This is Business Weekend with Ross Greenwood.

Hi there and welcome the Business Weekend.

I'm Ross Greenwood.

It's great to have your company today.

Coming up on the program.

Markets this week reached an inflection point.

On one hand, there's the bright and prosperous future and world full of data centers, GPU computer chips and generative artificial intelligence.

But they're also real concerns about the amount of money being spent to get to that bright new future and whether it will ever be repaid.

Today we'll hear from the Nvidia.

CEO, Jensen Wang, and Australia's leading tech investor.

People are starting to sort of their hairs on fire about the whether the capex of a trillion dollars is going to be serviced by the revenue that comes in, and everyone's kind of going, it's just all getting too hard right now.

I don't know what to think about this.

And the other concern for markets is the future direction of interest rates is not just here where a supposed string of interest rate cuts is now in doubt, but in America as well.

The problem is a lack of productivity now a handbreak on how fast our economy can grow, and that's a rising problem for the Albanasy government.

The answer is will productivity is week, So we just can't deliver enough supply to meet stronger demand, and that's showing through in the inflation numbers we've got.

Plus, the world's airlines are all gearing up for non stop travel to every.

Corner of the earth.

It doesn't matter whether it's.

QUANTUS Middle Eastern airlines, not the least being a new.

Luxury national carrier called read Air.

Will Today we speak with the chief executive of one of the world's biggest airlines, Cathe Pacific, which is also expanding fast the win it's share of global travel.

And over the last three years actually we've committed well over one hundred billion Hong Kong dollar into the future in building the Hong Kong International aviashre Hub.

So all that and plenty more coming up on today's program.

But look, let's start.

This week with our economy and the International Monetary Fund this week laid down a challenge to our government to impose more budget discipline and to reform the tax system.

But don't hold your breath.

It's not unusual for the IMF to put forward different ideas, and it's not unusual for the government to say we don't agree with all of them.

We don't agree with all of the proposals put forward in the IMF report around the GST or some of these other tax matters, but we are cutting income taxes three times, we are introducing a standard deduction to provide a little bit more relief but also to simplify the system.

Well, the Treasurer and there's no surprise here, he's a master out of He's fund the reporter as an endorsement of the government's policies.

Now it is a fact.

In fact reforming the economy.

That's what he said.

The truth is it's doing nothing of the sort.

The government's willingness and for this read the Prime Minister's willingness to generally reform the economy has created a handbrack on our ability to afford the government's spending in other areas of social reform.

The problem is, the IMF clearly points out, is that Australia is forcing upon itself lower than normal rates of economic growth.

And potentially higher inflation.

So, in other words, if there's no interest rate cuts in the their term question the government about why it can't improve productivity and pick up economic growth.

That answer goes straight back to the lack of will.

To reform and to potentially make political enemies by rewarding companies and individuals who actually create.

Economic growth here in Australia.

Progressive socialism, you see, has a price, and we're right now all paying for that.

Paul Bloxham is the chief economist at HSBC in Australia.

For years he's urged governments of all persuasions to reform so change the dynamics of our economy along with the perils of doing nothing.

And I spoke with him earlier.

I think we're growing as fast as we can grow at the moment, and it's not particularly strong.

I mean, growth is not particularly strong.

The GDP print we got told us we're running it a little bit below two percent, but that may very well be close to the maximum pace that the economy can grow.

In the end.

Is well, productivity is weak, so we just can't deliver enough supply to meet stronger demand, and that's showing through in the inflation numbers we got, I mean, inflation picking up again before we've even had much of a recovery.

Is assigned that the supply side and productivity is the challenge.

Okay, so then what that says, though, is government spending has continued to grow much, much faster than what the economy is growing, and that quite clearly leads you to a budget problem going forward with bigger deficits and debts.

We know that they're forecast out for a decade and really an over reliance in many ways on payg workers keeping their jobs.

Well, that's right, so the budget's in deficit already, and I think the challenge here or there are multiple challenges.

One is, as you describe, there is too much spending relative to the amount of tax revenue that's coming.

So there are always three solutions to this problem.

You be the slow down the spending.

You find more tax revenue, and that's one way the system works because the tax system is not index so you move up tax brackets and get more tax revenue, or you grow the economy faster.

Now that is the best solution.

Lifting productivity is the way to solve all of these problems.

The challenge is, of course, we aren't doing much to lift productivity, and that's the challenge that's been set.

I think the other thing to keep in mind is the government currently is assuming actually the productivity growth will go back to its twenty year average now one point two percent in its budget, in its budget estimpers.

