1 00:00:05,790 --> 00:00:08,519 Sean Aylmer: Welcome to the Fear & Greed business interview. I'm Sean Aylmer. 2 00:00:08,580 --> 00:00:11,549 Sean Aylmer: Last night, Treasurer Jim Chalmers handed down the federal budget 3 00:00:11,550 --> 00:00:15,839 Sean Aylmer: forecasting a surplus at $9.3 billion. It comes after a surplus 4 00:00:15,839 --> 00:00:18,299 Sean Aylmer: last year, too. That's the first back- to- back surpluses 5 00:00:18,299 --> 00:00:21,090 Sean Aylmer: in almost two decades. But from next year, we're in for at 6 00:00:21,090 --> 00:00:24,900 Sean Aylmer: least four years of deficits, in total about 112 billion. 7 00:00:25,410 --> 00:00:28,260 Sean Aylmer: In short, everybody will be talking about the cost of 8 00:00:28,260 --> 00:00:32,159 Sean Aylmer: living relief after last night, including $ 300 in power bill 9 00:00:32,219 --> 00:00:38,040 Sean Aylmer: rebates for households, about $ 325 for small businesses. There's additional 10 00:00:38,040 --> 00:00:40,920 Sean Aylmer: funding for medicines, there's rental relief, and of course, those 11 00:00:40,920 --> 00:00:44,340 Sean Aylmer: big stage three tax cuts. There's new spending over the 12 00:00:44,340 --> 00:00:47,010 Sean Aylmer: next 12 months of about $ 10 billion, which as Treasurer 13 00:00:47,010 --> 00:00:50,729 Sean Aylmer: described as modest and unlikely to add to inflationary pressure. 14 00:00:51,089 --> 00:00:53,940 Sean Aylmer: But the budget also includes Treasury forecasts that see inflation 15 00:00:53,940 --> 00:00:55,710 Sean Aylmer: returning to the target range by the end of the 16 00:00:55,710 --> 00:00:58,770 Sean Aylmer: year. It also suggests that the economy might slow down 17 00:00:58,770 --> 00:01:02,400 Sean Aylmer: somewhat. Every year, we get the absolute best budget and 18 00:01:02,400 --> 00:01:08,669 Sean Aylmer: analysis from Fear and Greed's resident economist, Stephen Koukoulas, AKA The Kouk. You'll 19 00:01:08,670 --> 00:01:11,850 Sean Aylmer: hear him every Monday morning on the week ahead. He's 20 00:01:11,850 --> 00:01:14,640 Sean Aylmer: the managing director of market economics and a former economic 21 00:01:14,640 --> 00:01:16,950 Sean Aylmer: advisor to a prime minister. He's also one of the 22 00:01:16,950 --> 00:01:20,579 Sean Aylmer: great speakers on economics that I've come across. Stephen, welcome 23 00:01:20,639 --> 00:01:22,770 Sean Aylmer: to Fear & Greed and welcome back to Fear and Greed. 24 00:01:23,370 --> 00:01:25,828 Stephen Koukoulas: It's great to be here and after a busy night 25 00:01:25,830 --> 00:01:28,679 Stephen Koukoulas: last night, looking at the budget, looking how financial markets 26 00:01:28,680 --> 00:01:32,190 Stephen Koukoulas: reacted to the budget. Gosh, there's a lot to get through. 27 00:01:32,400 --> 00:01:35,040 Sean Aylmer: Right on. First impression of last night's budget. 28 00:01:35,459 --> 00:01:40,440 Stephen Koukoulas: First impressions. Look, I think it's a budget that really 29 00:01:40,440 --> 00:01:44,459 Stephen Koukoulas: doesn't change the macroeconomic picture all that much. As you 30 00:01:44,459 --> 00:01:47,849 Stephen Koukoulas: alluded to in your introduction. There's a range, a big 31 00:01:47,850 --> 00:01:51,420 Stephen Koukoulas: array of small or medium- sized issues that are going to be 32 00:01:51,420 --> 00:01:54,750 Stephen Koukoulas: impacting specific parts of the economy, or dare I say 33 00:01:54,750 --> 00:01:58,920 Stephen Koukoulas: the electorate. But the ones that sort of seemingly will 34 00:01:58,920 --> 00:02:01,740 Stephen Koukoulas: impact everybody, of course, the statutory tax cuts, but they've 35 00:02:01,740 --> 00:02:03,509 Stephen Koukoulas: been around for quite a while now. So we know 36 00:02:03,509 --> 00:02:07,320 Stephen Koukoulas: that they're included in the budget figuring. There's across the 37 00:02:07,320 --> 00:02:11,400 Stephen Koukoulas: board relief on electricity prices with a subsidy that goes 38 00:02:11,400 --> 00:02:14,549 Stephen Koukoulas: to every household and quite a few of the small 39 00:02:14,550 --> 00:02:17,130 Stephen Koukoulas: business sectors. So that's a big item that's going to 40 00:02:17,130 --> 00:02:20,219 Stephen Koukoulas: save people a decent amount of money. And for renters, 41 00:02:20,219 --> 00:02:22,288 Stephen Koukoulas: there's an increase in the rental rebate, which of course 42 00:02:22,288 --> 00:02:24,599 Stephen Koukoulas: is also a very important part of the cost of 43 00:02:24,600 --> 00:02:29,730 Stephen Koukoulas: living pressures. And interestingly, and I won't say cynically, but 44 00:02:29,880 --> 00:02:34,260 Stephen Koukoulas: strategically, those last two measures, the electricity subsidy and the 45 00:02:34,260 --> 00:02:38,219 Stephen Koukoulas: rent rebate are going to slice something like three quarters 46 00:02:38,219 --> 00:02:41,969 Stephen Koukoulas: of a percentage point off the measure of inflation. Because 47 00:02:41,969 --> 00:02:45,120 Stephen Koukoulas: of course, rents and electricity in the inflation basket. And 48 00:02:45,120 --> 00:02:47,400 Stephen Koukoulas: that's why treasury has come up with a forecast for 49 00:02:47,400 --> 00:02:52,050 Stephen Koukoulas: inflation to be roughly a percentage point below what the 50 00:02:52,050 --> 00:02:54,539 Stephen Koukoulas: RBA was saying just a week ago for the end 51 00:02:54,540 --> 00:02:58,709 Stephen Koukoulas: of 2024. So it is a cost of living budget. 52 00:02:59,190 --> 00:03:01,919 Stephen Koukoulas: We have slipped back into deficit for the financial year, '24, 53 00:03:01,919 --> 00:03:06,660 Stephen Koukoulas: '25. It's not a huge deficit, but it's one of 54 00:03:06,660 --> 00:03:08,940 Stephen Koukoulas: those ones where I think we just sort of move 55 00:03:08,940 --> 00:03:11,429 Stephen Koukoulas: on and then start re- analyzing the economic data and 56 00:03:11,429 --> 00:03:14,160 Stephen Koukoulas: what that might mean for RBA interest rate settings. 57 00:03:15,330 --> 00:03:19,110 Sean Aylmer: Okay. I'm going to ask you a technical question here. Their rebates, so the rental 58 00:03:19,110 --> 00:03:23,160 Sean Aylmer: assistance and the energy are rebates as opposed to handouts. 59 00:03:23,160 --> 00:03:27,480 Sean Aylmer: So just explain why a rebate can take three quarters 60 00:03:27,480 --> 00:03:30,779 Sean Aylmer: of a percentage point off inflation, whereas if it was a 61 00:03:30,780 --> 00:03:32,970 Sean Aylmer: handout, that's not necessarily the case. 62 00:03:33,240 --> 00:03:37,530 Stephen Koukoulas: So let's use round numbers for ease. Just so it's a $500 electricity 63 00:03:37,710 --> 00:03:41,250 Stephen Koukoulas: rebate as opposed to a $ 500 check that landed in 64 00:03:41,310 --> 00:03:44,370 Stephen Koukoulas: your and my bank account on the 1st of July. That $ 65 00:03:44,370 --> 00:03:48,599 Stephen Koukoulas: 500, we would probably, or many of us, many Australians 66 00:03:48,599 --> 00:03:50,399 Stephen Koukoulas: would go out and spend it. So it'd be... And 67 00:03:50,400 --> 00:03:52,410 