1 00:00:03,930 --> 00:00:07,380 Michael Thompson: The Aussie economy slows and the likelihood of a recession 2 00:00:07,380 --> 00:00:11,039 Michael Thompson: later this year increases. The Reserve Bank's to get more 3 00:00:11,039 --> 00:00:15,179 Michael Thompson: powers to regulate payments providers, like Apple, Google, and buy- now- pay- 4 00:00:15,179 --> 00:00:18,599 Michael Thompson: later operators. And the government sets an end date for 5 00:00:18,600 --> 00:00:23,070 Michael Thompson: checks. It's Thursday the 8th of June 2023. Welcome to 6 00:00:23,070 --> 00:00:26,700 Michael Thompson: Fear and Greed, Australia's most popular business podcast. I'm Michael 7 00:00:26,700 --> 00:00:28,620 Michael Thompson: Thompson and good morning, Sean Aylmer. 8 00:00:28,770 --> 00:00:29,909 Sean Aylmer: Good morning, Michael. 9 00:00:30,179 --> 00:00:33,598 Michael Thompson: Sean, big show today. Afterwards you have an interview coming 10 00:00:33,598 --> 00:00:36,780 Michael Thompson: up with EY Chief Economist Cherelle Murphy. 11 00:00:37,110 --> 00:00:40,380 Sean Aylmer: Yes, I sure do. All about yesterday's economic growth figures 12 00:00:40,380 --> 00:00:43,500 Sean Aylmer: and, of course, the Reserve Bank's interest rate hike on 13 00:00:43,560 --> 00:00:47,940 Sean Aylmer: Tuesday. Where we are in economic terms, and Michael, not 14 00:00:47,940 --> 00:00:48,900 Sean Aylmer: exactly good news. 15 00:00:49,110 --> 00:00:51,929 Michael Thompson: No, it's not good news. It's important news. It is 16 00:00:51,929 --> 00:00:55,290 Michael Thompson: our main story this morning because the Australian economy grew 17 00:00:55,290 --> 00:01:00,240 Michael Thompson: by just 0. 2% during the March quarter, demonstrating just 18 00:01:00,300 --> 00:01:03,509 Michael Thompson: how much higher interest rates and the cost of living 19 00:01:03,510 --> 00:01:04,680 Michael Thompson: is hitting consumers. 20 00:01:05,280 --> 00:01:07,799 Sean Aylmer: Exactly. The result was lower than expected, and while it 21 00:01:07,799 --> 00:01:11,160 Sean Aylmer: shows that the economy is slowing and will support the 22 00:01:11,160 --> 00:01:15,480 Sean Aylmer: Reserve Bank's efforts to dampen inflation, it probably won't prevent 23 00:01:15,750 --> 00:01:18,959 Sean Aylmer: another interest rate rise. At least that's the conclusion of 24 00:01:18,959 --> 00:01:23,069 Sean Aylmer: several market economists who now think rates will rise at 25 00:01:23,069 --> 00:01:26,370 Sean Aylmer: least once, possibly up to three or four times. The 26 00:01:26,370 --> 00:01:29,639 Sean Aylmer: Bureau of Statistics figures yesterday showed that weak household spending 27 00:01:29,639 --> 00:01:32,760 Sean Aylmer: and a fall in consumption is weighing on the economy. 28 00:01:32,940 --> 00:01:34,950 Sean Aylmer: For the full year to the end of March, Australia 29 00:01:34,950 --> 00:01:38,640 Sean Aylmer: grew at a 2. 3% pace, down from 2. 7% 30 00:01:39,000 --> 00:01:41,849 Sean Aylmer: last year. There's always plenty of great information in the 31 00:01:41,849 --> 00:01:45,690 Sean Aylmer: national accounts figures, Michael. Higher taxes, along with bigger mortgage 32 00:01:45,690 --> 00:01:50,010 Sean Aylmer: payments have reduced the savings rate to just 3. 7%. 33 00:01:50,430 --> 00:01:54,060 Sean Aylmer: Now that's the lowest since June 2008. And remember, during 34 00:01:54,060 --> 00:01:56,610 Sean Aylmer: the COVID pandemic we were talking about these incredible 15 35 00:01:56,610 --> 00:01:59,969 Sean Aylmer: to 20% levels of savings? Well, it's back down to 36 00:01:59,969 --> 00:02:02,850 Sean Aylmer: a 15- year low. First of all, income taxes jumped 37 00:02:02,910 --> 00:02:06,840 Sean Aylmer: to 16% of household earnings, that's a two- decade high, 38 00:02:07,080 --> 00:02:11,010 Sean Aylmer: as wage inflation pushes workers into higher tax brackets. Net 39 00:02:11,010 --> 00:02:13,950 Sean Aylmer: exports detracted from growth thanks to a jump in imports. 40 00:02:14,160 --> 00:02:18,300 Sean Aylmer: Private investment was only slightly positive. And on productivity, which 41 00:02:18,300 --> 00:02:21,990 Sean Aylmer: is the economic topic du jour, well, Michael, it went 42 00:02:21,990 --> 00:02:25,890 Sean Aylmer: backwards during the month. GDP per hour worked was down 43 00:02:25,950 --> 00:02:30,240 Sean Aylmer: 0.2% over the quarter, 4. 5% lower than a year 44 00:02:30,240 --> 00:02:35,009 Sean Aylmer: ago. The worst result ever. Exactly what the Reserve Bank 45 00:02:35,340 --> 00:02:36,269 Sean Aylmer: doesn't want. 46 00:02:36,780 --> 00:02:39,419 Michael Thompson: Is that a particularly important measure? Is that one that 47 00:02:39,419 --> 00:02:41,460 Michael Thompson: really everybody looks at, productivity? 