Bush Bite Series: What does the 2020-2021 Federal Budget mean for investors?

KnowHow founder Bushy Martin says the 2020-2021 Australian Federal Budget provides a number of opportunities to boost spending and open up property investment potential.

In a live ‘Bush Bite’ video on Facebook, Bushy explained that the budget is all about encouraging Australians to spend and ensuring we ‘grow’, not ‘shrink’ .

“What the government’s done is created a growth vehicle. They’ve put fuel in the engine and the engine’s running,” Bushy said.

“In very simple terms, what I spend is your income and what you spend is my income. If we spend less, that means prices go down … businesses cut costs … unemployment increases and we spiral into depression. The government knows this, so what they’re trying to do with this budget is to create conditions that allow us to continue to spend.

“I’m not meaning to overspend, I mean continuing to spend on the sorts of things that we do day to day that we’ve all always done.”

Bushy revealed three key aspects of the budget which promote greater expenditure. The first area is infrastructure, which will draw the attention of property owners and investors.  

He said around $17 billion worth of infrastructure projects have been brought forward, which will not only create jobs and plenty of activity, but will also open up new real estate areas and opportunities.

“New infrastructure is actually a really good move because when we’re talking about roads, rail and major nation building activity, is going to create jobs and create a lot of spending,” he said.

“So, if you’re a property investor or a property owner like myself, then I always look at where that infrastructure is going to go, and try and get ahead of that infrastructure to take advantage of areas that are about to open up.”

Continuing on the trend of creating additional jobs, Bushy said wage subsidies have also been implemented.

“If we get people out of unemployment and into work where they’re earning income, they’re going to spend the money. So there’s some good wage subsidies that have been put in, particularly for people under 35, because the government knows that the youth and the young ones, when they’ve got income, they’re more likely to spend it,” he said.

“There’s been a lot of criticism of the government over older people not being accommodated. I understand that being the case. But if you’re looking at where to get the biggest bang for your buck, then older people tend to save it and put their money away. The government really wants to make sure that the money we’re making, we continuing to build the economy by spending and putting it back into the ongoing job creation.”

Bushy also delved into the impact of the tax cuts being provided.

“The third element that’s enabling us to spend more is by giving us tax cuts. So, that’s depending on how much you were earning. There’s a range of somewhere between $1000 and $2,500 extra per year that you’ll keep in your pocket, rather than giving it to the tax office. And for an average family, that’s roughly a bit over an extra $5000 that you’ll have in your back pocket to spend on things that are meaningful to you,” he said.

The budget has also provided big wins for first home buyers and new property investors, with Bushy explaining the savings and incentives that are emerging.  

“The government’s also given another 10,000 places in their first home loan deposit scheme, which effectively means that particularly first home buyers – and it’s focussed purely on newly built property – will be able to secure a loan with only a 5% deposit and they won’t have to pay mortgage insurance because the government’s guaranteeing that extra 15%, which will be a saving to most first home buyers of anywhere up to $10,000 or more,” Bushy said.

“Now, if you add that to all of the other incentives that have been added through HomeBuilder’s $25,000 [grant], first home buyers grants in each of the states, [and] stamp duty concessions in some of the states, for first time buyers you can get your hands on an extra $40,000 to $55,000.

“Then, if you take advantage of the Super Saver scheme, where you can put up to $30,000 super that goes towards your deposit very tax effectively, then there’s some really good incentives.

“Why is the government doing that? Again, that puts construction ahead of the agenda. And we’ve already seen a lot of first home buyers coming back into the market. New build homes require a lot of labour, which creates a lot of jobs, which creates a lot of income, which continues that merry go round in terms of the spend.”

When making budget-based decisions, Bushy emphasised that your approach and mindset will be huge in defining your financial future.

“What we do from here is absolutely critical in relation to the impact it has, because we’re going to go one of two ways – we can go further into depression or we’re going to come out of the recession. And the key thing that’s going to drive that is, are you an optimist or are you a pessimist? So there’s some pretty key decisions that you need to make around that,” he said.

“If you’re a pessimist and you hide your money under the bed and you continue to hold on to your cash and not spend any, then we’re going to spiral into depression. If you’re an optimist like me and you spend the money the way you normally would, that means our incomes will go up and that means the value of our assets will increase and we’ll get the economy back on fair footing sooner rather than later.

“So, keep spending to mend the economy, save so that you can pave the way for us to then invest in things that are going to increase in value. And if we do that, then we’re heading into good times.

“I think this is actually a very good budget. They needed to make that massive spend. They’ve kept it pretty simple. We just need to take advantage of that and get ourselves back on track because there’s some fantastic opportunities ahead. And for those who recognise it and take advantage of it, now’s a really good time to secure your future.”

Listen to the full Bush Bite video on Facebook below or access via Facebook here.

BUSH BITE – The Budget without the Bollocks and the BSWhat does it mean to you and what do you need to do about it?

Posted by Bushy Martin on Thursday, 8 October 2020

KnowHow founder Bushy Martin shares regular, live ‘Bush Bite’ videos on his Facebook page sharing tips and tricks to cut costs, boost your savings and take advantage of opportunities in property. Connect with Bushy here.

KnowHow is helping Australian property owners put an extra $400 to $1200 a month back in their pockets. Want to find out how? Contact us and we’ll tell you in 15 minutes if this is for you (no catch, no BS!).

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