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Speaker 1: Go to Koto.

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Speaker 2: Welcome to Shared Lunch.

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Speaker 1: I'm Garth Bray.

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Speaker 2: Well, the Reserve Banks made another call on the official

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Speaker 2: cash rate and that has implications for our whole economy.

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Speaker 2: Will it provide the stimulus that we need. One of

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Speaker 2: the earliest voices calling for stimulus to get things running again?

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Speaker 2: Here we Banks chief economist Jared Kerr. He takes us

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Speaker 2: through why he sees the need for this right now.

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Speaker 2: But first, some important information you should always consider when investing.

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Speaker 3: Investing involves the risk you might lose the money you

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Speaker 3: start with. We recommend talking to a licensed financial advisor.

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Speaker 3: We also recommend reading product disclosure documents before deciding to invest.

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Speaker 3: Everything you're about to see and here is current at

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Speaker 3: the time of recording.

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Speaker 2: Here is a man who thinks that stimulus might just

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Speaker 2: be the answer. Would that be fair to say? Oh?

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Speaker 1: Absolutely. I think it's pretty clear that the economy needs

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Speaker 1: a little bit of encouragement right now and we're just

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Speaker 1: not getting it. I think interest rates haven't reached that level. Well,

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Speaker 1: I know they haven't reached that level where you know,

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Speaker 1: investors and businesses feel like they want to take a

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Speaker 1: punt on something.

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Speaker 2: We've launched straight into without even saying welcome to Charesis

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Speaker 2: and thanks for being that's all right, no mucking around,

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Speaker 2: and straight into it. So what is it that makes

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Speaker 2: you think that there needs to be a stimilatory track

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Speaker 2: to monetary policy? And for someone who just wants to

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Speaker 2: speak in single syllables, what does that even mean?

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Speaker 1: It means that interst rates have not yet reached a

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Speaker 1: level that are exciting people or are that encouraging businesses.

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Speaker 1: So we have this theoretical rate called the neutral rate, right,

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Speaker 1: and we think it's around three. It's a Goldilocks rate.

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Speaker 1: It's not too hot, it's not too cold. Right. We

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Speaker 1: know that the cash rate at five and a half

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Speaker 1: percent last year was way way too restrictive, right, and

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Speaker 1: that drove the economy into a recession. They've cut the

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Speaker 1: cash rate from five and a half to three and

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Speaker 1: we haven't seen that, you know, inspire anyone. What it

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Speaker 1: has done is it's given relief to people, but it

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Speaker 1: hasn't really triggered them. We think it needs to go

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Speaker 1: down to at least two and a half and just

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Speaker 1: to give people that incentive.

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Speaker 2: So much to unpacking there. I guess some would say

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Speaker 2: your head for the neutral rate will get you to

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Speaker 2: the place where it's up to you to make the

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Speaker 2: decisions to take the risks, all that sort of stuff.

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Speaker 2: Why are we relying on a central bank and a

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Speaker 2: monetary policy to try and fire things up if they

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Speaker 2: aren't already ready to go.

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Speaker 1: Yeah, well, I mean that's their job, right, so they

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Speaker 1: let's go through it. They overstimulated during COVID. They you know,

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Speaker 1: they purchased a lot of government bonds, so they printed

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Speaker 1: a lot of cash. Central banks around the world printed

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Speaker 1: trillions of dollars, and we came out of it firing

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Speaker 1: on all cylinders right because governments were spending central banks

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Speaker 1: were printing cash. Next minute, we had an inflation rate

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Speaker 1: of over seven percent. Okay, they overdid it. They had

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Speaker 1: to get that back down to two. So they lifted

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Speaker 1: into shraps from their zero settings to quite aggressively high settings,

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Speaker 1: and that really hurt households and businesses, drove us back

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Speaker 1: into recession. And we haven't gotten out of that recession yet.

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Speaker 1: We're still like crawling out of this hole that the

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Speaker 1: central bank poured us into last year. And I think

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Speaker 1: you know, just using the car, you know, example, you've

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Speaker 1: had your foot on the heavy on the break, you've

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Speaker 1: taken it off, You've put the car in neutral. It's

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Speaker 1: just idling. We're saying, just put your foot on the accelerator,

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Speaker 1: not hard, just get the economy gone.

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Speaker 2: Is that a consensus view? Are you guys? Are you

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Speaker 2: on the outer on that?

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Speaker 1: We were? I mean we were calling this a year

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Speaker 1: and a half ago. We were well outside of the

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Speaker 1: consensus calling for a two and a half percent cash row.

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Speaker 1: Now there are a few more. Most economists are around

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Speaker 1: that sort of two seventy five three level, so we're

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Speaker 1: only arguing over fifty basis points.

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Speaker 2: There was a sort of a split decision back in May,

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Speaker 2: although there was a consensus around holding steady in Wellington.

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Speaker 2: On the most recent one you had I think that

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Speaker 2: in the US the first time in about thirty something

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Speaker 2: years that two governors said we want to express our

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Speaker 2: descent with the rest of what you guys are coming

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Speaker 2: up with the Bank of England. I'm just telling this

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Speaker 2: for the people that haven't been paying attention, you know

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Speaker 2: this is it getting harder to work out what's going

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Speaker 2: on in that room, what they're deciding and how they'll pick.

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Speaker 2: Is this just part of the cycle.

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Speaker 1: Yeah, I think it does get a little harder when

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Speaker 1: you're towards the end for starters. So from the Reserve

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Speaker 1: Bank of New Zealand's point of view, they've gone from

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Speaker 1: five and a half to three. You know, there's not

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Speaker 1: a lot left and they're just kind of feeling their

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Speaker 1: way down to the bottom, and the bottom's near right.

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Speaker 1: You can say the same thing for other central banks

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Speaker 1: around the world. But you know, let's not forget we've

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Speaker 1: had this tariff war of sorts over this year that's

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Speaker 1: really thrown a lot of things up in the year.

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Speaker 1: We know it's inflationary for the United States, so that's

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Speaker 1: why you're getting that sort of mixed feel from the

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Speaker 1: from the Fed governors, and we think it's deflationary for us,

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Speaker 1: but it's yet to feed through. So you know, there's

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Speaker 1: a lot of balls in the year. There's a lot

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Speaker 1: of volatility, there's a lot of question questions that need

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Speaker 1: to be answered.

