Inside 50: Trump, Iran & AGM mini season

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[Music]

Hello, I'm Alan Kohler, Editor-at-Large of Intelligent Investor and the Finance Presenter and Columnist for the ABC.

And I'm Stephen Mayne, contributor at Intelligent Investor, Founder of Crikey and shareholder activist, and we are..

And we are...

The Money Café.

The Money Café.

And some synchronicity... You are in the café and...

Well, we're in Arthur's Milkbar, which is owned by Marcus Bontempelli...

And his partner...

The champion footballer for the Western Bulldogs.

Correct.

Who played a stunning game on the weekend, I think. He's both café owner and the best footballer in the league, I would say.

He is a gun, absolute gun and Arthur's Milkbar is beautiful - it's not too busy this morning because it's in Kew and it's school holidays, so I think it's servicing all the private schools in the area. This is my sixth different café over the journey, Alan, of doing Money Cafes with you. I suspect you must be close to double figures over your many hundreds of café podcasts.

I was in a few cafes before you came along, Stephen, that is true. We're sitting here with our new Money Café caps, which are splendid items - thanks to Greg for organising them.

They are, a very nice black with a bit of white lace-type, people get those if they sign up...

Subscribe to Essentials...

The Essentials package.

Which is basically - just to give it a little plug now, the Essentials package at Intelligent Investor is my Weekend Briefing, which is a monster product, as you know, and CEO interviews, Talking Finance podcast...

CEO interviews, podcasts, stock tips, the whole box and dice - but people who haven't seen it, I always say, 7 o'clock every Saturday morning, it pops into your inbox and I always call it the best weekend read on all things business, finance and markets, which is Alan's 4-5-6,000 word opus and then a few diversions and links to interest reading and your favourite music videos and all sorts of...

And it takes me all week to do it.

And you get up at 4 o'clock in the morning on Saturday to finish it off every week.

4:30, yep, I do.

So, just to get that, you get a Money Café cap...

Well, the reason I get up, is because I don't want it to go out at 7 o'clock at something's happened overnight that I haven't seen. The day I don't get up, is when the market falls 10 per cent.

Correct. This is the dichotomy we're in this morning, Alan, because we're sitting here at 8 o'clock and Trump is going to end a civilisation at 10 o'clock, when his deadline, the fourth deadline, expires, after which he's going to blow Iran back into the stone age.

And this was a post on Truth Social last night and he said, "He hopes it doesn't happen, but it probably will."

"A whole civilisation will die tonight." So, the stable genius is about as mad as ever, I think, when his pronouncements over the last week, starting with that 20-minute address...

I think we're learning in the last week what a catastrophe his election was for America, really. I mean, he's completely - well, I don't know quite how to put it.

Well, he's just barking mad. You look for the stable - where's the stabilisation? Where's the sensible voice around him? Deputy President JD Vance is currently in Hungary trying to interfere with the Hungarian elections to prop up Putin's mate, Viktor Orban. That is where America is at, at the moment. Anyway, markets... Wall Street's closed steady overnight, oil's at $103... The market's obviously not pricing in a wipeout of Iran's power plants and bridges and a respondent wipeout of all Middle Eastern gas and oil facilities.

Nor are they pricing in a reopening of the Strait of Hormuz, because the price of West Texas crude, as I noted on the news last night, went to $115 dollars a barrel yesterday, which was a new record high and a premium to brent, which is very rare. Usually, brent crude, which is from the North Sea, trades at a premium to West Texas. That's flipped and apparently the reason for that, is because West Texas is being used by speculators as the main vehicle for speculating about the war in Iran. I'm not sure why that would be, but there you go, that seems to be what's happening. Obviously, it all affects our petrol prices. Diesel is up 83 per cent since the war began in Australia.

I'm going to put a fuel surcharge on my invoice for coming to today's Money Café, Alan. Having to drive all the way to Kew with massively expensive petrol prices, unlike people like you with your EV, you can just glide over, it doesn't cost you anything.

I just glide over, it doesn't cost me anything apart from a bit of electricity.

I'm surprised the EV sales weren't even higher in March.

They were pretty high.

They were pretty high, but I was thinking that we're going to see EV become majority of sales in one month this year at some point, it's going to reach that tipping point. I thought it was going to be a lot higher, they obviously haven't sold out.

China has become Australia's largest supplier of cars.

