Will AI really kill us all, the $50b deal everyone's talking about & $1-a-day Ozempic

Chanticleer

The episode explores significant shifts in Australian policy and global technology, beginning with the implications of new migration intake targets on the housing

Key takeaways

• Immigration Minister Tony Burke announced a reduction in Australia's migration intake to 245,000 for this financial year.
• The expansion of GLP-1 drugs via the PBS could lower annual costs for patients to approximately $375, or about $1 a day.

Main topics

• Australian Migration Policy
• GLP-1 Drugs and Economic Impact

Notable quotes

Australia wouldn't operate without the migrants.

Conclusion

The episode highlights how massive capital deployments in AI and shift

Transcript preview

Speaker 1 (0:04) The Australian Financial Review. Speaker 2 (0:08) Hello, I'm James Thompson, Senior Chanticleer Columnist at the AFR. Welcome to our weekly news breakdown of all things business, finance and markets. With me today, as always, is my Chanticleer colleague. He's one part equity, 12 parts debt. It's Anthony McDonald. How are you, Anthony? Speaker 1 (0:30) We just finished renovating, James. I'm more than 12 parts debt. Fantastic. Speaker 2 (0:38) This week we try and sort out whether AI is actually going to kill us. We take you inside what might be the biggest ASX float in Australian history. And we try and figure out what a $1 a day dose of a Zempik might mean for the economy. Speaker 1 (0:55) Okay, James, let's start with the world of politics. And on Thursday, Immigration Minister Tony Burke announced a series of long-awaited changes to Australia's migration policy, reducing the total intake from about $292,000 at present to $245,000 this financial year and to $225,000 by 2028. James, that's still much higher than what the Coalition wants and what One Nation wants. Pauline Hanson wants net overseas migration cut to $130,000. This is a heated debate. And on Tuesday, a migrant weighed in, Nuno Matos, the Portuguese CEO of ANZ, who we love here on the Shanticleer podcast. He told the AFR's Asia Summit that we need to be more businesslike in the way we think about migration. Did Burke reflect on this too? Yeah, I think he did. I mean, Burke made the point Speaker 2 (1:42) that the immigration debates got... out of control. We don't have a sort of migration overload problem here in Australia. We don't have open borders. He pointed out that the population is actually going to be, in 2030, 2031, is going to be 700,000 less than it was predicted to be before the pandemic. And then he brought it back to the economy, which I think was... rational pragmatism that certainly Nuno Matos was talking about on Tuesday. Matos made the point that open borders haven't worked in Europe, but we don't have open borders here. Matos's other point was we need to be more practical in the way that we think about immigration. We've got a problem here. We need to bring migrants in that can help us address that problem. And Burke went to this. He talked about migration being the solution to the housing crisis. Now, That is probably a bit rich. He did admit that housing is still trying to catch up to the recent boom in population that we've had post the pandemic. But he made the point, I really like this point, Anthony. He said that two-thirds of plasterers in Sydney and Melbourne, it's pretty hard to build a house without plasterers. Two-thirds of those plasterers are born overseas. So his point was, without migration, we don't sort the housing crisis out. Without migration... Prices go up. Without migration, we have an erosion of services, including vital services like health. So I think actually Tony Burke, the immigration minister, did reflect back a bit of what Nuno Matos was saying. We need to get more businesslike about our approach to migration. Is this going to kill the debate? I don't think so. I think this is still going to remain pretty hot. But that's really about inflation. We feel we're going backwards because inflation tells us that we are. And until we stomp on that inflation problem, I think it's going to be hard to sort the migration debate out. And the danger is that we get sort of irrational policy. But I felt there was a bit more rationality Speaker 1 (3:40) on Thursday from Tony Burke. Yeah, James, I just wonder about this announcement. Like, what's with these big announcements? Like, I'm not sure. there was that much in it, to be honest. I went back and looked at the intergenerational report from three years ago. It was forecasting 235,000 net migration a year. And now the government's come out at 245 and 225, like exactly around that 235 number. I just think it's another one of these announcements from the government where they feel like they have to come out and say something and address something. But I'm not sure it's a big policy switch or any sort of change in direction at all. Like this is what they were forecasting for the next 40 years. Yeah, but I think that's the point, Anthony. Speaker 2 (4:17) Migration has not been the long-term policy area that it should be. We're currently at 292,000. We're a long way from the intergenerational reports to 35,000 at the moment. So changes had to be made, and certainly the political pressure was building around that. So I take your point, and I think it would be good if we came up with a long-term migration policy and stuck with it. the pandemic has disrupted that and we've made this into a bit of a mess that does need to be sorted out. But Anthony, I wanted to bring in a great question we got from Evelyn, who's a year 12 economic student from the ACT, and she listens to our podcast with her dad. And she's got a question for us. She says, at the moment, Australia's headline GDP looks reasonably healthy, while GDP per capita and household living standards struggled. Have we become too dependent on population growth to generate economic growth? And what would a healthier growth model actually look like? Speaker 1 (5:12) This really does go to that migration debate, doesn't it? It sure does. Thanks for the question, Evelyn. She sounds pretty switched