healthy profits.
Speaker 1 (29:03):
We want that because it's a sign of a really
good economy. It means that the banks are doing really well.
We should be concerned when banks aren't churning a good
profit and at the end of the day, like, yes,
we don't want the banks to get rich rich, Like
the economy is really important, you know, community is really important.
But I think stepping away from that conversation about equality
(29:23):
and equity and all of that, because obviously a lot
of people are going to be quite opinionated. Beck they
can go, oh my god, but they should be passing
this on ra rah. They most often are, They're passing
that profit onto shareholders. So each and every single year
when they report a profit, or maybe it's every six months,
it depends on their reporting criteria, they pass it along
to shareholders, and they might reinvest some of that profit
(29:45):
back into building the business, but a lot of the
time it just goes directly to shareholders. And the reason
for that is the banks are already relatively well established
and they don't need to, you know, reinvest significant amounts
of their profit back into their business to grow it
again because they are already there back right.
Speaker 4 (30:01):
I see, Okay, So I just want to talk about
the budget really quickly because right now I don't actually.
Speaker 1 (30:06):
Sell sexy So yeah, like, what does what do you mean?
You don't know? Didn't you on Tuesday Night? Like a
couple of weeks ago, sit in front of the TV
with wine and you were like, well, sub balbo, what's
going on? And then you were like watching it like
the AFL Grand Final?
Speaker 4 (30:21):
Did people do that anywhere in the world?
Speaker 1 (30:23):
I did that?
Speaker 3 (30:24):
You did? That's so sweet.
Speaker 1 (30:26):
Yeah. My husband wasn't that impressed. He's recently got a
new PlayStation five and he would have preferred, absolutely, like
to play the golf game that he go, yeah, look
anything else, Like I thought a golf game was pretty bland,
but like he's been playing this golf game and yeah,
he kept asking me, can we gne that on you?
You can just read the report like, no, sir, this
is so exciting I need to yell at the TV
a little bit longer. Yeah, it's like my sport. I
(30:48):
really like it. I think it tells you a lot
about the government's priorities. It was interesting because obviously the
Albanezy government has prioritized cost of living relief, which I
think is really sexy. So we're looking at things like
housing and healthcare and clean energy measures and the budget.
Not everybody is happy about the budget. I think a
lot of people have seen it as a bit of
(31:08):
give and take like. I've heard a lot of comments
of people being like, oh my gosh, they're investing in this,
but that's taken away from X. That's not how the
budget works. You know, budget gets allocated in line with
priorities of the government but also the community and taking
lots of different factors into consideration. They're not looking at
it and going, oh, should we allocate to Beck or
Victoria like, they're not comparing the two. They're looking at
(31:31):
that situation and how much funding it would need and
then looking at the total budget and what they can allocate.
They're not kind of, you know, looking at it going
let's take away from Beck like. And I think a
lot of people when the budget comes out feel really attacked.
And that's not necessarily what's happening, but it's to their own.
We can all have our own opinions. But essentially, the
(31:51):
Albanese government has said that they're going to deliver get
this quote, a stronger economy and a fairer society. Ah,
I mean whatever. That just feels very political and I'm
very much of well, put your money where your mouth is, mate,
we walk the walk. I don't care about the talk, like,
just show me what you're going to do. So let's
talk about the budget a little bit more deeply. Do
you want to do that or is that too boring? Ah?
Speaker 4 (32:13):
Look, I actually want to know.
Speaker 1 (32:15):
It probably will be boring, but I really want to know.
Let's like pull out some headlines that I think we
should converse about. What do you recompects that. So recipients
of the Commonwealth Rent Assistant, So the CRA, which is
an existing program which about one point one million low
income Australians are eligible for, they're going to receive more
financial support. I think that's really important. So the CRA
(32:37):
payment is actually going to increase by fifteen percent, and
in a world where our inflation rate is sitting at
seven percent, like, that's probably pretty welcome. Yeah, definitely, So
that's good. The government's also going to reward small business owners.
