Podcast: Has this Tesla-approved radiologist potentially solved the housing affordability crisis?
This week Kym sits down for an extended chat with accomplished Adelaide Radiologist and Director of Fluid Solar Thermal – Roger Davies, who has come up with a plan. Aside from being an expert in Radiology, and Director at Adelaide MRI, his entrepreneurial tendencies have led him to patent his own renewable solar energy solutions in his $8m commercial building Fluid Solar House ( www.fluidsolarthermal.com ) which has been backed by Tesla & the State Government. More interestingly is his plan to create modular-style affordable housing using the same technology that can be built and maintained for a fraction of the cost of conventional housing.
Listen here: https://itunes.apple.com/au/podcast/accounting-insider-property-wealth-business-tips-tricks/id1068371887?mt=2 or https://soundcloud.com/accountinginsider/50-has-this-tesla-approved-radiologist-potentially-solved-the-housing-affordability-crisis
Welcome to another episode of Accounting Insider. I’m Kym Nitschke. In today’s episode I sat down with Roger Davies. Roger Davies is a radiologist entrepreneur and a pilot. He studied in Sydney and he’s now based in Adelaide. He’s patented solar energy solutions. He’s come up with low cost modular housing, and he’s build a Tesla-approved building for $8 million. He now drives a Tesla. And I hope you really enjoy today’s story about his life, what he does, and his work as a radiologist.
Kym: So jumping straight into this, thanks for joining us today Doctor Roger Davies, radiologist from Adelaide, Head of Adelaide Medical Imaging. I’m so excited about today and I’m not exaggerating by any figment of the imagination. I have been wanting to get you on this show for quite some time. You are such a fascinating person, and today, we are talking all things medical. Let’s go right back to the start of your career, can you just give us a bit of background to who you are and what you do in the medical space.
Roger: Sure, and it’s lovely to be here with you and it’s fabulous to talk. I find the interchange of ideas always throws new ideas up for me and it makes me re-evaluate what I’ve done. Or why I have done something and very often you get a new idea coming out of that process of reflection and re-evaluation. So it’s really good fun for me to do something like this with you, and I appreciate the chance.
I grew up in Sydney. I was born in Dorrigo, which is northern New South Wales, a little town whose claim to fame is one of the highest rainfalls in Australia. They can get 100 mm overnight. That’s quite a lot of rain to come down. Mainly dairy farmers and their cows, there used to be a bit of logging there but that’s gone now because of you know forestry protection. So Dorrigo is a tiny little town out in the bush, and my parents came to Sydney when I was about five.
Moved into a suburb that was apple orchards is at the time, and subsequently and it was completely overwhelmed by the Sydney development of you know smaller and smaller houses with larger and larger televisions in them.
So I grew up in Sydney, went to Fort Street boys high, which is a type of high school that we don’t have here in South Australia, so that is a selective state funded school. My dad went there and my grandfather before him, so I applied and was able to be selected for schooling in Fort Street Boys. Notable people went there, John Singleton in advertising, Neville Wran, who was at one point a Premier of New South Wales. John Kerr, who was the former governor general of note when he sacked Gough Whitlam and gave Malcolm Fraser the nod, so all sorts of reprobates went to Fort Street boys high.
I graduated from there and at the time the selection process for medical school was purely based on marks. So pretty much anybody could get in if they were able to you know accommodate all or adjust to the exam system and you know work the numbers so that you got a better mark than most other people.
It’s interesting, since then they’ve changed to a progressive vetting people to get into medical school, and you know there’s all sorts of screening processes now applied in different universities across Australia.
I think probably I would never get into medicine again. I think I’d be knocked out at the first hurdles as being a little bit too quirky or to diverse in terms of what might be perceived as the ideal doctor. And I’m not sure that knocking those people out at the beginning is necessarily good for medical technology and medical discoveries and keeping people who are only mainstream, tends to encourage conservative, middle of the road strategy. To some extent medicine grows because people are out at the edges looking for newness, difference, uncertainty, unexplained phenomena. Those people make observations that then lead to new devices, new ideas, new treatments.
Sorry I’ve diverted from your question, so Fort Street Boys High, Sydney Uni, medical school.
It was a curious course. The almost entire course was multiple-choice, and because I’m good at multiple choice answers I got through medical school with no problems. But at the end of it you don’t necessarily know a lot of medicine and I think your learning as a doctor often starts the day you graduate and then you realise that it’s actually you know, you have to be able to do all of these things and know all the information, and sort it and process it and problem solve.
I think while I was at uni I did computer science and maths as non-degree subjects and I had a kind of an ongoing interest in science. That combination of knowledge and understanding of physics for example, led me to select a career in radiology which was very much based in technology as opposed to people management.
So radiology is driven by the physics of radiation and the physics of ultrasound, and the physics of MRI and understanding those and having a really good grasp of the scientific principles allows you to use the technology to its best. But coupled with that, the process of imaging is very much about discovery and problem solving. You know, solving the clues to get to a diagnosis with the highest chance of success and the lowest likelihood of an erroneous diagnosis.
In that sense, radiology is hugely interesting and challenging, and continues to be so. It never becomes you know a mundane repetitious type of process, because you’re always trying to grapple with new problems, understand new diseases as they are discovered or as described, use new technology.
So when I started in radiology training there was no MRI in Australia, and it’s now an absolutely mainstream technology. CT was only just coming in when I was coming through, and so the first CT scanner that I saw was called and EMI scanner, and EMI of course were the record company that were the label that the Beatles made all their money on. They made EMI enough money that EMI could invest in this medical technology and it was directly because of the Beatles label that the CAT scanner came to be a technological reality, so it’s funny.
So the EMI scanner took 45 minutes to scan the brain, and the patient would be basically locked into a cage with water bags wrapped around their head, because the machine couldn’t accommodate the difference between air and water when it was taking the slices through the brain. So the patient would lie there for up to 45 minutes while they laboriously, you know, did one iteration at a time.
At the end of that time, it was about another half an hour of competing processing then to get the images out, so it was about an hour and a half process. A CAT scanner would do perhaps five or six patients a day.
If we look at the technology now, where we’ve gone to 160 or 320 slices acquired simultaneously image production in a fraction of a second. A whole study is produced in minutes as opposed to hours. The range and diversity of information that you can now glean from CT has almost no resemblance to the very first scanners that were invented, literally while I was going through medical school. So it’s been a real technology journey along the way.
Fabulous development of better strategies at imaging, and imaging the body in different ways, and x-rays use the fact that different parts of the body blocked x-rays to a greater or less extent. So that’s an x-ray, you know, a chest x-ray or something like that where you can see air versus water or water versus fat.
CT is able to detect differences in density around 100 times less than a chest x-ray. You have this fantastic fine detail between substances that are very similar. So white matter and grey matter in the brain for example are only around less than 1% difference in density, and you can pick the difference on a CT.
The spatial resolution of CT has really taken us completely into a different area, where we can now measure an object which is half a millimetre in each dimension. So that’s like a speck of sand is large enough to show up on a CAT scanner these days.
Ultrasound is another huge expansion of imaging, and so we went from barely being able to see a foetus inside the mother, to now being able to measure a tiny hole, a pinhole in the heart of a 20 week gestation foetus. I had one this week.
Amazing detail. Amazing ability to see structures inside, clearly enough for example to do targeted injections. So we can deliver steroids for example, directly into the versal space or the joint space, or the tendon sheath rather than just injecting in the area and hoping there was an effect.
It’s interesting that my job has probably changed by at least 80% every five years. If I look back every five years, the stuff that I was doing back then has either been supplanted or surpassed, or replaced by a newer strategy or a newer imaging technique. So over my own career I’ve moved from doing in patient intervention in hospital, I would be for example, having an anesthetised patient. I would have some sort of access device in their groin. I would be steering a catheter to inside their brain. You know, so it’s a long plastic curved tube, which through you can deliver metal or glue or therapeutic substances.
