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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Welcome to the Bloomberg day Break Asia podcast. I'm Doug Chrisner.

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Speaker 2: On today's episode, we'll bring you a conversation with Australia's

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Speaker 2: Treasurer Jim Chalmers, plus a look at the broader market

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Speaker 2: landscape with Mark Knackman. He is the global head of

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Speaker 2: Asset and Wealth Management at Goldman Sachs. Australian Treasurer Jim

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Speaker 2: Chalmers is warning of seismic impact from the Trump Administration's

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Speaker 2: tariff policies. Chalmers remarks come ahead of his fourth national budget.

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Speaker 2: It's due to be handed down on Tuesday. Here's Chalmers

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Speaker 2: speaking earlier to Bloomberg's Ben Westcott in Canberra.

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Speaker 3: So this is your fourth budget. Your first three were

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Speaker 3: really defined by controlling inflation and setting up new sources

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Speaker 3: of growth. How do you define your fourth budget?

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Speaker 4: Well, this will be a responsible budget which focuses on

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Speaker 4: cost of living relief without ignoring our responsibilities to the future. Certainly,

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Speaker 4: in the global economy casts a shadow over the world

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Speaker 4: and a cast a shadow over this budget, and so

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Speaker 4: our job is to provide that cost of living relief

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Speaker 4: in a responsible way. At the same time as we

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Speaker 4: make our economy more resilient to these external shocks.

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Speaker 3: Now, you've said that the underlying budget bottom line will

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Speaker 3: be pretty close to what it was at my EFO,

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Speaker 3: but economists, including those at Bloomberg, expect a revenue upgrade

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Speaker 3: potentially as much as fifteen billion dollars. Now do you

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Speaker 3: Is that? Obviously that's nothing compared to your first budget upgrades,

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Speaker 3: But is that discrepancy because you plan to spend that

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Speaker 3: revenue upgrade.

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Speaker 4: Well, A couple of important points about that. I mean,

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Speaker 4: first of all, the media budget update was only about

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Speaker 4: three months ago. The March budget is relatively unusual in Australia.

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Speaker 4: We usually go in May, and so the bottom line

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Speaker 4: will be roughly the same that we then we saw

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Speaker 4: in December. When it comes to revenue upgrades, there'll be

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Speaker 4: quite a small revenue upgrade, much much smaller than what

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Speaker 4: we've seen in earlier years, nothing like what you're suggesting

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Speaker 4: in your question. But what the bottom line will reflect

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Speaker 4: is the really responsible way that we've gone about managing

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Speaker 4: the budget. We have helped engineer the biggest ever nominal

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Speaker 4: improvement in the budget in a single parliamentary term, a

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Speaker 4: two hundred billion dollar turnaround in the budget. Two surpluses

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Speaker 4: in our first two years are much smaller deficit in

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Speaker 4: the third year than what we inherited from our predecessors.

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Speaker 4: All of that means less debt and less interest on

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Speaker 4: that debt, which is a big structural pressure on the budget.

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Speaker 4: So one of the defining features of the fourth budget

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Speaker 4: of this government, a bit like the first three, is

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Speaker 4: responsible economic management, not instead of helping with the cost

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Speaker 4: of living and investing in the future, but as well.

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Speaker 3: As now you've mentioned cost of living measures, and there's

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Speaker 3: widely expected to be new measures in this budget, including

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Speaker 3: potentially electricity subsidies. But given the fact that global growth

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Speaker 3: is slowing and that inflation is coming down, rates are

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Speaker 3: coming down, do you expect your reaching the end of

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Speaker 3: your sort of inflation curving policies and starting to shift

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Speaker 3: to a more stimulatory fiscal policy.

