Mailbag, incl: Should I sell a property in the face of AI? April 12, 2026

15:28Jason Moser:How? Like, yes. In the same way as I've... It's always said before, it definitely works. in the same way that locking up half the country into an internment camp would get rid of demand and that would help prices. And it's like, that doesn't mean it's a good idea. And that's, anyway, I'll shut up.

15:43Chris Hill:Sorry, mate. No, no, that's good. It's good, it's good. It's all worthwhile. So I guess I'm just mentioning it, Paul, because there is no solution where we say, can I please have the good things but none of the bad things. It just doesn't work that way. So, and Paul, honestly, so back to the point Ram I'm sure would happily make and I would happily agree with, which is how do we stop the reserve needing to do or choosing to do these things? And then just actually run the economy properly. Or shouldn't...

16:11Jason Moser:Don't even think that you can run the economy, right? That's the original sin right there, that it's something that can be controlled.

16:19Chris Hill:Let's run the country properly, because it is things like money printing and deficit spending that is creating the preconditions. It didn't create the Iran conflict. It didn't create the supply shock. but you start from a position where before the oil shock, we're at 3.7 % inflation. So, Paul, to the point, 3.7 % inflation is already too high. And that's why the oil thing, yes, it's additional, it's exogenous, but it's kind of like, well, you're starting at 3.7%. And so the issue is actually, if we started at 1 % inflation and RAM would say zero or deflation, that's also fine, but I'm not being ideological here.

16:53Chris Hill:I'm just saying if we started at 1 % and oil prices made, the average price has dropped 2%, you go 1 % to 3%. Okay, that's manageable. It sucks, but it's manageable. We'll get it back out of that when the exhaustion shock goes away, which is your point, Paul. When you start at 3.7, when you start at 25 % plus inflation over the last six years, five years, whatever it is, you're already, you've built your, whatever, I can't find a good analogy, mate. You've built the problem, and then you're adding another 3 % to that, and then you're adding oil price to that, and you're like, well, man, how bad does this get?

17:25Chris Hill:So part of it is that. So my answer, Paul, would be that I don't want to lobby anyone on to do anything differently right now, given the structure that we have, because right now is not the problem. Right now is trying desperately to deal with the supply shock and the price increase and the potential shortages and everything else. And by the way, we probably should have higher prices for something that's supply constrained. Well, I think I said this last week, but we haven't got enough oil. How else do you ration it? The best way to ration it is price it is. Now, not great for the person on low incomes who can't afford the higher prices, but how else do you do?

17:54Chris Hill:I mean, you can give out ration cards, I suppose. We go to World War II and that's very reasonable. I'm not obvious and logical one because it's just the market does its own thing. Those who need it can use it, can justify using it, tend to get it. And those who can't or choose to cut back or can cut back don't. And that makes sense too.

18:12Emily Flippen:Or we can have a central group of human homo sapiens who can make that decision. I mean, that's the choice. We organically discover it through our various individual interactions or we do it by committee. There's no third option. That's the option. And my pushback isn't that, oh, this is perfect over here, all the world's problems will be solved. It's just like there's no group of humans on the planet that are as farsighted, ethical, honest and smart enough who can understand the desires, dreams, hopes, demands of literally millions and tens of millions of people and make a decision on that. It's the height of hubris.

18:52Emily Flippen:So it's not like here lies nirvana and that way lies death. You know, it's just that it is destined to failure because it must always fail because a supercomputer couldn't figure that stuff out.

19:05Chris Hill:Yeah. No fair. So the answer, Paul, is there is no now. What should we do now? The government should massively reduce the government deficit so they're not adding demand to the economy and making things worse. That's easy. And that's really short of, again, abolishing central banks. That is the only reasonable thing that we can ask a government to do, to have a meaningful impact, not have rates go up. And again, Ram would have to blow up the system. If we're starting in 2026 in April and saying, right, we need a short-term solution here. We're not going to remove central banks in the next three months.

19:39Chris Hill:What could happen? Well, there's a budget due in literally, I think it's exactly a month after you're listening to this podcast. And the Treasurer could say, I'm going to remove stimulus from the economy so that I'm not working cross-purposes with the Reserve Bank so they don't have to deal with higher inflation to put rates up. That's the easy answer, Paul. There is a really simple answer. Even outside the questions of what should we do structurally is if you accept the structure as what we've got and long-term, I'm sorry, have the conversations, but in the very near term, it's absolutely within the control of the Treasurer of the day, the government of the day, and frankly, the opposition of the day to provide alternatives to demonstrate what they would do and why they would do it differently and have that political contest.

20:21Chris Hill:That's exactly what I think we need to do and should do and should do it now. Now, what do you cut? What do you spend money on? What do you raise taxes on? That's massively ideologically difficult, not because reasonable people can't decide what the policies are, just because it becomes a political battleground. And that's just stupidly hard for stupid reasons, because politicians are stupid in terms of their desire to put themselves ahead of the national interest. But that is the answer. And it's very much within our control. And Treasury Chalmers could do it in a month from today and massively reduce the pressure on the RBA to put rates up.

20:50Chris Hill:And it's really simple. That's not complex, not difficult. Now, we've got to make decisions. Do we take an extra 50 bucks, 90 bucks a month off you when you're paying your mortgage, Paul? Or do we tax someone else more or spend less on their health or education or welfare or business, corporate welfare or something else? You know, someone's going to make that call. You would say, I'd like to pay less on rates. I think that's probably reasonable. I think running a deficit budget with a 4.1 % unemployment is madness. There is no justification for it structurally other than because they want to do nice things and be nice, and that's fine, but they're building the problem.

21:23Chris Hill:They're kicking their proverbial can down the road every time they have a structurally unbalanced budget that is leaning towards more and more deficit spending.

21:32Emily Flippen:It's so obvious. I don't know why. I've got nothing to add. You're spending more than you own. The key word that you said there was structural.

21:40Chris Hill:Yes, yes.

21:41Emily Flippen:It wasn't like we had a bad year. Okay, cool. I mean, that's going to happen.

21:44Chris Hill:We are collecting more tax revenue than ever before. There's still a deficit. Right? And it's like mind-blowing. And everyone's got a reason why. And look, here's the thing. Everyone thinks their cause is worthy, right? Sure. If you like business welfare, then you like that because you justify that it's R &D and supporting the nation. If you like NDIS spending because you want to support people with disabilities, then you're going to say, I deserve that. Other things should be cut. If you want private education or public school education, if you want health care or more or less health care, every cause is worthy to those receiving the goods.

22:15Chris Hill:The challenge of government and the responsibility of government, frankly, and the, hey, put your big boy pants on and big girl pants on and do the right thing, guys, is we would like to fund all this stuff. Either we will and we'll tax you more and if that's what you guys want, tell us and we're representative of the people. If you want to pay more tax for the services you've got, great, let me know and we'll put your tax up tomorrow and that's how we'll balance the budget. If you don't want to and you think other things are worth doing more or less of, great, tell us that and we'll make those changes.

22:38Chris Hill:But at the moment, they're basically saying, well, we'll give you all the bickies and we won't take as much money away from you because we know you don't like that and we'll kick the can down the road. Well, actually, we're taxing you just indirectly.

22:47Emily Flippen:That's true, too. Yes. I mean, you know, it's some of the terms that get thrown around a little bit hyperbolic. But I mean, inflation is a form of tax. It's basically saying every hour that you work is worth less. And now, you know, on nominal dollar terms, it's not that. But that's literally what is happening. You know, we've mentioned many times in the pod, like when we were kids, if you're a millionaire, it's like fantastic. It's like a two-bedroom unit in the inner west. That was a good one, yep. Even that's being conservative, right? Like it's sort of like it's a false growth and it's sort of like – and it's a very sneaky tax in the sense.

