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

Michelle Bullock, the Governor of the Reserve Bank, said this yesterday.
I don’t think there are any straight cuts in the horizon for the foreseeable future.
Clearly the Reserve Bank is worried about inflation. Why is this? Peta Tilse.
Inflation is definitely sort of here to stay. Our monthly number, we’ve gone from quarterly measure now to a monthly measure.
And this is supposedly a bit more accurate with what’s going on.
The monthly measure for Australia was an annual change in the October numbers of 3.8%.
So that’s what they think has, you know, prices have risen by over a 12-month period.
But interestingly, if you look at the Brisbane data, and I’m looking at the Queensland Government’s website,
the annual change for Brisbane is 5.2%. So if you think you’re feeling it, you definitely are.
What does this mean for future interest rate movements? How does it look to you?
Yeah, that’s right. So essentially the market is now pricing in a 40% chance that we will get a rate rise at the February meeting. There’s definitely 50 basis points priced in, so half a percent, priced in for next year.
So if you are considering buying a house at the moment or getting a mortgage or changing your mortgage, what do you think? How does it look, Peta Tilse?
Well, the market’s kind of already priced it in, so I guess it’s what can you afford.
And at the end of the day, when banks are assessing your ability to repay, they are actually adding a few percent on to your actual, the rate they’re quoting you. So they are actually already stressing what they think you can pay, and that’s why sometimes you don’t get the home loan you want.
Whether people should lock in or not, look, it’s up to their personal situations. But
I was talking to someone the other day, and I said, you can always do the 50-50.
You can do like a, if it is something you’re a bit worried about and you’re comfortable with whatever that longer-term rate is, you can always lock in half of your debt at that rate and keep the rest on variable, just in case the market’s wrong at the moment.
Peta Tilse is head of funds management at NatGen.

612 ABC Radio Brisbane with Steve Austin.
Well the Reserve Bank has left interest rates or cash rate on hold, citing the recent pickup in inflation, the I-word. So how healthy is Australia’s economy? Well Peta Tilse is Head of Funds Management at NatGen. I asked her about the RBA’s decision first of all.
Steve, essentially they’re on hold. Just with the language that was used, it’s actually possible that we mightn’t get any more interest rate cut. Like 3.6% as a cash rate might be what they call the terminal rate, the last sort of bit of movement. Are you telling me that, particularly
I’m interested in homeowners and people have mortgages obviously. I mean that’s it guys, this is as good as it gets. We’re pretty close to it. So the main reason for all of this is inflation and that they’ve been watching that data closely. They’ve been taking, they say they take the signals from the inflation data and they actually released as well yesterday the statement of monetary policy which is kind of their quarterly outlook I guess on the Australian economy and where they see various data points moving in the future.
They did point to that some of the things that came through in our last inflation print in their mind were temporary. So things like those electricity rebates we’ve all been getting that they’ve sort of washed through.
I mean like electricity for instance for the quarter was up 18% because of that and annualised it’s about 12%. So they’re very significant sort of numbers but Michelle Bullock called that a blip so to speak. Although in my mind what that showed was that the so-called electricity subsidy was just disguising the true cost of electricity. Yes absolutely.
The band aid I think as we’vesort of been calling it to get us through. All right Michelle Bullock said this. Keeping inflation low and stable enables strong and sustainable employment growth. Is she saying that’s what
we’re focused on in the future? What’s she saying there Peta Tilse?
Yes absolutely. So there’s been this kind of in the markets they’ve been because they’re always I mean they’re focused on price stability and full employment. So it’s a trade-off. So do you sort of go hard on inflation or do you go hard to get to full employment?
And I guess we’re kind of at that point where we’re getting that soft landing we need hopefully if we can keep inflation in that sort of two to three percent band which is their goal to keep that price stability. In the statement of monetary policy though that three their sort of forecasts for inflation have risen ever so slightly.
So we should be seeing in the incoming quarters that rate rising to about I think it’s 3.1 or 3.2 percent but just marginally above. So they will be watching that like a hawk so to speak. Let me play this.
When combined with the fact that we hadn’t raised rates particularly high this could mean that less easing in monetary policy is needed in this episode compared to previous ones. So that’s what you’re referring to Peta Tilse?
