Gov't spending is officially out of control + The hidden health insurance perk

Hi everyone,

A busy week for me as I’m right in the thick of producing the current season of Your Money & Your Life which airs on the Seven network at 1pm every Friday and then on demand on 7Plus.

It has been fun visiting a lot of Australian families in our Kochie’s Budget Challenge segment to help them find savings on their biggest bills. We found over $9,000 in savings for one family!

In this week’s newsletter:

• Government spending is out of control.

• The RBA commentary on interest rates.

• Rental increases are starting to slow.

• How fast are properties selling?

• At-home medical care can be part of your private health insurance policy.

• The economic benefit of help from grandparents.

• Who eats the most peanut butter?

Government spending is just out of control

You all know this has been a bugbear of mine for a couple of years. While we have all been lectured on tightening our belt to fight inflation, federal and state governments have been gorging on a spending binge of record proportions.

According to a report from the Centre for Independent Studies (which is an economic think tank) released this week, federal and state government spending has hit the highest level since the end of World War II.

And more than half of all voters rely on governments for most of their income ... public service wages, welfare benefits or subsidies. As a taxpayer, just think about that.

Do we want governments - using our taxes - to drive the economy, or do we want business and consumers to drive it?

Governments had to spend big during the pandemic lockdowns to stop the economy plunging into a depression. But once the economy got back to normal, government spending should also have reverted to normal.

It hasn’t. The total federal and state government spending has surged to 39 per cent of GDP (GDP is the size of the economy), up from about 34-35 per cent before the 2008 global financial crisis.

Remember, you and I fund this spending through paying tax. So, when governments complain about having to lift taxes to balance their budgets the answer is simple ... just cut your spending back to normal levels rather than lift taxes.

The biggest lift in government spending has been the National Disability Insurance Scheme which costs $52 billion and makes Australia one of the biggest spenders on disability in the world. I think the NDIS is a wonderful initiative, but I can’t help thinking whether it needs to be reined in a little and made more efficient.

From the Reserve Bank … in their own words

A couple of weeks after every RBA board meeting, the minutes of that discussion are publicly released … the official record of what was actually said and debated at the meeting. It’s a fascinating insight into what actually happens inside these meetings which determine the repayments of millions of borrowers.

The minutes are especially fascinating after an RBA meeting which has surprised the financial markets. Like the one earlier this month. Markets were almost unanimously expecting interest rates to be cut … they weren’t.

So why weren’t they? The minutes of that board tell us why. What did they say?

• First of all, RBA board rate decisions are usually unanimous. Not this one. Six board members voted for interest rates to remain held. Three board members voted for a 0.25 per cent rate cut.

• Those six in the majority wanted to wait “for a little more information,” including quarterly consumer prices data to confirm inflation was slowing.

• Lowering interest rates for a third time within four meetings was not consistent with its “strategy of easing monetary policy in a cautious and gradual manner”.

• The RBA’s board believed rates at 3.85 per cent were still “modestly restrictive”, but “it was difficult to determine with precision how far interest rates needed to fall before monetary policy was no longer restrictive, and so members observed that it might be prudent to lower interest rates cautiously as the required degree of policy restrictiveness declines.”

• The three board members who voted for a rate cut argued, “there was already sufficient evidence” that inflation was on track to be sustainably back to target. Also, “All members agreed that, based on the information currently available, the outlook was for underlying inflation to decline further in year-ended terms, warranting some additional reduction in interest rates over time.”

• In terms of surprising the financial markets with their decision, the board said, “There had been previous occasions when market participants had been very confident about the outcome of a monetary policy decision but the [RBA] Board had decided on an alternative course.”

• In terms of actual economic data, the RBA said private demand, new dwellings and durable goods inflation had been in line with, or even “slightly stronger” than forecasts, which was high and they were hesitant to ease rates. While March quarter economic growth was anaemic, private demand was “stronger than expected” and the labour market had not eased as expected, assessing that “labour market conditions were tight.”

• In terms of the uncertain global economic outlook, the RBA board believes the most severe downside scenario had “declined”, although “the future state of US trade and other policies was unpredictable.”

Since the last board meeting, the unemployment rate for June rose to 4.3 per cent and is showing a distinct easing in the jobs market while building costs are slowing.

If the June quarter CPI figure, out next week, slows further within the 2-3 per cent target range, then a rate cut will almost certainly be agreed at the next RBA board meeting on 11-12 August.

Rental increases are starting to slow

The rapid increase in rents has been a major driver of inflation over the last few years, but there are strong signs of it slowing, particularly in Sydney and Melbourne.

According to property research group, Cotality, the rolling quarterly change in national rental values was up 1.3 per cent over the three months to June, and 3.4 per cent annually … the lowest yearly increase since February 2020.