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Speaker 2: And we've got another complication because we've got an acting

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Speaker 2: governor at the moment and possibly a permanent replacement coming

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Speaker 2: through sometime soon. Does that mean that the Bank's going

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Speaker 2: to be saying, well, the Monetary Policy Committee are going

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Speaker 2: to be saying we will leave it to the new boss.

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Speaker 1: No, I don't think so. I don't think so. They've

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Speaker 1: got a job to do. They know what the job is.

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Speaker 1: It is a it is a committee now rather than

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Speaker 1: a sole decision maker like it used to be. So

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Speaker 1: you've kind of you've spread that a little bit. And

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Speaker 1: Christian Christian knows what he's doing. Christian has been around

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Speaker 1: long time.

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Speaker 2: This is Christian Hawksby.

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Speaker 1: Christian Hawksby who's acting governor at the moment. He's been

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Speaker 1: at the Reserve Bank, I'm not sure about six or

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Speaker 1: seven years himself. He was working for Harbor Asset Management,

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Speaker 1: so he knows the markets very well. And he also

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Speaker 1: worked at the Bank of England prior to that. So

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Speaker 1: I'm going to talk about credentials. He knows what he's doing.

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Speaker 1: So there's no excuse, Oh, we better wait for the

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Speaker 1: next governor to come in. They just need to do

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Speaker 1: what they need to do.

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Speaker 2: A lot of people are saying it's not so much

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Speaker 2: about whatever the decision has been, it's more about where

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Speaker 2: we're headed from here. Absolutely, what the shape of that

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Speaker 2: curve looks like when we're going to see rates start

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Speaker 2: to rise again, where that bottom is. Do you have

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Speaker 2: strong views there?

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Speaker 1: Yeah, so our So, like I said, we're at two

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Speaker 1: and a half. Market's kind of around two seventy five ish,

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Speaker 1: So we're not arguing over a big difference. But from

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Speaker 1: our point of view, that extra twenty five is meaningful,

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Speaker 1: and it would just get mortgage rates, you know, that

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Speaker 1: little bit, that little bit lower than where they are today.

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Speaker 1: Whereas if we stop at two seventy five or three,

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Speaker 1: then mortgage rates that that's them done, that's that's the bottom.

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Speaker 1: And I just don't think that's stemmatry enough.

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Speaker 2: All right, So we do get to two point seventy

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Speaker 2: five or even two point five, what does that mean

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Speaker 2: for a mortgage customer?

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Speaker 1: So very simply, the cash rate is what the banks

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Speaker 1: deal with the central bank, right, the central bank is

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Speaker 1: the banker of the bank. So we're dealing at at

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Speaker 1: say three percent, but that's not where we've fund ourselves at.

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Speaker 1: Like we're all offer a term deposit rate. I think

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Speaker 1: we've got one out there at like four point one

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Speaker 1: at the moment, So that's quite a bit higher than

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Speaker 1: the cash right. That's because we're trying to get money,

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Speaker 1: you know, in the door, and then we lend it

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Speaker 1: out right, and then we're and then we're charging you know,

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Speaker 1: five percent on a on on a mortgage rate or above.

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Speaker 1: So you're all these rates, but the cash rate influences

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Speaker 1: everything above it. So you drop that cash rate from

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Speaker 1: five and a half to three, and what you've seen

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Speaker 1: is mortgage rates go from seven and a half to five.

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Speaker 1: So roughly lockstep doesn't happen precisely, but it has over

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Speaker 1: the over the year, we've seen that that whole lot

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Speaker 1: being being passed on. What does another fifty basis points mean?

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Speaker 1: Will those five percent rates or slightly above go into

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Speaker 1: the mid floors and you get that little bit of

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Speaker 1: extra a little bit of extra bang for buck and

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Speaker 1: delivering that that extra fifty basis points in the in

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Speaker 1: the cash rate term deposit rates four as well. So

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Speaker 1: there's a lot of savers out there that go, oh,

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Speaker 1: I didn't realize it so well. Actually, you know, we've

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Speaker 1: been talking about rate cuts for over a year. You

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Speaker 1: could have been preparing yourself on the way down. We

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Speaker 1: always talk about the household with debt, you know, your

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Speaker 1: mortgage rates falling. Actually, if you're if you're a retirement

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Speaker 1: you know, if you're in retirement and you're getting less

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Speaker 1: on you on your nest egg.

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Speaker 2: And that fixed income suddenly isn't quite so attractive. You

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Speaker 2: need to look at diversification.

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Speaker 1: Do you do this is precisely so. Putting the cash

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Speaker 1: rate at five and a half, you're trying to attract

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Speaker 1: savings right dropping it down, you're trying to get savings

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Speaker 1: to go out into more riskier assets. You want to

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Speaker 1: get them out into either simply buying shares or getting

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Speaker 1: businesses to put money out the door to buy you know,

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Speaker 1: investment like tractors and stuff.

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Speaker 2: I mean, if we look around, there's been a lot

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Speaker 2: of worry about debt. I mean, there's been a lot

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Speaker 2: of talk about debt this week. I think one of

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Speaker 2: the major papers saying, look, we're on track to a

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Speaker 2: trillion dollars worth of combined public and brother big number.

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Speaker 2: Does a big number like that give you any pause,

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Speaker 2: any concern?

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Speaker 1: Well, the big number, you know, shows a lot of

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Speaker 1: private debt, a lot of household debt right as a

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Speaker 1: percentage of income, it's gone sideways for a while, but

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Speaker 1: it's at a very high level, you know, comparatively speaking.

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Speaker 1: So we've got a lot of debt on the private side,

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Speaker 1: but we don't have a lot of public debt and

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Speaker 1: this is something that we need to smash, smash wide

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Speaker 1: open in the New Zealand public.

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Speaker 2: Smashing it down, you look about smashing it up.

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Speaker 1: I absolutely no smash the perception that we've got too

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Speaker 1: much debt as a government. I don't think we do.