48 00:02:42,119 --> 00:02:45,000 Sean Aylmer: It is at the moment, because if you have wages 49 00:02:45,000 --> 00:02:49,740 Sean Aylmer: growth without productivity, you end up with more inflation, therefore 50 00:02:49,740 --> 00:02:53,250 Sean Aylmer: you end up with higher interest rates. As Phil Lowe, 51 00:02:53,250 --> 00:02:57,149 Sean Aylmer: the Reserve Bank governor recently said, " Productivity is actually what 52 00:02:57,150 --> 00:03:00,298 Sean Aylmer: makes you progress as a nation." It kind of makes 53 00:03:00,359 --> 00:03:04,200 Sean Aylmer: society better, at least materially. If we're not having productivity, 54 00:03:04,200 --> 00:03:06,840 Sean Aylmer: in fact, we're having productivity growth go backwards, we're going 55 00:03:06,840 --> 00:03:10,709 Sean Aylmer: to end up high rates, higher inflation and definitely a recession. 56 00:03:11,550 --> 00:03:14,909 Michael Thompson: Speaking of Phil Lowe, Sean, just ahead of the national 57 00:03:14,910 --> 00:03:16,709 Michael Thompson: accounts, the Reserve Bank governor was speaking. 58 00:03:17,279 --> 00:03:19,710 Sean Aylmer: Yeah, he was. He said the path the bank is 59 00:03:19,710 --> 00:03:23,609 Sean Aylmer: trying to navigate, lower inflation, a growing economy and holding 60 00:03:23,610 --> 00:03:26,460 Sean Aylmer: onto the gains in the labor market, is difficult and 61 00:03:26,460 --> 00:03:29,280 Sean Aylmer: bumpy, but it is possible. He said higher rates are 62 00:03:29,280 --> 00:03:33,508 Sean Aylmer: slowing the economy through mortgages, but also inflation expectations and 63 00:03:33,508 --> 00:03:36,210 Sean Aylmer: the availability of credit. He also said the Fair Work 64 00:03:36,270 --> 00:03:39,839 Sean Aylmer: Commission decision to lift award rates by 5. 75% last 65 00:03:39,840 --> 00:03:43,080 Sean Aylmer: week was higher than he'd expected. He's keeping a close 66 00:03:43,170 --> 00:03:47,219 Sean Aylmer: watch on house prices. I don't know whether he's having sleepless 67 00:03:47,219 --> 00:03:50,069 Sean Aylmer: nights, but whatever the Reserve Bank governor does, the equivalent 68 00:03:50,070 --> 00:03:51,780 Sean Aylmer: of sleepless nights, I reckon that's what he's having. 69 00:03:52,469 --> 00:03:56,730 Michael Thompson: Fairly anxious time, I would imagine. So we've got a 70 00:03:56,730 --> 00:04:00,750 Michael Thompson: slowing economy as demonstrated by the GDP numbers. We've got a 71 00:04:00,750 --> 00:04:03,990 Michael Thompson: central bank governor who is trying to navigate a very 72 00:04:03,990 --> 00:04:06,780 Michael Thompson: narrow path. What's the bottom line here, Sean? What's it 73 00:04:06,780 --> 00:04:07,200 Michael Thompson: all mean? 74 00:04:07,650 --> 00:04:11,309 Sean Aylmer: Rates may, probably will still rise in an effort to 75 00:04:11,309 --> 00:04:14,010 Sean Aylmer: get inflation lower, and that might be more than one rate 76 00:04:14,010 --> 00:04:16,830 Sean Aylmer: rise. There's a real risk that the economy could go 77 00:04:16,830 --> 00:04:19,650 Sean Aylmer: into a recession. It would be mild, but a recession 78 00:04:19,650 --> 00:04:22,620 Sean Aylmer: nonetheless. It's certainly likely that the economy will go into 79 00:04:22,620 --> 00:04:26,760 Sean Aylmer: a per capita recession. That's when you measure the economy 80 00:04:26,910 --> 00:04:29,370 Sean Aylmer: as a ratio to the number of people in Australia. 81 00:04:29,879 --> 00:04:32,368 Sean Aylmer: There'll be job losses in coming quarters, though remember, the 82 00:04:32,370 --> 00:04:34,950 Sean Aylmer: starting point for labor market is pretty good. All in 83 00:04:34,950 --> 00:04:37,950 Sean Aylmer: all, it's going to be a very difficult rest of 2023. 84 00:04:39,120 --> 00:04:41,610 Michael Thompson: Sean, we had an interesting question come in in the 85 00:04:41,610 --> 00:04:45,149 Michael Thompson: last day or so from Benny, a listener who contacted 86 00:04:45,150 --> 00:04:48,510 Michael Thompson: us via Instagram. And we always welcome this kind of 87 00:04:48,510 --> 00:04:51,150 Michael Thompson: question coming in through social media because it's an interesting 88 00:04:51,150 --> 00:04:55,020 Michael Thompson: point that he makes. He says, " With only 3.3 million 89 00:04:55,110 --> 00:04:59,550 Michael Thompson: out of 26 million Australians having mortgages, I don't quite 90 00:04:59,550 --> 00:05:04,920 Michael Thompson: understand how hamstringing the discretionary spend of less than 15% 91 00:05:04,980 --> 00:05:08,610 Michael Thompson: of the population can have such an effect on inflation." 