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Speaker 1: Already and this is the Daily This is the Daily

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Speaker 1: oas Oh now it makes sense.

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Speaker 2: Good morning and welcome to the Daily OS. It's Tuesday,

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Speaker 2: the thirtieth of April. I'm Sam, I'm Zara. With the

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Speaker 2: federal budget just over two weeks away, the economy is

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Speaker 2: going to come roaring back into the focus of our politicians.

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Speaker 2: So we thought we'd get you ahead of the game

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Speaker 2: and sit down for a bit of an economic health checkup.

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Speaker 2: How are we going with inflation and cost of living?

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Speaker 2: Will the government act on hex and help debt indexation?

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Speaker 2: What can we expect from this year's budget? To get

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Speaker 2: all those answers, I sat down for a consultation with

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Speaker 2: Greg Jericho. He's the chief economist at the Australian Institute

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Speaker 2: and the Center for Future Work, and regularly contributes to

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Speaker 2: Australian media publications, including The Guardian. I'm going to bring

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Speaker 2: you that chat shortly, but first, Sarah, what is making

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Speaker 2: he lines.

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Speaker 3: The Queensland Government has announced a twenty percent funding increase

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Speaker 3: for domestic and family violence prevention. It comes ahead of

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Speaker 3: an emergency national Cabinet meeting tomorrow, when state and territory

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Speaker 3: leaders will meet with the Prime Minister to discuss action

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Speaker 3: on gender based violence. Queensland's additional thirty six million dollars

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Speaker 3: in funding will go towards frontline services and response programs.

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Speaker 3: CEO of advocacy group Dvconnect Beck O'Connor said the boost

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Speaker 3: is quote an important step forward in ensuring that people

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Speaker 3: get the right service at the time that they need it.

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Speaker 2: US Secretary of State Anthony Blincn has arrived in Saudi Arabia,

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Speaker 2: where Hill attends talks aimed at securing a cease fire

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Speaker 2: in Israel's war with Hamas in Gaza and getting more

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Speaker 2: humanitarian aid into the region. According to Reuter's Blinken will

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Speaker 2: meet with the foreign ministers from Katar, Egypt, Saudi Arabia,

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Speaker 2: the United Arab Emirates and Jordan for negotiations over how

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Speaker 2: the Gaza strip could be governed if the war ended.

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Speaker 2: Blincoln will also meet with Israeli Prime Minister Benjamin Nennahoo

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Speaker 2: this week.

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Speaker 3: Netball Australia has appointed former national team captain Liz Ellis

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Speaker 3: as a board director. Ellis played for the Diamonds from

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Speaker 3: nineteen ninety three to two thousand and seven and was

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Speaker 3: inducted into sport Australia's Hall of Fame in two thousand

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Speaker 3: and nine. Netball Australia's decision to appoint Ellis comes after

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Speaker 3: she criticized the body for its treatment of players amid

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Speaker 3: pay disputes last year.

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Speaker 2: And today's good news, Nicole Kidman has become the first

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Speaker 2: Australian actor to receive the American Film Institute's Life Achievement Award.

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Speaker 2: The fifty six year old was presented the award by

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Speaker 2: Meryl Streep I've heard of her. At a tribute in Hollywood.

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Speaker 2: Kidman said that making films is quote a privilege. She

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Speaker 2: thanked those in attendance for inviting me into your movie families.

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Speaker 2: Thank you for my childhood dream that became a reality.

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Speaker 2: We spend a lot of time I'm talking about money

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Speaker 2: issues on this podcast. You know, we do episodes on

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Speaker 2: hext at housing prices, we cover inflation, cost of living,

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Speaker 2: interest rates, and of course federal budgets very regularly as

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Speaker 2: topics on this show. But I kind of feel like

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Speaker 2: it's rare that we take the time to bring everything

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Speaker 2: together and look at the state of Australia's economy from

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Speaker 2: a bit more of a zoomed out perspective, and it's

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Speaker 2: really important. I mean, when all of these factors come together,

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Speaker 2: that's really what makes an economy thrive or falter. The

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Speaker 2: sore points of the economy can get exposed, often at

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Speaker 2: no fault of the groups in the economy that are

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Speaker 2: most affected. So with the federal budget on the horizon,

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Speaker 2: I thought this would be a really good time to

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Speaker 2: chat to an expert who knows how to pull these

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Speaker 2: threads together. Greg Jericho is the chief economist at the

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Speaker 2: Australian Institute, and I spoke to him about the health

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Speaker 2: of the Australian economy and what to expect with the

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Speaker 2: budget in a few weeks time. Greg, thanks so much

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Speaker 2: for joining us on the Daily ODS this morning.

