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

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Speaker 1: ohs oh, now it makes sense.

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

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Speaker 2: the fifth of September.

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Speaker 3: I'm emma, I'm zara.

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Speaker 2: The latest figures on Gross Domestic Product that's GDP show

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Speaker 2: Australia's economy is growing very slowly, so slow in fact,

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Speaker 2: the Australian Bureau of Statistics says it's just recorded the

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Speaker 2: softest annual economic growth in over thirty years outside the pandemic.

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Speaker 2: So why is that and doesn't mean Australia is heading

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Speaker 2: for a recession. We've got lots of questions and unless

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Speaker 2: you're an economist, these data releases can be a bit

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Speaker 2: tricky to unpack. So that's why we've brought in an

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Speaker 2: expert for today's episode, independent economist Nikki Hutley. We'll talk

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Speaker 2: you through the latest figures in the deep Dive.

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Speaker 3: The Federal government has announced a new plan to regulate

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Speaker 3: the use of artificial intelligence. The ten new guard rails

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Speaker 3: for organizations and businesses include cybersecurity and transparency standards based

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Speaker 3: off similar overseas models like AI standards used in Japan

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Speaker 3: and the EU. The strategies aimed at helping organizations, which

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Speaker 3: could range from corporations to education institutions, to harness the

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Speaker 3: benefits of AI and address concerns about its potential harms.

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Speaker 3: The guardrails are voluntary, but Minister for Industry and Science

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Speaker 3: at Husick so the Government is considering legislation to make

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Speaker 3: the new AI standards mandatory.

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Speaker 2: The National Fire Authority has warned large parts of the

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Speaker 2: country could be in for an early start to the

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Speaker 2: fire season if current dry conditions persist. It comes as

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Speaker 2: parts of WA and South Australia experience record high temperatures,

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Speaker 2: heightening the risk of bushfire acting in those areas. The

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Speaker 2: newly released Spring Outlook from the National Council for Fire

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Speaker 2: and Emergency Services said parts of South Australia, Victoria and

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Speaker 2: Tasmania were most at risk of early fires heading into summer.

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Speaker 2: Authorities are advising communities to stay vigilant and prepare survival plans.

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Speaker 3: Shares in AI chip giant in Vidia have fallen by

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Speaker 3: nearly ten percent. That's marking the biggest value loss ever

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Speaker 3: recorded for a US stock. A two hundred and seventy

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Speaker 3: nine billion US dollar drop in in Vidia's market value

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Speaker 3: has been attributed to growing concerns from investors about emerging

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Speaker 3: AI technologies. In Vidia technology is used by some of

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Speaker 3: the world's biggest tech companies that includes Microsoft, Google, Meta,

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Speaker 3: Tesla and Amazon to train generative AI models and to

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Speaker 3: develop new software.

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Speaker 2: And today's good news, Olympic gold medallists Jess and Miami

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Speaker 2: Fox are being honored in their Western Sydney home town,

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Speaker 2: with part of Penrith's Whitewater Stadium to be named after them.

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Speaker 2: The sisters want to combine three gold medals across the

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Speaker 2: kayaking and canoeing events in Paris. An artificial island in

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Speaker 2: the center of the Whitewater Sporting Facility, newly dubbed Fox Island,

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Speaker 2: will be on the world stage next year when the

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Speaker 2: stadium hosts the Canoe and Slalem World Championships. The New

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Speaker 2: South Wales Minister for Sports, Steve Campus, said there is

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Speaker 2: no doubt that the Fox family are the first family

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Speaker 2: of paddling in Australia. The contributions that each of them

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Speaker 2: has made, he said, have lifted the sport to new heights.

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Speaker 2: We'll be back with the deep dive right after this.

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Speaker 2: GDP for the June twenty twenty four quarter shows a

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Speaker 2: thirty year low growth rate for the economy as the

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Speaker 2: government blames high inflation and high interest rates. But with

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Speaker 2: both of those concerns not really expected to ease for

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Speaker 2: months or even years to come, what's in store for

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Speaker 2: Australia's financial future? Are we actually headed for recession this time?

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Speaker 2: To answer all your questions, I'm speaking with someone who

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Speaker 2: knows a lot more about what GDP means that I do,

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Speaker 2: and that's independent economist Nikki Huntley.

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Speaker 4: Hello, Nikki, Hello, Thank you for having me.

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Speaker 2: Before we get stuck in to those latest figures, could

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Speaker 2: you take us through the broader idea of GDP. What

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Speaker 2: does it actually mean? Why are these numbers significant?

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Speaker 5: Yeah, so GENDP interesting well, interesting to economic serves anyway,

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Speaker 5: is actually a concept that's not quite one hundred years old.