Yes that’s right. And the other thing too Steve is when you do have a higher inflation rate let’s call it just roughly speaking okay we’ve got a cash rate of 3.6 percent and let’s say the inflation rate’s 3.6 minus 3 percent. The real cash rate is about 0.6 if you follow. So basically if you strip out the inflation from the actual rate just roughly speaking it’s actually kind of stimulatory.
Okay so really what does this say then about the underlying fundamentals of the Australian economy? Is it healthy? Is it strong?
Is it weak? What is it Peta Tilse? I guess we’re kind of in that what they’d call the soft landing phase. So we’re okay at this stage. Inflation is what they’re watching as we’ve said so anything sort of above that 3 percent they’ll be watching like a hawk.
Growth is positive it’s at 2 percent that’s kind of trend but you know you’ve got to temper that with what’s going on with population growth and the unemployment rate while it did blip up to four and a half percent last month you know it’s not bad in the scheme of things like we’re not at five and a half percent put it that way. So we’re okay.
Could be better, could be worse, we’re okay is how I would describe it.
Peta Tilse I’ll leave it there thank you very much for your time once again.
Pleasure Steve.
Peta Tilse head of funds management at NatGen.

You’ll hear it on 612 ABC Radio Brisbane.
So let’s look at the latest unemployment data.
So Queensland, interestingly, unemployment in Queensland went down slightly.
In other words, things improved here job-wise.
Unlike the rest of the country, where there was a surprise, the unemployment rate went
up around the rest of the country.
So what does this mean?
Particularly when, say, you’re sitting around the board table of a reserve bank saying,
OK, we can ease the pain on Australians, or we’re going to keep the pain level where it is
if they want a mortgage.
Well, Peta Tilse is head of funds management at NatGen.
Peta, tell me, explain the unemployment figures to me first of all, please.
Morning, Steve.
So essentially, the market was expecting about 4.3 per cent.
This is actually the highest number that we’ve recorded since 2021.
So that it is quite a bit of an outlier there.
And if you think back to 2021, that’s when we’re coming off those COVID highs of unemployment.
So it is quite interesting for the markets.
Over the course of this year, we’ve sort of been in about a 4 to 4.3 per cent band mostly.
So again, it’s sort of a bit of an outlier.
Now, when you’re looking at the detail, so jobs growth was about 15,000, and we were
expecting about 20,000.
Now, unemployment data does bump around a bit, I will say that.
I think when you and I have spoken previously, when I used to be on a trading floor, we used
to take bets on what we thought the number was and there was no real rhyme or reason.
You know, so it can bounce around a bit.
But what was interesting, what’s interesting for the economy is that it’s, you know, we’ve
been seeing a pick up in the consumer.
So you and I are spending more.
And also, this data kind of unravels a bit.
And this was in the Reserve Bank minutes, board minutes for the last meeting, that there’s been a slowdown in the government jobs and the government funded jobs.
So you think of the care economy, as they call it, like the NDIS, aged care, health,
but also bureaucracy.
So basically, four out of five jobs in the last two years has been created because of this economy.
And now basically government jobs or government funded jobs.
Correct.
Right.
And so that’s now slowing down, which means private sectors, the place where people are
getting jobs from here on in.
And I guess we in the private sector don’t hire as many people.
So depending on what people do.
Well, things are tough in the private sector at the moment.
So here’s what interests me, Peta.
Why are economic commentators saying this will change the equation when it comes to
the cash rate from the Reserve Bank, which, as everyone knows, has a significant effect on what my mortgage interest rates are.
Why will this affect that?
So you’ve got to remember what the Reserve Bank is trying to achieve with lower or higher interest rates.
And that’s their mandate is around inflation, the Australian dollar, and employment.
So this is one of those kind of factors.
And essentially the Reserve Bank Governor came out yesterday and she actually did say that policy is marginally tight.
So what that means for you and I with mortgages is there’s possibly one more rate cut coming.
Now that was pushed right out to next year after that inflation print that we had a few weeks ago, which surprised everyone, which was a bit higher than expected.
And essentially before this data came out, the market was pricing the possibility of
another interest rate cut at about 39%.
And now it’s about 70%.
So November and December meetings are in play.
We could see this.
The quarterly inflation print comes out in a few more weeks.