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Speaker 4: Well, cost of living is still front of mind for

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Speaker 4: most Australians, and it's front and center in this budget,

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Speaker 4: and we recognize that despite the very substantial progress that

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Speaker 4: we've made together on inflation, people are still under pressure,

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Speaker 4: and the budget will help with some of those cost

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Speaker 4: of living pressures. We're making medicines cheaper, a huge investment

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Speaker 4: in bulk billing because more bulk billing means less pressure

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Speaker 4: on families. We will extend the energy bill rebates for

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Speaker 4: six months because that's hip pocket help for households. So

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Speaker 4: this is a real theme, the central theme of the budget,

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Speaker 4: helping with the cost of living. Recognizing that even as

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Speaker 4: we make this very substantial progress on inflation from higher

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Speaker 4: than six percent and rising when we came to office

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Speaker 4: to now in the bottom half of the Reserve Banks

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Speaker 4: target band at two point four percent, we know that

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Speaker 4: people are still under pressure, and so there's still a

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Speaker 4: focus on cost of living in the budget. But if

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Speaker 4: you take a step back from that, you ask me

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Speaker 4: about the progress that we've made in our economy. This

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Speaker 4: train economy is turning a corner. We've got inflation down,

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Speaker 4: real wages are up, and incomes of strengthening. Unemployment is

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Speaker 4: very low by historical standards. We've got the debt down,

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Speaker 4: interest rates have started to come down, and now growth

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Speaker 4: is rebounding solidly in our economy as well, led by

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Speaker 4: the private sector. So all of those things are very

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Speaker 4: welcome developments. But we know that there's more work to

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Speaker 4: do because people are still under pressure, there's all of

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Speaker 4: this global economic uncertainty. Those are the two big pressures

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Speaker 4: on the budget, and they fuel the two big priorities

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Speaker 4: in the budget, which is cost of living help and

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Speaker 4: investing in the future to make us more resilient.

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Speaker 3: You said they are extending the tricity substance both three months,

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Speaker 3: was it or no?

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Speaker 4: By six months?

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Speaker 3: Six months when not longer a year?

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Speaker 4: Well, we're doing what we responsibly can you know, we

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Speaker 4: have to make the budget add up. We need to

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Speaker 4: do everything that we can, but in the most responsible

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Speaker 4: way that we can. The energy bill rebates have played

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Speaker 4: a really important role in taking some of the edge

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Speaker 4: off electricity bills over the last couple of years. We

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Speaker 4: want to extend that for six months. This is the

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Speaker 4: hip pocket help that households need and deserve, which recognizes

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Speaker 4: that even with all this progress that we've made in inflation,

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Speaker 4: people are still under pressure. And whether it's cheaper medicines,

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Speaker 4: helping with electricity bills, more bulk billing, cutting student debt,

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Speaker 4: these are all of the ways that we can responsibly help.

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Speaker 3: Interesting, now, obviously you mentioned the global uncertainty. Will we

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Speaker 3: see more support for critical minerals and domestic industry in

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Speaker 3: this budget in response to the America First policies of

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Speaker 3: the US administration.

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Speaker 4: Well, our Future Made in Australia policy is all about

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Speaker 4: making our economy more resilient, and you've seen that we've

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Speaker 4: announced in recent months, and we will budget in the

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Speaker 4: budget for billions of dollars of investments in green metals,

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Speaker 4: for example, because we think this is an important way

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Speaker 4: that we make ourselves indispensable to the global net zero

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Speaker 4: transformation and also to supply chains as they're being reconsidered

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Speaker 4: and recast around the world. Now, this is a whole

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Speaker 4: new world of uncertainty that we're dealing with here. The

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Speaker 4: changes out of the US, for example, are not surprising,

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Speaker 4: but they are seismic. We're seeing uncertainty, policy uncertainty out

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Speaker 4: of the US. China is slowing, We've spoken about that

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Speaker 4: on a number of occasions. We've got conflicts in the

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Speaker 4: Middle East and Europe. We've got political uncertainty and division

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Speaker 4: around the world. And so the budget is designed not

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Speaker 4: just to respond to all of that uncertainty, but to

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Speaker 4: make ourselves more resilient in the face of those external

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Speaker 4: shops and the Future Made in Australia is really the

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Speaker 4: most important way that we're going about that, and there's

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Speaker 4: billions of dollars in new investments in green metals.

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Speaker 3: As part of that effort. Announced ones or just the

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Speaker 3: ones you've announced.