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Speaker 5: But it was in the dark days after the depression

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Speaker 5: that we decided we had to have some way of

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Speaker 5: capturing how to measure the size of the economy. How

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Speaker 5: did we know whether things were getting better or getting worse?

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Speaker 5: And so some writespart came up with the idea that

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Speaker 5: we would measure all the money that we spend, all

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Speaker 5: the money that we invest and save everything that we produce,

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Speaker 5: and we have these three different measures of what we

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Speaker 5: call GDP or gross domestic product. But essentially, if you

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Speaker 5: think about the economy as a kind of pie where

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Speaker 5: we're all contributing to it for the way we work

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Speaker 5: and what we produce, is that pie getting bigger and

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Speaker 5: is our individual share of that pie getting bigger as well.

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Speaker 2: Australia's economy grew by zero point two percent in the

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Speaker 2: three months to June. What does that mean?

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Speaker 5: That means that our economy is really weak. Now, that's

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Speaker 5: kind of what you'd expect given that we've had thirteen

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Speaker 5: interest rate rises over the last couple of years. The

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Speaker 5: Reserve Bank of Australia wanted to slow the economy down

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Speaker 5: because that's the only way that they can get in flesh.

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Speaker 5: And those big price rises we've been seeing back under control.

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Speaker 4: We've seen it particularly.

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Speaker 5: In consumer demand, so the things that we buy, whether

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Speaker 5: it's goods or services, going to the vet at the supermarket.

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Speaker 5: We've been spending a lot less money, but businesses have

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Speaker 5: been investing less as well.

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Speaker 4: We're building fewer houses.

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Speaker 5: It's basically the government spending and not just one government

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Speaker 5: or governments.

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Speaker 4: And also our exports that are.

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Speaker 5: Kind of holding the economy in place, but also the

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Speaker 5: fact that we have more people in the economy because

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Speaker 5: our population through natural birth but also migration has been

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Speaker 5: increasing and of course the more people you have, the

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Speaker 5: more toothbrushes you need to sell.

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Speaker 2: Nikki the as Head of National Accounts Catherine Keenan yesterday

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Speaker 2: said the latest GDP figures were the lowest annual growth

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Speaker 2: scene since nineteen ninety one ninety two outside the COVID years.

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Speaker 2: So it's easier for us to understand why the economy

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Speaker 2: slowed during the pandemic, But what is it about twenty

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Speaker 2: twenty four, about this quarter?

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Speaker 4: So there's a couple of things going on here.

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Speaker 5: One is an underlying economic malaise if you like that.

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Speaker 5: The Australian economy before COVID was quite stagnant. We had

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Speaker 5: very low growth in incomes productivity with sluggish and we

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Speaker 5: had this sense that we needed to build back better

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Speaker 5: after the COVID downturn, but we didn't really put.

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Speaker 4: In policies in place that allowed us to do that.

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Speaker 5: Unfortunately now, of course, once we had the pandemic, we

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Speaker 5: had huge amount of growth that led to very high

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Speaker 5: inflation which was picked up too slowly by central bankers,

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Speaker 5: and of course then they had to slam on the

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Speaker 5: brakes by raising interest rates and that's brought the economy down.

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Speaker 4: So there's two things.

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Speaker 5: There's one is that structural weakness that we had before

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Speaker 5: we even went into the pandemic. And on top of that,

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Speaker 5: we've had this, you know, really really short, sharp and

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Speaker 5: very strong increases in interest rates.

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Speaker 4: Never had that many rate rises that quickly before the

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Speaker 4: Reserve Bank.

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Speaker 5: It's a slow economy because otherwise we don't get the

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Speaker 5: inflation genie back in the bottle. The question then is

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Speaker 5: what is Australia's future, And I think Australians have a

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Speaker 5: bit of trouble thinking about what that looks like. The

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Speaker 5: truth is we're actually a services based economy, you know,

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Speaker 5: things like healthcare, age care, education, which is a see

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Speaker 5: the export for us as well. It's not all about

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Speaker 5: necessarily sexy high tech jobs where our future is. It's

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Speaker 5: not just about building new renewable energy projects.

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Speaker 4: We've got a shortage of lawyers who know how to

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Speaker 4: do the deals.

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Speaker 5: We've got a shortage of educators who can train the

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Speaker 5: people who need to work on those projects. Every single

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Speaker 5: area where these projects go up still needs teachers and

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Speaker 5: doctors and nurses and everybody else to support the population.

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Speaker 5: We do, I think can do a lot better with

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Speaker 5: regional Australia really misses out at the moment, and I think,

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Speaker 5: you know, we need to think more broadly how we

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Speaker 5: can engage all Australians in the growth story.

