There’s been a jump in Australia’s unemployment rate, rose to 4.5% in the month of April.
This means the Australian economy lost or shed 18,600 jobs, which would appear to signal
a slowdown in what’s called the labour market, in other words, where you and I get a job.
Queensland’s rate rose from 3.7% to 4.2% seasonally adjusted.
Well, what does that mean?
We’ll find out now from Peta Tilse, who’s Head of Funds Management at NatGen.
Peta Tilse, first of all, the Australian unemployment rate.
Steve, good morning.
Look, we’re weakening, I guess.
We’re not in dire straits, but we’re weakening.
The economic picture is weakening.
The unemployment moved from 4.3% up to 4.5%.
That was the national number.
So 33,000 people out of work, I guess, over the last month.
What about the Queensland figures, Peta Tilse?
Yeah, so that also rose.
The actual monthly number went up half a percent, but they look at this sort of trend number
and that was pretty flat.
So that was sitting at about 4.2%.
So okay, probably better than the national number, but okay.
Interesting point though, I was talking to someone yesterday that’s got a small business
and he was looking for someone just for 15 hours a week and he had 140 odd people apply
for this job.
Here in Brisbane.
Wow.
Here in Brisbane and he nearly fell over.
And I said, so what’s happened previous?
And he said, oh, maybe four or five people apply.
I don’t know whether it’s an attractive job.
I don’t think it is.
And it’s just a casual job.
So I guess things are just sort of softening.
We’ve got the instability in terms of fuel prices and what’s happening with the Straits
and Hormuz.
And then we’ve also got whatever’s going on with this federal budget and where that all
lands.
So it’s definitely a bit of an uncertain time, I’d say.
But interestingly from this data, the Invertecom is a good part of the news, I guess.
It’s not a done deal that the Reserve Bank will lift rates in June, which is what a lot
of economists were thinking.
It’s possible they might wait and see another month or so and maybe push out any further
increase to maybe August.
My guest is Peta Tilse, head of funds management at NatGen.
He’s walking me through Australia’s latest unemployment figures and Queensland as well.
So the unemployment rate is now 4.5% nationally, 4.2% for Queensland.
Peta, you once told me about the trimmed mean.
I want you to tell me about seasonally adjusted.
So Queensland’s unemployment rate rose from 3.7% to 4.2%.
When an economist says seasonally adjusted, what are they saying?
What does that mean for a layman like myself?
It just kind of factors in things like time of year or type of month.
So a month like February’s got less days to count or time of year.
In April we had Easter holidays and things like that.
Right, okay.
Nothing major.
Nothing major, yeah.
But the trend is more, so some months you might have more people not working because
they think, oh well, I’ll stay home on school holidays with the kids versus other times of the year, I guess.
Okay.
Now these figures would have been taken pre the federal budget as well.
So any effects coming as a sort of fallout from the federal budget has not trickled through yet.
Correct.
And it’s really interesting.
I guess it depends on what side of the fence you’re on with all this sort of stuff.
But I know accountants are very busy and getting a lot of calls at the moment because there’s
and also people with their wills.
So yeah, it’s really stirred the pot, this particular budget.
So there’s employment opportunities if you’re an experienced and retired accountant.
Correct, or a valuer.
Or a valuer.
Because people have to get their businesses valued or houses valued or, you know, so there’s
a lot of work for values, I think, coming if the measures that were announced get passed.
Peta Tilse, thank you very much for your time.
Pleasure, Steve.
Peta Tilse is Head of Funds Management at NatGen.

So in studio with me is Peta Tilse. Peta Tilse is Head of Funds Management at NatGen.
Peta, thanks for coming in.
Thank you, Steve.
Also with us is Tracy Norris. Tracy Norris is with Picture Partners. Tracy, thanks for joining me as well.
Thank you, Steve.
How would you describe your work and role at Picture Partners, first of all?
I am a partner in private practice, predominantly in superannuation, advisory and private clients.
So taxation, SMSF, superannuation, advising around retirements and wealth accumulation.
Thank goodness you’re here. Peta, how would you describe your role at NatGen?
Definitely not that. So it’s funds management. So I deal with raising capital essentially for investments in property.