We'll see at the midyear fiscal update we get next month whether they're still assuming that, because it's very, very much higher than I think is reasonable and higher than what we're assuming and of course what the RBA is assuming now.

Well, see that's the thing.

We do get this budget update in December, the mid year Economic and Fiscal Outlook my ethos people call it.

But the reality is the forecasts in there are going to be key for inflation, for economic growth, for unemployment, and for productivity.

These are going to be the key ones to watch.

That's right, And I guess one of the big questions I have is is will the government continue to be assuming will the numbers continue to be that there is assuming one point two percent productivity growth, because that's what has underpinned the budget to this point.

But of course we're running at the moment.

I mean, if you look at productivity over the past year, it's zero.

If you look at what it's been over the past decade, it's running at point three.

So where does the one point two number come from?

And if you are factoring that in.

That's going to make everything look a bit better than actually it is.

The economy is operating at its full capacity already, and this, I think is the primary reason the RBA is unlikely to be able to cut interest rates any further.

If we want things to get better, we have to focus on productivity.

And the reason for that is because if the economy tries to grow any faster, or if they consider cutting interest rates, it's only going to push inflation higher simply because the economy is operating at capacity.

That's right, we're operating already at the fastest growth we can have capacityizations already rising.

The unemployment rate's still very low.

It's below what the RBA would call full employment.

If you want the economy to grow faster, don't.

The RBA can't do anything about that.

It's really all about fixing the supply side of the and that comes back to all those productivity related policies that we've talked about before.

Okay, so the major story of this week, which goes to the heart of productivity, is in video and these massive quarterly results that has put out.

But it wasn't just that that.

Impressed me, but it was also the presentation of its chief executive Jensen Wang about the future of the world in an AI generative AI place.

But then that is going to bring productivity gains.

So is this where the government might get some hope the productivity starts to improve as a result of these computer chips and they're great innovation.

Absolutely, so more use of AI is a pathway, a potential pathway for lifting productivity.

And that doesn't just of course come from government.

A lot of it comes from business's choices to apply AI.

I guess the challenge at the moment is that if you look at how much adoption there has been in Australia, we're actually lagging.

We're well behind other countries.

We're actually pretty slow in terms of that AI adoption story.

And so I guess this is an opportunity for us to move faster to adopting AI.

But at the moment it's not really contributing as much as.

It should be.

But that goes to the heart of planning for data centers, for.

Energy, for water, for land use, for all of these things, to be able to take up those GPU chips, to be able to install loads, to have them at an industry level, at a government level to have it right throughout the economy to get those productivity improvements.

I think that's absolutely right, and I think one of the ones you mentioned is a really important one is that is getting energy in the right place.

You know, if we're going to get and if we're going to do all these sorts of things, we need to keep energy costs low.

We need to have available energy to be able to make that happen.

It's not the only story.

We've talked about competition, industrial relations, the regulatory environment, and we need to look at the tax system too, but we need to make sure we've got enough energy to support a build out that we require to support, for example, data centers and the AI story.

We've talked a little bit about the Treasurer of Gym Charters.

You've often called him Lucky Jim because generally, when things it's a bit tough, something happens that's favorable to Australia, favorable to the government, favorable to the treasurer.

Normally it's a mining boom.

There's no boo mining boom on the horizon.

Given the forecast for the iron ore price, especially falling dramatically from here, is maybe the luck that the government's got the actual productivity boom that does come from these II chips.

I'm pretty sure I haven't described the treasurer that way, But what I have described is the economy as having been very fortunate, very lucky, and we've been very lucky to benefit from China's emergence and the drive for demand that delivered for iron ore and coal and gas, and that was the success story over the past couple of decades.

But I don't think it's going to be the success story going forward.

China's growth is shifting.

It's going to be more about consumption, less about building things.

There's going to be less still demand over time, and so we need to try harder because if we're going to lift our living standards as much in the future as we did in the past, it's going to be all about lifting productivity.

Okay, then take me to one other the aspect of it.

We have a massive pot of capital in this country through our superannuation funds, and you've seen the Prime Minister even going and using this as a bargaining chip in the White House with the President Donald Trump.

Now, the fact of the matter is that that pot of money, that pot of capital is going to be astonishingly valuable to Australia and Australians into the future.

Is that another area where we may long term get some genuine returns that do aid our prosperity in this nation.

Oh, it's wonderful that we have such a big superannuation system.

I think that's a really big positive.

We've got this big pool of capital that can be drawn drawn upon.

