TRANSCRIPT

Tom Panos: 

Hey, listen, firstly, thanks for jumping on. I watched your video 10 minutes after the RBA announcement and for a guy that’s not in real estate, you’ve got your finger on. I mean, don’t get me wrong, you’re in the world of financial services, mortgage-broken, and you’ve got a lot of our real estate community that follow you. But you are spot on with feeling the pulse and temperature of that decision And I actually agree with you. I actually think the reason why I think you were right about the tipping point, mark, is, in the last couple of weeks, just the options that I’ve been doing, i’ve had a lot of vendors say you know what like if they don’t raise them anymore, we can learn to live with it, right, but if that happens anymore, we have to make plans. Because I wasn’t aware, mark, even though rates are so low, i’ve never sat down and worked out how loan repayments work, but some of the people’s loan repayments as they come off from fixed to fixed variable they’re more than doubling In.

Mark Bouris: 

Australia’s economic history, or since recorded history, we’ve never seen even though interest rates aren’t 18% like they were in the late 80s and 90s but we’ve never seen such a high proportion of net income, of a person’s net income being allocated towards them. This is the highest percentage of the average Australian’s net income that’s going to pay the bank ever in our history and that’s largely because, obviously, interest rates are fairly high at the moment, but largely because we borrowed more money than we’ve ever done before. So that’s the biggest issue and in some places they’re paying. Up to 50% of their household income is being spent on a mortgage. Normally, 30% is fairly comfortable, but 50% No.

Tom Panos: 

So, mark, here’s the interesting thing. So when I go through and I look at the impact that it’s got on different segments of people, the only people that seem to be unaffected by all of this is people who circumstances in life whether they’ve created them or they just fell into them have got zero debt, asset rich, don’t care whether rates go to 20%, their lives are different and that’s the wealthiest cohort of people in the Australian society. But when you go through the rest of the people, when you talk about Ahmed and Sarah who live in Punchbowl with a two-bedroom unit, when you go through to a tenant whose rent is going up not by $20 a week, it’s going up 300 bucks a week, some of these rents then you look. So you look at tenants, you look at buyers, business people that have got. They’re the ones that we often don’t look at, because when you think of mortgages, we keep thinking of people with houses, but businesses have got mortgages and debt correct?

Mark Bouris: 

Where are these organizations and or individuals? Who are they that can afford to buy property and pay overs at the moment? And where are the businesses that are creating this so-called inflation? Because, if what you and I are saying is correct, most people are tightening their belts and have been tightening their belts for a long time. So the consumers are not going out there and saying, yeah, i want to pay more for that plumber, i want you know that plumber’s, that electricity’s under right now. I want him for $110. Now, well, they’re not going to the coffee shop saying, listen, i don’t want to pay $3.50 anymore, i want to pay $4.50 for that coffee because I want that coffee. Now, the consumers don’t do that, it’s the bendors who do that. The bendors ask for more money. So you’ve got to start asking yourself the question which bendors are charging more money for goods and services? And the Reserve Bank governor said today it’s not really about goods that are going up in price, it’s services that are going up in price, one of which, in the basket of services that they choose, they choose rents. Rent is a service. So we all know the rents are going up, and you know, for the obvious reason because the governments haven’t allowed us to develop any more property for a long, long time. No GA has been approved for increase in density, pretty much anywhere. They’ve blamed COVID for a while because they don’t have to be able to work to make the approvals. But if you look at applications new applications, for you know developments they’re way down on the toilet, way down the toilet. So it’s no surprise that you know rents have gone up. And there’s no surprise. Rents have gone up because we’ve just let you know we’re bringing in more than a half a million more people to Australia And they’re we’ve got to live somewhere. There’s no surprise for any of that. So then, who are the vendors? Well, the service vendors, the people that are providing services, are, generally speaking, to some extent tradies, you know, which I’m very happy. The tradies make as much money as they can, but we don’t have enough tradespeople. We don’t have enough people applying their trade. We haven’t had enough government support to help the tradies out so that we can encourage more kids to become tradespeople, and so we’ve got a greater supply of tradespeople. Cause right now you try to get something done. Try and get a locksmith become a change lock Mate. You’re waiting forever.

Tom Panos: 

Try and get a.

Mark Bouris: 

You and I both have property in a certain part of Australia And I had to get one of my cars fixed, seem like no big deal. The motor mechanics sorry Mark can’t do it to mid July. This is like beginning of June, for God’s sake. So we need more tradespeople Again. This is. It goes back to government policy, tommy, and the government policy, both at council, state and federal, is not enough, not good enough And it’s inadequate. Then the final piece to all this big business seems to be making massive profits, all the retailers, massive profits. You’ve got to ask yourself this question How is it that they have so much control that they can pretty much put up their price wherever they want? Now I’m going to give you one example. I’m a farmer. Three years ago I had to restock my farm with cattle. I went to the cattle sales and I paid $6.50 for to buy a young cattle $6.50 per kilo, right. Recently I had to coal my stock because I’m getting too old. I had to go to the market, so I decided to sell halfway my herd. I got $3.30 for my beef cattle. So I thought to myself well, the market’s obviously a lot of cattle around for sale, so I’ve got a copper suite. That’s what the market says. That’s what the market says. I then go down to my butcher. I’m now paying much more per kilo today than I was paying three years ago, when I paid much more for these cattle. So somewhere there’s a big profit sitting. Now big time. Someone’s clipping the ticket.

