Ask Us Anything: The TRUTH of Victoria's Crime Wave!? + Should Australia Go Nuclear?

0:28I'm Adam Schwab. I am really struggling to understand what is going on in Victoria with crime. I know this isn't your traditional topic, but I'm keen to hear your thoughts as I know you guys are passionate about the Victorian government. I'm wondering why people are blaming Jacinta Allen for the escalating violent crime in our state. My understanding is that we vote in a local representative to the Victorian parliament and they review laws that are proposed by various government agencies, debate the merits of the proposal and then vote and that becomes law. I know the Labor government are in power, but from what I read, Jacinta Allen is not in favour of this violent crime and neither is either side of politics.

1:08Why aren't harsher, more serious penalties proposed with bipartisan support? I haven't seen any politicians come out and say they do not want change or disagree that it is becoming a problem. Who can actually fix it or who is blocking it? Is Jacinta Allen being used as a scapegoat because of slow public service policymakers not proposing better laws fast enough? I don't really get it, but I have a feeling you guys do. Big question, over to you guys. Interesting question, topical question, especially for Melbournians specifically. We have seen, and as I've said, I'm the victim of this crime, having two bikes stolen last month, but there've been a lot more serious crimes than this, sadly.

1:50Let me just give my quick take on sort of the history of it. So if you think back, there's really been, and the reason why just since Alan's been blamed is she obviously was part of the Dan Andrews government and much of this happened in Andrews regime. So sort of two significant events that happened. One was obviously COVID where Victorian government had 272 days or something like that of lockdowns more than anywhere else in the world. So we had a period where kids kids aged 13, 14, 15, 16, 17, weren't able to go to school and literally tens of thousands of them have been lost to the schooling system.

2:24So we've had this unprecedented tsunami of poorly educated kids. And remember, don't forget in COVID, Victorians were told they cannot go to school. So they had to stay home and that a lot of these kids just had nowhere to go, had no parental supervision. So there was the massive tragedy and trauma of COVID. This was obviously self-inflicted by, as we know, the worst government in the world, the Dan Andrews government. And then to make matters worse, not only did they create this tinderbox of kids that weren't at school, that weren't educated, didn't have supervision, they then decided to change the bail laws and basically not enforce them.

2:59So you could be effectively caught for doing something like having a knife or stabbing someone or raping someone or doing something very serious. and instead of being put under remand, which is what historically would happen when you commit a crime or allegedly commit a crime, the Victorian government said, you know what, you can go back in the community and when we'll hear a case and after you've heard the case, then we'll decide whether to put you in jail or not. And as a result, people are running around on bail and committing more crimes and in some cases murder. So we have these two terrible policy decisions created by a terrible, terrible government that's really, as I said in a couple of weeks ago, I actually thought a lot of this was confected, sort of call it right-wing tabloid, made up.

3:42Which would be what we saw in sort of 2016, 17 with the infamous African crime gang, which I think was made up. But I think in this case, we've actually got legitimate people who are out on bail repeatedly committing crimes. And Victoria has by far the highest level of criminality and the highest level of people being bailed. So it's just a bad situation on every front. The reason why Jacinta Allen is being blamed is maybe it's not her fault. Maybe it was Dan Andrews' fault, but she, rightly or wrongly, is considered the next generation, the next iteration of Dan Andrews. Dan resigned and she took over.

4:16She was the anointed successor. So that's why, rightly or wrongly, she's being blamed by many people. I do. Your views. So I'll say some facts and I'll say some anecdote. So these are some very irrefutable facts. I think it can be very irrefutable. I think it's just irrefutable. So here are some irrefutable facts. When a government gets elected in any state in Victoria, they can make laws, provided they can get it through the upper house because they have control of the lower house. And so if they think something is bad, for example, they think the bail laws are too soft, and so they think the age at which you can commit crimes is too high and they want to lower the age, which is the opposite of what happens right now in most states, especially Victoria, then they can pass a law and that becomes the new law.

5:09And so when people complain about magistrates, for example, bailing young offenders, here I'm not talking about 12-year-old offenders, I'm talking about 15-year-old offenders. When people complain about magistrates too keen to bail young offenders, those offenders going on to commit subsequent crimes while on bail, we can blame magistrates for that. But if we really didn't want that, if the government didn't want that. They would just change the law. And so the most extreme would be mandatory sentencing. There's big problems with mandatory sentencing. This is actually, but bail is before that.

