Has the time for Budget reform passed? March 27, 2026

25:42That's kind of, anyway, it's an aside. And if you're a green supporter, sorry, not sorry. It's just a funny thing. The call to authority thing is bad enough as a logical fallacy at the best of times. When you're just choosing people who have, you know, left-wing group says tax businesses more. I mean, color me shocked. It was just a funny old thing. On the tax though, mate, I want to propose an alternative. And we talk about fucking need to raise more money. I'm not going to get on that path. Here's what I reckon. If you are the family patriarch, right, of Family Australia, and you've got 28 million children, and good work, you've done well, and they're going to have children, they're going to have children, and you care a lot about the future of your family, what you're not going to do is flog off the family silver to pay for a knee's up.

26:31Right? Because you're going to say, well, hang on. Makes sense. I care about some sort of inheritance. I care about leaving something behind. I inherited this. I want to leave it in as good or better a state as I found it. so you know yes you can dig it up drill it up and sell it off and go for a party and then kind of go sorry kids I kind of just did all that you wouldn't do it right if you're half reasonable half responsible patriotic there's no worse than make money right Australia is Australia we're not going to annex any other countries God willing so we can't you can't get a second job Australia is already Australia all we've got is what we've got you can't ever have more than that because that's where we are so we're going to do that okay cool you're going to leave it for kids yeah you're going to leave it for kids alright cool here's the counterintuitive thing and people the oil and gas boosters I hate this and I don't care because it's just fun and it's just logically real so I don't care.

27:13If I'm upsetting you it's because you're biased not me. There you go. You're welcome. So we talk about percentage of revenue which is fine except we're now selling oil at 100 bucks a barrel and you get 25 % of that. Okay? At$67 a barrel you get 25 % of that and if the oil price was to fall to$10 a barrel you get 25 % of that. The question if you it's like saying I will sell off part of my house every day a small portion every day no matter what the price I'll just sell it if you're half smart you're going to go we just had a really big recession and the price of housing has fallen I know it never does but let's assume by 40 % are you going to keep selling then or are you going to say I'm not going to sell this for less than what it should be a reasonable price so I'm going to put a floor on the price I'm going to accept and if you want to offer me less than that that's cool I'm just not going to sell and then take it to oil and gas the idea that we would we would only take 25 % of whatever super high or super low price we were offered, it's kind of madness.

28:11Yeah. You know, the boss says to me, oh, I'd like you to work on Saturday for$7 an hour. I'm like, no thanks, boss. No, I'm good. I'm good. Okay, I'll give you$100 an hour. Okay, I'm there. Yeah, where do I sign? Yeah, can I work Sunday as well, please? And that's... So what does that mean for oil and gas? If it was up to me, and same with resource minerals, I would set a minimum price for a royalty. And someone would say, well, the miners can't dig that out profitably. You're good. Leave it in the ground. Why? Because I know in a month or a year or five years, I'm going to get a really good price for that when the prices recover.

28:43And so if I've got a total of 100 tons to sell, I'm going to get the best possible price for each and every one of those 100 tons. I'm not going to sell half of it cheap because the price happens to be in a lull. I'm going to be like, no, I'm going to withdraw my supply. I'll bring it back to market when I'm getting a good price. Thank you very much. You don't have to have a perfect price, but some flaw that just says, no, don't give our stuff away just because the market price is low. Go to hell. We'll keep it. Thanks very much. We'll store it up. and when we're ready to sell it at a good price, we'll let you know and you can have it.

29:07Now, we don't restrict them. We just say, here's the royalty. $10 a ton for iron ore, pick a number. Okay, well, I can't make money doing that. Fine, don't dig it up. Mothball of mine, when it gets to$40 a ton, let me know and we'll start doing it again. So if it was me, I would do a base price and then a percentage of the price above that. And that way we get some of the upside, but we don't lose value and sell stuff for peanuts just because the world market price is low. Yeah, and the other thing that's nice about that too is, I mean, you can always argue the fine-grained details, but directionally I think it makes sense.

29:39How much is a great question. Yeah, exactly. Yeah, so yeah, how much and when it kicks in. And it's not to gloss over it, but we're not going to nut it out now. But another part that's really important to all of that is consistency because the people who are actually investing their money and taking the risk and doing the work, you're less likely to do it if there's a very clear and present danger that you just, the goalposts are going to shift five times before you even build. So it's just like, I'm not going to do it. It's too risky for me to do it. And not in some evil capitalistic kind, oh, you only do it because you make money.

30:19It's like, well, of course we all only do stuff because we make money, right? Like even the most hardcore union worker rocks up to work because they expect a paycheck at the end of it and not unreasonably so. What you want though is just, I want a clear lay of the land so that I know exactly how this is all going to shake out because then I can plan around that, you know, and that particularly for projects that take, you know, in some cases decades to build. It's so, so, so, so super important. So, yes, do what you're going to do and just stick at it rather than waiting for the price to change and then jump up and down and then say it.

30:53The other thing too with I really hate about all of this is that we've talked before a lot on this pod about the difference between sort of stock and flow. And you will get various periods of time, various orbits around our big yellow sun where the profit's great and others where it's really low. And it's sort of like you need to step back and look outside of these sort of artificial temporal boundaries and just sort of go, you know, think of the person who started a startup, right? And they invested$100 ,000 of their savings in it. And then it took five years to actually make a profit and during which they, they lost 500 ,000.

