Trump – making tax cuts great again. Australia’s frightening loan ratio. Is Solomon Lew stupid enough to want to take over Myer?

This week James Kirby and I discuss Trump’s tax proposal and Australia’s latest budget update, as well as:
  • The reason gas prices have gone up: lack of renewable supply
  • Loan to income ratio paints an ugly picture of Australia’s property market
  • Is Solomon Lew stupid enough to want to take over Myer?
  • Could Universal Basic Income breathe life into the union movement?
  • More freedom for Saudi women could drive up the nation’s GDP
  • How 10 year averages paint a distorted picture of Australian stocks

Hello, I’m Alan Kohler, Publisher of The Constant Investor.

And I’m James Kirby, Wealth Editor at The Australian.

And we are the Money Café.

The Money Café.

Now, James, you would have had some money on Dustin Martin for the Brownlow, wouldn’t you?

Oh yes, well he was the favourite wasn’t he?

He paid $1.03 I think in the end.

$1.03.

So hardly worth betting on.

But there’s always someone who does though. There’s always someone who’ll do it, who’ll put a big bet on.

Well I suppose it’s potentially a 3% return in 24 hours if you want it, you know?

Yeah, something like a government bond-like return, only it’s a bet, it would be tax free of course.

As a bet, and you could actually lose. I mean not that you were going to that time.

Yes, that’s true, you could have lost.

What’s your tip for the Grand Final, James, come on.

You know, I’m not a footy fan, you know that.

I know that, I know that, but come on.

It has to be Richmond because I live in Melbourne. So there you are, Richmond. Aren’t they the favourites? Is there a favourite?

I don’t know actually.

You don’t know? You’re supposed to be the footy fan.

Adelaide are favourites, are they?

Adelaide are favourites, so there you are.

Richmond, I’m going for Richmond the underdog. Excellent.

If we were here tomorrow, if we were in this café tomorrow we would be surrounded by a swarm of Adelaide Crows fans, they’re starting to arrive as we speak. We’re here in Southgate of course, folks.

I imagine there’ll be more of them than there were GWS fans at the preliminary final.

Yeah, they weren’t very obvious were they?

No, they certainly weren’t. But it’s going to be a good day and I’m looking forward to it.

Yes, it’s always a fabulous day. I watch it and I’m not a fan. Now, the big news this morning was about – overnight, I suppose was Donald Trump.

And I’ve been reading in the Australian with some amusement, really, the reactions of Stephen Bartholomeusz and Bob Gottliebsen, who have both written on it this morning.

Yes.

Bob Gottliebsen says, “It’s going to transform the world, it’s just huge!”

Yes, he doesn’t understate things.

While Steve says, “Oh wait a minute, it’s too early to get too carried away.”

And that’s exactly what Steve tends to do, yes indeed.

That’s right.

It followed the perfect template for them.

Wonderfully in line with their characters.

But it is, if it happened, if it came through. I saw Jennifer Westacott, of the Business Council of Australia, instantly saying that the issue in Australia is that we look, you know, it’s like we’ve had our tax rates lifted. If they do it, if you had the world’s greatest economy and a 20% corporate tax rate, we really would be behind the eight-ball on every, even small business would be.

Not just us, every country in the world really would be under pressure because if America becomes a sort of a tax haven, well God help us all really.

But also, have you any sense of the realistic possibilities that this would come to pass? Because that’s what really matters, isn’t it.

Well, I don’t really know. I think that all of the simplified personal income tax measures are kind of interesting and well worthwhile, cutting the number of margins or the number of scales for the personal income tax down from 7 to 3, that sort of thing I think would be…

They’ve got an amazing tax system…yeah.

…fantastic, if they can pull it off.

Well their personal tax system, actually some people pay quite high taxes but you have to earn an enormous amount before you get into those high tax bands traditionally in the US.

It looks a bit like – so the one thing that the share market is interested in is the company tax rate cut from 35 to 20%. Now 35 is obviously ridiculously higher, or at least very high in world terms. It’s a big cut, how are they going to pay for it? They seem to be proposing to pay for it through tariffs, like targeted taxes, duties, on imports. Not blanket imports, not like putting a tariff on everything from China, for example.

