1 00:00:00,120 --> 00:00:03,360 Speaker 1: The federal budget is being handed down tomorrow and doctor 2 00:00:03,400 --> 00:00:08,240 Speaker 1: Susan Stone, Credit Union, it's a economics chair at UNISA. Susan, 3 00:00:08,240 --> 00:00:09,080 Speaker 1: good morning. 4 00:00:09,320 --> 00:00:10,320 Speaker 2: Good morning, Matthew. 5 00:00:10,480 --> 00:00:13,400 Speaker 1: Well, what are we expecting? And just before you answer that, 6 00:00:13,560 --> 00:00:16,280 Speaker 1: it just seems to me, looking at what the Treasurer 7 00:00:16,320 --> 00:00:18,600 Speaker 1: is talking about in the lead up to this and 8 00:00:18,880 --> 00:00:22,200 Speaker 1: the interviews he's giving, he is really hoping inflation comes down. 9 00:00:22,200 --> 00:00:26,840 Speaker 1: It all seems to be based on that wish. 10 00:00:26,920 --> 00:00:30,840 Speaker 2: Yes, they are projecting actually that it's a faster decline 11 00:00:30,840 --> 00:00:35,400 Speaker 2: in inflation than the RBA is, So they are counting 12 00:00:35,440 --> 00:00:41,559 Speaker 2: on inflation declining so that their spending won't have an 13 00:00:41,640 --> 00:00:45,240 Speaker 2: accelerating impact and have to cause the RBA to raise 14 00:00:45,640 --> 00:00:47,080 Speaker 2: rates at some stage. 15 00:00:47,159 --> 00:00:50,280 Speaker 1: That is well, to what extent isn't wishful thinking, because 16 00:00:50,320 --> 00:00:53,320 Speaker 1: obviously tax cuts that were legislated years ago are coming 17 00:00:53,320 --> 00:00:57,600 Speaker 1: in on July one. We've got, in the meantime, some 18 00:00:57,800 --> 00:01:00,880 Speaker 1: high fuel prices around the nation still peaking at around 19 00:01:00,920 --> 00:01:04,959 Speaker 1: two dollars thirty. We've got the grocery basket at the 20 00:01:04,959 --> 00:01:07,480 Speaker 1: shopping center still about twenty or thirty bucks more than 21 00:01:07,480 --> 00:01:09,520 Speaker 1: it was a few years ago, a handful of years ago, 22 00:01:09,680 --> 00:01:12,320 Speaker 1: just two or three, and they'd even less than that 23 00:01:12,560 --> 00:01:14,560 Speaker 1: in depending what you're buying. I mean, look at the 24 00:01:14,560 --> 00:01:16,880 Speaker 1: price of oil for good inness sake. Does that come 25 00:01:16,920 --> 00:01:19,520 Speaker 1: out of the Ukraine War as well? Olive oil? I 26 00:01:19,520 --> 00:01:24,120 Speaker 1: don't know that's gone through the roof. I mean fifty 27 00:01:24,120 --> 00:01:28,800 Speaker 1: dollars or four leters? Now when did that happen? And yeah, 28 00:01:28,840 --> 00:01:32,400 Speaker 1: wishful thinking, it seems to some degree it is. 29 00:01:32,800 --> 00:01:37,040 Speaker 2: There are it's not good signs that inflation is easy 30 00:01:36,760 --> 00:01:40,760 Speaker 2: at the rate that we had hoped. And that's why 31 00:01:40,880 --> 00:01:44,440 Speaker 2: the RBA has changed its tone to say we are 32 00:01:44,480 --> 00:01:47,400 Speaker 2: willing and able to raise rates again if we need to. 33 00:01:48,320 --> 00:01:50,520 Speaker 2: So we do have to be careful. And you're exactly 34 00:01:50,600 --> 00:01:54,559 Speaker 2: right about the tax cuts that are coming in in July. Now, 35 00:01:54,880 --> 00:01:58,440 Speaker 2: the thing about those is they are really disproportionately helping 36 00:01:58,520 --> 00:02:02,440 Speaker 2: people who make under none ninety a year. So it 37 00:02:02,520 --> 00:02:07,120 Speaker 2: will to some extent be much more biased towards spending 38 00:02:07,200 --> 00:02:12,200 Speaker 2: towards the things you're talking about, food, petrol and non 39 00:02:12,240 --> 00:02:16,920 Speaker 2: discretionary necessary items, and they need to be bought regardless, 40 00:02:17,520 --> 00:02:21,320 Speaker 2: So the impact on inflation, if you will, won't be 41 00:02:21,400 --> 00:02:24,079 Speaker 2: the same extent as if people would be going out 42 00:02:24,080 --> 00:02:27,760 Speaker 2: and buying a new car or taking a big holiday 43 00:02:27,960 --> 00:02:31,960 Speaker 2: or things like that. So by and large, you know, 44 00:02:32,320 --> 00:02:35,280 Speaker 2: those hopefully won't have too much of an impact on inflation. 