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Speaker 1: All right, Koky, Hey ya mate.

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Speaker 2: I'm really well Mark. It's been a busy week.

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Speaker 1: Very busy week for the budget. You and I have

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Speaker 1: not heard the budget reply yet, but the reply comes

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Speaker 1: in tonight. That's Thursday night. You're and I'm meeting Thursday afternoon.

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Speaker 1: But you know, like these days, you pretty much know

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Speaker 1: everything is going to be in the budget and in

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Speaker 1: the reply inters of policy. Well before the bloody things announced,

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Speaker 1: there wasn't much. Let's just go back to the budget.

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Speaker 1: There wasn't that much that was a surprise or a

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Speaker 1: surprise of any significance. Probably better way putting all materiality.

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Speaker 1: They came out of the budget on Tuesday night with

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Speaker 1: doctor Jim Charmers.

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Speaker 2: Yeah. The only thing that was took anyone's eye was

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Speaker 2: the income tax cuts, which took the bottom threshold from

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Speaker 2: sixteen percent to fourteen percent, So two changes of five

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Speaker 2: dollars a week in terms of income tax cuts over

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Speaker 2: the next two years. Everything else related to Medicare, childcare,

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Speaker 2: farmaceutical payments, defense spending, all those things had been well

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Speaker 2: telegraphed beforehand, had been announced beforehand, So in a way,

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Speaker 2: all we got on budget night was one new announcement

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Speaker 2: and just confirmation of the government's budget numbers. How big

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Speaker 2: was the budget deficit? How much is government debt? So

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Speaker 2: that's why I think it went through to the keeper,

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Speaker 2: and as we'll go through to the keeper as boring

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Speaker 2: as boring, it didn't move money markets. You know me, Mark,

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Speaker 2: I have one of my screens has always got the

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Speaker 2: futures up there and what's happening to bonds and interest

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Speaker 2: rate futures and stock market futures. The budget came out,

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Speaker 2: they didn't move. A couple of hours later, towards midnight,

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Speaker 2: the US markets opened Bang. That's when our markets moved.

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Speaker 2: Their ereacted more to US economic news than to our

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Speaker 2: own budget.

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Speaker 1: So just on those, maybe we just need to address

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Speaker 1: it a little bit. I don't think you could call

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Speaker 1: this budget inflationary. So what consumers who are listening to

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Speaker 1: us to be worried about will Will this either stop

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Speaker 1: interest rate reductions or alternatively, will it lengthen the period

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Speaker 1: of time before we get the next reduction down? Or thirdly,

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Speaker 1: could it potentially increase interest rates because of inflation? Be

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Speaker 1: fair to say that it's not an inflationary budget.

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Speaker 2: Yeah, I think so. And as we sort of alluded

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Speaker 2: to those income tax cuts. First of all, they don't

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Speaker 2: take effect for another fifteen months, and it's only five

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Speaker 2: bucks a week for people on a salary, So that's

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Speaker 2: not inflation. And the RBA would probably not even adjust

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Speaker 2: their forecast based on that. It's too small. All the

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Speaker 2: other things in there, well, there've been world telegraphed as

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Speaker 2: we were saying, they've.

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Speaker 1: Been electricity, electricity, that's.

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Speaker 2: Been a small extension. They'll actually lower the CPI in

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Speaker 2: the second half of this COMINGYBI and then it pushes

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Speaker 2: it back up in January the first twenty twenty sixth,

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Speaker 2: but we sort of knew that anyway. So it's and again,

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Speaker 2: as we've been arguing or discussing many times in the

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Speaker 2: last six months or so, the RBA focus on the

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Speaker 2: trimm demean and the electricity subsidies are taken out of

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Speaker 2: that headline inflation to get to the trim demain inflation.

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Speaker 2: So when you look at is it an inflationary budget,

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Speaker 2: probably not. And again that's why the markets didn't move

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Speaker 2: when they saw it.

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Speaker 1: What about in terms of just general worries, economic worries

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Speaker 1: that perhaps we should be having, And I've seen a

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Speaker 1: lot of commentators talk about this In fact, I don't

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Speaker 1: think I read one commentary in one either listening to

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Speaker 1: Guy News, which is pretty predictable what you're going to

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Speaker 1: get there, or even the Fairfax papers including the AFR,

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Speaker 1: I don't remember having read one commentary that was positive

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Speaker 1: in relation to the budget, Like I didn't see anything

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Speaker 1: that actually gave it a wrap.

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Speaker 2: Yet. Look, the things that were negative to my eye,

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Speaker 2: and that commentary that you referred to were more relating

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Speaker 2: to what could have been done but wasn't done. So

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Speaker 2: in a sense, it was not a bad budget, like

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Speaker 2: they didn't screw things up. Yeah, in fact, as we said,

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Speaker 2: well you said boring, it didn't upset the Apple camp

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Speaker 2: To use that terminology. The criticism of many people, including

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Speaker 2: economists like Saul le Slake and Chris Richardson, who I

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Speaker 2: respect completely and utterly, who are the budget gurus if

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Speaker 2: you like, of the economics profession, that their commentary or

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Speaker 2: criticisms were they should have done more reforming to the

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Speaker 2: tax system. They could have done more reforming to the

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Speaker 2: payment system, which is sort of like how much do

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Speaker 2: we pay for job keeper? Allows? Is what we do

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Speaker 2: for small business? Should we extend the instant asset right

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Speaker 2: down rules to next which potentially is no that it

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Speaker 2: finishes on the thirtieth of June this year, although will

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Speaker 2: see what happens in the election campaign. But things like

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Speaker 2: that were the criticism. And the other thing was, as

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Speaker 2: was revealed on Budget Night, the budget deficits are projected

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Speaker 2: for the next ten years, not just this year or

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Speaker 2: the next year, for ten years.

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Speaker 1: And that's and that's got to get fund that.

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Speaker 2: It's got to be fun. It's got to be borrowed. Yeah,

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Speaker 2: we know that the budget deficit, it's got to be brown.

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Speaker 2: When we have a surplus that reduces government debt, which

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Speaker 2: is why surpluses every cycle or an important thing. But

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Speaker 2: that decade of budget deficits, well, it's not a catastrophe.

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Speaker 2: And the deficits aren't as big as they are in

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Speaker 2: the US, for example, as a benchmark.

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Speaker 1: Or as a percentage of GDP.

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Speaker 2: They're not correct.

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Speaker 1: I think it's the deficit of GDP something like eighty

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Speaker 1: or ninety percent.

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Speaker 2: It is, yes, yes, so we're about a third of

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Speaker 2: the level the size of deficits. So we've got a

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Speaker 2: better budget position. However, let's keep it. It's one of

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Speaker 2: these questions about you know, through a combination of years

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Speaker 2: keating Costello, that reform agenda that we saw particularly back then,

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Speaker 2: got our budget position in very, very good shape. And

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Speaker 2: then of course the long came the global crisis and

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Speaker 2: the pandemic, and yet we had to spend money on

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Speaker 2: those issues. Fair enough. But now's the point, assuming we

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Speaker 2: don't get another pandemic or another you know, heaven forbid

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Speaker 2: another deep recession, you repair the budget when the economy

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Speaker 2: is doing okay, and we're doing okay. Now, the question

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Speaker 2: will be whoever wins this election, you know, in the

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Speaker 2: next five or six weeks, whoever wins. I wouldn't be

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Speaker 2: at all surprised if we have a what we might

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Speaker 2: call a mini budget or a budget statement a few

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Speaker 2: months after the election, where they say, okay, we've won

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Speaker 2: the election. We've got to give a bit of tough love.

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Speaker 2: We've got to make sure that those ten years of

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Speaker 2: budget deficits are only two or three years, and that

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Speaker 2: we actually pin our policies towards a surplus in a

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Speaker 2: couple of years time.

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Speaker 1: So maybe just explained listeners a little because a few

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Speaker 1: little things here. What's important is that if we are

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Speaker 1: running at a deficit, it's like running your business. You've

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Speaker 1: got to borrow the dough. I mean, if you want

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Speaker 1: to fund your business, you're losing money. You're either somehow

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Speaker 1: take it out of your balanced it you might have

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Speaker 1: a really great accumulator balance sheet, which we don't have

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Speaker 1: in Australia, which means you've got a spare cash, or alternatively,

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Speaker 1: you go borrow the dough. So in our case we

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Speaker 1: will borrow. In Australia's case, we will be borrowing the money.

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Speaker 1: So we've got to fund the deficit. Either we either

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Speaker 1: put the taxes up, which is not very palatable, or

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Speaker 1: we go to the MicroPlace and borrow the day.

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Speaker 2: And like businesses, like individuals, the government pays interest on

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Speaker 2: its debt. Correct Like when we say at the government

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Speaker 2: debt levels in a way, as you said, I hope

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Speaker 2: a lot of listeners sort of take stock of this

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Speaker 2: because it's an important issue. When the government has debt,

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Speaker 2: it borrows money and it pays interest on that money.

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Speaker 2: And where does the interest come from the budget. So

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Speaker 2: if the government's paying an extra five billion ten billion

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Speaker 2: a year on interest because debt's gone up and up

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Speaker 2: and up, that's five or ten billion that they can't

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Speaker 2: spend on roads, on many care, on education, on small business.

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Speaker 1: They have to raise taxes or they.

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Speaker 2: Have to raise taxes one or the other. So that's

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Speaker 2: why I think it's important that that structural balance, that

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Speaker 2: there's nothing wrong with running a deficit one or two years.

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Speaker 2: When the economies week run a deficit, that's absolutely fine.

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Speaker 2: But when the economy is strong and if we do

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Speaker 2: get a decent economic recovery next year fingers crossed that

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Speaker 2: we do, that's when you should be running a budget

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Speaker 2: surplus to cap that level of debt so that those

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Speaker 2: interest costs don't become embedded into your budgeting for the

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Speaker 2: next decade, which makes it very hard to reform the economy.

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Speaker 2: So and yes, and you've got to borrow it. And

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Speaker 2: this is the scary thing. The UK is going through

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Speaker 2: this right now. You borrow money to pay the interest.

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Speaker 1: How's that for a government policy of because they don't

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Speaker 1: have enough revenue correct to pay the interest.

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Speaker 2: That's why they're going through mayhem now in their economy. Again. Yeah,

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Speaker 2: we had the Liz Trust experience what year ago. Now

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Speaker 2: we've got the keya Starmer government that got elected what

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Speaker 2: six months ago, So they're trying to fix their economy

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Speaker 2: and they're sort of running after a train that keeps

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Speaker 2: going fast and fast and they can't catch up to it.

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Speaker 1: And just to be clear that that our debt, our

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Speaker 1: national debt, that is, you know what, by the way,

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Speaker 1: we all owe it, every single one of us those

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Speaker 1: a percentage of it. Our national debt is just just

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Speaker 1: a little less than a trillion dollars Aussie dollars. But

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Speaker 1: if they keep running a deficits, it'll go past the

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Speaker 1: tillion dollars fairly quickly. So if you have ten years

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Speaker 1: with the deficits, we could be looking at the trillion.

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Speaker 1: We will be looking at it and looking at a

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Speaker 1: trillion plus dollars of debt.

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Speaker 2: It gets to a trillion this year, it just puts

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Speaker 2: its nose above a trillion, and then on the current

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Speaker 2: budget numbering in two years time, it gets to one

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Speaker 2: point one. Two years after that it gets one point

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Speaker 2: two billion, trillion, trillion, trillion billion. We get those numbers

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Speaker 2: going up by give or take approximately fifty billion per

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Speaker 2: year until we get the budget back into balance. Then

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Speaker 2: the debt levels stabilize and if we get a surplus,

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Speaker 2: it starts coming down a bit. And that's what I

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Speaker 2: think in the medium term, not today or tomorrow. In fact,

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Speaker 2: obviously the budgets only two days old. But when we

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Speaker 2: get past this election, whoever wins, I would be happy

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Speaker 2: to see a mini budget that says, okay, people, you

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Speaker 2: might like this medicine, but we for the sake of

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Speaker 2: the long run economic well being of Australia. That sounds

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Speaker 2: very grad yes, but it's bloody true. We need to

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Speaker 2: sort of do something on tax and spending to make

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Speaker 2: sure that we get that budget deficit back towards zero

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Speaker 2: and if possible, get it into a small surplus.

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Speaker 1: So what about off balance you So you and I

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Speaker 1: discussed this last time. So off budget what they call

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Speaker 1: off budget expenditure which is not included in the budget,

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Speaker 1: which is like expenditure which you would effectively in business

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Speaker 1: say we're going to capitalize, We're not going to expense

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Speaker 1: it because it's you know, we're buying an asset or

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Speaker 1: we're creating expenditure. Yeah, it's sort of so that it

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Speaker 1: seems to be more from what I could see, more

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Speaker 1: and more that more and more money is being allocated

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Speaker 1: off budget at the moment than I've ever seen before.

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Speaker 2: Things like the NBN is off budget because I.

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Speaker 1: Have to ask youself the question mate, should we keep

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Speaker 1: investing in the NBN? Like my god, I mean, why

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Speaker 1: don't we get why don't we bring in our mask

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Speaker 1: up and say listen mate, we're going to scrap the

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Speaker 1: NBN and just replace every rooftop in Australia with will

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Speaker 1: fund it with a one of a muss little satellite dishes,

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Speaker 1: which I've got one of them my farm and it's unbelievable,

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Speaker 1: doesn't miss a beat.

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Speaker 2: Ever, I don't know enough about technology.

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Speaker 1: Mark cost me like four hundred bucks. I install myself

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Speaker 1: like it's that easy. It's as big as a small

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Speaker 1: small carry on bag on a plane on a domestic flight.

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Speaker 1: That's it, and that's it. Does the job, does the

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Speaker 1: job perfectly.

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Speaker 2: Look, I don't know enough about the technology. But in

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Speaker 2: terms of the budget and look, the government may or

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Speaker 2: may not do that, and again we'll wait and see

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Speaker 2: what the coalition parties come up with. They may want

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Speaker 2: to embrace that. I don't know. But for the here

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Speaker 2: and now, the government puts in off budget balance sheet

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Speaker 2: funding borrowing spending items that, as you said, are capital

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Speaker 2: expenditure sort of items, so things like a lot of

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Speaker 2: infrastructure spending, not just NBN, but other things relating to

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Speaker 2: renewable energy, water, you know, the water supply things, because

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Speaker 2: they're seeing to be the reason why they do it,

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Speaker 2: and I'm look, they're in the budget papers so you

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Speaker 2: can see it. But they're the sort of things that

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Speaker 2: in time, if the circumstances are right, the government then

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Speaker 2: can sell them to the private sector. So back in

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Speaker 2: the olden days, and I don't mean to talk about

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Speaker 2: the olden days, things like Telstra was set up because

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Speaker 2: the private sector couldn't put tel Stre in and then

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Speaker 2: it became a viable entity, of course, and the government

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Speaker 2: privatized Commwal's Bank Quantus. Things that were in the olden

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Speaker 2: days would have been off balance sheet. They became successful companies.

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Speaker 2: They did the job that the government of the day

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Speaker 2: wanted them too. We had our airline, we had a

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Speaker 2: public sector bank, we had to telecommunication services. And when

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Speaker 2: they were what do we call it mature enough and

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Speaker 2: big enough entities, they were privatized. They came off the

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Speaker 2: balance sheet. See that when the sale came through that

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Speaker 2: didn't go into the budget surplus. By the way, that

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Speaker 2: was off the balance sheet as well.

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Speaker 1: But that's the argument, that's.

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Speaker 2: The theory behind it. Yes, I'm just gonna give the theory.

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Speaker 2: But nonetheless, as you're quite rightly pointed out. And again

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Speaker 2: I don't mean to hark back to Chris Richardson, but

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Speaker 2: I will because he's such a budget guru. He did

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Speaker 2: this lovely chart. I'm sure if you just go through

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Speaker 2: social media pages you can you'll find it on the

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Speaker 2: evolution of off budget measures and you know, and the

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Speaker 2: last thing is bounced up and down a little bit,

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Speaker 2: you know, but it started to increase quite strongly.