So that was sort of the first 10 years, and that led me to developing that technique in children in particular. Children are technically a challenge because they are much smaller than adults and their tissues behave differently. Also the different disease processes that affect children are completely unlike adult processes.
Eventually, that led me to be offered a job at Great Ormond Hospital for sick kids in London. I was literally amazed at they even knew what I was doing, let alone interested enough in my work to invite me to go to London. So about 20 years ago, I uprooted my family of then two daughters and we went to London and lived there for a year. It was a fabulous journey, and I loved the work.
That hospital had a draw of at least 100 million people who would indirectly refer to it. So every week we would see diseases I’ve never even heard of or let alone knew anything about. So I would be looking up and finding out about these really rare and wonderful things that turn up from the north and part of Africa, and parts of France, Spain, Ireland, Italy. It was an incredible drain of patients just to that hospital. They would all come there because that was the last port of call when a child had a disease that was so unusual no one else could treat it.
In the end I came home because my two children announced that they weren’t going to keep living in London. They were 11 and eight at the time. One of my daughters said that London was like a rotten apple and Australia is like a ripe peach, and the other one declared that London was grey sky, grey rain, grey people. It was a harsh assessment, and in fact they’ve both changed their minds and they would love to go back to London as adults and experience the culture.
We had a fabulous year that year because the hospital where I was working had a charity office on the ground floor, and you could go and get tickets any day of the week to a show of some description. So we went out 150 times that year. We went out you know every second night and we would go to something. So we would see Nigel Kennedy as a fantastic violinist playing on the South Bank, and he just did a most remarkable concept that left me in tears. Shakespeare plays that were produced in a way that I had never dreamed of you know, in the round or live or open air was fabulous people acting.
Amazing musicians. There was a Russian musician that we went to see one night, and it was a lucky draw. It was whatever tickets were on we’d go there. At the time, it was Lady Di’s favourite charity and they had kind of a good draw on people. So this violinist was billed as ‘leaving the audience slack-jawed’, that was a big call, I thought. So we went along and sure enough we were literally open-mouthed. He was technically the most incredible player probably that I’ve ever seen. It was a remarkable performance.
One night we went to see Daniel Barenboim, who is a very eminent pianist and conductor playing a Mozart piano concerto. A double piano concerto so it’s unusual to see it. Sort of back to back Steinway’s with another pianist and the London Symphony Orchestra, and just a fabulous performance. So that was a brilliant year and culturally it was a huge experience for as all.
Stepping back to Australia, funnily enough I didn’t mind, and I can still recall that we flew back from London at the end of two winters and what they called a summer, which is only like our winter. You know it was literally grey sky, grey rain. So we had this miserable summer, and in fact it was funny that the hospital where I was working, the x-ray department had a skylight in the roof over the clerical area where the films were collated. It was about five months after I got there that I realise that it was a skylight. It was the first time that the sun actually came down, it was the next May you know before, there was a shaft of sunlight and I was like, ‘Oh it’s the sky!’ I just assumed it was a light until then you know, because it was grey like everything else.
Anyway, we had that brief summer and the second winter then, but by that stage my kids were ready to, you know, come home without me.
We stepped off the plane after a mainly night flight, London to Singapore and then it was the next day as we flew into Australia and it was like stepping into a child’s picture book. The colour in the sky, and grass was so green that incredible intensity of colour in Australia that we don’t appreciate because it’s you know, seen to be normal for us. But to come from a dark European winter, to this fantastic kaleidoscope of colour was fabulous. So Adelaide is a great place to live.
I then spent five years as a public hospital Director of radiology at the Queen Liz in Lyell McEwin hospitals. Managed to make a little bit of a stir by ordering and MR machine that arguably should have been delivered. It was promised, but at the last minute there was some hiccups with the delivery and I made sure that the machine came to the hospital because it was well and truly needed. I got into a bit of trouble for that, and subsequently decided that the path for me possibly was not in the public sector. I’m a bit of a disrupter of processes, and don’t follow them as well perhaps as I should.
By chance, I had started some locum work in Orange in New South Wales. They were desperately short of radiologists, and they were short in particular of people who could do interventions. So delivering pain management, injections into the spine or neck, knees and shoulders and that was part of my expertise by that stage I had developed that work.
I found myself going to Orange more and more regularly because I love the work and the people were very appreciative, and the hospital system there was well organised. We were doing a lot of great work for people who just couldn’t access that technology, literally this side of Sydney.
I found the travel was a bit onerous, because I almost did an eight hour journey by the time you got to Adelaide airport and fly to Sydney, missed the morning flight and get the afternoon flight. You know, you get to 4 o’clock in the afternoon and you are arriving at work for the day, so that dragged after a bit. For a little while I drove up and down from Sydney, so I could kind of get out of the Sydney airport and then drive three hours to work. That was better than sitting in Sydney airport for most of the day.
I then hit upon the idea of learning to fly and flying myself from Orange to Adelaide each week. So one summer I took lessons and got my licence. Bought a little two seater plane, and started to fly most weeks to and from Adelaide. It was a fabulous little aircraft, and as it turns out once you’ve taken off and got yourself to cruising height, for the next three hours – it is about three hours and 12 minutes. Really just change the petrol tank each hour and that was all there was to do, and most of the time was thinking, so quiet uninterrupted thinking time.
My little aircraft flew at just under 400 km/h and quite high. I could fly up to 20,000 feet, and that’s the bottom of jet air space and it used less fuel that I would use if I had drove a car across the plain. I was quite surprised when I worked that out, that I was so fuel efficient. I started looking into why aircraft engines were more fuel efficient than cars, and how to improve the fuel efficiency in car engines and how I could kind of make a difference to fuel economy. Because by then the whole idea of the fossil fuel economy was starting to look less certain than had been in the case previous. This was about 10 years ago now.
I worked out a way to use the hot exhaust gases from an internal combustion engine, to drive a turbine that would make power and add that power to the car wheels so that it would improve the fuel efficiency.
In principle a great idea, in practice a regulatory nightmare. So putting an add-on device to a car, you void the warranty, and the manufacturer doesn’t support it any more. The device has to be approved by every regulatory authority, so in practice a great idea but I could never sell it and it wasn’t going anywhere. But I put a lot of time into developing this turbine.
So I looked around for an alternative heat source that would be able to drive my turbine, and thought straightaway that perhaps the sun would be hot enough to provide me with some sort of motive power.
In general terms, heat engines are more efficient if they are hotter, so the difference between the hot side and the cold side of a heated engine is large, the relative efficiency is high. Converse, if you are trying to collect solar thermal, so hot water as energy, the hotter you make the device the less efficient it becomes. So there is a trade-off, a balance where you hit the sweet spot between efficiency of collection, and the efficiency of utilisation.
I discovered that the conventional solar evacuator tube collectors didn’t work as well as the manufacturers claimed in the wintertime particular. So that in the winter the water was just barely warm. It would be tepid, and so as a round the year device it just wasn’t collecting enough energy in the winter.
I had the idea one weekend of improving the performance of the solar collector by adding a second lot of radiant energy to the under surface of the collector. So normally the top gets the heat, the bottom loses heat so I thought righto, we’ll use both sides of the collector to add heat to it so it should work better and I was delighted by the improvement by performance.
Subsequently, we did the maths to generate a fixed plane R reflectance, meaning a flat surface and so painted colour bond, or to services. If you arrange the geometry the collector can receive up to twice as much energy as it would otherwise you know be able to gain, and we could arrange it so that the collection period was extended in the morning and the afternoon. So it was a longer period of collection, the collector gets hotter quicker and stays hotter for more of the day. That translated out to sometimes a threefold improvement in performance, compared to just the standard collector.
That was so valuable that I then went on to patented that and we’ve been granted a full Australian patent and we’re now in the process of patenting that overseas.