But the number of rental properties on the market is still well down. Cotality observed around 100,000 rental listings nationally, roughly 23 per cent below the previous five-year average, or around 29,000 fewer listings than it usually sees at this time of year.

It seems demand for rental properties has been easing because of the cut back in immigration numbers and a rise in the average number of people living in a house - adult kids moving back in with parents or sharing houses with others.

Over the past five years, rents have increased by 42.7 per cent nationally, taking the median weekly rental value almost $200 higher to $665 per week. Annualised out, this is equivalent to an additional $10,350 per year, spent on rent.

Considering wages are up only 15.8 per cent over the five years to March 2025, it’s no wonder renters are bringing in flatmates or moving in with parents.

But the most recent data shows the worst could be over … at least for Sydney and Melbourne renters where annual increases are now below the inflation rate.

Rental increases in the smaller capital cities still remain hot on an annual basis but the most recent monthly and quarterly figures show signs of slowing.

How fast are properties selling?

With the Spring Selling Season fast approaching it’s a good time to know just how fast properties are selling.

According to real estate giant, Ray White, the median number of days it takes to sell a house has stabilised to 31 days, but that number obviously changes between cities and suburbs.

Perth is the fastest-selling capital city, with houses taking just 13 days to sell… up slightly from nine days last year but still at a decade low. The numbers are remarkable: 76 per cent of Perth suburbs sell within 0-14 days, and another 21 per cent sell within 15-30 days.

Brisbane follows as the second-fastest selling capital city, with houses spending a median of 21 days on the market. 19 per cent of suburbs sell within 0-14 days and 64 per cent sell within 15-30 days. Five suburbs sell within 8-9 days across a tight price band of $522,500 to $750,000.

Adelaide's median days on market has remained remarkably stable around the 32-day mark over the last three years, showing minimal volatility compared to other capitals. No suburbs have a median days on market under 14 days, while only 3 per cent take longer than 60 days.

But Sydney, Hobart, and Melbourne markets are showing an increasing time on the market for properties.

Sydney has moved from around 25-30 days a decade ago to its current 34 days, representing a significant slowdown.

Melbourne's current 36-day median places it among the slower-selling capitals.

At-home medical care as part of your health insurance policy

With winter in full swing and colds and influenza sweeping the nation, there may be a way for those with appropriate hospital cover to receive care in the privacy, and comfort, of their own homes.

Several leading health insurance providers offer at-home care with some of their policies, meaning Australians with cover who meet eligibility requirements and have served relevant waiting periods could receive medicines, treatments, infusions, physiotherapy, dialysis, post-surgery rehabilitation and more, all from within their own four walls.

With our most vulnerable at risk of serious illness if they contract COVID-19 or influenza, health insurance is an effective way for Australians to continue receiving the care they need safely.

According to comparison website, Compare the Market, many health insurers offer various at-home care programs for a range of illnesses and conditions in some of their policies. While these home management and support programs aren’t compulsory for insurers to offer and do vary between providers, many Australians are missing out on at-home care because they simply don’t know what’s available to them as part of their policy.

Always check your policy wording for inclusions in your level of cover. If you’re eligible for at-home care and not currently receiving it, chat with your insurer about what you need to do to sign up. The treatments and programs available do vary significantly between providers, meaning some Australians may not be getting the most out of their current policy.

Just as department stores may stock exclusive items, it’s a similar story when it comes to health insurance and at-home services. Some are going to offer a greater variety of treatments you can receive at home, while others will offer minimal treatments or none at all.

You may be able to find at-home treatments with another insurer and if you’ve already served your waiting periods, they may allow you to switch and start taking advantage of these services sooner.

While Australians who don’t yet have hospital cover will need to sit out the relevant waiting periods before they can benefit from at-home care with their insurer, it’s worth considering if you think you’ll need care from home in the near future.

Like all insurance products, health policies require you to serve a waiting period before you can claim. However, for people with chronic conditions or who anticipate undergoing major surgery in the near future, policies boasting at-home care can be a life-changer.

It’s worth noting that Medicare can cover some telehealth costs for appointments with GPs, specialists, nurse practitioners, obstetricians, registered midwives and allied health professionals. This is another alternative for Australians who aren’t comfortable visiting hospitals or doctor practices amid a surge in illness in the community.

The Australian Government also offers at-home healthcare services for older Australians, but people may still be subject to public waiting lists.

This is where health insurance can come in handy. Even for those who don’t yet have a policy, you can sometimes access at-home care quicker than you would if you waited in the public system.

The cost of 'greycare': If grandparenting was salaried

With the latest winter school holidays around Australia now at an end there are a lot of grandparents in need of their own holiday.

They’re part of the ever-growing ‘greycare’ workforce … grandparents who step in to care for their grandkids so their adult children can work. It is a two-income society except, when you think about it, it might actually be three incomes … grandparents just don't get paid for their contribution to the running of our modern economy and families.

