1 00:00:03,450 --> 00:00:06,800 Sean Aylmer: Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. It's 2 00:00:06,800 --> 00:00:09,539 Sean Aylmer: been a big week for the economy. On Monday New 3 00:00:09,539 --> 00:00:13,250 Sean Aylmer: South Wales lifted restrictions and National Australia Bank estimates around 4 00:00:13,250 --> 00:00:17,209 Sean Aylmer: $100 million was spent in retail outlets on that day alone, 5 00:00:17,210 --> 00:00:20,280 Sean Aylmer: almost double the previous week. Then on Tuesday, NAB released 6 00:00:20,280 --> 00:00:23,840 Sean Aylmer: its business confidence survey showing confidence has rebounded in some 7 00:00:23,840 --> 00:00:26,410 Sean Aylmer: of the hardest hit sectors, albeit not quite what it was. 8 00:00:26,770 --> 00:00:30,380 Sean Aylmer: Wednesday saw the Federal Treasurer estimating the economy had contracted 9 00:00:30,380 --> 00:00:33,570 Sean Aylmer: by about 3% in September quarter. And then yesterday, the 10 00:00:33,570 --> 00:00:36,680 Sean Aylmer: labour force data was released, that's for September, with the 11 00:00:36,690 --> 00:00:40,909 Sean Aylmer: jobless rate up slightly to 4.6%, although employment fell by 138,000 12 00:00:42,150 --> 00:00:44,909 Sean Aylmer: for the month. As I said, a big week. Alan 13 00:00:44,909 --> 00:00:47,860 Sean Aylmer: Oster is the Chief Economist at National Australia Bank and joins me 14 00:00:47,860 --> 00:00:50,100 Sean Aylmer: again this morning. Alan, welcome back to Fear and Greed. 15 00:00:50,390 --> 00:00:50,720 Alan Oster: Thanks, Sean. 16 00:00:51,360 --> 00:00:53,020 Sean Aylmer: Let's start with the labour force. What did you make 17 00:00:53,090 --> 00:00:54,410 Sean Aylmer: of yesterday's numbers? 18 00:00:54,800 --> 00:00:58,700 Alan Oster: Oh, look, it's clearly a weak result. You don't everyday 19 00:00:58,760 --> 00:01:05,070 Alan Oster: lose 138,000 jobs, having lost roughly 140,000 a month before, but 20 00:01:05,370 --> 00:01:09,460 Alan Oster: it's really all about essentially what's happening with the virus. 21 00:01:09,530 --> 00:01:13,690 Alan Oster: The participation rate fell a lot. And the reason for 22 00:01:13,690 --> 00:01:17,119 Alan Oster: that is that, if you're getting COVID payments or you're 23 00:01:17,120 --> 00:01:20,589 Alan Oster: being paid the dole and your industry shut down, you're not 24 00:01:20,790 --> 00:01:23,440 Alan Oster: looking for new work. So therefore you're not counted as unemployed. 25 00:01:23,800 --> 00:01:29,500 Alan Oster: So I would basically say it's a weak result, not unexpected. 26 00:01:29,790 --> 00:01:33,850 Alan Oster: Participation rates, are sort of hiding some of the deterioration. So 27 00:01:33,850 --> 00:01:35,780 Alan Oster: one of the other ways you can look at it 28 00:01:35,780 --> 00:01:38,530 Alan Oster: is you can say, well, if I add back to 29 00:01:38,530 --> 00:01:42,640 Alan Oster: the unemployment numbers, the number of people who are working zero hours, 30 00:01:43,319 --> 00:01:46,560 Alan Oster: or have "left the labour force" since the middle of 31 00:01:46,560 --> 00:01:50,560 Alan Oster: this year, then the unemployment rate would be 8.7%. 32 00:01:50,800 --> 00:01:51,020 Sean Aylmer: Wow. 33 00:01:51,260 --> 00:01:53,390 Alan Oster: So I think that's a better perspective. I think the 34 00:01:53,390 --> 00:01:57,860 Alan Oster: idea that unemployment is not going up much is true, 35 00:01:57,860 --> 00:02:01,340 Alan Oster: but under very strict, essentially definitions. 