And that’s what they’ll be watching.
So we’ll know really in November what the RBA intends to do with the cash weight, which
will change the equation or may not for people with a mortgage.
Correct.
Peta, I really appreciate your help walking me through the mysteries of economics.
Peta Tilse, thank you very much once again.
Good on you, Steve.
Thank you.
Peta Tilse is Head of Funds Management at NatGen.

ABC Radio Brisbane. 
Before we look at the concerns about the pushing up of house prices, the RBA, the Reserve Bank, announced yesterday no change to the cash rate. 
So what does this mean for you and me? 
Peter Tilse Head of Funds Management at NatGen. 
What it means for you and me is our mortgages stay the same, Steve, so nothing done there. 
What was interesting is the why, of course. 
If we sort of cast our minds back about a week or so, the monthly inflation data came out and prior to that data coming out, there was a 70% chance that the November meeting we would see a rate cut. 
So that’s pretty much off the table now. 
Post that inflation data, it’s the chance of November rate cuts next to none. 
We are just expecting probably a 30% chance of an interest rate cut sometime next year. What we saw in that data, our Netflix costs are up. 
So that’s annualised, it’s up 9.4%. 
So although that’s not something that we all need to have in our households, that was something that stood out, wage costs are up. 
And they look at it in terms of what they call unit labour costs and that just means 
that whatever we’re doing, what’s the output we’re getting for it. 
So if you think of building a house or whatever and your trade only comes for a couple of days a week and then serves the rest of the week, well, that’s not being super productive because you’re only getting them working two or three days a week instead of five days a week like we would ordinarily. 
Little things like that, but it all adds up and it all is all inflationary. 
But what we also saw too is that household demand is growing faster than they expected. 
So that means what we’re buying as you and I is increasing more so. 
And that was a bit of a shock because previously it was actually government spending. 
That’s been kind of driving the economy. The unemployment rate, so that’s still sitting around about that 4.2 percent level, which is, I guess, a bit higher than the sort of 4.1 we’ve been at. 
But it’s still considered around about that full employment level. 
So they are watching the employment data and that could possibly be the one thing 
that might trigger them moving in the future if that continues to sort of stagnate, I guess. And yeah, the economy is growing stronger than expected. 
So there really was no real reason to move. 
So they didn’t. And the inflation data is the monthly data. 
So it’s a bit more volatile, but they’ll be watching that quarterly number when it comes out toward the end of the month or later on in October. 
Now, the day before yesterday, Treasurer Jim Chalmers gave the very strong impression that he felt inflation, that the government, the actions of the government have conquered or beaten inflation. 
On the basis of the RBA’s lack of movement yesterday, is that a reasonable position? 
Probably not, because I’ve just said, you know, we’ve still got electricity costs rising and all these other sort of things rising. 
And these are the components that feed into it. 
So is it likely that electricity costs are going to continue to rise? 
I think so, yeah, because at the end of the day, the amount of changes that are happening within the grid with net zero, etc., increasing generation with whether it’s your rooftop solar or whether it’s wind farms, etc. 
Networks have to be upgraded. 
That all costs money. 
There’s demand for those types of components. 
But, you know, it all just adds up. 
It all just increases. 
So it’s short of government subsidies, which are band-aids. 
The real costs are still there. 
Now, you’re in commercial property. 
Let me ask you about residential property. 
The cost of housing is continuing to nearly 1% a month here in Brisbane in a month on month. 
That’s, you know, what does this reveal? 
Peter Tilse supply demand, Steve, anything that moves price, it’s all to do with supply and demand. 
We don’t have the supply coming online to fulfill the demand. 
So we’ve been this this number is expected to keep increasing because we just don’t have the bandwidth to increase supply. 
So and we’ve got half a million people coming into the country every year 
and they all need to live somewhere. 
And whether they’re all in Queensland or Southeast Queensland, they’re not. 
But yeah, and we’ve also got a lot of things being built at the moment, 
a lot of infrastructure like, you know, I mean, gosh, cast your eyes around the state and you’ve got things like the Tumbo Hospital being built,you got Hospitals being built, you’re getting road upgrades, all of these other sort of things which creates demand for concrete aggregate and steel and everything else. 
And it all just creates demand for those products. 
And again, the more demand for things, prices increase. 
