FINALLY! Facebook takes on money scammers + Are we in a secret recession?

Hi everyone,

Happy Friday. Summer has begun, advent calendars are being opened, Christmas lights and trees put up and the sound of cicadas across our gardens. I love this time of year.

But there is still a flurry of financial and economic news which I reckon is important for you to be across.

In this week’s newsletter:

• The Aussie economy is stumbling along.

• Small businesses are doing it tough.

• Consumers are spending, but only if they can get a bargain.

• At long last! Facebook decides to fight the financial scammers.

• Property values continue to rise, but the market is definitely cooling.

• The changes at the luxury end of the property market.

• Travel money: What are your best options?

• How Australia’s government debt levels compare with the rest of the world.

The Aussie economy is stumbling along

Last Wednesday the Bureau of Statistics released the economic growth figures for the September quarter. This showed the economy had expanded by a paltry 0.3 per cent (below analyst expectations of 0.5 per cent) for annual growth of just 0.8 per cent.

It was the weakest annual growth since the recession of 1990 (if you take out the pandemic years). If you discount the impact of new migrants, Australia is in a per capita economic recession … and it feels like it.

Apart from new migrants the only reason we have any growth at all is because of record levels of government spending. As I’ve written about often, government spending is now even higher than during the pandemic - when governments had to spend on an economic stimulus to stop us going into another Great Depression with mass unemployment and business failures.

But we’re no longer in a pandemic or facing an economic depression. The economy is almost back to normal and fighting inflation.

The Federal Treasurer will quite rightly say government spending is the only reason we’re not in a recession. But the problem is that big government spending in an inflationary environment just adds to inflation, which means interest rates can’t be cut and the cost of living crisis continues.

It is a really fragile situation.

The economic slowdown is hitting small businesses hard

Small businesses are huge employers and they’re doing it tough. I wrote about the CreditorWatch report a couple of weeks ago which showed small businesses are closing at record levels.

One of the major reasons is that they’re being hit hard by rising energy and wage costs, which they can’t pass on through higher prices because consumers are under pressure and looking for bargains - not paying higher prices.

This week, the Australian Small/Medium Enterprise Resilience Radar (ASERR), by debt restructuring start-up AVA Advisory reveals:

• Over 25 per cent of small/medium enterprises (SME), which is equivalent to +860,000, say their business is “worse off” now than at the end of the pandemic.

• 33 per cent of small businesses are “worse off” when compared to 8 per cent of medium-sized businesses.

• 55 per cent have considered leaving/closing their business in the past year, with top reasons including, “too few customers” (36 per cent) and “a lack of profitable income” (29 per cent).

• One in three SMEs say they have a current tax debt, of which 68 per cent describe their debt as a burden on their business. 18 per cent that say this is becoming unmanageable without assistance.

• Food and beverage (42 per cent), retail (39 per cent) and professional services (36 per cent) are among the top sectors worse off now and are the three sectors with a higher proportion of SMEs saying profits have declined in the past 12 months.

It is grim out there for many small business owners which doesn’t auger well for employment. Businesses need to make a profit to expand and hire people. Otherwise, they start cutting staff.

Consumers are spending... but they are bargain hunting

The issue of consumers not willing to pay for any cost increases passed on by small businesses was reinforced in this week’s latest retail sales figures.

Retail sales rose more than expected in October as personal tax cuts, energy subsidies and a slowing in price pressures flowed through. Earlier-than-usual Black Friday discounting helped retail spending jump by 0.6 per cent in October, after September’s meagre 0.1 per cent rise. Retail sales were up 3.4 per cent for the year which is just below inflation, but the strongest growth since May 2023.

On the surface this was a good result but the Australian Bureau of Statistics (ABS) noted: "The rise in discretionary spending was driven by online discounting events while people also spent more on electrical goods, particularly televisions and other audio-visual equipment.”