36 00:02:01,640 --> 00:02:04,380 Sean Aylmer: Okay. So as we go forward, do you think that 37 00:02:04,470 --> 00:02:08,160 Sean Aylmer: the job losses and the falling in participation has peaked? 38 00:02:08,930 --> 00:02:11,950 Alan Oster: Well, I would suspect that there'll still be some hangover 39 00:02:13,070 --> 00:02:16,540 Alan Oster: in terms of job losses. We've got some internal data 40 00:02:16,540 --> 00:02:18,610 Alan Oster: that we look at each week and early October was 41 00:02:18,610 --> 00:02:21,359 Alan Oster: saying to us that it wasn't getting any better, but 42 00:02:21,360 --> 00:02:24,650 Alan Oster: as we go forward, you would expect as New South 43 00:02:24,840 --> 00:02:28,720 Alan Oster: Wales and increasingly Victoria re-open, people would then start looking 44 00:02:28,720 --> 00:02:32,870 Alan Oster: for a job. And therefore the participation rate would go 45 00:02:32,870 --> 00:02:36,410 Alan Oster: up and unemployment ... well, I think it probably will go 46 00:02:36,410 --> 00:02:38,810 Alan Oster: up a little bit more, but then hopefully in six 47 00:02:38,810 --> 00:02:41,389 Alan Oster: to 12 months time, it will be down to say 48 00:02:41,389 --> 00:02:42,680 Alan Oster: four and a half per cent again. 49 00:02:43,030 --> 00:02:46,970 Sean Aylmer: Right. Where do you think employment will get to eventually 50 00:02:47,060 --> 00:02:48,010 Sean Aylmer: in the next 12/18 months? 51 00:02:48,730 --> 00:02:52,270 Alan Oster: We have employment growing pretty strongly during the course of 52 00:02:52,620 --> 00:02:57,329 Alan Oster: the next year. So we have 4.3% growth in GDP, and 53 00:02:57,330 --> 00:03:02,669 Alan Oster: we have the levels of unemployment essentially reversing what we've 54 00:03:02,669 --> 00:03:06,220 Alan Oster: had recently, essentially by the middle of next year and the 55 00:03:06,500 --> 00:03:09,079 Alan Oster: labour market, hopefully by the end of next year, behaving, 56 00:03:09,350 --> 00:03:10,740 Alan Oster: what I might call more normally. 57 00:03:10,750 --> 00:03:13,700 Sean Aylmer: Okay. So how does that flow through to, well growth? 58 00:03:13,700 --> 00:03:16,329 Sean Aylmer: You've just told me 4.3%, but then interest rates? 59 00:03:16,610 --> 00:03:18,410 Alan Oster: Our interest rates, I think, are a long way away 60 00:03:18,410 --> 00:03:21,840 Alan Oster: from change. For us, a couple of things. The Reserve 61 00:03:21,840 --> 00:03:24,950 Alan Oster: Bank is basically saying, look, in some sectors, there's been 62 00:03:24,950 --> 00:03:30,419 Alan Oster: increases in inflation, particularly things like agriculture in terms of 63 00:03:30,419 --> 00:03:34,650 Alan Oster: supply chain, things in construction and manufacturing, et cetera. But generally, 64 00:03:35,010 --> 00:03:40,200 Alan Oster: it's not increasing wages. And if they're going to adopt 65 00:03:40,200 --> 00:03:42,810 Alan Oster: a rule that says, "We're going to wait until inflation 66 00:03:42,810 --> 00:03:45,500 Alan Oster: gets to two and a half per cent, not just in 67 00:03:45,500 --> 00:03:48,410 Alan Oster: our forecast, but in the actual numbers." Then you really 68 00:03:48,410 --> 00:03:51,710 Alan Oster: need wages growth of three and a half, because productivity 69 00:03:51,840 --> 00:03:56,930 Alan Oster: is roughly 1%. And wages growth at present is 1.7%. So, I 70 00:03:56,930 --> 00:04:00,220 Alan Oster: think you're going to see an increase in interest rates at 71 00:04:00,220 --> 00:04:03,470 Alan Oster: the very earliest by late '23, but more realistically I 72 00:04:03,470 --> 00:04:05,010 Alan Oster: think early '24. 