on for a year 12 economic student. But yeah, we've become reliant on population growth to generate economic growth, particularly in the past. four years post-pandemic. That's a bad thing. It points to sort of stagnant individual wealth and stagnant living conditions. And that's not the goal at all. We want to, if we can, get better year after year. I mean, the country is getting richer, but it doesn't necessarily feel like it. So it's like, well, what's the point of that growth then, I guess, is the general feeling. I mean, a healthier model of growth, Evelyn, something that expands the pie. as they say, without necessarily inputs, requires productivity, something that's also been missing. And how do you get that? I mean, we talk about it here on the podcast all the time. That's your targeted business investment, your sort of tax reform, regulatory reform, deregulation, removing red tape, encouraging investment. Some of that stuff's going on at the moment. A lot of it isn't. And every second conversation we have on the Transquick podcast, I think, ends up into this point where we need to be doing more on those fronts to improve the living standards for everyone. Speaker 2 (6:21) That's right, Anthony. But let's make no mistake, and coming back to Nuno Matos, a healthier economic growth model will still include migration. We want to bring people and talent to these shores. It's been a mainstay of the Australian economy forever, and I think it's going to continue to be an important part. I mean, cast forward, you mentioned the intergenerational report. We're an ageing population. You know, there is this sort of thought, and maybe AI has changed the argument a bit, but there is this view that we'll be in a sort of competition, a global competition, to bring people. to our economy over the next 30, 40, 50, 60, 70 years. So you want to make sure that we remain a great place, that people want to come and live from other places and they bring their skills and their dynamism and their growth. So I think it's still important to recognise that a healthier growth model for the economy will include a level of migration. Maybe it's better targeted. Maybe it's more business-like, to use Nuno Matos' view. But it'll Speaker 1 (7:25) still be there and it'll still be important. Mate, the fact we're having this migration debate is a complete blight on the political class in Australia. Seriously, Australia wouldn't operate. Without the migrants. Look who's working in the hospitals. Look who's plastering your house. Look at who's in the cafes. It's an absolute no-brainer. And we're here because these populist politics has come in only because we haven't developed housing like we should have, only because infrastructure hasn't been developed like it should have. I think they're the problems, not the migration. Well said, Speaker 2 (7:53) Anthony. Speaker 1 (7:53) Now, James, I wanted to ask you quickly about a column you wrote this week about the potential that we might see a huge rise in the use of a Zempic and other GLP-1 drugs. Because their price could come down to $1 a day. Did I read that right? One buck? Yes, it is right, Anthony. We've Speaker 2 (8:09) been following this story about how the use of drugs like a Zempik and other GLP-1 drugs like Wegovy could sort of change the economy. We got a little bit more information on this from an analyst at a firm called Jarden, Ben Gilbert. He's done a great job charting this. And he makes the point that a couple of things are about to change in the world of GLP-1 drugs. The first is that we're going to move from injections, a small needle, once a month. But soon, and you can already do this in Britain and the US, you'll be able to take these drugs via a pill, which for scaredy cats like me, Anthony, who don't like needles, this is great news. So that's one thing that's going to drive adoption. The oral form of these GLP-1 drugs is much cheaper because it's easy to transport, doesn't need to be refrigerated, and it's cheaper to produce. So that brings the cost down. So that's one part of it. But the other part of it is what everybody is predicting is an expansion of the use of these drugs via the pharmaceutical benefit scheme where the taxpayer subsidises the cost of these drugs. And what is expected next year is that currently you can get a Zempik on the PBS if you've got type 2 diabetes. But what we're expecting is an expansion of access to these drugs via the PBS. probably for people with cardiovascular disease, so heart disease, and are overweight to a certain level. So that expansion of the use of the drugs, plus the fact that these drugs will be available in oral form, is probably likely to see a hell of a lot more people get these drugs for cheaper. Now, at the moment, if you're taking these drugs privately, so you're not getting any help from the taxpayer, it's about $4,700 a year. If you're on the PBS, it's likely to cost you $375 a year, which is as close to a dollar a day as you can get. So we could see penetration of these drugs surge from levels at the moment, which are about 4 % to up towards 12%. That unleashes a boom of spending in two ways. One is on the drugs themselves, more people buying these drugs. But then there's what we've seen, and we've talked about this before, is once you're on these drugs, you buy a whole bunch of other products. You buy vitamins, you buy supplements, you buy protein powder, you buy health and beauty products. Ben Gilbert from Jardin's expecting a sort of extra $5 billion worth of those sales over the next four years. So this is just around the corner. Jarden expects the oral form of GLP-1s to be in Australia early next year. And probably early next year, we see the expansion of access to these drugs via the PBS. So there's going to be a hell of a lot more people paying a buck Speaker 1 (10:52) a day for a Zempik and similar drugs. Yeah, the injections versus oral thing I find pretty interesting. Up here, you go to the eastern suburbs and no one's face moves anymore because they've got that much Botox in there, right? That's all injected. It's not stopping them from that. But, I mean, in