Is the world finally ending , or was it just a Microsoft glitch ? Have rental prices affected fertility , and is WA's rental reform going to be followed by the rest of the country ? Catch today's episode of the Finance Show with Joe .
Welcome to the Finance Show with Joe . He's Joe , I'm Jess , I'm Shcmo . We're going to be talking about CrowdStrike , fertility rates and rental reform , but first , obviously , crowdstrike .
So I walked into Coles and I thought like it was Terminator 2 .
Judgment day .
I uploaded a photo on my Instagram and I literally I couldn't believe it . I walked into Coles and I saw a poster drawn in crayon , like they didn't even have , like nice crayon . It was crayon that said cash only ,
and you weren't even buying a banh mi or anything .
No no . That's the only time I ever see cash only, I wasn't in Cabramatta I wasn't at my barber , I was at Coles , and I never have cash on me , neither my job as a mortgage broker . Okay , we get paid digitally by the banks . Money goes straight into our account . I digitally by the banks . Money goes straight into our account . I don't see cash .
No , neither . But just by chance I had a few hundred dollars at home okay , in cash from birthday presents earlier in the year and they were stashed away in cards , all right , and I was like , okay , I'll open this , and I had to drive back home .
I was surprised they weren't on stuff under your mattress or something .
I'm not that Lebanese , I'm not that Lebanese , but I literally had to go home and I had to open up my cards and take cash out . To be able to go back to Coles and pay for my groceries in 2024 was not something I would imagine would ever happen ?
No , but it does sort of expose the weaknesses of digital finance , doesn't ?
it . It definitely does . So the story is Microsoft was having an update .
No , okay , it actually had nothing to do with Microsoft . Okay , nothing to do with Microsoft , it's all CrowdStrike . So CrowdStrike , that's basically like cyber protection , basically , okay , they released an update for their own software that crashed 8.5 million computers around the world . It was a bad update .
Yeah .
They noticed it quickly , but then to fix it you need to do it manually . Obviously , it's going to be a bit difficult when there's 8.5 million computers around the world , so they had to , you know , talk to everyone's IT person .
The part to us that we really saw affected because we work in banking NAB was down , cba was down , the big four yeah . Macquarie Bank , okay , it was outside of the big four . It was a lot of the major lenders and then it was like the second and third tier lenders that people don't like . That was still able to work .
Weren't using CrowdStrike .
Guys , maybe sometimes using the majors isn't a good idea like we recommend I don't know , I'm just going to put that .
It was funny as well . A little Easter egg I was watching Formula One Grand Prix and the Mercedes team used CrowdStrike , so their computers were down as well . You could see it on the pit wall . They just had blue screens . What ? During tests ? Yeah , I think it was during practice on the Friday , yeah , and they couldn't . Well , I mean , the car could run .
They just like the screens and stuff , like their data wasn't working , but 90% of the- . Well , yeah , their practice sessions I don't think were very useful . Oh my God , that's hilarious .
Just to divert from that , I wish we could talk about Formula One , for an hour . Just to divert from that , this does raise a massive question about digital banking .
Yeah , and just security and safety . You can't access your own money if something like this happens . This is unprecedented . This has never happened before on this scale .
Yeah , and we've seen a lot of news reports in the last 12 months ANZ moving to cashless , macquarie Bank moving to cashless . You know a lot of these major banks . They want to move to cashless so that they could track money better . The ATO can track money better and they can essentially make sure that people are paying their taxes on time .
Also , they can essentially make sure that people are paying their taxes on time . Also , they can put their fingers in every single pie and then also sell your data .
Well , that too . And then another big thing is the merchant charges . So when you go to an ATM or you go to not so much an ATM , but when you're buying from , I want to say , the bakery down the road and it's under 10 bucks , they have to pay a fee in order to be able to have that transaction go through . It's like 12 cents , so it's like 0.12% .
Yeah , I think it's around about 10 cents .
And then ? So what that essentially means is , if we move to digital banking , mainly whoever owns the terminal okay , whether it be Stripe , whether it be CBA , whether it be NAB whoever owns that actual FPOS terminal is making an extra 12 cents on every single transaction , Every purchase , which is the reason why they want to move to digital banking .
But we saw the effect One update can crash an entire system .
And CrowdStrike's been around for a while . It's not like they're not a respected software company .