73 00:04:05,350 --> 00:04:09,550 Sean Aylmer: Okay. Now onto retail spending, I mentioned the National Australia 74 00:04:09,550 --> 00:04:14,420 Sean Aylmer: Bank figures of about a hundred million on Monday. And that's an unusual spike. 75 00:04:15,000 --> 00:04:17,990 Sean Aylmer: There's also about $200 billion, I think sitting in savings 76 00:04:17,990 --> 00:04:20,130 Sean Aylmer: accounts in places like NAB and the other banks. 77 00:04:20,420 --> 00:04:20,500 Alan Oster: Yep. 78 00:04:20,580 --> 00:04:23,099 Sean Aylmer: What I'm wondering is, when is it that people start 79 00:04:23,100 --> 00:04:26,290 Sean Aylmer: spending that saving? What is it in the mindset that 80 00:04:26,290 --> 00:04:27,990 Sean Aylmer: they think, "I don't have to save anymore?" 81 00:04:28,400 --> 00:04:30,940 Alan Oster: Well, I think you probably going to find there's another 82 00:04:31,279 --> 00:04:33,190 Alan Oster: dynamic that we look at. We look at what we 83 00:04:33,290 --> 00:04:36,010 Alan Oster: call cash flow, in other words, dollars coming in versus dollars 84 00:04:36,010 --> 00:04:36,301 Alan Oster: going out. 85 00:04:36,301 --> 00:04:36,671 Sean Aylmer: Yep. 86 00:04:37,410 --> 00:04:41,140 Alan Oster: And roughly it's nowhere near what happened last year. So 87 00:04:41,140 --> 00:04:44,440 Alan Oster: they don't have as much spare cash as they previously 88 00:04:44,440 --> 00:04:47,390 Alan Oster: had. And if you're sort of spending the same amount, 89 00:04:48,089 --> 00:04:50,450 Alan Oster: or a little bit more than you actually getting new 90 00:04:50,450 --> 00:04:54,480 Alan Oster: income coming in, we've typically found the consumer will be 91 00:04:54,480 --> 00:04:59,130 Alan Oster: a bit cautious. So we do see consumption picking up, 92 00:04:59,640 --> 00:05:03,760 Alan Oster: mainly because we're reopening, rather than because consumers going to 93 00:05:03,760 --> 00:05:05,589 Alan Oster: go out and have a party and spend huge amounts 94 00:05:05,589 --> 00:05:07,989 Alan Oster: of money. Sure, they'll go and have a haircut. They'll 95 00:05:07,990 --> 00:05:10,690 Alan Oster: go out to a restaurant, et cetera, et cetera. But I 96 00:05:10,690 --> 00:05:14,440 Alan Oster: suspect the recovery in consumption is more about reopening rather 97 00:05:14,440 --> 00:05:15,909 Alan Oster: than consumers spending the savings. 98 00:05:18,130 --> 00:05:19,300 Sean Aylmer: Okay. And that'll be the same when Victoria eventually reopens?. 99 00:05:19,760 --> 00:05:22,120 Alan Oster: I think that, yeah, that's basically the same case. So 100 00:05:22,120 --> 00:05:24,270 Alan Oster: we're seeing the same thing. It's not really a lot 101 00:05:24,270 --> 00:05:27,940 Alan Oster: of difference across states and some of those deposits are 102 00:05:27,940 --> 00:05:30,810 Alan Oster: going to disappear. Some of those deposits, without getting into 103 00:05:30,810 --> 00:05:35,970 Alan Oster: the technicalities, were created essentially because of QE (Quantitative Easing) and the government 104 00:05:35,970 --> 00:05:39,909 Alan Oster: buying bonds. And when the government stops buying as many bonds, 105 00:05:39,960 --> 00:05:44,239 Alan Oster: those sorts of deposits disappear. So I wouldn't assume just 106 00:05:44,240 --> 00:05:47,030 Alan Oster: because you've got a big increase in savings rate that 107 00:05:47,040 --> 00:05:49,450 Alan Oster: the consumer is going to go out and spend it hugely, 108 00:05:49,640 --> 00:05:52,500 Alan Oster: but it is a factor that will help. I mean, 109 00:05:52,610 --> 00:05:55,789 Alan Oster: the