I was then making very hot water to run my turbine. So far so good. I realised when I sat down and thought about it that the by-product or the end product from the turbine would be a very large volume of moderately hot water or warm water in fact. If I had to get rid of that warm water in order to run the thermal process, it was quite expensive. I needed a big heat exchanger; it made the whole process marginal for me from a commercial point of view.
I always had in mind that if I invented something that was too expensive to actually put into practice, I was wasting my time and everyone else’s. So I was always trying to focus on ways that energy collection could be affordable and therefore valuable.
So I thought that if I could turn that waste heat energy into something useful, like heating a room or a building that it would then become valuable energy as opposed to a nuisance. So I turned my attention to how I could deliver heat into a building, and came up with a strategy of modifying a standard idea of hydronic heating, which is running parts through the building.
I also calculated that it would be possible to store quite large amounts of energy in hot water for a substantially lower cost than storing energy in an electric battery. To put some sort of numbers around it, it’s around a tenth of the cost, so heat storage is very cheap compared to battery storage.
In the winter it meant that I could collect heat on the days when it was sunny, store it for a few days in my tank and then deliver it to the occupied building when it needed the heat. Therefore I had if you like a dispatchable energy or a storage process, which was vastly competitively better than the current cost of PV panels and electric battery packs.
So I was very excited that I had a great product, and until someone pointed out to me that I would also have to cool the building in the summer in order for it to be a year-round valuable technology. A lot more thinking went into how we could do that and we ended up with the process where we evaporate water at night. That makes the water colder, and we store that cold water for use the next day to cool the building. So we moved the heating and cooling process to take advantage of the change in temperature from the day to night. It’s even possible to store energy four weeks or even months in a tank if it’s cold water. Then use it when you really need it in the middle of a heatwave in February in Adelaide.
So at the moment, I’ve got a very large tank filled with rainwater in the building that we will talk about. That’s currently storing energy at night by cooling the water and I’ll use that water next February if I need it. So that’s the equivalent of megawatt hours’ worth of energy that I can store really at no cost for months at a time.
So I thought I was on a winner, I could heat the building and I could cool the buildings, so I had this valuable tech and then someone pointed out to me that I would also need to be able to dry the air coming into the building. Because on a hot and moist day, if you bring air into a building it will then start to condense and then rain inside if you cool that air down to the point where the dew point is exceeded.
So I had all of my heat energy from my solar thermal collector, which in the summer was making squillions of kilowatts of heat, and came up with a strategy for basically sucking water out of the air using a process which is widely known but not used as much.
If you use a shaker of salt and rest it on the table, after a while it starts to get crusty because it’s sucked some water out of the air. So I use a salt solution to drive the air and I then used my heat to force that water out of the salt to regenerate the salt so it’s dry again ready for the next batch process of heating. So I’ve got a bank of salt which is being regenerated and it’s releasing hot, moist air directly out of the building. Then I’ve got a second bank which is being regenerated and that’s sucking water out of the air coming into the building.
So we can dry the air, we can cool the building, and we can heat the building in the winter with this process of evaporation desiccation and storage. Finally, I was happy that I had a suite of technologies that could fully replace air conditioning systems.
The final if you like element to this success was to then design a building envelope that was well enough insulated and low enough in draft air ingress, comfortable, and aesthetically pleasing. But very low energy consumption in order to have a building that was able to be run from its rooftop. So our ultimate goal was to build a building that was completely self-contained if it needed to be.
That process started about three years ago with design, and the hardest elements of the design were actually the air conditioning system, which a conventional mechanical engineer would simply say can’t work and in fact did say wouldn’t work. So I went to 3 firms in the end, and so Norman Disney Young did the air-conditioning for the Royal Adelaide Hospital. They did a feasibility study for me and said, can’t work thank you for coming.
I went to Lucid, another group of engineers in town, who said that if I pay them a very large amount of money they would be able to tell me if it would work or not. I said no, no, that’s not what I was asking.
I then went to another group of engineers, who I won’t name said that it’s a fantastic idea. Yes it will work, we’ve done the numbers. We’ll own that technology and we’ll licence it back to you. I said no, no, I came to you with this idea. It wasn’t the other way around. So in the end I used a very small local firm who were fabulous. An old guy, who is now retired in fact but he was very down to earth and practical, and he helped me through the nitty-gritty of getting an air condition system for a big building designed and commissioned.
So we ended up with this fantastic building. Its three stories, 3000 square metres. A fantastic space to be in, because it’s got this wonderful light well that comes down through the middle of the building, which I use to exhaust air out of the building. It’s a natural voidance driven ventilation system.
The building performed better than I hoped down to the point where we realise that if I put PV panels on some of the roof area that I could become completely self-sufficient from an energy point of view.
Last September, we have the grid failure which obviously no one was expecting to be really as bad or as damaging as it was. Suddenly the idea of the grid being the ultimate resource was broken. People realised the grid was expensive and now no longer reliable, so I went off grid in April just a few months ago. We run the building through the winter with no external energy supply at all to prove that we can run the building. Last summer I was collecting the data for the summer months to prove that I could do it in the summer as well.
A couple of weeks ago we had a big of grid party, and got the Federal Minister for Energy and Environment to come along. Instead of him cutting the ribbon he cut the symbolic electric cord between the grid and ourselves with a pair of pliers, and he officially opened the building for public interest and it was a fabulous ceremony. I was very appreciative to him for coming along and it certainly created a lot of interest.
We got a really good press coverage with the Australian Financial Review, and Roland and Tizer and Australian all written good pieces on us, and we got a lead story on ABC News that night. Since then my phone hasn’t stopped ringing. We’ve been overwhelmed with interest, and some orders.
We’ve converted our concept into sales, and I’m hopeful now that we’ll be able to roll that out to basically on a large scale substitute, existing grid-based energy systems with either near self-sufficient or complete self-sufficient rooftop collection.
Kym: That’s absolutely unbelievable. Questions are coming into my mind. I read about this place, and that it’s actually called the Fluid Solar Thermal House and online it said it cost $8 million, is that number roughly right?
Roger: That is roughly correct, yes.
Kym: So can you talk me through the numbers, like is it working financially?
Roger: So what we would like to do with the space in the longer term is provide a resource for medical practitioners, who will be needed in the northern suburbs of Adelaide because that’s the major growth area. Really, the southern suburbs are largely constrained by the sea on one side and the hills on the other, and all of the development is largely taken. There are little pockets of land that can still be built, but by and large the southern suburbs of Adelaide have got as big as they can be.
So as Adelaide grows, it will have to grow north out past Gawler, and there are a series of new suburbs coming on-stream, you know, Blakes Crossing, Andrews Farm and so on. Those suburbs are all north of the hospital Lyell McEwin, and from there it’s simply impossible to drive even to the Royal Adelaide for routine hospital care. I can see a time that the northern suburbs will be like Parramatta in Sydney it will be almost the centre of the city proper.
So with the long term vision in mind I built what I know can be a medical centre for up to 200 people you know, staff and doctors and so on giving outpatient services to people in the northern suburbs of Adelaide. So I have complete confidence that that process will unfold and we will indeed become a medical centre. In the meantime,
I’ve got this fantastic space and it’s a resource that I would like to and have indeed opened up to young inventors or people with great ideas, but then are able to convert from something in their bedroom or living room to a business. That whole concept of co-working space or shared space, office space, someone can buy a desk for I’m going to say $50 a week. They can be out of their house and actually in a place where other people are also excited, also learning how to run a business or to develop a business. Offer them some mentorship and a physical space and access to photocopiers. All of the things that you need to try and take an idea from just an idea to a small business venture or even a larger business venture.
So that idea of co-working space is a way of getting people into some form of their own business as opposed to being an employee is I think going to become the normal way of small businesses operating. I think we’re going to move away from having you know a fixed shop front where you’ll use the premises when you need to be there, you might be out visiting clients, and you might be off-site. So that way of sharing space is a much more efficient way to run a business, and two in that sense provide that service. So we’ve got room for about 150 people you know co-working environment, which we’ve called the Innovation Grid. I’m actively looking for people who want to work in the field of sustainable living if I can call it that. So both energy and the related parts of running a house, building a house, and operating house with smart technology using modern disruptive apps and technologies, to try and improve efficiency and lifestyle without costing more money.