31:35And then that year, in that year, they had a really, things finally got a bit of traction and you made a million dollars profit. Oh, look at all that money you made. We're going to take it off. He's like, yeah, but, but what about now? Now we're actually, actually before the accountants get too excited. Yes, we do account for that in our tax system. You can carry losses for, for that exact kind of reason. And I think that's one of the other things that sort of muddies the discussion around this, where you'll sort of see, oh, such and such paid no tax this year. It's like, yes, because there are very sensible accounting rules that account for the full life cycle of these kinds of projects.

32:08And what it's really saying is that you get to carry losses forward, as you do, dear listener, too, on your shares. If you buy a share and you make a loss, you can carry that forward indefinitely. You lost $100 ,000 on shares, great. One day when you make$100 ,000, you can wipe the two off and not pay any tax on that eventual capital gain. And it's just, it's not a loophole or anything like that. It's recognition of, you know, that one particular small increment of time doesn't necessarily reflect the broader picture. So that also has to be taken into account. And the final point I'll make on all of this is that, you know, you could argue quite easily, it's like when the oil price is high, we pay more tax anyway.

32:48Well, the producers pay more tax anyway. Right? There's a there's a, what is it? 30 % tax rate. You made more profit. You pay more tax. Not as, not as proportion, but the dollar amount. So, so it's, I guess it's just stop being so reactive. Yeah. Think, think, think through a long, what are, what is the structure that this needs to look like in good times and in bad times that we can sort of put in place now, give everyone a lot of clarity. You know, that if it goes to$300 a barrel or goes to$10 a barrel, I know exactly what's going to happen in all of those situations. I'll figure out what's right or wrong for me.

33:26I'll make my decisions around all of that. And when things are really good, I'll end up paying a lot of tax in the same way that I'll pay a lot of tax. If I was to get a pay rise to$10 million a year, all of a sudden my tax bill is going to go through the roof without any change to the tax code. And really, I don't want to feel as though I'm throwing too much shade at the Greens and others here. Like you said at the very beginning, we do need to have a more mature conversation around our resources and the money that we collect from all that. You and I have been banging on that for ages, but it's sort of like you're your own worst enemy guys, because the plan is so unreasonable that it's never going to get through, in which case nothing happens.

34:05So bring something to the table that's a little bit more farsighted, a little bit more holistic and a little bit more realistic to sort of get through it. It's sort of like, this is dead on arrival. It's DOA. these kinds of things, right? And not necessarily for cynical vested interest kind of reason, although that's all a big part of it as well. Let's just bring a little bit of common sense and maturity to the discussion. I think that's it, mate. I think that's exactly my point. And as I said, I was probably a bit too harsh with them in socials, but it was the idea of like all of a sudden the price is higher so now everyone's ranting about how much we should get from this as if there's some sort of ultra profit being made.

34:44And there is, right? I'm not saying there's not. It's just the politics of this as opposed to the policy of this. And it's the same for all the major parties. I think the majors are worse, generally speaking, than the Indies in particular. Greens, they don't have a lot of time for reasons. Love their environmental stuff. Their economics lose a lot to be desired. But just that idea of exactly what's the right approach for this, rather than just big price, 25 % revenue, that'll do, problem solved, all done. Can I, speaking of controversy, I don't know if we've talked about this I hate the idea of a gas reservation system and it's for the same so a gas reservation says we'll keep some for us and sell off what we don't need and the implicit outcome of that is not the volume it's we reserve at some sort of lower price because it's our gas and we should use our gas and we should get it for a better price and our this and our that and all that kind of stuff and it gets nationalistic and it gets kind of at some point you know my objection to it stems from what I kind of started by saying, which is the idea of family Australia, right?

35:48The idea is if we get cheap gas, we could do things without cheap gas. Like, yeah, we could. And then what we have to show for it? Well, consumption and stuff. And that very idea of taking it because it's cheap – by the way, it also assumes that somehow we should set price caps for companies that are doing this stuff just because arbitrarily we want to, which, again, is your point about changing the rules after the deals have been done. but just that and i just i am absolutely my generally on my pat the line on this one because most of all of course we should have gas why wouldn't we have our gas we can use our gas and we can make things cheaper we can do things and it's a fine idea what you're really saying is we want to socialize the gas because big companies can't make any money we just cap their prices because we just want to okay well that's what i said by people who complain about uh the environmental regulations and the fact that's too expensive to make stuff here it's like so Again, like everything, it's socialism for me and capitalism for them.

36:39I want the money, but I don't have to live by it, but I want them not to get the money. So you've kind of got that. And then just that idea of it infers, implies, states outright, we will use it, we will get less value for it than it's actually worth so we can use it all up now and do stuff with it. And I just find that thinking. We talk about time preference all the time. And you can tell those people aren't investors, right? Because it's just that idea of like, I want it cheap now That's why I can use it up all now. Or you could put it away and have more light. No, I want it now. It's like, okay.

37:10And that's what a reservation does. It encourages its use and encourages overuse because you're doing it for less than a market price. And so all the things. You're distorting price signals. Right, exactly, exactly. And yes, by the way, their outcomes are perfect. In the short term, they're 100 % right. We'll talk about smelters in a sec. We could have a million smelters doing aluminium if we all made themselves our gas at cost price. Sure. Okay. And we'd smelt a lot of aluminium. okay, cool, we probably screwed the environment. Knock yourself out, let's do that. And we'd have a lot of aluminium cans to show for it.

37:40And what would we have when next year, the year after, when the gas runs out or when we – What could we have otherwise? There's a supply of aluminium on the market, right? And the market price collapses as a consequence of that, you know, and then everyone loses their job because they can't sustain it in a profitable fashion. How did we get here? It's just like – it's the classic, you know, you're in a bread line in Soviet Russia going, how'd this happen? Yep. The same way it always happens because some bureaucrat feels as though they understand the exact supply-demand dynamics across a multi-million person economy.