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Speaker 1: I don't think we do it all. I think we

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Speaker 1: can take on a lot more debt to tackle the

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Speaker 1: infrastructure problems that we've got. That I would argue that

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Speaker 1: we have not only disappointed the New Zealand public, but

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Speaker 1: actually haven't fulfilled what we should have done as a

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Speaker 1: government over the last thirty years. We have not kept

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Speaker 1: up our infrastructure spending with our population. Right, that's just

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Speaker 1: a simple, simple message to everyone. You know, it takes

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Speaker 1: us forty minutes to drive tea case in Auckland.

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Speaker 2: Right.

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Speaker 1: Wellington looks more like Venice than it does anything else.

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Speaker 1: With all the water running down the streets. I mean,

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Speaker 1: you know, the burst pipes. There's so many examples, and

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Speaker 1: then the good examples christ Church. Look what happens when

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Speaker 1: you build back beautifully. It's a cool city. People are

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Speaker 1: a lot more upbeat down there, and it's because you know,

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Speaker 1: they've got the infrastructure, not.

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Speaker 2: Just because the regional economy is strong and you've got

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Speaker 2: a lot of farming and something happening there and that's

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Speaker 2: supporting it, whereas other.

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Speaker 1: Places Wykado and other areas not as upbeat as christ Church. Right,

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Speaker 1: they've got that farming base, you know, that's that external

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Speaker 1: sector that's doing well. You're getting high dairy price is

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Speaker 1: high meat prices, tourisms bouncing back. But the South Island

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Speaker 1: seems to be a lot more upbeat than the than

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Speaker 1: the North, and you know there's something going on there.

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Speaker 2: If you look at farming and agriculture in general. I

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Speaker 2: think the total agricultural debt is down at the moment,

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Speaker 2: So at a time where those prices are great, where

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Speaker 2: farmers are making bank, they're choosing to retire that rather

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Speaker 2: than to invest. What does that say?

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Speaker 1: Yeah, And I think they've been asked to do that too,

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Speaker 1: because they've taken on a little bit too much. So

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Speaker 1: I think the couple of the major banks have been asking,

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Speaker 1: you know, actually maybe you should repay a little bit,

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Speaker 1: which is prudent. But what we're seeing and is that

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Speaker 1: farmers are spending on the farm, so they may have

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Speaker 1: sort of run down their maintenance a bit. Now they're

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Speaker 1: back up to where it should be, spending more on

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Speaker 1: animal welfare, spending more on the farm, but not past

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Speaker 1: the farm gate. So they might be buying a tractor,

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Speaker 1: for example, but they're not buying a use. They might

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Speaker 1: be doing their fences, but they're not going on a holiday.

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Speaker 1: And I think that just shows you how cautious they are,

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Speaker 1: even though things are pretty good and they're getting a

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Speaker 1: very high payout, they're spending on the farm, they're not

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Speaker 1: spending outside of it.

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Speaker 2: And then if we're looking at business, I think the

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Speaker 2: business landing as well. You know, business borrowing in the

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Speaker 2: UNA was sort of up just a fraction, not even

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Speaker 2: a full percentage point. Again, that's you say, because it's

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Speaker 2: not stimulatory enough or companies just don't see the reward

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Speaker 2: justifying the risk.

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Speaker 1: Same same thing, even with the investment boosts.

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Speaker 2: What happened to the investment boost so right off a

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Speaker 2: larger portion of a capital purchase, we're not seeing that

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Speaker 2: play through.

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Speaker 1: No, no, we're not, And that that just proves the

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Speaker 1: fact that we're still in this recession, I believe. So

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Speaker 1: we recorded quite a sharp contraction last year and we're

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Speaker 1: going sideways, and it looks like in the current quarter

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Speaker 1: where and now we might we might record another contraction.

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Speaker 1: So it's pretty weak out there. Businesses aren't taking on

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Speaker 1: debt because they are cautious that they're worried about what

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Speaker 1: does all this tariffs mean for us? You know, the

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Speaker 1: New Zealand households not spending yet. You know, you're very

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Speaker 1: cautious as a business right now, and we're noticing that

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Speaker 1: in in our lending. That investment boost helps, but it's

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Speaker 1: not driving you to make the decision. And businesses aren't

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Speaker 1: making that decision at the moment. You ask them are

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Speaker 1: you investing? And you're getting quite a mixed response. Most

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Speaker 1: of them are saying no. And you ask them, are

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Speaker 1: you hiring people? Again, most of them will say I

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Speaker 1: actually go through a bit of a restructure still, So

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Speaker 1: until that turns and we see it going positive, and

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Speaker 1: there's signs that it is, such.

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Speaker 2: As sidelined, but there's signs there isn't. I mean, the

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Speaker 2: Performance of Services index I think came out this week

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Speaker 2: and it was the twentieth month in a row.

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Speaker 1: Less negative but negative.

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Speaker 2: Yeah, but the employer right that's been in the dumpster

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Speaker 2: for twenty months now, twenty months, Yeah, that tells you,

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Speaker 2: I suppose that if you're a services business, which is

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Speaker 2: sort of what two thirds of the economy. Yeah, that's

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Speaker 2: a lot of businesses out there that are weary about hiring.

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Speaker 2: H landing. Who's getting hit by that?

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Speaker 1: Oh well, you know, it depends what industry you're looking at.

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Speaker 1: Like I said, the agriculture side's doing well and they're

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Speaker 1: finding the workers that they need, so there's definitely not

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Speaker 1: a shortage of workers anymore that we had just a

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Speaker 1: couple of years ago. There's actually a bit of an oversupply.

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Speaker 1: And then you go across, like you say, most of

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Speaker 1: the services side, they're not hiring. I gave a few

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Speaker 1: presentations to quite large groups recently. One was in Wellington

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Speaker 1: and there were about two hundred people in the crowd

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Speaker 1: and I said, are you investing? Are you hiring? And

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Speaker 1: about eight people put their hands up. I counted them eight.

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Speaker 1: And then I went to christ Church and at least

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Speaker 1: a third, maybe forty percent put their hands up, So

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Speaker 1: still less than fifty, but Jesus a massive difference between

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Speaker 1: Wellington and christ Church and Auckland's kind of in the middle.

