Property Experts Warning: Australian House Prices Could Fall Another 10%

Australian house prices are down 7% from their national peak — and according to SQM Research’s Louis Christopher, there’s an 80% probability they’ll fall another 5–10% over the next six months. In this Straight Talk roundtable, Mark Bouris sits down with Louis and auctioneer Tom Panos to unpack what’s happening in Australia’s property market, why buyers are losing confidence and where prices could go next. From sharp falls on the Gold Coast to first home buyers walking away, rising government spending and the risk of recession, they examine what’s gone wrong and what needs to change. Subscribe to the Mentored newsletter here: https://the-mentored-platform-pty-ltd.myklpages.com/l/WWJGc5 Join my exclusive Mentored+ community: https://mentored.com.au/become-a-member/ Executive Producer: Samuel Morgan Head of Production: Jonah Mclachlan See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

• 0:00Speaker 00

  Welcome to Straight Talk, boys. This is a, this is a power panel. Louis Christopher, SQM, knows all the data. And of course, Tommy Panos, who is relentless when it comes to the property market, and is a guy on the ground. He goes to auctions, he does auctions, he knows what's going on. And our little round table, because this is actually a round table, I don't know if the cameras can pick it up. This is a round table. I'm going to send this package to the treasurer. I'm going to say, we held a little round table on what's going on in the property market here in Australia. And it's current. It's not something you held last year in July, August, when it was where none of us.

• 0:35Speaker 01

  Jack's aside, Mark, Jack's aside, he should watch it.

• 0:38Speaker 00

  No, he should watch it.

• 0:39Speaker 01

  Right.

• 0:39Speaker 00

  Will you, will you invite to the round table, Louis?

• 0:42Speaker 01

  Nah.

• 0:42Speaker 00

  Nah.

• 0:43Speaker 01

  Labor never invites me to anything.

• 0:44Speaker 00

  Will you ever invite me?

• 0:45Speaker 01

  No, never, never. In fact, from what I understand, leading up to the budget, the, the various real estate bodies, including the Property Council and the Investment Council. And I'm, I've got relationships with one of the chairman there, had said to me, the government is not interested in having any conversations, any socialisation, that they're very clean in their position. That was leading up to the, that was the three or four months leading up to the budget.

• 1:14Speaker 00

  Wow.

• 1:14Speaker 01

  Um, so it wasn't me, it wasn't anyone, to be honest with you, from what I understand.

• 1:20Speaker 02

  That the government has deliberately tuned out from the industry. They're not interested in hearing the views from the industry overall.

• 1:28Speaker 00

  Why do you think that's the case?

• 1:31Speaker 02

  Well, I guess it boils down to the fact of what they've been wishing to put forward in terms of the, the property taxation changes has been a, I think they've been wanting to do for many years now. And they've been helping them doing it. It's an ideological thing. I mean, let's recall, they, they first, raised a proposed change to negative gearing back at the 2016 election.

• 1:53Speaker 00

  Yep.

• 1:53Speaker 02

  So they've been looking to do this for quite some time.

• 1:56Speaker 00

  Bill Shorten.

• 1:56Speaker 02

  Yeah.

• 1:57Speaker 00

  And, and lost the election as a result.

• 1:58Speaker 02

  Lost the election, then they traded again in 2019, lost the election. In, of course, 22, they said, no, this is off the agenda, won the election.

• 2:08Speaker 00

  Yeah, funny about that.

• 2:09Speaker 02

  Yeah.

• 2:10Speaker 00

  And then, and then, and then again in 25, they, he denied it.

• 2:15Speaker 02

  They, they didn't flag, yeah, they denied it.

• 2:17Speaker 00

  And 18 months later?

• 2:18Speaker 02

  Here we are.

• 2:19Speaker 00

  Lo and behold, there we have it.

• 2:20Speaker 02

  Yep.

• 2:21Speaker 00

  What is, you, you've got a massive database. I mean, you've been looking at data. How many years you've been looking at the data in the property industry?

• 2:26Speaker 02

  Since 2001.

• 2:27Speaker 00

  Okay, so you've got a massive database, right?

• 2:30Speaker 02

  Yeah.

• 2:30Speaker 00

  Of, of sales, rentals, prices by region. Maybe you could just quickly explain, Louis, just give us a bit of a, a framework, how you break Australia up and how you look at the data.

• 2:42Speaker 02

  So we have data from the national macro level all the way down to the street level. Uh, so we collect individual records and from that we can create aggregated statistics, which gives us a very good snapshot in terms of what any market is doing around Australia. And it is true that there's not just one market, there's a multitude of markets. But saying that too, all markets seem to be one way or the other, impacted by macro events such as changes in interest rates, such as changes in property taxation, such as changes in population growth.

• 3:16Speaker 00

  Right, so if, is it fair to say then, right now, if you look, I mean, let's look at the national average, which is, you know, you aggregate everything.

• 3:25Speaker 02

  Yeah.

• 3:25Speaker 00

  So where is the property cycle right now?

• 3:28Speaker 02

  Okay.

• 3:28Speaker 00

  Nationally, now, as an average, I'm talking.

• 3:30Speaker 02

  As an average, nationally, housing prices are down by about 7% from their peak.

• 3:36Speaker 00

  Right.

• 3:37Speaker 02

  Some areas are falling a lot more, some areas less, but most areas, except for perhaps the city of Darwin and North Queensland has fallen.

• 3:46Speaker 00

  Okay, so, and I, I think it's important just to explain what peak means. Peak means the time, the time at which the national average was at its highest, which went, was like mid Feb?

• 3:55Speaker 02

  Yes, about mid Feb.

• 3:57Speaker 00

  But is that before the interest rate rise mid Feb or?

• 3:59Speaker 02

  Just after the interest rate.

• 4:00Speaker 00

  Just right after, right, okay. So the best time maybe to have sold your property if you're trying to get the absolute highest price on a, on a sort of a statistical level, would have been in sometime in February this year, 2026?

• 4:12Speaker 02

  Yes, that is correct.

• 4:14Speaker 00

  And since then, now we're in a trough now, right? We're in the trough. And from peak to trough.

• 4:17Speaker 02

  Would suggest we're at the bottom of this down.

• 4:19Speaker 00

  Okay, you're right, that's a good point.

• 4:20Speaker 02

  We're not at the bottom by any means.

• 4:22Speaker 00

  Wow, so, so from peak to bottom, from where we are, we're looking at a, did you say a national 9%?

• 4:27Speaker 02

  Uh, no, we're, we're down nationally about 7%.

• 4:30Speaker 00

  7%. I remember you predicting, this is maybe, post CGT changes, post the budget.

• 4:40Speaker 02

  Yeah.

• 4:41Speaker 00

  Um, and before a lot more interest rate changes, but you were predicting from, uh, peak to trough, a 10% national change.

• 4:49Speaker 02

  Yeah.

• 4:50Speaker 00

  Uh, have you changed your view on that?

• 4:52Speaker 02

  Uh, yes, our view on the trough is that it's going to be more than a 10% decline. Uh, and we think even above what's already happened, there is an 80% probability that housing prices are going to fall somewhere between another 5 to 10% over the next six months.

• 5:09Speaker 00

  Whoa, that's scary. Um, and I'm going to come back to you, Tommy, in a second because you're, you're on the ground. So if I,

• 5:18Speaker 00

  say to you, which metros are the most affected? So, but I don't know.

• 5:26Speaker 02

  I'll give you one area that's most affected right now, and that's the Gold Coast. So unit.

• 5:31Speaker 00

  Really?

• 5:32Speaker 02

  Yeah, absolutely.

• 5:33Speaker 00

  I thought the Gold Coast was staying strong.

• 5:34Speaker 02

  No, it's been smashed.

• 5:36Speaker 00

  Wow, wow.

• 5:37Speaker 02

  Yeah, so unit prices on the Gold Coast have fallen by 16% from their peak.

• 5:43Speaker 00

  No.

• 5:43Speaker 02

  Oh, absolutely. There's no question about it.

• 5:46Speaker 00

  And you're tracking it, that's, that's their stat, so that's off data.

• 5:49Speaker 02

  House prices on the Gold Coast haven't fallen as much, they're down by about 8% from the peak.

• 5:53Speaker 00

  So we're seeing the, the typical thing has always happened on the Gold Coast, for some reason.

• 5:57Speaker 02

  Very much happening in this cycle. And, and the reason is, is because it's a combination of a number of factors. We have had a surge in supply of new stock on the Gold Coast.

• 6:08Speaker 00

  That's true.

• 6:09Speaker 02

  You've been up there recently.

• 6:10Speaker 00

  Yep, there's cranes everywhere.

• 6:11Speaker 02

  Cranes everywhere, reminds me of the 1980s, right? So that's going on.

• 6:15Speaker 00

  When the Japanese were funding building after building after building.

• 6:18Speaker 02

  Correct. And in this cycle, there's been a lot of spec building on the Gold Coast driven by private credit.

• 6:26Speaker 00

  Wow.

• 6:27Speaker 02

  Okay, so, um, in previous cycles, we haven't seen a lot of speculative activity. And just to be clear, what I mean by that is that normally when developers get a loan from a bank, the bank demands, say, at least 90% pre-sales.

• 6:42Speaker 00

  Yeah, well, they want enough pre-sales to cover the costs.

• 6:44Speaker 02

  Yes, correct. But private credit demands a lot less than that in terms of pre-sales. I've actually heard of zero pre-sales of private credit and, and developers getting a loan. Not saying that's the average, I would say the average is probably 25%. So there's been a lot of speculative activity. And so there's been a building approvals and construction surge on the Gold Coast, precisely at the time when demand's fallen back due to the property taxation changes and the interest rate rises. And this is creating, uh, these big falls, particularly in the unit market on the coast.