That was an interesting graph on the news last night, 25 per cent, just passed Japan at 24. That's quite a moment, isn't it?

It is, I think. That is a moment. Anyway, we probably better conclude what's going to happen in Iran. People need to know, we need to say what's going to happen. Unfortunately, everybody, we just don't know.

It's funny, I went to the footy on Saturday with a mate who services the markets and he's hired a...

What do you mean, he services the markets?

Well, he does newsletters and he gives advice to investors, a big guy, he's got 10 people on his team or something, he's hired a retired commander or something and he's just so angry, he wants to retire and he hates Trump, because he can't pick it. None of the professionals can pick it, because it's not rational. Everyone who's used to talking about markets, there's normally fact, stats, rationality, this is confounding everyone because nobody actually really knows, yet we have to fill the airtime as if we do, Alan, and we don't.

No, we do not.

So what do we do? Don't go to 100 per cent cash, don't panic, carry on! It'll be all right.

No, but the key issue, is do the Straits of Hormuz open or not? That's kind of the main thing. Ray Dalio, the Bridgewater Associates Hedge Fund Manager, billionaire, posted a piece this morning in which he said, "A world war has 13 phases, we're at number nine..." or something - and he's kind of saying that this is a world war that's going to go on for a long time. That's a big picture, right? Ray Dalio is very big on...

Sounding very confident in his predictions that he has no idea about.

He's big on big pictures. Okay, so the Straits of Hormuz, will it open or not? I think what's going on now is that the Straits of Hormuz is going to be a toll booth.

And I've got no problems with that. Big ships pay half a million to go through the Suez Canal to the Egyptian Government, they pay a couple hundred thousand to go through the Panama Canal to the - well, it's largely the private operators these days. But the difference is that they're man made, so they took 10 years to build and cost, in today's dollars, many, many billions. Whereas, this would be a precedent where natural geography is getting tolled. But look, it's the most important chokepoint in the world, if that's the price of getting the damn thing open, just pay the toll for a bit. The Iranians have suffered tens of millions of dollars of damage. There is probably a case that they try and get some cash back to pay for rebuilding the country.

It's interesting because there are a number of chokepoints around the world, this is an interesting precedent, if this happens and Iran gets away with tolling the Strait of Hormuz, then Yemen will probably toll the entrance to the Red Sea...

Or the entrance to Port Philip Bay...

Put a toll on it.

Sydney Harbour, why not?

Torres Strait...

South China Sea, that's a big one, a lot of iron ore going through there. You can see why global shipping is talking about unimpeded shipping lanes and not one to set a precedent, so they don't want to set a precedent, but this is the first time something so important has been shut off for so long, so hence unprecedented times warrant unprecedented responses. Okay, first toll, just get the damn thing open.

All right, let's move on. You've got AGM season coming up, have you?

Yeah, mini-season, the companies that have a December 31 balance day and that's about 15-20 per cent of them. Interestingly, the big four oil and gas stocks are all in that category. We've got Santos on April the 16^th, dinosaur physical meeting in Adelaide; Woodside, April 23; Ampol, May 14; and Viva Energy, May 21. I was looking at the numbers, because I reckon that Jim Chalmers may go for the gas super profits tax in the budget after the states all agree to hand back their GST windfall, I reckon that sets it up. If the feds have taken a hit, if the states have taken a hit, why can't oil and gas help deal with this situation? I reckon it's coming and I had a look at the numbers, Woodside has net assets of $40 billion, the market cap's $68b, so there is $28 billion of, you'd argue, excess profit. Santos has got net assets of $15.6b, market cap $26 billion.

These will interesting questions at their AGMs, but the most exciting AGM of the mini-season is going to be ARN Media in the North Sydney office where Kyle and Jackie O used to perform. They're holding the AGM at the studios or the same building and the Chairman, he is a very brave man, Hamish McLennan, because he's up for election and he only owns $17,000 dollars' worth of shares and he's paid $325,000 dollars a year in cash. He did the deal, his name is on the contract and this is a company that rejected a takeover at $3.8 billion dollars in 2007, $3.8 billion dollars and now is capitalised at $73 million dollars and is being sued by two radio stars for $80 million each. The Chairman who signed the deal is seeking re-election!