But as we all know, because we all hold superinnuation, we want the return from that capital to be as high as it possibly can.

The key question is can is investing in parts of Australia going to give you the best of those returns?

And again we circle back to the same challenge.

The challenge at the moment is the cost base in Australia is growing too quickly because productivity is weak, and that's discouraging the investment, the business investment that we need to actually fix the problem.

And so whether the capital comes from our own economy, from the SUPERINNA superinnuation system or from abroad doesn't really matter that much from the overall story, which is we need to lift business and we need to encourage our lifting business investment because that's what's actually going to lift our living standards in the medium term.

I'll tell our Paul Blocks, I'm always great day for chating you about these things.

Many thanks for your time today, Thank you well.

Coming up after the break, the biggest story of the week, without question, with the quarterly results from the world's biggest company, the computer chip giant, in Vidia.

We'll hear from Nvidia's chief executive Jensen Wang and speak with one of Australia's biggest tech investors, Lofty Speaks chief executive Alex Pollack.

It's great to have your company here on business weekend.

Well, let's go to the markets, which this week hung on the fortunes of the world's largest com chute computer chip maker, in Vidia.

So it turns out even in Vidia's very best performance in this the latte quarterly sales report fifty seven billion dollars in sales a forecast of sixty four billion dollars in the current quarter, it simply wasn't good enough, sher markets felt.

Nonetheless, I ain't got a bit back at the end of the week, as investors question a payback period for the trillions of dollars right now being invested globally.

In the new generative artificial intelligence, infrastructure, energy.

And these new generation chips.

The man who best explained it this week, I think was in Video's chief executive Jensen Wang, who spoke with Fox Businesses Liz Kleimhan late this week.

One of the things that is really great about in Video's architecture is that we're so diversified.

You know, we run all.

AI is not just one thing.

It's not just one language model or one chat bite.

AI is a system of models, and you could use it for of course chat bites, but you could also use it for physics and biology and chemistry, and of course robotics and self driving cars, and even within language models, there's so many different architectures.

Nvidia's architecture is the only one in the world that runs literally everything, and yesterday we announced the big partnership with that Anthropic and now we're the only architecture in the world that runs every single premiere AI model, as well as every single open source model, and of course every single version modality of model.

And so our versatility makes it possible for us to have a lot of different customers, and for all of those customers, we can bring them a lot of other customers that ultimately use their cloud capabilities.

Yeah, it feels like all roads are leading to Nvidia.

How are orders for your next generationship the Ruben trending and are you still on track to ship them?

At the end of twenty twenty six.

Well I announced that GtC that starting this year, because we started shipping Blackwells over the course of this year through the end of next year, we have visibility of half a trillion dollars worth of Blackwell and Rubin, and we'll start shipping Vera Rubin in Q three timeframe of next year.

The silicon is back.

It is working wonderfully.

People engineers across in video are bringing up the system.

It's doing it beautifully, and we're on track for volume production in the Q three time frame of next year.

In the meantime, I announced that we have half a trillion dollars worth of visibility, but in the last thirty days we announced some major new wins that were not included in that half a trillion dollars, so we have We're adding, of course, the Anthropic opportunity.

We're adding Elon's Xai now being deployed in Saudi Arabia.

We announced a partnership with Humane and that those GPUs have been licensed and they're going to be deploying in Saudi Arabia.

And we also announced that AWS is going to also build one hundred and fifty thousand GPU AI infrastructure in Saudi Arabia.

All of those are all net new and so orders are still coming in, and so it's going to be a pretty pretty busy year for US.

The next It sounds like then.

The current quarter is going to be crazy good.

Can I say that?

What do you think?

Well, we guide it to a much larger quarter next quarter, and so next quarter, the guidance that we provided is crazy good.

I would agree with that.

But you know, we're in the beginning of a very long term buildout of the fundamental infrastructure of humanity, which is computing.

As you know, we reinvented computing for the first time in sixty seventy years, and so all of the computers that have been installed around the world is being modernized to accelerated computing and videos, GPUs and to artificial intelligence.

And so this buildout is going to last us many years to come.

You know, it was exactly a year ago and this is why I ask about Reuben orders, et cetera.

Because it was a year ago that you and I spoke about the problem.

A lot of companies wish they had Blackwell orders.

We're pouring in from the fire host, so fast demand outweight supply.

What specifically have you changed to prevent any bottlenecks when Reuben rolls off the Taiwan semi assembly line.

Well, you know, we're not going to be caught flat foot at too many times.