• 7:23Speaker 00

  Any other metros outside of Brisbane that are sort of really gaping sores?

• 7:28Speaker 02

  Uh, I would suggest Sydney's Cronulla.

• 7:31Speaker 00

  Cronulla.

• 7:32Speaker 02

  Is not looking that particularly good. Once again, we've seen, if you know Cronulla well.

• 7:36Speaker 00

  Yeah, lots of new buildings.

• 7:37Speaker 02

  Lots of new buildings, same thing's happening. It hasn't fallen by 16%. I've got it down by about 11% in terms of the unit market.

• 7:44Speaker 00

  There's still lots greater than the national average.

• 7:46Speaker 02

  Yeah, correct. Uh, and then, of course, in Sydney's North West, uh, we're seeing a similar thing in terms of.

• 7:54Speaker 00

  Where's North West? You mean suburb, for example?

• 7:56Speaker 02

  Say Box Hill.

• 7:57Speaker 00

  Box Hill, right.

• 7:57Speaker 02

  Yeah, towards Windsor.

• 7:59Speaker 00

  Right.

• 7:59Speaker 02

  Yeah, I mean, there's been a lot of activity for a very long time in those areas. And, uh, we're, we're seeing, uh, some steeper price falls there, particularly on the freestanding estate houses. Uh, so long and short of it, areas where we've seen, uh, pockets of oversupply, uh, we're seeing the greatest price falls.

• 8:22Speaker 00

  Tommy, you're on the ground. You're auctioning people's places, houses, apartments, all sorts of things.

• 8:28Speaker 01

  A lot less than before, but.

• 8:29Speaker 00

  Well, why?

• 8:30Speaker 01

  Oh, there's a, a loss of confidence in vendors that.

• 8:34Speaker 00

  The vendors don't have the confidence.

• 8:36Speaker 01

  They don't have the confidence. Well, actually, Mark, both parties don't have confidence. We're in a market of hesitancy. You've got buyers who know that there's good value. And there are some properties that have already dropped twenty percent. Um, I'm sure we'll come to it because I think, I think one of the things that with real estate and Lou will agree is that. Uh, there are markets within markets, right? You, a broad based view is a good. Uh, high level way to look at real estate, but right now.

• 9:05Speaker 00

  To start.

• 9:05Speaker 01

  To start, but right now, the truth is there are certain marketplaces where there's an undersupply of property in the lower price point. Fed by the five percent deposit scheme where other buyers wanna buy in the cheaper price point. Where you actually have not seen significant losses at that lower price point. So for many of those people, it actually has been a bit of a golden opportunity because theirs hasn't gone down that much like a. A unit, say in some parts of the inner west, right?

• 9:31Speaker 00

  That's if someone already owns a property.

• 9:32Speaker 01

  Correct.

• 9:33Speaker 00

  Yeah.

• 9:33Speaker 01

  And they've been able to move into the, to the next, you know, price point because that price has gone down. So.

• 9:40Speaker 00

  Yeah, the price point above them has come down, but their place has stayed pretty stable.

• 9:44Speaker 01

  So an example would be a unit in, say, Croydon or Summer Hill, an art deco unit. Has probably kept its value at around a million, might have gone down from one million and fifty to a million. They're looking at a house that's gone down from two point one to one point eight. So it's gone down three hundred there, theirs is probably gone down fifty, so they're actually making two hundred and fifty thousand in the upgrade.

• 10:06Speaker 00

  Proportionally better.

• 10:06Speaker 01

  For, for, for some people there, but generally speaking, the higher price points have come down, you know, eastern suburbs, the Melbourne high price points. They've come down. I forgot the question that you actually asked me now.

• 10:17Speaker 00

  What are you seeing on the street?

• 10:18Speaker 01

  Oh, what, what, what, what I'm seeing on the street is there's a hesitancy that buyers, even though buyers can see that there's value out there. That they can buy ten percent less than what they could have saved five months ago, they don't wanna catch a falling knife. And the second thing I'm seeing is that even though prices have come down, affordability hasn't come down. Because, you know, the cost of money and getting that money, in some cases. Uh, borrowing capacity has dropped more than the actual prices. So that's also been an issue. I mean, you can have property prices dropping, but it's still not. Affordable, it becomes less affordable. And from vendors' point of view, they're sort of thinking to themselves. There's no point going on to the market unless I have to because I'm not gonna get my price. So we're predominantly seeing vendors that transact at the moment are being the Ds.

• 11:03Speaker 01

  The death, the divorce and the debt. Those three are the drivers where people say, I'll transact. But if you've got, you know, Mr. And Mrs. Smith who own the home in, say, Haberfield, they've had it for fifteen years. They're not gonna rebuy again because that's not where their life is. Um, and they're not forced to sell, they've got enough to see through it. A lot of them are saying, I'm not gonna put it on the market, what for? I'll wait and get an extra three, four, five hundred thousand in the next few years. So we're, we're seeing hesitancy there and that's impacted volume. Volume, the industry that I come from, property services. And the mortgage brokers and all the people connected to real estate, it's not the prices that have impacted.

• 11:45Speaker 00

  It's number of transactions.

• 11:46Speaker 01

  It's the number of transactions, it's volume and that's, that's fallen off the cliff.

• 11:50Speaker 00

  You know, okay, well, what's interesting is the, we'll, we'll, I don't wanna talk so much about the policy of the capital gains tax, whether it's good or bad. I mean, we all have our own personal views and we all probably share the same view, but. But I, I'd rather more talk about where the policy was designed to try and do, or at least what the narrative was. Was that they were gonna make more people, we're gonna push the house price down or the price of dwellings down. So more people can now afford real estate. I'll my, I'll give you once, I'll give you one fact that comes from my business and like we would ordinarily up into mid February, we're lending. Or to the end of February, or at the end of March, actually, because we had a bit of a tail. We would lend three and a half billion dollars a month typically.

• 12:27Speaker 01

  When was that?

• 12:27Speaker 00

  End, end of March.

• 12:30Speaker 00

  The interest rate came into the late February and then the, uh, the couple of guys changes came into the May budget. So we're sort of tracking quite well. Now we'd be doing twenty percent less. And in the less bit, we are doing more refi than we've ever done before. So that keeps our numbers up. But in the less bit, the two parts of the marketplace that are most affected are first home buyers.

• 12:56Speaker 01

  Yeah.

• 12:56Speaker 00

  Who are virtually nil.

• 12:57Speaker 01

  Hmm.

• 12:58Speaker 00

  And investors has dropped from forty two percent down around twenty three percent.

• 13:03Speaker 01

  Yeah.

• 13:04Speaker 00

  So the government policy and interest rate environment. Has cancelled out two really important parts, the first time buyers and the investors.

• 13:15Speaker 01

  I think, I think, Mark, um, the budget overestimated the strategy that they brought up. This was a flawed strategy. The strategy was very, very clear. What we're going to do is actually leave the incentives in for the investors. And what will happen is investors are going to move away from buying existing stock, move to the new properties. Cause that's attractive. And then what will happen is first home buyers are gonna come in and buy those things. And that has not happened. That has not eventuated. In fact, what's actually happened is what you've just said is both those parties have walked away from the market. They've walked away. Investors have walked away because investors, the way that they think is not a little bit, not dissimilar to. Someone buying a new car, right? They're thinking to themselves, I'm gonna go buy something new.

• 14:00Speaker 01

  There's a profit already in there. I'm not gonna buy something that's got a profit to develop. I know that existing stock normally has a better capital growth. So investors walked away from all real estate. First home buyers have walked away for lots of reasons, but number one is they're paranoid about negative equity. Look, negative equity is not a problem when you're in your forties, right? But when you're, it, it, it's a problem for everyone, but it's less of a problem. When you're a young person and you have spent four, five years. Working two jobs, saving, right? And then you're being told, you paid a million. You use the five percent deposit scheme, that's fifty thousand, that means you borrowed nine fifty.

• 14:40Speaker 01

  Now your property may have gone down from a million to nine hundred thousand dollars, right?

• 14:46Speaker 00

  Well, based on what Lou said, yes.

• 14:47Speaker 01

  Correct, right?

• 14:48Speaker 00

  And maybe more.

• 14:49Speaker 01

  So, so what happens, and this is the interesting thing, it's your loan bit doesn't go down, it's your own money that goes down, right?

• 14:57Speaker 00

  The principal stays fixed, at least for the first four years.

• 15:00Speaker 01

  Correct.

• 15:00Speaker 00

  Cause you don't start paying your principal down until after four years.

• 15:03Speaker 01

  Correct, correct. So, Mark.

• 15:06Speaker 00

  So do you, do you think that's the reason the first time buyers have dropped off? Because, because one of the things we're noticing is that first time buyers don't qualify anymore. Because in the qualification process, we have to assess you on the current interest rate plus three percent. So as the current interest rate keeps climbing up, as the reserve bank keeps increasing the interest rates and we keep adding three percent to the new. Um, debt servicing interest rate, um, we're looking at people, we're assessing people on nearly ten percent interest at the moment. So, and then based on the amount, so we say your income's five thousand a month. After tax, let's call it, um, your living expenses are two thousand a month, it means you're three thousand dollars left.

• 15:46Speaker 00

  Um, we're gonna work out how much that three thousand dollars can service and based on how much you can service is the amount we'll lend you.

• 15:54Speaker 00

  We still can't lend them enough. Cause house prices haven't come down enough.

• 15:57Speaker 01

  Enough.

• 15:58Speaker 00

  It's a bit of a chase, so whilst every interest rate remain high and that threshold remains high. That the, you know, the regulator imposes on everybody. And whatever that exists, there's gonna be less buyers because they can't afford to pay what the, uh, vendor wants. The vendor who needs to sell will have to take a lower price. Um, but the other vendors, although you just explained, they're not gonna take lower price. They're, they're okay. They've paid down their mortgage. You know, like fifty percent of Australians are two years ahead of their schedule. So they've got plenty of fat left in their system. They don't have to sell. They're, they're pretty healthy.

