Treasury Insider: How Ideology Beat Common Sense in Australia | David Pearl

Australia is the most inflationary which country in the world now. There's no jurisdiction in the world that has gone further than us with renewable penetration and seeing costs slower. In fact, the cost of the transition is to be partly withheld. It could be as high as a trillion dollars. So this is a national scandal and it gets back to why people have gone to pulling hands. When I was in Treasury in 2023, people come into my office that close the door and we'd have whispered conversations as if we were being disloyal, but we were just talking about costs and trade-offs. Let me ask this truth. Sure. The senior people in those agencies in Canberra know what is happening and why is happening. I don't know if I can say that with confidence. My guest today is David Pearl. He spent many years at a very senior level in Treasury in Canberra. He's an outstanding thinker about Australia's place in the world. And he writes very extensively and very convincingly. What we're going to talk about today is in my view extremely important and I hope you find it deeply informative. David, thank you for joining us. Thank you, John. I think we'd both agree that this is a wonderful country. I sometimes cryptos and you smart decisions I ever made that's to choose my parents' world, they're Australian. I think we'd both agree that we've been a significant country that in many ways we've punched above our weight and we wish it well. But I think we would also both agree that we are in serious trouble and we are in serious trouble because we're making bad choices, decline is not any other to all. We actually could turn it around. I totally agree. I have great affection for this country as well. I suppose I came of age in the 1980s and 90s when Australia shook off the protectionist model and we had modernising governments of both the left and the right who substantially agreed on the vision of Australia that I'm trying to achieve. And it was one where markets and individuals with incentives would allocate resources but with the government that would secure national security but also legal rights but provide a safety net for those who are displaced by globalisation by shifts in the economy. And we emerged from the OSCD pack in the 80s and 90s but become a leader. Living standards grew more rapidly in Australia in the 1990s than in the rest of the OSCD. By some margin we were cohesive and unified and we were economy defined by opportunity not privileged. So we achieved that. It's not so long ago and I do believe that we can rediscover that but as I wrote in that piece in the Australian I think we've made some very poor choices. Let's frame this up. In the context of an Australian people who are plainly really upset with where the country's got to. You're seeing that in the polls every day. Things that we would never have anticipated. The two major parties together can't muster half of the primary vote of this country. One nation's come out of nowhere and yet at the other end you've got a lot of Australians who want to go in a different direction with bifurcating. What I'd love to do is explore with you some clearer thinking than perhaps we're reading about and seeing on our television about how we might think about this. And I would start by making this broad observation. Our fourth in the father's gifted us one of the best constitutions when they were setting up the federation of any country in the world and I think it's fair to say that primary objective was the safety and security of the Australian people. And under three broad headings I think I'd like to tease out your thinking on what that looks like. The first is national cohesion. If you're a nation of tribes fighting with one another you won't have the cohesion and the trust for the place to work. The second is our economic strength and the third frankly is our security, military, supply chain etc. So let's come to the first cohesion. Have you ever seen Australia as delighted as it is at the moment? No I haven't and my paternal grandfather Cyril Pearl was editor and author in Australia and he was a prominent Jew. He wasn't religious and I remember he was quite the two v star. He was in the late 60s absolutely and he was a little bit of a rebel and rebel rouser but he loved the country and he was always worried about any semitism and I remember him not wanting me to be called David because he was always concerned about that and I grew up John in the 70s and 80s without a hint of any of that. As I said I'm anglo from my mother's side but I have a Jewish name and I can't tell you how upsetting it is to see anti semitism raised its ugly head in Australia but to your point about social cohesion I haven't seen Australia more divided. If you think about the classical political thinkers like John Locke there was always this notion of a social contract and Australia had a wonderful social contract where whether you were born here or you immigrated you would embrace Australian values, you would demand rights but also meet your obligations and generation after generation of immigrants came here in the post-war war two period and when they assimilated in effect they were signing up to the contract and I think what we've seen in Australia and other western countries is recent flows of immigrants not endorsing the social contract and as John Locke and all classical political thinkers would predict once that happens you have division. Well David as we tease out this issue of social cohesion Von Dij was obviously a horrendous moment I do think there was a massive surge in awareness in the country that we're no longer being well led. It surely wasn't primarily about guns but I don't personally think it was primarily about anti semitism that might sound strange to say but to see it's ancient and penicious you've just referred to that it's not you it's evil but it's not you I'm not sure it was even primarily about radical political Islam because that's many centuries old as well the really troubling thing is that it happened here now on our watch in our midst what is it that created the vacuum that's allowed these things to break out in Australia which is you've just said for so long has been a place where those sort of things haven't happened from the first fleet days on. No totally agree well this is where I might have a slightly different perspective than some because I understand why many people blame what they call mass immigration but we had mass immigration in the post-war war two period the rallying cry then as you know as popular or perish and each successive wave of immigrants starting with greets and Italians but then extending through to the Vietnamese Koreans contributed enormously to this country so in effect they endorsed the social contract they were attracted by Australian values and they lived up to them what changed John is that we've had a minority of immigrants and I'd have to say that it's Muslim immigrants who haven't signed the social contract now that's to be deployed but I really point the finger of blame at those who run our cultural political and social institutions the people with the megaphone's people with the megaphone's because I think for several decades now they've been saying to school children and the rest of us and also new immigrants the Australia is illegitimate founded on racism and dispossession that it's something it's a country that's destroyed the environment and endangering the planet they've also been saying that your essence and identity can be found in your sexual preference or your skin color or your religion not your Australianness and I think Pauline Hanson for all of her crudeness if you like and I didn't like the way she first burst onto the national stage talking about Asian immigration I found that pretty abhorrent but if you remove all of that she's actually in her own way speaking about a one Australia an Australia of equal people where we judge people on character not on inherited characteristics so I do blame the people that run the institutions John because if we had schools and media and bureaucrats upholding Australia and teaching children and others to be proud of it and to respect the way of life then I think it would be much harder for a minority of immigrants to reject it the long marks for the institutions I think it was Lincoln herbs that what is taught in the classroom today becomes a philosophy of the country tomorrow exactly and in the name of tolerance, do you remember? Remember when that was the big thing, we had to be tolerant. I've always thought of tolerance. It says, "Yeah, it's a value, but it's a lesser value. I don't want to be tolerated by my neighbour." And I don't think I'm obligated just to tolerate my neighbour. I think it's higher than that. I need to respect them. And to the best of my ability, actors I actually care about. There I say, "Lovely neighbours." It's a much stronger concept than tolerating others. But toleration's gone now. In the name of identity politics, I hate to say this, but we become a nation of warring tribes. Stop and think about this. We now have dreadful divisions over