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Is the era of ‘regional cheapies’ over?

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Are the regions losing their edge?

I know a lot of people who leveraged ‘regional cheapies’ into successful investing careers.

These cheapies could often give people a way to create some quick equity gain, which they could then leverage into another deal.

But is the era of the ‘regional cheapie’ over?

Probably not, but it is true that the regions are losing their edge on pricing.

For instance, the Housing Industry Association’s (HIA) Affordability Index is calculated for each of the eight Australian capital cities and regional areas and takes into account the latest dwelling prices, mortgage interest rates and wage developments.

The latest report to June Quarter 2021 shows that affordability across Australia’s regional property markets has deteriorated at a faster rate than the capitals.

The HIA clocks the change:

“Over the past two decades, housing affordability was a greater challenge in Sydney and Melbourne than the rest of the country. Yet since the pandemic began it is the rest of the country that has seen a faster deterioration in affordability.

“This is not surprising given the rapid exodus of population out of Sydney and Melbourne to other states and regions.

“The number of people who left Sydney and Melbourne in the last year was tens of thousands more than the number of people who arrived. This is not unusual for Sydney but was a uniquely damaging development for Melbourne.

“In addition to this, Sydney and Melbourne suffered disproportionately from the closure of international borders and the associated loss of overseas migrant, student and tourist arrivals.

“This is why the deterioration in housing affordability was most acute outside of Sydney and Melbourne…

Across the regions, regional New South Wales saw the biggest deterioration in affordability in the nation, down by 22.8 per cent over the year. This was followed by regional Tasmania (-13.6 per cent), regional Queensland (-10.3 per cent), regional Northern Territory (-8.6 per cent), regional South Australia (-8.1 per cent), and regional Victoria (-6.5 per cent).

I think we do need to be a little careful here about creating a myth that isn’t quite true.

It is true that population growth has surged in the regions and fallen in the cities.

However, this is not so much about an ‘exodus’ from the capitals. Rather, it’s because nobody is leaving the regions for the capitals. The the regions has stopped, like a blocked pipe, and population is backing up and overflowing.

So it’s not about city people fleeing the capitals. It’s about regional people avoiding the capitals.

But otherwise it’s true. The regions have been outperforming. It’s not often that you see stronger price growth in the regions than you do in the capitals (with Sydney already growing close to 20%pa mind you!) but that’s what we’ve got.

A combined regional growth of 19.6% is epic.

It’s one for the history books.

But then there are just so many things about this boom that make it special.

JG.

RBA: “Housing boom is not our problem”

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The RBA is making it very clear – the boom rolls on.

So the RBA Governor Phil Lowe gave a speech last week where he schooled markets on just what’s going to happen with interest rates.

Basically, markets were pricing in a rate hike sometime in the next twelve months.

He reckons they’re dreaming.

Reserve Bank of Australia governor Philip Lowe is challenging market expectations for interest rate increases before 2024, and has pushed back against suggestions that rate rises and tougher lending standards can be used to quell rocketing house prices.

The market was pricing in the cash rate to rise from the current 0.1 per cent to 0.25 per cent by the end of 2022, 0.6 per cent by the end of 2023, and 1 per cent by the end of 2024.

… He said the delayed recovery meant wages growth would take longer to hit the 3 per cent mark the central bank believed was needed to drive inflation sustainably within its 2 per cent to 3 per cent target band.

“Our judgment is it will take some time for wage increases to lift to a rate that is consistent with achieving the inflation target … this judgment stands in contrast to the expected path of the cash rate implied by market pricing.”

“These expectations are difficult to reconcile with the picture I just outlined, and I find it difficult to understand why rate rises are being priced in next year or early 2023,” Dr Lowe said.

Seriously. What’s wrong with you guys. Rate hikes aren’t on the table to 2024 at the earliest. It’s like you guys aren’t even listening.

He also made it clear that the RBA is taking no responsibility for the housing boom, even though it was actually the RBA’s fault.

