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Speaker 1: Don't chain other.

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Speaker 2: Welcome to YBr property in size mate.

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Speaker 1: Thanks for having me.

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Speaker 3: Last time you and I sat together maybe two years ago,

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Speaker 3: I can't remember. Probably summit, Yeah, probably the AFR Probably summit.

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Speaker 3: It might be last year I did because I was

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Speaker 3: just marking around with the audience, as we tend to do.

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Speaker 3: But one of the things in that meeting, and you

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Speaker 3: are the chief economists and you are currently head of

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Speaker 3: Investment Strategy at the AMP Bank, is an AMP Bank

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Speaker 3: AMP group.

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Speaker 1: What's a group?

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Speaker 3: AMP Group, which for most people who may not know

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Speaker 3: that's it is a massive organization the size of a

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Speaker 3: public service in terms of its size.

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Speaker 2: You've been there for a long time.

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Speaker 3: You guys did research on lots of asset classes, and

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Speaker 3: I want to talk to you about two asset classes.

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Speaker 1: That is.

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Speaker 3: Interest rates in terms of being you know, not so

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Speaker 3: much asset class, but interest rates and what's coming up

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Speaker 3: in the thirty September. But probably importantly, I'd like to

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Speaker 3: talk to you at the residential property market asset class.

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Speaker 3: At that AFR summit, it was called in order to

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Speaker 3: get a handle on the government's strategy laid parties strategy

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Speaker 3: for building one point two million residential dwellings in Australia

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Speaker 3: across the country over a five year period. What you

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Speaker 3: were there, you talked to you listen to developers, address

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Speaker 3: the audience on the panel we're on. There was some

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Speaker 3: aid developer on there. What do you think about that

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Speaker 3: ambitious policy?

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Speaker 1: Well, that's I mean theory, that's the sort of thing

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Speaker 1: you need to do because of the shortage of housing

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Speaker 1: in Australia. But the problem is that it wasn't achievable

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Speaker 1: and to some degree it now lacks credibility. So that

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Speaker 1: was a couple of years ago. So it was five

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Speaker 1: million homes over five years, which is two one hundred

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Speaker 1: and forty thousand homes a year, and we're currently running it,

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Speaker 1: I don't know, maybe one eighty thousand dwellings a year,

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Speaker 1: so we're seventy thousand short. The problem is that when

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Speaker 1: we had that af Property Summit two years ago, the

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Speaker 1: population growth was surging. We were up around what six

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Speaker 1: hundred thousand population growth, five hundred thousand of which was

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Speaker 1: net migration, and of course that meant that the underlying

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Speaker 1: demand for housing in Australia was through the roof and

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Speaker 1: it had led to a huge shortage, which we think

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Speaker 1: we still have. I think we're about two hundred to

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Speaker 1: three hundred thousand dwellings short in Australia, and so even

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Speaker 1: though population growth has slowed back down again, still pretty

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Speaker 1: strong that it's about three hundred hundred thousand, which is

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Speaker 1: more than a normal it's more than normal. Yeah, you'd

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Speaker 1: be a little bit below that again, but it slowed

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Speaker 1: down and we are seeing some pick up bend home construction,

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Speaker 1: not a lot, so maybe on an annual basis we've

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Speaker 1: now come back into balance. Underlying demand for housing is

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Speaker 1: probably running around one hundred and eighty to one hundred

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Speaker 1: and ninety thousand dwellings. Home building is about the same,

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Speaker 1: so you're back in balance, but you still have that shortfall,

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Speaker 1: the backlock, the backlock which is built up, and unless

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Speaker 1: we can build something like two hundred and forty thousand

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Speaker 1: homes a year or sixty seventy thousand more than we're

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Speaker 1: currently building, that backlog will remain, and that means ongoing

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Speaker 1: upwards pressure on rents. It's cooled off a little bit,

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Speaker 1: but looks like the rental growth is bottoming out, starting

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Speaker 1: to pick up again and on going upwards. Pressure on

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Speaker 1: home prices in Australia and you can talk all you

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Speaker 1: want about negative gearing and capital gains tax discount and

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Speaker 1: super funds investing in housing and so on and so forth,

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Speaker 1: but that the bottom line problem as we just don't

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Speaker 1: build enough houses relative to the number of people in

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Speaker 1: Australia and demand is greater than supply. And guess what

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Speaker 1: happens when that happens, house prices go up.

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Speaker 3: So, I mean, you're a smart guy, you've been around

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Speaker 3: a million years and you have a PhD in economics,

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Speaker 3: you do and head up the analytical You've got a

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Speaker 3: big team that AMPVG. You head up the analytical team

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Speaker 3: in terms of their reporting to you to have me

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Speaker 3: idea what the solution could look like.

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Speaker 1: Well, it does mean at two things. You've got to

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Speaker 1: get the population growth down to a sustainable level. That's

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Speaker 1: part of it, and the other part of it is

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Speaker 1: just got to build more homes. And so I thought,

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Speaker 1: when they come up with that number, it's like a

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Speaker 1: good objective. But unless you can actually do that, then

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Speaker 1: it doesn't happen. Part of it in the short term

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Speaker 1: has to be more units. Unfortunately, I'm uit skeptical of

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Speaker 1: too many units because you end up with urban ghettos.

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Speaker 1: And overcrowding, and people just get annoyed in that jammed

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Speaker 1: up situation. But I think ultimately, if we want to

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Speaker 1: continue to grow our population at a decent rate, we've

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Speaker 1: got to expand beyond our big cities and decentralize, and

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Speaker 1: that to me is probably the longer term solution to

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Speaker 1: this short term. Yeah, it's more units. Back in was

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Speaker 1: it twenty sixteen seventeen, I think we got close. We've

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Speaker 1: got to about two hundred and thirty thousand dwellings in

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Speaker 1: one year, so we got close. But back then there

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Speaker 1: was a lot more units in the mix, a lot

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Speaker 1: less houses. So now you've got a lot more houses

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Speaker 1: in the mix, less units. Obviously, it requires more resources

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Speaker 1: to build a standalone house that it does a unit.

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Speaker 1: So you've just got to make it easier for developers

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Speaker 1: to get the property, rezone it or whatever is required,

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Speaker 1: get the approvals, make that faster. You've got to find

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Speaker 1: ways to put up properties quicker. It's now taking as

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Speaker 1: we heard of this productivity summit the government had a

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Speaker 1: month ago, it's taking fifty percent longer today than it

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Speaker 1: did ten years ago to build a home or you know,

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Speaker 1: which is just a joke in the great scam of things.

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Speaker 1: We've got more planners in councils and outside of councils

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Speaker 1: than ever before, but yet their productivity in terms of

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Speaker 1: getting approvals through has just slowed down to a crawl.

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Speaker 1: So you've got to look at all these sorts of things.

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Speaker 1: But as I said, ultimately you just keep jamming more

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Speaker 1: people into Sydney or Melbourne, you're just going to end

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Speaker 1: up with overcrowding, no matter how beautif all you make

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Speaker 1: the apartments. You've got to go beyond that, if you

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Speaker 1: look at places that have more affordable housing, even though

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Speaker 1: they've got more people than us Europe, I mean Germany.

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Speaker 1: Germany's got far less land that you can live on

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Speaker 1: than we do. I know, Australia it's all desert, well,

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Speaker 1: big chunk of it isn't. They've got far more livable

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Speaker 1: land than we do. About Their home prices and the

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Speaker 1: home price ratios are far more affordable than are in Australia.

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Speaker 1: And they managed to do that by having lots of

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Speaker 1: big cities. But they have lots of towns outside that

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Speaker 1: which are sizeable cities in themselves. One hundred and fifty

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Speaker 1: two hundred thousand year and they spread it around, whereas

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Speaker 1: we haven't really done that, We've just concentrated on a

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Speaker 1: big cities. So I saw Anthony Veller.

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Speaker 3: Anthony was on our podcast recently from Westpac and he

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Speaker 3: has subscribed to you. In fact, he's made a submission

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Speaker 3: to the Productivity not the PRODUC commission to the round

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Speaker 3: Table along those lines about sort of gearing up regional

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Speaker 3: areas put them in a position to sort of for

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Speaker 3: us to put our populations in those environments, you know,

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Speaker 3: and there's build more houses in those areas where you know, like.

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Speaker 1: Theoretically it might be cheaper.

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Speaker 3: Theoretically it might happen quicker because you're not putting the

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Speaker 3: you don't have the same impact, for example, on the

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Speaker 3: infrastructure that you might have in Sydney if you want

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Speaker 3: to put another couple of thousand houses, because Sydney has

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Speaker 3: already got five million people. So what does the does

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Speaker 3: the AMP have a position on? Did you have a

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Speaker 3: position for the round table?

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Speaker 2: Do you guys? Did you make put one in?

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Speaker 1: I did write. I've written lots of research on what

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Speaker 1: we need in terms of productivity generally and in terms

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Speaker 1: of housing. And my position for a long time has been,

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Speaker 1: you know, We've got to decentralize and make our regional

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Speaker 1: centers bigger centers than they are. We should people living

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Speaker 1: in Orange or and have decent transport to get to

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Speaker 1: and from.

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Speaker 3: Yeah, you need a bit of road because that is

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Speaker 3: not a good one, and you need a better train

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Speaker 3: system to do that.

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Speaker 1: So they're the sort of things we should be thinking

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Speaker 1: about pushing it through local councils. I mean, this is

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Speaker 1: where the Nimbi thing comes in, and I kind of think,

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Speaker 1: you know, I'm lucky. I live in a beautiful part

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Speaker 1: of Australia and my parents went there in Sydney's Northern Beaches,

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Speaker 1: and they went there when no one wanted to go there,

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Speaker 1: so it was real cheap and it was sort of

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Speaker 1: halfway long way away in those days, long way away.

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Speaker 1: It's still a long way way. It still takes me

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Speaker 1: for every to get in. But it's worth living there.

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Speaker 1: It's quality of life. If you start jamming lots of

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Speaker 1: apartments in there, that quality of life will go down.

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Speaker 1: So in that sense, yeah, I'm a bit of a nimby,

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Speaker 1: But then I reckon that's the story for the whole

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Speaker 1: of the city. You jam too much stuff in the

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Speaker 1: quality of life will go down. People will complain that

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Speaker 1: it's going to take it's taking longer and longer to

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Speaker 1: get somewhere. You go on the Metro these days, and

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Speaker 1: the Metro is fantastic, don't get me wrong, it is fantastic,

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Speaker 1: but guess what you get it on at peak hour.

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Speaker 1: It's chockers already, it's chockers. It's the same with our freeways.

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Speaker 1: We build these freeways, you start with two lanes and

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Speaker 1: then we realized five is jammed. Oh we'll have to

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Speaker 1: widen it, make it three lanes or something. And then

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Speaker 1: a little while we're going to do it again. You know,

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Speaker 1: this is going to keep going on and on and on,

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Speaker 1: and it's not going to get anywhere. It's just going

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Speaker 1: to lead to more frustration, people feeling more like their

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Speaker 1: quality of life is going down. And that's not the

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Speaker 1: way to go. But if you can have a situation

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Speaker 1: where more people can live in Orange or Geelong or

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Speaker 1: Port mcquarie or wherever it is, then that I think

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Speaker 1: is a sustainable solution. What we've got at present is

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Speaker 1: not sustainable.

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Speaker 3: So and what do you think about I mean, we're

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Speaker 3: doing our run round table there, it is right there,

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Speaker 3: But what do you think about in order to attract

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Speaker 3: people to live there. Sure, the house might be at

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Speaker 3: a price they can afford much more affordable. It might

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Speaker 3: be actually better to live in a place like Orange

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Speaker 3: because it's you know, you're jammed as hard as you

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Speaker 3: are in the city and here in Sydney. What be

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Speaker 3: think about the sort of sorts of indusies where the

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Speaker 3: government says, and I remember this happening in the eighties,

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Speaker 3: we used to have for people affected in a drought area,

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Speaker 3: if you're a farmer, usually get a special tax status

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Speaker 3: and they were sort of declared.