Have they identified the imports?

I think they’re starting to.

I mean by nature or by geographical region?

I haven’t had a chance to read the entire package yet, and I will do that soon. But it looks like they’re proposing to do that. I think most of it comes from the usual dividend that Republicans claim which is growth.

Yeah.

Economic growth from the tax cuts which then pay for themselves, which has never worked in the past.

But it has to be given a chance.

But this time, given it’s Donald Trump and he’s Donald Trump it will work this time. It didn’t work with Reagan, it didn’t work with Bush…

It’s different every time. Look at the amount of overseas profits and business that might be repatriated to the US. I mean that’s always been there too, but it’s probably never been the case quite so starkly with your Apples and Googles, the world’s greatest companies capable of doing that now. That’s kind of an unknown.

That’s right, but look, as with everything in economics, there’s swings and roundabouts. If all of that money does get repatriated the US dollar goes up and that crushes American manufacturing.

Yeah, and their bond market too. It will be really interesting to see how it happens. But in the short term it’s all about market sentiment.

And the point Stephen Bartholomeusz is making is there’s a long way to go here; don’t assume it will happen. The market has now had a big day and…

They still believe him, I think, Wall Street, they still believe in a Republican leader.

Well, they’d removed – investors had removed all possibility of this happening out of pricing which they’d built into it over the last couple of months of last year and now they’re putting a bit of the possibility back in.

Yeah, interesting time, too, because it’s a shaky time often in markets – September/October, it’s the dangerous period where the markets can get very wobbly. So maybe it will put a floor at least on the market running up to Christmas.

Now you wanted to talk about home lending crackdown. What’s are you saying about that?

I did, but actually before that, we might just, keeping it on that macro material, so it turns out that the budget deficit was supposed to be $37 billion and then the Treasurer came out yesterday, our Treasurer, Scott Morrison, in Australia came out yesterday and said that the budget deficit will be about $32 billion now. True or false?

That’s correct, well $33.2 billion.

Is that good news or bad news?

Well it’s interesting isn’t it, because I’ve been engaged in the last few days in a Twitter debate with Steve Keen, who everyone knows about it, and I kind of tweeted and I had on the news the other night that the government only lost $33.2 billion. How about that, isn’t that great. And he said, “Well that’s the creation of money and more money in the deficit of the government means more money in the private sector. What we need is more deficits, not less and I’m wrong to call it a loss.”

So he’s got a problem with the $32 billion, though…

$33.2 billion and you know, he and a number of other economists who have joined in the discussion are saying that deficits are good because they stimulate the economy.

Yes, but the issue is should they be $32 billion in a country this size at this time?

Well there’s a couple of things I’ve got to say about it. One is that we’ve had deficits now for 10 years, right, so we can’t actually get back into surplus and both sides of politics say that they’re aiming at a balance of budget over the course of the cycle. That is to say, when times are good you get a surplus and when times are bad you get a deficit, and we can’t actually manage the cycle anymore. And the other thing is that in 2013 we had deficit disaster, and the Coalition government got into power on the back of absolutely hammering the Labor party because of the deficit.

Which was pretty small at the time.

Which was smaller.

Yeah.

So they are the ones who politicised it and ever since the 2013 budget the deficit has gone up! You know, the question of whether deficits are good or bad really, you know, who knows? Honestly, I mean I don’t buy that proposition fundamentally. Because I think if you take it to the extreme…

Sorry, you don’t buy what proposition?

That deficits are good, that you can have deficits forever. 

Yeah.

I just don’t – it just doesn’t…

Well surely there’s a ratio GDP that has to be imposed, it can’t be infinite.

Well that’s the point. You take the Keen argument to the extreme and you’d say…

Yeah, it would be ludicrous.

…well, you wouldn’t even have taxes. You would fund the entire expenditure of the government by borrowing because wouldn’t that be great, all that money would be going into the economy. You’d be bringing money in from borrowing and you’d be pushing it into the economy and you wouldn’t be taking any out and that would be great. Well I think that’s rubbish, essentially.

