Mailbag, incl: Are LICs on the way back? September 6, 2026

24:22The idea is sound if you think that they will execute on it well. And frankly, it's got a lot of advantage. I do like the idea of sort of forced savings, I suppose. The trouble is, what happens to that forced save? What do you do? What do we mean by save it? I assume we mean like invest it somewhere, right? Buy some shares, buy some infrastructure. So, basically, put it in super is the recommendation. Which is just indirectly putting it into bonds or, you know. In other words, it's still entering the economy. You can't access it. You can't redeem it. But it's still being put out there, right? Because I suppose rather than consumption, though, so there is a slightly different or indirect path, which would be cooler than just putting it into paddle pops and petrol.

25:07Yeah, yeah, yeah. Yep, 100%. But, again, it's just all of the – I mean, I'm going to avoid it, but I'll just make the one comment, which is if, if, if, and if, yes, it's a good idea. And all of those ifs are ethical, farsighted, intelligent, capable, all of these things, you know, and I think even if you get all the human characteristics right, you're still going to fall short on the ability to foresee the future. It's a really great, I don't know if you saw it, it's a really good meme I think I saw on one of the social platforms recently and someone in the EU made the point is actually, you know, with the promise of AI, we might actually be able to make socialism work because the more intelligent socialists out there will acknowledge that it just, one of the challenges is in knowing if you're going to centrally plan everything, how much wheat am I going to need next year?

26:03And it's always, it's always been the Achilles heel of the whole ideology, right? So some of the smarter ones will sort of acknowledge that but they'll say well actually with ai it's so far seeing it can crunch data it can do all of this kind of stuff you know this is great meme this little rickety boat this big sea monster coming out the big sea monster was saying i like broccoli now and then the little boat was like ai that that planned production 24 months in advance and it's kind of like okay it's a little bit of a okay people are probably going i don't get it and that's just like well you you've got a weird sense of humor but but what it's really sort of getting at here is is that the what you need to do is you need to, you're looking at data that already happened.

26:42You're looking in the rear vision mirror and you're making decisions that have this incredible lag effect. Even the RBA usually says it's something anywhere sort of between six, 12, 18 months before decisions that we make and then impacts happen. So even if I'm super smart, I'm super capable, I'm super ethical, I'm beyond reproach in any of the human frailties that are out there, I still need to anticipate

27:07what millions of people are going to be thinking and feeling tomorrow and the day after that. And that's not a difficult problem. That's what you call an impossible problem. And so now you're giving, and the other thing just to layer on top of that is, it's not a victimless crime in the sense that if you get it right, which I've just said is essentially impossible, but let's say you do get it right, right? You've then got to be able to do it again and again and if you don't get it right the consequences are really really unfair and so it's sort of like the risk of failure is oh we try but there's sort of like victimless crime didn't kind of work but everyone's about the same it's like no no no no when this doesn't work out you absolutely crush the poor and you shelter the rich and in fact you you invert all of the incentives in society basically saying take as much risk as you want as long as you're rich and connected and got some assets, we'll bail you out.

28:02You get all the upside and we'll socialize any of the losses. And if you don't, I'm sorry, we're just going to steal from you through rampant inflation. But don't worry, we have to do it because everything's too big to fail. And that is the other side of the equation that at least must be considered. When we talk about if we did this, it could do that. Okay. Okay. Maybe, maybe. I disagree, but maybe. But then also acknowledge within that what the risk is. Scott, you come to me and go, I've got this horrible disease. And I go, I can cure it. I'm pretty sure I can cure it for you. So, okay, cool.

28:39What if it doesn't work? Well, if it doesn't work, you will die. I'm like, whoa, whoa, whoa, this is not a terminal illness. I know. I know. But if I get it right, if I get it right, I can help you here. I mean, that's actually a pretty good metaphor, right? So, it's why I am pretty stuck on these kinds of things. It comes from a good place. It's not a terrible idea. It was no more terrible than the existing terrible ideas, I suppose. But you've got to overcome those challenges. Yeah. So let me put it in that context then. There is a central bank and they're right now only using rates. In that scenario, and again, I know you reject the premise of the question, which is totally reasonable, by the way, I'm not having a go.

29:18Are we better off, if the Reserve's going to be in charge of trying to impact the pace of growth of the economy, positively and negatively, depending on the circumstances. Are they better off having two tools with which to do it to spread the impact more broadly or are they better off with just the one tool they've got now? I'm not trying to force you on. No, no, actually, I'm tempted to... I just... I don't know. I guess one... Systems theory would tell you that the more knobs and dials you've got to twiddle on something that is a chaotic dynamic feedback system, highly variable, three-body problem kind of stuff, you know, it's sort of like there is more unintended consequence that can go wrong.

30:02So there is something to, there is, I hear how you're laying it out. And in theory, then yes. I mean, obviously, the more tools I've got as a surgeon, the more likely I am able to get to the organ and chop it out and do the thing that I need to do. You're just going to give me a hammer and say, there you go. perform a triple bypass surgery on those tools like well no i need more tools yeah but but some systems are actually less robust under under more and then it is really hard to think and again you it's a hard thing to sort of wrap your head around but particularly for these sort of dynamic systems full of feedback loops um and very recursive in nature that's how that's how things get out of control very very the butterfly effect you know it's like there's a you know a little flap of the wings and then there's a tornado on the other side was a horrible analogy but that's the one that everyone goes with but but but it's sort of like well so that's really hard to predict what if i had a butterfly and a dragonfly and an old lady with a fan like well there's more control surely that's better it's like no you misunderstand the nature of the system maybe they actually amplify it actually amplifies it probably so yeah but but maybe but maybe not i i i don't know it's just, I do reject the premise of the question because it is implicit in it is various assumptions that more is always better, more tools are always more effective.

31:26And in fact, more fundamentally, that this is something that can even be tackled through a systemic reorganisation of policy. I just don't think it's true. Let me push you a bit harder, just for fun, and not to disagree with you. You mentioned more tools. If they would replace interest rates with managing superannuation contributions as the primary tool. One lever. Would you swap those levers? Probably. Okay. I'm just curious to investigate the thinking. I think I will. Yes, I think I would because my North Star here is I think that prices are signals. Right. And the most important signal in the entire economy is the price of money itself, which is interest rates.

32:06So you move away from that. So it's like you walk away from the flipping button, dude. Like just get back off. No good will come of this. so if that's the alternative then yeah I'm just trying to tease it out in terms of the relative attractiveness of each of them Kosey I would absolutely do it you mentioned tax rate we talked before about not using the tax rate per se but just superannuation contributions so I don't know if you meant that indirectly or directly but I would absolutely do it I am not as worried about RAM with the RBA controlling the price of money but I agree with him on money printing as we talk about on Friday if you heard us but yes I would absolutely if the choice is rates only or rates plus super I would Notwithstanding, Ram's very reasonable concern about the complex system, so maybe it would be a terrible idea, but I would do it because, again, if the choice is either rates only or rates plus super, I would choose rates plus super.