I can see that there is a big future for generating an area or a space where people come and are enthused, and invigorated by being in a place where lots of other people are all trying to develop new ideas and services.
Kym: In my own career I’ve had so many great ideas, but generally speaking they are hard to get off the ground, they start out with all the best intentions and end up costing me a pile of cash. I end up either closing them down, or selling them out or whatever. So with hearing all of these amazing ideas, I’m just trying to think of the numbers behind. Like financially, I imagine down the track when you get legal practitioners into it it will be a little business to have. But at the moment, I imagine that as it’s a prototype would it be fair to say that it’s not an efficient use of your finances at the moment.
Roger: Look, I was approached last week from a developer in New South Wales, to find out whether I would like to participate in a project to build 2000 homes. Now that alone would be enough business for me for the next 10 years, so we moved from in that sense building energy systems to building complete homes.
I didn’t quite finish the little story, so we’ve developed a modular home which is based on a panel which is able to be fitted into a container or onto the back of a semi-trailer. So 2.5 meters is the kind of maximum width without going wide load, and so we’ve developed these modules that plug together to become a home and I can do one or two storeys and I can do any number of bedrooms. So we basically plug them together like an enormous IKEA house.
Because I am not constrained by the other dimensions, so it has to be 2.4 wide, but it can be four meters in the other direction, I can have nice tall rooms. I can have clear storeys, I can have fabulous light. The whole building is made with a foam panel which is manufactured here in South Australia with a colour bond cladding, looks quite smart but it’s also very energy efficient. Very low heat losses in and out you know from summer to winter, nice tight bonds so that the house is airtight and therefore you don’t get drafts which destroy your energy efficiency. Because I can containerise them, basically I can build a house and put it anywhere in the world. We’re going to start in South Australia but obviously there’s a kind of a broader strategy there.
Because it’s built in a factory, and then pre-assembled, the onsite building time is really much lower than a traditional build. Part of this idea came to be because I watched the guys building my big building, and I would arrive most days for an inspection or for a site meeting. Pretty much always they’d be sitting in the tearoom having something to eat. After a while I wondered how it was that the building even got built, because it seemed that mostly they were in the tearoom. They did a fabulous job building the building.
But an Australian onsite worker cost typically in excess of 150,000 per annum per worker, and a skilled labourer is even more expensive than that. So the cost of building in Australia is almost entirely driven by the high labour cost of constructing anything.
Most buildings in Australia, almost all buildings in Australia are built onsite. So it’s variations on a guy with a hammer, and a ruler and saw, and he saws up, you know, cuts whatever it is and he makes it fit. So the exceptions to that, multi-storey buildings these days, typically will have a pre-factory build steel frame. You know, where each part is exactly measured and constructed in a CAD environment, and that steel frame goes up very quickly.
After that everything slows down, so typically the floors have to be poured with concrete, some sort of supporting steel work props underneath. Then you’ve got to wait two weeks to take the props out to build the next floor and so on and so on. So there are some mandatory times that take to build a building in Australia because most of the processes are onsite, labour intensive.
What that means is although our wages are the best in the world or close to the best in the world, our housing is also approaching the most expensive in the world, and your house acquisition is the single biggest cost that you face as a family or as an individual.
So in a sense we’re a very lucky country because we’ve got great incomes, but in that sense we’re not much better off than the average person anywhere because our houses are so expensive and that’s a kind of a 30 year process to get that mortgage down to zero.
So I looked at these guys while they were building and thought there is another way of doing it. If we expand or extend that idea of the steel framework to most of the fabric of the house, and have it all constructed in the factory and made exactly to size, that house could be built much more quickly onsite.
So I took that idea, and you might remember I’ve been working on this turbine now for some eight to 10 years. To build a turbine the precision is in the order of 10 microns. So to have the bits fit together and not fly apart when they’re rotating at 6000RPM, it has to be built exactly. So I knew that Australian factories were perfectly capable of building down to tolerances of one millimetre for example.
In the building industry a tolerance of five millimetres is thought to be very good. It’s more like a centimetre, so you kind of have a plus or minus. So basically you have a gap that you then fill up with some filler in order that the drafts don’t wash in.
So I said, okay, we’re going to make a whole house in a factory. It’s going to be built to a tolerance of one millimetre. It’s got to fit inside a container or on the back of a truck. It’s got to be able to be assembled rapidly, and therefore my onsite labour content is going to be dramatically reduced. My factory time obviously is more, but my onsite time is much less and the net cost to the house is going to be lower.
So we’ve gone ahead and we’ve done that. So these houses are well insulated, naturally ventilated so I use natural buoyancy, are quite light so the foundations are modest in terms of the size. The main thing the foundation does is stop the house being blown away on a windy day, so you have to hold them down because they’re quite light.
We have built for example a little one bedroom house for a caravan owner’s show, which was up in Hahndorf a couple of weeks back, built it in three days onsite. Dismantled it in one day and rebuilt it in two days down at Fluid Solar so in the carpark at Fluid Solar is a little one bedroom house, which includes bathroom, kitchen and mini laundry. So it’s a full little holiday cabin if you like that we built in three days. We think we’ll get that build time onsite down to two days as a likely speed will be able to do them, so we can do a four bedroomed house in a week for example.
Now in general terms it’s just not possible to build a house in less than 14 weeks and that’s if everything goes smoothly, you know a normal house. So if we can get the build time down to a week or you know something in that order the cost of the house is less. So we are aiming to bring that idea of affordable housing which is still you know, smart and comfortable to live in, with an energy system that basically allows you to go off grid or be near off grid to make the whole of the housing experience affordable.
I’d like to bring that to people on low fixed incomes, who at the moment can’t even think about getting out of the rental market into home ownership. Or perhaps simply offer long-term accommodation which is affordable for someone on a government pension, or some sort of similar scheme. Poor people, include old people who haven’t managed to save enough in their superannuation to live comfortably in retirement, so at the end of the day their fall back is the pension. It’s very difficult to live comfortably on a pension, and if your home ownership or your rental cost is two thirds of your total income each week, then you are really left with very little discretion income. So if I can bring down the price of housing then I can make it more affordable, and everybody that is in one of those houses will benefit from both the lower cost of the house and also the energy efficiency of the house.
Kym: So a four bedroomed house built in four days.
Roger: Yes, it’s an exciting concept.
Kym: And off the grid.
Roger: It can be off the grid that’s right, because we’re doing the envelope of the house to be energy efficient then the amount of energy that you need to run the house becomes much lower. Where the grid is available it simply reduces the size of the battery pack that you would need, and the batteries cost is one of the major contributing costs to the total cost of an energy system.
Kym: I’ve got my builders license, I’m not sure if you are aware of that.
Roger: No! Fantastic, I’m looking for builders.
Kym: Well you’ve got my number, give me a call. But I’m thinking about foundations here. If you don’t need a fixed slab, you could potentially do pods.
Roger: Correct. So typically 400 by 400 by 200 in a low wind category or 400 by 400 by 300 per footing, very quick to do and it even lends itself to those concreteness systems, you know where you hammer a stake in the ground and you use just the weight of the earth around. So that in that sense you could have those in a day and have a house finished.
I’ve also got an interesting idea, we haven’t done this yet but I’m thinking that there’s a lot of urban stock – I’ll backtrack for a moment. In terms of development, green field development is easy because you’ve got a blank sheet of canvas, but it’s not as energy friendly from the earth’s point of view, because you’ll be knocking down some fields or some forests in order to build housing. So one of the things that I would like to develop is called grey field renewal, where you renew a house or a suburb that is tired or at the end of its useful life, by replacing the housing stock with something which is more energy efficient and more modern to live in.
