Mailbag: incl. How can you own coal? October 1, 2023

0:10Welcome to Motley Fool Money, our very special Sunday Mailbag edition. It is special, if not only because I'm joined by Andrew Ram Page. How are you, buddy? Yeah, pretty good. How are you? I'm very, very well, thank you. Listen, you'll be happy to know we got the Bitcoin conversation out of the way before this podcast was recorded. So unless Andrew finds a small chick in my armor, we hopefully will assume that's been run in one. What do you reckon, mate? I love those conversations. They're really fun, actually. We would probably get these pods done. really quickly, except that we connect on Zoom and then we just like chat for like four hours.

0:52Oh, actually, we should probably do a podcast. Probably do a podcast. Exactly. That's 100 % true, mate. One day we'll do a behind the scenes podcast, but not today. Not today. Mate, hopefully, by the way, this is going out at the right time this morning because today being Sunday is the first day of daylight saving for the summer of 2023-24. So if the clocks are working and everything's being done properly, you'll get this. the usual time or you'll get this later i think if you're in the non-daylight saving states so uh either way the whole clock gets a bit weird from today uh what time you you get this podcast may depend on which time zone you're living in but we will still try and get it out early on sunday morning so you can enjoy for those of you who want to go for a run go for a walk uh mow the lawn do what you're going to do in the morning uh hopefully you can enjoy this podcast as you do all that and and hopefully we don't confuse the cows too much and the curtains don't fade a little bit extra in some places oh there goes our queensland listeners uh it's been andrew is nothing if not completely disregarding of the number of people who listen to this podcast and i appreciate that about him there's some fierce independence going on right there absolutely mate um friday's podcast was fun we we got through some heavy stuff and it was very cathartic let's try and uh let's try and go uh to the our listeners questions this time around um and we'll start with one from andrew who starts with possibly the best or maybe the second best.

2:13I'm not sure. You can tell me whether the Roy NHG epithet was appropriate or this one. And it says, Hi guys, I have a question for the Lennon and McCartney of free ASX-focused investment podcasts. Oh, I'll take that. I thought it was going to be like a Burton Ernie or like a Ren and Stimpy or, you know. I'll take that. I'll take that comparison. You are showing your age with Ren and Stimpy because there's only a very specific generational cohort who would refer. Before that, after that, No idea. The Renner Stippe fans, they know what Renner Stippe is. Oh, yes. You know what? Actually, late the other night, I just happened to have the free-to-air TV on, which I never watch these days.

2:50Renner Stippe came on. It was like, oh, such a blast from the past. Anyway, if you're below a certain age, just YouTube it and then scratch your head. Exactly. They watched what? Beavis and Butthead might be the other one. Oh, there's another one. Another good throwback. But no, the Leonard McCartney, according to Andrew, is I've had a question answered previously, so I thought I'd go again. And my question this time is around idea generation, which I love. How do you find new ideas and companies to analyze and possibly purchase? Andrew says, I'm a 28-year-old paramedic. Well, thank you, mate.

3:24So I certainly don't do stock picking as a profession, and I don't have any idea where to go in terms of looking for new ideas. I'm more interested in Ram's sphere of smaller cap companies. So I find it harder to find new companies that aren't hyper-speculative, pharmaceutical or mining businesses that haven't made a single sale or a dollar of profit. But the topic can still be applied to any area of the ASX. Do you go fishing or do you think I should go fishing in my area of expertise or day job? He says, financial companies, healthcare, retail, et cetera. Or do you try and broaden your horizons?

3:57What media do you utilize? Podcasts, The Fin, Reddit? I'm a Motley Fool subscriber, thank you, which I'm happy with, but I want to be able to maximize my pool of potential options. So I'm fully informed before I buy. Thanks, Andrew. Really good question, mate. I'm going to make you go first because this is a big one. Yeah. While you were talking, I think, how do I answer that without shilling straw man? I don't mean to, but the truth is I do. The whole raison d 'etre was - Also the reason for being. The reason for being. It really is. Like, because I think that the easy answer here is to say, do a scan.

4:40And there's a whole bunch of software that will do this. And I think I've said before on the pod, I'm not a fan of it. It just, especially if you are in small cap land, if you're looking for more established dividend paying companies, there's great value in sort of using a scan to refine things. But the trouble with, not the trouble, the reality with earlier stage companies is that they're at a stage and anyone who's run a business or established a business knows this, right? Like you raise capital or you take your own money and you invest it in plant and equipment or these days more likely websites.