32:55Maybe unwisely. Again, I'm very mindful of what Ram just said, and I feel like I'm stepping into the line. I'm not saying definitely won. I'm not playing well, but I'm mindful of your comments, and I'm saying, anyway, we should do it. If you get it wrong, the stakes are high. The stakes are really high here. But I think, Kashi, I think your point is, is it a fairer way to apply the brakes or the accelerator in the economy? I think, yes, it's fair. I think it's more reasonable. I also, frankly, think it's probably less likely to be railed against because people are getting the money back and there is some element of paying more mortgage debt to the bank or interest to the bank or to the government in tax.

33:31Putting aside more of your income for super is far more politically palatable. And so, yeah, I would do that, mate. I think if for no other reason than not with sending again, Rem's very reasonable points, maybe it's a terrible idea. It would go worse. I think it's more reasonable not to just whack the third of people. And we say the third of people with a mortgage, and it's true, Kosey. But here's the thing. Of that third, two-thirds of that third have had mortgages for more than 10 years. So they bought when prices were much lower. And frankly, yes, they've got disposable incomes. And yes, I'm sure their lifestyles have expanded because they've got more income.

34:02But who's really getting whacked hardest? People who bought the last four or five years. They are getting smashed. The five years before that, getting hurt. The five years before that, not fun. the five years before that, that's not great. The 10 years before that, oh, rates have gone up. That's interesting. You know, it's just, by the time you, if you bought a house in 1997, then yes, you've still got a mortgage, still one of those third, but the price you paid. And again, I'm not saying they're doing it easy. And if you're one of those people who do it tough, I'm not, again, don't at me. I'm not talking about everyone individually, but by cohort, we're really, really, really smashing the people who bought in the last five years.

34:34And then it kind of goes out in concentric circles from there. So yes, I think, and by the way, if you want to have a certain... When the reserve moves rates, the economists work out the total value of interest and say that's having an X billion dollar impact on spending in the economy. And so if your aim indirectly is to say we want to reduce demand in the economy by$25 billion, whatever the number is, and you're saying which is the best way to do that, I think it's fairer to take it away from more people rather than fewer. And so if that's the context, then yes, I would use super as well.

35:11Andrew writes in, and I'm going to... I don't know which Andrew. Maybe it's you, maybe it's not. Gentlemen, I want to have a whinge, says Andrew. Yeah, it could be. Yeah, it could be, could be. Expertly handled, he says, in regards to the question about pollies. I don't know what question that was, but thank you for the compliment. I'm going to suggest that we are coming from here, Andrew. He says, fancy, thinking Albo somehow was so intrinsically altruistic and genius that his every decision is the right one, just because he grew up in a council flat with a single mum. Put that card back in the deck for our sake.

35:40Who cares, says Andrew. I take that as a comment. All right. I imagine... Where are we? Also, the Allegra point regarding tax was teased out expertly by the Orange Advocate. I assume that's you. Taxing a cop$23 ,000 versus investment$7 ,000 to the punter feels wrong, but it's not for those exact reasons and more. I imagine no politician, if they were to read an analysis of that article, would come to the conclusion that maybe a way to make it seem more equitable we should lower the cops tax to seven grand instead final note on the whinge is just the classic packer line of generally we all hate paying tax because we know they i've got to rephrase this for you andrews i'm not going to say those words waste it and it doesn't matter who's in until it is punishable by singapore or john wick style by excommunication it will continue and the country gets worse this is some uh this is some very specific and direct and a little harsh responses andrew but you know final note which i'll die on this hill whinging it might be an issue Why can't we have blokes or sheilas like this back?

36:39Are they not just interested in re-election? Full disclosure, I'm from Lockhart, so I'm always contrasting very early memories of Tim Fisher versus who we have now. How far in the wrong direction we've come and the economic havoc it's wreaking. Andrew. I think we'll just take that as a comment and move on. Do you have any more? Yeah, you can get a sense of the frustration and the issues that are being referred to. Yep. I align in a lot of those things. Yeah. Yeah. Otherwise, I'll take it as a comment. Aaron has a question. Hi, fools. Second time question. Long time listener. Love the podcast, et cetera.

37:16Just. Only just, Aaron. A bit more next time. So you're doing well up until the et cetera, because you're just mailing it in, right? I can't bother that. Exactly. I worked for one company, he says, for 20 plus years on a good salary and have since been made redundant. And I've started consulting and entrepreneurship. It's what you do around 45, he says, to which I have to say, bastard. A few years down the track, mortgage well under control, with enough time for one or two more doubles of the current super balance before I need the money, we talked about that on Friday, I have not been contributing since leaving employment.

37:48The amounts I can afford to add are impactful to cash flow now, but are dwarfed by my balance and annual movements up and down in my super account. With no contributions to my current balance in high growth for 15 years, the simulators suggest$1.5 to$2 million. I'm assuming you're saying that's what he thinks he'll retire with. Is super actually a good use of constrained cash in midlife? Or is a gap in contributions a reasonable decision if you believe you are already well set up for retirement? Thanks for the answers and the laughs, Aaron. Now, Aaron, we can't give you personal advice, obviously, mate, so everything we say of this will not be that.

38:24Ram, what do you reckon, mate? If you're going to get to$1.5 or$2.5, do you say, well, stuff it, I won't bother contributing, or do you keep adding on the way through? I mean, if the capacity is there to do it, then that's one thing. But I mean, I can tell you my own experience of starting a business, there was plenty of, there was a good number of years there was no contribution that was in there. I just, you really have to be a masochist, don't you, to start a business. But you're investing outside super too though, right? So I think that's important to separate. Yeah, yeah, yeah, yeah, true.

38:56It just, it feels, it feels, I just feel as though we should be doing everything think we can to support people who want to do this when i say support i don't mean bailing him out after you know scott decides to open up a tap dancing school or something you know it's like what are you thinking what are you thinking you know um but in terms of like making the process uh as as low risk as it possibly can be um and the trouble is is is is that you know now that some of the rules have been changed as well if your business goes particularly well there's a big issue in that that you've got to give away as well as i sort of like i don't know i don't know what do i say what do i think um i tend to be look i've said on the pod many times before i i don't maximize my super contributions one there's the minimum required so there's already money going in uh two i want access to that money beforehand so i'll be prepared to get rid of some of the tax advantages for the optionality.

40:00It's a trade-off. Like 99.99 % of things in the universe, there's trade-offs. And that's one that I'm happy to accept. And I've just got my own little concern that I think over time that there'll be forced investing in some of the super things. And I think it'll probably, depending on what you're doing as well, you've got more flexibility as an SMSF, but I don't know. I don't like the idea of the government telling me I have to buy a bunch of their IOUs at egregious rates. It doesn't sit well with me. Or to get to 65 and then find out that actually, no, you've got to be 75 now. That would never happen.

