Dan Jovevski, Blaize Pengilly
Blaize Pengilly 00:09
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Dan Jovevski 00:43
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Blaize Pengilly 00:49
Today you're listening to Money Bites, a podcast presented by WeMoney.
Dan Jovevski 00:52
I'm your host Dan, your resident finance expert,
Blaize Pengilly 00:55
and I'm Blaize your resonance spendaholic. Now, this week we are going to have a deep dive into the Australian Federal Budget for 2020.
Dan Jovevski 01:03
On Tuesday night, sixth of October, Josh frydenberg, delivered the 2020 budget. And the second time the podium delivering the news which was pitted to create jobs, rebuild the economy and secure Australia's future. Today we're going to take a deep dive into find out the winners and losers and what it means for you. So we get into a damn, let's do it.
Blaize Pengilly 01:23
Okay, Dan, taxpayers winners or losers,
Dan Jovevski 01:27
Blaize Pengilly 01:28
Dan Jovevski 01:29
I think one of the biggest improvements to this budget is that for those folks who are earning 45 to $90,000 per year, they'll end up being about $1,080 better off in this budget. There's also a bump of people who are earning more than that. So if you're taking home more than $90,000 per year, that's an additional $2,565 that you're getting back each and every single year. pocket. I know it's huge.
Blaize Pengilly 01:56
But sorry, if you're earning more money, you get even more, you get more money again,
Dan Jovevski 02:00
I know it may seem a little unfair, but I think there's probably enough there for people to do some extra things in there. You know, household budgeting, or I know we can't go to Bali anymore. But I think a lot of people would have taken that and potentially gone on holiday, but we'll look
Blaize Pengilly 02:15
at bucks, that's that's five flats there and back is the path of least
Dan Jovevski 02:19
Blaize Pengilly 02:21
So how does it how does it work out is are we getting taxed? lis is like just going to be immediately in our tax return. How does that
Dan Jovevski 02:29
so the tax impacts are going to be immediate Blaize. So for those people who are expecting their paychecks coming in, the one great thing about this budget tax cut is that for those people who are getting their pay stubs, say the next week, fortnight or month, they'll see those immediate benefits flowing into their bank accounts.
Blaize Pengilly 02:46
So if you're one of those people and in between 45,090 k Yeah, you'll be expecting around another $20 in your bank account each week.
Dan Jovevski 02:54
That's better than the kick in the teeth.
Blaize Pengilly 02:56
Sweet. That's, that's a burrito and a coffee. So if you're earning more than 90 K, and then you'll be getting the extra $2,565. Like, that's pretty awesome. I'm all about people getting more money out of that tax. But don't you think it's a little bit of a? Don't you think it's a little bit unfair for those that are still on job k per job seeker? And, you know, they're kind of scraping by, especially with all the COVID supplements going down? Do you think it's a bit unfair? What are your thoughts on it?
Dan Jovevski 03:28
I think there is an element of inequality here Blaize. I think for those people that are really suffering at the moment, those people that most in need, there probably should have been a little bit more in terms of an automatic tax offset, particularly for those really entry level workers who have just into the workforce for their very first time or potentially earning a lower amount. They're not going to see some of those automated benefits. They might have to rely on some of the other benefits in this new budget that helps them retrain retool, or potentially, you know, find additional sources of employment.
Blaize Pengilly 03:59
Yeah, interesting. So this tax break, or tax cut, how do you What's the terminology?
Dan Jovevski 04:05
I think it's a tax cut.
Blaize Pengilly 04:07
Okay, so this tax cut, it's this isn't a new idea, because they said they bringing forward the stage two tax cuts.
Dan Jovevski 04:14
Yes, Blaize. I think the Morrison frydenberg budget release, already had planned to max some of these tax cuts into the future. And what they've done is they've accelerated them to happen right now. So they've brought their their plans forward by you.
Blaize Pengilly 04:31
Yeah. Awesome. And we all kind of win in the end, I guess. Absolutely. Wait. Dan, I know you're pretty excited about this one, because manufacturing had a big win.
