The "Greedy" Landlord vs The Economist. The TRUTH About Negative Gearing Nobody Tells You!

Añadido: 2026-05-17

[00:00:00]Hunters, the housing conversation is heating up right now. Budget's about to drop and the Murdoch and corporate media is absolutely losing its mind over potential changes to our housing and tax policy. And from what I can gather as just a regular punter looking at the conversation online is that there are two schools of thought. One school of thought is coming from people who invest in properties who the who are using the current system as it is and they say no no maybe keep it the the keep it the same way changes are not a good idea.

[00:00:31]And then there's uh economists that might be coming from the other perspective saying this system benefits some people more than others. We should probably rejig it so that it's more fair to more people. So, I thought this sounds like the makings of a great conversation between two pun that I have collected in my little Poked decks here.

[00:00:51]When I go to when something's too complicated to understand, I'd like the punters to meet for the first time Pamon Jack Henderson, who is in fact the punton I turn to. If I'm going to buy a property, I'm like, "Oon, like Jack, where should I buy? What should I do?

[00:01:06]What's going on?" Uh, Jack, how do you feel about being a punton for the punters?

[00:01:11]>> Right. And I'm not sure what a punamon is, but it sounds good. So, I'm fired up.

[00:01:15]>> It's like a Pokémon, but for the punters.

[00:01:17]>> Ah, right. Yeah. Yeah, man. You got to catch them all. So, I'm in. Let's do it.

[00:01:21]>> Exactly. And the more the better. And the other panon who is familiar to punters is Richard Dennis, who is an economist at the Australia Institute who talks a lot about housing and sort of stuff. So, uh obviously you're welcome back, uh Puntomon, Richard Dennis.

[00:01:35]>> Happy to be here. Thanks for having me.

[00:01:36]Now, I guess just before we sort of uh get started, let's sort of introduce to the punters like what each of you do.

[00:01:45]So, uh Jack, tell the punters sort of what your work is, what your role is, and how you I guess how you're approaching this housing conversation on tax changes.

[00:01:54]>> Um I I run a few businesses. um a lot of them in the property sector and uh I'm I'm a property investor myself and uh I'm not really approaching this conversation any different to any other day. It's always a conversation, right?

[00:02:10]Everyone's got an opinion on everything in this world. So my life is uh is the same. Hunter's listening in the podcast world. Jack is on Instagram and currently he is wearing a hat that in red that says greedy landlord. So, so I think that's the category. I feel like some people >> fired up.

[00:02:28]>> They put you in there.

[00:02:29]>> Are you trolling the punters right now?

[00:02:32]>> I don't know about trolling. I just understand how people get triggered about things that don't matter. A red hat with greedy landlord all of a sudden like kicks something in someone's brain.

[00:02:40]So, >> got him.

[00:02:41]>> Got him. He knows how social media algorithms work. And uh Richard, where are you coming from and joining this conversation with the perspective of who?

[00:02:49]>> Uh look, I I'm I'm an economist by training. Uh I'm I'm not a landlord, greedy or otherwise. And you know, the Australia Institute's focused on trying to make Australia a you know, prosperous, happy, safe nation. And you know, unfortunately, when uh a growing percentage of the population can't afford a house, then that really causes all sorts of not just economic problems, but social problems. And to be crystal clear, houses are a lot cheaper in other countries. Uh, Australia's always had high migration and we used to have cheaper prices. Uh, there are solutions to these problems, but um, there's a there's a big difference between decisions that help make people who already own houses even richer and decisions that would help Australia have cheaper houses. I'd like house prices to fall, by the way. So, I I suspect Jack and I will disagree on on on what a good thing for Australia is, but >> for me, mate.

[00:03:49]>> All right, good. Well, let's let's talk about how to drive house prices down, which is a terrible way for people to make money, but it's a great way it's a great way to uh to solve Australia's problems with housing. So, the perspective I bring is an economist who would like my kids to be able to uh buy a house without their life revolving around it.

[00:04:08]>> Mhm. So to you then Richard, if I asked the question, is Australia's housing broken? What would you say?

[00:04:15]>> Well, it's it's not broken for people who own two or more of them. It's not broken for people who'd like to inherit two or more of them. But for the vast majority of Australians who'd like to buy one for themselves, uh, and again, not have their whole life revolve around it, uh, our housing markets completely broken. But we have to be always really clear, broken for who, working for who.

[00:04:37]And you know, at no time in Australian history have people made more money out of housing than in the last 10 years. So for people who own two or more properties, the housing market is working just perfectly right now. But for the vast majority of Australians who own one or less houses, I I think it's a complete disaster. So literally depends what problem you think you're trying to solve. Does that uh align with what you're seeing, Jack? You are the guy that owns more than two houses. Is the housing system broken for you or for everyone?

[00:05:09]>> I'm not sure. It depends on what you classify as as broken. Do any of you have parents that are, you know, in their 60s or 70s trying to retire?

[00:05:16]>> Well, I guess that's the question I'm asking you from where you're sitting.

[00:05:20]>> Working for you?

[00:05:21]>> I don't think it's broken at all. It's not I mean anything will work for me because I'm I'm that way inclined whether it's housing or another marketplace but I think it absolutely works. I look at my parents who are in their mid60s who worked their slot out their whole life and um they retired because they had a home that they lived in that had grown in value over the 50 years that they worked. And I'm not sure if anyone realizes that the median value of a superenuation fund for a couple in Australia is $400,000. that, you know, if we didn't have housing and growth in housing, every single one of us would be working until 100. So, I just look at it through a different perspective. You know, you guys are or a lot of people looking at it through, oh, let's let's let's penalize the rich investor when the vast majority of the Australians who take who who have made money in property are not rich Australians. They're people who have worked hard and um you know, and fortunately can can retire and and have a good life. So, that's how I look at it. So when Richard says that there's a growing portion of the population who can't afford a house and that for most regular Australians who want a place to live in that those numbers are getting worse. Do you like you still think it's like so it doesn't sound broken for you but do you think it could be broken for people other than you that that can't get into the market?

[00:06:35]>> Not really. I think I think the thing that Australians because we're a relatively new nation in comparison to the vast majority of the world. The thing that people struggle with is change. So you know the often the um numbers that get pushed through the narrative is like median price in Sydney is X or Y, median price in Melbourne is X or Y, median price in you know another major city is X or Y. When you know Melbourne, Sydney and Brisbane, if you're living in the metro pockets of all of those places, they're obviously some of the wealthiest and and biggest cities in the world. So like the real estate market there is likely to be expensive for the normal person. But if you look in many regional and and when I'm saying regional like Newcastle which is where you are Punter Conrad regional is Newcastle and and Newcastle if you are a young couple working with two good two two incomes whether they you know classified as good or not that's that's up to you guys to decide is still really affordable in in my eyes and Newcastle is still expensive in comparison to the vast majority of other regional markets in Australia. So, I just think it's a perspective. It's a perspective shift.

[00:07:44]Like Sydney's Sydney shouldn't be cheap.