So you’ve got a good lens of people here.
I’m absolutely delighted. So I’m going to play you 20 seconds of my interview with Dr. Rand Lowe from Bond University before.
He described this as a Robin Hood budget to me.
I’m only going to play you an excerpt because he was kind of shocked at the triple hit baby boomers or older people have just received.
Let me play this.
I’m honestly surprised that he’s taken a huge hit three times in a row at Where the Wealthy in Australia offer and store their wealth,
which is real estate, superannuation and also discretionary trust.
So he is right in terms of it is ambitious because it’s really hitting the wealthy where I would say it hurts and three times in a row.
Three times in a row. Now I’m not sure you guys see it as ambitious.
How would you describe what you’ve been finding out after going through the budget papers, Peta Tilse?
I wouldn’t characterize it as Robin Hood. I’d be characterizing it as robbing Peta, not even to pay Paul, just robbing Peta.
Really? Okay. Tracy Norris, what about yourself? How would you describe it?
Look, the budget’s interesting. The fact that superannuation has been carved out and it doesn’t get hit through these CGT reforms is quite
contradictory to the fact we’ve just gone through four years of superannuation tax changes where there seemed to be this impetus where they
wanted us to take money out of super because it was too concessionally taxed.
But then if you move it out, you’re going to get taxed more under this budget.
So then everyone wants to keep it back where it originally started. So I’m a bit confused really.
The body, the spokesbody for superannuation funds has welcomed their decision to exempt superannuation
investors from changes to the capital gains tax, saying that the budget’s a win for 1.9 million Australians
with a super account who value stability in super tax settings.
Yeah, look, it is a long-term hold. So stability is really key if you’re committing to putting some money away for 40 years.
The constant changes get a little bit tiring. So yeah, it’s nice that there’s no further changes on top of what we’ve been dealing with.
But some of those other CGT changes for mum and dad investors are a little tough.
What are they? Roller, give me an education please, Tracy Norris.
A quick snapshot.
Thank you.
So we’re removing the 50% discount is apparently what we’re going to do.
And we’re going to go back to the 80s and we’re going to index capital gains.
So you only pay tax on the amount of the gain that isn’t represented by CPI inflation.
That can be quite punitive when you’ve got high growth assets that you’ve taken the risk on
and invested for a longer term because you took the chance that there would be growth, but you weren’t certain.
And when you have a capital gain, it’s really lumpy. It occurs in one year.
So where you’ve got a minimum tax then that they want to impose on capital gains of 30%, not a maximum tax of 30%,
I don’t really see that it’s about equity. It’s just a bit of a cash grab.
Because if it was a maximum 30%, you could kind of live with that a little and say, OK, well, that’s kind of averaging it over your hold.
Not quite as bad. So that’s tough.
And then pre-CGT assets, ouch, they’ll be in the scope of the net.
What sort of things would they be?
So if you’ve got property that you’ve held since before 1985, so long term hold,
previously those assets were forever exempt from capital gains tax.
But now from 1 July 27, it’s proposed that they would also come into the net of capital gains tax.
We don’t exactly know how they would deal with that pre-CGT proportion and the post.
But that’ll be the detail that we have to wait and see.
So what does someone who’s managing their own super, their own retirement, need to consider?
Well, we’ve put your point that this is not financial advice. You need to get your own financial advice.
But what do you think, as an expert in this area, think they need to consider, Tracy Norris?
Look at or examine more closely.
Look at closely. Well, we all know the power of compounding if you’re looking at investing, right?
And that’s why we invest, is we want to take some capital growth. We want some yield.
And together it adds together nicely to increase our self-sufficiency and provide for us and others that we may love
for opportunities that we want to have.
The people who are building for the future.
Yeah. But when you’re looking at a super fund, that looks to be potentially the best place to have capital growth
under these new reforms rather than holding it personally.
So what do we do? Do we make the decision that we invest all our eggs in that super basket
so that it has a better compounding effect by lower tax leakage,
which means you’re locking your money up and your circumstances can’t change?
Or do we accept that as individual investors we pay more tax,
which means our compounding won’t happen as quickly and you’ve got to put more away to get the same outcome?
