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Speaker 1: Could I mate a big meeting coming up next week,

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Speaker 1: very big meeting, and the markets are saying pretty much undersent,

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Speaker 1: pretty much one hundred percent probability of in just rate decrease.

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Speaker 2: They're talking twenty five base points.

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Speaker 1: You, Steve good Goodness has actually been out there throwing

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Speaker 1: out the fifty base points a few times, maybe just

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Speaker 1: sort of tickling the market a bit.

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Speaker 3: On X.

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Speaker 1: I mean, Stephen Coculas on X. What's going on out there?

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Speaker 1: What's changing? Where do you see it all sort of developing?

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Speaker 1: You know, like what are the developers?

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Speaker 2: What's the momentum.

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Speaker 1: But we'll leave money markets out of the moment, and

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Speaker 1: we'll leave out what the banks are saying at the moment,

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Speaker 1: and we'll leave at what all the other experts out

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Speaker 1: there are saying the moment.

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Speaker 2: What are you thinking? What are you feeling and hearing?

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Speaker 3: You're quite right, I am poking the bet that call.

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Speaker 2: Well, you do that on XC. I know you do

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Speaker 2: it on purpose.

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Speaker 3: It's more to generate a conversation, Yeah, because I get

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Speaker 3: frustrated and economics about a narrow consensus that doesn't question

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Speaker 3: where we are. So I'll take a step back. We

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Speaker 3: know that there is a there is an interest rate

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Speaker 3: that is what we call neutral, that doesn't add or

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Speaker 3: subtract to a functioning economy, and that's about three to

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Speaker 3: three and a quarter percent. We can't pinpoint it any

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Speaker 3: more closely than that as an official rate, as an

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Speaker 3: official cash rate. When, if, and when interest rates are

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Speaker 3: at that level, it's at that what we might call

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Speaker 3: the goldilocks, not too hot, not too cold, just right.

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Speaker 3: When the economy is strong or and or we have

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Speaker 3: high inflation, interest rates go above that level to scale

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Speaker 3: back the economy. When the economy is weak, they go

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Speaker 3: below that to stimulate borrowing spending.

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Speaker 1: So right now you would say the current cash rate

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Speaker 1: is restrictive, restrictive.

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Speaker 3: We're at three eighty five three point eight five percent

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Speaker 3: on the official rate, that's let's just call it fifty

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Speaker 3: basis points above neutral now.

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Speaker 2: And who also endorses that they do They also say,

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Speaker 2: we still believe that the current cash rate official rate

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Speaker 2: is restrictive.

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Speaker 3: Correct. So we've had the RBA governor, we've had Sarah Hunter,

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Speaker 3: who's sort of the chief economists I think her official

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Speaker 3: to assistant governor. We've had them coming out in the

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Speaker 3: last month or two or three saying that rates are

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Speaker 3: still restrictive, yes, and I think everybody i've heard agrees

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Speaker 3: with that. Now you have, as I said, you have

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Speaker 3: rates restrictive when you've got high inflation or an overheating economy.

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Speaker 3: Now the economy is not overheating. Definitely, definitely not. GDP growth,

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Speaker 3: which came out a little while ago and now sort

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Speaker 3: of a little bit like ancient history was weak, and

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Speaker 3: we've had things like retail spending, building approvals, consumers sentiment,

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Speaker 3: they're all pretty soft. Yeah, just have an overhead of economy.

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Speaker 1: Just on GDP though, just so for our audiences, just

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Speaker 1: remind us of something. So the annualized GDP is one

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Speaker 1: point two.

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Speaker 3: Around that point one point three three one.

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Speaker 1: Point three, okay, which is considered to be weak. That is,

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Speaker 1: GDP growth from one year period to another one year

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Speaker 1: period has only grown by one point three percent relative

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Speaker 1: to the previous period and GDP being the usual measurement.

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Speaker 1: But in addition to that, the quarterly, last quarterly GDP

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Speaker 1: growth was.

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Speaker 2: Point two, like this is not very good. Point two,

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Speaker 2: so that means.

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Speaker 3: Below the population. So that's why per capita.

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Speaker 2: And we're going we're in a recession.

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Speaker 3: We're going back with back need correct.

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Speaker 2: But we just need the per capital bit out at

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Speaker 2: the moment because you know, it's complex. I don't know

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Speaker 2: whether they should we shouldn't.

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Speaker 1: Do that, but but like if we just look at

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Speaker 1: the number, it's zero point two, which, by the way,

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Speaker 1: even if you extraplate that out, you know, for one year,

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Speaker 1: we're talking about zero point eight eight less than one

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Speaker 1: percent less one percent, which is strong.

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Speaker 3: In fact, it's weak.

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Speaker 4: And relative to other countries, very average compared to the US,

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Speaker 4: although they've got a bit of volatility with the Trump

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Speaker 4: tariffs and the big budget bill and all this other

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Speaker 4: stuff whatever it's Cobb.

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Speaker 3: Yeah, their economy is doing better than ours. New Zealand's recovering.

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Speaker 3: They did have a recession last year, but they've recovered.

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Speaker 3: They've had RB and Z New Zealand central Bank cutting

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Speaker 3: rates aggressively, really aggressively. Yes, so we are not performing

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Speaker 3: as we should. It's a bit like your old school

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Speaker 3: reports doing okay, but could be doing better. Economy okay.

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Speaker 2: You know what's funny about that? That usually meant that

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Speaker 2: you were not paying attention.

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Speaker 3: And you weren't. You weren't functioning at your potential. Correct,

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Speaker 3: because you're goofing off looking at the footy, and I

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Speaker 3: actually feel does my school report mark.

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Speaker 1: I feel that our government, I won't use the word guilty,

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Speaker 1: but is sort of participating in that.

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Speaker 3: Yeah.

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Speaker 1: I just think the goofing not maybe not goofing off,

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Speaker 1: but not paying attention, acting fast enough and not paying attention.

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Speaker 1: I just don't think there's enough attention paid to what's

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Speaker 1: going on there because they're not experiencing it. Be a

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Speaker 1: business owner, mokety the I'll take two steps back. One

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Speaker 1: is that this productivity summit, that treasure gim charms has

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Speaker 1: gone August. In August, that's still a little way away.

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Speaker 1: Look fair enough. But I can sit here and tell

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Speaker 1: you what will results be. We know it.

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Speaker 3: We know what the productivity issues are. It is the

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Speaker 3: tax system, It is red tape, it is skills education

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Speaker 3: and training. I was at a builders function last week,

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Speaker 3: I think it was, and even though the labor market's

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Speaker 3: a little bit softer, they can't find the tradees they

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Speaker 3: need to build a house.

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Speaker 2: And therefore cost of building I.

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Speaker 3: Do need that electrician, that bricklayer, the machine operator, whatever

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Speaker 3: the hell it is.

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Speaker 1: I got to pay up because because they're not stupid,

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Speaker 1: they were I'm so busy, I can't get there.

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Speaker 3: So that we know what productivity is about, skills, tax,

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Speaker 3: all these sort of things. Just do it, as like

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Speaker 3: the good old Nike. Just do it. You know, we

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Speaker 3: know what the result is going to be. And Okay,

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Speaker 3: there are going to be policy decisions to boost productivity

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Speaker 3: that might not be popular. You know, you're going to

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Speaker 3: crack a few heads when you're changing the rules and regulations.

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Speaker 3: But I look back at you know, Mark, I'm a

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Speaker 3: huge fan of Paul Keating and even Peter Cascello in

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Speaker 3: his heyday, you know, introduced the GST, introduced the Future Fund,

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Speaker 3: the Sovereign Wealth Fund, did a whole lot of stuff

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Speaker 3: that think, yeah, that's good Keating, reforming the banking sector,

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Speaker 3: all this sort of stuff. I opened that the competition

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Speaker 3: floated the.

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Speaker 1: Dollar reform supernuation. Right now, he's going nuts about what

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Speaker 1: they're proposing to.

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Speaker 3: Fair enough, fair enough to So there's a whole lot

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Speaker 3: of things that those reformers did twenty to thirty years ago.

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Speaker 3: What cost, It's a long time ago that we are

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Speaker 3: benefiting from today. We need that next increment of Okay,

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Speaker 3: take a deep breath. This Australia is doing okay, But

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Speaker 3: if we don't change these issues, it won't be long

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Speaker 3: before we are not doing okay.

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Speaker 2: And as Chris Joy said with your Beeth Economy, I

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Speaker 2: don't buy that. It's more of the it's more of

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Speaker 2: the point that he's trying to make.

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Speaker 3: I think, yeah, you're using colorul language to make a point.

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Speaker 3: No good on him, but we are at risk of

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Speaker 3: we do know, and the Treasurer knows this. And you know,

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Speaker 3: good old Jim I love him. I think he's a

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Speaker 3: good guy and he's working his tail off to try

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Speaker 3: to change things. He knows what's got to be done.

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Speaker 3: But he's got to bring the people with him. That

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Speaker 3: speech he gave to the Press Club what was about

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Speaker 3: a month ago now, he said, I've got to bring

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Speaker 3: people with me. I can't just sort of from on

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Speaker 3: high say I know everything that's I've got to repair.

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Speaker 3: So that's sort of why he's got to consult the

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Speaker 3: Trump the Electric. Yeah, he's not like that. He's got

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Speaker 3: to consult the Electric. You know, he's got to sort

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Speaker 3: of bring them along. So if we're to change the

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Speaker 3: tax system, if we're to do something on the GST,

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Speaker 3: if we do do something on negative gear and capital

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Speaker 3: gains tax, if we're to do some reform that cuts

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Speaker 3: red tape that might cause that business to fail because

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Speaker 3: they're relying on that tape to keep them in business.

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Speaker 3: Well sorry mate, you're losing out. You know, We've got

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Speaker 3: to changes for the efficiency of the economy. That's where

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Speaker 3: he's coming from. So that's but these things are more

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Speaker 3: long run. They're not going to change the economy tomorrow.

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Speaker 3: Even if you had your magic one today, it's not

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Speaker 3: going to change the economy tomorrow. They take a while

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Speaker 3: to permeate through the economy. Doesn't mean you don't do them.

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Speaker 3: You do them, do them faster, because the sooner you

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Speaker 3: do them, the sooner you get the benefit.

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Speaker 1: Well, so I noticed the Prime Minister right this very

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Speaker 1: day whiles you and I record this podcast, is actually

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Speaker 1: launching something today actually where he's calling on private enterprise

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Speaker 1: small business owners to do more for our economy. And

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Speaker 1: prior to you coming in here, I had a couple

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Speaker 1: in who's just closed.

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Speaker 2: Down the business.

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Speaker 1: You know, they're one of the statistics that we keep

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Speaker 1: reading about in terms of they're not bankrupt, but they've

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Speaker 1: closed the business down. Business closing in Australia and they're

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Speaker 1: a new South Wales couple running a restaurant, hospitality usual story.

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Speaker 1: What do you think about the Prime Minister saying private enterprise,

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Speaker 1: you're in private enterprise, you're for yourself, you're doing more

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Speaker 1: for the economy.

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Speaker 2: I mean, we're doing the best we can.

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Speaker 1: Like, I mean our response might be back, well, that's

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Speaker 1: a bit unrealistic, PM, Yeah.

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Speaker 3: Is it? Look? What is it?

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Speaker 2: Mate?

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Speaker 3: Is it?

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Speaker 2: Taxes? Is a gest What are we talking about here?

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Speaker 3: Because it's a couple of those things, and I I

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Speaker 3: don't want to move away from the fact that we

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Speaker 3: do have restrictive interest rates. Just by the way, I'm

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Speaker 3: wondering if we did have an interstrate structure, which just

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Speaker 3: goes back to that fifty point call that I've got,

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Speaker 3: which won't happen, but I'm still going to make it,

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Speaker 3: if we did have a lower interstrate structure, if the

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Speaker 3: Reserve Bank move rates lower, that's not the fix fix

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Speaker 3: all of everything. But cyclically, as the cycle changes, it

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Speaker 3: gives every Already the two rate cuts we've seen, I

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Speaker 3: know people saying, thank god that's happened. Now. It doesn't

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Speaker 3: mean they're going out and you're doing cartwheels down Pitt Street.

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Speaker 3: You know, I'm back happy days are here again. But

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Speaker 3: the sense of relief is obvious. My repayments have gone

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Speaker 3: down a couple hundred bucks. I'm still not going out.