Yeah, and also I think if you have to have the discipline, you know, you have to have the discipline. If everyone starts to say, “Look it’s okay, it’s all right, it’s deficit and we’re well able to service it” and all that, you end up with enormous problems long term if the percentage of GDP goes towards the loans.

Yeah, and just briefly, finishing up on this question. The improvement of the deficit of $6 billion from last year and $4 billion from the budget was due entirely to the fact that taxes rose by – I’m just trying to remember now, 6%. Taxes rose 6%, expenditure rose 3%. So was it just an increase in tax revenue, it wasn’t some sort of reduction in spending that they can take credit for, it was just the money flowed in and it actually gives a lie to some extent, to the Coalition’s claim that it’s a low taxing government. 

Yeah, well that’s worth remembering. Okay, folks well that’s our budget brief for this week.  But it was an interesting – it’s just an interesting movement of the figures.

Now the other thing, just while we’re on the subject of politics, and not going on too much about it. We’ve had the big gas crisis this week and the Prime Minister calling the gas companies in again…

And this time they did a deal right? What’s the deal in essence? Will it save us from brownouts or blackouts in the summer?

It’s flowed from reports from both the Australian energy market operator and the ACCC on Monday predicting a shortage of gas next year of, I can’t remember, 50 petajoules I think, or 50-100 petajoules and so the PM hauled the companies in and waved this thing around and said, “You’ve got to fix that”. And they said, “Okay, well we’ll supply.” So what they’ll do is, they’ll just – the gas companies…

They’ll redirect it from overseas is that…

Well what they’re going to do is instead of selling uncontracted gas on the global spot market, they’re going to sell it domestically.

Right.

At a higher price.

But they have to ship it right, down as well from Queensland is that right? So it’s going to be dearer. This gas that comes in, if people get the gas that was supposed to be sold internationally on the spot market in the summer, this gas will be dearer, right?

Yeah.

How much dearer?

They’re talking $2 per something or other.

It’s something like 10 or 11% I think, for the average consumer, I think it’s 10 or 11%.

Yes, I know but look, I reckon most of this stuff we’re doing we absolutely take with a grain of salt because the politicians are using it simply to score political points. 

I know. But how will the consumer know whether the gas they’re paying for can redirected from spot markets or whether it was always coming down the line anyway.

Well, the gas price has gone up, that’s for sure, and the reason the gas price has gone up – and here’s a controversial statement for you, James. The reason the gas price has gone up, and the reason there’s a shortage of gas is because there hasn’t been enough renewable energy electricity built. So that as the coal-fired power stations close down, such as Hazelwood, they have to be replaced by gas and so the increase in Gas Demand that AEMO and the ACCC have identified is from gas power generation. Demand from what they call RCI which is residential, commercial and industrial, is declining. Has declined for years.

Right, it’s not our fault!

So our demand is declining, the gas power generation is increasing and the reason there’s a shortage apart from that on the supply side is that is that the Gippsland Basin Joint Venture with ExxonMobil and BHP is old and the amount of gas coming out of that is declining.

Yeah.

And the third thing is that the Victorian government, weirdly, last year subsidised the Aluminium Smelter in Portland to stay open – $240 million.

Yeah, that’s because there’s jobs down there in a very remote region.

There’s jobs down there, so that was a political decision because of the local electorate and that was unexpected so the energy market went into a flat spin and so that increased – that’s 5% of Victoria’s demand for power. The demand went up, Gippsland basin supply is coming down for gas and gas power generation is becoming a very important part of the electricity grid as the coal-fired power stations close.  And so the problem is that there wasn’t enough solar and wind built.

Yeah, and that’s what AGL wants to do right? That’s what they want to do, they don’t want to extend an old coal station.

No they don’t.

They want to build windfarms. Well, at least this deal will take them off the front page, which I imagine they’ll be quite happy with after being on the front page for weeks.

Well, anyway, so housing, James…

And that’s the other issue that’s always on the front page, it’s housing.

What’s going on in housing?