I’ll get you to put your headphones on when you get a moment.
I’ve got a listener who wants to get some clarity around something.
Peta Tilse, what stands out to you, Peta Tilse, specifically around investing in property?
So when I was looking at this budget, you come from the lens of what are you trying to achieve?
Intergenerational fairness is what the Treasurer says.
So I had a son come home last night and I said,
oh well guess what, you’re going to be paying at least 30% tax now on your crypto, on your shares.
Don’t tell young people that. They’re going to be paying 30% on their crypto.
But that’s the thing. I mean he didn’t even know about the budget or whatever
and the point is you’ve got to be aware of these things.
And he said, well how did that happen? So that’s bad.
Anyway, I digress. But from a property perspective,
I guess what the federal government was trying to achieve is this fairness and getting people into houses.
The problem is demand is high and supply is low.
And I was just talking to Tracy earlier and just saying even here at South Brisbane,
back in 2018, banks would not lend to people wanting to buy apartments here because there was such an oversupply.
So what has happened between 2018 to today? It’s population growth.
Massive.
And where has that come from? That’s come from mostly net overseas migration
and people on various types of visas, etc.
So really, if we need to just catch our breaths rather than just go running in and taxing everybody
right across the board but pretending it’s a Robin Hood moment,
we really need to dampen that demand.
Dampen demand and increase supply of houses?
Yeah, which is economics 101.
And does this budget do that?
No.
My guests are Peta Tilse, head of funds management at NatGen, and Tracy Norris from Picture Partners.
Peta, I’m going to come back to you specifically in a moment about the $2 billion that they said was in there to help infrastructure.
Tracy, Gunta from Samson Vale, you have a question, you want to get clarity on something. Gunta.
Yes, Steve, thank you for taking my call. I’d just like to know if the CGT tax changes others, grandfathered?
Grandfathered because I looked on the internet, so I’m saying 21st July 2027.
Up to then it’s the 50% after that, it’s the CPI. I’m confused.
You can’t work out whether CGT is grandfathered or not?
Yeah.
Okay. Tracy, can you help clarify that?
I can. So your capital gains between now and 30 June 2027, you can still apply the discount.
So you will get that grandfathering if you are selling assets between now and then.
But gains that are happening after 1 July 2027, we’re going to be looking at new rules potentially.
Does that clarify at least for you, Gunta?
No, no, no, actually. So if I bought a property say in 2013 and sell it in 2030, how would the gains be calculated or the tax on the gains?
Yeah, okay. So I think we’re looking at a blended rule then, Gunta, which means that it’s not addressing their…
They’ve got to reform reducing regulatory burden and simplifying the tax system. I don’t think that’s achieved.
Right.
Because we’re going to have a blended calculation, which means we think that there will be an element of discount you can apply to some of that gain,
but then you may have indexation that will apply to the latter part of your gain, whether that’s pro-rata days or whether it’s a market value approach.
We’re not entirely certain until we get the detail.
That’s not just Gunta that’s not clear.
No, unfortunately.
So Gunta, by the sounds of it, you need to get your own specific advice. You need to sit down with your own advisor and work that out.
So Gunta, thanks very much for your call. 1300 222612 is the phone number.
Although we stress you need to get your own specific advice for your own specific circumstances.
My guess, although they’re experts and professionals, they’re not giving personalized advice. They’re just giving their overview of the budget.
Peta from NatGen. So $2 billion in this budget to supposedly speed up housing, to solve this problem of supply, to help with sort of infrastructure around housing.
You’re skeptical that it’s going to achieve anything. Tell me why.
Well, $2 billion, it’s going to be spent over 10 years.
So that’s $200 million a year. That’s not a lot if you’re really being ambitious and wanting to push this sort of forward and quickly.
Exactly. Putting that in context, we spend annually roughly on Medicare about $35 billion per annum, NDIS $55 billion per annum, and the Australian debt we pay about $30 billion per annum.
So a $2 billion program over 10 years is not probably a lot for the whole of Australia to be tapping into, to be freeing up all this land.