40:38Well, it's already happened and it happens everywhere. And I don't know. Let me walk this back. Whatever the risks are, however you see them, there is a risk there. And it's something that needs to be traded off. There is the money I have right now, full optionality, full optionality, not as good on the tax side of things. On the other side, it's like really big, strong tax incentives, but there's a bit of a risk around how that might go, whether you're even going to make it to retirement. Let's put that out there, right? Like, you know, there's no, not everyone does, right? Like there's, I think people in the financial community at large are too myopic with the super.

41:24because they have what is ostensibly a pretty good system overall. I'll admit that. It is. It's a great thing. I'm glad that we've got it. I think it's a force for good. But it's kind of like that homo-economist kind of view that everything is pure maximization under various different structures. And life is messy. Life gets in the way. There are all kinds of - Half of them in season four-backs. Yeah, you know. So where I end up with all of that is a little bit of this, a little bit of that, you know, and I'd love to pretend it was a bit more complicated. But as I say, I've got the mandated contribution.

42:00I'm pretty happy with that. I'll keep working as long as I can and that will keep tipping in. But I try and keep other stuff out of it because I'm arrogant enough to think I can do something with it that might actually be better, even outside of the tax discounts. So we'll see if that ends up being true. No, I think I like that, mate. Aaron I think there's three paths mate because there's kind of to frame up Ram's comment there's either add a super invest elsewhere or don't invest at all and so they're kind of it depends on what you're asking are you saying invest inside super or outside super are you saying invest or don't bother investing at all because the super's already big enough and so I don't need to invest any more money right right right so there's lots of questions there Aaron wasn't specific about that I'm just saying he's not the way the question's written it's not clear what you're wondering or suggesting I am not in that situation but if I'm relying on entrepreneurship and consulting and that employment is not as – no full-time employment is certain, right, because you've made redundant.

42:53So I don't want to pretend that full-time work or permanent work is necessarily more secure, but it tends to be more secure. The cash flow tends to be more reliable than if you're consulting or working for yourself in a service role in particular. I mean, Ram's got a small business. It's obviously very large. But his members are – you can kind of reasonably draw some sort of line as to what you think the revenue will be like in one, two, three, four, five years. If you're consulting and trying to get someone to come and use you for a short time and then find someone else to use you, that's a harder business again that sounds like you're in.

43:21So I would be thinking about the reliability of my income. And again, I can't give you advice, Aaron, so I'm not talking about you, but if I was in that situation, I'd be saying, well, I'm consulting, which I'm loving and it's great, it's good. But what happens if my clients don't turn up next week or next month or next year? What happens if I have fewer clients? And so I would be building personally a significant emergency fund, rainy day fund, cash back up, investing in your own name, something that says I have a buffer, a decent cushion. And I would suggest if you're consulting it, particularly I don't know if you have family, mate, but you see a mortgage under control, I would be making sure I had sufficient liquid assets to allow for variation in income, which is kind of the lot of a consultant or an entrepreneur.

44:03So personally, I would do that if it was me. If I was in that situation, I'd say, right, I think I'm going to do this. I'm doing it pretty well now, but economic circumstances, customers, my own expertise, five years' time is they don't want to talk to me, maybe. maybe it's a much bigger business mate you're hiring people to help you or maybe you're working on half or a third of what you're earning now so i i wouldn't personally add to super in that situation because i'd want to make sure you mention optionality ram and kind of you know the range of potential outcomes um so that's what i would do i wouldn't not invest at all um unless you don't have the capacity if you don't aren't no criticism don't obviously you know that life life is expensive so if you can't you can't but if you're saying well i could put money in super or I could not, that presumes that the money is available to be put in a super, in which case you can either spend it or invest it in or outside super.

44:48And so again, I'm not going to tell you what you should do, but I would invest that money outside super too, like RAM. Not because I'm as worried about the system changing itself, although it's possible, mostly just because I'm worried about my regularity of income and reliability of income flow. And so to account for that variability, I would want to have that money you said, RAM yourself, if you want to access it before retirement, whether you're forced to or choose to, having it outside rather than inside super is a better bet for me, even though, as you allude to at the end, mate, the tax system's much, much, much more generous inside super than outside.

45:18So I would not contribute to super if you feel like the rest of your life is set up, but I would absolutely, if I was not sure I had an income or the size and regularity of that income, I would probably be inclined to save in a high interest term deposit. So you've got some sort of walking around money just in case. And then once you get that to a reasonable enough level, I'd probably invest in my own name, I think. Yeah, each to their own. I mean, I'll just make the point that they have changed super several times. So it's not like hypothetical. No, we've had the conversation before. I don't imagine a scenario in which super is less attractive than investing in your own name.

45:52Yeah, that's probably fair too. Very possibly less attractive than it is now. And the last two years have changed for certain balances and all this other stuff. So very possible, is it likely? Probably on balance, I expect. But is it still better? Yeah, probably. So I'm happy to keep contributing to Super personally, but I'm also investing outside Super for the reasons we've talked about before. Fair enough. I'll make a comment just too on Aaron's situation here. It's just a really interesting factoid that I wasn't aware of for a long time. I think when you hear about entrepreneur founders or this kind of, you sort of imagine the 20-year-old.

46:31but most founders are in their 40s and it's people like Aaron where it's kind of like I've worked in a field for a certain length of time I've built up a certain degree of expertise and understanding and I'm a bit frustrated with how my old shop used to do it and I can I can do it I can do it better and it's sort of like it's sort of it's just it goes against the mold that you know, you have to be young and edgy and doing something in tech. You can grab with MBA. Yeah, yeah, yeah. No, it's some 40-year-old, you know, person who's just got like an itch to scratch and could be doing anything from, you know, laying bricks to, you know, engineering to consultant and doing a whole bunch of other things.

47:14And so, yeah, well done. Premier Online Investment Club, that kind of stuff. Yeah, right, you know. Well done. Take the plunge. It's good. We really do need to incentivise this kind of thing. That's not the right term. Stop disincentivising this because it is, at the base layer, it is the engine of all prosperity, right? We are long past the age of a civilisation where one human or very small group of people can achieve much. So, well, maybe that's changing with AI, actually. That's a different conversation. but generally speaking to really move the world into poker you need a coordinated effort amongst amongst um many many different kinds of even with ai you're still you're still layering on top of other people's work even if you're not working directly in a group you're you're taking someone else's raw materials you're doing someone else's services it's it's still a multi-factored um operation and you need the prime mover you know he's going to be like i'll take the risk i'll do this and i'll i'll stand it all up you know and i'll take i'll take the full risk if it blows up and hopefully I'll get a reward if I get it right.

48:18But it's just that process is the engine of everything. And it's not just I reckon, right? Like look at Australia, look at any country, but let's look at close at home and look at all of, look at our richest people, look at the biggest organizations, look at the jobs that were created, the wealth that was created, all of these kinds of things. It really just started with someone doing something that made someone else's life a little bit better off. You know, even if it's a big megacorp like Telstra, One point in time, some people got together and, you know, yes, under the public banner, but did, built some, laid some cable, did some, built some switchboards and did some things.