Well there’s some interesting things on housing, you know. One of the things that we’ve seen all week is this crackdown on home loans. Every time we see it – oh the banks are going to crack down on home loans, the regulators are making them push down and what they’re doing is, you know, they’re saying, look, in really bad spots we’re changing our loan to valuation ratios, right? So they’re saying we’re going to limit how much we will let you lend. But they never actually pay much attention to what really matters for most people which is their capacity to pay for the loan. All our attention in this market is on loan to valuation ratio. 

But, you know, one of the measures that should be in place is what they call loan to income ratio. Once upon a time when you went into a bank, for a long time, many years basically the rule of thumb was you’d get four times the household income. If the household income was $100,000 they’d let you borrow four times that and there was link between what banks would lend and how much people earnt.

These days that would buy you one of those bathing boxes at Brighton Beach. 

Well, no, they’re very dear too – you got the wrong thing! It would probably buy you a unit at the back of a bunch of units somewhere quite regional and remote.

That’s pointless now! Forget about it.

Here’s the thing, NAB this week, quietly, to their mortgage broker’s circle have put out an LTI, first time in Australia that they’ve used this and they’ve said “Folks, we’re going to have a limit”. They’re saying to the mortgage brokers, “You’ve got to build in the earnings of the person that you’re putting the loan to and we’re putting in an LTI, a Loan to Income ratio.”

And what is it?

It’s eight times salary.

Right.

Well, here’s the thing, the UK for instance. Is a similar market, right, they’ve got hot house prices there. The Bank of England brought in a measure recently for their LTI, do you know what the LTI was?  4.5. So what I’m saying is, banks are lending and their entire rules are, that people are coming in, they’re letting people borrow 8 times their salary, and traditionally it was 4 and overseas it’s 4. That’s scary.

If your recommendation of reducing the LTI to 4 or 5, that would make housing more unaffordable, in fact, nobody would be able to buy a house, forget about it!

I know. But it would actually…

I mean I’m not saying you’re wrong, I’m just pointing it out.

I know and I’m just pointing out it would be a fact and then it would have to prompt people to rethink the basics of housing because how it’s going here is just going crazy. I mean it really is and we keep thinking about loan to valuation ratios and it’s oh, look it’s okay because the loan to valuation is within the zone. Yeah, but if you look at it as an earnings multiple it’s really, really going nuts.

I had a graph on the news the other night of years to save for a deposit, which is the 20% you need, right?

Yeah.

Australia-wide, the average is now 8.5 years.

Yeah, to save.

Up from four years, 20 years ago.

That’s terrible as well.

So there’s your 4 and your 8, right there. Look at that!  How about that!

Yeah, again, isn’t that interesting.

Anyway, so it used to be 4 years typically and now it’s 8 and a bit, and in Sydney it’s 11 years to save for the 20% deposit. That’s using average earnings and median house price.

Look, I reckon what NAB did and what other banks are doing is they retrofit the ratio. They say, how much is the average house, oh, you know, it’s in the order of 640,000. What’s the average salary, it’s about $80,000 – oh reverse it.  It’s got to be 8 times then. That’s what they say, rather than any logical link, it’s just what the bank can get away with rather than what’s actually in any way reasonable for income earners. I thought the story of the week was Solomon Lew and Myer. What on earth? Did he lose it? Is it a complex game, what? I mean he owns 11% of Myer.

He does.

He’s the biggest shareholder and he stands up and he says, “The clothes look like they should be in an op shop and that the whole thing’s going down the drain.” What do you reckon? Was it a loose moment, or is he playing a game?

Well everyone said, oh, he’s just trying to talk the share price down so he can buy some more and take it over, cheaply. I mean is he that stupid to takeover Myer?

No, he’s not stupid.

He’s not stupid. He always used to say to me “I’m Solly, I’m not Silly!”

Yeah, and I reckon Solly and Mark McInnes are the best duo, they are the retailing team, par excellence in Australia, no-one beats them.

Except their company’s share price has been going down like all the other retailers.

It has, but it had a better run for a long time than most retailers.

Yeah, but it’s only stayed up because everyone thought Smiggle and Peter Alexander were good businesses, the rest of these businesses, Jeans West and Portmans are no good really, well, they’re struggling.

Well it’s relative, but he’s doing relatively well in an awful business. So what do you think long term is going to happen? Is he going to take over Myer as you say, why would he? He’d be mad to take over Myer.