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Speaker 3: I'm still being very cautious with my money. But they're

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Speaker 3: seeing the early stages of improvement. Let' learned this small

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Speaker 3: business sector. So the PM sort of saying we want

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Speaker 3: the private sector to get out, Yes, we do. You know,

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Speaker 3: business investment for fifteen years has been shocking. That's one

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Speaker 3: of the reasons we have bad productivity. Businesses have not

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Speaker 3: been investing in in technology, artificial intelligence, these sorts of.

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Speaker 1: Things activity started, yes, whereas the US and Germany unbelievable, staggering.

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Speaker 3: You know, in fact, a lot of Asian economgis that

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Speaker 3: I've seen the things on YouTube or whatever of car

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Speaker 3: manufacturing plants. Now there's barely a human. There's machines that

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Speaker 3: are screwing on the wheels and the seats and the windscreens.

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Speaker 3: A couple of humans working in the control consuming what what? What?

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Speaker 3: How bloody good is that?

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Speaker 4: What?

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Speaker 2: But what? Steve Coog fantastic during the and I was

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Speaker 2: only having this conversation some of the other day, and

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Speaker 2: I saw or a syntadinas who was the he was

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Speaker 2: a Minister for.

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Speaker 1: Industry, Innovation and Science under the termal government, right correct,

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Speaker 1: and then and then enough that under Morrison okay as

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Speaker 1: well so and Arthur now Is was becoming the embassad

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Speaker 1: in the US and now he's he's more in a

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Speaker 1: consultancy bit of industry. But but the thing that we

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Speaker 1: have we don't even have a Minister innovation anymore, and

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Speaker 1: there's no I mean, innovation is about what we're talking

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Speaker 1: about here in terms of productivity.

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Speaker 2: We need more innovation and we need businesses to be.

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Speaker 3: Encouraged to risk takers, not ridiculous risk, but to take

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Speaker 3: a risk. Mark you took a risk with every business

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Speaker 3: decision you take. Still do you do? Of course you do,

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Speaker 3: and not everyone's going to pay off. They don't. But

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Speaker 3: if you get most of them pay off when they

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Speaker 3: path they do well, that's good for the economy. And indeed,

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Speaker 3: in a funny way, this is why you want businesses

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Speaker 3: to start up. And if that idea doesn't come to

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Speaker 3: fruition and change the way things work, that's okay. But

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Speaker 3: we don't punish that poor decision, not poor decision, the

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Speaker 3: decision that didn't didn't take off, for example, because the

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Speaker 3: ones that do are fabulous. And again just look at

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Speaker 3: the USA are the innovation areas in innovation, technology and

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Speaker 3: the things. And this is the other thing about our

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Speaker 3: economy too. We've got to remember, and this isn't going

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Speaker 3: to change. We are not a manufacturing economy. We've got

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Speaker 3: a small manufacturing sector and we'll never get a big

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Speaker 3: one back again. And that's fine because people in Asia,

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Speaker 3: in South America, Eastern Europe to some extent produce things

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Speaker 3: cheaper than we ever will, and it'd be silly if

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Speaker 3: we tried to make them ourselves. We don't have the

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Speaker 3: population and we don't have the structure of our economy. However,

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Speaker 3: on services, you know, Australian financial services are fantastic. Our

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Speaker 3: superannuation industry you mentioned before. We have got some of

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Speaker 3: the best fund managers in the world who manage money

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Speaker 3: for the big institutions around the world. So the Black

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Speaker 3: Rocks and the State Street and these are the people

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Speaker 3: are using Australian fund managers because of their skills of

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Speaker 3: managing money. That's one thing that's great. So okay, is

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Speaker 3: that innovative, Yeah, it can be because of the economies

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Speaker 3: of scale. It's sort of well, getting to Christopher's point

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Speaker 3: the other day. People love Australia. It's a great place

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Speaker 3: to holiday. So we guess we're a tourist destination if

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Speaker 3: we can milk that for all it's worth. Because when

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Speaker 3: a foreigner comes to Australia to have a holiday, well

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Speaker 3: they stay at a nice hotel, let's charge them a fortune.

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Speaker 3: They eat at our restaurants, let's make money from they

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Speaker 3: buy our lovely wine around the country.

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Speaker 2: Does it?

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Speaker 3: Yeah, having tourism, in fact, it's great because it creates

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Speaker 3: a whole lot of jobs across the spectrum, and in fact,

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Speaker 3: many of them are quite labor intensive. You know, well,

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Speaker 3: at this stage, we don't have robots making up a room.

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Speaker 3: When you move out of your hotel room, you've still

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Speaker 3: got to be a person that makes the beds and

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Speaker 3: cleans and all that sort of stuff. So our structure

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Speaker 3: of economy, the point what I'm trying to say is

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Speaker 3: that we are a services based economy, which is very

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Speaker 3: different to the mindset that we have to have manufacturing.

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Speaker 3: And I'm still learning to overcome that because manufacturing is great.

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Speaker 3: Yeah we produce stuff and yeah you can touch it,

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Speaker 3: it's made, you know. Whereas a service, financial service so

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Speaker 3: what's a financial service, what's tourism, what's sports? Education, education,

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Speaker 3: things like that, so you get the best quality. Well again,

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Speaker 3: you know diversities in the UK and in America. You

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Speaker 3: know the Harvards and the Oxford and Cambridge whatever. Wow.

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Speaker 3: You know who doesn't think they're the best university to

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Speaker 3: send your kids too, if they can humanly get in there.

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Speaker 3: If you get they're making a fortune from them, fantastic.

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Speaker 3: We've got great universities in Australia. Let's encourage that.

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Speaker 1: For our Asian neighbors who love to come here and pay.

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Speaker 1: Because it's a safe country. It's a sort of integrated country.

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Speaker 1: You know you're not going to get sort of stood

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Speaker 1: down or stood out because you know you're not you know,

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Speaker 1: of a right color or right religion or whatever. We're

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Speaker 1: pretty tolerant in relation to those sorts of things. I mean,

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Speaker 1: if I just look at one thing in particular, and

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Speaker 1: you're talking about services, as I understand it, create me

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Speaker 1: if I'm wrong, or tell me if i'm close.

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Speaker 2: I think something like eighty percent.

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Speaker 1: Of our GDP is services related and twenty percent is product.

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Speaker 3: But it thinks like agriculture goods production.

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Speaker 1: Doesn't that tonally straight away services make so that's where

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Speaker 1: we've got to concentrate and put our efforts into more

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Speaker 1: making those more services more efficient, have much more innovation

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Speaker 1: and data driven outcomes around this stuff.

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Speaker 3: And have a margin on it, make money from it,

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Speaker 3: and don't change for it, and don't be shy about

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Speaker 3: it because you're getting this service. Yes it's good. So

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Speaker 3: it's a little bit like holiday. You think I've had

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Speaker 3: a holiday and just say I've spent ten grand on

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Speaker 3: a holiday. I've gone somewhere with the family, We've gone

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Speaker 3: to a hotel, We've spent this money. You come back

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Speaker 3: from that holiday, what have you got? Only memories and

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Speaker 3: a few photos. So you spend ten grand on furniture

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Speaker 3: and a TV and new kitchen, you've got goods to

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Speaker 3: show for it. So that experience, it's experiences. If you

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Speaker 3: like going to a concert, going to see Taylor Swift,

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Speaker 3: or going to the footy, you know, getting a great

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Speaker 3: seat at the football Grand Final and whatever. They're the

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Speaker 3: experiences that people who can afford it love to spend

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Speaker 3: their money on. Nowadays, they don't need another dining table,

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Speaker 3: They've already got one. They don't need, you know, the

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Speaker 3: latest TV because the TV that they bought two years

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Speaker 3: ago is pretty bloody good. They don't need to buy

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Speaker 3: another new car because the one they got two years

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Speaker 3: ago is also really good and is going to run

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Speaker 3: for another few years. What they do need or want

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Speaker 3: is to go on a holiday. They do want to

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Speaker 3: go to the footy Grand File, let's you know, they

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Speaker 3: do want to go to a concert. They do want

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Speaker 3: to do those experience, a walk along the Great Ocean Road,

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Speaker 3: you know, go on one of these hikes, you know,

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Speaker 3: fantastic and to do them well. And the companies that

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Speaker 3: are involved in ticketing, tourism, trekking, you know, all those

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Speaker 3: things are doing well. And that's where you know, we've

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Speaker 3: got to be aware of where we've got to be

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Speaker 3: careful not to sort of embrace manufacturing, not being any manufacturing.

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Speaker 3: The stuff that we do do is really good, you know,

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Speaker 3: manufacturing in CSL with plasma and blood and medicines and things, fantastic.

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Speaker 3: Our wine. I think Wine's camp is manufacturing. Not agriculture

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Speaker 3: again another really good business. You know, we export tons

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Speaker 3: of this stuff and you know whatever, not against them

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Speaker 3: at all, in fact, in favor of them. If you're

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Speaker 3: got to go for it, but don't discount the fact

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Speaker 3: that someone having a holiday spending three hundred bucks to

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Speaker 3: see Taylor Swift going to the NRL Grand Final, getting

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Speaker 3: the you know, spending one thousand dollars on a lamping

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Speaker 3: you know, a really nice camping trip where you stay

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Speaker 3: at these nice great.

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Speaker 1: So does that mean structurally the government hasn't change its emphasis.

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Speaker 1: State governments, federal governments and maybe local governments too for

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Speaker 1: that matter, have to start to change their emphasis on

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Speaker 1: how they market what we've actually got to each other,

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Speaker 1: to ourselves.

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Speaker 3: Yeah, and by.

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Speaker 1: The way, and how do we fix but then and then,

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Speaker 1: I know this bit off the topic, but how do

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Speaker 1: we fix travel costs? Like I mean, it's cheaper to

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Speaker 1: fly to Bali, yes, or my previous guest said it

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Speaker 1: was cheaper to fly to Italy and stay there for

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Speaker 1: three weeks, then needs to fly to Queensland or Melbourne

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Speaker 1: and stay that for five nights.

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Speaker 3: Yeah, that's probably right.

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Speaker 2: Yeah, So I mean that's just how on.

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Speaker 3: Earth does that happen? And this is something that the

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Speaker 3: Assistant treasure Andrew Lee is not about competition policy. We've

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Speaker 3: had virgin quantities on air fares, we had rex that

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Speaker 3: didn't make money. Unfortunately on the Sydney Melbourne leg they're

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Speaker 3: still still operating in other other legs. I don't know

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Speaker 3: how to get that competition in to be viable. It's

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Speaker 3: something where again, what's the what's the barrier to entry?

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Speaker 3: This is sort of getting into the nitty gritty of economics.

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Speaker 3: I'm sorry, but what's the barrier to entry? So if

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Speaker 3: usually if a firm is making unreasonable profits, let's call

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Speaker 3: it that.

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Speaker 2: Quantits making a lot of money, which is the case.

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Speaker 3: Yeah, and arguingly they're ripping us off.

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Speaker 2: You know, by the way, it's their job to do it.

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Speaker 3: If they get with half their luck. I'm not being

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Speaker 3: critical of.

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Speaker 1: Them, because that's their obligation, legal obligations to acting this

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Speaker 1: afternoon back, it's you know what I'm saying, But it's

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Speaker 1: the government's obligation also to say, okay, you're doing well enough,

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Speaker 1: we need to something encourage somebody else to come in

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Speaker 1: and take you on.

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Speaker 3: And in fact that's on the intern and maybe this

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Speaker 3: can be more demonstrated on the international leg whereas you know,

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Speaker 3: it's only it's only ever going to be bloody virgin

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Speaker 3: Quantits and maybe Rex or one other that might do

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Speaker 3: the domestic legs, but internationally Sydney to Europe, City to America,

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Speaker 3: Sydney to Asia or Melbourne, you know the big.

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Speaker 2: Cities, Asia to Australia.

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Speaker 3: Whatever, Singapore Airlines, Cathay Pacific, all of the Middle Eastern airlines,

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Speaker 3: Eddie had the Emirates, Turkish Guitar, Turkish United out of

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Speaker 3: the US or USA, all these people. Yeah, there's a millionaire.

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Speaker 3: There's dozens of airlines that if we let them come

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Speaker 3: in here. The only way that Quantus could get away

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Speaker 3: with charging those excessive affairs, well they couldn't because Singapore

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Speaker 3: had undercut them. Vietnam Airlines had undercut them. You know,

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Speaker 3: these other airlines would come in and undercut them if

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Speaker 3: we go. So we need structure open Slater and yeah,

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Speaker 3: look Bugaret, it open so that we need competition because

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Speaker 3: as you know, your brilliant market taking on the big

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Speaker 3: financial institutions, you were at the forefront of embracing competition.

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Speaker 3: You saw a market failure with Wizard and other things.