38:12It's just incredibly dumb. Or in this case, the average Joe public thinks that cheaper gas is better now because it's cheaper gas, so it must be better now. It's like even the opportunity cost to just be able to save that money or use that for something else more productive in some other way rather than just use up all the gas because it's cheap. And what does price do? It sends signals of how much should you use, who should use it, who shouldn't use it, where it can be put to economic value. It's kind of the whole point. And I don't want to be ultra neoliberal about it. I want a sovereign wealth fund.

38:40That's not a very neoliberal idea. But broadly speaking, sell it for the world price because you had not to. Just choose what to do with the pros. You absolutely can, yeah. You're still right to sort of say that we should get more for it. The starting point is I'm absolutely aligned on that. So before people get upset because I think, again, it's a nuanced point here. I'll let you finish, but I just want to emphasize that you are not saying we should just give it away. Most definitely not saying that. Correct. But this is not the solution for it. So, yes, people are grumpy at oil companies make a squillion dollars.

39:16But why are they making a squillion dollars? Because we're not charging them a market rate for the cost of goods sold. If you're making flour, right, and someone's going to sell you wheat for a cent a bushel, and you've got like an absolute fortune, people will say, we should tax bread. no we should just get a reasonable price for the wheat and the rest will look after itself it doesn't need a tax solution talk about you know markets mostly getting it right not always mostly getting it right charge a market price for the oil it's pretty simple i said this before my my thought exercise is a very simple one if you gave macquarie bank all the resources in australia and said set the price they would do the math very quickly and i guarantee the price for our resource would be a whole lot higher and there might be slightly less volume but if they're Australia should do on behalf of our citizens.

40:01Would you charge this price? No, not in a million years. And yet somehow we kind of just ignore it. So yeah, I understand the anger. I understand the idea of oil companies making a fortune and we're all not getting anything for it. They're a million percent right. Just be careful of the solution you choose to use. I'm not going to say it's necessarily even worse than what we've got now, but there are much, much better solutions out there, which just start from, they're ours. I'm going to sell them to you, oil driller, at a reasonable price, which gives me fair value and full value for the raw material I'm selling to you, which is the oil, which is the iron ore, which is the gold.

40:31It's ours. It's our common wealth, quite literally. If you would like it, I'm happy to sell it to you, but I'm going to sell it to you at a fair price, not a stupidly cheap price because, oh, if I don't, you might go away. Why do I care? I've still got the gold if you do. It's a nonsense, absolute nonsense. No, I've got nothing to add. Again, it's just thinking through things in a less ideological way, in a broader way, in a more holistic way, you know, And coming up with systems that really, I guess the best word for it is anti-fragile. The kind of system you want that when you poke it, it's like the spinning top.

41:07You push it and it sort of uprights itself. Again, these are the kinds of systems you want. You don't want fragile systems that work really well under it, idealized set of circumstances, and break thoroughly and completely with lots of ripple effects and downstream consequences. you know it and and then it's like wow we over-engineered this from a political angle and all these problems happen you know what let's add more layers of political and bureaucratic sort of decision making on top of it because that'll fix it and you just sort of you need to it's a it's a bit hackneyed but you need to sort of trust in the process right you need to remember what these things are telling you and and and what prices are telling you is a hell of a lot a hell of a lot and and and you can not like it um but but mandating uh changes to that is just well it's never ever worked in history so i i just i feel as though it's it's not an unreasonable thing for like the first person who thought about it you know the 40 000th time we've tried it it's like at what point do we just go it doesn't i get it i get the incentive i don't know the the intention rather i really do i i really and if you if you just only casually think about it it's it's very appealing.

42:16It just doesn't work. So we've got to move past this and have a more intelligent conversation. Simple as that. Yeah, and that's it. There are plenty of people out there who can help them if they want to listen. That's the other frustrating. They've just decided this works because of their ideological or pre-existing confirmation bias or whatever. It's like, ask somebody. Not every economist agrees. Not every investor agrees. Not every public intellectual agrees. But ask some questions, you know. If you have to fall back to the ACT or ACOS and the climate groups and that the Australians should agree with us.

42:45It's like, that's fine, but let's not pretend there's any sort of reasonable, you know, you've asked people whose answer you knew already. You know, this is Barbara haircut stuff. It's not a justification. I feel as though, I think the depressing thing is, I feel as though if there was a good faith discussion between sort of the two opposing ideologies, the irony I see it as I see it is that actually we all want the same thing. You know, like there's, I think everyone's sort of, we're aligned in terms of what we would like to see. We completely disagree in terms of how we sort of get there, but it's sort of like it's a really good starting point here because it doesn't have to be so adversarial here.

43:24Like we are on the same team. We are trying to sort of fix things. Let's just try and remember that there is sort of bring some empiricism and some, you know. A bit of experience, a bit of actual work theory. A bit of experience, yeah, you know. Yep, yep, yep. And I'm very big on systems that are sort of self-regulating because without that you just rely on the good grace of an inevitably small group of people and people are people, right? And it's just sort of like it's not going to solve it, guys. It really isn't. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

44:09I've got a new plan Okay I'm going to get rich That wasn't the plan before? No, no, no This is a better one I'm going to get richer So I've been aiming too small I've been aiming too low What I'm going to do Is I'm going to go into Regional Australia And I'm going to find myself A failing Really capital intensive business Employing Somewhere between 500 and 1 ,000 people Are they wearing hard hats These people? Oh yeah, gotcha It'd be better if they did no capital intensive and manufacturing the hard hats let's assume if they're not they should be they will be by the time I'm finished because everyone needs a hard hat handlebar moustache that would help preferably driving an old Commodore station wagon or something I've got the mental image go ahead good you're leading a little YMCA village people here around if I can drag you back a little bit let's let's let's let's let's let's let's let's let's let's let's let's

45:02let's You can stay there. That's why I keep going. So, yeah, I'm going to buy that business. It'll probably cost me a little bit of money, but that's okay because it's a failing business. The owners probably don't want a lot for it. The beauty thing, the way I'm going to make the money, though, mate, is as soon as I do, I'm going to book a meeting with a state and federal minister the day after, and they're going to write me a billion-dollar check. And so I'm going to be a billionaire by doing that. That's the plan. That's actually a very solid plan, yeah. I know. I mean, I'm kidding, right? I mean, it wouldn't.