48:54And like, how much wealth has that created for the country? And it's just like, I kind of go on a little bit of a tear on this too often because maybe it's just some of the friends that I've got here as well. But it's just sort of, it feels as though there's a, it's a icky, dirty, greedy, seedy, you know, it's sort of like, it's an untoward kind of thing when I really think it's sort of, once you pick at it, just how crucially important that kind of stuff is. And like, for everyone's sake, for everyone's sake, right? So good on you, Aaron. Good on you. Well done, mate. I'm sorry to hear for your redundancy, but maybe you'll look back on it as the push that made you do the thing that you always wanted to do, and you're far better off in the long term for it.

49:39Well done. Good luck. It's funny, right? There's two groups of people, and it kind of depends on whether you manage to land on your feet because there's people who may run who never worked again, and you're kind of like, that's a really terrible thing. Oh, yeah, for sure. Others who are like, you may run, it's like, oh, man, this is the best thing that ever happened to me because I managed to build something or get another job or change careers or find another passion, and kind of it can be, it's pretty stark. It's a pretty stark turning point and the directions can be almost, you know, intrinsically opposite.

50:00But yeah, it sounds like you've landed on your feet, Aaron. So well done. I'll give you one more stat just on that. If it doesn't work out, Aaron, usually I'm going to make up the number, but it's in the ballpark. It's something like when you look at the really successful entrepreneurs, it looks like from the outside at surface level that they just did a one shot. It's just like, boom, did this, birthed this idea and boom, instant success. when you tease it apart people have done it made made a lot of study of this kind of stuff there's usually it's sort of like the third or fourth go around that it sticks and even on the one that makes it it's usually like five to ten years of a brutal grind that's all right so you see it's like who's this person on the BRW reel oh wow they did that like yeah actually they they they did four or five businesses that absolutely collapsed um because because it's really hard this stuff And then on the one that they did do it, they just like ate two minute noodles and lived in a cardboard box for eight years while they got it off the ground.

50:55You know, it's, it's, um, all of that stuff, which is, which is not, not as, it's just to sort of say, I think it's, I think it's worth sort of pointing that stuff out before anyone goes on that journey, because you've got to go in eyes wide open, right? We all, we all going, Oh, it's going to be the best thing. I'm going to make a school in dollars. Like, well, statistically, no. And that's okay. And that's actually okay. It's like the ones that people who end up making, I've said to you before and probably said it on the pod, it's not because they're the hardest working or the most intelligent.

51:26It's actually stubbornness, I think, is probably the most important characteristic. Let's be plus short. Tenacity. It's called tenacity. Tenacity. Tenacity. Yeah, it is. It's like, no, I'm going to make this thing work. There is a problem. I can solve it. I can do it this way. Okay, that didn't work. And most people don't start a business. those that do most of them will fail just statistically and then when they fail they will never ever ever do that again because that was the wrong thing i touched the stove i got i'm never doing it again and i'm and and and and what it's a shame in a way and not everyone has the opportunity to just pick themselves up and go again but but it's sort of like that failure has just given you so many lessons right like i would never do it because i've done it once but I did have a cafe a million years ago, right?

52:12You did, yeah. And I've often said it's like, I kind of learned not to do that again. But I reckon if I did do it again, I don't know if I would guarantee I was successful, but I know that I would avoid a bunch of dumb mistakes I made the first time around. So what's your life again? Oh, just, it's sort of, that's why that tenacity matters because it's kind of like, oh, it didn't work, but because of that. So maybe if I don't do that this time around, then every iteration, you're coming at it more experienced, more worldly wise, you know, more, more aware of the downside, not just focused on the upside.

52:47And it just, it just leads to, it leads to better decisions. And I guess I'm just trying, you know, dream big, stick at it. And I wish you luck. No, I love it, mate. I also think to some degree entrepreneurs are born not made. And I say that not to some people, if you don't feel like you are one, you shouldn't try and be one. But I do more mean that you had, you had one already, then you'd done straw man. You know, I've chatted off about you saying, I think I could do this business. I might draw that business plan up in chat and see how it works. And I won't give all the details away. I don't know how serious you would end up being about it.

53:16But it's just you, right? You are just that bloke. And that's also really important. I think that is what we want people like Aaron to go, you know what, I've got an idea. Let's go and do a thing. And he probably would have done it anyway or maybe not had the opportunity to. But obviously, Aaron, you've gone, you know what, I can make a go of this. And that's really cool. So I think, yeah, if that's your itch, I mean, look, be responsible and all those kind of things and make sure your finances are looked after. And I'm not going to tell you how to suck eggs, but if it's right for you, it's a very, very cool thing to do.

53:42And as you say, mate, we do owe almost all of our progress. Almost all is probably too strong. A great deal of our progress. People who said, I'm going to start something new. Some things are invented inside businesses and inside research institutions and government agencies, not just entrepreneurs, but a lot of what we have, we owe to people who are just like, I think I could do that or better than that or a different version of that or I can add to that. And there's the usual, here's the other thing, There's the usual, the books that get written by the ones that really go stratospheric. Stratospheric?

54:10Let's go with that. But there's orders of magnitude more who just do well. Never get books written about them. Just have an idea. Build a business. Do a thing. Maybe you're making widgets in the local industrial estate down at your local industrial park, and that's what you do. You do it well, and the castle's coming in and paying you, and you do it because you love it, and you had a better idea of how to do it, or you can do it more quickly or cleanly or easily, or do it differently. That's really, that's how we progress. That is productivity as we talked about on Friday. We absolutely do. Let me give you an example.

54:41I went for a hike on the weekend with a mate who lives up this way. And we're talking about in our local area, there's an old guy who owns half the shops in the local street. Right. And he's been doing it for a long time, right? And so he's very experienced. These aren't big companies. In fact, they're all small businesses. They're all tiny, one shop, small, you have fish and chip here. There's a clothes shop there. These kind of little main street kind of shops. But think about the value add to the community here. Because the first level take is a bastard owns half the street. And he owns all, and he's really rich.

55:22And I was like, yeah, but it didn't start that way. And he gained his initial success by running something really good, in other ways offering really good value to other people. Taking that capital, instead of buying a yacht or a Ferrari and just going living a life of consumption, has then reinvested that back into the community with new businesses. As a result, creating more jobs, he's paying council rates, he's paying taxes. This is all. This is a good thing. Now, I would say if you're someone who is very good at medicine, then you should be in that game. You're a really good engineer. That's it.