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Speaker 3: Not thought this. These buses are ripping off people. You

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Speaker 3: got on there and you've changed need interest margins on

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Speaker 3: banks yep. So, by the way, thank you for that.

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Speaker 3: And I'm not saying that to blow smoke up or

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Speaker 3: anything like that. But where there is a market and

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Speaker 3: how did that happen? And we'll go back to the

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Speaker 3: reforms of the keeping years and how whatever years. I

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Speaker 3: can't really what you or this started up. But because

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Speaker 3: banks were protected before that, because of the rules and

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Speaker 3: regulations about the bank, it was.

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Speaker 2: Poor candel inquiry recommendation.

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Speaker 3: And then along came Mark Broson thought here's an opportunity

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Speaker 3: to undercover, so we need that in airlines.

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Speaker 1: It started off with government, though it started off with

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Speaker 1: courageous decisions by Keating.

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Speaker 2: Yes, and the chemical cameral grove was nine eighty seven.

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Speaker 3: Yes, Keating brought.

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Speaker 2: It in the mid nineties. He adopted it.

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Speaker 3: And the way you go and the banks who were lazy,

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Speaker 3: I'll be blunt. Back in the eighties the banks were lazy, laze.

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Speaker 3: They had an edge margin of three hundred bases.

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Speaker 2: They were not now, but they were.

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00:22:25,840 --> 00:22:28,360
Speaker 3: Yeah. But then along came you and a whole bunch

436
00:22:28,400 --> 00:22:30,800
Speaker 3: of others came along because they saw what you did first.

437
00:22:31,160 --> 00:22:34,639
Speaker 3: And now the margins under two hundred bases. And by

438
00:22:34,680 --> 00:22:36,560
Speaker 3: the way, they're still making money, by the way, look at.

439
00:22:37,760 --> 00:22:38,639
Speaker 2: And making a fortune.

440
00:22:38,720 --> 00:22:42,120
Speaker 3: It's still making fortunate. But there's an examples, by the way,

441
00:22:42,160 --> 00:22:43,800
Speaker 3: and the reason why this is important it's not just

442
00:22:43,800 --> 00:22:47,800
Speaker 3: because some economic theory that's a whole lot of crop.

443
00:22:48,440 --> 00:22:54,840
Speaker 3: It's we as consumers are benefiting from greater competition banks. Now,

444
00:22:55,080 --> 00:22:57,840
Speaker 3: banks are easy to dislike, but I don't. I think

445
00:22:57,880 --> 00:23:01,800
Speaker 3: banks provided an amazing serve today today, and they're so

446
00:23:01,920 --> 00:23:04,560
Speaker 3: efficient and the competition you can tell me more than

447
00:23:04,600 --> 00:23:07,200
Speaker 3: I can tell you. The competition in the banking sector

448
00:23:07,359 --> 00:23:10,679
Speaker 3: is it's extreme. It's extreme, it's very intense. And the

449
00:23:10,720 --> 00:23:14,119
Speaker 3: ability So if you've got your mortgage with bank X,

450
00:23:14,240 --> 00:23:17,040
Speaker 3: y Z, you think these other well they're offering twenty

451
00:23:17,040 --> 00:23:21,760
Speaker 3: basis points lower ring up, they'll they'll match it, going

452
00:23:21,800 --> 00:23:26,720
Speaker 3: to lose a customer, and it's good for consumers. And

453
00:23:26,720 --> 00:23:29,240
Speaker 3: that's what this when I'm banging on about, oh, we

454
00:23:29,240 --> 00:23:31,920
Speaker 3: need more efficiency and productivity and cut red tape and

455
00:23:32,680 --> 00:23:35,480
Speaker 3: recognize that we're a service as economy. See, banks are

456
00:23:35,520 --> 00:23:38,359
Speaker 3: a service. They're providing a service. They're providing an opportunity

457
00:23:38,359 --> 00:23:39,880
Speaker 3: for me to buy money to buy them a house.

458
00:23:39,960 --> 00:23:41,840
Speaker 2: And by the way, how's gilded banks.

459
00:23:41,880 --> 00:23:44,280
Speaker 1: They're making a lot of money and it's a very

460
00:23:44,520 --> 00:23:47,760
Speaker 1: and it's a very healthy industry. So yes, so we'll

461
00:23:47,760 --> 00:23:49,480
Speaker 1: get onto the economy now. But like, but this is

462
00:23:49,520 --> 00:23:52,919
Speaker 1: part of the economy, so so this summer they're holding.

463
00:23:53,800 --> 00:23:55,520
Speaker 2: Really they just have to that. No one has to

464
00:23:55,520 --> 00:23:56,960
Speaker 2: come up with anything of genius.

465
00:23:57,160 --> 00:23:59,840
Speaker 1: They just forgot about to say, Okay, where have governments

466
00:24:00,280 --> 00:24:05,440
Speaker 1: influenced structural change such that consumers do better, we don't

467
00:24:05,520 --> 00:24:10,879
Speaker 1: kill off the service provider, and and where we made.

468
00:24:10,720 --> 00:24:11,720
Speaker 2: A courageous decision.

469
00:24:11,800 --> 00:24:14,440
Speaker 1: And the best example, stirring at him right in face,

470
00:24:14,560 --> 00:24:17,359
Speaker 1: is there is comes from their very own One of

471
00:24:17,400 --> 00:24:18,480
Speaker 1: the greatest.

472
00:24:18,040 --> 00:24:21,600
Speaker 2: Gods of the Labor Party is Paul Keating. Serious, No,

473
00:24:21,640 --> 00:24:21,879
Speaker 2: he is.

474
00:24:21,880 --> 00:24:22,760
Speaker 3: He's bloody fantastic.

475
00:24:22,760 --> 00:24:26,720
Speaker 1: I love Paul Keeper and Keating did this courageous thing

476
00:24:26,760 --> 00:24:29,560
Speaker 1: back in the nineties. He did something else quite courageous,

477
00:24:29,560 --> 00:24:31,600
Speaker 1: which is also now being attacked by the current government.

478
00:24:31,760 --> 00:24:36,800
Speaker 1: He introduced the Superinnoation Guarantee, which is like probably one

479
00:24:36,840 --> 00:24:41,680
Speaker 1: of the globally recognized one of the greatest pension building

480
00:24:42,840 --> 00:24:44,200
Speaker 1: superhnovation funds.

481
00:24:43,920 --> 00:24:44,440
Speaker 3: In the world.

482
00:24:45,160 --> 00:24:47,000
Speaker 2: The rest of the world wasn't look at what we do.

483
00:24:47,320 --> 00:24:48,640
Speaker 2: Now we're tinkering.

484
00:24:48,680 --> 00:24:50,239
Speaker 1: I mean, I'm not here to get political, but now

485
00:24:50,280 --> 00:24:53,280
Speaker 1: we're tinkering with the superannuation and I just think it's

486
00:24:53,560 --> 00:24:55,040
Speaker 1: the silliest thing that we should ever do. I think

487
00:24:55,080 --> 00:24:57,720
Speaker 1: we should be encouraging more money to go more supernovation

488
00:24:57,880 --> 00:25:00,000
Speaker 1: and to be getting greater benefits out of the supernoat

489
00:25:00,720 --> 00:25:01,720
Speaker 1: instead of sort.

490
00:25:01,560 --> 00:25:02,480
Speaker 2: Of putting a lid on it.

491
00:25:02,640 --> 00:25:04,520
Speaker 1: And I think we should be making those big courageous

492
00:25:04,520 --> 00:25:08,480
Speaker 1: decisions about industries like transport, saying okay, you two guys

493
00:25:08,560 --> 00:25:11,440
Speaker 1: making a fortune, you know, to the two big airlines

494
00:25:11,440 --> 00:25:13,199
Speaker 1: for example, just for example, not trying to pick on

495
00:25:13,200 --> 00:25:15,680
Speaker 1: the airlines, but we need to start to.

496
00:25:15,880 --> 00:25:16,880
Speaker 2: We're not going to affect you.

497
00:25:16,880 --> 00:25:19,040
Speaker 1: You can compete and they'll probably end up being as

498
00:25:19,080 --> 00:25:21,440
Speaker 1: good as CBA is today, they'll probably make more money.

499
00:25:21,280 --> 00:25:25,360
Speaker 3: On it's not telling these airlines or even the supermarkets

500
00:25:25,359 --> 00:25:25,960
Speaker 3: you remember.

501
00:25:25,720 --> 00:25:28,600
Speaker 2: The market insurance company, supermarkets.

502
00:25:28,920 --> 00:25:30,720
Speaker 3: All that stuff. It's not telling them what to do,

503
00:25:31,280 --> 00:25:34,320
Speaker 3: but it is getting rid of the impediments to a

504
00:25:34,560 --> 00:25:36,840
Speaker 3: competitor to come in and say, hey, I'm going to

505
00:25:36,880 --> 00:25:39,119
Speaker 3: want to cut you, so you better lift your game.

506
00:25:39,119 --> 00:25:40,679
Speaker 3: And if you don't lift your game, you're out, you

507
00:25:40,720 --> 00:25:44,880
Speaker 3: know so, And of course they'll improve their service provision

508
00:25:44,920 --> 00:25:48,119
Speaker 3: and as consumers we are the ones that benefit from that.

509
00:25:48,200 --> 00:25:51,200
Speaker 3: It's not the government the benefits, it's not the businesses.

510
00:25:51,200 --> 00:25:52,639
Speaker 3: In fact, on the country, they've got to lift their

511
00:25:52,680 --> 00:25:55,960
Speaker 3: game if they're to succeed. So they've got to introduce

512
00:25:56,040 --> 00:25:58,680
Speaker 3: and it's even in retailing mark you know, I remember

513
00:25:59,680 --> 00:25:59,919
Speaker 3: can I.

514
00:26:01,000 --> 00:26:03,880
Speaker 1: So it was really important for everybody to understand too,

515
00:26:03,920 --> 00:26:05,680
Speaker 1: by the way, because you made quite a good point.

516
00:26:05,680 --> 00:26:07,520
Speaker 2: Then the banks have to improve.

517
00:26:07,560 --> 00:26:10,840
Speaker 1: So what our banks did, you know, whether you like

518
00:26:10,960 --> 00:26:13,400
Speaker 1: or not, it didn't make us have branches anymore. They

519
00:26:13,440 --> 00:26:15,680
Speaker 1: closed the branches down because the cost of cost me

520
00:26:15,720 --> 00:26:17,240
Speaker 1: income ratios were out of control.

521
00:26:18,320 --> 00:26:21,280
Speaker 2: But they got very innovative in relation to digital.

522
00:26:21,760 --> 00:26:23,879
Speaker 1: Yes, so you go along to CBA and CBA has

523
00:26:23,920 --> 00:26:27,280
Speaker 1: got an amazing app and has got an amazing app.

524
00:26:27,720 --> 00:26:29,560
Speaker 2: My Quarrie's going. They're all got amazing apps.

525
00:26:29,600 --> 00:26:31,760
Speaker 3: Okay, my banking is all done on this yep.

526
00:26:31,880 --> 00:26:34,520
Speaker 1: So so the point being here made is that they

527
00:26:34,640 --> 00:26:36,760
Speaker 1: innovated in order to.

528
00:26:36,800 --> 00:26:42,080
Speaker 3: Compete technology technology, and so in fact, this is what

529
00:26:42,960 --> 00:26:45,040
Speaker 3: is what we need to do. I'm not a bank analyst,

530
00:26:45,160 --> 00:26:47,720
Speaker 3: but this is an important point about that productivity issue.

531
00:26:48,080 --> 00:26:49,720
Speaker 3: You know, you mentioned that banks are still making lots

532
00:26:49,720 --> 00:26:52,920
Speaker 3: of money. And because they don't costs out because because

533
00:26:52,920 --> 00:26:56,160
Speaker 3: you said, the cost of me doing to the bank

534
00:26:57,200 --> 00:26:58,720
Speaker 3: back in the day, when I used to go into

535
00:26:58,760 --> 00:27:01,600
Speaker 3: a branch feeling in the withdrawal form, give it to

536
00:27:01,640 --> 00:27:03,240
Speaker 3: a teller, they tipe it in that give me a

537
00:27:03,320 --> 00:27:04,200
Speaker 3: hundred bucks to.

538
00:27:05,400 --> 00:27:06,040
Speaker 2: You lined up.

539
00:27:06,119 --> 00:27:09,000
Speaker 3: Whatever the cost of providing me that hundred dollars that

540
00:27:09,000 --> 00:27:12,199
Speaker 3: I then spend on the weekend, whatever was a fortune.