45:33happen? No, well, no, no. I think it's an incredibly smart plan. Not for everyone else. State and federal government are like, that's stupid, are they? Why would they give me$2 billion or$1 billion each just to keep a failing regional manufacturing business alive? Fido opportunity and self-interest? I don't know. No, because they care about our money. I mean, it's taxpayers' money. It's the national interest these guys care about. They're not that silly. They're not like Craven, surely. I feel like this is in relation to a specific news story. Oh, all right. You got me. I'm still not sure it's a bad idea, by the way.

46:11We're talking, of course, about the Boyne smelter in Queensland, owned by Rio Tinto. I think they own it wholly. I think the Tomago one is a joint venture. Either way, Rio is very involved in this one. Boyne is getting a billion dollars from the Queenslanders and a billion dollars from the feds. You know what's even better for the governments is this one's bipartisan, so the opposition in state and federal aren't going to complain. because the federal NLP are kind of like, well, if I complain about Albo's wasting the money, I'm going to bag my guy in Queensland. And the state Labor Party are like, oh, I really want to have a go at David Christofoli, but Albo signed the check too, so now I've been snookered.

46:45So this one will go through absolutely politically unchallenged because there is no political value in either party, unusually, frankly, making hay while the sun shines. In this case, it actually would be useful if they might. We are going to spend$2 billion to save 1 ,000 direct jobs. When you say save, how long for are we saving them for? Maybe. Forever? No. I mean, we're not. Maybe past 2030 or something. So we get five years out of it? Detask, detask, detask. Good return on investment. Yeah, so 1 ,000 jobs,$2 billion. That's$2 million a job. Okay.

47:33I don't know what's to say what's to say I don't know what we even say at this point are you joking me and this is not the first time this is the 85th time we've had Waila we've had Man Iser we've had a couple of plants in South Australia in Tasmania let's not do a drinking game on this thing right you couldn't mate Kogan's not even close to that well not for a while anyway I just it just astounds me mate and you're right what do you say at this point I don't know

48:04I really really really don't want to get to the usual hackneyed kind of give up phrases like we're not a serious country and that kind of stuff but I'm the optimist here and even I'm struggling you know the you know what's even more cynical about this is they go workers jobs national security manufacturing skills base and then that combination of buzzword bingo gets a decent minority maybe even majority of voters on side because who doesn't want national security and who doesn't want jobs and who doesn't want to make things and who doesn't want aluminium and and so it's just this idea you spoke before about you know being thoughtful and strategic about where this comes from it is just the most craven and cynical political approach to kind of go as you say hard hats handlebar moustaches making things there'll be some b-roll footage in the news of aluminium being smelted and so we get to save these jobs they'll be up front their hard hats themselves there'll be a company logo on them because of course our polis are for sale these days uh so we anthony with a rio tinto logo or david with a rio tinto logo and a hard hat and they'll say we've saved the jobs we care about manufacturing in this country we should make things future made in australia uh making doing making manufacturing making saving national security making security safe uh smelting jobs, money,$2 billion, you're welcome, Queensland, and then jump in the Comcast and go home.

49:24Mm-hmm, yeah. So just put some numbers here. Rio Tinto, after tax, made$15 billion last year. The year before they made$18.5 billion. Basically, in charity. Yeah, so it's kind of like you understand, like, what? Why do they? Now, why does, and I'm not throwing shade. I mean, Rio is the only rational one in the room here. It's like, you want to what? It's like that scene in War Dogs. I don't know if you've seen that movie. I have not. Jonah Hill. Oh, it's really good. Okay. And they're trying to, they're arms dealers or whatever. And they go to Russia and they get some work done. And the guy says, I can do it for you for this much.

50:06And they just lean into each other and go, oh my God, I can't believe we're getting this prize. Anyway, let's just pretend that we're negotiating. Okay, you drive a hard bargain. Yes, we will accept that. That must be the conversation in the boardroom at Rio, right? How many Buddy Bowls of Maui have they opened since the day they went, they're going to give us the money? $2 billion? Yeah, they're not close. Why are they? Let's step back here. Now, Rio, like any business, like any person, likes making money, right? They don't need added incentive to do that. So the reason that they're looking at this particular asset, one asset out of lots and lots that they have around the world, It's just like, it doesn't make any sense.

50:47And when I say it doesn't make any sense, it's like, it's costing us more to keep open than it is bringing in. So it's a loss making exercise, which is just a reflection of what the market is, it says of that product. It's like, you just can't deliver a product at the, at a price that the market wants. So no one wants it. So it's not there. It's like, okay, well, like, I guess we'll, we'll shut it down then. It's like, no, no, no, we'll pay you to keep it open. It's like, well, even if you do, it's only going to last for this long. And now we're just going to be in the same situation down the track.