At long last! Facebook targets financial scams

It’s about time. Meta is at long last cracking down on financial scams. Something they should have done years ago but which has taken pressure from the Government, the ACCC, media and the public to force action.

As you know, fake images and comments supposedly from me, have been used by these scammers to rip off unsuspecting Australians of millions of dollars. Meta has claimed there was nothing they could do about it. Now, miraculously they can.

One of the world’s biggest and richest technology companies has always been able to crack down on these scams but, I suspect, the lure of huge advertising dollars from the scammers meant the financial rewards outweighed their responsibilities to the victims of these scammers.

In February, Meta (the owner of Facebook and Instagram) will require financial services advertisers to verify they are a legitimate business and be appropriately licensed by Australian regulatory authorities.

Yes, it’s that simple. A stupidly obvious change which, as I say, should have been done years ago. To the end of September, there were $135m in reported losses from investment scams in 2024 in Australia, according to the National Anti-Scam Centre, with $35m coming from social media scams.

Financial services advertisers will be required to provide their Australian financial services licence number or declare an exemption. Individuals will need to provide a government-issued ID. The licence number will be authenticated by the Australian Securities Investment Commission.

It will apply to advertisers worldwide targeting Australian users on Meta’s platforms. The advertisers will also need to verify the business by uploading business documents. The person doing this will need to verify they work for the business, such as by supplying a work email address.

And, similar to political ads on Facebook, financial ads will require a disclaimer that allows users to see information about who is behind them.

Recently I was contacted by an elderly woman who had lost $100,000 clicking on a scam ad, illegally featuring my image and fake comments, which appeared on her Bible app which she read every morning. The combination of my image in the trusted environment of a Bible app gave the scam credibility in the eyes of this victim.

Another man recently lost $250,000 to a scam ad which appeared on a sports media platform.

Not only do these ads pop up on social media feeds and big platforms like Google and Facebook, but they now appear on legitimate news platforms as part of the programmatic advertising feeds at the bottom of news stories. You know those weird advertisements you see when you scroll down past the end of a story? That’s them.

Those advertisements and odd stories are provided by about four global tech companies who specialise in taking advertisements and distributing them globally. The legitimate news platform has no control over what appears on the feed, but they are paid for any reader traffic they generate.

The ones I’ve contacted to warn them of the scam ads using me simply say they have “no control over the content”. But they still take the money.

Not good enough.

Traditional media - television, radio and newspapers - are legally responsible for the advertising they carry. They can be prosecuted for any illegal or deceptive advertising.

Why can’t digital platforms carry the same responsibility? They are the ‘new media’ but play under very different rules.

Digital platforms would certainly take the issue more seriously if they had to pay compensation to victims of cyber scam ads carried by their platforms. Or, as big global tech platforms seem to pay so little tax in Australia, why not impose a levy on their Australian revenue which would then go into a compensation fund for the victims?

And don’t think it’s just grandma and grandpa being ripped off by these scams. It is right across the community.

According to recent Australian Tax Office (ATO) data, younger Australians have fallen victim to the most tax scams. People aged 25 to 34 reported the most amount of money lost to tax scams, closely followed by those aged 18 to 24. In contrast, those aged 55 and above were among those who reported the least financial losses to the ATO.

The problem is the scams are becoming more sophisticated and “real”. Gone are the days of scams which were full of typos, bad grammar, and promises of riches from foreign royalty. The ATO are seeing many more sophisticated scam messages using official language and fraudulent websites that mimic online services.

The changes this week, which include cracking down on text message scams, are a step in the right direction.

There is always a gap between advances in technology and government regulation. But that gap needs to get smaller.

Property values continue to rise... but the market is cooling

Aussie home prices rose for the 22nd consecutive month in November, up just 0.1 per cent. This is slowest monthly pace of growth since January 2023, when prices last fell.

Momentum in the housing market is slowing as sales volumes fall, advertised stock levels lift, auction clearance rates soften and affordability constraints bite.