Dan Jovevski 04:41
It did. And I think it's often forgotten part of the Australian economy. And if we think about what's happened over the last 20 to 30 years is we've seen this massive effort of globalization. Companies outsourcing their manufacturing options to overseas particularly to places like China, and the fact that the government put $1.3 billion towards the manufacturing sector. I think is a good sign to Ozzie businesses that are looking to produce more things here on our shores. So it's a huge win for a lot of business owners right now who are looking to get support from the government to create more supply chains in Australia, manufacturer more goods and more importantly, for Ozzy's, we can actually buy more things made here in Australia rather than having to send that money overseas. So it's a massive win.
Blaize Pengilly 05:25
I can see why you like it. more jobs, locally more local products. It's totally a win for Australia.
Dan Jovevski 05:30
Yes Blaize. Another win for this budget is young people.
Blaize Pengilly 05:41
Dan Jovevski 05:44
Let's do it. The government recently unveiled job makeup, which is a hiring credit that will give $200 a week to employees to hire anyone between the age of 630 an additional $100 for anybody who is aged between 30 to 35. Given job makers recent release, what do you think young people are thinking about right now? And what do you think employees thinking about and they've used watering or people?
Blaize Pengilly 06:07
Oh, honest opinion on what I think job young people are thinking about it right now. Probably a little bit sad that that freeloading days of job seeker, Bob, because they're getting forced into employment? No, I, I think it's I think Jamaica is a really good program from you know, from what we hear from the budget, it sounds awesome. It's encouraging people to hire young people, it's encouraging people to get off settling and into the workforce and have a steady income, which is great. So the hiring credit, so it's $200 a week for employees who hire anyone between the age of 16 and 30, and $100, for anyone 30 to 35. Now, that money is just going to go straight towards subsidizing their wages.
Dan Jovevski 06:48
Yes, Blaize. I think it's pretty clear. And also was well, I think one important thing to make mention about jobmaker is that it's for people who are working 20 hours or more per week. And this is excellent. This is not just for full time hires, but it actually encourages people who are maybe casual contractors who are working about 20 hours per week, all those on part time contracts. So I think this is going to be a win for more people in the economy that may be sitting idle, or may want to actually pick up that second or third job and really supplement their income. It's a huge win.
Blaize Pengilly 07:18
Dan, what do you think businesses are thinking about this? Do you think they're excited for job maker? How do you think they'll respond?
Dan Jovevski 07:24
I think they are over the moon Blaize? And I'll tell you why. For those employers that are out there that are thinking about how do we include more young people into the business, those who can't navigate the landmine of hiring people, whether in a part time or full time contract, but more importantly, the cost. If you think about all those people that are that have the capacity to work, but can't work at the moment due to employers not being willing to go through that process of hiring and onboarding somebody. Now they're giving that extra incentive. And when you think about it, $200 a week is huge. It's absolutely massive. And particularly if it's for people who are looking to work, say, only 20 hours per week, I think employers now will be looking around saying, What can I do my business has significantly improved my chances of becoming more competitive, or serving more and more people and involving more young people in the business. I think it is an absolute boon for businesses or Australia.
Blaize Pengilly 08:14
Hell yeah. Well, if you're a business and you're paying, you know, your, your waitress, 20 bucks an hour, $200 a week, that's half the wage.
Dan Jovevski 08:22
It's huge, you know, for people who are 20, who have just graduated uni, for example, who are thinking about joining the workforce, but finding incredibly difficult particularly now during city COVID. This will just make everybody think twice and three times about why wouldn't you be using jog naked to hire a brand new part of your workforce with young people that can help you accelerate growth? It's amazing. I really love this part of the budget hands on.
Blaize Pengilly 08:50
Yeah, it's awesome. And I guess we've been hearing all these horror stories lately about an agile being advertised in 450 applicants or 1000 applicants going for like a really basic job in an admin role or a cleaning position or whatever. So I guess it will be creating more jobs as well.
Dan Jovevski 09:06
Absolutely Blaize. The government is estimating This will add about 450,000 jobs for young people and will be available for businesses up to a year. So I think people should look at this and start hiring ASAP.
Blaize Pengilly 09:19
Awesome. And for businesses. When does this kick in? When When will this change that right now? Right now?
Dan Jovevski 09:26
Yep, seventh of October.
Blaize Pengilly 09:30
So we've got job seeker job, a PA job maker. Dan, what's next?