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Speaker 1: Now, yeah, I mean, and there are some things that

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Speaker 1: they should be doing. Yeah, definitely, yes, that's it's not

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Speaker 1: something all bad. Something is that, like you know, like

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Speaker 1: the Northern rivers sort of relief and all that sort

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Speaker 1: of stuff. Billion or something goes out that which is important,

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Speaker 1: and there are things that have to happen. But for me, man,

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Speaker 1: I'd rather just see everything in the budget. I just

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Speaker 1: don't like this business. I just think most people don't

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Speaker 1: even watch the budget, but let alone have a look

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Speaker 1: what's off budget. And I think Australians should be aware

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Speaker 1: that our budget is going to be in deficit of

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Speaker 1: for the next ten is potentially we're going to borrow

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Speaker 1: against that and our budget, and we are also spending

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Speaker 1: money off budget, like significant amount of money. It's not

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Speaker 1: like as a small amount of money, it's a ninety

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Speaker 1: one hundred million.

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Speaker 2: It's up to it's up to about one hundred bion

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Speaker 2: undred million budget list borough correct, Well, that money is

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Speaker 2: still borrowing, yes, correct, not in the one the it's

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Speaker 2: called the underlying cash balance, which is the one that

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Speaker 2: we all focus on. That's that twenty seven billion dollar

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Speaker 2: deficit for this current financial year that we're talking about.

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Speaker 2: But there's one hundred bion of accumulated investment slash spending

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Speaker 2: that's in the off off budget balance sheet of the government.

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Speaker 1: So so, and I guess, by the way, none of

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Speaker 1: this is probably going to affect interest rates right for

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Speaker 1: the money, I don't think so. But I think it's

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Speaker 1: just a good context for us to understand. And I

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Speaker 1: know we all know the Dunton's going to make it

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Speaker 1: like do his reply tonight. You know, there is some

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Speaker 1: talk about helping out in relation to excise tax or

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Speaker 1: reduction or temporary reduction and excise tax on fuel, which

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Speaker 1: I quite like the idea of in that it could

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Speaker 1: have an immediate benefit to definitely to small businesses but

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Speaker 1: hopefully it could have a quick benefit I should say,

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Speaker 1: to inflation, because it may well reduce the cost of items.

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Speaker 2: Schedule has a high weighting in the inflation calculation, so

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Speaker 2: it'll definitely kick the headline inflation line. But a little

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Speaker 2: bit like that electricity substy the RBL see that and

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Speaker 2: they can see that it ends in twelve months, and

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Speaker 2: they'll say, oh, look, we won't we won't take that

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Speaker 2: into account, even though we consumers who spend money on

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Speaker 2: petrol every week, well, think, thank god, I'm saving a

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Speaker 2: bit of money on my taker petrol.

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Speaker 1: Yeah, so it could put a bit more money into

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Speaker 1: people's pockets, consumers pockets. And do you think that could

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Speaker 1: be inflationary?

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Speaker 2: Well, the income tax cuts enough at the margin it is,

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Speaker 2: But I think the RBA would look and think, well, no,

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Speaker 2: it's not the sort of thing that's going to spook us.

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Speaker 2: The RBA have got much bigger fish to fry with

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Speaker 2: what's happening with tariffs, with what's happening I suppose in

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Speaker 2: the actual inflation numbers that are coming out now, and

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Speaker 2: they're nice and low, they've got bigger warriors to concerning

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Speaker 2: their estimates about what's happening to the labor market, and

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Speaker 2: don't forget, we've got this funny situation. We'll probably touch

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Speaker 2: on this a bit later. Where the most recent labor

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Speaker 2: market numbers had a minus fifty three thousand for employment. Now,

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Speaker 2: some people say that's just noise in the Bureau of Statistics,

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Speaker 2: But if that's the start of the trend, if we

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Speaker 2: get another negative next month, and who knows, we don't

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Speaker 2: get the next labor force numbers for about another two

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Speaker 2: and a half weeks, but if they're another week number,

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Speaker 2: then wow, that really puts a curveball into that whole

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Speaker 2: assessment that the labor market is tight, because it won't be.

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Speaker 1: So can we just talk about it for a second.

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Speaker 1: So sure, And this is taking us back into the

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Speaker 1: inflations discussion. So lay market's obviously one of the top

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Speaker 1: three things really important. I noticed in the budget of

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Speaker 1: doctor gin Charmers that he talked about a four point

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Speaker 1: two five percent unemployment number. Yeah, that's a that's a

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Speaker 1: it's a fairly big increase from where we've been hovering

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Speaker 1: for like sometime now. We're at four four point one.

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Speaker 2: We've been hovering around four plus or minus point one

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Speaker 2: point two for the last well basically past twelve months.

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Speaker 1: So a quarter percent increase to baseball, it's fairly significant.

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Speaker 2: It's noticeable in the historical context, it's still okay. And

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Speaker 2: if that's what the gosh, I don't bring up Nayry Mark.

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Speaker 2: I don't want to do that because I know we've

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Speaker 2: we've labored that to death at various times in the past.

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Speaker 2: But if that's what Treasury think is happening to nayru

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Speaker 2: and it's four point two five percent, and we're at

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Speaker 2: four point one today. And as I said, we had

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Speaker 2: a big negative unemployment. If we get another big negative

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Speaker 2: on unemployment for the next couple of months, we'll be

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Speaker 2: at four point twenty five quickly, you can blink, yeah,

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Speaker 2: because we're not that far as we sit here today. Yeah.

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Speaker 1: So, and anecdotally, I'm hearing there are a lot of

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Speaker 1: businesses going bust yep, like a lot small and medium. Yeah, totally.

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Speaker 1: Not just in the food industry, but food's probably been

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Speaker 1: most heavily affected. But clothing businesses for example Janus Yes,

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Speaker 1: I think was recently applied for administration. They're going to

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Speaker 1: keep up in their online stop. I'm talking about all

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Speaker 1: the physical stores. Do you think that we are continuing

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Speaker 1: notwithstanding that inflation. We'll talk about inflation numbers at a moment,

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Speaker 1: but we are starting to head into a pretty difficult

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Speaker 1: period now.

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Speaker 2: The short answer is that, as they say in the classics,

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Speaker 2: we're not out of the woods. We did have in

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Speaker 2: the December quarter last year, so the last three months

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Speaker 2: of twenty twenty four a bit of a pickup in

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Speaker 2: retail spending. We had Black Friday sales, and the Christmas

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Speaker 2: period was pretty good. I wouldn't say it was burning,

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Speaker 2: but it was pretty.

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Speaker 1: Good, better than expected, better.

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Speaker 2: Than expected definitely. Then we had the new year coming

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Speaker 2: and people probably got their credit card bills and a

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Speaker 2: few things like that. Retail spending was minus in January,

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Speaker 2: it was a tiny increase in February and these, and

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Speaker 2: in line with consumer sentiment, went up a little bit

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Speaker 2: when we had the rate cut back in the middle

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Speaker 2: of February. Woosh, it's come all the way back down

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Speaker 2: in the last couple of reading consumer sentiment, and that's

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Speaker 2: a good leading indicator what's happening to consumer spending. So

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Speaker 2: that's the long winded way of saying, I think consumers

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Speaker 2: are still under pressure. You that while the rate cut

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Speaker 2: occurred a month. I think, thank God for that it happened,

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Speaker 2: And yes, that's a bit of a relief for people

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Speaker 2: with debt. But again it's not quite like the five

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Speaker 2: dollars tax cut. But it's not enough to cause people

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Speaker 2: to say, I'm okay, now I've got plenty of spare cash,

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Speaker 2: because all it does is just give that initial bit

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Speaker 2: of relief. That's great. I'm not downplaying it for one second,

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Speaker 2: but it's not the sort of catalyst that makes people think,

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Speaker 2: all of a sudden, my mortgagury payments are down big time.

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Speaker 2: I'm going to gout and spen. I'm going to go

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Speaker 2: to restaurants again. I'm going to book my overseas holiday.

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Speaker 2: We're not in that space yet, so I think the

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Speaker 2: consumer side of the economy is still where there's weakness.

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Speaker 2: They're hankering, we consume as that is a hankering for

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Speaker 2: another rate cut. How soon we get that, of course,

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Speaker 2: we can chat about a bit late. But for the

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Speaker 2: here and now, we've also got this experience to where

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Speaker 2: wages growth, which did kick up last year, that might

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Speaker 2: have fueled that better retail spending at the end of

401
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Speaker 2: last year slowing. We had the tax cut, yes, and

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Speaker 2: the correct on the first of July last year, so

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Speaker 2: the first so the last quarter of last year was good.

404
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Speaker 2: Where's this extra injection of money to allow us as

405
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Speaker 2: consumers to go out and spend. It's just not there

406
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Speaker 2: unless we get more rate cuts. And I think that's

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Speaker 2: the sixty four dollars question.

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Speaker 1: So you might explain how we are getting monthly monthly

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Speaker 1: numbers as opposed to just waiting for the quarterly the

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Speaker 1: next set of quarterly numbers that we would expect. So

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Speaker 1: we got the end of January numbers, the sorry then

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Speaker 1: thirty seven numbers coming at the end of January. The

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Speaker 1: thirty one March numbers, which is like this weekend sort

414
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Speaker 1: of thing, don't come in until the end of April,

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Speaker 1: after Anzac Day, I think correctory, and we have to

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Speaker 1: wait for the next Reserve Bank meeting after that, which

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Speaker 1: is in May May.

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Speaker 2: May.

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Speaker 1: We do have a Reserve Bank meeting coming up in

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Speaker 1: April first first of April, which is like next week.

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Speaker 1: But they've got they got data. Let's talk about the

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Speaker 1: data that they currently have, so and also let's talk

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Speaker 1: about the weight that they would attach to that data.

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Speaker 1: So the data have is really monthly data.

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Speaker 2: The monthly inflation numbers came out earlier this week, and

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Speaker 2: they were encouraging, you know, to be blunt, you know,

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Speaker 2: for the last two years you and I have been

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Speaker 2: discussing inflation, inflation, inflation, When will it get back to

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Speaker 2: the target range. How's it going to get there? The

430
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Speaker 2: numbers that came out earlier this week, the headline inflation

431
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Speaker 2: annual terms two point four and remembering that the target

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Speaker 2: ban is between two and three percent, so a little

433
00:21:46,800 --> 00:21:49,440
Speaker 2: below the midpoint. Hooray, that's great news. And it's been

434
00:21:49,800 --> 00:21:53,240
Speaker 2: between two and three percent for seven months now, headline

435
00:21:53,440 --> 00:21:55,680
Speaker 2: headline not just a one month wonder, it's now seven

436
00:21:55,680 --> 00:21:58,960
Speaker 2: months and it looks as if headline's entrenched there now

437
00:21:59,000 --> 00:22:02,240
Speaker 2: the trimm demeanors we discussed many times as well, and

438
00:22:02,320 --> 00:22:06,760
Speaker 2: just recently with the petrol prices and electricity subsidies being

439
00:22:06,800 --> 00:22:10,640
Speaker 2: excluded from headline inflation to get trimmlin. Even that came

440
00:22:10,680 --> 00:22:12,880
Speaker 2: in at two point seven percent, So that's very encouraging,

441
00:22:12,960 --> 00:22:15,000
Speaker 2: just that much above the midpoint of the target. And

442
00:22:15,000 --> 00:22:17,200
Speaker 2: again that's three months it's been in the two to

443
00:22:17,280 --> 00:22:20,879
Speaker 2: three target. So you said encouraging, Yes, it's really encouraging.

444
00:22:21,440 --> 00:22:25,320
Speaker 2: And so in theory. With inflation back on target, you'd

445
00:22:25,400 --> 00:22:28,200
Speaker 2: say that the bias of the Reserve Bank is certainly

446
00:22:28,720 --> 00:22:32,439
Speaker 2: towards cutting interest rates. Whether they've got the what is it,

447
00:22:32,520 --> 00:22:35,480
Speaker 2: the wherewithal or the evidence that they need to pull

448
00:22:35,480 --> 00:22:38,919
Speaker 2: the trigger on the first of April, it's probably not

449
00:22:38,960 --> 00:22:41,160
Speaker 2: the case. It's not really being priced into the financial

450
00:22:41,160 --> 00:22:45,480
Speaker 2: markets at this stage. But that inflation number was, you know,

451
00:22:45,520 --> 00:22:47,080
Speaker 2: one of those ones I think, oh, that's great news.

452
00:22:47,119 --> 00:22:49,000
Speaker 2: We've got a little bit of good news coming on inflation.

453
00:22:49,119 --> 00:22:51,880
Speaker 2: And when we've gone through two tough years of really

454
00:22:51,920 --> 00:22:54,560
Speaker 2: high inflation, getting a little bit of better news on

455
00:22:54,600 --> 00:22:58,119
Speaker 2: inflation is something that I'm sure the Reserve Bank did

456
00:22:58,840 --> 00:23:01,760
Speaker 2: a little jig in then room and had a celebratory

457
00:23:01,760 --> 00:23:03,040
Speaker 2: cup of tea when they were up there.

458
00:23:03,160 --> 00:23:07,360
Speaker 1: So but even though that numbers come out, let's look

459
00:23:07,400 --> 00:23:11,240
Speaker 1: at the You mentioned the word evidence, and the Reserve

460
00:23:11,240 --> 00:23:14,760
Speaker 1: Bank is evidence based. They made decisions on evidence. But

461
00:23:14,920 --> 00:23:17,440
Speaker 1: mind you you were I disagreed on the February rate.

462
00:23:17,640 --> 00:23:19,359
Speaker 1: And by the way, what was interesting she did what

463
00:23:19,400 --> 00:23:22,159
Speaker 1: you said, She did reduce the rates, but then in

464
00:23:22,200 --> 00:23:25,440
Speaker 1: her speeches after it, she sort of started telling us that, look,

465
00:23:25,560 --> 00:23:28,600
Speaker 1: I don't expect anymore, so she should have had a

466
00:23:28,640 --> 00:23:33,600
Speaker 1: bed both ways. But and it looked like to some extent,

467
00:23:33,960 --> 00:23:37,400
Speaker 1: what's amazing after that rate reduction on that in February,

468
00:23:37,920 --> 00:23:40,560
Speaker 1: and after her speech, all of a sudden, all these

469
00:23:41,040 --> 00:23:43,320
Speaker 1: economists came out started saying, you know, we were saying

470
00:23:43,320 --> 00:23:45,560
Speaker 1: that the shoes shouldn't win the rate down. I thought,

471
00:23:45,640 --> 00:23:49,240
Speaker 1: sort of thought, the most economists will be unanimous, except

472
00:23:49,240 --> 00:23:53,800
Speaker 1: for me and maybe Hogan, we're saying it's not I

473
00:23:53,800 --> 00:23:55,760
Speaker 1: didn't think we were at the right spot. You just

474
00:23:55,840 --> 00:23:57,720
Speaker 1: yet I want rate reductions. Don't get me wrong, but

475
00:23:57,800 --> 00:24:00,040
Speaker 1: I just thought we weren't at the right spot in

476
00:24:00,119 --> 00:24:02,560
Speaker 1: terms of evidence I'm talking about. It wasn't sustainable.

477
00:24:02,600 --> 00:24:02,960
Speaker 2: It wasn't.

478
00:24:03,000 --> 00:24:06,360
Speaker 1: I wasn't convinced of the evidence being consistent enough if

479
00:24:06,400 --> 00:24:11,080
Speaker 1: we just look at that now, though, Steve, in terms

480
00:24:11,080 --> 00:24:13,919
Speaker 1: of being acceptable evidence, you've got to look at the

481
00:24:13,920 --> 00:24:17,359
Speaker 1: weight of the data that's coming to us as opposed

482
00:24:17,400 --> 00:24:21,399
Speaker 1: to the number. And these are monthly numbers. So the

483
00:24:21,520 --> 00:24:24,560
Speaker 1: last the only way I could justify her eighteenth of

484
00:24:24,600 --> 00:24:28,000
Speaker 1: February rate reduction was off the back of the December

485
00:24:28,080 --> 00:24:32,320
Speaker 1: quarter inflation ATO point five, which if I extrapolated that

486
00:24:32,400 --> 00:24:36,520
Speaker 1: out two months, Well, sorry, camera, if that out two months,

487
00:24:36,680 --> 00:24:39,480
Speaker 1: we have a two correct.

