1 00:00:04,720 --> 00:00:11,360 Speaker 1: The Australian Financial Review. Hello, I'm James Thompson, senior chanticleer 2 00:00:11,440 --> 00:00:14,960 Speaker 1: columnist at the AFI. Welcome to our weekly news breakdown 3 00:00:15,040 --> 00:00:22,480 Speaker 1: of all things business, finance and markets with me to 4 00:00:22,560 --> 00:00:25,400 Speaker 1: day as always as my chanticleer colleague. He's worth more 5 00:00:25,440 --> 00:00:28,520 Speaker 1: than all the shares in Australia's second biggest hospital company 6 00:00:28,520 --> 00:00:31,240 Speaker 1: put together. It's Anthony McDonald. How are you, Anthony? 7 00:00:31,440 --> 00:00:33,640 Speaker 2: Yeah, Fortunately no one and a half billion dollar loan 8 00:00:33,680 --> 00:00:34,000 Speaker 2: to here. 9 00:00:33,960 --> 00:00:40,680 Speaker 1: Jameson absolutely well. This week we reveal what the new 10 00:00:40,720 --> 00:00:43,840 Speaker 1: strategy of one of Australia's biggest companies tells us about 11 00:00:43,880 --> 00:00:47,080 Speaker 1: the coming AI boom. We take you inside the biggest 12 00:00:47,120 --> 00:00:50,400 Speaker 1: corporate collapse since the pandemic, and we explain the new 13 00:00:50,440 --> 00:00:54,240 Speaker 1: theory moving the market, the Taco theory. But Anthony, let's 14 00:00:54,240 --> 00:00:56,280 Speaker 1: start with the government decision that's going to shape the 15 00:00:56,280 --> 00:00:59,480 Speaker 1: country for I don't know forty years. The approval to 16 00:00:59,560 --> 00:01:03,960 Speaker 1: extend the Northwest Shelf liquefied natural Gas project, which is 17 00:01:04,000 --> 00:01:07,560 Speaker 1: operated by Woodside up there in Western Australia. Now, Anthony, 18 00:01:07,600 --> 00:01:10,679 Speaker 1: the Environment Minister Murray Waite, he was pretty open that 19 00:01:10,720 --> 00:01:13,360 Speaker 1: this was going to make people unhappy. Whatever his decision, 20 00:01:13,520 --> 00:01:15,400 Speaker 1: was Did he get it right though. 21 00:01:15,200 --> 00:01:17,360 Speaker 3: Well, there's definitely a spicy meat ball of a decision, 22 00:01:17,400 --> 00:01:19,200 Speaker 3: and yeah, I think it's right. But I mean it's 23 00:01:19,200 --> 00:01:22,720 Speaker 3: so controversial because it's gas, fossil fuels, climate change's big business. 24 00:01:23,240 --> 00:01:25,560 Speaker 3: I mean, you're never going to make everyone happy. I mean, 25 00:01:25,600 --> 00:01:27,959 Speaker 3: in a perfect world, the whole world would have already 26 00:01:27,959 --> 00:01:31,199 Speaker 3: transitioned from gas and off all fossil fields. We wouldn't 27 00:01:31,200 --> 00:01:34,320 Speaker 3: even be having this conversation, and would beyond the renewable energy, 28 00:01:34,360 --> 00:01:37,039 Speaker 3: the extension of the Northwest Shelf would be a no brainer, 29 00:01:37,040 --> 00:01:38,119 Speaker 3: wouldn't even be needed. 30 00:01:38,600 --> 00:01:39,880 Speaker 2: But James, we're just not there. 31 00:01:40,120 --> 00:01:42,399 Speaker 3: So we've come around to or realize we're not in 32 00:01:42,440 --> 00:01:45,160 Speaker 3: this perfect world and the energy transition is not going 33 00:01:45,200 --> 00:01:47,560 Speaker 3: to be a perfect thing. And the world needs gas. 34 00:01:47,720 --> 00:01:51,320 Speaker 3: Australia has gas. Australia needs gas and we need it 35 00:01:51,360 --> 00:01:54,520 Speaker 3: so badly that we're building an import terminal just south 36 00:01:54,520 --> 00:01:57,880 Speaker 3: of Sydney here, James, which is quite unbelievable really, And 37 00:01:57,880 --> 00:02:00,200 Speaker 3: there's another one in planning for Downagel Long. But I 38 00:02:00,280 --> 00:02:02,640 Speaker 3: think this decision, James, was a pragmatic one. You know, 39 00:02:02,680 --> 00:02:05,320 Speaker 3: the Labor government, they really changed their message on gas 40 00:02:05,600 --> 00:02:08,359 Speaker 3: in the past year or so. It is the transition 41 00:02:08,480 --> 00:02:11,600 Speaker 3: feel for the next few decades. And if you're okay 42 00:02:11,720 --> 00:02:13,760 Speaker 3: using it here in Australia, James, you've got to be 43 00:02:13,800 --> 00:02:16,840 Speaker 3: okay extracting it, don't. I think that's what this comes 44 00:02:16,880 --> 00:02:19,680 Speaker 3: down to. And it's something we do well at Northwest Shelf. 45 00:02:19,720 --> 00:02:22,600 Speaker 3: It's been operating for decades. This an extension of it. 46 00:02:22,600 --> 00:02:25,720 Speaker 3: It's a very very big extension. It's our third biggest export. 47 00:02:25,760 --> 00:02:27,520 Speaker 3: It's good for the country in terms of the country's 48 00:02:27,520 --> 00:02:30,400 Speaker 3: balance sheet. So yes, the right decision. 49 00:02:30,440 --> 00:02:31,040 Speaker 2: What do you think? 50 00:02:31,200 --> 00:02:33,880 Speaker 1: Yeah, Look, I think we've been talking for a while 51 00:02:33,919 --> 00:02:38,440 Speaker 1: on the podcast about how inflation changes everything. It's changed 52 00:02:38,480 --> 00:02:41,280 Speaker 1: the outcome of all these elections. Most of the incumbents 53 00:02:41,280 --> 00:02:44,639 Speaker 1: got kicked out because of high inflation, Anthony Alben Easy 54 00:02:44,720 --> 00:02:48,639 Speaker 1: being the notable exception. But the inflation story has changed 55 00:02:48,880 --> 00:02:51,160 Speaker 1: the government's few on gas. In the last couple of years, 56 00:02:51,160 --> 00:02:55,880 Speaker 1: it's become clear that because of inflation in the general populace, 57 00:02:55,919 --> 00:02:58,560 Speaker 1: the cost of living going up, and because of particularly 58 00:02:58,560 --> 00:03:02,400 Speaker 1: inflation and construction costs, the energy transition is not going 59 00:03:02,760 --> 00:03:05,160 Speaker 1: in the way we want it to or ultimately need 60 00:03:05,200 --> 00:03:07,760 Speaker 1: it too. It's just going to be slower and tougher 61 00:03:07,800 --> 00:03:11,440 Speaker 1: and more expensive than we thought. And when you've got 62 00:03:12,320 --> 00:03:16,640 Speaker 1: affordability problem, you know you need a transition fuel, as 63 00:03:16,639 --> 00:03:18,200 Speaker 1: you say, to try and get us from one point 64 00:03:18,240 --> 00:03:20,400 Speaker 1: to the other. Gas has something we've got lots of 65 00:03:20,560 --> 00:03:22,440 Speaker 1: and you can see in the last twelve months the 66 00:03:22,480 --> 00:03:25,800 Speaker 1: government's really changed their tune on gas. And Meg O'Neil, 67 00:03:26,200 --> 00:03:30,720 Speaker 1: the CEO of Woodside, she said exactly that the conversation 68 00:03:30,800 --> 00:03:33,400 Speaker 1: has changed in the last couple of years as people 69 00:03:33,440 --> 00:03:35,640 Speaker 1: are looking at their power bills and going, hang on, 70 00:03:35,720 --> 00:03:37,800 Speaker 1: why is this going up so far? Don't we have 71 00:03:37,880 --> 00:03:40,680 Speaker 1: lots of energy here in Australia. So I think you're 72 00:03:40,720 --> 00:03:45,000 Speaker 1: right pragmatic decision. Does the Northwest Shelf go for another 73 00:03:45,040 --> 00:03:48,080 Speaker 1: forty years out to twenty seventy Well hopefully not, I guess, 74 00:03:48,600 --> 00:03:50,960 Speaker 1: but you know that this gives Woodside the certainty it 75 00:03:51,000 --> 00:03:53,680 Speaker 1: needs to invest certainly over the next couple of decades. 76 00:03:53,720 --> 00:03:57,160 Speaker 1: So it's the one thing Anthony has taken six and 77 00:03:57,200 --> 00:04:00,200 Speaker 1: a half years to get this approval in place. That 78 00:04:00,240 --> 00:04:02,480 Speaker 1: can't be right, That can't be good for any business 79 00:04:02,480 --> 00:04:05,520 Speaker 1: in Australia. That is something that we need to learn 80 00:04:05,520 --> 00:04:08,280 Speaker 1: out of this episode. We've got to move faster on 81 00:04:08,320 --> 00:04:08,680 Speaker 1: this stuff. 82 00:04:08,800 --> 00:04:12,160 Speaker 3: Yeah, just quickly, James, for the Chuck hard Cares out there. 83 00:04:12,320 --> 00:04:14,120 Speaker 3: Can you think of a busier company in Australia in 84 00:04:14,120 --> 00:04:16,359 Speaker 3: the past five years? The mood Side, you know, it 85 00:04:16,400 --> 00:04:19,440 Speaker 3: bought BHP's petroleum business in a really rare script deal 86 00:04:19,560 --> 00:04:21,839 Speaker 3: I was worth tens of billions of dollars, tried to 87 00:04:21,839 --> 00:04:24,760 Speaker 3: buy Santos, sold a half share in its plutou up 88 00:04:24,800 --> 00:04:25,839 Speaker 3: there in the Northwest. 