Loop follies. California’s over budget railway. Italy’s Prime Minister.
Wry & Dry: a cynical and irreverent review of the week in politics, economics and life. For intelligent Readers who disdain the trivial.
Investment Matters
Company profit season continues. Craig provides deep dives on:
- Sandfire
- Woolworths
- Aurelia Metals
…with snapshots on Nanosonics, EarlyPay, Bapcor, Paragon Care, Integral Diagnostics, Worley, Independence Group, and Santos.
For the more complete picture, read this week’s Investment Matters here.
Wry & Dry’s ponderings…
Premier Carroll’s Sargeant Schultz defence, against everything. California is also having railway budget problems. Italy’s PM breaks a new record. Why are there no potholes in WA’s roads? Lake America. Cigar box lids.
1. Loop follies
Newbie Premier Carroll says he has found $1bn in savings to save his government’s planned Suburban Rail Loop. That’s a mere 2.9% of the original budget. Really? Inflation is running at over 3%.
And Wednesday’s report from the state’s Auditor-General found that the $34.5bn budget was ‘more likely than not’ to be blown apart and the project not be delivered on time (2035). Not to mention the secret 1% tax on all public transport fares since January 2025 to help fund this white elephant. Carroll was both Public Transport Minister and Deputy Premier during this period and is using the Sargeant Schultz defence1 against claims of prior knowledge.
Carroll’s planned 2.9% budget savings has been achieved by planning to remove the two things that would have made the SRL actually usable: the interchanges connecting it to the existing train network. Commuters will now emerge from an underground SRL station, cross roads in a Melbourne winter and several lanes of traffic, and descend into another station.
Carroll is now asking passengers to play chicken with cars dodging to avoid car-swallowing potholes between adjacent stations. This is public transport designed as an obstacle course. And surely epitomises this government.
But Carroll insists this is “common sense without the bells and whistles.” Bells and whistles apparently now including getting from one train to another without a jaywalking penalty.
Two tunnel boring machines remain underground somewhere in the south-east of Melbourne, too far gone to reverse, guaranteeing Victoria a railway line engineered less around commuters than around the impossibility of admitting a $34 billion mistake.
1 “I know nothing.” Sargeant Shultz was a German prison guard in the television series Hogan’s Heroes.
2. Straight line follies
Speaking of incompetence, Californians voted for a bullet train between Los Angeles and San Francisco in 2008. About 53% of voters thought it was a good idea. That sentiment may have, well, shifted.
Y’see, eighteen years later, the $33bn budget has ballooned to $231bn (sound familiar), with $15bn already sunk, and there is still not one centimetre of usable track. What does exist is an impressive collection of overpasses and concrete walls rising from the planned route; essentially the world’s most expensive abstract sculpture garden.
Victorians will find this oddly comforting. The state’s SRL has already achieved comparable dysfunction in just a third of the time, proving Melbourne doesn’t need decades to fail spectacularly; efficient incompetence is a local specialty.
Both projects share the same business model: spend billions, build concrete, promise trains “eventually,” and let future taxpayers discover what “eventually” means.
3. Long service, hard station
Giorgia Meloni is about to become Italy’s longest-serving postwar prime minister. A genuinely remarkable achievement in a country that treats governments the way most people treat gym memberships: enthusiastically acquired, rapidly abandoned.
Beating Berlusconi’s 1,412 days by a single day is either a triumph of stability or proof that Italian politics has simply run out of scandals interesting enough to topple her, which given Berlusconi’s low bar, is saying something. Readers will remember his ‘bunga bunga parties’.2
Meanwhile, the media have crowned Meloni “Her Majesty Queen Giorgia,” a title dripping with the kind of respect usually reserved for monarchs nobody voted for and can’t easily remove.
Longevity, it turns out, is the one metric Italian politics rewards regardless of results: outlasting your predecessors counts as success.
2 Silvio Berlusconi, was Italy’s three-time prime minister, who died in Milan, aged 86. He was a conservative media impresario, AC Milan owner and sometime cruise ship crooner, Berlusconi dominated Italian politics and public life for almost 20 years as the leader of centre-right parties. His final years in office in particular were marred by allegations of corruption and sordid tales of so-called “bunga bunga” sex parties being staged at his lavish Villa San Martino ion the outskirts of Milan.
