When the Catholic church put a candidate up for sainthood the promoter of the faith was employed as a cannon lawyer to argue against the candidate. The post became known as the devil’s advocate and by taking a skeptical view he acted as a counterpoint to God’s advocate who made the case for canonization.
Today I will be playing the role of devil’s advocate. The Firstlinks’ community has largely taken a negative view on the budget proposals released last week. I share many of these concerns. But here are two things I think are positive in the budget.
Negative gearing
When I first moved to Australia 11 years ago I struggled to understand the purpose of negative gearing. I still can’t figure it out.
Nobody has been able to explain how negative gearing currently helps anyone other than the person getting the negative gearing. It may once have encouraged investment in residential housing but the need for encouragement are long in the past.
Given the grandfathering of properties that are currently negatively geared – which I think is a good idea – it may take some time to return some sanity to the housing market. But the benefits shouldn't be discounted.
I don’t think it is beneficial for the country to have so much wealth locked up in unproductive residential housing. I also think that many people who are reaching for homes may be wealthy on paper but can’t enjoy that wealth because of mortgage obligations.
This isn’t a magic bullet that is going to fix housing affordability. Ultimately it is a supply and demand issue and not enough housing is being built for a variety of reasons. I do think this is a step in the right direction.
NDIS reform
This week I attended a talk by Luci Ellis who is the head economist at Westpac. She made some great points about the significance of the NDIS reform proposals. As Luci pointed out execution is key but this is still a meaningful step in putting the country on better financial footing for the future. This shouldn’t be ignored.
I’ve gone a bit budget heavy in this edition of Firstlinks. Noel Whittaker is not a fan. You can read his opinion here.
Matt Nolan from the e61 institute thinks the capital gains tax changes are sensible. Read his thoughts here.
Rachael Rofe weighs in on the impact of the budget on estate planning. Australia may not levy formal death duties, but a growing web of tax measures is quietly shaping what wealth is passed between generations.
Tony Dillon adds his two cents on the budget with unappreciated implications of the government proposals.
I would also encourage everyone to read my colleague Sim’s article on the budget. A lot of people my age are telling young people what they should or shouldn’t want. It is great to hear someone’s thoughts from Gen Z.
I’ve also written an article about steps investors should consider in response to the budget.
Mark LaMonica
Also in this week's edition...
Michael Collins argues the Iran war carries the hallmarks of a historic policy misstep. From oil shocks to fractured alliances, the war could tip an already fragile global economy into crisis.
Copper has had a rough few weeks. David Tuckwell says investors shouldn't ignore the potential for future price increases as supply increasingly falls behind demand.
Larry Swedroe looks at some unappreciated reasons why shares fall.
This week's white paper is Yarra's analysis of the 2026-27 budget and it's likely impacts.
Curated by Mark LaMonica and Leisa Bell
A full PDF version of this week’s newsletter articles will be loaded into this editorial on our website by midday.
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