1 00:00:00,080 --> 00:00:02,560 Speaker 1: Now the government's financial statements are out and it's not 2 00:00:02,640 --> 00:00:04,920 Speaker 1: looking that great. Debt is now at forty one point 3 00:00:04,960 --> 00:00:07,040 Speaker 1: eight percent of GDP. It's gone up in the last 4 00:00:07,080 --> 00:00:11,039 Speaker 1: year obviously. The operating deficit obergal X is sitting on 5 00:00:11,160 --> 00:00:13,720 Speaker 1: nine point three billion dollars. That's higher than last year's 6 00:00:13,720 --> 00:00:16,240 Speaker 1: which was eight point eight billion dollars. Revenue is up, 7 00:00:16,280 --> 00:00:19,560 Speaker 1: expenses up. Of course, Finance Minister Nicola Willis managed to 8 00:00:19,600 --> 00:00:21,439 Speaker 1: spin it in a good light health. 9 00:00:21,239 --> 00:00:24,079 Speaker 2: And education, but as a proportion of the overall economy, 10 00:00:24,320 --> 00:00:25,880 Speaker 2: Crown spending is reducing. 11 00:00:26,160 --> 00:00:28,800 Speaker 1: Brad Olson is infometrics principle economist and with us hih 12 00:00:28,800 --> 00:00:32,559 Speaker 1: Brad good evening. Obviously not great, But how much of 13 00:00:32,560 --> 00:00:34,360 Speaker 1: this should we give them slack fall because of the 14 00:00:34,400 --> 00:00:35,360 Speaker 1: state of the economy. 15 00:00:36,760 --> 00:00:38,479 Speaker 2: Well, I think more than that, just the state of 16 00:00:38,520 --> 00:00:40,599 Speaker 2: the economy. The challenges is that a lot of these 17 00:00:40,680 --> 00:00:43,479 Speaker 2: numbers were baked in by previous decisions, and unless you 18 00:00:43,479 --> 00:00:46,839 Speaker 2: were going to see some really really fundamental changes, and 19 00:00:46,840 --> 00:00:49,680 Speaker 2: that would probably have to affect the likes of, you know, 20 00:00:50,720 --> 00:00:54,200 Speaker 2: different welfare and social spending, health and education, you probably 21 00:00:54,240 --> 00:00:56,600 Speaker 2: couldn't do too much of a turnaround job too quickly. 22 00:00:56,640 --> 00:00:59,080 Speaker 2: So the fact that some of these indicators have either 23 00:00:59,120 --> 00:01:02,200 Speaker 2: stabilized or to move slightly in the right direction. Yes, 24 00:01:02,240 --> 00:01:04,440 Speaker 2: it's not enough yet, but some of them. I mean, 25 00:01:04,480 --> 00:01:06,840 Speaker 2: you look at the likes of spending now a smaller 26 00:01:06,880 --> 00:01:11,199 Speaker 2: percentage of GDP. You mentioned the debt figure up six 27 00:01:11,240 --> 00:01:14,640 Speaker 2: point seven billion dollars from last year, but three point 28 00:01:14,680 --> 00:01:17,600 Speaker 2: five billion lower than was forecast in the budget, and 29 00:01:17,640 --> 00:01:20,160 Speaker 2: the fact that it stabilized at forty one point eight percent. 30 00:01:20,640 --> 00:01:22,680 Speaker 2: The first change, and it will first part of a 31 00:01:22,720 --> 00:01:25,920 Speaker 2: turnaround is at least leveling things out and stopping them 32 00:01:25,959 --> 00:01:27,920 Speaker 2: going higher. So I guess on that front there is 33 00:01:27,959 --> 00:01:30,360 Speaker 2: a bit of a change, but clearly there's still a long, 34 00:01:30,520 --> 00:01:33,479 Speaker 2: hard slog for the government books to get back into 35 00:01:33,520 --> 00:01:36,120 Speaker 2: a more reasonable position. That's probably going to take quite 36 00:01:36,120 --> 00:01:38,120 Speaker 2: a few years, until probably the twenty thirties. 