Stephen Koukoulas: on items that we don't know, you can spend on 68 00:03:52,410 --> 00:03:54,090 Stephen Koukoulas: whatever you want. It's your money that's been put in 69 00:03:54,090 --> 00:03:56,640 Stephen Koukoulas: there by the government. Whereas when we get our electricity 70 00:03:56,640 --> 00:04:00,990 Stephen Koukoulas: bills, if you get a quarterly bill, it'll be $ 125 71 00:04:00,990 --> 00:04:03,510 Stephen Koukoulas: a quarter less than it would otherwise be. So instead 72 00:04:03,510 --> 00:04:07,440 Stephen Koukoulas: of sort of bracing when you get that envelope with 73 00:04:07,440 --> 00:04:09,299 Stephen Koukoulas: the little sort of thing they ask from the electricity 74 00:04:09,299 --> 00:04:12,269 Stephen Koukoulas: company or the email from one of the electricity companies, you 75 00:04:12,270 --> 00:04:13,980 Stephen Koukoulas: think, oh, gee, how big is my electricity bill this 76 00:04:13,980 --> 00:04:16,230 Stephen Koukoulas: year? I've tried really hard not to use too much 77 00:04:16,230 --> 00:04:18,390 Stephen Koukoulas: hot water. It's actually going to be a bit less. 78 00:04:18,510 --> 00:04:23,610 Stephen Koukoulas: So it doesn't the same affect as cash in people's 79 00:04:23,610 --> 00:04:28,559 Stephen Koukoulas: hands. It's still a net stimulatory measure. But I think 80 00:04:28,559 --> 00:04:30,690 Stephen Koukoulas: from what I was hearing from the Treasurer last night 81 00:04:30,720 --> 00:04:34,020 Stephen Koukoulas: in his interviews, the Treasury analysis suggests that it's not 82 00:04:34,020 --> 00:04:36,660 Stephen Koukoulas: quite the same stimulatory effect, in fact by quite a 83 00:04:36,660 --> 00:04:38,550 Stephen Koukoulas: margin as a cash hand out. 84 00:04:39,389 --> 00:04:42,869 Sean Aylmer: So along those lines... Well, is it a sleight of 85 00:04:42,870 --> 00:04:46,109 Sean Aylmer: hand? Maybe I'm being too cynical about the Treasurer and 86 00:04:46,109 --> 00:04:48,810 Sean Aylmer: Treasury on that one, but really what I'm worried about, 87 00:04:48,810 --> 00:04:50,880 Sean Aylmer: what does the Reserve bank think of that? Do they 88 00:04:50,880 --> 00:04:53,159 Sean Aylmer: see through that or they say, " Well, no, in actual fact, 89 00:04:53,160 --> 00:04:55,440 Sean Aylmer: inflation is going to come down to under 3% by 90 00:04:55,440 --> 00:04:58,529 Sean Aylmer: the end of the year as Treasury forecasts, hence, well, 91 00:04:58,529 --> 00:04:59,700 Sean Aylmer: maybe we need to cut rates?" 92 00:05:00,210 --> 00:05:02,849 Stephen Koukoulas: Look, I don't think it's going to figure hugely into 93 00:05:02,849 --> 00:05:06,089 Stephen Koukoulas: the RBA decision on interest rates. They'll be pleased to see 94 00:05:06,360 --> 00:05:08,970 Stephen Koukoulas: that headline inflation will be coming down, and there's this 95 00:05:08,970 --> 00:05:11,969 Stephen Koukoulas: question about whether it gets trimmed out of their trimmed 96 00:05:11,970 --> 00:05:15,000 Stephen Koukoulas: mean or their underlying measures of inflation that remains to 97 00:05:15,000 --> 00:05:17,070 Stephen Koukoulas: be seen over the quarters ahead, or when the effect of 98 00:05:17,580 --> 00:05:20,880 Stephen Koukoulas: the rent and the electricity rebates kick in. So they 99 00:05:20,880 --> 00:05:23,190 Stephen Koukoulas: might be trimmed out if you like, at the trimmed 100 00:05:23,190 --> 00:05:26,460 Stephen Koukoulas: mean measures of inflation without getting too technical here. But 101 00:05:26,460 --> 00:05:28,589 Stephen Koukoulas: the bottom line is the RBA will be pleased, at 102 00:05:28,589 --> 00:05:32,220 Stephen Koukoulas: least from an inflation expectations perspective to be seeing that 103 00:05:32,220 --> 00:05:35,370 Stephen Koukoulas: inflation might be below 3%. So back in the target 104 00:05:35,370 --> 00:05:37,740 Stephen Koukoulas: by the end of the year. They'll still be having 105 00:05:37,740 --> 00:05:40,619 Stephen Koukoulas: a look at what's happening to wages growth, what's happening 106 00:05:40,619 --> 00:05:43,920 Stephen Koukoulas: to demand in the economy, what's happening to the global economy 107 00:05:43,920 --> 00:05:46,620 Stephen Koukoulas: before they pull triggers on rate hikes or rate cuts. 108 00:05:46,980 --> 00:05:50,549 Stephen Koukoulas: But I don't think they'll be moved to change what 109 00:05:50,550 --> 00:05:53,519 Stephen Koukoulas: they would otherwise do in any material way. And just 110 00:05:53,520 --> 00:05:55,229 Stephen Koukoulas: by the way, before we saw that USA to come 111 00:05:55,230 --> 00:05:57,539 Stephen Koukoulas: out last night in the... What was it, an hour 112 00:05:57,540 --> 00:06:00,630 Stephen Koukoulas: and a half after the budget speech finished, I was 113 00:06:00,630 --> 00:06:03,930 Stephen Koukoulas: tracking the government bond futures market is one of the things that I 114 00:06:03,930 --> 00:06:04,470 Stephen Koukoulas: love to do. 115 00:06:04,529 --> 00:06:06,060 Sean Aylmer: God, you're an exciting guy, Stephen. 116 00:06:06,120 --> 00:06:08,789 Stephen Koukoulas: And guess how much the bonds moved in reaction? This 117 00:06:08,790 --> 00:06:10,920 Stephen Koukoulas: is how scared the bond market was about the inflationary 118 00:06:10,920 --> 00:06:15,089 Stephen Koukoulas: effects of these measures, 0. 0 basis points. 119 00:06:15,210 --> 00:06:22,140 Sean Aylmer: Wow, wow. Not much at all. So most of the watches of budgets, and I'm talking about 120 00:06:22,140 --> 00:06:25,770 Sean Aylmer: the media here and some really senior economic correspondents, they talk about 121 00:06:25,770 --> 00:06:27,510 Sean Aylmer: the fact that the next 12 months there's not a 122 00:06:27,510 --> 00:06:29,700 Sean Aylmer: lot of spending. That's kind of good. What they're all 123 00:06:29,700 --> 00:06:34,260 Sean Aylmer: worried about are these massive deficits in the next four years. 124 00:06:34,260 --> 00:06:37,500 Sean Aylmer: I think it's 112 billion, mostly because the money being 125 00:06:37,500 --> 00:06:39,900 Sean Aylmer: spent on the future made in Australia and we don't 126 00:06:39,990 --> 00:06:42,120 Sean Aylmer: really quite know where it's going. 127 00:06:42,660 --> 00:06:44,460 Stephen Koukoulas: Yeah, we don't know yet. There's not a lot of 128 00:06:44,520 --> 00:06:46,800 Stephen Koukoulas: flesh on the bones of some of these policies in 129 00:06:46,800 --> 00:06:50,159 Stephen Koukoulas: the out years, in the years beyond '25, '26 and beyond. 130 00:06:50,160 --> 00:06:52,678 Stephen Koukoulas: And that's where we get these well, sort of big- 131 00:06:52,680 --> 00:06:56,279 Stephen Koukoulas: ish deficits. You're quite right, that 28 billion next financial 132 00:06:56,279 --> 00:06:58,620 Stephen Koukoulas: year, 42 billion I think it is the following year, 133 00:06:59,580 --> 00:07:02,610 Stephen Koukoulas: they're not horrendous, but they're not great if you are 134 00:07:02,610 --> 00:07:05,700 Stephen Koukoulas: worried about the level of government debt. So we want 135 00:07:05,700 --> 00:07:09,810 Stephen Koukoulas: