Hey, coogie, how your mate?

I'm really good, Mark busy.

Couple of months and here we are a few days before the next RBA meeting, and the economy is a little bit better, but we're not good yet.

Well well better than it was, but not perfect and a long way from perfect.

And better doesn't necessarily all go well for borrowers, because you know, the perverse sort of thing about all this is that the worst economy is, the more likely is that they're going to get a rate cut.

The better of the economy is, the less likely it isn't going to get a rate cut.

So it's a bit of a it's sort of like.

Inversely related to race cuts or what a borrow wants, because borrowers, probably a lot of them.

Don't really care about the economy.

They're more interested in the economy being at such that they will get a rate cut.

Yes.

And in fact, it's really interesting because you're quite right because over the past month or so, roughly one of the rate cuts that was there has been now taken out.

That say, a month month and a half ago, there were three more rate cuts priced into the market.

Now there's only roughly two.

And that's because if you look at a range of data, compare with where it was a year ago.

So not in absolute terms, but GDP one point eight percent now was zero point eight percent a year ago.

Building approvals running at about seventeen thousand a month, we're running at twelve thousand a month a year ago, Household spending five percent.

Annual growth was three percent.

So as we like in economics, and you look at the charts when there's a turning point, it's good news, as in the economy is a little bit better, but we're not back where we can sort of put our hand in our hearts say the economy is good.

We're not good yet, but the rate cuts are starting to work.

The fact that the world economy has been really resilient to the tariff wars, if we can even call them that nowadays just.

Helping us strut It's taraff posturing, posturing.

I like it.

I like it.

Yet there's posturing, I mean, and it's worked.

Well, we've yea and the fallout has not been as bad as you remember.

Liberation Day.

Back in early April, stock market tank bonds were going crazy that you know, the UK was all in all sorts of troubles and sort of the implications around the world were huge.

There was a bit of a deep breath taken.

And I think the central banks have help because we've had rate cuts in many many countries since then, so they obviously helping the economy.

And here we are, you know, US stocks the record high, the ASX is just below a record high.

A bit of volatility there, but you know, and as I said, the economy is picking up, so a bit a bit.

I don't overstate it, but we're picking up a bit.

Well, let's just have a look at it for a second.

Like the way the IBA always likes to look at these things, and they tend to do it in a structured ways.

They look at the international markets.

That's really be part of their thinking or their and their ultimate deliberations.

So internationally, what's going on.

Let's let's pick up our biggest trading partners.

So let's look at China for a start, look at Asia in China, but China being our most dominant trading partner.

So how are things we're going to because the.

Better they are there, the more we're going to explore, the more likely it is going to increase.

How economy and our GDP, which is going to therefore less likely to have a rate reduction.

Correct.

China, which was in a bit of trouble at the start of the year, like most other central banks, the people's makeup China, the central bank there, they've cut interest rates.

They have a thing called reserve requirement ratio, which is the amount of money that banks are allowed to lend.

So it's sort of like the old fashioned days, well reverse deposit, you can lend x billion yuan or hy billion.

You aren't.

They're East policy.

So there it's more credit.

Available, so more money supply.

More money supplying the economy.

The economy has found a bit of a base.

There's still basically zero percent inflation, so they've got this problem with inflation being too low.

But bottom line, GDP's picking up, and from what you quite rightly said about our real dependence on China for our exports, so that's why we look at things like iron ore price two months ago ninety five US dollars a ton.

It's one hundred and five US dollars a ton, So that better news in China means that the iron ore price, some of these commodity prices have picked up.

We've actually had much better export data in the last two or three months, so that's money for the Australian economy.

So again it feeds into this narrative that I think we've sort of already alluded to in the first few minutes that there is a turning point in the economy.

Long may it last, and it still needs to be built on before we can sort of say, yep, we've got the economy back where we want it.

We're not quite there, but we're moving in that direction.

And where do you think I mean, we're just on that.

I mean in terms of markers, in terms of measurement, where does the game need to go?

After which the reserve means get worried, So I mean it used to be in the threes, but it is about where from one point do they want to see like two point seven three.

Even that was that funny thing, remember in the last statement on monetary policy when they revised their productivity numbers down quite dramatically, and that was sort of like the highlight of the statement, not necessarily what they're saying about interest rates or inflation.

They're saying that productivity is crap.

And yes, the data confirmed that we've had basically a decade of really poor productivity.

Why that matters is that lower productivity lowers that speed limit for GDP growth.

And you know, you and I have spoken about this for many a long day, those old in the old days, that three percent GDP growth that we grew to love and enjoy and that was a good economy was based on productivity, you know, one and a half percent annual growth, one and a half percent sort of other bits and bobs going on the economy.

So you can go three percent in real terms.

The IRB I reckon that's in the low twos.

Now they've trimmed off at least half a percentage point, maybe three quarters of percent.

So they're going to be saying, for the here and now, if we get GDP growth that maybe not two and a quarter, but if we get two and a half, they'll say, you know, mission accomplished.

We're growing.

So no more rate reduction.

If we get that GDP momentum over the next two or three quarters back to two point five from the slightly below two percent that we're getting now.

So maybe you could explain why that's important, because you know, when you look at if we can get GDP, let's say, fragument set to two and a half half, which may be the sweet spot for the IRBA.

And if productivity those stays, you know.

