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.