Yeah .
Although their reputation has certainly taken a massive hit now .
Huge If I see CrowdStrike somewhere . I never knew what CrowdStrike was .
That's the thing it was . We didn't even realize how a part of the world CrowdStrike was and just in their software and where it was , because it was protecting against cyber attacks . That's why airports and stuff use it .
And it became infamous very quickly . Sydney airport was shut down . Yeah , Melbourne as well , there were delays in flights down , yeah , melbourne as well . There were delays in flights . There were delays in trains , I'm certain as well . But one other issue we found was settlements .
For a transfer of title to occur , there needs to be a PEXA workspace , so a title . When you buy a property you buy the title deed that says I own this , which means I own that land . What we saw occur was , at 3pm , settlements weren't going through . Thankfully I had two settlements on Friday , one at 1230 and one at two After 3pm .
People weren't able to actually get their property and grab the keys and you were having conveyances on the seller's side saying why are you delaying settlement ? You're supposed to come in and they're like we're not delaying anything , we've got the funds , we can transfer it . And then the blue screen of death would pop up .
So we saw banking not only get affected on the oh I can't pay , fpos side , but we also saw them get affected on the mortgage side . I don't even know about the institutional banking or the corporate level of finance , you know , with the big transactions .
But for that to happen at the low retail level , with the mom and dads and , you know , people trying to buy their first home , just normal people , yeah Just normal people . It's a massive effect and it does raise the question should we move to a cashless society ? Well , clearly not , and I used to be against it . I like cash . I'm Lebanese .
At the end of the day . Okay , I don't use it that often , but I understand its purpose .
I understand .
I have a friend . He's a great guy . His name is Dimi . God bless him , love him with all my heart . Dimi goes to the ATM every single week and he will withdraw $250 . Okay , outside of his salary , that's $250 . He puts in his wallet and that is his coffee money . That is his spending money . That is , I'm going to 7-Eleven and I'm buying lunch money .
That is his Really good way to budget . He's a tradie . It's a fantastic way to budget because he knows at the end of the week if he has spent too much money . He now knows okay , I've spent too much . These are the locations I could go for lunch .
I could go to the local bakery and I could grab myself a sausage roll and a coffee and that's going to cost me eight bucks . It's going to keep me full for the whole day . I can go to the Vietnamese bakery we mentioned it earlier and I can grab myself a banh mi for like 10 bucks .
Yeah , okay , and you'll be full , and you'll be full , and they're fantastic sandwiches . I've said it time and time again Food tours , cabramatta Got to go . I'm now starting to think to myself this cashless society isn't it's like 99% not a good idea anymore .
I was against it before , mostly because you don't have control over your own money . Even like really rich people , money doesn't exist anymore , Like they have these huge amounts but they don't have those amounts . It's not like they have like a Scrooge McDuck vault that they dive into .
That's exactly right . I just kept thinking Terminator 2 , Die Hard 4 , all the great movies and I was like , oh my gosh , Skynet is here .
I mean it's been around for a bit . Like you know , all the little pods and stuff that listen to , I mean our phones , listen to us . You know you always get that ad . You're like how did they know that I was looking to buy this when I was talking about this ? Because they listen .
Let us know what you guys think . Society , or should we actually be moving ?
to more of a cash society . We see japan function quite well and they're 99 cash uh , I don't know about like that that high , but yeah , it's mostly cash they're mainly a cash society and they're considered one of the most advanced societies in the world yeah , look , it gives you more control .
I think it's fine to like just have it split down the middle because there is a convenience in having a digital . Yeah , um , it just can't be only thing we have .
But we need to move on to our next topic . This is a serious topic , which was a pretty damning article that came out this year .
It's a damning report from the ABS and stuff like that .
So the fertility rate has dropped in major capital cities as people have to decide between rent and having a kid .
It's not even just rent , it's even just mortgages and stuff , just everything cost of living and interest rates , like . I've even had this conversation myself .
I'm having it with my wife . Yeah , my wife is a doctor . I'm a mortgage broker that owns my own business , and we are having the conversation of can we afford to have a child ?
Yeah , because not only that , like you both have to work , because that's just how it is nowadays . So then you got to pay for childcare at some point , which is someone's salary every year , and all you're doing is working to pay for that childcare and then plus all the additional costs .