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Speaker 4: So the ones that we've made clear already, they'll be

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Speaker 4: budgeted for on Tuesday night. I mean, we've got a

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Speaker 4: huge agenda that brings together our industrial possibilities, the energy transformation,

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Speaker 4: the strengths and advantages that we have in critical minerals

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Speaker 4: and in other areas, and so we intend to play

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Speaker 4: that winning hand. The world is changing all around us.

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Speaker 4: The world is fragmenting, Supply chains are being reconsidered and rebuilt,

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Speaker 4: and we think we've got a very compelling offer to

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Speaker 4: the world, and so the budget is about making the

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Speaker 4: most of that opportunity, maximizing our advantages in the interests

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Speaker 4: of Middle Australia.

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Speaker 3: Now on that, I mean about a week after you

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Speaker 3: hand out this budget, in fact almost exactly, we're going

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Speaker 3: to see new tariffs unveiled by the US administration on

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Speaker 3: April second. Are you worried that those tariffs could throw

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Speaker 3: all your hard work in the budget completely off track

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Speaker 3: if they are particularly big or impressive.

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Speaker 4: Well, obviously we're concerned about these escalating trade tensions around

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Speaker 4: the world. As I said before, they are casting a

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Speaker 4: shadow not just over the budget, but over the global

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Speaker 4: economy more broadly. Australia has got a very trade exposed

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Speaker 4: economy and we are concerned about these trade tensions. Nobody

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Speaker 4: wins from a trade war list of all our country

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Speaker 4: like ours, and so we're obviously engaged with the US

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Speaker 4: administration with our counterparts there, but we're also designing a

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Speaker 4: budget which is all about are making sure that we

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Speaker 4: are beneficiaries, not victims, of the way that the world

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Speaker 4: is changing. Future Made in Australia is part of that.

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Speaker 4: The By Australia Plan is part of that as well.

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Speaker 4: All of this is about recognizing the way the world's

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Speaker 4: changing and trying to make sure not that just we're

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Speaker 4: not victims of that change, but that we can benefit

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Speaker 4: from those change as countries around the world are looking

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Speaker 4: for reliable partners like US.

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Speaker 3: Now you've mentioned the sort of negative side from the US,

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Speaker 3: but there's potential positive side in that the new tariffs

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Speaker 3: put on China might unleash a wave of economic stimulus

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Speaker 3: from Beijing. I mean, obviously there are a few unknowns

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Speaker 3: at this point. But in your opinion and the Treasury modeling,

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Speaker 3: do you think that will end up being a negative

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Speaker 3: or a net positive to Australia when balancing those two factors.

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Speaker 4: Well, we've seen a number of steps taken by the

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Speaker 4: administration in Beijing to try and support growth in the economy,

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Speaker 4: but we're still seeing China slowing. What you'll see in

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Speaker 4: the budget is Treasuries forecast for China and for the

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Speaker 4: US they will be they expect and they will casts

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Speaker 4: are slowing in both economies, and there's downside risks in

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Speaker 4: both places. And when you've got the two biggest economies

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Speaker 4: in the world presenting some risk to the global outlook

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Speaker 4: very weak period of global growth, then obviously we take

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Speaker 4: that into consideration. We're not revising down the American forecast,

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Speaker 4: for example, in the budget documents on Tuesday night, but

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Speaker 4: we do talk about all of the downside risks from

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Speaker 4: the two big economies in the world with their own

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Speaker 4: share of challenges, their own share of uncertainty, and I

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Speaker 4: think the announcements that we anticipate between now and the

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Speaker 4: start of April out of DC is just one of

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Speaker 4: those elements of all of that uncertainty.

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Speaker 3: I mean if we're revising down US and Chinese growth,

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Speaker 3: I mean, you've talked about Australiattorney a corner. Won't they

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Speaker 3: inevitably impact our own growth?

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Speaker 4: Well, first of all, we're not revising down the expectations

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Speaker 4: for growth in those places, but we are expecting a

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Speaker 4: slow down in growth in both of those places and

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Speaker 4: we won't be immune from that. We made that really clear.