89 00:04:26,000 --> 00:04:26,520 Speaker 2: As well. 90 00:04:26,760 --> 00:04:29,760 Speaker 3: When Global LNG last year, when it brought into a 91 00:04:29,839 --> 00:04:32,120 Speaker 3: US project called Driftwood, it now wants to develop that 92 00:04:32,120 --> 00:04:34,760 Speaker 3: that's going to cost tens of billions of dollars. Yeah, 93 00:04:34,839 --> 00:04:36,960 Speaker 3: it bought a clean ammonia project in the US that's 94 00:04:37,000 --> 00:04:39,039 Speaker 3: another two and a half billion dollars US last year, 95 00:04:39,080 --> 00:04:41,839 Speaker 3: and now it has this Northwest shelf extension and James 96 00:04:41,880 --> 00:04:44,680 Speaker 3: I saw cities analysts saying that could be a twenty 97 00:04:44,720 --> 00:04:48,520 Speaker 3: five billion dollar development. It's huge, huge maneuvering from a 98 00:04:48,560 --> 00:04:51,760 Speaker 3: company that's supposed to be in a sunset industry, whose 99 00:04:51,800 --> 00:04:54,560 Speaker 3: shareholders voted against this climate plan last year, who's some 100 00:04:54,640 --> 00:04:56,680 Speaker 3: of whose sharhold has tried to kick the chairman, Richard 101 00:04:56,680 --> 00:04:57,640 Speaker 3: Goiter out last year. 102 00:04:58,000 --> 00:04:59,320 Speaker 2: There's so much going on there. 103 00:05:00,000 --> 00:05:01,559 Speaker 1: True, but I think that's the nature of the beast. 104 00:05:01,600 --> 00:05:05,320 Speaker 1: You know that this energy transition is happening, it needs 105 00:05:05,320 --> 00:05:08,159 Speaker 1: to happen. It's it's all over the shop, and so 106 00:05:08,279 --> 00:05:10,600 Speaker 1: Woodside is going to be here, there and everywhere. I 107 00:05:10,680 --> 00:05:13,040 Speaker 1: think that's what you'll that's what will continue to see 108 00:05:13,279 --> 00:05:15,120 Speaker 1: that they're going to be need to be very nimble 109 00:05:15,160 --> 00:05:16,440 Speaker 1: as this as this plays out. 110 00:05:16,520 --> 00:05:18,320 Speaker 3: Okay, James has been killing me since the start of 111 00:05:18,360 --> 00:05:21,000 Speaker 3: this episode. What the hell is the tarco theory? 112 00:05:21,400 --> 00:05:25,280 Speaker 1: The tarco theory? Anthony was introduced to me by Anthony Scaramucci, 113 00:05:26,160 --> 00:05:30,320 Speaker 1: the Mooch, who was famously Donald Trump's press secretary for 114 00:05:30,400 --> 00:05:33,720 Speaker 1: I think nine days in the first Trump administration. I 115 00:05:33,760 --> 00:05:36,159 Speaker 1: spoke to him a couple of weeks ago and he said, 116 00:05:36,520 --> 00:05:39,880 Speaker 1: everyone over here is talking about the taco theory. Trump 117 00:05:40,400 --> 00:05:45,120 Speaker 1: always chickens out. And since since the Mooch told me 118 00:05:45,160 --> 00:05:47,200 Speaker 1: about this a couple of weeks ago and I put 119 00:05:47,240 --> 00:05:51,239 Speaker 1: it in there, He's right, it's everywhere. Because Trump suddenly 120 00:05:51,279 --> 00:05:54,800 Speaker 1: backed out of these tariff threats against China and against 121 00:05:54,839 --> 00:05:58,599 Speaker 1: the EU, and investors just expect that he's going to 122 00:05:58,640 --> 00:06:01,960 Speaker 1: back out on all these tariff and trade policies now. 123 00:06:02,480 --> 00:06:07,359 Speaker 1: Interestingly enough, Anthony on Wednesday night, it's a very brave 124 00:06:07,480 --> 00:06:11,440 Speaker 1: reporter in the Oval Office said Trump, excuse me, mister President, 125 00:06:11,480 --> 00:06:13,080 Speaker 1: have you heard of the taco theory? 126 00:06:13,279 --> 00:06:13,599 Speaker 2: Really? 127 00:06:13,760 --> 00:06:18,400 Speaker 1: And he said, that's a nasty question. He said, it 128 00:06:18,600 --> 00:06:20,640 Speaker 1: might look like chickening out to you, but it's just 129 00:06:20,760 --> 00:06:24,680 Speaker 1: good negotiating. Well, I'm sorry, Donald, but the market doesn't 130 00:06:24,680 --> 00:06:27,400 Speaker 1: believe you, mate. They have just decided that you are 131 00:06:27,400 --> 00:06:29,760 Speaker 1: going to keep backing out of these big threats that 132 00:06:29,800 --> 00:06:33,960 Speaker 1: you've made. Doge is dead. The restrictions on government spending 133 00:06:33,960 --> 00:06:37,040 Speaker 1: they're gone, the tariffs they look like they're gone. And 134 00:06:37,120 --> 00:06:40,640 Speaker 1: so here we are, the markets surging, We're back above 135 00:06:40,720 --> 00:06:44,920 Speaker 1: the levels we were at Liberation Day. The Wall Street's 136 00:06:44,960 --> 00:06:47,840 Speaker 1: only off three percent from its all time highs. No, 137 00:06:48,160 --> 00:06:51,200 Speaker 1: it's party time out there, Anthony. Does it feel quite 138 00:06:51,279 --> 00:06:53,240 Speaker 1: right to you that it's party time? 139 00:06:53,640 --> 00:06:56,720 Speaker 3: Not really, But I do like your taco theory. Trump 140 00:06:56,760 --> 00:07:01,640 Speaker 3: always chickens out. Tariffs are coming off, keep the taco 141 00:07:01,720 --> 00:07:04,440 Speaker 3: is going. It's highly ententitating, isn't it. 142 00:07:05,120 --> 00:07:08,440 Speaker 1: Yeah, it's like a Goose Marti Gomez restaurant in here 143 00:07:08,480 --> 00:07:11,040 Speaker 1: at the moment. Isn't it Alright, Anthony, let's get to 144 00:07:11,040 --> 00:07:13,040 Speaker 1: our first big topic. And on Tuesday we've got a 145 00:07:13,080 --> 00:07:17,560 Speaker 1: glimpse into the future when the telecommunications giant Telstra took 146 00:07:17,560 --> 00:07:21,320 Speaker 1: the wraps off its new five year strategy. Now, Telstra, 147 00:07:21,440 --> 00:07:23,440 Speaker 1: as we all know is it's a true giant of 148 00:07:23,680 --> 00:07:26,200 Speaker 1: Australian business. There really wouldn't be too many of us 149 00:07:26,320 --> 00:07:29,800 Speaker 1: who don't use its network or its digital infrastructure in 150 00:07:29,960 --> 00:07:33,000 Speaker 1: one way, shape or another. And as we all become 151 00:07:33,080 --> 00:07:36,800 Speaker 1: more connected, demand for that network and that infrastructure is 152 00:07:36,840 --> 00:07:40,240 Speaker 1: only going in one direction. The amount of data going 153 00:07:40,240 --> 00:07:43,360 Speaker 1: across the network in the past five years has tripled. 154 00:07:43,680 --> 00:07:45,200 Speaker 1: And if you think of all the stuff you do 155 00:07:45,240 --> 00:07:48,400 Speaker 1: on your phone, you can understand that. But Anthony, Telstra's 156 00:07:48,440 --> 00:07:52,080 Speaker 1: got a problem, doesn't It Demands through the roof, investments 157 00:07:52,080 --> 00:07:55,400 Speaker 1: through the roof, but Telstra is barely getting a return 158 00:07:55,520 --> 00:07:59,120 Speaker 1: above its cost of capital. Anthony, tell us a little 159 00:07:59,120 --> 00:08:02,000 Speaker 1: bit about what the cost of capital means and why 160 00:08:02,040 --> 00:08:04,040 Speaker 1: have Telstra's returns been so poor? 161 00:08:04,360 --> 00:08:05,920 Speaker 2: Well, James has been like this for years. 162 00:08:05,960 --> 00:08:08,720 Speaker 3: Like Telstra started out with a role gold network owned 163 00:08:08,720 --> 00:08:11,920 Speaker 3: by the government, subsidized by the government, regulated, lots of 164 00:08:11,920 --> 00:08:14,520 Speaker 3: political pressure to keep it roll gold service all parts 165 00:08:14,560 --> 00:08:17,760 Speaker 3: of Australia, you know, the remote and rural stuff. It's 166 00:08:17,800 --> 00:08:20,400 Speaker 3: a cost center, not a profit center for Telstra, and 167 00:08:20,840 --> 00:08:23,160 Speaker 3: still is. I mean Telstra's problem is that it's had 168 00:08:23,160 --> 00:08:25,880 Speaker 3: to keep investing in this network. You know, three G, 169 00:08:26,080 --> 00:08:29,400 Speaker 3: four G, five G, all that Capex James. It means 170 00:08:29,440 --> 00:08:32,720 Speaker 3: it's got a premium network, the biggest invest in Australia, 171 00:08:32,840 --> 00:08:34,560 Speaker 3: and if allays fair in love and war, it should 172 00:08:34,559 --> 00:08:37,200 Speaker 3: be able to charge premium prices and you know, really 173 00:08:37,280 --> 00:08:40,480 Speaker 3: really premium prices. But you know, the two b competitors 174 00:08:40,520 --> 00:08:43,800 Speaker 3: opt in Vodaphone. While they're small competitive Telstra, they do 175 00:08:43,880 --> 00:08:46,800 Speaker 3: keep it honest totally. They keep things pretty competitive in 176 00:08:46,840 --> 00:08:50,040 Speaker 3: the sector. I mean their network works fine for most 177 00:08:50,080 --> 00:08:53,240 Speaker 3: Australians for most jobs. They do their best to keep 178 00:08:53,280 --> 00:08:57,200 Speaker 3: the prices low, keep the pressure on Telstra. So Telstra 179 00:08:57,280 --> 00:09:01,160 Speaker 3: is this big, big gorilla, but the other two have 180 00:09:01,160 --> 00:09:03,160 Speaker 3: got networks that are competitive at least and that sort 181 00:09:03,160 --> 00:09:06,360 Speaker 3: of keeps a bit of a cap on Telstra's prices. 