Diapers aren't cheap . Baby formula is extremely expensive .
Clothes that they grow out of , and then you have to buy more .
There's a whole bunch of things , and one of the major things that came out of this I think it was a KPMG report the closer you were to a CBD , the less likely you were to have a child . They noticed in Melbourne Melbourne CBD itself . I think it dropped by 0.3% . There was something about 0.3 in there .
But if you went to the regional CBD which was Geelong , you're more likely to have kids and that is such a major impact . The central business districts are where people are expected to go and make money . It's where people are expected to be able to produce .
It's like the old timey market . It's where you go . You know I'm taking the potatoes out to market today .
Okay , I wasn't expecting to get that .
I don't know why it was Irish either . Jesus Christ , I don't know where your brain went , but like it's 100% true .
I have clients from Wollongong yeah , okay , that will have three kids . I'll have clients in Sydney that are like I have one child and that's it , and that's it , and no , we're not considering having a second . We're seeing a lot of single and we're seeing one or two child households .
We're not seeing the three , four kids anymore . Who can afford that ?
It's just Lebanese people that get paid in cash , but that's another story for another time . But but we see , like it's such a significant thing , and the government . This actually brings up a whole other point to me , which we've spoken about before . But the government is letting in a mass amount of migrants to compensate for our low fertility rate .
So let's put this in numbers . So the fertility rate , in order to sustain a population and continuously grow at a reasonable rate , is at 2.1 2.1 . Every couple needs to have at least 2.1 kids . Okay .
This decimal is named Frank Exactly .
You've got two and a half kids and a dog . Where it's currently at is 1.6 nationally , but we're heading towards a trend that it's going to be 1.45 , which means our population will continuously decline . We do not have enough babies to replace . It takes two people to make one person . That's not going to replace you . That's going to affect jobs in the future .
It's going to affect the availability of labor in general . Skilled or not skilled doesn't matter .
Japan's facing this issue . Japan's facing this issue . China has faced this issue in the past . But I think they're pretty sweet now .
With over their one point they're going to have an issue after their one-child thing because once they get into the well , like once they're working and they're like the main demographic , there's not going to be enough of them . It doesn't matter now because they're replenishing those numbers , but basically the one-child thing I think they've admitted .
Yeah , it was a mistake .
Yeah , 2.1 down to 1.45 . The huge issue with this is aging population , yeah , which we all study at school . A lot of retirees , current retirees , depend on the pension , which is government funded .
Yeah .
They didn't bring in superannuation until 22 years ago .
I was like four . Forget how old I am sometimes .
But I think superannuation was a compulsory thing around 2001 . Okay , where people , where employers , were forced to pay for their employees' retirement or help them build their retirement fund .
So somebody would get their salary and then 11% of that would go to the retirement fund and then the retirement fund would take that money and grow it at 10 or 11% , depending on what it is , and by the time you retire you'll have , you know , 300 , $400,000 . But there's a massive gap . I'm yet again . I'm in the mortgage market .
I've said it time and time again . We have these 40 to 50 year olds that don't have that much superannuation .
And this is when the renting stuff comes into play .
Exactly , and where does the pension come from ? The pension comes from taxes . We just had a tax cut . We just had a tax cut .
Now , whilst this is more money in our back pockets , which is all well and good depending on who you ask , because we all know my opinion on this right now okay , it's going to increase inflation , interest rates are going to go up again , yada , yada yada , but what is going to end up happening is either taxes are going to increase or we're going to have
another high level of migration well , it's going to be the migration thing because it's more of a population thing , and this is something that isn't um , it's not exclusive to australia .
This is happening in western western nations across the board , or developed nations , I should say um , because it's not limited to the West , yeah , develop nations in general . Basically , at this point , both parents are working . Both parents are under greater financial stress as things get more and more expensive .
They have to work more and more and this , that and the other , that there's just no time to have a kid .
So what do we think is going to be fair and a solution , Cause right now communism looks great to me . Smidgen of communism here and there . Socialism just a smidge , I'm not talking full socialist party .
I don't want to be .
Argentina or Venezuela .
Well , Argentina's gone full libertarian with it . That's what they're experimenting with , because they had a socialist government for the last . I'm not big into Argentina so I don't really know , but I did know they had like a socialist-leaning government before this so they went full libertarian , which is basically complete deregulation of everything .