• 16:28Speaker 01

  This morning I had coffee at Travatino's in Abbotsford. A young guy there, he's twenty seven years of age, he's a P T. He's actually, his, his old man's on, involved with the Tigers, I won't, no need to mention his name. And he said to me, I said to him, mate, why aren't you buying now? Why aren't you buying now?

• 16:46Speaker 00

  Why aren't you or why?

• 16:47Speaker 01

  Yeah, why aren't you? You're a, why aren't you buying? Here's what he said to me. I'm not buying because it's hard for me to afford to actually buy it. And I said, why is that? He goes, really simple. Me saving up for a deposit, I've been slammed with a tax on shares. I was using shares, right? I've been slammed there, right? Number one.

• 17:05Speaker 00

  Now you need to open that up a bit, uh, uh, uh, but Tommy, like. What a lot of young people do, they don't just put the money in the bank every month, they put some in the bank, but they're gonna buy stock.

• 17:14Speaker 01

  Correct.

• 17:15Speaker 00

  Shares on the share market and there isn't buy shares on the share market because the capital gains tax is pretty good, was pretty good. And then instead of paying, you know, whatever the tax rate is, they're paying only half that.

• 17:24Speaker 01

  Correct.

• 17:25Speaker 00

  On, on the transaction, on the capital gain. And that's a way of fast tracking your deposit.

• 17:29Speaker 01

  Correct.

• 17:29Speaker 00

  You could have put in the bank, I'm gonna earn six percent per annum, whatever the banks, four percent, whatever the banks pay, even pay tax on that. Or you're gonna buy shares, support the share market and you might make a hundred percent.

• 17:40Speaker 01

  Correct.

• 17:40Speaker 00

  Might be if you're really lucky. And you only have to pay a small amount of tax on that. So that's, that's what you're talking about. This is what this young fellow's talking about.

• 17:46Speaker 01

  And his words were, Tommy, I'm taking the risk, I'm putting my neck on the line to move ahead. So I invest there to get a deposit so I can get it faster. That's been taken away from me, right? Number two, he goes, conversations that I've had with the financial institutions as to getting into money means that it's gonna be hard for me. So. I think they're probably the two reasons, and I think the third reason, but is the psychological fear. Hey, I might be buying a cheaper home than six months ago, but I'm not prepared to catch a falling knife. And I have no faith in the direction the country's taking, so maybe I should do nothing.

• 18:26Speaker 00

  Well, go, go, maybe I can ask Louie on this one, um. Does the data indicate that buyers are reticent to put their hand up in the marketplace? Outside of those two reasons, because you know, you may have seen this in previous periods, that they think they can buy cheaper? In other words, I should wait because it's going to get cheaper and like the place is turning into shit. And there might be an opportunity, that million dollar plot probably that we'll just took my time, you just talked about now. It's not going to be worth nine hundred thousand. I might get it for eight fifty. Like opportunism, is there an opportunism thing going on?

• 18:58Speaker 02

  The data will not give the rationale as to why buyers are holding back. We can only speculate on that. And I agree with Tom's views as to why. I would add into that, my view, based on running my own business and knowing a number of business operators, both big and small, is that job insecurity has been increasing.

• 19:19Speaker 00

  Oh, wow.

• 19:20Speaker 02

  For people in their twenties and thirties.

• 19:22Speaker 00

  Cause the job numbers, the unemployment number jumped recently.

• 19:24Speaker 02

  It did jump. Now, there was still some employment growth. I'm talking about the concern on the impact of A I on on jobs. And from what I can see, graduate positions in the financial services sector.

• 19:40Speaker 00

  And the legal sector.

• 19:41Speaker 02

  Have been reducing the number of valuable positions to get into, into a career. And so I think there's some concern out there for existing. People got a got a job, will they hold their job in twelve twelve months from now?

• 19:59Speaker 00

  So job stability.

• 20:01Speaker 02

  Yeah, job stability. I think there's been more concerns surrounding job stability. Then over and above that, if you look at the job ad survey.

• 20:09Speaker 00

  Seek.

• 20:09Speaker 02

  Yes, job ads recently have been reducing.

• 20:13Speaker 00

  Yeah.

• 20:14Speaker 02

  Now, we don't know whether that's a defined new trend or not, but in recent periods, they have been reducing. So we'll see, there's still job growth. I don't want to over talk it. But I'm just wondering whether for first home buyers, whether they're also concerned.

• 20:30Speaker 00

  Do you think, do you think, and I asked you two guys, because I don't know, but a property buyers are that savvy? That in other words, they know there's been a reduction, they might not have gone to the Seek pages and looked at what Seek's saying. But they're, or is it just a feeling they have?

• 20:48Speaker 02

  Look, I think housing has always been an emotional investment.

• 20:54Speaker 02

  So, and you need buyers with confidence to jump into the market. I mean, it's going to be everybody's biggest in purchase, asset purchase in their lives, most likely.

• 21:04Speaker 00

  And liability purchase.

• 21:05Speaker 02

  Yeah, and liability purchase. So it's a big thing to enter into.

• 21:10Speaker 02

  Yeah, I mean, if you're lacking confidence for a multitude of reasons, then no wonder we're seeing less buyers in the market.

• 21:16Speaker 00

  Well, let's list the, let's list the confidence issues, Tommy, like let's just look at them now. So one, it would appear that we could be heading to a recession.

• 21:27Speaker 02

  Yeah.

• 21:27Speaker 00

  Let's open that up a little bit. You've been around a long time doing real estate.

• 21:31Speaker 02

  So.

• 21:32Speaker 00

  How do people respond to that thought? There could be a recession coming.

• 21:34Speaker 01

  I get, I get, I've got, I've got, I've got daughters that are twenty two and twenty years of age, right? And one of them asked me, Daddy, because I keep hearing, are we going to go into recession? She actually, one of them asked me, she goes, have you ever been in a recession? And I said, I have. And she goes, what did it feel like? She goes, what, what's it like? And it was when I was twenty years of age, twenty one, undergrad, sort of in real estate sales. Open up a real estate company, nineteen ninety. And what it felt like was a quiet lockdown at the start, is probably the best way.

• 22:15Speaker 00

  Like we're experiencing COVID.

• 22:16Speaker 01

  Yeah, like phones stopped ringing, like we didn't have emails then or text messages. It was the, the calls, the calls stopped coming in from buyers. And people go inward. That's the other thing you notice. And people get very conservative and people are paranoid. So what they're doing is they spend nothing, right? So that's, that's the feeling. And I remember it was nineteen ninety, ninety one, ninety two. But if I can recall, Mark, that seventeen and a half percent interest rate, it was different to now. It was a very, it was a fast, short jab. I remember it wasn't, it wasn't like, and I have to look it up. I don't know how long it stayed up.

• 23:00Speaker 00

  It lasts about eighteen months.

• 23:01Speaker 01

  Eighteen months, was it? Okay.

• 23:03Speaker 00

  That was one of the longest periods of high interest rates we've ever had.

• 23:07Speaker 01

  It was a keating, keating.

• 23:08Speaker 00

  It was keating, yeah. It was keating hawk, then it was just keating.

• 23:11Speaker 01

  So, so, so I know from economics, like at uni, they say recession, the definition is two, three month, two quarters that have had negative growth, right? So that's the way that you, that's the official diagnosis that you're in recession.

• 23:28Speaker 00

  Plus unemployment. They should add unemployment these days, but yes.

• 23:32Speaker 01

  Correct.

• 23:33Speaker 00

  High unemployment.

• 23:34Speaker 01

  So are we, like, what's your question? Are we heading into one? Like, I can tell you, if we have two rate rises, like I'd be, I'd be very surprised if, if we have two rate rises, then you add those two quarters. I think we'll be in recession. If we have one, maybe, maybe, maybe not. Many people say we're in a recession right now, but it's not actually the definition of a recession economically based on, on textbooks, you know?

• 23:59Speaker 00

  Do you think, therefore, I'm going to ask you, Louis, do you think as from a data point of view, you guys at SQM, research got this stuff happening all the time? Do you think the definition of recession is probably, needs to be modernized? And perhaps we are in a recession of some type?

• 24:12Speaker 02

  It's a, it's a good question. I mean, it's true that we've been in a per capita recession, except for the last quarter.

• 24:18Speaker 00

  You better explain that out.

• 24:20Speaker 02

  Okay, so basically, on a per person basis as an average, our standard of living has been falling. The output.

• 24:28Speaker 00

  Measured by?

• 24:30Speaker 02

  Measured by the A B S. So this, this all feeds through into G D P, right?

• 24:34Speaker 00

  Gross domestic product.

• 24:35Speaker 02

  Gross domestic product, but then you divide gross domestic product by the population, the number of people.

• 24:41Speaker 00

  From period to period.

• 24:42Speaker 02

  That's right.

• 24:43Speaker 00

  We'll see, we've had on a per person basis, we've got, we've got negative growth.

• 24:49Speaker 02

  We've had negative growth for some years.

• 24:51Speaker 00

  Yeah, yeah, a number of years.

• 24:52Speaker 02

  Yeah. So, and that's where you hear the stories, our productivity has been deteriorating. And that's measured by the G D P per capita. And what it really means is our living standards, on average, have been falling backwards for some time. So.

• 25:09Speaker 00

  As measured by, by those typical measurements.

• 25:12Speaker 02

  Now, the reason why it is not coming up in the headline number is in part because of relatively strong population growth. So total demand still increases, driven by a, a greater increase in population. But the economic cake that we all share, per person has shrunk.