Basically, it’s Canberra’s problem now.

On house prices, the RBA governor said he wanted to “make clear” it was not on the bank’s agenda to use interest rate increases to slow booming house prices, which are expected to grow by upwards of 20 per cent this year.

“While it is true that higher interest rates would, all else equal, see lower housing prices, they would also mean fewer jobs and lower wages growth,” Dr Lowe said, citing the importance of low-interest rates to business growth.

“This is a poor trade-off in the current circumstances.”

“While monetary policy is contributing to higher housing prices at the moment, the way to address these concerns is through the structural factors that influence the value of the land upon which our dwellings are built.

“The factors include: the design of our taxation and social security systems; planning and zoning restrictions; the type of dwellings that are built; and the nature of our transportation networks.

“These are all obviously areas outside the domain of monetary policy and the central bank.”

Yup. Low interest rates cause house prices to boom. But it’s not our problem.

Sorry, not sorry.

Let the boom continue.

JG.

No BS: Your mission or your money. Choose!

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No B.S Friday: Most people think they need to solve two problems with one solution.

I’m thinking about making friendship bracelets out of leather and selling them at the markets (when they open up again.)

I’ve got a passion for it. I like working with my hands. I like the feel of the leather. I like interacting with happy people in a craft market context.

It’s a lifestyle choice really.

I told a friend of mine. Do you know what he said?

“Jon, that’s crazy. That is such a difficult way to make money. It will take up lots of your time. It’s impossible to scale. Chinese producers will monster your margins. The market is really fickle depending on the weather…”

“It will be incredibly difficult to turn that into a viable career.”

And he’s right. Deciding to become a professional friendship bracelet maker would be an incredibly difficult way to make a living.

And is that going to stop me?

Nup.

Why?

Because I’m made all ready. I’ve got a fortune behind me already. It doesn’t matter if I don’t sell a single bracelet. It’s not going to touch me.

I am completely free to follow my passion for bracelet making because I don’t have to make it work financially.

My money gives me freedom.

And there’s something I do that I know a lot of people don’t do when they’re starting out.

I separate my money and my mission.

I see them as two separate things.

When you look at what a good life is, it’s solving two problems. The first problem is how do I survive? How do I gather the resources I need to get by? I call this the money problem.

The second problem is how do I create a life that’s enjoyable to live? How do I find a way to live with meaning and purpose and joy?

I call this the mission problem.

Now, it’s important to recognise that these are two distinct problems.

Most people try to treat them as if they were a single problem.

I love baking cakes (mission problem), so I’ll set up a cake shop (money problem).

I love being fit and dancing (mission problem) so I’ll become a dance teacher (money problem).

I love helping people (mission problem) so I’ll become a therapist (money problem).

The trouble is that most mission solutions are terrible money solutions.

Like friendship bracelets. It’s a perfectly lovely solution to the mission problem. It’s a terrible solution to the money problem.

So what I would encourage everyone to do is to keep these problems separate in your mind – you need money and you need to have mission – but they don’t need the same solution.

And the reality is that if you find a way to solve the money problem for good – and this is what wealth is – a permanent solution to the money problem – then you are completely free to follow your passions.

And your passions can be whatever they want to be, without feeling the pressure to make money as well.

Keep your money and your mission separate.

Then you’ll be free.

JG.

Fearful sellers + desperate buyers = BOOM!

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Nothing’s going to take the heat out of this market.

All my ears on the ground are telling me the market is scorching hot right now. Even here in the lockdown capital of Melbourne.

I’ve been hearing this from a few sources. But it’s also no secret. The AFR was running a story on the weekend about desperate homebuyers knocking on people’s doors, begging to buy their houses:

Families desperate to buy before house prices rise even further have resorted to knocking on doors in locked-down Melbourne to circumvent the state’s ban on inspections.