race. You're a racist if you don't acknowledge this colour of people's skins in some ways now. We have deep gender divides. At the same time, we can't decide what gender is. Now outrageously encouraged by the government, we have intergenerational friction. How on earth can we be a cohesive nation when it seems that all those people with megathons are trying to pull us apart? No, exactly. And I think this is where failing economics performance comes in. It's not the only factor. I think culture and the economic backdrop influence each other because there's no doubt that the whole of the developed world after the 2008 financial crisis experienced slowing in living standard growth. And I don't think it's any accident that in those years we saw the rise of climate change ideology, political correctness and even ideas of governments running economies because growth had peed it out, living standards weren't rising. And I think people respond when they can't pursue opportunities, they then want to assert claims at the cost of other people. So declining societies always become divided societies and each side influence of the other. So the government's budget I said on television after the budget was handed down, this government has given up on growth, has given up on offering young Australians opportunity. And so their only way of surviving politically is to sow the seeds of conflict and try to convince younger Australians that other Australians are living at their expense. So it's a classic example of a society in decline turning against themselves. Because we are in decline. We'll come to economics in a moment. I just wanted to tease out a couple more issues on the matter of a cohesive society. When we fragment as much as we have trust breaks down, there's a lot of research from around the world that shows that prosperous societies are high trust societies, low trust societies, are anything but prosperous. The breaking of trust I think is having a major impact on our ability to sort the economy. And you see it everywhere. The ANU's tracking of trust in the federal parliament and parliamentarians since 1971, it's a horrible graph. There are two massive blips. One was when the hard government was elected. There was an even sharper one when the Rudd government was elected, although it collapsed with astonishing speed. And it's just being downed as ever since. But it seems to me we don't trust our leaders. We don't trust our institutions. We're doubtful even of the ideas that stand behind the institutions. You've touched us on already. Aussie values. But what are our Aussie values? No one seems to be able to articulate them. We'll pull in Hanson I think is very effective at articulating them in a way that resonates with people. As I said, despite her being occasionally crude and despite her offending people, I think people sense that she's representing their understanding of Australian values. But trust is interesting John because trust can only decline from a high base. And I do think that we have traditionally trusted those who led our institutions, our governments up bureaucracies, our regulators, our cultural organisations, our economic institutions. They've been entrusted with power to govern their institutions in our interests if you like. That's the transaction. And I think starting 20, 30 years ago, the elites, the people running those institutions started to be guided by an ideological view which they hadn't been delegated to execute that hadn't had the consent or even discussion with people. The pandemic to me crystallised lack of trust. Why vaccination rates so low in Australia? Traditionally they're incredibly high. When I was younger, it was never a question that you vaccinate your children or get vaccinated. Just because our elites are bureaucratic and political elites lied about vaccination during COVID, the argument was that you had to be vaccinated in order to stop transmitting the disease, well that was a lie. And as we all caught COVID, despite being vaccinated, we knew. Might have been excusable at the beginning, but very obviously and very quickly became evident that it didn't. Absolutely. The Australian business change is another area where trust has been violated because when I joined Treasury in the late 90s and I worked in the OSD in the late 90s, the Australian bureaucracy's view of climate change was pragmatic and based on costs and benefits. So with the Kyoto Protocol, the Australian negotiator's argued for an increase in emissions for this country compared to Europe. Why? Because we're a young, immigrant society and a commodity exporter. And that was accepted by the Europeans. What's it in that position, John, was that climate burden sharing imposed a higher cost on Australia in terms of growth and our basic economic advantages. So we should be allowed to grow our emissions further. From the late 2000s, climate change became seen as a moral imperative, including in parts of government like Treasury, where the idea of costs and benefits, the idea of making small initial contributions in step with everybody else, knowing that it would cost growth, was replaced by this idea that it was a moral imperative and it ignored any trade-off that you could cut emissions, boost growth, raise living standards and save the planet. That's an ideological position. I define an ideology as a set of propositions where there are no trade-offs and where there are no risks and costs. And whenever I hear somebody speaking ideologically as a former Treasury officer, I know where they're coming from. But I think that was a violation of trust because with energy costs rising in Australia and every other country that's replaced fossil fuels with renewables, average people are understanding in their bones that there's an economic cost to pay. Instead of being upfront about that, when we started cutting emissions, governments and their bureaucratic advisors lied about it. It may not have been conscious, but it was part of a group thing. And I think the lower income people, people in the community are suffering from that, just like they did with the pandemic. So I think that's where the lack of trust comes from. Now, I want to drill into this, David. This is really interesting because I was there with key eights owner and all the rest of it. And we had the central agencies telling us how costly renewables would be and that they would be big trade-offs. We had A-Bare because it of course was critical to our understanding of Australia's economy relying very heavily on the regions and primary industries. Informing is deeply what's happened here really worries me. It's the point that you're raising. The breaking of trust when you don't tell people the truth about the trade-offs. I say in a free country is completely legitimate for the Prime Minister or any other Australian to say we have an existential crisis. That is the government's position and we must take these measures, provided you're honest about the cost. And that seems to have disappeared, as you've just said. That breaks trust in a really major way, but it also breaks social cohesion. And it breaks social cohesion because as you say people instinctively know something doesn't add up here. This is hitting the poor and the middle class is much harder than wealthier Australians. But I say with a lot of feeling it's also damaging rural and regional Australians are bearing the greatest brunt of it. The people who feed us. The people who look after our natural environment. Most of the so-called progress we've made in reducing emissions has actually come from restrictions on what farmers can do and land managers can do. I spend quite a bit of time in Sydney and I go to teal seats. They're not paying any price for this. They're not being told this is impacting a neither of the bureaucrats in Canberra. They're not living with the price of any of this. So that's socially, you're getting a breaking of trust. You're getting a pile on where people are not told the truth about the trade-offs. That is a massive shift. I remember Treasury and the central agencies telling us that we needed to know what we were signing up to so that you could make an informed decision. Absolutely. And I think that phrase you just used. John making an informed decision. We didn't have that during the pandemic. We didn't have that with climate change. We don't have that with taxation policy today. Treasury very sadly is now run by people who are not just politicised because Treasury has never been independent of government. Treasury secretaries have always seen themselves as advisors to governments, not as people who lecture or frustrate governments. But now it's swung the other way where you have a Treasury secretary ahead of productivity commission who cannot bring themselves to acknowledge that switching low cost fossil fuels to renewables entails any costs whatsoever. In fact, the first thing Jenny Wilkinson did when she became Treasury secretary was to release modeling, which asserts that cutting emissions and switching to renewables and electrifying the economy will boost growth and productivity, which is plainly false. So here you've got the head of Treasury