541
00:27:12,720 --> 00:27:16,080
Speaker 3: Nowadays I can get it one hundred dollars click click, click,

542
00:27:16,080 --> 00:27:20,880
Speaker 3: click click. It costs them a microcent and a faster human,

543
00:27:21,240 --> 00:27:22,920
Speaker 3: fast and more convenient. But the fact that there are

544
00:27:23,600 --> 00:27:27,480
Speaker 3: literally bitings of these transactions going on every year means

545
00:27:27,560 --> 00:27:33,280
Speaker 3: they still make money. But the efficiency is so powerful,

546
00:27:33,520 --> 00:27:36,520
Speaker 3: the productivity is powerful. And again I'll say it again,

547
00:27:36,600 --> 00:27:39,360
Speaker 3: Look at the bank share prices. They're still paying different ends.

548
00:27:39,480 --> 00:27:40,280
Speaker 3: Look at their p and L.

549
00:27:40,320 --> 00:27:42,359
Speaker 2: I don't remember CBA floated at six bucks.

550
00:27:42,400 --> 00:27:46,640
Speaker 1: It's no in nineteen ninety and nineteen ninety nine.

551
00:27:46,800 --> 00:27:50,119
Speaker 3: Yep, fix bucks. Imagine if you're still holding it.

552
00:27:51,000 --> 00:27:55,000
Speaker 2: But that's been good for everybody. Good for CBA shareholders,

553
00:27:55,040 --> 00:27:57,920
Speaker 2: good for consumers, good for pranuation holds, good for good

554
00:27:57,960 --> 00:27:59,560
Speaker 2: for superannuation who have reinvested.

555
00:28:00,280 --> 00:28:04,320
Speaker 1: So my point is, our point is government, if you're listening,

556
00:28:04,680 --> 00:28:07,439
Speaker 1: don't be afraid to make the big cause of cuping

557
00:28:07,520 --> 00:28:09,960
Speaker 1: made because someone's putting pressure on you from.

558
00:28:10,040 --> 00:28:14,320
Speaker 2: Whoever it is, whichever entity that is just still relying

559
00:28:14,320 --> 00:28:16,520
Speaker 2: on the old school team because if the old school.

560
00:28:16,240 --> 00:28:18,840
Speaker 1: System, because if you had never done that against the banks,

561
00:28:18,840 --> 00:28:21,119
Speaker 1: we probably wouldn't have the innovation we have today. And

562
00:28:21,119 --> 00:28:22,840
Speaker 1: you still be lining up a bank branch because the

563
00:28:22,840 --> 00:28:25,159
Speaker 1: banks never felt would never have felt any competition, never

564
00:28:25,160 --> 00:28:26,760
Speaker 1: felt compelled then to change what they were doing because

565
00:28:26,760 --> 00:28:30,280
Speaker 1: it's all working. And we'd be still lining up at

566
00:28:30,359 --> 00:28:32,400
Speaker 1: the teller with the filling a little pink format as

567
00:28:32,400 --> 00:28:32,879
Speaker 1: you remember, and.

568
00:28:33,400 --> 00:28:36,480
Speaker 3: Ucks and doing a hundred bucks. And again this is

569
00:28:36,520 --> 00:28:39,520
Speaker 3: the other thing that's extremes happened. It's true. That's it's

570
00:28:39,560 --> 00:28:41,480
Speaker 3: a nice way of explaining it, I think for our

571
00:28:41,520 --> 00:28:44,640
Speaker 3: listeners here because it does show. And even to the airlines,

572
00:28:44,640 --> 00:28:47,080
Speaker 3: we'll go back to then for just one second. You know,

573
00:28:47,800 --> 00:28:50,760
Speaker 3: nowadays you get your boarding pass on your phone. You know,

574
00:28:50,880 --> 00:28:53,600
Speaker 3: you don't click in and you check yourself in and

575
00:28:53,640 --> 00:28:55,520
Speaker 3: all these other things. There are few people at the airports,

576
00:28:55,520 --> 00:28:58,440
Speaker 3: which is fine, but that automation is something that the

577
00:28:58,520 --> 00:29:01,080
Speaker 3: airlines have embraced your card so they don't have to

578
00:29:01,080 --> 00:29:03,320
Speaker 3: print out these boarding passes that cost a fortune and

579
00:29:03,320 --> 00:29:06,200
Speaker 3: all these other things. So the efficiency is very very good.

580
00:29:06,480 --> 00:29:09,640
Speaker 3: I mentioned retailing before price gouging, so did the extent

581
00:29:09,680 --> 00:29:12,719
Speaker 3: that we and I don't think the big supermarkets are

582
00:29:12,720 --> 00:29:16,160
Speaker 3: price gouging because you know, people do shop around. So

583
00:29:16,280 --> 00:29:19,440
Speaker 3: there's Coals and Woolies and Aldi and the IgA stores,

584
00:29:19,480 --> 00:29:21,880
Speaker 3: and we want more competition there. But at the end

585
00:29:21,880 --> 00:29:24,719
Speaker 3: of the day, you know, the share price of Allworths

586
00:29:24,720 --> 00:29:27,040
Speaker 3: and Coals is where it was five years ago. They're

587
00:29:27,080 --> 00:29:29,720
Speaker 3: not price gouging. If they were making money, their share

588
00:29:29,720 --> 00:29:33,360
Speaker 3: price would be booming. It's not. And so there's one

589
00:29:33,360 --> 00:29:36,800
Speaker 3: example where perhaps they've taken a what was what do

590
00:29:36,840 --> 00:29:40,880
Speaker 3: we call it a political easy target because everyone goes

591
00:29:40,920 --> 00:29:43,120
Speaker 3: to the supermarket. Oh, the price of my potatoes has

592
00:29:43,160 --> 00:29:45,360
Speaker 3: gone up, the price of my washing powder has gone up,

593
00:29:45,400 --> 00:29:47,479
Speaker 3: and all the sudden people can see it. That's fine. We

594
00:29:47,520 --> 00:29:50,280
Speaker 3: did have high inflation, as we've discussed, we did have

595
00:29:50,360 --> 00:29:53,760
Speaker 3: high inflation. It did hurt. It was the consumer crunch

596
00:29:53,800 --> 00:29:56,760
Speaker 3: that occurred, but that wasn't because they were ripping people off.

597
00:29:56,800 --> 00:29:59,680
Speaker 3: That was because the price of buying that stuff input

598
00:30:00,080 --> 00:30:03,440
Speaker 3: went up. Supply chain problems, Yeah, cost of transportation was

599
00:30:03,440 --> 00:30:05,320
Speaker 3: a problem anyway, that's.

600
00:30:05,120 --> 00:30:07,920
Speaker 2: Just my WI should get straight to our board.

601
00:30:08,400 --> 00:30:10,480
Speaker 3: Yes, definitely, we've got a lot to talk about, Mark,

602
00:30:10,480 --> 00:30:13,680
Speaker 3: because the economy is rolling on still pretty slowly.

603
00:30:15,120 --> 00:30:19,000
Speaker 1: Right Cookie, now we're at the we're at the sharp end. Mate,

604
00:30:19,680 --> 00:30:21,320
Speaker 1: right now is on the left hand side as I

605
00:30:21,320 --> 00:30:23,360
Speaker 1: look at it, So it's all on the tightening side.

606
00:30:23,400 --> 00:30:26,360
Speaker 2: So you've got your categories. So what are we going

607
00:30:26,440 --> 00:30:26,560
Speaker 2: to do?

608
00:30:26,680 --> 00:30:31,160
Speaker 3: So RBA meets next week. They have something this This

609
00:30:31,280 --> 00:30:34,360
Speaker 3: is the boris the coolest version of the RBA board meeting,

610
00:30:34,920 --> 00:30:36,960
Speaker 3: and they look at the components of the economy to

611
00:30:37,000 --> 00:30:38,760
Speaker 3: see what's hot and what's.

612
00:30:38,600 --> 00:30:43,680
Speaker 2: Not just before we do, so we don't undersell the RBA.

613
00:30:44,080 --> 00:30:47,520
Speaker 2: And I think it's important because we're being a bit

614
00:30:47,600 --> 00:30:50,800
Speaker 2: cute with this, but sort of they're doing this, but

615
00:30:50,880 --> 00:30:55,120
Speaker 2: they have I think they're models called Martin, Yes, and

616
00:30:55,440 --> 00:30:56,800
Speaker 2: and they.

617
00:30:56,640 --> 00:30:59,040
Speaker 1: Have they model like this is modeling, but we're just

618
00:30:59,080 --> 00:31:00,480
Speaker 1: doing in a physical sense, but they do it in

619
00:31:00,560 --> 00:31:02,440
Speaker 1: a much more data driven sense.

620
00:31:03,640 --> 00:31:05,440
Speaker 2: We should just mention to everybody.

621
00:31:05,480 --> 00:31:08,480
Speaker 1: They just don't sit around you know, having a cup

622
00:31:08,480 --> 00:31:12,840
Speaker 1: of Team Lamington's and throw things around. They actually are

623
00:31:13,040 --> 00:31:18,640
Speaker 1: very technically biased, very data driven biased. And it is

624
00:31:18,720 --> 00:31:21,520
Speaker 1: and is not just what is the most recent data,

625
00:31:21,960 --> 00:31:26,920
Speaker 1: it's extrapolating forward extrapolating backwards sensitivity analysis.

626
00:31:26,920 --> 00:31:28,600
Speaker 2: They're saying, well, what if this, what if that? What

627
00:31:28,640 --> 00:31:28,840
Speaker 2: if this?

628
00:31:28,880 --> 00:31:29,200
Speaker 3: What that?

629
00:31:29,280 --> 00:31:31,520
Speaker 2: Therefore what it looks like? So as much, maybe you

630
00:31:31,600 --> 00:31:31,920
Speaker 2: just give.

631
00:31:31,840 --> 00:31:35,440
Speaker 3: Me a mark thank you for saying that. Because the

632
00:31:35,560 --> 00:31:38,719
Speaker 3: bank has well I think it's about four hundred economists

633
00:31:38,720 --> 00:31:41,440
Speaker 3: working for them. All of them are smart. To get

634
00:31:41,440 --> 00:31:44,600
Speaker 3: a job at the RBA, you've got to be mighty

635
00:31:44,640 --> 00:31:46,959
Speaker 3: good economics.

636
00:31:46,360 --> 00:31:50,160
Speaker 2: Yeah, and mathematics and model building.

637
00:31:49,880 --> 00:31:53,200
Speaker 3: Correct And so they're models, which I think is the

638
00:31:53,280 --> 00:31:57,280
Speaker 3: RBA governor and governors in historically and other RBA fishers

639
00:31:57,320 --> 00:32:00,800
Speaker 3: said they're the starting point of their deliberate They have

640
00:32:00,920 --> 00:32:05,640
Speaker 3: the models to look at the correlations between GDP and inflation,

641
00:32:06,040 --> 00:32:09,040
Speaker 3: what's happening in the world and inflation, commodity prices, all

642
00:32:09,080 --> 00:32:10,960
Speaker 3: of the interlinkages and even half of the stuff that we've

643
00:32:11,000 --> 00:32:11,640
Speaker 3: just been talking about.

644
00:32:11,680 --> 00:32:13,920
Speaker 2: And if we do this could happen, if we press.

645
00:32:13,800 --> 00:32:17,320
Speaker 3: On this button, what happens over here, And that's what

646
00:32:17,360 --> 00:32:22,800
Speaker 3: they do as the starting point, and that churns out,

647
00:32:22,840 --> 00:32:26,240
Speaker 3: I suppose is the word their recommendation unofficial forecasts and

648
00:32:26,240 --> 00:32:30,040
Speaker 3: their recommendations. Then the the Monetary Policy Board sits around

649
00:32:30,080 --> 00:32:34,120
Speaker 3: the table and looks at these numbers. And then also

650
00:32:34,280 --> 00:32:37,400
Speaker 3: here's the contribution. Because the other thing that the RBA do,

651
00:32:37,480 --> 00:32:40,520
Speaker 3: which is not model driven, they've got a business liaison program.

652
00:32:41,040 --> 00:32:43,520
Speaker 3: So in each of the capital cities and regions, they

653
00:32:43,520 --> 00:32:45,680
Speaker 3: go around, how's business, what are you doing? And they

654
00:32:45,880 --> 00:32:50,320
Speaker 3: categorize on construction and retail and it and whatever whatever

655
00:32:50,440 --> 00:32:51,040
Speaker 3: they are finding.

656
00:32:51,080 --> 00:32:52,400
Speaker 2: They're aware of all the bankruptcies.