other thing you see is that this time, last year, 110 00:05:55,790 --> 00:05:59,400 Alan Oster: all the spending was pretty much in essentially setting yourself 111 00:05:59,400 --> 00:06:01,700 Alan Oster: up in an office. In other words, you buy a 112 00:06:01,700 --> 00:06:05,920 Alan Oster: new computer, new desk, doing internal renovations. Unless you really 113 00:06:05,920 --> 00:06:07,750 Alan Oster: did a really bad job, you don't need to do 114 00:06:07,750 --> 00:06:11,130 Alan Oster: that again. And so some of the discretionary retail numbers, 115 00:06:11,130 --> 00:06:14,140 Alan Oster: we're looking at at present don't look as good as you might expect. 116 00:06:14,140 --> 00:06:15,469 Alan Oster: And certainly nothing like last year. 117 00:06:15,960 --> 00:06:17,620 Sean Aylmer: Stay with me, Alan. We'll be back in a minute. 118 00:06:22,690 --> 00:06:26,700 Sean Aylmer: I'm speaking to National Australia Bank Chief Economist, Alan Oster. Okay. 119 00:06:26,700 --> 00:06:29,580 Sean Aylmer: So let's go onto business confidence and your survey, which 120 00:06:29,580 --> 00:06:30,910 Sean Aylmer: was released on Tuesday. 121 00:06:31,110 --> 00:06:31,190 Alan Oster: Yep. 122 00:06:31,480 --> 00:06:33,979 Sean Aylmer: Some of the hardest hit sectors of retail, recreation, personal 123 00:06:33,980 --> 00:06:38,410 Sean Aylmer: services, wholesale trade, they all saw a big rise. Yeah. 124 00:06:38,410 --> 00:06:39,080 Sean Aylmer: Tell us about that. 125 00:06:39,330 --> 00:06:41,870 Alan Oster: There's two areas of the survey that are important. Number 126 00:06:41,870 --> 00:06:45,410 Alan Oster: one is confidence, but more importantly, and more related to GDP, 127 00:06:45,960 --> 00:06:48,130 Alan Oster: is what we call business conditions. Or if you like, 128 00:06:48,130 --> 00:06:52,409 Alan Oster: forward orders. What are you doing for sales, profits? What are 129 00:06:52,410 --> 00:06:56,390 Alan Oster: you doing for employment? Everything in the survey that looked 130 00:06:56,450 --> 00:07:00,040 Alan Oster: at actual outcomes for September, fell and fell a lot. 131 00:07:00,850 --> 00:07:04,350 Alan Oster: What happened, however, was when you're talking about confidence, you say, 132 00:07:04,870 --> 00:07:08,110 Alan Oster: the question broadly says, "Well, compared to where you're going now, 133 00:07:08,560 --> 00:07:10,050 Alan Oster: do you think next month is going to be better?" 134 00:07:10,590 --> 00:07:13,660 Alan Oster: And so you saw some of the biggest increases in 135 00:07:13,660 --> 00:07:16,270 Alan Oster: confidence in New South Wales I've ever seen. So it 136 00:07:16,270 --> 00:07:21,380 Alan Oster: went from something like minus 20 to plus 28 or something. 137 00:07:21,380 --> 00:07:24,460 Alan Oster: So it had a 42 point turnaround, which is the 138 00:07:24,460 --> 00:07:27,660 Alan Oster: biggest I've seen in the survey since the late eighties 139 00:07:27,950 --> 00:07:30,000 Alan Oster: in New South Wales. And you also saw a pretty 140 00:07:30,000 --> 00:07:35,420 Alan Oster: big jump everywhere in Victoria and everywhere else it fell. 141 00:07:35,670 --> 00:07:38,740 Alan Oster: So I think really what the survey was saying is, 142 00:07:39,140 --> 00:07:42,280 Alan Oster: "Things are tough in the real world, but gee, I'm 143 00:07:42,280 --> 00:07:46,540 Alan Oster: really optimistic that once I reopen, then things are going 144 00:07:46,540 --> 00:07:48,560 Alan Oster: to be a lot better." And that's the way I'd 145 00:07:48,560 --> 00:07:51,240 Alan Oster: sort of expect to see it happening. So I would expect to 146 00:07:51,240 --> 00:07:56,100 Alan Oster: see business outcomes in October being better than what they 147 00:07:56,100 --> 00:07:57,050 Alan Oster: were in September. 