This is according to the country’s biggest real estate agency, Ray White, who noted the trend as two out of five auctions in Melbourne were withdrawn over the past week by nervous vendors, exacerbating already low listings levels, fuelled by previous lockdowns.

Ray White Victoria and Tasmania chief executive Stephen Dullens said “red-hot demand” from buyers and an extended ban on inspections in Melbourne (in contrast to Sydney where private one-on-one appointments are allowed) was starting to create unforeseen issues.

“With the lockdowns in Melbourne continuing to extend, we’re seeing more and more customers becoming desperate with an urgent need to buy, sell or lease property,” Mr Dullens said.

“Across the industry, concerningly, we are seeing more and more examples of customers taking matters into their own hands.

“We have many examples where prospective buyers have knocked on the door or written notes to sellers, pleading for access to their homes. This occurs after being advised by the sales agent that an inspection isn’t possible.”

Mr Dullens said this led to the risk of the creation of an unregulated environment.

“An environment where surfaces aren’t cleaned, social distancing isn’t maintained and contact tracing isn’t possible, presents a substantial health risk to the community,” he said.

Highlighting the heightened demand and limited opportunities to buy, more than half of homes due to go under the hammer in Sydney and Melbourne this week sold prior to auction.

Yeah, ok. I reckon the real estate agents are worried about ‘unregulated’ sales because there’s no commission or auction fee if an agent isn’t involved. But still, the point stands.

Demand is hot right now.

You can see this is the search data as well. Realestate.com.au publish data on search activity on the website.

It shows that the number of views per listing of properties for sale on realestate.com.au, hit an all-time high in August, ahead of a delayed spring selling season in locked-down markets:

So we’ve got a perfect storm here. Demand is strong, but lockdowns are keeping supply from the market.

The total number of listings on the market right now is a full 30% below normal levels.

And when you get demand like that and supply like this you get…?

You guessed it.

Boom!

JG.

No BS: why marriages fail

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No B.S Friday: I feel sorry for young people these days…

Ok, I’ve got some marriage advice for you.

No, I know you didn’t ask for it. But neither did that guy on the internet, and here we are.

I’m not sure why I feel qualified to dish out relationship advice now and then. I guess I am ‘successfully’ married – Connie and I are happily racking up the years. Most marriages don’t last as long as ours has these days.

So you know, don’t take wealth advice from someone who’s poor. Don’t take marriage advice from someone living alone in a flat above a shop.

And I also feel like it’s pretty obvious where I’m coming from. I’m not sitting in a mumu on top of a mountain pretending to be some mumu guru, with some dazzling insight into the ultimate nature of reality.

I’m a guy in a baseball cap and a Merc. It should be obvious what you’re getting.

And so here’s my advice.

Stick with it.

Just stick it out.

In a way I feel sorry for our younger generations. They just have so much choice. Total personalisation is the norm. Every app, every consumer good should be totally customisable. Of course you should choose the colour that matches your distinct personality (provided your distinct personality gels with one of these six pastels.)

We’re taught to cut the cloth to fit the man, change the good to fit the consumer. This is the way it works. If the things not working, the thing needs to change.

And this is great if you’re buying a phone, but not if you’re choosing a life partner.

And a life partner is a journey, it’s a road. It’s not a one-off consumer good.

Sometimes the road will lead through sunny vistas and pleasant breezes. Sometimes it will lead through shady bogs that skirt the sewage treatment plant.

That doesn’t mean the road is wrong. Maybe it just means ‘keep going’.

Because the instinct to ‘find the perfect thing’, when applied to a life partner, can have us chasing our tails looking for that “perfect” partner.

It can have us thinking the thing needs to change, when what needs to change is our relationship to the thing – our relationship.

And a relationship is something that builds over time. Every year you spend shopping around is a year you didn’t spend cultivating and building your relationship into something beautiful.

And I think everything is like this. Don’t spend your whole life shopping around for a career, when the more time you spend in a career the higher up the tree you go. Don’t spend your whole life shopping around for the right investment strategy, when time on the tools is the best way to learn how to get great results,  no matter what you choose.