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Speaker 4: No problem is good to be here.

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Speaker 2: Let's say that I'm the economy and I come to

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Speaker 2: you and you're a GP and I sit down and

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Speaker 2: I want to just kind of have a chat about

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Speaker 2: how my general health is. What would your assessment be?

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Speaker 4: Oh, geez, I mean you're all over the shop.

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Speaker 1: Really.

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Speaker 4: Parts of you are looking really trim and good.

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Speaker 1: In other parts I'm wondering if you've been over indulging

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Speaker 1: or you haven't done any exercise for a while I mean, so,

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Speaker 1: you know, if you look at the real big picture things,

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Speaker 1: you think about unemployment. What unemployment's really good at the

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Speaker 1: moment three point eight percent. That's kind of astonishing, really,

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Speaker 1: it's amazing that we've been under four percent for so long. Inflation,

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Speaker 1: which is how much prices arising each year, the latest

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Speaker 1: figures have got that going up by three point six percent.

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Speaker 1: About eighteen months ago it was over seven percent, which

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Speaker 1: was far too fast.

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Speaker 2: So you're okay with how things are going on the

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Speaker 2: inflation site, yeah.

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Speaker 1: I mean, look, you know there's a lot of people

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Speaker 1: who are like, oh, we've got to get it under

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Speaker 1: three percent as fast as possible, and I'm like, I

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Speaker 1: can live with inflation above three percent so long as

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Speaker 1: it is steadily coming down. I'd rather that than going

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Speaker 1: hard and trying to get it under three percent and

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Speaker 1: risking a recession or something like that. So unemployment's doing well.

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Speaker 1: Inflation okay, could be better. But if you look at

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Speaker 1: the overall economy, the GDP figure, which measures everything we

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Speaker 1: produce in the economy, everything you spend, that's pretty crap

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Speaker 1: at the moment.

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Speaker 4: To be blunt, it's really low.

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Speaker 1: It's this sense that actually the economy is not performing

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Speaker 1: all that great, but certainly on the inflation front. I

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Speaker 1: think again it's this case of yeah, you look good,

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Speaker 1: but actually, if we take a bit of an X ray,

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Speaker 1: have a look at what's going on there, Yeah, I'm

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Speaker 1: seeing a few dark patches and things I would not

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Speaker 1: like to see. And that really gives across the problem

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Speaker 1: with inflation and cost of living rises at the moment

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Speaker 1: is a lot of the things that are rising fast

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Speaker 1: are in the areas that people can't avoid, and you know,

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Speaker 1: rents is just the classic rental prices are growing really

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Speaker 1: fast at the moment, faster than anyone's income is going up.

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Speaker 1: And so while overall inflation might be looking okay and

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Speaker 1: getting back to where the Reserve Bank would like it,

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Speaker 1: the cost of what we call essential items, you know,

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Speaker 1: those things you can't avoid paying for, they are still

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Speaker 1: rising pretty strongly. Though. You know, I can understand why

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Speaker 1: people are a little bit confused, because they'll see signs

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Speaker 1: of oh, things are going well, things are going down,

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Speaker 1: and they're like, but yeah, I'm still getting it in

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Speaker 1: the neck. I'm still really struggling. And that's quite understandable.

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Speaker 2: And I think it's in that kind of difference in

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Speaker 2: what we see being reported versus what's actually happening in

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Speaker 2: the hip pocket of a lot of our listeners. That

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Speaker 2: really confuses young Australians especially, And he read a piece

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Speaker 2: of The Guardian last week and he talked a lot

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Speaker 2: about those particular issues that are particularly relevant to young people.

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Speaker 2: So rent prices and hex and Help Dad, you'd made

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Speaker 2: a really interesting comment in the piece. You said, this

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Speaker 2: is not how the system was meant to work. No,

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Speaker 2: what do you mean by that.

