The Budget, Small Business & Why Your Financial Future Is Political — with Sarah Harding

Extended Transcript

Melanie Suzanne Wilson (00:01)

Sarah Harding is on the podcast again. Hello.

Sarah Harding (00:06)

Hello, thank you so much for having me back.

Melanie Suzanne Wilson (00:09)

It's great. We're keen to talk about the budget and small businesses in Australia and what's going on.

Sarah Harding (00:21)

I know. So obviously I, like many other people, was tuning in on Tuesday night to hear the federal budget from home. And look, a lot of what was said during the budget speech and since I think was definitely to be expected.

So there was a lot of commentary in the media leading up to the budget around what the government was proposing to do on budget night, and some of the policy agendas for this budget. So I wasn't really surprised when I heard, I guess, the treasurer talking about some of the proposed changes to the tax regime or even just to, you know, who they're prioritising with their budget as well. So a lot of it was to be expected. And I guess since then, you know, I've definitely been following the commentary online about, you know, how people are feeling. And look, when you look back at the history of political cycles and governance, you know, they definitely say that the Conservative Party or the Liberals previously were definitely better with economic management. And I think today, everybody in Australia can definitely see why.

Melanie Suzanne Wilson (01:56)

Okay.

Sarah Harding (01:58)

Yeah.

Melanie Suzanne Wilson (01:59)

Let's unpack to start with all of that, because I'm going to assume and trust that I'd have people listening who are on any end of the political spectrum. And I wanted to clarify when we are talking about conservatives, the conservatives who I'm close to are not telling anyone else how to live their lives culturally, socially, at least from my view, love who you want to love and wear what you want to wear. But we're zooming in right now on the economic management and on how to handle finance. And it seems like some conservatives in particular are passionate about supporting small businesses. It's empowering for individuals and giving people opportunities beyond the dependence on the large corporations, be it the Coles and Woollies, whatever else, is that your understanding of all of this?

Sarah Harding (02:59)

Yeah, so I guess, I guess, if you look again at, you know, who the budget was targeting, and who I guess, or who was advantaging and who was disadvantaging, it was very clear to see that the themes that have always played out from a Labour government would definitely, you know, be entrenched in that budget, right?

It was very much like, you know, being seen to be helping, you know, workers who are, you know, paying a lot of tax at the moment. And, you know, the theme was very much around getting more people into housing, right? Because we all know there's an issue out there with the younger generation trying to get into their first home. So that was very much who it was pitched at. Very much anyone who was working at the expense of anyone who is looking to do anything else. Being the fact that what was clear was that anyone who was attempting to invest, not necessarily investing into superannuation, but anyone who was looking to invest, you know, before superannuation, was going to be in a worse-off situation, or they were gonna basically be paying more tax and finding it harder to get ahead and develop that investment. So from my perspective, pitching, I guess, first-time owners or people struggling to get into the market versus investors doesn't really fly right because anyone trying to develop an investment strategy that they can't necessarily afford a home straight away is going to be an investor. So, pitching, I guess, people who are trying to save for a deposit or even invest for a deposit against existing investors doesn't really sit with me. Hence why I feel like a lot of what was coming out was more kind of like political spin than actually looking to address the issues that they said they cared about.

So that was very much like, you know, present throughout the whole speech. You know, anyone I think who's worked in this space and like a lot of the commentary I've seen online, it's very clear that anyone who has worked with individuals trying to help them to, you know, save for property, get into a property, you know, invest their, you know, investing, taxation, like anyone who's just been in the system, who's basically worked with people is very much opposed to what the government's proposing, yet the people who seem to be working in the public sector, working as academics, working as people who basically have always just really kind of like maybe, you know, had an income, relied on their superannuation, those people are kind of like at the moment not understanding the, I guess, consequences of what some of the proposals will actually mean. And so,

Melanie Suzanne Wilson (05:55)

That's it.

