Inspire & Inform Show – Episode 20

In E20 of the Inspire & Inform Show, Colin breaks down the recent federal budget in terms of infrastructure and it’s likely impact on consumer confidence.

Please see below for the full transcript of this video

—

Transcript:

Colin 0:01
Hello, and welcome to Episode 20, of inspire and inform. I’m going to be sharing today a little bit about consumer confidence and infrastructure spend post budget. For me, it’s been a really busy and intense week, I’ve never been busier than ever before in the last week, obviously, I’ve been working with a lot of first home buyers and new investors. So it’s a lot of education. But also, I can see a huge demand for that service, in that the home builder scheme, as you know, expires at the end of the year. So a lot of first home built as first time owners are rushing in to take advantage of the $25,000, home builder grand, which is understandable. So it’s been super, super busy for me doing a lot of properties, helping a lot of my clients get into properties, the right properties, and also doing the financing for them. So it’s been a very, very good week, I certainly am very, very blessed. And I feel very, very grateful for how things are starting to to pan out now. This week, I also had the wonderful opportunity to spend a little bit of time hearing the nav chief economist Alan asta. And tonight, I just have a few slides that I’ve picked from what I’ve learned. And I’d love to share that with you really just some data around consumer confidence spending. And a bit of the trend. Tonight, obviously, I also want to just make a special mention to the infrastructure spending from the budget allocation, which is very, very exciting. So I’d love to share that with you. My name is Colin Lee, and I’m the founder and CEO of inspire realty helping our clients build a better future together in this series of inspiring and for my aim to educate my clients and to provide you with the tools necessary to help you to make informed decisions about your property investments. You see, I’ve been investing in property for the last 20 years. And I’ve been, you know, making a lot of mistakes here and there, obviously. And I you know, I’m not saying that I’m a guru in property investment, but I’ve certainly made a lot of mistakes. And I love to share my knowledge and my learnings with my clients. I’ve built a multi million dollar property portfolio for migrant like myself, and I’ve been here for 20 years, I know that if I can do it, you can do it too. I just hope that you inspired tonight, and that you’d be interested in having a further chat and conversation with us to discuss your personal situation and help you to build your property portfolio. I think there isn’t a better time to start considering your options at the moment, particularly if you’re a new property investor or a first home buyer. I have been just seeing really the rise of how the government is really putting a lot of incentives and subsidies for home buyers, including stamp duty discounts. Really, I just think it’s such a really good time now to really take advantage and leverage on that now. So I’ll share with you a slide. You know from some of the things that I’ve learned from the nav chief economist, if you just bear with me, I’ll share my screen one second.

Colin 3:34
There’s always a glitch isn’t it? can’t seem to find the share screen. There we go. Okay, hopefully this all makes sense. Now. There we go. Hopefully you can see that now that’s a bit small. There we go. Okay. Firstly, from the budget, we obviously would love to I’d love to share with you where the revenue has come from in the last financial year. As you can see, just under half the pie is made up of individual income tax, raising about $222.2 billion from income tax, and obviously followed by company and resource rent tax at 887 point 1 billion. That’s a huge amount of revenue raised and also non tax revenue at 37. Point 5 billion. And there’s obviously the others as well, but a significant proportion of the revenue has really come from individuals income tax. The question is Where has the money gone? So let’s look at where the money has been sent in spent in the last financial year. And no surprise that Social Security and welfare has had the biggest injection of funds. You can see that the government’s put aside $227.5 billion for Social Security and welfare. So that’s a pretty significant amount of money, obviously to prop up shopkeeper and job seeker and there are $97.9 billion spent on other economic affairs. predominant infrastructure and other purposes 96 point 4 billion donor one that is health about 93 point 8 billion education 41 point 7 billion defense 34 point 4 billion, and all other functions at $78.5 billion. So as you can see, the government is spending big on social security and welfare. And I think that’s a great thing by the government just to prop up the economy. Hopefully, this will soften the blow for many Australians who’ve lost their jobs and can continue to write this through. So this is where the money has been spent. One of the key things I’ve really learned out of the the presentation, obviously, this is an NDB. presentation. And so basically, what they did was they looked at the forecasts from Treasury, and they compare it with what anybody would forecast. And you can tell the trend is pretty much similar. they reckon that it will be a bounce back in 2020, end of 2020, which is happening soon, all the way into 2021. and beyond. Hopefully, by that time, COVID would have rested a little bit, and a vaccine has been found. So the forecast looks pretty good. There will be an uptake of GDP for the next few years. So keeping our fingers crossed, hopefully this all comes true. And that we can get on with our lives. So the budget forecasts in nav has been for forecasting looks pretty similar. One of the things that they shared, so there will probably be about 30 slides, I just kind of picked about five slides from from what I’ve observed. And this is really data, week ending 26th of September. So this is really nearly a month old. But it does suggest that lockdown areas have seen a sales slowed down around 12% compared to this time last year. So there is a significant drop of 12%. The rest of Australia which is not in lockdown is slowing, but still above the same period last year. So there is an increase compared to the time last year. So there are two I guess, graphs here. One is the black line. And that is the lockdown. And that is what happened when there was lockdown. And then the red line is no lockdown, predominantly for the states that have no lockdown. So this predominantly reflects Victoria, which has been quite badly hit in the last few months, really starting from the first week of July all the way to last month spending. So this is worth noting, obviously, Victoria is a bit of an outlier. But the rest of Australia seems to be performing relatively well in terms of the consumption spending. I was just listening to the chief economist. And he’s obviously got a, I guess, an oversight of the the trends of the transactions from customers from nav. So this is a bit of a cross section split specifically for nav customers. Not that I’m promoting nav anyway, I don’t work for them. But this just kind of gives you a little bit of an idea as to the confidence that’s coming back in the market slowed down a little bit, but generally up compared to a lot same time last year. Now you also look at the recent trends on consumption. So retail is starting to slow,