45 00:02:35,480 --> 00:02:38,919 Speaker 2: It's the other types of spending that the government's putting 46 00:02:38,960 --> 00:02:42,760 Speaker 2: forward that are a little bit more worrisome. The Future 47 00:02:42,800 --> 00:02:46,240 Speaker 2: Made in Australia is talking about big dollars going into 48 00:02:46,280 --> 00:02:48,200 Speaker 2: the economy. Now, the good side of that is a 49 00:02:48,200 --> 00:02:50,480 Speaker 2: lot of that has to do with renewables and there's 50 00:02:50,520 --> 00:02:56,079 Speaker 2: some money going in there for you know, specific regions 51 00:02:56,120 --> 00:02:59,680 Speaker 2: in South Australia. South Australia is a strong renewables producer, 52 00:02:59,800 --> 00:03:03,359 Speaker 2: so so that could be good news. The money going 53 00:03:03,400 --> 00:03:06,280 Speaker 2: into defense also could be good news for South Australia. 54 00:03:06,400 --> 00:03:09,760 Speaker 2: But we need more training for people to get to 55 00:03:09,800 --> 00:03:11,480 Speaker 2: be able to get jobs that are going to be 56 00:03:11,520 --> 00:03:16,520 Speaker 2: available going into the future. But that's spending, depending on 57 00:03:16,760 --> 00:03:21,800 Speaker 2: how it's put into the economy, could potentially be inflationary. 58 00:03:22,560 --> 00:03:27,160 Speaker 1: Okay, so there's it's a fine line then. Really it's 59 00:03:27,280 --> 00:03:32,359 Speaker 1: just balancing through second surplus in a rye. What does 60 00:03:32,400 --> 00:03:33,560 Speaker 1: that mean for people? 61 00:03:34,360 --> 00:03:36,839 Speaker 2: Well, that's good news. I mean, you know, that's good 62 00:03:36,840 --> 00:03:39,360 Speaker 2: news from an inflation standpoint because it means at least 63 00:03:39,360 --> 00:03:43,040 Speaker 2: the spending this year has not contributed to pressure on 64 00:03:43,160 --> 00:03:46,880 Speaker 2: prices because they've actually taken money kind of out of 65 00:03:46,920 --> 00:03:50,040 Speaker 2: the economy because if they have a surplus, that means 66 00:03:50,040 --> 00:03:53,240 Speaker 2: the government is collecting more money than it's spending and 67 00:03:53,280 --> 00:03:57,280 Speaker 2: then that's like a savings So that's been good news 68 00:03:57,320 --> 00:04:03,120 Speaker 2: from the twenty twenty three twenty four perspective, and going 69 00:04:03,160 --> 00:04:06,200 Speaker 2: forward it does mean that the government from a from 70 00:04:06,240 --> 00:04:08,600 Speaker 2: a debt perspective is in a little bit of a 71 00:04:08,640 --> 00:04:12,200 Speaker 2: better position, even though Australia isn't considered to have huge 72 00:04:12,280 --> 00:04:18,119 Speaker 2: debt problems as a country. But as I said, really 73 00:04:18,200 --> 00:04:20,880 Speaker 2: is the timing. We don't want to have the government 74 00:04:20,960 --> 00:04:25,480 Speaker 2: coming in and spending too much too soon because that's 75 00:04:25,520 --> 00:04:28,919 Speaker 2: also going to the economy is actually not doing badly 76 00:04:29,000 --> 00:04:31,000 Speaker 2: if we take away you know, I mean, I know, 77 00:04:31,040 --> 00:04:32,880 Speaker 2: the cost of living is really bad, but if you 78 00:04:32,960 --> 00:04:37,560 Speaker 2: look at the government, the growth and businesses have been increasing. 