488
00:24:39,400 --> 00:24:43,639
Speaker 2: And I think that is the nutshell. You've got it

489
00:24:43,640 --> 00:24:48,359
Speaker 2: in a nutshell. That quarterly trimmed mean inflation number at

490
00:24:48,359 --> 00:24:52,600
Speaker 2: point five was the number that allowed them to go

491
00:24:52,680 --> 00:24:54,960
Speaker 2: twenty five. But with a huge amount of caution. As

492
00:24:55,000 --> 00:24:56,920
Speaker 2: you said, you said, here's a right cut, but don't

493
00:24:56,920 --> 00:24:59,080
Speaker 2: get too excited about another one around them. And so.

494
00:25:02,040 --> 00:25:04,840
Speaker 1: In the monthly numbers that we're now talking and I'm

495
00:25:04,880 --> 00:25:07,399
Speaker 1: now talking about, like let's talk about inflation or CUPI,

496
00:25:09,160 --> 00:25:13,160
Speaker 1: what is the monthly CPI that's that's been we're being

497
00:25:13,200 --> 00:25:15,199
Speaker 1: shown and what does that extra lay down to.

498
00:25:16,840 --> 00:25:20,159
Speaker 2: Read? There are many good economists who analyze the CPI

499
00:25:20,160 --> 00:25:22,520
Speaker 2: because such an important part of what they do. The

500
00:25:22,560 --> 00:25:25,880
Speaker 2: Westpac team justin smirk, I think is the senior economists

501
00:25:25,880 --> 00:25:28,080
Speaker 2: who looks at the inflation right. I think he's great.

502
00:25:28,119 --> 00:25:33,440
Speaker 2: I love his work when he saw the February monthly

503
00:25:33,760 --> 00:25:35,760
Speaker 2: inflation number. Because the monthly numbers do feed into the

504
00:25:35,840 --> 00:25:37,720
Speaker 2: quarterly you know, there is an overlap, but they're not

505
00:25:37,800 --> 00:25:38,200
Speaker 2: the same.

506
00:25:38,320 --> 00:25:38,640
Speaker 1: But they.

507
00:25:40,280 --> 00:25:43,000
Speaker 2: Yes, there's a they're not the complete inflation number. That's

508
00:25:43,000 --> 00:25:45,399
Speaker 2: why the quartering numbers are so important. The monthly numbers

509
00:25:45,440 --> 00:25:48,879
Speaker 2: are sort of like the score after twenty minutes of

510
00:25:48,920 --> 00:25:51,359
Speaker 2: the game. Handy to be ahead, but you're not winning

511
00:25:51,440 --> 00:25:55,160
Speaker 2: the game only. They're indicative only, and these two monthly

512
00:25:55,200 --> 00:25:57,520
Speaker 2: numbers are a good start. Yes, I'm happy, and I'm

513
00:25:57,520 --> 00:25:59,760
Speaker 2: sure they're happy. But Justin put in his note the

514
00:25:59,760 --> 00:26:04,040
Speaker 2: other that on his current thinking, they're going to be

515
00:26:04,119 --> 00:26:09,760
Speaker 2: getting a trimmed mean inflation rate similar to the point

516
00:26:09,800 --> 00:26:13,000
Speaker 2: five that we saw in the December quarter, So point

517
00:26:13,040 --> 00:26:15,639
Speaker 2: five one point six, so I think was his was

518
00:26:15,680 --> 00:26:19,200
Speaker 2: his forecast for the March quarter result that we get

519
00:26:19,280 --> 00:26:23,040
Speaker 2: at the end of April. If that's the case, so

520
00:26:23,080 --> 00:26:24,560
Speaker 2: we'll have just just to say it's a point six.

521
00:26:24,640 --> 00:26:26,280
Speaker 2: Let's just be early on the side of it being

522
00:26:26,280 --> 00:26:27,040
Speaker 2: a little up.

523
00:26:27,080 --> 00:26:29,640
Speaker 1: At in the March, we'll have had a point.

524
00:26:29,480 --> 00:26:31,120
Speaker 2: Five and a point six, and so we've got two

525
00:26:31,240 --> 00:26:33,600
Speaker 2: quarters half a year where if you add them up

526
00:26:33,640 --> 00:26:35,879
Speaker 2: it's one point one. You annualize that it's actually around

527
00:26:35,960 --> 00:26:38,760
Speaker 2: two and a quarter percent, two point two percent. So

528
00:26:38,840 --> 00:26:42,520
Speaker 2: that's why the May meeting of the RBA Board May seventeenth,

529
00:26:42,560 --> 00:26:43,760
Speaker 2: I think it is, off the top of my head,

530
00:26:44,240 --> 00:26:47,640
Speaker 2: is the one which is so called live, which many

531
00:26:47,720 --> 00:26:50,280
Speaker 2: market economists again, not all, but many of us thinking, well,

532
00:26:50,280 --> 00:26:51,879
Speaker 2: that's when the RBA is going to pull the trigger

533
00:26:52,080 --> 00:26:54,040
Speaker 2: on the next rate cut. So they need that quarterly

534
00:26:54,119 --> 00:27:00,399
Speaker 2: number which incorporates estenence of services, inflation, the price of

535
00:27:00,480 --> 00:27:05,359
Speaker 2: that haircut, which I desperately need, rents, insurance, all that serve, fees,

536
00:27:05,400 --> 00:27:09,840
Speaker 2: making finance, school fees, all that services stuff, car maintenance

537
00:27:09,880 --> 00:27:15,920
Speaker 2: and things like that, assurance so it's not bananas and takeaway.

538
00:27:15,440 --> 00:27:17,600
Speaker 1: Food, and because they're all behaving quite well.

539
00:27:17,480 --> 00:27:20,399
Speaker 2: And electric items and this and stuff, the goods goods

540
00:27:20,440 --> 00:27:23,359
Speaker 2: prices as opposed services, they're actually well and truly below

541
00:27:23,400 --> 00:27:27,720
Speaker 2: the target range. It's that services which the RBA's sort

542
00:27:27,720 --> 00:27:30,119
Speaker 2: of focus on and being reluctant to sort of follow

543
00:27:30,160 --> 00:27:33,080
Speaker 2: through with that rate cut because services is high. So

544
00:27:33,119 --> 00:27:35,919
Speaker 2: if we get that number coming through in April, at

545
00:27:35,920 --> 00:27:40,480
Speaker 2: the end of April and it is zero point six ish,

546
00:27:40,720 --> 00:27:42,680
Speaker 2: I think that's game on for a rate cut in mate.

547
00:27:42,680 --> 00:27:46,280
Speaker 1: Well, you would expect it has to be a game

548
00:27:46,320 --> 00:27:48,560
Speaker 1: on for re cutting in May, because if she cut

549
00:27:48,560 --> 00:27:50,960
Speaker 1: in February at point when it was point five at December,

550
00:27:51,520 --> 00:27:56,320
Speaker 1: and by the way, every quarter before December, September, June,

551
00:27:56,440 --> 00:27:58,639
Speaker 1: March were zero point five the.

552
00:27:58,800 --> 00:28:01,639
Speaker 2: Top of them. In fact, the ones back in March

553
00:28:01,720 --> 00:28:02,520
Speaker 2: last year was one.

554
00:28:02,440 --> 00:28:03,760
Speaker 1: Point zero, much higher.

555
00:28:03,880 --> 00:28:05,640
Speaker 2: That drops out of your rate.

556
00:28:05,680 --> 00:28:10,119
Speaker 1: Yes, correct. So if she dropped rates at that in February,

557
00:28:10,119 --> 00:28:11,879
Speaker 1: off the back of a point five at a quarter

558
00:28:11,960 --> 00:28:14,200
Speaker 1: at end in December, and we get a point six,

559
00:28:14,320 --> 00:28:17,000
Speaker 1: let's say point six, and then in March a couple

560
00:28:17,080 --> 00:28:20,360
Speaker 1: days times for it's two point four, you would it's

561
00:28:20,400 --> 00:28:22,240
Speaker 1: got to be them there that you're going to reduce

562
00:28:22,320 --> 00:28:23,560
Speaker 1: rates on the same logic.

563
00:28:23,520 --> 00:28:24,920
Speaker 2: On the same logic, So we have to see that

564
00:28:25,000 --> 00:28:26,600
Speaker 2: number coming out first the same moment.

565
00:28:27,160 --> 00:28:29,960
Speaker 1: So what do you think the risks are to a

566
00:28:30,080 --> 00:28:33,040
Speaker 1: point six? I mean, are you seeing something in services

567
00:28:33,160 --> 00:28:36,440
Speaker 1: or in goods that is presenting perhaps a risk?

568
00:28:37,200 --> 00:28:41,200
Speaker 2: No, this is good. See tariff's going to be later

569
00:28:41,280 --> 00:28:44,120
Speaker 2: rather than sooner. The tariffs implemented by Trump on the

570
00:28:44,240 --> 00:28:45,920
Speaker 2: second of April. It is going to be the biggest

571
00:28:47,040 --> 00:28:49,760
Speaker 2: tariff issue. But it takes a little wile for that to

572
00:28:49,760 --> 00:28:54,240
Speaker 2: permeate through the system. And you want to know, the

573
00:28:54,360 --> 00:28:58,600
Speaker 2: RBA will be watching it, We're all watching it. It's

574
00:28:58,640 --> 00:29:00,960
Speaker 2: a very important issue. You don't get me wrong, But

575
00:29:01,120 --> 00:29:04,040
Speaker 2: I think that's more a problem, a potential problem for

576
00:29:04,120 --> 00:29:08,000
Speaker 2: later in the year rather than sooner, and the inflation

577
00:29:08,120 --> 00:29:10,680
Speaker 2: risks again. So we've had two months of the quarter

578
00:29:10,840 --> 00:29:14,920
Speaker 2: coming out nicely behaved. Then you look at things like

579
00:29:15,280 --> 00:29:20,120
Speaker 2: what drives services inflation. It's predominantly wages. So the price

580
00:29:20,120 --> 00:29:22,959
Speaker 2: of a haircuts not the price of scissors and that

581
00:29:23,000 --> 00:29:25,760
Speaker 2: sort of stuff. It's the price of the labor of

582
00:29:25,800 --> 00:29:28,320
Speaker 2: the person that cuts your hair. And if wages are

583
00:29:28,360 --> 00:29:30,600
Speaker 2: going up a lot, the price of a haircut goes

584
00:29:30,680 --> 00:29:32,640
Speaker 2: up a lot. And in fact, the fact that wages

585
00:29:32,640 --> 00:29:35,720
Speaker 2: are coming down a bit, the growth in wages is

586
00:29:35,760 --> 00:29:39,040
Speaker 2: coming down a bit, is really encouraging for the services

587
00:29:39,040 --> 00:29:43,960
Speaker 2: type inflation. We've seen things like dwelling rent starting to ease,

588
00:29:44,320 --> 00:29:46,680
Speaker 2: So rents is still going out, don't get me wrong,

589
00:29:46,680 --> 00:29:49,640
Speaker 2: but the rate of increase is getting lower because we

590
00:29:49,720 --> 00:29:52,600
Speaker 2: have a bit more of an uptick in the rental

591
00:29:52,680 --> 00:29:56,200
Speaker 2: vacancy rate. Again not much, but that rent's problem, the

592
00:29:56,280 --> 00:29:58,840
Speaker 2: acute problem that we had a year ago is now

593
00:29:58,920 --> 00:30:00,000
Speaker 2: just a mini problem.

594
00:30:00,520 --> 00:30:03,400
Speaker 1: And what about the reduction in immigration, How does that

595
00:30:03,440 --> 00:30:03,720
Speaker 1: help you?

596
00:30:04,560 --> 00:30:08,520
Speaker 2: That is a really important issue. So we've got that

597
00:30:08,800 --> 00:30:11,680
Speaker 2: one of the reasons why house prices kept booming to

598
00:30:11,720 --> 00:30:14,480
Speaker 2: be frank when we had interest rate hikes a year

599
00:30:14,480 --> 00:30:18,120
Speaker 2: and two ago was it was just incredible demand. Immigration

600
00:30:18,480 --> 00:30:22,920
Speaker 2: was massive, We weren't building enough houses. The rental market

601
00:30:23,160 --> 00:30:25,640
Speaker 2: was as tired as a drum, and that spilt over

602
00:30:26,080 --> 00:30:29,920
Speaker 2: into prices. So the fact that the government's now targeting

603
00:30:30,320 --> 00:30:34,720
Speaker 2: alara net migration intake, and that was confirmed in the

604
00:30:34,720 --> 00:30:37,800
Speaker 2: budget the other night, getting back to where we were

605
00:30:37,880 --> 00:30:40,800
Speaker 2: pre pandemic, which I think was sort of like an equilibrium.

606
00:30:40,840 --> 00:30:44,240
Speaker 2: If there's such a thing in immigration takes some of

607
00:30:44,280 --> 00:30:47,120
Speaker 2: the pressure off that housing market, which takes some of

608
00:30:47,160 --> 00:30:51,200
Speaker 2: the pressure off the inflation rate. So that's like good

609
00:30:51,240 --> 00:30:54,640
Speaker 2: red wine. There's an optimal amount of immigration. Too much

610
00:30:54,680 --> 00:30:56,920
Speaker 2: you have a nasty hangover, and we had that a

611
00:30:57,000 --> 00:30:59,520
Speaker 2: year and two ago. Too little, there is no good

612
00:30:59,520 --> 00:31:02,800
Speaker 2: either because immigration with certainly the humanitarian part of it,

613
00:31:02,960 --> 00:31:05,000
Speaker 2: but there's also some skilled migrants that come in here.

614
00:31:05,000 --> 00:31:08,800
Speaker 2: And so if we target our immigration, well, we can

615
00:31:08,920 --> 00:31:11,640
Speaker 2: have the trainees that we need to build all these houses,

616
00:31:11,720 --> 00:31:14,200
Speaker 2: we can have the it gurs to do artificial intelligence,

617
00:31:14,640 --> 00:31:17,280
Speaker 2: and they can be an important part of Australia's longer

618
00:31:17,360 --> 00:31:18,440
Speaker 2: un economic development.

619
00:31:18,760 --> 00:31:24,200
Speaker 1: So what are the numbers have come out apart from

620
00:31:24,200 --> 00:31:25,960
Speaker 1: the CPI for the monthly places.

621
00:31:26,320 --> 00:31:29,040
Speaker 2: The employment number, which we touched on a moment ago.

622
00:31:29,640 --> 00:31:33,200
Speaker 2: The February employment number was a shocker. To be blunt, we've.

623
00:31:32,920 --> 00:31:35,600
Speaker 1: Had which way down, we had a bad.