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Speaker 1: The special economics, special designs. Yes, tax rates, yeah, and

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Speaker 1: they gave them lower tax rates.

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Speaker 3: I mean, I wonder whether or not anybody's ever thought

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Speaker 3: about enticing people live in those like Orange, like Balan

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Speaker 3: or Lake Port McCray, like the place you mentioned wog

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Speaker 3: or wherever big big areas and instead of people, if

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Speaker 3: you go and live there and work there, and particularly

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Speaker 3: if you're a professional so you're a professional services person,

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Speaker 3: that your tax rate there's a rebate you actually same,

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Speaker 3: but you get a rebate for living in those environments.

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Speaker 3: That would attract developers as well, because developers say, we

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Speaker 3: hang and I can get some I can find some

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Speaker 3: decent bias here, and all of a sudden we would

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Speaker 3: get more demand.

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Speaker 2: From those areas. Why do you think, I mean, you've

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Speaker 2: you've been watching.

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Speaker 3: This space, commenting on this space, probably being consulted to

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Speaker 3: do by various treasurers from various parts of government over

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Speaker 3: the years.

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Speaker 2: Why do you think governments don't embrace the full.

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Speaker 3: Deal we go hard at it and really push into

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Speaker 3: getting people into more regional areas.

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Speaker 1: It's a bit of a mystery to me. I mean,

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Speaker 1: to some degree, maybe they're too purists. They don't interfere

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Speaker 1: in the free workings of the market. But then they

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Speaker 1: talk about user pays anyway totally. You know, it's the

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Speaker 1: case with roads and this challenge now, how you make

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Speaker 1: people electric cars pay? So when you live in a city,

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Speaker 1: you're consuming more resources to operate that city, Whereas if

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Speaker 1: you're in a regional center, you should get a lower

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Speaker 1: tax rate. I don't know how it happens, but maybe

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Speaker 1: it should be a reduction on your income tax rate

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Speaker 1: or something, or just rebate rebate, give you a rebate

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Speaker 1: for living in that If you can show that you're

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Speaker 1: living outside a big capital city, then you get a

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Speaker 1: rebate on your income tax. Likewise, for corporates, if they

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Speaker 1: set up out there, they get a tax reduction on

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Speaker 1: their corporate tax. Totally my low corporates, you're like to

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Speaker 1: do that. Yeah, that's the way it should work. And

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Speaker 1: I think we had a fantastic opportunity at the time

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Speaker 1: of the pandemic because it gave us a pause in immigration.

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Speaker 1: People were working from home. That gave us a little

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Speaker 1: window to think about, well, how better could we rearrange ourselves.

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Speaker 1: And at that point in time, people were happy to

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Speaker 1: move out to regional areas. Then they find the pandemic

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Speaker 1: ends and they've all to go back to the city.

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Speaker 1: So we go back to traffic jams and things. But

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Speaker 1: these are the sort of thinking. This is the sort

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Speaker 1: of thinking. We need different sort of thinking to sort

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Speaker 1: of give people a stick and a carrot to get

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Speaker 1: out there in these regional areas. Regional centers have been

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Speaker 1: complaining for years that they've lost their numbers, that regional

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Speaker 1: Australia is in decline. This would reinvigorate it, This would

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Speaker 1: get it going again, and I think it would be

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Speaker 1: a fantastic thing to do, But unfortunately government doesn't seem

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Speaker 1: to be that keen. Maybe it's because this is the

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Speaker 1: gen Z conspiracy theory. Well, it's just the government's run

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Speaker 1: by baby boomers and gen x and they don't want

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Speaker 1: to do anything to stop property prices continuing to searche.

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Speaker 1: Maybe that's it, and so they don't really have a

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Speaker 1: serious effort because most voters, out of interest are property owners.

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Speaker 3: So when it comes to economic policy, foreigny government usually

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Speaker 3: you would expect to be based on pretty sound principles.

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Speaker 3: But one of the principles that I've always thought in

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Speaker 3: relational property at least and economic policy, but one of

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Speaker 3: the principles I thought was quite an interesting starting point

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Speaker 3: for Australia is that Australia is one of the few

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Speaker 3: countries in the world that has fifty I think it

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Speaker 3: used to be fifty close to fifty five percent of

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Speaker 3: the population living in three cities.

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Speaker 2: There's no other country does it.

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Speaker 1: It's most measures of urbanization, Australia is at the very

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Speaker 1: high adea totally. I think in terms of people living

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Speaker 1: in big cities is ninety five percent or some stupid

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Speaker 1: number like that. America was like something like eighty percent.

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Speaker 1: We have a really ridiculous situation in Australia. So if

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Speaker 1: you want to explain expensive property here, it's that function

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Speaker 1: that high urbanization concentration in big cities. They're all on

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Speaker 1: the coast, and coastal cities tend to be higher prices

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Speaker 1: than elsewhere. And then of course we put restrictions around

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Speaker 1: the cities, like Sydney is boxed in. And I'm not

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Speaker 1: saying that's a bad thing. It's actually a good thing.

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Speaker 1: We've got all these national parks and what have you

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Speaker 1: and the mountains, but it restricts how much you can

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Speaker 1: actually do. Ultimately.

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Speaker 2: Yeah, And if you had a piece of white paper though.

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Speaker 3: And you were and you were running a term to

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Speaker 3: review something and to come up with a policy, you

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Speaker 3: would actually put all your risks down. And one of

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Speaker 3: the risks was would be concentrated risk for Australia because

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Speaker 3: there is a concentration to me, people living in three

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Speaker 3: cities and.

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Speaker 1: That's a concentrated risk.

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Speaker 2: Deal.

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Speaker 3: Like, if you're running a business, if you're reporting to AMP,

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Speaker 3: you would look at risks for the business, and as

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Speaker 3: just as a pure economist, that would be one of

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Speaker 3: the first things you look at. And one of the

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Speaker 3: things and I think so not only is your solution

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Speaker 3: a good idea, but you solution seems to me to

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Speaker 3: solve the concentrated risk problem. And it's to me, I

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Speaker 3: just do not understand why it has never been addressed.

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Speaker 3: I don't understand the politics of it. But I thought

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Speaker 3: and have perhaps government have asked you about it? Have

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Speaker 3: they ever come to you and see, Look, Shane, look,

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Speaker 3: can you give us some ideas what you think about this?

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Speaker 2: As the treasurer picked up the phone.

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Speaker 1: Not in recent times, no, not in recent previous treasures

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Speaker 1: previous local member did. The local member was Joseph Velenski

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Speaker 1: and he asked me about it a few years ago.

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Speaker 1: Then he lost his seat, so it didn't help help

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Speaker 1: to their credit. I mean, Whitlam did a lot of

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Speaker 1: stupid things economically, yeah, but they did have a focus

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Speaker 1: on decentralization or we Wodonga was put up as an

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Speaker 1: ideal place and it probably still is an ideal And booms.

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Speaker 3: It's amazing Aubrey, those two cities, those towns what we

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Speaker 3: call they are both booming as they are big distribution

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Speaker 3: points for wars and everybody else for around the country.

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Speaker 3: Like they are hubs, massive hubs and supports a lot

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Speaker 3: of jobs and By the way, what's interesting about Aubrey

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Speaker 3: not what Dones haven't been there for well, but Aubrey

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Speaker 3: is that house prices boomed there really, Yeah, because there's

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Speaker 3: a shortage of property. Because I was down there doing

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Speaker 3: something that they were telling me we're go an office

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Speaker 3: down there, and they were telling me the same thing.

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Speaker 3: If I could just flip over to the economy, so

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Speaker 3: you know, you know, on the twentieth, on the thirtieth,

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Speaker 3: I should say, we're having the RBA.

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Speaker 2: Meeting twenty ninth, is it.

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Speaker 1: It's a two day meeting though, isn't Monday Tuesday, So

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Speaker 1: they give us the result on the.

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Speaker 3: Tuesday, so we get the result on the twenty I

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Speaker 3: doing so they're having a meeting. You know.

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Speaker 2: Of course we've had three rate reductions this year. We

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Speaker 2: miss one in July.

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Speaker 1: Sorry, I'm right, you're right. Yes, the next next Tuesday

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Speaker 1: is the thirty, right.

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Speaker 3: So the sov'll o pine and or give their opinion

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Speaker 3: anyway at two thirty one on the on the third

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Speaker 3: on Tuesday. So we missed a rate reduction in July,

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Speaker 3: whilst the market pretty much have pushed it in and

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Speaker 3: said it was going to happen, and the money markets

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Speaker 3: also responded prior to the meeting, two questions for you,

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Speaker 3: what do you think about them?

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Speaker 2: For a consumer a borrower?

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Speaker 3: What do you think about today these days under the

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Speaker 3: new regime of the Reserve Bank, under the new two

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Speaker 3: Reserve bank boards of what do you think about money

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Speaker 3: market using money markets? Predictions about rate reductions based on

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Speaker 3: them looking forward as to what's going to happen in

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Speaker 3: the comedy versus the way the IRBA seems these days

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Speaker 3: to be only interested in one thing, one thing alone.

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Speaker 3: What did yesterday's data tell me? And I'll give you

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Speaker 3: the out, I'll tell you what I'm going to do

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Speaker 3: with the interest rates. There seems to be a shift.

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Speaker 3: There's no premptive moves anymore.

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Speaker 1: What do you think about that?

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Speaker 2: And what would you say?

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Speaker 1: Well, that's the problem, But that's problem. We used to

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Speaker 1: manage it more on a prempty BASI. Yes, these would

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Speaker 1: be a forecast and our views that the rbas that is,

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Speaker 1: and then we'd send interest rates on the back of that.

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Speaker 1: Then that seemed to change around the time of the

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Speaker 1: pandemic or just after, and it became a little bit

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Speaker 1: more backward looking. Now it's it's it seems to me

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Speaker 1: anyway more backward looking, and what the RBA will tell

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Speaker 1: you on any particular day will be a function, as

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Speaker 1: you say, of the data that's just come out. And

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Speaker 1: then that's why this year we've seen sort of an

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Speaker 1: RBA which seems to run hot and cold.

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Speaker 2: It seems hot and cold.

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Speaker 1: Yeah, it is hot and cold back in February, but

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Speaker 1: it seemed rather hawkish, and then then.

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Speaker 2: July didn't cut.

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Speaker 1: It just so it's gone all over the place. So

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Speaker 1: the July meeting didn't cut, so it cut in February. May,

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Speaker 1: the July miss and then August. May was quite dubbish.

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Speaker 1: So they were hawkish in February and April. I thought

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Speaker 1: dubbish in May. Back to hawkish again in July. Then

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Speaker 1: they cut in August and they were dubbish. Now I

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Speaker 1: suppose it's September, so they'll probably be a bit hawkish

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Speaker 1: again because again, which seems a bit odd in a way.

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Speaker 1: It's like you're responding to the most recent data, and

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Speaker 1: we know the data itself runs hot and cold. You

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Speaker 1: go through phases where the inflation numbers are a bit

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Speaker 1: on the upside, then it goes through a phase where

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Speaker 1: they're a bit on the downside. And the reserve back

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Speaker 1: to some degree, seems to be reflecting that because it's

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Speaker 1: it's become a bit more backward looking than it used

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Speaker 1: to be.

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Speaker 3: Well, and if we cant just go back, like if

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Speaker 3: we go back to the February meeting, which I think

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Speaker 3: was the eighth of February this year, what sort of

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Speaker 3: got me to be confused was off off.