to be seeing where the policy detail in the provisioning, 136 00:07:09,870 --> 00:07:11,639 Stephen Koukoulas: if you like, in the budget papers for these measures 137 00:07:11,639 --> 00:07:13,800 Stephen Koukoulas: is going to actually be spent. Will it be in 138 00:07:13,800 --> 00:07:16,380 Stephen Koukoulas: areas that is going to be adding to productive capacity 139 00:07:16,380 --> 00:07:18,989 Stephen Koukoulas: of the economy? Let's hope so. Or will it be 140 00:07:18,990 --> 00:07:22,500 Stephen Koukoulas: in areas that are pretty borderline? I think that's where 141 00:07:22,500 --> 00:07:24,449 Stephen Koukoulas: we want to see... Oh, no, we've only got the budget 142 00:07:24,690 --> 00:07:27,119 Stephen Koukoulas: less than 24 hours ago, but we want to see 143 00:07:27,120 --> 00:07:29,129 Stephen Koukoulas: some flesh on some of these other ideas that the 144 00:07:29,129 --> 00:07:33,960 Stephen Koukoulas: treasurer has been talking about because they are potentially important 145 00:07:33,960 --> 00:07:37,350 Stephen Koukoulas: policy reforms made in Australia, these sorts of things. And 146 00:07:37,680 --> 00:07:40,830 Stephen Koukoulas: again, because I'm always a bit skeptical of these sort 147 00:07:40,830 --> 00:07:43,229 Stephen Koukoulas: of things. I'm a bit sort of nervous about picking 148 00:07:43,230 --> 00:07:46,199 Stephen Koukoulas: winners, particularly in areas where a lot of our foreign 149 00:07:46,199 --> 00:07:49,920 Stephen Koukoulas: competitors can produce the items. Solar panels, probably more efficiently 150 00:07:49,920 --> 00:07:53,010 Stephen Koukoulas: and cheaply than we can. So maybe we shouldn't be 151 00:07:53,010 --> 00:07:56,760 Stephen Koukoulas: doing it and pumping money into mining exploration on rare 152 00:07:56,760 --> 00:08:00,750 Stephen Koukoulas: earths and these sorts of things, whatever, particularly in the mining 153 00:08:00,750 --> 00:08:02,639 Stephen Koukoulas: sector has done so well in the last few years. 154 00:08:02,940 --> 00:08:05,070 Stephen Koukoulas: But I want to see the flesh on the bones 155 00:08:05,070 --> 00:08:07,559 Stephen Koukoulas: of these policies. But that probably won't happen until, well 156 00:08:07,889 --> 00:08:10,290 Stephen Koukoulas: do I state the election campaign or even after the 157 00:08:10,290 --> 00:08:10,950 Stephen Koukoulas: next election. 158 00:08:11,190 --> 00:08:13,290 Sean Aylmer: Stay with me Stephen. We'll be back in a minute. 159 00:08:20,639 --> 00:08:25,470 Sean Aylmer: My guest this morning is Economist Stephen Koukoulas. So I 160 00:08:25,470 --> 00:08:29,280 Sean Aylmer: suppose the question is whether or not this... I wouldn't 161 00:08:29,280 --> 00:08:33,330 Sean Aylmer: be cynical enough to say an election budget, but where 162 00:08:33,330 --> 00:08:35,578 Sean Aylmer: do you think the economy will be at the end 163 00:08:35,580 --> 00:08:38,130 Sean Aylmer: of this year, early next year, given what we've seen 164 00:08:38,130 --> 00:08:41,939 Sean Aylmer: last night? Because we will have an election probably February, 165 00:08:41,940 --> 00:08:44,760 Sean Aylmer: March next year. Best guess, what do you reckon? 