624
00:31:35,520 --> 00:31:39,560
Speaker 2: Number, we've had a we've had two years of fantastic

625
00:31:39,720 --> 00:31:45,000
Speaker 2: for the unemployment. The employment number of jobs fell fifty

626
00:31:45,040 --> 00:31:48,320
Speaker 2: three thousand, this according to the Bureau of Statistics. And

627
00:31:48,360 --> 00:31:52,480
Speaker 2: remembering the monthly numbers are incredibly volatile, and they're done

628
00:31:52,480 --> 00:31:57,040
Speaker 2: from a survey yep, and they can bounce around a lot,

629
00:31:57,080 --> 00:31:59,680
Speaker 2: so that one month we don't get too excited. We

630
00:31:59,720 --> 00:32:01,520
Speaker 2: want to two or three months to see whether there's

631
00:32:01,560 --> 00:32:04,880
Speaker 2: a trend. But if you take them even half at

632
00:32:04,880 --> 00:32:07,880
Speaker 2: face value in the context of the prior month too,

633
00:32:07,880 --> 00:32:11,400
Speaker 2: which by the way, was revised lower, you've got that

634
00:32:11,600 --> 00:32:14,640
Speaker 2: incredible employment boom that we saw during twenty twenty three

635
00:32:14,720 --> 00:32:17,960
Speaker 2: and twenty twenty four, kicking off twenty twenty five with

636
00:32:18,040 --> 00:32:19,840
Speaker 2: a clear turning point. You know, if you looked at

637
00:32:19,840 --> 00:32:23,000
Speaker 2: a chart of employment creation in trend terms, so you

638
00:32:23,040 --> 00:32:26,280
Speaker 2: took out that massive seasonal number of the minds three,

639
00:32:26,920 --> 00:32:30,800
Speaker 2: it's slowing again. Not a problem because as you correctly

640
00:32:30,840 --> 00:32:34,280
Speaker 2: anticipated the unemployment rate was steady at four point one percent,

641
00:32:35,240 --> 00:32:37,320
Speaker 2: and as we said before too, the unemployment rate's been

642
00:32:37,520 --> 00:32:40,680
Speaker 2: three point nine four four point one for four point

643
00:32:40,760 --> 00:32:44,040
Speaker 2: one for a year. And that's a good result, you know,

644
00:32:44,160 --> 00:32:46,680
Speaker 2: as the RBA government says, she's very happy to see

645
00:32:46,880 --> 00:32:49,480
Speaker 2: unemployment around four. What we don't want is to see

646
00:32:49,560 --> 00:32:52,440
Speaker 2: go to five, which, as you said in the budget papers,

647
00:32:52,480 --> 00:32:55,240
Speaker 2: isn't the forecast. So that's one number that's come out

648
00:32:55,280 --> 00:33:00,440
Speaker 2: that if the RBA had a stronger bias towards rates,

649
00:33:00,440 --> 00:33:02,760
Speaker 2: they could sort of wave their flag and say, look,

650
00:33:02,760 --> 00:33:04,840
Speaker 2: the labor market's weakening a bit too, because we had

651
00:33:04,840 --> 00:33:07,320
Speaker 2: that minus fifty three thousand for employment.

652
00:33:07,640 --> 00:33:12,280
Speaker 1: Yeah, so, and I think that's important also GDP, and

653
00:33:12,320 --> 00:33:13,840
Speaker 1: we I know we're going to cover the border moment.

654
00:33:13,880 --> 00:33:16,080
Speaker 1: But one of the things that's really interesting about GDP

655
00:33:16,920 --> 00:33:19,840
Speaker 1: that I've always thought was pretty fascinating. Mind you, most

656
00:33:19,840 --> 00:33:29,320
Speaker 1: people don't, but is that immigration drives dudyp Well, because

657
00:33:30,080 --> 00:33:31,240
Speaker 1: yes it does, because.

658
00:33:31,040 --> 00:33:34,800
Speaker 2: It's I think an economy persia immigration with plus productivity. Yeah, okay,

659
00:33:35,360 --> 00:33:37,520
Speaker 2: well we've had crap product.

660
00:33:38,480 --> 00:33:41,880
Speaker 1: Immigration is it does add to productivity, but if you

661
00:33:41,880 --> 00:33:44,440
Speaker 1: look at the total productivity, it's even better if you

662
00:33:44,440 --> 00:33:47,880
Speaker 1: have a greater percentage of productivity. So because just by definition,

663
00:33:47,960 --> 00:33:49,680
Speaker 1: more people here are going to drive more productive because

664
00:33:49,880 --> 00:33:54,360
Speaker 1: produce more sh more stuff. Say but but, but our

665
00:33:54,360 --> 00:33:57,360
Speaker 1: productivity is our productivity is a percentage is quite low.

666
00:33:57,480 --> 00:33:59,120
Speaker 2: It's been very poor for well the best part of

667
00:33:59,120 --> 00:34:00,200
Speaker 2: a decade to be frank.

668
00:34:00,320 --> 00:34:02,680
Speaker 1: And I mean on top of that, you can look

669
00:34:02,680 --> 00:34:05,240
Speaker 1: at the unemployment number or the employment number, and the

670
00:34:05,240 --> 00:34:07,200
Speaker 1: biggest problem with the employment number at the moment is

671
00:34:07,440 --> 00:34:10,480
Speaker 1: most of the new employees and I saw some numbers

672
00:34:10,480 --> 00:34:13,120
Speaker 1: around it the other day. More recently, eighty percent of

673
00:34:13,320 --> 00:34:17,160
Speaker 1: most of the new employed people have gone into what

674
00:34:17,160 --> 00:34:19,400
Speaker 1: would be considered nonproduct productivity jobs.

675
00:34:19,560 --> 00:34:23,239
Speaker 2: They've gone into public public sector inspired even though some

676
00:34:23,239 --> 00:34:24,920
Speaker 2: of them are employed by the private sector. They've been

677
00:34:24,960 --> 00:34:28,920
Speaker 2: employed because of government assistance for childcare, for age care, faciling.

678
00:34:29,000 --> 00:34:32,040
Speaker 2: So the nurses that work in a nursing home, for example,

679
00:34:32,239 --> 00:34:35,520
Speaker 2: might be a privately owned nursing home, but the nurse

680
00:34:35,520 --> 00:34:37,920
Speaker 2: comes employing them because they're getting a subsidy from the government.

681
00:34:38,280 --> 00:34:40,840
Speaker 2: So you're quite right. I think it's roughly eighty percent

682
00:34:40,880 --> 00:34:43,200
Speaker 2: of the jobs created in the last year or year

683
00:34:43,200 --> 00:34:46,120
Speaker 2: and a half have been what we call it inspired

684
00:34:46,160 --> 00:34:50,399
Speaker 2: by the public sector spending on health, education, age care.

685
00:34:50,440 --> 00:34:53,839
Speaker 2: All that's the ndis all that sort of stuff. And yes,

686
00:34:53,880 --> 00:34:57,680
Speaker 2: their productivity is very hard to measure. So one example,

687
00:34:57,719 --> 00:35:00,560
Speaker 2: and this is what I love about productivity in I

688
00:35:00,560 --> 00:35:03,799
Speaker 2: don't think we can bloody measure it. What's the productivity?

689
00:35:03,960 --> 00:35:06,600
Speaker 2: Just say a nurse you know it works in the hospital,

690
00:35:07,440 --> 00:35:11,040
Speaker 2: he or she do their their shift. How do you

691
00:35:11,040 --> 00:35:13,839
Speaker 2: measure the productivity? How many sick people they look after

692
00:35:13,880 --> 00:35:17,160
Speaker 2: that night? Or I got into trouble for saying this.

693
00:35:17,640 --> 00:35:20,799
Speaker 2: So what's the productivity of the Reserve Bank? Do they

694
00:35:20,800 --> 00:35:23,759
Speaker 2: write more reports? No, that's not more productive? Do they

695
00:35:23,760 --> 00:35:27,360
Speaker 2: make you know? So how do you get more something?

696
00:35:27,400 --> 00:35:29,480
Speaker 2: Dear to our heart a rugby league plan? You know,

697
00:35:29,600 --> 00:35:33,480
Speaker 2: just take I don't know, Latrelle Mitchell when he's fitting

698
00:35:33,520 --> 00:35:36,279
Speaker 2: well playing for South Sydney go the rabbit oz. How

699
00:35:36,320 --> 00:35:40,439
Speaker 2: does his productivity improve? More goals, more tries whatever. Yeah,

700
00:35:40,520 --> 00:35:45,120
Speaker 2: Nathan Cleary, you know there's getting back to that services

701
00:35:45,200 --> 00:35:47,200
Speaker 2: side of the economy and how many haircuts can you

702
00:35:47,280 --> 00:35:49,400
Speaker 2: do in an hour? Even the best haircutter in the

703
00:35:49,400 --> 00:35:52,360
Speaker 2: world can only do a couple in an hour. So

704
00:35:52,520 --> 00:35:56,920
Speaker 2: the services side has productivity measures that can't be measured,

705
00:35:56,960 --> 00:35:59,080
Speaker 2: and that's not being critical of the Bureau of Statistics

706
00:35:59,160 --> 00:36:02,400
Speaker 2: or whatever. Whereas if you're a I don't know, a

707
00:36:02,560 --> 00:36:06,719
Speaker 2: miner in the mining industry, and your company buys you

708
00:36:06,760 --> 00:36:09,919
Speaker 2: a new digger and a new truck and a new

709
00:36:10,000 --> 00:36:14,280
Speaker 2: rail system, you can probably quadruple your output of iron

710
00:36:14,320 --> 00:36:16,880
Speaker 2: ore or gold or coal or whatever the hell it is.

711
00:36:17,320 --> 00:36:19,799
Speaker 2: Because of machinery and your product you produce twice as

712
00:36:19,880 --> 00:36:24,360
Speaker 2: much stuff per person. And that's where productivity is easily measured.

713
00:36:25,080 --> 00:36:29,680
Speaker 2: In services. I don't know. I genuinely don't know how.

714
00:36:29,880 --> 00:36:32,080
Speaker 1: I don't know either. They don't measure the correct.

715
00:36:31,760 --> 00:36:34,719
Speaker 2: And then intact that and so obsessing about productivity. I

716
00:36:34,760 --> 00:36:36,560
Speaker 2: think we might be taking our eye off them.

717
00:36:36,640 --> 00:36:38,720
Speaker 1: I think, although THEBA.

718
00:36:38,800 --> 00:36:40,719
Speaker 2: I do like high productivity, but I think we're not

719
00:36:40,840 --> 00:36:41,479
Speaker 2: measuring it.

720
00:36:41,400 --> 00:36:43,720
Speaker 1: So that for the RBA, it's a big deal.

721
00:36:43,600 --> 00:36:45,319
Speaker 2: For ITRBA has it's a great big deal for them.

722
00:36:45,400 --> 00:36:51,320
Speaker 1: Yes, it's productivity and wages increases, correct and unemployment or employment.

723
00:36:51,640 --> 00:36:53,759
Speaker 1: They're sort of like have a little algo sitting on

724
00:36:53,840 --> 00:36:56,239
Speaker 1: all that stuff, which they like to sort of use

725
00:36:56,280 --> 00:36:58,359
Speaker 1: as a measure as to whether or not we need

726
00:36:58,400 --> 00:37:01,480
Speaker 1: to either decrease in reduced interest rates or increase inst

727
00:37:01,520 --> 00:37:04,479
Speaker 1: rates beliven the same, but that'll be an interesting one

728
00:37:04,640 --> 00:37:09,440
Speaker 1: GDP going forward. Actually, my gut feeling is that GDP

729
00:37:11,200 --> 00:37:15,640
Speaker 1: pulling productivity aside. But GDP will reduce over time with

730
00:37:15,719 --> 00:37:20,440
Speaker 1: the reduction in immigration. It looks like and you know,

731
00:37:20,480 --> 00:37:23,120
Speaker 1: if GDP reduces, that's one of the things that Reserve

732
00:37:23,160 --> 00:37:25,000
Speaker 1: Bank is very interested in because they don't want to

733
00:37:25,000 --> 00:37:27,600
Speaker 1: get that they get marked. I mean, we're going to

734
00:37:27,640 --> 00:37:30,560
Speaker 1: remember this. Everybody wants to do well in their job,

735
00:37:31,320 --> 00:37:34,200
Speaker 1: and our Reserve Bank governor she wants to be seen

736
00:37:34,239 --> 00:37:36,279
Speaker 1: as doing a great job, and everyone just thinks her

737
00:37:36,320 --> 00:37:38,080
Speaker 1: job is putting in this rates something don't know. Actually

738
00:37:38,239 --> 00:37:43,200
Speaker 1: her interest rate is to foster growth in our economy or.

739
00:37:43,239 --> 00:37:45,440
Speaker 2: And the well being and prosperity of all Australians or

740
00:37:45,480 --> 00:37:46,000
Speaker 2: something like that.

741
00:37:46,080 --> 00:37:49,640
Speaker 1: Yeah, it's the prosperity and welfare of all Australians, they're

742
00:37:49,680 --> 00:37:52,360
Speaker 1: the words. And the measure of prosperity in terms of

743
00:37:52,400 --> 00:37:55,000
Speaker 1: her mandate is growth GDP.

744
00:37:54,719 --> 00:37:57,560
Speaker 2: Both jobs, incomes, wealth creation.

745
00:37:57,320 --> 00:38:01,880
Speaker 1: Yes, and the measure of wealth fair is unemployment.

746
00:38:01,920 --> 00:38:06,279
Speaker 2: For example, output is GDP growth. So a strong economy

747
00:38:06,280 --> 00:38:10,040
Speaker 2: that's producing more stuff is a good economy.

748
00:38:09,560 --> 00:38:11,799
Speaker 1: And she get measured like that, and it's like it's

749
00:38:11,840 --> 00:38:14,560
Speaker 1: human nature. I'm going to use interest rates to make

750
00:38:14,600 --> 00:38:17,520
Speaker 1: sure that you know, I do my job. That's what

751
00:38:17,560 --> 00:38:20,839
Speaker 1: I'm here for job.

752
00:38:21,760 --> 00:38:23,719
Speaker 2: That's when she was appointed what eighteen months ago by

753
00:38:23,760 --> 00:38:26,799
Speaker 2: Jim Charmers. That's what you've got to do.

754
00:38:26,600 --> 00:38:29,920
Speaker 1: So GDP will be an important one for her. So

755
00:38:30,280 --> 00:38:32,520
Speaker 1: where are we at with GDP? We had any reads

756
00:38:32,560 --> 00:38:32,759
Speaker 1: on it.

757
00:38:33,000 --> 00:38:36,239
Speaker 2: We had the December quarter data again coming out in

758
00:38:36,280 --> 00:38:38,919
Speaker 2: early March. It's very low, which was a point six

759
00:38:38,960 --> 00:38:41,680
Speaker 2: for the quarter, one point three for the year, one

760
00:38:41,680 --> 00:38:43,560
Speaker 2: point three annuals. So it's best to focus on the

761
00:38:43,600 --> 00:38:46,319
Speaker 2: annual in a way because that's your sort of because again,

762
00:38:46,400 --> 00:38:50,440
Speaker 2: quarterly numbers in GDP even more volatile than very inflation numbers. Yes,

763
00:38:50,760 --> 00:38:52,600
Speaker 2: and it can depend on if there's a flood in

764
00:38:52,640 --> 00:38:55,879
Speaker 2: a coal mine in Queensland, output drops by point two

765
00:38:56,040 --> 00:38:57,520
Speaker 2: just from that, you know. So there's a whole lot

766
00:38:57,520 --> 00:38:58,280
Speaker 2: of things that impacted.

767
00:38:58,360 --> 00:39:00,319
Speaker 1: So what is he impacted? The flood.

768
00:39:01,920 --> 00:39:05,440
Speaker 2: Negative quite quite high, ye, because a lot of places

769
00:39:05,480 --> 00:39:06,680
Speaker 2: shut down for a long time.

770
00:39:06,680 --> 00:39:08,440
Speaker 1: There's a few points in it eyes that I understand.

771
00:39:08,520 --> 00:39:11,400
Speaker 2: I think that there's about a quarter of a percent

772
00:39:11,440 --> 00:39:14,680
Speaker 2: off GDP growth for the March quarter.

773
00:39:14,440 --> 00:39:16,400
Speaker 1: When we get not in the years of the quarter.

774
00:39:16,280 --> 00:39:20,680
Speaker 2: Yep, but as we hope now that the floods have

775
00:39:21,400 --> 00:39:23,640
Speaker 2: gone away and people are back and people are not

776
00:39:23,800 --> 00:39:26,719
Speaker 2: hunkering down because of this cyclone, they're about shopping and

777
00:39:26,760 --> 00:39:30,120
Speaker 2: re replenishing their pantries and things. So hopefully it was

778
00:39:30,280 --> 00:39:33,640
Speaker 2: actually dune quarter numbers forbid. Going a long way to

779
00:39:33,680 --> 00:39:35,239
Speaker 2: the future, there are going to be a little bit better,

780
00:39:35,320 --> 00:39:37,160
Speaker 2: but for the here and now it's bad. Yeah.

781
00:39:37,440 --> 00:39:40,440
Speaker 1: So then just on that, I mean, how do we

782
00:39:41,680 --> 00:39:48,040
Speaker 1: sort of reconcile that the government or treasury and or

783
00:39:48,080 --> 00:39:51,399
Speaker 1: the treasurer have made an assumption of I think two

784
00:39:51,480 --> 00:39:54,600
Speaker 1: point five percent GDP yep. And it's important for them

785
00:39:54,600 --> 00:39:56,759
Speaker 1: to make that assumption because they're going to work out

786
00:39:57,080 --> 00:39:58,480
Speaker 1: how the country is going to grow in order to

787
00:39:58,520 --> 00:40:00,600
Speaker 1: work out how much tax are going to colle yes,

788
00:40:00,600 --> 00:40:01,560
Speaker 1: extra extra tract so.