Sarah Harding (06:04)

That's obviously a bit of an issue, right? So let me take a back step and explain how the system works, right? In a healthy economy. So in a healthy economy, and one that is really good, you have a system that allows for upward mobility, meaning, you know, the poorest people in your society are given an opportunity and a chance to develop wealth and raise up and invest and become self-sufficient. So that's the definition of a good society, basically. You're giving people that opportunity to be able to get ahead, invest for themselves, be prosperous, fund their own life. And then at the end of the day, they don't require as much from the government as some people do. That's, I guess that's the definition of a good society. At the moment, well, I guess, let me, how do I say this? So previously, Australia offered a lot of that. You know, the economic opportunity in the country was very much tailored towards, and you know, as Janine Ellis said, having a go, right? Within that, you know, having a go, that allowed people to develop capital. start a business, hire people which then had economic benefit, and then pay taxes, right? So within that private enterprise space, the robustness of that space allows for taxation to be generated and flows back to the government, right? And so in a healthy economy, you've then got your public servants who provide all those services that we do need. You know, and back in the day, it was very much around like, you know, infrastructure and transport and, you know, you know, that kind of stuff. You know, really for a good functioning society that allows for upward mobility, you actually need both of those sectors to be performing well, right? You need the government to be as efficient as possible, providing those services and providing kind of like that safety net that allows for, you know, people that, you know, might need to use those services to, you know, to still get them. But you also do need that private sector to grow and be prosperous and provide jobs and generate profits so that then they have taxation to then filter that through back to the government, so then you can then have a healthy society. So that's basically how a good economy would work, right? We all know that. So everyone works together for the benefit of the economy. Nobody's pulling each other down. Nobody's saying you're getting too successful. You should pay more tax.

Melanie Suzanne Wilson (08:36)

Thank you. Thank

Sarah Harding (08:56)

That's not the definition of a good society, right? Because if somebody is prosperous in business, they're hiring more people, they're raising wages, they're being more productive, they're solving more problems and more issues. So we shouldn't be kind of like targeting them and branding them and pulling them down, kind of thing. At the same time, we also shouldn't have a government.

Melanie Suzanne Wilson (09:12)

Thank

Sarah Harding (09:15)

That is so big and so powerful that they're in everyone's lives, they're in everyone's pockets, they're stopping everyone from doing anything because they need to, because they need to prove that their job is relevant, right? So you need to get a healthy balance in a good society need every, like, you need everyone regardless of what their role is, what their job is, who employs them.

Melanie Suzanne Wilson (09:21)

Thank

Sarah Harding (09:37)

To basically have the revenue coming in to pay the bills, to pay down the debt if we need to use it. Like it just all needs to function properly. So what I kind of was thinking, and I think a lot of people are thinking this at the moment as well, and it's traditional, this is what happens through labour governments, is that they prefer to create bigger and bigger governance. So government structures, departments, know, the government, they're basically out there now telling everybody that, you know, and I'm pretty anti this, right? Because if the government was working efficiently and effectively, why are our taxes so high anyway? But they're telling people now that the way to extract more resources or money, more money from the resources that we have here in Australia, is by getting the government involved in the resource sector to manage that for everybody, so we all make more money. But is that how it works? Is that really how efficient businesses operate and run? No. So every time that the government gets involved in things that it doesn't have the professional expertise to get involved in, we know cost blowout, we know projects fail, know, look at Robodebt, for example, the government killed a bunch of people.

Melanie Suzanne Wilson (10:27)

It pretty much did.

I have a question here. I'm wondering if you are saying an element of control in all of this as well, because when so many people are dependent on the government for their livelihood, they are not, well, they may possibly be more reluctant to criticise the people who are feeding and paying them. Do you think this is

becoming a control issue as well.

Sarah Harding (11:23)

Definitely, because if you think about it from a labour perspective, who is more likely to vote for the Labour Party? Is it the conservative-ish, I say conservative, what does that mean? But somebody who works in the private sector, who starts a business, who takes risk, who wants to get ahead and succeed, who's done really well, who is very much about like, you know, building and conserving and preserving, you know, does that person vote for the Labour Party? Usually not. The people who vote for the Labour Party, the bread and the butter are traditionally, it was very much like the, you know, working class person who did have just, you know, they had a job, and that was it for them. They didn't really want to do much else. Or it was the public servants, right?

