How to boost your savings from the rate cut + Why we need a referendum on this

Hi everyone,

A busy week for me travelling through the Murrayland region of South Australia in my role as chair of the South Australian Tourism Commission. Highlights were touring the beautiful new hotel at Monarto Safari Park and star gazing at the River Murray Dark Sky Reserve, which is one of only of 16 accredited dark sky reserves in the world. Such a great experience.

And I really enjoyed speaking at the Family Business Association’s annual conference at Penrith. Such an inspiring bunch of entrepreneurs.

On the money front, the week was dominated by the Reserve Bank’s interest rate decision.

In this newsletter:

• An expected rate cut ... but how many more?

• How to put the 0.25 per cent home loan savings to good use.

• The proposed changes to superannuation: I want a referendum to make sure they’re fair! Who’s joining me?

• Despite all the market gyrations, here is proof you shouldn’t panic.

• Regional property values are outperforming the capital cities.

• The biggest selling book of all time.

A rate cut … but how many more on the way?

As I said last week, a 0.25 per cent cut in interest rates at the latest Reserve Bank board meeting was almost a certainty, but the surprise was that they debated a 0.5 per cent cut.

RBA Governor, Michele Bullock, dropped this tidbit during her press conference following the decision on Tuesday. But the board decided there was no overwhelming reason to go for the “double cut”.

It does, though, give an insight into the psychology of the board and how comfortable they are now inflation is back down to within their 2-3 per cent target range.

The cash rate now sits at 3.85 per cent, after the two most recent cuts which the RBA described in its statement as, “Monetary policy somewhat less restrictive,” with the March quarter CPI data providing them with, “further evidence that inflation continues to ease.”

Trade wars driven by the US are still top of the RBA’s list of worries: “This has also contributed to a weaker outlook for growth, employment and inflation in Australia,” the board stated.

The RBA still considers the labour market to be “tight”, meaning there are more jobs than workers available. However, it has slightly lowered its expectations for how fast wages will grow, and it now expects the unemployment rate to rise a bit higher - peaking at 4.3 per cent in December 2025, up from a previous forecast of 4.2 per cent.

Continuing weak consumer demand has also prompted the RBA to downgrade its forecast for economic growth from 2.4 per cent previously, to now 2.1 per cent. That’s a pretty big slowdown from what was expected.

This chart shows all the RBA forecasts:

So, the RBA’s cash rate is now down from 4.35 per cent to 3.85 per cent and the jury is still out on further cuts. So much is happening around the world, and I reckon the RBA is cognisant of how quickly things can change.

Some economists are predicting another four 0.25 per cent rate cuts before the end of the year, while others are forecasting just two more cuts.

What to do with those home loan savings from the rate cut

Aussie homeowners will likely “stash” rather than “splash” their savings from the latest RBA rate cut. New Compare the Market research shows most will either boost their savings or offset accounts, or they’ll keep their repayments unchanged.

To put that 0.25 per cent cut in perspective, a borrower with a loan of $666,000 will pocket around $100 a month. That’s more than $1,200 a year.

So if you’ve weathered the previous rate hikes and your budget is still in pretty good shape, it’s not a bad idea to keep your repayments the same, even when your lender passes on rate cuts. About 27 per cent of homeowners told CTM’s survey they would use this strategy to pay down their loan faster.

When you pay off more principal, the size of your loan - and ultimately the interest you pay, will reduce over your loan’s life. My tip is to check if you need to set a new repayment amount with your bank or lender now the savings are passed on, as it may automatically adjust in line with the rate change.

Some banks are also offering cashback offers of up to $4,000 if you refinance – another way to grow your savings.

If refinancing is something you’ve been considering, now could be a great time – especially if your current lender tells you they can’t match some of the competitive deals available right now. Time and time again, I see some of the best offers reserved for new customers, so ensure your loyalty isn’t costing you.

