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Speaker 1: Good morning everybody, Welcome to the Daily OS. It is Thursday,

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Speaker 1: the twenty eighth of April. Today on the podcast, we're

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Speaker 1: going to be talking to political journalist Tom Crowley about

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Speaker 1: the latest inflation numbers in Australia. It was the talk

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Speaker 1: of the town yesterday, especially on the election circuit. Why

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Speaker 1: we're going to reveal everything in our deep dive, but

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Speaker 1: first Zara take us through the headlines of the day.

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Speaker 2: We're sticking with the theme of economics because yesterday the

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Speaker 2: Labor Party announced its economic election pitch and as part

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Speaker 2: of that, the Labor Party proposed reforms to multinational tax

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Speaker 2: to quote close down loopholes which they believe allows multinationals

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Speaker 2: to quote avoid their tax obligations. So under this plan,

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Speaker 2: a future Labor government would also focus on rising inflation,

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Speaker 2: wages and government spending.

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Speaker 1: A Malaysian man has been executed in Singapore for attempting

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Speaker 1: to bring three tablespoons of heroin into the country. The man,

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Speaker 1: whose supporters say has been assessed by a medical expert

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Speaker 1: as having an eye a Q level consistent with an

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Speaker 1: intellectual disability, was arrested in two thousand and nine.

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Speaker 2: According to Me and Mar has sentenced former leader Unsunsuchi

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Speaker 2: to five years in jail in relation to corruption charges.

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Speaker 2: A military coup deposed Suchiese government in February last year,

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Speaker 2: and the former leader is now facing a number of

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Speaker 2: corruption charges. So this is just one of them.

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Speaker 1: And today's good news. The European Union has announced plans

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Speaker 1: to ban toxic or harmful chemicals used in cosmetics, toys

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Speaker 1: and other products. You remember how your parents said never

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Speaker 1: to put toys in your mouth. This is why. According

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Speaker 1: to the European Environmental Bureau, the banning of up to

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Speaker 1: twelve thousand substances would make it the world's largest ever

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Speaker 1: ban of toxic chemicals. So I've spoken about this a

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Speaker 1: couple of times on the podcast before the rising cost

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Speaker 1: of living. It is a massive election topic. It's coming

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Speaker 1: up in conversations with my friends a lot more than

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Speaker 1: it did a couple of months ago. But I think

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Speaker 1: for most of us we're feeling it in day to

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Speaker 1: day life. We're feeling it at the supermarket, at the

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Speaker 1: petrol station, and yesterday we've got some news that it's

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Speaker 1: not just us in personal little bubbles feeling the impact

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Speaker 1: of rising prices. It's in fact the worst that inflation

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Speaker 1: has been for twenty years. Tom, thanks for joining us

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Speaker 1: on the pod today shed some light on what we

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Speaker 1: found out yesterday and the general state of the prices

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Speaker 1: in our economy.

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Speaker 3: Thank you, Sam. I'm very happy to be here. And yeah,

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Speaker 3: it's a pretty eye catching headline, isn't it. The fastest

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Speaker 3: the prices have risen across the board in Australia in

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Speaker 3: more than twenty years. I don't know about you. I

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Speaker 3: can't remember very much about more than twenty years ago.

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Speaker 3: The year was two thousand and one, the last time

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Speaker 3: the prices were rising this quickly. So we found that

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Speaker 3: out yesterday with the release of the inflation statistics, which

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Speaker 3: come out every three months. And so again, inflation is

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Speaker 3: kind of We've talked about it a little bit on

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Speaker 3: the podcast before. It's really kind of like one number

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Speaker 3: that collects the price of everything and tracks how that changes.