So if you're thinking about like you're wanting to maintain your power in a society, you're always gonna skew your policies towards how can we create more of us so that people will continue voting for us, that we're dependent on us and we'll be able to keep our power, right? So that was very apparent through the budget. They basically, with the changes to capital gains tax, that's gonna penalise so many founders in Australia by paying more tax, right? So it's basically disincentivising people to start businesses here, grow businesses here, take the risk. And they're basically cutting the reward at the end of it by saying that you need to pay all this extra tax now because we're going to change the taxation model, because apparently the old model was just not fair. Even though they're not the ones taking all the risk and doing all the work, right? ⁓ So

That was very apparent through the budget. Yeah, all the policies that, you know, they were proposing around, like changes to the capital gains tax, changes to negative gearing. They're using these younger people who, you know, at the moment are feeling frustrated. They can't afford to buy, property prices have gone up. You know, they might not know where to go to get advice as well, which obviously that's a secondary issue. That's something I'm obviously passionate about. But that's what they're using to justify raising taxes across the board for everybody and making everybody's life harder while they sit there on their three to $400,000 a year incomes that are set at least for the next election anyway, and then they might get a nice pension when they retire. So, they're really what's the word? They're disincentivising investment, they're disincentivising starting a business, they're raising the level of complexity out there for people to actually try and manage their own wealth and money. And look, I was just talking to a financial advisor still working in the industry. And even they said, like, you know, they started 10 or so years ago, when it was cheaper to serve clients, it was easier to serve clients, it was less regulated, it was less complex.

Melanie Suzanne Wilson (14:02)

Yes.

Sarah Harding (14:22)

I was also talking to someone in the government recently, who called me a conspiracy theorist when I started raising these issues. Why would a Labour government try and create a more complex tax system and a more complex system for people to try and invest, to try and get ahead, at a time when the cost of getting advice for people has gone up exponentially?

Melanie Suzanne Wilson (14:39)

Thank you.

Sarah Harding (14:52)

So, you know, if they were really, this is what I think, like if they were really about getting people into their first home, think about what people do when they wanna buy, right? Just say you've got a good job, so you're probably really busy working all these hours, but you've got good cash flow. Where do they go to learn how to develop a deposit?

Melanie Suzanne Wilson (14:53)

Yes.

Sarah Harding (15:13)

Or what do they do to develop a deposit, right? Like, you know, do they jump online? Do they jump on the internet? And let's face it, there's so much on the internet now, who knows what the hell you should be listening to or not, right? You know, AI is great, but is it giving me the right advice? Is it right for me? Is it just giving me generic stuff? Who knows? So if the government actually wanted to get more people into homes, if they actually wanted people to then be able to afford those homes, why are they not doing anything about lowering the cost of advice?

You know what I mean? And to turn around and say, like, you know, well, people don't trust advisors anymore. Okay. How can we raise the trust threshold? Right? How can we make people, you know, trust advisors? How can we create that relationship again, and make sure that you know, people in the industry are ethical, professional, you know, it's seen as a profession, so that, you know, good quality people that don't, you know, do bad things want to enter it. And it's not too hard to enter.

But how do we actually create that trust again, so that people know where to go to be able to get the advice, to be able to then know where to buy, how much they can afford, how should they develop a deposit? And let's not like sting them with too many taxes as well, because that's just going to raise the amount of time they actually need to develop the deposit. If they actually did want to get people into homes, that's what they do, seeing any of that. All I'm seeing is a government trying to justify, through any way, any means, how to actually charge people more tax. And let's face it, I'm just so over this narrative that like, you know,

Melanie Suzanne Wilson (16:49)

Thank you.

Sarah Harding (16:55)

We just have to keep paying more and more and more taxes. But when we start asking about what are we paying for, where's it going, how are we contributing to it, what is a fair share? I might be paying 40, someone might be paying 200. What is a fair share? You're not allowed to, apparently. I feel like the system that we had that allowed us to build the country,

Melanie Suzanne Wilson (17:14)

Thank you.

