Household Finances – Digital Finance Analytics (DFA) Blog

The Next Incoming Tax Grab: Taxing Unrealised Gains?

I have highlighted the indisputable fact that the share of Government funding taken from households, via higher taxes, and freezing the bands so fiscal drag means we pay more, and despite the promise of tax cuts, has lead to the highest proportion ever. In fact, it is a bigger impost on households that the higher interest payments thanks to rate hikes.

This is also a function of Corporations paying less, thanks to their ability to structure their affairs, get massive Government handouts, and their capacity to pressure our elected officials.

Given the fact that the federal budget is facing a structural deficit, perhaps it should be no surprise that a new front in taxing more is opening. And that relates to taxing assets, and especially unrealised gains. It starts with superannuation, but it is unlikely to stop there. Tuesday’s budget indeed revealed Labor is full steam ahead on taxing unrealised capital gains.

In the budget forward estimates it reveals Labor expects to tax an extra $9.7 billion from superannuation funds over the five years from 2024-25 to 2028-29, compared to what was forecast in MYEFO. And it is worth reading the small print.

If Labor is re-elected with this policy intact, this could be the thin end of the wedge. As well as freezing the protected level to $3million, which means over time more will get dragged, in, so yet another form of fiscal drag. The $3 million cap, unindexed, is a sneaky ‘tax on young people, tomorrow’ that is dressed up as a ‘tax on rich people, today’ so its a deceptive tax grab that borrows from young people’s future by ignoring that in 40 years when today’s 25-year-olds are retiring, $3 million will not be considered a very high balance!

And the precedent would be set to tax unrealised gains is taxing a profit you may never receive. As day follows night, this would be widened, potentially hitting a lot of farmers, small businesses, and entrepreneurs and even eventually perhaps the family home.

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The Great Budget Bust Up: With Tarric Brooker…

In this “Election Special” Journalist Tarric Brooker and I discuss the announced election, and look at the data surrounding the upcoming campaigns.

This is perhaps one of the most consequential elections of the recent era, and we touch on the main policy areas, around housing, employment, productivity, infrastructure, and the gas reservation. Make your vote count!

You can follow Tarric’s latest article on the jobs market here: https://www.burnouteconomics.com/p/has-the-australian-job-markets-luck

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Digital Finance Analytics (DFA) Blog

The Great Budget Bust Up: With Tarric Brooker…

00:00 / 01:25:09

Gouged By ColesWorth, In Spades?

Last Tuesday I had Andy Schmulow the ACP Candidate for the Senate in NSW in the upcoming election, on my live show. Dr Schmulow left no stone unturned as he methodically called out the power of big business from the Banks, Airlines, Big Consulting Firms and Supermarkets, across Australia who are systematically gouging ordinary households and businesses across the country, protected by the current political system.

Its corruption on a grand scale, which is why our big banks, airlines, gas companies and supermarkets are making super high profits at our expense, and many shareholders by the way in these companies are overseas, so we lose out there too.

And in an interesting happenstance, the ACCC on Friday released their massive 441 report on the Big Supermarkets. It is a thorough examination of the extraordinary number of moving pieces in the grocery sector, and the legitimate concerns of different players at different stages though the value chain.

The ACCC says that Grocery prices in Australia have been increasing rapidly over the last 5 financial years. Most of those increases are attributable to increases in the cost of doing business across the economy, including particularly production costs for suppliers, which has increased supermarkets’ input costs. However, ALDI, Coles and Woolworths have increased their product and EBIT margins during this time, meaning that at least some of the grocery price increases have resulted in additional profits for ALDI, Coles and Woolworths.

They say Coles’ and Woolworths’ apparent ability to increase retail margins for packaged grocery products by more than is necessary to accommodate a wholesale price increase indicates they have – and sometimes exercise – a level of market power in retail markets.

But despite the furore over rising prices, the ACCC noted there’s nothing illegal about businesses making a profit. Woolworths recorded a profit of $739 million in the first half of the current financial year, with Coles reporting a $576 million profit during the same period.

The ACCC says there’s no “silver bullet” to address all of the issues identified in its full report but has recommended a suite of potential legislative and policy reforms to address areas that aren’t working well — particularly when it comes to competition in the industry.

At the heart of the final report of the Australian Competition and Consumer Commission’s supermarket inquiry is a simple truth: the horse has bolted. They suggest things cannot change. But I say, rubbish, time for new broom, to stop the gouging… but that needs real political intent. Cue Andy!

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Digital Finance Analytics (DFA) Blog

Gouged By ColesWorth, In Spades?

00:00 / 00:15:42

Another Bill Shock For Households!

As expected, and covered in my earlier posts, due to poor Government Gas policy over a long period leading to a Gas cartel, Electricity bills will rise by as much as 9 per cent from July 1, the Australian Energy Regulator has declared. The Australian Energy Regulator (AER) released its draft decision “default market offer” (DMO) today, which will see price caps for customers on standing retail plans lifted starting from July 1.

As a result, prices are expected to rise between 2.5 per cent and 8.9 per cent for customers in NSW, south-east Queensland, and South Australia. Small business customers face prices increases of between 4.2 per cent and 8.2 per cent.

“We’ve seen cost pressures across nearly every component of the Default Market Offer (DMO), and we have given careful scrutiny to every element of the DMO cost stack to ensure prices are a reasonable reflection of the costs of a retailer to supply electricity.” AER said.