Dan Jovevski 09:38
Don't worry Blaize. The government's already thought about what's next. Tell me job trainer
Blaize Pengilly 09:43
Dan Jovevski 09:44
Absolutely. Job trainer is a billion dollar program that's available to low cost training places for school leavers and about $1.2 billion towards wage subsidies for about 100,000 new apprenticeships and traineeships This is absolutely amazing.
Blaize Pengilly 10:01
What does it mean?
Dan Jovevski 10:03
I think it encourages more people to start training more people who have just left school. And it also just takes away that, that burden for all of these employers. So if you're a plumbing business at the moment, you're thinking about, do I get that extra apprentice or not? Right now, it just makes absolute sense to take advantage of the job trainer and hire more people.
Blaize Pengilly 10:26
Okay, great. So more young people are going to be getting jobs out of this?
Dan Jovevski 10:29
Blaize Pengilly 10:29
How long is the job maker scheme expected to last for?
Dan Jovevski 10:33
It's expected to last for you Blaize. So I think businesses right now should be strongly considering taking advantage of all these special considerations for their businesses to hire more young people.
Blaize Pengilly 10:43
So it lasts for a year. Now what if God forbid something happens and we get a terrible second wave of COVID? Or they don't get out of the pandemic? As soon as we expect? Do you think the scheme will have paid off in a year's time? We're still in an economic downturn?
Dan Jovevski 10:56
I think employers shouldn't wait, I think if if we don't know what the the course of COVID is going to be over the course of the next year or two years. So if you're thinking about hiring somebody, I think you should do it. Now we don't know what the next 12 months is going to look like. One thing I can say, though, is that the government has been incredibly responsive to the latest developments in the economy. And if we do get an extension, or there is going to be some benefits cut in the future, I think you should take these opportunities while paths are available.
Blaize Pengilly 11:22
And what would your advice be to all the young people listening out there that are looking for a job?
Dan Jovevski 11:28
if you're looking for a job right now, scrub up your resume, get out there apply to as many roles as you can. Of course, if you're not getting any bites, or you're spamming all these websites, they're going to be inundated with resumes. So what I would suggest is a Hinton tip, if you think about the way that a lot of young people get jobs these days, I don't know about you guys, but when I graduated uni, I got a lot of jobs through connections for other people. I think this is a really important point. For those who really want to get a practical tip here to stand out in the sea of different applicants is to try and leverage or immediate connection of networks and people that you might know to pass your resume over to say the boss or the hiring manager, or rather than just being another number on say, seek.com or other employment and hiring websites. What do you think, guys?
Blaize Pengilly 12:16
I think it's that old cliche. It's not what you know. So you know,
Dan Jovevski 12:18
Blaize Pengilly 12:20
See, Dann the whole job maker. It's really just the government's plan to push people off job seeker and into the workforce to steppingstone?
Dan Jovevski 12:30
Some say push, I'll say, encourage.
Blaize Pengilly 12:34
gentle nudge across the line into the workforce.
Dan Jovevski 12:38
Blaize Pengilly 12:43
Dan, I know you've just had a kid. I would love to know your opinion on this because it's been in hot debate all year, childcare, winner or loser?
Dan Jovevski 12:55
Absolute loser Blaize. This budget doesn't really give anything for childcare. I think a lot of the benefits for childcare and daycare during the COVID pandemic have now dissipated. And there is nothing in particular here that's new. for childcare providers or people with children to help them through this difficult time.
Blaize Pengilly 13:14
you'd think that childcare would be just a no brainer to invest in right? If you pay for a childcare worker. So how many how many kids can childcare worker look after it 510 1520 however many That is, if you're looking up to five kids, that's five or 10 people that could be in the workforce, because they're not having to look after their kid. Surely, it's a no brainer to be investing in childcare.
Dan Jovevski 13:37
Absolutely Blaize, I couldn't agree with you more. And just from my personal perspective, my wife has the opportunity now to work two jobs as opposed to just one by having additional childcare placements for a young boy. So I think more people should have the ability and should be encouraged to send their children to childcare if they candidate if they want to, to then use that time to potentially earning more money. And I think they should have been more for childcare, particularly in this budget, and particularly now, in this pandemic. ablaze according to the abc news report, and I tend to agree with the contents here is women are losers of this budget.