Tom Panos: 

Someone’s clipping the ticket there, or multiple times.

Mark Bouris: 

Let’s have a look at it. I think big business is creating inflation. Consumers don’t pay anymore, they pay whatever they charged. I think big business is creating inflation. I really do. Airlines, retailers and we know who we’re talking about. I’m not going to say any names. That’s one. Two, i think the tradesmen to the extent we still got to hangover trying to fix houses up and finish houses off. Government hasn’t given us enough tradesmen And, as a result of that, tradesmen are so busy. They’re just saying, look, this is the price we’ve got to pay to get the job done. Fair enough, i probably would do the same thing if I was in their position as well. And then, finally, government threw too much money at us back in the COVID period. They let it last for way too long And now we’re paying the price of it. So they let us go up And now they’re letting us go down And they’re watching us on the way down And it seems to be done with not one centillar. Not one centillar of empathy towards us. That’s what I’m getting for the other.

Tom Panos: 

And, Mark, I get it like no one put a gun to anyone’s head in 2020 and 21 and said take that money or we’re going to kill you. I understand we’ve got free will to make decisions but, Mark, you know what it’s like. We’ve got various groups of people in our society and some of those people are more vulnerable and they make decisions and they get influenced by some people more than others, And I think that is actually what we know about. our government basically said in Australia that we’re going to go to 2024.

Mark Bouris: 

And he definitely and I mean everyone keeps saying he didn’t tell us that they weren’t going to. He told us they weren’t going to go up to 2024. What do you also didn’t tell us is something else He didn’t tell us that when they’re going up, they’re going to go up 11 times and four of those going to be 50 basis points, like if he had a said listen, i don’t think interest rates are going up to 2024, but when they go up, i’m going to put them up 11 times in a row and four of them going to be half a percent. And if you had a said that, he would have frightened the bejesus out of the whole country and the newspapers would have been all over it. People are going wait a minute, let’s just chill a little bit here. He said they’re going to go up. Most people thought, well, go up, what do you mean? Or maybe they’re going to go up one or two times, it should be okay. But that’s what he left out, and what we’re not discussing is what he left out, not what he said. I don’t think the important thing is what he said. That is important because people heard it, but I think the important thing is what he didn’t say, and that’s that.

Tom Panos: 

Yes, yes, yes, mark, spot on, because there are certain people whose influence and power means that emitting of information is far more impactful than someone else not emitting information. And if I can tell you, if he had just said everything that he said plus added but by the way, beware, you should always be concerned. And if rates did go up, this is what it would mean to your loan repayment. If he told people that your loan repayments would go up more than double, i think a lot of people would have rethought it. But, mark, were you surprised with today? Were you expecting that?

Mark Bouris: 

I think the coolest to do every month was in Australia reviews, i think the coolest, the well-known economist, you know, chief economic advisor Julia Gillard. He and I get together once a month. He comes up from Canberra and we actually examine everything and then we put out a prediction. And Cook and I decided on this occasion that we didn’t think the RBA would go again, mainly because we thought the RBA made a mistake last time round won. But we did predict that it would go last and we thought they’d make a mistake by going. But two, we also took the view that surely they know that house prices or dwelling prices increasing over the last two months by you know one point, whatever it is nationally, is a function of supply or lack of supply. Surely they know that they can’t be using that as an asset class increase to you know, push them into pushing interest rates up to stop us from spending way too much money. Surely they know that. I mean and you talk about all the time there’s no stock. There’s no stock, so prices are going to go up. There’s no stock. That’s what happens. That’s demand and supply. That’s one of the simplest. That’s the first thing kids learn in economics 1A when they go to university What the demand and supply curve looks like and where they meet hits the X-axis, and where they hit on the X-axis, that’s the price. And if supply curve moves away, which is what’s happened here, price is going to go up with the demand curve remains the same And if the demand curve drops, if the supply curve moves away, the prices, generally speaking, will stay the same. So I’m totally surprised. I think he knows something else that well, there is something else I want to say to me And he would definitely know. I assume he knows anyway, and Alan Koehler said it this week, and Alan Koehler is a great economist, a great commentator. Alan Koehler took the last three months inflation reads not the last 12 months, which is 6.8 from May to May last year, but the last three months. And if you take the last three months inflation number for each month, they add them up, divide them over three And then you just say let’s say inflation doesn’t go up or down for every month from the next nine months. In other words, three months past, nine months future. Let’s say that’s the case. Alan Koehler’s calculation and my calculation, sevegukula’s calculation, is that inflation right now has a run rate of 3.5%, not 6.8, 3.5%. Sure, if I look at inflation and I look backwards. For the last short months it is 6.8 or 7%. Because I’m looking backwards? Because I’m looking back in April last year. The April last year was very high. The month of May last year was very high because interest rates hadn’t even just started. June was very high, july was high, august it was very high until about November And then it started to slip away and it started to fall down. But if you understand the law of averages, of course inflation is going to be much higher. If you look in a historic sense, he should be saying wait a minute, i’ve got all the right signs now, three months running averages showing 3.5% yearly rate ahead, i won’t put rates down, i’m not going to put rates down. I’m not saying you should put rates down, but I’ll sit back and I’ll wait And let’s just see what the June number comes out And let’s have a look at the July number And if there is similarly low to March, april, may. You know, beautiful, that’s a box of chocolates. All good, we’re in, we want to. That’s what we want to say I’ve got.