And yeah, it’s it’s kind of like a bit of a vicious cycle. 
So bottom line, everything is very hot and we’re not talking about the weather. 
That’s a good way to put it. Yes. 
Peter Tilse, thank you very much for your time. 
Pleasure, Steve. 
Peter Tilse is head of funds management at NatGen.

Australian banks are offering a sweet deal to certain professions. If you’re a doctor or a lawyer,
perhaps in financial services, or even a pharmacist, Australia’s banks are revealed that they will
write you a mortgage without the need for mortgage insurance. Peta Tilse is head of funds management at NatGen. Peta, what is Lenders Mortgage Insurance or LMI? Morning, Steve. So, Lenders
Mortgage Insurance is what it says it is. So, it is actually insurance for the lender. So,
when you’re buying a property or a house, there’s a certain amount you can borrow
before this Lenders Mortgage Insurance kicks in. So, if we’re talking like a $500,000 house or
property, you might only have a certain amount of deposit. So, let’s say you only had $50,000,
which is 10%, which is a really nice deposit. That means that you’d be borrowing 90% of the
remainder from the bank to purchase the property. So, what actually happens in that instance is
the bank says, well, we would prefer that you had a 20% deposit. So, and then therefore lend you
80%. Because there’s that kind of 10% difference, they want you to take out Lenders Mortgage
Insurance, i.e., insure the bank against your own personal risk. So, protect themselves, basically.
Protect themselves. So, in that instance, like if we’re talking about that $50,000 deposit on the
$500,000 loan, for that $450,000 that the bank’s going to lend you, you get the pleasure of paying
about $9,000 in Lenders Mortgage Insurance to protect the bank. So, that’s what it costs,
roughly, in that circumstance, right, about $9,000. That’s a lot of money.
It sure is on that sort of size line. So, I mean, and don’t forget you’ve got all those other costs
too, like stamp duty and building pest inspections and transfer duties and all sorts of loan
application fees. I never miss you there. But there’s all those other kinds of fees too. So,
when you’re buying that $500,000 property, all of a sudden you’re now up to about $525,000
all these other little bits and pieces of costs. The reason I asked this, Peta, is because the
Commonwealth Bank has just started waiving Lenders Mortgage Insurance for some specific
professions and they stand out in my mind. Which ones? It’s certainly not a journalist, is it, Steve? No. No. Okay. So, when you’re thinking about why banks would be doing something like
this, there’s a business aspect, of course, because the more they can lend, the more money they make.
But there’s also the risk aspect because they don’t want to be giving away money and losing money.
So, they obviously view various professions in a risk light. And if you think about
doctors and dentists, you can’t avoid them, right? So, those guys, because of who they are,
they can borrow up to 95% of a property without having to pay for Lenders Mortgage Insurance.
So, basically, with a 5% deposit, so back on that $500,000 property, they only need to
muster up $25,000. They don’t have to pay the Lenders Mortgage Insurance. So, Australian banks like CBA,
NAB, Westpac, ANZ as well? Yeah. So, and then even last year, apparently, ANZ went a step further and
was waiving Lenders Mortgage Insurance on 145 suburbs around the country. And it’s not
the ones that you think. It’s ones like Hamilton in Brisbane or Turac in Melbourne,
those sorts of suburbs. So, they were happy to double down, I guess, and let people have
smaller deposits there for those homes. So, these are the major, the big four banks saying,
well, if you’re a studied medicine or you’re a lawyer or you’re in financial services,
we think you are no risk to us and therefore you won’t have to, or less risk, and you won’t have
to pay this exorbitant mortgage insurance that all the rest of us, players, have to pay.
That’s it. And they’ve just added, apparently, pharmacists. So, pharmacists are now added to
that list. And apparently, a pharmacist can earn $100,000 instead of $150,000 a year
and still qualify for this exemption. Does this sort of thing happen often in the area of finance,
Peta Tilse? Privileged professions is how I describe it. Well, I don’t know about privileged
professions per se, but it’s, again, it comes down to risk. So, I guess, at the end of the day,
if there’s a recession, a doctor and a dentist will still have a job. Barristers and solicitors
always take care of themselves. Do you know what I mean? So, it’s kind of like, it’s all to do with
the risk aspect of things. And, you know, like a judge and a magistrate, well, they’re still going
to be employed. And it’s really like, if you’re a contractor or something like that, well, you
mightn’t have a job next week. So, they’re really just looking at it from a risk lens.