And we now have a much better understanding of the scale and the breadth the diversity of our customer base.

We've done a really good job planning our supply chain.

We now have the largest supply chain of any company in the world.

We work with TSMC, of course manufacturing in Taiwan, and then also very proudly for the first time here in the United States, we work with every single memory vendor.

Now we have three different sources, three gigantic sources of really complicated memory, and every system maker in the world are partnering with us.

Well.

The question of returns for investors, not just from Nvidia, but indeed for the whole tech sector is now permeating the entire stock market, with most of the Stiller returns posted earlier this year now being dripped away.

So how should an investor view the boom and now this retraction.

Alex Pollock is chief executive of the tech specialist funds manager Loft to Speak and joins mid How Alex, always great to get your perspective on this sort of stuff.

I mean, in Video, they could not have done better with that sales report they brought out, but it was not enough to maintain or reassert any sort of a sense of control inside the stock market.

Yeah, I mean, investors have just got the jitters, and they've got the jitters about a couple of things.

One of them is that guy that sold out ahead of the big you know that movie in the Big Short.

He sold out of his shareholding in Video a couple of weeks ago, and you know, there's been a few other sellers, and people are starting to sort of, you know, get their hairs on fire about the whether the capex of a trillion dollars is going to be serviced by the revenue that comes in, and everyone's kind of going, it's just all getting too hard right now.

I don't know what to think about this.

So matter what they posted, I don't think the investors have got it in their heads that they need some more time to process is.

And you know, honestly, I think this correction is a bit healthy because they need to process it right.

It's a lot to process, and.

It's also a lot of money that's having to be committed, not just say in the chip makers or in the data centers that are being built right now, but it goes to every business on the planet that's having to commit to grutips to modernize their own businesses.

And of course everybody's now saying, when's the payback?

Where does what does the payback look like?

I guess yeah.

I mean people are looking for that killer application like email was to the Internet, and they're sort of saying, well, I don't know what it is that I'm going to be using, you know, AI four.

But actually, you know, if they sort of really think about it, they're using AI every day.

I mean, it's a spell correct on your on your on your typing, and it's the you know, I went in I had a consultation with my doctor the other day and she ran the AI over the top of it.

She asked me, and.

As I left, she had all the scripts just banged to my phone instantaneously and the referral letter to the specialist all done.

So she would have had to have, you know, if she's seeing twenty patients a day, that's fifty or sixty thousand dollars a year.

She'd have to pay for an administrative assistant to be able to do all those scripts and all those little jobs at AI just picks up and does for you.

People are sort of saying, yeah, but I don't have that particular you know, necessity for you know, to write scripts for AI.

But AI is different for everybody.

It's like a Swiss army knife with a billion attachments.

You might only use one, but you can't buy just that one attachment for the Swiss army knife.

Everybody's got a single reason for wanting to use AI.

All those reasons are different, but you can't just say, oh, I only want this bit of it or that bit of it.

It all comes out of one central idea, which is this you know, language model that predicts what's going to happen next.

You can't strip out this bit from that bit from that bit.

It's sold as a package.

I was really fascinated listening to Jensen Wang, but also listening to his analysts call this week, I thought it was really instructive in where the future goes He betten anybody else and justifies the trillions of dollars that will be invested into this to really make these chips faster, to make the more interpretive into the future, to basically do more of these basic jobs that you're talking about.

And the payback doesn't necessarily come to this company or that company.

It might, but it really comes to a whole economic view of the world.

I guess yes, that's one hundred percent right.

What investors are nervous about is that it's all come in a rush, right.

You know, two years ago nobody had heard of and then all of a sudden, you know, there's trillions of dollars of money being committed all over the place, and people are correctly so to some degree, and people are just going, well, hang on, I'm a little bit you know.

Put I'm not comfortable with this as it stands.

Right now, give me a minute to process it.

That's what this corrections about, I think.

So give me a sense of the investments that you're sort of now trying to calibrate as to which have the greatest opportunities because it's my sense is that the data centers, the chip makers, they're effectively just building the infrastructure.

It's what comes off the back of that.

That's where the genuine.

Advancements come from in the future.

That's where, if you like, the genuine money is going to be made, regardless of what sort of a clawback we get right now.

Yeah, I mean, and for those you know specifically about around that question, right, the obvious and the sensible way to play it, and it's one of the ways that we play it very carefully and on an ongoing basis.

We own Microsoft, we own Google, and we own aw Amazon, and we own those companies for their position with as hyperscalers serving businesses and consumers.