• 25:35Speaker 00

  Right. And we've got more persons as well.

• 25:37Speaker 02

  And we got more persons.

• 25:38Speaker 00

  Yeah.

• 25:39Speaker 02

  So this is, this is a big issue.

• 25:41Speaker 00

  So if we, we could talk about like this, we have a cake in the middle of the table.

• 25:44Speaker 02

  Yeah.

• 25:45Speaker 00

  And there's three of us today.

• 25:46Speaker 02

  Yeah.

• 25:47Speaker 00

  But what you're saying is the cake is a twelve inch cake.

• 25:51Speaker 02

  Yeah.

• 25:51Speaker 00

  A twelve inch across diameter. You're saying that cake now is only six inches in diameter. Not only we've got three people across it around the table, we've got now twelve people around the table.

• 26:00Speaker 02

  Yes, well, I would say the cake is probably the same or has only grown a little bit. But the number of people around the cake has doubled.

• 26:09Speaker 00

  Doubled. So more people are going to carve up a smaller cake, a slightly smaller cake.

• 26:13Speaker 02

  Yeah. And so that means then bottom line is our standard of living has been falling.

• 26:20Speaker 00

  And let me explain that a little bit too, if I could put in really commonplace parlance. So what you mean by that, Louis, though, is that when you say standard of living, if we measure the standard of living by what we can voluntarily have, and in this case, it's having a nice piece of cake.

• 26:35Speaker 02

  Yeah.

• 26:36Speaker 00

  Because if you've got enough money, you can buy a nice piece of cake and you can send your kids to music lessons or dancing lessons or buy them a, one of those bikes that Tommy drives up in Byron Bay.

• 26:45Speaker 02

  Yeah.

• 26:46Speaker 00

  But so, but if, if all of a sudden your cake, the money you take home, that's your cake.

• 26:50Speaker 02

  Yeah.

• 26:50Speaker 00

  And in this example, I'm going to get less of that, if there's now twelve people around the table, the same size cake, I'm going to get, my one twelfth is going to be less than my one third.

• 26:59Speaker 02

  Correct.

• 26:59Speaker 00

  That means my standard of life is that I'm not having as much cake. Basically, I'm just not having as much cake.

• 27:06Speaker 02

  And that's what's been going on.

• 27:07Speaker 00

  And that's, that's what we call the standard of living.

• 27:09Speaker 02

  Yeah.

• 27:09Speaker 00

  Now, let me just talk about that standard of living. This is really important to me. And I think, I know, I know you guys agree with that. Would you agree, and I don't mean it's a leaning question, but would you agree that the basic fundamental role of a government and the policies that they bring into place?

• 27:27Speaker 00

  And fundamentally, should be about either maintaining our standard of living or improving our standard of living. More cake.

• 27:33Speaker 01

  More cake. Everyone wants more cake. And we expect the government to do their best to be able to enable that.

• 27:39Speaker 00

  Would you, would you, would you say that's, that's at, at a very basic time, like Albanese and everybody else in that government who are running the show?

• 27:47Speaker 01

  Yeah.

• 27:48Speaker 00

  Guys.

• 27:48Speaker 01

  I, I, I.

• 27:49Speaker 00

  What we're playing, paying you for is we wanna, don't wanna get a small piece of cake.

• 27:54Speaker 01

  Mark, the cake, you could actually write a book about the cake, to be honest with you. Because if you fundamentally think about the issue that we've got at the moment, you and I and Louis and many people in our generation benefited during a period where the cake got bigger and bigger. And that was as a result of having leaders that were Keating, Hawke, Costello, Howard. These people were about growing the cake. What we've seen in recent times is let's move pieces around the cake. Let's grow bigger shares of within the cake, not make the, the cake bigger. And many people feel that the government is saying, we believe

• 28:38Speaker 01

  that the way the cake should look like is the government has the biggest slice of the cake, right? That's, that's, that's the fundamental issue. And, and people are sort of saying, we've got a problem with that. And that's why you're getting some people take off and go to other places where they're saying, hey, in this place here, they're letting us actually grow a double decker cake, right? Um, so this is why I think people are frustrated. And again, I wanna, Mark, you know, I wanna make it very clear, I, I, I've been, I have voted for Labour more than I voted for Liberal, like you. I came from that part of Sydney where you were brought up, hey, Labour, they're the working party, right? So that's, so this

• 29:18Speaker 01

  is nothing, I'm not anti-Labour. I'm anti not having common sense. Like, it's clear, we need the cake to get bigger. If the cake gets bigger, everyone's happy, including the new migrants that come in.

• 29:30Speaker 00

  And both you and I, you know, where the sons are migrants.

• 29:34Speaker 01

  Absolutely.

• 29:35Speaker 00

  And, and, and that was sort of what our families built their lives on. They were pretty, you know, um, they're pretty convinced that the cake would keep getting bigger. And that's why, that's why we've come to our country.

• 29:46Speaker 01

  Yeah.

• 29:47Speaker 00

  This is a land of plenty.

• 29:48Speaker 01

  The Greeks and Italians were building the cake. If you look in the sixties, they were building it.

• 29:52Speaker 00

  Especially in Haberfield. But, but so, okay, so we now we've got a narrative. So, you know, and I, this is not a bash up Jim Chalmers opportunity, but, you know, Jim has to be accountable for what he says, and what he does, but what he says. So recently, Jim was saying, I heard him talking on somewhere or other, saying that, um, the reason we had to have an interest rate rise more recently is because of the Middle East. Now, the Reserve Bank, of course, this is off the back of the Reserve Bank's change more recently. And the, and the Reserve Bank, of course, said, that's not, well, the governor said in her

• 30:32Speaker 00

  address after the, um, what she, what they printed out at two thirty one P M on the, whatever the date was last week, um, she goes and addresses the media. And she said, inflation started before that, and my role is to stop inflation. The narrative of the treasurer said, no, it's all about the Middle, inflation's here, yes, but it's all about the Middle East. Do you buy that? Do you guys buy that?

• 30:56Speaker 01

  It's certainly not all about the Middle East. I, I mean, the facts are that government spending as a proportion of GDP has been increasing. Basically, government expenditure is now running at about twenty eight percent of GDP. At the start of this century, it was running at about fifteen percent of GDP.

• 31:15Speaker 00

  So that, when you say government spending, Louis, maybe you could explain to what it means. What does that mean, government spending money?

• 31:21Speaker 01

  Total expenditures on, on welfare, on, say, infrastructure, on government's own departments.

• 31:28Speaker 00

  Public servants.

• 31:29Speaker 01

  Public servants, the whole box and dice in terms of where our taxes go.

• 31:34Speaker 00

  So maybe you can explain a little bit more. Like, so governments take in around twenty four point one percent of GDP in taxes.

• 31:42Speaker 01

  Yes.

• 31:42Speaker 00

  So the government's books, it's, it's a profit and loss.

• 31:46Speaker 01

  Yeah.

• 31:46Speaker 00

  It's revenue, which is tax, maybe a few other bits, but basically taxed. Money we all pay, okay? Corporations, B H P, banks, everything like that. That's their revenue. That's the top line. Then they have another line which says, what we're the government gonna spend off that money we raise. So twenty four point one percent of GDP has been, is currently the amount of money they're raising from taxes.

• 32:08Speaker 01

  Yeah. And they're spending a bit more than that.

• 32:10Speaker 00

  They're spending twenty eight percent or close.

• 32:12Speaker 01

  So I think it's about twenty seven, twenty eight.

• 32:14Speaker 00

  Yeah. So I think it's twenty six point nine.

• 32:16Speaker 01

  There, there we go.

• 32:17Speaker 00

  That's twenty seven percent. Let's settle on that. So basically, what that means is, like, if you ran your businesses like that, you'd be in trouble. If I ran my business like that, I'd be in lots of trouble.

• 32:27Speaker 01

  Yeah.

• 32:27Speaker 00

  Because I'm losing money. I, I earn twenty four point one and I spend twenty six point nine, twenty seven, I'm, there's a three percent gap or close enough.

• 32:36Speaker 01

  Yeah.

• 32:38Speaker 00

  What are governments, where do governments get that money from? How do they bridge that gap?

• 32:41Speaker 01

  So they're borrowing, they're running budget deficits, and we're currently in a budget deficit.

• 32:45Speaker 00

  So that's what a budget deficit means?

• 32:47Speaker 01

  Yeah.

• 32:47Speaker 00

  They're spending more than their.

• 32:49Speaker 01

  And through doing that, that means you have to borrow.

• 32:52Speaker 00

  Yeah. So if you did that, your house, if you did that, your house, you did your house.

• 32:57Speaker 01

  Yeah.

• 32:57Speaker 00

  What would your family say to you?

• 33:00Speaker 01

  Um, okay, what would my family say to me?

• 33:03Speaker 00

  Dad, why are you spending all this money on trips to Bali and everything, and more than we're earning?

• 33:07Speaker 01

  Yeah. Yeah, yeah, yeah. I mean, look, there's, as we all know, there's good debt and there's bad debt. I, I, I'd have, actually, to answer your question, I'd have diff, I, I'd have some members of my family that would say, they don't give a stuff, keep the good times happening. I don't care where it's coming from. But I'd have some other people that are saying, Daddy, do we, where's this money coming?

• 33:27Speaker 00

  And you say, I'm gonna borrow it.

• 33:29Speaker 01

  I'm, I'm gonna borrow it.

• 33:30Speaker 00

  We've got a house, I'm gonna keep borrowing against our house, okay?

• 33:33Speaker 01

  Yeah.

• 33:34Speaker 00

  And I'm gonna keep doing it every year for the next twenty years.

• 33:37Speaker 01

  Yeah.