But he is a mate of the Murdochs, the Murdochs are the second-biggest shareholder, along with Kerry Stokes. They own 30 per cent between them, so will Camp Stokes and Camp Murdoch save a Murdoch man in Hamish McLennan, who's also Murdoch's Chair of REA Group. Then you've got the whole debate about Kyle and Jackie O. I've asked about Kyle and Jackie O the last three AGMs, I'm the only shareholder who asks about their vile content and why aren't you sacking them? This year, every man and his dog's going to be there asking those questions.

You're going to be there, are you?

Well, it's a hybrid, it's a 9 a.m. hybrid. It's $500 bucks to go there and back, fuel surcharges, so I'll probably be on the phone in my PJs from home, but at least they haven't - normally, companies in crisis cancel the hybrid and they just go physical and force you to turn up. So at least they've stuck with the formula and it should be good.

Murdoch and Stokes only own 30 per cent between them, is that right?

Yeah.

So he could still get knocked off, even with them in...

He could, but normally 30 per cent is enough to save the day.

Only just.

Yeah, it'll be close, but he should get voted off. He was also the Executive Chair of Channel Ten at one point, they went broke too. He was Chair of Australian Rugby Union, that didn't work out too well, but he's done well at REA Group.

Do you think Jackie O and Kyle will win their lawsuits? I'm not a close follower of this so I wouldn't know.

Now that they're working together again and they're both suing for $80 million, their strength is in being a team, because obviously they had a shocking contract and they just tried to get out of it by claiming they were fighting. So they just have to say, "Hey, we're not fighting anymore, we're ready to work, keep giving us each $10 million a year!", "Oh, but we're going to go broke.", "Too bad, that's your fault." But good old Kyle, he's taking on Stokes, Murdoch and the world and he's going, "Pay up! You signed..."

They could send the company broke.

They could, yeah, big judgment. They've already got $1.3 billion of accumulated losses on the balance sheet. Old media's dying, the whole of Channel Nine sold off all their talk stations for $56 million, having put them together for $600 million. The radio business is dead, killed by Spotify and podcasts and everything else.

How much could they pull out of then company before it goes under, do you reckon? Obviously, not $160 million...

No, but certainly the litigation has led to the share price crashing more. It's 23 cents, it was up around $1 dollar when that contract was signed - and they got partly paid in stock, so Kyle and Jackie O are losing because they're on an equity deal as well. But that will be good fun, that AGM coming up on May the 7^th, so if anyone's available, 9 a.m., May the 7^th, at the North Sydney headquarters, don't miss it, it will be one for the ages. We've got so many questions, Alan, I reckon we should...

Let's move onto questions. Before we do that, let's have a quick word from our sponsor.

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Now, before we do the questions, just a warning that what we're giving here is general advice, we don't know you so we can't give personal advice, we're not licenced to do that. It's really not even general advice, let's face it. [Laughs]

Finger in the air advice. The first question - we've got two questions from Megan and Janet - Alan has caused a firestorm with his piece on the ABC last week, calling for the nationalisation of childcare. Megan says, "Alan, I love your idea of nationalising childcare, it would help address the needs of one in four Australians who live in a childcare desert and allow for nation-wide leave, portability for childcare staff as additional benefits. Have you had any interest in your idea from the Federal Government, opposition or crossbench?" And Janet says, "I support your idea, Alan, and I felt so since I was a maternal and child healthcare nurse in Western Australia in 1966. I'm now 85 years old, unable to get meals at home because of the mess in aged care. What has happened to the lucky country?" Alan, take us through this, you've done this two-minute piece, have you had any reaction? Have people celebrated your - what's happened?

Colossal reaction to it on Twitter/X. So much abuse, so much abuse...

The most abuse you've ever received?

Probably, although that's a high bar.

You are an agent provocateur, you like to stir the pot, but this one's really kicked over the beehive. You're a communist, are you? You're a nationalising communist.

That's right, the ABC is full of communists and I'm just one of them and fair enough, okay... No, look, clearly there's a problem with childcare and kindergarten in this country, it's really expensive. There is a subsidy from the Government which assists very low income families, the trouble is that the taper falls pretty steeply and if you're reasonably well paid and you have a big mortgage, you're not getting much subsidy for childcare and you're struggling. What it's really doing, it's hurting the middle classes to a very kind of large extent and I think that most people that look at it, the productivity commission did a report on it and recommended that the subsidy increased to a flat 90 per cent or 100 per cent for some and then changed the taper. The problem with all that is, this is a private industry, 70 per cent are for-profit, so what you're doing...