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Speaker 1: About twenty percent people put their hand up. So when

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Speaker 1: I do that and I sort of gauge a crowd.

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Speaker 1: I sort of walk out going okay, that's you know,

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Speaker 1: depending on where you are, it's worse. But overall it's

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Speaker 1: still quite weak, even in the hot spots like christ Church.

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Speaker 2: But then as cutting if there's that much gloom, as

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Speaker 2: cutting interest rates really going to provide people with the

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Speaker 2: stimulus because they're still going to be nervous about taking action.

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Speaker 1: Right, better than doing nothing, It's better than leaving the

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Speaker 1: cash rat restrictive or neutral, so you're effectively not not

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Speaker 1: doing anything.

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Speaker 2: We talked about tariffs there, and I would just want

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Speaker 2: to ask you have we overbaked the concern around the

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Speaker 2: trade war and the tariffs and that kind of thing.

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Speaker 2: With US tariffs, I think US experts are about two

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Speaker 2: percent of our GDP. There's plenty of other places we're

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Speaker 2: doing business.

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Speaker 1: Right, and talking to exporters, they'll say, you know, the

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Speaker 1: US is actually one of the most profitable markets that

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Speaker 1: we that we export into, so they can actually wear

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Speaker 1: a bit of that tariff themselves. Kiwi dollars come down

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Speaker 1: a little bit as well. I hope it goes a

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Speaker 1: little bit further, and again that helps, you know, it

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Speaker 1: helps from the the US side. There's fewer US dollars

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Speaker 1: they need to buy Kiwi. So you know, we definitely

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Speaker 1: got panicked at the start when Trump came out with

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Speaker 1: these massive numbers, but we all turned to each other

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Speaker 1: and said, that's a negotiating in tact. He's going to

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Speaker 1: water it down. He warded it down a lot more

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Speaker 1: than what we thought, and I think if we look

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Speaker 1: at the impact, most of it's going to be on

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Speaker 1: the US consumer. I would love New Zealand to get

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Speaker 1: a ten percent tariff rather than a fifteen percent, but

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Speaker 1: you know, it's not going to end the New Zealand story.

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Speaker 1: They are a very very big export destination for US,

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Speaker 1: but we export meat and they're not going to stop

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Speaker 1: eating burgers, and they'll wash it down with a Kiwi

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Speaker 1: wine as well, So I'm not too worried about that.

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Speaker 1: To be fair, we thought, what does it mean for

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Speaker 1: the rest of the world. It's a world that's slower

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Speaker 1: and trading less with each other, but not to the

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Speaker 1: extent we were worried about. In April. There's a slow

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Speaker 1: down there. China is already diverting some of their exports

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Speaker 1: into Europe and elsewhere. I think that's a bit deflationary,

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Speaker 1: you know, that slower growth, that diversion of trade. So

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Speaker 1: from our perspective, we actually think it's deflationary. It's going

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Speaker 1: to add to inflation dropping below two percent.

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Speaker 2: Of these people will worry that, like you said, it

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Speaker 2: was going to be a widespread tip for tach kind

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Speaker 2: of reciprocally, people haven't sort of done the tack right.

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Speaker 1: Typical analysts like ourselves, you know, you go down these

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Speaker 1: rabbit holes, you go, well, this is what we've seen.

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Speaker 1: It could spiral off over here, or it could calm

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Speaker 1: right down, and we were worried more about the spiraling

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Speaker 1: into uncharted territory, whereas it just at the end of

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Speaker 1: the day, the tariffs are a tax take. It's all

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Speaker 1: mostly what it is. It's let's just, you know, take

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Speaker 1: ten to fifteen percent, and when you model what the

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Speaker 1: impacts of tariffs are going to be ten to fifteen percent,

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Speaker 1: you actually generate quite a bit of revenue for the

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Speaker 1: government thirty forty fifty percent. Tariffs don't generate much revenue

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Speaker 1: because it smothers the trade exactly, people divert their trade elsewhere.

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Speaker 1: It actually changes behavior. If you're a government and you

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Speaker 1: want to take you want to generate revenue, you don't

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Speaker 1: want to change behavior, and that's where we've ended up

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Speaker 1: on most of these tariffs. So I'm looking at it

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Speaker 1: and going, Okay, he's done a whole lot of negotiating,

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Speaker 1: He's done a whole lot of things behind the scenes,

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Speaker 1: but he's kind of he's just wanted to generate some revenue.

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Speaker 1: I mean, he's got to pay for the tax cuts

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Speaker 1: that he brought in in his first term.

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Speaker 2: Someone asked to I mean we worry about this, I

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Speaker 2: suppose as a nation, going back to what you said

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Speaker 2: about our debt levels and whether we've serviced the needs

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Speaker 2: of our society. Around economy, there's a lot of pressure

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Speaker 2: on governments to return to surplus quickly, and a lot

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Speaker 2: of scolding gets applied to whether it's national or labor holding.

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Speaker 2: The Treasury ventures about that return. I think at the moment,

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Speaker 2: even Fitch, one of the ratings agencies, when it reconfirmed

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Speaker 2: that New Zealand's got a I think.

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Speaker 1: It's a double a plus under them.

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Speaker 2: I think, great credit school to have to borrow, but

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Speaker 2: please don't do any borrowing instead of almost the thing.

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Speaker 2: It's nice, but don't take it for a drive because

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Speaker 2: they're saying you keep pushing down the road to the point

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Speaker 2: at which you're returning to surplus. And they're saying that

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Speaker 2: to worry. I mean, you've worked in international money markets

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Speaker 2: and you know you've got to heed those people, haven't you.

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Speaker 1: Yeah, yeah, oh absolutely, it's a it's a big deal.

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Speaker 1: And New Zealand's got a triple A rating under under Movies, right,

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Speaker 1: that's as high as it gets. I kind of wish

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Speaker 1: we didn't have that, to be fair, and it was

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Speaker 1: double A and that was all we were all we

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Speaker 1: were going for. But yeah, no, there's there's a there's

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Speaker 1: an op x versus capex thing here. So there's running

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Speaker 1: a deficit because you're spending too much and you're not

401
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Speaker 1: collecting enough revenue and you need to think about your taxes.