• 33:37Speaker 00

  And at the end of the twenty years, um, that, that, maybe the house can be worth a lot, but like, we're gonna have quite a big debt, and I'll probably die.

• 33:44Speaker 01

  But girls, you'll have to take over. I don't know what the state of affairs are gonna be, but it's gonna be over to you.

• 33:49Speaker 00

  What do you think they'll say then?

• 33:50Speaker 01

  Uh, well, if they look closely at, at, at what the numbers are gonna look like, they'd say, stuff that, keep your holiday. That's what I reckon.

• 33:56Speaker 00

  Don't, don't spend.

• 33:57Speaker 01

  Don't spend. They'll say that. So Mark, I wanna say something.

• 33:59Speaker 00

  It's pretty simple, though, isn't it?

• 34:00Speaker 01

  It's, it's pretty simple. Can I, can I just add this? That I think we all agree, it doesn't matter whether you've got a Labour in, Liberal in, um.

• 34:09Speaker 00

  It's not about politics.

• 34:09Speaker 01

  Government, government overall is inefficient.

• 34:12Speaker 00

  Hmm.

• 34:13Speaker 01

  I think we all agree, compared to, say, the private sector.

• 34:15Speaker 00

  Yeah, totally.

• 34:16Speaker 01

  So if government spending as a proportion of GDP is increasing, that in part explains why productivity per person's been falling. Just a theory, just a theory.

• 34:28Speaker 00

  Potentially.

• 34:29Speaker 01

  Yeah.

• 34:29Speaker 00

  Because then people aren't incentivized.

• 34:31Speaker 01

  Yeah, that's exactly.

• 34:31Speaker 00

  There's no incentive.

• 34:32Speaker 01

  Yeah. Mark, I wanna add, I wanna add this. And I Googled this before I went on A I, before I came in. I, I thought to myself, I wanna remember, when did I first meet you? It was two thousand, two thousand and six I walked in, I remember. I was unwell, that's when I got diagnosed. I walked in, right? You know what I did? I went in and had a look at what was a deficit or surplus in two thousand, I've just did this before I walked in.

• 34:54Speaker 00

  Yep.

• 34:55Speaker 01

  Two thousand and six, we had a surplus.

• 34:57Speaker 00

  Yeah, surplus.

• 34:58Speaker 01

  Of seventeen billion.

• 34:59Speaker 00

  Yeah.

• 35:00Speaker 01

  And I had a look at what is the forecasted surplus or deficit two thousand and twenty six, twenty seven. It's thirty billion. Then I worked out what it costs to pay, like, the money that you've borrowed, right, that it's grown. It's eighty million a day. So eighty million every day, the government, before they can pay for any services, any hospital workers.

• 35:24Speaker 00

  Anything that helps our standard of living.

• 35:26Speaker 01

  Correct.

• 35:26Speaker 00

  Anything that's gonna help us live a better life.

• 35:28Speaker 01

  Correct. So Mark, think about it. If this deficit keeps growing and that bill every month keeps going up, people, someone's gotta take, pay the invoice. And the invoice is probably gonna be paid by my daughters and their buddies.

• 35:42Speaker 00

  Yeah. And one other way of doing that is, well, government only earns revenue from one place, tax. So one way we could fix this is increase the taxes.

• 35:52Speaker 01

  Yeah.

• 35:53Speaker 00

  Because that is the only way out. Like, if you come to me, I'm a lender, and you say to me, um, look, I've got a difference deficit. I'm gonna tell you, but, well, mate, I can't lend you any more money. You've gotta go and earn some more money.

• 36:04Speaker 01

  Correct.

• 36:05Speaker 00

  And you go and earn some more money.

• 36:06Speaker 01

  Is there another option, Louis? Is there any other option apart from, I'm trying to work, is there spending less?

• 36:11Speaker 00

  You either earn more.

• 36:13Speaker 01

  Yeah.

• 36:13Speaker 00

  Borrow more, or both, or, and Louis just said, spend less. Because what we might, one of my mortgage brokers might say to you, well, uh, Mark, um, you know, like, I can't put your application up because, you know, you don't earn enough money, net. So maybe you should stop spending on Uber Eats, stop having a bet on the footy. Um, you know, maybe stop going out on Friday nights for a, a, a Palmy and Schnitzel, whatever it is. And because I can see those numbers in your credit card spending. I can see it, you know, like, and just, just slow you down. But for the next three months, get yourself in a good shape. And maybe come back and I can lend you the amount of money you need to do, go and borrow the, buy, buy that property you wanna buy, buy the thing you wanna buy.

• 36:55Speaker 00

  That's household economics. Home economics, which when I went to school, that was something, that was a subject. How hard is it for the government? And I'm not trying to play it down just to apply simple home economics to our economy. Why is it so hard, do you think?

• 37:13Speaker 02

  I think there's a degree of ideology in it.

• 37:16Speaker 00

  I'm perplexed though, Louis, I'm seriously perplexed. I don't know why it's so hard.

• 37:19Speaker 02

  Yeah.

• 37:20Speaker 00

  Why can't we go back and do what Costello did? He did that. We had a surplus.

• 37:25Speaker 02

  It's a, it's a good question.

• 37:26Speaker 00

  And we paid our debt to, national debt to zero.

• 37:29Speaker 02

  Yeah.

• 37:30Speaker 00

  Zero in two thousand and six.

• 37:32Speaker 02

  That's right. And we had a, we had savings.

• 37:34Speaker 00

  And he put four hundred million, I think it was, into the future fund.

• 37:38Speaker 02

  The future fund, that's right.

• 37:39Speaker 00

  And not one dollar's been added to the future fund since, other than what it's earned.

• 37:43Speaker 02

  Yeah.

• 37:43Speaker 00

  So in, in, you don't have to be an economics, uh, you don't have to be Milton Friedman.

• 37:49Speaker 02

  Yeah.

• 37:50Speaker 00

  You know, one of the world's, you know, the best economists or, or Keynes to work this stuff out. It's pretty simple. Why do you think, you said ideology, what do you think it is?

• 38:00Speaker 01

  I think it's ideology as well. I think.

• 38:02Speaker 00

  Do you think they're trying to send us broke up?

• 38:04Speaker 02

  I, I, I don't think they're actively trying to do that. Um.

• 38:08Speaker 00

  Do you think they don't care? They must be able to see it.

• 38:09Speaker 02

  Oh, they, yeah. Look, um, each political party has its own base, of course.

• 38:16Speaker 00

  Of voters.

• 38:17Speaker 02

  Of those, voters. Um, I would argue that there is a larger proportion of public service voters who will generally vote towards Labour.

• 38:29Speaker 00

  Cause that's who's paying the bills.

• 38:30Speaker 02

  Yeah, that's exactly right. You follow the money.

• 38:33Speaker 00

  And they get paid seventy percent, uh, superannuation. A normal person probably never gets twelve.

• 38:37Speaker 02

  Yeah.

• 38:38Speaker 00

  They get, it's a pretty good gig.

• 38:40Speaker 02

  Yeah, that's.

• 38:40Speaker 00

  And I'm not having a crack at, by the way, if you're smart, you probably are working for the public service now. It's a smart place to be.

• 38:46Speaker 02

  And let's recall, of course, the, uh, you know, as Tom made mention, that the whole Keating government was involved heavily in microeconomic reform, which increased the size of the cake.

• 38:57Speaker 00

  Hmm.

• 38:58Speaker 02

  Uh, so it doesn't mean that every Labour government's going to be like this, where they're focusing on who should be around the cake. Uh, but it does appear that, you know, recent governments have been more focused on that rather than growing the cake. And this goes to the point about, all right, where, where we don't have as much productivity going on. So when you see an increase in government expenditure, that's what creates inflation, going all the way back to the inflation question. That's what can contribute to inflation. So then to the point of charmers, avoiding that particular point is most interesting, kind of self-serving, isn't it? To say this is all on the Iran war, this is all about oil prices.

• 39:41Speaker 00

  And what he calls private demand.

• 39:43Speaker 02

  Uh, yeah.

• 39:44Speaker 00

  And that's sort of like indicating that Tommy's out there spending too much money.

• 39:47Speaker 02

  But if you look at the stats, it's quite clear, government demand has been increasing more rapidly than private demand. That the ABS publishes this.

• 39:56Speaker 00

  Hmm.

• 39:56Speaker 02

  It's clear as black and white. It's a fact.

• 39:59Speaker 01

  The, the, the, the, it, it is, it is, the more you think about it, it is the ideology, because if you, if you fundamentally think about what's happened, there's one ideology is, um, uh, aspiration, one is redistribution. And if you listen to just the dialogue of the, of the treasurer, he'll keep making reference and the independent reserve bank said that it was, you know, the, the war overseas. Basic economics one O one. If, if you're doing an economics degree, in year one, you're taught that things that drive inflation are individuals, businesses and government. Those three things will drive inflation.

• 40:43Speaker 01

  At the moment, I mean, the way the government is carrying on is they're sort of saying everyone else is the problem, except for, for us, you know. He, at no, at no point are they, are they saying, having said that, in the last forty eight hours, I've noticed the treasurer's talking about the mid, uh, midpoint budget or whatever they're, they're using, saying, oh, it's, it's gonna be hard, we've got to tighten it up.

• 41:09Speaker 00

  The December budget.

• 41:10Speaker 01

  Yeah.

• 41:10Speaker 00

  My if, yeah. That's, it's the one they put in the, I think, my if, yeah, they put it out, it's, it's the, the midterm of the budget.

• 41:18Speaker 01

  Yeah.

• 41:18Speaker 00

  And it's a financial, like, forecast and change. So they'll, they usually announce it in December. Be interesting if they do do something. Um, I, I guess we both, all of us, to settle on the word ideology. The question is, well, what is that ideology? Um, what, what are we talking about? So we keep talking about Keating and Hawk. Keating and Hawk were the right of the Labour Party, to the right. This Labour Party is to the left, has a lot of left influence on it.