Sarah Harding (17:24)

Like I said previously, at the start, that system is just breaking down. You know what I mean? It's not working anymore. You've got people now being penalised for having a go, for starting a business, for trying to get ahead themselves, at the expense of people who are looked after by the government, who are given a nice salary, regardless of what they do, doesn't matter if they go and blow up a hydrogen plant in Gladstone and waste $500 million. Like, who cares? Like, yeah, go for it, you know, they're looked after, they can do whatever they like, there's no accountability really there because people don't understand, you know, a lot of people don't understand politics, they just hear the, you know, the, I guess, the marketing messages, get like, they get sucked in. And it actually takes people a long time to realise that they're actually being scammed, right? Especially the younger, yeah. Feed the rant for a second because we are fed all sorts of things in the narrative. And one thing we need to translate and debunk early on in this is to say, when we are talking about investment, we're not only talking about the giant entities. We're not, we're not only talking about Coles and Woollies here.

I keep going back to them, but they do run people's lives a bit. We need to remind people that part of what we're referring to, and please let me know if this does include the really small businesses. I have two groups that I'm thinking of in my head. Firstly, there's the chip shop. And secondly, there is the person who does a day job, doing whatever and on the side, to really try to get by because things cost a lot.

There's someone who sure might've tried doing a whole lot of Uber Eats deliveries, but then wants to feel independent and has set up a side hustle or a business that they hope will grow to more. There is so many Aussies who are, I don't mind if it's a little candle stall at the markets, whatever that might be. And they are hoping that it will grow because keep in mind that I won't name names, a beloved skincare, it's not quite cosmetics, but there's a brand I know of that you'll find in the aisle of every bathroom section of the supermarket that started off as a concoction in a kitchen. I can say that it started as a concoction in a kitchen. So these small businesses have the potential to grow. And it sounds like these people, be it the chip shop that someone is completely serving all day long as their main source of income, their main business or the side hustles that people hope will grow to something more independent than serving orders, things like that. Or even people work in health, and then some of the apps make you actually be your own individual ABN, things like that. So you're not really employed by someone. So all of these things are going on. So are we talking about those people?

Sarah Harding (20:34)

Well, just yeah, look, and I'll just say like, it just shows how, I guess, ignorant and stupid this government is. Like I said, you know, we all know from history that Labour loses elections on economics. Liberals usually lose elections on, I don't know, maybe the social issues, maybe climate change. don't know. Like, I don't know why liberals lose, but they do, usually probably because they've been around for too long, not necessarily the economic side, but it's really silly, right? So the reason that we want a healthy small business community in Australia, and one that is prosperous, is that usually small businesses in Australia operate in Australia, they do an annual tax return, and they pay their taxes, right?

They're good taxpayers, obviously, when things are going well, and they're accountable to Australia. They can't shift money offshore. Well, most of the time they obviously, like, you know, if they are just small businesses in Australia, it's a lot harder for them to have complex tax structures to be able to avoid tax. So that is good for the government, right? Whereas this government is like, screw the small businesses, who needs that? They're really good, like they're good payers and they're very good to, you know.

to actually get money out of. Let's screw that. Let's just let these big institutions dominate the Australian marketplace. And then let's keep running ABC documentaries about how the gas industry really just sells its product for nothing from Australia to Singapore and then sells everything from Singapore because the tax rates lower and it's easier to do business there. So if the government knows that these multinationals are very sophisticated in their businesses to be able to then, you know, operate in more favourable tax environments, we're gonna give all the power to those guys, and then we're still gonna be able to generate more and more revenue from the business sector. It just, to me, doesn't add up, right you actually do still want a healthy small business community, which is able to thrive, which is able to grow, which is able to create jobs. And with every job that you create, someone has to pay, obviously, you know, personal tax, payroll tax, you know, all the taxes that come through that way. So, to try and disincentivise that within a community, I don't feel as sustainable. So if you think about you know, what they're doing now, adding complexity to taxes, making people pay more taxes if they want to invest, if they want to start a business. You know, it's really not sustainable. Bringing in a taxation model for GST, not for GST, for capital gains tax that we had in, you know, pre 1999, then kind of like not addressing the fact that we got rid of that because the system was too complex, you know, it doesn't make a lot of sense to me, right? And so I just don't think these changes will be sustainable longer term if they do come in. So I will say this as well. didn't say it at the start, but you've got to be careful as well, especially with government legislation and policy that

Melanie Suzanne Wilson (23:35)

Thank

Sarah Harding (23:57)

The media will highlight issues, they'll say the government's looking to do this, they'll say this is what's going to happen. But until legislation is actually passed through both levels of parliament, that's when it becomes law. So all we know now is what the government's released in its budget papers, what they're proposing to do, what their intention is with policy.