402
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Speaker 1: You need to think about your spending, and you know

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Speaker 1: this government's doing doing that. But then there's the well,

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Speaker 1: if we went out to the market and issued an

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Speaker 1: infrastructure bond and said hey, we want fifty billion dollars

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Speaker 1: and we're going to issue that and it's going to

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Speaker 1: go towards infrastructure, then most people will turn around and

408
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Speaker 1: go okay, fine.

409
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Speaker 2: New Zealand.

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Speaker 1: Good risk would put how money there Singapore going into

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Speaker 1: building as sets people. There's going to be a return

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Speaker 1: on it, hopefully, you know, it might be a toll road,

413
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Speaker 1: it might be whatever. Get the private people involved, you know,

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Speaker 1: do what you need to do to build the infrastructure.

415
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Speaker 1: I don't think the rating agencies or investors would even blink.

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Speaker 1: It's like, yeah, okay, you're finally playing catch up for

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Speaker 1: thirty years of not doing enough, cutting taxes, spending more

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Speaker 1: on on on beneficiaries or whatever. That's what gets the

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Speaker 1: rating agent's more concerned building a bridge, building a road

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Speaker 1: or whatever. That that's not a that's building in the

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Speaker 1: productivity of your economy. And we sit here looking at

422
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Speaker 1: these really disappointing productivity numbers for New Zealand and elsewhere,

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Speaker 1: but for New Zealand in particular, and we just go,

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Speaker 1: you know what, A lot of that's just the lack

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Speaker 1: of infrastructure. We haven't invested in ourselves, and governments need

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Speaker 1: to realize that if you think about the long game,

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Speaker 1: and unfortunately they're only thinking about three year games, if

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Speaker 1: you think about the long game, spending more on infrastructure today,

429
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Speaker 1: we'll give you a harder, faster, stronger economy. Oh and

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Speaker 1: that's a larger tax base tomorrow. We don't seem to

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Speaker 1: be able to think in ten twenty fifty year chunks.

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Speaker 1: We're only thinking in three yearly chunks. Look at this

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Speaker 1: government now that they haven't been in there that long.

434
00:22:47,560 --> 00:22:50,520
Speaker 1: They're kind of halfway through and they're already looking to

435
00:22:50,600 --> 00:22:53,320
Speaker 1: next year, going jeez, we've got to deliver in order

436
00:22:53,400 --> 00:22:56,359
Speaker 1: to get voted back in. It's not enough time, not

437
00:22:56,440 --> 00:22:58,280
Speaker 1: enough time for either side of government.

438
00:22:58,560 --> 00:23:00,240
Speaker 2: We might get to decide on a four year term

439
00:23:00,280 --> 00:23:01,280
Speaker 2: at the next selection.

440
00:23:01,800 --> 00:23:03,640
Speaker 1: But it's like you want to give them a four

441
00:23:03,720 --> 00:23:07,200
Speaker 1: year term with the expectation to get in two almost

442
00:23:07,240 --> 00:23:09,240
Speaker 1: like the US, you kind of expect them to get

443
00:23:09,640 --> 00:23:11,720
Speaker 1: two terms and you've got them in there for a

444
00:23:11,800 --> 00:23:14,679
Speaker 1: chunk of time and you can kind of get stuff

445
00:23:14,760 --> 00:23:18,560
Speaker 1: done over that over that time frame. But three yearly

446
00:23:19,359 --> 00:23:22,679
Speaker 1: and then and then the complications of coalitions, it's just,

447
00:23:23,840 --> 00:23:27,800
Speaker 1: you know, it really inhibits their ability to get stuff done.

448
00:23:29,240 --> 00:23:33,960
Speaker 2: Well. It provides ideas, yeah, possibly, but I mean you

449
00:23:34,000 --> 00:23:36,320
Speaker 2: get ideas. You get minority parties like Act with the

450
00:23:36,320 --> 00:23:39,480
Speaker 2: Greens that are living in sort of slightly saltier suggestions

451
00:23:39,520 --> 00:23:42,439
Speaker 2: like we should run hard on that deficit or we should,

452
00:23:42,640 --> 00:23:45,879
Speaker 2: you know, really pull the chucks out and go for

453
00:23:45,920 --> 00:23:49,600
Speaker 2: an extremely simultary position and that what what function does

454
00:23:49,640 --> 00:23:49,919
Speaker 2: that have?

455
00:23:50,920 --> 00:23:54,640
Speaker 1: Well, I think you get you get these two centralist parties,

456
00:23:54,680 --> 00:23:57,000
Speaker 1: and then you get some on either side recommending the

457
00:23:57,080 --> 00:24:00,959
Speaker 1: more extreme, and a lot of odors will look at

458
00:24:00,960 --> 00:24:02,920
Speaker 1: the two central parties and go, you know what, they're

459
00:24:02,960 --> 00:24:05,440
Speaker 1: not really either size, not really giving me something. So

460
00:24:05,720 --> 00:24:08,000
Speaker 1: I'll go to the ones that are a bit more extreme,

461
00:24:08,040 --> 00:24:11,600
Speaker 1: and we and we see that. I just wish we

462
00:24:11,600 --> 00:24:14,760
Speaker 1: would have a better debate about the type of debt

463
00:24:14,800 --> 00:24:17,639
Speaker 1: that we could issue and what that money would be

464
00:24:17,720 --> 00:24:20,840
Speaker 1: used for. If we went out to the investment community

465
00:24:21,040 --> 00:24:25,399
Speaker 1: and said, give us fifty billion dollars we want to

466
00:24:25,440 --> 00:24:29,280
Speaker 1: do these projects over the next ten years, will you

467
00:24:29,359 --> 00:24:33,280
Speaker 1: fund us? Absolutely? They would absolutely. They are looking for

468
00:24:33,520 --> 00:24:37,280
Speaker 1: ten twenty thirty year debt. ACC is a great example.

469
00:24:37,400 --> 00:24:42,200
Speaker 1: Insurance companies. They want long term bonds to invest into,

470
00:24:42,280 --> 00:24:44,800
Speaker 1: so they would be you know, itching to buy twenty

471
00:24:44,840 --> 00:24:45,760
Speaker 1: thirty year bonds.