5:15All the money gets spent up front. And you have to hire people. You need someone to do some marketing. You need someone to do some development. You need someone to do some sales and et cetera, et cetera. admin bookkeeping all this kind of stuff and all that all that you see on your statement of income is loss and zero revenue yeah so everything looks terrible and there's a lot of companies that just stay in that stay in that place because business is hard and it's not to be critical it's just most businesses don't ever get out of that stage because they just don't find enough traction but even the ones that do don't reveal themselves initially in fact there's a bunch i've said before oh, there's a bunch of companies in my portfolio that are making a loss.

5:56And it'd be easy. And in fact, a younger version of myself would have said, why on earth are you investing in loss-making companies? My answer these days, a little bit more nuanced, is like, well, I don't expect that loss to be there forever. But my point is, is that when I'm scanning for the kinds of things that a sensible person would rightly look for, I want really high returns on invested capital, return on equity, or whatever profitability metric you want to use. I want low levels of debt. I want steady share counts. I want, you know, rising profit per share. All things that are great to have.

6:28You just, you don't get them in small cap until, and by the time that they've sort of revealed themselves, a better part of, not, you've got to be careful here. It's like, you can still do extremely. You don't have to be first in the gate to do well. In fact, I really encourage you to, I think you can do extremely well by being, quote unquote, late to the party, but investing at a higher price, but a much lower risk adjusted sort of price. but you you by the time something is obviously a great business a good part of that is gone and my favorite example i'm sorry for repeating it is pro medicus right like it's you know it's god knows how many hundreds of billions of dollars of you know market value now it's like on 123p it's kind of it's kind of you know at the times when when you the people who made the really great returns on it wasn't that obvious back back in the day so what you need to do i think is um uh read a lot where where do you start if you if you literally you've come off the of the spaceship you say read a lot oh i don't know where do i where do i start there what do i get ideas from where how do you find pro medicus matter some of those i mean they're not going to be in the fin or they are now probably because they're big, but they weren't around.

7:46Is there a place to start? I mean, you said there are 2 ,000 companies. You don't do a screen, so start with the A's or, you know. I won't shill, Sean, man. So there's a bunch of small cap fund managers who write regularly because they're trying to attract capital, right? That's their business. But they'll put out a lot of their – they'll often feature a company that will be way outside of the top 300. Twitter is great. Twitter is fantastic. You'll be able to curate a good list of follows there. And you've got to be careful. I mean, like just social media in general, like take everything with a grain of salt, approach it with a healthy degree of skepticism, understand that everyone is talking their book.

8:30But if we're talking idea generation, you will, I think, through that process, come across things that you might not have otherwise had a look at. Then once someone's, oh, this person's talking about this company, never heard of it before, then I just go to ASX.com, totally free, dig up the latest presentation, dig up the latest annual report and read the damn thing. And if that sounds like hard work, well, it kind of is.

8:59If getting incredible returns was easy, we would all do it. That is why you do it, I think, is because most people don't want to do that. And if you're the kind of person who can take a bit of an active interest in this, and I think you'll find that you build up a library over time. So on day one, you're not going to be aware of anything. A week later, you'll be aware of five, six companies that you didn't know of a week before. A year later, you'll know a whole bunch. And I'm such a broken record when it comes to companies because I just keep coming back to the ones that I know really well. I probably should venture out, but I know them so well, right?

9:37And it's just I don't need the novelty of something new as long as I feel as though things are more or less on track there. And every now and again, you'll just, you know, whether it's, you know, go to other podcasts. There's like a thousand podcasts out there. No, there's not. There's just this one. You'll find all kinds of people talking about different companies that you go, huh. And then I'll have a look and then have a look at. And I wish there was an easier, shorter cut way of doing it, but there's not. I'm going to disagree with you on one point, mate, which is just I wouldn't eschew screens for the sake of it in terms of just throwing up some other company names that might give you a starting point.

10:16Oh, yeah, true. Yeah, true. So don't use a screen and then buy just the results of the screen. That's not going to help you. When we say screen, by the way, it's a fancy term just for saying using a computer to find certain attributes that are shared by certain companies and say, show me all the companies that have X attribute. I have regularly in smaller company land, mate, actually looked at, your point of profit is really good. I actually look a lot at the revenue growth as a starting point. Yeah, me too. Me too. So, you know, don't screen. Now, revenue growth's not enough. But, you know, looking for profit growth.