148 00:07:57,350 --> 00:08:00,310 Sean Aylmer: Do you think business and consumers will be worried about 149 00:08:00,310 --> 00:08:03,910 Sean Aylmer: the numbers of COVID cases when reopening occurs? Now, Victoria 150 00:08:03,910 --> 00:08:05,500 Sean Aylmer: hit a record yesterday. 151 00:08:05,540 --> 00:08:07,870 Alan Oster: Well, I think it's not so much New South Wales 152 00:08:07,870 --> 00:08:10,590 Alan Oster: and Victoria, because you know, they're saying we're going to 153 00:08:10,590 --> 00:08:14,500 Alan Oster: reopen anyway. I think the interesting question might be what 154 00:08:14,500 --> 00:08:18,300 Alan Oster: happens if you're in some of the areas like Western 155 00:08:18,300 --> 00:08:21,930 Alan Oster: Australia and Tazzy, maybe to some extent Queensland, where you're 156 00:08:22,040 --> 00:08:23,910 Alan Oster: really not used to having the virus and then suddenly 157 00:08:23,990 --> 00:08:28,210 Alan Oster: the virus turns up. That might be also interesting to watch, 158 00:08:28,660 --> 00:08:31,660 Alan Oster: hard to sort of say, but really when we're looking 159 00:08:31,660 --> 00:08:33,689 Alan Oster: at the numbers, what we're saying is look, in the 160 00:08:33,690 --> 00:08:38,620 Alan Oster: short term maybe GDP fell ... Our forecasts haven't changed for ages. 161 00:08:39,070 --> 00:08:42,470 Alan Oster: We've had September, minus three and a half. Why? Because our 162 00:08:42,490 --> 00:08:44,920 Alan Oster: internal data is about half the fall of what happened 163 00:08:44,920 --> 00:08:49,120 Alan Oster: last year. And last year it fell 7% and a 164 00:08:49,120 --> 00:08:51,990 Alan Oster: sort of a kickback at about 2% in the December quarter. 165 00:08:52,470 --> 00:08:54,650 Alan Oster: What I thought was interesting and you mentioned it was 166 00:08:54,650 --> 00:08:59,329 Alan Oster: that the Treasurer's out talking about, we're expecting GDP to 167 00:08:59,330 --> 00:09:03,050 Alan Oster: fall by three or even more, but in context, up 168 00:09:03,050 --> 00:09:06,179 Alan Oster: until this week, he'd been saying we expect GDP to 169 00:09:06,200 --> 00:09:09,429 Alan Oster: fall by two, or even more. So I think someone 170 00:09:09,429 --> 00:09:12,550 Alan Oster: in Treasury has told him, minus two is probably too low. 171 00:09:13,040 --> 00:09:15,270 Alan Oster: So he's sort of out there signalling that when you 172 00:09:15,270 --> 00:09:18,550 Alan Oster: get a minus three or whatever, that's not a big surprise. 173 00:09:18,770 --> 00:09:21,350 Sean Aylmer: Okay. How about final things. House prices? I can't let 174 00:09:21,500 --> 00:09:24,490 Sean Aylmer: you go Alan without asking about house prices. We've seen 175 00:09:24,490 --> 00:09:27,260 Sean Aylmer: the Council of Financial Regulators come out, give its view. 176 00:09:27,309 --> 00:09:30,589 Sean Aylmer: APRA acted on that. Do you think things will cool somewhat? 