92 00:05:08,730 --> 00:05:11,940 Sean Aylmer: Ah, great question, Benny. It is. So there's 26 million 93 00:05:11,940 --> 00:05:15,150 Sean Aylmer: Australians, but on average there's two and a half Australians 94 00:05:15,150 --> 00:05:18,480 Sean Aylmer: per household, the latest figures say, though I dare say post- 95 00:05:18,509 --> 00:05:21,540 Sean Aylmer: COVID, it may have come down a bit. That means 96 00:05:21,630 --> 00:05:24,750 Sean Aylmer: you've got about 10 or 11 million households and in 97 00:05:24,750 --> 00:05:26,969 Sean Aylmer: fact, from memory, the Bureau of Statistics in the middle 98 00:05:26,970 --> 00:05:30,539 Sean Aylmer: of last year put it at 10. 9 million households. 99 00:05:30,750 --> 00:05:33,960 Sean Aylmer: So it's 3. 3 on 10. 9. Now, the rule 100 00:05:33,960 --> 00:05:35,729 Sean Aylmer: of thumb is you've got about a third of the 101 00:05:36,540 --> 00:05:38,789 Sean Aylmer: population with a mortgage, a third's paid it off and 102 00:05:38,790 --> 00:05:41,159 Sean Aylmer: a third are renting, and that kind of is about 103 00:05:41,160 --> 00:05:45,180 Sean Aylmer: right, 3.3 million out of 10. 9. So that's part 104 00:05:45,180 --> 00:05:48,419 Sean Aylmer: of it. So you're actually left 30%, not 15%. The 105 00:05:48,420 --> 00:05:51,178 Sean Aylmer: other part of it is, as Phil Lowe said yesterday, 106 00:05:51,178 --> 00:05:55,589 Sean Aylmer: it's not just mortgage rates, it's credit card rates, it's 107 00:05:55,650 --> 00:05:59,369 Sean Aylmer: inflation expectations, what people think. So if they put interest 108 00:05:59,369 --> 00:06:03,630 Sean Aylmer: rates up, people start thinking that inflation won't rise as 109 00:06:03,630 --> 00:06:07,710 Sean Aylmer: much, therefore change the way they behave. The availability of 110 00:06:07,710 --> 00:06:09,719 Sean Aylmer: credit when rates are higher, it's actually harder to get 111 00:06:09,719 --> 00:06:11,459 Sean Aylmer: a loan for a new car, that type of thing. 112 00:06:11,700 --> 00:06:15,210 Sean Aylmer: So it does affect lots more people. Cracking question, but 113 00:06:15,299 --> 00:06:17,428 Sean Aylmer: the two reasons is the number of people that live 114 00:06:17,430 --> 00:06:20,490 Sean Aylmer: in households and the fact that interest rates affect more 115 00:06:20,490 --> 00:06:21,330 Sean Aylmer: than just mortgages. 116 00:06:21,630 --> 00:06:23,790 Michael Thompson: All right. A great question from Benny, so thank you 117 00:06:23,790 --> 00:06:26,130 Michael Thompson: very much, Benny, for getting in touch. So big day 118 00:06:26,130 --> 00:06:28,830 Michael Thompson: yesterday, obviously, Sean. How did local markets respond? 119 00:06:29,610 --> 00:06:36,299 Sean Aylmer: The S&P ASX 200 ended the day down 0.2% to 7, 118 points. Most 120 00:06:36,299 --> 00:06:39,930 Sean Aylmer: of the fall actually occurred before the 11: 30 AM announcement. 121 00:06:40,200 --> 00:06:42,810 Sean Aylmer: There were about the same number of companies gaining as 122 00:06:42,810 --> 00:06:46,380 Sean Aylmer: losing yesterday. Generally, the consumer discretionary stocks did best. They're 123 00:06:46,380 --> 00:06:48,630 Sean Aylmer: the ones that did worst on Tuesday following the Reserve 124 00:06:48,630 --> 00:06:52,949 Sean Aylmer: Bank's interest rate increase. The technology, healthcare and utility sectors 125 00:06:52,949 --> 00:06:56,550 Sean Aylmer: were also positive. Energy and financials were the worst performers. 126 00:06:56,910 --> 00:06:59,790 Sean Aylmer: Among the large caps, Michael, National Australia Bank fell 1. 127 00:07:00,450 --> 00:07:05,490 Sean Aylmer: 5%. Westpac was down over 1%. Diversified miner South32 dropped 1. 128 00:07:05,880 --> 00:07:09,899 Sean Aylmer: 7%, while REA Group, the online property company, was off 1. 129 00:07:10,170 --> 00:07:14,700 Sean Aylmer: 4%. Gaming machine manufacturer Aristocrat Leisure was the best of the lot, 130 00:07:14,700 --> 00:07:18,420 Sean Aylmer: stocks up 1. 7%, while the tech leader WiseTech Global 131 00:07:18,420 --> 00:07:22,559 Sean Aylmer: finished more than 1% higher. A few interesting companies yesterday, 132 00:07:22,559 --> 00:07:25,290 Sean Aylmer: so Beach Energy was the worst of the large caps, 133 00:07:25,290 --> 00:07:28,649 Sean Aylmer: finishing down nearly 8% after disappointing results from its gas 134 00:07:28,650 --> 00:07:32,520 Sean Aylmer: drilling program in the Perth Basin. Couple of very small 135 00:07:32,520 --> 00:07:35,280 Sean Aylmer: stocks worth of mention, shares in dual listed New Zealand 136 00:07:35,340 --> 00:07:41,939 Sean Aylmer: cancer diagnostics business Pacific Edge fell, wait for it, 74%. 137 00:07:42,900 --> 00:07:44,580 Michael Thompson: Wow, that is a big drop. 138 00:07:44,700 --> 00:07:48,330 Sean Aylmer: Yeah. After the company lost its US Medicare coverage for 139 00:07:48,330 --> 00:07:52,800 Sean Aylmer: its flagship bladder test product. And on the other side 140 00:07:52,800 --> 00:07:56,340 Sean Aylmer: of the coin, not quite as dramatic though, battery materials 141 00:07:56,340 --> 00:08:00,960 Sean Aylmer: and technology company NOVONIX' share price jumped 19% after it 142 00:08:00,960 --> 00:08:03,480 Sean Aylmer: said it had locked in a deal worth almost 50 143 00:08:03,480 --> 00:08:07,260 Sean Aylmer: million Aussie dollars with South Korea's LG Energy Solution. 