One of my ideas is that we could potentially have everything lined up, have council approvals and so on. In a two-week period I think we could demolish a domestic sized house, take that away and replace it with one of our new nice three or four bedroomed energy efficient houses. So in theory, I could send mum or dad to Bali for a couple of weeks or Queensland and they’d come back to a new house. So it’s a bit of an extension of you know make my back garden beautiful on the weekend, it’s come back to a new home.
That would allow large scale urban renewal using existing land, and very quickly turn that land into better accommodation but also affordable accommodation. I
Kym: Talking about the numbers, it’s four days to build, what sort of costings?
Roger: So you’re builder, so you will appreciate this. Our base cost is under $1000 a square metre, and that’s competitive with any current building technology. When you add in the time factor, so if you’ve saved that 14 to 28 weeks of holding costs, where for a family you’ve got to go and rent somewhere else for example. Typically, redoing an old house is a nine-month project, not a six-month project, so people can be in that sense out of pocket by a years’ worth of rent plus the holding costs of their home. So once you factor in the much lower holding costs of building, the whole process becomes very competitive with existing technology.
Kym: Then have you had anyone look at it from aesthetic resale point of view from like let’s say we build a 300 square metre home, it costs us $300,000, is the remark it there for people happy to pay that? Traditionally in Adelaide all our houses are made out of brick, and if you go to an inspection you’ve got people tapping on the wall to work out whether it’s a solid brick wall or not. Have you factored in elements of that? Is this house going to be viewed as being transportable for want of a word?
Roger: Sure, and we are very keen to avoid that genre of finish. So our aim is to have everything internally looking very much like a traditional house except that it’s not brick.
Interestingly, if you say to somebody look, what’s your current utility bills and there are many people in Adelaide paying 3000 a year altogether on utilities. So their gas might be 300, there electricity might be another 400 per quarter. Four sevens is 28, so about $3000 is about a very common number. If you said to somebody look, would you like a house with no utility bills, that’s a saving of 3000 per annum, there are many people who would go, actually that’s pretty attractive. I quite like that idea.
Kym: I love it, and my power bill’s a lot more than that and I’ve got solar panels as well. But, if I look at your house from the outside, does it look like a normal house?
Roger: Can look like a normal house. We’ve actually deliberately set out kind of an iconic strategy, so I’ve kind of change the look and feel to in general terms of light into the middle of the building, because I find that light coming through a clear storey changes the internal feel of the building. Having light come from two different angles, turns out to make the space inside feel quite different, and it’s only when you walk into those spaces that that effect comes apparent.
This dawned on me quite recently. I decided I would test out my technologies somewhere on myself as a first guinea pig. So we rebuilt our three-bedroom over what was the garage of my existing home, and you know, it crept across onto the laundry and made a little bit of extra room down the passageway. So we’ve built three bedrooms.
It’s got this external cladding with the foam panels, and the floors are heated and cooled by this new technology. The build time, because the builder was doing it using the traditional methods was the same time as it took to build any building. So we saved no money on that because the cladding cost is very similar to any cladding and so on. But it did give me a good handle on how it could look and how we could make it look you know good and like a normal home.
One of the things I did because I had a little south facing bathroom, with a tiny window that had to be very high because we were looking onto a neighbour, and you’ve got to have small high windows. I said look, we’ll put a skylight in the ceiling, and I was amazed at the difference that it made with the skylight coming in as well as the light. Both tiny windows, but because the light is coming from two directions it changes the airiness or the lightness in the room. So I try and always design rooms with either two windows or three storey and another window or a light coming in from the external, and it does change the spaciousness of the home.
Because we are not obliged to have a roof cavity, it’s a single panel. Typically 150 millimetres thick, and the external surface is the roof, and the internal surface is the internal ceiling of the home. So typically likely raised ceilings, and we can do any angle we like over two degrees, but typically it’s somewhere between four and six degrees. But it does mean the internal dimension of the room in my smallest building is 3.7 metres to the top of the ceiling, in the smallest home. So the old number is eight feet and that’s sort of 2.4 metres. So if you go to 3.2, 3.6 metres to your ceiling, the whole room feels spacious; it does not feel tiny. One of the features of old Adelaide homes is the fact that the ceilings were up at nine or 10 feet, so you had a 3.2 metre ceiling, and it makes a difference to the feel of the room.
It’s valuable from my point of view because that’s the place that hot air can go that doesn’t affect the person. So as soon as you are above eye level, the fact that the air is hot up the top doesn’t make you feel any hotter. It means that I can use that hot air at the top to exit out through this clear storey that I’m using for light, and drive natural buoyancy. So the whole of the ceiling is focused towards conducting the wasted heated air to the top of the building which is then exhausted naturally without having to have a fan.
So we use the natural buoyancy to drive air flow through the building I use the skin of the building itself to radiate heat into the room, and a radiating wall is much more comfortable than a point source of either heat or adaptive blowing hot air into a room. As soon as you’ve experienced the radiating heating effect, it’s clearly superior to and preferable to point heating of any description, which includes reverse cycle air-conditioning or radiators, you know where you’ve got you stand and burn your feet, and your head is still in a draft.
Kym: Can we move over to your connection and association with Tesla?
Kym: So you drive a Tesla?
Roger: I do indeed, it’s a fabulous car.
Kym: I remember seeing this at a party I think it was about two years ago, and we couldn’t find the exhaust pipe. We went out to the street and saw the car parked on the street, and the Tesla people will know have sort of unusual doors, and door opening devices. It’s a very unique car, and obviously no exhaust pipe which looks unbelievable from the back, but there are so many other features that are unique in that car. But can you please tell us about your Tesla and your connection with the company?
Roger: Sure. It’s the P85D, and you have to understand the naming system a little bit to know what that means. So the 85 refers to the nominal kilowatt hours in the battery pack. To put that into perspective, my building, my big 3000 square metre building has a battery pack with a useful capacity of 100 kilowatt hours, and my car has 85 kilowatt hours of a battery in it. So it’s a big battery for a little car.
That battery typically takes 6 to 8 hours to charge from completely flat, and depending on how I drive the car, that will get me somewhere between 350 and 500 kilometres.
So in practical terms, if you’ve just driven 400 kilometres it’s time to have a break. In general terms it is usually possible to find a place to plug the car in if you are and a holiday cabin, you plug it into an extension cord and into the power. By the next day, you’ve got another 200 kilometres or so useful range. So the car is mainly used around the city, where I drive to and from my place of work.
The big building that we’ve been talking about has almost 100 kilowatt with PV panels upon the roof, and most of the year I have surplus power. I have enough power in the middle of summer to charge seven or eight cars simultaneously. So I’ve provided car charging spots. I wrote to Tesla and said I’ve got this free power, and I would like to have some outlets. Tesla immediately sent me two of their outlet charges, so it’s now a destination point on the Tesla website for people in South Australia. They can come to Fluid Solar House and plug-in, and it’s one of a few places where you’re actually charging your car from the sun.
So it’s a genuine fossil fuel free solution. One of the criticisms of electric cars is of course that, you’re just using that power from the power station that burns coal anyway, so it’s not really saving anything. But from my own experience, we will be able to provide something approaching 1 million kilometres per year of car travel. If my occupants in my building drove electric cars, they can charge three times a week from my roof. Whenever there would be surplus energy we would be putting it into those cars in the car park, and that’s a genuine solar solution.
So if you think of the car as being the overflow charging battery that carefully dries to a nice place where there is some solar power, if we looked upon it as a broad prospect, we would have roof top charging from everywhere available. So charging electric cars driven by the workers in the factory or the business where they are working, and we would convert roughly half of our transport energy consumption from fossil fuel, petrol, to genuine solar power.