Peta Tilse is the head of funds management at NatGen. This is 612 ABC, Brisbane, Steve Austin’s
my name. Peta, I have to ask, like, you’re a, you are, you work at the coal face here in Brisbane,
you raise your own kids, you know, you’ve gone through all of the struggles that every other
family has gone through, yet you’re a professional. Is this sort of thing reasonable, Peta Tilse?
Is someone who works in the area of money and property, is this sort of thing reasonable?
Well, look, I mean, it’s commercial, sadly, and, you know, it comes down to risk. And
that’s just the way it’s viewed. And I guess they’ve got data to back certain professions,
certain roles in society, as being sort of, you know, less risk, I guess, in terms of lending.
Peta Tilse is head of funds management at NatGen.

But the Reserve Bank Governor, as you’ve heard, says it was a consensus decision by the Reserve Bank to cut the interest rates.
The banks of Australia rapidly followed suit.
It’s the second cut this year.
Australia’s Treasurer Jim Chalmers says it reflects the substantial progress in the fight against inflation.
But as you’ll hear, it also means that there’s going to be further pressure on an already-inflated housing market.
Peta Tilse is Head of Funds Management at NatGen.
I asked her, first of all, today, her reaction to the rate cut decision.
Morning, Steve.
So, as expected, markets had fully priced in a 25 basis point interest rate cut.
So that brought the cash rate down from 4.1% down to 3.8%.
So what it means for an everyday borrower on, say, a $500,000 loan, that’s about $80 a month of saving.
So it’s not, you know, castles or things like that, but, you know, $80 in your pockets better than the banks.
Now, what was interesting out of yesterday is they’ve turned what’s called dovish,
instead of being hawkish, where they stomp on anything that looks like inflation, which means they increase interest rates.
They’ve turned dovish, which means, okay, we’ll let things kind of fly.
So essentially, we had data at the end of last month’s CPI data or inflation data,
which showed the inflation rate come down to 2.4%.
And the trimmed mean, which is the preferred measure that the RBA uses.
There it is. That’s what you all talk about at the pubs.
That’s the one. That’s the one.
Yep, yep.
So the trimmed mean, which basically looks at the middle chunk of things in the survey,
that’s under 3%. So remember, the reserve bank’s always looking at that sort of 2% to 3% band.
Yep.
And so now we’re just under, just.
Now, interesting things out of the CPI was one of the biggest contributors to it was housing.
And within the housing part of that electricity contributed 16.3%, like had a 16.3% rise, but, you know.
So the price of electricity is going up massively still.
Massively. And especially for Brisbaneites, because if you recall, we previously had the $1,000 Queensland Government rebate.
And so basically that got washed out of last quarter’s data.
Yep.
I mean, I can vouch for that. I mean, my electricity bill is nasty and it’s $1,800 a quarter.
So I’ve got to work at my sons and their air conditioning use.
Good luck.
Yeah. Anyway, the other things though that that’s going well for the economy at the moment is still we’ve got unemployment.
Well, it’s good for us in general because we’re employed.
So 4.1%. But that means there’s not a lot of give if things accelerate.
And growth is still sort of a bit over 2%, which is which is good.
My guest is Peta Tilce, Head of Funds Management at NatGen.
This is ABC Radio Brisbane. Steve Austin is my name.
I want to ask you about housing.
I still think this is the major issue for Australians.
Interestingly, Ray White’s Chief Economist, Narita Konsebi has pointed out that the combination of interest rate cuts, the re-elected federal government’s policies to, you know, have a 5% deposit scheme,
you know, lower mortgage insurance situation and global economic uncertainty creates a what she says is a perfect environment for accelerated price growth across Australia’s property markets.
In other words, this all puts increased pressure on the housing market.
How can it not put forced prices up already massively overinflated even further?
Yes.
So let’s go back to basic economics. What affects price?
It’s your various supply and demand dynamics, right?
So and also there’s kind of like other things like, for instance, with if you if you go to borrow money to buy a house, APRA, which is the is the other potential sort of regulator for banks.