Blaize Pengilly 14:20
What do you mean women are losers when I was watching the budget? just said women are winners,
Dan Jovevski 14:25
Well, let's let's dig into it. Because sometimes the devil is in the detail.
Blaize Pengilly 14:28
I thought women would win as in this budget, because they're getting $240 million towards increasing jobs. But that's not immediate, is it? That's not really for right now. What What do women actually get out of this budget?
Dan Jovevski 14:40
Blaize It's a really good point. The security statement outlines turned $40 million of funding measures for the next four years. So this is not immediate. It's going to focus on increasing jobs for women in male dominated industries like construction, and more co founder grants for women founded startups, as well as more women. I encourage you to pursue careers in science, technology, engineering and math. But really, it doesn't offer anybody help, particularly women. Right now, if you start thinking about people, and they're looking at their financial futures, they're worried about what's happening tomorrow, next week, in the next couple of months, as opposed to what's happening, you know, in a couple years, Tom, and I think they could have gone further to provide more immediate relief for people, particularly women who are suffering now during the pandemic.
Blaize Pengilly 15:26
Yeah, I mean, don't get me wrong. I'm excited that they're putting funding into encouraging jobs in those areas. But how does that even how does the rollout work? If these industries are so dominated by males as it is? How is it isn't they it's $240 million, a bribe from the government to hire some women for your team? How will it practically play out?
Dan Jovevski 15:46
the proof will be in the pudding and Tom will tell blows up with all of these measures. Sometimes everybody gets excited about the dollar amount and the the focus, but really, the next year, we'll be able to say whether or not the government follows through into the livers what they've set out to achieve. And I can tell you what, women in Australia and NACA, understand by and let the government play platitudes, and throw money around without the follow up. So I think Australia, or the Australian Government is going to be put to task if they don't follow through with a lot of these commitments.
Blaize Pengilly 16:17
Yeah, we'll be standing there with the flaming torches. Where's our jobs in the industry?
Dan Jovevski 16:27
Blaize I another massive winner is mental health. And I think you've got some numbers for us to put this into perspective.
Blaize Pengilly 16:33
blackdog Institute has released some information and some statistics about how Australians faring with the pandemic. And it's no surprise that people are suffering from anxiety and panic, depression, anger, confusion, uncertainty, financial stress, so much more so than they were at the start of the pandemic. And you know, a lot of it's to do with health care workers because they're on the front line. being placed in quarantine is not a pleasant experience. And it also has been shown to have long term negative psychological effects. A recent review actually found that potential psychological effects of quarantine can include depression, PTSD, confusion, anger, boredom, obviously. And so many times you can do a puzzle, and loneliness. Also having so much uncertainty around finances and around jobs, a lot of people either having the hours reduced significantly or to zero or losing a job in total. All of these factors are just stressful, and they're having a huge impact on our mental health as a country. So I'm so excited to say that mental health has really taken a big win in the budget. But what's the breakdown? What How is mental health benefiting from the budget in?
Dan Jovevski 17:48
Look, I think that there are some more practical elements around the Medicare funded psychological services will be doubled from 10 to 20. It comes after it is announced subsidized health services, including more mental health services, there'll be extended until March 2021.
Blaize Pengilly 18:03
Personally, I'm excited to say that the sessions, the free sessions you can get as part of the mental health plan going from 10 to 20. is amazing. Because I've seen in my own personal life with my own friends, they're afraid to go and use the 10 sessions, because what if they're feeling a little bit crap now and then they use up all the sessions and then all of a sudden, that kind of couple months time they feel crap again, and they used up their sessions, they kind of afford to go back for more help. Having 20 sessions just really opens up the opportunity to really get stuck in and take care of your mental health in general, well being without the fear of running out are not going to have it, you're not gonna have enough cash in the future that get your mental health back on track. Because these services, let's face it, they're expensive. So it's pretty exciting to say.
Dan Jovevski 18:45
What's not a loser, the economy?
Blaize Pengilly 18:47
Uhh Dan, I'm so disappointed it's climate. Do you know what I had my hopes up because taxpayers are winning? Boom, that's exciting for me, young people win. That's exciting for me. But come on, can't we do something about the climate?
Dan Jovevski 19:02
What's the devil in the detail here?