79 00:04:37,720 --> 00:04:42,279 Speaker 2: I mean, big four banks have posted that the business 80 00:04:42,320 --> 00:04:46,240 Speaker 2: investment and business spending has actually been increasing. It's been 81 00:04:46,279 --> 00:04:49,599 Speaker 2: pretty strong. Businesses are still you know, expanding to a 82 00:04:49,600 --> 00:04:53,440 Speaker 2: certain extent, So you don't want the government to come 83 00:04:53,480 --> 00:04:57,640 Speaker 2: in and start competing with businesses for scarce resources. Yeah, yeah, 84 00:04:57,720 --> 00:04:58,359 Speaker 2: that's it. 85 00:04:58,760 --> 00:05:02,760 Speaker 1: Yeah, the future Made in Australia policy that you mention. 86 00:05:03,720 --> 00:05:06,560 Speaker 1: A lot of that spending is subsidies though, isn't it. 87 00:05:06,640 --> 00:05:10,520 Speaker 1: That's essentially what it is. It's encouraging business through subsidies 88 00:05:10,560 --> 00:05:15,320 Speaker 1: to produce locally and in the renewable front. Is that 89 00:05:15,360 --> 00:05:17,200 Speaker 1: the way to go? Do you think as an economist, 90 00:05:17,240 --> 00:05:22,400 Speaker 1: is that the right spend if you like, of taxpayers money? 91 00:05:23,440 --> 00:05:28,200 Speaker 2: You know, it's it's as a knee jerk reaction. Most 92 00:05:28,440 --> 00:05:33,239 Speaker 2: economists are allergic to subsidies and grants because the idea 93 00:05:33,360 --> 00:05:37,040 Speaker 2: is you don't want businesses to start to become dependent 94 00:05:37,200 --> 00:05:40,360 Speaker 2: on them, because then they're going to make decisions over 95 00:05:40,360 --> 00:05:42,039 Speaker 2: the long run that they're going to keep getting this 96 00:05:42,120 --> 00:05:44,880 Speaker 2: money from the government. But if the government, but there's 97 00:05:44,920 --> 00:05:47,839 Speaker 2: a lot of things that are really expensive to invest 98 00:05:47,880 --> 00:05:51,039 Speaker 2: in and no one business and some of the renewables 99 00:05:51,120 --> 00:05:55,240 Speaker 2: and the changes that that businesses have to make to 100 00:05:55,360 --> 00:05:59,240 Speaker 2: decarbonize are very expensive and they're one off and it's 101 00:05:59,480 --> 00:06:03,360 Speaker 2: very hard for them to justify that over time. And 102 00:06:03,400 --> 00:06:06,040 Speaker 2: so if the government helps with these kind of things 103 00:06:06,040 --> 00:06:09,960 Speaker 2: to help businesses go in the right direction and help 104 00:06:10,040 --> 00:06:16,680 Speaker 2: them to undertake needed adjustments to their production processes. Then 105 00:06:16,920 --> 00:06:19,880 Speaker 2: then subsidies are seemed to be a good investment because 106 00:06:20,320 --> 00:06:23,840 Speaker 2: they have long run payoff for the economy and for society. 107 00:06:23,920 --> 00:06:26,480 Speaker 2: And those are those kinds of things are are very 108 00:06:26,680 --> 00:06:29,480 Speaker 2: are considered to be good by economists, those kinds of subsidies. 109 00:06:30,279 --> 00:06:35,120 Speaker 2: It's really you have to worry about if businesses were 110 00:06:35,160 --> 00:06:38,080 Speaker 2: already already going to make those investments. You don't want 111 00:06:38,120 --> 00:06:39,880 Speaker 2: to certainly don't want to pay them for things they 112 00:06:39,880 --> 00:06:42,760 Speaker 2: were already going to do or or be. You don't 113 00:06:42,800 --> 00:06:46,080 Speaker 2: want them to start to become dependent on those subsidies. 114 00:06:46,760 --> 00:06:48,719 Speaker 2: So that's that's kind of the line. 115 00:06:49,080 --> 00:06:52,080 Speaker 1: And I suppose, I suppose while they're getting those subsidies. 