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Speaker 2: The back of the data, I.

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Speaker 3: Wouldn't have expected rate reduction at that point, but it

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Speaker 3: seemed like they took the previous two quarters. I forgot

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Speaker 3: about the quarters before that, and the previous two quarters.

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Speaker 3: I think, as I recall show, we're like showing a

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Speaker 3: run rate of point five each quarter.

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Speaker 2: So we're looking at it sort of a two ye low.

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Speaker 3: Side, And it looked like she ignored the first two quarters.

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Speaker 2: Of the year and gave us a rate reduction off

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Speaker 2: the back of that.

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Speaker 3: It was like, you know, and she pretty much blindside

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Speaker 3: of the market because the money market was running a

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Speaker 3: different direction. Then, as you say, there was another rate

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Speaker 3: reduction a bit later on, and then the July meeting

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Speaker 3: she said, no, no, I'm not going to do that

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Speaker 3: because it looks pretty obviously we want more data, so

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Speaker 3: she waited to hear what she's gonna hear it.

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Speaker 2: I think twenty eighth of.

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Speaker 1: July July was when it was all those priced inland

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Speaker 1: and most economists one or two were looking for a cut.

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Speaker 3: Well, the ones who said the ones who said we

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Speaker 3: predicted she would make a move, I didn't really hear

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Speaker 3: from them saying that they wouldn't. But there's plenty there's

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Speaker 3: a couple of them said it. But but but the

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Speaker 3: July one, she was definitely saying she She basically said

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Speaker 3: to us that they said to us, I need more data.

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Speaker 3: I'm going to wait for the twenty eighth ABS stuff

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Speaker 3: to come out in the twentieth. The twenty I thought

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Speaker 3: of a day that came out. Then they gave us

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Speaker 3: a reduction in August. Do you think the new program?

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Speaker 3: But it looks to me the new program of just

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Speaker 3: responding based on the data I had, fresh data, have

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Speaker 3: it in front of me today.

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Speaker 2: Is the right way to do it? Or do you

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Speaker 2: prefer the old pre empty process and.

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Speaker 1: I prefer the brand fity process. So I think what

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Speaker 1: happened here was that they got caught out by the

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Speaker 1: uptiket inflation coming out of the pandemic. Then they became

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Speaker 1: more backward looking in response to that, and it was

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Speaker 1: actually probably started a little bit before that, because in

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Speaker 1: twenty twenty they said they'd started to say, through the pandemic,

438
00:21:24,080 --> 00:21:26,600
Speaker 1: we're going to really wait now till inflation starts to

439
00:21:26,640 --> 00:21:29,480
Speaker 1: take off before we start raising rates. So therefore they

440
00:21:30,480 --> 00:21:33,920
Speaker 1: they probably now feel they waited too long. So that's

441
00:21:33,960 --> 00:21:35,480
Speaker 1: why they've become more focused on.

442
00:21:35,440 --> 00:21:38,320
Speaker 2: So more reaction to what they didn't do, react to what.

443
00:21:38,320 --> 00:21:40,480
Speaker 1: They didn't do, and then and then on the way down,

444
00:21:40,560 --> 00:21:43,440
Speaker 1: it's been similar that they were caught out on the

445
00:21:43,480 --> 00:21:45,680
Speaker 1: way up, so therefore they've been cautious on the way

446
00:21:45,720 --> 00:21:48,919
Speaker 1: down in cutting rates. But you could argue that it's

447
00:21:49,000 --> 00:21:51,120
Speaker 1: led to monetary policy which has been a little bit

448
00:21:51,160 --> 00:21:53,840
Speaker 1: too tight. I mean, some might say, well, well, the

449
00:21:53,880 --> 00:21:56,480
Speaker 1: property market's taken off, but the property market is only

450
00:21:56,560 --> 00:21:59,160
Speaker 1: one part of the account one ase it's one asset class.

451
00:21:59,160 --> 00:22:00,920
Speaker 1: You've got to look at all the other bits. And

452
00:22:01,240 --> 00:22:03,960
Speaker 1: the overall economy has been pretty subdued. Yes, there's been

453
00:22:04,080 --> 00:22:06,320
Speaker 1: strong employment growth, but it's mainly because of jobs in

454
00:22:06,320 --> 00:22:10,240
Speaker 1: the public sector and age care and healthcare.

455
00:22:09,960 --> 00:22:11,560
Speaker 2: And the ISS and that sort of stuff.

456
00:22:11,920 --> 00:22:14,679
Speaker 1: Private sector jobs growth has been pretty weak, and so

457
00:22:15,040 --> 00:22:17,679
Speaker 1: all up, I would say that monetary policy has been

458
00:22:17,720 --> 00:22:20,280
Speaker 1: a little bit too tight than it really should have been,

459
00:22:20,640 --> 00:22:24,520
Speaker 1: and it's partly because of this lag or backward way

460
00:22:24,560 --> 00:22:27,960
Speaker 1: of looking at things, whereas I think the previous approach

461
00:22:27,960 --> 00:22:31,520
Speaker 1: where they've taken more forward looking approach to things and say, well, look,

462
00:22:31,600 --> 00:22:34,960
Speaker 1: you know we're forecasting inflation to be around target. We've

463
00:22:34,960 --> 00:22:37,720
Speaker 1: only got md as pick up and economic growth. Why

464
00:22:37,800 --> 00:22:40,600
Speaker 1: we've got interest rates that there's still relatively high levels.

465
00:22:41,280 --> 00:22:46,960
Speaker 3: Would would you be prepared to sort of maybe offer

466
00:22:47,760 --> 00:22:52,040
Speaker 3: your views on what you think or perhaps speculate the

467
00:22:52,160 --> 00:22:54,639
Speaker 3: RBA is thinking of in terms of what is growth?

468
00:22:54,680 --> 00:22:56,040
Speaker 2: So what is a growth number?

469
00:22:56,080 --> 00:22:58,000
Speaker 3: So you know, in the old years ago, we'd always

470
00:22:58,040 --> 00:23:00,560
Speaker 3: be looking at three three percent out of three in

471
00:23:00,560 --> 00:23:04,400
Speaker 3: front of it, they're talking, you know, to seven sort

472
00:23:04,440 --> 00:23:06,359
Speaker 3: of thing, I think, And the budget was two seventy

473
00:23:06,359 --> 00:23:07,720
Speaker 3: five or something or something like that.

474
00:23:08,200 --> 00:23:10,040
Speaker 2: Do you think that and we just had a one

475
00:23:10,040 --> 00:23:14,320
Speaker 2: point eight that's you're looking forward? Do you think we're.

476
00:23:14,160 --> 00:23:18,159
Speaker 3: Getting closer to our let's call it our closer to

477
00:23:18,240 --> 00:23:21,159
Speaker 3: a new GDP growth number?

478
00:23:22,400 --> 00:23:24,640
Speaker 2: Well, maybe two twenty five to fifty.

479
00:23:24,800 --> 00:23:26,840
Speaker 1: What could be something like that? It used to be

480
00:23:26,880 --> 00:23:29,800
Speaker 1: three yea with throughout one and a half percent population growth,

481
00:23:29,800 --> 00:23:31,720
Speaker 1: one and a half percent productivity, and then it's up

482
00:23:31,760 --> 00:23:34,160
Speaker 1: to about three. But now you could argue it's two

483
00:23:34,200 --> 00:23:36,320
Speaker 1: to two point two five or maybe two point twenty

484
00:23:36,359 --> 00:23:38,600
Speaker 1: five or something like that. So one point eight. We

485
00:23:38,640 --> 00:23:40,520
Speaker 1: are getting closer to that, but we're still below it,

486
00:23:40,560 --> 00:23:42,479
Speaker 1: and we've spent quite a bit of time below it,

487
00:23:43,520 --> 00:23:46,520
Speaker 1: and some people get obsessed with per capita GDP, and

488
00:23:46,520 --> 00:23:48,320
Speaker 1: it's been below it for a long, long long time.

489
00:23:48,800 --> 00:23:51,359
Speaker 1: So in that sense, yes, we are getting closer to it,

490
00:23:51,400 --> 00:23:53,560
Speaker 1: but it's still a fair way to go. And the

491
00:23:53,640 --> 00:23:56,520
Speaker 1: latest starter which came out for I think it was

492
00:23:56,560 --> 00:24:00,000
Speaker 1: a JOm quarter, it was a little bit on the upside,

493
00:24:00,160 --> 00:24:01,760
Speaker 1: but you just got to allow that some of that

494
00:24:01,920 --> 00:24:06,680
Speaker 1: was distorted, I think because consumer spendings tend to pick

495
00:24:06,760 --> 00:24:11,840
Speaker 1: up in lag So we had the the Cyclone our fridge,

496
00:24:11,880 --> 00:24:14,240
Speaker 1: which pressed things at the end of March, and then

497
00:24:14,359 --> 00:24:17,280
Speaker 1: Queenslanders and northern New South Wales people suddenly spend again

498
00:24:17,320 --> 00:24:20,879
Speaker 1: at the start of March start of April. We also

499
00:24:21,000 --> 00:24:24,280
Speaker 1: had Nintendo Switch, which often when these new products come out,

500
00:24:24,320 --> 00:24:26,800
Speaker 1: they give you a bit of a boom hard to

501
00:24:26,800 --> 00:24:29,359
Speaker 1: believe that, but it does, it does. Yeah, And then

502
00:24:29,400 --> 00:24:31,800
Speaker 1: we had a Swift, Well, Taylor Swift is the same

503
00:24:31,840 --> 00:24:34,359
Speaker 1: sort of thing. I'm kind of excited now because the

504
00:24:34,520 --> 00:24:37,040
Speaker 1: new trailer Swift album on the way. I think, is

505
00:24:37,040 --> 00:24:40,720
Speaker 1: it October sometimes Swift? I am. Yeah. I went with

506
00:24:40,880 --> 00:24:44,960
Speaker 1: we know Diana, Diana, she's been on. Yes, we both

507
00:24:44,960 --> 00:24:47,120
Speaker 1: missed out on tickets. I spent hours on that day

508
00:24:47,160 --> 00:24:52,199
Speaker 1: trying to get tickets, and anyway, it was coming as

509
00:24:52,240 --> 00:24:53,760
Speaker 1: a friend of ours managed to get the ticket to me,

510
00:24:53,800 --> 00:24:56,280
Speaker 1: but who works with us, and she managed to get

511
00:24:56,320 --> 00:25:00,000
Speaker 1: tickets for herself and three others. And then just before

512
00:25:00,160 --> 00:25:04,080
Speaker 1: or the day of the concert, they released some side tickets,

513
00:25:04,280 --> 00:25:05,920
Speaker 1: so you don't actually see the front of the stage.

514
00:25:05,960 --> 00:25:11,400
Speaker 1: You sit on the side. And I get anxious when

515
00:25:11,400 --> 00:25:13,120
Speaker 1: this happens. I've got to try and get these tickets

516
00:25:13,280 --> 00:25:15,440
Speaker 1: and so down and I tried to get me. Boom

517
00:25:15,480 --> 00:25:17,480
Speaker 1: managed to get them for us, and they were sixty

518
00:25:17,520 --> 00:25:20,639
Speaker 1: five dollars. That's cheap. That's cheap, And I reckon it

519
00:25:20,680 --> 00:25:23,439
Speaker 1: was just as good because you're actually down quite close.

520
00:25:23,520 --> 00:25:25,520
Speaker 1: It's just that when she's in front of the stage,

521
00:25:25,520 --> 00:25:26,760
Speaker 1: you can't see it. But if she goes out on

522
00:25:26,800 --> 00:25:28,120
Speaker 1: the catwalk. You can see it perfectly.