And people don't even necessarily know that they're using the cloud when they're watching Netflix.

Why would they, but they're using those businesses to serve AI.

And so the point about it is those are the businesses that wholesale will be buyers of AI.

And that's one of the ways that we are playing it through the Microsoft's, the Googles, and the Amazon's, because they're the principle, as it were, servers of the AI services.

So you are an active funds manager, you try and pick these opportunities, see where they might last, see where there might be some venue for the longer term.

But a lot of people play it differently, simply going by the exchange traded funds for the for the NASDA composite or whatever it might be.

So if there is a flyer that is unexpected, they pick up a little taste of that.

The problem is when markets reverse as they are now, they also pick up the downside.

Well, what that is, correct, But we're an ETF, we're an exchange traded fund ourselves.

So this you know, correction has resulted in a you know, five six percent reduction in the value of our shares.

We're not you know, we're not bleeding out here, far from it.

It's just, you know, we're a diversified fund as well as and trading as an ETF, and our unit price on the ASX on the stock exchange has come back as it were in the last three weeks from you know, five eighty.

To five forty.

I mean it's you know, it's not great, but it's hardly calamitous.

And so the reality is, are you still finding people wanting to put capital in that's the key to these things, isn't it.

Because of course, if there's capital coming through the door, you've got to expend that capital.

You've got to find these opportunities.

People have been hanging back on the sideline for months, waiting for a moment when they think it's going to pull back.

I suspect, I don't suspect.

I know.

We've got daily inflow coming from investors that are saying, Oh, here's my moment.

It's come back five, six, seven percent.

Now I have a chance to get in.

We see those flows on a daily basis, and we're not surprised by it.

And as you say, those inflows we must deploy into the companies that you talked about.

We talked about the thing that also got me about Jensen Wang, and it gets me when you hear Elon Musk speak well some of the other chief executives of the big, big tech companies.

The far sightedness with.

Which these executives are thinking right now.

They're playing a game that is almost many decades into the future for where they think they're technology will change the face of the earth.

I think that's one of the things that really gets me.

Listing the Gensen Wang this week.

That's one hundred percent right.

Nobody had heard of a large language model.

People understood that machine learning was all around us five years ago.

We first bought Nvidia ourselves loftus Peak Fund.

We first bought it in twenty sixteen at an adjusted price of seventy five cents.

You know, it was obvious that there was a whole lot of machine learning going on.

The large language model that was developed over the course of twenty twenty, twenty one, twenty two.

We were watching where that was going, and it was quite you know, what it is, the large language model is it's a probabilistic thing that based on everything that's happened before, what they called the training predicts, as it were, the next word that will happen.

And you know the example I give sometimes is, you know that sentence they used to train you at school to write properly, the quick brown fox over the lazy You punch that into AI and ninety nine percent of the time it'll come out with the word fox at the end of it.

Because that phrase quickbound fox jumps over the dog jumps over the lazy fox has every letter in the alphabet.

And that was what was used to teach school children how to form every letter.

So all that the AI is is something that predictively says, these are the things that happened before.

The most likely word that happens now is the word fox.

Based on everything that I have learned from my training, It's simple in a way, but the maths is stupendously complex, But the underlying principle is not difficult.

I'll tell you what.

It's always fabulous to talk to you about these things.

Alex Polloch, the chief executive of Loft to speak many things for your time today.

Thanks Ross, it's been a pleasure.

Well.

Coming up after the break, we take you to another industry that knows plenty about investing billions of dollars of capital and hope of future demand, International airlines, and we speak with Cathay Pacific's chief executive Ronald Lamb on Hong Kong's future as an airline hub and why it keeps expanding in the new routes, the latest of which is Adelaide.

Thanks for being with us here on business weekend.

Well, the globally aviation industry is right now seeing massive investment from airlines upgrading to new technology aircraft that fly further and fly cheaper to strategies that let them fly anywhere in the world without stopping.

It might be Quatis's Project Sunrise or the new national carrier in Saudi Arabia.

Read air Tens of billions of dollars are being invested.

One airline that's joined in is Hong Kong's Cathe Pacific, which now flies to one hundred destinations.

It's a clear side of confidence in the Chinese constrolled island state.

And this week I spoke with his chief executive, Ronald Lamb as the airline returned to flying direct to adelaide As.

Indeed, we are very confident about the future of Hong Kong as an international aviation hub.

And over the last three years actually we've committed well over one hundred billion Hong Kong dollar into the future in building the Hong Kong International Aviation Hub.