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Speaker 4: We've been very upfront about our concerns about where this

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Speaker 4: is all heading. We do see this as a new

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Speaker 4: world of uncertainty, and that's why it's so important that

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Speaker 4: we have got the budget in much better Nick, It's

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Speaker 4: why we are investing in the future of our economy.

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Speaker 4: It's while we are making our industries more resilient in

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Speaker 4: this context, in the face of all of this unpredictability

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Speaker 4: and volatility. That's our responsibility. We take that responsibility. We

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Speaker 4: embrace the opportunity not just to help people in the

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Speaker 4: near term, but to build Australia's future as well, and

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Speaker 4: that's what the budget will be all about.

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Speaker 3: So sure, a final question, We're expected to head to

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Speaker 3: an election within weeks potentially. Your first term has been

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Speaker 3: really dominated by the inflation crisis, the cost of living crisis.

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Speaker 3: What would a second term of a labor administration look like.

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Speaker 4: Well, the budget is really where we bring it all together,

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Speaker 4: the progress that we've made to here and our plans

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Speaker 4: to make the most of it from here. And if

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Speaker 4: you think about that progress inflation down considerably, real wages

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Speaker 4: and income strengthening, unemployment, low, interest rates coming down, debt down,

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Speaker 4: growth rebounding solidly. We have actually built together as Australians

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Speaker 4: a pretty remarkable platform for prosperity into the future. And

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Speaker 4: so the budget is really all about making the most

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Speaker 4: of the decisions and the sacrifices that we've made together

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Speaker 4: to ensure that we can build a future that we

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Speaker 4: can all be proud of in the face of all

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Speaker 4: of this global international, global economic uncertainty. But inflation is

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Speaker 4: really it has been the defining focus of the first term,

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Speaker 4: but we haven't lost sight of the productivity challenge the

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Speaker 4: second term. We'll probably rebalance that a little bit, a

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Speaker 4: bigger focus on growth and productivity in the second term

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Speaker 4: without forgetting our responsibilities on cost of living and inflation.

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Speaker 2: That was Australian Treasurer Jim Chalmers speaking yesterday to Bloomberg's

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Speaker 2: Ben Westcott in Canberra. Welcome back to the Daybreak Asia podcast.

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Speaker 2: I'm Doug Chrisner. Volatility certainly has been the name of

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Speaker 2: the game as the trading week kicks off in the

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Speaker 2: APAC region. For more on the broader outlook for markets,

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Speaker 2: we heard from Mark Knackman. He is Global head of

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Speaker 2: Asset and Wealth Management at Goldman Sachs. He spoke earlier

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Speaker 2: with Bloomberg's Paul Allen and Heidie Stroud Watts in Sydney.

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Speaker 1: Every day it's sort of, you know, variations on a

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Speaker 1: theme of global volatility and uncertainty and trade. How's that

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Speaker 1: kind of broader macro environment benefiting or affecting your business?

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Speaker 5: Sure, I think it's interesting. It's a really interesting time

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Speaker 5: right now, given the uncertain that you mentioned, And I

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Speaker 5: think what we're really focusing on, number one, having a

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Speaker 5: lot of dialogue with our clients, both on the institutional side,

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Speaker 5: on the ball side, and really having a long term

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Speaker 5: perspective in terms of how people should think about asset allocation,

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Speaker 5: what geography is, what products and so I think that's

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Speaker 5: been the focus of the work that we're doing with

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Speaker 5: our client and some kind of you know, staying away

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Speaker 5: from the daily volatility and taking a longer perspective around

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Speaker 5: all these teams.

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Speaker 1: Is there more of an opportunity for geographic diversification. I mean,

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Speaker 1: you're here in Australia. I believe you're off to Singapore

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Speaker 1: as well on this trip.

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Speaker 5: Sure, and look, we continue to be excited about all

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Speaker 5: the regions. There's opportunities in all of them. We continue

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Speaker 5: to build up our business in Australia, for example, there's

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Speaker 5: a lot of interesting opportunities for us to invest in Australia,

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Speaker 5: and there's interesting opportunities for us to help Australian companies

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Speaker 5: and invest abroad. At the same time, a lot of

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Speaker 5: Australian investors are looking at the global landscape and becoming

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Speaker 5: broader and diversified themselves. So there's lots of opportunities for

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Speaker 5: us to work with clients here across the global scale.