Tom Panos: 

Yeah. So, mark, you’re so right. And the reason I say it is that I’m really worried that when we have our normal seasonal spring in flux of listings and then we layer that with the amount of people and you know it because they’re on your own book the amount of people that are coming off fixed to variable, which I got it wrong You’re the one that helped me clear it up And then I did my own analysis. There hasn’t been a hell of a lot of those. That happened earlier on this year. They seem to be starting to happen now. So what worried Mark is and I might be getting paranoid here, like the big short or something. I’m trying to read something that’s not there, but I’m just thinking spring in flux of listings all of a sudden you’ve got these fixed variable people that have made the decision I’m not going to keep this And I’ve already seen signs of those already And they’re all on the market at the one time. And that is really concerning because right now this demand and supply curve is, as you’re saying is, basic, but that’s what’s actually keeping this market up. It’s a very fragile market. And then I had a guy. I’ve had a week off, i’m with my daughter and a guy where I’m at said to me oh, mate, but there was a house that sold in Byron Bay for 45 million. What are you going on about? about the market? I said, mate, there’s one house that sold in Byron Bay for 45 million. There’s 10,000 properties in Punchbowl, greenacre, bankstown. Mate, let’s look at those scenarios, mark, it’s a distorted. This real estate market is distorted because there’s just no trading.

Mark Bouris: 

If you look at the volumes And Australians, they’ll do anything not to have to sell the property when they’re under the pressure. And I think Australians have been looking. Oh well, hang on, the prices are rising so I’m not going to sell right now. I’ll wait a bit because I can hang in there just a little bit. I mean I’ve sold the car, I’ve sold the boat, I’ve sold the holiday property, whatever. I’ve got the best rate in the mortgage market that I could possibly get. I’ve just got $5,000 back from one of the banks because I refinanced with them. I mean I’m working a little bit harder, a little bit extra, And look, don’t worry, what we’ll do is we’ll hang onto this property, because someone said that maybe interest rates might start coming off later in 2023 or sometime in 2024. All I have to do is hang in there. Now. That’s okay if the reserve doesn’t keep putting the rates up, And that’s okay if the rates start coming off sometime towards the end of this calendar year or early in 2024. But if, for some reason and this is the new narrative now, Tom it’s not whether the Reserve Bank is going to put interest rates up, the new narrative should be how long will they keep them up and when, and what are they looking for in order to start to reduce them? And then the question becomes in your game for the property prices, how long can people hold on for? How long can they possibly hold on for? And do the two meet? Is the Reserve Bank monitoring this sort of stuff and saying, wow, we just don’t want to. This is going to be freefall. And, of course, overriding all that, or overlay all that, what about all the people coming off the fixed rates, going on a variable rate? They’re not affected yet And, as I tried to explain to you the other day, the fixed rates were given. The money was given to the banks by the Reserve Bank of Australia from three years ago, from the 1st of March three years ago to 2019. On the 1st of March, the government made available money fixed money to the banks, and the banks then just packaged it up and lent it out as fixed rate for a maximum of three years, So that money became due from the banks back to the Reserve Bank, to be repaid by the banks back to the Reserve Bank on the 1st of March this year, And the banks can’t extend beyond that date. Now the money starts to roll off fixed from a consumer’s point of view, as and when they drew it down. So people borrowed fixed from the 1st of March of 2019, sorry, so 2020, I should say, Tommy through to about January 2022. So over the next two years all those fixed rates are going to roll into variable rate and the new rate they’re going to double. And I can tell you now that 40% of all new lending from 2020, March 2022, January 2022 was fixed rate. In a normalized market it’s about 5%, Somewhere between 5% and 10%, depending on the institution, And it normally only happens in January and again in June because the fixed money becomes available. So we got this distortion in the lending market that was put in there for the right reasons in the beginning by the Reserve Bank to stimulate lenders, to stimulate borrowers to buy property, But maybe it was there for too long. I don’t know the answer to that question. Who knows the answer to that question? But why? for sure it’s coming home to rumors now. This is a cumulative thing. So 40% of all lending over that two-year period was fixed rate. Normally it’s only 5% And they’re all now rolling off into variable rates, which is double what these people borrowed at the fixed rate. There’s only one scenario People are going to start to say hang on, we can’t hold on any longer and we must sell. That’s what I think is a 50-50 chance of happening in the next six to nine months, after which we’ve got a problem.