The government's not doing anything for you except like run basic economy and structure of things . We'll see how it plays out . I have no idea . There's never been a libertarian government before .
Which is another insane thing , but you know I don't want to get into Argentina . This is a finance show with Joe , based in Illawarra .
But I definitely think and I think we're already seeing this happen sort of across the board again People are angry in general over the quality of their lives is decreasing and everyone's starting to notice , and it's not just poor people , it is now the middle class which is continually shrinking .
I think we now need to seriously look at the way Australia is built , now more than ever . We've been talking on this show for the last three to four months . There's been a lot of doom and gloom . This is a serious doom , okay , like fertility rates dropping by 0.7% .
That means 70 , our country is basically being replenished by 70% less than what it was previously . Yeah , essentially this . That means our country is basically being replenished by 70% less than what it was previously .
Yeah , essentially this isn't the first time it's happened . This happened in the 70s as well , but the 70s also weren't a good time for the economy . It was also a recession for developed nations as well Oil crisis and stuff like that . So maybe we're being a little too reactionary right now because things are a bit rough .
In the post-COVID sort of stuff , it's sort of figuring things out as economies trying to keep growing , but the way they're growing is by , like , bleeding their people .
And I just I think we need yet again government reform , I think there needs to be less regulation and I think there needs to be crosses and checks around what the government is spending money on .
Well , yeah , that's part of that corruption watchdog that they talked about earlier .
Yeah , I'm all in on the corruption watchdog . I mean .
I think the only people that aren't in on it are the ones in parliament . That's it . I'm pretty sure it's a bipartisan . I don't know anyone that's like , yeah , no , the government should be able to do whatever the hell they want . No one should tell them what to do Should .
I run for office .
I don't know , man Give it a go .
Give it a red hot go .
I would hate to work in politics personally , Like that's no , not for me .
I just think to myself , if I was in , and the way that I would say is the first thing I would be doing . I think the Romans said it best , and the only reason why I know this is because of the movie the Dark Knight .
Okay , where , when you're bringing in politicians , you should be bringing them in kicking and screaming , not because they want to be politicians , but because they are the smartest people to do so .
Yeah , it really depends on the person too , because there is the idea of , like the reluctant king , yeah , whereas the person who doesn't want to rule is the one who should be ruling , but there's a reverse to that . Whereas the guy who doesn't want to rule really doesn't want to rule and doesn't , and then things just sort of fall apart .
So it's not perfect , but the idea . Anyone who goes into politics has already got a good opinion of themselves , so to speak , and they have a fascination with the idea of power Because you've got to put up with a lot of stuff and you've got to have a lot of drive to do this .
You don't just sort of I mean , if you've got to know a lot of money , yeah , you can just fall into it . But generally speaking , why do people want to be politicians ? That's the question I ask . Is it because they want to help people ?
I'm sure some of them do , but no , I don't think it's the majority . Not a single one of them wants to help anyone .
No , I'm sure there's some idealists that exist , that are out there . I just don't think it's the majority . I think most people are after money and power .
They start as the idealist . By the time they're in a good position . It's money and power .
Yeah , we see examples of that constantly . But anyway , this is a finance show .
I want to hammer them , no but I just genuinely think we and I've said it time and time again we're going to see so much more bankruptcy in the next six months .
Yeah , I mean , people are just going to keep doing it harder and harder .
People are going to do harder , we're going to have a lower fertility rate , we're going to have more migration and you're going to have a lot more senior people NIMBYs being like not in my backyard , but it's going to be too late by then .
I think , yeah , honestly , the local councils kind of just need to get some balls and piss off their electorate . I know that's not what you're supposed to do as a politician , because you're supposed to represent them .
Yeah , we've got one more story that we need to cover and we do hope that we actually see this across all Australian states , but Western Australia has brought in their rental reform , yeah , which is .
Okay . So basically you get a little . You get a bit more like basic human rights as a former renter . So basically , with those rent rises that happened all across nationwide , you can now in WA you can only raise your rent once every 12 months which is pretty reasonable , I feel . Because , yeah , the market does change . Rents do need to go up .
There is a symbiotic relationship between landlord and renter so landlords can only increase rent by every 12 months . Yeah , pets are mostly allowed pets are mostly allowed .