55:56You're just a wonderful juggler. You know, the circus needs you, right? We all have something to contribute. And the value of the savvy capital allocator feels very selfish. It feels like it's only good for you, bro, that you happen to have that skill. But like, do you think the world is a better place for Warren Buffett having existed? I mean, yeah. Like, obviously, the amount of capital he has directed to valuable enterprises that employ a lot of people that pay a lot of dividends, where those dividends get funneled back to Omaha, where they can be invested into other enterprises to such a degree that this guy is literally bailing out the US government when things go pear-shaped.

56:42Do you know what I mean? You've got to go a little bit deeper in some of these kinds of things. Anyway, I'll shut up now. Here's my hot take on the AI thing. I reckon, I reckon, I reckon that there is a huge opportunity in AI outside of software, outside of the traditional things that people are looking at, just in giving agency to people who want to run a small business. Whereas before I really had to have a good conveyancer and lawyer on hand. I really needed, I had to have a certain personnel infrastructure built around. You look at all entrepreneurs, like I've got a good accountant, right?

57:22If you don't, you're not in business. I've got a good accountant. I've got a good lawyer. I know someone at the council. I know, and these are very hard things to build up around you. Once you've got that built up around you, you're a superpower because it's like, when I see, I was like, oh man, that bakery sucks and no one's going in it and they're going out of business and it's for sale. I'm going to buy it and I'm going to set it up. I know I'm going to get PTYLTD registered before the afternoon is out because I just give my mate a call and they'll do it all. And I've got the capital from my other ventures and boom, boom, boom, boom, boom.

57:54Before you know it, everyone's still got bread at the bakery. There's some jobs that are going there and everything is a wonderful thing. But that was a hard thing to establish. Now, I think this is, anyone listening, let me try and be a bit inspirational here. If you've ever had that itch and it's got nothing to do like with tech, right? These AI tools are going to be your best friend. Aaron's doing consultancy. It's like, well, mate, 90 % of your legal questions can be answered without having to go to a human now. You can figure out your accounts with, I mean, if you haven't done this, by the way, just point one of these models at your accounts and just say, is there anything I'm sort of missing here?

58:32Or just that usual question with you and your partner on the couch at night with your cup of tea. It's like, oh, I'd love to run that bakery. It's like, how do you do that? And these are really good questions. It feels like, oh, how do you not know that? Of course you don't know that. I don't know. Do I need a license for that? Who do I contact? It's like, you now literally go, it's like, I want to do a bakery. And it goes, okay, here's the business plan. Here's the people you need to contact. Here are your licensing fees. This is where you go to register your business. Boop, boop, boop, boop, boop, boop, boop.

59:03And you are up and running. And what you might've spent 30 bucks on tokens. This doesn't guarantee success, but the barriers to entry are so low now that, and I just think everyone's looking at the, obviously the big things that this technology is going to move. I think it's sort of, well, I'll tell you, my business plan is just like, I would love to, I would love to over the next 10 to 20 years. I'm not going to say exactly what the idea is, but just own a bunch of small businesses. I would love to be private equity for a bunch of small businesses. Not private equity in those soulless eight-hole buggers.

59:39It's private. It's my equity. I'm putting it on the line. Not with a view to engineering an exit from a buyout from some big megacorp five years down the track. I'm buying this thing because I think I'm going to get a really good return on invested capital. And the damn thing is never going to grow. I'm going to buy the local knickknack shop and I'm going to get a 14 % ROIC on that for here until kingdom come. Yes, please. That's really wonderful. And if I do get any excess capital out of that, which if I'm doing it right, I will, then I'm going to fold that into the pastry shop down the road.

1:00:12And then I'm going to put it into this and that. It's like, that is like, it excites me so much, right? I just feel as though there's a, there's a, and I will be competing when I, and anyone else who cares to do this and people, whether I say it or not, people will be doing it. It's like you're competing with people who will never do it. You know, 68 year old Gazza is just not using one of these tools and never going to, and is, you know, checked out anyway. It's like it, well all of the tech bros focus on these big mega sort of opportunities out there is just like right in front of you. If you can be 15 % more efficient through these tools than other people, it's like you've got a massive edge.

1:00:52You've got a massive edge. And it's a skill that will potentially pay off for you and for those around you. So what am I saying? Aaron, you've inspired me. You've inspired me with your redundancy. And I've gone off on a bit of a tangent. But I'm just really saying anyone who's listening there is just like go and scratch that itch. Don't bet the farm and don't do something stupid reckless. But last shot. I will add just my own very quick thoughts. And it's only because you told me, I don't know if it was on here or not on here last Thursday before. You said something like, if anyone's ever got an idea to do something, there would have been a better time to do it.

1:01:27It was kind of whatever you put it. This is your moment. Yeah. And so none of those are businesses. I stood up, and I don't know if I went to this last week, I stood up two separate websites. Completely. Now, they're not business ideas. There's no advertising. There's no revenue. This is just. No passion project. Right, they were. One's a Bush Pultry website. That one's a slang repository. And honestly, mostly... I haven't seen the slang one. No, it's new. Okay. And it's not about that, right? And by the way, yeah, don't, whatever. The point was just, well, you said it. I was like, so both. I had that in my head and I've got the, and we've got the tool.

1:02:00And so, you know, you get a new tool, you're like, I wonder how I can use that. I've got a new hand tool. I wonder why I can go and cut up, right? So you just want to use the new thing. And so literally, as I don't know if I said this, I said last week I did it with ChatGPT Voice. Did I explain that version of it last week? You told me, I think you might have told me, but it was off air. So very quickly. It's a good story. Drove to be on a podcast. Speaking of, you said you were on the second best finance podcast. Equal second best is Rask Finance that I was on this week. So check that one out as well.

1:02:24Yeah, yeah. Thanks for having me on. But only some money so you can come back. Don't stay at Rask or Equity Mates. They're okay but they're not quite monthly for money. You can be only one. So I press the voice button to chat GPT and it stays on. So you just talk backwards and forwards. I'm driving down the Hume Highway between Barrow and Melbourne and I'm chatting this thing. And I think I don't know, I can't remember exactly the origin of why I thought either was a good idea. But it was your idea in my head of like, never been a better time to do it. It's like, I'm thinking, well, that sounds pretty cool.

1:02:50I wonder if I could do that. And I'm like, what could I do? And I don't remember whether, I mean, the backstory quickly was my son, we used to read bush poems to my son when he was a kid. And the website I used went offline. And so I've got a book and it's all fine. I was like, I wonder if I could find all the public domain stuff. Your son slept like a baby. I was like, oh my God, dad's coming around a bush poem. I'm asleep, I'm asleep. No, he enjoyed it. He just used to choose the poems. So, yeah, so there. And my point was, it's just a legacy project. It was literally like a, hey, wouldn't it be cool to take all the public domains?