10:47It's a start. Well, yeah. Revenue growth says that we've actually got a commercial product or service. And more people are liking it than did this time last year. It's a good start. It's a really good start. It's a good start. But not the end, but it's a really good start. So I would use a screen for that. I have done in the past. And again, think about mispricing, right? You're looking for ideas, Andrew. You're looking for ideas, not just that are good businesses, but ones that market's missing. If everyone's doing the same thing, then you're going to pay the same price to everyone else and get the same results to everybody else.

11:14So you're looking for something different. Revenue growth's a great way to start. Just look into those businesses. Why are their revenues growing? Can I understand the business or know what's going on? I love your fund manager letter idea, Andrew. I think it's really good. Business with certain attributes too. You asked, do we look in certain sectors? I don't generally do that, But I also find that you often can end up with finding ideas. Start with companies you like or that look attractive. What you'll often find is their competitors can either be sometimes as bad or as good. We talked about airlines on Friday.

11:44Technology tends to be a pretty good place because they tend to have pretty good economics, as Andrew already mentioned. So that's really useful and very worthwhile. The last thing I would say, Andrew, is don't, not Andrew Ramma Page, but Andrew who sent us the message, um don't don't embrace the FOMO too much Iran made a really good point about you know I could look for other companies but I know this one's really well and this is enough I don't need novelty and so there is some sense of but what if there's a better idea out there you'll drive yourself mad trying to get your head around every possible opportunity before you do anything um but find find good stuff that you think is gonna be market beating that's kind of all you need to do right now there might be the the great you know discovery out there somewhere trust me if it's good enough it'll come across your desk at some point if you keep reading and keep looking because if we use revenue growth for example it'll start to do well or people start to talk about this company that's done really well for x years in a row was growing at a certain rate those kinds of things tend to be pretty useful as starting points in terms of um the other the other benefit of reading and where i think your question actually is also really useful mate is think about business models and the way to think about companies so there's one there's one thing which is andrew's been doing this for a long time now when he looks at a small cap he knows what who's looking for.

12:55That's harder to do when you're just starting because you don't know what you're looking for and you don't know what the companies are. So you've got both obstacles to overcome. Reading widely about businesses, about the economy, about successful companies, about things that are going well and not going well, you start to build up, to use Munger's phrase, a latticework of mental models. You start to learn and internalize those things that make companies great. And what that also does, it'll help throw up some opportunities, by the way, but it'll also seriously shortcut your analysis because you can discard stuff much more quickly.

13:27What has this business got that's unusual or different? Well, nothing. Okay, well, maybe not. What's happening with revenue or gross profit or bottom line profit or the operating model of, for example, economies of scale or building up a loss-making customer base before you then turn profitable once you hit a certain scale or whatever those things are. There's often a range of options that come from that. Hey, mate, let's move on. I will throw this out there. And I do this because it's free. So not the shill. But it's not obvious on our homepage. If you don't even have to create an account, go to strawman.com, go to the companies tab up the top, and then click on rankings.

14:06Now, this is all being delayed by a month. But you'll just see a list of companies that were being discussed a month ago. But you'll see companies that tend to go in the small cap area. So things like LaserBond, M-Vision, and Terrace Technology, Smart parking, that's an interesting one. Juratec's an interesting one. You know, Mac 7 technologies. Now, none of these are endorsements, by the way. But I can be pretty confident that by reading out some of those names, a lot of listeners would never have heard of those companies. So it's a start, right? It's a start. And yeah, just check it out and don't sign up.

14:42I'm not shilling. I'm just saying it's somewhere you might come across some names you weren't familiar with. Or sign up because you're going to get some useful information from people. I ran white, but I will, if you find that valuable and useful. I'm going to say, mate, not about straw man at all, but I am going to, because that kind of lends itself to other areas of community engagement and forums across the internet, no names, no pack drill, just also be very, very careful about the, sometimes the wisdom of crowds and sometimes the madness of crowds. And so, you know, the straw man community are fantastic, but there are other sites where all the knuckleheads talking about all the same things are just, you know, lemmings off a cliff so just don't mistake popularity or common view for success unless you know those people have been successful themselves in the past so just just keep that in mind as well if everyone's talking about this great new thing maybe it's great new thing maybe it's next fortescue or woolies or csl or maybe it's the next disaster waiting to happen everyone's excited about the hot money's chasing because they're day trading this sort of rubbish well i should mention too that the rankings there are on activity not on likes you know so so it might be that there's a company that ranks really highly because everyone's talking about how terrible it is.