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Speaker 3: And so when inflation's going up quickly, that suggests that

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Speaker 3: the price of a whole number of different things are

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Speaker 3: going up quickly, and that's what we saw yesterday. Five

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Speaker 3: point one percent was the total number for how much

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Speaker 3: prices have risen over the last twelve months, which is,

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Speaker 3: as I say, the biggest since two thousand and one,

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Speaker 3: and then we can sort of take a little look

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Speaker 3: at some smaller kind of individual what were the bits

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Speaker 3: that made that up. So, for example, the biggest one,

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Speaker 3: which won't surprise anyone, was petrol, which has risen about

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Speaker 3: thirty five percent over the last twelve months. But the

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Speaker 3: cost of housing has gone up significantly. It was the

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Speaker 3: biggest increase in rental costs since twenty fourteen. The price

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Speaker 3: of different groceries. I think vegetables went up about fifteen

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Speaker 3: percent in the last year, and beef and veal went

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Speaker 3: up for about fifteen percent in the last year. Is

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Speaker 3: a whole bunch of different things have been rising in prices.

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Speaker 3: I guess we kind of know some of the reasons,

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Speaker 3: and we've talked about some of the reasons before. Russia's

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Speaker 3: war in Ukraine has something to do with what's happening

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Speaker 3: with petrol in particular. Climate change and COVID have both

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Speaker 3: sort of played their part in food prices. We know

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Speaker 3: that housing prices have been going up for a very

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Speaker 3: long time. But all of those things kind of culminated

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Speaker 3: in this really big headline yesterday and assign I suppose

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Speaker 3: that what we've been experiencing as you say in our

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Speaker 3: daily lives over the last few months, certainly not a

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Speaker 3: figment of our imagination. Prices are going up very very quickly,

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Speaker 3: and it's a significant issue that we'll be talking about

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Speaker 3: a whole lot more.

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Speaker 1: So we always talk about you know, you're sitting with

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Speaker 1: your parents and you hear stories about how they bought

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Speaker 1: a house for sixty thousand dollars, and then you might

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Speaker 1: hear from even twenty years ago when this inflation figure

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Speaker 1: last popped up to this severity. You know, a house

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Speaker 1: might have been six hundred thousand dollars in Sydney or Melbourne,

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Speaker 1: and now it's a couple of million dollars. So it

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Speaker 1: strikes me that inflation is normal. Is it normal what

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Speaker 1: we're experiencing now? And why is it such a big deal?

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Speaker 3: Yeah, So what really matters, I think when we talk

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Speaker 3: about inflation is the pace of inflation. How fast are

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Speaker 3: price is going up? So generally speak as you say,

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Speaker 3: there is this kind of natural drift up over time,

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Speaker 3: like you hear you go way back to the olden

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Speaker 3: days and you might hear your grandparents talking about how

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Speaker 3: they could buy a whole meal for sixty cents or

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Speaker 3: something like that. That over the sort of the broader

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Speaker 3: period of time, those rises, as you say that, they're

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Speaker 3: normal and they reflect I guess, rising incomes as people

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Speaker 3: get richer and as we make more money collectively and

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Speaker 3: there's more money flowing around. It seems to be I

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Speaker 3: guess kind of a naturally occurring phenomenon that prices go

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Speaker 3: up a little bit. And generally speaking, economic policy authorities

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Speaker 3: and experts tend to view a small stable amount of

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Speaker 3: inflation as an okay thing, But the keyword there is stable.

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Speaker 3: When prices are really volatile, rising quickly, they can create

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Speaker 3: all sorts of problems. One of the big ones, and

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Speaker 3: one of the ones that probably is most front of

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Speaker 3: mine for many people in the audience, is the impact

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Speaker 3: on the cost of living. So this idea that kind

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Speaker 3: of prices are going up really quickly, and maybe your

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Speaker 3: weekly essential grocery shop was one hundred dollars one week,

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Speaker 3: and then it costs you one hundred and five dollars,

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Speaker 3: you know, the next week or the next month, and

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Speaker 3: your wage hasn't kept up with that. Then you know,

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Speaker 3: essentially you're poorer because you can't buy the same essentials

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Speaker 3: that you bought last week with that money. And so

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Speaker 3: that's kind of one of the effects, but it creates

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Speaker 3: all sorts of other uncertainty. It's sort of hard to

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Speaker 3: plan for the future when when the value of things

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Speaker 3: and the price of things is changing so rapidly. So

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Speaker 3: there are lots of reasons why sort of run away

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Speaker 3: fast and very high inflation is the kind of thing

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Speaker 3: that trips up a bar that we might worry about.