5:41So the sort of mandatory bail is what you sort of need to do. Mandatory sentencing happens later. Well, exactly. So judges generally don't like it if you take away their discretion. And magistrates are not exactly judges, but they sit in judgment. And so they generally, anyone sitting in judgment doesn't really like being told that they have to do something and mostly they'll try and rebel against that. So those are facts and that's what's going on in Victoria. So if they wanted to change things, they could change things. The government could pass laws. And then we come to, like anecdotally, what we hear is happening in Victoria and it sounds like what is happening is that young, this seems to be predominantly a problem of young offending By young, I mean under 18.

6:32Probably it's 14 to 18. We can blame all sorts of ethnic groups for it, but we don't need to blame ethnic groups for it because there's a fundamental underlying problem no matter where you're from or what colour your skin is. And that fundamental underlying problem is that it seems anecdotally, and I talk to people in the police force about this as it happens, that young offenders are not worried about being caught committing non-violent crimes in particular. So stealing your bike twice, even if they're caught, they are not worried that there will be any consequences for committing that crime.

7:08They're not even sure ultimately they're going to be charged with that crime at all. And I've certainly heard stories where offenders have been caught and their main concern is not to be hurt by the police physically because they know that there is unlikely to be other consequences of that. and I think in Victoria, we just need to be honest and say, we've had an ultra-progressive government in this state for a long time and we say this is a Victorian problem. Well, Queensland had the same problem. They elected a conservative government. That government changed the law to adult time for adult crimes.

7:44It's unclear if it's going to work in the long term. I don't know. It's worked in the short term. It certainly sent a signal. So, I'm not advocating. But I definitely think Victoria needs to get much tougher on crime because people don't feel safe here. And ultimately, we cannot look to the magistrates or the police force to make decisions about what getting tougher on crime means. It has to be led by a government that has decided enough is enough. Whilst we don't want to incarcerate young people, and we don't know that incarceration provides good outcomes for them long term, we're at a point where we're going to have to incarcerate young people because they have to be off the streets and we have to show all the other young people that committing a crime has serious life consequences in Victoria.

8:32I think that's what it comes down to. Yeah, I was very much in the, I don't think we should be jailing kids camp probably 12 months ago, but I've completely flipped now. I think we got to the point where it's out of control. People are dying, people are getting raped, people are getting injured, people are getting their stuff stolen, which is obviously less bad. There's machetes everywhere. It's become a lawless state and it sort of flows down. So you've got judges and magistrates who don't give people the proper bail or don't remand people or don't give them the proper eventual punishment. So you've got police who, to your early point, can't be bothered going through all the hassle of arresting somebody and going through the charge because the judges don't let them off anyway.

9:12So it sort of flows down that way. So I think it's come to the point where we can't give these judges and magistrates, these far left, these woke judges and magistrates, so much discretion because they've lost our trust. They can't be trusted. They're beyond reproach. They need to be told what to do because they've failed. And I think it's got to the point where it's up to a government to step in and actually put these criminals behind bars for a period of time. And as you say, act as a turn to other people in the community to stop that this is not acceptable. And it's not only young people, because the person who stabbed that Taiwanese lady in the middle of the city who was out on bail when the stabbing occurred, that was not a kid.

9:50No, absolutely. So it's not solely, I portray it as a kid's problem. It's not solely a problem for kids. I certainly think the new police commissioner in Victoria, who's got a few problems because he seems to like getting around in the police helicopter, but I think that commissioner definitely wants to be tougher on crime in general. I would just say this comment as a final broad comment. People, like there's a vibe that gets created in society and it takes time. It's like a brand. And the brand of Melbourne is that it's a bit chaotic and a bit out of control. And part of that is all of these weekly protests that have gone on the city for so long and trashed parts of the city and make it, you know let's say either not so much unsafe a bit unsafe but uncommercial to operate a business in the city on a sunday part of it is this crime wave that you've talked about i think the melbourne brand that criminals see like if a criminal looks at melbourne they say the melbourne brand is we can kind of get away with almost anything here and there's not going to be a lot of consequences and i think ultimately that is what needs to change it's going to be pretty terrible to come down hard.