Well it would only because it’d be a trophy thing where he feels like he’s got too much money and needs to get rid of some.

Yeah, that’s unlikely.

That’s right.

I wouldn’t like to be Myer though. He’s up to something. He’s asked for the share register this morning and that means he’s going to put something to the shareholder. I imagine he’s going to spill the board the push them all out.

Do you? That’ll be funny, well not funny, that would be bad for them.

Well I can’t put it past him, he’s got a long history with Myer and Coles Myer and all that.

Oh he does, he can’t leave them alone.

I know.

He just can’t leave them alone.

Revenge is a dish served cold, is if anyone remembers, when Solomon Lew actually had real trouble on the Coles Myer board once upon a time, he was more or less pushed off.

Yeah, they booted him off.

He was pushed off wasn’t he?

Yeah, that’s right they booted him off.

He’ll be back for revenge, hey.

He wants revenge, clearly.

Keep watching.

Now, listen, we’ve got some questions. Do you want to do them now?

Yes, yes let’s do some questions. What have we got?

So, Matthew Glynne. “Recently on the Money Café you were discussing Universal Basic Income. What a UBI give society an excuse to create an underclass of less uneducated as they would not be working anyway. Is it not more likely that a three day weekend and more annual leave is the result of less work due to automation. We are already lagging behind Europeans in the annual leave stakes in Australia. It was a struggle for Labor to achieve these gains. Is this where the unions make a comeback into the employment arena. What do you think?”

Gee…

It’s okay, come on!

Thank you for the question Matthew. I don’t immediately see how the unions make a comeback if there’s a universal basic income. I don’t see the link there. Though, I wouldn’t rule them out making some sort of a comeback in the gig economy where the conditions are so poor for so many people. But universal basic income. Look, I think he’s got a point. If a whole tier of society knew they didn’t have to work, then it may not be the best thing from a sort of mental health point of view. You know?

Well, I think the proponents – I’m not actually a fan of UBI, but the proponents of it talk about it being basically a restructuring of the entire welfare system. It would replace all other welfare and so everyone would get paid a certain amount, no matter what.

To do with as they like, isn’t that right?

Yeah. So I suppose, yeah, I think it’s…

Look I think it’s a bit defeatist. My gut feeling is it’s kind of a defeatist approach. It’s saying, oh, there’s nothing we can do. All these people are going to be unemployed with automation, let’s just pay them.

I spoke to Jim Chalmers, MP and Mike Quigley, former NBN.

What’s he doing now?

Well they both together wrote a book on this very subject.

Yes.

I interviewed them for The Constant Investor.

Right.  Because you know, Quigley did the job for free, and the guy who replaced him gets $3 million a year.

Oh I don’t think he did it for free.

He did it pro bono.

He did it for free did he?

He did, yeah. 

Well, that’s news to me.

He was the inaugural foundation, yeah.

Well, there you go.

If I’m wrong I’m sure we’ll get some letters, but I don’t think I am. Anyway, yes, they wrote a book.

Well, anyway, so they spent a year or two researching the whole problem of automation and jobs and came to the conclusion that universal basic income is not a good idea. They had a bunch of other ideas, but that’s not one of them. I guess I’m on board with that, I don’t think it’s going to happen. But I do think there’s going to be a lot of dislocation and disruption and I do think, Matthew Glynne is onto something. You know, we’ll just have to work less. Won’t that be good?

Sorry, don’t agree, there’s always work to be done. There’s always lots of work to be done to make the world a better place and it’s a question of how we compensate ourselves. Sorry.

That’s funny!

Okay.  How about Phil [Lorritt] here, what does he say. “Do you think it’s skewed at the moment that the start point of any 10 year comparisons is 2007.” Oh really good point, that’s such a good point, Phil. I think he’s suggesting that when we do these 10-year pictures of everything, we’re all going to what would have been pretty close to the top of the pre-GFC. November 2007 was the very top of the Australian stock market when it hit, what was the number, 6800, or thereabouts.

Yeah, that’s exactly right.