essentially putting forward propositions probably framed by the expectations of the government of the day, which simply do not leave Australians in a position where they can make a genuinely informed decision. Also their passionate belief. We've had a number of Treasury secretaries. What are passionate beliefs have to do with it? Absolutely, but this is the problem because Martin Parkinson Ken Henry, who I was very close to in his Treasury secretary was not an ideal log, but has sort of become one. But Martin Parkinson, Ken Henry, Stephen Kennedy and Jenny Wilkinson, they've all built their careers on climate change apart from Ken Henry. They would all describe themselves as passionately supporting the renewable clean energy transition, yet they're in a position of responsibility. It gets back to trade-offs, John. I say to left-leaning friends in Canberra, it would be just as wrong for a Treasury secretary to say to a right-wing government who wanted to abolish the minimum wage or privatize a Medicare. By all means do that, Prime Minister, but these are the costs, these are the risks, these are the consequences. That allows you to make informed decisions. So we haven't had a public service on critical issues of energy taxation, fiscal management, which has been able to provide rational advice. I think that is a major concern because when Australia looks down on other countries, we've always said rightly that we have first-rate institutions. We don't have that. Look at our fiscal and monetary frameworks. When you're in government, John, we had both sides of politics committed to a balanced budget and surpluses when it's possible. We had both sides of politics and the RBA committed to inflation reduction. Now we have a Treasury that actually supports permanent deficits. I was staggered in my final use of Treasury to see a minute going up to a Treasury or saying, forget about balancing the budget over the cycle or smaller government. Just limit net debt as a proportion of the economy. So that's essentially saying to the government, you can continue to expand government provided taxes rise as well. And the debt burden as a share of GDP doesn't rise. I was staggered to see that. And then secondly, we've got an RBA which coming out of the camp pandemic did not follow every other central bank in the developed world and said, no, we're going to lock in labor market gains at the risk of higher inflation. Australia is the most inflationary rich country in the world now. We haven't gotten on top of that inflation. And that inflation has hurt lower income people and wage earners most heavily. It gets back to your, it's a regressive tax. It's a first thing in Treasury we would say to a spend thrift government that, you know, spend money if you like. But if it's inflationary, that's a regressive tax on low income people. I want to really tease out some of these economics issues in a moment. But before I do this, just one other thing I'm just harking back to my own experience. I was not one of those ministers who sought to declare war on my department. And I look back on many of the people that I worked with in the two portfolios that I had with enormous respect. And in some cases, affection, you know, I mean, I caught up with some of them for a bit. And we laugh about old times. One of them said to me, right back in the rubbed use, I can't believe what's happened to my own profession. No one in this town is writing serious papers anymore. But the point I wanted to make was that I always found they were broadly willing to try and help me achieve what I was trying to do, whether they personally agreed with it or not. I wouldn't have known. But they'll quite feel it. So I remember two particular instances when I floated ideas, one of them I took their advice. They said, oh, minister, that would be extremely courageous from Yes, minister. And I think they were right. So I went with them. Another one, I remember a man I respected hugely, was on a matter of aviation today, minister, I must put on my black hat and warn you that if you do this, I think this is what will happen. I thought he was wrong. So I didn't follow that advice and this guy didn't fall in. I literally didn't fall in. But the point is this, particularly Treasury, as a line minister, if I can do it that way, I knew if we put up poor policy, it would be challenged with an intellectual razor-like approach to reality. And ideology is obviously taking the place of reality. The simple proof of that to me is the fact that we're not being told the truth about renewables, because with renewables you have to have more than one system. Absolutely. Big lies contain a grain of truth. So the grain of truth in the renewable li is that the variable imports into a renewable facility, sun and wind are free. But that hides the lie. And the very simple analogy would be offering somebody a car powered by intermittent renewables. It would perform perfectly while the weather conditions were cooperating. But for the 60% to 70% of the time the weather wasn't, you'd need another car. And so the idea that renewables are cheap is a fiction. The other point I would make to people like Chris Bowen is that if renewables are genuinely cheaper, remove the mandates, the require energy retailers to purchase renewable credits, and remove all of the subsidies. In economic terms, for the consumer renewables are poor, because they don't provide power on demand. So you've got a backfiller whole system to achieve that. Whereas if you have a nuclear or a coal gas fired facility, you can switch it on and off. But secondly, from the point of view of renewable developers, you've got massive fixed cost investments in wind and solar facilities that produce intermittent market revenues, sometimes a lot, sometimes none, most of the time none. And so that's why they need the subsidies. So the graph you just showed before shows almost a one-to-one relationship between proportion of electricity obtained from renewables and cost of electricity. It's almost a one-to-one relationship. There's no jurisdiction in the world that has gone further than us with renewable penetration and seen costs lower. Now farmers who are bearing the brunt of all these new facilities and low income people who are flocking to one nation and other parties are the canaries in the coal mine, the insulated people, the secretaries of the Treasury and other departments earning a million dollars a year, the people and education institutions, the people in till electorates, they're insulated because they're rich and they're protected. Again, I go back to the pandemic as a kind of microcosm of all of that where you had insulated people applauding lockdowns and work from home directives. And then everybody that worked with their hands are on their feet were wiped out from their employment and basically had to start again. So just one more thing on trust, John, I didn't touch on this before. It's not just the absence of trade-offs, which I totally agree with you. It's not permitting people to question. I think that's what really has resulted in the rage, which is finding expression now. Because if you ask a reasonable question, what's a biological woman, can a man really become a woman? Is Australia really that bad a country? Haven't we always treated aboriginals with respect? Haven't we got less serious racial divisions than in the US? Can you really save the planet when you only produce 1% of global GDP in China and India or not doing it? You couldn't even ask those questions in Australia until very recently. You were howled down. Even in government, in Treasury, I remember sending an email to Martin Parkinson, them some senior people when I was a Treasury representative in the US, when the climate change history started. And I said, look, as economists, we can't model an economy beyond six months. Our forecasts are always wrong. So why are we attaching so much significance to climate modeling 50 to 100 years ahead? Now, I wasn't a climate skeptic then. I wasn't a denier. I was just an economist and a policy advisor questioning the ability of modeling to predict the far off future. But I could see that I'd crossed the line. And I was probably seen as not cooperating with the leadership of the department. And that's-- That sends a very strong signal to everybody else. We've got a lot of ambitious public servants, and they hear the secretary talking about cheap renewables and right down to the graduate level, nobody outtests it. When I was in Treasury in 2023, people come into my office and close the door and we'd have whispered conversations as if we were being disloyal. But we were just talking about costs and trade-offs. That's the really sad state of our institutions. It's not permitting people to ask reasonable questions and telling them they're ignorant, which I think has really got up people's goat. Well, here's the great foolishness of the people who have participated in that whole. If you like, denigration of people who disagree, the overreach is so bad that a majority of Australians are now prepared to support parties that don't believe climate change action is urgent. It's an absolute home goal and