So this is just to make sure banks just don’t go out there and land willingly and get us into a whole heap, get people into a whole heap of trouble.
So they’ve got this thing called a line serviceability buffer, essentially.
So basically, irrespective of what that variable rate looks like, like, you know, say at 6%.
And basically they get the lender to add 3% to that.
So now we’re looking at a lending rate of 9%.
And they and if you can meet the grade for that, you’ll get the loan.
And mind you, after this race, recent cut, the best I could see at the minute was about 5.49%.
But anyway, so we’re still talking about 8.5% to 9%, right?
So that’s a lot of money to prove you can serve us.
So that’s just one thing.
So that’s going to hamper things.
But, you know, as interest rates come lower, that test will mean more people can actually apply to get a loan, etc.
So again, that’s sort of increasing the demand side of things.
Secondly, when we look at property and look, I look at it from a commercial property perspective, because that’s what we do at NAC Gen.
But it’s the same with residential.
It’s about population growth.
And for instance, in Australia, our population is growing about 2%.
In the southeast Queensland corner, we’re 2.3%.
That’s massively high by global standards.
Massively high.
Correct.
And even on the Queensland government’s own kind of trackings, like we’ve got a population of about 3.8 million people in the southeast Queensland corner.
And they’ve got this regional plan that goes out to 2046 and they’re expecting it to get to 6 million people.
So we need to find another 900,000 new homes to house all these people.
And don’t forget, we’ve got net overseas migration.
So that’s a combination of temporary people that are that might be students coming to land English and whatnot versus, you know, the people that are moving here to actually work on mines or wherever they’re going.
So when you’re looking at those kind of demand characteristics, it’s really strong.
Yet, is supply actually keeping up with that?
No, supply is slowing down.
Correct.
And the federal government’s increasing demand.
Correct.
And not tinkering with the things that they can tinker, which is, which literally is, you know, maybe we don’t bring in so many students, for instance, on those visas and sort of let a bit of absorption occur and the economy sort of settle a bit.
But, you know, that’s government policy and they have to figure those things out.
It all comes down to supply and demand and what price we have to pay for things.
And don’t forget, we have got, Brisbane has got an incredible next few years of infrastructure spend coming with obviously with the Olympics, but it’s all the other things like, you know, the Kumara connector, the Kumara hospital, you know, the various upgrades to other hospitals, the Cross River Rail, etc.
Like there’s so much infrastructure being built at the moment that there’s high demand for labour, which means you’re paying more for tradies.
But can you afford to pay them to build you a new house?
Probably not.
You know, so it’s, it’s, we’re coming up to a difficult period in my opinion.
I’ll talk to you again about this.
Peta Tilse, thank you very much for your time.
Pleasure, Steve.
Peta Tilse is head of funds management at Natgen.

ABC Radio Brisbane. 13.5 to 9, believe it or not, there will probably be some benefit for
Queensland as a result of the Trump tariff moves. So how will this affect residents in the state?
Peta Tilse is Head of Funds Management at NatGen. I spoke to Peta Tilse early this morning
and observed that the stock market or the share market has taken a hammering.
Yeah, morning Steve. Look, all of us have superannuation,
accounts, all of those ask that work, etc. And so if you actually had a look at your account today,
it’s probably looking a bit dusty after being battered last week and yesterday. Having said that,
if you do have some cash on the sidelines, I mean, some of these super funds have been sort of taking
money out of shares in recent times because they’ve been overvalued. Well, they’re probably just
redeploying and yeah, so they’re probably just redeploying and putting more capital to work.
The other side of things too is we’ve seen the Australian dollar that absolutely got hammered
yesterday and in fact this morning, it’s still trading under 60 cents US. That’s actually really
good for our exporters. And inbound tourism as well, I understand. Correct. And it’s great
for our exporters. It also makes, it pretty much negates whatever tariff he’s just put on us.
So it’s actually making us more competitive globally. So that’s actually positive.
And then in terms of interest rates, because for those of us that have mortgages,
there’s actually more forecasts of interest rate cuts. Now they’re actually talking that in May,
we might get 50 basis points as a cut. ANZ, which has been probably one of the banks,
the majors that only thought one interest rate cut this year about a week ago. And
NAB on the other side was always expecting three. ANZ is now saying three interest rate cuts this
year. So that will bring our cash rate down to 3.35 cents. So that’s a lot lower than where we are
now at 4.1. So that will help mortgages. And yeah, and so those sorts of things will filter through
to us everyday people. My guest is Peta Tilse. She’s head of funds management at NatGen.