523
00:25:28,119 --> 00:25:31,119
Speaker 3: Well, this is quite an interesting point, like well, it

524
00:25:31,160 --> 00:25:35,879
Speaker 3: sounds a little flippant. These events like the Nintendo Switch

525
00:25:35,920 --> 00:25:39,159
Speaker 3: being released in Jurn and you know, Taylors with the

526
00:25:40,040 --> 00:25:42,720
Speaker 3: impact that they can have on the economy is sort

527
00:25:42,760 --> 00:25:46,919
Speaker 3: of informs us a little bit about the quality or

528
00:25:47,800 --> 00:25:50,200
Speaker 3: maybe the reliability of data.

529
00:25:50,280 --> 00:25:52,440
Speaker 2: Of financial or data economic data.

530
00:25:52,800 --> 00:25:55,240
Speaker 3: It's sort of informs us a little bit in that

531
00:25:55,480 --> 00:25:57,760
Speaker 3: we've got to watch way for things to smooth themselves

532
00:25:57,800 --> 00:26:00,159
Speaker 3: out a little bit. And when we can't take me

533
00:26:00,200 --> 00:26:02,879
Speaker 3: too seriously, who would think that, I mean, she let's

534
00:26:03,280 --> 00:26:05,880
Speaker 3: say she took a billion dollars. I don't know what

535
00:26:06,240 --> 00:26:08,760
Speaker 3: she made, but still you wouldn't think in an economy

536
00:26:08,760 --> 00:26:12,840
Speaker 3: our size were a relatively relatively speaking, that it would

537
00:26:12,840 --> 00:26:14,760
Speaker 3: have such an impact. But it definitely will have for

538
00:26:14,800 --> 00:26:16,520
Speaker 3: a quarter or for definitely for a month. But it'll

539
00:26:16,520 --> 00:26:18,720
Speaker 3: definitely we'll have a we'll have an impact for a quarter.

540
00:26:19,359 --> 00:26:20,960
Speaker 1: Yeah, and then then you've got to wait and see

541
00:26:20,960 --> 00:26:22,760
Speaker 1: whether it was sustained or not. But I think it

542
00:26:22,800 --> 00:26:25,920
Speaker 1: also tells us that Australians were feeling kind of stretched

543
00:26:25,920 --> 00:26:29,160
Speaker 1: and so they prioritize their spending, like whether it's Nintendo

544
00:26:29,200 --> 00:26:31,080
Speaker 1: switch or a tailor swift, I'm going to have that,

545
00:26:31,640 --> 00:26:34,240
Speaker 1: but around that there's not much spending. It's the same

546
00:26:34,280 --> 00:26:37,199
Speaker 1: with sales activity. So we have the indo financial use

547
00:26:37,200 --> 00:26:39,480
Speaker 1: of sales, which I didn't think used to be much

548
00:26:39,480 --> 00:26:43,399
Speaker 1: of a thing, or the Black Friday where the hell's

549
00:26:43,600 --> 00:26:46,439
Speaker 1: from some American in bit and suddenly that becomes a

550
00:26:46,440 --> 00:26:49,359
Speaker 1: big thing and people hang out for that now because

551
00:26:49,359 --> 00:26:51,320
Speaker 1: they know when you go to Harvey Norman or wherever,

552
00:26:51,640 --> 00:26:54,320
Speaker 1: you can get something at twenty thirty forty percent less. Yeah,

553
00:26:54,480 --> 00:26:56,400
Speaker 1: so you don't spend in the normal times. You hang

554
00:26:56,400 --> 00:26:59,840
Speaker 1: out for these sales, and therefore in the quarters or

555
00:26:59,880 --> 00:27:01,560
Speaker 1: the months of the year where you have these things,

556
00:27:01,600 --> 00:27:03,639
Speaker 1: it really just sorts the data a distortion. And there

557
00:27:03,680 --> 00:27:05,640
Speaker 1: was a bit of that in the June quarter as well,

558
00:27:06,320 --> 00:27:10,640
Speaker 1: along with we had Easter, and then at the end

559
00:27:10,640 --> 00:27:14,040
Speaker 1: of the Easter Easter Monday week we had the Antic

560
00:27:14,119 --> 00:27:15,119
Speaker 1: Day on the Friday.

561
00:27:15,240 --> 00:27:16,480
Speaker 2: Yes, we had a short month.

562
00:27:16,560 --> 00:27:18,840
Speaker 1: Yeah, so people take three days off and you get

563
00:27:18,840 --> 00:27:23,800
Speaker 1: this lengthy ten day holiday period just taking three days off.

564
00:27:23,920 --> 00:27:25,000
Speaker 2: So at the bank, do you do you?

565
00:27:25,480 --> 00:27:29,000
Speaker 3: Will you in your analytical team, will you sort of

566
00:27:30,440 --> 00:27:31,880
Speaker 3: make adjustments for all these things.

567
00:27:31,960 --> 00:27:33,800
Speaker 1: Well, we try to. We try to. I mean, it

568
00:27:33,840 --> 00:27:36,480
Speaker 1: can get a bit complicated and the abs sometimes so

569
00:27:36,520 --> 00:27:39,040
Speaker 1: they do, but and they'll often refer to these things,

570
00:27:39,080 --> 00:27:42,200
Speaker 1: but you don't know quite how serious they were until

571
00:27:42,240 --> 00:27:45,359
Speaker 1: after the event. But it can cause these funny distortions

572
00:27:45,400 --> 00:27:47,320
Speaker 1: like that one point eight percent growth number might have

573
00:27:47,359 --> 00:27:50,280
Speaker 1: been inflated a little bit because of this combination of

574
00:27:50,320 --> 00:27:54,480
Speaker 1: funny things in the June quarter. Yeah, so we did

575
00:27:54,560 --> 00:27:55,440
Speaker 1: try and adjust for them.

576
00:27:55,560 --> 00:27:59,480
Speaker 3: So just on just on distortion, so to speak, given

577
00:27:59,720 --> 00:28:04,840
Speaker 3: the inflection numbers that came out today, what impact has

578
00:28:04,920 --> 00:28:10,320
Speaker 3: the disappearance of for example, the thousand bucks at the

579
00:28:10,440 --> 00:28:14,640
Speaker 3: previous Queensland premiere offered prior.

580
00:28:14,359 --> 00:28:17,280
Speaker 2: To the last queen election didn't work.

581
00:28:17,359 --> 00:28:21,040
Speaker 3: Yeah, but they took the thousand bucks and I think

582
00:28:21,080 --> 00:28:24,880
Speaker 3: it's just expired. What impact does that have and what

583
00:28:24,960 --> 00:28:27,920
Speaker 3: impact are you guys baking into when the federal governments

584
00:28:29,440 --> 00:28:32,040
Speaker 3: electricity rebates drop off I think this year at the

585
00:28:32,080 --> 00:28:34,080
Speaker 3: end of the year, end of this year in December.

586
00:28:35,080 --> 00:28:39,160
Speaker 3: What impact do you think in terms of in terms

587
00:28:39,160 --> 00:28:42,560
Speaker 3: of inflation and or TRIUM mean, do you think it

588
00:28:42,560 --> 00:28:44,720
Speaker 3: should have for twenty six I mean, do you think

589
00:28:44,720 --> 00:28:45,880
Speaker 3: there could be a jump.

590
00:28:46,200 --> 00:28:49,160
Speaker 1: Well, there could be a jump. Say if you take

591
00:28:49,200 --> 00:28:53,000
Speaker 1: the situation where that Queensland rebate fell off, So it

592
00:28:53,040 --> 00:28:54,920
Speaker 1: was about a year ago now and people got it

593
00:28:54,960 --> 00:28:58,160
Speaker 1: for a few months till I use it month. It's

594
00:28:58,200 --> 00:29:00,920
Speaker 1: one thousand dollars off your bill, right and then if

595
00:29:00,960 --> 00:29:03,600
Speaker 1: your bill is three hundred dollars a month, then it

596
00:29:03,640 --> 00:29:06,640
Speaker 1: will take you nine a bit months to use it up.

597
00:29:06,680 --> 00:29:09,840
Speaker 1: So we'll start to drop off now. Others, if you've

598
00:29:09,840 --> 00:29:11,640
Speaker 1: got a big house and use a lot of electricity,

599
00:29:11,640 --> 00:29:14,320
Speaker 1: you might use it up in a month, but anyway

600
00:29:14,320 --> 00:29:16,240
Speaker 1: it's all out of the system. You had something similar

601
00:29:16,280 --> 00:29:19,440
Speaker 1: in Wa, had something similar in Tasmania. They've all dropped out.

602
00:29:19,520 --> 00:29:23,000
Speaker 1: And so electricity prices as measured by the ABS are

603
00:29:23,080 --> 00:29:25,320
Speaker 1: up twenty four point six percent on a year ago.

604
00:29:25,640 --> 00:29:28,520
Speaker 2: Now now August up to us, which is why we

605
00:29:28,600 --> 00:29:29,240
Speaker 2: got a three.

606
00:29:29,560 --> 00:29:31,240
Speaker 1: Why we got a three, Yes, you've got that. That

607
00:29:31,360 --> 00:29:32,640
Speaker 1: is a big item. I think it was the top

608
00:29:32,640 --> 00:29:36,080
Speaker 1: of the list key driver of prices in and the

609
00:29:36,160 --> 00:29:39,479
Speaker 1: twelve months to August, so you've got to allow for that.

610
00:29:39,760 --> 00:29:42,520
Speaker 1: Then there's the next big event, which is as you

611
00:29:42,640 --> 00:29:44,600
Speaker 1: just regard the federal government's one drop off at the

612
00:29:44,680 --> 00:29:46,120
Speaker 1: end of this year. So at the moment it was

613
00:29:46,240 --> 00:29:50,320
Speaker 1: seventy five dollars a quarter a quarter, and it's still

614
00:29:50,360 --> 00:29:53,240
Speaker 1: having distortionary impacts. But as we go to next year

615
00:29:53,240 --> 00:29:56,560
Speaker 1: that will drop off. As things stand at present, electricity

616
00:29:56,600 --> 00:29:59,680
Speaker 1: prices once that drops out of the system altogether will

617
00:29:59,760 --> 00:30:01,240
Speaker 1: jump something like fifteen percent.

618
00:30:01,520 --> 00:30:04,960
Speaker 3: And would you expect then the RBA or the ABS

619
00:30:04,960 --> 00:30:07,160
Speaker 3: so should say, well, what do you think the RBA's

620
00:30:07,160 --> 00:30:09,400
Speaker 3: stands will be. They'll say, oh, inflations out of control

621
00:30:09,440 --> 00:30:11,440
Speaker 3: because that's there forever now. Or do you think they'll

622
00:30:11,480 --> 00:30:13,800
Speaker 3: they'll accept they'll do some adjustment themselves.

623
00:30:14,720 --> 00:30:17,320
Speaker 1: Well, firstly, I've got to assume the federal government doesn't extend

624
00:30:17,320 --> 00:30:19,000
Speaker 1: it again. They could, I don't think they will because

625
00:30:19,000 --> 00:30:20,280
Speaker 1: they're not facing election re election.

626
00:30:20,400 --> 00:30:21,040
Speaker 2: They won the elections.

627
00:30:21,080 --> 00:30:22,480
Speaker 1: They won the election, they're in there, they've got a

628
00:30:22,560 --> 00:30:26,720
Speaker 1: big majority, so that probably it probably ends as scheduled.