51:15I mean, the tragedy being, it's like, yeah, well, it's all right. We'll give you another$2 billion then. And then this is like, it's kind of like, it's the Keynesian idea of when there's a recession, let's just pay everyone to go out into the Simpson Desert and dig a massive hole with some teaspoons because everyone will have a job. And it's like, true, they will have a job. But to what end, right? Like, it's sort of, it doesn't. And you're paying the bill, that's the other thing, right? It's like, this is not money. Well, our kids are paying the bill and, yeah. Right. I was going to say the money's not magic in existence.

51:44It probably is for different reasons we won't get into. But it's not cost-free. The taxpayers are paying more or getting less or being settled with more debt. Whichever of those three is, they're all awful, so choose your least favourite one or your most favourite one. We're shoveling$2 million a job at Boyne so we can keep making aluminium that we can't do profitably just so we can say we're doing it. And it's money that won't be spent somewhere else. It won't be adding to profit. We're taking taxes earned by productive parts of the economy and throwing it on the bonfire of unproductive business, inefficient business, loss-making business, so we can say we do a thing.

52:25It is about the least... A business that's making stuff that no one wants at the price that they need to be able to sell it for. And so those workers aren't working somewhere else where they could be employed more productively. The tax money isn't going to somewhere else that could be used more productively, or God forbid, actually just not taking on as much debt. But you can't care about productivity on one hand and throw$2 billion on unproductive business on the other hand and say, we're helping. It is, as you would say, you haven't said it for a while, stop helping. Just stop helping, guys.

52:51Yes, please stop helping. I hear you in my head. It's a scary place, but welcome. And like, it is. It's just that. It's like, there is no justifiable rationale for this outside some combination of votes, votes, votes, and votes. A little bit of ideology and a little bit of blue-collar Labor background of we like to do things and make things and making things are supposed to be good, so let's make more things, which is the whole future made in Australia stupidity. Can I take a... It's the votes thing, just quickly, I don't get. Of course. It's like, what do you mean? It's like, hey, everyone, we're going to put you more in debt and we're going to make your children's lives more difficult.

53:25Vote for us. And like, okay. How is that? No, no, no, actually, you missed the point. You would never be a political spinner, mate. So I am Anthony Albanese. I'm David Christofillian. I'm going to walk up and shake some hands. I'm going to save a thousand jobs because I saved jobs. So the people in the area, it's got to be regional, right? Remember, it's just kind of in the cities. The people in the regions go, oh, they're good guys. We'll vote for them next time. Mm-hmm. Mm-hmm. Because here's the thing. You and your kids and me and my kids are carrying more debt. But the bloke with the handlebar moustache doing the YMCA out the front of the Gladstone Boyne smelter is kind of going, so my job's safe?

54:03Yeah. And his wife goes, so your job's safe? He goes, yeah. and the people in the town go, so we'll vote for them then. Politics is local as they say, mate. I suspect very strongly the rest of the country doesn't realise the impostor's being put on them or doesn't care or doesn't notice or doesn't know to care. And the people who are benefiting from it, it's like tariffs all over again. This is how tariffs work, right? You're going to put tariffs on and make everything more expensive. Yes. But you're going to save some jobs over there. Yes. Am I going to notice the price increase on my products?

54:30Probably not. Well, I noticed the saved job. Oh, you'll notice that. Well, I guess that makes political sense. I mean, this is Trump 101. It's exactly what's going on. The idea that somehow saving that job is worth this amorphous, uncertain, never actually, you know, listed on an invoice, cost of products being more expensive because of the tariffs. I could be way too harsh, but to my mind, it is just cynical political bastardry, if you don't mind me using the phrase, because that's exactly what it is. I reckon you could make everyone there much happier with the current plan and spend half as much.

55:03and you rock up into town and you go, I'm going to give you all a million dollars, but you lose your job. Who's with me? Yes. You watch those tools fall, like just drop, like and not like no judgment. I would do it. So I get to retire and I have a million dollars or I can continue to work in a small, like no, I'll take that. I might lose my job eventually into that process anyway because this thing's probably destined for the scrap heap. Yeah. It's just maddening, mate. The reason it's maddening is, again, it's not an ideological kind of thing. It's maddening because it makes us all poorer. That's what, and even Rio Tinto is not interested in it, right?

55:46Like that's the other thing. It's sort of like, I guess we'll do it because it's free money and why wouldn't we? But it's only a temporary thing. It doesn't change the underlying structural dynamics of the situation. So it's sort of like it's got a very surface level sort of shine to it, but just don't pick, you know, a centimetre below that because it is a bad deal for everyone. And even for the people who was like, I like making stuff here and I like jobs, which I do too, by the way. I just like to do it in a value accretive way that makes us all better off. Otherwise, it literally is. It sounds stupid, like it's such a stupid example, but it is literally of the same character to say, I'm going to, the unemployment rate is too high.

56:33I'm going, anyone who wants a job, come out here, grab a teaspoon and start digging. And it's like, well, that's stupid. It's like, yes, it is stupid. And that's exactly what we're doing here, right? And now all these people digging this pointless hole with a teaspoon, it's like you're not doing other things that actually people want and need and makes us richer. It just leads to a very, very bad place. And, you know, it'd be one thing if it was, I don't know. I'm trying to think of an example where it might make sense. That's the problem. I reached out. But one of the most profitable, well-run materials companies on the planet that last year alone, which was a reduction from where they were a few years back, made$15 billion.

57:26We're going to give you all this taxpayer money to do something you don't want to do. You know, it's just, it's madness. It's absolute madness. The company says, I can't properly do this thing. Okay, I'll give you some money then. Or just don't do the thing and give the, I always said a million times about every context we've done this, look after the workers. Look after the workers very, very well. Sure. This is not hard, right? Fund their bonuses. Yeah, for sure. Do what we need to do. But don't get thrown good money after bad. It's just madness. This is, I mean, the other thing I always think too is I feel for, and again, most employers, most jobs are created by the small and medium enterprise sort of sector, right?

