The Lucky Country isn’t what most think – A look back in history on how we are destroying our own luck

Welcome to Finance and Fury, the Furious Friday edition

 A reminder of how lucky we are and why we are called the lucky country. Also, what we have to lose if we neglect to remember this

Some perspective: You don’t know what you have until you have lost it Taking things for granted like our power, because blackouts suck What about the billions of people who don’t have power or deal with rolling blackouts daily? Who would value having power more? The hatred of the rich shows the lack of gratitude by those who do it Countries with the highest number of millionaires/billionaires per capita have the highest GDP per capita and quality of life They are wealthy (some exceptions) because they provide more value to our lives We are lucky to have “rich people

But why are we called the lucky country? First used in 1964 by Donald Horne – The Lucky Country The origin of the phrase was negative in the context of the book “Australia is a lucky country run by second rate people who share its luck”

Where did we come from? Few places on earth better suited for middle-class prosperity than Australia British convicts and free settlers – first government in 1788 were autocratically governed by a British Governor (mini-dictatorship) Considerable unhappiness with the way some colonies were run The monopoly of Rum used as currency and Australia has a history of a beer economy English common law was introduced, the rights of Magna Carta and the Bill of Rights 1689 were introduced. The number of settlers increased and they were given resources and land from the government. Convicts were used as Laborers Land assigned back then as “Liberty Plains” is now Homebush and Strathfield in Sydney Then had the gold rush and entrepreneurs came flocking in Given the freedom and vast resource-rich country Australia is, it provides an ideal environment for upward mobility From the pioneering ranches of the nineteenth century to the middle-class suburbs of the late twentieth

 

Has our luck actually changed? Or did we change our luck? Became a socially divided society like most first world countries The political influence will either make it or break it Bob Hawke – Legendary figure for Labour, 1983 – 1991. Did you know the Hawke Government implemented financial deregulation and reform? Australian dollar float, dismantled the tariff system, privatized state sector industries, ended the subsidisation of loss-making industries and introduced full dividend imputation. Did also have some popular ALP policies, with tax system reforms and introduction of Fringe benefits tax as well as capital gains tax He would be considered moderate these days, if not closer to the LNP A political party for the working class is now dominated by those operating outside the tangible economy Some people are focused on achieving one thing and will do whatever it takes to do it Pushing for climate change mitigation programs will further deindustrialise Australia What about all of the people who will lose their jobs? Or those in other countries that rely on our Coal for energy?

What has changed our economy? Gradual deindistrialisation stems directly from policies imposed by local governments in NSW, VIC, and QLD Sydney’s manufacturing employment is down 50% in the last 2 decades Politics was slowly transformed into an instrument of the bureaucracy and “progressive” gentry Why are the yellow vests protesting? We are sabotaging our economy, dependent on resources sales to China Our commitment to renewable energy dwarfs EU, US, and China. Per capita, we have 5 times the number of renewables Our energy costs are now among the highest in the world ALP want to boost renewables from 20% to 50% in 2030 and the Greens want 100% Ironically just as Australia is to replace Qatar as the world’s largest producer of natural gas, industrial enterprises in Australia are under pressure from high energy prices Imports are replacing the closing Australian producers With more taxes, energy prices, fuel, and super payments, there is less disposable income to you OECD households were considered middle class, but this has dropped 1% per decade since the 1980s and now ranks below the OECD average

 

How policy affects our market? How our luck may have run out? Decline in Australia’s middle class resulting in the regulation of land and expenditure to promote urban density 1981 to 2016 - property-ownership rates fell from 60% to 45% for 25 - 34-year-olds UK has only 6% of the land urbanised US has 3% and Canada has 2.1% urbanised 3% of Australia is urbanised Major cities in the first world have a “smart growth” model Helping turn once affordable cities into some of the world’s costliest According to the RBA, planning regulations are a major addition to this cost Inner core of Brisbane, Sydney, and Melbourne represents 11%, 7% and 13% of the greater metro population (31%) More than four-fifths of families living in single-family homes in suburban areas Market manipulation can leave limited choices Not enough supply to keep up with the demand adds to increased prices Projections show 50% of Sydney’s dwellings will be apartments by 2050 40% of Sydney 35-49 year old’s live in townhomes or apartments, which is double the rest of Australia This is a market-distorting approach that doesn’t let supply free and restricts demand choices The threat of a financial meltdown as urban-core property prices decline is real

 

This process is not unstoppable: The issues reflect policy decisions and not our economic or social fundamentals Unless something changes, we may have a bleak future Urged to settle where supply is allowed, making it unaffordable and congested An ever-increasing demand for government revenues With a little direction, this can be undone which is what will be tackled in next Friday’s episode

 

Be honest about what got us into this problem: We are a lucky country, but luck can run out when you take it for granted Next episode will talk about some cautionary tales

 

Thanks for listening, if you want to get in contact you can do so here.

Also, I am doing the St Vinnies CEO sleepout in June. If you could help support that would be greatly appreciated.