so direct result in my view of a lack of intellectual and professional quality. I can't put it any other way. And John, your government under John Howard, I remember how it's saying to the community, if we don't enforce border, if we don't protect the borders and regulate who comes to this country, the social licence for a generous immigration system will disappear. And this is what's happened on issue after issue. I think immigration is a good thing. We shouldn't demonise it. We shouldn't pursue net zero immigration, but we should regulate it. And the problem with immigration is that it has been effectively hijacked by a combination of profit seeking universities and who are selling degrees on the implicit promise of permanent presidency. The community has lost oversight of immigration. I don't think the numbers have been too high as a result of that, but I think Australia has always benefited from responsible immigration, but the problem is anybody who questioned immigration was called a racist. Anybody who questioned energy costs as a result of renewable energy or it's funny. Paul Keating in the Labor Party rightly said 10, 15 years ago, it's the Asian century. Don't look to Europe and the US. They have a state of their case. Look to China and India. They're going to be ruling the roost. Another reason I changed my view of climate change is that I used to talk to Chinese and Indian officials in the margins of G20 meetings. This is going back 15, 20 years. And they didn't believe in cutting emissions. They would always say to me, but then their ministers would say to Australia ministers, we're going to industrialise, thank you very much. Individual living standards in our country are one sixth of living standards in your country. Your responsible for the bulk of post-industrial revolution emissions, we're not. That doesn't filter back. So I always thought that as another evidence of the ideology side of climate change, is that people at Paul Keating and people who run the Labor Party, when it's inconvenient, they ignore what China and India are doing. Well, everyone of those people who shut down these conversations at a dinner party, or in their media interview, or in the advice they give to ministers, need to realise they've managed a massive home call. Because Australian people now plainly moved on outside of those inner-city areas where they're insulated. And they were. They insulated. But I just wanted to move now to the economy. So what I'm trying to establish here is that a divided, internally untrusting, if I can use that term, society loses its prosperity. And I would say our cultural weaknesses lie at the heart of our failing economic performance. And it's pretty staggering. You've written pretty convincingly about it. It's bad enough on paper. It's worse when you look at the numbers behind the never-ending increase in tax take, the off-budget items and what have you. Let's just start with the basic. Since COVID, we've had the fastest of chronic living standards in the OECD and on a per capita basis, people are not imagining the cost of living crisis. We are going backwards. Both of those statements I understand are quite accurate. They're accurate. We've been hit far more by the inflationary aftermath of COVID than any other Western country. So real household disposable incomes. So that's how much households have to spend after you take into account inflation tax and mortgage payments between 2019 and 2024 fell by 2% in Australia. Real wages fell by 4%. Across the OECD, disposable household incomes rose by 7%. So we've basically broken away from the pack. And while we're still a rich country, as a legacy effect, if you like, of decades of economic success, and we still have mining revenue coming in, we've dropped significantly. In the OECD league table after COVID, primarily because of the inflation that RBA has been happy to tolerate, which the government, I think, pressured them to allow. And then secondly, bracket creep as well, which many other OECD countries index their tax date. So we've had this big fall since COVID. We had signs of economic difficulty in the decades before which I'm happy to talk about. But the period of economic mediocrity, if you like, from the 2010s to 2020 went across the Western World real wages, didn't grow proactively flatline. That was a global phenomenon, but a hit Australia as well. But then we've fallen off a cliff almost since COVID. Now, going back to our earlier conversation, I don't know what advice ministers are getting. But our day, Treasury own finance for that matter. There's key departments that have been all over it saying, this is because your energy costs are ballooning. This is because your industrial relations policies are wrong. This is because you're overspending. Surely, David, the senior people in those agencies in Canberra know what is happening and why is happening. I think if you, as one of the senior leaders of Treasury, I think on industrial relations, senior Treasury officials would understand that you want a more flexible system that enables employers and employees to strike bargains. That was the industrial relations system that Hawke and Keating, or Keating in particular, put in place. Why? Because it would boost productivity and raise living standards and benefit workers. I think senior Treasury people still know that intellectually, but they won't say it. Because I think in the modern public service, the typical secretary knows that they have to be seen to be a supporter, almost in coalition with the government. On climate change, I don't think they know whether it's group think or ideology. I've seen very senior Treasury people shout down people who suggest that there may be a productivity cost. I continue to say that if you're a graduate seeking employment in Treasury or any other department and you said that emissions cuts have a cost to growth and Australia has to adopt a very cautious approach, you would not be hired. It's a quite a scary thing that we've had institutions and I don't want to over dramatize it that have been hijacked. It's been from above. Different level Treasury people, John, are more open, but on climate change, I don't think so. I think they've been come out of the school system and the university system. But the real shift in Treasury came from above with secretaries who saw themselves as political players, who traded on the department's influence to run a political line and who would sort of say to us and others, look, the world's changed. We go back to Treasury providing razor sharp criticism of proposals. I remember as early as the Rudd government and it continued under subsequent coalition governments. Securities and deputy secretaries would say to us, people like me will be writing those comments and they'd say, make sure they're helpful. Or people really respect Treasury's view, but don't come across as to purest. The message was sent to everybody in the SES, forget about your economic expertise. Don't be a policy samurai. It was almost a term of abuse and Treasury. Except views from other departments, understand what the government's committing. The problem is that's not in the public interest because the public wants decisions to be made with a full knowledge of costs and benefits. And ultimately it hurts governments as it did during the pandemic. And I think as it's doing now with tax, Treasury didn't provide, you can tell from Jenny Wilkinson speech, did not provide sound economic advice on changes to capital gains, negative hearing and trust taxation. I worked in the tax area of Treasury. We long argued internally that you cannot blame higher real estate prices in Australia on a single change to capital gains tax in 1999. We long argued that you had to look at immigration, monetary policy and supply constraints. Did that advice go to Albanese and Jim Charmers before they I don't think so. We had a Treasury Secretary, Jenny Wilkinson. This is the first time a secretary has ever said this in my knowledge who says that you must tax savings as heavily as you tax labor. That was not the view within our department. The view within our department was the conventional economic view, which is that savings, which are funded by post-tax labour income for most people, should be taxed far less heavily than labour. Why? Because you have risk, you have a delay before you get the return and savings funds investment, which funds growth. Even left-leaning economists would acknowledge that, whereas we had a Treasury Secretary two weeks ago saying, in principle, quoting some OECD study, you tax savings as heavily as you tax labour, I thought that was a pretty disastrous line to cross. Even Ken Henry, who I do still respect, apart from climate change, where he has become, I think, very emotive, but Henry came out and said, "No, that's not right." He's a review of tax said, "You do not aim to tax savings as heavily as you tax tabats, a basic economic principle." So this is how much things have shifted in even over a decade. My broad understanding, I just run this by you, we were certainly mad when I was on Razor Gangs and ad hoc revenue committees and all of those things, because we were paying a lot of attention to trying to grow a robust economy that worked for the Australian people and particularly young people. People were forgetting youth unemployment was, I think, 38% or something when we got in the government. 