629
00:30:26,840 --> 00:30:29,560
Speaker 1: That means your inflation rate might jump up to three

630
00:30:29,640 --> 00:30:33,400
Speaker 1: and a half percent. The RBA should say, well, we're

631
00:30:33,400 --> 00:30:35,280
Speaker 1: going to look through that, just as we did when

632
00:30:35,560 --> 00:30:38,520
Speaker 1: the headline inflation rate dropped to one point nine percent recently,

633
00:30:38,520 --> 00:30:41,840
Speaker 1: because the rebates came in they said, well, that's mainly

634
00:30:41,920 --> 00:30:43,800
Speaker 1: due to the rebates. We're going to focus on the

635
00:30:43,880 --> 00:30:46,480
Speaker 1: underlying rate. It's more like two and a half or

636
00:30:46,520 --> 00:30:48,560
Speaker 1: it's been coming down from the high threes into two

637
00:30:48,640 --> 00:30:51,080
Speaker 1: and a half. So I think as we go the

638
00:30:51,160 --> 00:30:54,440
Speaker 1: other way, the RBA should be focusing on the underlying

639
00:30:54,520 --> 00:30:56,680
Speaker 1: rate or the trim mean as they call it, which

640
00:30:56,680 --> 00:31:01,040
Speaker 1: will strip out those high swings and like prizity prices.

641
00:31:01,480 --> 00:31:05,120
Speaker 3: But and if you think if when I think about that,

642
00:31:05,120 --> 00:31:07,640
Speaker 3: that's fine, but the actual cost of living has actually

643
00:31:07,680 --> 00:31:12,040
Speaker 3: gone up, Well that's true, that's true, and that's nearly

644
00:31:12,400 --> 00:31:14,600
Speaker 3: to be consistent, the IBO should do that, and the

645
00:31:14,680 --> 00:31:17,960
Speaker 3: IBA should do that to be consistent. But there is

646
00:31:18,040 --> 00:31:21,400
Speaker 3: now a new high cost of living and it's also

647
00:31:21,480 --> 00:31:23,720
Speaker 3: going to be well, it's only for consumers, so it's not.

648
00:31:23,720 --> 00:31:27,000
Speaker 2: Going to affect businesses. There's no change there, but consumers

649
00:31:27,000 --> 00:31:27,200
Speaker 2: that have.

650
00:31:27,240 --> 00:31:30,280
Speaker 3: High cost of living, so therefore businesses will have less

651
00:31:30,320 --> 00:31:33,120
Speaker 3: money to spend, consumers have less spent.

652
00:31:33,200 --> 00:31:36,560
Speaker 1: Still on arcaucs, I think prices over the last five

653
00:31:36,640 --> 00:31:41,000
Speaker 1: years since twenty twenty are up something like twenty twenty

654
00:31:41,080 --> 00:31:43,640
Speaker 1: twenty one percent. Wages are up for something like fifteen

655
00:31:43,720 --> 00:31:47,400
Speaker 1: to sixteen percent, So households, consumers, whatever you want to

656
00:31:47,400 --> 00:31:51,000
Speaker 1: call it, you and me behind by about five percent

657
00:31:51,000 --> 00:31:53,800
Speaker 1: in real term, So wages today by about five percent

658
00:31:53,880 --> 00:31:56,120
Speaker 1: less than they did five years ago. So that's the

659
00:31:56,120 --> 00:31:58,640
Speaker 1: cost of living challenge which is still there. So yes,

660
00:31:58,920 --> 00:32:01,960
Speaker 1: wages are now growing three and a half percent, prices

661
00:32:01,960 --> 00:32:04,320
Speaker 1: are growing at the latest number three So there is

662
00:32:04,400 --> 00:32:07,840
Speaker 1: real wage growth there, but it's going to take years

663
00:32:07,880 --> 00:32:10,960
Speaker 1: and years before people make up for the loss that

664
00:32:11,000 --> 00:32:12,960
Speaker 1: they've experienced over the last five years.

665
00:32:13,240 --> 00:32:17,360
Speaker 2: So do you think I mean, I've used on it,

666
00:32:17,400 --> 00:32:18,360
Speaker 2: I've been interested with You have to.

667
00:32:18,360 --> 00:32:21,760
Speaker 3: Say, do you think that the muntary policy as we

668
00:32:21,840 --> 00:32:26,200
Speaker 3: know today, which is managed by the RBA, do you

669
00:32:26,240 --> 00:32:27,800
Speaker 3: think is as effective as it used to be?

670
00:32:29,440 --> 00:32:31,320
Speaker 1: Oh? I think it is. I think of course, when

671
00:32:31,400 --> 00:32:33,280
Speaker 1: rates went up it caused a lot of pain. When

672
00:32:33,360 --> 00:32:35,120
Speaker 1: rates went down, you know, people got a lot of

673
00:32:35,120 --> 00:32:38,600
Speaker 1: money and spent and pushed up property prices. So in

674
00:32:38,600 --> 00:32:40,560
Speaker 1: that sense it's just as effective. It's just that the

675
00:32:41,320 --> 00:32:45,520
Speaker 1: RBA to get prices back down to where they were,

676
00:32:45,640 --> 00:32:47,920
Speaker 1: And this is something the Reserve Bank was talking about

677
00:32:48,000 --> 00:32:49,560
Speaker 1: in Parliamentary.

678
00:32:49,120 --> 00:32:51,160
Speaker 2: Comic Committeer Inquiry.

679
00:32:50,680 --> 00:32:53,560
Speaker 1: Inquiry Economics Committee. I think to get prices back down,

680
00:32:53,640 --> 00:32:55,480
Speaker 1: you've got to keep rates really high, and then you

681
00:32:55,560 --> 00:32:58,680
Speaker 1: probably have to pump you drop the economy into recession

682
00:32:59,200 --> 00:33:01,800
Speaker 1: to get prices back down to where they were five

683
00:33:01,880 --> 00:33:04,600
Speaker 1: years ago. It's such that our wages buy as much

684
00:33:04,600 --> 00:33:06,920
Speaker 1: as they did back then. So I don't think that's

685
00:33:07,040 --> 00:33:08,560
Speaker 1: going to happen, and they don't want to do that.

686
00:33:09,200 --> 00:33:11,840
Speaker 1: But the real issue is that I think what's happened

687
00:33:11,880 --> 00:33:15,160
Speaker 1: here is a lack of productivity in the economy. So

688
00:33:15,200 --> 00:33:17,440
Speaker 1: it's really an issue for government. We've got to find

689
00:33:17,480 --> 00:33:20,360
Speaker 1: ways to work smarter. If we're going to put more

690
00:33:20,400 --> 00:33:24,400
Speaker 1: and more people into things like the NDA. I mean,

691
00:33:24,760 --> 00:33:27,240
Speaker 1: I'm not going to say that that's not worthy spending.

692
00:33:27,280 --> 00:33:29,640
Speaker 1: You know, there's lots of people with real seving should

693
00:33:29,680 --> 00:33:31,520
Speaker 1: be routed there. Yeah, it shouldn't be ruted. And that's

694
00:33:31,520 --> 00:33:34,160
Speaker 1: where the problem has been that people have been overcharging,

695
00:33:34,800 --> 00:33:36,880
Speaker 1: some people who shouldn't have been getting it have been

696
00:33:36,920 --> 00:33:40,680
Speaker 1: getting it, and cost growth has been out of control.

697
00:33:40,720 --> 00:33:42,000
Speaker 1: If we're going to do that, if we're going to

698
00:33:42,000 --> 00:33:44,800
Speaker 1: put more and more people into the public sector, then

699
00:33:44,920 --> 00:33:47,840
Speaker 1: we have to realize that the longer term consequence of

700
00:33:47,880 --> 00:33:51,000
Speaker 1: this will be a permanent reduction in our living standards,

701
00:33:51,080 --> 00:33:53,400
Speaker 1: that our cost of living will be high because public

702
00:33:53,400 --> 00:33:57,720
Speaker 1: sector roles are less productive than private sector roles by definition,

703
00:33:57,880 --> 00:34:02,600
Speaker 1: by definition, how big the difference is, but there is

704
00:34:02,640 --> 00:34:06,440
Speaker 1: a difference there. And lately something like four of the

705
00:34:06,560 --> 00:34:08,920
Speaker 1: five jobs, four out of five jobs created over the

706
00:34:09,000 --> 00:34:12,040
Speaker 1: last two years have been in mainly public sector or

707
00:34:12,040 --> 00:34:13,640
Speaker 1: public sector related roles.

708
00:34:13,960 --> 00:34:16,479
Speaker 2: And it seems to be that this government, the current

709
00:34:16,520 --> 00:34:20,240
Speaker 2: government then not only a federal better state levels, including

710
00:34:20,320 --> 00:34:23,480
Speaker 2: Queensland which is a liberal state, but are starting to

711
00:34:24,280 --> 00:34:29,160
Speaker 2: pull back on that growth. If they pull back on.

712
00:34:29,120 --> 00:34:32,359
Speaker 3: That growth, in other words, they're in government now, they

713
00:34:32,360 --> 00:34:35,360
Speaker 3: probably don't need to do too much many more appointments

714
00:34:35,360 --> 00:34:36,520
Speaker 3: and put out too many.

715
00:34:36,320 --> 00:34:38,880
Speaker 2: More, too many big infrastructure.

716
00:34:38,320 --> 00:34:40,800
Speaker 3: Jobs and employees, you know, thousands of pounds of people,

717
00:34:40,800 --> 00:34:43,120
Speaker 3: and they're probably they're trying to call back on the

718
00:34:43,200 --> 00:34:47,400
Speaker 3: ndis where they can et cetera, if we don't continue

719
00:34:47,440 --> 00:34:54,080
Speaker 3: to get the growth in employment. In other words, you know,

720
00:34:54,280 --> 00:34:56,640
Speaker 3: what they're part of the mandate is full employment, which

721
00:34:56,640 --> 00:34:59,200
Speaker 3: is measured by unemployment. So in other words, unemployment sort

722
00:34:59,200 --> 00:35:03,160
Speaker 3: of starts to grow. At what point do you think

723
00:35:03,200 --> 00:35:05,600
Speaker 3: that the RBA will get very nervous and you know,

724
00:35:05,760 --> 00:35:08,360
Speaker 3: I don't want to use the techno terminal, will you

725
00:35:08,400 --> 00:35:11,320
Speaker 3: know the nehrus. So where do you think the r

726
00:35:11,400 --> 00:35:13,200
Speaker 3: b A is relative to that? Where were they going

727
00:35:13,239 --> 00:35:14,960
Speaker 3: to say, wait a minute, it's four and a half.

728
00:35:15,120 --> 00:35:17,799
Speaker 3: That is way too high for unemployment. We are not,

729
00:35:18,520 --> 00:35:20,880
Speaker 3: you know, executing on our mandate to keep full employment

730
00:35:20,920 --> 00:35:25,359
Speaker 3: because you know, and were therefore need three more rate reductions.

731
00:35:25,880 --> 00:35:26,839
Speaker 2: What do you think about that?

732
00:35:27,320 --> 00:35:31,280
Speaker 1: Well, it's quite possible if the looks like the public

733
00:35:31,320 --> 00:35:34,239
Speaker 1: sector employment growth is slowing down, it does it looks

734
00:35:34,280 --> 00:35:37,840
Speaker 1: like the government purposely Yeah, I think they've got the

735
00:35:37,840 --> 00:35:39,920
Speaker 1: message that this is having an impact.

736
00:35:39,960 --> 00:35:43,560
Speaker 3: That definitely New Wales, like New South Wales Mookis has

737
00:35:43,600 --> 00:35:47,000
Speaker 3: told me, like he is on our podcast, he is

738
00:35:47,080 --> 00:35:50,640
Speaker 3: reducing the amount of employment of people into the into

739
00:35:50,680 --> 00:35:51,480
Speaker 3: the government offers.

740
00:35:52,200 --> 00:35:56,000
Speaker 1: So so therefore the private sector has to fill the role.

741
00:35:56,080 --> 00:35:58,000
Speaker 2: But it's not being it's nothing gat I know that's.