Colin 8:21
but above. But above the start of the year. hospitality. As you can see, this is the gray line for hospitality. Hospitality has really struggled at the peak of COVID in the first week of March, I know because my brother runs a restaurant. And he tells me that during those period, it was certainly very difficult. I look after a number of my interest my clients interest in retail and commercial properties. I’ve managed their property portfolio, some fairly high net worth individuals that I work with. And I can see that they are starting to they really weren’t affected. And there was some rent rebates that they were starting to give up to the tenants just to be able to help them right through the curve. But really, it started to pick up and it’s plateauing now, so from the really the start of July all the way up till September, the hospitality industry has really picked up. But as you can see, overall, it’s it’s traveling pretty well, retail spending has been quite strong. So that’s that’s pretty good overall terms of consumer confidence. Something they showed and this is no surprise, but they also compared the I guess the spending by state, most states slowed into mid September. Victoria has been down by 10% as you know, but generally they were saying that things are starting to flatten flatten out as you can see. So, so yeah, so these are all the other states the blue line is Victorians a little bit of an uptick. But you can see that consumer spending has improved significantly. Since the beginning of April, when Pete, the peak of COVID really hit Australia, so looks like things have plateaued, and it’s starting to write it out. So So that’s all I have to share for you in regards to consumer spending. What I like to do really is just to share a little bit about some of the infrastructure spend from the recent announcement from the budget. So I break it up into three categories, really. The first category is water infrastructure. And it’s great to hear that the governor will be providing about $2 billion over the next 10 years for development and delivery of a 10 year rolling program for priority water infrastructure investments, including grant funding for the planning and construction of water infrastructure in partnership with states and territories. So that’s really good, you know, the improving our water infrastructure, and $7.5 billion will be spent on in transport infrastructure. So that will fast track a lot of investment in projects, working in consultation with state and territories as well. And projects have been identified as ready to go or shovel ready, will get a lot of the funds. So just to share my screen once again, and have a look at this.

Colin 11:27
Um, so state by state it’s it’s a little bit different. The Australian Capital Territory 150 $5 million will be injected into transport infrastructure. That will include $88 million for the Malanga River Bridge and 50 million for Southwest carto upgrade package. In New South Wales, there will be about $2.7 billion dollars investment in transport infrastructure that’s on top of the existing infrastructure, and that’s 500 and 60 million for the singleton bypass or the New England highway 300 and $60 million on a New Castle in a bypass city bypass between Rankin Park and Jasmine and 100 and 20 million for the prospect highway upgrade, and an additional $491 million for the coffs Harbour bypass taking the contribution to about 1.5 billion. And obviously the few other things in terms of the the train as well, Northern Territory about 100 and 90 million investment transfer infrastructure that includes 100 and $20 million for upgrades to the carpenteria Highway and $23 million upgrade to the Stewart Highway in pull on Gilad and if I pronounced that correct, Queensland about $1.3 billion investment in transport infrastructure that includes 700 and $50 million for stage one of the coomera connector that’s connecting Kumara to Narang. And, and a few others, South Australia about 620 $5 million investment in transport infrastructure that includes 200 million for the handoff township improvement 130 6 million for Stage two main South road duplication and hundred million for this transit ski track upgrade, Tasmania 100 300 and $60 million in investment, Victoria, worth mentioning $1.1 billion in transport transport infrastructure, and that includes a 300 and $20 million for the Shepperton rail line upgrade. I’ve actually got a friend who lives in Shepperton and should be pretty happy about this 200 and $8 million for the stage two of Warren ball real light upgrading 292 million for barwin, hits, road upgrade, etc cetera, Western Australia $1.1 billion in transport and infrastructure when read too much into that. But the other thing is they will also be spending a lot of money on roads and safety upgrades over the next few years. So I think that’s really, really positive on an overall note that the government is spending a lot of money on infrastructure on transport on water. And I think what that would do is really stimulate the economy by way of jobs, that is just going to fast track a lot of the projects and brought bringing it forward, which creates more jobs. And hopefully that gets a good uptick as well for our economy. Anyway, it’s been really lovely sharing a little bit of data with you today, it’s really good to see that the activity in the market is starting to really pick up. I’m certainly very busy looking after a lot of my clients now, which I am going to get back to some nights I really work till very late just to be able to get the contracts and the finances out of the way. So it’s an exciting time before the end of the year. If you are a first home buyer just know that you know there’s a lot of good things happening. And if you’re curious about looking at some options for you to take advantage of the $10,000 First I’m going to grab $25,000 Home Builders scheme plus the stamp duty exemptions for properties that you can buy, particularly in Sydney in New South Wales up to $800,000 which really opens up to a lot of options out there. Feel free to give us a call or send me an email or make an inquiry on our website ww ww inspire realty.com Hey, thank you so much for your time. Have a good evening and we’ll see each other soon, same time next week. Bye for now.