[00:07:47]You know, Brisbane city shouldn't be cheap. Melbourne shouldn't be cheap.

[00:07:50]Just like when you go to New York and you're born in New York, even though Mandami is sort of sort of [ __ ] this up now. Um, you know, it's like an it's for the rich. It's a city for the rich and you know, saying poor people should just leave the city. Is that what you're saying?

[00:08:03]>> They shouldn't leave the city. They shouldn't leave the city at all. they should just accept that if they want to live in one of the biggest and most exciting or one of the most opportunistic cities in the world cuz that's what these places are um you know that that they are going to be places that are more expensive than a town that doesn't offer the same opportunity.

[00:08:20]Looks like you've got thoughts, Richard.

[00:08:23]Look, I mean so many thoughts. The idea that if you own a house it's because you worked hard and if you didn't own a house it's cuz you didn't work hard just blows my mind. So, let's let's picture a woman who's worked in aged care for the last 40 years and she's retired now, but she doesn't have a house. Is that cuz she didn't work hard? Or what about the person who inherited a house 30 years ago and it's doubled in value in the last 30 years? Did they work hard? So, this work hard, own house thing is just demonstrabably untrue. There are people who work really hard for low wages and don't own a house and are retiring.

[00:09:01]That's a problem. I think some people might some people might not. No, let me not misconrue the message. Just the minority population, not the majority.

[00:09:09]>> It's on It's on tape. It's on tape.

[00:09:11]Jack, you said what you said. So, there are people out there whose parents have worked hard right now and they're 65 and they don't own a house and they never will and their kids won't inherit a house. So, I'm worried about them. Not everyone needs to. It's a democracy. We get to choose who to worry about. we get to choose what kind of housing policies to have. And I'm far more worried about women who've worked their whole life and don't own a house and who've got two kids. I'm far more worried about their retirement than I am worried about people that own two or more houses giving their kids a leg up. But it's a democracy, okay? So, I'm not right. But I this idea that because people who own houses must have worked hard is nonsense. they might have inherited them. Okay, that's not hard work. So >> So you're seeing a a trade-off in interests where you go uh there is a certain group of people like is that compelling at all, Jack? Where's like there's a certain group of people that despite working hard are are just not going to be getting into a house anytime soon. We live in a world where there are going to be different segments of all populations like to to try and single out and change a policy that obviously um any policy right that's regardless if it's housing or not um if we try and make a policy work for the smallest segment or one of the smallest segments of of the Australian population that's great. We can make everything sound bad. Well, I tell you what, the the small population is people that own two or more houses.

[00:10:45]There's far more people there's far more people in Australia that don't own a house.

[00:10:50]>> Mhm.

[00:10:51]>> And will never own a house. There's far more of them than there are people owning three, four, five houses. So, I'm not talking about a minority share of the population. To be crystal clear, I'm talking about a very large percentage of Australians who are not going to inherit anything from their parents and who will never be able to afford to buy a house of their own. That's you know what do we got? 72% of Australians uh you know uh are only ever going to own one house.

[00:11:19]>> When I didn't say anything about two or more houses I just said my parents bought one house and fortunately it went up in value and they can retire and good luck. That's all I said.

[00:11:25]>> Happy days. Happy days. Good for you.

[00:11:28]whether they have one or more houses doesn't um change the fact that some people are never going to own a property regardless of policy. So that's >> but the percentage of people that applies to is what policyy's all about.

[00:11:40]And >> 72% >> let's drill in let's drill in on exactly that because we've kind of come to the whole policy thing. So I I guess where we where we're landing is at we're talking about which part of the population should we make policy for and how effective is policy at changing these numbers. Richard, you're coming at it saying there's a growing portion of people who are going to find it hard if not impossible to get into a house despite working hard. And Jack, you're you're it looks like you're coming at it going there will always be certain segments of the population that won't be able to afford a house. And it sounds like you're skeptical on whether policy can in fact change that outcome. Is that a fair sort of assessment on how you think policy can impact this discussion?

[00:12:26]>> Yeah, I I'm I'm saying that um you know, let's use the example that Richard used, the the the lady who worked a ring out her whole life in age care and never got to own a home. Her not being able to own a home, I can assure you, has nothing to do with uh the current policy. like, >> okay, great. Let's start exactly there.

[00:12:48]Well, I guess there's a question for you, Richard, because the conversation now, and I'm glad we came to it early, is negative gearing and and and capital gains tax. Are are they the pol like is it worth having the discussion around that because obviously the government's looking at that, or do you think there are other policies that you would pitch to Jack and say, well, actually, I think if we change this, it would change the outcome. Would you start with those two policies or something else?

[00:13:10]>> Yeah, start there. Sure. Look, once upon a time, we didn't have the 50% capital gains tax discount. Like, we it's it's not chiseled in stone.

[00:13:18]>> What was the other thing we had? Just to give everyone context.

[00:13:21]>> Well, you you there's a lot of context.

[00:13:23]You you go whatever context you want.

[00:13:24]You go first.

[00:13:25]>> It was ind it was index based on inflation, right? So, make sure you tell the whole story. We didn't have it, but we had something something else. So, let's just make sure we tell the whole story. That's the issue with all these things. They always lose context.

[00:13:36]>> Okay. So, I don't know. I don't know what point you're making, but sure. I was just saying we didn't have the 50% capital gains tax discount. So then people in their head when they hear that statement go, "Oh, we didn't have anything."

[00:13:48]>> I make sure that was clear.

[00:13:50]>> Well, well, I could go through a whole list of policies we used to have in the 80s and 90s if you think that's necessary. I was trying to make an important point that the introduction of the 50% capital gains tax discount was a radical change in policy. a radical change in policy by Peter Castello because uh well yes it's true there was an indexation regime behind before that which most people don't understand you should explain it to them if you want to waste 5 minutes but it's irrelevant for the point I'm making because after Peter Castello and John Howard changed it if you owned a property for one year one year you became eligible for a 50% tax discount when you when you sold it that was a huge change and ever since they intro introduced it, the average rate of increase in house prices has has soared.

[00:14:39]So, ever since we introduced that policy, the ratio between the price of a house and and average wages, that ratio has just got worse and worse and worse ever since we introduced it. Of course, we should change it. Get rid of it.

[00:14:54]Right. So, you're saying that uh cuz Jack's Jack Jack's pointing out that we used to index investments. So, I'm playing cash. I'm the regular pund that doesn't follow property property stuff here. So, we used to have if you bought an investment, the government would do some little maths and say because inflation's gone up and the value of your property or investment's gone up.

[00:15:13]We'll do some calculations, find out what inflation was and deduct it from your final sale, so you're not getting taxed on I guess and wasn't technically an increase. But then Richard, you're saying the capital gains tax discount was such a radical acceleration of this this mechanism. I suppose from from where I'm sitting, the logic has always sounded the same. When when investors say to me, they go, "Oh, well, it's cause inflation." Um, that seems to be the the reasoning behind the capital gains tax discount, but it sounds like Richard, you're saying that this far exceeded the erosion that inflation would have had on an asset investment.