742
00:35:57,840 --> 00:36:00,239
Speaker 1: The problem here. And if you don't get that, then

743
00:36:00,280 --> 00:36:02,960
Speaker 1: it's quite conceivable the unemployment rate, which is currently four

744
00:36:02,960 --> 00:36:04,959
Speaker 1: point two, suddenly jumps up to four and a half.

745
00:36:05,080 --> 00:36:07,279
Speaker 1: Now the RBO's forecast is four point three. So if

746
00:36:07,280 --> 00:36:09,440
Speaker 1: you've got a four point three and it's stabilized. They're

747
00:36:09,480 --> 00:36:11,400
Speaker 1: probably not going to worry, But if you get up

748
00:36:11,440 --> 00:36:14,200
Speaker 1: to four and a half, you probably would start to

749
00:36:14,200 --> 00:36:17,479
Speaker 1: worry because we know from history that unemployment can feed

750
00:36:17,520 --> 00:36:21,560
Speaker 1: on itself. Once unemployment starts going up, people feel more cautious,

751
00:36:21,640 --> 00:36:23,719
Speaker 1: they know their friends or they know someone who's lost

752
00:36:23,719 --> 00:36:26,520
Speaker 1: their job. In theology, I better cut back my spending

753
00:36:26,600 --> 00:36:30,680
Speaker 1: and everything tones down, and then then you get less spending.

754
00:36:30,840 --> 00:36:33,799
Speaker 1: Businesses feel less confident, they hire less people, and the

755
00:36:33,800 --> 00:36:35,640
Speaker 1: whole thing goes into a bit of a downward spiral.

756
00:36:35,840 --> 00:36:37,200
Speaker 1: So that is the risk in all of it.

757
00:36:37,280 --> 00:36:38,680
Speaker 2: You think this is a risk, I mean, is that

758
00:36:38,719 --> 00:36:39,200
Speaker 2: a risk, But.

759
00:36:39,239 --> 00:36:41,800
Speaker 1: It's not my base case. But it's a risk worth

760
00:36:42,760 --> 00:36:45,799
Speaker 1: worrying about. And I think it's critical the next few

761
00:36:45,800 --> 00:36:48,800
Speaker 1: months you have to see more private sector jobs coming

762
00:36:49,000 --> 00:36:51,400
Speaker 1: along to fill the gap left by the public sector,

763
00:36:51,880 --> 00:36:54,160
Speaker 1: and that if you don't see that, then the Reserve

764
00:36:54,239 --> 00:36:57,439
Speaker 1: Bank I think, gets very nervous, and yes they will

765
00:36:57,440 --> 00:36:58,600
Speaker 1: have to cut by more so.

766
00:36:59,239 --> 00:37:02,080
Speaker 3: And just finally on this shame, I mean, I think

767
00:37:02,120 --> 00:37:03,719
Speaker 3: your prediction is there won't be a great reduction of

768
00:37:03,719 --> 00:37:05,720
Speaker 3: the thirties is tempus we don't need to get sort.

769
00:37:05,560 --> 00:37:07,880
Speaker 1: Of label that, but there will be one in November.

770
00:37:08,480 --> 00:37:09,000
Speaker 2: I'm hoping.

771
00:37:09,040 --> 00:37:11,000
Speaker 3: So I'm assuming that we'll get the right amount of

772
00:37:11,040 --> 00:37:14,520
Speaker 3: data at the end of October, but just you know,

773
00:37:15,600 --> 00:37:18,800
Speaker 3: sort of developing this a little bit more just putting

774
00:37:18,840 --> 00:37:20,520
Speaker 3: parking money through policy for a moment.

775
00:37:22,400 --> 00:37:24,120
Speaker 2: Where do you think then the.

776
00:37:24,080 --> 00:37:27,640
Speaker 3: Government should be with fiscal policy or government policy, government

777
00:37:28,080 --> 00:37:30,640
Speaker 3: economic policy to make sure that we don't get an

778
00:37:30,719 --> 00:37:33,000
Speaker 3: unemployment number that starts to trend towards four and a

779
00:37:33,040 --> 00:37:36,080
Speaker 3: half five whatever some other number. To make sure that

780
00:37:36,440 --> 00:37:39,479
Speaker 3: our economic growth continues to get up to two point

781
00:37:39,480 --> 00:37:42,600
Speaker 3: two five? Are there things that you would be thinking

782
00:37:42,600 --> 00:37:46,520
Speaker 3: about that the federal government should be doing relative to

783
00:37:47,280 --> 00:37:48,319
Speaker 3: fiscal policy for us?

784
00:37:48,360 --> 00:37:51,440
Speaker 1: Now, I shouldn't be going on a spending spree.

785
00:37:52,560 --> 00:37:54,439
Speaker 2: They should be I read you talk about this before,

786
00:37:54,480 --> 00:37:55,080
Speaker 2: but yes.

787
00:37:55,120 --> 00:37:58,960
Speaker 1: They should be looking at ways to control spending and

788
00:37:59,160 --> 00:38:02,200
Speaker 1: if anything, lower tax rates. That's where the real issue was.

789
00:38:02,200 --> 00:38:04,279
Speaker 1: In Australia, we're paying more and more in tax. If

790
00:38:04,280 --> 00:38:06,680
Speaker 1: you look at the share of people's income which has

791
00:38:06,760 --> 00:38:09,040
Speaker 1: been devoted to tax, it's going higher and higher. As

792
00:38:09,040 --> 00:38:13,839
Speaker 1: in Bracket GREB and the current budget which came out

793
00:38:13,880 --> 00:38:17,319
Speaker 1: back in March. It shows a balance in ten years time.

794
00:38:17,320 --> 00:38:19,440
Speaker 1: But the only way we get to balance is not

795
00:38:19,520 --> 00:38:24,040
Speaker 1: because of spending restraint, because of Bracker tax, which means everybody,

796
00:38:24,040 --> 00:38:26,520
Speaker 1: whether you're high income or your low income, you're going

797
00:38:26,560 --> 00:38:28,360
Speaker 1: to be paying more and more of your income in

798
00:38:28,440 --> 00:38:30,960
Speaker 1: tax and you have less need income, you'll have less

799
00:38:31,000 --> 00:38:33,399
Speaker 1: net income. And that's been a huge burden on people

800
00:38:33,440 --> 00:38:35,319
Speaker 1: in the last few years. The big burdens have come

801
00:38:35,360 --> 00:38:40,040
Speaker 1: from less higher interest rates, the reduction in or the

802
00:38:40,120 --> 00:38:43,239
Speaker 1: rising costs associated with higher inflation, wages not giving up,

803
00:38:43,440 --> 00:38:46,319
Speaker 1: and then of course the surge in tax as a

804
00:38:46,360 --> 00:38:48,239
Speaker 1: share of income. All of those things have been part

805
00:38:48,239 --> 00:38:52,200
Speaker 1: of the burden. And if said the government needs to

806
00:38:52,239 --> 00:38:55,520
Speaker 1: do things which provide help for the economy, but do

807
00:38:55,239 --> 00:38:58,799
Speaker 1: it do so in a way that boosts productivity, and

808
00:38:58,840 --> 00:39:05,439
Speaker 1: that means tax cut. I think it's indexing the tax

809
00:39:05,480 --> 00:39:08,000
Speaker 1: scales I think would be one place to start. You

810
00:39:08,120 --> 00:39:11,480
Speaker 1: probably have to get down corporate tax rates or provide

811
00:39:11,480 --> 00:39:14,680
Speaker 1: more incentives for businesses to invest. You've got to do

812
00:39:14,800 --> 00:39:16,960
Speaker 1: things to deregulate I mean, aunt least the government. Since

813
00:39:16,960 --> 00:39:19,000
Speaker 1: we're getting the message on this front, you've got to

814
00:39:19,000 --> 00:39:21,239
Speaker 1: make it easier for developers and home builders to get

815
00:39:21,239 --> 00:39:23,759
Speaker 1: out there and build homes, build a house in eight

816
00:39:23,800 --> 00:39:27,920
Speaker 1: months rather than a year and a half. They're the

817
00:39:27,960 --> 00:39:30,120
Speaker 1: sort of things they need to do. They don't all

818
00:39:30,160 --> 00:39:34,360
Speaker 1: require massive government spending to get that to happen. It's

819
00:39:34,480 --> 00:39:38,840
Speaker 1: really about fixing the tax system and deregulating the broader economy.

820
00:39:39,040 --> 00:39:42,160
Speaker 3: And business investment, of course is down or still pretty average,

821
00:39:42,200 --> 00:39:42,720
Speaker 3: pretty flat.

822
00:39:42,960 --> 00:39:44,920
Speaker 2: It's not an ocient saverage, but quite flat.

823
00:39:45,560 --> 00:39:48,440
Speaker 3: And unless businesses invest, they're going to be in centivized

824
00:39:48,440 --> 00:39:50,480
Speaker 3: investment with that twenty thousand dollars whatever it is that

825
00:39:51,000 --> 00:39:54,920
Speaker 3: investmental healths like this, it's ridiculous, so joke. I mean, like,

826
00:39:55,080 --> 00:39:56,839
Speaker 3: what costs twenty grand? I'm in these cameras in these

827
00:39:56,880 --> 00:39:59,200
Speaker 3: room costs more than that. And there's a really small business.

828
00:39:59,200 --> 00:40:01,759
Speaker 3: So if you want business is to invest into the

829
00:40:01,840 --> 00:40:04,920
Speaker 3: business only. I think one of the few ways, one

830
00:40:04,960 --> 00:40:06,880
Speaker 3: of the only ways I know of, is reduced the

831
00:40:06,880 --> 00:40:09,200
Speaker 3: company tax. Will reduce the tax burden on us, so

832
00:40:09,239 --> 00:40:11,880
Speaker 3: we've got more money to invest in the business. Otherwise

833
00:40:12,120 --> 00:40:14,960
Speaker 3: we're going to say business is going to say I'm

834
00:40:14,960 --> 00:40:17,080
Speaker 3: not investing any more money. I'm just making enough money.

835
00:40:17,120 --> 00:40:19,319
Speaker 3: As it is, just based on how hard I work,

836
00:40:19,360 --> 00:40:21,880
Speaker 3: and you know what the business earns. I'm not going

837
00:40:21,920 --> 00:40:23,800
Speaker 3: to increase my revenue line, so I'm not going to

838
00:40:24,000 --> 00:40:26,440
Speaker 3: unless I can get some some something from you.

839
00:40:26,480 --> 00:40:27,879
Speaker 2: It's going to be a bit a give and take here.

840
00:40:28,440 --> 00:40:32,480
Speaker 3: Do you think that in terms of the business community,

841
00:40:32,520 --> 00:40:35,680
Speaker 3: that we are getting enough interaction between the government and

842
00:40:35,760 --> 00:40:39,799
Speaker 3: the business community to incentivize us to put more money

843
00:40:39,800 --> 00:40:41,560
Speaker 3: into Like if you go to the States, the amount

844
00:40:41,560 --> 00:40:45,080
Speaker 3: of money gets invested into AI et cetera. And their

845
00:40:45,120 --> 00:40:49,840
Speaker 3: productivity is so good because you know, relative and Germany again,

846
00:40:50,120 --> 00:40:53,439
Speaker 3: whereas ours is dreadful. And I don't know, I don't

847
00:40:53,480 --> 00:40:55,239
Speaker 3: know the taxables over there. I don't know whether you've

848
00:40:55,239 --> 00:40:56,359
Speaker 3: got some incentivized right.