1:03:16I'm not going to recommend it as IP, but stuff's public domain after 1955 or before then. It's too hard to find. What if I could find it, verify the veracity of it, verify it and just put it up online? Yeah, what if is where it started. Right. And so I was like, well, I might not fucking do that. And so I talked to it while I was on the car, got back and we started designing. And this thing did ace. You mentioned all the lawyers and stuff, mate. this thing went so much deeper and broader than i had even conceived of its own volition i don't mean run away like how over the pod bay doors i mean i said look i want to do this like okay well we'll check all the original sources we'll make sure we verify that's in the public domain we'll check to make sure there's the source of the same that different versions of the poems don't exist we'll try and reconcile the problems if there's some um old language that was not in regular use now but it's offensive we'll make sure we put a cultural note on that all this stuff i'm like Dude, that would have cost you like 15K in six weeks in the old world.

1:04:08But no, I didn't ask for any of it. It actually improved my idea. It did a much more – part of me was like, do I really want to do this? I probably shouldn't. It's just as I'll keep doing it. It cost more tokens too, by the way. But it just did it and it stood this website up. Yeah, a pittance. A pittance really. What, you spent like 200 bucks on tokens? Not even. Half an hour of a lawyer's time, right? I upgraded to ChatGPT Pro and I burned through my first month's tokens in a week. and then reset so I'm good to go again. But so, and look, it's not about the, anyway, and then the second one was, to my point about the new toy, I wonder what else I could do.

1:04:41It's like, slang, I was thinking about some public domain repositories or something was how my kind of, my thought process, what else could I do? Slang, let's do slang because that's not IP and it's kind of a fun thing to do, Australian slang, so I'll pull that together. And this is not a single bit of, not even vibe coding, just telling it what I wanted. And it came back with, here's an idea, here's a mock-up. It's like, oh, that's cool just change these few things for me I know you've had the same thing with straw man go and do it come back I think that should be bigger let's add another page for that let's add a category for that and this thing was stood up literally from zero I've done two websites in two weeks and this is I'm working full time probably 10 hours of your actual time right and 10 hours across the week but even then it was like it'd do a task and because I was doing a tri-colot of tokens it'd go away for 20 to 40 minutes at a time and do a tranche of poems so I'd check all these ones kind of like 40 minutes later and go okay here's what i found what i'll do next it's like do this go 40 minutes later comes back okay do this so 10 hours probably but only just like it's you know most of the time just checking to where it got to and telling you what to do next anyway sorry you started me on that one with the small business thing i mentioned it too i'm so sorry this is the podcast this is the q a thing but but it's just sort of like this is this is such a boon for humanity and we uh we have, it has never been a better time to do these things.

1:05:57And even to just get to the, there is so much value I find in just, I wonder, I think you start off with that. That's what it was. Yes. I wonder if I, well, did you know this? Oh crap. I didn't, is there another way around that? I don't know. There is a bunch of stuff I've built on Strom and that I've thrown in the bin. Right. Right. Oh, this is really cool. I've got this data feed. I reckon. What if we could? That's crap. Now in the old world, I had to have the idea I had to spec it out exactly I had to give it to a developer I don't want to do that I'm getting busy sorry I'm pretty sure they don't listen to the plug sorry love you and then they'd whinge about it and then they would build it and they would build it exactly to my specifications and then you would look at it and you'd go nah it's not what I want which would drive them mad hey you pay per hour so shut the fuck up B be happy i want more work done yeah yeah i'm not trying to be difficult you don't know until you see it it's like i'm just a chef out there going i'm gonna add three eggs instead of two maybe it's a bit richer and creamy i don't know i'm gonna try it and you try it right and and then you would you would see the results of your thought bubble and you'd go no i need to change that but that iterative process and a it no longer takes months and it no longer takes tens of thousands of dollars yes and so so i think a lot of people were put off very sensibly and rationally with with entrepreneurship because it's like if i don't get this right i'm risking a lot of my savings and i've yeah i really got to get it right it's very hard for me just to try again and again and again but now it's sort of like you can take this thing within an inch of the finish line not that you will ever know until you do it business is experimentation but but you you you Well, I just think that there is going to be – we are going to go through a period where people are going to be like, already it's happening, right?

1:07:54Like it's the worst thing ever. It's the death of society. Yeah. And it's going to be a tough transition. Don't get me wrong. A lot of drawbacks too. It'll be terrible. It'll be terrible for a lot of people. But the bigger picture is it ushers in a world where there's just really just a bit of imagination and could be botherness about starting a business. And when you reduce the cost of failure, it means you get more shots on goal. More people, more shots on goal, more value. man I'm so I know no one will believe this but I'm so bullish about the future I just think it's going to be a really crap 5 to 10 years yeah yeah it's a tough way through alright let's finish off let's finish off with a so called message from RJ there you go RJ fellas hope we are well we are love the pod and respect the no nonsense insights into many interesting topics this is less of a question but I'd love to hear your thoughts really you want us to rant We'll give you a opinion, sure.

1:09:01About the potential resurgence of listed investment companies post-budget tax reforms. I occasionally find myself on dark corners of the internet, brackets Reddit, anonymously commenting on finance pages, being a bit of a miserable prick every now and again. It's quite soul-cleansing, actually, says RJ slash Andrew Page. Anyway, a recent post spoke about the attractiveness of LICs, now that income is taxed more favourably than capital gains. But I was publicly slaughtered with downvotes at the following comment. Quote, I mean, if you're after capital depletion, underperformance and high fees, then yeah, sure, buy listed investment companies.

1:09:40These LACs are literally the stock market version of the off-the-plan property spruikers that lure uneducated people to buy into developers' margins with the promise of depreciation tax benefits. Only they do it with franking credits and dividends. End quote. Harsh but fair It's very high quality miserable prickness RJ. Is this a fair analogy? He asks. Well she asks. I don't know. Maybe it's a lady Every single well known LICI I have looked up has gone backwards in share price over the last five years I mean this doesn't include dividends but still surely people are aware that capital depletion in an investment product is not exactly ideal Please, says RJ Commence rant I mean you've done it so well RJ you have like the amount of people that will optimize for tax minimization or some other kind of thing that, that directly hurts them is just a mind blow to me.

1:10:36I, I, I, I've never understood it now. Look, to be fair. And someone made the point on straw man recently, which I think was a good one, which is, um, it's not all about return maximization. So some people I won't name the funds. It's a bit unfair, but there are some funds out there that have underperformed, but they have provided a high yield and lots of franking credits and a very stable income stream. Now, I would still push back against that because I think it's a little bit, personally, I'd just rather a little bit of volatility and better returns. But the point being is that not everyone does and each to their own.

1:11:19And so there will be some structures that kind of are all of the things that you said, RJ, but maybe in a particular dimension is suitable to someone. I'm trying to be generous here because I largely agree with what you're saying. Yeah. But look, you know, the other part of me is sort of like, look, they're offering a service and people are taking it up and, you know, the customer's always right, I guess. As long as I only draw the line at wherever there is malfeasance or wherever there is deception or inducement or one of those kinds of things. But if everything's on the table, everyone's honest and clear and people still decide to go ahead and do it, yeah, do it.