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Speaker 3: We don't know yet, you know, it's only kind of

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Speaker 3: the last six months or so that we've started to

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Speaker 3: see this elevated inflation, but it's starting to look like

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Speaker 3: it could be cause for concern. And I think that

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Speaker 3: point about wages is the really interesting one, you know.

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Speaker 3: I think if we had seen big wage growth, then

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Speaker 3: this level of inflation might not sting as much. In

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Speaker 3: something like, you know, a supermarket cut that might be

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Speaker 3: eight dollars more than it was six months ago. But

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Speaker 3: because we haven't seen that wages growth, it does seem

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Speaker 3: to be impacting a lot of Australians. Whenever we read

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Speaker 3: a headline about inflation, it's always followed at some point

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Speaker 3: in the article by the words Reserve bank. What is

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Speaker 3: the Reserve Bank's job in responding to a warning that

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Speaker 3: inflation is on the rise. So the answer has to

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Speaker 3: do with interest rates. And you're right, you know, inflation

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Speaker 3: and interest rates are often kind of two terms that

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Speaker 3: everyone really talks about, doesn't always explain, and there is

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Speaker 3: a link between the two of them, which I'll try

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Speaker 3: and kind of explain as snappily as I can. So

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Speaker 3: the Reserve Bank, let me take a few steps back

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Speaker 3: and explain what it actually is. It is the government's bank,

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Speaker 3: but it's not the kind of bank that you can

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Speaker 3: just walk into and set up your own account. It's

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Speaker 3: a bank for other banks. And so NAB and Westpac

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Speaker 3: and A and Z and Cornwealth Bank and all these

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Speaker 3: banks have accounts with the Reserve Bank, and they use

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Speaker 3: the Reserve Bank to kind of make, you know, sort

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Speaker 3: of short term loans when the banks need cash for

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Speaker 3: their customers or whatever it may be. And so what

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Speaker 3: the Reserve Bank can do is it can change how

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Speaker 3: much interest it charges those banks for those sort of

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Speaker 3: short term loans, with the idea that the banks then

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Speaker 3: pass that on to all of their customers to us,

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Speaker 3: and that that kind of has an effect on the

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Speaker 3: overall economy. Now that all sounds very abstract, but what

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Speaker 3: does it actually mean. It means that when the Reserve

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Speaker 3: Bank wants to stimulate activity, wants to encourage lots of

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Speaker 3: spending in the economy if it cuts interest rates and

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Speaker 3: makes them low. What a low interest rate means across

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Speaker 3: the economy is it's really cheap to borrow. You don't

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Speaker 3: have to pay much interest when you borrow, and so

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Speaker 3: that encourages spending. On the other hand, when the reserve

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Speaker 3: bank wants to dampen spending, reduce it, then it will

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Speaker 3: increase interest rates. Higher interest rates makes it more expensive

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Speaker 3: to borrow, more attractive to keep your money in the bank,

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Speaker 3: and it has that tampering effect on spending, reduces spending.

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Speaker 3: Why would you want to reduce spending. Well, when you're

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Speaker 3: worried about something like inflation, that that's one reason. When

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Speaker 3: there's lots of money, people are spending lots of money.

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Speaker 3: That's the kind of thing that can continue to push

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Speaker 3: up and contribute to inflation. And so when the reserve

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Speaker 3: bank is worried about that, it will use the interest

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Speaker 3: rate to try and rain things in a little bit.