4. Who luvs ya, baby?
The below chart is somewhat misleading. It shows the change in net trust Australians have in significant institutions. Hats off to the RBA.
What it doesn’t show is the actual net level of trust. So, whilst the level of trust in the criminal justice system has improved (clearly Victorians were not surveyed), its net trust rating is -9%, Australia’s lowest. Note that the Senate and the House occupy rungs just above it.
The most trusted organisations are, in order, CSIRO, the BoM and the Electoral Commission.
Explanations for the general decline in trust are plentiful, although BoM’s decline is probably caused by its inability to get the weather to agree with its forecasts.
5. Why there are no potholes in Western Australia
Uncle Albo has responded to the Productivity Commission’s blunt verdict on the current GST-distribution formula to the states.
The formula gives significant extra funds to Western Australia.
The plain language verdict was that the formula was “a costly mistake” that should be unwound.
Uncle Albo has responded the way any unprincipled leader would: by looking at the electoral map and quietly filing the report under “problems for future prime ministers.” As did his predecessor, Miracle Morrison.
Uncle Albo could have sacrificed a little of Labor’s 55.8% of WA’s two-party vote, where most Labor-held WA seats are now comfortably safe, several sitting on double-digit margins to obtain a fiscally responsible and fairer outcome. But Readers know that Uncle Albo is a stubborn man.
Wry & Dry has done the maths on this, since nobody in government seems inclined to. WA receives an extra $6.6 billion per year above what the pre-2018-Miracle-Morrison-let’s save-four-seats formula would deliver. Divide that by the roughly 892,635 Western Australians who voted Labor two-party-preferred at the 2025 federal election, and you get approximately $7,394 per Labor voter.
Naturally, no individual WA voter receives a cheque; the money flows into the state’s coffers and premier Cook’s re-election prospects. But as a measure of political return on electoral investment, it’s extraordinary: Uncle Albo is effectively paying $7,394 for each WA Labor voter, annually, to keep 11 of WA’s 16 lower house seats content and quiet. A subsidy so generous it makes negative gearing look like loose change.
Compare that to the additional $450-per-taxpayer national cost of “no worse off” top-ups to the other states and territories, and the picture sharpens: everyone else chips in a modest, largely invisible contribution, while WA collects a jackpot dressed up as fiscal equalisation.
It’s less a funding formula than a loyalty program. And it works: there are no potholes in WA’s roads.
6. Lake America? Really?
Trumpster is bored. He needs a distraction from Ukraine, Iran, inflation, China, North Korea, etc. So, he’s slapped tariffs of 50% on some Canadian goods.
In a fit of eco-nationalism, Canadian PM Carney, driven to the brink of politeness itself, has retaliated with tariffs of up to 50% on frozen octopus, chainsaws, and processed cheese — a target list so specifically petty it reads less like trade policy and more like a very passive-aggressive grocery boycott.
Trumpster, for his part, responded with characteristic proportionality: renaming Lake Ontario “Lake America,” presumably the diplomatic equivalent of graffiti-ing someone else’s property.
The reasoning is vintage Trumpster: since the deepest part of the lake sits in US waters, America “claims most of the Lake’s volume” — a legal doctrine last seen in a toddler dividing a shared bathtub.
Having already rebranded the Gulf of Mexico last year, he now muses aloud about renaming the Atlantic and the Pacific too, apparently under the impression that geography is real estate he simply hasn’t gotten around to putting his name on yet.
This is a man who governs the world’s most powerful nation by scorekeeping: insulted by a Canadian politician, he retaliates against a lake.
7. The big issue in the UK: cigar box lids
Britain’s puritan revival marches on: the Labour government wants to strip Havana cigar boxes of their labels, apparently on the theory that a well-dressed box, not the actual tobacco, is what’s radicalising Britain’s youth.
Winston Churchill’s grandson calls it “idiotic,” which is generous given his grandfather smoked roughly a quarter-million cigars in his lifetime and still managed to defeat Hitler.
Cuba, Honduras and the Dominican Republic, nations rather more dependent on cigar exports than Britain is on plain packaging, have spent two years writing increasingly frustrated letters to whomever calls Downing Street home, only to be fobbed off to a junior minister.