23:30Emily Flippen:It's just like we'll give you all this stuff and we won't directly tax you. Well, great, I'll have that. And then everyone goes, well, cost of living crisis. Where did that come from? It's like, well, it's all that helicopter money they got thrown out. I mean, that's where it came from, right? that's exactly where it came from and now in the middle of a living a cost of living crisis we're still doing it we're still doing it they're like and we expect the definition of insanity doing the same thing and expecting a different result we and yet we do it here we are um it's it's pure madness it's pure madness all right let's get an anonymous question from someone who

24:02Chris Hill:doesn't put the name at the bottom because that's a very good idea hi team this is our anonymous questioner my partner and i both 37 moved to australia 11 years ago welcome well i've been it for a while now, but welcome anyway. Thanks to your advice and the wisdom of the late Charlie Munger, we've gone from sleeping on friends' couches to a relatively comfortable position. I'm currently weighing up selling an investment property to deleverage. My concern isn't market volatility, but job security. I use AI daily and I love it, says our questioner, but I've realized displacement isn't a 10-year outlook anymore.

24:34Chris Hill:It could happen now. Following several rounds of redundancies, I've had to use AI to handle tasks once managed by a much larger team, and I'm not even an IT guy. If I'm doing this already, I can only imagine what happens when the executives fully catch on. Given these models are the dumbest they will ever be, I feel the risk to my role is rising. My plan is to move the property equity into a broad-based ETF. That keeps me compounding, but removes the debt pressure. Am I being too cautious by selling into this doom and gloom, or is it actually different this time? Perhaps new jobs will emerge, similar to when Microsoft Excel was introduced.

25:14Chris Hill:General advice only. Thank you. Cheers, Anonymous.

25:19Emily Flippen:I mean, it's a question of the degree of debt that you're carrying there. If it was a pretty chunky amount of debt and losing your job would really put you in a difficult situation, I mean, it feels like playing a bit of a game of chicken. But if you've got a fairly sizable buffer that's there, you know, you're one of these property investors that actually makes a net positive return on your rental income. I know it's crazy, right? But, you know, if you're someone of that inclination. Hypothetically, you know, because, you know, I keep being told by various experts that the smart thing to do is to lose money on a cash basis every year.

25:59Emily Flippen:But if you're in that situation, like, so it's hard to give such general advice on a very broad general situation. There would be people out there who you could paint that picture. It's like, actually, the debt's very modest. The rent more than covers it. And in which case I'd say, well, probably not, right? Like, if you're getting a decent yield and all the rest of it, then why not? If you're so negatively geared that you're bleeding thousands of dollars every month, and if you were to lose your job, you would be a forced seller in a very short space of time, then yeah, probably deleverage. That's probably a good idea.

26:35Emily Flippen:But there's a lot of gap between those things. I'm not trying to sort of wiggle out of answering the question, but I think I've often sort of said on the pod is that try and do some scenario analysis and just ask yourself if I did lose my job tomorrow.

26:49Jason Moser:I'm not saying you would, but just do it. What if? What if? How do things look like, unless, say, it takes 12 months, 24 months, 36 months to get another job, what do those various situations look like? There'll be some that are very bad. There'll be some that you can handle, and there'll be some that aren't bad at all. But what's that spread look like? You always find a set of scenarios where it's like, oh, this is bad, right? No matter how bulletproof you are, there's always some set of circumstances. But if on the balance of probabilities, like most situations aren't very easily handled, me personally, that's not a way I want to live my life.

27:27Jason Moser:Now, it's hard because if a lot of these negatives don't happen, I mean, here's the thing with leverage. Leverage, if you think markets are going to go up, leverage is great. You'll do far better than you would without it. And so you sort of go, oh, geez, I don't know, Anonymous, maybe you shouldn't do it. yeah, you're right. I'm a bit worried. Five years later, the market's 10x from where it is. It's like, well, that was dumb advice, wasn't it? It's like, yeah, well, but I mean, this is the thing. You're dealing with uncertainty. And when you're dealing with uncertainty, you've got to embrace it.

28:00Jason Moser:You certainly can't deny it. And you certainly can't pretend it's not there. And that's what I worry about with a lot of property investors, a lot of share market investors, frankly. It's just sort of like you are structured for perfection. And you're out of the game the second that there's a slight wobble. And it's like that is – there's a lot of people who think that they're the world's greatest investor, God's gift to investing because they did some very, very reckless things and it just happened to go well for them. And I think you've always got to look back at your own experience and go, well, how much of that was great foresight and how much of that was a bit of luck, right?

28:40Jason Moser:And if you're honest with yourself and maybe there is a little bit of luck in there. It's just like, I wouldn't push my luck, I suppose. Or I would at least want to know that if my luck turned, I'm in a pretty resilient situation. Does that make sense?

28:56Chris Hill:Yeah, it does totally.

28:57Jason Moser:I think it's hard anonymous.

29:03Chris Hill:There's two questions. How big a deal is it? Which is obviously a question we'd spend hours on. And then it's how does it play out? And that's kind of important because let's say you're laid off an 18 months time. At that point, assuming you have the cash, you can then sell your house an orderly sale or investment orderly sale at some future point over three months or six months and then put the money into shares, what's left in the shares. And there is not to do – well, if you own the investment property, you would theoretically expect it to do better than another investment. If that's the case, then there's no way to get out of that investment unless you couldn't actually manage from the date of redundancy to sell it in orderly manner without having massive financial issues.

29:43Chris Hill:If that's the case, I can't give you personal advice, even though you didn't give us your name. If you can't manage a month without a salary and pay the investment property off, then yes, sell it because you're taking stupid amounts of risk because you're literally a month away from bankruptcy. So don't do that. That's dumb. but assuming somebody has some sort of buffer then the question really is just can i sell it in orderly fashion if i'm made redundant if i can then you need to sell it now i'm not saying don't sell it either by the way because i don't know an investment property i own shares so i have my my uh my tips are all on on that particular square right so i'm not saying you should have the investor property either i'm just saying if you owned it now you obviously own it for whatever reason and if that reason remains i don't think the chance you lose your job because of ai is the issue i will say the one thing would be different to that is if everyone lost their job at the same time causing a massive crash in the housing market and you worry about negative equity and that's very reasonable to think about so think about that and make a decision on the basis of that i will also say at that point we're all in trouble because if that's a big crash of that size you reckon company shares are going to get smashed by the recession that follows so yeah i understand the concern um i think i always get massive i do worry about a medium term spiking unemployment personally.

30:51Chris Hill:I fear, and not a prediction, just a concern of preparedness, I suppose. I have a concern that the redundancies may advance at a pace faster than our ability to create the jobs. So you mentioned anonymous that Microsoft Excel was introduced, a whole lot of accounts clerks lose their jobs. Absolutely. How many typists do you know in organizations today? None, because a personal computer let bosses type their own emails rather than get a typist to type battle letter um you know all of those sequences factory workers put out of work well agriculture first by factory workers factory workers by automation um there are there are waves of displacement and i do worry the displacement comes faster than the job creation that replaces it um but by the way there's also a scenario where ai does so much stuff we can't physically create enough jobs for people um and again i can't put odds on that either but that's just that's a possibility.

31:41Chris Hill:So yeah, I would consider your investment thesis on the property. I consider your ability to withstand a redundancy if it was to come and what you would do as a result. Because frankly, the other thing is the only gap is the negative gearing gap because the shares will, whatever you got in the property, you'll have in shares. That doesn't change. In theory, you back yourself to live on whatever money you could earn by changing jobs or you got saved up or whatever else. So yeah, I can't give you an answer, obviously, anyway, if I wanted to. But I don't know that, other than for peace of mind reasons, which might be enough, by the way, deleveraging now doesn't necessarily need to happen for that purpose.

32:22Chris Hill:If property prices fall, they fall anyway. And so who knows what's going to happen. But if you can withstand the redundancy and then give yourself time to sell, if you own the property because you like it, I don't see a reason to do it quickly. That said, I don't own an investment property. I'd be in shares personally. So I'm talking about both sides of my mouth.

32:38Emily Flippen:Yeah. I mean, yeah. Yeah, we talked a bit on Friday, but I thought I just, again, that scenario analysis kind of thing as well. I would just, I don't know. I just say this because I just, I feel as in Australia, we sometimes need reminding of the fact that the laws of economics are the same here as in other parts of the universe. And it's easy to sort of point to, you can cherry pick data, But I like places like New Zealand or Canada as good proxies because modern Western democracies, good rule of law, strong economy, good institutions, you know, all of the great places, wonderful places. You know, both Canada and New Zealand would be in my top 10 places to live if I wasn't here.