G8 Education has their AGM in four weeks as well, they're the biggest listed one.

There you go. And so, you're subsiding the shareholders of private companies and I don't think that's a great idea. That's what led me to say, well look, really what should happen is the Government should take it over. Another way to look at it, is the provision of public education should extend to kids under five. At the moment, as soon as your kid turns five, you stop paying for kindergarten and you can send your child to a state school and it's free. The other thing I didn't have time in that piece to talk about, is that if you're working full time, even when your kid goes to school, you've still got to pay because the school comes out at 3 o'clock and if you're working, you're not getting home at 3 o'clock, so your kid's going into afterschool care and that's really expensive.

They're often run by for-profit companies like Camp Australia, owned by private equity.

That's right. Also, in the morning, usually you've got to go earlier to work than 8:30 or something when the kid goes to school. You've got in the morning and in the afternoon, you've got a private provider that charges a lot. Even people that have got their kids at school are paying a fair bit of money too, so I think the whole system needs to be looked at. It would be better in my view if the Government took it over and turned it into a state education system, but I don't want to give anyone the impression that I think it's going to happen, of course it won't happen. But what I was trying to do was draw attention to it, which I succeeded in doing, Stephen.

You certainly did, Alan, and it is interesting that the Government doesn't provide funding for for-profit schools, you have to be a not-for-profit. So, even the Kings College or Scotch College, even the most exclusive schools, they qualify for Government funding because they're not-for-profits, which strictly speaking is not for distribution, they can make a profit, they just can't distribute it to the members.

Also, donations to them are tax deductible. None of that works unless they're not-for-profit. That doesn't apply to kindergarten and childcare.

So you could just say, let's just borrow the policy of no funding for for-profits and expand that from schools to childcare and that would wipe out the industry overnight. You'd still have not-for-profits like Goodstart and others doing it, but is it really fair to ban a for-profit company? Are you saying they're so evil that they can't be trusted in childcare?

No, I'm not saying they're evil. Mind you, there have been some problems with the paedophiles, let's face it, but putting that to one side, they could pass a law saying, only not-for-profits get subsidies, then the whole industry goes broke and the Government could pick up on the industry from the liquidators. How good would that be?

The question of banning - Cricket Australia is currently looking at privatising The Big Bash, because at the moment, it's banned. Private operators are banned, you have to be not-for-profits, owned by state cricket associations. I'm about to lodge a board nomination for the Brisbane Broncos, which is an ASX listed company controlled by News Corp. My platform's going to be, private operators should be banned in the NRL like they're banned in the AFL and Cricket Australia should not privatise. It is an interesting general discussion about sectors from sport to childcare to education, where you ban or you don't ban profit and private companies and you insist on having not-for-profits or whatever. You're saying, get the for-profit operators like G8 out and you wouldn't mind not-for-profits, but you just prefer it to be bolted onto the public education system effectively?

Effectively, that's right, that's what I think - and I'm going to vote for you at the Brisbane Broncos, Stephen. I think you'll make a magnificent Director, if that's what they're called. Are they called Directors or Governors or something?

Yeah, regular Directors, public company. They won the flag so there won't be a lot of anger in the room when I run.

Brad says, "The last episode featured someone who was spooked about the current market and had considered selling the investments in their SMSF despite being early 40s. This sounded like a person that should not own an SMSF. I would argue SMSFs are generally more expensive, less diversified, more time consuming, have members that are under-insured. The person that benefits most from an SMSF is generally the accountant. What are your thoughts on SMSFs and should the rules be tighter for those who can start/manage them?"

You're right, of course, Brad, the main winners from SMSFs are accountants, that's for sure. But look, a lot of people feel better running it themselves and I think as long as they understand what they're doing and that it might be costing them more than it would otherwise cost them, I think what the hell, go for it.

They do tend to be more conservatively managed, they got higher allocation to cash and obviously a lot more concentrated investments like your big investment property or whatever. I'm still with two super funds and two industry funds.

My SMSF is largely cash at the moment because I'm terrified of what's going on.

We're only giving general advice, but if people want to follow the Kohler model, go to cash, SMSFs to cash!

I'm the world's worst investor, so don't follow me.