Tom Panos: 

Mark. I don’t know how it could happen, but I would love, i think and a lot of people have been saying it in the comments get low on talk to Mark, because, mark, you’re an intelligent, you’re an educated person, lecturer at university, business law, run very big companies dealt with the packers. Just to ask some simple questions, because Dr Low’s answers are very simplistic. The other day I heard him say what are we going to do about the property problem that going on? He says people should stay home longer. That’s all right. If you’re living in South Yarra and you’ve got butlers’ headquarters at the back and you say, go there, you don’t say that to someone in St Mary’s, you’re going to have to stay living here with the other five people in this two bedroom unit. There’s just got to be a more hybrid approach. It just appears it’s like one trick weapon. It’s like the guy that the card.

Mark Bouris: 

I’ll be out there and go and solve everything. I’m probably in his defense now and I will defend him on this one. He will probably say to you look, tom, it’s not my job. I’m not going to go to the bank to worry about what’s affordable and what’s not affordable, because I’m not supposed to look at any particular asset class. My mandate is to control inflation and I’ve got to get it back to you. We, all of us, have agreed that it’s going to be 2% to 3%. Now I question whether that’s the right number, by the way, at the moment, but I hope this is accepted for the moment. He would say it’s not the reserve bank’s job, with monetary policy, to assist those people, it’s the government’s job, it’s the, it’s Albo’s job, it’s Jim Charmer’s job to maybe put in some other measures that help out the person, that some areas or in those areas we’re talking about. And maybe they could do it by decreasing their tax or giving them a tax rebate for a certain amount of the interest income they paid on their mortgage as a result. And it may have maybe mean-sested perhaps, because I don’t know. If you remember, i certainly remember this in the 80s, frank Creen, who was Simon Creen’s father and Frank Creen was a treasurer under the Labor Party during the mid-80s, frank Creen introduced a home loan interest rate rebate and it was mean-sested because interest rates are going up at that time and we just come out of recession and it works. A lot of people apply for these home loan rebates and it helped those people who were underwater effectively. So the Reserve and Governor would say yes, i empathise, i really feel sorry for everybody. I don’t know whether he does or he doesn’t, but he certainly says it. But he also would say he’s nothing to be asked, but it’s not my job. My job, his job, is to reduce inflation. So I think there’s an error in the mandate. I think someone should be saying hang on, dude. Yeah, you’re supposed to look after inflation We’re getting all that But at the same time, you’re supposed to make sure you don’t crush the economy, you don’t crush the country, you don’t put us into recession, you don’t crush people’s hopes and dreams, you don’t put people into a bind as to whether or not they can plan not to have a kid for next year. They can’t plan to have a kid next year because they don’t have the room, et cetera. I just think there’s an error in the way the whole mandate is put together. That’s what I think And I know we just had the review of the Reserve Bank, but no one discussed this And every single time they put rates up and down, but for every time they put a rate up it has a human impact on someone’s borrow money, and by every single time they put a rate up.

Tom Panos: 

It’s a good point. That’s a very good point. You’re basically saying is, maybe the position description needs to change, because I know that they’re an independent body, but they are appointed by the government And he’s got it. I mean, i know they’re independent, but the truth is they report into our budget, but they choose the government at the time They choose to be members of the board.

Mark Bouris: 

yes, and I know his position is coming up for his ends at the end of September and is up there for review. whether or not Albo and Chalmers et cetera decided to reappoint him it will be another matter, i guess, but I do think it’s about making them accountable in writing, like in their mandate, in whatever legislation there was that incorporated the Reserve Bank of Australia in the mandate to more accountable, to think about welfare. Now it does say welfare in their mandate, but it talks about prosperity and welfare. But I think there should be a greater emphasis on welfare because even when they put interest rates down, it has a human impact. because when they’re putting interest rates down if you remember, during COVID they got down to 0.1 of a percent That had a huge impact on retirees who were living on pensions and living off their earnings, especially the money in the bank, because they’re earning no money. I mean that too. So you know, like if you consider going from that far that side and that far that side, maybe they’ve got to be bringing it in a little bit more, less reductions and less increases, And let’s just try and keep it in that sort of Goldilocks place. I don’t know what it is, but let’s keep it in a Goldilocks place And that’s not being such a big hurry. To get it down to two to 3%, My God, it’s been at, you know, eight, eight and a half percent. You’re not, you know, anybody would know you’re not going to get it down to two and a half percent, two to two to down to two to three percent in a short period of time. So don’t bash us to death. Let’s just maybe do it over a nice orderly fashion over a period of two years. It doesn’t have to be done before the day it retires.

Tom Panos: 

You make so much sense, mark, and I reckon the reason why is you’ve got this combination. Look, you’ve been. you’ve walked the path of the people that are walking it now. You I heard you on a post on Instagram where you spoke about how similar this was to the early 90 periods when you were. I think you were talking about the mortgage that you had and the decisions that you had to make. You’ve walked the path of pain and suffering, and I think that’s what allows you to have this empathetic view on the various groups of people. But, on the same token, you’ve also been involved with big business. You’ve got the theory. Yeah, i think you should start. I think you’ve got to get on the TV show again. I think you’ve got to get that money show. A few people have been one guy here, chris Dossain at Mark Burris for RB Governor. Trust me, mate, he’s got a lot bigger things to worry about than having to be crucified by everyone, and I do feel sorry in one regard for the governor, but I’m also very mindful of it that he’s getting paid a million dollars. He doesn’t have his testicles on the line like a business person has, like our real estate agents have, like our mortgage brokers have right He can make decisions. Yes, there could be a bit of hatred there.