37 00:01:38,600 --> 00:01:40,720 Speaker 1: But why is the operating deficit still widening? 38 00:01:42,440 --> 00:01:45,039 Speaker 2: Well, I mean the government is still spending more in 39 00:01:45,080 --> 00:01:47,120 Speaker 2: general than it's earning. If you look at the sort 40 00:01:47,120 --> 00:01:51,240 Speaker 2: of spending figures. Total revenue, so money earned by government 41 00:01:51,280 --> 00:01:54,520 Speaker 2: was up two point five billion from last year, spending 42 00:01:54,600 --> 00:01:56,680 Speaker 2: up three point four billion, But again a lot of 43 00:01:56,720 --> 00:02:00,720 Speaker 2: that coming down to the likes of social security and welfare. 44 00:02:01,040 --> 00:02:04,000 Speaker 2: That's both job seeker support. Because the economy is weak here, 45 00:02:04,040 --> 00:02:06,240 Speaker 2: you've got more people out of jobs, so that's sort 46 00:02:06,280 --> 00:02:09,080 Speaker 2: of cyclical. But of course you've also got those higher 47 00:02:09,120 --> 00:02:12,080 Speaker 2: superannuation payments. Like when you look through the numbers, those 48 00:02:12,120 --> 00:02:14,680 Speaker 2: are the areas that you see the biggest changes. What 49 00:02:14,760 --> 00:02:18,600 Speaker 2: the government has done, particularly around Kaying Aura has seen 50 00:02:18,680 --> 00:02:21,520 Speaker 2: a little bit less going through in the expense line, 51 00:02:21,560 --> 00:02:24,200 Speaker 2: so that's an important change. But at the same time, 52 00:02:24,240 --> 00:02:27,040 Speaker 2: there are then concerns in the community around social housing. 53 00:02:27,080 --> 00:02:29,200 Speaker 2: So all of this is a very delicate and very 54 00:02:29,240 --> 00:02:30,400 Speaker 2: difficult balancing act. 55 00:02:30,639 --> 00:02:32,400 Speaker 1: I think, what is it We're supposed to hit surplus 56 00:02:32,400 --> 00:02:34,000 Speaker 1: in about four years and twenty twenty nine. 57 00:02:34,080 --> 00:02:37,560 Speaker 2: Is that credible? Well, I mean it also depends on 58 00:02:37,600 --> 00:02:40,880 Speaker 2: exactly what you include or exclude from the various measures. 59 00:02:40,880 --> 00:02:42,960 Speaker 2: I mean it's sort of I think it's around twenty 60 00:02:43,040 --> 00:02:46,560 Speaker 2: thirty is sort of where my mind is sitting when 61 00:02:46,600 --> 00:02:49,079 Speaker 2: you look at the various indicators and realizing that's still 62 00:02:49,120 --> 00:02:51,920 Speaker 2: a long way away in terms of other economic shocks 63 00:02:51,919 --> 00:02:54,120 Speaker 2: that could come through and a whole lot of other changes. 64 00:02:54,200 --> 00:02:57,400 Speaker 2: So look, I think we are seeing that first shift 65 00:02:57,440 --> 00:03:00,720 Speaker 2: towards stabilizing things to bringing down a expenses as a 66 00:03:00,760 --> 00:03:03,200 Speaker 2: proportion of GDP. But it's still going to take a 67 00:03:03,200 --> 00:03:05,160 Speaker 2: while for those numbers to get back into what we 68 00:03:05,280 --> 00:03:09,120 Speaker 2: might feel as a sort of comfortable and sustainable zone. 69 00:03:09,320 --> 00:03:12,000 Speaker 2: Let's remember the reason we need to get the government 70 00:03:12,080 --> 00:03:14,919 