182 00:09:06,400 --> 00:09:10,760 Speaker 3: So this constant reinvestment from Telstra, combined with the pricing pressure, 183 00:09:10,800 --> 00:09:13,760 Speaker 3: combined with the regulatory and political pressure which is still 184 00:09:13,800 --> 00:09:17,360 Speaker 3: there a couple of decades on from the privatization means 185 00:09:17,360 --> 00:09:19,360 Speaker 3: it Telstra hasn't been able to really get the returns 186 00:09:19,400 --> 00:09:22,840 Speaker 3: it should have on these really valuable assets. Now, the 187 00:09:22,880 --> 00:09:25,320 Speaker 3: cost of capital is how much it costs Telstra to 188 00:09:25,360 --> 00:09:29,080 Speaker 3: borrow how much it should cost capital to spend shareholders money, 189 00:09:29,120 --> 00:09:31,800 Speaker 3: like what the return is that shareolders they expect, and 190 00:09:31,840 --> 00:09:34,560 Speaker 3: the returns that shareholders makes the profit It just isn't 191 00:09:34,640 --> 00:09:37,920 Speaker 3: enough to cover those numbers. Now, in the past, if 192 00:09:37,920 --> 00:09:40,280 Speaker 3: you bought Telstra shares, you weren't really buying it for 193 00:09:40,320 --> 00:09:42,320 Speaker 3: its profits, right, You're buying it for its dividend, right, 194 00:09:42,360 --> 00:09:45,160 Speaker 3: and you expected it to make normally twenty eight cents 195 00:09:45,160 --> 00:09:47,440 Speaker 3: a year in dividends it would pay out. You didn't 196 00:09:47,440 --> 00:09:49,280 Speaker 3: worry so much about the capital growth which would come 197 00:09:49,320 --> 00:09:51,280 Speaker 3: from the earning scrace and everything, and you just milk 198 00:09:51,320 --> 00:09:54,440 Speaker 3: the dividends for what they're worth own it for that. Now, 199 00:09:54,480 --> 00:09:57,360 Speaker 3: if you've owned Telstra shares and lots of strains did, 200 00:09:57,400 --> 00:10:00,319 Speaker 3: and I think more than one millions still do, it's 201 00:10:00,360 --> 00:10:04,240 Speaker 3: been a pretty sluggish ride, which is ironic, James, isn't 202 00:10:04,240 --> 00:10:07,800 Speaker 3: it Because the company at its heart it's about technology. 203 00:10:07,880 --> 00:10:08,760 Speaker 2: Yeah, it's technology. 204 00:10:08,800 --> 00:10:11,800 Speaker 3: Infrastructure, and what's been a better place to invest in 205 00:10:11,800 --> 00:10:16,040 Speaker 3: the past decade than technology and tech infrastructure. So it's 206 00:10:16,040 --> 00:10:19,240 Speaker 3: been a big problem for Telstra James. That leads to 207 00:10:19,240 --> 00:10:21,920 Speaker 3: the obvious question, what's the CEO, VICKI Brady. What's she 208 00:10:21,960 --> 00:10:22,679 Speaker 3: going to do about it? 209 00:10:22,920 --> 00:10:25,360 Speaker 1: Well, look, the first thing she's going to try and 210 00:10:25,400 --> 00:10:28,559 Speaker 1: do is, over the next five years, get Telstra's return 211 00:10:28,600 --> 00:10:31,760 Speaker 1: on invested capital from about eight percent at the moment, 212 00:10:32,040 --> 00:10:34,880 Speaker 1: which is barely washing its face, up to about ten percent, 213 00:10:34,920 --> 00:10:38,040 Speaker 1: and that would be absolutely industry leading in the telco 214 00:10:38,120 --> 00:10:41,360 Speaker 1: sector around the world. How is she going to do it? Well, Anthony, 215 00:10:41,400 --> 00:10:43,360 Speaker 1: I'm sorry to say, she's going to make you pay. 216 00:10:43,679 --> 00:10:46,320 Speaker 1: You're going to make us all pay. Look, I mean, 217 00:10:46,760 --> 00:10:49,160 Speaker 1: at the heart of this is exactly what you said. 218 00:10:49,200 --> 00:10:52,520 Speaker 1: Telshra's got a premium network. All Telstra's customers tell it 219 00:10:52,559 --> 00:10:54,600 Speaker 1: all day and all night that it's got a premium network. 220 00:10:55,040 --> 00:10:58,640 Speaker 1: It dominates the mobile business. Particularly. What Brady needs to 221 00:10:58,679 --> 00:11:02,160 Speaker 1: do is extra track the right amount of return for that. 222 00:11:02,400 --> 00:11:04,760 Speaker 1: So what we'll start to see over the next five 223 00:11:04,840 --> 00:11:09,520 Speaker 1: years is Telstra sort of offering attributes of that network 224 00:11:10,760 --> 00:11:14,160 Speaker 1: that people can buy if they need an extra premium service. 225 00:11:14,440 --> 00:11:17,000 Speaker 1: I'll give you a couple of examples. Let's say you're 226 00:11:17,160 --> 00:11:20,360 Speaker 1: a you know, you love streaming movies on the go, 227 00:11:20,720 --> 00:11:24,880 Speaker 1: so you need a really good, really high quality, reliable 228 00:11:24,960 --> 00:11:28,080 Speaker 1: service for that. Well, telstrall make you pay a little 229 00:11:28,080 --> 00:11:31,600 Speaker 1: bit extra for that extra reliability. You're a food vendor 230 00:11:31,720 --> 00:11:34,240 Speaker 1: right at a big music festival. The one thing it 231 00:11:34,240 --> 00:11:36,719 Speaker 1: can't go down is your payment system, so you might 232 00:11:36,760 --> 00:11:39,640 Speaker 1: pay a little bit extra for a guaranteed spot on 233 00:11:39,679 --> 00:11:42,840 Speaker 1: the network to make that work. You're a business that 234 00:11:42,920 --> 00:11:46,880 Speaker 1: does artificial intelligence stuff. You need really low latency. You 235 00:11:47,000 --> 00:11:49,600 Speaker 1: want the bits and the bytes going down the pipes 236 00:11:49,640 --> 00:11:51,960 Speaker 1: really quickly, so you know you'll pay a bit of 237 00:11:52,120 --> 00:11:54,800 Speaker 1: extra for that. The idea, Brady says, is to sort 238 00:11:54,840 --> 00:11:58,960 Speaker 1: of have a good, better, best service and charge people appropriately. 239 00:11:59,559 --> 00:12:03,120 Speaker 1: Now that is done, and in every sector you can 240 00:12:03,160 --> 00:12:07,400 Speaker 1: think of, there's a tiered pricing model. It hasn't been 241 00:12:07,400 --> 00:12:09,520 Speaker 1: done in telcos. They haven't been good at it. Basically 242 00:12:09,600 --> 00:12:12,400 Speaker 1: they've built the network and said, look how good this 243 00:12:12,440 --> 00:12:15,280 Speaker 1: thing is. You know, we might change your data inclusions 244 00:12:15,360 --> 00:12:17,960 Speaker 1: or your data speeds a little bit, but that's that's 245 00:12:18,000 --> 00:12:20,199 Speaker 1: that's all. So this is a bit of a step 246 00:12:20,280 --> 00:12:22,760 Speaker 1: change for Telstra, and as more and more data goes 247 00:12:22,840 --> 00:12:25,280 Speaker 1: down these pipes, as more and more of us become 248 00:12:25,400 --> 00:12:28,600 Speaker 1: reliant on the network, it wants to get a return 249 00:12:28,679 --> 00:12:30,839 Speaker 1: for that, and its shareholders do too. 250 00:12:31,160 --> 00:12:32,800 Speaker 2: You know what Teestra could do, James, what's that? 251 00:12:33,000 --> 00:12:34,920 Speaker 3: For the ones that are into streaming and for the movies, 252 00:12:34,920 --> 00:12:36,840 Speaker 3: they could make the first movie free and it could 253 00:12:36,840 --> 00:12:38,959 Speaker 3: be Jerry maguire And you can sit there listen to 254 00:12:39,000 --> 00:12:42,320 Speaker 3: someone saying, show me the money, Show me the money, and. 255 00:12:42,240 --> 00:12:44,520 Speaker 2: Then everyone can understand what Telstra's on about. 256 00:12:44,600 --> 00:12:46,840 Speaker 1: I think they'll have a much more subtle slogan than that. 257 00:12:47,360 --> 00:12:50,520 Speaker 3: Yes, but James, you promised us AI. Where does this 258 00:12:50,559 --> 00:12:52,880 Speaker 3: new revolution come into for Telstra? 259 00:12:53,360 --> 00:12:55,640 Speaker 1: Well, look, I mean obviously it comes in through the 260 00:12:56,200 --> 00:12:59,120 Speaker 1: demand they expect to see across its network that's going 261 00:12:59,200 --> 00:13:02,720 Speaker 1: to be AI driven. But the message I got was 262 00:13:02,760 --> 00:13:06,040 Speaker 1: that what Brady's saying is that AI is not some 263 00:13:06,080 --> 00:13:10,640 Speaker 1: sort of experimental thing now is here. It's using AI 264 00:13:10,760 --> 00:13:12,880 Speaker 1: to do all sorts of things on its network. So 265 00:13:13,320 --> 00:13:16,560 Speaker 1: make sure that you know recognize patterns such that it 266 00:13:16,760 --> 00:13:19,720 Speaker 1: if its network goes down, it can quickly do maintenance. 267 00:13:19,720 --> 00:13:22,520 Speaker 1: It can do preventative maintenance. I mean one of the 268 00:13:22,559 --> 00:13:26,000 Speaker 1: interesting things. One of the big costs for Telstra is 269 00:13:26,120 --> 00:13:29,640 Speaker 1: power and petrol. So yes, you know you need a 270 00:13:29,640 --> 00:13:31,640 Speaker 1: lot of you need a lot of energy to keep 271 00:13:31,679 --> 00:13:34,840 Speaker 1: the network going. But every time there's an outage somewhere 272 00:13:34,840 --> 00:13:38,079 Speaker 1: on its infrastructure, someone gets in a truck and rolls 273 00:13:38,120 --> 00:13:40,160 Speaker 1: out there and goes and fixes it. So if you 274 00:13:40,160 --> 00:13:44,120 Speaker 1: can have AI monitoring and self healing they called it 275 00:13:44,400 --> 00:13:46,640 Speaker 1: the network, then you can save a lot of money 276 00:13:46,640 --> 00:13:49,120 Speaker 1: doing that. The other place you can save money is 277 00:13:49,120 --> 00:13:54,280 Speaker 1: if you can deploy AI into your workforce. Now we're 278 00:13:54,320 --> 00:13:57,280 Speaker 1: already seeing a little bit of that. When you ring 279 00:13:57,360 --> 00:13:59,320 Speaker 1: up Telstra and you get on the ring up the 280 00:13:59,320 --> 00:14:01,360 Speaker 1: coll center and got an issue, you know, it's a 281 00:14:01,400 --> 00:14:04,439 Speaker 1: pain in that pain bum No one likes that. Back 282 00:14:04,480 --> 00:14:06,480 Speaker 1: in the day, they used to have used to have 283 00:14:06,520 --> 00:14:10,280 Speaker 1: to manually enter the notes from that conversation. Now AI 284 00:14:10,400 --> 00:14:14,160 Speaker 1: does that for them automatically. Only saves the call center 285 00:14:14,200 --> 00:14:17,480 Speaker 1: person thirty or sixty seconds per episode, But when you're 286 00:14:17,480 --> 00:14:20,360 Speaker 1: doing millions of these a year, that starts to add up. 287 00:14:20,800 --> 00:14:24,160 Speaker 1: Brady was actually quite honest. She said, Look, in five years, 288 00:14:24,880 --> 00:14:28,280 Speaker 1: the Telstra workforce will be smaller than it is now. 289 00:14:28,880 --> 00:14:31,080 Speaker 1: Now We don't know how much smaller? Is it ten percent? 