But until such time as they legislate that policy, we actually don't know whether it will become part of, you know, part of law in the country. So, anything I say now, I'm basing on the fact that, you know, Labour have suggested that this is the direction they want to go in, this is what they want to do. But again, until such time as it's legislated, we actually don't know, you know, the wording of that legislation and how it will then flow into law within, yeah, within the economy. But I just, yeah, I just can't see how any of it's going to be sustainable longer term. You know, and at the same time, everybody knows that government spending is blowing out, right? You know, so where's the revenue coming from? All I'm hearing is like, let's shut everything down. Let's shut the resources down. Let's overtax everything. But as we know, you know, if you've got no investment coming in, you've got no capital coming in, you've got no jobs being created, you've got no people paying tax. So where's the money coming from, right? Less people are like, you know, trading properties now because, you know, why would you want to, you know, sell a property? What else are you going to do with the money if you sell it? Like it's, it's, it's, yeah, it's, I feel like they just, it's all being done for politics and less for the actual, you know, economy.

Melanie Suzanne Wilson (25:31)

Wow.

Sarah Harding (25:38)

And so I think people are going to start to realise that by the next election, when people are paying more taxes, when it's more hard to buy a property or existing property or get ahead or pay for advice or pay for the cost of living, people are going to start to realise that not having an investment mandate is just going to basically not be great.

Melanie Suzanne Wilson (26:00)

Okay. A few things here, buying a property. I'm going to take the leap and guess that people will even have more of a chance to buy a property if they are empowered to create their own businesses, partly because the world with AI overseas with the global economy, the world is favouring founders now, but also

Sarah Harding (26:03)

Yeah.

Melanie Suzanne Wilson (26:29)

How many people can really buy a house, especially in a major city, but in all sorts of places? How many people can buy a house with a typical salary these days? I'm assuming that people need to create a business at least on the side of a job, even if they don't want to do that as their entire occupation. Do you see that something like that is needed to even own a home? Even regardless of what measures are done specifically for housing, it seems like this area is going to impact housing affordability anyway.

Sarah Harding (27:14)

Exactly, yeah. So, when you buy a house, especially in an economy where house prices are high, it's not just about having the income, it's also having about the capital, unless you're one of that like top, you know, 0.1 % of the population that, you know, makes a million plus per year kind of thing, right? Like if you're someone who is the majority of people out there that, you know, might be earning 100,000, 150 in a city, you know, you've obviously got borrowing constraints around how much you can borrow.

So if you do want to buy a home, you need capital. So where's the capital coming from now? You know, how are you developing that capital? If you're saving in a bank account, that's going to take you forever, right? If the cost of living is high, and you obviously need a lot of, you know, control over your spending, you need a lot of discipline. And so it's becoming harder and harder if you want to, like before, previously, prior to the budget, and the changes coming in. So before, I guess the tax environment incentivised more favorable outcomes if you were a growth investor. to say, for example, you had $5,000 and you wanted to buy a growth ETF and you wanted to generate, so an ETF is like a basket of shares wrapped up into one share, which is traded on the market. And so,

Melanie Suzanne Wilson (28:24)

Sorry, what is that for those who don't know?

Sarah Harding (28:34)

If you wanted, you know, for that share price to exponentially grow so that you could obviously turn your $5,000 into $30,000, let's say, you obviously need, yep, you need good returns, and you need favourable tax, right? But under this new tax regime that that labor want to bring in, you are now all you're all you're now doing on your big game is paying more tax. So the capital you've got left over is actually going to be smaller, right? So

Melanie Suzanne Wilson (28:45)

That's fun.