Speaker 2: accounts back into a more sort of sensible order is 71 00:03:14,960 --> 00:03:17,200 Speaker 2: that the next time something comes out of the blue 72 00:03:17,240 --> 00:03:19,639 Speaker 2: and hits the economy, we need to have buffer room 73 00:03:19,639 --> 00:03:21,959 Speaker 2: to respond. And at the moment we're still trying to 74 00:03:22,000 --> 00:03:23,839 Speaker 2: pay off the credit card bill from the last couple 75 00:03:23,919 --> 00:03:25,320 Speaker 2: of times we've wrapped it up. 76 00:03:25,520 --> 00:03:27,840 Speaker 1: Hey, listen, what do you make of the OCR announcement 77 00:03:27,919 --> 00:03:29,880 Speaker 1: yesterday with the double cut. Do you think that that 78 00:03:30,000 --> 00:03:31,760 Speaker 1: is enough to get our spending again? 79 00:03:33,400 --> 00:03:34,960 Speaker 2: Well, in a sense, I mean the proof will be 80 00:03:35,000 --> 00:03:37,360 Speaker 2: in the pudding, but not for another twelve months. I mean, 81 00:03:37,560 --> 00:03:40,360 Speaker 2: those decisions that were made yesterday still won't flow through 82 00:03:40,360 --> 00:03:42,320 Speaker 2: to the economy fully. Brad, it was for a while. 83 00:03:42,560 --> 00:03:44,880 Speaker 1: No, But Brad, it was supposed to be a head change, 84 00:03:44,920 --> 00:03:47,040 Speaker 1: a game changer in our heads. Right, We're supposed to 85 00:03:47,040 --> 00:03:50,320 Speaker 1: stop being scared, stop saving, and start spending effective. Now 86 00:03:50,560 --> 00:03:51,320 Speaker 1: is that going to work? 87 00:03:52,200 --> 00:03:54,040 Speaker 2: Well, that's the talk, But That's why I'm a little 88 00:03:54,080 --> 00:03:56,600 Speaker 2: bit sort of, I guess, curious, and a little bit 89 00:03:56,600 --> 00:03:59,040 Speaker 2: there's a part in the bottom of my stomach here 90 00:03:59,040 --> 00:04:01,760 Speaker 2: that still worries that if we've got, you know, three 91 00:04:01,800 --> 00:04:04,400 Speaker 2: hundred or so basis points of cuts and that hasn't 92 00:04:04,440 --> 00:04:06,880 Speaker 2: done anything, but we're waiting for just that extra little 93 00:04:06,920 --> 00:04:09,000 Speaker 2: cut to get us over the line. I worry that 94 00:04:09,040 --> 00:04:12,160 Speaker 2: when inflation is nearly at three percent and similar, by goodness, 95 00:04:12,200 --> 00:04:14,080 Speaker 2: we could look back at this decision in a year's 96 00:04:14,080 --> 00:04:16,640 Speaker 2: time ago, we might have overdone it. I get the 97 00:04:16,680 --> 00:04:20,160 Speaker 2: call for stimulus and support, but that inflation worry, It 98 00:04:20,279 --> 00:04:21,960 Speaker 2: really does sort of stick in the back of my 99 00:04:22,680 --> 00:04:24,400 Speaker 2: throat and it worries me that will be there in 100 00:04:24,400 --> 00:04:26,040 Speaker 2: a year's time and still concerned. 101 00:04:26,120 --> 00:04:27,200 Speaker 1: Yeah, hey, thanks very much. 102 00:04:27,240 --> 00:04:27,400 Speaker 2: Brad. 103 00:04:27,440 --> 00:04:30,160 Speaker 1: Always appreciated this, Brad awesome informetrics principle Economist. 104 00:04:30,839 --> 00:04:34,039 Speaker 2: For more from Heather Duplessy Alan Drive, listen live to 105 00:04:34,120 --> 00:04:37,159 Speaker 2: news Talks. It'd be from four pm weekdays, or follow 106 00:04:37,200 --> 00:04:38,960 Speaker 2: the podcast on iHeartRadio.