1:11:59There's just a reason it should exist and you should do it though, right? You're saying there's guys doing anything wrong necessarily, but you wouldn't recommend people go and jump in an LSE. No, but although I'm allowing for the fact that there might be a dimension to it that gives you some value that maybe isn't 100 % perfectly rational, but is important to you. And value is subjective, so I don't know. Yeah. But yeah, burn them all.

1:12:25I'm not putting any of my money in. Well, there's an exception, actually. Anyway, yeah, go on. Here's the thing, RJ. I agree with you entirely. Because what... So look, there is a very, very, very large proportion of the investment community, largely older people these days, who grew up with LICs as the, I'll say poor man's ETF, but I really mean the old man's ETF because there weren't ETFs available. And so if you wanted to invest and get that broad diversification and get the, and frankly, keep your fees lower than an external fund manager were going to charge you, I'd get the appeal. 20 years ago, I'm saying I'm an LIC fan, right?

1:13:01Why would you not? Because it is the best way to get broad exposure, all the things. So it makes perfect sense. Now, some have done better, some have done worse, and that's fine. But that's in a different world. And that's why a lot of them have been around for so long, because they were the only listed alternative. You either had your broker create some sort of quasi-indexing portfolio for you, or you picked a lot of blue chips, or you bought an LAC. And in that world, the LAC is the least worst option by probably a decent margin for those who didn't want to pick stocks but wanted to get market exposure.

1:13:29So it makes a lot of sense. In the current world, what I think you're seeing is people defending that view of LACs rather than actually where the real comparison should be, which is LACs versus what else. and now there is a what else? The fourth category of ETFs is now here. And so all of a sudden you now get to say, well, are LACs terrible? No. Are they worse at ETFs? I dare say on average, yeah. I mean, the returns seem to suggest that. And maybe LACs, the other problem is, I say problem, LACs are active, generally speaking active managers. And so it may just be they've had just rough stock picking for the last few years and maybe they come back.

1:14:02So we've got to be careful of separating the structure from the way the structure is operated. Could LAC, if Buffett, you know, I mean, effectively, Berkshire is an LAC, right? So is Solpats. Not exactly, but, you know, close enough that if you describe it that way, people would know. Spade to spade kind of thing, yeah. Right? I mean, they're operating companies and there's differences, right? There's not just a pure funds management layer. But, you know, to the extent that Berkshire and Solpats are LACs, are they great? They're brilliant. Are there some bad LACs? Yes, there are. Does the LAC structure itself make the difference?

1:14:28Not necessarily. It depends on how or where it's being used and how the capital is being deployed. I think you're right, though, about LSEs as a group, particularly when you compare to ETFs, which are simply available and don't have those things you talk about. They don't have the layer of fees. They're not trying to pick stock actively. The average financial loser is after fees. LSEs fees are probably lower on average, but traditionally and directionally, they're not that different. So I think you're probably – I think – I suspect your description is probably a little too harsh. because I think you may have imputed some qualitative factors based on the returns.

1:15:10I think the returns stand alone without having to do the other stuff. Not that you're wrong, just that, you know, that's what's going on. But yes, you're right about the attractiveness of LSCs. LSCs are sold as a particular solution, and some people want that solution, and that's fine. Not LLSs. Again, as I said, I really want to be careful here. It's not structural, and it's not necessarily in every or any individual fund manager or LSA manager. It just is inherent in the structure. If the Vanguard S &P 500 ETF was an LSN 7 ETF, it'd be a great LAC. If we call Berkshire an LAC, it's a great LAC.

1:15:41So it's all a bit relative in terms of the implementation, but the numbers suggest it's a suboptimal way to invest. So I suspect the people who slaughtered you with downvotes are LAC devotees and you walk into a Labor Party meeting and tell them that John Howard's the best prime minister ever or go to a Liberal Party and tell them that Goff's the man, you're probably going to get down votes and that's okay, but that's kind of... By all means, Reddit is going to tell you what they think, but just remember you're asking for or accepting the opinions of people who you kind of know what they think anyway, so don't be too disheartened by the down votes.

1:16:15You probably, to be fair in your quote, weren't trying gently to get them to change their minds. You're poking the bear. So maybe you got what, if not, you deserved, what you should have expected. But yeah, ETFs, to my mind, dramatically better than LICs for all the reasons. Yeah. What do you think about the broader point there, though, of these recent structures incentivizing or disincentivizing capital investment and focusing more on income generation? Do you buy into that view? the numbers seem to say i haven't actually dug deep enough i actually don't think i have a firm opinion because i haven't spent the time to dive into it yet but taking various things at face value it feels as though and again these aren't black and white things but overall the incentive has moved more towards income and less away from growth and the argument being that it's sort of like well i mean i just made the point earlier in a different different vein about like all prosperity coming from initial investment, right?

1:17:15And it's like, if you just, all you're going to do is just continue to sweat your assets as hard as you can without making new investments, it's kind of like, well, we're all ultimately poorer if we run that experiment forward fast enough. So is there something to that, I guess? Yes, there is. I'm not sure how strong it is and how necessary, how important the criticism is. So the chain, if we compare this, if we close our eyes in 1999 and come back today, things are the same as they were. And so when we talk about incentive and disincentivizing, we're talking really about versus yesterday versus 10 years ago versus 20 years ago versus 30 years ago.

1:17:51And so we get back to the question of should governments actually incentivize? We've kind of talked around that a little bit of should they incentivize or stop disincentivizing? And there's different things there as well. So yes, relative to before the changes were announced, low-cost entrepreneurship is far less attractive now than it was a year ago. Because if you sold a business for$5 million, and there's a whole lot of other tax rules, by the way, so don't at me on the individual tax rules. I'm just going to use really random numbers because it makes the point. If you started a business with a sheet of A4 paper and a printer and a laptop, and you sold that business for$50 million 10 years later, Under the old rules, you'd pay no tax on the first$25 million, you'd pay full tax on the rest.

1:18:32Under this rule, again, they've made some changes since, again, so don't at me. But the criticism was you pay tax on the full$50 million because your cost base was a paddle pop stick and a 40-year-old laptop. And so, yes, in a relative sense. Because we're not factoring in time, effort, sweat, emotion, stress, risk. Now, you're not in either scenario, by the way. So it's just a question of how much did you make and what tax rate is levied on that benefit. And you're right. That stuff doesn't get counted. I mean, maybe you paid yourself a wage, and again, that's why it's messy at all. It's really political, and it's really self-interested and self-serving, a lot of this criticism, and that's where I very much struggle, because no one's trying to actually explain it properly.

1:19:09They're trying to make an outlandish case, all capitalists are bastards and should pay more tax, versus we couldn't possibly have a country unless we didn't tax entrepreneurs. It's like, you're both idiots and arguing your own game. Too far in the extreme, in the direction. It's all that. So that's the debate. So that said, mate, here's the other thing. It depends on what capital we're talking about. I have very little sympathy for the argument, not that I want to pay more tax and separate from how much the tax rate should be. If I buy shares of BHP on the market and I'm paying the current or the previous tax regime, it's irrelevant to BHP.