849
00:40:57,080 --> 00:41:00,000
Speaker 1: See our tax rate, corporate tax rate is thirty percent. Yeah,

850
00:41:00,400 --> 00:41:03,480
Speaker 1: I think it's what twenty one or twenty out at

851
00:41:03,480 --> 00:41:04,920
Speaker 1: the lower end. It was at the higher end, but

852
00:41:05,000 --> 00:41:08,839
Speaker 1: they cut it. They cut it. And there's a whole

853
00:41:08,840 --> 00:41:11,120
Speaker 1: bunch of cultural factors as well. There's more people with

854
00:41:11,200 --> 00:41:14,520
Speaker 1: patient capital in the US willing to put money into startups.

855
00:41:14,719 --> 00:41:16,560
Speaker 2: There's more money.

856
00:41:16,719 --> 00:41:18,759
Speaker 1: There is more money basically, but the tax system is

857
00:41:18,800 --> 00:41:22,000
Speaker 1: a big part of it. And Australian businesses feel well,

858
00:41:22,080 --> 00:41:25,520
Speaker 1: I'm losing too much of my income in tax and

859
00:41:25,560 --> 00:41:28,880
Speaker 1: on the other hand, everything I want to do takes

860
00:41:28,880 --> 00:41:32,120
Speaker 1: too long to employ someone. There's a huge burden around that.

861
00:41:32,200 --> 00:41:35,000
Speaker 1: All these things are too difficult, and so you've got

862
00:41:35,000 --> 00:41:37,239
Speaker 1: to free up the burden on business to enable this

863
00:41:37,320 --> 00:41:39,799
Speaker 1: to happen. But you've also got to do something about

864
00:41:39,840 --> 00:41:42,080
Speaker 1: the tax system. Do I think the government's getting I

865
00:41:42,120 --> 00:41:43,400
Speaker 1: think they're starting to get.

866
00:41:43,200 --> 00:41:46,880
Speaker 3: It, But yeah, someone win the votes on I think. Sorry,

867
00:41:46,960 --> 00:41:49,959
Speaker 3: they won't win them down election, I think, but.

868
00:41:50,360 --> 00:41:52,600
Speaker 1: That's the problem. They don't see votes in it. But ultimately,

869
00:41:52,840 --> 00:41:56,239
Speaker 1: if they want to keep good growth in employment to

870
00:41:56,280 --> 00:41:59,440
Speaker 1: get people's living standards up, then they have to embrace

871
00:41:59,480 --> 00:42:05,120
Speaker 1: the business community. So I have to introduce policies to this. Otherwise, yeah,

872
00:42:05,120 --> 00:42:06,839
Speaker 1: we're not going to see good growth in the living centers.

873
00:42:07,160 --> 00:42:09,960
Speaker 1: You know that three percent number you referred to. It

874
00:42:10,040 --> 00:42:13,360
Speaker 1: arose because we've had good productivity growth over the last century,

875
00:42:13,480 --> 00:42:15,840
Speaker 1: and it was reinvigorated by the stuff that Hawk and

876
00:42:15,880 --> 00:42:18,360
Speaker 1: Keating did in the eighties and then Howard and Costello

877
00:42:18,440 --> 00:42:21,360
Speaker 1: did or continued to do through the nineties into the

878
00:42:21,360 --> 00:42:23,680
Speaker 1: two thousands. But ever since then it's sort of all

879
00:42:23,719 --> 00:42:26,160
Speaker 1: fallen asleep. You know, we just don't do these things.

880
00:42:26,200 --> 00:42:29,120
Speaker 1: If anything, we put more taxes on and we just reregulate,

881
00:42:29,920 --> 00:42:31,160
Speaker 1: as we've said in the labor market.

882
00:42:31,239 --> 00:42:33,480
Speaker 3: And one final question, what do you think about government

883
00:42:33,560 --> 00:42:35,719
Speaker 3: incentives for people to buy homes, like, for example, the

884
00:42:35,719 --> 00:42:39,719
Speaker 3: five percent of goverment guarantee mortgagee's guarantee. Yeah, first time

885
00:42:39,760 --> 00:42:42,719
Speaker 3: as grants. You just mentioned John Howard. I remember we're

886
00:42:42,719 --> 00:42:44,600
Speaker 3: in two thousand and two election. He double the first

887
00:42:44,640 --> 00:42:47,200
Speaker 3: time own as grant. But all I remember is that

888
00:42:47,200 --> 00:42:48,920
Speaker 3: the prices just went up by the same amount.

889
00:42:48,960 --> 00:42:50,280
Speaker 2: But what do you think about government?

890
00:42:50,480 --> 00:42:51,399
Speaker 1: I don't like any of them.

891
00:42:51,520 --> 00:42:53,080
Speaker 2: Yeah, I don't know.

892
00:42:53,239 --> 00:42:55,680
Speaker 1: But if you get in first, you're at the top

893
00:42:55,719 --> 00:42:58,960
Speaker 1: of the que you get that thing, then fantastic, you

894
00:42:59,000 --> 00:43:02,319
Speaker 1: get an advantage. But everybody else down the queue, the

895
00:43:02,360 --> 00:43:05,640
Speaker 1: price just goes up by the same amount. Yes, it's

896
00:43:05,640 --> 00:43:10,680
Speaker 1: it's ridiculous. You know that. Our solution our generation I'm

897
00:43:10,680 --> 00:43:15,440
Speaker 1: a baby boomer. Our solution to enabling younger people to

898
00:43:15,440 --> 00:43:16,680
Speaker 1: get in, to say, oh you can get in with

899
00:43:16,760 --> 00:43:20,040
Speaker 1: five percent deposit, you know, borrow ninety five percent to

900
00:43:20,040 --> 00:43:23,560
Speaker 1: only ridiculous out solution. Yeah, i'd freak out. I mean,

901
00:43:23,600 --> 00:43:25,759
Speaker 1: I got worried back in the nineties when I was

902
00:43:25,760 --> 00:43:27,799
Speaker 1: taking out loans. Yet to borrow three hundred and fifty thousand,

903
00:43:27,840 --> 00:43:30,360
Speaker 1: I'm thinking, oh, geez, that's a lot of money. Yeah, now,

904
00:43:30,440 --> 00:43:32,080
Speaker 1: of course it's not much. People got to borrow a

905
00:43:32,120 --> 00:43:35,960
Speaker 1: million or something. But that's it's it's a ridiculous situation.

906
00:43:36,400 --> 00:43:37,760
Speaker 2: Why do it comes keep trying an outthough?

907
00:43:37,760 --> 00:43:41,400
Speaker 1: Shame because because there's votes in it for some most.

908
00:43:41,280 --> 00:43:43,200
Speaker 3: Of these people who vote from don't even take advantage

909
00:43:43,200 --> 00:43:45,040
Speaker 3: of it. As you say, it's only people in the

910
00:43:45,040 --> 00:43:45,760
Speaker 3: front of the queue.

911
00:43:46,239 --> 00:43:47,799
Speaker 1: Yeah, I know they don't get the advantage of it,

912
00:43:47,800 --> 00:43:50,120
Speaker 1: but they think that it's a handout for them. But

913
00:43:50,200 --> 00:43:52,000
Speaker 1: it's it's a mirage.

914
00:43:52,560 --> 00:43:54,719
Speaker 3: It's it is a handout. But then to pay more

915
00:43:55,040 --> 00:43:58,360
Speaker 3: so over time with a public benefit from it, you

916
00:43:58,360 --> 00:43:59,800
Speaker 3: would be because our house prices go.

917
00:44:00,600 --> 00:44:03,840
Speaker 2: And then that's probably the just a final comment from you.

918
00:44:05,000 --> 00:44:09,160
Speaker 3: The division it's becoming two ninety six, No, no, sorry,

919
00:44:09,160 --> 00:44:12,920
Speaker 3: it's become a political divisions of between the haves and

920
00:44:12,960 --> 00:44:16,719
Speaker 3: the have nots, and like parents and their kids, and

921
00:44:17,080 --> 00:44:19,040
Speaker 3: you know, the banker mom and dad is nearly a joke.

922
00:44:19,080 --> 00:44:21,279
Speaker 3: But the bank amount and Dad are like, we run

923
00:44:21,280 --> 00:44:23,839
Speaker 3: a mortgage business. You know, like probably of our two

924
00:44:23,880 --> 00:44:26,120
Speaker 3: and a half billion dollars that we settled last month

925
00:44:26,360 --> 00:44:28,040
Speaker 3: for we do about two and a half billion a month,

926
00:44:29,200 --> 00:44:32,360
Speaker 3: we would I would say thirty percent of those applicants

927
00:44:32,880 --> 00:44:35,000
Speaker 3: were assisted by the parents.

928
00:44:35,160 --> 00:44:36,799
Speaker 1: Yeah. Yeah, and that's a lot.

929
00:44:36,840 --> 00:44:41,000
Speaker 2: That's massive. We're talking about nearly a billion dollars just

930
00:44:41,080 --> 00:44:42,080
Speaker 2: in my fair outcome.

931
00:44:42,120 --> 00:44:44,400
Speaker 1: If your parents are well off, then you're okay. If not,

932
00:44:44,480 --> 00:44:46,120
Speaker 1: then you're not in trouble.

933
00:44:46,160 --> 00:44:47,799
Speaker 3: It's not a fair outcome for those people who don't

934
00:44:47,800 --> 00:44:49,440
Speaker 3: have wealthy parents. But it's not a fair outcome for

935
00:44:49,520 --> 00:44:52,480
Speaker 3: parents they're wealthy. I mean, they're habit healthy, they're happy

936
00:44:52,480 --> 00:44:54,040
Speaker 3: to help, but they probably I.

937
00:44:53,960 --> 00:44:57,160
Speaker 1: Didn't have to rely on my parents or scheme or

938
00:44:57,160 --> 00:44:59,880
Speaker 1: anything wacky like that. I mean we we did have

939
00:45:00,000 --> 00:45:02,399
Speaker 1: first time owners grants because I remember Hawk and Keating

940
00:45:02,520 --> 00:45:04,560
Speaker 1: used it and how but that was at a time

941
00:45:04,600 --> 00:45:07,280
Speaker 1: when house price to income ratios were a lot more modest.

942
00:45:07,320 --> 00:45:09,440
Speaker 1: Yeah yeah they are now and they would usually wheel

943
00:45:09,480 --> 00:45:11,840
Speaker 1: them out when there's a recession on you wiel that

944
00:45:11,920 --> 00:45:14,279
Speaker 1: out because you know the economy is depressed, you want

945
00:45:14,320 --> 00:45:17,000
Speaker 1: more people to build homes. Fair enough, that's one way

946
00:45:17,000 --> 00:45:19,440
Speaker 1: to encourage it. Now it's just wheeled out just to

947
00:45:19,520 --> 00:45:23,560
Speaker 1: keep to enable people to get in. But it's not

948
00:45:23,760 --> 00:45:26,480
Speaker 1: designed really to build more homes. It's really just to

949
00:45:26,560 --> 00:45:28,640
Speaker 1: enable them to get in, which just pushes prices up.

950
00:45:28,840 --> 00:45:30,920
Speaker 2: You're right, because how would wheel that out before the election?

951
00:45:31,000 --> 00:45:33,640
Speaker 3: Because it was an affordability problem here in Australia big time,

952
00:45:33,880 --> 00:45:36,600
Speaker 3: and there was, and that we had gone through a dip,

953
00:45:36,680 --> 00:45:38,600
Speaker 3: so if you remember, it might have been two thousand one,

954
00:45:38,640 --> 00:45:38,959
Speaker 3: not two.

955
00:45:38,840 --> 00:45:40,759
Speaker 1: Thousands of it. We had a bit of a dip.

956
00:45:40,800 --> 00:45:43,160
Speaker 3: Then in two thousand economy, yeah, it dropped off a

957
00:45:43,160 --> 00:45:46,120
Speaker 3: bit because that was two thousand and introduced the GEST

958
00:45:46,320 --> 00:45:47,160
Speaker 3: July two thousand.