144 00:08:07,560 --> 00:08:09,960 Michael Thompson: All right, so much happening at home. What's happening on 145 00:08:09,960 --> 00:08:10,890 Michael Thompson: international markets? 146 00:08:11,940 --> 00:08:13,500 Sean Aylmer: A bit of a flip side here because there was actually some pretty 147 00:08:13,500 --> 00:08:16,079 Sean Aylmer: good news in global markets over the last 24 hours 148 00:08:16,139 --> 00:08:18,929 Sean Aylmer: or so. Now, imports to China fell by 4. 5% 149 00:08:18,929 --> 00:08:22,289 Sean Aylmer: percent during May. Might think that's bad, but it was 150 00:08:22,289 --> 00:08:26,790 Sean Aylmer: about half as much as was expected. German industrial production 151 00:08:26,850 --> 00:08:30,390 Sean Aylmer: raised 0.3%. That was a bit better than people thought. Now 152 00:08:30,390 --> 00:08:33,300 Sean Aylmer: Germany's the most important economy in Europe. It's the world's fourth- 153 00:08:33,360 --> 00:08:38,100 Sean Aylmer: largest economy. So what happens there does matter. Also, Japan's 154 00:08:38,160 --> 00:08:42,210 Sean Aylmer: leading economic indicators measure, which is used to measure the 155 00:08:42,240 --> 00:08:46,140 Sean Aylmer: economic outlook in the world's second- largest economy rose to 156 00:08:46,140 --> 00:08:48,809 Sean Aylmer: its highest level since late last year. So there really 157 00:08:48,809 --> 00:08:51,870 Sean Aylmer: was some good global economic news around the place yesterday 158 00:08:52,110 --> 00:08:55,290 Sean Aylmer: amid all the bad local economic news. So it's a 159 00:08:55,290 --> 00:08:58,109 Sean Aylmer: tale of two cities, so to speak. Just before we 160 00:08:58,109 --> 00:09:00,990 Sean Aylmer: go, oil's down to touch, Michael, as is gold. Coal 161 00:09:00,990 --> 00:09:03,929 Sean Aylmer: prices continue to trade near two- year lows. But the 162 00:09:03,929 --> 00:09:07,228 Sean Aylmer: Aussie dollar's high, it's up at 66. 7 US cents. 163 00:09:07,380 --> 00:09:09,599 Michael Thompson: Okay, massive start to the show, Sean. We'll be back 164 00:09:09,599 --> 00:09:11,459 Michael Thompson: in a moment with the rest of the day's business 165 00:09:11,460 --> 00:09:20,970 Michael Thompson: news. Sean, Treasurer Jim Chalmers will give the Reserve Bank 166 00:09:20,970 --> 00:09:25,800 Michael Thompson: more power to regulate companies in payments and better coordinate 167 00:09:25,800 --> 00:09:27,240 Michael Thompson: regulators in the sector. 168 00:09:27,660 --> 00:09:32,759 Sean Aylmer: The modernization of payments system regulation, what a mouthful. It's 169 00:09:32,759 --> 00:09:35,879 Sean Aylmer: actually the most significant reform in the space probably since 170 00:09:35,879 --> 00:09:38,819 Sean Aylmer: the Wallace inquiry, which was 25 years ago or so. 171 00:09:38,970 --> 00:09:42,510 Sean Aylmer: And it basically recognizes that payments providers go beyond banks, 172 00:09:42,570 --> 00:09:46,319 Sean Aylmer: and regulators need greater powers to manage the payments system, 173 00:09:46,380 --> 00:09:48,990 Sean Aylmer: according to a report in the Financial Review. Now, about 174 00:09:48,990 --> 00:09:55,259 Sean Aylmer: 55 million payments worth about $ 650 billion are made in 175 00:09:55,260 --> 00:09:59,280 Sean Aylmer: Australia every day, and a growing number of these are 176 00:09:59,280 --> 00:10:05,160 Sean Aylmer: facilitated by technology companies like Apple, Google, Block. China's WeChat Pay's 177 00:10:05,160 --> 00:10:08,160 Sean Aylmer: another one. Even the buy- now- pay- later providers such 178 00:10:08,160 --> 00:10:12,238 Sean Aylmer: as Zip and Afterpay. A review back in 2021, which 179 00:10:12,240 --> 00:10:16,230 Sean Aylmer: until yesterday hadn't been acted on, found Australia's payments regulations 180 00:10:16,620 --> 00:10:20,070 Sean Aylmer: are archaic, basically written when people still wrote checks and 181 00:10:20,070 --> 00:10:24,120 Sean Aylmer: smartphones hadn't been invented. Hence, we need some new rules. 182 00:10:24,480 --> 00:10:27,929 Sean Aylmer: Broadly speaking, the Reserve Bank will get greater powers as 183 00:10:27,929 --> 00:10:31,679 Sean Aylmer: will the treasurer. That's all about regulating those payment providers. 