657
00:32:53,040 --> 00:32:55,080
Speaker 3: Oh indeed they are, and they ask people what are

658
00:32:55,080 --> 00:32:58,840
Speaker 3: you hearing? Because again what you're hearing today will not

659
00:32:58,840 --> 00:33:00,360
Speaker 3: be in the data for another couple of months.

660
00:33:00,560 --> 00:33:01,520
Speaker 2: So they're getting some real time.

661
00:33:01,560 --> 00:33:03,280
Speaker 3: So they get some real time stuff that feed into

662
00:33:03,320 --> 00:33:05,080
Speaker 3: the whole decision. And therefore we're going to cut rates

663
00:33:05,160 --> 00:33:07,880
Speaker 3: or hold them steady or put them up. But the

664
00:33:07,920 --> 00:33:12,840
Speaker 3: modeling is the I don't know, the backdrop and the

665
00:33:12,880 --> 00:33:15,240
Speaker 3: support for what they do, yep, and so that. But

666
00:33:15,280 --> 00:33:16,000
Speaker 3: they have all of.

667
00:33:15,960 --> 00:33:19,080
Speaker 2: These components effectively, that and a whole more.

668
00:33:19,120 --> 00:33:20,720
Speaker 3: Yes, it's effectively this sort of stuff this is why

669
00:33:20,720 --> 00:33:23,040
Speaker 3: the now they back in the back in the day,

670
00:33:23,040 --> 00:33:26,000
Speaker 3: they used to have a monetary policy checklist. Yeah, they

671
00:33:26,000 --> 00:33:29,440
Speaker 3: then got rid of it because it was too formulaic,

672
00:33:29,560 --> 00:33:32,560
Speaker 3: if that's the right word, and they instead relied on

673
00:33:33,160 --> 00:33:35,120
Speaker 3: the modeling. That's when, oh gosh, I think it was

674
00:33:35,160 --> 00:33:37,800
Speaker 3: even Ian McFarland as governor. I'm going back that far,

675
00:33:38,320 --> 00:33:42,920
Speaker 3: and then Glenn Stevens. They sort of maybe twenty odd years.

676
00:33:42,920 --> 00:33:45,800
Speaker 3: They've always had models, but then they sort of changed

677
00:33:45,800 --> 00:33:48,000
Speaker 3: their approach and got rid of the checklist and decided

678
00:33:48,000 --> 00:33:52,640
Speaker 3: to adjust policy and assess monetary policy from arranged. But

679
00:33:52,680 --> 00:33:56,160
Speaker 3: this is still this is still relevant and from my perspective,

680
00:33:56,600 --> 00:33:58,480
Speaker 3: I'm not as smart as the people at the RBA.

681
00:33:58,600 --> 00:34:01,000
Speaker 3: I need something like this to under stand what is

682
00:34:01,000 --> 00:34:03,800
Speaker 3: happening in the economy and where the pressures are. Because

683
00:34:03,800 --> 00:34:08,560
Speaker 3: each of these things is sensitive to interest rates. It

684
00:34:08,680 --> 00:34:10,960
Speaker 3: is a hard data. We do the data on GDP, inflation,

685
00:34:11,040 --> 00:34:13,120
Speaker 3: labor market, so we can sort of see compared with

686
00:34:13,160 --> 00:34:15,879
Speaker 3: what we're used to. This is this historical thing as

687
00:34:15,880 --> 00:34:19,120
Speaker 3: well as throwing forward, are we underperforming and if we're underperforming,

688
00:34:19,160 --> 00:34:23,360
Speaker 3: we need more rate cuts. If we're outperforming, if we're booming.

689
00:34:23,400 --> 00:34:25,799
Speaker 3: We need rate hikes, the simple as.

690
00:34:25,719 --> 00:34:28,000
Speaker 2: That, And it does go back to the simplicity of

691
00:34:28,120 --> 00:34:29,799
Speaker 2: keeping us between two and three percent.

692
00:34:29,840 --> 00:34:33,520
Speaker 3: Correct and full employment, and between two and three percent correct.

693
00:34:33,239 --> 00:34:35,520
Speaker 2: Full employment as measure by unemployment.

694
00:34:34,960 --> 00:34:38,400
Speaker 3: Which is very hard to get a hard measure. But anyway,

695
00:34:38,400 --> 00:34:39,200
Speaker 3: we've got our checks.

696
00:34:39,520 --> 00:34:41,160
Speaker 2: I'm sure it was important to say that, because no,

697
00:34:41,360 --> 00:34:44,760
Speaker 2: I don't want anyone the thinks we're undermining the RBAU don't.

698
00:34:44,920 --> 00:34:48,719
Speaker 3: No, no, no. And while we can debate their decisions,

699
00:34:49,800 --> 00:34:52,080
Speaker 3: did they they've been too slow, too much, too little,

700
00:34:52,120 --> 00:34:55,319
Speaker 3: too late, whatever to whatever, this is sort of like

701
00:34:55,480 --> 00:35:00,600
Speaker 3: a if the RBA were ever to look at this,

702
00:35:00,600 --> 00:35:03,000
Speaker 3: this exact board here, I think it'd fit they sort

703
00:35:03,000 --> 00:35:04,800
Speaker 3: of say, yeah, that's actually not a bad way of explaining.

704
00:35:04,840 --> 00:35:07,400
Speaker 2: Yeah, yeah, particularly for the point of view of our podcast,

705
00:35:07,440 --> 00:35:07,839
Speaker 2: that is.

706
00:35:08,000 --> 00:35:10,839
Speaker 3: And for people to understand. In fact, Michelle Bollocks, in

707
00:35:10,880 --> 00:35:12,720
Speaker 3: her term, which has been there almost two years.

708
00:35:12,640 --> 00:35:14,920
Speaker 2: Now coming up in the September, ye yeah wow.

709
00:35:15,719 --> 00:35:20,200
Speaker 3: She has been very very good and trying very very

710
00:35:20,239 --> 00:35:26,160
Speaker 3: hard to make the RBA output understandable to the punters.

711
00:35:26,200 --> 00:35:29,040
Speaker 3: And that's not being patronizing, because back in the day,

712
00:35:29,080 --> 00:35:30,600
Speaker 3: you look at this sort of stuff, and god, that's

713
00:35:30,920 --> 00:35:34,400
Speaker 3: highly complex, and it's complex to you and me. Know,

714
00:35:34,520 --> 00:35:36,759
Speaker 3: no wonder people can't understand what the Reserve Bank did.

715
00:35:36,840 --> 00:35:38,400
Speaker 3: So she's trying to make it easy. So this is

716
00:35:38,440 --> 00:35:40,040
Speaker 3: what we're trying to do too. We're trying to help

717
00:35:40,080 --> 00:35:43,960
Speaker 3: their rather than hinder them. Okay, so going through our

718
00:35:44,040 --> 00:35:46,880
Speaker 3: checklist here GDP growth as we said, point two percent

719
00:35:46,920 --> 00:35:51,920
Speaker 3: for the quarter one point three, I'd be cutting rates unambiguously.

720
00:35:52,880 --> 00:35:58,400
Speaker 3: Inflation Now, the Bureau of Statistics produced the monthly reading,

721
00:35:58,800 --> 00:36:02,960
Speaker 3: which is a subset of the quarterly result. We do

722
00:36:03,040 --> 00:36:06,319
Speaker 3: have the monthly reading up to May. In a few

723
00:36:06,320 --> 00:36:10,040
Speaker 3: weeks time we get the dune quarter end of dual number,

724
00:36:10,360 --> 00:36:12,880
Speaker 3: which is what about three weeks four weeks away, But

725
00:36:14,239 --> 00:36:17,759
Speaker 3: we already know that headline inflation is two point one,

726
00:36:17,960 --> 00:36:20,560
Speaker 3: near the bottom of the band. The trimmed mean in

727
00:36:20,600 --> 00:36:22,279
Speaker 3: the main numbers two point.

728
00:36:22,000 --> 00:36:23,840
Speaker 2: Four, best we've ever seen, best we've had.

729
00:36:23,680 --> 00:36:26,160
Speaker 3: For a long time. I cut rates because inflation is

730
00:36:26,239 --> 00:36:30,040
Speaker 3: under control. It's yesterday's problem. Labor market. I'm putting in

731
00:36:30,080 --> 00:36:33,359
Speaker 3: neutral because, as we discussed, we've got a four point

732
00:36:33,400 --> 00:36:36,520
Speaker 3: one unemployment rate. That's pretty good compared with the last

733
00:36:36,560 --> 00:36:37,600
Speaker 3: fifty years of history.

734
00:36:38,160 --> 00:36:40,040
Speaker 2: There's some pretty good, bloody good.

735
00:36:39,880 --> 00:36:42,680
Speaker 3: Bloody good and there are still some anecdotes and anecdotes

736
00:36:42,719 --> 00:36:46,760
Speaker 3: and some hard evidence from the NAB survey of labor

737
00:36:46,800 --> 00:36:50,200
Speaker 3: shortages in some areas. So the labor market is tight

738
00:36:50,360 --> 00:36:52,760
Speaker 3: in some areas. So we mentioned it. In building and construction.

739
00:36:53,040 --> 00:36:55,520
Speaker 3: If I want to find some tradees to fast track

740
00:36:55,560 --> 00:36:58,040
Speaker 3: the construction of this dwelling, I can't find them. I

741
00:36:58,080 --> 00:37:01,440
Speaker 3: can't find enough of them at the right price. Yeah, So,

742
00:37:01,560 --> 00:37:04,920
Speaker 3: Lady Marcus Chentral wages neutral as well. They're running at

743
00:37:04,920 --> 00:37:09,920
Speaker 3: about three point four percent. We know that for a

744
00:37:09,960 --> 00:37:11,480
Speaker 3: given product. This is where it gets a bit messy,

745
00:37:11,480 --> 00:37:12,840
Speaker 3: and I don't mean to be messy on the on

746
00:37:12,920 --> 00:37:17,600
Speaker 3: the podcast. But if we get wages at about between

747
00:37:17,600 --> 00:37:20,759
Speaker 3: three and three and a half percent annual increase, that's good.

748
00:37:21,000 --> 00:37:24,839
Speaker 3: That's consistent we see inflation rate. We're at three point four.

749
00:37:25,200 --> 00:37:26,960
Speaker 3: We weren't three point two the quarter before that. So

750
00:37:27,040 --> 00:37:28,719
Speaker 3: at three to three and a half you will take

751
00:37:29,000 --> 00:37:31,160
Speaker 3: We don't get the next wage number till the middle

752
00:37:31,160 --> 00:37:34,040
Speaker 3: of August, so we've got that'll be really interesting number.

753
00:37:34,080 --> 00:37:38,400
Speaker 3: By the way, in national economy, I'm putting between neutral

754
00:37:38,400 --> 00:37:44,279
Speaker 3: and easy We've got the Trump BBB legislation just went

755
00:37:44,320 --> 00:37:47,640
Speaker 3: through at the time of our recording. Basically, that's a

756
00:37:47,680 --> 00:37:51,360
Speaker 3: stimulatory measure for the economy, and we know that Trump

757
00:37:51,400 --> 00:37:53,400
Speaker 3: is sort of bagging power. Aren't you cutting more? Well,

758
00:37:53,400 --> 00:37:55,320
Speaker 3: Pal's actually a little bit worried that this is stimulating

759
00:37:55,360 --> 00:37:58,680
Speaker 3: the US economy. We had the non fine payrolls last night.

760
00:37:58,680 --> 00:38:01,920
Speaker 3: They were good. Unemployment back to four point one. China

761
00:38:01,960 --> 00:38:04,799
Speaker 3: is still weak. Having said all that, Europe's muddling. UK

762
00:38:05,040 --> 00:38:09,000
Speaker 3: is in trouble. The world economy is weak, but not

763
00:38:09,080 --> 00:38:12,000
Speaker 3: catastrophically so, and most central banks are still cutting, although

764
00:38:12,040 --> 00:38:14,040
Speaker 3: they're coming towards the end of the cutting cycles. That's

765
00:38:14,040 --> 00:38:17,000
Speaker 3: why I'm neutral to slide easy. I still think the

766
00:38:17,000 --> 00:38:19,239
Speaker 3: Fed's got a few rate cuts to come, regardless of

767
00:38:19,239 --> 00:38:23,240
Speaker 3: mister Trump, but it's on the easing side. House prices

768
00:38:23,440 --> 00:38:31,040
Speaker 3: starting to pick up again, the rate cuts. Oh look,

769
00:38:31,600 --> 00:38:34,520
Speaker 3: the house prices are starting to pick up again because

770
00:38:34,560 --> 00:38:37,920
Speaker 3: there's a shortage of housing. We're not building enough. Immigration

771
00:38:38,040 --> 00:38:42,560
Speaker 3: is still strong, and that's why house prices going back.