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Speaker 2: The language around GDP figures at the moment. You know,

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Speaker 2: we've heard the treasureressay words like soft and subdued. It's

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Speaker 2: a very kind of, I guess demure approach to speaking

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Speaker 2: about economics. But should we be concerned when we hear

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Speaker 2: the economy described as quote unquote soft.

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Speaker 5: Well, we absolutely should, because when the economies, it means

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Speaker 5: there's fewer jobs being created, and that means unemployment is rising.

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Speaker 5: We've already seen that it means it's not only harder

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Speaker 5: to find a job, but then it becomes harder to

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Speaker 5: get a decent wage increase.

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Speaker 4: From a financial well.

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Speaker 5: Being point of view, we need economic growth to make

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Speaker 5: sure that we are improving our standard of living.

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Speaker 2: So there is that growth, albeit slow. What are we

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Speaker 2: predicting to come next? This is sort of looking back

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Speaker 2: at those months, the three months to June, where in

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Speaker 2: September now, so are we heading for a recession.

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Speaker 5: Yeah, look, it's way too early to say the our word.

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Speaker 5: But the big question is what do the policymakers do.

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Speaker 5: And there's two sets of policy makers. One's the Reserve

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Speaker 5: Bank and they can use interest rates, and the other

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Speaker 5: is governments, and they of course can do things like

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Speaker 5: the tax cuts that we've already had, or giving people

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Speaker 5: other types of incentives to help them with the cost

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Speaker 5: of living and other pressures. Keep the economy. They can

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Speaker 5: invest in more infrastructure, build more roads. They're already doing

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Speaker 5: a lot of that. That's kind of what's helping the

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Speaker 5: economy go at the moment. So the big question really

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Speaker 5: is what happens with interest rates, And it always takes

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Speaker 5: interest rates a long time to work. You can see

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Speaker 5: interest rates started rising back in May twenty twenty two,

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Speaker 5: so more than two years ago, and we're still feeling

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Speaker 5: the effects. We still haven't seen all of that come through.

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Speaker 5: The big question is if the Reserve Bank waits too long,

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Speaker 5: If they wait right up until that point when everything's

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Speaker 5: slow and inflation's back where it needs to be, if

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Speaker 5: they don't cut interest rates before then, then they risk

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Speaker 5: us going into a recession because that downward pressure is

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Speaker 5: on the economy, so everything will come down to timing

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Speaker 5: on the first rate cut. So far, the governor's saying

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Speaker 5: not this year. I think it's probably a little bit

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Speaker 5: too early. There's too many risks going both up and

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Speaker 5: down to rule anything in or out at this point

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Speaker 5: in time. In fact, I would think that it's more

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Speaker 5: likely that we should have an interest rate cut before

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Speaker 5: the end of this year, maybe in November, to just

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Speaker 5: start getting things moving.

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Speaker 4: Otherwise you'll slow the economy.

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Speaker 5: Too much and instead of having that soft landing that

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Speaker 5: the policy makers like to talk about, we could have

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Speaker 5: a crash landing, and that's something that nobody wants to see.

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Speaker 2: So the IRBA has said there's not going to be

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Speaker 2: any rate cuts before Christmas, or they want people not

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Speaker 2: to expect that. But based on what you're telling us,

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Speaker 2: maybe the idea is that we need a decision before

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Speaker 2: that point in order to affect change around the end

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Speaker 2: of the year, that the decisions we make now actually

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Speaker 2: take a while to influence the economy.

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Speaker 4: Yeah, that's exactly right.

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Speaker 5: In fact, if they cut interest rates in November this year,

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Speaker 5: we won't see that for quite a long time. There

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Speaker 5: are some things that are going to help the economy.

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Speaker 5: Obviously the tax cuts, although it kind of looks like

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Speaker 5: everybody's saving those rather than spending them, but it will

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Speaker 5: help households. Things like the energy rebates that just take

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Speaker 5: a little bit of pressure off the bills. Some state

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Speaker 5: governments are doing a fair bit of spending as well

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Speaker 5: and helping helping out, so that will offset some of

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Speaker 5: the pressure from interest rates, but not enough at the

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Speaker 5: moment to stop the economy from slowing further. So, you know,

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Speaker 5: this is what the Reserve Bank and economists do. They

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Speaker 5: look further out. They're not looking in the rear view mirror.