58:02It's like, what about, you know, Ted's plumbing business? Like you don't get the, it just, it's sort of one set of rules for big business. You can understand why people get so angry with quote unquote capitalism. It's just like, wait a second. It's like, you can do whatever you want. even if it's something you just like absolutely just bleeding cash and it's like we will still all chip we'll pass the hat around as a country and we'll help you out it's like what oh okay but i guess that means that when you start making heaps of money we get it back no no it's just a gift it's in no strings attached gift like that's what's so unfair about it you know and it's just it's not the same to sort of say there's some guy in the blue mountains with an online business who's not doing so well so we give you like is that i get the the optics are very different but the But the character is kind of the same thing, and it's just, yeah.

58:49You know what? So here's the thing, mate. Last month, I know these numbers off the top of my head because I talked about them. Last month, we added 38 ,000 people join the unemployment queue. 38 times as many as the jobs we are, quote, saving at the Boy in the Smelter. Yep. What do those people get? Nothing at all. Why? Job start or whatever it's called. It's not a vote. Yeah. Job seeker, yeah. If we genuinely, to your point about T-spits, right? If you, I mean, don't have a coronary. Give them teaspoons. If that's what you want to do, give them teaspoons of pay for some money. Great. Do it. But if you're not going to do that, don't pay for these thousand jobs.

59:23This is one 38th of one month's unemployment numbers. And I don't say that callous. It's not like I don't care. I care deeply. I care that there's 38 ,000 Australians who want a job and can't get one. 30 ,000 more, by the way. There's 600 and something thousand altogether. This is the tiniest drop in the ocean. We're spending$2 billion. How much are you spending on the other 600 ,000 unemployed people? Job start. Yep. Job Seeker, whatever it's called these days. Why aren't you spending as much on them? Because there's no bloody votes in it. And this is why it's maddening. It's just the political soundbite and it's the 50-second talking points on the TV and it's Albo and David saving jobs.

59:59There's no way in the world this cuts it other than if you're looking for a question or answer you've already got. By the way, just really quickly, mate. I know we've talked about this before and someone will say it, so I'll just cover it and then we'll move on. You can jump in, of course, as well. The national security thing. we need to make aluminium for national security for planes and I've come up with a new analogy to kind of explain to someone's like yes if we didn't have aluminium we could make our own planes sure without importing aluminium yep spot on great here's the thing if you get a fence that's got 100 holes in it spending 2 billion dollars to fix one of the holes is not helping you there is no fundamental difference there's no difference at all we are no safer nor less safe for the presence of an aluminium smelter in Queensland which is not you can make planes You make the body of a plane, sure.

1:00:43What rubber are you putting in it? Oh, we don't have any of that. All right. Electronics? No, we don't do those either. Munitions? No, none of those. Seats? No, we don't make those here either. Okay. What about the componentry, the metals you need? Oh, we don't do that. What about the expertise from plane building? We haven't built planes here for years. Okay, cool. So if we have the aluminium anymore, you couldn't make a plane? No, we couldn't. If we had the aluminium, could you make a plane? No, we couldn't. So what the hell are you talking about? and I'll give some people the benefit of that if you haven't thought it through that's cool if I've helped you think it through great not that I'm a genius or an expert but think about it that way right how does it fundamentally change the degree which we are safe or not safe against the rest of the world and if the answer is doesn't change at one iota then stop buggerizing around pretending it does it is just a nonsense argument I said I don't mean to sound harsh if you haven't thought it through and this is like oh yeah good point great not because I'm a genius because I hope you think about it that's fantastic if I've explained it before you heard it before you're still on that path i don't know what to tell you other than you got to at some point let go of unreality because it just it just does not make a sack of difference no matter what you do well in australia it doesn't i repeat a point i always make as well is that when when this if when it's not going to happen but if it was to close down remember it doesn't go anywhere the stuff exists right yeah throw a white sheet over the top of it and then if something changes in the future and we decide that we do have the capacity to make a complete airplane and somehow that all miraculously comes like we can just like we can dust it off and fire it up again you know it's like yep think about every person listening i reckon you've got stuff in your shed right now that you haven't used forever but one day you'll go oh i need the thing that and and you'll use it and it's there yep you know no you don't think you know what i'm gonna pay the local teenager to come around and like just fire up my leaf blower once a weekend you know i don't need it but yeah it's it's it's just a silly kind kind of thing it's just sort of like i i don't think people understand the nature of stuff and it just kind of tends to keep on existing a lot of the time too particularly when it's big metal heavy stuff right that's just there i'm not saying there isn't some refurbishment and maintenance and there there is but it's it's like it's so tiny compared to just churning out something at a loss year after year after year, just this black hole of money.

1:03:06And again, my favourite term, opportunity cost, is money that's not in a hospital, that's not helping a sick child, that's not doing something that we could argue. It would be different if it was like we've got absolutely everything we want in this country. I guess we could do this as well. Couldn't spend a lot we've got. Yeah, yeah. Yeah, you know, but it's like, no, that$2 billion is not going towards something else that I would argue is going to impact a lot more than 1 ,000 people, right? And even if your view is we pay too much tax, put on a tax break. Guess what? Cut taxes, people spend that money.