789
00:40:01,600 --> 00:40:03,319
Speaker 2: They can lect that those forecasts are important ye.

790
00:40:04,200 --> 00:40:06,279
Speaker 1: And therefore the extra tax I collect tells me how

791
00:40:06,320 --> 00:40:08,359
Speaker 1: much money or extra money I've got to spend yep,

792
00:40:08,520 --> 00:40:11,200
Speaker 1: and or how much I need to borrow. So they're

793
00:40:11,239 --> 00:40:16,160
Speaker 1: looking at a two point five percent. Just it's an

794
00:40:16,200 --> 00:40:18,839
Speaker 1: interesting question, a little bit not quite related to interest rates,

795
00:40:18,880 --> 00:40:22,719
Speaker 1: but how does the how do you reconcole Treasury's two

796
00:40:22,719 --> 00:40:25,720
Speaker 1: point five percent GDP growth for the next two months

797
00:40:26,120 --> 00:40:29,920
Speaker 1: relative to say, looking at a number of just under

798
00:40:30,120 --> 00:40:35,000
Speaker 1: to just around two off the back of our historical

799
00:40:35,440 --> 00:40:36,480
Speaker 1: growth numbers.

800
00:40:37,040 --> 00:40:40,480
Speaker 2: Compared with what you and I have been used to

801
00:40:40,560 --> 00:40:43,400
Speaker 2: over many decades. We used to have the Australian remember

802
00:40:43,440 --> 00:40:44,280
Speaker 2: the three three threw.

803
00:40:46,239 --> 00:40:49,160
Speaker 1: Yeah, I've never by the way, very rarely have over

804
00:40:49,239 --> 00:40:52,200
Speaker 1: seen it for the last decade. No, I haven't seen

805
00:40:52,239 --> 00:40:52,719
Speaker 1: it a long time.

806
00:40:52,840 --> 00:40:54,600
Speaker 2: For a long time. We did get it in the

807
00:40:54,640 --> 00:40:56,239
Speaker 2: eighties and nineties.

808
00:40:56,200 --> 00:40:59,160
Speaker 1: Yeah, yeah, but I haven't seen in that last ten years.

809
00:40:59,160 --> 00:41:00,600
Speaker 2: At least you might have had the odd quarter where

810
00:41:00,600 --> 00:41:02,600
Speaker 2: it's spiked up, but it hasn't been sustained. So the

811
00:41:02,600 --> 00:41:05,600
Speaker 2: fact that the budget papers have two and a half

812
00:41:05,960 --> 00:41:07,520
Speaker 2: two and three quarter, it might be one year into

813
00:41:07,560 --> 00:41:12,520
Speaker 2: the into the future, certainly not three. And that's with

814
00:41:12,640 --> 00:41:15,000
Speaker 2: decent population growth is you were learning to so people

815
00:41:15,000 --> 00:41:17,040
Speaker 2: coming here and buying and spending, you know, should be

816
00:41:17,040 --> 00:41:20,239
Speaker 2: boosting GDP. I think it's a function of the fact

817
00:41:20,280 --> 00:41:23,080
Speaker 2: that we're more of a mature economy, and that's there's

818
00:41:23,080 --> 00:41:25,439
Speaker 2: not going to sound you know, too boring in a sense.

819
00:41:25,480 --> 00:41:28,759
Speaker 2: But the aging population is still an issue. Old people

820
00:41:28,800 --> 00:41:30,640
Speaker 2: spend less than young people. You know, we've already got

821
00:41:30,680 --> 00:41:32,520
Speaker 2: our house, we've got our car, and we don't want

822
00:41:32,520 --> 00:41:34,640
Speaker 2: to buy more things. You know, we sit it home

823
00:41:34,640 --> 00:41:37,200
Speaker 2: and watch TV rather than going out clubbing all night,

824
00:41:37,640 --> 00:41:40,719
Speaker 2: you know, speaking up my kids rather than me. But

825
00:41:40,800 --> 00:41:44,120
Speaker 2: you know so you so, the aging population just lowers

826
00:41:44,120 --> 00:41:47,359
Speaker 2: the growth rate in one in one sense, and I

827
00:41:47,360 --> 00:41:49,600
Speaker 2: think the other thing, which is sort of just dampening

828
00:41:49,680 --> 00:41:54,200
Speaker 2: our growth momentum is well as learning to and even

829
00:41:54,200 --> 00:41:57,800
Speaker 2: though we can't measure, is that is that productivity boost

830
00:41:58,520 --> 00:42:01,520
Speaker 2: is not there. Back back in the day when we

831
00:42:01,560 --> 00:42:03,919
Speaker 2: had three three and a half percent GDP growth year

832
00:42:03,960 --> 00:42:08,080
Speaker 2: in year out, we were reforming our economy. And there

833
00:42:08,080 --> 00:42:12,280
Speaker 2: I say, thanks to you with Wizard reforming the banking sector.

834
00:42:12,920 --> 00:42:19,200
Speaker 2: The benefits that reforms like that our banking and finance. Yeah,

835
00:42:19,280 --> 00:42:20,920
Speaker 2: all that sort of stuff, floating the.

836
00:42:20,840 --> 00:42:24,239
Speaker 1: Dollar and keating do you regulated my industry, la? People

837
00:42:24,239 --> 00:42:24,920
Speaker 1: want me to do it?

838
00:42:25,320 --> 00:42:27,920
Speaker 2: And floating the dollar, things like that just allowed our

839
00:42:27,960 --> 00:42:32,920
Speaker 2: economy to be vibrant for a decade or two putting

840
00:42:32,920 --> 00:42:34,600
Speaker 2: money to seper and I know we still got that coming,

841
00:42:34,600 --> 00:42:36,880
Speaker 2: but their super funds've got lots of cash. They're investing

842
00:42:36,920 --> 00:42:40,120
Speaker 2: it and growing the economy. Reforms like that were how

843
00:42:40,120 --> 00:42:41,799
Speaker 2: we were able to grow the economy and we were

844
00:42:41,840 --> 00:42:44,520
Speaker 2: a much younger society than too. And it was that

845
00:42:44,560 --> 00:42:46,640
Speaker 2: reform agenda, which comes back to our question at the

846
00:42:46,719 --> 00:42:48,840
Speaker 2: very beginning about watching the budget have done better or

847
00:42:48,880 --> 00:42:52,680
Speaker 2: done more of And this is again that what do

848
00:42:52,680 --> 00:42:55,920
Speaker 2: we do to reform our tax system, our spending system,

849
00:42:56,480 --> 00:43:01,960
Speaker 2: regulatory environment to ensure but business people who will be

850
00:43:02,040 --> 00:43:04,799
Speaker 2: the driver of long run economic growth. Sure, the government

851
00:43:04,800 --> 00:43:07,040
Speaker 2: can spend money each year, and that's handy when we've

852
00:43:07,080 --> 00:43:08,640
Speaker 2: got a week economy and we need to get more

853
00:43:08,719 --> 00:43:12,279
Speaker 2: nurses and HK. That's fine. But if you're to sustain

854
00:43:12,880 --> 00:43:16,960
Speaker 2: a good decent rate of economic growth for five years,

855
00:43:17,000 --> 00:43:19,600
Speaker 2: for ten years, you need the private sector to kick in.

856
00:43:20,080 --> 00:43:20,799
Speaker 2: And that's just not.

857
00:43:21,239 --> 00:43:23,040
Speaker 1: Consumers incentivized though today.

858
00:43:23,080 --> 00:43:26,000
Speaker 2: Yeah, so consumers spending, that's fine, but it's really capex.

859
00:43:26,080 --> 00:43:30,440
Speaker 2: It's really business investment, investment buying machinery and equipment, investing

860
00:43:30,480 --> 00:43:33,239
Speaker 2: in AI, buying the buildings and structures that you need

861
00:43:33,280 --> 00:43:36,759
Speaker 2: for warehousing for hotels, so tourists can come in and

862
00:43:36,760 --> 00:43:39,560
Speaker 2: stay at snazzy hotel. Either that snazzy restaurant pay us

863
00:43:39,560 --> 00:43:41,600
Speaker 2: lots of money, so we get his training to become

864
00:43:41,680 --> 00:43:44,960
Speaker 2: richer from things like tourism. That's the drop. So that's

865
00:43:45,000 --> 00:43:49,799
Speaker 2: the private sector investing in machinery, buildings, AI and sort

866
00:43:49,840 --> 00:43:53,719
Speaker 2: of artificial intelligence and technology that are that have been

867
00:43:53,719 --> 00:43:55,879
Speaker 2: the missing link. And if you look at our cap

868
00:43:56,040 --> 00:43:59,880
Speaker 2: X numbers over the last decade, they've been rotten. The

869
00:44:00,120 --> 00:44:03,200
Speaker 2: US has been booming with all its capics, and I

870
00:44:03,239 --> 00:44:05,600
Speaker 2: know they're the poster child, if we can call it that,

871
00:44:05,680 --> 00:44:10,640
Speaker 2: of the last decade or two of technology. We've been

872
00:44:11,320 --> 00:44:15,120
Speaker 2: really lagging. And I think that's where the discussion about

873
00:44:15,160 --> 00:44:16,879
Speaker 2: how do we encourage how to WII, or how does

874
00:44:16,880 --> 00:44:19,640
Speaker 2: the government encourage the private sector to pick up on

875
00:44:19,960 --> 00:44:22,919
Speaker 2: bloody run and grow the economy higher people and pay

876
00:44:22,960 --> 00:44:26,160
Speaker 2: good wages and all this other stuff. It comes back

877
00:44:26,160 --> 00:44:28,640
Speaker 2: to things like get the regulatary environment, the tax environment,

878
00:44:28,719 --> 00:44:32,239
Speaker 2: which are hard to reform, no doubt, neither side of

879
00:44:32,239 --> 00:44:35,160
Speaker 2: politics has done it for two decades. The last big

880
00:44:35,200 --> 00:44:39,200
Speaker 2: tax reform was the GST and related tax policy twenty

881
00:44:39,200 --> 00:44:42,720
Speaker 2: five years ago. But we need and this is where

882
00:44:43,040 --> 00:44:45,520
Speaker 2: we need to have a perhaps a rethink, and you've

883
00:44:45,520 --> 00:44:47,720
Speaker 2: got to take the people on board, the voters on side,

884
00:44:48,000 --> 00:44:49,920
Speaker 2: and say, hang on, things are okay. You know, Austraia's

885
00:44:49,920 --> 00:44:51,520
Speaker 2: still a bloody good place. You know, we're still a

886
00:44:51,520 --> 00:44:54,520
Speaker 2: great economy and great society to live in. But we

887
00:44:54,560 --> 00:44:57,480
Speaker 2: need to have a bit of a frank discussion, some

888
00:44:57,600 --> 00:44:59,960
Speaker 2: tough love even you know, not everybody's going to win,

889
00:45:00,880 --> 00:45:03,359
Speaker 2: where we have to reform our tax system and how

890
00:45:03,400 --> 00:45:08,720
Speaker 2: we have to re calibrate our spending programs to ensure

891
00:45:08,760 --> 00:45:11,640
Speaker 2: that in the next ten and twenty years we and

892
00:45:11,719 --> 00:45:15,200
Speaker 2: our kids have an even better economy to live in.

893
00:45:15,239 --> 00:45:19,399
Speaker 2: Because that's what Hawk Keating did and certainly the first

894
00:45:19,400 --> 00:45:22,239
Speaker 2: part of the Costello as Treasure years did with a

895
00:45:22,239 --> 00:45:26,399
Speaker 2: whole lot of you know, the Future Fund and the

896
00:45:27,040 --> 00:45:29,960
Speaker 2: GST and things like that. There was a two decade

897
00:45:29,960 --> 00:45:33,600
Speaker 2: period roughly of good reform and we're still benefiting from that.

898
00:45:33,920 --> 00:45:36,680
Speaker 2: We need to re enter that phase, and I say

899
00:45:36,719 --> 00:45:39,120
Speaker 2: we need to redo it sooner rather than later.

900
00:45:39,320 --> 00:45:41,920
Speaker 1: So if you're looking at or if you're talking to

901
00:45:41,920 --> 00:45:44,279
Speaker 1: a consumer who's interested in indust rates going up or

902
00:45:44,320 --> 00:45:48,719
Speaker 1: down and if the Reserve Bank is interested in being

903
00:45:49,239 --> 00:45:52,280
Speaker 1: nos is going to be measured for its prosperity mandate,

904
00:45:52,320 --> 00:45:53,759
Speaker 1: that is growing the economy, and they're going to be

905
00:45:53,800 --> 00:45:58,560
Speaker 1: measured by GDP. What number is the reserve do you

906
00:45:58,600 --> 00:46:01,319
Speaker 1: think our consumer or listener should be looking at for

907
00:46:01,400 --> 00:46:04,080
Speaker 1: what the Reserve Bank's looking for when it comes to GDP?

908
00:46:04,480 --> 00:46:07,000
Speaker 1: You know you mentioned historically many many years ago, twenty

909
00:46:07,080 --> 00:46:11,520
Speaker 1: years ago it was in the threes. The treasurer Treasury

910
00:46:11,960 --> 00:46:14,239
Speaker 1: in the last budget took two point five what it was?

911
00:46:14,920 --> 00:46:18,839
Speaker 1: Where does the Reserve Bank hope, because we know where

912
00:46:18,840 --> 00:46:21,120
Speaker 1: they want inflation between two and three? Where does the

913
00:46:21,160 --> 00:46:24,760
Speaker 1: Reserve Bank want to see GDP? And like, for example,

914
00:46:24,800 --> 00:46:28,560
Speaker 1: if it comes it at one, for argument's sake, anually

915
00:46:29,400 --> 00:46:30,680
Speaker 1: we would expect to rate reduction?

916
00:46:30,880 --> 00:46:32,399
Speaker 2: Oh god, yes, yes that's not good.

917
00:46:33,160 --> 00:46:34,440
Speaker 1: It's a silly thing for me.

918
00:46:34,719 --> 00:46:36,720
Speaker 2: We got four percent would be hypening.

919
00:46:36,800 --> 00:46:39,880
Speaker 1: So where do you think we want to see GDP

920
00:46:40,040 --> 00:46:40,480
Speaker 1: number at?

921
00:46:40,560 --> 00:46:43,880
Speaker 2: Yeah? If we can, And again just abstracting from that

922
00:46:43,960 --> 00:46:46,640
Speaker 2: volatility that we mentioned, because there's an oil shark or

923
00:46:46,880 --> 00:46:53,480
Speaker 2: water in Lismore and southern Queensland, whatever, ideally, what do

924
00:46:53,520 --> 00:46:56,040
Speaker 2: we call it? The goalielocks not too hot, not too cold,

925
00:46:56,040 --> 00:46:59,200
Speaker 2: but just right. I would say it's going to be

926
00:46:59,200 --> 00:47:01,319
Speaker 2: between two and a half than three right, So not

927
00:47:01,320 --> 00:47:04,080
Speaker 2: saying two point seventy five, that's too precise. But if

928
00:47:04,120 --> 00:47:07,040
Speaker 2: we've got GDP growth two point six, two point eight,

929
00:47:07,040 --> 00:47:09,799
Speaker 2: two point seven, two point nine too, that would be

930
00:47:09,960 --> 00:47:13,920
Speaker 2: the sort of level of growth in the current structure

931
00:47:13,960 --> 00:47:18,200
Speaker 2: of our economy that would create enough jobs to keep

932
00:47:18,200 --> 00:47:23,640
Speaker 2: the unemployment rate low, to allow for moderate increases in

933
00:47:23,680 --> 00:47:27,319
Speaker 2: real wages. So the workers are happy, businesses are happy

934
00:47:27,320 --> 00:47:28,680
Speaker 2: to pay a bit of a pay rise, but not

935
00:47:28,760 --> 00:47:31,520
Speaker 2: too much, not too little. Again, So if I was

936
00:47:31,560 --> 00:47:32,799
Speaker 2: to sort of put my hand on my heart, so well,

937
00:47:32,840 --> 00:47:36,080
Speaker 2: what would be our optimal rate of GDP growth? And

938
00:47:36,520 --> 00:47:39,120
Speaker 2: for the Reserve Bank more important than me, I would

939
00:47:39,120 --> 00:47:41,000
Speaker 2: say to be about two and three two point seventy

940
00:47:41,000 --> 00:47:43,640
Speaker 2: five percent plus on minus a quarter of just allowing

941
00:47:43,680 --> 00:47:44,880
Speaker 2: for the volatility.