[00:15:52]Absolutely. And it was designed to and it was described as such at the time.

[00:15:55]And and get this, at the time, people said it would make houses cheaper. Like when we introduced it, the argument was, "Oh, look, all this money will now flood into housing and supply will increase and we'll get cheaper houses." So yeah, though it was a radical change in policy, it was an inequitable change in policy. And if your objective was to pump the price of houses, it succeeded spectacularly. But when it was introduced, the government that introduced it said it was going to put downward pressure on prices, not upward pressure. So it was a radical change introduced by the Howard Castello government. It costs a fortune. It's shoveled hundreds of billions of dollars into the pockets uh of the of the wealthiest Australians. And at the same time, the percentage of Australians who work in aged care who can buy their own home has declined. So, I couldn't agree with Jack more. There's always been people who can't afford a house. The problem is in the last 30 years that proportion has been increasing. I think that's a problem. Jack doesn't. It's a democracy.

[00:16:58]>> And you're pointing out that one change.

[00:17:00]So, what's your take on on that pitch for the impact of the capital gains tax, Jack?

[00:17:06]>> A few things on that. It wasn't just real estate, right? That's a that's a discount across all assets in Australia.

[00:17:12]Um, so that that's the first thing. Um the the second thing is you know we can't forget that 70% plus of transactions in Australia go to owner occupiers not to investors of which the capital gains tax discount doesn't apply to because there is no capital gain on owner occupier properties. Um and you know I think there is a multitude of reasons that it was introduced. It wasn't just to you know make property cheaper. was probably introduced also to bring investment and bring more supply which you know supply hasn't come >> yeah yeah but that's not a tax issue that's a planning issue not a tax issue you know >> the rationale was it would lead to more supply and it hasn't >> yeah the that's a planning issue like I said so the supply the supply constraint is um you know people private private money can only uh only develop what is available to develop and uh it's very challenging to build property in Australia >> can Come in there, Conrad. Like, let's be if I'm a property developer and I've just developed like I bought a green field site and I've built 300 houses on a green field site. I promise I don't put them all on the market at the same time because I want to keep the price high. The right similar if I've just built a block of apartments, I'll let lots of them sit there empty because I want to keep the price high. So, there's plenty of evidence of what's called land banking where land is approved. land is approved for development, the developer buys it, and the developer doesn't want to flood the market and push price down.

[00:18:42]Fair enough. They're trying to get rich.

[00:18:45]But this idea that oh, it's all the bureaucrats fault. Let me just read.

[00:18:49]>> Have you ever developed property before?

[00:18:51]Have you ever developed property before?

[00:18:52]>> Not true. Let Let me read you what the Australian Bureau of Statistics says.

[00:18:56]>> Yeah. Yeah. Please.

[00:18:56]>> In the last 10 years, population's grown by 16%.

[00:19:02]16.

[00:19:02]>> Mhm. Over the last 10 years, population's grown by 16%. The number of homes has increased by 19%.

[00:19:09]>> Jack, you're you're kind of saying, "No, it's not a tax policy setting. It's the fact that there's not enough development sites." And then Richard saying, >> "No, no, no. It's not the fact that it's not enough development sites. It's the fact that there is there is a there is many things that goes into developing real estate, right? One of the things is you need to have a resale price that makes it a profitable site. Um now you also then need to have land that can be developed that has uh the correct planning and that also makes financial sense. Now I can tell you if you look at Melbourne for example at the moment the vast majority of apartments in the inner metro ring of of Melbourne and this will be true for many markets um the the developed stock is selling cheaper than what you could build the same property for. And that that obviously doesn't uh doesn't make sense to develop. Um and and you know the the the most challenging part of developing other than building cost developers generally don't build like land developers don't build. They only you know do the land and then they sell them to builders. Um but but the taxes have continued to increase on on development as well. So Richard seems to know his numbers. I'm sure he'll know the numbers of of how much if you go into building a block of land, how much of that land is taxed?

[00:20:28]>> Before we move on to tax, you you said that when Richard brings up the idea of land banking, which is I guess the concept going if the developer has lots of blocks, if they put them all on at the same time, the price will drop because there'll be more of that thing in the market.

[00:20:40]>> And Richard saying there's evidence that that actually happens. So despite what you know, uh, developers saying being like, "Oh, we wish we could release more. We wish we could. Their profit motive from Rich's perspective is saying that the profit incentive says don't release them even though we pretend we want to cuz if we did we'd sell it for less and make less profit. You're a developer. You like have developed properties in that space. Are you saying that doesn't happen or you don't think that happens?

[00:21:05]>> I think it depends on the on the context. Like if if you're building an apartment building, every single one of those apartments goes on sale the day that they get released. If you are doing land development, it's a very different thing because that happens in stages. If there's >> So it could happen in land then you you you'd say it's >> well no it can't happen in land because if you're building a building you're building the whole thing at once. When you're doing land subdivisions yeah it happens in stages because there is a lot of infrastructure that needs to go in before the land is built >> and it also needs to be funded.

[00:21:32]>> They're not land banking >> but so but what it depends on the context in which you're using land banking. Developers right now absolutely own significant parcels of land. Now if that land cannot be developed right now that would be classified as land banking. But they are holding that land for the day in which it will be reszoned and then have the ability to be developed. That is absolutely called land banking. And generally something else happens with that land while it's while it's happening. You know, you look at if you're in Sydney, um you look at a lot of what happened around the new airport and park like a lot of that was farmland and then eventually that got reszoned and and and eventually it can obviously be developed which is what's happening right now. Um so developers absolutely bank land but the vast majority of land that is being banked cannot be developed and they'll be paying this beautiful tax called land tax on it which is uh which is a fabulous tax that you know property investors pay for just owning land.

[00:22:29]>> That's the whole point of land tax. Like let's be clear. The whole point of land tax is to encourage people to not sit on empty blocks of land and increase the supply of land for housing. You pay land you pay land tax on developed land as well. It's BS.

[00:22:46]>> Absolutely you do. But at least you charge rent.

[00:22:49]>> They charge it because they can't develop it. No, they charge it because it's a tax on on owning land as an investor in in every state. I love the way I love the way you keep splitting irrelevant hairs, but sure. Um, the point >> it's not irrelevant because a narrative needs to be told as the truth.

[00:23:06]>> Okay. Well, >> I've seen the headlines. All the headlines like pick tiny little bits of the truth to create a narrative to push whatever the agenda is. So, if you just land tax is paid to make land be developed, that's not true because land tax is paid on every parcel of land developed or not.

[00:23:26]>> Yeah. Okay, that's right. So, let's tell the full full truth. Okay, so you agree on that. So, you agree on that.