772
00:38:42,480 --> 00:38:45,480
Speaker 2: Up, not because of interest rates, not because of affordability.

773
00:38:46,920 --> 00:38:49,600
Speaker 3: So if affordability is well, if affordability was a problem,

774
00:38:49,640 --> 00:38:52,600
Speaker 3: surely house prices would fall, don't they. That's my rhetorical

775
00:38:52,680 --> 00:38:53,200
Speaker 3: question to you.

776
00:38:53,680 --> 00:38:57,920
Speaker 1: But but I mean rate As rates reduce houses, it

777
00:38:57,960 --> 00:38:58,840
Speaker 1: become more affordable.

778
00:38:58,920 --> 00:39:02,279
Speaker 3: Oh, yes, it does. The way that I'll spend two

779
00:39:02,320 --> 00:39:05,279
Speaker 3: minutes on this because I heard Chris joining you, Chris Joy,

780
00:39:05,560 --> 00:39:08,800
Speaker 3: and he was adamant about it, and good on you, Chris.

781
00:39:10,120 --> 00:39:13,120
Speaker 3: I don't think house prices are driven by interest rates.

782
00:39:13,480 --> 00:39:15,160
Speaker 3: And what I'll do is, I'll take a step back.

783
00:39:16,160 --> 00:39:19,520
Speaker 3: If interest rates are unchanged, house prices are increased by

784
00:39:19,560 --> 00:39:22,880
Speaker 3: about five percent per year, right, the cost of building,

785
00:39:23,320 --> 00:39:28,399
Speaker 3: all that sort of stuff. When we've had rate I'll

786
00:39:28,400 --> 00:39:32,200
Speaker 3: look at from the spective of rate hikes. Well, just

787
00:39:32,280 --> 00:39:34,520
Speaker 3: in the recent ex cycle from two thousand and two

788
00:39:34,600 --> 00:39:36,000
Speaker 3: to the end of two thousand and four, we had

789
00:39:36,040 --> 00:39:37,799
Speaker 3: four hundred and twenty five points of rate high house

790
00:39:38,080 --> 00:39:40,319
Speaker 3: went up, Frozen went up. In Perth, I went up

791
00:39:40,360 --> 00:39:45,040
Speaker 3: thirty seven percent. Why didn't interstrates work in Perth? I

792
00:39:45,080 --> 00:39:47,040
Speaker 3: went back to two thousand and two to two thousand

793
00:39:47,080 --> 00:39:50,240
Speaker 3: and eight. We had a whole lot of rate hikes

794
00:39:50,400 --> 00:39:52,600
Speaker 3: in that boom. We had a mining boom and rates

795
00:39:52,640 --> 00:39:54,680
Speaker 3: went up. What happened the house prices in Melbourne and

796
00:39:54,680 --> 00:39:59,120
Speaker 3: Sydney up eighty eight zero percent. Rates are going up.

797
00:39:59,200 --> 00:40:02,520
Speaker 3: What happened? Shortage cost of building these sorts of thing.

798
00:40:02,520 --> 00:40:04,919
Speaker 2: So it's it's just a basic of supplying demand.

799
00:40:04,880 --> 00:40:06,520
Speaker 3: Supply and demand and the cost of construction.

800
00:40:07,040 --> 00:40:09,520
Speaker 2: But what drives demand, What.

801
00:40:09,560 --> 00:40:12,600
Speaker 3: Drives demand, people hold format.

802
00:40:12,600 --> 00:40:14,759
Speaker 2: People to do. But what drives the demand within a person.

803
00:40:15,719 --> 00:40:18,480
Speaker 3: It come where they've got a job. Labor market's important

804
00:40:18,520 --> 00:40:20,080
Speaker 3: for the for the the reason why the host price

805
00:40:20,120 --> 00:40:22,040
Speaker 3: is going up now because the labor market's relatively tight.

806
00:40:22,080 --> 00:40:23,920
Speaker 3: As we said just a moment ago to you.

807
00:40:23,880 --> 00:40:25,480
Speaker 2: And I agree on most things, but on this one

808
00:40:25,800 --> 00:40:26,680
Speaker 2: we agree to just.

809
00:40:26,719 --> 00:40:29,160
Speaker 3: Okay, we'll agree to disagree. I'm writing a mark, I'm

810
00:40:29,160 --> 00:40:30,680
Speaker 3: writing a paper on that note. I'd love you to

811
00:40:30,800 --> 00:40:31,279
Speaker 3: comment on it.

812
00:40:31,360 --> 00:40:33,880
Speaker 2: No, I definitely will, because we're going to publish it.

813
00:40:34,160 --> 00:40:35,719
Speaker 3: I don't know. I'm writing it first and then I'm

814
00:40:35,719 --> 00:40:36,919
Speaker 3: going to have a chat to a few people about

815
00:40:36,920 --> 00:40:38,279
Speaker 3: what you want to put it. It's going to be

816
00:40:38,880 --> 00:40:40,680
Speaker 3: I don't know if you read Allen Coleer's piece in

817
00:40:40,760 --> 00:40:43,920
Speaker 3: the monthly quarter whatever that whatever. That quarterly essay is

818
00:40:43,920 --> 00:40:46,600
Speaker 3: that he wrote about a year ago on why house

819
00:40:46,640 --> 00:40:48,840
Speaker 3: pricings unafford It was actually quite a good read. It

820
00:40:48,840 --> 00:40:50,560
Speaker 3: was like twenty five thousand words. It was a mini

821
00:40:50,760 --> 00:40:56,600
Speaker 3: mini book, really interesting. I'm not sure whether I agree

822
00:40:56,640 --> 00:40:58,680
Speaker 3: with all of his stuff with a housing debate.

823
00:40:58,840 --> 00:41:01,640
Speaker 1: It's just a typical of economist and it's healthy to

824
00:41:01,680 --> 00:41:05,799
Speaker 1: disagree economic science. You know, rarely do scientists ever agree

825
00:41:05,840 --> 00:41:07,680
Speaker 1: on anything. But that's the point, is the one that

826
00:41:07,680 --> 00:41:08,839
Speaker 1: we've done, and that's the whole point.

827
00:41:09,000 --> 00:41:10,960
Speaker 3: And that's what it's so complex to fix it. Yeah,

828
00:41:11,080 --> 00:41:15,480
Speaker 3: because if we can't self excluded, if smart people can't

829
00:41:16,120 --> 00:41:17,879
Speaker 3: work out what the problem is, how do you fix

830
00:41:17,920 --> 00:41:19,640
Speaker 3: something that you don't know what the problems? I agree,

831
00:41:19,760 --> 00:41:21,560
Speaker 3: And if housing affordability is an issue, and I think

832
00:41:21,600 --> 00:41:24,000
Speaker 3: that is an issue, that's what I do. We all agree, Yeah,

833
00:41:24,000 --> 00:41:26,279
Speaker 3: I affordability is an issue and to young people and

834
00:41:26,400 --> 00:41:28,120
Speaker 3: rental and all this sort of stuff. You know, we'll

835
00:41:28,120 --> 00:41:31,239
Speaker 3: talk about that. I'll show your draft of my look.

836
00:41:31,680 --> 00:41:35,719
Speaker 3: Retail sales weak as water consumers, consumers aren't hunkering down.

837
00:41:35,920 --> 00:41:38,160
Speaker 3: Consumer sentiment it's picked up a bit, but it's still

838
00:41:38,200 --> 00:41:41,440
Speaker 3: well below neutral. So there are more pessimists and optimists.

839
00:41:41,560 --> 00:41:43,359
Speaker 3: So I'd be cutting rates on the back of that

840
00:41:44,000 --> 00:41:46,360
Speaker 3: building approvals. I'm going to put that in the negative side.

841
00:41:46,560 --> 00:41:49,400
Speaker 3: We've had a dip back in building approvals in the

842
00:41:49,520 --> 00:41:53,239
Speaker 3: last three to four months. We're not building enough. And

843
00:41:53,320 --> 00:41:56,640
Speaker 3: while red tape regulation those sort of things that are

844
00:41:56,719 --> 00:42:00,520
Speaker 3: constrained on new construction, so are interest rates. Our interstrates

845
00:42:00,520 --> 00:42:06,280
Speaker 3: will help our business building building numbers pick up business investment.

846
00:42:07,080 --> 00:42:11,600
Speaker 3: Putting that between utually, it's not catastrophic, but it's you know,

847
00:42:11,800 --> 00:42:14,080
Speaker 3: as we were saying, we want cap X to improve

848
00:42:14,080 --> 00:42:16,200
Speaker 3: our product heat. One way we're going to get that

849
00:42:16,200 --> 00:42:19,800
Speaker 3: productivity better is if businesses, the private sector, as the

850
00:42:19,800 --> 00:42:24,880
Speaker 3: Prime Minister said, invest in machinery, equipment and people so

851
00:42:24,960 --> 00:42:26,280
Speaker 3: that they produce things more efficient.

852
00:42:26,320 --> 00:42:28,359
Speaker 1: And by the way, just on that, I mean, if

853
00:42:28,400 --> 00:42:30,239
Speaker 1: I could just interject, I would like to see the

854
00:42:30,280 --> 00:42:37,000
Speaker 1: government invest more money in making the employees that they

855
00:42:37,719 --> 00:42:40,759
Speaker 1: put on in the various parts of governments to be

856
00:42:40,840 --> 00:42:44,799
Speaker 1: much more efficient too. So I think capital investment another

857
00:42:44,800 --> 00:42:47,919
Speaker 1: that it's called business investment, called a capital investment by

858
00:42:48,000 --> 00:42:50,239
Speaker 1: government instead of you're saying, oh, we've got all these

859
00:42:50,280 --> 00:42:51,880
Speaker 1: things have got to fix, let's just put more people

860
00:42:51,880 --> 00:42:55,120
Speaker 1: on and who just end up working more hours, therefore

861
00:42:55,160 --> 00:42:56,239
Speaker 1: becoming less productive.

862
00:42:56,280 --> 00:42:57,240
Speaker 2: To have the same outcome.

863
00:42:58,120 --> 00:43:00,160
Speaker 1: I would like to see much more capital investment by

864
00:43:00,200 --> 00:43:03,799
Speaker 1: government in making sure that the people they employ are

865
00:43:03,840 --> 00:43:04,520
Speaker 1: much more efficient.

866
00:43:06,040 --> 00:43:08,840
Speaker 3: Transfer to driverless trains, So let's.

867
00:43:08,680 --> 00:43:11,480
Speaker 2: Not just try and solve everything by people. Let's just

868
00:43:11,480 --> 00:43:13,240
Speaker 2: try and have some combination.

869
00:43:13,440 --> 00:43:14,920
Speaker 3: Is there a way that we can fix it with

870
00:43:16,200 --> 00:43:19,439
Speaker 3: capital investment? Employing another hundred people on this job.

871
00:43:19,560 --> 00:43:21,399
Speaker 1: I know it's outside of business investment. I'm doing about

872
00:43:21,400 --> 00:43:22,680
Speaker 1: capital investment generally.

873
00:43:22,560 --> 00:43:25,760
Speaker 3: It's very very relevant. We need it across all sectors,

874
00:43:25,800 --> 00:43:32,240
Speaker 3: all sectors private public, and then retail, finance, tourism, everything, export, industry, mining, everything.

875
00:43:32,239 --> 00:43:34,000
Speaker 1: Because when I heard the promise to say that he

876
00:43:34,120 --> 00:43:38,320
Speaker 1: wants businesses to take a greater role in our recovery

877
00:43:38,320 --> 00:43:40,240
Speaker 1: at the moment or our growth at the moment.

878
00:43:40,000 --> 00:43:42,000
Speaker 2: I thought of himself, Yeah, but you're out there.

879
00:43:41,920 --> 00:43:44,440
Speaker 1: Employing, you're you're the biggest employee, had been the biggest

880
00:43:44,440 --> 00:43:46,360
Speaker 1: growth and employment in this country for a couple of years.

881
00:43:47,000 --> 00:43:49,440
Speaker 1: What have you done in terms of capital investment to

882
00:43:49,520 --> 00:43:52,120
Speaker 1: make it your more efficient set of trust trying to

883
00:43:52,120 --> 00:43:53,040
Speaker 1: put more people.

884
00:43:52,719 --> 00:43:55,080
Speaker 3: Out on it. And it even relates to some of

885
00:43:55,120 --> 00:43:57,040
Speaker 3: the very big ticket items that we've got in our budget.