Mark Bouris: 

He’s gonna say I just do my job. I know that likes to work there. I don’t want the next Reserve Bank governor to be able to say that. I want someone to say, no, your job extends into you know the word empathy won’t be used but like extends into people’s welfare and making sure you don’t crush the joint in your process. And you know, the most effective interest rate increased regimes where inflation has been raging, particularly, i do remember well in the late 80s and early 90s the most effective interest rate regime is when they put us into recession. They have to break something. They have to break out a will, you know, and the will of the business owners to charge extra money for a coffee, or the will of the trade to say, look, you know, because the business starts pulling back here, you know, we want to see what trade is saying Hey, mate, can you bring the current stuff? I’ll fix it because I really need the work. So they’ve got to break something And that usually means a recession. So you know, when you get the recession, everyone’s writing about it, everyone’s talking about it. And that’s what happened in the 90s, you know Paul Keating said it the interest rate. This is the recession we had to have. They were Keating’s words in 1990. He was a treasurer at the time. He then became the Prime Minister because he was correct And I’d rather than tell the truth. We need to break something, otherwise we’re going to push this business, our country, into recession. Get up and say, hey guys, everybody, and maybe sit next to the treasurer and the Prime Minister. Through them, say, let’s do a thing on Channel ABC on 7 pm on Sunday night. Address the nation. We just need to stop spending so much money. And vendors, please don’t put your price up for a while. You know, and big rig.

Tom Panos: 

I reckon, mark, i reckon that would be a mate. People would pay a million dollars to sit and walk You with the treasurer, the Prime Minister, rba. Simple question, facilitation of questions. Because I’ve got to tell you it would help so much because if they don’t give us the real narrative, we come up with our own narratives. Right, and that was well. What are the advantages of? you know, when we were, you know, having those daily press conferences during COVID, the truth of the matter was it was at least giving people information on a timely matter, and that’s the moment we don’t have that.

Mark Bouris: 

Suggestion. But I think the politicians and the public service will gain so many brownie points that they just sit down and explain what they’re trying to do and maybe have it facilitated and maybe do it more than once. And it takes a bit of courage, but I think the mountainale climb. Everyone will probably say you know what, they’re probably right. And then at the same time, a bit like during COVID, ring up all the big banks, ring up all the big retailers and CEOs and say, listen, guys, you’ve got to pull up. And all the big petrol stations and all the big airlines, hey, you’ve got to stop doing this. And then go down the chain to wherever it’s coming from. You’ve got to stop charging more money, otherwise we’re going to put this country in recession and we’re all going to suffer. What’s the point? What about a bit of just like a decent conversation?

Tom Panos: 

Yes, yes, conversation.

Mark Bouris: 

Hey, guys, we’ve got to fix this place up. If that was your business or my business, you’d be sitting down with your CEO and your managers and all that sort of stuff. So we’re going to say, hey, we’re going to do something that we’re going to fix to join up. So they’re running a business, they’re running a country, sit down and talk about it and share it with your stakeholders. Where the stakeholders here? Thanks.

Tom Panos: 

Yes, yes, and I know, and I know it. you know we’re trying to make a metaphor as an example, but the truth is, australia is a company and there is a CEO and there’s various people there And and yeah, i’d, mark, i’ve got to tell you, you make so much sense. My 20 cents worth from the property side of you is. And I’ve just said this to a friend of mine. He said to me Tom, i know that I’m going to have to sell. There’s no way I can afford. He’s going from four grand a month to eight five. And he just rang me and he just rang me up and he says listen, i can’t come up with an extra grand a week. Right, if it was 200 a week, 300 a week, but I can’t come up. And the other thing is, even if I hang in there you raised it earlier how long will I have to hang in there? for How long does it mean that I’m going to go to my folks? I’m going to go to my best mate and say give me the 30 grand just to three through the next three, four months? So my advice to him was if you think you’re going to sell, i would sell it now and don’t take the risk of being in the mix. You know, six months down the track, when you got everyone on the market and you got a bit of pain and suffering, i would sell it now. And then he goes to me, tom, he’s a Greek origin. He goes, tom, i never thought I would sell the family home. You know it’s a psychological thing And I said, listen, it’s difficult, but you’ve got to be practical and don’t make decisions based on emotions. Make be practical. It’s a big thing You feel like.