[00:23:30]>> By the way, you want to tell the full story about everything? We we might be here for a couple of days, but I don't disagree with anything you just said >> and nothing you said contradicts the point I'm trying to make, which is if I'm sitting on an empty block of land where I'm not getting any rent in return, that's an expensive block of land to hold on to. And if I'm sitting on a block of land that does have rent on it that I'm paying land tax on, I might hang on to the land because I think the rent's worth it. But I think we can both agree, and that's the important point. When we agree with each other, we should admit it. I think we can both agree that when there's an empty block of land on which land tax is payable, the property developer is far more likely to sell it to someone who's in a hurry to build a house on it because it's expensive to sit on the empty land. So the beautiful thing is we hear property developers simultaneously and this is genius. So let's let's put all the context out there Jack.

[00:24:25]>> We hear property developers simultaneously saying all this land tax that encourages me to not sit on land is terrible but the reason houses are expensive is there's not enough development going on. I mean pick a lane. Do you think is that do you see that duality there, Jack, where they're making both those arguments at the same time or not?

[00:24:48]>> No, because one thing I can tell you, one thing I can tell you about property developers is they are in the game to make money, right? Like, as we all are, you wouldn't run a business if it was a nonforprofit.

[00:24:57]>> Um, that's what a charity >> about land tax doing exactly what land tax is designed to do.

[00:25:03]>> Well, it's not this. Well, you finish you you finish you finish what you were saying Jack and then we'll come back to Richard >> because let's say that you own a thousand acres of land for example and you are doing what you said you are land banking that land right now if that land is not able to be developed because of a multitude of ress maybe the zoning is not correct maybe the infrastructure isn't there um whatever the reason is you still pay land tax on that land now one thing I can tell you is when that land gets reszoned because then the Alleywood General says that land is worth a significant amount more money.

[00:25:39]It can be reszoned to be developed, but maybe the infrastructure is still not there, which is true for a lot of locations. The infrastructure isn't there to develop the land, although you can develop it, which means you still pay a higher land tax, but no one's going to develop it because without the infrastructure, you're >> waiting for the development.

[00:25:56]for the infrastructure in in in locations that don't have things like upgraded storm water, upgraded power, roads, all these things that get put in by councils, a property developer can't actually develop the land once it comes absolutely he can develop it. But until that happens, >> it can't.

[00:26:15]>> Is that not fair enough? Is that not a fair enough argument, Richard?

[00:26:18]>> That's fair.

[00:26:19]>> That's fantastic. Oh, so I I'm feeling sorryer and sorry for >> You shouldn't feel sorry. You shouldn't feel sorry. No, they they don't feel sorry for you. They don't feel sorry for them.

[00:26:29]>> I'm just saying that's that's how that's how it happens.

[00:26:31]>> Yeah. Well, that's No. Well, let's, you know, to use your argument, let's give people more context, Jack, let's let's talk about all the things you didn't mention. So, who amongst us doesn't have a thousand acres of land sitting around, but let's imagine I've got a thousand acres of land sitting around like Jack says, and Jack says, "Maybe I can't develop it cuz the nasty bureaucrat hasn't resoneed it or the nasty government hasn't never said nothing has provided the infrastructure.

[00:26:58]>> Anyway, we're sitting here wish I could develop my thousand acres. The main problem I can't develop my thousand acres is of all my capitals over here in my other thousand acre development. And I I I can't develop all the land I own all at once. And what land tax does is give me an incentive to either hurry up and develop it or sell it to someone who's in a hurry. And the point I'm making, it's a simple point and I'm pretty sure Jack agrees with me. So let's clarify when we agree is that the many people many property developers perhaps not Jack simultaneously argue simultaneously argue that the problem for house prices is that there's not enough getting built. Supply supply I hear property developers say supply all the time. They simultaneously say it's all about supply, but then they complain about land tax when what land tax does is push supply onto the market because if you're not in a hurry to develop, you have an incentive to sell to someone who is in a hurry to develop. So, let's agree that there's a contradiction in the property developer argument that's that that land tax is bad when and at the same time arguing that there's not enough land to build on. It's nonsense.

[00:28:14]It's a multi-dimensional thing what what you're saying.

[00:28:17]>> It's complicated. Yeah.

[00:28:18]>> No, it's not it's not complicated. It's multi-dimensional. Land tax land tax at the end of the day gets passed on to whoever buys it, right? They have a feasibility. Any cost associated with developing that land gets built into the feasibility and no property developer is going to develop anything unless there's a margin and they all run at different margins. So, if there is a land tax component in the P&L or in the feasibility, the end buyer pays for that land tax. That's the reality.

[00:28:42]>> That's not true.

[00:28:43]>> That's okay. That's >> Why is that not true, Richard?

[00:28:45]>> That is true.

[00:28:46]>> Uh because No, because ultimately >> developed property. You're talking about things you don't even know about. You've never even developed a property. How do you know?

[00:28:53]>> Now, now we're name calling. I I got plenty of friends who are property developers. Ultimately, >> ultimately, the price of the house, let's let's be clear, the house price at the end is determined by what someone's willing to pay for it.

[00:29:07]>> So, you know, if if we put by your logic, >> that's right. That's right. It is developed. It is it is the land won't be developed until the market is there to pay it.

[00:29:19]>> Is not going to develop it until there is a market.

[00:29:23]>> Let me know when you're ready to be corrected. You go. I'll correct you. You go. Hang on. So, let me let me play catch.

[00:29:28]>> No, no. I I got to correct this nonsense. It is just made up stuff that gets said all the time.

[00:29:33]>> Can I I'm just going to catch people up and then we'll go to Richard for what you think is wrong. So, I'm playing catch-up and we've got Jack is saying that any taxes and extra costs that are imposed by taxation, uh, lazy council, slow council, red tape, then gets passed on to the cost of the end consumer. But it sounds like and and then that then determines the the price of the property at the end. But it sounds like you're about to disagree with that, Richard.

[00:30:00]>> Absolutely. But only if Jack's ready to let me talk. One thing I just want to add on there when you say it gets passed on to the end consumer. Yeah. So it does get passed on to the end consumer but the the thing on that is they will not develop it until the market is there to pay the price.

[00:30:18]>> Okay. So I think we are getting somewhere here with how this system sort of works. Um, but Richard, you go and then I'll try and piece it together because I I think what I'm seeing here is you have we have directly two perspectives on this property housing situation. One on the ground developing and looking at the exact incentives and one from the bird's eye looking at the system as a whole and the incentives and the purpose of things like taxes and why the system is how it is. So, Richard, why is Jack wrong in assuming that that's just going to be passed on to the customer in the price of the land or house? Look, he's not completely wrong, but he's he's only kind of partially right sometimes. So, let's let's take Jack's logic that the the higher the cost to the builder, the higher the price you and I have to pay. Common senseish? Kind of makes sense. Uh, put more tax on, builder will pass more cost on to us. Common senseish. kind of makes a bit of sense, but >> and if they can't make a profit, then they won't >> Well, let let me finish. I'm trying to step it out. All right. So, let's go back to the bidding, right? So, builder costs has to be covered. Common senseish makes sense. Taxes are a cost. Common senseish has to be covered. So Jack's basically saying, "So the more tax we put on, the higher the price and that if the profit that the developer can make can't cover that cost, then nothing will ever get built there." Well, that's not true. That's not true. That's not true.