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Speaker 6: Of course, we've seen a lot of volatility in the

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Speaker 6: past few weeks on public markets, but you work a

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Speaker 6: lot in the private space as well. Can you talk

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Speaker 6: to us about some of the opportunities that you're looking

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Speaker 6: into there.

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Speaker 2: Sure.

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Speaker 5: Yeah, we continue to think that the private markets are

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Speaker 5: really attractive and I think we've seen kind of that

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Speaker 5: shift in terms of number of companies staying private, number

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Speaker 5: of companies staying private longer, in terms of some of

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Speaker 5: the unicorns on the tech side, and so we think

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Speaker 5: that the private space continues to be very interesting. I

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Speaker 5: think global investors, as both on the institutional and on

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Speaker 5: the high network side, are continue to increase their allocation

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Speaker 5: of their capital into the private space, and so we

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Speaker 5: see interesting opportunities there on the private credit side, the

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Speaker 5: private equity side, the secondary side, and we think these

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Speaker 5: the flows into private assets will continue. At the same time,

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Speaker 5: we also see that the boundaries between the public and

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Speaker 5: private markets will continue to kind of become softer and

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Speaker 5: we'll see more of a continuum between the two markets.

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Speaker 6: Is the enthusiasm for private markets related to some extent

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Speaker 6: to the way that they're insulated for some of the

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Speaker 6: global upheaval that we're seeing at the moment.

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Speaker 5: I'd say that at the core, and this is why

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Speaker 5: I mentioned earlier the kind of long term investing focus.

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Speaker 5: When you look at long term returns on a long

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Speaker 5: term basis, private equity has outperformed the public equity markets.

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Speaker 5: I think you look at a longer term basis, private

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Speaker 5: credit has outperformed public credit and so those are really

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Speaker 5: the trends that large global investors are looking at why

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Speaker 5: they're allocating more into private assets.

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Speaker 1: There's a lot more regulatoris personally when it comes to

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Speaker 1: private markets. Now, is that something that you can predict

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Speaker 1: what that regulatory response is going to be, particularly with

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Speaker 1: some of the probes that are happening in Australia.

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Speaker 5: Sure. Look, I think we operate globally. We operate globally

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Speaker 5: under various different regulatory regimes. I think private markets still

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Speaker 5: are relatively new, saying, and so the regulators in all

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Speaker 5: the jurisdictions are trying to get their arms around how

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Speaker 5: to get involved in them. And we work very closely

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Speaker 5: with the regulators around that, and we continue to want

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Speaker 5: to make sure that these markets function properly. So I

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Speaker 5: think that there's something we're going to spend a bunch

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Speaker 5: of time on in all the jurisdiction to continue to

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Speaker 5: work with our regulators on where are you.

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Speaker 1: Trying to grow the business most across the world. Where

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Speaker 1: are you sort of investing the most, hiring the most.

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Speaker 5: Yeah, I'd say we have. You know, one of the

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Speaker 5: great things about our asset and wealth management businesses, we

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Speaker 5: have a multitude of gross opportunities. So we're growing our

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Speaker 5: wealth business globally, including in Australia, and we've been growing

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Speaker 5: materially in Australia over the last couple of years. We're

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Speaker 5: growing our asset management business. We're both public and private side.

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Speaker 5: I'd say on the on the alternative side, you know,

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Speaker 5: private credits, secondary are the two areas that have been

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Speaker 5: the fastest grow over the last couple of years, where

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Speaker 5: we think private equity growth activity will continue to grow.

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Speaker 5: And on the public side, it's really our solutions type businesses.

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Speaker 5: I think one of the things we continue to be

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Speaker 5: to see as an interesting trend is people outsourcing the

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Speaker 5: management of their pension funds two larger asset measures, and

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Speaker 5: we've been doing this with pensions as big as fifty

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Speaker 5: billion dollars, where a pension fund realized that a large

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Speaker 5: asset measure has a lot of ecology scale, a lot

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Speaker 5: of risk management tools, lots sophistications around a lot of

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Speaker 5: these products. So we continue to see the big gross

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Speaker 5: opportunity there as well.