Sarah Harding (29:04)

It doesn't favor people who are trying to invest that capital to develop more of a deposit to be able to have more of a deposit to buy a home in an environment where property prices keep going up, right? So it's like I said to you, the way that they've structured this new tax regime is penalising anyone who doesn't have the capital at the moment to be able to afford to buy a home or afford to buy assets.

and then telling people it's about getting them into homes, right? Like, I don't see how that's the case. The only thing that they're doing for that, which is obviously problematic, is that they have said that people can keep the 50 % capital gains tax discount if they buy a new property, I believe. So if you're buying a new build, you can choose the model of taxation, which is obviously gonna incentivise people to, you know, buy new properties.

But at the same…

Melanie Suzanne Wilson (30:05)

Hold on, hold on. So that's not just a first home buyer but an actual new property that is being built new.

Sarah Harding (30:12)

A new property. Yeah. Yeah. So

I think the direction of the government is that they want people to be buying these new homes, and for established homes, obviously, then under the new tax regime, you'll just be paying more tax for holding these older homes.

Melanie Suzanne Wilson (30:27)

Okay.

I'm going to call out the environmental angle here. I know we're sticking with the money talk, but I'm sorry, but if someone cares about the environment and wants people to use the resources that already exist, then why give people extra incentive just to pay for new builds in presumably new, cleared land, unless you're rebuilding?

Sarah Harding (30:57)

Well, yes, guess, you know, we all know that, you know, this government and Labour governments all love to rely on immigration because it looks like the country is growing, right? Rather than working on productivity in the economy, getting people more productive, earning more money, paying more tax that way, like, you know, growing.

They obviously wanna bring in a whole bunch of new people, and they're hoping that those new people, over time, will then vote Labour because they'll owe them, which then obviously means that they can still win elections in the future. It's all strategic, right? They obviously need to provide more housing for the amount of immigration we've got because when you've got so many houses in an economy and you've got so many people, right? If you stick in a short period of time, an exponential overload of more individuals into that economy, while not also building out the infrastructure and the housing to accommodate, you then put more pressure on the housing crisis, right? So this government actually needs people to be incentivised to help build those new homes in new places to help build out the economy. That's ultimately what they're trying to do.

Melanie Suzanne Wilson (32:15)

Interesting, interesting. And of course, as the housing turns into a crisis, it's impacting the quality of life and the health for people. I can tell you I've seen the most bizarre rental setups in Sydney. I think I might get away with calling this out. There was a place that I nearly moved to at the beaches and then people revealed it was registered as a warehouse and not residential.

You know, that's the place I was going to move to when I told you I was moving, and I realised, okay, I can't do this. And then I was looking at a place near another beach and the so-called kitchen was literally out in the backyard, under just a shed veranda roof thing. This isn't even a full shed. It was just this tin roof. mean, sorry that's taking the Aussie stereotype too far. What happens during rain or hail? This was not actual housing. That's, I mean, I get that there's the phrase put a roof over your head, but let's go a step further. Add walls.

Sarah Harding (33:36)

Desperate times call for desperate measures, right? Like, yeah, it's, it's not good. So I think that's that is obviously so if you look, I was thinking about it today, right? If you look globally, at different countries and economies where this socialist left agenda of making sure that everyone is poor, and maybe 1 % of people are rich, right? ⁓

Melanie Suzanne Wilson (33:46)

Yes.

Sarah Harding (34:09)

and not letting it, like I said, the social mobility, not letting anyone else get rich. If you look at how that's structured, like across the globe, it's actually pretty bad, right? So, like Los Angeles, for example, we all know has the most homeless people in the whole of the United States. What type of governance structure does California have? Hugely left wing, we know that, Europe, for example, where is the highest rate of unemployment today in Europe? Finland.

Is that a right or a left wing, you know, society?

Melanie Suzanne Wilson (34:43)

looked into Finland a lot, but the example I can think of is Tony Robbins said that he visited a communist country, and he saw some, I think they were bureaucrats, they were public servants, whatever, living the whole lifestyle, as then down the street, people were lining up for, I don't know, bread, rations, something like that, and so people had been

Sarah Harding (35:08)

Exactly. level of, yeah, in so in socialist communist, you know, countries, we know, just through people's experiences, that the inequality gets worse, it doesn't get better, you actually do need a conservative, right-wing government to tackle, you know, putting the policies in place that allow for those people in poverty to be raised up and to be able to get ahead and get a job and then start to invest and then start to buy things and then start to sell funds, right? You need that structure in place, but it goes against that philosophy of the communist nation that everyone has to pay their fair share. Everyone has to pay thousands in tax. And if you're not paying half your wage or 70 % in tax, then you're a bludger. You know what I mean?