116 00:06:52,200 --> 00:06:56,000 Speaker 1: I mean, job creation is potentially something that comes out 117 00:06:56,000 --> 00:06:58,560 Speaker 1: of that side. That's the spin off. But it is 118 00:06:59,080 --> 00:07:02,120 Speaker 1: again it's text y Adulla's buying jobs essentially is what 119 00:07:02,160 --> 00:07:02,800 Speaker 1: it comes down to. 120 00:07:03,480 --> 00:07:06,080 Speaker 2: Yeah, you have to make sure that the benefits that 121 00:07:06,080 --> 00:07:08,400 Speaker 2: you're going to get over the long run in terms 122 00:07:08,480 --> 00:07:11,840 Speaker 2: of not only people having jobs, but people gaining skills, 123 00:07:11,880 --> 00:07:14,960 Speaker 2: people gaining experience, people being able to then go into 124 00:07:15,080 --> 00:07:20,000 Speaker 2: the economy and use that experience. If it's just if 125 00:07:20,040 --> 00:07:22,000 Speaker 2: it's just the kind of one off. If the government 126 00:07:22,080 --> 00:07:25,880 Speaker 2: puts a subsidy in to transform the Wyela plant to 127 00:07:26,520 --> 00:07:29,000 Speaker 2: help it have a lower emission standards, and we bring 128 00:07:29,000 --> 00:07:31,640 Speaker 2: in a bunch of workers to do that work. If 129 00:07:31,640 --> 00:07:33,680 Speaker 2: that work doesn't continue, you want to make sure that 130 00:07:33,720 --> 00:07:37,920 Speaker 2: those workers then have alternate opportunities in the economy that 131 00:07:37,960 --> 00:07:39,960 Speaker 2: they can then use those skills, and then that's a 132 00:07:40,000 --> 00:07:43,000 Speaker 2: good investment. That's investment in people, and it's an investment 133 00:07:43,120 --> 00:07:46,200 Speaker 2: in growing jobs. But if they then come out and 134 00:07:46,240 --> 00:07:49,360 Speaker 2: there's no other work for them, then that's a bit 135 00:07:49,400 --> 00:07:50,280 Speaker 2: of a problem. 136 00:07:50,800 --> 00:07:53,200 Speaker 1: The Treasurer has talked up cost of living as a 137 00:07:53,360 --> 00:07:55,680 Speaker 1: relief as a big part of what he's going to 138 00:07:55,680 --> 00:07:57,920 Speaker 1: present tomorrow night, and we know the tax cuts on 139 00:07:57,960 --> 00:07:59,880 Speaker 1: the way. What else would you think is in this 140 00:08:00,040 --> 00:08:01,160 Speaker 1: a cost of living relief? 141 00:08:01,800 --> 00:08:04,200 Speaker 2: Well, they're talking from what I understand, they're talking about 142 00:08:04,520 --> 00:08:09,080 Speaker 2: providing more in terms of cuts for power bills, which 143 00:08:09,120 --> 00:08:10,880 Speaker 2: is a good thing for South Australia because we know 144 00:08:10,920 --> 00:08:13,440 Speaker 2: we have some of the highest utility bills. And the 145 00:08:13,520 --> 00:08:15,560 Speaker 2: other good thing about that is they're talking about funding 146 00:08:15,560 --> 00:08:19,160 Speaker 2: that all on their own. Last the last budget where 147 00:08:19,160 --> 00:08:22,640 Speaker 2: they provided utility bill relief, they split the cost with 148 00:08:22,760 --> 00:08:26,280 Speaker 2: state government. But from what I understand, they're now talking 149 00:08:26,320 --> 00:08:30,080 Speaker 2: about funding that relief without involving state government, which is 150 00:08:30,160 --> 00:08:32,120 Speaker 2: good news for South Australa because it means the state 151 00:08:32,120 --> 00:08:35,079 Speaker 2: will be able to use you know, money for something else. 152 00:08:36,400 --> 00:08:42,240 Speaker 2: They're also talking about, you know, ensuring paid paternity leave 153 00:08:42,920 --> 00:08:46,080 Speaker 2: for those who for young families who are going to 154 00:08:46,120 --> 00:08:49,680 Speaker 2: have going out on paternity leave. You know, there's the 155 00:08:49,720 --> 00:08:53,280 Speaker 2: student loan, the heck, the change in the indexation which 156 00:08:53,320 --> 00:08:55,840 Speaker 2: is going to stay a lot of people that are 157 00:08:55,840 --> 