38%? We're worried now because it's on 11. That, in effect, the best taxation systems are the ones that impact as far down the line as possible from the creation of wealth towards the expenditure of wealth. You try and avoid taxing production. You try and avoid the distribution of that money into workers' hands and what have you. You move it down. You try and avoid not taxing savings too much. Tax people, when they've created the wealth and go to spend it. Surely that's the broadly, the right approach. I can identify the tax reform blueprint that guided both John Howard and Paul Keating was prepared by Sir Kenneth Asprey, who I think was commissioned by a coalition government early 70s before Whitlam came in. His review of taxation should be read today because it was the architect architecture that both of our reformist governments implemented. Asprey essentially said, Australia is a middle-class society. The middle 70 or 80% of Australians identify as middle-class. They work for a living. They didn't inherit wealth. They're not living in cardboard boxes. They should be taxed more or less proportionately. We should reserve progressive taxation and wealth to the ends of the spectrum. To people who inherit wealth, who might be described as privileged, and to people who have no economic opportunity. Rather than seek to redistribute income through the tax system, which kills savings and growth, you have education, health and other services that benefit people lower down the scale. That was his vision. It was less reliance on income tax a flatter rate of tax for the middle, which is what the Morrison government actually was doing with stage three. They were saying that 90% of people would face a 30% top tax rate. Shift the burden to consumption, which can't be shifted overseas. Tax business investment less tax savings less. That was the blueprint. A frustrates me, John, because newspaper editorial always talk about tax reform and Anthony Albotton's last week turned around when he was criticized about the budget and said, "Well, you've all been writing about tax reform. Well, I did tax reform. Why aren't you applauding me?" But there are two types of tax reform in Australian history. There's pro-growth tax reform, which is the asprey vision, which I've just described. You lessen the burden of tax and equalize it so that you get more growth and more revenue. Or there's the redistribution, Rob Peter to pay Paul tax reform. They're completely different. They're different political and economic consequences. But we've allowed in this country tax reform to become a generic term, meaning something positive. And now we have a prime minister who's actually taking the tax system backwards, claiming the mantle. So it's the abuse of language, if you like. But on tax, you're right. It's a necessary evil. I always used to say to young treasury people, tax is necessary, but it's an evil. You have to hold those two thoughts in your head. It's necessary to fund worthwhile things, but any tax is costly. But treasury, at its worst, I would say, is captured a little bit by the ATO. And even Ken Henry, when he was selling his mining tax, he was saying himself and briefing Wayne Swan to say that you can apply a rent tax and have no adverse impact on investment. An honest approach would have been to say, there's a case for a rent tax. We've got one called the PWRT for offshore development. Why don't we have one for onshore development? But we have to do it with the states, not unilaterally. We have to apply the rate in a way that doesn't force capital to flee, yet gives the committee a return. They could have done that in a rational way, but under the pressure of politics, Ken Henry and some of these supporters in the department were briefing the government to say, you can impose this tax and there'll be no adverse impact on investment. Internally, I start you against that. I'd say, why don't we, you know, be far more effective if Rudd was honest and upfront about the costs and risks. Just like we're talking about with climate change again, if governments that said to the Australian people, if you cut emissions, it cuts growth. So let's just do it with our eyes open and let's keep a weather eye on what the bigger members are doing. We wouldn't have got ourselves into this difficulty. It gets back to the social licence because of the lies, because of the policing of the bait on immigration, on energy, on national security. We've actually resulted in the worst possible outcome with irrational policy strategies which fall into a heap and which result in that anger you were talking about. I think one of the things has driven a lot of that anger, which surely have to be the realisation of the hypocrisy behind this. The reality is that you've got an awful lot of people in the labour movement and ideas say in the bureaucracy as well, who've done very well out of the lighter taxation on savings and investment than on income. They prosper. Dare I say at the Prime Minister himself as a substantial holder of real estate. And now they're saying to the next generation, 'No will change the boundaries so you can't do it the way we did it.' It's quite scary because it's almost as if the Albanese government has an explicit image for our society. They want savings to occur through superannuation funds because the discount on capital gains at superannuation funds benefit from the third discount. That wasn't touched by the budget. Foreign residents who invest in Australian assets aren't affected by this increase in capital gains taxation, effective increase in capital gains taxation because they pay their home country's rates on their global income. So they're hitting Australians who have traditionally invested in real estate and shares real estate in particular as investors to minimise the impact of our high personal tax rates. If your marginal dollar above 190,000 is going to be taxed at 47%, it's rational for you to invest in property. So the government's vision seems to be we have a million Australians who are disabled who get uncapped welfare regardless of the seriousness of that disability. We have people on unemployment benefits so we're not going to expect anything in return of. We've got migrants who come in who have full access to every benefit Australian residency offices but don't have to subscribe to values. And then we have people who burn wages and save through superannuation not through opening a business investing in high risk shares or buying investment property. It's dividing Australians not based on age but based on aspiration. I think non-aspiration Australians who look to the state are quite happy with the Albanese government's vision but I think they misread the politics because there are millions of Australians who negatively gear and have investment properties. It may not be an enormous amount but they're climbing that ladder and as you said John, the political class, not least the Prime Minister and Labour front benches, have pulled the ladder away from them. And I think viscerally that explains the reaction to this budget. To me in many ways, if you really worried about housing and I think it is a crisis, I actually believe it's unbelievably important nationally as she forced to address young people feel cut out, they feel unable to start their own families. That I think is having an impact. It's just one of many factors I know. In family formation and in having children, fewer children we have. The more Canberra will quietly try and keep those immigration numbers up, that further breaks trust because people think It's out of control and they do think it's out of control. Young people, many of them are convinced that a Thai immigration that's stopping them have a home. I don't know why people can't understand that the Australian people feel so insulted, so ignored. That's why you're getting this massive reaction. But one of the things that I've been interested in your views on is, in fact, a new Britain about it extensively. Why is it that no one seems concerned about the levels of government expenditure anymore? Because there are serious problems. We used to go on and on about debt being 19 or 20% of GDP. And it was in those days costing us around $5.5 billion a year in interest and give or take a few billion these days and it doesn't seem to matter. But in those days you get out of how many roads and how many hospitals and how many services that could provide. And we knew that if we pulled the government's hands out of people's pockets, they would invest more that would advantage economic growth. No one seems to care about the deficits. It's not just an Australian problem. No. I mean, I understand that globally, if you add it all up, global debt to GDP, something like 95%. Now, people say it's not very high in Australia. I just found a very big warning shot there. We are close to the point where many of those countries, you know, you do we know 95%. Where