33:23Emily Flippen:Auckland's seen house prices drop 26 % in the last few years. Toronto's seen about a 23 % drop. Now, this isn't the, oh, here we go again with the property doomerism. And it's not really to do anything other than I just sometimes feel as though we see it in Australia as sort of like, that's an impossibility. And you see the headlines when prices are down 2 % quarter on quarter. Whoa, people freak out. It's just like, that's something to bear in mind, particularly if you are negatively geared, because you do need enough of a capital gain to offset the loss and make all of it worthwhile, even with the tax savings that you've got.

34:02Emily Flippen:and when you're buying a house who's on a nominal, don't forget, you can work out PEs for houses. We talk about price earnings ratios on stocks all the time. We go, whoa, 50, that's really high. Well, that's a 2 % yield. There's plenty of investors

34:16Jason Moser:with a less than 2 % gross yield at the moment. In other words, you're buying a nonproductive asset for a price earnings multiple of 50 times. And it's just like, what does that mean, Andrew? Does that mean it's going to crash? I don't know. I don't know. I just mean that all I know is that as with stocks, The higher that multiple, the more difficult it is. And so I just, whenever it comes up, it's just, I like to, I just like to add that reminder here that it does and can kind of happen. And it's probably still fine for a very long-term investor. I mean, here I am sitting with my largest asset down 50 % from the top, and I'll tell you all day long, that doesn't really matter.

34:49Jason Moser:That's just how it goes. Volatility is part for the cause. But if you've gone into this enterprise not expecting that as a possibility, I think that's where the damage is potentially done because it's just not on your radar even as a possibility. If you've structured to account for that probably inevitability over a long enough sort of time frame, you know, just weave all of that in. And it's not having a go at property. I'd be saying the same to stocks. Hey, Andrew, I've got all my money in this one company. It's trading at 50 times earnings. I've got a whole bunch of debt against it. What should I do?

35:23Jason Moser:I'd be saying exactly the same thing. So it's not asset class favoritism. It's just any asset. There is a price that sort of makes sense and you need to sort of account not just against the fact that prices can sometimes fall, but is one thing if it falls and you've got a lot of sort of buffer there and there's another thing to fall where it's just like you're wiped out and you're a forced seller. And maybe in a situation where there's a lot of other forced sellers on the market because a lot of other people have done that as well. It's just, you know, too many people, shares, property, anything.

36:01Jason Moser:Bitcoin, they can only ever see upside.

36:05Emily Flippen:And any asset, any structure, just account for the downside. And if it happens, you're prepared. And if it doesn't, then you're okay, right?

36:14Chris Hill:Yep, absolutely. I forget that, separate to whether, again, in the context of, well, if it's a redundancy, it's worth buying or selling, but you're right, it's the same thing.

36:22Jason Moser:That's what I mean. As I said at the start, like imagine if you get redundant, it's like, yeah, but this asset's kicking off a 5 % yield. Right. You know, after tax, it's fantastic. They've got really great tenants in there. They look after the place. They pay the rent on time. It's like, don't do a damn thing. Why would you get rid of that? That's a quality asset. Keep doing it. What, the nominal price falls 20 % because the market crashes? All right. Cool. You've still got your tenant. They're still paying rent. You're still okay, right? I'd be just as flippant as it was with shares. But if you are losing$300 a week or whatever it happens to be, you know, and it's just like anything other than a 4 % compound growth rate is going to wipe you out.

36:58It's like, it just strikes me as reckless. And whenever you sort of generally make this point that people go, yeah, but it hasn't happened. It's like, well, not in the last 20 years, but all the time it has actually happened. It's not in your unique experience. And it's just, you know, I always say it's like the smoker. I smoke two packets a day my whole life and I live to 80. Therefore, smoking's not bad for you. It's very spurious reasoning, you know?

37:26Chris Hill:One day Andrew will tell you about the turkey story, but not today. Not today. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

37:40Chris Hill:Hey, I got a question from Tin Man, who says, please call me the Tin Man. So we will, Tin Man. Nice. Hi, guys. Long time listener. Please feel free to... We're flying and we've got the crew together. Perfect. Does that make me the Wizard of Oz? I'm not sure. I'm not sure about that. So, Dorothy. I'm the little man behind the camera. Toto, probably, frankly. Anyway. Longtime listener, please feel free to add your roses slash praise in here. See, Tin Man, that's not how it works. You can't just... We're not looking for placeholders, mate. We're looking for genuine... So, Paul got himself off the warning, but Tin Man, you are unfortunately now officially warned.

38:14Chris Hill:That's it, yes. Consequences can be savage. Yellow card. Yellow card, yellow card. I guess he turns a little bit back here. You'll love me. I'm a lot older than you guys. There you go. I took your advice. Oh, no, we didn't. On CBA shares and bit the bullet on the capital gains tax. We didn't give you advice, Tin Man. What did I say? Easy on there. Easy on. Holding an asset just because the tax you might pay rather than because of its future might be silly. So if you did do something and we helped you think differently, that's okay. We didn't recommend you study CBA shares. All right, here we go.

38:45Chris Hill:Two questions from Tin Man. Should the Reserve Bank have the ability to change the superannuation levy by a quantified amount? If so, what do you think the amount could be set at? And two, should the Reserve be able to use a deficit levy, deficit levy tax, sorry, for people over a certain level of income, e.g. set at the Polly's base income level? Look forward to your discussion around this or different ideas. i we've i i have said a lot of times that we should use superannuation levy as well as instead of uh interest rates i think it's fairer it's broader is more useful that just came from a listener and i don't know who that listener was i can't remember so if it was you uh write in and get the get the praise now a couple have suggested there was one originally who said it and i was like man that's a great idea i've taken that even wrong with it so um very well done yes i think they should uh What do you think the amount could be set at?

39:35Chris Hill:I did look at the numbers and I can't remember exactly what it is anymore. I think it'd be end up being half or full percentage points at a time to have the same sort of sized impact as a quarter of a percent rate rise. I just can't remember what the numbers are anymore. I did have them. I think I end up kind of roughly agreeing with someone on Twitter that a quarter of a percent in interest rates was something close to 1 % of super, which doesn't sound, super contribution, sorry, which doesn't sound right, but I think that's kind of where it got to. So half to 1 % at a time. The benefit team manager, you don't need to decide.

40:08Chris Hill:It needs to be a quantified amount. They can just increase it. There's nothing to say on rates that there's a ceiling or a floor for rates from the RBA. There's nothing to say they have to use a quarter of a cent at a time. They could go 0.36 % or 0.259 % or whatever they wanted to do. I suspect that would fall into line with a reasonably consistent quantum. But you'd be looking, I suspect, for an amount that approximated a quarter of a percent rise in interest rates. Just to kind of, if that's the... And by the way, we shouldn't do it just because of the status quo. But if the view is that amount of money yet to go is about right, then you reverse engineer the super contributions to allocate that amount of money to either increasing or decreasing demand as you went forward.

40:49Chris Hill:So yes, they should, in my opinion. You could do it with a third party, but there's already enough cooks in that particular kitchen. So I would absolutely give the Reserve Bank a second lever. I think it's fairer. I'd frankly go further, mate. Actually, I'll go further in a minute. Second one, I'll get you to jump in a minute, Ram. Should there be a deficit levy tax for people over a certain level of income? I think no, but I think yes. Deficit levy tax, no. But if the view is people over a certain level of income should contribute more to remove the deficit, then we do it with income taxes. There doesn't need to be deficit levy tax because, frankly, the way we keep running deficits, it would become standard anyway, right?

41:30Chris Hill:So it's kind of like the Medicare levy. We pretend it's not really taxed. It is. It's like, oh, you can tax plus Medicare levy. So you mean the whole tax is just higher? Yeah, that's what I mean. So can we call it one thing? No, no, we'll call it different things. Tim, you're right. If you're saying should we increase tax for higher incomes to pay off the deficit, that's one thing we'd do for sure. I don't think it's the first thing I'd do, but it's something we could do if we wanted to. I wouldn't pretend it's a deficit levy tax. I'd just say we're spending X dollars. as we're collecting less than that, we choose to spend the same amount of money and we need to pay for that.

42:01Chris Hill:What can we do with it? Taxing people over a certain amount of income would be one way to do it. I would actually personally use GST as well, as long as there are offsets for low-income earners. That's the third chunk or third category I think we should look at. Ram, should the RBA change the superannuation levy? No, God, no.