Obviously there's like they keep saying like we have reasonable conditions and within reason . So basically it seems like it's they can't stop you from having pets unless they have a good reason to not let you have a pet , which for a lot of people is a big deal .
I know when I was looking for rental properties , we had to cross off a few things because they were like yes , you can have pets , but it's going to cost you an extra $30 a week or something , or straight up , no , you can't have a pet which is fair . Look , at the end of the day , it's the landlord's place . You could , you could .
I reckon it's reasonable to come up with like some sort of deal , like some sort of negotiation , because , yeah , your dog , you know , might be great and really well trained , but you're not going to live there forever . The next person's dog might chew up the walls much , tear up the carpet or destroy doors and stuff like that because it's poorly trained .
You don't know that , yeah , hence you talk , you negotiate funny .
You mentioned that we bought a second golden retriever on the basis that our first one was so good and , like the second one , is so bad . She's more disciplined when we're around , but when we're not around she's so much more naughty , cheeky . No , it's not cheeky . She's eaten my couch . Her poo was full of leather . She's destroyed all the landscaping .
She has literally destroyed my house . She has decreased the value by God knows how much . There's hair everywhere because now she's finally getting rid of her summer coat oh sorry , her puppy coat and the adult coat is coming in . I completely forgot how hard golden retrievers could be , and now that I've got two of them , she revs him up . He's old .
He's like I want to sleep , but she revs him up and she gets the puppy energy right out of him again .
Now imagine that , and it's not even your dog .
No , not even my dog , not even my house .
Well , like , exactly . But like from a landlord's perspective . Like you put up with that stuff because your dog , you love that dog . Now it's a landlord with you don't really know your tenants , you don't know this dog . All you know is the dog's ruined a lot of shit .
Yeah , that's exactly right . And then the last thing is segue away from the older retrievers that segue away from the older retrievers , uh , that we can now make minor modifications in rental properties , yeah , which you've got . Had a past experience with you , discussed it on last episode yeah , it's just like so .
Basically , you can now , again with your landlord's permission because it is their property at the end of the day put up pictures on your wall . You can put up fly screens , you can put in that , um , well water saving shower heads , and stuff like that , which I don't know why a renter would do it , considering they don't pay the water bill .
What I'm seeing is WA do , and I can't believe it , because their housing market has been booming . We talked about it last episode . They're still the highest-growing state right now , at 1.8% . But what they're doing is they're actually forcing investors out of the market .
They're pushing investors out because they're like nope , you can't increase rent every six months , it has to be every 12 . You want to have a rental property ? Fantastic Pets have to be allowed Within reason Within reason . You have to allow somebody to have their pet dog if it's a well-behaved dog .
Look at the end of the day , these are normal . These are people who want to live there . Like it's an investment to the investor , but it's a home for the people who live there .
Yeah , I think Manny mentioned it on our last episode with him and he was talking about WA really wants the owner-occupied people to come in . Yeah , and good on them . We've seen it , I've said it time and time again WA is investing in their city , they're investing in sport , they're investing in local entertainment , they're investing in property .
They want to see it grow and it is growing .
Yeah , and it's working , yeah , in a good way . It seems like they've got some long-term thinking going on . It doesn't seem like short-term profits are the topmost of mind .
Yeah , they've got their eye on the target of . We want to be Australia's I don't want to say most prominent city . It's always going to be Sydney and Melbourne .
Yeah , there's too much history .
There's too much history there , but they've got such a massive advantage , being on the same time zone as Perth not Perth as China , because it's such a lower end of the market we are seeing the migration happen . Yeah , probably call off investors and allow more people to migrate there . It'll allow more people to purchase and occupy .
Which is what they want . You don't want like those empty apartment buildings for investors . No one lives in them .
Yeah , exactly .
Like , if no one wants to live there , what's the point ? Yeah , you've invested all this money and now you've just got empty buildings . That accumulate wealth , I guess ? Yeah , but if no one is buying them or no one's interested in even being in and around the area , then then no , you're not going to accumulate wealth .
So here's some question I want to ask you , and you can drop a comment below Do we think that other states will follow ?