290 00:14:31,160 --> 00:14:33,880 Speaker 1: Is at five percent? Is it forty five percent? I 291 00:14:33,920 --> 00:14:36,080 Speaker 1: don't know when Vicky Brady doesn't know, which is fair 292 00:14:36,200 --> 00:14:40,040 Speaker 1: enough because the tech is developing very quickly here. But 293 00:14:40,600 --> 00:14:43,440 Speaker 1: we've got a big AI summit coming up next week, Anthony, 294 00:14:43,880 --> 00:14:47,640 Speaker 1: And to me, this is more proof that this stuff's 295 00:14:47,640 --> 00:14:50,960 Speaker 1: becoming very real, very quickly, isn't it. I mean, you 296 00:14:51,120 --> 00:14:55,000 Speaker 1: talked to one of our big data center leaders, Greg Goodman, 297 00:14:55,080 --> 00:14:57,720 Speaker 1: this week. Where does he think we are in this 298 00:14:57,840 --> 00:14:59,240 Speaker 1: sort of whole AI revolution. 299 00:14:59,480 --> 00:15:02,480 Speaker 3: Ye, our data center leaders Greg Goodman. Now, James, that's 300 00:15:02,520 --> 00:15:04,680 Speaker 3: a sentence you wouldn't have said like a year ago, 301 00:15:04,800 --> 00:15:07,280 Speaker 3: let alone two years ago. It's amazing how much this 302 00:15:07,280 --> 00:15:12,480 Speaker 3: this space, to use Goodman Group's word, is changing. You know, 303 00:15:12,560 --> 00:15:16,800 Speaker 3: like this is a logistics company that develops warehouses, logistics parks, 304 00:15:16,800 --> 00:15:19,120 Speaker 3: that sort of stuff. Now it's really leap left into 305 00:15:19,360 --> 00:15:22,240 Speaker 3: data centers. And he says, it's hot, hot hot, you know, 306 00:15:22,320 --> 00:15:22,840 Speaker 3: red hot. 307 00:15:22,920 --> 00:15:24,560 Speaker 2: You know what, while while we. 308 00:15:24,520 --> 00:15:27,040 Speaker 3: Might think that the data centers stories come off the 309 00:15:27,080 --> 00:15:30,240 Speaker 3: boiler bit, he says, like on the ground, it's still 310 00:15:30,280 --> 00:15:30,640 Speaker 3: red hot. 311 00:15:30,640 --> 00:15:31,440 Speaker 2: It's as hot as ever. 312 00:15:31,560 --> 00:15:34,400 Speaker 3: And why it's just it's just the simple message we've 313 00:15:34,440 --> 00:15:36,760 Speaker 3: been hearing for a while now, James. It's that generative AI, 314 00:15:36,800 --> 00:15:41,120 Speaker 3: which is the AI that can create new content like text, images, music, 315 00:15:41,160 --> 00:15:43,480 Speaker 3: and video. And the data demand is going through the 316 00:15:43,560 --> 00:15:48,240 Speaker 3: roof the big software companies Amazon, Microsoft, Google, Meta, et cetera. 317 00:15:48,960 --> 00:15:52,160 Speaker 3: They're investing huge sums into AI, tens of billions of 318 00:15:52,200 --> 00:15:54,520 Speaker 3: dollars a quarter some of them, and they need data 319 00:15:54,560 --> 00:15:57,440 Speaker 3: centers to make that growth come true. Yeah, So, like 320 00:15:57,480 --> 00:16:00,640 Speaker 3: I said, he's gone from logistics parks to jump over 321 00:16:00,680 --> 00:16:03,080 Speaker 3: into data centers and he reckons He's going to have 322 00:16:03,520 --> 00:16:06,120 Speaker 3: five hundred megawat's worth a data center started by June 323 00:16:06,200 --> 00:16:06,680 Speaker 3: next year. 324 00:16:07,200 --> 00:16:08,520 Speaker 2: Five hundred megawats is a lot. 325 00:16:08,600 --> 00:16:10,560 Speaker 3: He's got one in Sydney at Artaman, just up the 326 00:16:10,600 --> 00:16:11,640 Speaker 3: road from North Sydney here. 327 00:16:11,680 --> 00:16:13,520 Speaker 2: James got one down there for you in Melbourne. Take 328 00:16:13,560 --> 00:16:15,920 Speaker 2: out of Paris. Back of the envelope. 329 00:16:16,000 --> 00:16:19,640 Speaker 3: Five hundred megawats is about five billion dollars worth of development, right, 330 00:16:19,680 --> 00:16:21,920 Speaker 3: so Goodman Group will find some of that itself. It'll 331 00:16:21,920 --> 00:16:24,640 Speaker 3: also bring in some capital partners. The names that it 332 00:16:24,640 --> 00:16:28,000 Speaker 3: brings in James's capital partners and the price at which 333 00:16:28,040 --> 00:16:30,440 Speaker 3: they come in or the return expectations at which they 334 00:16:30,480 --> 00:16:32,240 Speaker 3: come in in a I mean, that's the bit that 335 00:16:32,440 --> 00:16:35,480 Speaker 3: really shows you how hot this sector is. 336 00:16:35,840 --> 00:16:38,840 Speaker 2: We don't really have that data yet, but. 337 00:16:39,080 --> 00:16:42,200 Speaker 3: If Greg Goodman's to be believed, there's plenty of capital there. 338 00:16:42,200 --> 00:16:44,800 Speaker 3: It's just a matter of getting the timing right. But 339 00:16:45,160 --> 00:16:48,320 Speaker 3: for him, he says, for Goodman Group, they've got all 340 00:16:48,320 --> 00:16:50,800 Speaker 3: these developments. They've been working away at them in the 341 00:16:50,840 --> 00:16:53,080 Speaker 3: background for a bit, he said, You've got but they're 342 00:16:53,120 --> 00:16:56,400 Speaker 3: trying to do that prep work as fast as they can, 343 00:16:56,520 --> 00:16:59,120 Speaker 3: you know, securing the power, securing the approvals, getting all 344 00:16:59,120 --> 00:17:01,480 Speaker 3: the equipment. He said, there's not many holidays at Goodman 345 00:17:01,520 --> 00:17:03,640 Speaker 3: Group at the moment because there's this big opportunity there 346 00:17:04,040 --> 00:17:08,120 Speaker 3: and they're all rushing to get it out. Basically saying, look, 347 00:17:08,160 --> 00:17:11,240 Speaker 3: don't forget about the data centers theme. It is definitely 348 00:17:11,520 --> 00:17:14,440 Speaker 3: not dead. Yeah, fair enough, now, James, speaking of AI, 349 00:17:14,840 --> 00:17:16,960 Speaker 3: we had inn videos result this week. Can you tell 350 00:17:17,000 --> 00:17:17,760 Speaker 3: us about it quickly? 351 00:17:18,119 --> 00:17:20,840 Speaker 1: Oh? Well, you and your generative AI Anthony, that's so 352 00:17:20,960 --> 00:17:26,720 Speaker 1: old hat. That's last week, mate. I'm onto agentic AI now, 353 00:17:27,480 --> 00:17:29,560 Speaker 1: which sounds even cooler, doesn't it. This is all about 354 00:17:29,560 --> 00:17:32,960 Speaker 1: AI agents now, AI agents they're the ones that they 355 00:17:32,960 --> 00:17:35,880 Speaker 1: can basically think for themselves. This is where you get 356 00:17:35,920 --> 00:17:39,360 Speaker 1: an AI agent that can reason, work through a problem, 357 00:17:39,400 --> 00:17:42,159 Speaker 1: and then take action. So you know, you might have 358 00:17:42,400 --> 00:17:47,760 Speaker 1: an AI agent that does summarizes the call center transcripts 359 00:17:47,960 --> 00:17:51,080 Speaker 1: or does some other role in videos. Ideas that we're 360 00:17:51,119 --> 00:17:53,880 Speaker 1: going to have a sort of virtual workforce of these 361 00:17:53,920 --> 00:17:55,280 Speaker 1: that you can just sort of pull off the shelf 362 00:17:55,320 --> 00:17:57,280 Speaker 1: and say, yep, take that one, Take that one, take 363 00:17:57,320 --> 00:18:01,240 Speaker 1: that one, And that's where we're moving now. To be fair, 364 00:18:01,480 --> 00:18:03,679 Speaker 1: that's where AO needs to move because the money is 365 00:18:03,720 --> 00:18:06,200 Speaker 1: not in mum and Dad sitting at home doing chap 366 00:18:06,280 --> 00:18:09,840 Speaker 1: GPT searchers on their next holiday. There's no cash in that. 367 00:18:09,920 --> 00:18:14,040 Speaker 1: The cash is going to come from businesses replacing human 368 00:18:14,119 --> 00:18:18,000 Speaker 1: workers with virtual workers. It's that simple. Well, it is 369 00:18:18,040 --> 00:18:20,320 Speaker 1: that simple, and it's that scary, and it's that exciting. 370 00:18:21,119 --> 00:18:24,199 Speaker 1: That's where Invidio says we are now and that's the 371 00:18:24,240 --> 00:18:27,280 Speaker 1: next part of this revolution. So watch out. I think 372 00:18:27,320 --> 00:18:28,399 Speaker 1: we're going to have a lot of fun at the 373 00:18:28,440 --> 00:18:31,719 Speaker 1: AI Summit next week chewing through some of what that 374 00:18:31,840 --> 00:18:35,840 Speaker 1: means for austrained society, because I'm going to have some implications. 375 00:18:36,000 --> 00:18:40,480 Speaker 2: Oh yeah, there's a lot going on for our second 376 00:18:40,480 --> 00:18:40,920 Speaker 2: to be James. 377 00:18:41,000 --> 00:18:44,080 Speaker 3: Let's look at Astralia's biggest corporate collapse since virgin This 378 00:18:44,119 --> 00:18:47,320 Speaker 3: week Hospitals Group Healthscapes lenders finally called in the receivers 379 00:18:47,560 --> 00:18:49,360 Speaker 3: and when it's sold as soon as possible to try 380 00:18:49,400 --> 00:18:51,840 Speaker 3: and recoup as much of their loans as they can. 381 00:18:52,320 --> 00:18:52,600 Speaker 2: James. 