The Leadership Vacuum – An Unvarnished View

I can barely begin to express the extent of my disgust at the lack of true leadership in our country’s political sphere.

While I’m not known for subtlety at the best of times, the kit gloves are off when it comes to attacks on Aussie property investors.

Frankly, the lack of support for the vital role landlords play has me convinced the last ten years must be marked down in history as the Decade of Dickheads in High Places!

Here are my untethered thoughts on where it all went wrong, and how best to fix it.

Aussie Aspirants

We have a segment of the population whom are motivated to secure their financial future, but consistent moves by our so-called leaders not only stifle the enthusiasm of smart financial thinkers, but actively penalise them for wanting to get involved.

It completely frustrates me.

Property investors have become whipping horses for political point scorers.

When you actually bother to research a thing or two about this industry, it’s obvious the rhetoric touted by these talking airheads isn’t supported by actual evidence.

The vast majority of Australians who own an investment property are typical, every day, middle-class folk just trying to fund a decent standard of living in retirement.

Over 90 per cent of them own just one or two properties. It’s a long way from the ‘fat cat’ image that spineless pundits like to paint about the landlord class. And, if anyone’s worked hard enough and been disciplined enough with their money to have a bigger portfolio, good luck to them!

These every day Aussies should be applauded, not punished. They are role models for important character traits such as goal setting, sacrifice, independence and having a go.

Borrowing Bollocks

Australians have a special connection with the concept of property ownership, and for more than two centuries, it’s provided both shelter for the population (which governments clearly can’t afford to fund) and a vehicle for securing a good financial future (thereby also reducing the unsustainable strain on the government purse from aged pensions).

Look through our country’s history and you’ll find a miniscule proportion of Aussies have found themselves in fiscal difficulty as a result of borrowing funds to invest in residential real estate.

But over the past few years, there’s been an unfathomable approach in the way the big end of town has treated investor finance. It’s been hair-brained thinking of the highest order with no historical precedent to support the moves.

Commentary during the Banking Royal Commission would have everyone thinking that banks throw money around willy-nilly. Let me tell you that for every parcel of 1000 residential property loans approved over the last decade, 950 should have been approved. During the BRC, we heard the stories of the ‘worst 50’ loans – ones that should never have been approved.

Instead of dealing with the banks for inappropriately approving those 50 loans, the regulatory response was to strangle the life out of credit policy – in essence, to start declining 500 out of every 1000 loan applications!

The whole thing was an enormous overreaction that is depriving responsible adults the opportunity to move forward with important life-building decisions.

The BRC was a great opportunity to look at the loan-application process and put modern technology to good use by improving efficiency. Instead, we’ve squandered the occasion and replaced the aeroplane with the horse-and-cart on the tech front. It’s not as if home loans are a new fad!

There’s more. We’ve made it harder for anyone looking to buy real estate by introducing a new loan assessment process for calculating a borrower’s living costs. From uber eats to holidays and handbags, banks are now heavily scrutinising every single financial transaction that a borrower has made and refusing to accept one’s ability to adjust discretionary spending as required – we are now treating adults like 2-year olds.

More than anything else, the knock-on effect of this macroprudential credit policy strangulation has been detrimental to the national economy.

It is stupidity on steroids!

You Cannot Multiply Wealth By Dividing It

There’s a well-established history of knocking down those who dare to improve their prospects through vehicles such as real estate investment. Australia has grown to become world champions at the tall-poppy syndrome.

Government statistics prove that most people aren’t anywhere near financially self-sufficient by aged 65. Society’s legacy for poor financial literacy is that more of our taxpayer’s revenue is spent on aged pensions each year than anything else. Approximately $50 billion last year.

But, instead of encouraging households to invest, we penalise them. We charge them higher stamp duties, higher interest rates and we slug them with land tax and CGT that homeowners don’t have to pay.

There are many snipers out there whom applaud the idea of taking more away from those who’ve earned it through hard work. Good leadership involves encouraging people to be better; to have a go!

‘You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from someone else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my friend is about the end of any nation. You cannot multiple wealth by dividing it.’ – Dr Adrian Rogers [1931]

Moves To Improve

So, after several years of good work rebuilding the national economy at risk of coming undone, the RBA has felt it necessary to step in because of two self-inflicted actions of hypocrisy.

1. Depriving deserving people of the opportunity to realise life-changing goals while significantly reducing the revenue filtering through our ecosystem.
2. Imposing a raft of policies which essentially take from those who’ve already made sacrifices and give to others who complain loudly but do little.

Well, here are my thoughts on turning this ship around.

Firstly – better financial education across society is crucial.

I remember a lesson in my early primary school years wherein my teacher explained the importance of saving some of my pocket-money for expensive items and upcoming events. This simple principal was the start of my program of enlightenment about the key fundamentals behind personal finance and future planning.

Why financial education isn’t a mandatory part of curriculums is beyond me.

Next, let’s look at ways to support investors. They take educated risks to build better lives, and the flow on upside benefits us all. But instead of referring to investors as role models for goal setting and financial responsibility, we criticise them, blame them for everything under the sun, and use them as bate for the tall-poppy syndrome.

Finally – to those who dare to dream, don’t sit idle and trust the ‘brains’ of those in so-called leadership positions to make good decisions which encourage everyone to better themselves. Don’t allow yourself to get engrossed in those few negative things that dominate the headline of the day.

Take note of the fact that, by 2035, Australia’s retirement age will be 70 and the overwhelming majority of the population won’t have anywhere near as much in superannuation as they require.

Take charge and forge your own future, because the one thing that we can all control is what we do with our time and what our money.

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