11:04But unfortunately, when the pendulum swings too far one way, the only way to correct it is probably to swing it too far the other way for a period of time. Well said, question number two. All right. Question number two comes in from Duncan. Skase and Bondi, who do you think are the ones in the corporate world in Australia today? Who will be the next? Are you game to pontificate? Oh, God. I hate this question so much. Can I just say, I refuse to stand in the court being sued for defamation next to you on this, Adam. So maybe pick dead people. What's the safest? Yeah, I'm not sure that actually – and just for our younger listeners, Christopher Scase, Alan Bond, the two of the sort of high-flying entrepreneurs, I think they're both the richest person in Australia briefly in the 80s.

11:54Bond, obviously, Bond Corp. Skase had Quintex, which owned a bunch of hotels. Were they richer than Kerry Packer ever? Were they richer? Well, they all sort of oscillated. Kerry Packer was the richest and then was and then was. And they all had a turn. Bond officially went under in about 1989. Skase a little bit earlier. And Skase famously fled to New Yorker and eventually died there. And Bond died more recently. You should talk about what they own because, like, I think you have to paint a picture of them for people that don't know what they were like. Yeah, well, I think the big deal – So if you actually look at – so there was sort of Christmas out at Alan Bond.

12:26Another one was John Sporvans who owned a business called Adsteam, which is not really talked about much, but had some – all these businesses actually had really good assets, which shows that the way you go broke is by having too much debt. So Sporvans and Adsteam owned at one point Woolworths, David Jones, and a bunch of other really good businesses, and that went broke. I think Tooth & Co. went on. Alan Bond owned Channel 9. This is when Channel 9 made lots of money. He owned a bunch of brewing – Swan Brewery, which I think owned 4X and a bunch of other beers. He owned a lot of real estate. He owned a bunch of mining companies.

13:01And so Christopher Skase owned the Sheraton Mirages in Gold Coast and Port Douglas. He built them, right? I mean, basically, Port Douglas was a fishing village and he went and built this incredible resort there. Skase, to his credit, they were all quite sort of visionaries in many ways. What really killed them was A, too much debt and then interest rates skyrocketed. And you probably put John Elliott in that bucket in a slightly separate sense as well. So we had, this is in the 80s where you had a period of sort of lowish interest rates in the early mid 80s. And then interest rates sort of went up a lot in the late 80s when there's this sort of asset boom.

13:33And there were some other things. We should say there's some other things going on as well. So one is every one of these people was a very big flamboyant character that could not get enough publicity. Like that is all they wanted was to be bigger and more famous and richer than the other ones. So they were very big personalities. And like Ellen Bond funded the Australia 2 like yachts, right, that won the American Cup. Yeah, and that's really what allowed Bond to grow his empire more because banks would just lend him lots of money because he was the America's Cup winner, the famous person who took the crown off the Americans.

14:15And the other thing to say about this period is that there were still quite a lot of companies that had lazy balance sheets or undervalued assets on their balance sheets. And so a lot of these guys would be corporate raiders that would come into a business where they felt the assets were deeply undervalued on the balance sheet, buy them, fire a whole lot of people, strip all the assets out, and try to make money like that. So that's like – that wasn't the problem that brought them down. But it was like – it's hard to explain. I was going to say it's hard to explain what a crazy period that was.

14:48I mean, in some ways, this period is not that different to that period. Different in a sense. But the personalities were bigger and more like – I don't know. They were just much bigger out there personalities. I think there's a couple of key – and also Alan Bond obviously went to jail eventually for effectively an issue using company money to – He bought a business called Bell Resources, which was Robert Holmes' court's business, and siphoned out the money to try and use the save Bond Corp. There was an issue with, I think, a painting by Sunflowers. I think it was by Monet. He had this famous issue where he used company money to buy a painting and he didn't pay.

15:27There was a whole bunch of other stuff that swirled around these guys. But if it boils down to it, the main difference is we have interest rates of 3 % to 4 % to 5 % now, and they were at 16%, 17%, 18 % then. And if you've got a balance sheet loaded up with debt, as these guys did, because they bought a lot of assets like we talked about, that's what kills you when you have high interest rates and a lot of debt. And then they made some very bad decisions, which largely involved various versions of fraud to try to keep their businesses afloat or enrich themselves. Yeah. When things start going off the rails, obviously people get desperate, but really had interest rates never gone up, there's a real chance that Scase and Bond and Spolvins and John Elliott and all these guys, and of course they were all guys, they may have got through because there were some really good assets on these balance sheets.