184 00:10:32,010 --> 00:10:34,108 Sean Aylmer: The major banks in Australia will be very happy about 185 00:10:34,110 --> 00:10:37,439 Sean Aylmer: that because Matt Comyn from Commonwealth Bank has basically argued 186 00:10:37,470 --> 00:10:40,289 Sean Aylmer: it's an uneven playing field at the moment because Apple 187 00:10:40,290 --> 00:10:42,420 Sean Aylmer: isn't regulated, but Commonwealth Bank is. 188 00:10:42,840 --> 00:10:46,679 Michael Thompson: Hey Sean, you mentioned checks there, and perfect segue- way 189 00:10:46,679 --> 00:10:49,140 Michael Thompson: into our next story because the federal government will stop 190 00:10:49,140 --> 00:10:53,819 Michael Thompson: writing checks, literally, by 2028 with an eventual end to 191 00:10:53,820 --> 00:10:58,078 Michael Thompson: their use economy- wide planned for 2030. But I really 192 00:10:58,080 --> 00:10:59,790 Michael Thompson: don't know that many people that still use them. 193 00:11:00,210 --> 00:11:04,080 Sean Aylmer: I was talking to my mother- in- law yesterday and 194 00:11:04,080 --> 00:11:07,170 Sean Aylmer: she was talking about how she pays her energy bill 195 00:11:07,380 --> 00:11:09,208 Sean Aylmer: and asked whether I could give her a lift to 196 00:11:09,210 --> 00:11:12,449 Sean Aylmer: the bank to get a check to give her energy 197 00:11:12,450 --> 00:11:15,270 Sean Aylmer: company. And it really took me by surprise because I 198 00:11:15,270 --> 00:11:20,009 Sean Aylmer: thought no one wrote checks anymore. About 0. 25% of all 199 00:11:20,009 --> 00:11:23,549 Sean Aylmer: transactions processed are actually checks, so there's still tens of 200 00:11:23,549 --> 00:11:26,400 Sean Aylmer: thousands of them out there. Basically, the check is going 201 00:11:26,400 --> 00:11:29,490 Sean Aylmer: the way of the dodo, though. Federal Treasurer Jim Chalmers 202 00:11:29,580 --> 00:11:35,460 Sean Aylmer: said the government will systemically transition transactions to digital. Some 203 00:11:35,460 --> 00:11:39,419 Sean Aylmer: regions and some age groups use checks more often. Chalmers 204 00:11:39,420 --> 00:11:42,389 Sean Aylmer: said, Australia needs to grow modern, world- class and efficient 205 00:11:42,420 --> 00:11:47,338 Sean Aylmer: payment systems that are safe, trusted, and accessible and enable 206 00:11:47,400 --> 00:11:52,260 Sean Aylmer: greater competition, innovation and productivity. Clearly, Chalmers doesn't think checks 207 00:11:52,349 --> 00:11:54,780 Sean Aylmer: fit into those categories, and I think he's probably right. 208 00:11:55,559 --> 00:11:57,718 Sean Aylmer: What were you laughing at? Was there something smutty in that? 209 00:11:58,139 --> 00:12:00,659 Michael Thompson: No, I was only laughing when you said that checks 210 00:12:00,660 --> 00:12:02,970 Michael Thompson: are going to go the way of the dodo. I said, " What, 211 00:12:02,970 --> 00:12:07,770 Michael Thompson: checks are going to get eaten by Portuguese sailors?" May 212 00:12:07,770 --> 00:12:11,429 Michael Thompson: be taking it a little bit too literally, right? Moving 213 00:12:11,429 --> 00:12:15,959 Michael Thompson: on, Sean, Brookfield, the Canadian investment giant taking over Origin 214 00:12:15,960 --> 00:12:20,309 Michael Thompson: Energy has told the competition regulator that if successful it 215 00:12:20,309 --> 00:12:24,330 Michael Thompson: will develop an additional 10 gigawatts of renewable energy capacity 216 00:12:24,330 --> 00:12:26,640 Michael Thompson: than it would if Origin was left on its own. 217 00:12:27,210 --> 00:12:30,270 Sean Aylmer: The claim's made in Brookfield's submission to the Australian Competition 218 00:12:30,270 --> 00:12:33,509 Sean Aylmer: and Consumer Commission as part of its agreed upon $ 18. 219 00:12:33,509 --> 00:12:37,828 Sean Aylmer: 7 billion takeover of Origin. The essence of the submission 220 00:12:37,830 --> 00:12:42,328 Sean Aylmer: is that Australia's clean energy transmission will be stymied if 221 00:12:42,330 --> 00:12:45,749 Sean Aylmer: the deal is blocked. It says a successful takeover will 222 00:12:45,750 --> 00:12:50,610 Sean Aylmer: bring substantial public benefits by accelerating Australia's decarbonization efforts at 223 00:12:50,610 --> 00:12:54,179 Sean Aylmer: a time when the transition is faltering. Brookfield plans to 224 00:12:54,179 --> 00:12:57,120 Sean Aylmer: build an additional 14 gigawatts of renewables over the next 225 00:12:57,120 --> 00:13:00,510 Sean Aylmer: decade at a cost of about $ 20 billion. It says 226 00:13:01,050 --> 00:13:03,870 Sean Aylmer: that will support local manufacturing in the wind, power and 227 00:13:03,870 --> 00:13:08,040 Sean Aylmer: battery industries. And ultimately the transition will deliver cheaper, cleaner 228 00:13:08,040 --> 00:13:11,429 Sean Aylmer: energy and storage, placing downward pressure on wholesale prices over 229 00:13:11,429 --> 00:13:13,980 Sean Aylmer: time and consequently energy bills. 