Most of that span is on new fleet, but we also spend a lot on our cabin products as well as launch products.

So this involves some you know, sort of one hundred and fifty aircraft on order, including and I should mention this thirty five of the triple seventy nine.

Now we should explain these aircraft are bigger than jumbo jets seven four seven, they're bigger than a three eighty in terms of their lengths, So you've gone for very large aircraft.

As part of your fleet renewal.

Yes, our future Longholf fleet will consist of eighty fifty nine hundred one thousand, as well as triple seven that'sh nine and very happy that this year we've make announcement for some additional order of Triple seven dash Night, making the whole fleet will turn to thirty five of them together close to fifty of our fifty.

So it will be a very scalable, lowhold fleet for the future.

And as with any fleet campaign, we have looked at different consideration before we make the decision, both on the technical side as well as on the commercial side.

And I must say I think this time is a very competitive campaign and we have been very glad that we've selected triple seven Dash Night at the end.

Okay, so Ronald, just explain where you see the future of aviation.

From Cathay's point of view, you can see the Middle Eastern airline, even a new Saudi airline emerging.

Now they believe they're at the center of the universe as it were, with the ability to fly without stopping to any point on the globe.

Just explain from.

Your point of view the strategy when it comes to what travelers will want from Cathai in terms of international travel in the future.

Sure, we're very confident about the future of aviation industry, in particular in the Asia Pacific regions for the past decade, as we have seen this region is the growth engine for the global aviation industry and Cathe is right at the heart of this region.

Our unique position is that we use Hong Kong as our hub to connect China with the Well, and we're here to connect the Well with China as well.

So I think we're really well positioned for the future.

And what in terms of what customers will be looking for, I think first and foremost is connectivity, and through the Hong Kong Aviation Hub, we connect passengers from different parts of the world to more than one hundred destinations worldwide, and we keep adding new destinations like Adelaide this time is our latest addition to our network.

The second thing is our premium service.

We believe that apart from the connectivity, most important thing for our passengers is our service both in the air as well as in the ground.

And as I just mentioned, we have committed well over one hundred Hong Kong dollars billion into the future to upgrade that experience for including our cabin products and our lounch products, our in flight proposition when it comes to entertainment and dining, so that we can elevate the premium experience for our customers.

I'd say that more of them will be willing to travel through Hong Kong.

So when I speak to the chief executives of a New Zealand or of Quarters, one of their strategies in going with the I three fifty, the ULR Flights, Euge Flights, Ultralong Haul Project Sunrise, this is all about not having to stop in Hong Kong, not having to stop in sn Poor or do Bai where passengers may be cherry.

Picked to go and fly somewhere else.

This is about going direct to a route.

Just explain in those terms where Hong Kong, which has always been a hub, which means people need to stop there to go somewhere else where, does that sit in the future.

Well, we're still very comfortable out the future.

I think one stop products still have is position.

I think traveling long haul up to twenty hours is sometimes pretty challenging from a physical angle.

So we do believe that there's a future for people wanting to stop and many of our passenger when they stop over in Hong Kong actually they spend a couple of days visiting Hong Kong as a mid pond for their leisure travel or business travel as well.

And when it comes to the cafe strategy, because Hong Kong is pretty well positioned and we are able to fly to major market without using the ultra long haul ultra long.

Range aircraft capability.

For example, our longest flight right now is to the east coast of the US, which will take up to around fifteen to sixteen hours quite comfortibly using our existing aircraft without the ultra long range setting.

So there's more emphasis in every airline on the premium cabins.

Will you allocate more of your.

Aircraft in the future to those premium seats because quite clearly that's what passengers are demanding, and you get you get the premium as it were for people who do travel with those classes.

Is that where you'll put the emphasis in these new aircraft.

Well, we've been retrofitting our aircraft and in the next few years, we'll have one new cabin product coming out at least in each of the following years.

And when we look at our new cabin product design, we follow the customers.

So we study our customer demand for different cabins very carefully, and indeed there's a trend of the demand for more premium travel, in particular for premium economy.

So for example, in our Triple seven three hundred.

Ear ratial FED we now have a larger number of premium economist seats than before.

But I think we'll follow where the customer bring us, and we will continue to study if the customer demand more business class or premium economy.

For sure, our next generation product will follow that trend.

I mentioned earlier Ronald about the confidence in Hong Kong not as a destination as an airport for the facilities, but it also means that the economy itself there has to be strong.

It's banking sector has to be strong, it's funds management industry has to be strong.

It's racing industry has to be strong horse racing.