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Speaker 1: Well, that's sort of especially relating to that Hex and

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Speaker 1: Help debt. I mean, yeah, the whole system of Hex

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Speaker 1: and helped when it was originally devised back in the

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Speaker 1: late eighties, and my first year at UNI was nineteen

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Speaker 1: ninety and so I was fully under the HEX system.

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Speaker 4: But it was supposed.

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Speaker 1: To be a fairly you know, it was a contribution

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Speaker 1: to the cost of your education. There was no sense that, oh,

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Speaker 1: it is really paying for the full cost of your education.

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Speaker 1: So the actual amount you were paying for HEX wasn't

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Speaker 1: overly onerous, and so you didn't have a lot of debt.

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Speaker 1: And also the system was devised on this whole proviso

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Speaker 1: that oh, well, if you go to union you get

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Speaker 1: a degree, you're probably going to earn more than the

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Speaker 1: average person, more than the person who doesn't go to UNI,

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Speaker 1: who maybe has just got year twelve, maybe did a

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Speaker 1: tape course or something like that. And so as a result,

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Speaker 1: your capacity and your likelihood of repaying that debt is

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Speaker 1: going to be a lot better. You're going to be

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Speaker 1: able to do it, and so will start you repaying

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Speaker 1: it when you get to around ninety percent of average earnings. Now,

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Speaker 1: what you have is a system where the debt, the

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Speaker 1: actual you're starting with, is much much bigger, quite quite

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Speaker 1: significantly so, and you're starting to repay it when you're

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Speaker 1: just earning a little bit over minimum wage.

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Speaker 2: Yeah almost sometimes, you know, straight after the university.

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Speaker 1: Yeah, it took me a long time actually to get

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Speaker 1: a job where I was I mean, it didn't help

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Speaker 1: that I graduated during the ninety nineties recession. Not really

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Speaker 1: good strategy on my behalf, But it took me a

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Speaker 1: long time to actually get a job where I was

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Speaker 1: eligible to repay my hacks. Now it's pretty much away,

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Speaker 1: it's really hard to avoid it. And the other big

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Speaker 1: issue is inflation. Was it was all devised, Oh, it's

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Speaker 1: kind of interest free because it's linked with inflation, so

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Speaker 1: you don't have to worry about it. You're not really

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Speaker 1: taking on more debt. Well, the problem is, that's okay

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Speaker 1: if you're living in a world where your income, your

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Speaker 1: wages are rising faster than inflation, your wages going up

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Speaker 1: faster than your prices.

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Speaker 2: Are, yeah, which we know is not happening.

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Speaker 1: What we've seen over the last two years is that's

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Speaker 1: been completely flipped, where inflation, the prices of things have

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Speaker 1: gone up more than have your income. And so what's

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Speaker 1: happening is you're paying back debt and you're still being

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Speaker 1: worse off because the amount that that debt is rising

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Speaker 1: is rising a lot more than your actual income is.

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Speaker 1: And so you know, I was calculating that Let's say

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Speaker 1: you're someone on sixty brand and you've got the average

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Speaker 1: debt for someone in their twenties, which is about thirty thousand,

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Speaker 1: seven hundred. After you've paid off your compulsory payments, you're

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Speaker 1: actually going to end up with about two hundred and

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Speaker 1: seventy two hundred and eighty dollars more debt than you

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Speaker 1: had beforehead because you know, the inflation has been so

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Speaker 1: huge and your income isn't actually rising. So that's what

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Speaker 1: I mean by it's not working like it was it

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Speaker 1: was meant to. It's been kind of bastardized along the way.

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Speaker 1: It's gone from being that, oh, a modest contribution.

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Speaker 2: Give you a bit of a head start.

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Speaker 4: Yeah, And it's this sense of you're getting some benefit.

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Speaker 1: From going to UNI, so you'll be able to afford

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Speaker 1: to repair because you're going to be earning more and

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Speaker 1: you won't have to start repaying it until you sort

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Speaker 1: of get to those levels. Last year, you know, people's

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Speaker 1: hex step went up by seven point one percent. I

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Speaker 1: mean it's a massive you know, if you've got forty

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Speaker 1: thousand dollars debt, adding another seven percent onto that is

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Speaker 1: pretty especially when you know your wages haven't gone up

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Speaker 1: seven percent. They might have gone up two and a

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Speaker 1: half three percent. It's not a case of you're not

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Speaker 1: even treading water. You're actually going backwards.