886
00:43:57,080 --> 00:44:00,960
Speaker 3: For the next ten years. Defense and things. It's not

887
00:44:01,000 --> 00:44:07,080
Speaker 3: necessarily necessarily just building building submarines and missiles. And I'm

888
00:44:07,080 --> 00:44:09,880
Speaker 3: not a defense expert by any means. I reckon that

889
00:44:09,920 --> 00:44:13,000
Speaker 3: our biggest three is some sort of cyber attack. It'll

890
00:44:13,000 --> 00:44:15,480
Speaker 3: be It won't be they drop a bomb in Sydney

891
00:44:15,480 --> 00:44:18,520
Speaker 3: Harbor or anything like that. It'll be a cyber attack

892
00:44:18,560 --> 00:44:23,440
Speaker 3: on our banking, on our technology. Yes, it'll be something

893
00:44:23,480 --> 00:44:27,360
Speaker 3: like those lines. That will be very painful anyway, So

894
00:44:27,400 --> 00:44:29,000
Speaker 3: that's what we should be spending out defense money on

895
00:44:29,120 --> 00:44:31,880
Speaker 3: putting up barrists up. But that's another issue. Business confidence

896
00:44:32,320 --> 00:44:35,719
Speaker 3: pretty ordinary, not catastrophic again, but erring on the side

897
00:44:35,760 --> 00:44:39,319
Speaker 3: of easing global commodity prices, they're actually doing okay. You know,

898
00:44:39,440 --> 00:44:41,640
Speaker 3: so iron ore is still close to one hundred US

899
00:44:41,680 --> 00:44:44,440
Speaker 3: dollars a ton. Oil is very volatile, but all the

900
00:44:44,480 --> 00:44:47,640
Speaker 3: geopolitical issues there. But we don't have a commodity's boom

901
00:44:47,760 --> 00:44:48,160
Speaker 3: or a bus.

902
00:44:48,200 --> 00:44:52,520
Speaker 1: So that's jenip terms. Its commodity prices are not doing anything.

903
00:44:52,760 --> 00:44:55,359
Speaker 3: Stock market, well, we don't record highs. I'll just put

904
00:44:55,360 --> 00:44:58,239
Speaker 3: that in neutral but maybe slightly there. But you don't

905
00:44:58,280 --> 00:45:00,879
Speaker 3: hike industrates as your stock market's doing well, well, if

906
00:45:00,880 --> 00:45:02,719
Speaker 3: it's doing well because of low costs and the right

907
00:45:02,840 --> 00:45:05,439
Speaker 3: and the rest that's right and current straits we said

908
00:45:05,440 --> 00:45:08,520
Speaker 3: they're restrictive, so to get to neutral, we need to

909
00:45:08,560 --> 00:45:11,319
Speaker 3: cut them to get to neutral. So we've got the

910
00:45:11,680 --> 00:45:16,560
Speaker 3: red dots are overwhelmingly on the easing side or neutral side.

911
00:45:16,600 --> 00:45:18,920
Speaker 3: There's almost nothing, but there's nothing in the tightening side.

912
00:45:18,960 --> 00:45:22,560
Speaker 1: So when I see this compared to previous periods, yep.

913
00:45:23,360 --> 00:45:25,360
Speaker 1: I think one of the things that our watchers and

914
00:45:25,440 --> 00:45:28,920
Speaker 1: listeners need to understand or maybe take from this, maybe

915
00:45:29,120 --> 00:45:31,560
Speaker 1: or if they could take from this, is that when

916
00:45:32,080 --> 00:45:34,680
Speaker 1: the majority of stuff isn't easy, or at least it's

917
00:45:34,760 --> 00:45:37,520
Speaker 1: half an easing and half a neutral, they've got to

918
00:45:37,520 --> 00:45:39,680
Speaker 1: look at that in the backdrop of where interest rates

919
00:45:39,680 --> 00:45:44,319
Speaker 1: are currently and currently interest rates right now restricted. So

920
00:45:44,880 --> 00:45:48,200
Speaker 1: if you have a restrictive interest rates, but everything else,

921
00:45:48,239 --> 00:45:50,680
Speaker 1: even if everything else is in neutral, you would still

922
00:45:50,760 --> 00:45:52,880
Speaker 1: maybe think maybe we should have read.

923
00:45:52,520 --> 00:45:54,880
Speaker 3: Wish Why I'm on this is what I'm saying. I

924
00:45:54,920 --> 00:45:56,879
Speaker 3: don't think it's the fifty basis points.

925
00:45:56,600 --> 00:45:59,000
Speaker 2: That won't happen, but it won't happen because they do too.

926
00:45:59,040 --> 00:46:00,520
Speaker 2: They do one enjoy in August.

927
00:46:00,800 --> 00:46:02,319
Speaker 3: Yes, they've got another one in August. At the end

928
00:46:02,320 --> 00:46:04,239
Speaker 3: of August, I think it is in another one, and.

929
00:46:04,040 --> 00:46:05,479
Speaker 2: They'll have data coming out of July.

930
00:46:06,000 --> 00:46:08,759
Speaker 3: Correct, they'll have that very important CPI, the inflation number

931
00:46:08,800 --> 00:46:12,200
Speaker 3: at the end of July. And then we've got, of course,

932
00:46:12,239 --> 00:46:15,879
Speaker 3: every monthly labor force number is really important for their deliberations.

933
00:46:15,920 --> 00:46:18,840
Speaker 3: And as you see, labor market's okay good at the moment,

934
00:46:18,880 --> 00:46:22,839
Speaker 3: it's very very good. So yes, that sort of goes

935
00:46:22,880 --> 00:46:27,279
Speaker 3: into the rate cutting, So cut twenty five. It's one

936
00:46:27,280 --> 00:46:29,600
Speaker 3: of those ones. What they say, We've had this cliche

937
00:46:29,640 --> 00:46:31,800
Speaker 3: many times before. It's what they say, is this is important.

938
00:46:31,840 --> 00:46:34,120
Speaker 3: Is what they do in the language the governor. She'll

939
00:46:34,120 --> 00:46:37,200
Speaker 3: give her press conference an hour after the decision is

940
00:46:37,320 --> 00:46:40,200
Speaker 3: announced to the public. They'll be sort of three or

941
00:46:40,239 --> 00:46:44,120
Speaker 3: forty very eager journalists there to ask her and grilla questions,

942
00:46:44,120 --> 00:46:46,360
Speaker 3: as they should. And she's done a brilliant job, frankly,

943
00:46:46,480 --> 00:46:49,840
Speaker 3: in how she handles the journalists. And she's very honest

944
00:46:49,840 --> 00:46:51,880
Speaker 3: and I think she's a breath of fresh air and

945
00:46:51,960 --> 00:46:56,840
Speaker 3: how central banking should be functioning. And again, it's not

946
00:46:56,880 --> 00:46:58,680
Speaker 3: to say that we all agree with everything she says

947
00:46:58,760 --> 00:47:02,400
Speaker 3: or doesn't say. Or whatever. It's at least transparent. The

948
00:47:02,480 --> 00:47:05,239
Speaker 3: RBA's deliberations are transmits. Well, actually, I don't think that

949
00:47:05,239 --> 00:47:07,960
Speaker 3: that's right, but I can understand where you're coming from,

950
00:47:07,960 --> 00:47:10,480
Speaker 3: and I think that's a really important part of RBA

951
00:47:11,440 --> 00:47:14,839
Speaker 3: operations right now. So what she says, will she signal, Well,

952
00:47:14,840 --> 00:47:18,560
Speaker 3: here's twenty five and if we get that low CPI

953
00:47:19,200 --> 00:47:22,239
Speaker 3: low inflation number at the end of July, if the

954
00:47:22,320 --> 00:47:25,000
Speaker 3: next couple of employment numbers between now in our next

955
00:47:25,040 --> 00:47:29,520
Speaker 3: meeting shine employment at four point three ish percent, yeah,

956
00:47:29,560 --> 00:47:30,440
Speaker 3: we'll probably go again.

957
00:47:30,760 --> 00:47:32,520
Speaker 2: And if they don't, will then pause, I reckon you

958
00:47:32,760 --> 00:47:33,360
Speaker 2: say that.

959
00:47:34,080 --> 00:47:37,239
Speaker 3: Shouts said. In those words, she will say that we

960
00:47:37,400 --> 00:47:42,040
Speaker 3: continually on the outlook for information that confirms the inflations

961
00:47:42,200 --> 00:47:45,920
Speaker 3: at the bottom half of our target reserve bank speak,

962
00:47:45,920 --> 00:47:47,120
Speaker 3: which I haven't learnt to do.

963
00:47:47,640 --> 00:47:51,480
Speaker 1: Yeah, but I but I think that where we are

964
00:47:51,560 --> 00:47:55,400
Speaker 1: right now, I think we should sort of enjoy the

965
00:47:55,400 --> 00:47:57,440
Speaker 1: moment because you know, we've been through a lot of

966
00:47:57,520 --> 00:47:58,520
Speaker 1: interest rate increases.

967
00:47:58,560 --> 00:48:00,600
Speaker 2: We are in pretty good terartory, I.

968
00:48:00,480 --> 00:48:04,000
Speaker 1: Think, data wise, for seeing interest rates come down, and

969
00:48:04,120 --> 00:48:06,120
Speaker 1: maybe you could just reflect quickly on what the money

970
00:48:06,120 --> 00:48:06,719
Speaker 1: markets are saying.

971
00:48:06,760 --> 00:48:08,719
Speaker 2: You have the best information.

972
00:48:08,360 --> 00:48:11,399
Speaker 3: Money markets who trade every day on these sort of things.

973
00:48:11,440 --> 00:48:16,960
Speaker 3: We've got the money market pricing in about another one

974
00:48:17,000 --> 00:48:18,919
Speaker 3: hundred points of rate cuts between now in the middle

975
00:48:18,920 --> 00:48:21,480
Speaker 3: of twenty twenty six, so over the next twelve months roughly,

976
00:48:22,200 --> 00:48:25,520
Speaker 3: we've got an official cash rate currently three point eight

977
00:48:25,640 --> 00:48:29,799
Speaker 3: five priced into two point eight five, no lower. So

978
00:48:29,840 --> 00:48:31,680
Speaker 3: we're not going back to where we're during the pandemic,

979
00:48:31,840 --> 00:48:35,480
Speaker 3: no way, but we're getting sort of this range now

980
00:48:35,520 --> 00:48:37,839
Speaker 3: that if we do see these three or four more

981
00:48:37,920 --> 00:48:41,359
Speaker 3: rate cuts between now and this time next year, that's

982
00:48:41,480 --> 00:48:45,399
Speaker 3: seventy five one hundred points off mortgage rates, and then

983
00:48:45,400 --> 00:48:48,479
Speaker 3: that'll be enough to breathe a sigh of relief. People

984
00:48:48,520 --> 00:48:50,759
Speaker 3: will feel a bit of a relief. And you know,

985
00:48:50,800 --> 00:48:52,960
Speaker 3: when we do have those rate cuts coming through, I'm

986
00:48:52,960 --> 00:48:56,359
Speaker 3: sure retail spinning will pick up, consumer confidence will pick up,

987
00:48:56,640 --> 00:48:59,600
Speaker 3: the builders will say, I can afford to build this property. Now,

988
00:49:00,120 --> 00:49:02,200
Speaker 3: get some of these red dots not moving towards a

989
00:49:02,280 --> 00:49:05,400
Speaker 3: rate high, but moving to neutral, which is sort of

990
00:49:05,400 --> 00:49:10,080
Speaker 3: the the goldilocks where we want to be. The Reserve

991
00:49:10,120 --> 00:49:12,919
Speaker 3: Bank know that, and we also need to see too,

992
00:49:13,000 --> 00:49:16,319
Speaker 3: just by the bye, what the actual government delivers in

993
00:49:16,400 --> 00:49:17,720
Speaker 3: terms of its reform agenda.

994
00:49:18,160 --> 00:49:22,040
Speaker 1: And then finally, Kookie, just one one wrap to the government.

995
00:49:22,120 --> 00:49:23,560
Speaker 1: I don't give them any, but I'll give him one

996
00:49:24,440 --> 00:49:26,960
Speaker 1: if they can. And that's not the government, by the ways,

997
00:49:27,000 --> 00:49:30,200
Speaker 1: the RBA is doing it and us consumers. But if

998
00:49:30,200 --> 00:49:35,279
Speaker 1: the government, under this government's leadership, if the RBA can

999
00:49:35,360 --> 00:49:38,920
Speaker 1: land us, you know, consistently, you know, closer to and

1000
00:49:38,920 --> 00:49:43,920
Speaker 1: a half percent inflation and unemployment number four point one,

1001
00:49:44,800 --> 00:49:45,919
Speaker 1: they've done a bloody good job.