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Speaker 5: They're saying what's going to happen in six months or

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Speaker 5: twelve months, and they're adjusting their policy. The question is

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Speaker 5: do they get the forecasts right? And there's a lot

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Speaker 5: of uncertainty these models. It's not like doing a physics

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Speaker 5: or chemistry experiment where you know, you drop the two

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Speaker 5: chemicals in the beaker and they react exactly the way

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Speaker 5: you know every single time under the same conditions. Economies

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Speaker 5: are made up of people, and people don't always behave

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Speaker 5: in the same way, so it becomes very hard to predict.

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Speaker 2: You've mentioned big government spending initiatives and their influence on

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Speaker 2: stimulating economic growth. But there's another factor that has been

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Speaker 2: discussed on how immigration is helping us economically for the better.

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Speaker 5: So there's been a lot of research done around the

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Speaker 5: economic impacts of migration and the answer is it depends,

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Speaker 5: but by and large, overall it doesn't have that big

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Speaker 5: an impact on GDP, the economic.

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Speaker 4: Growth per se.

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Speaker 5: What it does do though, is there's some research done

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Speaker 5: that shows that like in regional Australia, it can have

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Speaker 5: a really meaningful impact to bring more skills into particular

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Speaker 5: areas where they might otherwise have been have been missing.

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Speaker 5: But essentially, you know, there are something that we kind

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Speaker 5: of refer to as the three p's of growth, and

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Speaker 5: that's the things that drive the economy, which is population.

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Speaker 5: Of course, migration is a big part of that participation,

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Speaker 5: so how many people are actually working and then productivity.

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Speaker 5: Now we know productivity actually went backwards again this quarter,

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Speaker 5: which is not great.

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Speaker 4: It's been very soft for a long time.

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Speaker 5: The participation rates very high, but it's probably getting close

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Speaker 5: to its levels. So really we're looking at the population

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Speaker 5: growth to drive economic growth. But when you have population

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Speaker 5: driven economic growth, the pie gets bigger, but it doesn't

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Speaker 5: necessarily mean that we're all better off. And in fact,

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Speaker 5: if you look at this last quarter's National accounts, household

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Speaker 5: incomes went backwards, our spending went backwards. And this is

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Speaker 5: where you've got to be so careful at just talking

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Speaker 5: about GDP and talking about average numbers. GDP is a

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Speaker 5: particular construct. It is useful for some things, but it

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Speaker 5: doesn't tell us all the story. And particularly when we

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Speaker 5: think about the impacts of migration, we shouldn't just think

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Speaker 5: about it as well that's the way to boost GDP,

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Speaker 5: because migration has all sorts of other impacts, and the

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Speaker 5: ones we're most interested in from an economic well being

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Speaker 5: are we lifting productivity, Because it's productivity that's really going

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Speaker 5: to boost our lifestyle.

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Speaker 4: So if we have skilled migration, that's going to be

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Speaker 4: the most.

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Speaker 5: Important thing that we can consider when we're talking about

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Speaker 5: the economic impact of migration.

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Speaker 2: As an economist, what do you think our approach needs

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Speaker 2: to be to support the transition to net zero and

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Speaker 2: make sure that doesn't impact the economy or risk a recession.

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Speaker 5: I think everybody is thinking about green steel, we're thinking

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Speaker 5: about can we economically make green hydrogen?

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Speaker 4: The jury is still a bit out on that, but

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Speaker 4: that's a very important part of the equation.

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Speaker 5: But of course perhaps more difficult for Australia will be

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Speaker 5: that transition away from fossil fuel exports. You know, exports

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Speaker 5: are twenty percent of our GDP our economy and fossil fuels,

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Speaker 5: unfortunately are a very big portion of that. So we

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Speaker 5: have to find things that are going to replace them

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Speaker 5: of equal value so that we don't find our economic

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Speaker 5: pie is shrinking again. That's why there's so much focus,

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Speaker 5: you know, from industry, from researchers, from government to say, well,

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Speaker 5: what's the next thing, what can we support, what are

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Speaker 5: the things that need to be put in place to

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Speaker 5: help that transition happen.

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Speaker 3: Thank you so much for listening to another episode of

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Speaker 3: The Daily OS. That's all we have time for today,

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Speaker 3: but if you learn something from today's episode, you can

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Speaker 3: hit follow on Apple or Spotify, or if you're watching

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Speaker 3: us on YouTube you can hit subscribe. We'll be back

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Speaker 3: again tomorrow, but until then, have a great day.

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Speaker 1: My name is Lily Maddon and I'm a proud Arunda

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Speaker 1: Bungelung Calcuttin woman from Gadighl Country. The Daily oz acknowledges

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Speaker 1: that this podcast is recorded on the lands of the

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Speaker 1: Gadighl people and pays respect to all Aboriginal and Torres

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Speaker 1: Straight Island and nations. We pay our respects to the

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Speaker 1: first peoples of these countries, both past and present.