166 00:08:45,090 --> 00:08:48,510 Stephen Koukoulas: Yeah, look, I think that's the timing. If Jim Chalmers 167 00:08:48,510 --> 00:08:50,700 Stephen Koukoulas: could wave his magic wand and clearly he could only 168 00:08:51,090 --> 00:08:53,219 Stephen Koukoulas: wave a dead stick at the moment, not a magic 169 00:08:53,219 --> 00:08:55,049 Stephen Koukoulas: wand, but he would love to see a couple of 170 00:08:55,049 --> 00:08:57,989 Stephen Koukoulas: interest rate cuts before election day and he would love 171 00:08:57,990 --> 00:09:01,500 Stephen Koukoulas: to see an upgrade to those budget deficit projections out there. Now you've 172 00:09:01,950 --> 00:09:03,929 Stephen Koukoulas: got to remember that... Well, of course depends when the 173 00:09:03,929 --> 00:09:06,001 Stephen Koukoulas: timing of the election is, but there is another (inaudible) 174 00:09:06,001 --> 00:09:09,809 Stephen Koukoulas: about December. And even if there's not a formal 175 00:09:09,809 --> 00:09:11,880 Stephen Koukoulas: budget, because there's an election held in February or March 176 00:09:11,880 --> 00:09:14,549 Stephen Koukoulas: as you alluded to, there is this thing called the 177 00:09:14,549 --> 00:09:17,729 Stephen Koukoulas: PEFO, the pre- election fiscal outlook where the secretaries of 178 00:09:17,730 --> 00:09:21,630 Stephen Koukoulas: treasury and finance produce a budget document based on the 179 00:09:21,630 --> 00:09:24,960 Stephen Koukoulas: latest numbers, completely independent of the government of the day, 180 00:09:25,170 --> 00:09:29,040 Stephen Koukoulas: which has those budget numbers there. So Jim Charmers has 181 00:09:29,040 --> 00:09:30,809 Stephen Koukoulas: got to be a little bit worried that while he 182 00:09:30,809 --> 00:09:33,360 Stephen Koukoulas: is got two surpluses under his belt, and that's a 183 00:09:33,360 --> 00:09:36,299 Stephen Koukoulas: good thing, those deficits that you touched on in the 184 00:09:36,299 --> 00:09:39,240 Stephen Koukoulas: out years could be pretty significant. And when that PEFO 185 00:09:39,240 --> 00:09:40,828 Stephen Koukoulas: comes out or the next budget, if there is one 186 00:09:40,830 --> 00:09:42,958 Stephen Koukoulas: before the election, we could be sort of having a 187 00:09:42,960 --> 00:09:48,060 Stephen Koukoulas: bit of a debate again about budget deficits of 28, 30, $ 40 billion or thereabouts. 188 00:09:49,080 --> 00:09:50,969 Sean Aylmer: I can't let you go without asking about the economic 189 00:09:50,969 --> 00:09:54,299 Sean Aylmer: growth figures too. The treasury has actually downgraded its forecast 190 00:09:54,299 --> 00:09:56,040 Sean Aylmer: for growth this year and next year. Is it something 191 00:09:56,040 --> 00:09:57,000 Sean Aylmer: we should be worried about? 192 00:09:57,780 --> 00:10:00,150 Stephen Koukoulas: A little bit. And I think that's why the treasury 193 00:10:00,150 --> 00:10:03,449 Stephen Koukoulas: also has a slightly lower inflation profile than the Reserve 194 00:10:03,450 --> 00:10:06,750 Stephen Koukoulas: Bank put out too. Apart from those mechanical issues of 195 00:10:06,750 --> 00:10:10,589 Stephen Koukoulas: electricity and dwelling rent. They've got a weaker growth performance 196 00:10:10,590 --> 00:10:12,869 Stephen Koukoulas: and a slightly higher unemployment rate. Not a huge amount, 197 00:10:12,869 --> 00:10:16,530 Stephen Koukoulas: but even a quarter of percentage point on economic growth and 198 00:10:16,590 --> 00:10:20,490 Stephen Koukoulas: unemployment can have a material impact on your inflation forecasts. 