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Speaker 1: That's going to be a massive opportunity in Australia given

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Speaker 1: the pension pile here right.

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Speaker 5: Yeah, I think we see It's interesting we see that

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Speaker 5: opportunity across the globe, and I think typically what happens

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Speaker 5: is moments of uncertainty end up creating more opportunities because

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Speaker 5: the trustees of the pension funds, who really want to

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Speaker 5: safe keep the long term pension for the pensioneers, really

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Speaker 5: are looking at who is going to be able to

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Speaker 5: provide the best risk meagement, best return over long term

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Speaker 5: for their pensioneers. And so we see that as a

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Speaker 5: big opportunity here. We see it in Europe, in the US,

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Speaker 5: in Japan.

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Speaker 6: Are there any specific sectors or themes that your clients

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Speaker 6: are talking about at the moment, And just for an example,

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Speaker 6: we've seen a huge run up and a lot of

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Speaker 6: excitement around AI, but there are now some discussions about

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Speaker 6: whether or not opiceeing shades of dot com here. Can

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Speaker 6: you talk to us a little bit about that.

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Speaker 5: I mean, when you think about over the last kind

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Speaker 5: of twelve to eighteen months, you talk a lot about

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Speaker 5: private credit. That's an asset asket kind of is new

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Speaker 5: in a sense, and I think has some very attractive characteristics,

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Speaker 5: and I think it took people a while to figure

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Speaker 5: out where in their asset allocation to put private credit.

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Speaker 5: So on the one hand, it's kind of fixing come

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Speaker 5: instrument on the island. It's private and so people had

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Speaker 5: to figure that out. So that private credit from a

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Speaker 5: park perspective was very interesting. From a SEME perspective, obviously,

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Speaker 5: AI all infrastructure as a same is a big scene.

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Speaker 5: When you think about digitalization, decobonization, all these kind of

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Speaker 5: trends will continue to drive more infrastructure needs, so we

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Speaker 5: see a lot of interest in those needs. I think,

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Speaker 5: as with all thems, those are going to go a

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Speaker 5: bit in cycles. People will get ahead of themselves and

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Speaker 5: the market will consolidate a little bit. But these are

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Speaker 5: big seams that over a long period of time we'll

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Speaker 5: have a lot of gross in them.

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Speaker 1: You're often your name is often floated as one of

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Speaker 1: the names to potentially come up for the top job.

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Speaker 1: Is that something that you sort of think about or

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Speaker 1: you know that you're open to.

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Speaker 5: I think at this point moment in my key job

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Speaker 5: is to run our Ascent valvest management business, and as

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Speaker 5: I mentioned earlier, we have a lot of gross opportunities there,

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Speaker 5: so I'm plenty busy focusing on that very quickly.

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Speaker 1: Then, in your current role, if there's a top position

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Speaker 1: that Goldman's isn't in yet.

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Speaker 3: What's your focus?

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Speaker 1: Where would you like to be number one? Where you're not.

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Speaker 5: Look I think generally speaking as a friend, we'd like

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Speaker 5: to be kind of top contender in everything we do.

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Speaker 5: I would say that on the alternative side, we kind

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Speaker 5: of view ourselves as a top five or six player,

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Speaker 5: so we still have a good amount of room to

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Speaker 5: make up to kind of be a top three player,

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Speaker 5: So that that is a big area of focus for us.

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Speaker 2: That was Mark nine Upman, Global Head of Asset and

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Speaker 2: Wealth Management at Goldman Sachs. Thanks for listening to today's

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Speaker 2: episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday,

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Speaker 2: we look at the story shaping markets, finance, and geopolitics

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Speaker 2: in the Asia Pacific. You can find us on Apple, Spotify,

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Speaker 2: the Bloomberg Podcast YouTube channel, or anywhere else you listen.

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Speaker 2: Join us again tomorrow for insight on the market moves

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Speaker 2: from Hong Kong to Singapore and Australia. I'm Doug Chrisner,

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Speaker 2: and this is Bloomberg