16:13Like if you look at the assets on Bond's balance sheet, they were excellent assets and they're still around to this day. So the underlying, and this is the thing that people get wrong when they hear about somebody gone broke. Often you can go broke, like whether it's an airline, whether it's a trading business, the assets remain. It's just you change ownership. Usually the bank picks it up and go on its way. So Fairfax is another great example. So Warwick Fairfax, who was a she-on of the Fairfax family, did a leverage buyout of his cousins and his uncle's stake in 1987-88 with help from Laurie Connell, who was another sort of one of Bond's mates in WA.

16:45And Fairfax went under, just had too much debt. And Fairfax became a really valuable business later on in the next 10 or 15 years under different ownership, but the owner went under. So I think the one sort of thing you really need to remember in these collapses, and Trevor Sykes wrote a couple of great books on this whole era, is you need to understand the difference between going bankrupt at a corporate level and the underlying assets. And if you look at today, because interest rates are so low, it's much harder to go bust. And people still do go bust and people go under every day. But if you're a big business, it's much harder to go bust in a lower interest rate environment like we are now than obviously a much, much higher interest rate environment like we had in the 80s.

17:24So I think now is a different time. So let's break it into a few characteristics that these people had. One is extremely media hungry and flamboyant in the traditional rich person, fat cat type of mold. So we don't really have the – I mean Trump is that guy. But like, we don't really have those people in Australia to the same degree anymore, do we? Like, that's not really the cool thing today, is it? If you look at the sort of richest people in Australia, they're kind of the Gina Reinharts, the sort of miners who just have cash spigots. Then you've got the Atlassian guys who aren't, obviously Mike gets a bit of publicity, but I don't think they go out of their way to get it.

18:05No, they're not hungry. They're not these like, look at me, look at me kind of people. But there's no, like, if you look at Atlassian, Canberra, these businesses don't really, and haven't ever really had debt. It's a different era. So it's a different way of structuring. Characteristic one, we're unlikely to have another bond or scarce character because people just don't have those oversized public personas in this era because it's like this is the era of nerds. We like this era. It's not the era of business wheeler dealer making billions of dollars so much. So one is that. Two is I totally agree with you on debt.

18:42like what we're seeing with debt because you know in the financial crisis we saw some things that were similar to some of what went on it wasn't a rise in interest rates but it was yeah exactly i mean david co like he wasn't the flamboyant personality in any way that these guys were and he certainly there's no hint that he was corrupt at all but his fate is not dissimilar to the kind of heavy debt falling to pieces fate that these guys suffered. I think right now more what we're seeing with debt is the explosions in private credit markets as opposed to bank lending where, you know, we've seen this collapse of this hotel empire in the last few weeks.

19:32So I don't know how to pronounce his name, but I think his name is John Ojimis. if you read what Joe Aston writes about him, which is not only that he took all his debt, but maybe the way he valued the assets. Joe has cast some aspersions over that. I think that might be one to watch and see how that plays out. But the thing is, he was never rich enough to make enough of a mark like Bond and Skace did and never flamboyant enough because he wasn't rich enough to be flamboyant enough. So I think that era of the mega, high profile, fat cat, billionaire, well, they weren't billionaires then, but equivalent billionaires, entrepreneur kind of person, it feels unlikely that's going to play out in exactly the same way in this era.

20:18I think each era is unique and has its own types of characters that make lots of money. and asking whether there's a Bond and Skace equivalent in this era is the same as asking who the robber barons of this era are going to be, but there are going to be none because the circumstances that created robber barons are from a different era and that era is not today's era and we have different circumstances creating different people. I think probably the closest I see to anyone from that crazy 80s era, and it's not an Australian, but it's an American, it's a guy called Sam Altman. So I think Sam Altman from OpenAI is the closest I've seen to one of those 80s scam artists.

20:57I don't call him Scam Altman for nothing. He feels like the closest we've come to is creating what is almost a Ponzi scheme in many ways. Except he's not making his money by – like these are all corporate raiders that bought all these assets and created conglomerates. He might be a guy that is, you know, like the emperor's new clothes. Yeah. There's circular transactions. There's$20 billion losses on$13 billion. of revenue. Here's the closer we've come to someone like that who is almost becoming too big to fail in some ways, quite worryingly. So I don't think that fortunately no one in Australia jumps to mind, but there's possibly a few overseas that have.