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Speaker 3: And that's what we're expecting it to do now. So

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Speaker 3: we've been in a period over the last few years

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Speaker 3: where inflation has actually been much lower than we want

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Speaker 3: it to be, sort of lower than what we would

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Speaker 3: consider healthy, and so interest rates have been very low,

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Speaker 3: trying to kind of encourage people to spend. But now

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Speaker 3: is the sign that, for the first time in a decade,

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Speaker 3: really we're going to start to switch those settings and

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Speaker 3: be more interested in higher interest rates and trying to

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Speaker 3: kind of dampen activity a little bit.

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Speaker 1: So don't be surprised if you see a hiking interest

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Speaker 1: rates from the Reserve Bank. Tom, to wrap up this conversation,

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Speaker 1: I'd love you to try and put this chat about

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Speaker 1: inflation into the context of the federal election. How do

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Speaker 1: you expect the inflation discussion to influence the election for

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Speaker 1: both sides? And what's your current hot take? I've asked

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Speaker 1: you for the last two weeks. Where are you sitting

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Speaker 1: in terms of the state of affairs of the Australian election?

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Speaker 3: Both very good questions. Sam. I'll start with the kind

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Speaker 3: of how does this affect the government because I'm talking

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Speaker 3: here about the resul Bank, and if you like, there

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Speaker 3: are kind of two key government institutions that affect the

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Speaker 3: economy that we expect to kind of act in a

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Speaker 3: time like this. One of them is the Reserve Bank,

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Speaker 3: and one of them is the government, the politicians and

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Speaker 3: this sort of thing. You know, when it comes to

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Speaker 3: sort of high inflation, it's probably more on the reserve

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Speaker 3: bank turfs than it is on the government turf. But

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Speaker 3: there are some things that the government can be sort

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Speaker 3: of held accountable for and asked about. Here. One of

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Speaker 3: them is wages growth. So again this kind of question

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Speaker 3: of well, you know, wages have been trailing behind inflation

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Speaker 3: for more than a decade, and that means that that

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Speaker 3: real living standards have gone backwards. You know, what is

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Speaker 3: the government doing about that? And you know, what are

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Speaker 3: the two major parties who are seeking to form government,

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Speaker 3: what do they propose to do about that problem. But

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Speaker 3: then there are other things. I mean, as we said,

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Speaker 3: you know, housing affordability has been going up for a

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Speaker 3: long time, and some of the drivers of this inflation,

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Speaker 3: even climate change, these are things that the government can

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Speaker 3: can contribute to as well. And so again, you know,

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Speaker 3: to the extent, you know, the government has a lot

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Speaker 3: of scope in what it spends and what it taxes

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Speaker 3: to influence inflation as well, and so it puts a

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Speaker 3: little bit more of a focus on management of the economy,

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Speaker 3: and I think that this is something that the government

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Speaker 3: has been very keen to emphasize in its campaign. The

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Speaker 3: government has spent a lot of time talking about Australia's

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Speaker 3: sort of strong economic performance after COVID and talking about

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Speaker 3: how low unemployment is and how many people are back

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Speaker 3: into work, and really spinning that as a positive story.

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Speaker 3: This sort of cost of living issue and this inflation issue,

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Speaker 3: the fact that we learned yesterday that it's getting worse,

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Speaker 3: I think that complicates the story a little bit. It's

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Speaker 3: way too simplistic to talk about whether this is good

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Speaker 3: or bad economic management from the government, but it does

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Speaker 3: just sort of speak to how well do people feel

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Speaker 3: the economy is working for them. And it may be

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Speaker 3: true that a lot more people are back in jobs

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Speaker 3: after the pandemic and feeling good about that, but as

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Speaker 3: these cost of living issues start to bite, I think

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Speaker 3: that reflects a greater anger and expectation. I suppose both

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Speaker 3: you know, both of the major parties that are seeking

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Speaker 3: to form government, and sharpens our focus on that economic debate.

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Speaker 3: So I think I'd expect to see a lot more

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Speaker 3: conversation about the economy over the rest of the election campaign.