So, yeah, very good point. Yes, 10 year comparisons always have their issues and where you start your measure from is so important, isn’t it?

I’ve been doing graphs on the ABC news for about 12 or 13 years now.

For many is the day.

And one thing I’ve learnt, among many other things is that you can prove anything at all, depending on where you start the graph.

Exactly I feel is you sit down at a Bloomberg machine you can just move the data around until you get the graph looking the way you want it.

Exactly and so, Phil you’re absolutely right.

Yes, he is, he’s on the money there. Thank you, Phil. I’ll take up the next question, Alan. It’s from Adam: “Dear Alan and James, please comment on the top three winning and losing stocks as interest rates rise.” That’s a good question. I think it’s a tall order for us to actually name three winners and losers but why don’t we talk first of all about banks, because there’s a real debate, do banks gain or lose when rates rise? I always was under the impression that rising rates were good for banks because they can conceal their margin improvement.

Yes it’s both good and bad. See the bank share prices went up as interest rates fell. That is to say, bond rates in particular, as they fell, because of valuation effect.

And the search for income and dividend and that.

Exactly, so the bank share prices all went up because they were compared to bonds and people were prepared to pay more for the bank shares, but on the other hand, what happens when interest rates go up, they take longer to put up their deposit rates than they do to put up their lending rights and so the lending rates go up instantly.

That’s right, and the deposits take a bit longer, like three months.

Take a bit longer and they make a bit more money, and in fact, take forever. They don’t put up the deposit rates as much.

The answer is that from a company perspective as an operating entity, rising interest rates is good for banks, but it doesn’t necessarily mean they’ll be better stocks because they did so well with the dividend yield.

Exactly, so in general you would say, and we’re not going to name stocks Adam, because we can’t think of them on the fly like this, but in general as interest rates rise you want to be out of stocks are yield based stocks, that are all about yield. That is to stay real estate investment trusts, Telstra…

And telcos masked as utilities, yes, as Telstra was.

You want growth stocks. You want stocks that are exposed to the growing economy. When interest rates are going up, they’re going up because the economy is growing.

Just thinking off the top of my head here, but Computershare was always seen as a stock because it had so much money at call etc, with the share registry, that rising rates was useful to it.

Oh yeah, that’s right. Well, in fact, now that you mention it, insurance companies have a lot of money sitting in investment accounts that are exposed to bond rates. Right, so that’s…

They have money mandated into those accounts, isn’t that right? They’re not allowed – they must invest in certain fixed income.

Yeah, that’s right. As their fixed income rises, they’ll do better. So insurance companies might be okay, but on the other hand, we seem to be getting a lot of hurricanes and stuff like that lately.

Yeah, catastrophe risk.

You’ve got your catastrophes going on. Climate change is not doing too well for the insurance companies.

But on the money side, it’s good for them, rising rates. Okay, we think we have one last question there. We do want to take that one from Gabriel.

Gabriel says, “I love your podcast. I came across it from listening to the Property Couch”, which I did last week.

Yes, you told me, yes indeed.

Did I tell you that?

Yes, you did.

And Gabriel says, “I’m hooked!”

You’re hooked on The Money Café, I presume.

No, hooked on The Money Café, that’s what he’s saying. What sector in the Australian market do you think will perform better over the next one to two years? Better than what, Gabriel?

Well, better than property, perhaps?

Better than it has done. What sector will perform better? Well…

Yes, indeed, well we have mentioned companies exposed to rising rates and conversely, get out of companies that are sort of riding on low rates, that’s one thing. You’d have to say – though the big question is resource stocks isn’t stocks, isn’t it? For me, I think it’s the big one.

Sure.

It really is, the Rios, the Fortescues…

Do you have to take a position or may have an opinion about China on that?

Yeah, you do.

And I don’t know.

Because it’s so opaque.

China is a bit binary, you know, it could all fall apart and go down the absolute toilet or it could be fine.

What’s extraordinary is how little anyone seems to know about – using iron ore prices as a proxy for China, right? So iron ore prices are all about China and no-one, nobody knows where iron ore prices are going, including the companies. I mean they’re sliding down again now. They’re absolutely like rolling down, all the way back down to the mid-60s I think per tonne and you just have to go with the notion that if the global economy improves, the big resource companies will be in a better spot. 