472
00:24:46,200 --> 00:24:49,480
Speaker 2: Were the world champions of comparing ourselves straight to kicker,

473
00:24:49,680 --> 00:24:51,120
Speaker 2: who's doing it better than us? Right now?

474
00:24:53,280 --> 00:24:56,040
Speaker 1: I think Australia is definitely uperforming us at the moment.

475
00:24:56,359 --> 00:25:01,160
Speaker 1: And that's because they are, and you know they're. Their

476
00:25:01,240 --> 00:25:04,600
Speaker 1: central bank didn't go as hard on the rate hikes,

477
00:25:04,760 --> 00:25:08,320
Speaker 1: so therefore the Ossie economy didn't slow down as much.

478
00:25:08,720 --> 00:25:13,160
Speaker 1: They didn't record a technical recession. They've got a recession

479
00:25:13,320 --> 00:25:16,399
Speaker 1: in per capita terms, but it's quite shallow compared to ours.

480
00:25:16,440 --> 00:25:18,600
Speaker 1: So we just look at the Aussie economy and go,

481
00:25:18,760 --> 00:25:23,000
Speaker 1: oh man, it's just growing nicer than ours. The labor

482
00:25:23,040 --> 00:25:27,680
Speaker 1: markets tighter, wage growth is more. They're just more buoyant

483
00:25:27,760 --> 00:25:30,320
Speaker 1: than we are at the moment, and that's why we've

484
00:25:30,320 --> 00:25:33,560
Speaker 1: seen a net forty three thousand kiwis leave in the

485
00:25:33,600 --> 00:25:34,160
Speaker 1: last year.

486
00:25:34,760 --> 00:25:36,480
Speaker 2: People are heading there, mostly.

487
00:25:36,240 --> 00:25:39,760
Speaker 1: Didn't going to Australia, so we've seen seventy odd thousand

488
00:25:39,840 --> 00:25:44,119
Speaker 1: kiwis leave and then some coming back, but that net

489
00:25:44,200 --> 00:25:47,520
Speaker 1: forty three is huge. That's a lot of kiwis leaving.

490
00:25:48,760 --> 00:25:51,679
Speaker 1: It goes in cycles, and we saw it in twenty

491
00:25:51,800 --> 00:25:55,960
Speaker 1: and twelve when the Aussie mining boom was really in

492
00:25:56,080 --> 00:25:59,479
Speaker 1: full flight and people were going over driving a truck

493
00:25:59,520 --> 00:26:02,119
Speaker 1: and per for like two hundred thousand dollars. Not so

494
00:26:02,240 --> 00:26:04,000
Speaker 1: much of that these days, not so much of that,

495
00:26:04,080 --> 00:26:07,360
Speaker 1: but definitely better prospects at the moment. Otherwise we wouldn't

496
00:26:07,359 --> 00:26:10,960
Speaker 1: be seeing the numbers of kiwi are leaving to Australia.

497
00:26:11,119 --> 00:26:13,520
Speaker 2: How much of it is off savings and just a stronger,

498
00:26:13,720 --> 00:26:18,200
Speaker 2: you know, a better national superinnuation structure so that people

499
00:26:18,240 --> 00:26:19,680
Speaker 2: are putting more money aside.

500
00:26:20,240 --> 00:26:22,840
Speaker 1: Oh, I mean that's been a strength of Australia for

501
00:26:22,840 --> 00:26:25,959
Speaker 1: a while. Now. They've got I think the fifth largest

502
00:26:26,440 --> 00:26:29,720
Speaker 1: sovereign wealth fund on the planets for an economy, which

503
00:26:29,760 --> 00:26:32,919
Speaker 1: is less than two percent of the global economy. To

504
00:26:32,920 --> 00:26:35,040
Speaker 1: have that sort of savings there, and do you know what,

505
00:26:35,200 --> 00:26:39,760
Speaker 1: they don't think they've got enough. They are still increasing

506
00:26:40,119 --> 00:26:42,600
Speaker 1: their compulsory I think it's gone up to twelve percent now.

507
00:26:42,760 --> 00:26:45,080
Speaker 1: It was nine percent when I was working there. I

508
00:26:45,200 --> 00:26:48,480
Speaker 1: tell you what, working thirteen and a half years in Australia,

509
00:26:48,960 --> 00:26:51,840
Speaker 1: I've actually got this nice little nest egg sitting there

510
00:26:52,000 --> 00:26:54,000
Speaker 1: that I wouldn't have had Otherwise. There's no way I

511
00:26:54,040 --> 00:26:57,679
Speaker 1: could afford to put nine percent away over that entire period.

512
00:26:57,800 --> 00:27:00,520
Speaker 1: But it's sitting there and it's great. We're doing it

513
00:27:00,560 --> 00:27:03,880
Speaker 1: here now. Should be compulsory should be a much higher rate.

514
00:27:05,320 --> 00:27:09,119
Speaker 1: But you know, some things Australians just do do better

515
00:27:10,040 --> 00:27:12,239
Speaker 1: than us. They dig holes better than us, I can

516
00:27:12,280 --> 00:27:14,760
Speaker 1: tell you that much. But we grow stuff on top

517
00:27:14,880 --> 00:27:19,439
Speaker 1: much better than them. One thing they are pretty good at,

518
00:27:19,560 --> 00:27:22,719
Speaker 1: and particularly at the state level, is the big infrastructure stuff.

519
00:27:23,320 --> 00:27:25,440
Speaker 1: You know, they just seem to get stuff done. And

520
00:27:25,480 --> 00:27:28,600
Speaker 1: I use Sydney as a classic example, where you've got

521
00:27:28,640 --> 00:27:34,720
Speaker 1: this bridge and it's got heaps lanes, it's got a

522
00:27:34,760 --> 00:27:37,640
Speaker 1: train track gone both ways, so trains can go across,

523
00:27:37,840 --> 00:27:40,919
Speaker 1: you can walk down one side, you can cycle across

524
00:27:40,960 --> 00:27:44,040
Speaker 1: the other side of it. And that was built, you know,

525
00:27:44,119 --> 00:27:50,720
Speaker 1: fifty years ago. That's not enough. Their cities grew and

526
00:27:50,760 --> 00:27:54,760
Speaker 1: they've got a tunnel going underneath. Now you've got theories.