Time is an incredible tool. Just ask old mate compound interest.

So that’s my advice to young people. Stick it out. There’s limits to that idea of course. But stick it out. Give it a crack. Put in the time.

Because time is the great creator of all things.

And you need it on your side.

JG.

Shock! Brutal times for busy builders

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Builders are busy, but busy does not mean profitable.

Why are builders going bust in the middle of a boom?

No, that’s not a set-up for a joke, or if it is, I’m not seeing the funny side. Business Insider last week was reporting that the industry is getting set for a ‘biblical’ bust, with as many as 60% of builders already losing money:

From the outside, the construction industry would appear to be making hay while the sun shines.

The hugely popular HomeBuilder program, handing out $25,000 grants to eligible Australians, has helped fuel record demand for building and renovation projects.

The pipeline of work is so significant that many builders have the next 12 months booked out entirely, with prospective clients having to work just to find somebody ready to break ground.

But despite the apparent gravy train, the industry says it is heading off a cliff.

“It is a perfect storm,” Russ Stephens, cofounder of the Association of Professional Builders, told Business Insider Australia. “Excess demand is creating shortages that are destroying any net profit builders were expecting to make.”

Material shortages and skyrocketing prices mean builders are now paying top dollar for timber and other resources, as construction inflation flirts with 25%. Government grants have ironically only “poured fuel on the fire”, as a global timber shortages bites.

At the same time builders are forced to navigate state-wide lockdowns and other pandemic disruptions. Two in five workers are still prohibited from work under tough restrictions implemented in Sydney’s south-west, while $6 billion worth of projects in affected LGAs remain frozen indefinitely.

“Builders are literally busier than they’ve ever been, in a lot of cases running four or five times the workload they would have previously…they’ve never seen anything like it,” Stephens said. “But it is just leading to this nightmare scenario where they are constantly needing to reschedule.”

Stephens estimates as many as three out of every five construction companies is currently making a loss, whether they know it or not.

“Most don’t even realise it, because they sign fixed price contracts ahead of time that don’t account for unforeseen costs. The longer these jobs go on, the bigger the blowout becomes,” he explained.

“A job might be meant to run for seven months but will run for nine. That is weeks of extra scaffolding, fencing and toilets. It is weeks of vehicles, offices, and supervisors while you’re not able to take on new jobs. That is what catches a lot of guys out.”

I’m hearing similar stories on the ground too. Busy does not equate to profitable.

And where does this leave us mid next year?

With the building industry under strain, are we going to be talking about bringing even fewer homes to the market?

Are we going to be talking about falling supply?

Are we going to be talking about falling supply just as stimulus programs, money printing and record low interest rates cause a surge in demand?

And if supply tanks while demand surges, what happens to prices?

You see where I’m going.

JG.

The GDP boom before the storm

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Last week’s GDP data hides a funny quirk.

So the Aussie GDP data was out last week and it was a bit of a funny one.

Seems the government wasted a lot of money on vaccines nobody wanted, and that gave GDP a boost that nobody saw coming.

Lol.

No, on the whole, the results were ok, in that the economy didn’t go backwards as some people were expecting.

At 0.7% in the quarter, it surprised to the upside.

But that also tells you how far expectations had fallen. Three months ago everyone was gearing up for the long-boom.

With over half the country in lockdown, those happy days are gone.

And the September quarter, which we’re living through right now, is probably going to be a bit of a shocker.

But for the meantime, the data still tells a happy story. GDP is still 1.6% higher than it was pre-Covid. We’re still making ground.

And it tells a story of an economy in a relatively strong position, entering a very challenging period.

Most analysts seem to think we’ll drop big-time in September, but then get back on track by December.

But the key stand-outs from the latest release for me are:

Vaccine hesitancy saved the economy

Of the 0.7ppts of growth, 0.5pppts came from “other inventories”.