177 00:09:31,050 --> 00:09:33,980 Alan Oster: I think they're already cooling a little bit. So what 178 00:09:33,980 --> 00:09:38,000 Alan Oster: we're seeing, if you're looking at prices, the peak growth 179 00:09:38,000 --> 00:09:41,570 Alan Oster: rates have started to come off just about everywhere, but 180 00:09:41,570 --> 00:09:43,500 Alan Oster: they're still at levels that would scare the hell out 181 00:09:43,500 --> 00:09:47,550 Alan Oster: of people. So, we're looking at say something like 20% 182 00:09:47,550 --> 00:09:49,809 Alan Oster: increase in house prices over the course of this year. 183 00:09:50,110 --> 00:09:53,120 Alan Oster: And most of that's already happened. We'd expect something like 184 00:09:53,120 --> 00:09:56,500 Alan Oster: three to 5% in house price increases next year. So we're not 185 00:09:56,500 --> 00:10:00,980 Alan Oster: expecting falls, but the regulator's out there saying, "Well, do 186 00:10:00,980 --> 00:10:03,010 Alan Oster: the banks need to have a bigger buffer?" So if 187 00:10:03,010 --> 00:10:06,179 Alan Oster: you had a, let's say an interest rate of 2%, you 188 00:10:06,179 --> 00:10:08,480 Alan Oster: have to prove to us now that you can pay 189 00:10:08,480 --> 00:10:11,190 Alan Oster: it back if rates went to five, whereas before you 190 00:10:11,190 --> 00:10:12,830 Alan Oster: had to pay it back if rates went to four 191 00:10:12,840 --> 00:10:16,520 Alan Oster: and a half. I think it will help slow. But 192 00:10:16,550 --> 00:10:20,910 Alan Oster: if house prices continue to go up, then I think 193 00:10:20,910 --> 00:10:24,260 Alan Oster: the regulator will probably come along. And the one that 194 00:10:24,260 --> 00:10:26,870 Alan Oster: they seem to be signalling, which I find a bit strange, 195 00:10:26,870 --> 00:10:29,880 Alan Oster: but the government sort of signalling, is debt to income ratio. 196 00:10:29,880 --> 00:10:32,359 Alan Oster: So in simple terms, you've got an income of a 197 00:10:32,360 --> 00:10:35,530 Alan Oster: hundred thousand. You can go to a bank and get 600, 198 00:10:35,530 --> 00:10:38,500 Alan Oster: but you can't get any more than 600. And that would 199 00:10:38,500 --> 00:10:41,790 Alan Oster: have a really big negative impact on first time owners. 200 00:10:42,390 --> 00:10:44,329 Alan Oster: So what we're really seeing is we're starting to see 201 00:10:44,330 --> 00:10:47,640 Alan Oster: affordability issues being a problem. So that's starting to take 202 00:10:47,640 --> 00:10:51,599 Alan Oster: a little bit of heat out, the APRA changes to 203 00:10:51,600 --> 00:10:54,170 Alan Oster: the buffers will take a little bit more out. And 204 00:10:54,170 --> 00:10:58,230 Alan Oster: if it doesn't sort of slowed much more significantly, then 205 00:10:58,230 --> 00:11:00,910 Alan Oster: they might come along with a bit of a sledgehammer 206 00:11:01,780 --> 00:11:02,560 Alan Oster: and really stop it. 207 00:11:02,940 --> 00:11:06,020 Sean Aylmer: The final question. Climate change, Guy Debelle, the Deputy Governor 208 00:11:06,020 --> 00:11:09,270 Sean Aylmer: of the Reserve Bank, came out yesterday and you're probably 209 00:11:09,270 --> 00:11:11,330 Sean Aylmer: going to correct me here, but I can't remember someone 210 00:11:11,330 --> 00:11:15,130 Sean Aylmer: from the bank being quite as strident about the role 211 00:11:15,130 --> 00:11:18,440 Sean Aylmer: climate change, not just climate change, but policies around it, 212 00:11:18,440 --> 00:11:21,130 Sean Aylmer: consumer demand, that actually will have on the economy. I 213 00:11:21,130 --> 00:11:22,929 Sean Aylmer: think that's as strong as I've heard the bank talk 214 00:11:22,929 --> 00:11:24,440 Sean Aylmer: about it. What's your take on it? 215 00:11:24,809 --> 00:11:26,610 Alan Oster: Guy's got a bit of a history. So you're going 216 00:11:26,610 --> 00:11:29,350 Alan Oster: to say you haven't heard anyone from the bank say 217 00:11:29,350 --> 00:11:30,651 Alan Oster: this before. Guy said this before. 