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Speaker 2: And so I think what I'm hearing from you in

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Speaker 2: terms of this metaphor of a health check in for

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Speaker 2: our economy is that we're okay, we're stable. Things are looking,

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Speaker 2: you know fine on the X ray machine. There are

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Speaker 2: particular ailments that are affecting younger populations more. And now

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Speaker 2: we have the budget on the fourteenth of May, and

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Speaker 2: that's kind of then to continue the metaphor where we

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Speaker 2: go and get told what booster shots were getting this

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Speaker 2: year and what pills we need to take in all

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Speaker 2: of that context of the issues facing young people, but

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Speaker 2: then also the fact that we're traveling okay economically. What

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Speaker 2: are you expecting Jim Chalmers to say on the fourteenth.

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Speaker 1: Yeah, I think there's going to be a lot of

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Speaker 1: tough decisions being made and trying to seek the right balance,

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Speaker 1: because what he's dealing with is yet we've.

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Speaker 4: Got a slowing economy.

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Speaker 1: And normally, if you've got an overall economy that's grown

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Speaker 1: as pathetically as Australia's economy is at the moment that

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Speaker 1: and people might have heard, you know, per capita recession,

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Speaker 1: like the only thing that's really keeping the economy growing

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Speaker 1: is population growth. Normally, in that type of situation, you'd

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Speaker 1: be expecting the government to really be spending big or

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Speaker 1: investing big trying to get the economy going. But one

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Speaker 1: of the risks with that at the moment is we

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Speaker 1: do have a pretty tight labor market. There's low unemployment,

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Speaker 1: and so if you put out a lot of money

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Speaker 1: and a lot of spending that might drive up inflation

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Speaker 1: even more.

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Speaker 2: So that's the danger with something like a stimulus payment

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Speaker 2: for example.

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Speaker 1: Yeah, so I don't think there's going to be any

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Speaker 1: stimulus payments as such. What they might be looking at

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Speaker 1: and something that I think they should be looking at

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Speaker 1: in terms of helping people out the cost of living.

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Speaker 1: Is subsidizing things, actually lowering the cost of childcare, you know,

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Speaker 1: giving an energy supplement, and so it's actually reducing the

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Speaker 1: cost in effect reducing the prices of things. Some economs

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Speaker 1: will say, oh, but that will mean that there's that

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Speaker 1: freeze up money to go spend elsewhere, and it's like, yeah,

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Speaker 1: but the problem is inflation at the moment has not

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Speaker 1: been driven by Oh, everyone's got heaps of cash and

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Speaker 1: we're out there spending madly and somehow we've got to

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Speaker 1: slow that down. We know that people have not actually

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Speaker 1: been spending much at the shops. The last Christmas was

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Speaker 1: a terrible one for retailers.

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Speaker 2: Right, that's really interesting.

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Speaker 4: You know where the prices have been coming up.

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Speaker 1: One coming out from overseas that there has been a

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Speaker 1: lot of that price is sort of imported companies over

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Speaker 1: the past two years have been taking advantage of the

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Speaker 1: supply side issues to raise prices more. We certainly saw

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Speaker 1: that with groceries. It's not having so much now, mainly

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Speaker 1: because they have got a lot of attention on them.

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Speaker 1: But also as we see in the in the last

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Speaker 1: inflation figures, the biggest drivers of inflation were rents. And

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Speaker 1: it's not like, oh yeah, people want to rent board,

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Speaker 1: you know, it's just you know, lords to be able

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Speaker 1: to take advantage to raise rents. Education costs again, it's

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Speaker 1: not a case of oh, you know, universities and high

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Speaker 1: schools and everything are dealing with lots of people suddenly

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Speaker 1: want to be educated, so they're able to rise cost

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Speaker 1: healthcare again, you know, when you're feeling flushed with cash,

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Speaker 1: you don't suddenly think, oh yeah, I want to go

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Speaker 1: to the GP and the hospital. You know, that's driven

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Speaker 1: by other cost factors. And then the final biggest driver

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Speaker 1: of inflation was insurance. And again you know, when you

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Speaker 1: get a wage rise, you don't think, oh, well, I'll

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Speaker 1: add a bit more to my car insurance or anything

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Speaker 1: like that. You know, it's that's driven by other things.