230 00:13:14,340 --> 00:13:18,990 Michael Thompson: Now, Sean, burns treatment specialist PolyNovo said sales for its 231 00:13:18,990 --> 00:13:23,280 Michael Thompson: polymer film surgical products nearly doubled last month, sending their 232 00:13:23,280 --> 00:13:24,900 Michael Thompson: share price up 15%. 233 00:13:25,290 --> 00:13:27,720 Sean Aylmer: I'm loving these biotech stories, Michael. 234 00:13:27,750 --> 00:13:29,159 Michael Thompson: There's some good stories, aren't there? 235 00:13:29,190 --> 00:13:30,870 Sean Aylmer: Yeah, we have. We've had a bunch of companies that 236 00:13:30,870 --> 00:13:34,170 Sean Aylmer: have done really well on the global stage. Neuren Pharmaceuticals, 237 00:13:34,350 --> 00:13:37,199 Sean Aylmer: Helix Pharmaceuticals. In fact, I think they're the best performers 238 00:13:37,200 --> 00:13:39,059 Sean Aylmer: in the local market over the last 12 months or 239 00:13:39,059 --> 00:13:42,599 Sean Aylmer: so. Now PolyNovo has come out with a strong revenue 240 00:13:42,599 --> 00:13:46,199 Sean Aylmer: result, and said sales in Canada, Hong Kong and India 241 00:13:46,260 --> 00:13:49,439 Sean Aylmer: are encouraging, and it has received its first order from 242 00:13:49,440 --> 00:13:53,460 Sean Aylmer: the Middle East. Not that investing in pharmaceutical companies is 243 00:13:53,460 --> 00:13:56,250 Sean Aylmer: for the faint- hearted, though. PolyNovo is actually yet to 244 00:13:56,250 --> 00:13:59,490 Sean Aylmer: make a profit. Its outlook in recent month has benefited 245 00:13:59,490 --> 00:14:02,850 Sean Aylmer: from a product recall from one of its biggest competitors. 246 00:14:03,059 --> 00:14:05,069 Sean Aylmer: You don't really want to rely on that as a 247 00:14:05,070 --> 00:14:08,309 Sean Aylmer: business strategy. But its share price is up 20% in 248 00:14:08,309 --> 00:14:10,559 Sean Aylmer: the past three weeks. Mind you, it's down close to 249 00:14:10,559 --> 00:14:15,060 Sean Aylmer: 40% since its peak in early February. Yesterday's news is certainly 250 00:14:15,210 --> 00:14:16,620 Sean Aylmer: good news, and good luck to them. 251 00:14:16,950 --> 00:14:20,759 Michael Thompson: Yes, indeed. And Sean, Bain Capital has secured the backing 252 00:14:20,759 --> 00:14:24,209 Michael Thompson: of STA Health's board after increasing its takeover offer for 253 00:14:24,209 --> 00:14:25,290 Michael Thompson: the aged care provider. 254 00:14:25,620 --> 00:14:30,660 Sean Aylmer: It upped the offer by about 6% to $827 million, and STA's largest shareholder, 255 00:14:30,660 --> 00:14:33,840 Sean Aylmer: Wilson Asset Management, said the increase is a positive outcome 256 00:14:33,840 --> 00:14:37,169 Sean Aylmer: for shareholders. The offer is now $3. 20 per share, and STA's 257 00:14:38,070 --> 00:14:42,479 Sean Aylmer: price jumped 13% yesterday to $2. 89. The board of STA 258 00:14:42,629 --> 00:14:45,030 Sean Aylmer: said it will allow Bain to undertake further due diligence 259 00:14:45,030 --> 00:14:48,630 Sean Aylmer: for 30 days ahead of a binding offer, at least 260 00:14:48,630 --> 00:14:50,970 Sean Aylmer: it hopes for a binding offer. STA is one of 261 00:14:50,970 --> 00:14:55,469 Sean Aylmer: Australia's largest aged care operators, having more than 6, 500 places 262 00:14:55,679 --> 00:14:58,079 Sean Aylmer: in more than 70 homes across the country. Now, Bain 263 00:14:58,080 --> 00:15:00,150 Sean Aylmer: still has a few hurdles to clear, hence the difference 264 00:15:00,150 --> 00:15:03,750 Sean Aylmer: between the $ 3. 20 offer price and the $ 2. 89 265 00:15:03,750 --> 00:15:07,530 Sean Aylmer: trading price. It still needs final approval from its head 266 00:15:07,530 --> 00:15:11,070 Sean Aylmer: office in Boston. It also needs regulatory approvals, including from 267 00:15:11,070 --> 00:15:13,620 Sean Aylmer: the Foreign Investment Review Board here in Australia. 268 00:15:14,400 --> 00:15:17,638 Michael Thompson: All right, turning to international news now, and Russia was 269 00:15:17,639 --> 00:15:20,400 Michael Thompson: accused of a war crime yesterday over the destruction of 270 00:15:20,400 --> 00:15:22,831 Michael Thompson: a dam to slow Ukraine's counter- offensive. 271 00:15:22,831 --> 00:15:26,880 Sean Aylmer: " Torrents of floodwater burst through the dam in southern 272 00:15:26,880 --> 00:15:30,930 Sean Aylmer: Ukraine, forcing the evacuation of tens of thousands of civilians. 