There are some fantastic cashback offers popping up. You can essentially lock in a better interest rate and pocket some extra cash. It’s like having your cake and eating it too. Just double-check any applicable fees you may incur to switch lenders, as you don’t want them to gobble your savings up.

Meanwhile, around one in five homeowners surveyed (21 per cent) say they will put the extra money into an offset account.

When used correctly, offset accounts are a great way to help you pay less interest on your home loan. Whatever amount of money is in your offset account is subtracted from your home loan balance each month. The more money you have in an offset account, the less you’ll pay in interest on your home loan. But remember there are fees associated with offset accounts, so ensure the savings outweigh these costs.

The survey also found around a fifth of mortgage holders would spend the extra money from a rate cut on things like groceries (14 per cent), holidays (3 per cent), health and beauty (2 per cent) and social activities (2 per cent).

Who will help me fund a new referendum?

Labor has been swept back to power and realistically is looking at another six years in power. It is unlikely that a Coalition could unseat them at the next election in three year’s time as the gap just seems too big.

So, Labor has a mandate now for extensive productivity and tax reform.

Treasurer, Dr Jim Chalmers, did his PhD thesis on former Treasurer Paul Keating and his reforms, which have been the foundation of this economy’s success ever since.

This is the chance for Jim Chalmers to transition from a Paul Keating disciple to a Paul Keating 2.0 and introduce fundamental reform to rebuild the economic foundations for the next 30 years.

But those reforms have to be fair.

Take the plan to increase the tax paid on superannuation balances over $3 million from 15 per cent to 30 per cent. There is no doubt there was rorting of the system when former Treasurer, Peter Costello, allowed unlimited contributions to superannuation.

The wealthy warehoused millions of dollars of investments under the superannuation umbrella to reduce tax compared with what they’d pay if invested outside of superannuation. That means every other taxpayer is subsidising those tax concessions. I reckon a limit is fair.

But the plan to tax unrealised capital gains annually is just crazy. How can people expect to come up with the cash to pay each year when the asset hasn’t been sold? What about farmers who have their farm in their super fund? They will be unfairly penalised for making a living. Will capital losses be able to be claimed annually as well and the government pay cash into the super fund?

It is just really messy.

And then there is the question of fairness.

Federal politicians, former state premiers, ministers, governors, public service department heads, judges and magistrates are all EXEMPT from any of these proposed changes. Politicians and bureaucrats have extremely generous superannuation policies which would bump a huge number of them over $3 million.

For example, according to their public asset registers, 215 of the sitting 227 MPs and senators in the last Parliament held investment properties. Some have up to seven properties in their portfolio.

The Treasurer says it would need a referendum to change the constitution for any new superannuation rules to apply to this privileged group.

I say, bring on the referendum. Let’s vote. I’m sick of this … rules for all and then different rules for the elite.

It has to be a level playing field for everyone.

A referendum is an expensive operation at about $400 million, but I think it’s worth it for ensuring fairness across the community so the elite privileged are treated the same as everyone else.

To make sure we’re getting value for the referendum spend, lets add another couple of questions to the vote. A suggestion from me:

Stop political parties accessing our private phone numbers during election campaigns.

Clive Palmer spammed millions of Australians with his Trumpet of Patriots SMS messages, which couldn’t be blocked. No other organisation is allowed to do this, but political parties are exempt from the privacy rules.

I say we vote to overrule the exemption of political advertising as breaching misleading and deceptive conduct rules. All advertisers must justify the claims they make in promotions, but not political parties. Why should they be exempt? Shouldn’t their claims have to be honest like everyone else’s?

Let’s use a referendum to once and for all bring politicians and political parties in line with the rest of us.

Why should they be treated any differently to any other organisation?

Despite all the market gyrations … don’t panic

It has been a wild 2025 so far, thanks to the unpredictability of the Trump administration. Markets have been extremely volatile which can be incredibly stressful for investors.

But keep it in perspective.