The solution is simple, end the gas cartel, reserve gas for domestic use, rather than deciding to let international corporations hold Australian households to ransom, and import gas at international prices. And no, the answer is not to use more public money to subsidise the profits of the cartel, while appearing to sound caring to households.

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Digital Finance Analytics (DFA) Blog

Another Bill Shock For Households!

00:00 / 00:03:43

Not Pretty: Household Finances Under The Microscope…

We look at the latest from our surveys ahead of our live show on Tuesday 11th March, where we deep dive on post code analysis.

Despite the political spin, many households are caught in a cash flow crisis, thanks to rising prices, interest rates and frozen tax bands which means that despite of some small income growth (not for all though) households are exposed to cash flow pressures.

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Digital Finance Analytics (DFA) Blog

Not Pretty: Household Finances Under The Microscope…

00:00 / 00:27:41

Rear View Mirror Still Shows Rising Inequality Across Australia!

The DFA surveys have been tracking the rising pressure on households, thanks to rising pressures from costs of living inflation, higher mortgage and rental payments, and static or falling real incomes, which are not expected to catch up with past peaks for years. Our latest release to end February 2025 is out, and I will make a show on this shortly, as well as cover the post code level analysis in next Tuesdays live stream. https://youtu.be/FUmpN6eKjsM

One of the points in our analysis is the rising levels of financial pressure for some households, while others are doing just fine, thanks you, with net wealth rising from home price growth, and investments thanks to stock market rises. Roughly one in three households are in financial clover, a third are hanging on just, but a third are continuing to fall behind, and getting into deeper financial do do.

But now the mother of all household surveys, the Household, Income and Labour Dynamics in Australia (HILDA) Survey was released today. They reported that financial inequality in Australia is at its highest since 2001 just a young people find themselves shut out of the housing market. The report says there was a fall in home ownership between 2002 and 2018, but home debt across all households rose in a “sustained fashion” regardless.

And things are getting harder for single parents, who have seen a 76% increase in childcare costs per child since 2006 and more than half (51.2%) of respondents said their real income decreased between 2021 and 2022.

They now have released their 19th annual report with data from 2001 to 2022 called wave 22. Wait, you say. Surely, we are in 2025, so is this really that relevant? This is indeed one of my bug-bears about the HILDA reports, they are so lagged as to be seriously misleading.

But all up, the HILDA data does confirm the trends in our surveys, but the true impact won’t be seen until future releases of their surveys. But ahead of the upcoming election, it is important to recognise the rising disparity between those households under financial pressure and the rest of the community. Unfortunately politicians tend to be in the doing well category, (from property portfolio or other investments), not to mention any specific member, nudge nudge wink wink…

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Digital Finance Analytics (DFA) Blog

Rear View Mirror Still Shows Rising Inequality Across Australia!

00:00 / 00:13:47

Is Brisbane The Next City To See The Home Price Fall Shoe Drop?

Something a bit weird is happening in property markets across Australia.

Normally as we head into the peak autumn selling season momentum and prices tend to step up. But so far sellers are racing to beat the competition into a falling market already padded by properties that failed to sell in spring last year and this has pushed up the volume of residential listings in parts of Sydney and Melbourne more than 50 per cent on last year according to CoreLogic data. And now its spreading to Brisbane and Perth too.

“Brisbane looks to me like a really soggy market and I wouldn’t be surprised if house prices go negative in the next couple of months,” said AMP chief economist Shane Oliver. Brisbane could be the next capital to enter a downturn after Sydney. “It’s often the case that once the momentum turns negative, you go further negative for a while, so when prices are falling, history tells us that can go on for a little bit. I think momentum is starting to work against Brisbane, and it is now weakening at a similar pace as Sydney was six months ago.”

So for now, perhaps Brisbane is the one to watch…

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Digital Finance Analytics (DFA) Blog

Is Brisbane The Next City To See The Home Price Fall Shoe Drop?

00:00 / 00:12:22

Even Rate Cuts Won’t Help Home Prices…

The debate about when and if the RBA cuts the cash rate continues to run, with many property spruikers claiming people should buy now before the cuts arrive, because home prices will start to run again, when cuts do arrive. Just don’t mention the extreme unaffordability.

Earlier this month, Australia and New Zealand Bank (ANZ) adjusted its cash rate forecast, saying the RBA will likely cut interest rates by 25 basis points (bps) at its February meeting. Its economists believe that there will be two 25-bp cuts in this cycle (in February and August 2025), taking the cash rate to 3.85 per cent.

However, other market analysts are less sure, pointing to the strong labour market, risks from the low exchange rate, and high Government spending and household support putting pressure on underlying inflation. Then we have the potential fallout form the Trump effect.

My own research as I discussed in my Tuesday live show, indeed shows households are under pressure, and I doubt that small rate cuts, if they arrive, will be sufficient to reverse the damage done to households since rates started to lift in a late and half-hearted attempt by the RBA to crush inflation.

Seems to me we are in no-mans land at the moment. Even if rate cuts do come, they will not be sufficient to rekindle price growth in the eastern states. However, in WA, where growth remain buoyant, it might start increasing again. So it will be important to look at local conditions ahead. Check out my January 2025 data which will be out in a couple of weeks.

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Even Rate Cuts Won’t Help Home Prices…

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Digital Finance Analytics (DFA) Blog

Even Rate Cuts Won’t Help Home Prices…

00:00 / 00:07:22