42:18Emily Flippen:For God's sake, do not give these people more power. Like no hard no, strong, the most emphatic no that I can go, for God's sake, it's like giving a machine gun to a monkey. Like they do enough damage as it is with the tools that they've got and to give them another one, you know, nah, nah, sorry. And I really, I really not trying to sort of suggest malfeasance or anything. It just comes back to the Hayekian facial conceit, you know, which is just the height of hubris to think that a board of 12 very, very rich people can make decisions for the whole nations by meeting once every six weeks. It's demonstrably nonsense.

43:04Emily Flippen:You can point to a thousand examples and it just, Timmy and I get it, right? These are the kinds of discussions that are really great when you can sort of talk about the theoretical side of things. When push comes to shove, like in the realm of meat space, someone's got to actually make these judgment decisions. And they're going to do it not because they're not evil, they're not trying, you know, but just how? The only thing you need to ever point at is that any time these clowns make a decision, you can line up the best credentialed professors and experts around the country and there's always a heated debate as to what they should do.

43:50Emily Flippen:Now, what does that tell you? It tells you, oh, but it's data-driven. It's like, well, the data's the data, and yet you get a group of experts in the room and no one can agree on what you should do. So it's like, it's so inherently subjective and destined to fail. We figured out most, well, I would like to think we figured out as a species a long time ago that markets are really the best way at allocating resources.

44:15Jason Moser:And we've leaned into that in the West for a long time. and we've seen life, we've seen standards of living explode and we apply it everywhere except for money, which is kind of like irony of ironies, right? And now we're going to give you more tools to sort of tinker? Just no, no, no, no, no, no, no, no.

44:35Chris Hill:Let me hold your feet to the fire for a second. I mean, I still want to reject the premise of the question. That's fine. If the RBA exists and they have rates as a tool, would you be against them having a second tool to use as well instead of? In other words, we're saying there's going to be these people whose job it is to impact demand in the economy, and right now we use the cost of money to do it. Would it be better or preferable to add superannuation so I could use one of two levers to do the same job? Is there any benefit in that, do you think, in the structure that we have?

45:07Emily Flippen:Look, to be fair, it's probably less bad. Okay.

45:12Chris Hill:I just want to get back to Tim Ant's question.

45:15Jason Moser:sometimes there's a lot there's like a lot in life where it's just you there's just certain frameworks that no amount of tweaking is going to get us there you know it's like i've got to

45:28Emily Flippen:lose some weight and i'm going to follow this diet that requires i eat sand and that's a stupid example now you can optimize the amount of sand that you eat or not eat or when you eat it you You can tweak that paradigm as much. It's always a dumb idea. It's just a dumb idea. It really is. And I'm sorry I'm so wedded to it. But yeah, I never, ever, ever. The other trouble with it is it's just like even if the theory is sound, you've got to practically implement it in a way that is objective and far-sighted and holistic and ethical. and just, it is too much.

46:14Jason Moser:It is too much, you know?

46:17Chris Hill:So is she maybe against a deficit levy on the same basis or is the taxism different?

46:29Jason Moser:I'm against anything that, it's kind of like the tweaking thing again. It's like we encounter problems and so we add a new law and then we have another problem and so we add another levy And then you fast forward 20 years and you've got the Encyclopedia Britannica as the tax code, which is really just something that people with good accountants and lawyers can exploit and the rest of us can't. And now, you know, you're paying thousands of dollars to figure out how much more thousands of dollars you've got to pay to the government. And it's just like, so it's sort of like the road to hell is paved with good intention, as I always say.

47:03Jason Moser:And it's just like, I am, even when there are some things which in and of themselves as one, like, let's debate this particular point. Yeah, it's fine. I don't actually have a strong view against that kind of thing. It's probably an incremental net positive. But you do get, I mentioned to you off air, right? Like, I've said this on the pod before. I'm playing around with AI a lot, right? I'm trying to sort of build this agentic system and having various degrees of success with it. But it's a lot of fun. But I said to you, I'm up to like version five or something now, because you reach a point, and I think anyone who's in systems design, anyone's done any coding or that, you reach a point where it's like, I could patch this together and it would work.

47:48Jason Moser:But the more intelligent thing to do is just tear the whole damn thing down and start again from firm foundations. And I know this is unrealistic. I know it's never going to happen. But I really feel like that's where we're at with the tax code. it anything tear it down start again keep it super simple super super super simple you know and we can have the debate as to how it gets done but it's just sort of like adding another levy here changing another thing here you know it's just sort of like and then you know next year there's another crisis and there's another thing that we need to solve so let's add this and then let's add that you know and it's just it it it it it's throwing sand into the gears is is what it's doing rather than saying you know what maybe we just pull the engine apart and rebuild it from scratch and have something that really works here rather than, you know, have one team over there throwing sand into the gears while the others are trying to sort of add a bit more lubricant and the rest of it.

48:41So I know I'm not being helpful.

48:44Jason Moser:I'm not being helpful. These are all great suggestions, but it's just, but like, and then there's going to be another crew in charge and they're going to try and do something and then I'm going to do this and then, you know, we're going to do that. And it's a mess and it's too complicated. Start again. Yeah.

48:59Chris Hill:I think that, you know, it's funny though. it reminds me of the disruptive company versus the incumbent. Yes, exactly. And as much as you say start again, it might not be the best thing to do. And I probably wouldn't start again, but I would actively hack away at what we have. But either way, the ability to start again is so stupidly difficult once you reach some sort of... What's the right word? It's like an institutional inertia. It's just what I was going to say. It's exactly what it is. And not that it can't be done, but trying to drag 28 million people through whatever that looked like, gets out some other side.

49:35Chris Hill:I mean, the challenge of rebuilding a tax system literally from scratch, like, hey, everything you think you know, what we're going to do now is this. It's like, whoa, what the... No, I'm not going to... That seems scary and weird and hard. And what we... People don't like change. I'm all for idealism. But there is a pragmatic reality of like, man, can we do that? I think I wouldn't... You know what I think I'd probably do is design the... I would start again on paper, but then I would work towards the start again outcome rather than we blow the whole thing up and start again because I don't think it's feasible.

50:04Chris Hill:Yeah, it's probably smarter. I'm not saying that. I just think the pragmatic reality is it's just hard to do in a complex system where there is so much inertia, structures, programs, systems, like everything already set up to do this thing. It's like, we don't do that anymore. It's like, what do you mean? I'm saying we shouldn't even do it. I just think the chance of being able to is really hard but what you could do is absolutely write down, hey, we want to end up here. let's over 10-15 years work towards less of this stuff and more of that stuff so when we get there we'll be closer to what seems to be a better end goal and it's not perfect and it'll never please anybody but in the realm of the possible when we deal with humans rather than machines the ability to be able to just kind of hey let's make this happen over time is probably as good as we can get I suspect I'm a big fan of

50:47Emily Flippen:I've mentioned before I love all my razors Occam's razors you do I love a razor I should call you Gillette I must call you Gillette the laws that are there and they're like Buffettisms. They're these sort of heuristics that are just chock full of incredible hard won wisdom. Anyway, what I'm really fond of, which I think is suitable here, is called Gaul's Law, G-A-L-L-S, apostrophe S. It comes from 1975, a great year 1975. I think you'll agree, mate. Very good, very good. Yes, yes.

51:22Emily Flippen:Semantics, systematics. systemantics get it right how systems work and especially how they fail and his law says a complex system work that works is invariably found to have evolved from a system simple system that worked a complex system designed from scratch never works and cannot be patched up to make work

51:41Jason Moser:you must start over again that with a simple working system and build outwards and he was he offers a it's such a good book if you can find it um it's so so good the other great one is the systems bible i'm going to forget the author and it's a really fun read because it's kind of uh it's a fun read he says uh i thought it was a really fun read you know it's just it's so well written and and it's it's almost like a poetic kind of language and just it just talks about exactly this kind of stuff right and i think more policy makers should lean into this because again they're not evil people they're not dumb people they just they're they're good people trying to do an impossible task, a Sisyphean task almost.