Most grandparents take on this role because they want to help their adult children and because they love their grandchildren. All they want is to be appreciated for what they do to help and not be taken for granted. After all, they’ve been through the child-rearing phase of their life which often meant coping with a single income and a partner as a stay-at-home parent.

Times have changed. Cost of living and cost of lifestyle means working parents are now the norm, rather than the exception.

But what’s the economic impact of ‘grandparenting’ in helping a modern two-income family? What would be the savings on the cost of outsourcing care … remembering it's after-tax cost savings?

I’m going to try and figure it out …

The ‘varied’ role

Now if we were to break down the daily tasks of a ‘professional grandparent’, obviously the main one would be in providing ‘top-notch childcare’.

But let’s think about what that means. Grandparents tend to adore their grandkids, so I’m thinking ‘greycare’ is unlike any other childcare out there. It is bespoke, delivered with love, and it’s also tailored to each grandchild and the needs of the family.

I reckon that’s a pretty awesome person for the job.

In addition to ‘champion child wrangler’, we should add the following tasks to the ‘greycare’ job description:

• Food fairy - Involves providing endless snacks and supplying lunch daily. Must remember who likes Vegemite, who hates butter, and who is ‘allergic’ to the crusts. Also, serve up an early dinner for the kids so they don’t morph into gremlins - and if there are leftovers in the fridge for when Mum and Dad walk through the door, well, you’re worth your weight in gold.

• Nurse/mystical healer - Administer band-aids, hugs, and that special grandparent magic for stubbed toes, vague tummy aches, and invisible boo-boos. Also required to be on-call for surprise sick days that fall outside regular ‘greycare’ hours.

• On-demand taxi - Transport grandkids to and from activities, playdates and, on occasion, the emergency department. Mileage is charged at $1 per kilometre if using your own car.

• Housekeeper hero - Stack and unstack dishwasher until you can no longer remember if it’s clean or dirty. Sort a mountain of washing, pick up 1,000 + toys, sweep, vacuum and generally maintain the house to a ‘mildly destroyed by day's end’ level.

• Entertainer/best friend - Kick a soccer ball, build forts, play UNO for the 47th time, make loom band bracelets and basically be a (insert age) kid to play with for the day.

• A human Siri - Be able to answer random questions in the car like, “How many dwarf planets are there?” - without googling.

• Relationship counsellor/life coach - Help little ones navigate friendship and sibling spats. “No, you don’t get to be the hide ‘n’ seek finder every time …”

• Hidden educator - Teach life skills without even trying. A trip to the shops with pocket money is a crash course in budgeting and financial literacy. Baking muffins doubles as a hands-on science lesson (“egg binds the cake mixture …”) .

Compensating grandparents

Now to add it all up. First up, lets establish the benchmarks; Long day care can cost anywhere between $70 and $190 a day depending on where you live. Family day care is $60 to $150 a day with hourly rates of $10-20. Occasional care is $10-15 an hour. After school hours care is $15-40 per session.

But all these costs are for group care rather than individual care.

The average cost of a nanny in Australia is $30-45 an hour… at, say, $35 an hour it totals $280 for an eight-hour day. But lots of grandparents work more than this, starting early when their adult kids leave for work and finishing when they come home. So, let’s say the day is roughly 10 hours … that's $350.

We also need to increase the nanny rate to take into account the additional services offered, such as private chauffeur, personal chef, cleaner, counsellor, casual nurse and full-time child entertainer - I think we might be in the realm of $400 + a day (I’m being conservative here).

Then there are also ‘grandparenting expenses’ - such as sushi rolls for the kids when at the shops, an ice cream for everyone at the beach, movie tickets (plus snacks) which all add up, not to mention mileage for all the collecting and dropping off that comes with the job. As I mentioned earlier at $1km, that adds up pretty quickly.

Whilst some of these expenses can be foreseen and accounted for in the form of a ‘spending amount’ for the day by the adult kids, grandparents often foot the bill for incidental costs.

So, now I am thinking this equation:

• $400 day rate + $50-ish in expenses + $30 in mileage + bonus rates for being on-call + the fact that this is an exclusive role which only four people in the world could do - assuming the child has two sets of grandparents. The grand total? Somewhere in the vicinity of $500 a day.

• For one day a week that’s an economic benefit of $24,000 for a 48-week year. Even at a once a week $150 a day childcare rate, the saving is $7,200 a year.

The real compensation

Let’s be honest though, grandparenting is a labour of love. The rewards are beyond compensation, although you will be paid in free fridge artwork and a special bond that is unlike any other.

So, as the school holidays end and the “greycare” workforce collectively exhales, here’s to the unsalaried superheroes - the grandparents.

Keeping the wheels of family life, and the wider economy, turning with love and laughter.

I just thought this was interesting and amusing …

Who doesn’t love peanut butter?!

Have a great week, everyone.