218 00:11:30,651 --> 00:11:31,080 Sean Aylmer: Right. 219 00:11:31,660 --> 00:11:34,760 Alan Oster: But I think he's basically right. What he's saying is, 220 00:11:35,700 --> 00:11:40,100 Alan Oster: zero emissions by 2050, if you don't get that, people 221 00:11:40,100 --> 00:11:43,760 Alan Oster: are going to start to worry about whether you're sustainable 222 00:11:43,760 --> 00:11:47,699 Alan Oster: into the medium term. And so, therefore, the train's already 223 00:11:47,700 --> 00:11:50,660 Alan Oster: left the station and if you don't sort of put 224 00:11:50,660 --> 00:11:55,370 Alan Oster: that in, then they will stop buying your bonds. They 225 00:11:55,370 --> 00:11:59,020 Alan Oster: will cause some problems and you're better off to essentially 226 00:11:59,020 --> 00:12:01,910 Alan Oster: bite the bullet, it's happening anyway, but do it in 227 00:12:01,910 --> 00:12:05,870 Alan Oster: a gradual phase so that you don't immediately turn off 228 00:12:05,870 --> 00:12:09,390 Alan Oster: the coal industry. You give it time. And so, it's 229 00:12:09,640 --> 00:12:14,170 Alan Oster: almost a case that, or it is the case, that coal is 230 00:12:14,170 --> 00:12:18,030 Alan Oster: good in terms of emergencies. And Europe's finding out, if 231 00:12:18,030 --> 00:12:20,720 Alan Oster: it's not windy, then there's a bit of a problem. But 232 00:12:20,720 --> 00:12:25,189 Alan Oster: beyond that, in terms of the cost of production, it's 233 00:12:25,250 --> 00:12:29,530 Alan Oster: now already cheaper to use renewables than it is to 234 00:12:29,530 --> 00:12:31,770 Alan Oster: build a new coal plant. Now, if the coal plant's 235 00:12:31,770 --> 00:12:35,980 Alan Oster: already been built, or the power, then it's okay, but 236 00:12:36,179 --> 00:12:38,800 Alan Oster: you would have to assume that we need to be 237 00:12:38,800 --> 00:12:42,750 Alan Oster: competitive in energy. And I think someone was telling me 238 00:12:42,860 --> 00:12:46,939 Alan Oster: the other day that there's four big things in terms 239 00:12:46,940 --> 00:12:50,380 Alan Oster: of getting renewable energy, like copper and things like that. 240 00:12:50,830 --> 00:12:53,950 Alan Oster: And Australia is in the top four producers in three of 241 00:12:53,950 --> 00:12:56,730 Alan Oster: those four. So Australia is still well placed. 242 00:12:56,940 --> 00:12:57,120 Sean Aylmer: Yep. Yep. 243 00:12:57,600 --> 00:13:00,030 Alan Oster: And so you just need the adjustment, but you do 244 00:13:00,030 --> 00:13:02,940 Alan Oster: need to do it. Otherwise, you'll get pinged and you 245 00:13:02,940 --> 00:13:05,190 Alan Oster: might argue, but we're the only ones or one of 246 00:13:05,190 --> 00:13:07,070 Alan Oster: the very few countries in the world that actually had 247 00:13:07,760 --> 00:13:10,220 Alan Oster: delivered what we said we delivered, but that's not the 248 00:13:10,220 --> 00:13:10,929 Alan Oster: way they look at it. 249 00:13:11,170 --> 00:13:12,790 Sean Aylmer: Alan, thank you for talking to Fear and Greed. 250 00:13:12,960 --> 00:13:13,290 Alan Oster: Thanks, Sean. 251 00:13:13,630 --> 00:13:16,319 Sean Aylmer: That was Alan Oster, Chief Economist at National Australia Bank. 252 00:13:16,679 --> 00:13:18,740 Sean Aylmer: This is the Fear and Greed Daily Interview. Join me 253 00:13:18,740 --> 00:13:21,100 Sean Aylmer: every morning for the full Fear and Greed Podcast with 254 00:13:21,150 --> 00:13:23,569 Sean Aylmer: all the business news you need to know. I'm Sean 255 00:13:23,670 --> 00:13:24,880 Sean Aylmer: Aylmer. Enjoy your day.