they lost control. We're getting close to that point. There's a slippery slope with debt. And the. Hemingway. Hemingway. Hemingway. I didn't want to quote that. Absolutely. So, you might have a business that is indebted based on assumptions about cash flow. The cash flow starts to decline for whatever reason and they take out more debt because they think they can carry the burden and before they know that the receivers are in town. And Australia's federal and state government debt in net terms is much lower than the OSCD average. But if you unpack our situation, it's actually really dire. Serious G7 economies like France and the United Kingdom are in low growth debt traps now. So, what do I mean by that? They've got unaffordable welfare states. They've got left leaning or big spending governments who've tried to jack up taxes on hiring come people or savers. That's hurt growth, hurt revenue and resulted in the government having to borrow more. So, Australia isn't imminently in a debt trap but we're not too far away. And it irritates me, John, that governments put out budgets and I'm always asked by journalists or what do you think of the forward estimates. My response is they're fictional. So let's unpack that. The medium term budget predictions say that Australia's budget will be in surplus within 10 years and the net debt will stabilize it around 20%. And people say, "Well, that's good. We've got a sustainable position." No. And the parliamentary budget office has very subtly but lethally exposed this. There are three massive assumptions underpinning that scenario. Bracket Creek. The primary fiscal consolidation strategy of the Labor Party and until recently the Coalition was to spend irresponsibly knowing that inflation would push people into higher brackets. Pretty cynical. It is pretty cynical because it's only just related, it's regressive and it's damaging to incentive. So I think it's actually a big deal that Angus Taylor has walked away from that. So the current projection see tax to GDP rising because of Bracket Creek. If governments are forced to give back Bracket Creek, that creates a hole in the finances. The second and even more important hole is spending. So we know the NDIS is growing at 10% a year. If you look at the 10 years spending growth assumptions implicit in those public accounts, there's something like less than 2% real terms a year. So what that is assuming is that future coal-multed governments will allow all time limited commitments to run down and not be replaced and they will impose spending control on open-ended spending like the NDIS. So that's not realistic too. And the third killer one is productivity growth. Our 50, our 30-year average productivity growth rate was 1.5. Treasury has now adjusted that down to 1.2, which underpins the return to budget surpluses and stable debt. The RBA now adopts 0.7. Australian productivity growth in the last few years has been 0.3. Productivity levels and Australia are back at 20-15 levels. So if you combine those three things, without productivity or sustainable growth in incomes, you're not going to have physical sustainability. But overlaid on that, you've got a tax system that disproportionately relies on personal income taxes and bracket creep. And you've got totally uncontrolled spending commitments, not targeted or means tested or with co-payments, which was the old Peter Walsh, Peter Castello coalition approach. That's the old Australian welfare model, was to be generous to people that really needed not provide blank repayments for everybody. That's another big ideological shift from the Alpenese government. I think for political reasons, whether it's childcare, whether it's NDIS, whether it's medicines, they want welfare to go to everybody to create that. Well, it's because so many well-educated and well-off Australians, no vote labour. And in no small part, quite frankly, that's because so many of them work for the public sector where they're insulated. Well, 50% more than 50% of Australians rely on the government for more than half of their income. That includes public servants and people receiving benefits. And that distorts the politics of a society as well as the economy. It brings down productivity, it weakens incentive and it changes the politics. So you go back to the Prime Minister talking about tax reform. He claims it's tax reform, but they abandon the stage three cuts because workers haven't had enough of a cut. I agree that workers are paying too much tax. I didn't agree with that. But that's because the government's spending too much. What the Prime Minister was glossing over was at the stage three, whether cuts for the people who are a little bit better off because they had to wait so much longer. So now the top rate, which is not far short of 50%, cuts in at 190,000. If it had been inflation adjusted, it would have been closer to 300,000. It's worth noting that America now doesn't cut into around 600,000. And it's 30% in sense. We're pushing middle Australians, tradeys, productive people, the people who you want to incentivise into a tax bracket where they're starting to say the incentive isn't there. But aspiration and incentive seem to be words disliked in the Canberra bubble tonight. It's more an aspiration. And the government and Treasury certainly takes a point in time perspective and says, well, if you're earning $50,000 a year, how much do you benefit from capital gains, tax discounts or negative gearing? Oh, it's not very much. So we can remove the incentives and not hurt you. That's an incorrect perspective. I think the Howard and Blair and Clinton and Keating Hawk perspective was, let's not presume the person earning $50,000 a year doesn't want to through investments and hard work and risk taking. And up on the tax, end up on the top rate. I remind people that Paul Keating and Bob Hall cut the top personal rate from 60 to 49%. They broaden the base and introduce capital gains and fringe benefits tax, but that was part of the trade off. Keating after the Banana Republic comment, cut real spending growth, cut spending growth and real terms for four years in a row. And John Howard brought in his GST combined with spending restraint. Get back to your point about our public finances. I tried to explain before how if you adopt the more realistic view of tax spending growth and productivity, we're not going to have future surpluses and that our debt burdens could continue to rise. In 2006, 20 years ago, Peter Kostell, I got up in Parliament and said we've paid off Commonwealth debt. Net debt's now 20, 25%. We had the global financial crisis where government spending jumped up and didn't return to pre-crisis levels and went to the pandemic. The Morrison government did phase out or did allow for a lot of spending to phase out, but those two big seismic events saw net debt go from zero to 20. If we have a global national security breakdown, if the Iran oil crisis continues, if there's a domestic economic shot, it could easily go up to 50. And that's not even adding up state government. So I say to people, debt is dangerous. That traditional fixation with debts, not some old-fashioned concern. But the problem is we have central bankers who printed money to purchase government debt as recently as during the pandemic. So that's saying to governments, you can spend as much as you want and we'll monetise it. And then secondly, we've got sadly Treasury secretaries and Treasury itself saying to governments, you can continue to run deficits indefinitely and continue to raise spending as a share of GDP, provided taxes are high enough and provided future debts stable as a share of the economy. Again, the realist in me says that's saying to governments, the NDIS is sustainable because taxation is going to catch it or we're going to assume productivity is high enough. It's giving a green light to Canberra to spend more money, to take more money in. And I think that's the concern. I think all-keating, how would in Castelo, people like you, you and your bones, that if you give government a green light on spending and tax, it builds on itself. And we're seeing that now with the economy suffering under poor industrial relations and energy policies. What does the government do? They actually raise tax to lower growth even further. So that's changed gears. Yes. The third leg, if you like, of national security, the prime responsibility of the government. So we've talked about a cultural decline, trust being broken. Well, basically underlying our inability to get our economic policy together. Trust has been broken largely in ways that people can't evaluate what's really happening and they're very, very angry about it. But let's come to the third. Perhaps in some ways the most important of all. If energy is, as they now say, our economy and our security, I can't think of the country in the world as making a bigger mess of it. I'm a farmer. And I've for a long time been deeply invested in the role that Australia can play, not just in feeding its own people, but globally. We're masters at it. We really are. Just on climate, I'd make a point. We're being asked to pay a disproportionate part of the price