Mark Bouris: 

You get a point where it’s ego or it’s a big thing. You’ve put your heart and soul into the place, you’ve probably done some renovations, you’ve got all your stuff there. But I went through in the 90s and, you know, once I made the decision, once it was sold and we moved out, it was okay, i mean, and you just say, well, that was an ear in my life. But the whole process of making the decision is quite traumatic And I feel for every single person who’s put in that position, it’s a dreadful position to be put into, having to make that decision, and that’s what that’s what I’m sort of sort of you and I talk about. The reserve ends up putting people in that position And I think that’s unnecessary because those particular people who they are putting in that position, i can guarantee they are not the people that are creating inflation. They are being punished arbitrarily and capriciously for something that’s happening that they are not contributing to.

Tom Panos: 

That’s the comment of the year. That’s the comment of the year that people did not cause the inflation And it’s usually

Mark Bouris: 

vendors, mate, so it’s usually vendors of services and vendors of product that are creating inflation Gas companies, electricity companies, and all these things are tied up with government policy too. By the way, it’s much more complicated. There’s a lot more to all this. It’s a bit like the GFC. We call it the GFC. It sounds very simple, but it was much more complicated and a lot of agendas and very, very personal interests and profiteering were involved in why the GFC happened and it took many years to unfold. And I think globally and as well as here in Australia. I think that this whole period and the inflation and the interest rate increases because it’s happening in America, even in a greater clip, much greater clip. I think at some stage we’ll be watching this on Netflix. This will be a thing I mean. This is not just because this is not one of your normal interest rate change periods. Normally, in Australia, interest rate change periods are six up or six down, and they do one a month, they do one every couple of months and no period of 18 months or 12. You see a nice gentle curve and a nice gentle curve up or down. Whichever way it is going, up or down, we didn’t have interest rate increases since 2010. And I think it’s 2010, somewhere around there, and so we had no interest rate increases for 12 years. That in itself tells me that the Reserve Bank maybe, when they said, oh, we’re not going to put rates into 224, maybe they could have said look, by the way, we haven’t had interest rates increases since 2010. And that’s 12 years ago. And, by the way, our current official interest rate is 0.1 of a percent, which is, by any measure, extraordinarily low. So when we do put them up, we’re probably going to have to put them up quite a lot. And someone might have said well, mr Reserve Bank, how much? We might have said 10, 11 times, because I’d like to get it up around the inflation number, around 3%, 2 to 3%, the inflation number I want. That’s the number we want. We want our official rate to be close, which has always been close to the inflation number. So if you had have said that, someone would have gone hang on, that’s at least eight or nine increases. People might have gone whoa, i can’t afford eight or nine increases, let’s hold back, let’s stop spending. That’s what could have happened, and I don’t for one second accept that they didn’t know, that They know more about this stuff than you and I do. They know a bit about it but they know it to the nth degree. They’ve got 500 economists sitting there. They’re all PhDs and some of that in economics, in the comics, they know their stuff. Why this wasn’t told to us And, as you said earlier, it’s what he didn’t say that is probably created this sort of bubble of people thinking ah, never going to be a problem. Borrow as much as you can, buy, buy, buy, keep spending money. Interest rates really low. Let’s take that really low fixed rate at 2.99. I’ve never seen a 1.99 fixed rate in my lifetime 67, mate. Never seen a fixed rate at that rate ever. No, that can’t last.

Tom Panos: 

No. So, mark, you said something before I. Just before I went on leave, i did a conference and the CEO said to me oh, he goes. It’d be good if you were there first thing in the morning so you can see where I’m doing my roundup and summary of the year And that way you can sort of, when you’re doing your presentation, have that in your mind. So I went along, you know, and I got there a bit earlier, which pissed me off, because he spoke from nine till 10 and I wasn’t on till 130, but he’s the boss, he was paying the bills and I sat there and they had the. They had it. They’d gone up 23% year on year, 23%, year on year Incredible. And then, but the interesting thing was the brief was how the people would deliver to their customers, the news that rates were going to go up. And he said to me the narrative’s got to be when they’re delivering, it is that our costs have gone up inflation. I’m thinking to myself on the one hand they’ve just cracked 25% growth in profits year on year And on the other hand, we’ve got to put them up as inflation.

Mark Bouris: 

And, by the way, that doesn’t make sense. There’s someone make money, mark, what you said makes sense, but what they said doesn’t make sense. If they’re making such big profits, then the cost, the cost of the inputs, kind of gone up by that much. Otherwise, whilst the revenue number might have gone up, the cost would have followed, that’s so the profits wouldn’t have gone up. You know what I mean. If the cost of inputs have gone up as well, so somewhere there’s a mismatch between the cost of inputs and the repricing of the product, and that’s called profit And candid.

Tom Panos: 

I think that was just a sales line to try and hopefully get another 25% next year. That’s what I think it was. Mark, you make so much absolute sense and I think your people at Yellowbrick Road are so lucky to have you, because you’re able to communicate and these mortgage brokers that you’ve got these mortgage brokers you’ve got. It’s a two-way relationship because you’re getting the third input from the conversations that they’re having with their existing clients and their prospective clients.