52:24Jason Moser:And what these lessons sort of show you is that when you have, you know, complexity is your enemy. It is always your enemy. It's your enemy in investing. It's your investing. It's your enemy in policymaking. It's frankly, it's your enemy in just the way that you live your life, you know. And yet we ignore that wisdom. And you look at some of the institutions that have lasted for a long time, they're actually pretty simple at their core, you know, and, and, and, you know, not to say, again, there's a Nirvana fallacy here. If we just did this, all our problems would be solved, which is usually the pushback when you get to that.

53:01And it's like, that's, that's a spurious argument.

53:04Jason Moser:It's a straw man argument, in fact, and it's not, not what I'm saying, but I am saying that we know enough, we should know enough from our hard one experience to know that taking a very complex system that is demonstrably failing and making it more complex is not the path forward. Even if in isolation, that particular tweak is on and of itself good and in a net positive, you're destined, you're just doomed to failure and you're certainly not going to fix things in the way that they need to be, fixed is the wrong word, improved. And it's naive and it's fantastical in the sense of perhaps the realism of that ever being implemented but we shouldn't let that stop us from recognizing the core truth of the principle right and uh good old gall good old gall he was john gall he was right he was dead right the system's bible by the way oh so he did that as well okay right well the system's bible is apparently the third edition of systematics oh okay then right so that because the title of i looked up for you

54:05Chris Hill:i can say that he's polished enough okay so he says uh the the title the front cover is the Systems Bible to the Beginner's Guide to Systems Large and Small, being the third edition of System Antics by John Gore. Ah, there you go. Well done. It's a really good book. You say true to type, which is important. Nice. Yeah, yeah. And just incredible wisdom there in all of that. Yeah, I think that makes a whole lot of sense. Question now from Tom. He says, G'day, Scott and Andrew. This is my third time writing into the pod machine. As the token ag listener, as an agriculture, culture, the one who previously wrote in about having a crack at ag tech, suffering a temporary setback where it didn't quite work out, but stubbornly refusing to lose the fire.

54:47Chris Hill:I thought it only polite to reintroduce myself once again before stepping forward to place a humble offering before the mailbag altar. I think that's an appropriate thing to do and well done. I like it. I've been listening long enough to remember when the running joke was Scott asking Ram week after week to remind him what straw man actually was. The good thing is Tom, you know it's Australia's premier online investment club, so we both know when that's important. We got there in the end. We did. Those were simpler times, says Tom. They were. Then the show evolved, I think that's a generous word, into our weekly updates on Ram's ever more impressive feats of strength and endurance.

55:20Chris Hill:Oh, yeah. Achievements so extraordinary, they begin to feel almost as plausible as a fund manager consistently beating the market after fees. Nicely done, Tom. It's a lovely, lovely connection there. But now, as any seasoned listener knows, the path to having a mailbag question read aloud requires a certain ceremonial respect for the hosts. One must, as it were, kiss the ring, bestowing the appropriate praise upon the twin custodians of sensible investing wisdom, who, week after week, descend from their ivory microphones to offer suitably exaggerated reverence to the two benevolent... Sorry, I missed the line.

55:57Chris Hill:...descend from their ivory microphones to translate the mysteries of markets into something mere retail mortals like us can understand. As such, allow me to offer suitably exaggerated reverence to the two benevolent sages of sensible capital allocation whose weekly musings surely deserve a place somewhere between Buffett's shareholder letters and Munger's collected wisdom in the canon of investing literature.

56:21Emily Flippen:Paul, that's how it's done, mate. I have no notes.

56:24Chris Hill:You've nailed it. That was Tom, by the way. No, Paul earlier wrote in.

56:28Emily Flippen:I'm giving Paul a very good example of how we... See, Paul? There's protocols. There are certain protocols. We've always done it this way. Surely we used to do it that way. I don't make the rules. Actually, I guess we do.

56:42Chris Hill:And we're sticking to them, goddammit, because why not? All right. With the proper rights now dutifully observed, says Tom, I'll move on to the actual reason for writing. And with a degree of trepidation, fully aware that sticking my head above the parapet risks being promptly hoist on my own petard. Thank you, a lovely podcast reference there. You've definitely been listening. Yeah. However, I wanted to gently pull you up on something discussed in a recent episode. The issue relates to your discussion of Matt Canavan becoming the leader of the Nationals and specifically the comment he made about wanting to see, quote, more Aussie babies, end quote.

57:18Chris Hill:Oh yeah, that might have been a little rant from me. Sorry. The interpretation on the podcast seemed to lean toward the idea that this was some kind of dog whistle to racists or an attempt to out One Nation, One Nation. just quietly Tom since you've sent this in he's gone even harder trying to out one nation one nation but let's leave that aside for a second I have to say that wasn't how I this is Tom interpreted the comment at all when I heard it I assumed he meant something much more mundane and economic that Australia should aim to create the conditions where couples who want children feel financially and socially able to have them things like housing that is attainable an economy where families are not forced into two full-time incomes just to stay afloat, and a society where raising children doesn't feel like an act of financial self-sabotage.

58:06Chris Hill:In that sense, says Tom, I took the comment less as a cultural signal and more as a shorthand for wanting a country where family formation feels possible again. And when I heard Aussie babies, I assumed he meant exactly that. Babies born in Australia, to Australians of every race, background, colour and creed. Furthermore, Matt Canavan himself is an interesting case. From what I know of him, says Tom, he's actually the sort of personal story that many Australians, including you two gentlemen, might normally admire. He grew up in Logan in Queensland, hardly a place associated with political elites or silver spoons.

58:39Chris Hill:Interestingly enough, it's also Jim Chalmers' electorate. He went through the public education system, studied economics, worked his way through policy and public service roles, and eventually entered politics. You might disagree with his views, that's obviously fair game. But he strikes me as someone who is authentic and genuinely believes what he is arguing for, which is sadly something we rarely see in modern politics. I'll agree with you there. Which leads me to my question. Firstly, would you reconsider your interpretation of Matt Canavan's comments on the episode, particularly the suggestion they were simply one nation adjacent?

59:13Chris Hill:And secondly, related to that, Canavan has been fairly unapologetic about the idea that Australia should, quote, build more stuff here, end quote. As someone who considers themselves a free market extremist, My instinct is always to favour comparative advantage in open trade. Countries specialising in what they do best has been one of the great engines of global prosperity. You're dead right there. However, my day job working in agricultural commodity trading is currently giving me a front row seat to how fragile some global supply chains really are, and particularly the instability in the Middle East.

59:47Chris Hill:Disruptions in energy, fertiliser and shipping markets ripple very quickly through to Australian agriculture. Inputs like urea and fuel sit right at the foundation of modern farming systems, and by extension, food production itself. Without access to these basic economic inputs, Australia would quite literally be up the proverbial without a paddle. So where would you draw the line between the efficiency of free markets and the need for strategic domestic capability? Are there certain inputs, like fuel and fertiliser, that become genuine national security issues where a country like Australia should think seriously about maintaining domestic production.

1:00:22Chris Hill:Thanks again for everything you do, says Tom. The podcast is genuinely one of my most must-listen shows every week, and I enjoy every episode. I'm sure the wider audience would echo the same appreciation for the time, insight, and thoughtfulness you bring to the discussion each week. Thanks, Tom. Tom, what I love about that, that is a criticism sandwich that they teach in HR. You start nicely, you end nicely, and then you go, you books are idiots. So I love that you did that, Tom. That's very, very kind of you. All right, let's go around. Question one. Would you reconsider, given what Tom has already told us and what he saw as Matt Canavan's point, our interpretation of Canavan's comments about more Aussie babies?

1:01:04Emily Flippen:Sorry, sorry. I had my thing on mute while I was Googling. Can you see my screen?

1:01:09Chris Hill:Curse of modern technology.

1:01:12Emily Flippen:I'm sorry. Actually, the way you phrased it, Tom, I was nodding furiously. I mean, I guess we don't know. Only he knows what he meant by it. And it might have been unfair of me or us or, oh, I'm through you on the bus. Of being, of interpreting it in a less than complimentary way. And I should give the benefit of the doubt. Because the way you framed it was like, yeah, I agree with all of that kind of stuff. and this is sort of maybe this isn't fair either but the trick of populists is really there's nuggets of truth in there that can be exploited to achieve various political outcomes so look if he was to get up there and give a speech and say it in the way that you said it Tom I would have no hesitation whatsoever but the way he said it and the way I interpret it, and this might be all me and not him, was I took it in a very different way.