I'm pretty bad too, Alan, don't worry. Trudy says, "I'm feeling like a cog in the inflation machine lately. On the show, you've discussed how the RBA aims for 2 to 3 per cent inflation to keep us motivated, but here's the paradox, when I try to lift my productivity by taking on a second income or contract, the tax on that additional income feels like a disincentive. Heavy taxation on second incomes actually discourages the productivity we need to maintain the economy's momentum." I guess this is just the age-old argument about incentive, isn't it? The more you earn, the more tax you pay, so people do have a disincentive to work more. The top tax rate kicks in at $190,000, which as one of our questioners says, only 4.4 per cent of people are earning more than $190,000, so it is quite high.

But the top tax rate is 45 per cent, plus the Medicare levy.

In world terms, that's very high.

Well, yes, but when I was born back in 1952, the top marginal tax rate was 75 per cent.

Yeah, but that's post World War II when governments all over the world were nationalising everything and taxing the bejesus out of everything for the war effort and they just came down across the world. Hong Kong is 15 per cent.

I'm just pointing out, 75 per cent, that is disincentive, right?

Yes, it certainly is.

Wasn't there a time in the UK when it was more than 90 per cent?

Yeah, that's right. But look, I think about this, that with inflation bursting, fuel prices going up, this is forcing people to take on extra shifts to meet the higher cost of fuel and that sort of stuff and this is forcing people into higher tax brackets, so it is the old bracket creep argument and bracket creep is killing people because it's so brutal and they've given not enough back on bracket creep. Jim Chalmers, your mate from your recent podcast, is he going to give us a tax cut? Is he going to hand back some bracket creep in this coming budget?

I don't know, who knows? Tom says, "Love the podcast, it's rare to get quality opinions this consistently..." Nothing but quality opinions here, Tom!

[Laughs] That's right.

[Laughs]

Go to cash!

"I'm an Australian in London..." says Tom, "Recently made redundant as my company restructured around AI. Ironically, I used AI daily and the capability shift in just two years has been staggering. Everyone says reskill, but into what? These tools already operate at PhD levels across most fields. My worry is this hitting Australia, where people are leveraged 9 or 10 times their income on a mortgage. If redundancies accelerate and re-employment slows, is there a systemic risk in housing that nobody is pricing in?" I think that's a good point, Tom, and I interviewed Jim Chalmers recently and asked him about AI, he doesn't think it's going to be a problem. This afternoon, I'll be recording a piece on the employment effects of AI for the ABC to run on next Sunday, that's my next ABC Sunday, two minutes...

The next beehive you're kicking over. Don't say there's going to be 30 per cent unemployment, please!

No, I'm saying I don't know. I don't think anybody knows. This is the problem, I'm starting the piece with a couple of grabs, one from somebody who says there'll be 20 per cent unemployment and somebody else who says it'll be fine, it's only going to reshape jobs, not going to erase them. Then I quote a Goldman Sachs study on what's been going on so far and the answer is not much, it's 0.1 per cent employment effect, so Tom is one of a very few people who are being made redundant by AI, but then there was a big study published by 15 academics at eight Northern American universities, US and Canada, and they've done a survey of hundreds of economists, AI experts, general public, a whole lot of people about what they think is going to be coming from AI, as a result of AI.

The median forecast was for rapid progress of AI, 4 per cent GDP growth and a reduction in workforce participation in the US. They haven't called it unemployment, they've called it participation because people just drop out of the workforce, a reduction of 10 million people dropping out of the workforce, which is about 9 per cent reduction in participation. If that translated to Australia, that would be a million people over a couple of decades. Again, this is a survey of everybody's predictions and they don't know. Nobody knows.

As you know, Alan, I'm more in the, it'll be Y2K, as in the doomsdayers will be proven wrong, it won't be the disaster that people predicted with Y2K, but one fact I can give you on AI, is Anthropic released their latest monthly revenues overnight and at the end of December, they said they were running at annualised revenue of $9 billion a year and now at the end of March, they're running at annualised revenue of $30 billion a year. On the space of three months, they are growing like topsy exponentially and I'd like to point to the upside of that, there are a lot of companies, entrepreneurs, start-ups, who are paying Claude, because Claude is primarily at the enterprise level, to help them with their start-ups and their businesses and making them more efficient.