[00:31:56]That's not true. I'm choosing my words carefully here. That's not true. Because ultimately, you can't sell a house for more than someone's willing to pay for it. And if the property developer has sat on this land for a while and there's been new taxes added and the cost of building's going up, that developer isn't entitled to make a profit one day.

[00:32:18]And if they've overpaid for the land, then they're going to have to sell it to someone else at a lower price. And the price that they'll be able to sell the land at the lower price the so that God forbid a property developer makes a loss, right? but they're going to have to sell that land to someone who thinks they can still make a profit. So the idea that when we increase tax, all of that is paid for by you and I is just classic scare story from every industry in Australia, the property developers are just better at it. But if if if Jack's right, then if we tripled the taxes, then house prices would triple.

[00:32:58]>> No, it wouldn't. Nothing would get built.

[00:33:00]>> Sorry, sorry, sorry, sorry. Uh if we triple the taxes, house prices will go up significantly. They wouldn't report nothing.

[00:33:09]>> Let me finish. Jack's kind of arguing that the more we increase tax, the higher the price we'll have to pay. But in a market, and I am an economist, you're a property developer. I'm an economist. I'm pretty sure I know how markets work. Like ultimately price can't be higher than people are willing and able to pay. So in Jack's model, no property developer will ever go backwards. But of course, what happens when we introduce these land taxes and other things is the people that bought the land hoping for speculative gain often have to sell at a loss to someone else. And by the way, this is how house prices come down. The only way the only way for house prices to come down is if property developers make a loss at some point. So yeah, this idea that we just every time we put a tax on ultimately gets paid by you and I, so we're all just cutting off our nose despite our face. It's property PR 101. It's literally just not true. Surely that's true on some level in the sense where Jack's saying >> where I started kind of true sometimes a little bit but >> but where he says when he says if if the if the taxes do end up too high and property developing does get too expensive is it not true that then they would not develop properties is it does it not kind of end there in the in the story >> that that developer that owns that land won't and they'll have to sell the land to someone else and the price that someone else will pay will be lower.

[00:34:39]This is how markets work. The land just won't sit there for a thousand years because the tax went up, right? It's just not how it works.

[00:34:48]>> The prices will adjust and then someone else will develop it, >> which is what's happened in Victoria. I mean, when labor when when Victoria introduced the land tax, I'll never forget it. This property developer came on and went, "Oh, with this land tax, it's not worth me staying in Victoria.

[00:35:03]I'm going to sell my houses and invest somewhere else." It's like, good. That's the point. That's the plan. Because when the property developer sells the house cuz they don't like the land tax, they just increase the supply of houses for you and I. So the whole point the whole point of the tax is to make the property owner who was sitting on it land banking or just making a lot of money in rent think stuff it. It's not worth it. But they don't dynamite the house. They don't dig up the block of land and take it to Japan. They sell it to someone else for a lower price. And that's how house prices come down. That's the point. That's the plan. So then Jack, final thoughts on that and then I want to move back to capital gains because I didn't real obviously property is very complex and there's different tax settings and things that I guess Richard says definitely impact the the housing market and people's ability to get in the market. But what's your final thoughts on the land tax component? When you look at Melbourne, Jack, do you go >> that is it's going well. It's going the Melbourne uh the Melbourne economy is going really really well. So uh Prices are becoming affordable. It's working.

[00:36:09]>> Are they?

[00:36:09]>> What's the medium What's the medium price for a house in Melbourne?

[00:36:12]>> I don't know. But >> you don't know. You don't know. You're talking about things you don't even know that I can't.

[00:36:16]>> You're very clever. You know the decimal places. You both know things. You both know things. Let's not Let's not disparage people's ability to know things. But But back to what you were saying, Jack. You think that you think that the that the taxation changes in Melbourne, has that discouraged your personal decision? Cuz I think Richard's pointing out that house prices have not risen in Melbourne at the same rate as every other state in the city uh state in the country. And Richard would say that is directly because of the taxation changes. And as if you're looking as an investor at Australiawide, I'm assuming that's what you're doing. When you look at Melbourne, do you want to invest there or don't you want to invest there?

[00:37:03]>> Melbourne right now, if you don't worry about me, let's just talk about all the other property investment firms in Australia where everyone is right now because it looks affordable in quotation marks to uh to all other markets >> to invest because the house prices aren't rising as much as other other states. So wouldn't you go, oh, I might be in Brisbane because that's going to >> That's the thing. That's the thing.

[00:37:24]Melbourne up until 2022 was the was the best performing real estate market in Australia. They obviously had really poor leadership. Best performing up until 2022 for the last 25 years >> performing from an affordability point of view. Worst performing. This is the point. Whose side are we on?

[00:37:39]>> Yeah.

[00:37:40]>> Well, we know where Jack's sitting and we know where Richard sitting. So, keep going.

[00:37:43]So obviously they had some pretty poor leadership during co and you know a lot of their a lot of their people migrated north and they've had some they've had some policy change but now it's like a huge opportunity for for property investors. So >> you would say it's a good opportunity to invest in property in Melbourne.

[00:38:00]>> Yeah suppose it depends on what you're investing for. But if you're if you're investing for uh >> you know like for profit you're investing >> I'm not investing there. No me personally I'm not investing there.

[00:38:09]>> Okay. Why not?

[00:38:10]>> Cuz I don't like the place. I think it's a [ __ ] hole. But that's all right.

[00:38:12]That's my personal preference. That's >> But what if if it was a [ __ ] hole with good returns? Wouldn't you wouldn't you be like, "Well, I mean, >> it's run by communists." That's how I look at it. That's why I said, "Don't worry about my opinion." So anyway, that's >> okay. So, let's go back to Well, well, let's let's just clarify. Jack's just told people it's a good opportunity to invest in Melbourne. And didn't they just >> I said other people are seeing it as a good opportunity. I wouldn't invest there. I don't like it.

[00:38:38]>> All right. So, let's make sure we don't Let's split some more hairs, Jack. Okay.

[00:38:42]It's fun.

[00:38:42]>> Sounds like the talking fact. So, >> okay. Well, let's let's get the facts exactly right. Other property developers saying that Melbourne is a good opportunity to buy. Yes or no?

[00:38:52]>> Develop developers or not. Investors are Yes. Developers can't make anything stack. They're two different two different people. Property developers think that it's a terrible place.

[00:39:00]Property investors, but like a passive mom and dad in it's like you want to split her hairs to wake up.

[00:39:06]>> It's not. It's it's two separate things, mate. Property development and property investment are not the same thing.

[00:39:12]>> Property development is a business.

[00:39:14]Property investment is a completely separate thing. It's an investment.

[00:39:18]>> Fascinating. Um, so can you clarify who it is?

[00:39:22]>> Investors. Investors, like I said, like >> so they introduced a land tax and investors think it's a good time to invest. Good to know.