273 00:15:31,259 --> 00:15:34,619 Sean Aylmer: The destruction came a day after Kyiv launched multiple attacks 274 00:15:34,619 --> 00:15:37,440 Sean Aylmer: across the front line for the apparent beginning of its long- 275 00:15:37,440 --> 00:15:40,260 Sean Aylmer: awaited counter- offensive," according to a report in the Telegraph 276 00:15:40,260 --> 00:15:44,370 Sean Aylmer: of London. Volodymyr Zelensky Ukraine's president said the explosion was 277 00:15:44,370 --> 00:15:49,020 Sean Aylmer: the largest manmade disaster in Europe for decades. US intelligence 278 00:15:49,020 --> 00:15:51,869 Sean Aylmer: was leaning to the conclusion that Russia had triggered the 279 00:15:51,870 --> 00:15:54,209 Sean Aylmer: flood. Now, Russia blamed Ukraine for the destruction of the 280 00:15:54,210 --> 00:15:58,440 Sean Aylmer: dam, terming it an act of sabotage that endangered water supplies 281 00:15:58,440 --> 00:16:02,040 Sean Aylmer: to Russian- controlled Crimea. The dam and its hydroelectric power 282 00:16:02,040 --> 00:16:05,040 Sean Aylmer: plant powers 3 million homes, or at least it did 283 00:16:05,130 --> 00:16:08,969 Sean Aylmer: power 3 million homes. A nuclear power plant around 150 284 00:16:08,969 --> 00:16:13,470 Sean Aylmer: kilometers upstream also uses the water to cool its reactors. 285 00:16:13,500 --> 00:16:17,250 Sean Aylmer: So strategically a very, very significant dam. 286 00:16:18,000 --> 00:16:21,090 Michael Thompson: Yeah, certainly a fairly disturbing story, that one. This next 287 00:16:21,090 --> 00:16:25,829 Michael Thompson: one, Sean, is about the business of sport. The ludicrously 288 00:16:25,830 --> 00:16:30,150 Michael Thompson: wealthy Saudi- backed LIV Golf Tour has agreed to merge 289 00:16:30,150 --> 00:16:33,930 Michael Thompson: with the US PGA and European Tours, unifying professional golf 290 00:16:33,930 --> 00:16:34,740 Michael Thompson: around the world. 291 00:16:35,100 --> 00:16:36,660 Sean Aylmer: Are you a golf fan, Michael? 292 00:16:39,120 --> 00:16:39,121 Michael Thompson: No? 293 00:16:39,121 --> 00:16:39,420 Sean Aylmer: Nuh? 294 00:16:39,420 --> 00:16:43,229 Michael Thompson: Sorry. I struggled with that, didn't I? I don't sit 295 00:16:43,230 --> 00:16:47,759 Michael Thompson: down and watch it, but I enjoy the spectacle of 296 00:16:47,760 --> 00:16:50,730 Michael Thompson: it because there is just so much money involved. 297 00:16:51,480 --> 00:16:54,510 Sean Aylmer: Yeah, totally. I actually find it one of the most 298 00:16:54,510 --> 00:16:58,139 Sean Aylmer: relaxing things to watch on TV, which perhaps suggests I'm 299 00:16:58,139 --> 00:16:59,700 Sean Aylmer: a bit of a dope. But if an Australian is 300 00:16:59,700 --> 00:17:02,219 Sean Aylmer: playing, I tend to watch it for hours. Anyway, for 301 00:17:02,219 --> 00:17:05,310 Sean Aylmer: those people who haven't followed it, golf split in half 302 00:17:05,369 --> 00:17:08,850 Sean Aylmer: less than a year ago, with some players, including Australia's 303 00:17:08,850 --> 00:17:12,810 Sean Aylmer: best, guy called Cameron Smith, joining the rebel LIV Tour 304 00:17:12,990 --> 00:17:16,200 Sean Aylmer: with its massive purses. Now, LIV is run by Aussie 305 00:17:16,200 --> 00:17:20,219 Sean Aylmer: Greg Norman and backed by the Saudis. Others stayed with 306 00:17:20,219 --> 00:17:24,029 Sean Aylmer: the US and European PGA Tours. The two sides hated 307 00:17:24,029 --> 00:17:28,770 Sean Aylmer: each other, basically. Plenty of criticism from both sides. Under 308 00:17:28,770 --> 00:17:31,200 Sean Aylmer: the new deal, which no one saw coming, at least 309 00:17:31,200 --> 00:17:34,440 Sean Aylmer: not this quickly, the three will merge into a single for- 310 00:17:34,440 --> 00:17:38,369 Sean Aylmer: profit entity. Now, the PGA in the US is a not- for- 311 00:17:38,369 --> 00:17:42,209 Sean Aylmer: profit, so that is quite a significant change. LIV players 312 00:17:42,209 --> 00:17:45,540 Sean Aylmer: who were suspended by the PGA Tour, for example Cameron 313 00:17:45,540 --> 00:17:48,418 Sean Aylmer: Smith, will be allowed back. Now, not sure what the 314 00:17:48,420 --> 00:17:50,040 Sean Aylmer: new tour will be called. Not sure what it means 315 00:17:50,040 --> 00:17:52,829 Sean Aylmer: for the Australian PGA, which is a satellite of the 316 00:17:52,830 --> 00:17:56,670 Sean Aylmer: major PGA Tours, but we have peace in our time 317 00:17:56,670 --> 00:17:59,910 Sean Aylmer: for golfers, and presumably there'll be more money for golfers 318 00:17:59,910 --> 00:18:03,600 Sean Aylmer: who didn't join the LIV Tour. Now on that, would 319 00:18:03,600 --> 00:18:06,330 Sean Aylmer: you have any concept of what the highest paid golfer, 320 00:18:06,330 --> 00:18:08,730 Sean Aylmer: this is according to Forbes, might earn in a year? 321 00:18:10,530 --> 00:18:12,359 Michael Thompson: I know that some of these figures that were thrown 322 00:18:12,359 --> 00:18:14,908 Michael Thompson: around and that were used to entice players across to 323 00:18:14,910 --> 00:18:19,289 Michael Thompson: the LIV Tour were enormous. North of a $ 100 million. 