Their argument, reasonably, is that a Cohiba isn’t a Marlboro. The government’s counterargument: tobacco is tobacco, evidence be damned.
Cigar merchant James J. Fox, trading since 1787, now faces extinction not from bad cigars but from bad branding law.
Next up, presumably: plain-label Scotch, unmarked gin bottles, and a stern warning label on the Ritz’s champagne trolley.
8. Midterm election update
Readers will know that the US mid-term elections are held on the first Tuesday after the first Monday in November. Which this year is Tuesday 3 November. Every House seat and 35 of the 100 Senate seats are up for grabs. Essentially to the highest bidder.
If the Republicans lose both chambers, Trumpster will be a “lame duck.” Which, if nothing else, will give cartoonists content to last the remaining two years of his term.
Democrats need a net four-seat pickup to seize the Senate — modest math, made messier by their own candidates. One imploded under sexual assault allegations. Another must explain his association with a commentator who said America “deserved 9/11;” words conveniently (for Republicans) spoken just before the anniversary.
Yet Trumpster remains the Democrats’ best asset: 34% approval, an Iran war driving up fuel prices, and a map of flip-state-possibles now stretching into ‘red’ (i.e. Republican) states.
Senate betting: Democrats at $1.72, Republicans at $1.83.5
In the House, Democrats need to ‘flip’ just net five seats to gain control. But many of its primaries have gone seriously leftward. As Wry & Dry noted recently, Americans hate socialists more than they hate despots.
But voters may overlook one or two 1960s evolutionary throwbacks in the House. Trumpster doing his best to sabotage his own party remains a winner for Democrats.
House betting: Democrats at $1.12, Republicans at $5.00.3
Has Trumpster sabotaged his own party’s? Largely yes, but perhaps just not quite enough to save Democrats from nominating their own liabilities.
3 Source: Sportsbet.com.au.
Snippets from all over
CIA goes to Moscow
Details continued to emerge about a meeting that the head of the CIA, John Ratcliffe, had in Moscow earlier this week with Russian officials, including reportedly the intelligence chief, Alexander Bortnikov. Mr Ratcliffe apparently discussed the war in Ukraine and pressed Russia to strike a deal. (The Times 28 August)
Wry & Dry comments: Trumpster wants good news before the midterm elections.
Qatar meets Iran
Qatar’s prime minister visited Iranian officials in Tehran—part of wider efforts to revive a dialogue between Iran and America. (Economist 28 August)
Wry & Dry comments: It will take more than one meeting.
Nvidia’s new record
Nvidia reported record quarterly sales of $96bn and profits of almost $60bn, up 106% and 126% respectively from a year ago and beating analysts’ forecasts for a 15th straight quarter. (Financial Times 27 August)
Wry & Dry comments: Nice work, if you can get it.
More sanctions
Scott Bessent, America’s treasury secretary, threatened to expand secondary sanctions against Iran’s trading partners, targeting sectors such as digital assets, technology, gold, aviation and shipping. Calling the plan “Operation Economic Outcast”, he said Donald Trump was asking world leaders to “cease their interactions” with Iran. (Economist 26 August)
Wry & Dry comments: This must be Plan F. Or is it G?
UK to boost Ukraine’s missile production
Britain has agreed to give Ukraine classified blueprints for a long-range missile that can strike deep behind enemy lines ahead of Andy Burnham’s first visit to the country since becoming prime minister. (The Times 24 August)
Wry & Dry comments: “… deep behind enemy lines…” means “on Tsar Vlad’s front lawn.”
It figures
- 3.5%: Australia. Inflation in the year to July, down from 3.8% in June. But well above forecasts. Be prepared.
- 1.9%: Japan. Inflation in year to July, up from 1.6% in June.Interest rates may rise from current 1%.
And to soothe your troubled mind…
“We’re into some real foolishness now. It’s Lake Ontario, buddy.”
Tim Houston, premier of Nova Scotia, in a social media post.
Wry & Dry comments: Real foolishness began on 5 November 2024.
Disclaimer
The comments in Wry & Dry do not necessarily reflect those of First Samuel, its Directors or Associates.
Cheers!