• 41:48Speaker 00

  What do we think the ideology is? You, you mentioned is, um, um, transfer of wealth or redistribution of wealth? Um, it's clearly the care economy, um, which is looking out after those people who need care, which is, I think, welfare is important. I, I think it's really important. Um.

• 42:07Speaker 01

  Big government. Government must be bigger than business.

• 42:11Speaker 00

  Because government makes, because they take the view, we, the government, can make all the right decisions for you.

• 42:15Speaker 01

  We will make better decisions for the country.

• 42:18Speaker 00

  Leave it to us.

• 42:18Speaker 01

  Yeah.

• 42:18Speaker 02

  Like, yeah, they, they, I, I think they just take.

• 42:21Speaker 00

  That's the ideology I want to work with.

• 42:22Speaker 02

  Capitalist system, the pure capitalist system.

• 42:25Speaker 00

  Will create too much people, too many people need welfare.

• 42:27Speaker 02

  Create too much inequality.

• 42:28Speaker 00

  Yeah.

• 42:29Speaker 02

  Is, is the view. And look, there's no system that's perfect.

• 42:32Speaker 00

  No.

• 42:33Speaker 02

  We know that. Uh, but yeah, that's, that's the view. And so then they determine, well, who should have the greatest slice of the pie? That's their determination.

• 42:42Speaker 00

  And if you're not gonna, and we, the government, if it's them talking, we, the government, don't trust that, that capitalist system, because we know that too much wealth is gonna go into the hands of too few.

• 42:52Speaker 02

  Yeah.

• 42:52Speaker 00

  And, uh, therefore, as a result of that, whilst we're in government, we're gonna make sure that's not the case. And we're gonna distribute back, back to those people who need the, who need the welfare. Now, we're not talking about people here who are out of a job. Live in a housing commission, um, and or are disabled. We are talking about people, there's a, there's a new layer of people that they're trying to look after.

• 43:17Speaker 02

  Well, that's true, but there, there is also, I think we need to consider this, that there is also a self-conflict here. Bigger government equals more power.

• 43:27Speaker 00

  Hmm.

• 43:28Speaker 02

  More concentration of power with the government.

• 43:31Speaker 00

  And more likely of getting voted back in.

• 43:33Speaker 02

  Yeah.

• 43:34Speaker 00

  Maintaining my position.

• 43:35Speaker 02

  That's exactly right. Um, so, yeah, look, you know, I have my own biases. I'm a small business operator. Um, yeah, obviously we've got a name out there, but what we do, we, we, we don't hire that many people. I'm a small business operator. I believe in smaller government. I always have.

• 43:53Speaker 00

  Hmm.

• 43:54Speaker 02

  You know, just being upfront about it.

• 43:55Speaker 00

  Yeah, but that's your ideology.

• 43:56Speaker 02

  That, that's my ideology, that's right. But I like to believe it's backed with numbers.

• 44:00Speaker 00

  Yeah.

• 44:01Speaker 02

  You know, and I'm a numbers guy.

• 44:02Speaker 00

  Yeah.

• 44:02Speaker 02

  And I can see what it takes to grow the cake, going back to the cake.

• 44:08Speaker 00

  Analogy.

• 44:08Speaker 02

  Analogy. Okay. And what, what it takes to shrink the cake, right? And shrinking the cake means running the economy inefficiently. And I'm afraid that this is what's been going on.

• 44:22Speaker 00

  Yeah. And Tommy, you're a small businessman too. I mean, you, you represent yourself. I mean, you, you've got different businesses, but, you know, you pay. But, by the way, right here in this business, this mental business or this, um, straight to a business, this is a small business as well. And, uh, you know, we feel the effects of change in the economy, just like everybody else. Um, but like, what do you think about, um, what's your view on the split in Australia? Because it seems to me that there's fewer of us who have our ideology. And it seems to be more people attracted to this new ideology of the current government. Do you feel that is the case?

• 44:58Speaker 01

  Yeah, but I, I, I do think.

• 45:00Speaker 00

  Is there a change?

• 45:01Speaker 01

  I, I, yeah, I, I, I think the, the, the latter group is smaller. I think that, um, a lot of people that may have traditionally, uh,

• 45:18Speaker 01

  voted for Labour are beginning to see that this extreme ideology does not fit in with, uh, their values. I think, I, nor, normally, take the budget for example, normally when something happens, you get one group that's cheering and one group that's angry. This time around, nearly everyone was angry. There's only a small cohort of people that are saying, uh, that they're happy. I mean, and yes, I am a small business. I also, the work I do, education, training, consulting, is to small businesses fundamentally, right? Real estate companies. And they just feel the, I mean, you mentioned the word productivity. So

• 46:03Speaker 01

  in the old days, you'd work ten hours and you would do ten hours of selling. Now.

• 46:11Speaker 00

  Per day.

• 46:11Speaker 01

  Per day. Very productive. Now, they're doing six hours. Why? Because four hours requires all this compliance, red tape, all this.

• 46:24Speaker 00

  Know your client.

• 46:26Speaker 01

  They're my clients.

• 46:27Speaker 00

  Um, uh, mate, I got five sets of solicitors who work for me and they all know me for twenty five, thirty years. And now everybody's, every time we put in a different matter with different lawyers, I have to go through this process of identifying myself.

• 46:40Speaker 01

  Okay, so that, that impacts productive, pro- productivity is a, it's a, it's a simple concept, Mark, like one, one, one person, right? Can sell for eight hours a, the day. Another person only sells for, uh, four out of the eight hours. The, the other, this person that does eight hours is twice as productive, right? They're both in for eight hours, except now what's happening is many of those hours are coming in with all the red tape compliance. And a lot of, I've got a client that I'm doing a conference for on Thursday. And he says, Tom, you know, our issue is like between the compliance, red tape of government, and also the fact that there has been low unemployment.

• 47:25Speaker 01

  The minute you're sort of saying is we need to go down this direction, we get pushback from, from our staff because both they know they can get another job, number one. But number two, we've got to keep ticking every box to make sure. And that's why I think.

• 47:38Speaker 00

  They don't want to take a risk.

• 47:39Speaker 01

  Yeah, and businesses are, you know, I'd love to look at the latest data with businesses. Man, they're, um, slowing down and closing down at a rapid, rapid rate, you know? Um, you've seen the fuss that, I mean, they're already, anyway, I don't want to sidetrack this conversation.

• 47:58Speaker 00

  No, but the, the, the regulatory process is a byproduct of the ideological process. Because if I increase the people who work for the government, they're going to do a job.

• 48:10Speaker 01

  Yes.

• 48:10Speaker 00

  It's not their fault. Uh, they're gonna go find work. They're gonna say, okay, well, we should regulate, um, I'm working in this particular department and my job is, um, you know, in real estate, making sure people don't get ripped off, consumer protection, but, but let's call it that. Um, I want to make sure that, um, we don't, or, or anti-money laundering, or, you know, like Austrac or something like that. And these numbers have increased amazingly, which is, the idea of it is very good to stop money laundering and it's to stop, um, terrorism or this, that, get it?

• 48:38Speaker 01

  It's important that it's done, right?

• 48:40Speaker 00

  But, but it gets overdone, everything gets overcooked.

• 48:43Speaker 01

  Yeah.

• 48:43Speaker 00

  And as a result of that, all of a sudden, um, Tommy's trying to sell, be my real estate agent for something I want to sell. And he's got to identify me as someone who's, I am actually Mark Boris, when he knows I'm Mark Boris, because he knows, he's been knowing me for thirty years. Um, he's been dealing with me thirty years. I mean, that is so ridiculous. Like, I mean, Tommy should be able to say vouched. Instead of me having to produce my license back and front, photograph and, you know, look left, right and centre on the, onto my phone and go through the process to make sure that my phone can identify me, then sending that off to Tommy. So Tommy then can send it wherever he's got to send it to, to make sure that Mark Boris is the vendor of that property. And then I've got to do this, and then Mark's got to do the same thing with his lawyer. The lawyer's got to re-identify me as well.

• 49:24Speaker 00

  This is all money, this is money spent and time spent that adds nothing to the value of the property.

• 49:30Speaker 01

  It's also been one of the bigger causes as to why developers have decided they're going to sit on the sidelines. I mean, apart from the, the model not adding up, right, land improvement, sale price, you know, they're not Mother Teresa, they want to make a profit. But one of the main reasons that they're not going ahead is that all the stuff that you're talking about, the compliance and red tape for a developer is just slowing up, slowing up, time is money, takes away from any margin that they're going to make. So they're not building, which is another cause of the housing crisis that we've got.

• 50:03Speaker 00

  Not enough stock.

• 50:04Speaker 01

  Yes.

• 50:04Speaker 00

  So, and then that comes down to that, that, um, regulatory environment actually affects the productivity environment.

• 50:10Speaker 01

  Yeah.

• 50:11Speaker 00

  And Australia's productivity, now Louis, where is Australia's productivity? Like, how have we been going?

• 50:15Speaker 02

  Well, it, it's been trending down over the last three years.

• 50:19Speaker 00

  Yeah.

• 50:19Speaker 02

  Uh, and I think we're off from the peak. Uh, it's, it's coming up to ten percent.

• 50:25Speaker 00

  Wow.

• 50:25Speaker 02

  Uh, which is huge. Uh, so.

• 50:27Speaker 00

  What?

• 50:28Speaker 02

  Yeah, we were, we were ten percent more wealthier per person three years ago than where we are now.

• 50:33Speaker 00

  Wow.

• 50:34Speaker 02

  So it's, it's a meaningful decline.