1002
00:49:46,320 --> 00:49:48,680
Speaker 3: If we can, If we are here in a year's

1003
00:49:48,719 --> 00:49:51,760
Speaker 3: time and we're roughly two and a half inflation, roughly

1004
00:49:51,800 --> 00:49:53,520
Speaker 3: four to four and a quarter, you know, without being

1005
00:49:53,520 --> 00:49:56,560
Speaker 3: the decimal point low fours, let's call it, that'll be

1006
00:49:56,560 --> 00:49:59,160
Speaker 3: a great outcome for unemployment to it run employment rate

1007
00:49:59,400 --> 00:50:02,399
Speaker 3: four point one, four point two, four point zero unemployment rates.

1008
00:50:02,400 --> 00:50:03,840
Speaker 2: And if we've had three rate reduction.

1009
00:50:03,760 --> 00:50:07,600
Speaker 3: Half we've had the rate cuts. GDP's two and a half,

1010
00:50:07,640 --> 00:50:09,799
Speaker 3: two and three quarter percent. So we've got a bit

1011
00:50:09,800 --> 00:50:12,640
Speaker 3: of business investment coming back up because the private sector

1012
00:50:12,760 --> 00:50:16,120
Speaker 3: is spending, spending on capex and those sort of things.

1013
00:50:16,360 --> 00:50:18,480
Speaker 3: Retail sales have picked up a bit because we consume

1014
00:50:18,480 --> 00:50:20,680
Speaker 3: as a whole breathing a side of relief on the

1015
00:50:20,719 --> 00:50:23,319
Speaker 3: rate cuts. That will actually be pretty bloody good. We'll

1016
00:50:23,320 --> 00:50:26,680
Speaker 3: have a really good conversation if that happens.

1017
00:50:26,840 --> 00:50:29,520
Speaker 1: Maybe one year ago, I think about a year ago,

1018
00:50:30,480 --> 00:50:34,120
Speaker 1: you and I threw up the proposition that it's all

1019
00:50:34,160 --> 00:50:36,719
Speaker 1: going to be even threes, so I remember that.

1020
00:50:36,920 --> 00:50:39,479
Speaker 2: Yes, three through three.

1021
00:50:39,560 --> 00:50:41,799
Speaker 1: So it'd be really interesting if that we're going to

1022
00:50:41,800 --> 00:50:45,080
Speaker 1: get around that territory, because you know, then we are

1023
00:50:45,160 --> 00:50:46,240
Speaker 1: really the lucky country.

1024
00:50:46,400 --> 00:50:49,160
Speaker 2: I'm going to sure inflation has gone back good, some prices.

1025
00:50:48,840 --> 00:50:53,680
Speaker 1: Haven't really gone reduced, but still we haven't had massive increases.

1026
00:50:53,719 --> 00:50:57,120
Speaker 1: I mean right now, we are not feeling the benefits

1027
00:50:57,160 --> 00:51:00,279
Speaker 1: of low inflation yet because it takes well to fee

1028
00:51:00,400 --> 00:51:02,399
Speaker 1: because our incomes and we going to sort of catch

1029
00:51:02,480 --> 00:51:04,360
Speaker 1: up to that cost of living increase.

1030
00:51:04,440 --> 00:51:06,720
Speaker 2: We had heavy cost living increase.

1031
00:51:06,719 --> 00:51:08,759
Speaker 1: You had your in twenty twenty one, twenty two, and

1032
00:51:08,840 --> 00:51:10,600
Speaker 1: twenty three, and probably a little bit of twenty four.

1033
00:51:11,400 --> 00:51:15,440
Speaker 2: So we haven't felt that yet. But in a low inflation.

1034
00:51:15,440 --> 00:51:19,640
Speaker 1: And I say this to listeners to give them some

1035
00:51:19,640 --> 00:51:23,719
Speaker 1: confidence and hope, we haven't really endured a low inflation

1036
00:51:23,880 --> 00:51:25,280
Speaker 1: rate period yet.

1037
00:51:25,640 --> 00:51:27,160
Speaker 2: So you been a couple of months, yeah, a couple

1038
00:51:27,200 --> 00:51:30,360
Speaker 2: of months literally, and a low interest rate period yet.

1039
00:51:30,440 --> 00:51:33,360
Speaker 3: Only really just started. You know. The first cup was

1040
00:51:33,360 --> 00:51:34,200
Speaker 3: in February, which.

1041
00:51:34,000 --> 00:51:36,160
Speaker 2: Is we'll get it there. We'll get there in May.

1042
00:51:36,480 --> 00:51:40,960
Speaker 3: And again, Mark, we've had this conversation to an economy

1043
00:51:41,000 --> 00:51:45,719
Speaker 3: doesn't turn around in months. A year. Yeah, and so

1044
00:51:46,360 --> 00:51:49,960
Speaker 3: what you do today, the Reserve Bank or the government whatever,

1045
00:51:50,320 --> 00:51:53,759
Speaker 3: does not impact on these dots for about a year.

1046
00:51:54,040 --> 00:51:56,239
Speaker 1: And the good thing about this though we started two

1047
00:51:56,320 --> 00:51:59,200
Speaker 1: years ago, Mate, we're around the other way. We're looking

1048
00:51:59,239 --> 00:52:02,840
Speaker 1: at rate rises to bring everything into neutral from tightening.

1049
00:52:02,840 --> 00:52:06,600
Speaker 3: Because we had high inflation, we had three point four unmployment,

1050
00:52:06,600 --> 00:52:08,680
Speaker 3: we had wages growth it was four and a half percent.

1051
00:52:08,960 --> 00:52:12,680
Speaker 3: The international economy was booming. House prices are going twenty percent. Yea,

1052
00:52:13,040 --> 00:52:16,080
Speaker 3: all of the almost all of these got through in

1053
00:52:16,120 --> 00:52:19,319
Speaker 3: the tightening camp. And on behold the RBA titan. Yep,

1054
00:52:19,440 --> 00:52:23,920
Speaker 3: they did. But in a funny way. You know, this

1055
00:52:24,040 --> 00:52:25,960
Speaker 3: is the thing. Yes, I've been critical of the RBA.

1056
00:52:26,040 --> 00:52:27,799
Speaker 3: But if we're here in a year's time and we

1057
00:52:27,840 --> 00:52:30,160
Speaker 3: do have two and a half inflation, yeah, plus and

1058
00:52:30,200 --> 00:52:34,319
Speaker 3: minus a few tenths, the labor market is at full

1059
00:52:34,360 --> 00:52:40,280
Speaker 3: employment and growth happening, I'll eat some humble pie.

1060
00:52:40,520 --> 00:52:44,880
Speaker 1: Same here, and I will say right now, I feel

1061
00:52:45,000 --> 00:52:49,359
Speaker 1: quite confident. I feel quite confident that I'll definitely give

1062
00:52:49,560 --> 00:52:52,719
Speaker 1: the RBA a wrap. Oh yeah, they took some courageous yep,

1063
00:52:53,080 --> 00:52:54,600
Speaker 1: but they did say some greateous moves.

1064
00:52:55,000 --> 00:52:57,400
Speaker 3: Oh that some of those last couple of great hikes

1065
00:52:57,440 --> 00:53:00,360
Speaker 3: in twenty three towards the middle country of the exact dates.

1066
00:53:00,360 --> 00:53:02,160
Speaker 3: Now thought, oh my god, what do they do?

1067
00:53:02,280 --> 00:53:05,360
Speaker 1: And you're not critical, by the way, weber rate right November,

1068
00:53:06,440 --> 00:53:08,040
Speaker 1: we were critical, didn't it happen?

1069
00:53:08,960 --> 00:53:11,120
Speaker 3: But that was one of the early ones of Michelle

1070
00:53:11,120 --> 00:53:13,719
Speaker 3: Bullocker's gardner. I think she just wanted to this is

1071
00:53:13,760 --> 00:53:16,520
Speaker 3: not a critician. She wanted to impose her you know,

1072
00:53:16,680 --> 00:53:21,000
Speaker 3: stamp on, I'm a tough inflation fighter. And well maybe

1073
00:53:21,040 --> 00:53:21,839
Speaker 3: maybe she was right.

1074
00:53:22,239 --> 00:53:24,560
Speaker 1: Well, time will tell them, but I have to I

1075
00:53:24,600 --> 00:53:26,919
Speaker 1: did my hat to them now right now. So because

1076
00:53:26,920 --> 00:53:30,200
Speaker 1: we're in a good, good position, So mate, twenty five

1077
00:53:30,239 --> 00:53:33,200
Speaker 1: base points on, I think a July, July and the

1078
00:53:33,239 --> 00:53:35,080
Speaker 1: next and then everyone should be looking out for the

1079
00:53:35,160 --> 00:53:37,480
Speaker 1: data comes out at the end of July, really important

1080
00:53:37,480 --> 00:53:39,960
Speaker 1: CPI data that'll be we'll get you know, the quarterly

1081
00:53:39,960 --> 00:53:43,000
Speaker 1: and we'll get the yearly for June and you know,

1082
00:53:43,000 --> 00:53:45,839
Speaker 1: we're hoping it's going to be the same territory it's

1083
00:53:45,880 --> 00:53:47,920
Speaker 1: currently sitting. And I don't see ay reason why shouldn't be,

1084
00:53:48,000 --> 00:53:50,680
Speaker 1: to be frank with you, unless something crazy happens, if

1085
00:53:50,719 --> 00:53:54,759
Speaker 1: we haven't been expecting, and then we'll see in the

1086
00:53:54,760 --> 00:53:56,480
Speaker 1: next meeting of that I think is the eighteen of

1087
00:53:56,480 --> 00:53:56,840
Speaker 1: the August.

1088
00:53:56,920 --> 00:53:58,960
Speaker 3: It's late August. Yes, I don't have the dates in

1089
00:53:58,960 --> 00:54:01,239
Speaker 3: front ofly, but middle to late August it might be.

1090
00:54:01,719 --> 00:54:05,640
Speaker 4: Yes, I've got a FEU in August, but that it

1091
00:54:05,680 --> 00:54:06,319
Speaker 4: is because we've got.

1092
00:54:06,239 --> 00:54:08,440
Speaker 3: The wages numbers coming out then about the same time.

1093
00:54:08,560 --> 00:54:11,320
Speaker 1: So we got yes, two board rb A board meetings

1094
00:54:11,320 --> 00:54:14,719
Speaker 1: in the next six weeks, and I would expect, and

1095
00:54:14,760 --> 00:54:16,799
Speaker 1: I think you would agreed with me too, rate reductions

1096
00:54:17,440 --> 00:54:18,839
Speaker 1: of reduction each one.

1097
00:54:19,320 --> 00:54:21,600
Speaker 3: If I was a betting person, that's I have my money,

1098
00:54:21,600 --> 00:54:24,960
Speaker 3: and that's sort of as we're saying, largely, not completely,

1099
00:54:25,000 --> 00:54:26,640
Speaker 3: but largely priced into the capital market.

1100
00:54:26,719 --> 00:54:30,160
Speaker 1: Credit mate, good to see Coogie's mark. Well done, mad,

1101
00:54:30,239 --> 00:54:32,719
Speaker 1: and I'll be sending a copy of this to joy Boy.

1102
00:54:33,040 --> 00:54:37,879
Speaker 3: Thanks mate. We should have a chat getting in here.

1103
00:54:38,560 --> 00:54:40,719
Speaker 2: It's hard to get in hard.

1104
00:54:40,760 --> 00:54:45,480
Speaker 1: He was always around in Miami or wherever he's got

1105
00:54:45,520 --> 00:54:46,520
Speaker 1: officer around the world now.

1106
00:54:46,840 --> 00:54:49,040
Speaker 2: But like it was enough getting him him just for that.

1107
00:54:49,120 --> 00:54:52,960
Speaker 3: But like if you can get in, I'll crawl over

1108
00:54:53,040 --> 00:54:53,840
Speaker 3: broken the last.

1109
00:54:53,600 --> 00:54:55,799
Speaker 2: To get him to the opposite each other.

1110
00:54:56,600 --> 00:54:57,440
Speaker 3: You can be you can be.

1111
00:54:57,360 --> 00:55:00,320
Speaker 2: The I'll be the media judge mate th skoi

1112
00:55:06,120 --> 00:55:06,359
Speaker 1: Yahm