All of these things have been reasons why people have chosen to visit Hong Kong in the past, and they need to be reasons why people will go there in the future as well.

Indeed, actually I myself sit on the Tourism Strategy Board run by the Hong Kong Saar government and we've been looking at different ways to develop Hong Kong as a tourist destination.

And in recent years, actually Hong Kong has got a number of new landmarks.

For example, the West Kaolon Cultural Park, which features some world class leading museums that has attracted tourists from the Chinese mainland as well as from international origins.

And earlier this year we have opened our Kitech Sports Park, which is a huge stadium that can hold international events and concerts.

And since this new landmark has been opened in the last few years, we've seen a lot of uptake on some demand, all from China as well as from international origins.

In fact, many people in Hong Kong have been telling me that since middle of this year, there's a lot of tech in terms of hotel.

Demand, retail demand, dining demand in Hong Kong.

And if we walk out to the street of Hong Kong, you can certainly feel the strong weight of tourism has come back already.

Okay, then you mentioned, of course starting flights into Adelaide.

Tell me about Australia as a destination for Cathay.

The reason for it is, of course you've seen Turkish enter this market.

Katar now has more flights according to it's a relationship with Virgin Australia.

You've obviously got to domestic airlines.

Most of the Chinese airlines now flight of Australia.

To many people's observation, it is a very well catered full market.

So just explain the reason that you have for trying to build more access points into Australia.

So, first of all, our relationship with Australia has data back a long long time.

In fact, our first flight started in nineteen seventy and we've been here in Australia for nearly fifty five years now and up to now we have been flying to six new destinations in Australia and Adelaide is the latest.

Addition to our map into Australia.

And on a weekly basis we are flying too close to one hundred flights per week nowadays.

For example, Sidney, our biggest destination, we're flying four times Melbourne three times a day, so it's a huge presence.

In fact, we believe we are one of the biggest international allies connecting Asia with Australia.

So with all these long history, we are very confident about the future of connecting Australia with Asia and in fact with the world and China.

So we see big demand and it's not just about a quantity because we can see a lot of Australian customers as well as Asian customer or customer from the Chinese mainland.

They actually prefer our service because we have the best of both while being Chinese.

At the same time, we are also very international, so it's a great blending for our customers.

So everything else being equal, we believe.

This is still very strong demand to choose KAF Pacific service in and out of Australia.

So therefore we are very confident about the future of this market and we continue to invest into new destination and new frequency into this market.

Ronald Blamb, Chief Executive of Cathay Pacific.

Great to chat you and have you on the program today.

Many thanks for your time.

Thank you.

The Federal government.

Is almost adamant it can fall fill its target of one point two million new homes to be built between the start of this year and twenty thirty, but in truth it's already way behind its target.

For the government is artificially stimulating demand by encouraging new home buyers to get into the market with just a five percent deposit.

The lender's risk effectively is being ensured by the government, which is a great strategy for buyers, but only if home prices keep on rising.

Carlie Chatfield looks at the impact of the government's first home Buyers scheme on the Capital city markets.

It has been almost two months since the government expanded its five percent deposit scheme to all first home buyers.

The expanded scheme allows all first home buyers to buy property with just a five percent deposit, with no cap on the number of participants in the scheme, no income limits, and increased property price caps.

Effectively, according to critics, the Labor government nationalized the existing private home lenders insurance scheme that has existed for decades.

What we are doing as of today bringing forward our plan for five percent deposits.

What that will do is to allow more young people in particularly get to get into their first home.

In the past few weeks, Labour's Housing Minister Claire O'Neill revealed that first home buyers are taking advantage of the scheme.

Of fifty seven thousand homes sold in October five, seven hundred and seventy eight were purchased using the government's deposit scheme.

Our program is now helping one in ten get into the home of their own, and that's exactly what we hoped would happen.

Constathopolis, principal and owner of McGrath West, Northwest and Hawkesbury, has seen a jump in first home buyer interest since the scheme started in October.

We've definitely seen an increase with first home buyers purchasing units in particular, so there's been a lot of activity around the apartment space, less activity in the housing space, but definitely the scheme has been working well since first of October in our regions.

For many first home buyers previously shut out of the market because they could not accumulate a large enough deposit, a door to property ownership is finally open.

I think what it's done is it to unlock the capabilities where they would normally have been not able to come up with a ten percent deposit plus have to pay for lenders mortgage insurance, but.

Some politicians have raised concerns that the scheme is fueling demand amid a housing shortage and surging property prices.