All right. So I could break it down. So Senator Murray Watt said there’s $500 million over 10 years for reforms to our national environment laws, which will help deliver faster approvals for housing, energy and minerals projects.
He then says 105.9 over four years to provide better access to information and improve the user experience for proponents through the use of AI and better access to environmental data.
Well, we saw what happened with the BOM website, didn’t we? So let’s see how this plays out.
Bureau of Meteorology website. I don’t think we’ve got to the bottom of that entirely yet.
$70 million over four years to fast track approvals with states and territories, including priority areas like housing, energy and critical minerals.
This will include establishing bilateral agreements and delivering landscape scale approaches through strategic assessments and bio-regional plans to balance development and environmental protection.
Can you interpret what that means for me? No, you can’t either. Okay. All right. I could go on, but this was what made up the $2 billion, apparently.
Yeah. And that’s why it’s I mean, it is a very complex area. And that’s why. So to build a two bedroom apartment and one of these buildings around us here at South Brisbane, right?
Each one of those apartments, I think we’ve spoken about this before, costs in these days, $1.5 million to make.
Minimum. Minimum. Minimum. Yes. So they’re not going to be selling them for $800,000.
They’re going to be selling them for greater than one and a half million dollars per apartment.
So that’s not affordable for a lot of people that are locked out at the moment of the housing market.
That’s Peta Tilse, head of funds management at NatGen. Let me go back to Tracy Norris from Pitcher Partners.
Tracy, amongst the discussion groups around investors, hedge fund people and the like, the talk is now because of the change in capital gains tax.
And because capital is global, that now the incentive is actually to get your money here and not invest it in Australia and send it overseas.
Can you speak to that at all? Yeah, sure.
I mean, there’s a lot of thought around what yield will investors be chasing now, because if you’re taxing gains more highly, what does that look like from a return point?
And for those in Australia, we have tax on capital gain on our worldwide assets.
So even if we invest overseas, unfortunately, that’s still captured in the net of making good income here in Australia.
So if you have a gain on a foreign share or if you have a gain on foreign investment, that still will be captured here as an Australian tax investor, unfortunately.
Peta, can I come to you with a question from a listener, Anne, who says an existing investor, long term landlord to a string of tenants, some good, some bad.
She says, I think I’ll be worse off unless I sell before the 1st of July next year.
And that’s what Tracy was sort of talking about before about that capital gains discount.
That’s what they’re talking about, changing it as of July next year.
Right.
So we’ll still be, from what was said in the budget, we’ll still be under the existing arrangement up until then.
And then we kick over to that inflation adjusted capital gains tax treatment.
So Anne’s right.
Yeah.
And particularly as a landlord too, Steve, because the negative gearing, it will be grandfathered for those investments that you’re in now.
But if you’re planning on entering new properties, the negative gearing is going to close out except for new builds.
Starting today, I think, isn’t it?
Yeah, since budget announcements.
Since last night, since 7.30 last night.
Yeah.
All right.
Joel from Brisbane has a question.
Could we explain how removing negative gearing will help first home buyers?
Wouldn’t it be better to remove capital gains, asked Joel.
Can you speak to that at all?
Oh, a little.
Peta’s probably done a lot more research on that.
Peta, do you want to look at that?
Well, I guess I’d probably comment.
Look, back in 1985, I think I was 11, so I wasn’t aware of this.
But apparently Paul Keating in 1985 did a similar move.
And the unintended consequence of that was 1% vacancy rates in Sydney and Perth.
Yep.
And then in 1987, I believe it got wound back.
So it’ll be interesting to see how this plays out in terms of the tinkering with negative gearing.
That’s really not clear.
It’s not clear the federal government’s going to achieve any of what they’re claiming.
No, that’s right.
And people have losses in property, but they’re willing to withstand that to get that sort of capital gain at the end of the day.
Right.
And a lot of Australians invest in property because that’s all they know.
They didn’t have access to shares back in the day.
You know?
Yeah.
They were literally, oh, there’s a house down the street and, oh, well, I know that.
It was a simple investment for them.
They understood it.
Yeah, correct.
Okay.
Tracey, Mary of New Farm asked, could I ask, if you could help, what would be the impact of tax changes on share investments?