Blaize Pengilly 19:03
The budget doesn't include any more clarity about whether or not we're going to hit zero carbon emissions. And also renewables like wind and solar, the Australian Government now considers them to be mature technologies. So they're successful enough to not need any more government support, so no more funding for those. I guess I was disappointed because they didn't really announce anything new or exciting for climate. They're the government's plan to continue to fund the Australian Renewable Energy Agency arena for another 10 years is great, but it's not new news. I was hoping that in the budget would say something new, exciting, some more funding towards climate because climate is so important. What are your thoughts on the lack of new information or new new funding for the climate?
Dan Jovevski 19:50
Great question. And I think if you look at Australia's position in renewable technologies, and if you look at other more advanced economies, particularly Germany, where now you're seeing an ever increasing rate of energy consumption coming from renewables. And look at Australia, we're a huge country, we've got huge amounts of sunlight that's coming to our shores. And yet, we don't really power as much of energy needs the use of renewables. And this would have been a perfect timing, particularly for those technology companies and entrepreneurs that are looking to create sustainable technologies that not only can they export to other countries, but more importantly use at home to find our own energy needs. I thought there should have been more for local businesses, and more for Australians. So we don't have to rely on this old dirty technology of generating energy.
Blaize Pengilly 20:40
Renewable Energy isn't a new idea. You know, it's been around for ages now. Can't we just get on the train?
Dan Jovevski 20:47
Totally. And I think what you're seeing right now is this huge, long, global shift towards more renewable energy and investment. So I think the next 10 years will be radically different. But the budget could have done more to accelerate that future and bring that future closer for us. So Blaize, this one gets a half tick for me.
Blaize Pengilly 21:07
For me, I'm gonna go full thumbs down. Also, Australia, you're right. We are a huge country. We're sexually a giant solar panel just waiting to be used. Also, we've got the ozone hole above us. There's like not even anything protecting us from the full power of the sun. Can't we just embrace it already?
Dan Jovevski 21:27
I think we should be taking advantage of it plays great point.
Blaize Pengilly 21:32
What's your takeaways from the budget?
Dan Jovevski 21:34
It could have been worse, we could have sat back here and said, right, the government hasn't really looked at the plight of most Australians going through navigating the pandemic. And they'll being more self serving. I think what they've done here is try to cover all the bases. But more importantly, they will focus on growth, employment, and helping other industries really get ahead during this difficult time. So it's got a massive, big tick. For me, I think the biggest highlights for me is certainly the young people joining the workforce, we're moving into an era where more and more people are taking out more part time employment, you know, multiple different jobs. And I think that's going to encourage a lot more young people to say, you know, what, my career is not gonna be me joining a company, and, you know, working there for two or three years anymore, it's going to have multiple phases, you know, multiple different employers, different types of roles, leveraging my skills, and that's where I think the future is heading. So that was the my biggest winner of the budget. The Biggest Loser that I can see so far, is probably the economy in general, with restricted trade and entry to Australia, the changing way that we're exporting our goods and services to the rest of the world, that is clearly going to have a longer term impact. So I think the economy is going to suffer a little bit, but this budget will hopefully soften that blow and make us all better off in the years to come. How about you boys? What do you think?
Blaize Pengilly 22:49
Dan I made it pretty clear before not very happy in regards to climate but for women, for young people, for taxpayers, it's a total win. And you know what, for young people, I'm excited. I feel like good Mac sales are going to be going through the roof this weekend, because people will be celebrating the opportunity to get more work and get off jobseekers. So yeah, I'm pretty excited and it'll be interesting to see how it plays out. Hopefully, it's all as positive as it seems so far. That's all from us this week. Be sure to like, subscribe and review us wherever it is. You listen to your podcasts.
Dan Jovevski 23:24
We're back next week to discuss home loans, home ownership, credit scores,
Blaize Pengilly 23:28
and you'll get to meet Royce, a 21 year old student investor.
Dan Jovevski 23:32
Thanks for tuning in to the Money Bites podcast. If you've enjoyed the show, please do us a big favor by liking, subscribing and reviewing us on your streaming service. This helps other people find us too.
Blaize Pengilly 23:42
Thanks for listening. We'll catch you next week on Money Bites.
The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.