00:08:59,040 Speaker 2: paying back their hex debt, so that that'll help a bit. 158 00:09:00,080 --> 00:09:06,280 Speaker 2: They're also talking about enabling healthcare workers. They have to 159 00:09:06,679 --> 00:09:10,199 Speaker 2: healthcare workers, many of them have to go through mandatory 160 00:09:10,280 --> 00:09:14,160 Speaker 2: practical training while they're working and so sometimes they have 161 00:09:14,240 --> 00:09:16,120 Speaker 2: to take off time from work and they don't get 162 00:09:16,120 --> 00:09:20,440 Speaker 2: paid for that. They're talking about providing up to around 163 00:09:20,480 --> 00:09:23,199 Speaker 2: three hundred and twenty bucks a week for those people 164 00:09:23,200 --> 00:09:26,560 Speaker 2: to help them fund that training. And given the big 165 00:09:27,040 --> 00:09:29,800 Speaker 2: health industry in South Australia, that'll help a lot of 166 00:09:29,840 --> 00:09:32,640 Speaker 2: people here. So these are the kind of things that 167 00:09:32,679 --> 00:09:33,560 Speaker 2: they're talking about. 168 00:09:34,040 --> 00:09:36,120 Speaker 1: Mike has asked a good question on the text line, 169 00:09:36,160 --> 00:09:38,400 Speaker 1: how can we have a surplus when we owe money. 170 00:09:38,679 --> 00:09:40,120 Speaker 1: I'll let you explain that one. 171 00:09:41,160 --> 00:09:45,240 Speaker 2: Well, there's debt and then there's your annual income, right, 172 00:09:45,320 --> 00:09:48,760 Speaker 2: so if you know the surplus refers to the annual 173 00:09:48,800 --> 00:09:53,640 Speaker 2: income of the government. They still have debt from previous 174 00:09:53,679 --> 00:09:57,760 Speaker 2: deficits and from previous borrowing, so we owe money from 175 00:09:57,760 --> 00:10:01,560 Speaker 2: that previous debt the surpluses. Last year, we took in 176 00:10:01,600 --> 00:10:03,160 Speaker 2: more revenue than we spent. 177 00:10:03,400 --> 00:10:05,720 Speaker 1: So it's like having a mortgage you owe money on 178 00:10:05,760 --> 00:10:07,720 Speaker 1: and a bank account in which your pay goes and 179 00:10:07,800 --> 00:10:09,480 Speaker 1: you've got a few hundred bucks left over at the 180 00:10:09,559 --> 00:10:10,440 Speaker 1: end of the pay period. 181 00:10:10,600 --> 00:10:13,320 Speaker 2: Essentially absolutely, yet you store owe money on your house, 182 00:10:13,400 --> 00:10:15,760 Speaker 2: but you had a y yeah, exactly. 183 00:10:15,520 --> 00:10:18,320 Speaker 1: All right. One here on the two hundred and seventy 184 00:10:18,320 --> 00:10:21,920 Speaker 1: five dollars electricity bill reduction, you talk about cheaper power prices, 185 00:10:22,000 --> 00:10:24,480 Speaker 1: and this was a key promise leading in I don't 186 00:10:24,520 --> 00:10:27,000 Speaker 1: think anyone has seen their power bills for by two 187 00:10:27,080 --> 00:10:29,920 Speaker 1: hundred and seventy five dollars since your last election. 188 00:10:30,120 --> 00:10:33,440 Speaker 2: Or will No, No, probably not. I mean they're talking 189 00:10:33,440 --> 00:10:36,600 Speaker 2: about some relief, obviously that the size of that we'll 190 00:10:36,600 --> 00:10:41,840 Speaker 2: find out tomorrow night. It's talking about on average, trying 191 00:10:41,880 --> 00:10:46,400 Speaker 2: to alleviate those increases without They're not going to eliminate them, 192 00:10:46,400 --> 00:10:47,040 Speaker 2: that's for sure. 193 00:10:47,240 --> 00:10:49,040 Speaker 1: Yeah, indeed, all right, we'll wait and see what happens 194 00:10:49,040 --> 00:10:51,199 Speaker 1: tomorrow night. Might have a chat later in the week. 195 00:10:51,280 --> 00:10:56,040 Speaker 1: Season perfect. Thank you, doctor, Susan Stone. Credit Union SA 196 00:10:56,120 --> 00:10:57,480 Speaker 1: economics chair Uni Essa