15:53Or how great it is, but they're wrong. Yeah, exactly. The question was like as an idea generator and from that standpoint, and in fact, just anything, right? Just to really hammer the point home, I'll use my favorite saying, you can borrow an idea, but you can't borrow the conviction, right? So it doesn't, even if we opened up everything from the fool's walled garden and our walled garden, it's just like, and you go, oh, that's what everyone likes. I'm going to buy it. That is a really dumb thing to do frankly because because at some point the market will will will you know um have a little tante and it'll fall down and because you don't know anything other than some random guy on some random podcast on some random website said expressed a positive view on it you will panic and you will do something that you that you potentially regret and so you you've you've got to use that as a starting point and own the idea and the only way you'll own the idea is by reading a hell of a lot and thinking a hell of a lot and coming to your own conclusion.

16:48I will take a very slight tangent, mate, and talk about two stocks I own, Solpats and Brickworks. As we record this on Thursday morning, the 28th, Solpats is down 6.1 % and Brickworks is off by 9.3%. I will happily buy more shares at those prices for the record. Not that I'm shilling you about the stocks either, but it's... So, and I just want to raise that because the companies I've talked about before in this forum and other places. and if you had bought soulpats because you heard me mention it and then it falls six percent or you bought brickworks down nine percent you're like oh my god philip's an idiot uh this thing's down i thought he said it was a good stock amount of sell now maybe it's good idea because maybe these share prices are half from here they're not going to but maybe they could um in that case you know the your point about borrowing conviction and the idea is really really important right because i'm looking at that going huh that sucks i might buy more other people are going oh my god philip's mentioned that i bought it on his idea now the shares are down he's clearly an idiot i'm going to sell my shares and go and buy what someone on hot copper wants me to buy and that's okay but um the conviction is important right if you i have i have high levels of conviction in those companies the share price falls suck because it cost me some more money frankly i'm kind of excited because i get to buy some more cheaply although not within two days of mentioning it now i've done that so when's that least at this point um i'm an idiot for mentioning it there you go i love our listeners not to you know what you must you must be devastated mate because now you're only up 35 % over the last five years excluding dividends, right?

18:09The thing is, I just don't care. It just doesn't matter because long term, I'm going to own these companies hopefully for decades. And if the shares fall now, I'm not going to remember. I'm not going to remember they did, let alone what day they did, or I might get used to buy some more. Either way. Anyway, my point wasn't to talk about these companies or companies I own, other than your point about conviction. I have a high conviction of these companies. I own them. I love them. I'll buy some more at some point. Maybe soon, maybe not. But other people who heard me mention it once, bought the shares, and then went, I didn't really get what they did and i don't really know i know i'm scared because the shares have fallen maybe the whole thing's over um that that that's when that's the example of you talking about you know the conviction and versus versus the idea it feels like it feels a bit like us covering from our vantage point but i think both of us have been doing it long enough to know that you sort of in good faith you know well this is what i think because i love talking about stocks i love it but it's just it's a very it's a minefield right because firstly you can get accused of sort of like trying to talk your own book and things like oh well no i'm not okay so now i'm going to be a bit guarded in what i say now you've got no conviction yeah now i've got no conviction and and then and then if you sort of say well no i i do like this and it's like i mean this this is this is the point that just bears repeating again and again and you were the one who pointed this out to me um actually i think the best performing company since the turn of the century on the asx is realestate.com surprise surprise for a bunch of reasons that should not be a surprise um but that is that is a stock that has had 20 drawdowns like more times than you know you can count right it just it just happens all of the time and so even when you're right you're going to look you're going to spend the majority of your time below the previous high you are yeah yeah that's right yes it's almost certain that when you do buy it i'm not saying you buy this particular company of course but but you know you buy a company that someone's spoken positively on you know it's very good chance that in the next in the short even the medium term it'll be down and if you know if you can sort of say uh five years later i was like oh i remember talking really positively about that no one cares no one remembers right and and and he's my favorite stat again i'm sorry for repeating it but peter lynch ran the magellan fund for was it magellan fund uh yeah yeah yeah yeah yeah for 20 something years and it was one of the best performing funds on record in fact most of his investors lost money and how do i how do i square that circle you're telling me this is the best managed fund in the u.s like one of the best funds ever how did i lose money well he lost money because everyone only piled in when it was high and the second that it went down they sold so they bought high sold low bought high sold low there was a small minority that just held through the whole time and they made squillions of dollars and that is that is one of the most important things that you can internalize, I think, about markets is that that will always be thus.