Of that, 0.35ppts came from public authorities, which is most likely the stock-piling of vaccines and other medical supplies.

We might have piles of vaccines that people don’t want, but it gave us a good growth number in the quarter.

The infrastructure boom continues

There was a 7.4% surge in public infrastructure spending, driven by state and local governments, which by itself accounted for more than half of the growth in quarterly GDP.

A 1.3% increase in other government spending accounted for the other half, which had a focus on health and stimulus.

Businesses are still booming

Business investment was up a strong 2.3% in the quarter. Business conditions are still bully. The June half earnings reporting season saw listed company profits rise nearly 50% last financial year, with 75% of companies seeing profits up.

But the big positive was a huge return of capital to shareholders – with 89% of companies raising or maintaining dividends driving a record dividend payout of nearly $40bn and over $20bn in buybacks.

It’s a good to be in, or own, business.

Households are still flush

With the economy largely lockdown free during the June quarter, household spending jumped 1.1% in the quarter, with domestic tourism up 28%!

The savings ratio fell, back towards more normal levels (although this was more about household incomes being stronger than expected than it was about households saving more.

Whatever the case, a long period of above-average saving has left Australian households with a savings warchest of around $200 billion! The latest data shows that $25bn was added in June alone.

The big question that everyone wants to know, is what are households going to do with all this money once the economy opens up again?

So on the whole, the picture that emerges is one of an economy doing pretty well, and set up as well as you could hope for, going in to lockdowns.

But how things play out from here?

That’s still anybody’s guess.

JG.

No BS: Why the Covid war make us nervous wrecks

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No B.S Friday: This is why the Covid arguments make you nervous.

I was talking to a friend the other day, and she admitted that Covid was making her a nervous wreck. She was losing sleep over it.

And it wasn’t that she was worried about getting the virus, or worried that it might be a totalitarian power play dressed up as a virus.

No, what was stressing her out was how divided her community had become.

Her social and family circle (and I’m not talking about her Facebook feed which is even worse) had polarised.

People had set up in both camps. Pro-vax, anti-vax.

She was pro-vax herself – which is actually a funny way to say it. She’s not pro-vaccinations for the sake of it. She sees it as a really difficult choice that we have to make to avoid the worst affects of the pandemic. She’s not a cheerleader for Pfizer.

But she’s in that camp, and she’s now wondering if she can even be friends with the friends that have ended up on the other side of the fence.

And it’s not that she has anything against them. She does worry about creeping police powers too. But it just doesn’t seem like there’s room for conversation.

It’s a war and in any war you have to choose sides. Only Switzerland has the luxury of remaining neutral.

But as I said, we’re not talking semi-randoms on Facebook here. We’re talking about people that she’s known for 20 years.

And she lays in bed at night worry about it.

And I get it.

We’re a herd species. We instinctively gather into tribes for safety and connection and grooming. I don’t think lone-wolf humans really thrive that well.

And so we instinctively start to get very nervous if we’re cut off from our tribe. The tribe gives us our sense of safety in the world, and without it we feel a lot more insecure.

And when our tribe starts fighting – when we feel that those relationships we’ve spent 20 years cultivating might no longer be able to help keep us safe – it hits us deep in the nervous system.

It becomes very hard to relax.

(As I’m writing this, I’m wondering if there might be a gendered dimension to this. In times of danger, women invest in relationships, men invest in semi-automatic weapons. But I have learnt that I’m better off not talking about this kind of stuff.)

And from what I’ve witnessed, the Covid and Vax issue cuts across all sorts of political and social lines. I’ve seen nurses who are passionately anti-vax. I’ve seen mung-bean eating hippies posting selfies from the Vax clinic.

In a time like this, it’s hard to know where our tribe is.

And when we don’t know where our tribe is, like a monkey lost in the forest, we get anxious.

That’s what I reckon’s going on for a lot of people right now.