1:02:19Emily Flippen:And again, maybe that says more about me than Matt. So I'm 100 % willing to say, yes, I probably should have given him the benefit of the doubt. I really didn't, but he's got a history. He's got a history. And it's like, if Scott came out and said it, it's like a guy I've known for a long time. It's like, well, I could probably contextualize that statement. I can put that fit that into the broader context of things I know what he thinks and how he says someone like Matt and the controversies he's had I just I I think it's a generous interpretation to think that he meant it that way but who knows you know so I it's not it's not worth sort of debating it other than to sort of say I agree with your framing uh of that it is an absolute tragedy that you know so many people aren't having kids not because they don't want to but because financially it's not able to to do it i mean that that is that is that is civilization going backwards right um so yes uh um uh yes uh well the second part was more about sort of

1:03:19Chris Hill:can i jump on first then we'll both go to the second question is that all right yeah yeah please please just so you frame it up yeah good um i think you've been generous tom and i have no personal beef with matt canavan when you say you want more aussie babies you're not saying i want people who want to be able to have kids to have kids now generously that was matt canavan shorthand and that's exactly what he meant. But he didn't say that, he had every opportunity to say that, and Paul is no better than the rest of us how to choose their words. So they are understood. I spend too much time on Twitter, and a decent, but thankfully very small minority of people will talk to me about the great replacement theory and how people are coming from around the rest of the world to replace Australians and how our culture is being challenged and we should be having more Australian babies.

1:04:01Which is rich given our national history. Right?

1:04:04Chris Hill:But people say we should have more Australian babies so that we can preserve our culture and not have other cultures overtake us. Now, maybe I'm a victim of that experience and I will tell you more Aussie babies is not even slightly code for less of those bloody foreigners. Now, maybe Matt meant both. Maybe he meant neither. Maybe I'm being too cynical. I suspect that the people who talk to me on Twitter about some of these things will hear exactly what they want to hear when they hear more Aussie babies. And maybe you will too, Tom. and maybe Matt gets to say, what I really meant was, and that's kind of the problem with the dog whistle idea.

1:04:39Chris Hill:Now, maybe it wasn't and I don't want to be too unfair to Matt Canavan. If he says it's not, then I'd better take him at his word. But the dog whistle is well known, which is you say a thing knowing full well how people will take it so you don't have to say the thing out loud. That's the very nature of the dog whistle. So if you say, I want to see more Aussie babies, you're not really saying, I want to see more Australian families have kids if they want to, which is what he could have said in three more words, five more words, whatever it was. Now, maybe a three-word slogan works, but again, ask yourself why it works.

1:05:08Chris Hill:Does it work because of how you interpret it, Tom? Yes. Does it work because of how others interpret it differently, Tom? Yes. And so who knows what he meant. He has plausible deniability, right? No, no. What I meant was exactly what Tom said. Okay, well, if that's what he says, then I can either call him a liar or I can accept it. I'm not going to call him a liar. So if that's what he says and that's what he says he means and that's what he genuinely means, then great. And I've been too cynical. and if that's what Canavan's got to wear because other pollies are cynical and he's not, then okay, cool.

1:05:36Chris Hill:Can I share with you, though, what Matt Canavan has said? And to be fair to Tom, he said this since Tom's... Tom might not have a different view, but he may still hold that view. Here's the quote from Matt Canavan as posted in news.com.au. Not exactly a left-wing rag. Quote, we need to scrap net zero. We need to make things again. We need to protect our industry so we can make things again. We need to grow Australia so we can defend Australia and pass it on to the next generation. Patriot agenda for Australian economic revival, end quote. Quote, a manufacturing renaissance through the protection of key industries against unfair competition.

1:06:16Chris Hill:And all tools should be used to achieve this, including tariffs. Closing our borders to mass migration so our intake is properly calibrated to the infrastructure, service and housing we have. Energy abundance by scrapping net zero and investing in all forms of energy so Australia can enjoy lower prices and deliver real fuel security. A 21st century national works program that builds dams, roads, rail, ports and spaceports to renew our pioneer spirit, end quote. Now, I agree with some of those things. I don't agree with all of them. That could have been said by Paul and Hanson, you'd be nodding your head.

1:06:47Chris Hill:Maybe the two just find themselves in the same place. But if you view the Nats as having not been dragged to the populist right to counter one nation, Again, Tom, I'll say that's an incredibly generous interpretation in my view. So I think that all else being equal, the best assumption is to assume that politicians are politicking because that's kind of the way they do it. Matt Canavan has been very clear on net zero and more coal and other things. That's not new news. I agree with him on population growth. Ram and I have talked about that before. So I'm not saying everything he says is wrong.

1:07:20Chris Hill:I'm not anti-Matt Canavan individually. But if you can hear what I just quoted and not think, he just ripped a page out of the national the one nation policy book and then read it out loud so that that seemed like more like one nation uh you say do i suggest they're one nation adjacent mate i i again if i'm too cynical that's fine our listeners can make their own views if you can't hear what i just listed and think that's not canavan lurching dramatically to the populist right to protect the right flank of the lnp against a rising one nation you're more generous than i'm i can make myself be i'm a i'm a pretty optimistic like i'm pretty generous i'm pretty Pollyanna.

1:07:56Chris Hill:I don't know how that's not just pure populist Trumpian one nation stuff. And if that offends people's sensibilities, I'm sorry. I'm not anti-Canavan, I'm anti the Nats. I am pro positive policy and I've whacked the government probably more times than the opposition over the last couple of years on policy areas. But I don't know, it seems pretty one nation adjacent to me, I have to say. Yeah.

1:08:20Emily Flippen:Yep. It's interesting though. I agree with you. There was things in there I agree with yeah right but the the trouble is is well I agree with the North Star right yes it it's the it's the execution of it right like I I'm I'm very much in favor of I would see it as a civilizational fail if we're not using more electricity in 10 20 30 50 years time and and it seems like it's a political statement these days like oh you hate the No, I would really like to be generating lots of green energy, right? But energy is very much tied to standards of living and capabilities. And, you know, it's just if we're using less energy, something's gone very wrong, right?

1:09:04Emily Flippen:Ask the people who come from countries who have far lower, you know, kilowatt hour consumption than we do. And, oh, nice places. They're really not. But it's too simplistic to think that, well, the only way to do that is to, you know, use old dinosaur bones to do it. There's other ways to do this kind of stuff. So this is what is, unfortunately, in the political realm, there's very little space for nuance. And there's a hell of a lot of nuance with all of those kinds of things, same with the population debate, the immigration debate, the energy debate, the manufacturing debate.

1:09:42Jason Moser:And even if it's on coming from the other side of politics, which, you know, you might more generally agree with in principle, there's a lot of dumb stuff that they would say too. And, you know, it's sort of like, well, it's actually not that simple, you know. And well, let's go on to the second part of the question. I think that's a really good one. I mean, there is a hell of a lot of daylight between full protectionism and laissez-faire capitalism. So much daylight in there, right? And again, in politics, you sort of tend to sort of argue the extremes. So, yeah, there are some things where you don't, as a strategic decision for the greater good of the country, you might do things that in and of themselves aren't economically optimised because there's, you know, other considerations that are at play.

1:10:40Emily Flippen:I think that too much of it, though, is just fanciful thinking in the way that Matt has sort of framed it. You know, it's just like we should produce more here. It's like, well, I think where I always have a trouble with it is it assumes that there's all these sort of capitalists on the side going, you know what, there's a ton of money to be made there, I just don't want to do it.

1:10:59Chris Hill:I only do it if government does it. I would do it, but they should do it. I would do it. I would do it.

1:11:05Jason Moser:We're obviously capable of doing it and we can make heaps of money. I just don't want to do it. And like, no, wherever there is a profit to be made, someone will stand up and go, yeah, I'll give that a crack. And how we move forward is up for debate, but we have to ignore there is a reason why we don't do a lot of manufacturing here. There's a reason for it. And you've got to understand and explore those reasons to even begin to think about sort of remedying that situation, if indeed it is something that needs to be remedied or needs to be modified in some way or tempered in some way. And maybe it does need to be tempered in certain areas, right?