Last week I spoke about financial literacy and preparing for retirement to members of Brighter Super along with their Chief Investment Officer, Mark Rider.

I’ve known Mark for about 20 years when he was working for an investment bank (he’s also worked in the Reserve Bank as well) and I found his presentation so interesting.

Brighter’s main investment fund is its MySuper account. Have a look at the performance over this last tumultuous year. Despite sharemarket crashes over recent months, on an annual basis the MySuper returns are just under 10 per cent for the year and almost back to its Jan/Feb peaks. So even after all the Trump-induced volatility, when you step back and put it in perspective, returns are still solid.

But, as I have said on numerous occasions, superannuation is a long-term investment. Over the last seven years, which includes the pandemic, the MySuper performance is up 54 per cent. Yes, it had its up and downs and weathered numerous “financial crises”, but over the long-term it has been a consistent performer.

The chart which really shocked me, though, was this one below.

When we go through a financial crisis, our confidence is often shattered by media headlines and commentary shouting words like “crash,” “trillions wiped off the markets,” “superannuation returns hit,” etc.

It creates a sense of panic and the knee-jerk reaction is to say ,“Blow it, I don’t need the stress, I’ll go to the cash option.” The superannuation equivalent of sticking your money under the bed.

Have a look at this. If you had panicked and gone to cash over those seven years, look at the difference in return - 54 per cent against 15 per cent.

I just found that staggering and an incredible lesson in staying the course, and being in a good fund. Naturally, you always need to get your own individual financial advice to suit your personal situation.

After seeing this slide from Mark, one Brighter member in Rockhampton admitted he had to get advice because he’d panicked and had no idea the impact. It’s a good lesson.

Regional property values outperforming the cities

Data from property research group Cotality (formerly CoreLogic) shows regional dwelling values rose 1.5 per cent in the three months to April, outpacing the 1 per cent quarterly rise in the combined capital cities.

WA dominated the quarterly growth leaderboard, with values in Albany (up 7 per cent) and Geraldton (rising 4.5 per cent) leading the pack. South Australia’s Victor Harbor-Goolwa followed closely, increasing 4.2 per cent, while Mildura-Buronga (4.1 per cent) and Mackay (4 per cent) rounded out the top five.

After dominating throughout 2024, the pace of quarterly growth has eased significantly in QLD’s mining markets amid worsening affordability and global economic uncertainty.

Geraldton values surged 26.9 per cent over the year to April, while Gladstone, Townsville, Mackay and Albany all saw annual increases above 20 per cent.

At the other end of the spectrum, Bathurst, Nelson Bay and Geelong recorded mild quarterly declines and Warrnambool experienced the sharpest decline on an annual basis, with values down -4.2 per cent, followed by Ballarat and Geelong, each falling -2.2 per cent.

Rockhampton, Gladstone, Mackay and Townsville recorded the shortest time on market over the past year, recording medians of 11, 12, 13 and 13 days respectively. Sellers in Albany recorded the smallest vendor discounts at -2.3 per cent.

In contrast, affordability pressures and elevated listings weighed on selling conditions in NSW’s Bowral–Mittagong region, where properties spent a median of 77 days on market, and sellers offered the largest discounts at -5.3 per cent. This was followed by Batemans Bay (73 days and -4.6 per cent discount) in NSW and the Traralgon-Morwell region (70 days and -4.3 per cent discount) in VIC.

The biggest selling books of all time

I love reading for pleasure. Currently I’m reading Wild Dark Shores by Charlotte McConaghy and of the 11 books I’ve read so far this year, I’ve enjoyed Mick Herron’s Slough House series (which Apple TV’s Slow Horses is based on), The Silence in Between by Josie Ferguson and The Women by Kristin Hannah.

Among my all-time favourites have been the Harry Potter series which I read with my kids and grandkids and the Lord of the Rings Trilogy , both of which seem to be among the biggest selling books of all time.

Here are the others:

An interesting ‘read’, isn’t it?