They've got a number of different financial measures that they're
going to introduce. So the instant Asset Right of threshold
is going to be temporarily increased to twenty one thousand
(33:00):
dollars from the first of July from this year. So
that means that if you have a small business which
get this peck. I think you'll laugh at this if
you have an annual turnover of less than ten million dollars,
you're a small business, Like, so.
Speaker 4 (33:13):
What what that's literally everyone?
Speaker 1 (33:15):
Well, I just thought that small business would end it
like a million, but it doesn't. It ends at ten
million dollars, So twiggle room. Yeah, right, Like imagine being
like I'm a small business owner and you're earning like
nine million.
Speaker 4 (33:26):
Dollars Like what wow?
Speaker 1 (33:28):
Anyway, unrelatable. But they will be able to instantly deduct
the entire cost for certain assets that cost less than
twenty thousand dollars, which are first used between the first
of June twenty twenty three and the thirtieth of June
twenty twenty four. So the twenty thousand dollars threshold applies
to each asset. So small businesses can take advantage of
this measure to buy multiple assets, which is kind of good. Beck,
(33:50):
and I guess to put that into a little bit
of perspective for you, Like, let's say you have a
beauty business and you want to start doing laser Like
this will increase my revenue, right, Like having a laser machine.
If you buy that, you're going to get an instant
asset right off on that. So like the tax comes
back to you. So it's actually relatively sexy and can
be for a lot of businesses worth up to like
(34:11):
thirty percent of the value of that item. So that's
actually very good. So it's not like, oh yeah, instant
asset right off when you're kind of like, well, what
does that mean. It means that, like you can write
off the tax on that item. It doesn't mean you
get that whole item for free, but like you can
write off that tax and it's going to put you
in a better financial position. So instead of, you know,
as a business owner, we pay thirty percent on tax
(34:34):
as a general kind of blanket rule. Obviously, there's lots
to it, and you need to talk to your account
and if you're going to you know, take this on,
but it's important to understand the instant asset right off
means you are kind of, let's call it, like, in
a very basic way, getting a really big discount on
an asset that you need to purchase for your business
to grow.
Speaker 4 (34:51):
Gotcha, And you can purchase as many of those under
twenty thousand dollars assets.
Speaker 1 (34:57):
Yeah, which is kind of sexy. I mean, OK, there
are a lot of people in our community who aren't
so excited about the instant asset right off because this
year they're scrapping the instant asset right off for cars.
So a lot of small business says, yeah, so it's
not completely scrapped, but it goes back down to that
twenty thousand dollar mark, Whereas right now you can ride
(35:18):
off a car for up to fifty nine thousand dollars
each financial year. So that's going to be, you know,
scrapped on the thirtieth of June. So I mean, you're
probably not always looking at carsales dot com dot U.
I'm not either, huh. But it's just an interesting thing
to talk about because at the moment, lots of cars
are hard to come by because it's in the lead
up to June thirty, and lots of small business owners
(35:40):
are kind of like snapping up the SUV they've always
wanted to buy, or like snapping up a car for
their business because their accountant has called them and said, hey, Beck, like,
if you were planning on buying a car, now would
be a great time because if you buy it after
the first of July, like you're not going to get
basically sixty thousand dollars tax, right off, it's going to
drop back down to twenty and obviously that's pretty attractive.
(36:02):
So lots of cars are off the market. So I
don't know what you'd call him, my brother in law.
Like my sister's partner's currently looking for a car, let's
call him brother in law. He's probably not rather alike,
but sorry, Alex, like they're not married, but that's okay,
Like I'm manifesting and manifesting anyway. They were looking for
an amok, which is like a big training car, not
one left in the country. Really not why you can't
(36:25):
get it before June thirty. It's just interesting to see
how those things work because you wouldn't think about it.
But if you've been looking for a family car and
you just can't seem to find one, my friends, that's
because all the small business owners have already gotten on it.
Speaker 4 (36:37):
I think this is probably like a tax question, but
one for the taxman. I should say a tax woman.