21:04I don't care how great AI gets and technology and scans and filters get because no one's interested when it's down. Everyone's interested when it's up. And again, the person who says, I really like this, and especially in the context that we talk about stocks, because we're not traders, we're not speculators, we try to be part owners in a business i will say i like company x y and z because i believe over the next five ten plus years that this will be a much bigger more profitable company and all that anyone goes is well i remember listening to this idiot six months ago said this and it's down 10 what an idiot you know and it's sort of like it's frustrating but and again i'm not trying to sort of make excuses or anything but if you're gonna i guess what i'm trying to do is put some personal ownership on things if you're gonna be that person expect the results that you're almost inevitably going to get that's right and that that's harsh bit of tough love and that's why you shouldn't listen to anyone including us you should you should own your own idea just to come full circle and okay i'll shut up now no i like it mate it's really it's really really important hey um let's this is i like this one too um this is let's get a bit philosophical for a second we've got a question from tim who says how come individuals pay progressive tax on their income yet companies and superannuation funds attract a flat tax rate do you think it would be fairer and maybe solve a few problems if they were all treated the same hmm it's a good question you go first on that one all right ah dear tim let me try and attack this from a couple different angles um the difference between individuals and companies and superannuation funds is that individual is limited in their labor efforts, at least, we'll get back to capital in a minute, by the virtue of being one body and only having 168 hours a week, I think, from memory, to do the work.

22:55And so the amount that I can do extra or less is kind of confined by that, the amount of value I can create. Now, hedge fund managers might get paid squillions of dollars. And again, there might be some errors on the outside, but that's kind of why we have progressive tax for those people. But my time doesn't scale. If you're a company and you're a corner store or Woolies, the capital scales effectively infinitely, but certainly in a very, very different way. So if I say, well, if I earn more than$18 ,000, I pay 15%, I earn more than$35 ,000, I don't have the scales. I pay whatever percent. That's kind of proportional to a single person's output and and it's more equal that the as much we're talking about inequality a lot um the inequality of income is far far less the inequality of corporate profits but between my 10 year old's lemonade stand and what's the biggest company in the world these days tesla i think largest company by market cap it would be up yeah and probably profit wise it might be close to berkshire i don't know what the most profitable company in the world this apple would be up there yeah let's call it apple um so you know my young looks like an apple's profits um it's very hard to say when and how you should apply a progressive tax rate on on any sort of earned amount and here's why if you if you said like take woolies right woolies is one entity i don't know how much money it earns a year uh used to do about 40 billion in revenue i'm sure it's more than that now um whatever the number is let's say it's let's say it's 10 billion just to make my life easy uh thousand stores 10 billion dollars worth of profit $10 million attracts a 50 % tax rate.

24:35If they broke those into 1 ,000 individual stores, sold them all off individually, and they paid, rather than paying 50 % on$10 million, they pay 5 % on, what does the number work out to? $10 million each? Then it's the structure you're taxing rather than the actual dollar value of profit. And you don't get that with people because you can't have more than one person per person, if that makes sense. And so it just scales really, really differently. So it's a very, very difficult thing to apply a progressive rate of taxation The other thing is capital structures are always really, really different.

25:04So think about the amount of revenue, the amount of capital expenditure, the margins. We talked about, well, these margins of 6%. Apple's margins are probably, I don't know, 25%, I would speculate. So again, how do you kind of align those? So I think because companies are kind of these artificial structures, and it could be partnerships, it could be trust, it makes no difference really. They scale differently to human endeavor, human effort, human time per hour worked. And it just makes more sense that if you say, right, we're all going to work 168 hours a week, if you happen to earn more than me and it's meaningfully more than me because you happen to be in the right job or have the right skills or whatever then you probably should contribute more to society in proportion to that extra ability to earn money over and above your basic cost of living right and that's that's where it's that's when progressive taxation works because again once you've covered your basic costs they should be very affordable for everybody and then after that you know if you if you if you can't buy three lamborghinis but only two because your tax rate well that's probably fair uh versus someone who needs to be able to buy a second hand high lux to get to work so that that kind of progressive taxation works in that perspective it is definitely different and we see there's a very good argument to talk about the capital gains tax rates for example uh as to how they should apply for non-earned income earned being literally earned for labor rather than the money doing its own thing uh definite definite an argument for that one.

