📈 Australia's affordable rentals are anything but | Meta removes AI image feature days after launch

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The Big Picture

• Australia's affordable rentals are anything but for those who need them most. A Four Corners investigation has found flaws in Australia's affordable housing schemes, with an analysis of listings revealing most properties are out of reach for low-income households. The guidelines allow providers to set their own market rent benchmarks, creating a system that inadvertently favours middle-income ‘Goldilocks’ tenants who earn enough to afford the rent but little enough to qualify. (ABC)
  
  

• Oil continues to rise as US and Iran trade strikes. Oil rose 4.1% to US$79 a barrel as the US launched its fifth round of strikes on Iran. The two sides are also telling conflicting stories about the Strait of Hormuz, Iran says it has closed the waterway while the US military insists shipping continues through the southern route. (FT)
  
  

• CGT changes sting Australians working overseas. Australians who become non-tax residents while working overseas will now lose access to any CGT discount on investment properties from July 2027. Under current rules the discount is only lost proportionally, but the new law is all-or-nothing, with expat tax specialists warning many Australians on overseas stints in cities like London and New York will be caught off guard. (AFR)
  
  

• Investors pile into income ETFs. Money flowing into cash and fixed-income ETFs more than doubled in June as investors rotate out of growth assets in response to three RBA rate rises and the budget's CGT changes. (AFR)
  
  

• RBA preparing for rising defaults in private credit sector. RBA documents reveal the central bank is preparing for mounting defaults across Australia's $250 billion private credit sector. There is particular concern about heavy concentration in property and construction loans and the risk of spillover from a collapse in offshore markets. (AFR)

Companies in the news

• Meta removes AI image feature days after launch. Meta has pulled its Muse Image feature just days after launch after widespread criticism over privacy concerns. The feature, which allowed users to generate AI images using public Instagram accounts, was discontinued after users and public figures urged others to opt out. Meta said it had "heard the feedback that this feature missed the mark." (Reuters)
  
  

• Tesla wants all drivers to pay road user charges. Tesla has told the NSW parliament that it should scrap its planned EV tax and introduce a national road user charge applying to all vehicles instead. Tesla argues it is likely unconstitutional following the High Court striking down a similar Victorian tax in 2023. (AFR)
  
  

• Anthropic's Australia investment depends on copyright clarity. Anthropic told Treasurer Jim Chalmers that its $21.6 billion Australian investment is contingent on clarity around local copyright laws. The government has ruled out a blanket copyright exemption but is considering reforms including statutory licences to make it easier for AI firms to pay for copyrighted material. (AFR)
  
  

• Airbnb pulls World Cup tourists from hotels. Airbnb offered homeowners $750 bonuses to list near stadiums meaning more than 52,000 extra listings in US World Cup host cities. New York hotel groups now forecast World Cup revenue of US$160 million, roughly half of the US$300 million predicted at the start of the year. (FT)
  
  

• City Chic jumps on earnings upgrade despite sales decline. City Chic shares surged 24% after EBITDA growth of up to 95%, driven by margin expansion and cost cuts despite global sales falling. Shares hit their highest level since April but remain down 98.5% from five years ago. (AFR)

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Bill Gates’ daughters shopping app accused of inflating sales

Phia, a personal shopping assistant co-founded by Phoebe Gates, has been accused of claiming credit for around $61 million in online sales it did not originate. The app markets itself as a personal shopping assistant that finds discount codes for users, earning commissions from retailers on resulting sales.

But some users were finding irregularities with the desktop version which reportedly would increase sales by opening background tabs without user interaction and injecting its own referral codes to override legitimate ones. Bloomberg investigated the reports and tested the app across more than 50 websites and confirmed the behaviour, which independent researchers say violates the policies of many digital platforms. (AFR)

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Why Younger Generations Are Choosing Pets Over Kids

A recent found that 43% of Americans now prefer pets over children. A separate survey found that 67% of 18 to 26 year olds chose to get a dog instead of having a child. We broke down what this means for the pet economy on a recent episode of Equity Mates Investing in our latest episode from our The Decade Ahead series. (Spotify | Apple | YouTube)

Australia now has more pets than people. 31.6 million pets versus 27.7 million humans, and the pet population is growing faster. 73% of Australian households now own a pet, up from 61% before COVID. And younger generations are not just owning more pets, they are spending significantly more on them.

Boomers spend around $2,400 a year on their pets. Millennials spend $5,150. Gen Z spends $6,100. A third of millennials and nearly a third of Gen Z have gone into debt because of their pet.

Young people are delaying having children, and pets are filling that gap earlier. As Bryce put it, spending $10,000 a year on his dog Penny, once you love your pet you just keep spending. Food, daycare, grooming, insurance, vet bills, it all starts to add up pretty quickly.

The result is an industry on track to double globally by 2035, from around $270 billion today to $570 billion. Here in Australia, the pet industry is already worth $21.3 billion and growing so fast it is set to overtake the entire alcohol industry within a few years.

• With SpaceX recently becoming the largest IPO in history and OpenAI, Anthropic and Canva all rumoured to be going public in the near future, it can be easy to get swept away in the hype. Today on Get Started Investing Jess chats with Bryce to understand how to actually invest in these IPOs and whether any of them are actually worth it. (Spotify | Apple | YouTube)