382 00:18:52,680 --> 00:18:54,840 Speaker 3: This collapse has been a while in the making, own 383 00:18:54,840 --> 00:18:57,000 Speaker 3: a brook Field by one of its private equity funds, 384 00:18:57,200 --> 00:18:59,480 Speaker 3: pay too much and lumped Healthscape with too much debt 385 00:18:59,520 --> 00:19:03,240 Speaker 3: and rent to survive any longer. Brookfield invested in June 386 00:19:03,280 --> 00:19:07,240 Speaker 3: twenty nineteen and officially loses control this week. It will 387 00:19:07,320 --> 00:19:09,840 Speaker 3: dust all of its investment, estimated it to be about 388 00:19:09,840 --> 00:19:14,520 Speaker 3: two billion dollars, and likely cause Healthscapes, banks and landlords to. 389 00:19:14,600 --> 00:19:17,080 Speaker 2: Dust some cash as well. James. 390 00:19:17,400 --> 00:19:19,399 Speaker 3: This is a sad corporate story. I mean, it's a 391 00:19:19,520 --> 00:19:23,159 Speaker 3: very important company, second biggest private hospital's owner in Australia, 392 00:19:23,359 --> 00:19:26,320 Speaker 3: huge part of the elective surgery production line in particular. 393 00:19:26,840 --> 00:19:29,400 Speaker 3: It's gone under. Its future is now up in the air. 394 00:19:29,440 --> 00:19:32,680 Speaker 3: Australia is probably a little bit poorer for it now. 395 00:19:32,840 --> 00:19:35,480 Speaker 3: It's a tempting to blame Healthscape's private equity owned Brookfield 396 00:19:35,520 --> 00:19:39,320 Speaker 3: for pushing it too hard on this investment. Do you 397 00:19:39,359 --> 00:19:40,639 Speaker 3: think this was Brookfield's fault? 398 00:19:40,760 --> 00:19:43,280 Speaker 1: Well, Anthony, you put him in the private equity Hall 399 00:19:43,280 --> 00:19:46,760 Speaker 1: of shame a few weeks ago, so I'd find that 400 00:19:46,800 --> 00:19:48,800 Speaker 1: hard to argue with. I mean, I think you said 401 00:19:48,800 --> 00:19:51,359 Speaker 1: it right. They paid too much, They loaded up with 402 00:19:51,480 --> 00:19:55,879 Speaker 1: too much debt, and they change the sort of nature 403 00:19:55,920 --> 00:19:59,520 Speaker 1: of the cost base where they got stung by a 404 00:19:59,520 --> 00:20:03,240 Speaker 1: big shift instructural costs around rent and also wages. Now, 405 00:20:03,640 --> 00:20:07,640 Speaker 1: did Brookfield see the pandemic coming which unleashed all this inflation? No, 406 00:20:07,840 --> 00:20:10,879 Speaker 1: you know, fair enough, But things happen in business. You 407 00:20:11,480 --> 00:20:14,560 Speaker 1: need to have a business that can withstand a little 408 00:20:14,600 --> 00:20:17,160 Speaker 1: bit of change or a lot of change. Actually, and 409 00:20:17,240 --> 00:20:19,320 Speaker 1: this business just hasn't been out of cope with it. 410 00:20:19,720 --> 00:20:23,560 Speaker 1: Other businesses have. But the debt and the rent agreements, 411 00:20:23,560 --> 00:20:27,480 Speaker 1: particularly of just hamstrung this business. So look, I think 412 00:20:27,480 --> 00:20:29,960 Speaker 1: Brookfield has to take the line and share of the 413 00:20:30,040 --> 00:20:33,440 Speaker 1: blame here. There are some big structural changes in healthcare. 414 00:20:33,640 --> 00:20:36,400 Speaker 1: We don't like going to have overnight stays in hospital anymore. 415 00:20:37,480 --> 00:20:40,480 Speaker 1: We like going for day days, and they are eight 416 00:20:40,520 --> 00:20:45,479 Speaker 1: times cheaper than staying in overnight, and so Brookfield suffered 417 00:20:45,480 --> 00:20:48,040 Speaker 1: a bit from that. There's a question about whether the 418 00:20:48,040 --> 00:20:51,119 Speaker 1: private health insurers are sharing enough of their profits to 419 00:20:51,160 --> 00:20:54,080 Speaker 1: support the sector. I think that's a legitimate question that 420 00:20:54,119 --> 00:20:57,280 Speaker 1: we'll see debated. But look, I mean, the company that 421 00:20:57,359 --> 00:20:59,760 Speaker 1: signs the check has to be the one that bears 422 00:20:59,760 --> 00:21:03,640 Speaker 1: alts responsibility, I think, and Brookfield's in that position. It's 423 00:21:03,680 --> 00:21:07,600 Speaker 1: not comfortable, but that's the way it goes. I guess 424 00:21:07,680 --> 00:21:10,520 Speaker 1: we can keep doing the post mortem forever. But what 425 00:21:10,680 --> 00:21:12,919 Speaker 1: matters now for you know, the people who are booked 426 00:21:12,920 --> 00:21:16,080 Speaker 1: in for surgery in the next few weeks. What matters 427 00:21:16,119 --> 00:21:19,760 Speaker 1: now is what happens next. So are there potential bidders 428 00:21:20,240 --> 00:21:22,399 Speaker 1: ready to come forward? They've had months to get ready. 429 00:21:23,080 --> 00:21:26,679 Speaker 1: Are they going to suddenly step forward and pay a price, 430 00:21:27,400 --> 00:21:29,400 Speaker 1: make a half decent bid and keep this thing going. 431 00:21:29,920 --> 00:21:32,840 Speaker 3: Receiverships should help James, like it really does. I mean, 432 00:21:32,880 --> 00:21:35,360 Speaker 3: it puts a timeframe on it, puts certain around the outcome. 433 00:21:35,600 --> 00:21:37,960 Speaker 3: You know, receivers there to sell it. This is for sale. 434 00:21:38,000 --> 00:21:41,240 Speaker 3: This is not Brookfield flying kites, which we've seen in 435 00:21:41,280 --> 00:21:43,560 Speaker 3: the past. You know, this gets the lenders together, gets 436 00:21:43,600 --> 00:21:46,160 Speaker 3: the landlords together, gets Brookfield out of the way, gets 437 00:21:46,160 --> 00:21:48,159 Speaker 3: Healthscope out of the way, gets Healthscope board out of 438 00:21:48,200 --> 00:21:52,000 Speaker 3: the way, and says we're doing something like deals like 439 00:21:52,040 --> 00:21:54,680 Speaker 3: this really are like hurting cats. You need to get 440 00:21:54,760 --> 00:21:57,280 Speaker 3: everyone on the same page at the same time, and 441 00:21:57,320 --> 00:22:00,239 Speaker 3: it's so hard to do. Sometimes it's just easy when 442 00:22:00,240 --> 00:22:03,720 Speaker 3: you've got an outsider and outsider with sort of legal 443 00:22:03,920 --> 00:22:06,600 Speaker 3: responsibilities and someone that the court will back if they 444 00:22:06,680 --> 00:22:10,800 Speaker 3: have to, to take a side here and get something done. 445 00:22:10,920 --> 00:22:14,000 Speaker 2: And that's what's happened with the receiver James. 446 00:22:13,720 --> 00:22:16,960 Speaker 3: Healthscope CEO this week Tino, who's been He told both 447 00:22:16,960 --> 00:22:20,399 Speaker 3: of us if Healthscope has three problems, receivership is the 448 00:22:20,400 --> 00:22:22,720 Speaker 3: best way to fix two of them, too much debt 449 00:22:22,760 --> 00:22:25,320 Speaker 3: and too much rent. The third one, which you just said, 450 00:22:25,359 --> 00:22:28,639 Speaker 3: then the structural issues in the healthcare system. Basically, we 451 00:22:28,680 --> 00:22:30,919 Speaker 3: have more private hospital beds than we need for now 452 00:22:30,960 --> 00:22:33,280 Speaker 3: at least, which is quite amazing if you think about 453 00:22:33,359 --> 00:22:37,040 Speaker 3: our aging population total and the demands and you hear 454 00:22:37,080 --> 00:22:39,920 Speaker 3: hospitals are overrun. All that sort of stuff that can't 455 00:22:39,960 --> 00:22:42,640 Speaker 3: be fixed by receivership. The fact that, like you said, 456 00:22:42,640 --> 00:22:44,920 Speaker 3: the models of care, the people not doing as many 457 00:22:45,040 --> 00:22:48,280 Speaker 3: nights in hospital that can't be fixed by receivership. The 458 00:22:48,280 --> 00:22:50,960 Speaker 3: fact that private hospitals are getting less of the private 459 00:22:51,000 --> 00:22:52,960 Speaker 3: money that goes into the private health sector than they 460 00:22:53,080 --> 00:22:56,160 Speaker 3: used to, about a billion dollars less according to Ramsey Healthcare. 461 00:22:56,560 --> 00:22:59,840 Speaker 3: That can't be fixed by receivership either. So there's still 462 00:23:00,280 --> 00:23:03,000 Speaker 3: some problems there that whoever it is that ends up 463 00:23:03,000 --> 00:23:05,479 Speaker 3: owning these hospitals is going to have to deal with. 464 00:23:06,160 --> 00:23:09,879 Speaker 3: Receivership won't change any of those, but it should act 465 00:23:10,000 --> 00:23:13,800 Speaker 3: as a lightning rod, perhaps for the industry, but most importantly, 466 00:23:13,840 --> 00:23:15,440 Speaker 3: it'll bring all the parties together. 