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Speaker 1: So it's a lot of things that aren't really going

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Speaker 1: to be, say, affected by an interest rate rise, that

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Speaker 1: could dampen it all down, I think for youth. I mean,

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Speaker 1: the obvious thing for HEX is do something about this indexation.

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Speaker 1: It's not actually going to help people's cost of livings

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Speaker 1: as such, because you're.

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Speaker 2: Reading, and that can change with a change of policy

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Speaker 2: right now.

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Speaker 1: Yeah, your repayments are based on your incomes, so it doesn't.

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Speaker 1: But what it can do is they could cap indexation.

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Speaker 1: You know, they could say your hex hex and help

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Speaker 1: will go up by whatever the CPI formula is, but

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Speaker 1: we'll cap it at three percent because that's what we're

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Speaker 1: targeting for inflation, so three they could do that. They

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Speaker 1: could just get rid of indexation completely. They'd cost about

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Speaker 1: one and a half billion dollars a year, which sounds

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Speaker 1: like a lot of money until you hear the government

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Speaker 1: talk about how they're investing fifty billion dollars in defense,

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Speaker 1: and no one bats an eyelid. So I think there

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Speaker 1: are things they can do on that HEX thing. I

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Speaker 1: think they will have to do something because there's been

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Speaker 1: a lot of focus on it. I mean, they could

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Speaker 1: even say, actually this year will have an indexation pause,

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Speaker 1: so this year no indexation, then next year.

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Speaker 4: Will go back to what it was.

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Speaker 2: That's interesting.

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Speaker 1: They could even say, actually last year's seven point one percent,

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Speaker 1: let's forgive that. That would be a fairly bold thing

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Speaker 1: and obviously a lot more costly to the budget. But

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Speaker 1: you know, they can do something there. It's not a

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Speaker 1: case they can say, oh, well that's the system. They

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Speaker 1: can change the system. The interesting thing is the politics

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Speaker 1: of where all this is. We know there's going to

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Speaker 1: be an election probably March to May next year, so

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Speaker 1: this could be the last budget before the election, So

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Speaker 1: it might be a case they don't want to give

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Speaker 1: out everything now, they want to leave it for their

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Speaker 1: big announcements as they get closer.

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Speaker 4: To the election.

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Speaker 2: There's a lot there.

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Speaker 1: Yeah, and we'd also expect, given just what we've seen

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Speaker 1: over the last week, I would suggest if they don't

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Speaker 1: have anything to do with domestic violence, so they're going

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Speaker 1: to look very stupid.

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Speaker 2: And not reading the room.

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Speaker 1: They haven't always been great at reading the room, but

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Speaker 1: I think, yeah, this has just become so hot, so

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Speaker 1: very quickly. And one of the things, you know, we

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Speaker 1: certainly have been arguing is doing things like raising job

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Speaker 1: seeker actually helps because anything that kicks people out of poverty.

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Speaker 1: Allows women to be able to leave a violent partner

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Speaker 1: and not be completely destitute, is something that actually helps.

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Speaker 1: Things like that are things like domestic violence.

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Speaker 2: Greg, thank you for that very thorough health check and

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Speaker 2: the economy. I really appreciate your time, say I'm really

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Speaker 2: good to chat. That's all we got time for today

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Speaker 2: on The Daily Odds. Some exciting news happened on our

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Speaker 2: Instagram page last night. We announced the launch of a

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Speaker 2: new sports newsletter. This is going to be a daily

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Speaker 2: sports newsletter coming at you at five pm Australian Eastern

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Speaker 2: Standard time. I'll throw a little sign up link in

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Speaker 2: today's show notes. It's a great way to support the

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Speaker 2: company and what we're trying to build. We'll be back

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Speaker 2: with another episode of The Daily Odds tomorrow morning. Until then,

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Speaker 2: have a great date. My name is Lily Maddon and

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Speaker 2: I'm a proud Arunda Bunjelung Calcottin woman from Gadigal Country.

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Speaker 2: The Daily Ods acknowledges that this podcast is recorded on

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Speaker 2: the lands of the Gadigal people and pays respect to

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Speaker 2: all Aboriginal and Torrestrate island and nations. We pay our

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Speaker 2: respects to the first peoples of these countries both past

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Speaker 2: and present,