Is there anything you can say?
Yeah, so with the share investments, you can still negative gear those.
So if you want to take a margin loan out on your shares, you know, that’s still allowed.
That’s okay.
Wow.
Just not property.
We’re protecting an asset class, but we can have a margin loan over our shares.
But the capital gains laws will also apply to shareholdings.
So I was looking at this last night with respect to my sons as well, who I tipped them into Commonwealth Bank shares when they were young with birthday monies and said, here, you need to start saving.
This is what shares look like.
And you can go visit the bank and, you know, be an owner.
But anyway, they’ve got some CBA shares, which I also put them into dividend reinvestment plans.
Bill Hardley now, when you think about, okay, all of those dividends are calculating the capital gain when their index will be painful.
But anyway, what it looks like is the CPI growth since they’ve had these shares compared to the discount, the capital gains tax is a little bit offensive for them.
For young men, they don’t have a significant marginal tax rate.
Yeah.
And under the new rules, they would have a minimum of 30 percent tax that have to pay on a capital gain.
So it’s like, how do they actually then save enough to create a housing deposit?
This was their way they were saving for a housing deposit.
Yes.
Because house prices aren’t coming down.
Yeah.
So, Mary, I think the issue around shareholding is that it’s more liquid.
It’s going to be easy to divest out of and you can match your needs easier with shares because you don’t have to sell a whole corner of the house.
You’re just selling a parcel.
Right.
But the reality is the capital gains will make it hard to get ahead and to reinvest and take opportunities.
So, Philippa asks, is the capital gains tax on owner-occupied homes or just investment properties?
Just investment properties, I think, Philippa.
That’s right.
That’s correct.
Yeah.
We haven’t got to our own homes yet.
So whether you want to gild your bathroom in gold.
Do it now.
Do it.
Which is what people are saying is frustrating about this.
So, Peta, a lot of my listeners are playing with crypto.
Yes.
They now have a tax bill coming.
They do.
Yeah, absolutely.
They’re captured exactly by this, exactly that 30 percent that Tracy just mentioned.
So I think it’s pretty sad that we are taxing savings that you’ve already paid tax on to
save.
Like that money came from somewhere and that’s usually from your hard work, which you’ve
already been taxed and now you’re getting taxed again.
Gosh, why aren’t we reigning in spending?
This budget is in a structural deficit.
We’ve got to 20, 30 something, I can’t even remember.
A decade, yeah.
Yeah.
A decade, a structural deficit for a decade.
Every year.
Assuming everything goes to plan.
Yeah.
And the assumptions, the assumptions within that, like they’ve got stronger growth assumptions
than the Reserve Bank.
The smartest economists in the land are in the Reserve Bank, you know.
Like I don’t feel like Treasury’s quite, well Treasury’s just painting a story, but anyway,
I’ll probably get in trouble by someone here.
But anyway.
You be you, Peta.
Take no prisoners.
Really, we’re growing debt every year by $30 billion and that’s insane.
Like we’ve just increased the tax intake in one fell swoop with all of this and here we
are still spending.
Any final statement you’d like to make, Tracy Norris?
Look, I think that the claim that it’s addressing intergenerational equity is a little ambitious
in my thinking because if you want to address intergenerational equity, that means equity
and fairness across the board.
And I think creating minimum tax rates of 30% with non-refundable credits around family
trust taxes and capital gains now being potentially indexed again and subject to highest marginal
rates of tax doesn’t address that when you make an investment choice, you’re going for
a longer term sort of outcome and maybe an average tax rate of 30% is more fair and equitable
than the ambitious budget we’re talking about.
Why didn’t they try and rein in spending at all?
Any idea, any thoughts?
Probably too hard.
Too hard for them.
Politically too hard.
Politically, but it’s insane.
Like there’s I think about $16 billion worth of savings coming with the NDIS, but they’re
still spending and that’s in outer years.
And you can tighten things up and have better rules in place and register operators and
get rid of some of that fraud.
I appreciate you both coming in.
One of my listeners Megan asked, you have a testamentary trust in your will with your
husband.
I think you need to get professional proper advice Megan.