Could you imagine going to someone that has to live in that house because they can't afford anything else and saying, " Are you paying your fair share?” Like, you should be paying more tax. Like, it's not actually what those people need, right? They need structure. They need a system that allows them to get out of that position and get into a position where they're productive people in society and they're giving back. And so look, they have been like, like I say, traditionally in...

Australia, we have had those, you know, those, those systems, right? Like, you know, people have grown up in housing commission, and they've gone out, and they've got really good jobs, they've skilled themselves, they've started businesses, and they've been really successful. Like, there's so many success stories out there like that. But if we change the tax system the way they are, we are, we are disincentivising those people from starting those businesses, from giving it a go, from being able to develop that capital that they needed for that business to grow, right? And so that's where it becomes problematic. So in hugely socialist societies as well, people aren't talking about it at the moment, but allowing the 1 % to hold everything and everybody else to have nothing, the risk in that is that people get so angry and so upset that they end up burning your house down, right? Like the last time I was in LA, that was just before the fires. So I was researching about it. And yeah, someone had like, was getting charged for lighting a bunch of fires across LA. And it basically just like everyone's house when all these celebrities’ houses went up in smoke, right? Because the issue is socialism doesn't work. Because if you don't give a go to the person that doesn't have anything, they're gonna burn your house down someday.

Melanie Suzanne Wilson (37:34)

Thank you.

These people didn't get the support that they needed, and that's what happened before they felt that resentment.

Sarah Harding (37:52)

Exactly. And so the story was this person, yeah, was really resentful of rich people, they're all bad and tax the rich and screw them and all this kind of stuff. You realise that the rich haven't created that the government has created that that is a system problem, right? So if the government was smart, and the government did care about care about people, they would be seeing this as a red flag, right? You want to lower that level of resentment in society. want, and again, you want everyone to work together. Everyone, you know, stop telling everyone they're going to be equal. Nobody is equal, right? Some people, unfortunately, are just severely disadvantaged, while other people are just, you know, really, really lucky to be really skilled at something and do really well, right? You're never going to remove that from a society that you know, that equal outcome, right? Like, so we need to structure society so that regardless of your circumstances, regardless of how much money you've got, regardless of how talented you are, everybody can work together to make it a better place.

Melanie Suzanne Wilson (38:54)

Okay. That is busting the stereotype about economic conservatives because you are not shaming the people who are in a particular circumstance, and you're not shaming the ones who have particular abilities or hurdles to overcome in a way it's the opposite. And I can relate to this so much. There are structures out there that pretend to give people opportunities when they're actually not, and also, I can have so much compassion for anyone who is trying to sort life out, and we know that that happens to People on this end of the political spectrum as much as the opposite, I'll say personally on my end. It feels like a month or two ago, if that, it was about a week or two before Easter that I fainted, and I realised I have to take a moment. And I have not seen many conservatives or people from that space at all saying, just get up already. No. People are compassionate. And what I'm saying and what you were saying is that people need genuine opportunities instead of, instead of restrictions and control over how the opportunities form, because there are more ways to look after yourself. Yes, people need to get a job, and that's a part of it, but people need more self-care than only having a job that does mean a business, and it can mean investing. know that people are talking now about very small-scale investing.

I know that a lot of people, including myself, would have assumed that investing means you need thousands or millions to put something into something large, but have you seen there are very small-scale ways for people to explore the possibility of investing?