The annual growth rate in property prices dipped to 5.5 per cent last month, down from October’s 5.9 per cent pace. It was the slowest annual pace since September 2023 - down from the recent peak of 9.7 per cent in February 2024.

The CoreLogic data showed that the monthly lift in national home prices was driven by a 1.1 per cent jump in Perth, a 0.8 per cent gain in Adelaide, and a 0.6 per cent rise in Brisbane.

But prices slipped 0.4 per cent in Melbourne (it’s the eight consecutive month of falls) and 0.2 per cent in Sydney (the third straight monthly decrease).

As these charts show, the slowdown is picking up pace because of continuing high interest rates, cost of living crisis and affordability.

The auction market ended the spring selling season with a whimper as the preliminary combined capitals clearance rate fell to 63.4 per cent, on par with the first week of November as the lowest early clearance rate of the year so far.

Dream home ... still a dream

It’s the top end of the property market in Sydney and Melbourne where values are softening the most, while more affordable areas are holding up pretty well.

Even so, it’s hard to believe the prices still being paid for properties at the luxury end of the market.

According to a report this week from Ray White chief economist Nerida Conisbee, when it comes to Australia's most expensive locations, the old money suburbs aren't budging.

Bellevue Hill, Point Piper and Rose Bay continue to top the list of most expensive suburbs for luxury homes in Australia. The top 10 per cent of these markets now have an average price above $11 million.

Sydney continues to dominate, with one Melbourne suburb, Toorak, appearing. But beneath the high-level numbers of the most expensive suburbs, the luxury market is now shifting.

Nerida has taken a look at not only where the most expensive luxury homes are located but also the suburbs that have seen the strongest increase in prices. Rather than looking at just the median price, Ray White have concentrated on prices and growth in the top 10 per cent of the market in each suburb to get a better read on the luxury end of the market.

Changes happening on the Gold Coast has seen it showing up in the luxury end of the property market. Luxury homes at Main Beach have nearly doubled in value since 2019, jumping from $3.8 million to $6.6 million. Not bad for a suburb that was sitting at 50 in the most expensive luxury market in 2019.

Surfers Paradise North is similar. The median price for luxury properties has surged past $6.7 million and is now on par with Coogee and Clovelly in Sydney. Mermaid Beach-Broadbeach also features in the top 10 of growth areas for luxury properties.

There is continued strength in luxury markets in Perth. Cottesloe in Western Australia has seen property values increase by $2.4 million in just five years. Prices are now similar to luxury homes in East Melbourne and Roseville in Sydney.

Canberra suburb, Forrest, is also a luxury home star performer. While Canberra’s property price growth is now relatively stable, the top end has seen impressive increases.

Meanwhile, traditional powerhouses like Mosman and Double Bay continue to perform well, but they're no longer dominating the growth story.

What does this tell us? According to Nerida, while the top end of the market remains relatively stable, albeit slowing, the path to luxury status is becoming more diverse. While it continues to be dominated by Sydney suburbs and Melbourne’s Toorak, the Gold Coast, Perth and even Canberra, are now seeing some of the luxury property growth in the country.

Bellevue Hill and Point Piper aren't likely to lose their crowns anytime soon, but the competition for top spots is becoming increasingly interesting.

Cash, travel, debit or credit cards? Why you should think about your money when travelling

Planning an overseas trip is exciting, but sorting out your money can feel like a bit of a minefield. Gone are the days of stuffing your wallet with traveller’s cheques. These days, you’ve got a mix of more modern options - prepaid travel cards, credit and debit cards, and of course some good old cash. Each has its pros and cons, and I reckon the smartest approach is to combine a few to cover all your bases.

Having just returned from an overseas trip, here are some of my tips that will help you work out what’s the best money mix for your next adventure.

Prepaid travel cards can lock in good exchange rates

Prepaid travel cards are a top choice for many Aussie travellers because they let you load up on foreign currency before you leave - locking in the exchange rate so you know exactly how much you’ve got to spend.