942
00:47:45,200 --> 00:47:52,759
Speaker 1: So if in the main decision, yep, we've had an

943
00:47:52,800 --> 00:47:56,319
Speaker 1: April GDP number come out, is there an April?

944
00:47:57,040 --> 00:48:00,320
Speaker 2: We don't get one till June. We don't get the bloody.

945
00:48:00,080 --> 00:48:03,160
Speaker 1: We get monthlies GDP. No, no GDP monthies either.

946
00:48:03,560 --> 00:48:06,200
Speaker 2: It's only the CPI that's gone we only get quarterly GDP,

947
00:48:06,280 --> 00:48:08,120
Speaker 2: and the only one we got was about three weeks ago.

948
00:48:08,200 --> 00:48:09,840
Speaker 1: Okay, so the one we got three weeks ago for

949
00:48:09,880 --> 00:48:13,919
Speaker 1: the December period point six, so that is for six

950
00:48:13,960 --> 00:48:17,319
Speaker 1: to twenty four. It sort of doesn't really say rate

951
00:48:17,360 --> 00:48:18,400
Speaker 1: reduction or rate increase.

952
00:48:19,080 --> 00:48:21,680
Speaker 2: But don't forget that point six. While it superficially looks

953
00:48:21,880 --> 00:48:24,600
Speaker 2: quite good, it was after I think four quarters of

954
00:48:24,680 --> 00:48:27,080
Speaker 2: rubbish point two. So you've got to put it in

955
00:48:27,080 --> 00:48:29,360
Speaker 2: the again, like our inflation numbers, put in the context

956
00:48:29,400 --> 00:48:31,440
Speaker 2: of the quarter before, which.

957
00:48:31,239 --> 00:48:34,000
Speaker 1: Was if you take a yearly number, it's one point three,

958
00:48:34,120 --> 00:48:36,040
Speaker 1: it's one point three. But if you if you if

959
00:48:36,080 --> 00:48:38,000
Speaker 1: they do what they did for inflation and they just

960
00:48:38,040 --> 00:48:41,520
Speaker 1: take the latest route in an extra late four, it's

961
00:48:41,560 --> 00:48:44,360
Speaker 1: not that exciting when it comes to looking at perhaps

962
00:48:44,360 --> 00:48:47,239
Speaker 1: getting a rate reduction. So, because what I'm trying to

963
00:48:47,239 --> 00:48:48,960
Speaker 1: cover here is the top three ones, we're going to

964
00:48:49,000 --> 00:48:51,680
Speaker 1: go through your whole list in a moment, but we're

965
00:48:51,760 --> 00:48:56,080
Speaker 1: a really interesting point here for the for this, I

966
00:48:56,080 --> 00:48:58,240
Speaker 1: don't think for the for the meeting that we're talking

967
00:48:58,239 --> 00:49:01,880
Speaker 1: about next week. I think for meeting in May. Sure,

968
00:49:01,960 --> 00:49:04,480
Speaker 1: so I have a view on the main meeting, but

969
00:49:04,520 --> 00:49:06,279
Speaker 1: it's going to be on the Darta, of course, but

970
00:49:06,400 --> 00:49:09,880
Speaker 1: what people should be looking for is in order to

971
00:49:09,880 --> 00:49:17,759
Speaker 1: get a rate reduction, is hopefully is a is Well,

972
00:49:17,760 --> 00:49:19,960
Speaker 1: we won't know anything for GDP, but we can take

973
00:49:20,280 --> 00:49:22,560
Speaker 1: you know, the latest number for the December quarter, and

974
00:49:22,560 --> 00:49:24,360
Speaker 1: we can also take all those quarters prior to that

975
00:49:24,400 --> 00:49:26,560
Speaker 1: for the previous year in twenty twenty four, and we've

976
00:49:26,600 --> 00:49:29,320
Speaker 1: got a pretty crappy sort of GDP. So that's that's

977
00:49:29,360 --> 00:49:32,120
Speaker 1: a tick. And then inflation we're sort of heading in

978
00:49:32,160 --> 00:49:34,320
Speaker 1: the right direction, which you've just covered up beautifully, and

979
00:49:34,800 --> 00:49:37,080
Speaker 1: labor markets. In terms of unemployment, I'm talking about as

980
00:49:37,080 --> 00:49:40,319
Speaker 1: opposed to employment, but unemployment, you know, it's looked like

981
00:49:40,440 --> 00:49:42,799
Speaker 1: it's going to track. Even the Treasury says we're going

982
00:49:42,840 --> 00:49:45,680
Speaker 1: to look at you know, a different number, you know,

983
00:49:45,960 --> 00:49:50,400
Speaker 1: a number with above two percent. So we're looking at

984
00:49:50,400 --> 00:49:53,279
Speaker 1: you to two point four five at two point two

985
00:49:53,320 --> 00:49:55,920
Speaker 1: five percent, two point four five four.

986
00:49:55,520 --> 00:49:58,000
Speaker 2: Point sorry four pou employment, right.

987
00:49:58,160 --> 00:49:59,640
Speaker 1: We go four point two five. I've got to ti

988
00:50:00,360 --> 00:50:04,480
Speaker 1: for four point so that's that aug as well. So yeah,

989
00:50:04,600 --> 00:50:07,120
Speaker 1: there is some hope out there on the horizon. There

990
00:50:07,200 --> 00:50:10,239
Speaker 1: is hope, and that I don't feel that excited about it.

991
00:50:10,200 --> 00:50:16,120
Speaker 2: Mark where the excitement will come. I'd say between assume

992
00:50:16,200 --> 00:50:19,719
Speaker 2: the RBA do nothing next week. From then until the

993
00:50:19,880 --> 00:50:25,440
Speaker 2: May meeting of the RBA Board, there will be three

994
00:50:25,560 --> 00:50:29,239
Speaker 2: numbers only that will be I won't say only, but

995
00:50:29,280 --> 00:50:31,880
Speaker 2: three numbers that will be the krem Dela creme of

996
00:50:31,920 --> 00:50:35,480
Speaker 2: whether we get that rate cut or not. Critical will

997
00:50:35,520 --> 00:50:39,280
Speaker 2: be the March quarter inflation numbers.

998
00:50:39,320 --> 00:50:40,280
Speaker 1: It comes out of the end of April.

999
00:50:40,480 --> 00:50:43,239
Speaker 2: In v April, we've discussed that zero point five point

1000
00:50:43,320 --> 00:50:45,879
Speaker 2: six for the trim domain game on for eight cut

1001
00:50:46,840 --> 00:50:51,280
Speaker 2: point seven or point eight mm. That'll be a spanner

1002
00:50:51,320 --> 00:50:54,920
Speaker 2: in the works. The other two numbers are the two

1003
00:50:55,000 --> 00:50:58,319
Speaker 2: monthly employment numbers, so we'll get one of them in

1004
00:50:58,360 --> 00:50:59,800
Speaker 2: a couple of weeks time in the middle of a

1005
00:51:00,239 --> 00:51:02,120
Speaker 2: and there's one that comes out just before the next

1006
00:51:02,160 --> 00:51:05,840
Speaker 2: board RBA board meeting. We will be able to validate

1007
00:51:05,960 --> 00:51:09,120
Speaker 2: or otherwise that minus fifty three thousand in employment. So

1008
00:51:09,160 --> 00:51:12,080
Speaker 2: if it bounces back fifty three thousand, well yeah, it

1009
00:51:12,120 --> 00:51:15,919
Speaker 2: was just a statistical anomaly. If we get minus fifty

1010
00:51:15,960 --> 00:51:19,400
Speaker 2: three fivewed by zero or even a plus ten, you

1011
00:51:19,440 --> 00:51:22,920
Speaker 2: know it's pretty weak. And the unemployment rate, again, that

1012
00:51:23,040 --> 00:51:25,480
Speaker 2: unemployment rate if it's because four point one and it

1013
00:51:25,480 --> 00:51:26,879
Speaker 2: doesn't take much for it to get to four point

1014
00:51:26,880 --> 00:51:28,960
Speaker 2: two or four point three. Then again it's game on

1015
00:51:29,040 --> 00:51:31,440
Speaker 2: for the rate cut. So if there are only three

1016
00:51:31,520 --> 00:51:33,600
Speaker 2: things that I was looking at, and of course I'll

1017
00:51:33,600 --> 00:51:36,440
Speaker 2: be looking at a whole lot more than that. Between

1018
00:51:37,040 --> 00:51:39,480
Speaker 2: the April meeting of the RBA and the main meeting

1019
00:51:39,560 --> 00:51:41,279
Speaker 2: of the RBA, it'll be the two labor force and

1020
00:51:41,320 --> 00:51:45,239
Speaker 2: numbers and the CPI, all the while having an eye

1021
00:51:45,320 --> 00:51:49,040
Speaker 2: on Trump Tariff's second of all, second of April is

1022
00:51:49,040 --> 00:51:52,640
Speaker 2: the big day for exactly what form they take, whether

1023
00:51:52,680 --> 00:51:54,600
Speaker 2: Australia's exempt, which we won't be, by the way, or

1024
00:51:54,600 --> 00:51:57,120
Speaker 2: I don't think we will be. On steel, aluminium. He's

1025
00:51:57,120 --> 00:51:59,759
Speaker 2: talking about copper, he's talking about tariffs on cars. Now

1026
00:52:00,040 --> 00:52:02,040
Speaker 2: that doesn't affect us because we don't make any cars,

1027
00:52:02,200 --> 00:52:05,680
Speaker 2: but we supply a lot of the the minerals and

1028
00:52:05,840 --> 00:52:08,920
Speaker 2: materials and metals that go into car production around the world.

1029
00:52:08,960 --> 00:52:11,439
Speaker 2: So if cars get hit, then maybe we'll be less

1030
00:52:11,440 --> 00:52:13,520
Speaker 2: demand for our copper and our iron ore and things

1031
00:52:13,520 --> 00:52:16,440
Speaker 2: to and o aluminium. So I'll be looking at that

1032
00:52:16,520 --> 00:52:18,600
Speaker 2: to see whether that has any what we call it

1033
00:52:18,640 --> 00:52:20,160
Speaker 2: a blowback on our economy.

1034
00:52:20,480 --> 00:52:23,360
Speaker 1: So let's go through your board. Now the board. Okay,

1035
00:52:23,400 --> 00:52:25,560
Speaker 1: the legendary board, so let's still get it.

1036
00:52:25,640 --> 00:52:29,279
Speaker 2: Monetary policy checklist board. Okay, we mentioned GDP that is

1037
00:52:29,480 --> 00:52:35,040
Speaker 2: clearly clearly in the neutral slightly towards easing. It's picked

1038
00:52:35,120 --> 00:52:37,279
Speaker 2: up a bit, but it's not strong. You wouldn't high

1039
00:52:37,280 --> 00:52:40,600
Speaker 2: grates on your GDP result. Inflation. I'm excited about inflation.

1040
00:52:41,440 --> 00:52:44,000
Speaker 2: I'm moving that almost to the easing. We're in the

1041
00:52:44,040 --> 00:52:47,600
Speaker 2: middle of the target range. But inflation is coming down

1042
00:52:47,640 --> 00:52:50,359
Speaker 2: and if anything, it'll be lower in the quarters ahead.

1043
00:52:50,400 --> 00:52:52,719
Speaker 2: But as we said, watch the March quarter numbers out

1044
00:52:52,760 --> 00:52:53,560
Speaker 2: at the end of April.

1045
00:52:53,640 --> 00:52:57,520
Speaker 1: Now and clear this is for the April meeting.

1046
00:52:58,000 --> 00:52:58,439
Speaker 2: April meeting.

1047
00:52:58,480 --> 00:53:00,040
Speaker 1: What we're now doing is one April meet.

1048
00:53:00,320 --> 00:53:02,799
Speaker 2: Because we'll do the main meeting next when we've got

1049
00:53:02,800 --> 00:53:03,320
Speaker 2: those numbers.

1050
00:53:03,360 --> 00:53:03,680
Speaker 1: Ye.

1051
00:53:03,840 --> 00:53:05,759
Speaker 2: On the labor market, I'm putting it at neutral because

1052
00:53:05,760 --> 00:53:08,759
Speaker 2: four point one unemployment is still pretty good and we're

1053
00:53:08,800 --> 00:53:10,719
Speaker 2: not sure whether their minus fifty three is valid as

1054
00:53:10,719 --> 00:53:15,319
Speaker 2: we've discussed, so it's not it's certainly not tightening, but

1055
00:53:15,400 --> 00:53:18,040
Speaker 2: it's not so catastrophic that they need to urgently cut

1056
00:53:18,120 --> 00:53:20,919
Speaker 2: rates because of the labor market. So that's neutral. Where

1057
00:53:20,960 --> 00:53:24,120
Speaker 2: we get to the easing wages. We've had the wage

1058
00:53:24,200 --> 00:53:27,359
Speaker 2: number came out after the February meeting, three point two

1059
00:53:27,400 --> 00:53:32,040
Speaker 2: percent annual growth. It's slowing, so wages aren't a problem

1060
00:53:32,840 --> 00:53:35,120
Speaker 2: international economy. I'm going to put that in easing. We've

1061
00:53:35,120 --> 00:53:37,160
Speaker 2: got rate cuts. Well, the FED was on hold in

1062
00:53:37,160 --> 00:53:40,760
Speaker 2: the US this last meeting, but the keyw's of cut.

1063
00:53:40,960 --> 00:53:46,040
Speaker 2: Canada still cutting, European Central Bank cut, Bank of England

1064
00:53:46,080 --> 00:53:47,720
Speaker 2: was on the hole, but they've got an easying buyas.

1065
00:53:47,719 --> 00:53:50,359
Speaker 2: So global rates are either steady or low. And that's

1066
00:53:50,400 --> 00:53:52,400
Speaker 2: after a whole bunch of rate cuts, and the international

1067
00:53:52,440 --> 00:53:56,839
Speaker 2: economies on on edge over the tariff issue. So I'm

1068
00:53:56,840 --> 00:53:57,839
Speaker 2: putting that in the easy stit.

1069
00:53:57,880 --> 00:53:59,839
Speaker 1: Whatever happens, something's going to happen from the tariff issues.

1070
00:54:00,040 --> 00:54:02,439
Speaker 2: It'll be big. And yes, we can't forecast that. It's

1071
00:54:02,520 --> 00:54:04,920
Speaker 2: like trying to forecast the effect of a well, of

1072
00:54:04,920 --> 00:54:06,759
Speaker 2: a war or something. Yeah, who knows what happens, but

1073
00:54:06,880 --> 00:54:08,520
Speaker 2: it's not going to be good. I think we can

1074
00:54:08,560 --> 00:54:10,279
Speaker 2: say that. It's how bad will it be? Is the

1075
00:54:10,320 --> 00:54:13,880
Speaker 2: only question. House prices. I'm putting that back in neutral.

1076
00:54:14,480 --> 00:54:17,759
Speaker 2: They've actually kicked up the last six weeks. We had

1077
00:54:17,800 --> 00:54:21,360
Speaker 2: a bit of a period late last year, maybe in January,

1078
00:54:21,360 --> 00:54:25,040
Speaker 2: where house prices were flat to slightly weaker. Auction clearance

1079
00:54:25,080 --> 00:54:28,000
Speaker 2: rates are up a bit. House prices in the weakest city,

1080
00:54:28,000 --> 00:54:29,600
Speaker 2: which was Melbourne, have just kicked up a little bit.