Sarah Harding (41:01)

Yeah, but you have to be cautious now, right? So that's the main thing that came out of the budget was the fact that, you know, if you are an individual by yourself and you are, you know, starting out or you're trying to develop some capital, if you are now to invest into just saying, you know, small investment and you, you you top that up all of the time, as soon as you sell that now, if you, know, previously to the, you know, to, I guess, yeah, prior to what the budget was announcing, if you held that investment for over 12 months and it grew in value, you would get a 50 % discount on the gains that you made from that. So the remaining 50 % would then be taxed at your marginal tax rate. And so that would be better for you as someone trying to develop some capital to be able to, kind of like, yeah, to develop that investment. But moving forward as an individual, if that's the case, so they're just about to change the model. So that let's say, for example, you have $1,000 that you put into an investment, and you're topping that up all of the time with your salary and trying to build it. And then in three years’ time, you sell it for 3,000 or whatever, or 4,000 or whatever. You have to work out what the actual, and this is where it's gonna get confusing, because you are now going to be taxed on the proposed gain that you've made in your own personal marginal tax rate minus the inflation of the actual investment. So as you can imagine, every single year inflation is actually different, right? Some years at 7%, some years at 3%, depending on how they manage the economy, they will give you some way to work out exactly what your gain is, factoring in all the inflation that's gone into that gain since you've owned it. So as you can see, this allows for, I guess, I feel like it will probably allow for lot of administrative errors, people not understanding. Obviously, it depends on how it is actually…

Melanie Suzanne Wilson (43:05)

Okay. And you mentioned portfolio, and that will translate to people who are perhaps looking at shares, things like that. I, I would love to understand shares, and I wish everybody would, but would this also apply for simple down to earth scenarios where perhaps two friends want to set up a new a new business or someone wants to help an existing business and chip in a bit. Is that another form of investing, or is this mainly the complicated form like shares

That is spot on. You mentioned scams. That's a whole thing in itself. I was recording right before this one with a former detective who said some scammers will put effort in for years. She talked about that's a whole thing in itself. She mentioned romance scams where people seriously rip people for years on end. It's not just a click of a button, but

Yeah, people lose tens of thousands, people lose all sorts of money. That's a whole thing.

Right, right. You mentioned the cost of advice. I would hope there are some people who can afford advice more than they think they can. I never even looked at the cost of advice. I'd have no clue about the numbers. And I think advice would have been handy many times in life for everybody. And you talked in the previous episode you were on about how the cost exists for a reason because

It's not cheap to run that business. It's, there are essential costs in providing that financial advice service. So it would be nice to explain to people for a moment, the investment. Look, salespeople say don't use the word cost. So it would be good to explain to people what they would need to contribute.

into receiving financial advice and why it is working that way. And also, I'm hoping there would be anything else. I know people need individualised advice, but if there's a book someone could read to get just a bit of a start, anything at all. And look, if there are some apps that help people a little bit, again, this feels a bit like when we're talking about health-related things, and you say, seek professional advice for your individual situation. Yes, but what can people do?

It sounds like the irreplaceable aspect is the accountability and the social connection, so to speak, with a fellow human who is encouraging you beyond simply being informed, and you're spot on because it's like what Jimmy said in another episode that people have the information. I mean, sometimes people don't know about something, like when someone gets scammed, they don't want to get scammed, but with some things, people either know the info or they know where they could find it, things like that. But it takes, it takes guidance from fellow human beings to guide people on prioritising their economic self-care and prioritising being proactive, and this is the theme of the week. You're one of a few this week to say, look, don't wait until a breaking point with whatever is going on and be proactive, it self education and also preparation of all sorts.

You have to have the courage and the mindset to be willing to seek opportunities and connect with people. I appreciate so much that the connection is a part of what you identified as the opportunity. I agree so much. There were plenty of moments when I was in a situation I didn't even understand or wondered how I would handle, but then getting out there and connecting with people.

It guides things onto a better path. So that's something anyone can do, because let's hope, actually, here's a point. Yes. Individual advice is great, but you also host a community, and that's a way to connect with people near you; you have something that people can go to if they are near your area. There is the voice of Mozman, and I have set up a membership platform for the Motivate Collective. And again, this is an example where things start small because we have listeners from anywhere in the world. And if people want a conversation, if people want a sense of community, we are here.

We are not expecting anyone to do this in isolation. So that's a way to connect and to grow and rebuild. So it seems like there is hope, and whatever happens in the government that we can't control, they will do what they will do. People can still connect and find solutions.

Yes, Sarah, thank you.