1:19:44Yes, it matters a little bit. We talked about ethical investing before. It matters a little bit on secondary issues. In other words, when they want to raise more capital. So that matters. If they're trying to raise growth capital, that matters. I have a lot more sympathy for the startup story. That being said, I've asked you this before and you've answered it and I've asked other people. No one who started a business three years ago wouldn't start it today because the potential tax rate if they make a billion dollars is higher. You know, there's not going to, in my opinion. Maybe one person, maybe three people.

1:20:11Maybe someone says, oh, of course I would, but would you actually? You know, who didn't start a business in 1999 and then did in 2000 because the tax rate suddenly halved? Yeah, I mean, someone, yeah, because law of averages, big numbers, whatever. The guy with the great idea, you didn't, you know, you started straw man when you, you would not start straw man today because of the tax rate. You were like, I've got a really good idea. I think a private online investment club would work and I think I can make it really big and I think I can get a really nice lifestyle out of it. I'm going to give it a go, see how I go.

1:20:36And if I make enough money to pay a truckload of tax, well, the tax bill will suck, but I'll be really happy with what's left over. So I kind of, I just, you're right directionally and you're right theoretically. In any practical sense, does it actually meaningfully retard investment? On the margins, very slightly, I suspect. And again, the other thing is we've got the counterfactual because we had it in 1999 and then we changed it. And there was no great sudden boom in entrepreneurship and startups in 2000 when all of a sudden John Howard said, guess what? Harvey the CGT and the CGT went, oh, we'll start all those businesses we weren't going to start last year then.

1:21:09So we kind of have the example. We have the, here's one we prepared earlier version, which is it doesn't change much. So what about the megacorp side of things? You know, if you're an AMP or you're someone like that with very big budgets, and again, you are being consulted by MBA types who are actually looking at this stuff. And we'll just sort of say that's your first mistake, but they all do it, right? Yeah, of course, of course. I 100 % agree with you, and yet. um and i wonder i don't think that the person with the itch is going to be um sway but i do wonder if some of the very deep pocketed large enterprises might slowly start pivoting to just a little bit you know at first it's like actually we are going to do better for our shareholders just by paying out dividends and we won't we'll pay out as much as we can because we we have less of an incentive to do it yeah it's a little bit nerdy and yeah you thought it through but when you've got like 400 consultants and a floor two floors full of people who you employ to do exactly that yeah and then you multiply that by the by the all the big companies across the country i do wonder it's like are we are we shooting ourselves in the foot to a degree and i should be careful because as i said at the start i don't i don't have a firm opinion i'm still trying to get my head around it but i guess i'm trying to sort of that's a great question fantastic yeah like is is Is it different there?

1:22:34On the edge cases, it should be, even without the MBAs. Every company who's worth their salt should be asking themselves, what is the best use of my capital in the interest of my shareholders? And so, yes, relatively, every smart company should have been saying, I had a decision I would have made before the budget. Let's rerun the numbers under the new rules and just make sure it's still the right thing to do. So, yes, I suspect on the margins you're absolutely right. Two things, I have very little respect for most capital allocation decisions than most ASX companies in Megacorps. So do I think they've done the work in the first place?

1:23:03Do I think they're going to change it as a result? Probably not, honestly. I mean, maybe the NBA swayed them, but if the NBA should have been telling something different six months ago, probably weren't, or they weren't listening, because there's not a lot of evidence that Australian companies have really good capital allocation processes and outcomes. But also, again, I will go back to, and I'll keep harping on it, but the 1999 example, we didn't have an explosion of new investment in 2000 because the rules changed. And so changing back to that, again, will behaviors be different maybe will the advice be different possibly we have computerization on the internet maybe the people learn some different things maybe the zeitgeist is different so yes it's very possible i i and direction it's true so yes yes relatively speaking plus some percent yes 100 um so the question the question goes back to incentive like do are we i mean every tax a disincentive right so the question is the question is always what how much do you tax and who do you tax and what do you tax and what is reasonable and not reasonable.

1:24:00And that's probably a much bigger conversation than at the end of an hour and a half long mailbag episode. Yeah, yeah, yeah. But I think that's the right question. I, like you, don't think the government should be incentivising anything. The question would be, is the allocation of the tax burden in the best interest of the country? And that is a really big question. We won't try to even answer now. But I think that's a very, very valid question. I don't – we should disincentivise things we don't want and disincentivize as little as possible of things we do want in a relative sense. We've got to collect the tax, right?

1:24:31So we're almost of entrepreneurship. Yes, let's have no tax. Well, then we can't have police and army. We need something. What do we tax? We're back to that conversation. So I think that's, I think you're asking the right question. So yes, directionally, it must, by definition, turn the dial towards income from capital. Theoretically, it must. Which is more, which is the wrong, it's not the right word, but it's more extraction than creation. No, extraction's not right. It's more reaping what you've sown rather than reinvesting. And there's nothing wrong with reaping what you've sown. We worked very hard.

1:25:04We made a lot of investment. Cash is now being generated. We are now choosing to give this to the owners. There's no value judgment on it. But there is a cost to that. The unknown cost is the rate of return, right? So if there was an equal opportunity, giving money back will earn the shareholders 5 % or I can reinvest it at 5 % tax it better I'm going to do it that way if I can reinvest with a 20 % internal rate of return then I should do it anyway there are arguably I mean there's a fascinating we're not going to do it now again there's a fascinating conversation about what does it disincentivise and if it disincentivises just the crap marginal stuff it's probably better it's good it's better if she holds hands anyway yeah there's too much silly investment right right so there's some argument to say yes and that's a good thing which again unless you've got time and space to explain that, you can shout it down from the bully pulpit or around the place.

1:25:55How can more investment be bad? Well, if it's malinvestment, then it's terrible. It's very bad. Don't do it right. Very, very bad. If you like waste, then I guess it's good. I haven't answered your question, mate, but directionally, yes, I'm far from convinced it's a reason not to have made the changes because I don't think it's material, but it absolutely asks the right question of not what are we incentivizing, what are we disincentivizing and is it the best structure for our tax collection? And if you want to maximize tax collection and national prosperity. I don't mean maximizing and collect as much as you want.

1:26:23I'm just saying, if you've got to balance off the tax you collect and the prosperity you, and not even create, allow, get out of the way of. Again, I don't want to put too much action in, but that always should be the trade-off, right? And that should be the challenge, I suspect. Yeah, interesting. No, thanks for that. I appreciate it. It helps form the view. I doubt it, but hopefully it's helped someone. Mate, I reckon we've probably done this one to death. Will you come back on Friday? Hell yeah. Hell yeah. Let's see what happens in the markets and the economy in the meantime. Until then, check out all the socials.

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