26:26Superannuation funds is again different because the fund itself isn't the person. It's a structure. So a single fund could have up to six members in an SMSF these days, and a retail industry fund can have hundreds of thousands of members. And so again, how do you apply a tax rate for one member versus six members versus a thousand members versus a hundred thousand members? Progressively, you kind of can't do it. It's not possible to do it that way because the fund is the fund. The fund isn't the members. Even if you have an SMSF, the law says the fund is separate to you as an individual and the fund has a different structure.

27:00So I don't know that they need to be the same. I don't think it makes sense for them to be the same. What I do think is when the money is then moved or streamed from those entities, from companies or funds to individuals, then we should be absolutely more thoughtful about how that happens. And I think, for example, giving people tax-free superannuation payments in retirement, if you can take$200 ,000 worth of super out and pay not a cent in tax as you spend that money, other than GST, I suppose, that seems remarkably unreasonable to me when you're paying 38 cents a dollar earning 100 grand of earned income.

27:35Those two numbers seem in stark contrast. Without getting too political or philosophical or ideological about it, I don't think a flat tax rate works for individuals. I think the reality is that we all should be in a perfect world able to afford the necessities at minimum wage with a reasonable tax burden. And then after that, the people who earn more and therefore have more after tax income should be able to chip in a little bit more to reflect their extra earnings on top of minimum wage and other things and the amount of money that's made by others in that context. Frankly, people in my industry earn more money than people digging holes, not because my industry is any more useful to society, but because I can make some money for people and they're prepared to pay me more to do that, for example.

28:23Now, should I pay the same tax rate as someone digging the hole? I don't think so. If I earn more than them, I think that's very appropriate for me to actually put in more of my income to help fund things from society. Hedge fund managers who earn a million times what I earn should pay more again. I think that's totally reasonable. That's just my view there. Ram, do you have a different or similar view? It's such a deep topic, isn't it? I mean, you can get into a lot of detail but you know i generally in favor of progressive you know i'd probably be at the stage where it's like you know beyond some very large and a very large number that you know it's 90 tax uh i don't think that takes away the profit motive and incentive um you know we can debate where that up that line is drawn and the rest of it but yeah i'm not going to add much there i did want to say a couple things um i i does depress me that super has gone from this i this means of allowing us to provide for ourselves better in retirement yep to a to a tax haven for the rich is just depressing and yeah that's that's and i do i do think too that you know i think too many people i said this last time whatever that those that have had incredible success in life discount the privileged opportunities that they had by virtue of either their genetics or their their their family or their connections you know so i i don't i don't think it's unreasonable to expect that at a certain point that you you give a little bit extra back because you are giving it's not a donation you are you are giving it back that society has enabled you to create that wealth.

30:03And at the same time, you need to be rewarded. If you've created genuine value for people by offering a great service or inventing a great product, I mean, I'm the last, but absolutely, you should be really well compensated. And that's going to incentivize a lot of people to do it. But we also, and there's a lot of great research out there that shows that after a certain point, I mean, money is sort of everything at a certain point, and then afterwards it's not, it's nothing. so it's sort of like you know when you can't eat and you're living in a cardboard box it really helps to have that extra hundred bucks you know when when you're getting to the stage where it's just like i'm worth you know 240 million you know to get to 340 million what what what actually changes exactly like zero changes and it just becomes more of a you know measuring you know of a certain organ you know between you and your other rich mates at a certain point and so So, yeah, I think we need to sort of recognize all of that in how we design it.

31:02The depressing thing is, mate, we talked about this on Friday, was that unfortunately the people who have the most say are the people who have the most money and they tend to structure things that are in most favor to them, which is just so depressing. Anyway. Yeah. Yeah, I think that's probably – hopefully that does the job, Tim. I think there is, frankly, I'd rather look at the way people minimise tax and multinational tax collection, other things, if we're looking at fairness across the system. I agree with you, Rem. I've said many, many times about superannuation. And look, most people who are members of our services and frankly listening to this will probably be unhappy with us saying that.