It sounds a bit complicated without knowing the circumstances.
In the meantime, Tracy Norris from Picture Partners and Peta Tilse from NatGen, thank you very much to both of you for coming in.
Pleasure.
Thank you, Steve.

So what are the big drivers of the inflation rate?
Most of it’s being blamed on the Middle East but it’s been driven before that.
Things have been going up well before that in a range of areas. So let’s go to
Peta Tilse. Peta Tilse, both a professional and raising
multiple children, head of funds management at NatGen.
I spoke to Peta earlier on and said look what are the big drivers of this?
Morning Steve. Just to recap the inflation that came out yesterday
surprisingly was actually slightly better than expected
from what economists were expecting. Sadly we’re above
that 4% level. The Reserve Bank wants the 2 to 3 percent
band. In terms of what the key drivers were
it was actually energy costs unsurprisingly. Electricity, the power
that you and I pay when we turn on our lights and
appliances at home. Yeah correct and then when you look at that
over a 12 month period it’s actually a 30
over 30 percent increase. So if we cast our minds back to
to this time last year there was a you know all those
rebates and so forth washing through the system so a lower base I guess
but now we’re you know 30 percent higher so to speak. So
this is all impacting families because it’s a non-discretionary spend. You can’t
not turn on the lights. So how does a mother of three kids
feel this? How will a mother of three children
feel the effects of inflation? Inflation seeps through everything like
it measures what we use all day every day and
what it’s affecting is your spending power essentially. So
when you go to the shops I literally did my my Woolooz order the other day
and I’m not kidding you in two weeks the milk price has gone up seven percent.
So I had to check my you know because it’s all digital these
days you can actually check what you spent it on.
And it’s up seven percent so it’s starting to
flow through. It’s only just the beginning of feeling the food price
increase. It hasn’t actually filtered through yet as I understand it Peta Tills.
That’s right and these things can take six to nine months.
That’s usually the the sort of average so we’re only just
starting to see what it’s going to look like. And so if you’re buying
meats or any of the sort of the produce you’ll start to see a significant lift
in prices over the next few months. Yes I’d agree because I mean you think
about if you’ve got a contract to supply I don’t know um coles,
wollies whatever usually that’s at a fixed price but
that they because that’s how you’ve negotiated your deal.
But if your if your fertilizer costs have gone
over you know a ridiculous up a ridiculous amount and your
fuel costs your diesel costs are up a ridiculous amount
that the the actual producer will absorb it
for a period but then it’s just impossible you just can’t deliver on that
contract at that price like it doesn’t make sense.
So some of these things will be renegotiated
um or just passed on to us and and don’t forget
uh you know the transport operators getting it to and from the farm gate
uh to the to our shops etc um they’ve got to pass on their costs too. So
that’s why it takes a little bit of time to adjust when people think well
you know I’ve got this contract uh and then there’s a bit of renegotiation but
the reality is um it’ll flow through. My get. Think of your your your uber driving
Steve so if you hop in an uber like remember that that was part of the
the conversation how does a an uber driver um keep it at you know that same
trip at 10 bucks when it’s costing him or her a lot more money to fill up their
car. As fate would have it I caught a taxi yesterday and interestingly
before or I booked it they actually give you an advisory warning up front saying
you will be charged a uh a fee or an extra charge because of the
increase in the price of fuel and they did it up front which was good
of them but I thought oh yeah crikey of course.