If you tax persons, I'm sorry, I should say a
tax person. So if it's under twenty thousand dollars, I'm
assuming because it has to be like new from the
first of July. You can't get a secondhand car I'm
assuming is that right?
Speaker 1 (36:53):
You need to talk to the taxman, because I think
it depends on that, yeah, or the person or whatever
we're doing. Like, I'm just trying to do the right thing.
I'm just trying to answer the question exactly the same.
Oh my gosh, I just doing my best, okay, and
so even it's my best should be enough, like, oh
if I talk to the tax people, Yes, it depends
because I think that there's a lot of semantics in
(37:13):
it about you know, how old it is and what
that means and how that works. Because I have bought
a car before in our business and been able to
write it. Often it was secondhand, and I'm very big
as an advocate I suppose of buying secondhand cars because
like brand new cars lose a lot of their value.
And I'm you know, I'm a money gal. So I
think have a chat with your accountant and they can
give you the specifics. Obviously this is not a tax
(37:35):
planning episode. I just think it fits into this conversation nicely.
And as you guys know, I love a bit of context,
like I love being able to go, oh, did you
know this? This and this? And there's no I'm a
rocks left. I have no intention of ever buying an ammarok,
but I feel smart at knowing that you know, yeah, same.
We're going to stop talking about the tax side of
things very shortly because I actually am planning to do
(37:55):
an entire tax planning episode really soon, because it's coming
up to tax time and I want to make sure
that we're in the best possible position.
Speaker 2 (38:01):
Beck.
Speaker 1 (38:02):
Yes, small to medium sized businesses, so obviously medium are
going to be more than ten million dollars worth of turnover.
Wild congratulations. But these businesses and I like this are
going to be encouraged to buy energy efficient fridges, electric
cooling systems, batteries and other assets that to quote, support
electrification and more efficient use of energy. Very good. So
(38:24):
companies with a turnover of less than fifty million dollars
unrelatable content will be able to deduct an additional twenty
percent of the cost of depreciating assets that are eligible
under the Small Business Energy Incentive measure. That's a mouthful.
Speaker 4 (38:39):
That is a mouthful.
Speaker 1 (38:40):
What is a depreciating asset.
Speaker 4 (38:43):
An asset that you buy and then immediately it loses value?
Speaker 1 (38:47):
Amazing and that happens over time. Check it out. Are
youshes on the money?
Speaker 4 (38:51):
Oh my goodness to me, I could pretty much just
take over from this point.
Speaker 1 (38:54):
But I think it's important to talk about that, right
because when we talk about instant asset ride offs, that
means that you're claiming one hundred percent of that depreciation
in one financial year. If you do that, you can't
claim it over subsequent years. But each and every single year,
your asset will decrease in value and at some point
it kind of becomes zero and you can no longer
(39:15):
claim it because it's not endless, and that asset essentially
isn't worth much anymore. Right, So it's important to understand
that over time. If you, as a business buy an
air conditioner, it's a two thousand dollar air conditioner. Next year,
technically to the business it might be worth eighteen hundred dollars,
and the year after that and the year after that
just decreases and decreases, and then it might be worth
absolutely nothing because it's a thirty year old air conditioner.
(39:37):
You know, no one's going to pay full price for that,
So the taxman builds that in because otherwise, if your
assets didn't depreciate over time, beck you'd end up buying
a two thousand dollar air conditioner, and then that adds
two thousand dollars to the value of your business. And
then in a couple of years you might buy a
few more things, and then you have this business that's
valued at like, you know, one hundred thousand dollars when
(39:59):
you I don't actually have one hundred thousand dollars worth
of assets you could recover. Does that make sense? So,
like I couldn't sell those things for one hundred grand.
So the taxman's like, let's just be reasonable about this
and actually claim what you're losing on those assets, which
is quite helpful.
Speaker 4 (40:14):
Yes, okay, that is helpful and very kind.
Speaker 1 (40:17):
You should just call the tax people kind. Okay, weird. Look,
I love the tax people. Let's leave it there. Ok.
Let's leave it just in case they come for us.
