The Long Goodbye

I apologise for my absence over the past couple of weeks but the current strain of Covid hit me big time and well I have had a fair bit of work to do as well.

And to be honest I am a bit distracted, after all I did buy a boat this year and I have grown weary of the shite that is dished up in the media and how gullible many folks have become.  I don’t think I am alone regarding my last point.

Anyway, I turned 58 this year and as a forewarning this post – my last for this year as we are about to go on an overseas break – might sound, to some, like a grumpy old coot.


Meet the new boss, just like the old boss

The end lyrics from Won’t Get Fooled Again by The Who.

Yes I am showing my age!

In this case I am referring to the RBA’s new head honcho, Governor, Michele Bullock.

Bad decision earlier this month if you ask me.  Inflation isn’t being driven by domestic consumption.  It is from geopolitical tensions, poor government policies and green/red tape.  For example, the latest clutch of housing construction rules adds between $25,000 and $50,000 per new build depending on location and household type.

If domestic consumption was to blame, then why not do something meaningful, like placing the GST on all goods and services and raising the level of this consumption tax, say from 10% to 20%, for six to twelve months at a time.

But that would take some guts, which is sorely lacking in public life these days.

We desperately need serious tax reform in this country.

We also need tough love across the board and not feel good politics.

Some were critical of my comments last post regarding my suggestion that the RBA make longer range decisions.  Many said I was making the same mistake as Philip Lowe.

For mine, the RBA should meet, say, four times a year, and decide about interest rates once every 12 months, in July each year.  They should make big decisions regarding interest rates, like hiking the cash rate by 1%, then resting for a year.

Again, for mine this is what they should have done 18 months ago.

Much has been said about the future direction of interest rates with the RBA head saying that the data will decide where the cash rate goes in the future.  For mine, and given the current state of play, the only statistic the RBA needs to monitor is real wages.  See chart 1 below.

As to where the cash rate goes next, the financial market is thinking they are likely to remain steady for much of next year, with a slight chance of a fall.  See chart 2.

To me, the RBA has gone too far, and by about 1%, and I think the cash rate will fall by about this amount by the end of calendar 2024.  Trusted economic indicators and especially of the job market, suggests that Australia is heading for harder financial times over the coming years.

Big Australia

The ABS has released a new population forecast data set, calibrated from 2022, which suggests Australia’s population could grow between 3.7 million and 4.6 million people over the next decade.

This would see between 30.2 million and 31.2 million would call Australia home.

As at mid 2023, some 26.4 million people lived in Oz.  As at the time of writing – late November 2023 – about 26.9 million live here.

Some 30% of our population is born overseas.  This will lift to 33% by 2033.  It was 27% ten years ago.

Heaps of folks are calling for this growth to stop, especially given the recent disgraceful behaviour, but without it we are stuffed economically.

Now days we live beyond our means, we cannot afford the maintenance, we need many more here to achieve an economy for scale and also, increasingly, for geopolitical balance.

Now I am starting to sound like an old man!

If we didn’t rely so much on income taxation (and had a wider tax base) and used our mineral wealth much more wisely, then we could get away with a much smaller population base.

But that again takes political guts and actual decisions not just words, weasel or otherwise.

We also need immigrants of conviction not convenience and we should be much more selective as to who we allow in and critical when it comes to how they behave.

Worldwide foot falls are heading our way.  We can attract some of the best citizens in the world and we should try and do so.

And as a side bar, this is how Australia’s population is currently growing:

  • One birth every 1 minutes and 42 seconds.
  • One death every 2 minutes and 52 seconds.
  • One person arriving to live in Australia every 42 seconds.
  • One Australian resident leaving to live overseas every 2 minutes and 30 seconds.
  • An overall total population increase of one person every 47 seconds.

I think we should be making plans how we host 50 million residents by 2050 and 100 million by 2100.

That would be a nation building programme worth pursuing.

Housing crisis

I don’t know about you, but I have grown tired of this general conversation.

Chart 3 shows that the rental vacancy rate has been down before.  It will, like in the past, bounce back.

Tenants are going to have to share, like many of us did in our youth, and we need to encourage (not just allow) more of the housing that the market can afford.  In short the “missing middle”, which includes moveable dwellings plus backyard homes.

Land tenure also needs to change, and the town planning metric should be population per hectare not dwellings.

Also, home buying – for both new and old dwellings – should only be allowed for those that hold an Australian passport.  No exceptions.

The housing sector also needs major taxation reform, grandfathered, and including changes to stamp duties, infrastructure charges, negative gearing and capital gains tax, in concert with the implementation of a federal land tax.

We also need one building code, Australia wide, with climatic zonal differences.

New development applications, supported by the appropriate documentation, should be decided in three to six months, not years, let alone decades!

Unless we do this stuff nothing meaningful will happen in this space.

The current federal and select state government largesse in the space will just inflate prices and see very few extra homes actually built.

Housing outlook

Real estate is all about supply and demand.

Demand (i.e., sales) is steady when compared to the past ten year average, whilst supply (stock listed for sale) is down, some 20% against the long term trend.  See chart 4.

We also have an undersupply of rental stock and new builds.

Unless things go really pear-shaped then, for mine, Australian housing values and rents are likely to rise during 2024 and 2025.

Now inflation is likely to be stuck between 3% and 4% for some time, so there will not be a lot of real price growth.  Rents could rise between 5% and 10% per annum over the next couple of years, until the vacancy rate lifts over 2%, which is another 18 months to two years away.

Ironically, in an increasing uncertain world, Aussie’s will likely invest even more strongly in real estate.  So next year, in particular, could be a strong one for Australian housing.

Lies, damn lies and statistics

And on that note, 2024 faces a lot of headwind.  It is a year of elections, both here and abroad.

My end note this year is don’t trust much that you read and hear – my musings included! – and especially if you are getting your intel for free.

I posted a while back my seven rules to help better understand the world.  Revisit it here.  It was written during the height of Covid, but change Covid to Hamas, Putin, Trump and Xi Jinping and you get the picture.  Feel free to add your own despots or pollie, my list is by no means exhaustive.

Merry Christmas

So, spend some time over the Christmas – New Year period with someone that matters.  Do something you want to do.  Smile, better still laugh.  We are only here once.

All the best.



The Matusik Missive will return soon after Australia Day next year, but in a new format.  Substack here we come.

The Long Goodbye is a novel by Raymond Chandler, published in 1953, his sixth novel featuring the private investigator Philip Marlowe.  I think it is his best book.   It was also made into a great movie in 1973, staring Elliot Gould and an uncredited appearance by Arnold Schwarzenegger.

Moreover, The Long Goodbye has been called “a study of a moral and decent man cast adrift in a selfish, self-obsessed society where lives can be thrown away without a backward glance … and any notions of friendship and loyalty are meaningless.”

Make of it what you will.


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