So one of the solutions for storing solar energy from PV, which is at the moment ridiculously expensive, is to actually just put that straight into cars that are part around the buildings. So my prediction is that from 20 years from now that will become the norm, and probably half of the people will have electric cars at that stage, because petrol cars last about 20 years, so they are wearing out and not being replaced. Rooftop charging during the day will become the norm for businesses, that would be useful, but a normal part of business activity.
Kym: There is a rumour going around that you got your car for free from Tesla.
Roger: No, that would be really lovely if that was true. No, like all things there is a price to pay. The car, P85D, so the is for performance P, and the D is for all wheel drive. So each wheel is driven by an electric motor. The performance is 0 to 100 in three seconds, so that means if you are a car nut, that is faster than any available Porsche that you can buy in a dealership in Australia, and it’s very quiet. It’s a beautiful quiet car to drive around in.
Kym: Have you ever been inconvenienced by having a flat battery?
Roger: In that car no. Because I charge at work, I drive to work, I just plug the car in and I drive it home at night. I don’t think I’ve ever charged my car at home. I’ve never had to, so literally I don’t even think about it. I just plug it in as I get to work, or there is a charger here in the afternoon. So if you start thinking about charging your card during the day instead of at night, then the whole equation changes. The last time I went to a petrol station and had a flat tyre. You still get flat tyres. But it’s literally something I’ve not even paid attention to any more.
Kym: Have you met Elon Musk?
Roger: I’m hoping to meet Elon Musk tomorrow night strangely. Elon Musk of course has been in the news supplying batteries to South Australia. He’s been in town this week at a space conference that’s been organised here in Adelaide, and we understand that he will be an unexpected guest tomorrow night at the Sod Turning ceremony, out at the wind farm which is out at Hornsdale.
That’s near James Town about two and a half hours north of here. So there’s a big celebration tomorrow night, and as a Tesla owner I was invited to attend, so we’ll all be driving out there tomorrow night to have this Sod Turn ceremony for the 100 megawatt hour battery pack that Tesla are about to install in South Australia, and it’s just possible with I may have the opportunity to have a chat with Elon tomorrow night.
Kym: Do you think he will be impressed by your building?
Roger: I would love him to be impressed by my building. He’s a fantastic marketer. He’s got a fantastic handle on how to market in his case cars for example. One of the things that I liked about his whole marketing approach is that no one else ever tried to sell me that vehicle. I found out about it. I read about it. I researched it on the website. I looked at people’s reviews. When I first went to a salesperson, they weren’t a salesperson. They were a customer service person, and they were just there to help me achieve my dream, which was buying the car. There were no sales at all in that sense involved in that whole transaction. I would like in that sense to do that same process with my buildings, where people know all about them, they’ve research them, they’ve done their cost comparisons. They’ve come to me already as a committed buyer, and really all I do is convert them into a crusader, who advertises my product for me. A bit like Apple sells computer. You know, they have people that who become absolutely enthused and dedicated to Apple technology because it’s great. That’s a completely different process to conventional sales and marketing, advertising campaigns, hard sell, you know that whole kind of traditional way of doing business.
Kym: Does your car drive by itself?
Roger: It does. Interestingly it gets a bit annoyed with me if I take my hands off the wheel, and I don’t know how it knows that I’ve took my hands off the wheel. So for example if you simultaneously you know, want to pull up your left sock and reach for a handkerchief to blow your nose, immediately the screen flashes and it says put your hands back on the wheel. So you’re not allowed to take your hands off the steering wheel, but in general terms it will drive itself better than I can after a little while when you’re tired and not paying attention. It’s anticipating more quickly than you are. So I quite often put it on, so even though I’m still holding the steering wheel the car is self-driving. It will change lanes by itself, so if you put on the lane indicator it will wait until there’s a free space beside you because it’s looking for vehicles beside you and it will then change lanes into the next lane and resume the process.
It’s very good at managing the distance between itself and the car in front, and you can set that to a range of vehicle lengths. Typically, you get caught as a drive when the car in front of the car in front of you decides to turn left or stop for a dog or something, the car behind it is obscuring it, so you can’t see the event happening. So the guy in front is suddenly decelerating and the car behind him of course starts to decelerate and it’s only then you become aware that suddenly your stopping distance is starting to encroach.
The Tesla’s fantastic because it’s continuously measuring the distance between you and the car in front and calculating your speed and stopping time, and it warns you as soon as you’re approaching close to coming up to the vehicle in front of you too quickly. So that’s just one of their really nice driving features.
Kym: So how far are we away from you being able to sit in the back seat of your car, it to drive you to work and you to check emails, send text and make phone calls?
Roger: The technology’s there, the problem is drivers. So if we could get rid of drivers off the road, if all cars were self-driving they would all drive in perfectly ordinary predictable patterns. They would all keep away from one another, no one would pull out suddenly into lane of traffic you know, and have the car behind run into them etcetera. So the main problem is impatience and lack of attention and of course a self-driving vehicle has neither of those attributes. So they’re patient and they wait you know for the right length in front and so on.
So eventually yes, I’m sure we will move to a largely if not entirely self-driving autonomous vehicle driving because you’ve got all that time. You’ve got time to do emails.
Kym: What’s your call on that, five or 10 years, 15?
Roger: So it’ll be driven by the rate of turnover and in South Australia the average is a vehicle will last 21 years, so it will be a 20 to 30 year timeline here, because it’s a dry state and vehicles don’t rust out. In the Eastern states I can see it happening a little bit more quicker than that because the vehicle’s lifespan is lower. Once you’ve driven electric vehicles you would not by choice go back to a petrol vehicle.
Kym: Can we go back and I’m fascinated by this and that whole talk about that new type of housing. Potentially from my point of view it’s a solution and that’s the world wide solution for us, low cost housing and that potentially could change the world. I’m not passing that off lightly but I’m fascinated by it and I want to learn more about it. But I think it’s the way of the future and you’re onto something big, but how does that fit into your world from like you’ve got medical happening and now you’ve got building. How do you balance the two? Do they overlap? Are they worlds apart?
Roger: No, funny enough they’re driven by the same desire, so as a medic our ethos is to help people and if you like, the traditional motto is ‘First do no harm’, so whatever you do you try never to do a procedure or give a treatment that’s disadvantageous. But more importantly that we are trying to help people in their individual paths through life with in my case pain management which is a fantastic field to be in. people who have been in pain sometimes for years, for them to get out of pain is a life changing event. Their whole face changes, their visage, their outlook, their depression lifts so you know it’s a very rewarding field to be in to relieve pain.
The problem in general terms with medicine is you’re only ever treating one person at a time. In that sense you’re entire capacity to help and influence people is limited to the number of people you can see in a day, and the number of days you want to work, and the number of years you keep going at it.
I’ve always had the idea of that if I can bring a change in technology to a million people or some millions of people that would be more valuable in a way than any amount of medical care that I can deliver to one person at a time. So in the medical sphere, the best thing you can do is introduce sewerage for example, because that stops a whole lot of diseases being passed on. After sewerage you have fresh clean water, and if you can do clean water and sewerage then you do food management. So you have refrigeration.
Those three basic strategies deliver health to a population which is otherwise diseased and dies early. So those three public health measure are the three most important things.
So delivering medical care, the individuals are a long way behind that in terms of net good to the public that you can produce. So an individual doctor intervening with an individual patient is a rewarding career, but you’re still only ever helping one person at a time. So I’ve had the idea of that if I’ve had a good idea I have to share it as widely as possible and have as many people benefit from it as possible.
Kym: For someone in the medical sector who is a graduate, would you suggest radiology as a career path is a good one? Would you suggest that there are too many radiologists now?
Roger: There aren’t too many radiologists because the rate that technology has expanded has substantially exceeded the capacity of radiologists to deliver that process.
Kym: So the field is widening with what they can treat?