1:11:42Jason Moser:You've got to remember, you know, urea is a great example, right? It's like people who make urea want to sell it, want to sell it, right? And if we want to buy it, I mean, this is such a thing of beauty. It will happen. I don't know what scenario people imagine when it's kind of like there's someone over here who's desperate to sell me something. Someone over here wants to buy it. It just wouldn't happen because the government's in the way. it's like really i maybe you're talking about cocaine there's a point to be made but when you're talking about like industrial inputs i i just i you've you've at very least got to understand the lay of the land before you can possibly formulate a response and move move forward from there and the reality the very it's a very very very long um deep dive you could do on it but the short answer is is we were out competed as as was much in the west that china rocked up and said we much much cheaper and do it now in fact better in a lot of ways and we just we just can't compete and all that says really is is that it's like well okay cool we maybe we still want to go ahead with it but just expect that it's not going to be as good and it's not going to be as cheap and and and and by the way be the change you want to see in the world if you want to buy something that's crappier and more expensive then do it everyone loves to sort of bang the table oh we should do it like do it do it you know but no i mean then they walk out of kmart with a bunch of crap made from china it's like well so it's what other people should do not what what you should do right and and whenever you try and interrupt these these sort of ironclad laws of of economics you you end up with unintended consequences that end up being far worse than the problem you're you're trying to solve.

1:13:27Jason Moser:Not always, but just 98 % of the time, right? And so what Matt is arguing for, Tom, is a lower standard of living sort of because it's more Australian.

1:13:42Chris Hill:Say that 14 times because that's exactly what he's arguing for. He doesn't say this is an object or objective, but he is campaigning for the average Australian to be worse off. That's literally how this ends up.

1:13:55Jason Moser:yeah let's let's shut off you're not allowed to buy any car that isn't made in australia right and let's play the record forward for 10 years the cars aren't that good yeah they're really expensive because it's a tiny market no one else in the world is buying them right and and and that's not having a go at australia very capable people very intelligent people but with their structural disadvantages in a thousand different ways they're just not going to make that viable so So it sounds good, but it just doesn't work and they failed for a reason. Now, if you want to talk about strategic dimensions, and I guess my point has always been that if and when there is a need for us to do something here at home because the world has gone so pear-shaped so quickly that there is no other alternative, we'll actually do it.

1:14:48Jason Moser:We've got the technology. We've got the materials. to completely hobble an entire economy, which is just another way of saying to completely lower our standard of living because it feels good to say we made it here is crazy. Now, if something just horribly goes wrong and it's like, gosh, we've got no urethra, this is not a mystery how to make this stuff. We know how to make it.

1:15:09Emily Flippen:We'll do it.

1:15:10Jason Moser:We'll do it. As I always say with these aluminium smelters and stuff that they're trying to desperately keep open, I'm like, chuck a white tablecloth over it. One day we need it, great. We'll dust it off. We'll crank it up again. We'll oil the gears and off we go. We're good to go. But I'm not going to like triple the cost of what my aluminium has to cost just in case that might never come. You've talked before about the value of strategic stockpiles and stuff. Knowing that it's going to potentially spend money that we will never use, but just in case. It's a good idea. I can get behind that stuff.

1:15:43Jason Moser:I really can, Tom. And I really do share your sentiments in a lot of different ways. It's just that to have default settings for our economy on very edge case what ifs, it just doesn't seem like the sensible way to do it. I would rather have a much, much more vibrant, productive, higher standard of living economy. And that if something goes really bad, then, okay, yes, we sort of have to sort of retool and reconfigure for a year or two and then we're back. It seems a better path forward than, you know, I could say I should grow all my own vegetables and I should mill my own lumber and I should extract my own just in case the global supply chain breaks down.

1:16:33Jason Moser:And I could, but I'm working like a dog for really crappy, really crappy tomatoes and artichokes and timber that's not straight. Or I could just go down to Bunnings or wherever and Woolies and just buy it. And if things get real, I say, okay, I guess we've got to make some hard decisions. And thank goodness I put some baked beans in the garage for just such an eventuality. That's kind of probably a simplistic but not an unreasonable analogy.

1:17:01Chris Hill:Yeah, I think that's right. I don't want to go over the ground, Tom. But yes, stockpiles is my answer. And the reason is that stockpiles you pay effectively just the carrying cost for because you're not doing stuff that you're never going to use. If we had nine days or 120 days worth of fuel, for example, rather than 28, we'd have a storage cost, which would be the infrastructure cost to create, build, tanks and whatever else. And then we'd have the carrying cost of that extra stock. But we'd tell it all through and we'd just replace it first in, first out. Imagine a really, really long pipe. Put it in the beginning of the pipe, 28 days later it comes out of the pipe and you use it.

1:17:37Chris Hill:We just make a longer pipe that's 90 days or 120 days worth of supply. So yes, it costs a bit more for the infrastructure and it costs a bit more because you're carrying more inventory, you're paying interest cost on that inventory, but you're not paying extra for the ongoing product other than just that bit. Now, reasonable question. If we can subsidise refining and drilling that costs less than the cost of the stockpile, do that, because why the hell wouldn't you, right? Yeah, hell yeah. If it can't be done, then do the stockpile, is my personal view. Because of the edge case, Ram does a really nice job of...

1:18:04Look, I've always said I think defence is really hard

1:18:08Chris Hill:to work out how much to spend on. and we can argue about submarines versus drones versus whatever. But realistically, and I've said a lot of the times, I'm no World War II scholar, but in World War II we were underprepared. That's why we sent Army reservists, effectively just lightly trained militia to Kokoda, who absolutely just shone, did themselves massive credit becoming a fighting force. They had no right to. They were literally the dad's army, weekend warrior staff, who'd been all of a sudden thrown into war against the highly, highly trained and disciplined Japanese troops. We didn't have enough army.

1:18:40Chris Hill:We didn't have enough materials. We didn't have enough, you know. So at some point you say, well, let's not make that mistake again. And I have massive amounts of sympathy for that view. I though would also say, what are we preparing for? What are we allowing for? And what are the odds of those things happening? And what is the cost of doing so? I could, no, I'm not going to that path. Essentially, every insurance premium you pay is a reduction in living standards. to remove some risk from your life. So I pay car and home insurance, health insurance, that in some years I will never touch any of.

1:19:15Chris Hill:In fact, I don't remember the last time I personally claimed on health insurance. I might have a pair of glasses five years ago. I haven't claimed on car insurance in 20, 30 years. I haven't claimed on, I've claimed on my home insurance last in my old house when we had a hailstorm that did some damage to some roofing. Now, I paid a squillion dollars. I could have had a much higher living standard in the meantime if I just said, I'm not going to pay those premiums. It'll never happen. Now, God forbid, but tomorrow... I'm sorry, I claim on house insurance with a bloody flood. But that's it, right?

1:19:47Chris Hill:So I've already forgotten about it. Had I decided that home insurance was a waste of money when the house got flooded downstairs, I wanted to sum up for the repairs. So I've got to make a decision every time on how much do I pay? What is worth insuring? Is income protection insurance worth it? I don't know. Well, how much should I pay? I don't know. What are the chances of claiming? I don't know. I've got to make a decision on that. We can decide to pay insurance premiums as a country and all these things, and we absolutely can. And I'm not even saying we... I don't think we should, but I'm not saying we couldn't democratically choose to do it.

1:20:15Chris Hill:I think people like Matt Canavan, I don't mean him personally, but choose whoever else is talking about this sort of garbage. There you go. They're giving away my thoughts. He's doing the whole, would it be better if we had all these good things? Yes, it would. Would you like all these insurance policies? Yes, I would. Yes, we should have those insurance policies. Okay, cool. Your next question would be, okay, yeah, but how much is that going to cost us and what does that mean for my living standards? Many people who are generally on the right of politics, and this is a horrible, horrible generalisation, I don't mean it as a pejorative or not, would say we spend too much on government, we should have less government, we should have more freedom, we should have higher standards of living, and at the same time saying, but also we should pay more for everything because we want to make some stuff here.