199 00:10:20,760 --> 00:10:22,139 Stephen Koukoulas: Look, I think it's fair to say, and as we've 200 00:10:22,139 --> 00:10:25,170 Stephen Koukoulas: alluded to in our weekly discussions, the economy's weak. The day that 201 00:10:25,620 --> 00:10:28,769 Stephen Koukoulas: it's come out in recent times has been pretty weak. 202 00:10:28,770 --> 00:10:32,848 Stephen Koukoulas: Retail sales down, building construction down, the job vacancies are 203 00:10:32,850 --> 00:10:35,550 Stephen Koukoulas: down. So we've got this scenario where the economy is weak and 204 00:10:35,550 --> 00:10:38,910 Stephen Koukoulas: I think as we touched on now, very early comments, 205 00:10:39,150 --> 00:10:41,309 Stephen Koukoulas: that's going to be what the Reserve bank's thinking about 206 00:10:41,309 --> 00:10:43,259 Stephen Koukoulas: when it sets interest rates. It'll have a look at 207 00:10:43,259 --> 00:10:45,990 Stephen Koukoulas: this budget and as we said, it'll be pleased that 208 00:10:45,990 --> 00:10:50,850 Stephen Koukoulas: there's a mechanical slicing of a bit off the inflation 209 00:10:50,850 --> 00:10:53,250 Stephen Koukoulas: rate, but I don't think it's going to be reacting 210 00:10:53,250 --> 00:10:57,240 Stephen Koukoulas: specifically to that inflation rate given how that's been achieved. 211 00:10:57,450 --> 00:11:01,259 Stephen Koukoulas: If a weak economy compounds that and gets inflation even 212 00:11:01,259 --> 00:11:03,990 Stephen Koukoulas: lower than treasuries forecasting, and who knows, if we get 213 00:11:03,990 --> 00:11:07,559 Stephen Koukoulas: a couple of weaker GDP labor force numbers in the 214 00:11:07,559 --> 00:11:10,050 Stephen Koukoulas: next couple of months, that could be the case. Then 215 00:11:10,110 --> 00:11:12,390 Stephen Koukoulas: that's why the (inaudible) cutting interest rates. 216 00:11:12,450 --> 00:11:14,880 Sean Aylmer: Stephen, people call me a veteran journalist, which I hate, 217 00:11:14,970 --> 00:11:17,370 Sean Aylmer: right? I'm going to call you a veteran economist, and 218 00:11:17,370 --> 00:11:20,160 Sean Aylmer: I say that in the nicest possible man. Because I'm 219 00:11:20,160 --> 00:11:25,049 Sean Aylmer: sure we're about the same age. You've covered 25, 30 years 220 00:11:25,049 --> 00:11:25,949 Sean Aylmer: of budgets, I'm guessing. 221 00:11:26,429 --> 00:11:29,160 Stephen Koukoulas: Well, just a bit of background, my first year was 222 00:11:29,160 --> 00:11:31,800 Stephen Koukoulas: in the Department of Treasury. When I left ANU all 223 00:11:31,800 --> 00:11:35,850 Stephen Koukoulas: those years ago, it was in 1986 mate, so I'm coming up 38 years ago. 224 00:11:36,480 --> 00:11:38,729 Stephen Koukoulas: I think I'm a bit older than you. 30 years ago I was 225 00:11:38,730 --> 00:11:44,069 Stephen Koukoulas: sitting in treasury with a sharp pencil and some graph paper. 226 00:11:44,790 --> 00:11:45,180 Sean Aylmer: Oh, wow. 227 00:11:46,290 --> 00:11:48,600 Stephen Koukoulas: That was the technology of the day. (inaudible) , people were smoking in the 228 00:11:48,600 --> 00:11:53,069 Stephen Koukoulas: building and we went to the treasures of... Paul Keating 229 00:11:53,070 --> 00:11:54,718 Stephen Koukoulas: was treasurer then. And I remember going to the budget 230 00:11:54,719 --> 00:11:58,559 Stephen Koukoulas: night post- budget drinks. It was a lot of fun. 231 00:11:58,889 --> 00:12:01,050 Sean Aylmer: I bet it was. I bet it was. Last night's 232 00:12:01,050 --> 00:12:04,920 Sean Aylmer: budget, where does it rate in those 38 budgets? Is it 233 00:12:04,920 --> 00:12:07,080 Sean Aylmer: kind of top, middle or bottom? 