Roger: So I think treatment is becoming a significant component of radiology. Whereas when I started interventional radiology almost didn’t exist. Out of hospital treatment is also expanding quite significantly, so the range of conditions that can be treated as an outpatient. I think that’s very valuable from the point of view of public policy, because if you can get someone who’s got back pain back to work for example, or you can relieve someone who’s got shoulder pain and get them back into some sort of, even volunteer career is better than them sitting at home being disabled and feeling disabled, so just picking that as an example.
Any outpatient treatment pathway that leads people back to a useful productive life is a fantastic use of resources, compared to – and I’m exaggerating here, compared to the current situation, where typically, in one’s last year of life you absorb 25 to 30% of your lifetime’s medical resources. So in that very last year of your life and you’ve usually got a terminal condition or a pre terminal condition, you use an enormous amount of medical care, for at the end of the day a very modest extension of your life cycle for example. So using all of that resource on people who are inevitably in the very last stages of their life is not a fantastic allocation of resources.
Allocation of medical resources is a very complicated, very problematic area, so health planning if we want to call it that, because there are a whole series of competing demands on the resource and they’re not all driven by the broader picture of public good. So there are factions, there are enthusiasts, there are existing infrastructures that has to be supported.
In South Australia, we have for whatever reason decided to allocate one sixth of the entire health budget for the whole state to do the hotel service just for one building; that the New Royal Adelaide Hospital. So one sixth of our entire health budget will be spent for the next 30 years on the physical building and on the hotel services to support the Royal Adelaide Hospital.
Kym: What are the hotel services?
Roger: Cleaning, porters, security guards.
Kym: One sixth?
Roger: Of the entire health budget is being spent on one building which in itself is not delivering any healthcare. So that’s a good example of an allocation of resources that I don’t believe is the best use of resources.
Kym: So do they have to take resources away from what currently being used by all the other medical practitioners in the state?
Roger: Inevitably. Indirectly or directly, they have to downsize other services or they have to tax everybody more. They are the only two possibilities. So that’s an allocation of resources that if you look at it from that point of view, we could have had one of the best health research institutes in the world if we had allocated all of that money to health researchers as opposed to a construction of a building for example.
So we are misallocating resources in health if our perspective or if our focus is on delivering the best good or the greatest good to the most people.
Kym: Can we move over to finance now, do you have an in-house accountant working for you here?
Roger: We don’t. We use a firm of accountants. We have moved recently. I’ve been lucky enough to have the same accountant for most of my professional life. He’s moved a couple of times from firm to firm, and we’ve followed him rather than stay with the firm.
Kym: How much of your headspace is allocated to finance and all things money on a daily basis? Are you so hands on that you’re checking your bank balances every day?
Roger: I think it’s much more sensible to have structures in place. First of all good reporting structures, so we run a business. We have around 50 employees, so that’s a big wages packet every week, and obviously we need to know what cash flow and where our expected outcomes are going. So everything is cash flowed and we know through the year of where we’re going to be at.
But in general terms, trying to run a business by looking at how much money you made is much less successful than looking at how a business is delivering a service. Making sure that your service is relevant to your patients if it’s a medical practice. Making sure that your quality of service is maintained. Making sure that you’re keeping abreast of current technology so that you are offering services, which are appropriate to the needs of your patients.
In general terms, if you deliver good services and you have good structures in place for managing your staff and HR, to some extent that then flows to a successful business which is making money. But if you just look at the end product which is making money, you’re going to miss the steps along the way, for your business to work efficiently and effectively in the first place.
Kym: Is it sort of like a micro patient focused analysis of your business that you do on a regular basis, to work out whether you feel that your patients are happy coming to you for the services that you are providing.
Roger: We have a very intense process of quality assurance at every level of the business. So at a basic level of radiation protection for example, there’s a licensing requirement, there are monitoring requirements. We measure and report the amount of radiation we’ve used on patients, to make sure that those amounts of radiation are within the guidelines and established appropriate amounts, and what’s an ideal amount of radiation to use. So radiation protection if you like is at one level of the quality assurance that is an automatic part of the process.
We look at the mix of the workflow, so for example, patient waiting time for me is a critical factor. Patients hate waiting and why should they. So if you make sure that your patients are given appropriate timely appointments, so that the doctor is available at the time that they are allocated or available within 15 minutes is our target. That patient is likely to go home and say, hey, I had a great service today. These people looked after me.
Phone men at the front desk are critical. In fact, the front desk is probably as important as any other part of the process, so that the patients are politely answered, their queries are dealt with, their concerns are met. All of those things which are not medical at all in one sense are critical from a patient’s point of view that they feel that they are being looked after. As well as being looked after, so that their movement through our workflow is smooth for them, is comfortable, and is respectful.
They are not driven by money, but the net result is that our waiting room is full, so that tells me that we are delivering a good service.
Kym: Self-managed super funds, do you believe in them? Do you have one?
Roger: I do exclusively. My view is that if you are giving your money to some manager and he’s charging you 30% of the income that year, he has to be doing a fantastic job. So if the income on that year that your super fund is say 5%, and it’s a 2% service fee, he’s just taken 40% of your hard earned income to do probably not very much other than park the money somewhere.
I’m not a big fan of the Australian stock market. So if we have a look and the first time the Australian stock market got to 7000 was in 2006/7 and it’s still not back at 7000 now. So 10 years later, if you had invested your money in the stock market in 2007, you would still be waiting just a guess and return.
Kym: Just to recuperate your losses, you would still be waiting.
Roger: Correct. There are a few things about the stock market. If you factor in the effect of the stock market reports either the top 20 or top 50 or 100 stocks, if you’re in a company which goes bad, you drop out of that list. So automatically every year the failures are removed from the list. So over a period of time, we don’t follow the same 100 companies over a 20 year cycle, we follow the best 100 companies.
Now, if you were investing in a company and you knew next year that it was going to go bad, well of course you would sell your shares when it was still valuable. But in fact, if you’ve invested in a company which goes bad and drops out of the top 100 or whatever measure you are using, you’ve still made a loss. You’ve still had to sell out you know two cents a share or the company closed, it then takes new companies coming into the top 100 and say gee whiz, they’ve gone up this year. So it’s a false measure of the performance of companies in general, if you only measure the performance of the top 50 or the top 500 because you’re automatically excluding the failures.
So when they quote performance of a long period of time, the stock market is artificially reporting better results that if you had have owned the same stocks for that period of time. Not all of those stocks are going to do as well, and some are going to drop out.
If you do some sort of exchange trading fund, where you are just following the mean, if you were following the mean in Australia your money still wouldn’t be worth of what it was worth in 2007. So it’s not been a great investment.
Counteracting against that, you do get some tax credits, where the company taxes ultimately add onto the individual taxpayer. So if you are on a high tax bracket, those imputed tax credits can be valuable. The Australian stock market is not valued to the same extent as the American stock market, so our earnings multiple at the moment would be 14 or 15 to one as the median, so that’s about what a share price should be. In America, the multiple is now 27 times the earnings, so on the face, the American stock market is substantially overvalued. It’s overvalued to the same extent that it was in 1928. So at some point soon, if events pan out as they usually do, there has to be a substantial correction in the American stock market to get them back to something like 15 times the annual earnings.
I heard the other day Myers reported their results, so their earnings across the group were $11 million net. I thought how many employees have they got, and how much capital have they got invested. If you divide that into the $11 million, that return on investment is terrible. In general terms, retail is probably not a good area to be investing at the moment, because the Internet is going to take over 30% of sales over the next 10 to 20 years let’s say.
So if you have invested in traditional floor space retailing then you are probably on a losing market for the next 20 years. If you then go and invest in an up comer and invest in Amazon, you know fantastic share price or Tesla; amazing share price. Tesla is now capitalised more than Ford, the American motor company. He is not producing anything like the number of vehicles, but the share market has valued him at $400 a share.
So those people who look like are going to be great tech successes, Amazon for example, I don’t believe has actually reported a profit in 20 years.
Kym: They keep reinvest in into the company.
Roger: They do. So in general terms, if you’re reliant on a fund manager and he is following the stock market, then he’s probably over the last 10 years not made a fantastic investment for you.