959
00:45:47,360 --> 00:45:50,200
Speaker 1: The GST brought forward a whole bunch of activity and

960
00:45:50,320 --> 00:45:53,320
Speaker 1: it sort of fell into a hole, including with housing,

961
00:45:53,400 --> 00:45:56,120
Speaker 1: so it fell into a hole posts the Olympics and

962
00:45:56,200 --> 00:45:57,640
Speaker 1: post the Gust.

963
00:45:57,760 --> 00:46:00,720
Speaker 3: It was the first quarter I recall in Courted history

964
00:46:00,719 --> 00:46:04,400
Speaker 3: that the mortgage mark didn't grow and because I remember

965
00:46:04,440 --> 00:46:06,319
Speaker 3: Kerry Packer ringing me out and saying, son, now, how

966
00:46:06,320 --> 00:46:08,839
Speaker 3: come we're going backwards for this quarter? And I had

967
00:46:08,880 --> 00:46:11,160
Speaker 3: to go off and explain it to him. And it

968
00:46:11,200 --> 00:46:13,520
Speaker 3: wasn't a pleasant conversation. I'll never forget the conversation for

969
00:46:13,560 --> 00:46:16,279
Speaker 3: the rest of my life. But and you're right, there

970
00:46:16,360 --> 00:46:18,760
Speaker 3: was a downturn. There was a downturn in that period.

971
00:46:18,800 --> 00:46:21,080
Speaker 3: And because I remember in the beginning of two thousand

972
00:46:21,120 --> 00:46:24,760
Speaker 3: and one, beginning of that year, the RBA dropped rates

973
00:46:25,560 --> 00:46:29,480
Speaker 3: in the February meeting. And I remember it well because

974
00:46:29,960 --> 00:46:34,480
Speaker 3: I remember thinking the money markets were telling us that

975
00:46:34,520 --> 00:46:36,040
Speaker 3: they were going to do. In those days, you know,

976
00:46:36,320 --> 00:46:38,520
Speaker 3: it was rare that the RBA did not do what

977
00:46:38,520 --> 00:46:41,120
Speaker 3: the money market was saying. And we actually dropped it

978
00:46:41,200 --> 00:46:43,960
Speaker 3: right before the before the RBI meeting, just bit cheeky,

979
00:46:44,480 --> 00:46:46,239
Speaker 3: and Kerry said to me, he said, son, if you

980
00:46:46,280 --> 00:46:48,960
Speaker 3: get this wrong, you'll be paying me the money that

981
00:46:49,000 --> 00:46:51,120
Speaker 3: we lose for dropping our rates. It was only on

982
00:46:51,160 --> 00:46:53,600
Speaker 3: new lines for dropping our ads our rates ahead of

983
00:46:53,640 --> 00:46:56,759
Speaker 3: the RBA, and I remember I was shitting myself for

984
00:46:56,840 --> 00:46:59,600
Speaker 3: about two weeks. It was actually one and a half weeks.

985
00:46:59,840 --> 00:47:00,719
Speaker 2: We called it.

986
00:47:00,719 --> 00:47:03,040
Speaker 3: I don't know, we're so likely, thank god, But today

987
00:47:03,040 --> 00:47:05,120
Speaker 3: I would never do something like that because it's the

988
00:47:05,200 --> 00:47:08,120
Speaker 3: unpredictability of our IBA. Like what we're talking about earlier

989
00:47:08,120 --> 00:47:12,000
Speaker 3: on it's it's it's a topsy turvy at the moment,

990
00:47:12,000 --> 00:47:13,680
Speaker 3: and I'd be too frightened to do anything of them

991
00:47:13,760 --> 00:47:18,719
Speaker 3: because I and uncertainty in unpredictability is a problem in economies.

992
00:47:19,280 --> 00:47:20,160
Speaker 1: It's a big problem.

993
00:47:20,280 --> 00:47:22,480
Speaker 2: You know, everybody finds it difficult.

994
00:47:22,719 --> 00:47:25,160
Speaker 3: So if I look, if you look forward as the bank,

995
00:47:25,520 --> 00:47:29,440
Speaker 3: as the chief economists of the ap Bank AMP Group,

996
00:47:29,920 --> 00:47:33,799
Speaker 3: which includes the AMP Bank, do you what do you

997
00:47:33,880 --> 00:47:38,840
Speaker 3: think for the next twelve months. We're not expecting it,

998
00:47:38,960 --> 00:47:40,200
Speaker 3: tell me by a month, but what do you think

999
00:47:40,200 --> 00:47:42,200
Speaker 3: for the next twelve months in terms of the official rate?

1000
00:47:42,200 --> 00:47:44,880
Speaker 3: Where do you think we're going to land? I know it's.

1001
00:47:45,440 --> 00:47:47,759
Speaker 1: I think we've still got several more carts, So one

1002
00:47:47,800 --> 00:47:50,239
Speaker 1: in November. The Reserve Bank have said that they want

1003
00:47:50,239 --> 00:47:52,200
Speaker 1: to ease in the cautious and measured way, so that

1004
00:47:52,360 --> 00:47:56,560
Speaker 1: probably means every every quarter, So one in November, another

1005
00:47:56,600 --> 00:48:00,560
Speaker 1: one in February, and probably another one in May. So

1006
00:48:00,600 --> 00:48:02,640
Speaker 1: that will take the cash rate currently three point six

1007
00:48:02,680 --> 00:48:04,600
Speaker 1: down to two point eight five percent.

1008
00:48:04,760 --> 00:48:06,520
Speaker 2: And do you think there will be the sweet spot?

1009
00:48:07,040 --> 00:48:10,279
Speaker 1: Well? Hopefully hopefully, I mean the receive banks own analysis

1010
00:48:10,320 --> 00:48:13,839
Speaker 1: would suggest that the their neutral rate. It's a bit

1011
00:48:13,880 --> 00:48:16,439
Speaker 1: hard to work out what precisely it is the rate

1012
00:48:16,480 --> 00:48:19,320
Speaker 1: of interest, which is neither causing the economy to expand

1013
00:48:19,400 --> 00:48:23,360
Speaker 1: or contract, is around two point nine percent. So that's

1014
00:48:23,400 --> 00:48:25,799
Speaker 1: why we've got two point eight two point eight five

1015
00:48:25,880 --> 00:48:29,040
Speaker 1: is just the the where you end up with three

1016
00:48:29,120 --> 00:48:30,480
Speaker 1: point two five percent moves.

1017
00:48:30,640 --> 00:48:32,759
Speaker 3: That's interesting because an off finish off of this. But

1018
00:48:33,040 --> 00:48:37,280
Speaker 3: can you imagine like if the rate of growth GDP

1019
00:48:37,440 --> 00:48:41,200
Speaker 3: growth was two seven Yeah, the rate of the fisher

1020
00:48:41,239 --> 00:48:47,759
Speaker 3: rates to eight five inflation, similar numbers, similar number here

1021
00:48:48,120 --> 00:48:51,880
Speaker 3: we got this sort of equilibrium. Wages growth hopefully is

1022
00:48:51,880 --> 00:48:53,520
Speaker 3: a bit better than that, but like you know, everything

1023
00:48:53,560 --> 00:48:55,200
Speaker 3: is sort a bit of an equilibrium all around the

1024
00:48:55,520 --> 00:48:58,480
Speaker 3: all around the sort of around the threes. So it'd

1025
00:48:58,520 --> 00:49:00,719
Speaker 3: be like as bit a gown of the casino, and

1026
00:49:01,080 --> 00:49:03,399
Speaker 3: we're doing the triple threes of the four threes, we're

1027
00:49:03,400 --> 00:49:03,719
Speaker 3: going to.

1028
00:49:03,640 --> 00:49:06,960
Speaker 1: Have a little bit a little bit higher.

1029
00:49:07,080 --> 00:49:09,440
Speaker 3: Yeah, well, be nicely unemployment down there that territory, if

1030
00:49:09,440 --> 00:49:11,279
Speaker 3: we can get it down the territory. But and do

1031
00:49:11,320 --> 00:49:13,399
Speaker 3: you think the Reserve Bank and I'm not I don't

1032
00:49:13,400 --> 00:49:16,160
Speaker 3: mean this in a criticism center point of view, but

1033
00:49:16,160 --> 00:49:17,400
Speaker 3: do you think the Reserve Bank will get us to

1034
00:49:17,440 --> 00:49:17,919
Speaker 3: where they want?

1035
00:49:18,120 --> 00:49:19,200
Speaker 2: That is good?

1036
00:49:19,200 --> 00:49:25,480
Speaker 3: And unemployment numbers, good inflation numbers, a less restrictive.

1037
00:49:26,800 --> 00:49:29,360
Speaker 2: Interest rate. Do you think they'll get us to where.

1038
00:49:29,200 --> 00:49:32,440
Speaker 3: They wanted us to be because that as an ideal world,

1039
00:49:32,680 --> 00:49:34,239
Speaker 3: or do they really need to take us into a

1040
00:49:34,360 --> 00:49:35,120
Speaker 3: sort of.

1041
00:49:35,239 --> 00:49:36,880
Speaker 1: I don't think they want us to know us in

1042
00:49:36,880 --> 00:49:39,040
Speaker 1: a recession. If that were the case, then they would

1043
00:49:39,040 --> 00:49:41,960
Speaker 1: have raised rates before more aggressively, more aggressively like New

1044
00:49:42,040 --> 00:49:44,000
Speaker 1: Zealand has done, and they have gone into recession and

1045
00:49:44,040 --> 00:49:46,440
Speaker 1: their property market is is cactus.

1046
00:49:46,480 --> 00:49:50,040
Speaker 3: Yeah, present prices and they just had another rate reduction

1047
00:49:50,040 --> 00:49:51,120
Speaker 3: I think so.

1048
00:49:50,960 --> 00:49:52,960
Speaker 1: So that was last week. So that so I don't

1049
00:49:53,000 --> 00:49:55,120
Speaker 1: think they wanted I don't think the Reserve Bank was

1050
00:49:55,160 --> 00:49:57,759
Speaker 1: to do that. Yeah, I don't want to have a

1051
00:49:57,760 --> 00:49:58,439
Speaker 1: recession here.

1052
00:49:59,560 --> 00:50:03,120
Speaker 2: So they're for they're looking for that sort of goalie exposition.

1053
00:50:03,160 --> 00:50:05,600
Speaker 1: They're looking for a sweet spot, yeah, which means you

1054
00:50:05,680 --> 00:50:08,600
Speaker 1: get your rate of inflation down and your interest rates down.

1055
00:50:09,280 --> 00:50:13,080
Speaker 1: But the only niggling sort of annoyance in the whole

1056
00:50:13,120 --> 00:50:16,680
Speaker 1: thing is that prices are still going to be relatively high.

1057
00:50:17,000 --> 00:50:19,600
Speaker 1: It's just not going up at the same rate anymore.

1058
00:50:19,239 --> 00:50:20,800
Speaker 2: With that one or landing beside by supply.

1059
00:50:21,239 --> 00:50:22,880
Speaker 1: That's right, You've got to boost the supply side of

1060
00:50:22,880 --> 00:50:25,840
Speaker 1: the economy. You've got to encourage just being courage businesses

1061
00:50:25,880 --> 00:50:27,799
Speaker 1: to invest, encourage more people to get out there and

1062
00:50:27,840 --> 00:50:31,600
Speaker 1: work longer hours, and all people to take up AI

1063
00:50:32,680 --> 00:50:34,240
Speaker 1: do the sort of things you're seeing in the US.

1064
00:50:34,520 --> 00:50:37,800
Speaker 3: Yeah, doctor Chane Oliver, thanks very much, appreciate it, my pleasure.

1065
00:50:37,800 --> 00:50:38,960
Speaker 1: Thanks for having me. You're welcome.