I had lunch yesterday with a very conservative investor who set up a new fund, when – five years ago? It would be five years ago, which was the last time I had lunch with him, when he was setting the fund up and we got together again yesterday. It’s a fund of high net worth individuals to invest and buy businesses like Warren Buffett. He’s been going, he’s looked at hundreds of businesses, and bought one, he can’t find any to buy.

He sure is conservative.

He’s conservative, he can’t find anything to buy.

Then he’s got company risk, he’s got all his eggs in one basket.

I know, and I said to him, because I was just about to say to Gabriel, the sector that I’m suggesting that’s going to do well is lithium mining, right. So I sent this to this guy yesterday, “What about lithium mining?”. He said “Oh, no, I wouldn’t touch it with a barge pole because there’s going to be a lithium rush on and there’s going to be all these lithium mines set up and…

There’s no lack of them apparently, isn’t that it, there’s no lack of them.

…there’s going to be oversupply.

Yeah.

But I said listen, you know, maybe you’re right, but the thing is we’re going to electrify transport, we know that in 10 or 20 years’ time every car on the road is going to be electric.

Well our old friend Tim Treadgold, who really knows resources, following it for 30 years, said to me, that you could get the whole world’s supply of lithium out of Australia in one plane. You don’t actually use an enormous volume, yes, it’s needed but it’s not a scarce resource.

No, no, but it’s dear though.

I know it’s dear that’s because the mines haven’t started producing it yet in the volume, but they can.  It’s not like gold, it’s not rare.

I know that’s true. There’s tonnes of it isn’t there.

So it seems.

There you go Gabriel, so okay, we’ll forget about it. We’ll have to leave it there today. Oh do you want to say something about Saudi women?

Yes, I did.

You did, because that’s an economic story.

It’s an economic story, an unlikely one. The first thing I saw this morning was a tweet from Piers Morgan, he of the more Twitter followers than the entire British newspaper industry circulation combined.

Is that so, is that right?

Yeah, he likes to say that, Piers Morgan.

I’m sure he does.

Yeah, and he tweeted this morning that Saudi women are being allowed to drive.

Yeah, catch up…

No, this is really big news because, well it was absurd right? It was beyond absurd, last year these women landed a jet in Saudi, do you remember this? I think it was Qatar, landed a jet in Saudi in an emergency. So the women were allowed to land jets in Saudi, but they weren’t allowed to drive. This really moved it into a completely bizarre zone. The new ruler of Saudi announced last night that they’re going to let women drive. Now, the GDP implications are that women are an underused capacity in Saudi, but the way that they were paid, like last week we talked about women and men in super, which got a lot of attention, I notice. Well, in Saudi, the issue with women working is there’s no lack of jobs, right, but their salaries have to include their driver fees. They’ve got to be driven around by a guy, because they’re not allowed to drive, and that’s in their pay packets. That’s all going to go, so they reckon it’s actually going to be a boost to Saudi GDP.

Our Saudi rulers have not seen the light in terms of the rights of women, it’s not about that, it’s just about money.

I don’t know, what they’ve seen.

It’s just about money. Oh, dear oh dear.

In any event, women can drive in Saudi now, and that’s a business story, folks.

Yeah, well, they still can’t go out, apparently, without a…

Without a chaperone, I’m sure. But, you know, there you go. Take it or leave it.

Well, that’s where we should leave it for today. Don’t forget you can subscribe to The Money Café on Apple Podcasts or your app of choice, and while you’re there please give us a review, or a rating because it helps listeners find the show, and send us a question, we’d love to answer it. As you heard today, we answered a few questions. Of course, we’re not going to go on and on about it, so don’t send too many questions in everybody, no…

Be succinct if you could.

Yes, that’s right. To do the question, which we’d love to hear, email us on hello@theconstantinvestor.com, which as you can tell is connected to The Constant Investor, which is a great service. Until next week I’m Alan Kohler, Publisher of The Constant Investor.

And I’m James Kirby, Wealth Editor of The Australian, which is a great newspaper.

See you next week.

Thank you.