Kym: In your super fund, do you have properties or do you still have some stocks but you will not so enthusiastic about them?
Roger: My advice to investors is focus on what you know. So a lot of my effort goes into my own business and trying to improve the quality of the business and we talked about that. If you understand the stock market, and you think you can do better than the average return of the average fund manager – I’m saying don’t invest in the stock market. If you understand real estate, you’re probably better off investing in real estate that you understand. So I think the most important thing when you are making investment decisions is to not go in as a blind investor, relying upon someone else because probably they are going to take a percentage of your money by some means of fee or something else.
You are better off in understanding the process in which you are investing, having a view as to what’s likely to be successful in the long term and investing accordingly. For me, coming from Sydney, the property market has been second to none as a long-term investment vehicle. It is called real estate for a reason.
Kym: What about life insurance, trauma, TPD, do you believe in it, are you over waiting that, or do you think it’s something that doesn’t fit into your portfolio?
Roger: Again, without being too personal I see the value of insurance as managing a risk, which you could otherwise not accommodate. So if you can afford to write your car off over the life of a vehicle, you’re better off not ensuring it because eventually the insurance premiums must at least equal, if not exceed the loss that you would incur.
Having said that, if you have an individual asset that you own and can’t afford to lose.
Kym: Like your income earning potential.
Roger: Potentially, then it would only be sensible to insure against that, if the value of insurance is not excessive, you know if the cost of the insurance is not excessive. We all insure our houses and not expecting them to burn down. Interestingly, we don’t insure our marriages; although 50% of the marriages do burn down, and maybe we will be you know as a society, we would be better off with the expectation that all people getting married getting into an insurance deal, in other words, a prenuptial, where they agree at the beginning of what would happen at the end of the relationship. So there is no need to employ very expensive lawyers and a lot of heartache, entering into a situation which is already turmoil. A breakup is always a very unhappy process.
The legal system, if we follow Westminster, so the Australian legal system is adversary, meaning you get two sides and they are going to fight. So having partners who are willing to fight, backed by lawyers who are just too willing to fight is a recipe for disaster. I noticed a couple of days ago that they announced an overhaul of the Family Law Act.
So if we were sensible about insurance, one of the insurances that we would take out is that we would automatically enter prenuptial agreements with our partners, and make sure that at the end of a relationship there is a comfortable parting of the waves that are pre-organised, pre-agreed set of rules. You asked me about insurance, that’s a good example of insurance. That’s a high-risk and that’s a big risk.
We insure our motor vehicles, principally because the risk of being liable for a third party claim is much greater than the value of the vehicle, so again, very sensible risk management.
Our businesses are all insured against loss of income, because if there was a fire in the building, we would be carrying all the costs of running the capital for example, all the machines are all leased. So that would be you not a major risk for ours not to be able to at least cover the mandatory outgoings over the period of time when you have reinstated the business.
I think insurance, in general terms, should be a consideration of acceptable versus unacceptable risk, where you cover yourself for losses that can’t otherwise be managed from within your capacity to pay or sustain the loss.
Kym: I know that you love playing your violin.
Roger: I’m a passionate violin player.
Kym: How many years have you been playing?
Roger: I’m going to say over 50, because that would be giving my age away, and I can still remember the first time I’ve picked up a violin. I was six, and I was so excited about this violin that my parents had got me as a present. I wasn’t allowed to play it until I had got a violin teacher, so I was hanging out for this very first lesson because I really wanted to play this violin.
Over the next 10 years or so I studied moderately and consistently, and I would say consistent practice as a student is the single thing that sets a good player apart from a not so good player.
At about the age of 16, the HSC, the Higher School Certificate for New South Wales and for the studying for intense effort to get into medical school, ultimately took me out of violin playing for a period of time.
I started again when my eldest daughter was seven, and I was trying to get her to play the violin. I was kind of revisiting my own childhood and said it’s great fun, and you’ve really got to do it. It’s something that you will really enjoy. My seven year old daughter said to me, dad, do you play the violin? I said yes I do, thinking I used to. She said to me, have you still got your violin? I’ve never seen you play it. I thought she’s right, she’s never seen me play the violin, and it’s sat in the cupboard all those years. I had carried it around with me from place to place, but I just didn’t get it out and play it. So I got out the violin and then I started playing again.
It was very funny, I joined a local string orchestra, and I was sitting at the back of the second violins, which is about as far back as you can go. The guys sitting next to me said, how long have you been playing? I did a mental calculation and said a long time. He said who is your violin teacher at the moment? I said I don’t have a violin teacher at the moment. Afterwards, I realise that he was suggesting that maybe I should get a violin teacher!
So I went back and got out my books, practised all the technical and effectively kind of relearned at high speed, and the process that I have gone through as a kid. I still had all of my scales and arpeggios, you know minor thirds and sixths and all the things you do. Eventually I got myself back playing better than I had been able to play as a child which was fabulous.
I joined a string quartet that has played every second Sunday for about the last 30 years together. We play right through the classical string repertoire a few times. For about the first five years that I was playing with these guys, and they had been together longer than I had joined their group. They would say to me, do you like Mozart Kursaal 465? And I had to say I’ve never heard of Kursaal 465.
So after about five years of playing consistently, I started to see things for the second time, so in that five years I was pretty much always playing something that I had never seen. So I got better at sight reading and being able to think fast enough to work out which position I wanted to be in, and how I was going to bow it. After that, it became more and more about the way you can make music with someone else all fit into a group that is trying to make a cohesive sound, and play with a certain style or passion. So it becomes about making the music and about reading the notes. If you can get to that point with a musical instrument, it really is a fabulous experience.
So then my seven-year-old daughter, in fact did learn the violin for a while and I want say rebellious, but she is certainly her own person and she decided that she was going to play the cello. We went ahead and got a cello for her, and she took that up and went on to become a really delightful cello player and that has become part of her adult experience. As a cellist she teaches little kids now music in school, so she is quite an accomplished player in her own right, but also enjoys teaching other little children that same skill base.
My second daughter, moved from the violin to the viola and got a scholarship in high school play in her viola. The number three daughter is currently still playing the violin, and she is now a really adept violinist. She’s got a great singing voice, so her singing has become more important to her than her violin playing.
My number for child, is also a very adept violinist. He plays without effort. He has great tone and naturally gifted and doesn’t do a lot of practice despite my efforts. Again, he has got to a point where he is able to enjoy the music that he’s making, and not just struggling with the notes.
My littlest one at this stage is able to sing in tune, which is a fabulous skill to have at the start, and has yet to take up a musical instrument. Now he’s not yet three, so I guess we can forgive him for not getting onto the keyboard or the strings. I’m sure he will in due course and probably start on the violin I guess.
Kym: What is your favourite piece to play?
Roger: Funnily enough Mozart Kursaal 465. It’s called the Dissonance, and so it’s a string quartet where Mozart is experimenting with almost the clash between notes that are very close to one another for example, or having two of the four instruments playing slightly at odds with the other two. So it was one of the early pieces of music that led over the next 150 years to the sort of Stravinsky, that 20th-century sound of these really interesting clashes. Or Brahms wrote some fabulous music where in an orchestra you might be playing three four while someone else’s plane four four. So you know he literally has the music you know head banging against itself.
One of the very early examples of Mozart, and at this stage he had written more than 400 pieces of music, so 465 was his 465th in his catalogue of roughly 600 pieces that he wrote, and he started to experiment with this idea of clashing or interference of sounds with each other. It’s a fascinating piece to play, and four very different parts to the string quartet, and each one of them has a kind of a challenge, which is not just technical. It’s more about the way you interact with the other people.
Kym: Doctor Roger Davies, thank you ever so much for your time today, I’ve enjoyed our chat and really hoping that the listeners enjoy it half as much as I have today.
Roger: It’s been absolutely my pleasure, and thank you for the conversation that we’ve had.
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