467 00:23:15,240 --> 00:23:16,840 Speaker 2: In terms of this actual deal. 468 00:23:17,359 --> 00:23:20,520 Speaker 3: Now, James, perhaps a surprising thing, given what we've seen 469 00:23:20,520 --> 00:23:22,680 Speaker 3: in some other situations in the past year or two, 470 00:23:23,200 --> 00:23:25,240 Speaker 3: is that the government has pretty much stayed out of 471 00:23:25,240 --> 00:23:28,520 Speaker 3: this one. You know, he sat back and it's let 472 00:23:28,520 --> 00:23:31,200 Speaker 3: a business fail here. Yeah, yeah, Do you think that's 473 00:23:31,240 --> 00:23:31,959 Speaker 3: a good thing or not? 474 00:23:32,320 --> 00:23:35,000 Speaker 1: Well, Look, I mean we've been critical of the government 475 00:23:35,040 --> 00:23:38,560 Speaker 1: stepping into buy a crappy steel plant in Wuyela and 476 00:23:38,600 --> 00:23:41,600 Speaker 1: a pretty crappy regional airline called Rex, so you know 477 00:23:41,640 --> 00:23:45,160 Speaker 1: we shouldn't. We can't slam the government for staying out here. Look, 478 00:23:45,480 --> 00:23:48,879 Speaker 1: it was very deliberate. The health Minister Mark Butler. He 479 00:23:48,920 --> 00:23:51,159 Speaker 1: made it clear that there was no way he was 480 00:23:51,200 --> 00:23:54,040 Speaker 1: going to step in and use taxpayer money to fund 481 00:23:54,240 --> 00:23:57,120 Speaker 1: a private equity back to business, and he was very 482 00:23:57,119 --> 00:23:59,080 Speaker 1: clear about that. I think he even said a foreign 483 00:23:59,119 --> 00:24:03,359 Speaker 1: private equity back to business. So the government wants Brookfield 484 00:24:03,400 --> 00:24:05,560 Speaker 1: out of the way too. And so now they've cleared 485 00:24:05,560 --> 00:24:08,480 Speaker 1: the decks. So the opportunity is there at least for 486 00:24:08,520 --> 00:24:10,639 Speaker 1: the government to come in and start fixing some of 487 00:24:10,680 --> 00:24:12,959 Speaker 1: these big problems. But they're going to need to. You know, 488 00:24:13,000 --> 00:24:16,640 Speaker 1: this isn't just going to heal itself. Butler called I 489 00:24:16,640 --> 00:24:19,280 Speaker 1: didn't get this. But Butler called health scope and outlier. 490 00:24:19,520 --> 00:24:24,080 Speaker 1: It's not an outliner. Yeah, private hospitals are struggling big time. 491 00:24:24,640 --> 00:24:28,200 Speaker 1: And so unless there's a bit of industry reform, unless 492 00:24:28,240 --> 00:24:30,600 Speaker 1: they sort of use this as the lightning rod, as 493 00:24:30,640 --> 00:24:33,720 Speaker 1: you say, then we could have another hospital back in 494 00:24:33,800 --> 00:24:37,040 Speaker 1: the Sick Bay in the not too distant future. So 495 00:24:37,400 --> 00:24:40,080 Speaker 1: which brings us, Anthony to what are the lessons here? 496 00:24:40,480 --> 00:24:43,040 Speaker 1: What are the lessons for the country, for investors, even 497 00:24:43,040 --> 00:24:44,040 Speaker 1: for the health system. 498 00:24:44,200 --> 00:24:47,040 Speaker 3: Oh, James, you know me, and my mind goes straight 499 00:24:47,080 --> 00:24:49,600 Speaker 3: to deals, the way deals are done, the way these 500 00:24:49,640 --> 00:24:52,600 Speaker 3: private equity bids sort of work. Yeah, Australia has this 501 00:24:52,720 --> 00:24:57,240 Speaker 3: thing for assets with infrastructure like properties. All these businesses, 502 00:24:57,280 --> 00:25:02,280 Speaker 3: they're operating businesses. But anything with a government contract earnings 503 00:25:02,280 --> 00:25:06,760 Speaker 3: that can be called defensive. The financial engineers can't help themselves, 504 00:25:06,800 --> 00:25:09,879 Speaker 3: but look at this and say, it's infrastructure like that 505 00:25:09,960 --> 00:25:11,560 Speaker 3: means we can pay a lot for it. We can 506 00:25:11,600 --> 00:25:13,199 Speaker 3: load it up with debt, we can run it on 507 00:25:13,200 --> 00:25:15,520 Speaker 3: a shoe string budget. We can get earnings going up 508 00:25:15,640 --> 00:25:17,800 Speaker 3: and then float it back on the ax the suckers 509 00:25:17,840 --> 00:25:21,119 Speaker 3: out the other side and make some easy money. James, 510 00:25:21,119 --> 00:25:23,480 Speaker 3: this one makes you think twice. You know that such 511 00:25:23,480 --> 00:25:27,320 Speaker 3: a defensive business could go bust is almost unimaginable. If 512 00:25:27,359 --> 00:25:31,600 Speaker 3: you're talking about an investment grade type structure industry player 513 00:25:31,640 --> 00:25:35,760 Speaker 3: coming in with industry player like debt to equity ratios, 514 00:25:36,760 --> 00:25:40,080 Speaker 3: it just wouldn't go bust, right, But it's completely understandable 515 00:25:40,080 --> 00:25:42,080 Speaker 3: when you get your head around the financial engineering the 516 00:25:42,080 --> 00:25:44,400 Speaker 3: Brookfield had to do just to get this deal done 517 00:25:44,440 --> 00:25:47,280 Speaker 3: in the first place, and then pile on what happened 518 00:25:47,280 --> 00:25:49,480 Speaker 3: in the industry soon after, like you said, COVID, the 519 00:25:49,520 --> 00:25:52,240 Speaker 3: structural change, etc. So I think it should provide a 520 00:25:52,280 --> 00:25:56,040 Speaker 3: bit of pose thought really, like what is infrastructure? What 521 00:25:56,080 --> 00:25:58,359 Speaker 3: sort of businesses should you load up with? Fixed costs 522 00:25:58,400 --> 00:26:02,000 Speaker 3: like rent and interest payments? How defensive are hospital earnings? 523 00:26:02,359 --> 00:26:02,560 Speaker 3: You know? 524 00:26:02,640 --> 00:26:05,159 Speaker 2: What comes with being the government. 525 00:26:04,800 --> 00:26:08,320 Speaker 3: Back sector like private hospitals which wouldn't exist at such 526 00:26:08,320 --> 00:26:10,800 Speaker 3: scale if we're not for the government mandated and funded 527 00:26:10,840 --> 00:26:14,840 Speaker 3: private health insurance system and not medicare. What responsibilities come 528 00:26:14,880 --> 00:26:17,320 Speaker 3: with that in tough times? Like can you just cut costs? 529 00:26:17,359 --> 00:26:20,080 Speaker 3: Can you get your way through things like you might 530 00:26:20,160 --> 00:26:22,080 Speaker 3: normally do for a less important business? 531 00:26:22,400 --> 00:26:23,440 Speaker 2: For me, that's one of the lessons. 532 00:26:23,480 --> 00:26:23,639 Speaker 3: I mean. 533 00:26:23,680 --> 00:26:24,919 Speaker 2: The other thing we've. 534 00:26:24,560 --> 00:26:27,560 Speaker 3: Heard a little bit this week people saying about FERB, 535 00:26:28,080 --> 00:26:31,960 Speaker 3: the Foreign Investment Review Board, which looks at all foreign 536 00:26:32,080 --> 00:26:36,760 Speaker 3: investment in Australia or big ones and property at least, 537 00:26:36,760 --> 00:26:38,920 Speaker 3: and perhaps they should have a good hard look at themselves. 538 00:26:39,080 --> 00:26:41,639 Speaker 3: Why did they let such a big deal on a 539 00:26:41,680 --> 00:26:45,119 Speaker 3: systemically important business like Healthscope happen in the first place 540 00:26:45,200 --> 00:26:48,400 Speaker 3: in twenty nineteen. It's a good question, right, because first 541 00:26:48,480 --> 00:26:50,679 Speaker 3: jobs protect the national interest, but normally we see that 542 00:26:50,720 --> 00:26:55,199 Speaker 3: along security lines. Yeah, you know, Chinese buyers have been 543 00:26:55,280 --> 00:26:59,200 Speaker 3: ruled out of buying electricity networks for example, or pockets 544 00:26:59,240 --> 00:27:03,120 Speaker 3: of national interes. We normally think like the farmers graincop 545 00:27:03,160 --> 00:27:04,959 Speaker 3: wasn't allowed to be brought by the Canadians because they 546 00:27:05,000 --> 00:27:07,040 Speaker 3: were worried about the farmers and what it would do 547 00:27:07,119 --> 00:27:09,160 Speaker 3: to grain supply and the way the grain was moved 548 00:27:09,200 --> 00:27:13,360 Speaker 3: around in regional areas. But what about bitters blowing themselves 549 00:27:13,440 --> 00:27:15,879 Speaker 3: up financially on important assets? 550 00:27:15,920 --> 00:27:17,000 Speaker 2: Should that be a category? 551 00:27:17,520 --> 00:27:19,920 Speaker 1: I don't know. I mean, how does FERB look into 552 00:27:19,920 --> 00:27:22,600 Speaker 1: the future and say, what if there was a pandemic 553 00:27:22,680 --> 00:27:26,800 Speaker 1: that sent inflation up to nine percent? Is that realistic? 554 00:27:26,800 --> 00:27:29,000 Speaker 2: Anthony? I don't think it is. No, I don't think 555 00:27:29,040 --> 00:27:29,840 Speaker 2: it's realistic at all. 556 00:27:30,040 --> 00:27:32,720 Speaker 3: And if we're getting FERB to be a ruler over 557 00:27:32,800 --> 00:27:35,480 Speaker 3: financial structures like that, I think the country's lost the 558 00:27:35,520 --> 00:27:37,200 Speaker 3: plot personally. 559 00:27:37,520 --> 00:27:39,040 Speaker 1: Can I give you one lesson? 