[00:39:30]>> NO. AND MAYBE BECAUSE THEY had the the strongest lockdowns in all of in the world and a lot of their population went north. That that's got nothing to do with people not wanting to live there.

[00:39:39]>> I think it was the lizard people. I think it was the lizard people and something to do.

[00:39:43]>> All right. We got to we got to get this get this back on track, guys. I got to ask you. Let's uh keep this less passive aggressive and more more positive because I think >> the punters will love it.

[00:39:56]what we're trying to well the algorithms will love it but I'm trying to work out here because this is this is this exact conversation is kind of what plays out in the media right now essentially exactly this and that's why I'm trying to cut to the core of where these uh where these differences lie and I think it often is in the definitions and the different categories that people are looking at when the when the property investor says something about Melbourne they're coming at it from a certain perspective and that's what we're trying to drill down into. And I think it's clear that Richard's coming from the perspective of if it locks more and more Australians out of being able to afford a house to live in and not invest in, that's a bad thing. And Jack's coming from the perspective if it's a good investment, this is what I'm looking for. You are looking for more profits.

[00:40:42]You are looking for more return because it sounds like you think if you get more profits in housing, then there will be more housing. Is that like a rough un like take on your position, Jack? What if if you get more profit in housing, then there's more >> it's a good thing, right? If if houses are more profitable and people can invest in housing, then that's the camp you're in. You're like, this is this is good.

[00:41:05]>> I think housing is a is an incredible wealth creation vehicle for the everyday Australian. Absolutely.

[00:41:10]>> Yes. Okay. And Richard's pointing out that has come at a cost at entire generations of people not being able to afford a house to do the thing of living in as opposed to wealth creation. And I think they're the two perspectives that are sitting right next to each other.

[00:41:23]housing to live in, housing to invest in. Let's come quickly back to capital gains tax. Give me your pitch. Why should the government not do anything about the capital gains tax discount?

[00:41:37]Why should they keep the same from your perspective?

[00:41:40]>> I just to be clear, I'm not in the camp of they should keep it the same. I'm I'm in the camp of >> Oh, what what's your position?

[00:41:46]>> Well, they should do anything that they think is going to be good for everyone, right? Um, so one, >> so you're open to the idea, you're you're open to potentially Richard saying to you that actually the solution that's better for the most Australians might actually be to do something about it. Are you open to that possibility?

[00:42:03]>> Yeah, I I'm open to the possibility, but my my opinion is it's not going to to fix the actual problem.

[00:42:10]>> You're not pushing the government to not change it. You're just skeptical about whether it will do anything.

[00:42:15]>> I just think it's not going to do anything. All right. They're they're you know the thing about let's go tax these wealthy property investors. Let's let's talk about me. I've got 15 16 properties. Um you know I'm a I'm a rich property investor. They're thinking they're going to hurt.

[00:42:31]>> You're the guy.

[00:42:32]>> Yeah, I'm the guy. Nearly all of my properties other than the first few that I bought when I was an 18 to 21y old kid are owned inside of a company structure of which is not subject to capital gains tax. And I know that to be true for all of my very very rich friends. So the the wealthiest people are not going to be affected by this. I can assure you.

[00:42:55]>> So you won't be affected by this change.

[00:42:57]>> I'll be affected by sentiment shift. No doubt. But I'm not going to be affected.

[00:43:01]>> What do you mean? Sentiment sentiment shift. Prices will come down.

[00:43:04]>> The the sentiment shift is any time that things change like right now with this war that's going on in the world, people sit on their hands and they do nothing, right? So, but that lasts for about 6 months and then people get on with it just like no one remembers what it was like prior to the capital gains tax change um you know all those years ago.

[00:43:24]The same thing will happen if they change it. It will just become the norm and we get on with our life until they change something else in the future. So, I just think that it's not going to affect the people that they want it to affect. It will actually affect the people that they don't want it to affect which is your everyday Australian who like I said earlier like the median superanuation is 400 grand. If people can't retire on equity in their home which is built over 30 or 40 years, that is not a good thing.

[00:43:49]>> Yeah, but I think that's a separate that that might be a separate argument. We'll leave we'll leave the retirement thing out out of it. So, but it sounds to me like you might be potentially persuadable on on the >> on the potential capital gain. I don't care. I just don't care. That's the thing. Like the same as negative gearing. Negative hearing only affects people that own property in their personal name, which for a rich person is not true because there's risk in owning assets in your personal name.

[00:44:14]>> So you don't you don't care because it doesn't impact you or you don't care because you don't care about the person that they're saying. I am the person I'm the enemy.

[00:44:23]>> That's that's what I'm trying to get.

[00:44:25]I'm the enemy.

[00:44:26]>> You kind of said you're not >> exact. Not what I'm saying is they just don't the wealthiest people who they're trying to say, you know, they are take advantage of the the capital gains tax and they're the ones that were given >> saying that's not you.

[00:44:38]>> That's exactly right. That's not true.

[00:44:40]That's my point.

[00:44:41]>> So, okay. So, so you are in fact you're you're kind I feel like you've taken on the mantle for these other people and you've gone, "Oh, well, they're talking about me, so I'm going to step in and have a response on behalf of them." But you've just said that these tax changes won't affect you. So, you're you don't really care about them. Richard, give Jack a pitch. You've just met him. He's he's open-minded and he's like, "Listen, it's not going to impact me." Uh, and you're going, "Well, Richard, you care, you seem to care about whether the nurse can afford a house. You seem to care about whether housing is something that everyone can afford to live in. And I think you'd both agree should be able to retire with having a house that you don't have to be uh renting for the rest of your life." What's your pitch to to Jack when you say, "Hey, I think capital gains is something we should look at."

[00:45:26]How how would you go about that?

[00:45:28]>> Oh, well, the introduction of the 50% capital gains tax discount just made houses more expensive. Uh it didn't it didn't help uh lower houses at all. It cost the Commonwealth government an enormous amount of money. The >> Do you know how much how much it costs?

[00:45:46]>> About 10 billion a year, uh according to Treasury. So, I'll post it in the comments later. So, it's expensive.

[00:45:52]>> So, it's expensive. It led to higher house prices and even people like Jack who are rich and own lots of houses don't care about it. So, fantastic. If rich people don't mind if we fix it, uh if it will lower house prices and uh we'll get, you know, lots of money to spend on other things. We haven't even talked today about the old-fashioned idea that, you know, the liberals used to support and pretty much every country in the world does more of than us, which is actually build housing and rent it to people. Like we we we have the Defense Housing Authority that builds houses and rents it out to soldiers. We're spending a fortune building houses in Perth to rent them out to the American nuclear submariners. Most countries in the world do what Australia used to do and build houses and apartments where they're needed, rent them out to people. And you know, basically, Jack might not care that Sydney's expensive, so buy a house in Lithgo. But, you know, I'd like there to be aged care workers in Sydney. I'd like there to be child care workers in Sydney. And I think they should be able to live near the people they care for.

[00:46:57]So, I care about not just prices as an average across the country. I think that people should be able to live near where they work. And the idea that rich people live in some suburbs and poor people spend hours coming to wipe their bums for them when they're old. That's not the kind of society I want to live in.