234 00:12:07,740 --> 00:12:10,290 Stephen Koukoulas: Look, it's in the middle- ish area. Look, I don't 235 00:12:10,290 --> 00:12:12,900 Stephen Koukoulas: think there's been any disaster. We think back to the 236 00:12:12,900 --> 00:12:15,750 Stephen Koukoulas: 2014 budget with Joe Hockey. That was a shocker. Some 237 00:12:15,750 --> 00:12:18,718 Stephen Koukoulas: of Treasurer Swan's budgets in... I'd have to remember the 238 00:12:18,720 --> 00:12:21,690 Stephen Koukoulas: year, 2010 or 11- ish. I can't quite remember the exact year now, 239 00:12:22,020 --> 00:12:24,360 Stephen Koukoulas: shockers, they were really bad. And we go back to 240 00:12:24,360 --> 00:12:27,000 Stephen Koukoulas: the '80s and look, I'm a Paul Keating fan unashamedly, 241 00:12:27,210 --> 00:12:30,838 Stephen Koukoulas: some of his budgets were fantastic. So it's not a 242 00:12:30,840 --> 00:12:33,809 Stephen Koukoulas: shocker, definitely not a shocker. It's pretty good for the 243 00:12:33,809 --> 00:12:36,600 Stephen Koukoulas: times. Pretty good that we've got at least a couple of 244 00:12:36,660 --> 00:12:40,380 Stephen Koukoulas: surpluses in there. And it's pretty good that there is 245 00:12:40,440 --> 00:12:43,949 Stephen Koukoulas: at this time when we've had a genuine post- pandemic 246 00:12:44,130 --> 00:12:47,190 Stephen Koukoulas: cost of living pressure. I've seen some people on X 247 00:12:47,190 --> 00:12:49,349 Stephen Koukoulas: and other places complaining about, " Oh, they're giving away money 248 00:12:49,349 --> 00:12:52,619 Stephen Koukoulas: to people. Isn't that bad?" Look, the government's in power 249 00:12:52,830 --> 00:12:55,350 Stephen Koukoulas: to help some poor people who are doing it tough 250 00:12:55,350 --> 00:12:57,478 Stephen Koukoulas: at the moment. So a bit of rent rebate, a bit of 251 00:12:57,480 --> 00:13:02,010 Stephen Koukoulas: electricity subsidy. Look, they're probably not pure economic textbook wonderful 252 00:13:02,010 --> 00:13:04,290 Stephen Koukoulas: things to do, but hey, a few hundred bucks is 253 00:13:04,290 --> 00:13:05,909 Stephen Koukoulas: hardly going to blow up the economy. 254 00:13:06,480 --> 00:13:09,480 Sean Aylmer: Stephen, thank you very much for getting up so early 255 00:13:09,480 --> 00:13:11,549 Sean Aylmer: in the morning. Have you had much sleep or not? 256 00:13:11,789 --> 00:13:14,520 Stephen Koukoulas: Not a lot. I've been churning away most of the night 257 00:13:14,520 --> 00:13:16,890 Stephen Koukoulas: reading through the budget papers, and I think I've got 258 00:13:16,890 --> 00:13:18,960 Stephen Koukoulas: everything that I need to do sorted out. So I'll 259 00:13:18,960 --> 00:13:20,730 Stephen Koukoulas: probably go back and have a cup of tea now 260 00:13:20,730 --> 00:13:24,480 Stephen Koukoulas: and read whatever else is written about the budget because I've only seen a few bits 261 00:13:24,480 --> 00:13:25,078 Stephen Koukoulas: and pieces on it. 262 00:13:25,170 --> 00:13:26,880 Sean Aylmer: Well, thank you for talking to us this morning. 263 00:13:27,210 --> 00:13:27,420 Stephen Koukoulas: Thanks, Sean. 264 00:13:27,420 --> 00:13:32,670 Sean Aylmer: That's Stephen Koukoulas, AKA The Kouk. He's the managing director of Market Economics. You'll 265 00:13:32,670 --> 00:13:36,150 Sean Aylmer: find him at thekouk. com or on X, using the 266 00:13:36,150 --> 00:13:38,819 Sean Aylmer: handle TheKouk. This is the Fear & Greed business interview. Join 267 00:13:38,820 --> 00:13:41,340 Sean Aylmer: us every morning for the full episode of Fear & Greed 268 00:13:41,340 --> 00:13:44,098 Sean Aylmer: daily business news for people who make their own decisions. 269 00:13:44,099 --> 00:13:45,689 Sean Aylmer: I'm Sean Aylmer. Enjoy your day.