560 00:27:39,320 --> 00:27:39,600 Speaker 3: Yep. 561 00:27:39,920 --> 00:27:43,200 Speaker 1: So every year the government, the health minister comes out 562 00:27:43,200 --> 00:27:46,760 Speaker 1: and sits tells us how much private health insurance premiums 563 00:27:46,800 --> 00:27:50,040 Speaker 1: are going to rise by Now that health minister likes 564 00:27:50,680 --> 00:27:52,760 Speaker 1: his job, he wants to be voted in back next time. 565 00:27:53,080 --> 00:27:55,280 Speaker 1: He never puts through an increase that's probably what it 566 00:27:55,280 --> 00:27:57,919 Speaker 1: should be. He always tries to get that increase as 567 00:27:57,960 --> 00:28:01,000 Speaker 1: low as possible. But the problem is, as with lots 568 00:28:01,000 --> 00:28:03,159 Speaker 1: of things in Australia, we sort of never want to 569 00:28:03,200 --> 00:28:07,000 Speaker 1: pay for what something's actually worth or actually required, and 570 00:28:07,080 --> 00:28:09,600 Speaker 1: so we strangle the amount of funding at the sort 571 00:28:09,600 --> 00:28:11,879 Speaker 1: of top of the funnel, and then we set the 572 00:28:11,920 --> 00:28:15,360 Speaker 1: insurers and the private hospitals against each other to try 573 00:28:15,400 --> 00:28:19,200 Speaker 1: and fight as hard as they can for that artificially 574 00:28:19,280 --> 00:28:22,360 Speaker 1: constrained pool. I think we've just got to figure out 575 00:28:22,400 --> 00:28:25,199 Speaker 1: we are getting older, we will get sicker, it is 576 00:28:25,240 --> 00:28:27,199 Speaker 1: going to cost more, and we've sort of got to 577 00:28:27,200 --> 00:28:29,720 Speaker 1: cop that. And at the moment we've got this system 578 00:28:29,760 --> 00:28:33,000 Speaker 1: where we don't let that price signal flow through to 579 00:28:33,040 --> 00:28:35,760 Speaker 1: the market. We let a bloke who wants to get 580 00:28:35,760 --> 00:28:38,240 Speaker 1: reelected or a person who wants to get reelected, we 581 00:28:38,360 --> 00:28:42,280 Speaker 1: let them control where the prices are set. So I 582 00:28:42,280 --> 00:28:45,080 Speaker 1: think that's an issue too. Mark Fitzgibbon, who used to 583 00:28:45,120 --> 00:28:47,960 Speaker 1: run the health insurer NB, he says, get an independent 584 00:28:48,040 --> 00:28:50,000 Speaker 1: umpire to do that job, take it out of the 585 00:28:50,040 --> 00:28:52,520 Speaker 1: hands of the politicians. I reckon that's a good start 586 00:28:52,520 --> 00:28:55,400 Speaker 1: to Yeah, well said, all right, we'll be back after 587 00:28:55,400 --> 00:28:58,560 Speaker 1: the break, Anthony. We're getting a very important health check 588 00:28:59,000 --> 00:29:14,240 Speaker 1: for the Australian economy next week back in a second, Well, 589 00:29:14,280 --> 00:29:15,960 Speaker 1: welcome back. If you want to know more about what 590 00:29:15,960 --> 00:29:18,640 Speaker 1: we're talking about today, and a whole lot more. AFR 591 00:29:18,720 --> 00:29:22,000 Speaker 1: subscribers can sign up to the Chanticleer newsletter at join 592 00:29:22,080 --> 00:29:26,040 Speaker 1: dot AFI dot com forward slash Chanticleia. Every Saturday morning, 593 00:29:26,040 --> 00:29:28,520 Speaker 1: the newsletter pulls together the best Chanticleer columns from the 594 00:29:28,520 --> 00:29:32,240 Speaker 1: week and delivers them straight to your inbox. All right, Anthony, 595 00:29:32,400 --> 00:29:35,040 Speaker 1: we mentioned on Tuesday where we will be up in 596 00:29:35,080 --> 00:29:37,920 Speaker 1: Sydney for the AI Summit. I think it's sold out. 597 00:29:37,920 --> 00:29:39,760 Speaker 1: It is going to be really good. Isn't it a 598 00:29:39,800 --> 00:29:41,800 Speaker 1: really good sense check of where we're actually at? 599 00:29:42,000 --> 00:29:44,480 Speaker 3: Oh? Totally, such good timing for it, James. There's lots 600 00:29:44,480 --> 00:29:46,280 Speaker 3: and lots happening, as we've spoken about earlier. 601 00:29:46,400 --> 00:29:50,440 Speaker 1: Absolutely, on Wednesday we get GDP growth figures here in Australia. Now, 602 00:29:50,600 --> 00:29:54,160 Speaker 1: we saw the inflation number monthly inflation read during the week. 603 00:29:54,160 --> 00:29:56,440 Speaker 1: It came in a little bit hotter than we expected. 604 00:29:57,200 --> 00:30:00,960 Speaker 1: Does that mean a July the rate cut is off 605 00:30:01,000 --> 00:30:02,000 Speaker 1: the table, Anthony? 606 00:30:02,040 --> 00:30:03,720 Speaker 2: Do you think potentially? 607 00:30:03,800 --> 00:30:05,880 Speaker 3: I mean, as for this GDP number, I saw a 608 00:30:05,960 --> 00:30:09,520 Speaker 3: JP Morgan, we're expecting point three percent quarter on quarter growth, 609 00:30:10,040 --> 00:30:12,040 Speaker 3: which sounds all right, James, But remember the RBA is 610 00:30:12,080 --> 00:30:15,480 Speaker 3: expecting two point one percent for this calendar year. So yeah, 611 00:30:15,520 --> 00:30:16,920 Speaker 3: if we are going to hit two point one percent 612 00:30:16,960 --> 00:30:19,160 Speaker 3: for twenty twenty five, sounds like we're going to need 613 00:30:19,160 --> 00:30:20,920 Speaker 3: it to pick up in the second half. Yeah. 614 00:30:21,000 --> 00:30:25,240 Speaker 1: Well, I mean Paul Bloxham, who's the former RBA economist 615 00:30:25,320 --> 00:30:28,920 Speaker 1: now at HSBC. He says the maximum, the maximum the 616 00:30:28,960 --> 00:30:32,440 Speaker 1: economy can grow is two percent now and he reckons 617 00:30:32,440 --> 00:30:35,680 Speaker 1: where we've really got an issue. So this GDP number 618 00:30:35,720 --> 00:30:37,720 Speaker 1: is going to be really interesting to see. All Right, 619 00:30:37,840 --> 00:30:39,760 Speaker 1: on Friday night, we're going to get us job numbers, 620 00:30:39,800 --> 00:30:42,640 Speaker 1: which leads us into our question for the week. We 621 00:30:42,760 --> 00:30:45,200 Speaker 1: love questions here at the podcast. Our question this week 622 00:30:45,280 --> 00:30:48,640 Speaker 1: is from inz Zine from Wollongong. You've got a question 623 00:30:48,720 --> 00:30:50,400 Speaker 1: you want to send in, you can email us at 624 00:30:50,480 --> 00:30:53,160 Speaker 1: chanticleer at afi dot com. You can also send us 625 00:30:53,160 --> 00:30:55,920 Speaker 1: a question in audio form by recording a voice memo 626 00:30:56,040 --> 00:30:58,200 Speaker 1: on your phone. Just include your name and where you're 627 00:30:58,240 --> 00:30:59,160 Speaker 1: from and email. 628 00:30:58,960 --> 00:30:59,440 Speaker 2: It to us. 629 00:30:59,720 --> 00:31:01,320 Speaker 1: And of course some of you will have noticed that 630 00:31:01,320 --> 00:31:03,520 Speaker 1: there's now a widget that allows you to ask questions 631 00:31:03,600 --> 00:31:06,440 Speaker 1: on every chant of clear article on AFI dot com. 632 00:31:06,480 --> 00:31:09,680 Speaker 1: We're getting great questions through there. Please keep them coming 633 00:31:09,680 --> 00:31:12,120 Speaker 1: and we'll get to as many as we can. Let's 634 00:31:12,120 --> 00:31:12,600 Speaker 1: hear from an. 635 00:31:12,600 --> 00:31:16,080 Speaker 4: As Anthony and James. I was wondering with the whole 636 00:31:16,240 --> 00:31:19,880 Speaker 4: US situation. Could you outline the best in worst case 637 00:31:19,920 --> 00:31:23,400 Speaker 4: scenarios what would happen if US became debt free? And conversely, 638 00:31:23,400 --> 00:31:26,280 Speaker 4: what would happen if the US government went bankrupt? How 639 00:31:26,360 --> 00:31:31,280 Speaker 4: did this effict Australia? Thanks, and he's from Wollongong and A. 640 00:31:31,560 --> 00:31:33,880 Speaker 1: That's a great big picture question, Anthony. 641 00:31:33,920 --> 00:31:35,760 Speaker 3: You want to start all right, let's sing about the 642 00:31:35,800 --> 00:31:39,160 Speaker 3: US being debt free. The US's debt was worth one 643 00:31:39,280 --> 00:31:41,880 Speaker 3: hundred and twenty four percent of GDP last year, one 644 00:31:41,880 --> 00:31:45,520 Speaker 3: point twenty four times GDP, so it had US thirty 645 00:31:45,520 --> 00:31:48,040 Speaker 3: six trillion dollars in debt and the GDP so that 646 00:31:48,160 --> 00:31:51,120 Speaker 3: economic activity of the country was worth US twenty nine trillion. 647 00:31:51,600 --> 00:31:52,880 Speaker 2: That's a lot of debt, James. 648 00:31:53,000 --> 00:31:55,880 Speaker 3: Now that debt would take a lot of repay just 649 00:31:55,920 --> 00:31:57,960 Speaker 3: to pay the interest on that debt. Don't even worry 650 00:31:58,000 --> 00:32:00,600 Speaker 3: about paying off the debt. Just to pay the interest 651 00:32:00,640 --> 00:32:03,080 Speaker 3: on that debt. They're looking at close to a trillion dollars. 652 00:32:03,480 --> 00:32:06,680 Speaker 3: Yeah a year now, James. Remember the US budget deficit 653 00:32:06,920 --> 00:32:09,560 Speaker 3: is running close to US two trillion dollars a year, 654 00:32:09,600 --> 00:32:12,640 Speaker 3: so the debt's actually getting bigger. The interest costs are 655 00:32:12,640 --> 00:32:17,040 Speaker 3: going up so unfortunately. As I just I find it 656 00:32:17,080 --> 00:32:19,520 Speaker 3: really hard to see how that debt's. 657 00:32:19,200 --> 00:32:20,680 Speaker 2: Going to be paid off in full. 658 00:32:20,720 --> 00:32:24,080 Speaker 3: If it does happen, it's going to take It's hard 659 00:32:24,080 --> 00:32:26,080 Speaker 3: to see it happening in our lifetime. It's going to 660 00:32:26,160 --> 00:32:28,800 Speaker 3: take a while unless they've got an inheritance from a 661 00:32:28,920 --> 00:32:34,000 Speaker 3: richar in Saudi Arabia or something. It's just so hard 662 00:32:34,000 --> 00:32:37,800 Speaker 3: to see it paid down via repayments. I mean the 663 00:32:37,840 --> 00:32:41,040 Speaker 3: way it could get debt free then via some sort 664 00:32:41,080 --> 00:32:45,240 Speaker 3: of restructure where the lenders get wiped out like yacks. 