Yes but taxis ride share anyone who relies on fuel to earn their income is
going to be really in in filling the pressure. So flip
that into those numbers we saw yesterday we were only measuring up to March 31st
you didn’t you didn’t get that charge prior to March 31st that’s only a recent
thing so the next month the next quarter it’s going to look a lot uglier I’d
suggest. My guest is Peta Tilse Peta Tilse is an economist she’s with NatGen
this is 612 ABC Brisbane. Peta I just want to ask you something about
economics I was always taught that governments create inflation when you
know that the government spending is the essential cause of inflation uh now this
one may be slightly differently because of the conflict in the
Hormuz but is that right is it I mean up until this point you’ve seen a lot of
the the media commentary and the the the economists and commentators in the
newspapers have been warning the federal government for at least 18 months for at
least 18 months saying you’re spending too much money you’re putting pressure
under inflation is that fair? That that is absolutely fair um because when you
look at who the participants are on the economy you’ve got um obviously the
government but there’s obviously the private sector and and the consumer and
yeah the usual it’s around about that sort of 30 percent mark of you know where
the government sort of participates uh within economic growth I guess sort of
leading into this we we’ve sort of had our foot flat on the accelerator in
terms of spending and I guess probably the the biggest case in point is and
everyone’s sort of been talking about it is how unsustainable some of the
programs are that are out there like uh you know NDIS blowing out to 55 billion
dollars I mean I’ve actually got a family member that’s dependent on that
program um with a severe disability but you know there’s there’s all those
providers out there that that aren’t licensed I mean can’t you you know as a
government wouldn’t you have better checks and balances in place before you
you let money flow out the door quickly so there’s things like that and then you
know there’s other bits of waste out there um in terms of how how contracts are
delivered uh and we’ve seen that in various inquiries so so there’s money
that that’s being spent um that could be spent better and and actually improve
productivity and the like for Australians Peta Tilse is my guest we’re
talking inflation this is 612 ABC Brisbane Steve Austin’s my name Peta
people like Michael Matusik have been warning for some time that the
people seem to forget housing makes up more than 20 percent of the CPI and it’s
actually you know house price inflation is running hotter than headline
inflation the federal government’s five percent deposit scheme actually made it
worse it didn’t fix anything it made it worse particularly at the lower end of
the market actually it made it harder for poorer people to get into a home
tell me the story you heard of of to build a two just a basic two-bedroom
apartment in Brisbane please Peta Tilse a basic two-bedroom apartment Steve
these days uh when you look at land costs finance approvals so that’s kind
of like your call your core works before it’s even come out of the ground is
about seven hundred and fifty thousand dollars per apartment then add on the
actual build etc um the the variable costs they call it uh that’s another
seven hundred and fifty thousand dollars so we’re talking one and a half
million dollars for a developer to pretty much break even and as interest
rates rises so so does the the cost to hold so if you’re building a high-rise
apartment in Brisbane and this probably explains some of the things you’re
seeing as you drive down the street you’re targeting at least a one and a
half million dollar price point so if you’re looking uh you know you and I
looking to buy and we want to buy something at eight hundred thousand
dollars there’s not a lot out there um so the the price point is changing and
it’s you may as well just make the uh the the fit out of that particular
apartment high end and and get your one and a half two million dollar price tag
so they’re building for wealthy people or people of of means
not for people who may actually need housing correct
my guess is Peta Tilse what does this mean for say the Queensland state
government it looks to me like it’s going to make their job
very difficult even at a time when they’re negotiating enterprise bargaining
agreements with unions but it also means they have less bang
for their buck when they spend money on state programs
how does it look to you uh the state programs are going to be
more and more expensive sadly which impacts all of us as taxpayers rate
payers um you know we want those hospitals uh
completed we want those roads built we want um cross river rail to finish
take your pick um and uh you know this just all adds to the the cost burden i
guess and and therefore the debt of the state um which
impacts us all ultimately so what’s the reserve bank
going to do when they have to make uh when they have their next meeting
Peta Tilse i don’t even think it’s uh i don’t even think you’d flip a coin
or anything like that i think it’s uh it’s a done deal um we will get a 25
basis point rise next week and there’ll be more to come
uh so that’s actually the interesting bit because
if you think about um household spending it’s tightening up
and it’s it like people will possibly not go out as much and so forth
uh they’ll be tighter with their dollars so there will be a point
where the the economy will slow down which is exactly what
higher interest rates are designed to do um but it’s it’s that and the cost of
everything else that um is is going to uh impinge on on
a finite budget like if you’re a pensioner on a fixed income you’ve
only got so many dollars to spend you can’t go and tax your neighbor
so um to some extent the economy will slow
but some economists are saying this might be it but
um most i think there’s at least another one or two
interest rate rises for this year Peta Tilse thank you very much once again
pleasure stave Peta Tilse uh is head of funds management at natgen