1081
00:54:29,600 --> 00:54:31,920
Speaker 2: Sydney which is weakers again. I'm not talking about any

1082
00:54:31,920 --> 00:54:36,239
Speaker 2: big increases, but more steady, and the RBA won't even

1083
00:54:36,239 --> 00:54:38,000
Speaker 2: care about it. They'll they'll be thinking, we're not worried

1084
00:54:38,000 --> 00:54:40,080
Speaker 2: about housing. It's not a burn, it's not a bust.

1085
00:54:40,719 --> 00:54:44,000
Speaker 2: Retail sales. I'm putting that in easing with consumer sentiments,

1086
00:54:44,000 --> 00:54:47,760
Speaker 2: so those two go hand in hand. Consumers are gloomy. Spending,

1087
00:54:47,840 --> 00:54:52,160
Speaker 2: as we discussed, has been pretty ordinary. Building approvals I

1088
00:54:52,160 --> 00:54:55,239
Speaker 2: won't put that in tightening, but we're actually starting to

1089
00:54:55,239 --> 00:54:57,759
Speaker 2: build a few more houses that the building approvals numbers

1090
00:54:57,800 --> 00:55:00,640
Speaker 2: are trending up, not super strong and coming from a

1091
00:55:00,680 --> 00:55:05,360
Speaker 2: really low base, but we've got the housing cycle, supply

1092
00:55:05,520 --> 00:55:09,080
Speaker 2: side response, the construction and response starting to pick up again.

1093
00:55:09,080 --> 00:55:10,680
Speaker 2: I'm not going to put my hand on my heart

1094
00:55:10,680 --> 00:55:12,880
Speaker 2: and say, oh, we're in for a building boom. Probably not.

1095
00:55:13,320 --> 00:55:15,040
Speaker 2: But it's better to have a plus sign than a

1096
00:55:15,080 --> 00:55:18,239
Speaker 2: minor sign. It's one of those things. Business investment that

1097
00:55:18,360 --> 00:55:22,840
Speaker 2: was a shocker that came out last quarter. Negative Businesses

1098
00:55:22,840 --> 00:55:24,840
Speaker 2: were saying that business investments that the what do we

1099
00:55:24,880 --> 00:55:28,000
Speaker 2: call it, the driver of productivity. Businesses have got their

1100
00:55:28,000 --> 00:55:30,319
Speaker 2: hands in their pocket right now, and I think part

1101
00:55:30,320 --> 00:55:33,640
Speaker 2: of that's due to the election yep. So, and particularly

1102
00:55:33,680 --> 00:55:38,279
Speaker 2: with things like renewable energy nuclear versus solar and wind

1103
00:55:38,320 --> 00:55:40,560
Speaker 2: and all that sort of stuff. If you're in that space,

1104
00:55:40,600 --> 00:55:42,080
Speaker 2: you're going to not do anything until you know who

1105
00:55:42,080 --> 00:55:42,400
Speaker 2: wins here.

1106
00:55:42,480 --> 00:55:43,759
Speaker 1: You won't know what the policy is going to be.

1107
00:55:43,840 --> 00:55:46,480
Speaker 2: Yeah, Yeah, And that's so businesses saying, well, who's going

1108
00:55:46,520 --> 00:55:49,160
Speaker 2: to win this election. I'll make my decision to invest

1109
00:55:49,239 --> 00:55:51,480
Speaker 2: or not to invest when I see who's who's in

1110
00:55:51,560 --> 00:55:56,000
Speaker 2: power and similar business confidence taking a dive into the

1111
00:55:56,000 --> 00:55:59,600
Speaker 2: negative territory over the last couple of months from the

1112
00:55:59,680 --> 00:56:06,200
Speaker 2: NAB survey, Commodity prices neutral China's had some policy stimulus

1113
00:56:06,200 --> 00:56:08,719
Speaker 2: in its economies. Its economy has been very weak, and

1114
00:56:08,800 --> 00:56:10,480
Speaker 2: to the extent that we've got iron or still at

1115
00:56:10,600 --> 00:56:14,040
Speaker 2: US one hundred dollars a ton, good news. Oil prices

1116
00:56:14,040 --> 00:56:17,960
Speaker 2: are down a bit, but just stabilizing. Neutral only stock

1117
00:56:18,000 --> 00:56:21,919
Speaker 2: market taken a hit. Finally, I'm moving that to sort

1118
00:56:21,960 --> 00:56:24,600
Speaker 2: of I won't put in easing, put it more in neutral.

1119
00:56:25,280 --> 00:56:27,839
Speaker 2: And the current interest rates settings yet they're restrictive. So

1120
00:56:28,040 --> 00:56:31,400
Speaker 2: what that means is that you're coming from a high

1121
00:56:31,440 --> 00:56:34,719
Speaker 2: base and that if there's anything in interestrate's only down,

1122
00:56:34,760 --> 00:56:37,840
Speaker 2: not up. So you can see from the board there's

1123
00:56:38,040 --> 00:56:39,839
Speaker 2: the ones that matter. I think Mark, you made this

1124
00:56:40,320 --> 00:56:42,799
Speaker 2: absolutely vital point. When we look at this board, these

1125
00:56:42,840 --> 00:56:46,120
Speaker 2: are not equal issues. The ones in the top three,

1126
00:56:46,520 --> 00:56:49,480
Speaker 2: maybe even the top four include wages, are the things

1127
00:56:49,520 --> 00:56:53,040
Speaker 2: that are dominant for the RBA, and you can see

1128
00:56:53,080 --> 00:56:56,719
Speaker 2: they're neutral to slightly easing, which means for next week

1129
00:56:57,440 --> 00:57:00,279
Speaker 2: one April one April two thirty, in the after moon

1130
00:57:00,600 --> 00:57:06,360
Speaker 2: Sydney time, you will see the RBA probably hold, but

1131
00:57:06,520 --> 00:57:09,960
Speaker 2: will have its language and its statements about how they

1132
00:57:10,000 --> 00:57:13,879
Speaker 2: read the economy, saying we are inclined to cut into

1133
00:57:13,920 --> 00:57:19,280
Speaker 2: straits if the data on inflation the labor market continue

1134
00:57:19,320 --> 00:57:21,160
Speaker 2: to weaken as we expect.

1135
00:57:21,400 --> 00:57:25,080
Speaker 1: And on this meeting between you and I, our interest

1136
00:57:25,120 --> 00:57:28,840
Speaker 1: rate reading meeting, I am in complete agreement with you

1137
00:57:28,920 --> 00:57:34,200
Speaker 1: on this one. But I do think, well, I'm actually

1138
00:57:34,280 --> 00:57:36,479
Speaker 1: really going to be very curious as to see whether

1139
00:57:36,600 --> 00:57:41,520
Speaker 1: or not our Reserve band governor throws the wet blanket

1140
00:57:41,520 --> 00:57:45,400
Speaker 1: over all the positives that you've talked about, just to

1141
00:57:45,400 --> 00:57:47,400
Speaker 1: make sure we don't get ahead of ourselves thinking there's

1142
00:57:47,440 --> 00:57:50,200
Speaker 1: going to rate reduction in May. At least she did

1143
00:57:50,200 --> 00:57:53,400
Speaker 1: in February. I wouldn't. I'm just curious. I'm not saying

1144
00:57:53,400 --> 00:57:55,080
Speaker 1: she will. I'm just curious to see whether she will

1145
00:57:55,120 --> 00:57:56,320
Speaker 1: do what she did in February.

1146
00:57:56,480 --> 00:57:58,720
Speaker 2: Well, her track on. She's been governor for what eighteen

1147
00:57:58,720 --> 00:58:01,280
Speaker 2: months now, and she did a hike in was it

1148
00:58:01,320 --> 00:58:04,120
Speaker 2: November twenty three and one cut in every twenty five.

1149
00:58:05,120 --> 00:58:08,040
Speaker 2: But all of the fantastic thing about the Reserve Bank

1150
00:58:08,080 --> 00:58:09,840
Speaker 2: now is that they do the press conference after each

1151
00:58:09,960 --> 00:58:12,840
Speaker 2: RBA meeting, And the questions now from the Durnas are

1152
00:58:12,920 --> 00:58:14,480
Speaker 2: really good. The first couple I think they've got a

1153
00:58:14,520 --> 00:58:16,920
Speaker 2: bit excited and asked, oh, you're going to cut a

1154
00:58:17,040 --> 00:58:19,560
Speaker 2: high grate, So they're pretty dumb questions, all due respect

1155
00:58:19,560 --> 00:58:21,880
Speaker 2: to my journalist friends out there. But now the questions

1156
00:58:21,880 --> 00:58:24,080
Speaker 2: are really good. They're actually drilling into some of the

1157
00:58:24,120 --> 00:58:26,880
Speaker 2: issues that we discussed and you're not blowing up our

1158
00:58:26,920 --> 00:58:30,200
Speaker 2: own tires here, but you know, they're discussing things that

1159
00:58:30,240 --> 00:58:33,520
Speaker 2: are really important to that interest rate decision and to

1160
00:58:33,640 --> 00:58:37,360
Speaker 2: her massive credit. Michelle Bullock is a very good communicator,

1161
00:58:37,920 --> 00:58:40,280
Speaker 2: and yes, your point, Well, she when she's asked this

1162
00:58:40,360 --> 00:58:42,240
Speaker 2: question about a lot of the pressures on interest rates,

1163
00:58:42,480 --> 00:58:44,800
Speaker 2: she'll say, I'm not ruling anything or anything out, anything

1164
00:58:44,960 --> 00:58:52,760
Speaker 2: or anything out. We probably have a predisposition, mild predisposition

1165
00:58:52,800 --> 00:58:56,040
Speaker 2: towards cutting interest rates, but we need the inflation rate

1166
00:58:56,120 --> 00:59:00,560
Speaker 2: to be lower before we'd even consider it like that.

1167
00:59:00,960 --> 00:59:04,320
Speaker 1: And if you were to be asked a question, if

1168
00:59:04,320 --> 00:59:06,560
Speaker 1: you were if you were the Reservement Governor and on

1169
00:59:06,640 --> 00:59:11,160
Speaker 1: Tuesday and someone asked you the question, mister coo coolers

1170
00:59:11,840 --> 00:59:16,760
Speaker 1: in previous periods, and by the way, we have to

1171
00:59:16,760 --> 00:59:20,360
Speaker 1: go back to before twenty ten. But in previous periods,

1172
00:59:20,800 --> 00:59:28,080
Speaker 1: the general rhythm of rate reductions was five or six

1173
00:59:28,160 --> 00:59:31,880
Speaker 1: rate reductions, and the general rhythm of rate increase is

1174
00:59:31,880 --> 00:59:33,360
Speaker 1: by the way, it's five or six two. Of course,

1175
00:59:33,360 --> 00:59:36,240
Speaker 1: there's been a lot of intervening, weird periods, including the

1176
00:59:36,280 --> 00:59:40,640
Speaker 1: GPC and COVID. But what would you say that would

1177
00:59:40,640 --> 00:59:45,760
Speaker 1: you would you and leaning into money markets right now,

1178
00:59:46,240 --> 00:59:48,840
Speaker 1: would you say that we've got one hundred basis points

1179
00:59:48,840 --> 00:59:50,800
Speaker 1: in US. In other words, one hundred based points worth

1180
00:59:50,800 --> 00:59:53,840
Speaker 1: of reductions get us down to like three forty five

1181
00:59:53,960 --> 00:59:56,040
Speaker 1: or three twenty five or three thirty five whatever.

1182
00:59:56,080 --> 00:59:59,680
Speaker 2: Someone, Yeah, I think if I'll say what I think

1183
00:59:59,720 --> 01:00:04,320
Speaker 2: the governor's and she sort of said this, and so

1184
01:00:04,520 --> 01:00:08,800
Speaker 2: is the Deputy Andrew Houser. That the neutral interest rate

1185
01:00:08,920 --> 01:00:12,080
Speaker 2: and why it's an academic exercise. What the neutral interstrate is.

1186
01:00:12,120 --> 01:00:14,200
Speaker 2: This is actually quite important to how the RBA think.

1187
01:00:14,920 --> 01:00:17,160
Speaker 2: Is probably about that level that you said three three

1188
01:00:17,160 --> 01:00:19,200
Speaker 2: and a quarter three point three whatever that happens to

1189
01:00:19,240 --> 01:00:22,200
Speaker 2: be roughly. So we've got interest rates above neutral. And

1190
01:00:22,200 --> 01:00:24,880
Speaker 2: by neutral, what that means is that it's an interest

1191
01:00:24,960 --> 01:00:30,160
Speaker 2: rate that neither restricts nor stimulates economic activity. It's the

1192
01:00:30,240 --> 01:00:32,880
Speaker 2: rate that everybody's happy with. So when rates are above that,

1193
01:00:32,880 --> 01:00:36,160
Speaker 2: it's restrictive. It means that people they're hungering down there

1194
01:00:36,200 --> 01:00:37,720
Speaker 2: because I've got to pay more than they would like

1195
01:00:37,800 --> 01:00:39,880
Speaker 2: to on their mortgage debt and all that other stuff,

1196
01:00:39,880 --> 01:00:43,560
Speaker 2: and they're borrowing costs. When rates are below that, I've

1197
01:00:43,680 --> 01:00:45,000
Speaker 2: really I'm going to out and spend and get the

1198
01:00:45,000 --> 01:00:47,680
Speaker 2: economy growing again, like we saw the pandemic when interstrates

1199
01:00:47,720 --> 01:00:50,680
Speaker 2: were crazy low. So I think she'd sort of say,

1200
01:00:50,720 --> 01:00:52,880
Speaker 2: can she see a hundred hundred points of rate cuts

1201
01:00:52,880 --> 01:00:56,560
Speaker 2: in total? She might say that if we have to

1202
01:00:56,560 --> 01:00:59,680
Speaker 2: get the rates back to neutral, she probably wouldn't be

1203
01:00:59,680 --> 01:01:02,160
Speaker 2: this explo because she doesn't want to give forward guidance.

1204
01:01:02,480 --> 01:01:06,200
Speaker 2: But if inflation is under control over the next year

1205
01:01:06,320 --> 01:01:08,479
Speaker 2: or two, there's a few more rate cuts to come

1206
01:01:09,240 --> 01:01:11,480
Speaker 2: that if we do get two point five two five

1207
01:01:11,480 --> 01:01:14,960
Speaker 2: ten five inflation, we're eating a little bit below. If

1208
01:01:14,960 --> 01:01:18,400
Speaker 2: we get unemployment four point two four point three GDP

1209
01:01:18,680 --> 01:01:21,760
Speaker 2: hovering it to rather than two and three quarter percent. Yeah,

1210
01:01:21,760 --> 01:01:24,760
Speaker 2: they they're going to trim them some more. And can

1211
01:01:24,800 --> 01:01:26,520
Speaker 2: I see hundred points c Look, I can see hundred

1212
01:01:26,560 --> 01:01:29,240
Speaker 2: points of cuts. It will not be a smooth path.

1213
01:01:29,400 --> 01:01:31,560
Speaker 2: Every meeting they go twenty five, twenty five, twenty five,

1214
01:01:31,880 --> 01:01:35,240
Speaker 2: it'll be a cut, a pause, pause, cut, depending on

1215
01:01:35,320 --> 01:01:38,240
Speaker 2: that inflation number that comes out quarterly more than the

1216
01:01:38,240 --> 01:01:38,960
Speaker 2: monthly numbers.

1217
01:01:39,320 --> 01:01:46,920
Speaker 1: So, just to finish off, do you think that the

1218
01:01:46,960 --> 01:01:50,640
Speaker 1: interest rate, the rhythm of interest rate changes up or

1219
01:01:50,680 --> 01:01:58,200
Speaker 1: down and also the period between rate changes has been

1220
01:01:59,680 --> 01:02:05,440
Speaker 1: pad structurally change as a result of COVID and probably

1221
01:02:05,440 --> 01:02:09,240
Speaker 1: even the GFC. Just somebody said, are we looking at

1222
01:02:09,280 --> 01:02:11,680
Speaker 1: structural change or we're just looking at just getting ourselves

1223
01:02:11,680 --> 01:02:12,720
Speaker 1: back into that rhythm.