1:03:39If I've got$2 billion more in my pocket because they're not collecting tax from me, I'll spend that money in the economy. Whether it's spending or tax cuts or both, it is going to improve the circumstances. Compare the way we are now because guess what? You're spending that$2 billion on something productive that actually does a thing, that actually is adding to the national stock of capital. Accretive. Thank you. As opposed to whatever the other one is, reductive? What's the word? Yeah, decreed. There you go, decreed. I don't know. Yeah, but I mean, that's really the strange thing for me when you say it buys votes.

1:04:09You're right, it does. But really, what's happening is like, hey, do you in the longer term want to pay more taxes and have reduced services and higher debt? Yeah, yeah, yeah. No, I don't want that. Well, that's literally what you're voting for here. Exactly what you're voting for, correct. It's really easy to go, someone, oh, I see someone suffering. Someone should do something great. It's all done. It's like, yeah, but it's not. We haven't fixed anything here. And we've just created another problem that's going to come and haunt us down the track. And, you know, I really, there's a lot of things that you can talk about in this sphere where reasonable people can reasonably disagree and there are different points of view and you can sort of go around.

1:04:47You know, I can have my opinions but still recognize the merits in another argument. This is one of those categories that's like, I just, for the life of me, can't wrap my head around the other way of looking at it other than a cynical political calculus. You know, take that away. It's like there's no reason to do that. And if that, if it's the cynical political calculus is the only reason, it's like, if anything, it should make you angry and be a political negative. It's like, wait, you're screwing with our quality of life and how much tax I have to pay, how much service I have to get. so you can get another three or four years in power.

1:05:23It's like, screw you. That's like, it's offensive. Yep. Yeah, I think, honestly, I think that's, you know, we talk about tariffs having concentrated costs and diffuse benefits. These bailouts do the reverse. Your concentrated benefits and diffuse costs. And if you can do that and get away with it, that's where the, I could be wrong, I think that's where the politics comes in. I just don't know why, I just don't know why no one gets called them out on it. I mean, we're not very, you and I aren't very bright. Like, let's just be honest here, right? Between us, we could probably get a massive brain-powered boiling egg, but not much more than that.

1:05:53We get close, right? Yeah, yeah. And very slow boil too. But it's just how is it that these are almost fringe views, you know? If you're listening out there and we're missing something, I'm not being disingenuous. Like, correct us here. Like, what are we seeing here that just isn't so? Or what are we missing? because it just makes zero sense to me. And from first principles too, rather than just the talking points that you'll hear otherwise, which is fine. Oh, it's easy to say this and that, but yeah, just follow through on it, you know, like, and then why? And then why? Anyway. Mate, let's finish up with something.

1:06:31I'm an optimist, right? So I'm going to inhabit your world for a minute. And I kind of alluded to this before. I am on record as banging the drum over and over and over again about budget reform for lots of reasons. I'm not going to go down that path again. other than to say that's not an excuse to go back there but tangentially I'm actually getting a little bit concerned that the boats already sail on this one not because it's been done but because it might be too late to try and do something and I desperately hope I'm wrong and I'm an optimist by nature so hopefully by this time next week I'll have snapped out of it but if the war in on Iran conflict in Iran I think you're supposed to call it these days because there's government approved terms for these things continues for any length of time.

1:07:16And if the oil price remains high for any length of time, the odds of meaningful economic damage continue to rise. And the best time to make changes when you're taking money out of something is when things are going really, really well. So for example, when the government's got a massive tax take, a substantial GDP, when the inflation is running hot, when we need to, despite our comments about dealing with supply over the long term, take some decisions now to reduce the pressure on inflation. through government spending and, frankly, money printing. You want to take that away when things are good.

1:07:48So you can go, okay, well, we're going at 4%. Now it's only 3%, but that's pretty good because we've got ourselves back in order. What really worries me is we've got a budget coming up in a month and a half's time. And a month ago, I would have said this is the time, and frankly, the reporting was saying this is the time Jim Chalmers can and should do something about it. Now, whether he was going to or not, we'll never know. We'll only know what he ends up doing in May. So many bloody trial balloons of, you know, leaked ideas and suggestions that don't, you know, Just see if the public hates it enough that we can take it away before we actually announce it to the budget.

1:08:16I really worry, mate, that if this continues for another month, we've missed the boat. If the economy is in some sort of downturn, maybe it's a recession, maybe it's just less growth, maybe it's a tax take, maybe it's higher unemployment, maybe it's failed businesses, whatever. I mean, you can do it, but we kind of started by talking about, you know, you can fix inflation tomorrow if you chose to, but it'd be stupid and painful. I really worry that the time for reforming the budget, the opportunity for reforming the budget it's kind of disappearing or at least getting smaller and smaller than every passing day.

1:08:45And it's not that you can't do it, it's just that to do it now, having whiffed it for the last five-odd years, the chance is just – or the scope is just getting far, far, far reduced compared to what it would have been had they done it last year or the year before. Yep. I mean, can't you give me some – I did the need to – can't you do the positive and reassure me that everything's going to be okay? I mean, I'm hesitating because I don't want to go down the path, but it's the whole problem with the way that we conceive of and run the economy. It's like you're right. That's the theory. When things are good, we'll take some out.

1:09:24But we never do. And you're making the point right now. We don't. We don't do it. And that's why I always, I guess, I scratch my head at your optimism on this front. It's not that I don't see your point. It's just that I've never, ever, not once or hardly ever, Never, ever, ever anywhere around the world seen, you know, maybe there's a couple of exceptions, but, you know, where that philosophy has been followed through. So we're very good at spending more than we have to solve an emergency. We're just not good at the other side of things. So this is why I always come back to a very mathematical argument when it comes to sort of debt deficits, inflation, and all of that big longer term macro stuff is it only goes in one direction because the imputed corrective mechanism is never employed.