[00:47:13]So, I'm excited that Jack doesn't mind.

[00:47:15]I'm excited that we could raise a lot of money and I'm excited that house prices will likely come down as a result. So, let's do it. Maybe we can finally we can agree potentially on what a housing building solution looks like just after this. But Jack, when you hear that pitch that goes, "It's cheaper. We're going to save $10 billion a year. How awesome is that? It's going to bring down house prices. How awesome is that? It might improve the ability of people to buy it and it doesn't affect you as you've just said." How's that? That sounds like a pretty good pitch. Are you on board with that?

[00:47:46]>> I I think there's lots of other things that can be done, right? The the the good thing with >> But is that the only reason? Like let's isolate let's isolate that and go does that still not sort of swing you on the on the capital gains on how they change your situation.

[00:47:59]>> It's not going to change anything.

[00:48:00]>> No, but but I genuinely think >> if if rich if what's Richard saying is true if cuz like we can we can you you're skeptical about that. But if it changed all that, would that then get you on board? Because it sounds like you're saying it won't change anything.

[00:48:15]So you're a bit uh nihilistic about it.

[00:48:17]But if by some miracle uh Richard was right and it did happen, would that sound good to you?

[00:48:22]>> Yeah. I mean, look, if a nurse can live in if a nurse can afford to buy a property in Kuji in the future, then >> like that's great.

[00:48:30]>> Sounds good.

[00:48:31]>> It's not going to happen.

[00:48:33]>> It just Okay. So then so we can put so I think this is a good spot to put the flag in the sand and say if Jim Charas does something and if by some miracle they do something about the capital gains tax there Richard is saying that this will change things in a put houses in a more affordable direction for the average nurse and if he so you've kind of both put your position on here's what we think will happen so we'll get to revisit this and go you know whose prediction whose punt was correct on this sort of thing. So let's let's land cuz I know you got to go and I really appreciate you guys taking the time to kind of nut this out for a regular punt to trying to understand this complex landscape. Um Rich has mentioned that that solution there. Another solution which which I think you both might agree might be more effective. Uh that is if the government like it the government defense housing authority builds houses directly. the government does it directly and it's shown to have a track record to be able to do it and like you've said supply is the problem and and if it's not profitable for developers they won't develop in certain areas because they're not going to make money >> is a good solution then like Richard saying >> I know what you're going to say is it a good solution that the government build it >> yeah why why not >> okay go and go and have a look at how much it costs a private developer investor whatever you want to call them to build something and then go and look how much it costs the government to build the same You think >> government sucks.

[00:49:55]>> Do that.

[00:49:55]>> Yeah, they suck at building [ __ ] and and everyone being us as humans in this society take advantage of it. So >> fantastic.

[00:50:04]>> That's You think 10 You think 10 billion's a lot of money for uh you know capital gains tax discount every year.

[00:50:09]Watch how much it costs if they try and build [ __ ] >> Well, as luck would have it because we like facts on on this show. There's a thing called the Defense Housing Authority and you can go to the Defense Housing Authorities's annual report and you can see that the Defense Housing Authority makes a profit building houses and renting them out. So, >> a profit how >> uh the property they do sell them.

[00:50:32]>> Who do they sell them to?

[00:50:33]>> Uh humans. You might actually see ads for them. Let's let's remember >> the government develops sells them to defense for property investors to >> buy the defense houses. Hang on.

[00:50:44]Remember, you're the expert on everything.

[00:50:47]>> No jabs, Richard. No jabs. Explain it.

[00:50:51]Explain what the Defense Housing Authority because punters won't have heard it because this is the perfect example of and and I get it because a lot of the conversations I have with random punters say, "Yeah, the government sucks at building stuff." And Richard, I guess, has an example here with the Defense Housing Authority. So, what is it and how does it work? And it sounds like that you're saying it proves that what Jack's saying about government always sucking at everything cuz yeah, there are plenty of examples of it blowing costs out. I think we can all agree with that. But Richard, finish that defense housing uh example and we'll we'll wrap it up.

[00:51:20]>> All right. So, it's really complicated.

[00:51:22]What they do is they buy land uh and they build houses on it and they rent some of the houses out to soldiers and then they sell the houses sometimes to punters with a >> ten can I buy a house >> from from the defense authority. You should look into it Jack. There's good money to be made. Um >> how do I do that?

[00:51:45]>> I know I know I know how the DH works very very well. What I want to know is publish the p publish the profitability data that you just mentioned.

[00:51:52]>> I do.

[00:51:53]>> Okay. So, what's the profit? I show you.

[00:51:56]>> Wow. I love I love this approach to knowledge.

[00:51:58]>> I just think on the internet very well. I >> I don't know. I don't know if you noticed, Jack, but we're we're live doing this right now. But if you bung in Defense Housing Authority annual report into Google, you can find it. It's really >> hands a minute ago.

[00:52:14]>> Do it, Conrad.

[00:52:15]>> All right. And a minute ago, you literally just said you they didn't sell to the private sector.

[00:52:20]>> No, no, no. I just said I said how do they how do they derive a profit? I said that's what I asked the question which is reported annual reports. Do I have to look at their annual reports?

[00:52:29]>> It's all on tape. Anyway, here's the point.

[00:52:32]>> Publish DHA.

[00:52:34]>> Here's here's the point, Conrad. Uh the Defense Housing Authority has been doing this for many years. It's quite successful. We could scale it up if we wanted to. But let me be clear.

[00:52:45]The idea that property developers want to help push house prices down so that all the properties they already own are worth less money is bizarre.

[00:53:00]Now, I don't believe that Jack wants to impoverish himself. I don't think that any property developer wants to impoverish themselves. So, shouldn't we be a bit cautious about the idea that property developers have got the answer for us on how to make houses cheaper? I mean, there's a conflict wild >> because if houses are more expensive, they make more profit is what you >> and if house prices fall, they lose money. And if they've borrowed to build, then they're possibly going to lose everything. So again, the idea that we should take our advice from the people who wear hats saying whose side they're on, I don't mind landlords.

[00:53:41]>> We should take our advice from people who have never done anything and just sit in sit in an office and talk about it.

[00:53:46]>> You're the only smart person in town, mate. Good on you. Not at all.

[00:53:50]>> Come on, boys. Let's be friends.

[00:53:52]>> Hunter, where's this? Where's this profitability? You've got the report up in front of you. Show tell me the profitability numbers.

[00:53:57]>> Okay, here's what I did. And Richard can send through whatever. I literally got the latest report from the DHA 2324. I know it's not latest one. It's the one I clicked. Uh or it might be the latest one they released. I I went into my AI that reads this stuff for me. I said, "What's the profit?" So, this is how I did it. Like fact checks, welcome citation necessary. DHA's net profit after tax in 2324 was about $53 million.

[00:54:20]Profit before tax 76. Uh income tax expenses 22. Net profit after tax 53.

[00:54:26]>> You're welcome.