324 00:18:20,129 --> 00:18:24,060 Sean Aylmer: Yeah, well, so the top paid golfer is a guy called 325 00:18:24,060 --> 00:18:27,300 Sean Aylmer: Dustin Johnson. He's an American. He moved to LIV Golf 326 00:18:27,420 --> 00:18:32,160 Sean Aylmer: 12 months ago. $ 107 million. He's the sixth highest paid 327 00:18:32,190 --> 00:18:33,840 Sean Aylmer: athlete this year. 328 00:18:34,469 --> 00:18:35,730 Michael Thompson: Oh, isn't that incredible? 329 00:18:36,359 --> 00:18:38,430 Sean Aylmer: There's a boxer, a Mexican boxer in front of him, 330 00:18:38,430 --> 00:18:40,950 Sean Aylmer: a couple of basketball players and a couple of footballers. 331 00:18:41,160 --> 00:18:45,119 Sean Aylmer: I mean, Cristiano Ronaldo and Lionel Messi. Quite amazing. Phil 332 00:18:45,119 --> 00:18:48,900 Sean Aylmer: Mickelson, who's in the twilight of his career, he made $ 333 00:18:48,900 --> 00:18:52,109 Sean Aylmer: 106 million. He went to LIV as well. In fact, 334 00:18:52,109 --> 00:18:56,940 Sean Aylmer: six of the eight highest paid golfers are LIV golfers. 335 00:18:57,750 --> 00:19:00,359 Michael Thompson: God, there's some money in it. And Sean, don't you 336 00:19:00,359 --> 00:19:04,020 Michael Thompson: find it amazing that no one saw this coming? That 337 00:19:05,369 --> 00:19:08,849 Michael Thompson: a deal of this magnitude in something that has been 338 00:19:08,849 --> 00:19:12,148 Michael Thompson: so acrimonious for so long now that they've managed to 339 00:19:12,150 --> 00:19:15,090 Michael Thompson: do this deal and it just took everybody by surprise. 340 00:19:15,270 --> 00:19:18,330 Sean Aylmer: Yeah, the language has been softening, definitely. And even Greg 341 00:19:18,330 --> 00:19:20,668 Sean Aylmer: Norman, who runs the LIV tournament, he was down in 342 00:19:20,670 --> 00:19:23,820 Sean Aylmer: Adelaide six weeks ago when LIV played a tournament down 343 00:19:23,820 --> 00:19:27,119 Sean Aylmer: here. He was a little bit softer about the PGA 344 00:19:27,119 --> 00:19:29,490 Sean Aylmer: Tour. He's been a critic of that group for years, 345 00:19:29,490 --> 00:19:31,948 Sean Aylmer: well before LIV, and even he was a bit softer 346 00:19:31,950 --> 00:19:33,718 Sean Aylmer: on it. Now, it's not clear that he'll actually have 347 00:19:33,720 --> 00:19:35,340 Sean Aylmer: a role in any of this either because the press 348 00:19:35,340 --> 00:19:39,570 Sean Aylmer: release that came out didn't mention Greg Norman's name. But 349 00:19:40,080 --> 00:19:41,879 Sean Aylmer: yeah, it's fascinating. Did I ever tell you the time I 350 00:19:42,179 --> 00:19:43,199 Sean Aylmer: interviewed Greg Norman? 351 00:19:44,460 --> 00:19:46,290 Michael Thompson: Yes. Yes, you did. 352 00:19:46,559 --> 00:19:53,520 Sean Aylmer: I've seldom met such a self- confident individual. Not ego, self- 353 00:19:53,520 --> 00:19:55,859 Sean Aylmer: confident. He just knew what he was good at and 354 00:19:55,859 --> 00:19:57,900 Sean Aylmer: he knew what he wasn't good at, and I found 355 00:19:57,900 --> 00:19:58,800 Sean Aylmer: that quite admirable. 356 00:19:59,369 --> 00:20:02,940 Michael Thompson: Well, that's probably the right man to front the LIV 357 00:20:02,940 --> 00:20:05,369 Michael Thompson: Tour, in terms of you need someone with a lot 358 00:20:05,369 --> 00:20:07,530 Michael Thompson: of confidence because he copped a heck of a lot 359 00:20:08,700 --> 00:20:10,051 Michael Thompson: of flack for his role in that. 360 00:20:10,051 --> 00:20:11,760 Sean Aylmer: Yeah, yeah, yeah. 361 00:20:11,760 --> 00:20:13,918 Michael Thompson: So that doesn't surprise me, what you're saying. It's a 362 00:20:13,920 --> 00:20:16,109 Michael Thompson: fascinating story, Sean. We better wrap things up. We've got 363 00:20:16,109 --> 00:20:19,379 Michael Thompson: a good interview coming up with EY Chief Economist Cherelle Murphy. 364 00:20:19,619 --> 00:20:22,228 Sean Aylmer: Yes. It's all about the economy, what happened in terms 365 00:20:22,230 --> 00:20:25,379 Sean Aylmer: of the economic growth figures yesterday, interest rate rises on 366 00:20:25,380 --> 00:20:27,510 Sean Aylmer: Tuesday, and more importantly, what's going to happen. 367 00:20:28,050 --> 00:20:30,119 Michael Thompson: Excellent. It's coming up next in the Fear and Greed 368 00:20:30,119 --> 00:20:35,490 Michael Thompson: playlist on your podcast platform or at fearandgreed.com.au. Thank you very much, Sean. 369 00:20:35,790 --> 00:20:36,540 Sean Aylmer: Thank you, Michael. 370 00:20:36,630 --> 00:20:39,898 Michael Thompson: It's Thursday, the 8th of June 2023. Make sure you're 371 00:20:39,900 --> 00:20:43,200 Michael Thompson: following the podcast and join us online on LinkedIn, on 372 00:20:43,200 --> 00:20:46,619 Michael Thompson: Instagram and Twitter and Facebook. I'm Michael Thompson and that 373 00:20:46,619 --> 00:20:48,330 Michael Thompson: was Fear and Greed. Have a great day.