1:20:52Chris Hill:So, okay, well, which one of those do you want? If the answer is both, then it probably talks to, I'll say an ideology, I don't mean it again in a pejorative sense, but you've got to work out what you want to pay and what you're getting for it and what the risks are worth taking and what you should do. for me i suspect that if we are invaded by indonesia or china or god forbid the yanksy donald trump wakes up on the wrong side of the bed um you know if we'd had 100 days of fuel we might be able to last behind the barricades for another month or two and then the tanks are straight over the top the drones are bombers and the you know like it's not going to change our ability to be resilient against national security it's just not you know half pregnant is half pregnant a bit less insecure is still insecure right it doesn't does it change the outcome of the war no okay so then what are we paying the insurance premiums for you know if you pay the insurance premium i will you only have to pay 99 of your home renovation rather than 100 of the home well then i'm not going to bother you know is it going to stop me if i'm going to be absolutely safe no okay then what are we doing um so yeah i i hear you tell me i really do and i really i've said a million times the the instinctive need for security and for making stuff here it's why populism works because everyone goes well that sounds good yeah of course we should do that why wouldn't we the problem is ram and i have to be the the sad sacks who say well actually here's why

1:22:07Emily Flippen:we wouldn't just understand that there's no free lunch it's like okay if that's what you want then that's got to be paid for and you know it's always a good idea when it's not you paying for it but it's like you have to pay for it yeah that's right that's right and i'm like oh now i'm now i'm i'm less sure about it right or or maybe i still am and i'm happy with that compromise but i just the trouble with sort of the modern political discourse is that it's the magic pudding fallacy. It feels like we can do this and it just never runs out. We can just keep eating this thing forever and it's good and it's like it's not going to end up in any way.

1:22:42Emily Flippen:We're already sort of down the path here a fair way and I think a lot of our ills are from previous political sort of decisions that didn't go, you know and they're just I don't have the answers. I don't have the answers but neither does Matt right and and and it's certainly it's just easy to get up onto a tree stump and go more babies and more this and you know it's like and it just sounds great it's like okay can you sketch out a plan how I do that without being you know without really feeling that as as having and and using the word the the economy is stupid it's like what what I mean is how can I do all of that and not have to work harder for the same amount of the same quality of life that I have now.

1:23:26Jason Moser:If you can sell that to me and you can sketch out a plan, or maybe it's just a little bit of a cost, but a huge reward. I'm all ears, but just to sort of, you know, I can get up, I can get up and sort of say, Hey, Australia should be the center of AI innovation and we should have rocket ships. Like, cool. Oh, I'm all for that. Okay. How's it happen? I don't know. That's for someone else to figure out. So it's kind of like, so it's kind of a pointless thing, right? Like you, you, you need to draw a line between these ambitions and how they're going to be done and who's going to pay for them and what the returns are going to be.

1:23:58Jason Moser:Not in a, because I want GDP to go up or some nonsense, but because I want everyone who lives in this country to feel safer and have a better quality of living. That's what it's all about at the end of the day. And these guys, I just think as a general rule, they don't care about it, right? And then it's not just, it's not even Matt, right? It's just Albo and like all of them, right? Like just these lovely little sort of sound bites that kind of sound good, but just don't address the problem.

1:24:24Chris Hill:Here's the maths for me. It is, I hear the soundbite. That's cool. So tell me what you're going to do about it. Tell me how much it's going to cost. And tell me in real world terms, not motherhood statements, tell me in real world terms what we're getting for that. You mentioned returns, right? Not a GDP sense. We should have, we should make our own fuel here. Okay. What's that going to cost? I don't know. Well then don't come, go find us. Or this much. Okay. Who's going to pay for that? Well the government okay so you mean taxpayers yes okay so how much more am i going to pay i don't know well work that out uh or no we're gonna charge you more in fuel okay so that's that's lower severely tell me how much i'm going to be worse off a year because i'll pay more for fuel well i don't know okay we'll go and work that out when i do all that what specifically is it going to keep us safer from or more resilient because of because we're refining fuel here compared to the alternatives what is stockpiling going to cost us this much okay fine so is this is that more or Less, that's more.

1:25:19Chris Hill:Okay. How are we better off? Well, if we have a war with China and China stop our ships coming to the country, we can last for three months instead of two. Okay. Or we're completely selfish on fuel. Okay. They have got a billion people, a shared load, I was going to say a bad word, of warships, a military that's bigger than our population and a gazillion drones. So we have fuel security. Are we safe now? No. We're safer. no because it's not going to stop doing anything what's it going to stop nothing okay well if that's the case we're spending a lot of money on a vanity project that makes us feel better but actually makes us not materially safer yes okay and i'm not being harsh at you tom i'm just you got to go through the whole thing tell me the whole story define it cost it up tell us what we get for it tell us what we're safer because of tell us what we're more certain because of and if your case is I'm paying 100 % of the cost for a 0.1 % chance of an outcome, I'm going to say, dude, I'll roll my dice because we can do everything.

1:26:25Chris Hill:We can do everything. We can produce everything here just in case. Just in case China stops mining vanadium, we should do it here. Okay? So we're going to spend$85 billion building a vanadium plant that we might be able to use if we have some electronics capacity, but we don't. Let's build an electronics plant. Okay, cool. What do you use that for? Well, satellites. Okay, let's build a satellite plant. Okay, cool. I built a satellite, need a rocket ship. Oh, bugger. All right, build a rocket ship plant, guys. Okay, cool. Want to build a rocket ship plant, but don't have the machinery to get the rocket ships into the...

1:26:51Chris Hill:Okay, let's build that too. You've just created, frankly, a quasi-socialist state where we're all getting taxed 90 % to build the stuff that no one actually needs because we're worried about not being self-sufficient. And that's cool. But again, just recognize what you're doing, how much you're actually costing to make those things happen. And it's very... I'm not trying to be negative. I just think if you're saying, I'm going to do this thing because there's an advantage. You've got to demonstrate the advantage you've got to compare to what it costs. And I just, no one yet has ever shown me that maths in any meaningful way, let alone a conveniently convincing way, which is not even another whole, you know, level of abstraction.

1:27:26Chris Hill:It's just not going to happen. Even when you've got like a PWC that you can throw a bunch of money that will give you the answer that you want, even then you can't come up with the numbers, right? So it's sort of like, it would be such a compelling, I mean,

1:27:37Emily Flippen:I don't think anyone, any right-thinking person, and if you were to sort of say, hey, here's a plan. We're going to create a bunch of jobs. We're going to have so much more security. Everything's going to be cheaper. We're going to be, you know, it's like, who's against that?

1:27:51Jason Moser:Who's against that? I'm not against that. Like, let's do it. Let's do it right now, right? But to your exact point, matey. Oh, but here's the bill. Yeah, it's like, oh, I don't want to do that.

1:28:02Chris Hill:And what outcomes does it change? None. Okay. Sorry, Tom. I didn't mean a wet blanket, mate. I just, I love the idea and I instinctively, I agree. Like that would be good, yes. But when you play it out, I don't see how other than feeling better about it because we kind of just said, look, we did a thing, Jeremy Clarkson style, if you watch Clarkson's Farm. It's like, cool, but has it changed any art? It comes or has made us feel differently? And if the answer was made to feel differently, but we're poorer, that's an expensive price to pay.

1:28:30Emily Flippen:And the other thing I'll always say with a lot of this stuff is just get out of the way. I mean, you will find that, again, the human spirit being what it is, if there is an advantage to be exploited, someone will do it. Like, oh, it turns out that, I mean, those kids over in Perth decided it'd be really cool to have a bit of software that they could make their school scrapbook with. Now they're one of the biggest companies in the world. You know, it's like, brilliant. Do it. Great. Yeah. Done. Good job. No one had to pass a policy decision to do that. They just did it. Right. And that will always, whether it's that person or another person, that will always bubble up.

1:29:07Emily Flippen:You have to start with that realistic understanding that if no one is ever doing it, then what does that say? It says that it's not as straightforward as it seems.

1:29:17Chris Hill:That's a lovely way to finish, I think. Nothing is as straightforward as it seems. Speaking of which, though, it is straightforward. You'll be back next Friday, surely? Yes, of course. That's got to be the most straightforward thing in the world. Thanks for the great questions. Sorry to be a little bit of a harsh time. If you've got any more, remember info at fool.com.au. We'll see you next Friday. Fool on. Cheers.