Mark Bouris: 

We get a lot of fun. That shakes your own view on what’s really happening. now, Funnily enough, we ran a competition. We offered five prizes of $12,000 each and we got something like 1,300 applications from people whose interest rate had gone up by $1,000 a month. That’s about $12,000 a year, which is what we offered five people $12,000. This is a prize as a gift. Why we did it? because we actually wanted to gather inputs from as many people as possible to enter into the competition, to tell us what they’re experiencing. We wanted to get the narrative from these people and we then compiled all that, tommy into a report and we called it the Human Impact Study. It was a study and we sent it on to the Reserve Bank Governor. We delivered it to him and he sent us an email back saying thanks very much. I’m going to share this with my colleagues and that’s the only thing I’ve heard from it. By the way, he still put interest rates up. It didn’t work and it cost him $60,000. It doesn’t matter. I’ve got to find out firsthand from people in their stories They did it by video or by text narrative and to see what pain there is. This is across Australia, not so much in West Australia and not so much in Adelaide, really the eastern states, sydney, melbourne and all the big geographical areas across the eastern states. We got to talk 100 people. I probably got personal emails, maybe from two or 300 people. I got to one. I couldn’t answer them all. We had to set up a whole division of people here who go around answering these emails on my behalf, because we don’t want to leave people putting a message out and just being left sitting there doing nothing. They just wanted to tell you the story. People just want someone to listen. They want to tell you the story. Most times we couldn’t help 99 out of 100, we couldn’t do anything about it. At least they showed some gratitude that they were able to express their story. tell us how they’re feeling. tell someone someone cared. That’s my whole point. Apart from you and me and a lot of other real estate agents and mortgage brokers we can, who are they looking out there to? Who actually gives a damn about what’s going on? Who in the government actually cares? I haven’t seen any people stand up and say this is terrible. This is not what we want. Just hang in there. We’re going to fix this. Why can’t some? why can’t? why don’t they give a damn? I don’t know. What are they more interested in?

Tom Panos: 

Because it is hard, mark. The truth is it is hard. I remember one CEO in a business that I was involved in. He made a strategy and the strategy was that it was going to look great on that spreadsheet for the next 12 months. It was going to look good, but I said to him. I said you understand the impact that it’s going to cause subsequently. Like you know, like quantitatively it looks good for this year, like qualitatively, and he just said, listen, that’s a bigger problem for others to sort out. This is my job, that’s what I care about. Right, and I think sometimes it is like that People say this is my job. Like Dr Lowe said. I heard him say it last time He was being grilled by he was being grilled hard by a journal on I don’t know, abc. Anyway, he just turned around and he just said I’m not resigning, i’ve got a seven year contract and I’m staying my job. He could have just said it in a nicer way I’ve been facing so much.

Mark Bouris: 

They’re unelected officials and they have too much input into how we live our lives. You know, like, we never get a chance to vote for them, and you know, like, and you know they’re on big wickets And I, for me, i just think not only should there be more transparency from them, there should be more empathy from them as well, but I also think that we should have some. There should be some way we can have an input as to how they behave and, of course, what’s going to happen. Someone’s going to say we’ll go and see a local member Yeah, but my local member doesn’t have any. My legal local members are teal. When she’s not going to be able to influence any outcome to Dr Lowe, no way. She might be interested in doing that, but and she might be prepared to do that, but she’s not going to have any influence over that. You know, and you know, this is Australia and one of you know. I think what’s becoming bluntly obvious is one of the flaws in our system is that we don’t have any input into how powerful unelected officials impact our lives, and it’s not just in mortgages and stuff. There’s a lot of other things that becoming glaringly obvious over the past few years. Covid’s a great example, you know. I mean I’m not saying that. You know COVID didn’t exist. I’m not trying to create any conspiracy theories at all. But at the same time there were unelected officials making decisions about our freedoms And I kept wondering to myself well, these are people who are telling me that I can’t go somewhere. I’m going to stay home when I’m not sick And I’m not going somewhere where I’m going to be exposed to anybody. I’m just going to get in my car and drive to my office and sit in my office and lock my door and do my work And I’m not at the risk of being arrested, perhaps, particularly in places like Victoria. And I just think these things need to be revisited. That’s what I think, and it’s not just around interest rates and people not showing any empathy and not really looking as though they don’t care. He may well care, but he doesn’t look like he cares, and that’s you know. It’s like you’ve got kids. At the end of the day, mate the kids. You can’t say to kids I look like care and don’t look like you care. I mean, kids are interested in not what you say, but how you are, what you do. We’re all still kids. We’re all still you and I. Little boys tell it hard and all the women are little girls are still at heart And we all want to know that someone gives it down And we’re all looking for who that individual is. And it’s not up to you and me, tommy, but you know, unfortunately we’re taking on because you know, we just that’s an interesting topic for us, you know, and it’s in our territory. But you know, i just wish some of our elected officials would take that up And I also wish some of our unelected officials would start to feel the need to be a little bit more caring.

Tom Panos: 

Yeah, a guy just put a quote there. Mark says success is the family you raise. There’s great comments coming through here, mark. One final question to you is and I know that it might be, you know too early because this is better than before.