The take-up of AI products is enormous, as those exponentially rising Anthropic revenues show and it was going to list in the next year or two, probably with a market cap of north of a trillion dollars. Space X will probably be north of a trillion dollars and OpenAI will probably be north of a trillion dollars. Three new floats, all starting with a market cap of more than a trillion dollars if you believe the pundits at the moment. That's real value - leave Space X to one side, that's real value, so the impact is going to be huge because they've got to get a return from somewhere, so it's going to be massive.

That's right, it's going to be massive and I think what Tom's experience points to, is what AI is doing is both improving productivity and replacing human beings, I think it's both. It's not one or the other.

It's definitely both, absolutely.

It's definitely both. The only question is, what happens to the people it replaces? Will they be able to get another job, as a lot of people are confident they will, or will they not? Tom's saying, "What am I going to do, reskill into what...?"

Todd says, "Love the show. With the impending capital gains tax discount reduction and no certainty of exempting existing shareholders from the change, i.e. grandfathering, do you think it makes sense to pin your ears back now and buy more shares in case existing shares are grandfathered? Also, do you think it makes sense to sell some shares now where you're sitting on healthy capital gains?" This is another one where we're getting into the fraught area of giving advice and guessing what's going to be in the budget. I would say, Governments generally respect the concept of not doing something retrospective.

If you did have a massive capital gain on your CSL shares now just because you bought them for 77 cents and you decided to sell them now, I think you can be reasonably confident that you'll be getting the full capital gains discount on those sales now. They won't reach into the past. That's tentatively saying, maybe you might want to sell a couple of things now if you're nervous. As for pinning back and buying now, it's just guesswork. What's your best guess and is there anything to say to investors about how to play it?

I think you're right that if there is a reduction in the discount from - I think the consensus seems to be from 50 to 33 per cent - if that does happen, it'll be grandfathered, that means that the capital gain up until the date of the budget will be at 50 per cent discount and a capital gain after the budget will be at 33 per cent...

If CSL shares double after May 8, you'll have two different calculations.

That's right. I think it's a bit of extra work for the accountant, quite a lot of extra work.

Absolutely.

But I do think that you don't need to sell now - if you believe it's grandfathered, which I think it will be, you don't really have to sell now because your gain up until the date of the budget will be at 50 per cent discount, that's what grandfathering means.

If the market's up or down on budget day will be a factor in terms of where everyone's level gets set.

Sure.

It's like when the Victorian Government introduced rate capping for councils, it didn't take into any account which councils had been jacking up the rates by 20 per cent a year and which hadn't, everyone just got frozen in time at that particular year.

Given what's going on in Iran, it's not out of the question that there's a fair decline in the market between now and the budget.

You don't think it'll be something a bit less complicated like, as of June 30, the system changes and so therefore...

Yeah, it could be.

It's hard to predict. You can do Barbecue Area's question.

Barbecue Area - "My question relates to the Albanese Government's response to our fuel crisis and their lack of response to our longstanding inflation crisis. How come the Government immediately cut fuel excise and heavy hauler duties to ease inflation supply chain issues in our current crisis, yet when it comes to inflation, they leave it to the RBA to raise rates, whilst they the Governments raise spending which adds to inflationary pressures? Surely, the Government could have played a better part from 2022 to 2025 and if so, what should they have done?" Okay, well, I think what you need to remember is the Government is basically populated by politicians...

Very profound, Alan.

What politicians are motivated by, is staying in office. That's it.

Hang on a minute, Jim Chalmers delivered two surpluses, I'm actually going to defend the Government here and say that they did their share of the work to fight inflation by contracting the economy by running a couple of years of surpluses. Then in terms of fighting inflation, all the energy subsidies were an attempt by State and Federal Governments to subsidise energy prices to get inflation down. Do you think there's a case that Governments haven't done enough to fight inflation?

Yeah, of course.

What could or should they have done?

As I'm saying, the politicians want to relieve the cost of living crisis, right? Inflation's up, prices are up, everyone's struggling and the Government wants to say, "Okay, we're going to give you money, we're going to cut the electricity prices," or whatever and that makes them popular, but it goes directly against what the RBA is trying to do which is to slow the economy down, obviously.