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Speaker 3: I think the other question you asked me there was

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Speaker 3: what do I think is going to happen? And once again, Sam,

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Speaker 3: I think I'm going to cop out.

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Speaker 1: I've asked you this a couple of weeks in a row, Tom,

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Speaker 1: and you've copped out every time. And I'll allow him

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Speaker 1: a perhaps one or two more weeks of cop out

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Speaker 1: before I demand an answer. Are you taking the cop

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Speaker 1: out route today? Maybe I'll try and say something. So

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Speaker 1: here's what we're watching, Sam.

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Speaker 3: I think over the last few months leading up to

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Speaker 3: the election, Labor had a very strong lead in the

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Speaker 3: polls and there was a lot of dissatisfaction with the government.

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Speaker 3: It's probably pulled a little bit closer, but that doesn't

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Speaker 3: really mean that the government is pulling ahead. In fact,

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Speaker 3: I think probably what a lot of experts and commentators

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Speaker 3: who are looking on and following this election have suggested

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Speaker 3: is that there is a lot of disenchantment in general

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Speaker 3: with the major parties and that support and approval for

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Speaker 3: the major parties is kind of, you know, at one

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Speaker 3: of the lowest points that it's been for a long time,

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Speaker 3: and that's what we seem to be seeing, and so

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Speaker 3: that raises what I think is an interesting question of

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Speaker 3: well does either party win. Of course, to form government

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Speaker 3: in your own right, you need to get seventy six

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Speaker 3: out of one hundred and fifty one seats in the

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Speaker 3: House of Representatives. But sometimes nobody gets there. It's happened

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Speaker 3: before that nobody's got there, and I think it's looking

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Speaker 3: more and more likely, particularly because there are a lot

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Speaker 3: of sort of independent challenges and challenges from minor parties

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Speaker 3: in some seats that there's just sort of a lot

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Speaker 3: of different moving parts. It's quite possible, and I think

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Speaker 3: we're sort of starting to focus a little bit more

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Speaker 3: on this idea of what happens if neither party gets there.

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Speaker 3: And the short answer to that is that that would

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Speaker 3: mean that both Labor and the Coalition would need to

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Speaker 3: negotiate with these independents, with all the other minor parties

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Speaker 3: who find themselves in the Parliament and try and cobble

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Speaker 3: together enough to get to seventy six with their support.

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Speaker 3: That's a much sort of more difficult job, and it

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Speaker 3: means that parties might have to re wait their policies

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Speaker 3: and work towards some sort of compromise. That's a very

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Speaker 3: interesting territory that we could well be heading into. So

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Speaker 3: I'm not going to predict that we end up with

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Speaker 3: a minority government, but it's becoming more and more of

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Speaker 3: a possibility, and conveniently enough, it's something that Billy and

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Speaker 3: I are going to tackle on No Silly Questions week,

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Speaker 3: so keep your eyes peeled for that one. I think

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Speaker 3: it's looking like a close and interesting race. Sam, I

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Speaker 3: think that's slightly less of a cop out that I've

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Speaker 3: done before.

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Speaker 1: No, that was pretty good, Tom, that was pretty good.

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Speaker 1: I think a lot of experts are saying that the

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Speaker 1: minority government question is one that we should be taking

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Speaker 1: more seriously and learning more about, and I think for

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Speaker 1: a lot of our listeners and myself included, it needs

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Speaker 1: a bit of an education piece before we launch into it,

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Speaker 1: and that's what I'm so grateful that No Silly Questions provides.

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Speaker 1: That's all we've got time for today. This podcast has

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Speaker 1: inflated in time, so we'll leave it there for you,

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Speaker 1: but definitely do listen to today's episode of No Silly Questions.

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Speaker 1: It's about vaping. It's an interesting election topic, not one

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Speaker 1: that you'd see in the headline necessarily, but one of

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Speaker 1: the more fascinating conversations. Nonetheless, until then, we'll speak to

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Speaker 1: you tomorrow