These cards are super handy if you’re hopping between countries since most let you load multiple currencies. And if you lose your card, the issuer can replace it, so you’re not completely out of pocket. Plus, there’s no risk of overspending - you can only spend what’s on the card, which is great for budgeting.

But it’s not all smooth sailing. Some travel cards come with annoying fees, like loading fees, ATM withdrawal charges and inactivity fees if you don’t use the card for a while. And if you spend in a currency you haven’t pre-loaded, you could cop extra conversion charges. So, as always, read the fine print before signing up.

Credit cards are perfect for big expenses (and points)

Credit cards are obviously the most convenient way to pay for things like hotels, rental cars, flights and meals while abroad. They’re widely accepted, and many travel-friendly cards now waive foreign transaction fees - a big plus if you’re making lots of purchases.

Some credit cards even come with perks like complimentary travel insurance or rewards points. But check the fine print, these extras often only kick in if you meet certain conditions, like spending a minimum amount every month.

One thing to watch out for is cash advances. Withdrawing money from an ATM using your credit card might seem like a quick fix, but the fees and sky-high interest rates will start adding up. If you need cash, a debit or travel card is a far better option.

A credit card is a must-have for any trip I take, but I use it carefully - and stay away from making cash withdrawals.

Debit cards are the safer option for day-to-day spending

If you prefer to spend your own money rather than rely on credit, go for a debit card. Most debit cards on the Visa or Mastercard network are accepted worldwide, and they’re great for controlling your spending - you’re limited to what’s in your account, so there’s no risk of coming home to an eye-watering credit card bill.

That said, international ATM and transaction fees can stack up pretty fast. Some Aussie banks have debit cards with no overseas fees, so it’s worth shopping around for one of these before you go.

Exchange rates

When deciding between a credit card or a travel card, be sure to check the exchange rates they offer and compare them with the mid-market rate to check that you are being offered a fair rate. Some providers include a profit margin in the exchange rate as an additional way to make money, or instead of charging transaction fees.

It’s always worth having some cash on hand

No matter how digital the world gets, there are still places where cash is king. Tipping, market shopping or that little café that doesn’t take cards – you’ll need cash for those.

I reckon it’s a good idea to arrive with a small stash of local currency for essentials like taxis or public transport to your hotel. But don’t carry too much - you don’t want to risk losing a big chunk of your holiday budget if your wallet goes missing.

You can buy foreign currency before you leave at your bank or a money-exchange service. Just shop around for the best rates and don’t do it at the airport - it’s notoriously expensive.

What’s the best mix?

There’s no one-size-fits-all answer, but I think a combination of cash, a travel card and a credit or debit card will cover all bases. Use your travel card or debit card for day-to-day spending, your credit card for big-ticket items and cash for tipping or emergencies.

Prepaid travel cards are great for peace of mind since you’re not dealing with fluctuating exchange rates or interest fees. But if you’re confident in managing your money, fee-free debit cards can give you more flexibility and fewer upfront costs.

How Australia’s government debt ranks on a global scale

As both major political parties head into their summer break and prepare for a federal election year, there will be a lot of focus on not only cost of living but also economic management. The next election will be focussed on the financial credentials of both parties.

While I write about the problems in the economy regularly and often criticise political parties, on both sides, on their decisions, the facts are that Australia is a well-managed economy when compared with the rest of the world.

While it’s un-Australian to acknowledge anything a politician does well, Prime Ministers and Treasurers on both sides of politics have done a pretty good job over the last 20 years. When you look around the world, you wouldn’t want to be anywhere else.

That’s why we are one of only nine countries in the world to have a Triple-A credit rating by all three major international credit rating agencies.

The level of government debt is often a hotly debated economic focus. This chart shows the level of government debt as a percentage of the size of the economy. A bit like your mortgage as a percentage of the value of your house.

As you can see, compared to the rest of the world, Australia’s government debt level is one of the lowest in the world.

Have a great week, everyone.