I would say that I'm amazed there's this much criticism about State and Federal Governments easing the pain of a shock. This has been a shock and all they've done is ease the shock by 20-30 per cent. They haven't cut the price back to $1.50 a litre like it was and everyone's going, "Oh, you're irresponsible..." This price increase was hurting people massively and they've just provided some relief, it's like giving unemployment benefits when someone loses their job. Surely, it's the right decision, yet people are bagging the Government saying it's reckless.

I kind of agree with you, except to say that really what that means is there'll be more rate hikes. Luci Ellis at Westpac is the outlier of predictors of economists, she was the Chief Economist effectively at the Reserve Bank, she says there'll be three more rate hikes this year.

Three more for five in total.

Five in total. I think part of the reason for that - I haven't spoken to her about this, but I imagine part of the reason for that is the cut in the fuel excise is the equivalent to a rate cut. What that means, is that the fuel excise reduction means that the burden is going to be more put upon borrowers. Those with a mortgage will do more of the heavy lifting, while motorists - and presumably obviously they're also people with a mortgage - get a bit of a benefit.

And inequality will get worse, because the people who don't have a lot will be paying truckloads more on their mortgage.

Exactly.

Scott says, "Over the past few decades, the price of the average home has gone from around four times the average weekly wage to roughly double that, yet agent commissions in metro markets still often sit at 2 to 3 per cent. At what point do we admit that this model is no longer tied to the actual work involved and what should replace it?" Real estate agents...

Well, don't pay 2 to 3 per cent, everybody. Just tell the agent you're not paying 2 per cent, "I'll give you 1 per cent." Or whatever.

It's a bit of an industry cartel, isn't it. Try hire an agent on an hourly rate, Alan. You can pay barristers $8,000 dollars day, you can't pay an agent per hour or day, it's all percentage figures.

No, no, I'm not suggesting that, I'm just saying that if you stare the agent in the eye and say, "I'm only giving you 1 per cent." They'll go, "Okay, that's fine." Or even 1.5, I mean, crikey, that's fair. I do think if anyone is charging 2 to 3 per cent, it's an absolute rip off.

There's a lot of people getting rich on the property trough. Realestate.com, even though its share price has crashed from $265 to $158, they're still worth $20 billion dollars and they're basically getting paid by agents and by property transactors. You've got the stamp duties, land taxes... Everyone is supping at this trough massively and I agree, agents - I wouldn't be opposed to Governments coming in and regulating, saying you can't charge more than 1 per cent. 1 per cent is a lot on a median house of $800,000, it's still $8,000.

Yeah and a lot of people are now getting vendor's advocates as well as the agents.

On percentage commissions.

Yes.

It's like fund managers. Fund managers still getting paid 150 basis points or 1.5 per cent a year, that is ridiculous.

Yeah. Do you want to do the ARN question?

We've already done that, I think...

Sarah says, "I do enjoy listening to your podcast and Alan's segments on the ABC. I was wondering, do you have any good news to report? Everything is so grim lately, I really just want to go hide under a rock..."

Thanks, Sarah. What about Artemis? We've seen the dark side of the moon. I'm a moon baby, I was born July 23, 1969, that was when Neil Armstrong was just careering back to land in the ocean and they only went again six years later. They haven't been to the moon for 50 damn years and we've finally gone around the moon and we've seen the dark side, that is good news, Sarah, that is humanity progressing, let's be excited and celebrate the good news.

I cannot understand why Pink Floyd wasn't playing as they did it.

Maybe they didn't give the licensing approval, Copyright issues. Certainly no good news for our footy teams, Alan, Essendon and Richmond are both on the bottom without a win, so we can't talk about good news there, but I think the moon landing is the best news going around, or the moon navigation around the dark side.

I guess so.

Xavier's tuning in from South Korea, "Regarding David Pocock's proposed gas tax, do you expect that there will also be changes to provide a 25 per cent cash refund for unsuccessful exploration drilling, i.e. dry holes? If the Federal Government wants to take the profit from resources, it also has to take some of the exploration risk..." and he goes on to talk about how Norway does it. This goes back to, are they going to do a gas tax grab? I think it's possible, but I think it's too early to get into the drill baby drill, they Strait of Hormuz is closed forever, we've got to dig up the Great Australian Bight or we've got to open up new areas for exploration because we've got to fill the gap from the Middle East. That could happen if everything gets blown up, but as of now, I don't think we need to particularly change the incentives on exploration, do we?