But I think it helps to name it. It helps to name and understand our anxiety.

And I think we can speak to it. Although this topic is a heated one, people are still fundamentally good and loving, no matter what they think, and through the mist of this confusion, our tribe’s still there.

And what to do?

Get off facebook. Stop looking at what people post in the heat of the moment.

Get on the phone and have a chat.

As always, the antidote is real, genuine connection.

Connection soothes the troubled monkey.

JG.

‘The advice that cost me $300,000’

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I do the sums on how much the wrong advice would have cost you.

You know, things are so big and moving so fast that’s it’s hard to keep track of things.

It’s amazing to think that just 18-months ago, all the banks were talking about double-digit price declines. CBA said falls of 32% were even a possibility.

Did it happen?

Nup.

Now prices are what, up 20% or there abouts. With no sign of slowing down yet.

So imagine if you listened to them.

Or imagine if you listened to Harry Dent or Martin North. These guys, like a broken record, have been predicting a property “crash” for close to 15 years now.

There’s always people who want to believe them. There’s always people who will buy the books or attend the seminars.

“How to Prepare for the Great Crash of 2005 2010 2014 2018 2022.”

(Any day now. No, totally. Any day now.)

Imagine if you had listened to them.

And this isn’t an academic question. People had money on the line.

Imagine if you sold out of the market, like Martin North did, selling his Surry Hills apartment in 2005 for a couple of beans and a button.

Imagine if you sold out.

Or imagine if you didn’t buy. Maybe you were ready to get in the market, and then saw that the great crash was coming, and decided to sit on your hands.

Where does that leave you?

Well, depending on which capital city we’re talking about, probably down about $300,000. Something like that.

That’s real money. We’re talking real money.

It’s real money real people don’t have in their pockets because they listened to the ‘experts’.

It was the same story in 2011. Robert Kiyosaki – the author of ‘Rich Dad, Poor Dad, Terrible Property Investor’ was in Australia, saying that Aussie property was overvalued and set for a significant question.

Poor ol Dymphna Boholt had to follow him on stage and explain why this super-star was wrong.

But he was wrong. Way wrong.

Imagine if you got out in 2011 and stayed out. Where would that put you.

Down a million bucks or something?

Instead, imagine if you had listened to Dymphna in 2011 and bought into the Sydney market.

With her strategies behind you, your net worth would have to be up about $2-3 mill at least by now.

Or imagine you came to one of our events last year, and listened as we laid out the case for what was going to happen – the record low interest rates, the money printing, the massive stimulus and infrastructure program.

We laid it all out.

The boom in household income and savings, the mortgage holidays, the rebounding consumer confidence.

We laid it all out. And we said what was going to happen.

There’d be six months where prices would pause, or maybe retrace a little.

And then all the easy money would kick in and things would boom.

And I think there’s enough data up on the scoreboard to say we were right.

It happened much as we predicted it would happen.

And where would that have left you, if you’d listened to us?

Up about $300 grand on my maths.

JG.

Revealed: What the Doherty Report ACTUALLY says

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Scratch the surface and the Doherty model looks pretty bodgy

So more and more we’re hearing about the ‘Doherty Modelling’. It seems our fate hinges on how the Doherty Institute says we should play the end of lockdowns.

I’d never heard of them so I had to look it up. The Peter Doherty Institute for Infection and Immunity (it’s full name!) is a collaboration between the University of Melbourne and The Royal Melbourne Hospital. It’s named after Peter Doherty, an Aussie champion who won a Nobel Prize in 1996 for discovering how the immune system recognises virus-infected cells.

(There you go.)

And the government asked Doherty to model what would happen if they wound back lockdown restrictions under different vaccination rate scenarios.

(This is important. The government commissioned – and paid for – this report.)

And what did the Doherty Model tell us? Well, if you believed the politicians, it said that we SHOULD open back up once we get to 70-80% vaccination rates.