1224
01:02:13,520 --> 01:02:18,360
Speaker 2: Look, I think that's a fantastic question. Something has changed,

1225
01:02:19,160 --> 01:02:24,440
Speaker 2: Something has changed, And a number of people mentioned the

1226
01:02:24,480 --> 01:02:28,120
Speaker 2: effects of technology, artificial intelligence and those things on the

1227
01:02:28,160 --> 01:02:32,360
Speaker 2: economy that we are getting let's call it machinery or

1228
01:02:32,720 --> 01:02:35,960
Speaker 2: to do stuff for us. And one classic example is banking.

1229
01:02:36,120 --> 01:02:39,320
Speaker 2: Who has a checkbook anymore? Who uses cash anymore? So

1230
01:02:39,720 --> 01:02:42,840
Speaker 2: that structural change should have improved the efficiency of banks,

1231
01:02:42,840 --> 01:02:45,960
Speaker 2: and it has. It unambiguously has. They don't have tellers,

1232
01:02:46,000 --> 01:02:49,040
Speaker 2: they're filling in forms and all that other stuff. So

1233
01:02:49,080 --> 01:02:53,760
Speaker 2: that changes the economy, which changes the need and the

1234
01:02:53,960 --> 01:02:57,560
Speaker 2: urgency and the magnitude of interest rate ups and downs.

1235
01:02:58,440 --> 01:03:00,680
Speaker 2: If we take out the pandemic, where were cut for

1236
01:03:00,720 --> 01:03:03,400
Speaker 2: obvious reasons and that was sort of so that's still

1237
01:03:03,440 --> 01:03:05,840
Speaker 2: in people's minds and it's a misleading thing to look at.

1238
01:03:05,880 --> 01:03:08,320
Speaker 2: We've got to look at where we were. Even as

1239
01:03:08,360 --> 01:03:13,200
Speaker 2: you said the GFC my hunches. So I'll answer it

1240
01:03:13,200 --> 01:03:16,160
Speaker 2: this way. My hunch is it over the next five years,

1241
01:03:16,640 --> 01:03:19,600
Speaker 2: if we look at the average Australian cash rate, it'll

1242
01:03:19,640 --> 01:03:22,960
Speaker 2: be in the low three percent range. There were periods

1243
01:03:23,000 --> 01:03:26,280
Speaker 2: like now it's above that because inflation was too high,

1244
01:03:26,640 --> 01:03:28,800
Speaker 2: and maybe in two years time it'll be two and

1245
01:03:28,800 --> 01:03:31,800
Speaker 2: a half percent because oh the Trump tariffs have hit

1246
01:03:31,840 --> 01:03:35,080
Speaker 2: the economy and we've got a problem occurring because immigration

1247
01:03:35,200 --> 01:03:37,880
Speaker 2: is too low. You haven't forbid, you know, And so

1248
01:03:38,040 --> 01:03:39,640
Speaker 2: I think that that's going to be more than norm.

1249
01:03:39,720 --> 01:03:43,360
Speaker 2: So we're returning to still you know, four or five

1250
01:03:43,440 --> 01:03:46,040
Speaker 2: or six rate hikes and cuts, but at a lower

1251
01:03:46,120 --> 01:03:48,920
Speaker 2: level around that three ish percent, So down to two

1252
01:03:48,920 --> 01:03:51,480
Speaker 2: when things are crooked, back above four when things are burning.

1253
01:03:51,640 --> 01:03:53,440
Speaker 1: So yeah, I sort of agree, And I think you

1254
01:03:53,440 --> 01:03:56,080
Speaker 1: and I had this conversation a long time ago, maybe

1255
01:03:56,280 --> 01:03:59,680
Speaker 1: like half a dozen meetings ago, where we thought three

1256
01:04:00,760 --> 01:04:03,560
Speaker 1: it seems to be that magic number for a whole

1257
01:04:03,560 --> 01:04:11,439
Speaker 1: lot of things, du dyp wage growth, unemployment. Yes, maybe

1258
01:04:11,600 --> 01:04:14,200
Speaker 1: three is a bit being a bit optimistic, but definitely

1259
01:04:14,240 --> 01:04:16,880
Speaker 1: inflation and perhaps even cash rate.

1260
01:04:17,200 --> 01:04:19,920
Speaker 2: The official you will take it, Yeah, half two and

1261
01:04:19,920 --> 01:04:24,080
Speaker 2: a half three, three, And because that is that's a

1262
01:04:24,120 --> 01:04:26,440
Speaker 2: really nice way of putting it. And when we deviate

1263
01:04:26,560 --> 01:04:29,520
Speaker 2: from three, let's say things are too hot too cold

1264
01:04:29,640 --> 01:04:33,200
Speaker 2: you depending which measure you're looking at, that.

1265
01:04:32,400 --> 01:04:35,200
Speaker 1: That in itself is a structural change. I think was yes,

1266
01:04:35,320 --> 01:04:37,080
Speaker 1: back in the day, it was five yeah, totally. So

1267
01:04:37,400 --> 01:04:40,760
Speaker 1: that magic number was five percent unemployment. Wow, that's low.

1268
01:04:40,920 --> 01:04:43,600
Speaker 2: Yeah, and five percent cash right, yeah, that's what we

1269
01:04:43,720 --> 01:04:47,360
Speaker 2: got to six and seven heaven forbid. So yeah, things

1270
01:04:47,360 --> 01:04:48,520
Speaker 2: have changed structurally.

1271
01:04:48,520 --> 01:04:51,560
Speaker 1: It's sort of you know, it's sort of changes position

1272
01:04:51,920 --> 01:04:55,200
Speaker 1: and and this is this is a you know, really

1273
01:04:55,280 --> 01:04:58,600
Speaker 1: nothing of anything, just a thought thought bubble. But you know,

1274
01:04:58,640 --> 01:05:00,400
Speaker 1: I just sort of shooting the b is now. But

1275
01:05:02,000 --> 01:05:05,120
Speaker 1: I think that structural change from five to three is

1276
01:05:05,760 --> 01:05:07,800
Speaker 1: putting aside all the COVID crap and everything. But just

1277
01:05:07,800 --> 01:05:10,120
Speaker 1: so the new the new let's call it hate the

1278
01:05:10,360 --> 01:05:14,120
Speaker 1: new normal. Let's say three three territory. I actually think

1279
01:05:14,160 --> 01:05:16,080
Speaker 1: another structural change will be there won't be five or

1280
01:05:16,120 --> 01:05:18,000
Speaker 1: six rates up or five or six rates down. I

1281
01:05:18,000 --> 01:05:20,800
Speaker 1: think it'll be like some up being some disaster that

1282
01:05:20,840 --> 01:05:24,320
Speaker 1: we have to deal with. But if it's just normal economy,

1283
01:05:24,480 --> 01:05:26,760
Speaker 1: I think we're just we'll see one or two changes

1284
01:05:26,840 --> 01:05:28,840
Speaker 1: up and one or two changes down. You know, they

1285
01:05:28,880 --> 01:05:32,360
Speaker 1: get to go three three, twenty five, three fifty three,

1286
01:05:32,520 --> 01:05:35,120
Speaker 1: two point seventy five, two fifty and it'll just sort

1287
01:05:35,160 --> 01:05:36,400
Speaker 1: of hover around that period.

1288
01:05:36,200 --> 01:05:38,920
Speaker 2: We stay there for longer before I wish it would.

1289
01:05:39,480 --> 01:05:43,680
Speaker 1: I'm hoping that's like we don't have this volatility because

1290
01:05:43,760 --> 01:05:45,960
Speaker 1: that we it gives you an eye something to talk

1291
01:05:46,000 --> 01:05:48,800
Speaker 1: about every night. But I think from a point of

1292
01:05:48,880 --> 01:05:51,760
Speaker 1: view of all these things like business confidence, consumer confidence,

1293
01:05:52,280 --> 01:05:54,240
Speaker 1: et cetera, I think we need to get to that

1294
01:05:54,360 --> 01:05:56,040
Speaker 1: territory where.

1295
01:05:55,880 --> 01:05:59,320
Speaker 2: It's stability is a good thing. In fact, yeah, I'm

1296
01:05:59,360 --> 01:06:02,720
Speaker 2: speaking of the converted here. I'm sure one thing that

1297
01:06:03,080 --> 01:06:05,160
Speaker 2: business doesn't like this is in the conversations. I have

1298
01:06:05,200 --> 01:06:07,720
Speaker 2: a lot of business people of all sorts of colors

1299
01:06:07,720 --> 01:06:11,920
Speaker 2: and stripes whatever. In a way, and this relates to

1300
01:06:11,960 --> 01:06:14,280
Speaker 2: things like the carbon price and things in a way,

1301
01:06:14,320 --> 01:06:17,920
Speaker 2: they don't care what the policy is or superannuation policy

1302
01:06:18,160 --> 01:06:21,200
Speaker 2: whatever is. Just don't change in every five minutes government

1303
01:06:21,440 --> 01:06:24,040
Speaker 2: of the day. Okay, if we have a compos okay,

1304
01:06:24,120 --> 01:06:27,120
Speaker 2: that's in, I'll work around that. Oh now it's been

1305
01:06:27,160 --> 01:06:29,000
Speaker 2: repealed and now it's coming back in on our having

1306
01:06:29,040 --> 01:06:32,640
Speaker 2: nuclear I now having just you know that volatility in

1307
01:06:32,720 --> 01:06:35,280
Speaker 2: that sort of policy is something that businesses hate. So

1308
01:06:36,240 --> 01:06:38,680
Speaker 2: they can live with. They can live with, you know,

1309
01:06:38,760 --> 01:06:42,760
Speaker 2: a policy that's in place that doesn't change.

1310
01:06:42,400 --> 01:06:45,280
Speaker 1: But then if I'll quickly finish off of this, we

1311
01:06:45,760 --> 01:06:50,520
Speaker 1: don't want to bore our listeners. But if that is correct,

1312
01:06:51,360 --> 01:06:54,680
Speaker 1: and I agree with you therefore, and given the way

1313
01:06:54,800 --> 01:06:59,480
Speaker 1: governments poll today, does that mean then we're not going

1314
01:06:59,520 --> 01:07:02,680
Speaker 1: to have any real budgets? Is that the reason why

1315
01:07:02,720 --> 01:07:04,080
Speaker 1: we're just going to have I just thought we just

1316
01:07:04,160 --> 01:07:06,400
Speaker 1: had like because you know, they want to poll. I

1317
01:07:06,400 --> 01:07:07,440
Speaker 1: mean they want to get reelected.

1318
01:07:07,440 --> 01:07:08,240
Speaker 2: They want to get re elected.

1319
01:07:08,280 --> 01:07:10,120
Speaker 1: Yes, and that's and they poll and they find out

1320
01:07:10,160 --> 01:07:13,600
Speaker 1: exactly what you just said, let's not change. I think

1321
01:07:13,680 --> 01:07:18,800
Speaker 1: let's just let's not make any big ballsy changes Ala Costello,

1322
01:07:19,920 --> 01:07:20,400
Speaker 1: et cetera.

1323
01:07:21,200 --> 01:07:24,960
Speaker 2: I fear you're right. The only thing I'll say that

1324
01:07:25,160 --> 01:07:28,560
Speaker 2: can overcome that is when you get someone who can

1325
01:07:28,600 --> 01:07:31,800
Speaker 2: sell the story really well. And as I said, if

1326
01:07:32,520 --> 01:07:35,720
Speaker 2: whatever happens at the election or whatever, the person and

1327
01:07:35,760 --> 01:07:39,240
Speaker 2: it is a personality, I think it has to bring

1328
01:07:39,320 --> 01:07:41,920
Speaker 2: the electorate along with you. And that's what Keating and

1329
01:07:42,000 --> 01:07:46,600
Speaker 2: Castillo did with the GST tax reform, tariffs, all that

1330
01:07:46,680 --> 01:07:51,680
Speaker 2: stuff that occurred, floating dollars and banking deregulation. They were

1331
01:07:51,680 --> 01:07:55,200
Speaker 2: out there arguing the point till they're blue in the

1332
01:07:55,200 --> 01:07:57,320
Speaker 2: face and there was a lot of resistance a lot

1333
01:07:57,320 --> 01:07:59,160
Speaker 2: of those changes, don't you. Yeah, we think I don't

1334
01:07:59,200 --> 01:08:01,480
Speaker 2: remember that. People, Oh no, you can't let the foreign

1335
01:08:01,520 --> 01:08:03,360
Speaker 2: banks in here. I know, you can't let bloody non

1336
01:08:03,400 --> 01:08:03,920
Speaker 2: banks come in.

1337
01:08:03,920 --> 01:08:06,680
Speaker 1: And well, I remember two thousand and July first July

1338
01:08:06,720 --> 01:08:09,480
Speaker 1: two thousand and the gest came in. We fell in

1339
01:08:09,480 --> 01:08:14,960
Speaker 1: a hole between houses stop getting built more than just

1340
01:08:15,000 --> 01:08:18,519
Speaker 1: sub getting lanted, because everything was ten percent more yep.

1341
01:08:19,120 --> 01:08:23,240
Speaker 2: And that sort of was so that and it was

1342
01:08:23,280 --> 01:08:26,640
Speaker 2: still a good reform. Yeah, totally, absolutely essential reform. I

1343
01:08:26,720 --> 01:08:29,840
Speaker 2: arguably should have been a bit more bold, if you like.

1344
01:08:30,640 --> 01:08:34,240
Speaker 2: But the thing, yeah, I'd like to see a salesperson,

1345
01:08:34,520 --> 01:08:37,519
Speaker 2: a political salesperson this is come and say this is

1346
01:08:37,640 --> 01:08:39,920
Speaker 2: what we need and why we need it, and they'll

1347
01:08:40,080 --> 01:08:43,040
Speaker 2: argue the case about why. Okay, I'll be a bit

1348
01:08:43,120 --> 01:08:48,439
Speaker 2: radical for a second. It's why taxes should increase. Nobody's

1349
01:08:48,439 --> 01:08:50,320
Speaker 2: going to sell that politically. And I don't want to

1350
01:08:50,320 --> 01:08:53,200
Speaker 2: pay more tax either, you know. But if people are

1351
01:08:53,240 --> 01:08:54,760
Speaker 2: told we've got to pay a bit more tax to

1352
01:08:54,800 --> 01:08:59,960
Speaker 2: cover our budget deficit, to cover our aging population, maybe

1353
01:09:00,000 --> 01:09:01,560
Speaker 2: I will be grudgingly supported.

1354
01:09:01,600 --> 01:09:04,639
Speaker 1: But good one is, well, I'm going to reducing them

1355
01:09:04,680 --> 01:09:06,280
Speaker 1: tax if I'm going to increase Jesse.

1356
01:09:06,840 --> 01:09:09,800
Speaker 2: Exactly trade off. Yes, correct, that's that's the one that

1357
01:09:09,840 --> 01:09:11,560
Speaker 2: a lot of people talk about. But yes, I think so,

1358
01:09:11,800 --> 01:09:13,840
Speaker 2: but we haven't it's going to be I haven't heard

1359
01:09:13,840 --> 01:09:15,519
Speaker 2: that argument for many a long day.

1360
01:09:16,600 --> 01:09:18,839
Speaker 1: Maybe tonight you and I are both going to get surprised.

1361
01:09:18,840 --> 01:09:21,280
Speaker 1: Maybe the Don's going to come out and sort of

1362
01:09:21,280 --> 01:09:23,760
Speaker 1: say we're going to do that, But I doubt very much,

1363
01:09:23,760 --> 01:09:26,360
Speaker 1: because they do the same polling that everyone else does,

1364
01:09:26,400 --> 01:09:29,800
Speaker 1: and they want to win elections just like everyone else does.

1365
01:09:30,720 --> 01:09:35,920
Speaker 1: Cookie or will we revealed in our next meeting, which

1366
01:09:35,960 --> 01:09:39,360
Speaker 1: is towards the towards middle. May you and I meet

1367
01:09:39,360 --> 01:09:42,160
Speaker 1: a couple of days before THEBA and we'll see a

1368
01:09:42,200 --> 01:09:45,080
Speaker 1: lot of numbers and and I know you'll be emailing

1369
01:09:45,120 --> 01:09:49,000
Speaker 1: me straight after the April numbers come out. Holy, this

1370
01:09:49,080 --> 01:09:52,040
Speaker 1: is this is good, mate,