of so-called mitigation. We know it's not going to make any difference. The chief scientist down in Finkel told us that. So we'll have to pay the price of adaptation if there is any. All of us should be set against the background of the point you made earlier. The modeling is all low confidence. And now the most extreme scenarios upon which the media, because they wear a lot of blame in this, the hysterical parts of media, and the politicians and many in the bureaucracy. They based Australia's response on those more extreme models, low confidence as they were. The scientists are now saying to the international climate change panel, "Are implausible and should be withdrawn." I don't know whether anybody's heard that on the ABC. I suspect they haven't. They fellow travellers in all of this. But what really hard drives me, it really does, is that our security depends upon liquid fuel security. There are over 5,000 people I'm told now working in Canberra and the Department of Energy and climate change. Where were they when it came to something as basic as making sure we could feed ourselves or something went wrong? Self-remite, supply chain security. We got worked up about it in COVID times. Where were they when they said to Prime Minister Abbott, "We don't need to have our 90 days in reserves." We had an oil shock on the other side of the world, just how people were keeping repeating this. We went into that with China had over 1,000 days in reserve. America fully self-sufficient. Didn't need to keep reserves. It had 400 days to pan trading nation like us, no reserves of its own. 254 days. New Zealand? 94 days. We went into this with about 19 or 20 days of diesel. We don't like high petrol prices because it gets us to work into our social lives and picks the kids up. It's diesel, it feeds us. I made that point in an audience in Melbourne the other day and somebody said, "Well, electrify your tractors. The technology doesn't exist." It doesn't exist. It isn't likely to. For decades. No. Absolutely. We have got to the point, David. We're so obsessed with renewables. 5 and 1/2,000 or so people working in this area in Canberra that we've ignored the fact that we are now effectively a fuel in secure country. We are therefore a food in secure country, Australia, that normally feeds many times its own population. Am I dreaming this up? What is that? A staggering reality that we ought to be shell-soc by. What's an Alice in Wonderland reality? Because what did we learn in the 70s? It was that when the first oil crisis hit in 1973 and I peck quadrupled the price of all overnight, we had ruinously high inflation and a spike in unemployment in this country. The connection between energy costs and economic well-being and national security is obvious. Today, we're living through something similar, although it's not as serious as the 70s. You get back to the fact that 91% or over 90% of primary energy to man in Australia is fossil fuel related. That the clean energy revolution has gone a certain distance in the power grid. I think renewables account for about 30 or 60 to 70% of the time they account for zero. That's worth repeating that. Absolutely. 60 to 70% of the time, renewable energy cannot supply to the power grid. That's why you need batteries. That's why you need firming. That accounts for the massive costs. There is no chance of building batteries globally to make renewables work. With current technology. If you unpack the Treasury modeling on, and this goes to your point about national security, if you unpack the Treasury modeling on the clean energy transition and it's implicit in what this person said to you, it's that renewables are cheap, just false. If we have a renewable-dominated electricity grid, future power prices will plummet. That spurs the electrification of the economy. People look at cars, but going beyond that. Even that modeling, when it comes to agriculture, heavy transport, industry, it cannot account for the transition for them because the technology simply doesn't exist. In a way, we've embarked on the easiest system to overturn, which is their energy system. Far from making it cheaper, it's actually made it more expensive. That's hurt everybody. On agriculture, heavy transport and industry, there's no current or even immediately foreseeable technological fix. What the Treasury model is and what the government, people like Chris Bowen are really saying, is that you're going to have to tax those, tax their consumption of fossil fuels, tax their production of emissions, to force them to adopt so-called clean techniques, but also to force future technological change. It's based on a fantasy and wishful thinking. I get back to the ideological element, which is if you ask Chris Bowen or Anthony Albanese, they would say we can have zero emission economy, future prosperity and rising living standards and a clean global environment with no weather threats. If you'd said that more than 20 or 30 years ago to the Australian people, you would have been laughed out of court, but you have a chorus of people inside and outside of Canberra who are in force. We don't underestimate the number of senior bureaucrats, including people who run Treasury. Look at their CVs. They worked at the Department of Climate Change. They were promoted by somebody like Martin Parkinson or even a Ken Henry who committed climate change, evangelists. All these quangos, clean energy, corporation or renewable bodies, department, they're all ideologues. It's a little bit like the Australian Human Rights Commission. They all have a black letter, law, view of human rights. Equal dignity, equal rights to all, but there's been a curtain, those institutions globally and then our run by people who are ideologues who are enforcing an academic, you know, progressive view of the world. The same has happened. All of these economic agencies are telling Bowen reinforcing his untruths. There's no smoking gun in Canberra. There's no ministerial submission saying this is the cost of the transition. In fact, the cost of the transition is deliberately withheld. So this is a national scandal and it gets back to why people have gone to Pauline Hanson. I understand their anger. I think you do too. I understand it. I'm just worried that we don't find the right policy prescriptions here because they're not easy and they won't be sold with throwaway remarks. I don't want to accuse anybody of not taking them seriously, but it requires us sort of thoughtful deliberations if you and I have been trying to reflect on here and it's going to require unbelievable courage to turn this around. Well, it's interesting because if we had trust in our traditional institutions and if our political debate allowed people to be skeptical and question ideology, I would say we wouldn't have had Trump or Hanson. There are two elements to their rise and also Nigel Faraz. I think there's the economic front, the capacity of rich countries to provide. economic opportunity and high living standards to many of their people has reduced since the global financial crisis. We don't fully understand as economists what's gone on. So we're not the high growth, high opportunity societies of the 80s and 90s. And then secondly, there's been this cultural revolution. People call it progressive. I was reading a CS Lewis essay the other day and he said, "If society is going in the wrong direction and you put up your hand and say, 'Let's turn back to where we were to find the right direction, you're progressive.' But we've allowed ourselves to be frogmarch, I would argue, by these institutional leaders who've imported ideological, wishful thinking perspectives in a way that has delegitimised popular views. So if Hanson can be explained, democracy could well give her some electoral power, but the challenge for her and her supporters will be, it's a bit like the dog chasing after the ambulance, if you reach it, what do you do with it? And day-to-day governing is very different from opposition outrage. You've been a senior official, I've been a senior cabinet minister, it's hard. It's really hard. And it's interesting, the US system has checks and balances. So a president is not a legislator, as you know John. A president is like a secular monarch, commander and chief, they can veto bills. But an Australian Prime Minister or a British Prime Minister, they have to get into the weeds of government and they have to take over the departments of state and run the country. And that's very different. If we had a presidential system, it would actually be a little bit easier because the hard legislative slog would still be done by the Congress. But in Australia we expect more from Prime Minister. So that's going to be an enormous challenge for whoever emerges as Prime Minister. I genuinely suspect there's no proper awareness in government or the bureaucracy that we are in our food insecure and how serious that is. We hear constant references to these being the most dangerous time since the 1930s. We've not even secured our supply chain security. We have no Australian flagged vessels of any consequence at all if our shipping lanes to the North are cut. The government itself