I wouldn't have thought so. I do think that big picture, one of the reasons we pay so much for childcare and kindergarten and pay so much for tertiary education, is that we don't tax our resources enough. I think countries like Norway and other countries that have higher levels of taxation on those who can afford it tend to have better education systems that are free and better welfare systems than we do.

WA is the worst offender at that, their taxes, their iron ore and gold royalties are ridiculously low. Broome, should be Dubai, Broome should be skyscrapers and luxury hotels everywhere, funded by the literally trillions of dollars of wealth in that red dust, the iron ore. Instead, it all goes down to Perth, all gets burgled by Canberra and you're struggling to find a community centre in Port Hedland. None of the riches have gone to the owners or the areas where those riches have been extracted from.

How terrific would that be, Dubai in Broome, crikey, what a horror show, Stephen.

Kicking over another beehive, go with that one on the ABC, Alan! All right, your turn. Last question, what do you want?

Last question, what do we do? Warwick perhaps?

Yeah, Warwick.

Warwick says, "I feel the NDIS is usually talked about in economic terms at least of being a massive black hole for the federal budget. I'd appreciate your comments through the lens of it being a stimulus to small business across the country, importantly in rural and regional areas. I see local exercise physicians, carers, overwhelmingly women, transport drivers and even the construction industry benefitting from the funding provided to recipients, whereas most people seem to think the funds somehow stop with the recipient. For what it's worth, I'm not a recipient, just an observation."

I've just had an epiphany, Alan, Gillard and Shorten, they were visionaries, they could see the AI jobs wipeout coming down the line, so they created the NDIS as a job creation program to fill the gap from the AI wipeout. Look, I'm being facetious obviously, but look, it's rising at 10 per cent a year, it's costing the budget $50 billion, there's 800,000 beneficiaries, it's the world's most generous NDI scheme and a lot of people get employed, particularly in rural areas. So Warwick is right, but you still can't ignore the value for money, fairness and equity question, because for every dollar that goes into the NDIS, there's a dollar less for childcare, it's all about options and where you prioritise the allocation of a scarce resource.

That's right. I agree and I put this to Jim Chalmers in our interview, does he think the NDIS, given that it's growing much more quickly than expected, than planned, doesn't that mean that it was poorly designed? Because they designed it, they had one kind of set of forecasts and expectations and it's blown that out, so it seems to me obvious that it was poorly designed. The NDIS is great, it just wasn't well designed, so they probably do need to change. The Government acknowledges this, they need to fix it, they need to change the design of it in some way that keeps it under better control. Obviously, the key problem is the extent of autism diagnosis and I think ADHD is going on it as well, is that right? Those kind of things are much larger than expected. Think about that. Do we just let it happen and say, as our questioner says, that it's just a stimulus to the economy and away you go, that's fine? If we do, the money's got to be found, you've got to fund it somehow.

I do think there's an argument that it shouldn't be overtaking Medicare. Medicare is available to everyone, the NDIS goes to 800,000 people only. It only deals with a minority of the population, whereas free public education, these things are universal and everyone benefits from them, so it is a very large amount of money to spend on 800,000 people, but look, once something's in, it's very hard to take it away. So I think you've just got to try and manage the speed of it and we won't be putting dental into Medicare any time soon, there's a budget in deficit. I think we're done, Boss, and the Bont in Arthur's Milkbar here - we haven't seen the Bont yet, where is he?

No, we haven't seen him.

We thought we'd get a VIP visit from the Bont today, but...

He's having a sleep in.

Well, he works hard.

He does.

I wonder if he's got an SMSF? Probably.

Well, he has good staff.

Excellent staff, great coffees, good pastries here.

Good pastries - you haven't eaten any of your pastries.

Well, I'm about to tuck in, it's hard to talk and eat at the same time with the headphones on, Boss. I can't even where my Money Café hat with these headphones on, so we'll take our headphones off, put our hats on and tuck into these beautiful Bont pastries.

Very good. Thanks, everyone, for listening to today's episode of The Money Café, I'll be back next week with James Thomson. I'm not sure we'll be in the Bont's café again, but never mind. Send in your question and we'll answer it, email themoneycafe@intelligentinvestor.com.au. Until then, I'm Alan Kohler, Editor-at-Large of Intelligent Investor and Finance Presenter and Columnist for the ABC.

And I'm Stephen Mayne, contributor at Intelligent Investor, Founder of Crikey and shareholder activist.

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