527
00:27:54,840 --> 00:27:57,359
Speaker 1: You've got plenty of ways to get across the Sydney Harbor.

528
00:27:58,040 --> 00:28:03,480
Speaker 1: Right here, You've got a bridge that was built in

529
00:28:03,520 --> 00:28:06,080
Speaker 1: the sixties, I think, on the cheap. On the cheap,

530
00:28:06,880 --> 00:28:10,280
Speaker 1: it reached capacity five years later, so we tacked on

531
00:28:10,920 --> 00:28:14,320
Speaker 1: some clip ons and we've done nothing since. The only

532
00:28:14,359 --> 00:28:16,800
Speaker 1: other way to get across is with maybe a fury

533
00:28:16,800 --> 00:28:21,040
Speaker 1: if you're lucky, or a kayak' that's your option. Strong

534
00:28:21,080 --> 00:28:25,960
Speaker 1: swimmers need strong swimmers exactly. I think it just highlights

535
00:28:26,000 --> 00:28:29,480
Speaker 1: the difference between us. They can they can deliver these

536
00:28:29,480 --> 00:28:32,560
Speaker 1: big projects in Australia and they can think a lot

537
00:28:32,600 --> 00:28:36,320
Speaker 1: further ahead for some reason, and I just wish we

538
00:28:36,400 --> 00:28:37,400
Speaker 1: would snap out of it.

539
00:28:38,120 --> 00:28:40,280
Speaker 2: Let's look at we're in the middle of earning season

540
00:28:40,320 --> 00:28:44,200
Speaker 2: at the moment. What are the economic themes, the macro themes,

541
00:28:44,240 --> 00:28:47,040
Speaker 2: the big bits of or clues you're getting about the

542
00:28:47,080 --> 00:28:49,000
Speaker 2: state of the world and the state of the economy

543
00:28:49,360 --> 00:28:51,280
Speaker 2: from some of the results that we're starting to see through.

544
00:28:51,320 --> 00:28:53,840
Speaker 2: We've had you know, like I think a two milk

545
00:28:53,880 --> 00:28:55,800
Speaker 2: and a couple of the big gent Taylor's here, ass

546
00:28:55,800 --> 00:29:00,160
Speaker 2: he's had the some of the resources reports in the

547
00:29:00,240 --> 00:29:04,920
Speaker 2: last couple of days. Does that help color your understanding

548
00:29:04,920 --> 00:29:05,720
Speaker 2: of what we're going through?

549
00:29:05,920 --> 00:29:09,720
Speaker 1: Yeah, it does? It does you know, you get a

550
00:29:09,760 --> 00:29:13,480
Speaker 1: flavor as the house. You know, certain certain businesses are

551
00:29:13,520 --> 00:29:16,080
Speaker 1: fairing and you know it doesn't match the data yet

552
00:29:16,280 --> 00:29:22,200
Speaker 1: kind of does There's certain external businesses that are exporting stuff,

553
00:29:22,200 --> 00:29:25,760
Speaker 1: they're doing they're doing okay, tourism related stuff, some some

554
00:29:25,840 --> 00:29:29,320
Speaker 1: other things are bouncing back. But generally looking across the

555
00:29:29,320 --> 00:29:32,720
Speaker 1: whole economy, if you actually go beyond the listed companies

556
00:29:32,760 --> 00:29:35,960
Speaker 1: and you look at say corporate tax that the government's collecting.

557
00:29:36,560 --> 00:29:40,680
Speaker 1: It's very very weak, very soft. So you know it's

558
00:29:40,760 --> 00:29:44,080
Speaker 1: still it's still you know, better than last year, but

559
00:29:44,160 --> 00:29:47,960
Speaker 1: not good. And we're still sort of feeling our way

560
00:29:47,960 --> 00:29:52,520
Speaker 1: out of this of this recession. You know, earnings overseas

561
00:29:52,520 --> 00:29:55,240
Speaker 1: have been okay, but you know, I'm not shooting the

562
00:29:55,320 --> 00:29:56,000
Speaker 1: lights out.

563
00:29:56,560 --> 00:29:58,720
Speaker 2: And you've got a lot of I D based liquidations.

564
00:29:58,760 --> 00:30:00,000
Speaker 2: They're already coming cracking down.

565
00:30:00,080 --> 00:30:03,200
Speaker 1: They have just gone like that, and it's like, you know,

566
00:30:03,360 --> 00:30:05,800
Speaker 1: we see we sit there and go, you know, I'm sorry,

567
00:30:05,840 --> 00:30:09,920
Speaker 1: but that's exactly what you see in a recession. People

568
00:30:09,960 --> 00:30:12,680
Speaker 1: hold on for as long as they can and then

569
00:30:12,720 --> 00:30:15,080
Speaker 1: if the if you're not recovering quickly, which we're not,

570
00:30:15,720 --> 00:30:20,200
Speaker 1: then unfortunately a lot of these businesses go bust. And

571
00:30:20,320 --> 00:30:23,959
Speaker 1: we have seen quite a lift in receiverships, liquidations, you know,

572
00:30:24,040 --> 00:30:26,480
Speaker 1: all that, all that horrible stuff that we don't want

573
00:30:26,520 --> 00:30:32,160
Speaker 1: to see. And again we look at that and say, hey, yeah,

574
00:30:32,160 --> 00:30:34,280
Speaker 1: there's a lot of pain out there. What are we

575
00:30:34,360 --> 00:30:38,600
Speaker 1: doing as a country? Government's not stilatory, central banks not stilatory.

576
00:30:38,840 --> 00:30:42,960
Speaker 1: We've been through this huge recession. Where's the where's the

577
00:30:43,000 --> 00:30:43,600
Speaker 1: helping hand?

578
00:30:45,240 --> 00:30:51,480
Speaker 2: You've been quite interested in understanding money and finance and

579
00:30:51,640 --> 00:30:54,040
Speaker 2: the economy for quite some time. How did that spark start?