665 00:32:45,600 --> 00:32:48,680 Speaker 3: That is, take your cash out and hide it under 666 00:32:48,680 --> 00:32:52,040 Speaker 3: the mattress type bad. That is end of day stuff 667 00:32:52,080 --> 00:32:53,600 Speaker 3: in terms of financial markets. 668 00:32:53,800 --> 00:32:55,880 Speaker 1: Yeah, I mean, I think the best scenario it ads 669 00:32:55,960 --> 00:32:57,960 Speaker 1: is that the government doesn't have to pay down its 670 00:32:57,960 --> 00:33:00,840 Speaker 1: debt immediately or even in a hurry, or even entirely. 671 00:33:00,960 --> 00:33:05,000 Speaker 1: Like a bit of debt for like any household or business, 672 00:33:05,000 --> 00:33:07,720 Speaker 1: a bit of debt is actually a bit useful. Let's 673 00:33:07,760 --> 00:33:10,440 Speaker 1: you do things. So the best scenario I think at 674 00:33:10,440 --> 00:33:13,520 Speaker 1: the moment would be if the government recognized the problem 675 00:33:14,160 --> 00:33:17,320 Speaker 1: and sort of committed to tackling it over the long term. 676 00:33:18,040 --> 00:33:21,360 Speaker 1: If it does that, then the people, the bond holders, 677 00:33:21,400 --> 00:33:24,840 Speaker 1: the people who lend the US government money every ten minutes, 678 00:33:25,240 --> 00:33:29,239 Speaker 1: they would say, look, okay, we get it. You know, 679 00:33:29,320 --> 00:33:33,320 Speaker 1: the US is a responsible borrower. They're doing the right thing. 680 00:33:33,360 --> 00:33:35,080 Speaker 1: They get the problem, They're going to attack it. That 681 00:33:35,080 --> 00:33:38,920 Speaker 1: would be the best situation because the cost of money 682 00:33:39,280 --> 00:33:41,760 Speaker 1: would fall. But at the moment we've got the cost 683 00:33:41,760 --> 00:33:45,960 Speaker 1: of money rising. It's quite high, and that's because the 684 00:33:46,000 --> 00:33:49,520 Speaker 1: bondholders don't believe that the government wants to be responsible. 685 00:33:49,760 --> 00:33:52,560 Speaker 1: They're just seeing them spend like a drunken sailor and 686 00:33:52,600 --> 00:33:57,880 Speaker 1: cut taxes. So could the US government go bankrupt. It's possible, again, 687 00:33:58,160 --> 00:34:02,480 Speaker 1: extraordinarily unlikely. I've seen countries go bankrupt before where they 688 00:34:02,520 --> 00:34:05,920 Speaker 1: can't meet their debt repayments, and as Anthony says, that 689 00:34:06,080 --> 00:34:09,480 Speaker 1: is just crazy for the bondholders. They would push the 690 00:34:09,560 --> 00:34:12,799 Speaker 1: price of money through the roof, and that would come 691 00:34:12,880 --> 00:34:16,520 Speaker 1: back to bite Australia because all of our banks, for example, 692 00:34:16,520 --> 00:34:20,280 Speaker 1: they have to go into international bond markets to raise money, 693 00:34:20,560 --> 00:34:23,280 Speaker 1: and they would need to pay a higher prevailing price 694 00:34:23,360 --> 00:34:26,240 Speaker 1: for that money. And guess what, the banks just wouldn't 695 00:34:26,280 --> 00:34:28,280 Speaker 1: eat that cost. They would pass it through to borrowers 696 00:34:28,320 --> 00:34:31,080 Speaker 1: down here, and so the cost of money would go 697 00:34:31,200 --> 00:34:34,720 Speaker 1: up for the entire world. So I mean, that's why 698 00:34:34,760 --> 00:34:38,480 Speaker 1: the bond market matters, Anthony. That's why when we hear 699 00:34:38,560 --> 00:34:42,720 Speaker 1: these stories about people becoming worried about the American debt situation, 700 00:34:42,960 --> 00:34:46,480 Speaker 1: it actually does matter to Australia eventually, and so we 701 00:34:46,520 --> 00:34:48,000 Speaker 1: want it to get We want them to get it 702 00:34:48,040 --> 00:34:48,839 Speaker 1: sorted out as well. 703 00:34:48,880 --> 00:34:52,360 Speaker 3: Right, absolutely, if the US goes broke, that's like hellscope 704 00:34:52,560 --> 00:34:53,560 Speaker 3: times are gazillion. 705 00:34:55,400 --> 00:34:58,560 Speaker 1: Yeah, well said Anthony. Well, Anthony, before we go today, 706 00:34:58,560 --> 00:35:00,520 Speaker 1: we wanted to take a moment to pay tribute to 707 00:35:00,520 --> 00:35:04,600 Speaker 1: an integral member of the Chanticleer podcast team, and indeed, Anthony, 708 00:35:04,640 --> 00:35:08,480 Speaker 1: the leader of the AFRs podcast division, lap Fan, who 709 00:35:08,560 --> 00:35:11,080 Speaker 1: is our super producer and the head of podcast here 710 00:35:11,080 --> 00:35:13,719 Speaker 1: at the Finn, is very sadly leaving us to start 711 00:35:13,760 --> 00:35:16,720 Speaker 1: a new chapter with his beautiful family in Vietnam. Now, 712 00:35:17,160 --> 00:35:22,520 Speaker 1: Laps just a brilliant guy. He's calm, he's enthusiastic, he's energetic, 713 00:35:22,800 --> 00:35:25,640 Speaker 1: and he's relentlessly positive. He's just a great guy to 714 00:35:25,719 --> 00:35:29,160 Speaker 1: work with. But I think it's really important to recognize 715 00:35:29,160 --> 00:35:32,320 Speaker 1: the role he's played in building up the Finns podcasts. 716 00:35:32,960 --> 00:35:35,360 Speaker 1: From the very first podcast we did, which was an 717 00:35:35,400 --> 00:35:38,120 Speaker 1: award winning series called The Sure Thing. Go and check 718 00:35:38,160 --> 00:35:40,719 Speaker 1: it out if you haven't listened, Lap's been the champion 719 00:35:40,719 --> 00:35:43,120 Speaker 1: of the format inside the finn Now. He's held the 720 00:35:43,160 --> 00:35:46,200 Speaker 1: hands of countless reporters like us trying to make the 721 00:35:46,280 --> 00:35:49,799 Speaker 1: format work for the first time. He's worked tirelessly with 722 00:35:49,920 --> 00:35:55,000 Speaker 1: advertising and marketing and editorial. He's experimented with different formats 723 00:35:55,040 --> 00:35:58,359 Speaker 1: and ideas, and he's helped bring tens of thousands of 724 00:35:58,480 --> 00:36:02,280 Speaker 1: new listeners and read into the AFAR fold. I think 725 00:36:02,760 --> 00:36:06,080 Speaker 1: Anthony being first through the door, being a pioneer of 726 00:36:06,120 --> 00:36:09,800 Speaker 1: something is often really hard work and it's sometimes thankless. 727 00:36:09,800 --> 00:36:13,640 Speaker 1: But Lap, your contribution to the AFR is mighty, and 728 00:36:13,680 --> 00:36:16,400 Speaker 1: the fact that you've done it with a big, passionate 729 00:36:16,400 --> 00:36:19,000 Speaker 1: smile on your face is what we'll remember most. 730 00:36:19,040 --> 00:36:19,680 Speaker 2: Here, James. 731 00:36:19,719 --> 00:36:21,960 Speaker 3: I mean the Seant Clear pod. It wouldn't be here, 732 00:36:22,000 --> 00:36:24,640 Speaker 3: wouldn't have done as well without Lap. Of all the 733 00:36:24,640 --> 00:36:26,160 Speaker 3: things that the financial reviews tried in. 734 00:36:26,200 --> 00:36:27,040 Speaker 2: The past decade. 735 00:36:27,360 --> 00:36:29,520 Speaker 3: I Reckon podcast is right up there in terms of 736 00:36:29,560 --> 00:36:31,239 Speaker 3: the success and a lot of that credit has to 737 00:36:31,280 --> 00:36:36,720 Speaker 3: go with LAP is endless energy, enthusiasm, ideas and pursuit 738 00:36:37,040 --> 00:36:40,480 Speaker 3: of what is a really good form and something that 739 00:36:40,520 --> 00:36:44,239 Speaker 3: our readers and our listeners have really responded to. So yeah, On, 740 00:36:44,280 --> 00:36:46,360 Speaker 3: behalf of you, James On, behalf of our other super 741 00:36:46,360 --> 00:36:49,640 Speaker 3: producer Alex Goer and myself. We'll really miss you, Lap, 742 00:36:49,640 --> 00:36:51,319 Speaker 3: and we can't wait to come and record a live 743 00:36:51,360 --> 00:36:53,520 Speaker 3: pod in Vietnam on our next world tour. 744 00:36:54,520 --> 00:36:58,360 Speaker 1: Well, we'll see you later, Lap, and we'll see you 745 00:36:58,360 --> 00:37:02,319 Speaker 1: all next week. Thanks a lot for listening. If you 746 00:37:02,440 --> 00:37:04,440 Speaker 1: like the podcast and you want to hear more, consider 747 00:37:04,480 --> 00:37:07,040 Speaker 1: sharing or giving the podcast a review, as it helps 748 00:37:07,080 --> 00:37:10,080 Speaker 1: other listeners find us, and don't forget to follow wherever 749 00:37:10,120 --> 00:37:13,440 Speaker 1: you get your podcasts. At The Financial Review, we investigate 750 00:37:13,520 --> 00:37:16,879 Speaker 1: the big stories about markets, business and power. For more, 751 00:37:17,120 --> 00:37:19,400 Speaker 1: go to afar dot com and you can subscribe to 752 00:37:19,440 --> 00:37:23,120 Speaker 1: The Financial Review The daily Habit of successful people at 753 00:37:23,200 --> 00:37:27,040 Speaker 1: afar dot com slash subscribe. Chanticleer was hosted by me, 754 00:37:27,400 --> 00:37:30,840 Speaker 1: James Thompson and Anthony McDonald and it's produced by Alex 755 00:37:30,920 --> 00:37:33,560 Speaker 1: Gau and lap Fan. A theme is by Alex Gou, 756 00:37:33,840 --> 00:37:36,120 Speaker 1: head of podcast is lap Fan and the head of 757 00:37:36,160 --> 00:37:50,280 Speaker 1: premium content is Fiona Buffini. The Australian Financial Review