All right, Let's move on from small businesses. So base
rates of supportive payments, so things like job seeker and
Youth Allowance and the Partnered Parenting payment and OZ study
is going to rise by forty dollars a fortnite from
(40:38):
the twentieth of September. So there's been a bit of,
like I guess, backlash from that because forty bucks beec
it's not really going to get you much. Yeah, I
feel like on job seeker or youth allowance or your
parent or like you're doing or study, like forty bucks,
what's that going to get you nowadays? Literally? Not that much?
Speaker 4 (40:56):
Not that much.
Speaker 1 (40:56):
Like I feel like nowadays, you go to the supermarket
with a fifty dollars crisp note and you're like, that's
so much money, and then you get like two things
and you're like, where did this money go? So I
feel like that was a bit low. Obviously there's lots
of like maths and analysis behind this, and they feel
like that's sufficient, but there's obviously a fair bit of
backlash because they do deserve more. Like if you're in
(41:17):
that situation, forty bucks in a rising inflation environment not
going to do all that much. Mats not enough exactly.
So the government will spend three billion dollars on direct
bill relief, So that's quite sexy, co funded with state
governments to eligible households including pensioners, senior healthcare card holders,
and family Tax Benefit A and B recipients. So the
(41:39):
government claims more than five million households are going to
have up to five hundred dollars deducted from their power
bill next financial year. Oh that's a big deal. I
think that's pretty good, especially for people who, you know,
if you're a pensioner or you have a senior healthcare
card holder, like you're going to need that type of relief,
And I'm sure that that will take a bit of
pressure off, Like energy these days is so expensive, and
(42:02):
we already know that, Like, let's be honest, let's stereotype
for a hot second here, My nanna never turns her
heater on like she wants to be warm all the time.
I swear only one room in her house is ever heated.
And they're already so careful about these things. So I
think that that might take a little bit of pressure
off the people who you know, aren't doing incredibly financially
but still deserve to have that relief because look, honestly,
(42:24):
it's a basic human rash. Yeah, all right. Next up,
we have single parents. They're going to be able to
claim the single parenting payment until their youngest child turns fourteen,
whereas the old age used to be eight years old.
So that's a significant jump in age, and I think
that that will be really helpful, and they plan to
triple the bulk billing incentive that GPS receive, meaning it
(42:47):
there'll be more common consultation types which doctors can choose
to bulk bill for, which I think is really sexy.
I ried doctors and I've been having this conversation recently,
and they're like, look, that's not actually going to do
as much as you think it is. And I think,
you know, let's take all of that with a grain
of salt. I think that the government stepping in to
kind of triple the bulk billing incentive is good, but
(43:07):
there's obviously a lot of other pressures on doctors to
be able to bulk bill and actually be able to
afford it, because they're paying like rent, and they're paying
you know, their nurses, and they're paying everything else, and
they're in the firing line for the cost of living
crisis as much as we are. And I'm not saying
that they're not doing well financially, like if you're a doctor,
you probably have a relatively good income. As a stereotyping thing,
(43:28):
but I think it's worthy of mention because I think
a lot of gps are going to go v like,
that's not going to fix it, like everything's not going
to go back to being bulk billed. But that's our
government trying to take a little bit of pressure off
that system, so hopefully things can be a bit easier
for the people who need it to be easier. And
I think that that's, yeah, probably a good place to
leave it, my friend, sounds pretty good. You reckon, Let's
(43:53):
go absorb it.
Speaker 4 (43:53):
And see you guys soon, See you.
Speaker 1 (43:55):
Guys next week. The advice shared on She's on the
Money is general in nature and does not consider your
individual circumstances. She's on the Money exists purely for educational
purposes and should not be relied upon to make an
investment or financial decision. If you do choose to buy
(44:17):
a financial product, read the PDS TMD and obtain appropriate
financial advice tailored towards your needs. Victoria Divine and She's
on the Money are authorized representatives of Money. Shepper Pty
Ltd ABN three two one six four nine two seven
seven zero eight AFSL four five one two eight nine
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