21:34That's right. I think it's a really great, great, great trip down memory lane and a great question. And I think thankfully for the better, we're the days of Bond and Skates and Spolverns and Elliot are behind us for now anyway. We'll go to a super quick break and back with question number three in just a moment. And we're back, Michael, question number three. Okay, this question comes in on LinkedIn as well from Luke. With rising energy costs and the global shift toward clean power, should Australia finally embrace nuclear energy or does the risk still outweigh the reward? I've got the quickest answer to this question.

22:08I've got no idea. Like, I'm not an expert in this. I'll say this. My main issue with the nuclear power debate is the same as my main issue with any discussion about climate change, and the same as my main issue with a whole lot of topics in society now. instead of discussing science, having an open debate and talking about it, it's become politically partisan and a religion on each side of politics. And so I don't know the answer to the question, but I certainly know the answer to a bit of a different question, which is, should we have an open and honest discussion about nuclear power so that people who are not political and not experts understand the facts?

22:49Yeah, it would be nice to have a really open and honest discussion about nuclear power? Absolutely. I think it's a great question. I'm in your camp. I'm definitely not an expert on the economics of nuclear power. There's certainly a big cohort, and it's actually a cohort that's really on the left that says these nuclear power plants are simply too expensive to build. And I think there's some legitimacy in that because in Australia, it's so expensive to build anything because of the power of unions and our building costs being some of the most expensive in the world. So I think there is some justification behind that.

23:19The cost to build the plan is outweighs the benefit. Ironically, nuclear is one of the cleanest forms of power you can get. On the flip side, you're seeing China going with a huge expansion of nuclear power, and the US is talking about expanding nuclear power, especially the power data centers. So if they're doing it in China, and they're doing it in the US, and obviously they have a lot of nuclear power in Europe and Japan, although Japan, after the meltdown in 2011, I think it was, have really turned away from nuclear power. But we've seen nuclear power become a lot safer, certainly in the last 20 or 30 years.

23:54And we've seen the cost potentially come down because they've got much smaller reactors. So I think we should be looking at it more than we are. I don't think a simple blanket nuclear power is terrible is the right answer, nor I think we should be building 100 nuclear power plants tomorrow like China is. I think the answer is somewhere probably in between. And I think we should be doing more work on it because it is a really clean form of energy. But I still think that for mine, of the best form of energy going forward is solar with battery. As we continue to improve the efficiency of solar, and the efficiency of solar doubles almost every year, it's significantly better.

24:26Obviously, the challenge with solar is it's a daytime energy source and a lot of energy is used at night. So, you've got to be able to flip that, especially during that sort of evening period. And that's really done through batteries. I love the concept of using electric cars as batteries for home. So, you power your car. A car battery is three exercise of a Tesla Powerwall, for example. So I think solar with battery, for my mind, is the more likely way we go forward with the grid. But I don't think we should be as dismissive as nuclear as some has been. And I don't think it should be the political hot potato it's been.

24:59And for some on the right, just suggesting it as simply a way to avoid other renewables, I don't agree with that either. But I think we should look at it more closely and see what they're doing in places like China and how is it working there? I feel like 500 ,000 people have this firm opinion on nuclear power and 500 of them are experts. That's what I feel like is going on in society, right? And so this is the story of so much stuff that's going on in society. So, yes, I would like open debate emphasizing science and economics from people who are nonpartisan on nuclear and a whole lot of things so that people like me, who are not going to spend my life deep diving into the technical aspects of this, can understand more clearly and honestly what's going on in the arguments for or against each of them.

25:49But what you notice is that the right seems to just be advocating nuclear power as if it's the most obvious choice possible. And Elbow shuts down all debate about nuclear power as if nobody on earth would ever consider it. And the answer's got to be somewhere between those two, basically. Yeah, I think we're in complete agreement. This is another great, really thought-provoking question and what we love so much about our listeners who ask the hard questions of us. So we'll bid farewell. We'll see everybody for our big episode on Tuesday, of course. Thank you again for our three fantastic question askers.

26:24As always, we'll see everybody next week.