• 50:37Speaker 00

  And so what, what, we've got the capital gains tax legislation coming through. We've got high interest rates at the moment. We've got this regulatory environment that's sort of sitting below us. We've got, um, a bigger government growing, growing, growing. Um, and we've got an election coming up in twenty twenty eight. We've got like different parties sort of positioning themselves.

• 50:59Speaker 00

  What would you do if you became the leader of the Labour Party today?

• 51:06Speaker 00

  Seriously.

• 51:06Speaker 01

  Can, can, can I start? The first thing I, the first.

• 51:08Speaker 00

  Tommy wants to go for it, but I, I, I got a view too, go for it, please.

• 51:12Speaker 01

  The first thing I would do

• 51:16Speaker 01

  is hire a smart group of people that probably aren't employed by the government to get them to go in and to say, um, let's reduce government spending, have a goal. Let's aim for a three percent reduction. And the way that you'll do it is line by line, go through and see what can we get rid of? What?

• 51:45Speaker 00

  In terms of what we spent?

• 51:46Speaker 01

  Yes. What can be delayed? I'm not saying we're going to stop all projects. What can be delayed? What, what can we prioritise do this? And let the government to do their thing, right? In helping us get inflation down, which in turn will help interest rates come down faster.

• 52:06Speaker 00

  Which will make affordability easier.

• 52:07Speaker 01

  So that, that would be get smart people in there line by line and say, that's a priority, that's not a priority. We can do that in ten years, we can do those roads in ten years, right? That's there, that would be the first thing. The second thing is I would quickly, straight away, have a look at migration and the type of migrants that are coming in, right?

• 52:27Speaker 00

  In terms of skills?

• 52:28Speaker 01

  Skills, but I, I mean, also, I mean, I totally get the, the concept of family reunions. If you've got a, if you've got a doctor that's moving to, to, let's say, Bangalore, because we need doctors there. You know, doctor might bring his doctor wife with him or, I, I get that as well. But I would have a look at the, uh, the skilled migrant prioritising that, because that would be important for the building. Takes the building costs down, because one of the reasons they're not building is the deal doesn't stack up with labour force. Um, the next thing I would do is I would seriously, uh, have a look at bringing in the negative gearing back on just a limited number of properties.

• 53:10Speaker 01

  Because I actually think that if they, I'm totally against this concept where people have got, you know, twenty, thirty properties walking around. You know, these, the Andrew Tate group of buyers agents, let's just go buy all these properties. The deal's got to stack up, the negative gearing's got to work because everything is going to work to the dollar. I get that concept, I'm not in favour of that. But I do think that good long-term landlords provided a solution in this country, a solution that the government many years ago said, we don't want to participate in. They're the ones that caved in on public housing and said, let's leave it to the mums and dads do it. And they gave them some incentives along the way to do it for them because it was too tricky. I mean, that, that's the truth of the matter. So I would look at maybe.

• 53:52Speaker 00

  Form of negative gearing back into the system?

• 53:54Speaker 01

  Form of maybe a maximum of two, three properties. On the capital gains tax, I would one hundred percent. These young people that are using shares to build a deposit, I'd be looking at that, um, as well.

• 54:07Speaker 00

  As an exemption.

• 54:08Speaker 01

  As an exemption. The other thing I'd be looking at is the, the capital gains tax, the fifty percent discount. I would look at having a system, if you have held a property for a period of time, you're a long-term landlord. You're not a flipper of a landlord, right? I would give those people the incentives to want to invest in property long-term because this country operates a lot better when we do have landlords that provide housing for our tenants, but not ones that are short-termers, right? I would look at maybe sort of saying, if you've had a property.

• 54:39Speaker 00

  So there's a long-term capital gains tax discount and a short-term capital gains tax, which is maybe not the same discount.

• 54:44Speaker 01

  Correct.

• 54:44Speaker 00

  Which they have in the US.

• 54:45Speaker 01

  Correct.

• 54:46Speaker 00

  If you're a short-term owner of real estate or a property and you flip it, you have to pay one tax rate if you hold it for so many years. You, you get a, you get a capital gains tax, uh, benefit. And all, in America, what you can do is you can roll it over. So if I make capital gains tax on this property and I buy another property, as long as you buy something, you can roll straight into the other property. So that you can sort of defer it forever.

• 55:05Speaker 01

  Spot on. And the last thing I would probably do, I would look at a cohort of people in Australia, people that have had a big impact in my life, nurses.

• 55:16Speaker 01

  Um frontline workers, these people, they're needed in this country. And in many ways, they get treated quite poorly.

• 55:25Speaker 00

  They need to be living close to where they're providing the services.

• 55:27Speaker 01

  One hundred percent. And we should look at seeing providing those some sort of assistance, whether it's rental assistance, you live around Newtown, Camperdown, you're competing, and I know it. I've been a land, I'm a landlord in those areas, Newtown. I know, and we all know that when overseas students come in, you want your lease finishing up at a time when the students come in, because you end up getting four or five uh tenancy applications involving a lot of the overseas students. It takes the rent up by a hundred, two hundred. The same workers that work at R P A Hospital, right, or the services, get impacted by competing against those tenants.

• 56:07Speaker 01

  I would look at supporting the, the, the, like the nurses, our firemen, people, essential services of people that give a lot to this country.

• 56:18Speaker 00

  We should look after them.

• 56:19Speaker 01

  Hundred percent.

• 56:21Speaker 00

  Louis?

• 56:21Speaker 02

  Oh, I, I agree with that sentiment. Um, you know, if we're, if we're going to discuss the solutions to.

• 56:27Speaker 00

  You're the new boss.

• 56:28Speaker 02

  Improving housing affordability. Okay, well.

• 56:30Speaker 00

  You're the bo- boss of the country. You're another prime P M. What were you gonna do?

• 56:34Speaker 02

  Okay, uh, let's say the focus is on improving housing affordability. I would look to reduce the total tax intake that occurs when we're building new homes.

• 56:46Speaker 00

  You mean all the tax add-ons?

• 56:48Speaker 02

  Yeah, all the tax add-ons. So on aggregate, when you build a new home, forty percent of the price of the cost of that new home taxes.

• 56:56Speaker 00

  So for, so, so, okay, so of the money that developers spends on building a house.

• 57:02Speaker 02

  Yeah.

• 57:03Speaker 00

  On a block of land.

• 57:04Speaker 02

  Yeah.

• 57:05Speaker 00

  That he's subdivided.

• 57:06Speaker 02

  Yeah.

• 57:07Speaker 00

  Forty percent of that cost to him.

• 57:10Speaker 02

  Yeah.

• 57:10Speaker 00

  Is spent on taxes.

• 57:12Speaker 02

  Correct.

• 57:12Speaker 00

  Not, not spent on plumbers, not spent on surveyors or architects or brickies or whatever.

• 57:19Speaker 02

  Yeah.

• 57:19Speaker 00

  It goes to the government, one government or other.

• 57:21Speaker 02

  Yes, that's right. Local, state, federal.

• 57:23Speaker 00

  Yeah.

• 57:23Speaker 02

  Yeah. So it's forty percent on aggregate.

• 57:25Speaker 00

  Right.

• 57:26Speaker 02

  So imagine if we're able to cut that in half.

• 57:28Speaker 00

  That's forty percent reduction in cost.

• 57:30Speaker 02

  Yeah. Okay, that would go a considerable way to improving affordability on new homes at least.

• 57:37Speaker 00

  Well, it certainly would get the developers to become incentivized to build more stuff.

• 57:41Speaker 02

  Exactly. It lowers their break even point.

• 57:43Speaker 00

  Yep.

• 57:44Speaker 02

  So that would be one thing I would do. Now, the other thing that I would do is I would get rid of stamp duties and I would replace it with a broad-based land tax. Okay, and what that would do, of course, it would stabilize state government revenues as opposed to the boom bust revenues that we have now. Uh, now, I know not everybody's in favor of land tax, and I doubt there'd be political will to do it. But I just noted if we're able to do that, we would actually see a more liquid market out there. Uh, so that would be the, the two.

• 58:19Speaker 00

  And, and so the land, the land tax would go to the state government.

• 58:22Speaker 02

  It's state government, right? And look, it's been done before. Remember, we used to have state excise taxes, and then we brought in a, a broad-based G S T. It's, it's not impossible where we had the state governments come in and agree. So it is possible we could try and do this, but I just don't think the political will's there. So I'm, I'm actually quite negative that we can actually make any change.

• 58:44Speaker 00

  Would you change the G S T system?

• 58:47Speaker 02

  No, I think the G S T system has been working fine.

• 58:50Speaker 00

  You, you wouldn't increase it, what I mean?

• 58:51Speaker 02

  Wouldn't increase it. No, I'd leave it alone.

• 58:53Speaker 00

  And would you, what would you do with um the cover against tax change uh policy that's currently in place?

• 58:57Speaker 02

  I'd bring back the discount for sure.

• 58:59Speaker 00

  You, you would, so would you do what? And, and the negative gearing?

• 59:03Speaker 02

  Uh.

• 59:04Speaker 00

  Would you do what Keating did in ninety ninety-six or seven?

• 59:07Speaker 02

  It's a good question. Uh.

• 59:08Speaker 00

  Six or what?

• 59:08Speaker 02

  I, I, I take the view that seeing higher rental yields in the market's not necessarily a bad thing. So investors right now are demanding higher rental yields to compensate them for the loss of taxation benefits. Worldwide, you see higher rental yields. And if we were to see higher rental yields, what you would see in this country is the rise of the build to rent schemes come through. Uh, and I don't think that's necessarily a bad thing. I think you would see a genuine increase in supply if you were to see more build to rent schemes come through. But the numbers have got to stack up. That's the reason why we haven't seen it come through in this country yet.