31:41And I won't say I don't care, but I'm not going to pull any punches anyway. The reality is that superannuation was supposed to incentivise retirement savings. And the extent to which it does that is important. the extent to which it becomes an estate planning tool or a tax minimisation tool is a bastardisation of the whole approach. You and I are a unity ticket there, mate. Super should absolutely relieve the pressure on the federal budget and it should provide for an incentivised way to do that to the point where you get the pension plus something as a reward for making that effort and putting the money aside because you put your deferring consumption.

32:22That's completely appropriate. Once it goes past that, my solution is really simple, Ram. I would simply say to people, your superannuation payouts are taxable now, as is the aged pension, but at a higher tax-free threshold. So if the pension is X a year, put it at that plus, I don't know, pick a number, 20 grand, right? Up to that, you pay no tax. So you can get the pension without paying tax. You get the pension at work, more without paying any tax because again it recognizes the tax-free threshold you get the pension and get some super and not pay any tax because the super is designed to help but once you get above a certain level above that you start paying speaking of tim's question progressive tax you pay 15 cents in the dollar then 30 cents in the dollar 38 cents in the dollar then 45 cents in the dollar if you earn 200 grand if you get 200 grand worth of superannuation you know streamed income allocated pension that the fact that should be tax-free that you're not contributing anymore to society yes you contribute during your working life but some people currently working there is no there is no fairness in giving someone a tax-free income of 100 150 200 grand and slugging other people who are earning 30 50 80 100 grand you know 15 20 30 40 cents in the dollar it's just it's just fundamentally an unfair um distribution of the burden of paying for the things that we all like and use yep we like defense forces and police and roads and health care and you know the fact that we should pretend that just because it was in super and you know i'm happy for some super to be done you know but i think that's that's the simplest way to do it and that way we're not saying people you can't have more than a certain amount of super we're just saying good on you if you save money great if you've done well great you're gonna have to pay some in tax when you take it out because that seems just very fundamentally reasonable i don't i honestly don't know why well other other than for political you know cowardice reasons it's it's the simplest solution in the world it makes it fairer across society um you know if if we've got two people listening to this and someone's on 150 grand with a free tax-free super another one's digging a hole why should the person dig in the hole pay the tax the other person not pay any just because you have paid tax in the past doesn't give you a free ride for the rest of your life in my view yep the final principle i would apply is simplicity so i i would i would yes yes there is too much friction in our economy because the rules that are well-intentioned things just get so complicated that it's very hard unless you're on the most basic of sort of structures it's very hard to do your tax and even then it's just annoying right like i i feel as though that any any tax policy should definitely have simplicity at its heart because we're all we're all it's far better of us as a society that we're all out there creating value for each other.

35:06Then we're all spending weeks and weeks pouring through shoeboxes full of receipts and spreadsheets and trying to calculate this or that. Even if you could argue that that is better slash fairer slash whatever, I would forego a bit of that stuff for the simplicity of things, I think. And that's why I think, not that I have a perfect answer, but that's why this would be really simple, right? It's like whatever the source of income, when you're over 67, which are retirement age these days, or 65 for earlier retirees, you have a high tax-free threshold, but everything's taxable. Yep, easy. Done. No, no, no, no.

35:43And by the way, worker-related tax deductions, they can go negative gearing, that can go, like it's really, it's really, really simple. Most of these things were put in because special interest wanted them. And I think to your point, mate, and you know what? The other thing, by the way, is people say, oh, we should really pay enough tax. Well, firstly, that's fine. You have that view. Secondly, if you want to pay less tax, get other people to pay their first share. You know, when you say we're paying too much tax, maybe you are, but a lot of people aren't. And so if you rebalance the burden, we probably will pay less tax, frankly.

36:10Take out the ridiculous deductions and take out the tax avoidance from, you know, structures and multinationals and others. We could probably generate the same amount of tax revenue and pay less personal tax each. Those of us who are getting slugged full freight because we're not taking advantage of tax dodges. You know, you want to pay less tax, that's how you do it. Yep. Yep. Hey, Ian sent me an email and is very gently getting right up me. So let me share this with you. Hi, a question for Scott, if I may. I'll get you to jump in too round. In the 1st of September podcast, Scott suggested we read the AICD interview with Robert Milner.