580
00:30:54,160 --> 00:30:57,560
Speaker 1: Yeah, pretty much my my my whole sort of adult life.

581
00:30:57,600 --> 00:31:01,560
Speaker 1: Like it started at school and like many students are

582
00:31:01,560 --> 00:31:05,640
Speaker 1: completely useless at English Mass, you know, I was getting

583
00:31:05,800 --> 00:31:08,720
Speaker 1: like you know b's and c's and stuff. And then

584
00:31:08,760 --> 00:31:12,560
Speaker 1: I had this fantastic economics teacher who's now teaching at

585
00:31:12,600 --> 00:31:16,840
Speaker 1: with Slate Girls, Dan Rennie, and he just brought it

586
00:31:16,880 --> 00:31:21,920
Speaker 1: to life. He got me reading the monetary policy statements

587
00:31:22,120 --> 00:31:26,080
Speaker 1: from the Reserve Bank at like the age thirteen fourteen,

588
00:31:26,160 --> 00:31:29,040
Speaker 1: and I've been reading my whole life. That's my whole life.

589
00:31:29,400 --> 00:31:32,640
Speaker 1: I've been reading these monetary policy statements. But my best

590
00:31:32,680 --> 00:31:34,600
Speaker 1: mate he went on to be a lawyer, so he

591
00:31:34,680 --> 00:31:37,360
Speaker 1: was dreaming about being a lawyer and I'm dreaming about

592
00:31:37,400 --> 00:31:41,280
Speaker 1: being an economist. And we both get together these days

593
00:31:41,440 --> 00:31:43,880
Speaker 1: and look back and laugh and you know we were

594
00:31:44,360 --> 00:31:47,240
Speaker 1: we basically have done what we said we're going to

595
00:31:47,280 --> 00:31:48,720
Speaker 1: do it, like age fifteen.

596
00:31:49,280 --> 00:31:51,560
Speaker 2: How do we get people fired up about that interested

597
00:31:51,560 --> 00:31:52,080
Speaker 2: in those things?

598
00:31:52,200 --> 00:31:54,920
Speaker 1: Is it just or yeah, try it out. I Mean

599
00:31:54,960 --> 00:31:57,080
Speaker 1: there's some cool things that I wish that I wish

600
00:31:57,160 --> 00:32:01,479
Speaker 1: were around when I was at at school. There's a

601
00:32:01,560 --> 00:32:04,880
Speaker 1: system or a program called Banker, which is so cool.

602
00:32:05,880 --> 00:32:10,880
Speaker 1: They get students, you know, really involved in finance and

603
00:32:10,920 --> 00:32:14,680
Speaker 1: making decisions as if they're adults and you know, running

604
00:32:14,680 --> 00:32:18,880
Speaker 1: a home, running a business, buying shares, that sort of stuff,

605
00:32:19,000 --> 00:32:22,280
Speaker 1: and they get them involved in it early. I think,

606
00:32:22,440 --> 00:32:27,720
Speaker 1: you know, financial literacy is something where I don't think

607
00:32:27,720 --> 00:32:30,959
Speaker 1: it requires a lot and I'm glad the government's tackled

608
00:32:30,960 --> 00:32:32,400
Speaker 1: this and said, you know, we need to do this.

609
00:32:32,760 --> 00:32:35,400
Speaker 1: I don't think it requires a lot of teaching to

610
00:32:35,520 --> 00:32:40,040
Speaker 1: give you just a real basic understanding. I'm always saddened

611
00:32:40,080 --> 00:32:42,680
Speaker 1: when I hear of people being so scared to walk

612
00:32:42,720 --> 00:32:44,640
Speaker 1: into a bank. Oh, I don't want to talk to them.

613
00:32:45,040 --> 00:32:48,160
Speaker 1: They're not going to approve my loan. It's like walk

614
00:32:48,240 --> 00:32:49,920
Speaker 1: in there, slap it on the desk and say I

615
00:32:49,960 --> 00:32:52,400
Speaker 1: want my loan, you know, and if they say no,

616
00:32:52,560 --> 00:32:54,160
Speaker 1: go to the next one. Go to the next one.

617
00:32:54,200 --> 00:32:54,520
Speaker 2: You know what.

618
00:32:54,600 --> 00:32:57,680
Speaker 1: The bank's there. They want you as a customer. And

619
00:32:58,120 --> 00:33:01,000
Speaker 1: it's that financial literacy. You know, if you if you're

620
00:33:01,000 --> 00:33:03,160
Speaker 1: not there and you and you're you're not comfortable in

621
00:33:03,200 --> 00:33:05,960
Speaker 1: your own understanding, you are going to be nervous walking

622
00:33:06,000 --> 00:33:07,800
Speaker 1: into a bank. And that shouldn't be the case if

623
00:33:07,840 --> 00:33:11,760
Speaker 1: they had had proper bit of training on on on

624
00:33:11,840 --> 00:33:14,720
Speaker 1: just how to do simple things and putting money away

625
00:33:14,720 --> 00:33:17,320
Speaker 1: into it into a shares your account I think is

626
00:33:17,360 --> 00:33:17,760
Speaker 1: part of that.

627
00:33:17,960 --> 00:33:19,800
Speaker 2: Right, money makes it matter.

628
00:33:20,080 --> 00:33:24,440
Speaker 1: Yeah, yeah, they'll be scared of it. Just just start

629
00:33:24,520 --> 00:33:26,080
Speaker 1: doing it right.

630
00:33:26,160 --> 00:33:29,240
Speaker 2: Well, let's see if that attitude will infuse itself out

631
00:33:29,280 --> 00:33:31,600
Speaker 2: after this podcast and we'll start to see those green shirts.

632
00:33:31,680 --> 00:33:34,560
Speaker 2: Jared Kre thank you very much for your time here,

633
00:33:34,760 --> 00:33:37,719
Speaker 2: and thanks very much for your attention for listening in.

634
00:33:38,120 --> 00:33:40,120
Speaker 2: Whatever you made of that, let us know, let us

635
00:33:40,200 --> 00:33:42,280
Speaker 2: know if there's something else that we should be covering

636
00:33:42,280 --> 00:33:44,920
Speaker 2: here on the Shared Lunch. That's us for now,