• 59:49Speaker 02

  Yields have been too low. So I'm, I'm kind of neutral when it comes to negative gearing uh overall. Uh, I've always taken the view that, okay, if you're going to uh take negative gearing away, you've got to phase it out. You don't strip the Band-Aid off. You've got to phase it out over time, and Labour has not been doing that. It's, they're, they're, time and time again, they just want to strip it off immediately. And this causes major waves in the housing market. That's what we're going through.

• 1:00:18Speaker 00

  Well, structural change is no good. Then these are structural changes, or these are changes that create structural change.

• 1:00:24Speaker 02

  Yeah.

• 1:00:25Speaker 00

  I mean, and, and you just, like, the, the normal person out there who might be thinking about buying, might have a couple of properties, might have a house and a rental property, um, they can't handle structural change, and they've got no, they've got no, they don't know how to respond to it. They've got no impact on it. They've got no influence over it. And all you're doing is putting people in a negative frame of mind. I, I find the country right now really negative. Really negative.

• 1:00:48Speaker 02

  Yeah.

• 1:00:48Speaker 00

  And not about ideologies, just, just feel like shit. They don't actually know why, which is why I want to bring you guys in today. People don't really know why we're feeling so bad, but things are tough out there.

• 1:00:58Speaker 02

  Well, there's a wealth effect, of course, and it's, you know, there's, there's a lot of evidence for it. When you see falling housing prices, consumer confidence starts falling. The overall feeling of, of feeling reasonably comfortable and wealthy reduces.

• 1:01:12Speaker 00

  Hmm. And you spend less.

• 1:01:14Speaker 02

  And you spend less as a result.

• 1:01:16Speaker 01

  And you support your kids less. That's why all of a sudden at my options, I've noticed that when I'm there with a young couple, the few that are remaining that are there, the mum and dad are not next to them, Mark. They're not next to them because the wealth effect is gone.

• 1:01:31Speaker 00

  Oh, you mean the parents of?

• 1:01:32Speaker 01

  The parents. I used, so, Mark, um, you know, I'm, I find Saturdays a fun time. I get to, I may, I only do it to stay in the market. It gives me a bit of credibility in my Monday to Friday work, right? And you'd sell a property and then you go over, you see a young couple, how you young guys, well done. Uh, that's your mum. Yeah, yeah, yeah. Um, yeah, oh, they're paying for the stamp duty or they're paying for this. They've disappeared because all of a sudden they're thinking to themselves, I've got to worry about myself now.

• 1:01:59Speaker 00

  Yeah.

• 1:01:59Speaker 01

  The value of my house has gone down. I used to have a two million dollar house down. It's gone down, right? My mortgage is still there. I need to look after myself now. Um, so they're probably not helping their kids like before. So that's taking some first home buyers out of the market too.

• 1:02:14Speaker 00

  Often referred to as a mega mum and dad.

• 1:02:15Speaker 01

  Correct.

• 1:02:16Speaker 00

  Which was a quasi-bank, but it was actually supporting our property market by supporting the buyers who were lucky enough to have a mum and dad who could actually put them in that position.

• 1:02:24Speaker 01

  Well, it was a redistribution of wealth made by the family decision under the roof themselves versus the government doing it for you.

• 1:02:31Speaker 00

  Yeah, so like, a- a- and, and how do you feel about, I mean, both of you are probably old enough to remember this, but Paul Keating reversed his, uh, he, he got rid of negative gearing in, um.

• 1:02:41Speaker 02

  Eighty-seven.

• 1:02:41Speaker 01

  Eighty-seven it was.

• 1:02:42Speaker 00

  It was eighty-seven. He brought it back. Didn't take him long. Eighty months.

• 1:02:46Speaker 01

  No, it was eighty-five, eighty-seven.

• 1:02:47Speaker 02

  Got rid of it in eighty-five.

• 1:02:49Speaker 00

  Yeah.

• 1:02:49Speaker 02

  And then brought back negative gearing in eighty-seven.

• 1:02:51Speaker 00

  He brought the negative gearing, realized that we need a negative gearing. Negative, most people think, oh, this person's going to own this property, get a tax deduction for the rest of life. No, it normally happens for about five years. Because after about five years, it starts to become positively geared.

• 1:03:03Speaker 01

  Yeah, what are you gonna do? Hold the trophy? I've lost money again this year. I'm, I'm negative gear. I like seriously.

• 1:03:08Speaker 00

  It's just a way to get into the system. That's all it was. I mean, there, there are some people who are sort of clever. You know, they're, they're, they're the exception. They're definitely not the rule.

• 1:03:17Speaker 01

  This, this budget, Mark, you know what it's done. I've got three mates that have all put around twenty-five million dollars into the market in the last month. They're investors. They're rich investors.

• 1:03:28Speaker 00

  And guess what's happening? They're gonna snap up all the property.

• 1:03:30Speaker 01

  They're snapping it up. You saw the guy from Straffville the other day. He bought a, a, a, a, a site for twenty million in Tamarama that had traded for thirty million three, four years ago, right? But see, rich people, they don't care about negative gearing. They don't give a stuff.

• 1:03:45Speaker 00

  Alec, Alec.

• 1:03:45Speaker 01

  Correct. Alexander Phillips, you tell me. It was a mortgagee sale. The vendor's, you know, quite famous. Um, so, um, the, the issue is that wealthy people are actually, like, rents have been okay, property prices have gone down. That means that number, the yield is better. These people are cashed up, right? They're not dependent on having a negative gearing benefit. They're going in. Some of them, one of them bought a positive geared property, saying to me, Tom, it's, it's happy days at the moment.

• 1:04:15Speaker 00

  But I don't understand, then if, if the, the ideology of the government is to redistribute wealth, all that's really happening is it's, it's going around the other way. It's going back to the rich people. So then people really can afford to buy right at the moment, at least, so the rich people. House prices are going down, they're gonna go buy more.

• 1:04:30Speaker 01

  And, and, and, and, you know, every, every time the Reserve Bank has a meeting, you know, go look at my social media comments from some of the people. Actually, some of them a bit tone deaf, but quite a few rich people are saying, hope rates go up. They've sit, they've got twenty million sitting in term deposits. You've got, you've got to remember that. You've got to remember, we've got a cohort of people at the moment, just the way the system is in Australia because of the one tool, which is interest rates. We've got a cohort of people that are being impacted, that are collateral damage, right, the most vulnerable. And on the other hand, you've got other people there that are, you know, sitting there thinking, great, my term deposit's gone up, right? So, uh, how is this, uh, uh, generational equality?

• 1:05:12Speaker 01

  That's one of the unintended consequences that we can all look back and say, man, it hasn't gone. Six months post-budget, Mark. Let's what, let's look at what's happened.

• 1:05:21Speaker 00

  It's getting worse.

• 1:05:22Speaker 01

  Six months. First home buyers are down twenty percent on last year. Fact, data. People can go in and look at it. Twenty percent. It hasn't helped them. We've got a country that generally is despondent, that has got no optimism whatsoever. We have people that have paid millions and millions in Australian taxes that are leaving this country. I think a responsible government will, should sit down and say, okay, let's see how this thing is going. I think that's what needs to be done. And I also think, Mark, listen, it's not even, don't even go worry about Dave Hughes or any other people that have been loud, right? Even the, the, the elbow should go and read the comments on his own page.

• 1:06:08Speaker 01

  I'm not talking about an algorithm.

• 1:06:08Speaker 00

  I actually read his, the comments on his page.

• 1:06:11Speaker 01

  On his own page.

• 1:06:12Speaker 00

  Yeah.

• 1:06:12Speaker 01

  Have a look at what people are saying. Maybe the time has come to actually listen to what the people are saying, something that they probably didn't do hard enough leading into the budget.

• 1:06:24Speaker 00

  Okay, thirty seconds each. What will you say to the government? Look at, look, look down the camera, the camera's on you. What, what, what, what do you want to say to them, Louis? Jan genuinely.

• 1:06:32Speaker 02

  I I would say your your job needs to improve your um big time in terms of the quality you've been putting out there and helping the community. I would say you need to reduce government spending, which will help reduce inflation. And you need to relook at the property taxation changes you've brought in. So that's it.

• 1:06:54Speaker 00

  Tommy, just look at this camera and say it.

• 1:06:57Speaker 01

  Same, same, and I urge you to go read the comments on your own pages. Please listen to what people are saying, not some algorithm that might be taking them to a world of right wing, you know, shouting. Have a listen to the own comments of the people that follow your pages. That's what I would say.

• 1:07:21Speaker 00

  And I will say,

• 1:07:25Speaker 00

  don't be afraid to make a mistake.

• 1:07:28Speaker 00

  If you're worried about being reelected because you won't get reelected because you think people will blame you for making a mistake. If you get out there now and say, you know what? We made a mistake. We misread it. We're gonna correct that mistake. You've got more chance of being reelected, if that's your game, than if you don't admit it. And just get up in front of the media, in front of everybody, and just say, because everybody knows you made some mistakes. You're spending too much and the capital gains tax legislation was no good. So fix it. It's easy. We have to do it in the corporate world. We stuff up, we have to go and front shareholders. Difference in our world, your shareholders can call a meeting anytime.

• 1:08:12Speaker 00

  You guys, shareholders, only call a meeting once every three years. In fact, you call the meeting and we can only vote for you once every three years. Treat us like everyone else gets treated, like the corporate world gets treated. Go out and front up to your shareholders. That's us, us voters, stakeholders. Tell us you made a mistake and I guarantee you, you'll get 50% of the people will forgive you as long as you fix it.

• 1:08:34Speaker 02

  Well said.

• 1:08:35Speaker 00

  Just just own up and own it. Thanks, guys. That was wonderful. Awesome. So good.

• 1:08:40Speaker 02

  Thank you.