That’s how it was sold. On the 19th of August, Premier Gladys Berejiklian said in the NSW daily update “as the Doherty Report says once you get to 80% double doses and you have to open up”.

You HAVE to open up.

Crikey.

On the 23rd of August Prime Minister Morrison said in Parliament “The plan as we set out very clearly about…that when we reach 70%, and we reach 80%, we can move through to phase B of that plan, those marks have been set by the Doherty analysis that was undertaken Mr Speaker”.

Only trouble is, the Doherty Report didn’t say that. The Doherty Report didn’t not say that either. All it did was model what would happen under the scenarios the government gave it, using assumptions the government gave it.

Now I haven’t actually read it. I’m a busy man. But I know a guy who has – Matt Barrie, the CEO of Aussie tech darling Freelancer.com.

He gives us a pretty brutal dissection of the report. It’s worth reading. But the key takeaways for me are:

Doherty only models out to 180 days

There doesn’t seem to be a good reason for this, other than perhaps that it takes us right up to the next election, and not beyond.

But as a result of the 180 day cut-off (which the government asked for), some of the charts look pretty ridiculous:

It also means that our totals are, in Barrie’s words, “garbage”, because in many cases they stop counting just as cases and deaths start to rise.

Doherty assumes unlimited ICU capacity

The Report notes that “ICU admissions [assume] unconstrained capacity, even when national thresholds are anticipated to be reached or exceeded”.

To “open up” under the Doherty modelling, even at 70%, Australia would have to double ICU capacity.

But it’s not just a case of rolling in another bed. Each ICU bed is manned by the equivalent of five full-time registered nurses across eight-hour shifts, 24 hours a day, seven days a week. Approximately half of these nurses need to hold a postgraduate qualification in critical care nursing.

Grattan Institute health economist Stephen Duckett has said “When we hit a trigger point of 12,000 new cases every day, then we know that we will hit ICU capacity shortly after if new cases continue to grow”.

The Doherty modelling assumes new cases will reach at least 55,000 per day.

That looks like a problem to me.

Doherty assumes perfect TTI+Q

The “test trace isolate & quarantine”(TTI+Q) assumed in the modelling is based upon the performance of the Victorian public health response at the height of the ‘second wave’ in 2020.

These cases peaked at 700 per day.

In the Doherty modelling the cases peak at over at least 55,000 a day, and could even get up to 120,000 a day.

The assumption that public testing, tracing, isolation & quarantine can perform at the levels Victoria performed at 700 cases a day is fantasy.

Even on the latest outbreak in NSW, tracing seems to tap-out at just 200 cases, with everything above that “unspecified”.

The quarantine program is not with out its problems either. Currently we’ve had one breach for every 67 infected, with only a few thousand travellers to work with.

That doesn’t inspire confidence.

There is no ‘freedom’

Even taking the assumptions at face value, Doherty modelling shows lockdowns occurring 80–273 days a year. That’s 3-9 months of the year!

Is that the freedom we’re aiming for?

Doherty assumes vaccines are incredibly effective.

The Doherty Report assumes a massive (90+%) drop in transmissibility with a double-does of the vaccine.

But there is no international evidence for such a high effectiveness rate.

If this was even remotely close, new daily infections in the US, UK and Israel would be well under control by now. They are not.

Indeed in Israel, case rates have climbed almost as quickly among people with two doses as among the unvaccinated.

So look, like Barrie, I don’t think Doherty is doing anything dodgy here.

They’re just crunching the numbers on the scenarios the government gave them, using the assumptions the government gave them.

That these assumptions are completely ridiculous is not on Doherty.

It’s on the government.

As Barrie says,

“Abdication of leadership to reliance on a modelled scenario is simply a way to blame someone else if it all goes pear shaped, which the Doherty Institute appears all too happy to play along with, either because it is a captured entity or doesn’t see what is coming.”

Yep, in 180 days our politicians will be saying, don’t blame us, blame the models.

Weak as piss.

JG.