Laboured solutions are making the problem worse.

They are pouring fuel on the fire with a five percent deposit scheme which is increasing the price of entry level housing and mid level housing in ways that are punishing first home buyers.

Prop tracks October Home Price Index reported a spring price surge, with national home prices across all cities and regions rising zero point six percent in October to a new record high, with the increase being attributed to this year's series of rate cuts, population inflows, and the expanded five percent home deposit scheme.

Soaring property prices are forcing some first home buyers to team up with siblings to get a foot on the property ladder.

After a three month search, Rollina Aboyd and her brother bought their first home together in Sydney at the end of October.

Pulling resources helped them to break into the property market.

Me and my brother teamed up together to buy a home because obviously either one of our incomes alone wasn't going to be enough to service the loan, so obviously it would be a good idea if we both teamed up and bought something together rather than continue renting.

Even though they considered themselves savvy savers, ever, increasing home prices meant buying together was their only option.

We both have pretty good jobs, and we've always kept aside a certain amount of money per month to just go to whatever savings that we wanted.

To save up for.

Aria Group Senior economist Angus Moore says that although the scheme is still in its early days, it should have a moderate impact on the demand for properties in affordable parts of the market where first home buyers are typically active.

We wouldn't expect this to translate immediately into home prices.

It takes a little while for people to apply for the scheme, get finance, find a home, and for then that activity to start showing up in home prices.

These changes will clearly bring some first time buyer demand forward and allow some first time buyers to buy a bit sooner.

That will have some impact on home prices, and that impact will be focused in the more affordable parts of the market where first home buyers are a bit more active.

There are also concerns that the government is failing to take action where it really matters, such as tightening lending rules for property investors, leaving first home buyers at a disadvantage and struggling to get their foots on the property ladder.

The housing crisis is in every country, town, and every city in this nation.

Every Saturday morning, we see first time buyers standing alongside investors being outbid.

Investor activity accelerated in the three months leading up to October one, with the number of new investor loons swelling to thirteen point six percent.

This lifted the share of new investor loans to forty percent of all loans during that period.

We've definitely seen the return of the investor.

So normally what we see is when the stock market or commodities markets are being impacted, they normally retreat back into property bricks and mortar.

Many first home buyers struggle to compete at auctions, often losing out to investors with deeper pockets.

Auctions were very, very hard to attend to because I feel like you were constantly getting let down, especially with the people.

You know, the bids that were happening.

There were some crazy bids.

First home buyers also often struggle with key hurdles when entering the property market, particularly when it comes to navigating the property purchase process.

I think that the major challenge that we've seen is actually understanding how to purchase property.

So I'm talking about the legalities of contracts and changes and requests, but also more importantly working out how to bid at an auction, when to buy prior or how to negotiate, also looking at what's involved with a property transaction through financing, building in pest reports, Strata reports.

I feel like I had to rely a lot on my own research and my own you know, watching YouTube videos, watching you know, tiktoks or whatever to kind of understand the process.

That was a bit of a challenge.

So what exactly can be done to help first home buyers get their foot in the property markets.

Many agree that boosting the number of homes is key to helping buyers get into the market.

The government has set an ambitious goal of delivering one point two million new homes by twenty twenty nine.

And fundamentally, the only way that we improve housing affordability sustainably over the long term is building more homes where people want to live.

However, disappointing building approvals figures tell a different story, with the number of homes being approved each month consistently behind that goal.

At the moment, we're not really on track to hit that one point two million over five years target that the national Cabinet has set, in part because we're just not building as much higher density as we used to.

There are some good changes from state governments to try and encourage that, but we're yet to see that really translating into completions on the ground.

Government policy could also remove hurdles by reforming and simplifying the property purchase process and help first home buyers secure their first home.

I think if you're a first home buyer, it's really aligning yourself with someone, whether they're a real estate agent, property conveyance, a solicitor, mortgage broker, anyone that's related in that space to be able to actually educate on what and how to buy property.

Definitely education and simplifying it for people that would be good.

Early data suggests the scheme has had a moderate impact on property prices.

The government now faces the challenge of supporting first home buyers without adding further pressure to the property markets.

They can purchase homes just like the ones behind me.

And that's it for the program this Sunday.

Up next all the latest news right here on sky News.

Business Weekend returns next Sunday, but of course you can keep up to date with all the Lattice business news with our daily program Business Now Full thirty pm Eastern Time and via our website skynews dot com dot au.

Thanks for your company today, I'm Ross Greenwood.

We'll see you next week