keeps referring to the potential trouble to our North. We may or may not be involved. And yet find our shipping routes cut. We saw what happened when they were cut on the other side of the world. Within a matter of a couple of weeks we had very serious problems with fuel supply. If they cut closer to home for whatever reason, we don't have ships with in common deer as a government to go off to somewhere else and find our oil or what have you. We don't have our reserves on side. We're told by Mr. Boen, it's not going to happen because it's not competitive. Well, wind is not coming. If we're going to spend a trillion and you'd have to think that it's probably a realistic fear. The size of our debt again, trying to get to renewables, surely we can spend some money putting down some proper crude reserves and trying to incentivize the private sector to do something serious about refining. I just recapture, you know, just to make the point again, being in agriculture. We can't produce your food without affordable oil and large quantities of diesel. We produce no fertilizer here. We produce no crop protection stuff here. All of the stuff 15 years ago was not a problem. We could do it all here. We can't now. Is there any prospect of enough people in Canberra having the intelligence and the courage to call this out and say to the government, offering people relief on their fuel exercise? Can I say to you, I know the coalition thought it was a good idea. I don't. That was the moment to seize and say, we've had a massive wake up call. We'd like to give you relief. But actually our priority is to get some decent reserves in place. If it's going to cost us 20 billion, I think that's the rough estimate. To put down say 50 or 60 days of supply, you've just blown 15% of it on a bit of exercise relief. And people might like high fuel prices, but empty grocery stores are another matter altogether. Which you know, the government's committing tens of billions of dollars to prop up industries that are crippled with high energy costs. The insurance scheme for heavy industry, which we're putting out of business, with our own policies. That's right. So future Made in Australia was an NDIS for businesses suffering from the government's own policy. So they're prepared to commit those sums. But it's interesting if Anthony Albanese in Chris Bowen called the press conference and said that the Iran crisis shows us that we have to invest in proper fuel reserves and secure supply chains. And if they made it abundantly clear how exposed we were in areas like fertilizer, it would undercut their ideological pretense. Chris Bowen is telling the COP conference at this very time that the best response to global fuel insecurity is to double down on wind and solar. So again, how diluted can our leaders and their bureaucrats become in Canberra. It's interesting. Tobacco exercise, I know it's a very specific issue, John, but to me it's a classic case study that in Canberra nobody is allowed, nobody with ambition or any responsibility is allowed to say that punishingly high exercise rates have underwritten the emergence of an organized crime to back our industry. Every single government or bureaucratic spokesperson on this issue ignores that obvious reality and says no, we have to spend more on enforcement. Reminds me of the prohibition era in the US. Prohibition era gave the mafia the biggest leg up it ever had historically because it was ineffective. And on every street corner there was a speakeasy and the local mafia, Don, would be providing bootleg liquor to it. We're doing the same thing in Australia. And that's what concerns me. We don't have even the opposition which is starting to question this, can't bring themselves to come out and say we should be slashing cigarette exercise because that puts the criminals out of work. So basic economic realities seem to escape this bubble. It's a bit like the US during the Vietnam War where Lyndon Johnson was being told by the military top brass that it was winnable. I think that's the sad thing when you concentrate political and bureaucratic power. It's very easy for it to become unanchored in reality. In my view of something goes wrong to the North, the government ministers ought to be asking themselves just what do they think their legacy will be if they've not secured our supply chains. Even worse if we're enrolled in conflict as they keep warning us we could be, what do they think their legacy will be? When despite their rhetoric and despite the claims that we're ramping up the fence expenditure, our defense capability right now, as I clearly understand it to be the case is in decline. We are becoming less capable, not more. And the promises are we may or may not get all the submarines in a few years' time. This goes back to the whole issue I think of breaking trust. You can't say the issues are serious and then not do anything about them as they are doing on the fence. It's another example where I think people in the street don't feel as secure as they should. And the leadership is not there to say we should be preparing. We need to make the sacrifices now in case something does go wrong, including spending money on reserves. Take your claim. That in reality, what are they doing? Oh, most dangerous times ever. And by the way, we've gone to 2.9% of it on GDP, including a whole lot of things. Go have nothing to do with current capability at all. Our real expenditure is still only two. So all these numbers that come out on defense spending are fake. 2.9% is a fiction, as you know. We're closer to 2%. And a large part of that 2%, which is not high in historical terms or compared to many other developed countries, is devoted to an orcas initiative that many in the Labour Party don't support that they inherited from previous government. The average Australian understands that whether it's Donald Trump or his successor, the US may not come to our aid the way it has historically. So I think the government, the public, rather, would be very open to a government that leveled with them. And in a way, this is a challenge for Angus Taylor because he's rightly said he's going to eliminate Bracket Creek. That'll have to be paid for. He's rightly said he's going to raise defense spending in real terms, not this phony figure to 3% of GDP. Maybe it needs to go to four. And he's never said anything very specific about NDIS. I think the trade off to the Australian people has to be if you want to abolish Bracket Creek and if you want a strong, capable defense force in a more uncertain world, you can't have and NDIS in its current form. Nobody would pre-foundly disaple people should be supported by the taxpayer. But what we have now, which is 1.7% of GDP and rising, $50 billion, is uncapped, unmeans tested, and going to many children with mild autistic problems. So I think that's the kind of leadership you would need. Now, God forbid, if we came under attack, we were a full wallbroke up to an north. I dare say Prime Minister would say, we have to wind back the welfare state in order to fund a bigger defence effort. But both sides of politics, I think, come up with that rhetoric about a dangerous world, but they get away with squibbing it. But I do think the average person probably has a better intuitive sense of how insecure our region in the wider world is and they do. I hope they do, and I'll close on this point, I have to say as an Australian who loves this country, somehow it gave a very deep insight when on the one hand our energy minister was saying, no one in the world is asking for more fossil fuels while the Prime Minister and the Foreign Minister are going cap in hand to countries like Indonesia and the Philippines, which actually have a large proportion of people who are poor and food poor begging them for oil and fertilizer. Australia, how do we hold our head high, that we were not prepared? And if that's the case, with an oil supply issue on the other side of the world, if something serious happens in this part of the world, all I can say is I wish some of the people would have those megaphone's that we were talking about earlier would stop and think about what their legacy is going to look like. Every ANZAC day we celebrate the leadership we had in the past, the courage of our people in the past. There might be a few people hanging their heads in shame if they don't get a bit more real about the world we live in. My final comment would be, history is not going to be kind. I suspect future generations when they read about this period of Australian history are not going to be very well disposed to those who lend our institutions. So to end on my note of hope, there are many, many foreigners out there who want better. I just hope this conversation that they tap into it will encourage them to anchor themselves in reality and in decency. We don't need the indecency that's breaking out trust at the moment. And the other thing that I would say is I'm really deeply encouraged by many of our young people. You know, tough times sometimes produce the great leaders you need and all part of them and let's encourage them. Absolutely. David's been a pleasure. Thank you John. [BLANK_AUDIO]