This is 612 ABC Brisbane. So an Aussie dollar around 60 cents US is good for our exports,
which would be good for mining and the agricultural, our farmers. It’ll be great for inbound tourism,
which should look after Queensland somewhat. It’ll slow Australians going overseas and spending
their money overseas are more likely to spend it here. In a sense, it’s sort of an irony, isn’t it?
The Donald Trump’s wild move looks like it’s killed off Peter Dutton’s prime ministerial
ambitions and it’s helped Anthony Albanese, who has been, what’s the word? Less than complimentary.
Doing a Stephen Bradbury. Thank you. So Albo’s doing a Stephen Bradbury. And of course Brent
Crude. The price of Brent Crude went down significantly as well, which will also make our
petrol significantly cheaper once the oil companies pass it through. So and that’s all to do with the
everyone’s sort of worried about what they’re calling now an economic nuclear winter. Like that’s
so dark, right? So that’s that’s sort of how they’re describing what’s what’s going to happen in the
States. But you’ve got to remember, we’re talking about two of the world’s largest economies,
which are the US and China. And if those two slow down in growth in terms of what they’re doing,
that means less demand from everybody else, what we export to those particular countries. And
whilst in the states, they’ve got a trade surplus with us, we import more from the states than we
export to them. In China, it’s not not the case. And, you know, more than a third of our exports
go to China. And so there will be kind of repercussions, I guess, in the sense that demand
will drop off. But that Australian dollar being quite soft is actually in our favour.
Isn’t that ironic? This is 612 ABC Brisbane, my guest is Peta Tilse. Peta, given what’s happened
in the United States, and there’s some rumblings about a possible recession, what does this mean for
property or house prices at all, where people, a lot of people have invested
in different areas of the property market. What do you see?
So there’s still going to be demand, Steve, because we still haven’t solved the housing crisis in
Australia. You know, the beauty of property is it’s all always bricks and mortar. It’s an asset
that will always be there for people. So I don’t think property prices are going to go down anytime
soon. And in fact, when interest rates do come lower, it sort of makes things a bit more affordable.
So it probably supports property valuations. Now, let me play you what Michael Knox, chief
economist at Morgan’s told me a couple of days ago. His argument is that we’re slightly misunderstanding
the Trump tariff. It’s not a protection move. It’s a negotiation or a trading move.
So this is not a conventional tariff war. This is an invitation to bargain and enter a bargain
for lower tariffs. So if, for example, China cut its tariffs in half, the US would cut its tariffs
in half in return. So it is, as I say, amazingly, in the case of Donald Trump, it is the beginning
of a bargaining process. That’s Michael Knox from Morgan’s. So have any countries indicated at all
that they are prepared to start talking or trading their tariffs? Well, the word is, Steve, that
over the weekend about 50 countries turned up on the US doorsteps. So they’re ready to make deals,
I believe, Israel, some of the smaller Asian countries. Vietnam, I believe. Yep. They’re all
over there ready to cut a deal. So in the scheme of things, he’s begun what he probably set out to do.
So now as an unexpected result from this, does this mean that Donald Trump’s wild move
will actually assist lower inflation in Australia? Is that what’s slowly starting to appear?
That this will actually force inflation down? They will put the recession question to one side,
but will actually lower inflation in Australia, Peta Tilse?
I guess it depends on what’s used. So, excuse me, in terms of, you know, if we’re aligned on
imports for certain major projects and things like that, well, you know, that’s going to be more
expensive. But it just, yeah, it just kind of depends. It’s not going to solve our energy
issues internally, which means we can’t really be out there manufacturing to compete for anything here.
But we can still pull out of the ground more iron ore and we can still pull, you know, get
more beef off the land, so to speak. We can do all those things, but it’s not changing our
cost of production internally at this stage because we still have various wage costs and
other factors of production, you know, cost of production.
Peta Tilse, thanks very much for your time once again.
Pleasure, Steve.
Peta Tilse, she’s head of funds management at NatGen.