[00:54:28]No, that's that's not the that's not that that's the business. That's not the development. I'm telling you right now.

[00:54:33]I'll get I'll publish it. I'll do I'll do a real life just so you know.

[00:54:36]>> Fantastic. I can't wait. All right.

[00:54:38]Here's what we're going to do. Here's what we're going to do because because this is where often it lands and I guess I want to I want to like this is where I you know people when they have discussions coming from different perspectives I'm trying to ascertain what are the data points that would shift someone's opinion. So if your opinion Jack is that uh the government can't do anything, can't turn a profit, then Richard's saying, "Well, actually, I can prove to you that there is something in the government that functions quite well." Hang on. But then please inverse Richard is the same thing. Just wait. Just wait. Just wait. Inverse for Richard. If Jack can prove that the DHA is a massive failure and it's an absolute money suck of resources, >> those numbers that you just outlined aren't the development numbers. It's a property management company that that manages 11 billion worth of real estate >> and before we sort of get there >> head and it's like they can develop property that that revenue is a proper investment.

[00:55:33]>> I'm going to have I'm going to have to go soon.

[00:55:37]Let me finish. I >> we got to cut this off. But essentially what I what I'm going to do to leave it here for punters to go because this is where we want to land. Who who do we get our numbers from? So Jack, sounds like you've got a great explanation as to why this number is profitable and as to why you still think it's >> because that's a business. That's not a property development. They're property management numbers. 17,000 properties I manage.

[00:55:57]>> So Jack's So Jack's going to send me his his data. Richard's going to send me his numbers and then I will sit down with Punter James and we will sift through it and try and work out where we land. Uh both of you, I really appreciate you taking the time. It was a bit a bit tense there, but I really appreciate the different perspectives that we've come because I think we understanding a little bit more about how different people who sit at different parts in our economy assess these conversations. Uh guys, unless you want do you want to say anything before you leave, Richard?

[00:56:25]>> I got to go. See you guys.

[00:56:26]>> Richard, I really appreciate. Thank you.

[00:56:29]>> Jack, anything you want to add now?

[00:56:31]Richard's he's gone. What do you got?

[00:56:34]>> No, I uh I find it very funny. Look at those numbers that that DHA >> give your explanation. Give your explanation on the DHA and then and then you send me >> saying that the develop he he's saying that you know it's profitable. So that numbers at your was it 70 million in in in gross revenue 50 odd million in in profit.

[00:56:53]>> Yeah. Profit before tax and then after tax it's like 53.

[00:56:56]>> Yeah. Yeah. So so what that is is a property management business. They manage 17,000 plus DHA properties. The revenue from that is the business that manages the properties. Right. Because essentially what happens is the vast majority of those DHA properties are funded by property investors. They're not funded by the government. The government puts in the tenants being the the defense, you know, personnel.

[00:57:18]>> Yeah. Defense people, >> you know, they they a lot of the time guarantee a certain return and a certain yield and you can only lease them out to DHA people. So the revenue that is derived there of $70 odd million is not property development revenue because the property development is done by the personal or the private property investor. That revenue is derived from the property management.

[00:57:38]>> Who's the who's the investor though?

[00:57:41]>> People, >> human beings. That's what I'm saying.

[00:57:42]That bloke has no idea what he's talking about.

[00:57:46]>> I'm telling you, right?

[00:57:47]>> Hang on. Hang on. Hang on. So, hang on.

[00:57:48]So, you're telling me that the DHA uh outsources to private property developers the development of >> 70 plus% of those properties. Yes. DHA is a is a scheme, >> right?

[00:58:03]>> Yeah. Yeah, >> they those properties are purpose >> isn't employing >> 70 plus% of those properties are owned by private property investors and then what the DHA does is puts the defense personnel into those properties and then their revenue is derived from management.

[00:58:21]>> So then it sounds like okay that's a good distinction. So then it sounds to me like in order to determine the case of cuz I think the original statement we're trying to get to the core of here is that the government sucks at everything. And I think what we're trying to work out if the government are not property developers, right? That's the thing.

[00:58:37]>> If there's 30%, right, if there's 30% of uh houses that are being developed by the government, >> it's probably less than 30%. You have to look up the exact data, but the vast majority of them are up.

[00:58:48]>> Can you point that to me? Can you point me?

[00:58:50]>> Yeah, I'll get you all the I'll get you all the stuff.

[00:58:52]>> Yeah. that that would be good because because because essentially we can look at the side by side to see if developers are better and get a more cost effective return on the property or whether the government can in fact do it because I think from the perspective I'm coming from let's say you know Richard's not here is that there's only one thing worse than the government developing something and that's a forprofit pseudo privatized government service. You want to know why the NDIS is blown out? I just did a video on it. It's cuz they [ __ ] privatized it. That's why they did it cuz you've got Yeah, but that kind of cuts against what you're saying because Medicare is much more efficiently administered. The admin costs are way lower. The effectiveness is way higher and it's more accountable.

[00:59:32]And what we've got in the NDIS is a privatized industry sucking at the bottomless pit of government funds and it's less accountable, outcomes are worse. So I think that's my example to counter with Richard here saying project, right? It's the same. It's like government projects, they have a budget of why it ends up costing zed and and generally the reason for that is probably governments aren't really good at estimating and then the private sector want to suck every dollar they can out of it. I agree. I agree totally.

[00:59:59]>> Yeah.

[01:00:00]>> Punters, if you want to listen to the full extended edition because pun Richard Dennis had to dive out after the hour >> and pun Jack and I kept on chatting. So if you want to listen to that full extended edition, head over punters over join the punters over on Patreon. You'll see that there. But Punter James, the main disagreement that I think uh it all came down to is I appreciated them both of them citing their claims and one of the big ones that it landed on at the end there as you heard was the role of the Defense Housing Authority cuz I always want to be fair to everyone bringing perspectives onto the podcast.

[01:00:36]I hit up cuz we're stuck in the middle going who's correct in their interpretation of the data. Right. where we're just punters in there going, "Okay, now you're both making opposite claims, but claiming the same sources."

[01:00:46]In the show notes, you will see a note from Penton Richard Dennis, and you'll see a note from Penton Jack Henderson.

[01:00:52]Both using the same data, kind of trying to claim different things. Uh, Pamon Richard Dennis is trying to say that it is cheaper, easier, more effective, and can be done and has been done before to use the government to build houses directly and not have to always build houses for profit. And he recites the Defense Housing Authority. Punderon Jack Henderson is saying that I think his core argument is the government sucks at it and it's mostly making money from leasing from other private property developers to bolster the portfolio and they develop minimally.

[01:01:21]>> Okay, >> my just regular pun to take it does look as if both have >> are looking at different parts of what's the true picture. They both invest from and manage properties that are leased from other private providers, but they also do develop and build houses.

[01:01:39]>> Okay, so same data point, two different narratives around >> two different narratives as you heard, very different perspectives. And it's always good when you can land the plane and both end the conversation believing the other is wholly wrong on almost every possible bloody metric.