1:10:16So how else can it – it cannot be anything other than thus. So you're right to be negative, right? Like it just, we're spending so much more than we have. And there will be, we're in a crisis now, right? There's a war going on, right? Like this is it. This is what a crisis looks like. Not even particularly bad one from our very privileged position here in Australia, you know, but it could get worse. And even if it somehow resolves tomorrow, there'll be another crisis, you know? And when that happens, we'll do what we have to do. And it's like, we'll fix it tomorrow, right? We'll get through this and then we'll fix it.

1:11:01Okay, that was COVID. That was the GFC. That was the dot-com bubble. I was like, you know, now it's this. And then we'll get through it. We'll do what we had to do. We made tough decisions. We made compromises because we had to do it. And then it's like, okay, so things seem to have been a bit better now. are we going to sort of do the right thing and sort of balance the equation? It's like, no, we're not going to do that. And so it's not even, to me, I don't think cynicism or pessimism isn't the right word. I think it's rationalism in the face of an empirical reality of this is just what happened.

1:11:43We can have our own opinions, but we've all got the same shared history. Like this is what has happened for the last 100 years. and for someone to say, yeah, but next time we'll get it right. That's not optimism. That's naivety, right? Like, and, and, and to say that I think that, what do you think? Well, I think they'll do the same that they always, I was like, is, is that cynicism? I mean, it's, it's of a cynical flavor, but, but maybe I'm trying to make myself feel better about my worldview here, but I just, I, I don't see it as pessimistic or, or, or, or cynical. I just see it as, yes, you, what other interpretation is there?

1:12:23It's just how it is, right? I suppose that's right. I suppose that's right. I just, I don't, you're right, man. I'm always thinking optimistically. I want to be on your side. I want to be on your side. I want to be optimistic, but it's like, it's almost a naive optimism at this point that it's like, I know that it's like that. Having that friend who is just useless, who's always borrowing money, always weaning it up against the wall, just absolutely useless. You've known them since you were six years old when you were a kid. You're 55-year-old man at this point. He's never changed his way. And he comes around and says, Scott, give me 100, I'll pay you back.

1:13:07It's like, give him the money, but don't pretend that he's going to pay you back, right? Like, at what point do you get to... And then for someone to say, oh, you're a cynic if you think you'll never pay you back. No, that's my lived experience and the very, very, you know, objective reality and appraisal of the scenario. It's just what it is. You know, it's... I largely agree. And maybe I just got sucked in, but there was, there seemed to be momentum for changes. The CGT stuff, negative gearing stuff, the conversations were being had, the reports were being written. And again, it was like six weeks out, so they had plenty of time to pull back if they didn't want to.

1:13:45And it felt like momentum was building to, hey, no significant opposition. Maybe this will actually start happening now. We could be in a place where it's actually, they're prepared to do it. And it's not so much, did I expect it to be better all of a sudden? But just whatever momentum, whatever wind was in those sails just seems to have been completely taken out. And even me, like as much as I would reform the budget I would have done last year and this year and the year before, if I was treasurer and this does keep getting worse, I think I'd pull my own horns in. Only, not because I don't have the will.

1:14:10And to your point, you're right about the you know definition sanity being the same thing expecting a different result but if i was treasurer i would have i would have i would have you know a month ago i said to cabinet this is what we're going to do with the budget we're going to change all this stuff and yeah it's going to hurt a little bit but it's worth it i just i have whatever whatever intent i have whatever intent the government had before this just seems like it'll it may just the opportunity may be taken away from them whatever whatever limited small inconsequential positive things i'm going to do maybe it just seems they have less room to do them now and so i don't know yeah you're right it's probably gonna happen anyway but just feels like it's even less lucky now yeah and the the trouble is is that because i mean i don't relish this fact but the world is a scary uncertain place and and stuff happens you know all the time and so the the trouble is is that the best intentions will always be trumped by some external event you know and it's just like it's like that sign at the pub, free beer tomorrow, right?

1:15:08Like we'll do it then, you know? But there's always in the moment a reason not to do it. And you can always kick that can down the road. So, yeah, I would love to have that optimism. But I think it's naivetism, honestly, mate, if I'm being blunt about it. Like, I don't know how else you get. Should it be that way? Yes. I mean, I'm the master of shouting at the sky saying how things should be, you know. Way of need to change, yeah. But it's just not going to be. It's just not going to be. And if that makes me a cynic, then I'm a cynic. I think we all know that already. But yes, I take you, also take you.

1:15:54Well, a well-supported cynicism. Justified cynicism, exactly. Yeah, justified. And to your point, at that point, is it really cynicism anymore? Or is it just reality and logic? I don't know what the answer is. Yeah. You know, it's like thinking that Trump is all of a sudden going to be a very balanced and rational person. Like, really? Who would say that? Well, he could. He should. Yeah. He could and he should. Anything's possible. Is he going to? No. I mean, would you make that bet? No. Are you a cynic for thinking that? No. That's just a rational read of the scenario. You know, Putin's all of a sudden just going to think, I really am sick of killing all these Ukrainians.

1:16:30I'm going to... Like, okay. But it's just, some things are just like, these are really dark examples. I really want to walk that back. But it's just. No, it's totally fair. I don't know, mate. I don't know. Totally fair. Totally fair. On that happy note, will you come back on Sunday and answer the listeners' questions instead? Yeah, I'd love to. I'd love to. Absolutely. Good. If you're still listening, info at fool.com.au is the email address. You should send those to our member services. Fools will get them to me. I'll get them to Andrew. We will hear his answers. Preferably not about Bitcoin.

1:17:03Anyway, until then, full on. Cheers.