Depends on how much public pressure there is , because recently there's been a lot of public pressure from renters after those post COVID . Basically , just how everything sucks Like they pay ridiculous amounts of money but they get nothing from their landlords Again , not every landlord .
There are many decent people who are landlords , but there are also many who are not .
I've got a client recently who purchased an investment in Queensland in 22 . And I will never forget this phone call because she was the first person that has said it to me in six months and I've got a lot of clients . I've got a lot of clients . I've got a lot of people I work with day to day . I'll say oh , how much rent .
We have to do a fact finder . So I go how much rental income are you collecting on this property ? And she goes well , it should be 600 , but I've got it at 480 because I don't want to be a C-U-N-T to my tenant yeah , cause there's , there's , there's the economic reasons for doing things .
Then there's a social reason , and that was the first time in six months I had heard that comment and God bless her . I can't , oh , damn it . I said her I'm not going to mention names , but God bless her because she is probably the only landlord I can think of .
That thought that everyone else is thinking I've got to make mortgage repayments , I've got make electricity and I should have more money in my back pocket , which isn't a bad way to think . At the end of the day , you've got one life to live .
You want to make sure that you live it in a comfortable way , but when you have landlords like that , they're very far and few in between . Seeing WA go to this reform is forcing people to be those kinds of landlords .
Well , it's just forcing people not to be exploitative , because right now there's just not that many protections for renters in New South Wales .
When you have BlackRock , one of the largest investment firms in the world , going to local auctions to buy houses okay , and they're bidding against mom and dads with families . These sorts of laws need to come into play .
This is what I mean . Yeah , there's a limit , like you know , everyone's all about , we're all about making money , all that sort of stuff . It's a finance show , after all , but there is a way to do these things , shall we say , ethically .
That's such a big thing to say . You can make money ethically if the government puts in the right rules and regulations for you to do so .
Yeah , and you know we made this argument that maybe they have done that and that's part of the regulation which is stopping dwellings from going up . I don't think that's true . I think that's building regulations , not like rental regulations . Yeah , not 100% on the building stuff , but at least with the rent stuff .
Like anytime you want to take anything up or something's gone wrong , you have to go to the ombudsman . There's no just like simple law . I know a lot of people that were getting those rent rises and they were like , yeah , but we've been asking for these repairs for two years .
At this point you still haven't repaired these rentals , whereas , like , why should I pay you more when you can't ? You won't even fix this . I live here , this is my home , but I'm not allowed to fix it .
Yeah .
So , yeah , just things , that there are things that make sense economically and there are things that make sense in practice . Yeah , sometimes what works on paper doesn't work in practice , which is , you know , communism , like on paper , like it makes a complete logical sense but it doesn't .
It clearly doesn't work out because the human condition you come up with many things- and this is the philosophy show with Michael , but I agree with everything that you're saying . I like the rental reform as someone that's an advocate for people to buy their first homes , for people to be able to accumulate wealth , for people to be able to build themselves up .
I would rather that happen in a sound , economic , ethical way that is fair , where if you are working harder to make more money , you deserve it . I don't like the black rock coming in and buying properties and hiking up the rent . It was like that medicine that happened in the states where ?
oh that martin scli guy ?
Yeah , he went and he bought this medicine and he hiked up the price by 2,000% or something .
Yeah , I think it was like HIV medicine or something .
It was no , it was diabetes , diabetes .
Fuck , so that's even worse .
More people so many people have diabetes . They hiked up- .
Especially in America .
Yeah , and then they finally came in and said no , nobody's allowed to do this . Yada , yada , yada . I like WA , I like the fact that they're doing this . They're building an owner-occupied society where people take care of their properties , and I hope that we could see the same in New South Wales , victoria , adelaide .
The reason why I hope so much is because you won't have people outbidding each other by $250,000 , $300,000 , hundred thousand dollars , creating these inflationary prices .
At the same time and I'm going to finish on this note I want to see the government allowing more builders to enter the market with less regulation , to be able to build more dwellings so people can afford to live in New South Wales again .
Yeah , just building on that to close off , victoria , I think , is on that track A hundred percent . All their prices are going down , the growth is going down and the rent is going down and investors are becoming less interested , which is great for the people that actually live there .
That is exactly right . So let us know what you think about WA's rental reforms , and let's finish off on that . My name is Joe . That is definitely some schmo .
Don't listen to a word I say
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