Mark Bouris: 

Well, we don’t know if you should depend on what the data says, but I think if you at the end of so the end of July, so sort of on the 24th or 25th of July, we’ll get the 12 month official CPI number for the previous 12 months. I think I would say the August meeting will be very important. The one or two August meeting will be. The second will be a very important meeting, he did say, and it will depend on the data. But he did say in his last paragraph if the data suggests that he has to put interest rates in this today, put the rates up. He will continue to put rates up. They might remain resolute in getting ourselves getting us to the 2% to 3% ban in inflation. I think it’d be a pretty ballsy move to go again in July, one July. But if the annual CPI number that the Australian Bureau of Statistics prints at the end of July for the preceding 12 month fiscal year is too high, in other words above 6%, my gut feeling is he might jam another one into us in August. That will be the recession we’d have for sure. Yeah, yeah.

Tom Panos: 

Back to Paul Keating’s quote Mark Burris, thank you so much. You’re an absolute legend, i can tell you the real estate community, you’ve become a voice for the real estate community as well, and the reason why is the real estate community is fundamentally built on small businesses and people who wake up on the Thursday every month saying list properties, make sales, or you won’t eat and your staff won’t eat. This is how the business community of real estate works.

Mark Bouris: 

You know what, tommy? It’s no different to mortgage programs. It’s pretty much what I’m writing on. It’s the identical setup And I’m really prisioned. Thanks for taking the time out of your holiday to actually address your audience. I want to say one thing about well, you just mentioned Paul Keating. I mentioned him earlier. He’s probably a good example of what I call empathy coming from a politician. Now, paul upset a lot of people. He had this very acute tongue in terms of his way spoke. But Keating got it And Hawke got it too. They were the first to always get up and sort of talk us through with truth. Keating said this is the recession we had to have. He didn’t need to say that And in fact that I think that ended up losing him the prime minister election in the 95 and 96 election, whichever one, it was when he was promised and he lost because he’s too truthful, because the media just jumped all over him. He said this is the recession we had to have, and I think. But those politicians really are shining lights to me Keating Hawke, howard Fraser, and even Howard is treasurer. They explain things to us Costello, they explain things to us Hockey, even. They explain stuff to us And I felt as though I was being probably guided and I’m not here to have a go at Jim Charmers at all, but he also knows how brutal the media are. Media are much more brutal today than they’ve ever been the past, And you’re on a short fuse all the time. You know it just takes a quick light and the bomb goes off and you’re in trouble. But for me, i want to see, i would like to see and I think most Australians would like to see just much more empathetic and much more emotion. Even if Hawke went, i remember he told everybody after we won the Emery XCAP, everyone should have holiday tomorrow. I mean that’s sort of stuff. I mean that’s sort of us, that’s our culture, that’s what we’re like.

Tom Panos: 

You mentioned Mark, you mentioned Howard. Last Friday I was coming back, i was on the far north coast and I flew back in from the Gold Coast on a virgin flight And there I was. I see John Howard, right, and this is the fascinating thing He’s in a line and he didn’t take the fast track line. I presume it’s probably because maybe he’s a Qantas flyer and he didn’t. and he I don’t know what the story was, but he was he was at the back and there’s a guy with a suit I can’t get over it because he ended up sitting next to me goes over to the Virgin Girls. It was Gates. it goes over and says to these girls He goes. do you realize? one of the most important people in Australia is queued up at the back there trying to get on the plane, right, anyway. and I heard him say next thing, you know is this guy with a suit sat down with me and I said, mate, that was, that was good What you’ve done. And I said did they fast track? and he goes. I’m not sure He goes. I just got on the plane then And he said to me goes, mate. John Howard was one of the few people that cared about the people of Australia as much as he cared about himself. He goes don’t get me wrong, he’s a politician right And he was on a salary and he’s got his own career, but he cared about people and you brought another couple there that you brought in Howard and Fraser.

Mark Bouris: 

That was what the big personality is Howard Fraser, fraser Horne They’re hard on the sleeve. I mean we we might not have gone for labor political or liberal politician, but that’s a there’s a common denominator between all of those people that I just mentioned They wore their heart on the sleeve, They’re very empathetic, they understood Australia, they understood our culture and they taught.

Tom Panos: 

Well, I’ve just worked it out, Mark, You were his neighbour. He was up in Bensonwood. Peter, Yeah, I’m looking at Howard.

Mark Bouris: 

he’s a good student For a long, long time. So he’s always a you know, a labor type guy. You know union style guy, labor type guy. He look, whether it’s my politics or not, it doesn’t matter, but he did wear his heart on his sleeve. He was empathetic, he did explain things, he was honest in his opinions not always what we wanted to hear but at the same time he’s honest in his opinions. I’m not suggesting the current guys are dishonest, but they are guarded because of the way media operates today and the media is so broad and so brutal that they’re very, very careful There.

Tom Panos: 

Tommy All righty, Mark Burris, thank you so much. Always an absolute pleasure. Thank you Starting off. Thank you for everyone. We had a thousand viewers right at the start of this.

Mark Bouris: 

It’s very good Good stuff, Tommy.

Tom Panos: 

Enjoy We’re caring about what’s happening at the moment. Thank you.