In the very low point one point two point three, maybe explain what flag that puts up for the RBA relative to interest rates because and how that sort of bleeds into inflation potentially.

Really good point.

It's all about the thing in economics, the speed limit of which the economy can grow.

Some people ask, why don't we just have the government or the reserve bank print fifty doller notes droppen from a helicopter.

Everybody's will put you know, ten grand in everybody's bank account.

We're all going to be better off.

Well.

Sounds good, but the reality of that is that we would all go out and spend it, most of it.

I know I would.

That would fuel economic growth for a very very short period.

Every shop would sell everything they've got.

But it means higher inflation, and it means the economy grows too strongly, too much of a good thing.

It's sort of like Easter Sunday when you've had three or four chocolate eggs, have a fifth and six too many, too many, and you get it.

You feel crooked.

That's what happened in an economy too.

You can have too much of a good thing.

So that's why the RBA looks at this GDP, looks at the productivity, and so it says, well, if we're growing it above two and a half percent, and your GDP growth, it's probably too strong.

So put it this way.

Certainly above three percent, they would sort of say, look, we are growing too strongly.

We need to put on the brakes, put on the policy brakes, just to cool that spending down a little bit, to cool back that pace of expansion of the economy because it's too strong.

And indeed, if we look back to twenty twenty two, when we came out of the pandemic, everybody had saved some money.

We yep, b we're out.

We can go and spend and you know, we're out of this bloody lockdown and all this other stuff.

The economy went wosh, and that's when we had that inflation problem.

So that was part of that, and it wasn't necessarily a mistake that the government did or the Reserve Bank did necessarily because we were coming out of a pretty bad pandemic.

But then the reality check is that you and I and everybody listening.

So I said, well, oh, thank god, we're out of this pandemic.

I'm going to go on a holiday.

I'm going to buy that new car that i'd put off been buying.

I'm going to buy some new bits and piece the restaurant, go to the restaurant again at last, and go and go and have a few beers at the pub and bush.

The economy went really strong, inflation kicked up, and therefore that's why we saw the RBA hiking four hundred and twenty five basis points.

So if productivity was higher, yes, and let's say, in a word, two and a half percent GDP growth, And if productivity that was higher, is it fair to say that the Reserve Bank doesn't mind that because they're going to say, the manufacturers or the merchants.

Are getting more of the product.

Therefore they won't be putting prices up because they can make the same they can make the same margin just by selling more product.

Correct.

But if so, therefore it is so low productivity is a bit of constraint on GDP in terms of what's acceptable GDP.

And productivity is about your ability to grow the economy without adding to inflation.

So one little example.

I'll use this because it's sort of makes the point in terms of labor productivity.

Just so you've got ten people, you give them a pick of shovel and a wheelbarrow and say in the pilbro start mining iron or you're not going to dig a lot of iron or out aa same ten people, But the company buys a couple of diggers, a couple of trucks, and a couple of crushes, and all this upflight, and they how you get iron or out of the ground, you get it to the port.

Imagine the productivity growth.

Certainly, got ten workers, your tonnages per week or per month would be massively high.

With the machinery and equipment, your productivity just because you've invested a couple of million bucks in machinery.

Is that inflationary, No, it's actually growing the business more quickly because you've got better productivity enhancing tools.

So you know, the worker's officers got to have the skills and knowledge to run the machines.

You know, how do you work the digger?

How do you get all these things working?

But it's the machineries or which comes back to this point that I think we discussed last time at that productivity roundtable that Treasurer Jim Chalmers had is that part of this issue of productivity is the getting the private sector and the government investing in machinery, equipment, AI technology to make sure that we as business people were as consumers, can do more in the same amount of ours because we're using pressing a button or we're using machines to do some of the work for us.

So we therefore probably have given our current productivity demise yep, have to probably be prepared to accept the lower GDP growth number, and therefore that's where the Reserve Bank is.

And the closer the our actual GDP gets to that, you know, the sweet spot, the less likely there will be a rate reduction.

Correct that.

I think that's in a nutshell in fifty words or less, however many you said that is, and that is the lemma right now for the RBA, they would sort of like to cut into straits, I think, because they're pretty confident that inflation, aside from the monthly volatility, is sort of tracking in the middle of the range approximately.

You know, we had Sarah Hunt of the chief economist at the RBA talking a few days ago.

We had the Governor herself.

Speaking at the House of Reps Parliamentary Committee on Monday, she was saying a similar sort of thing.

They'd like to, but they're just a bit cautious about overstimulating the economy before they're confident that one inflation's locked in, two that we're getting some sort of productivity response, which isn't yet happening.

Yeah, the inflation sort of looks like is locked in, but we don't know because that can change you quickly.

But yes, but the productivity thing is one thing is for sure is not locked in.

No, and productivity is one of these things it takes a long time to change.

It's a big turn around to It's one of these.

Things that if you so.

I think one example of productivity is the skills of your workforce.

You know, it's all very well and I've heard a number of businesses, particularly a year or two ago, saying I've got this great business plan, I've got all the cap X, I've got my finance approved, I'm ready to rock and roll, but I can't find the workers with the skills that I need to get it off the ground.

And that was with six hundred and seven hundred thousand people unemployed.

So that goes to show that we've got to ensure that our kids from KINDI you can read and write matter, through the school, through the university, through TAFE training, through all the skills and knowledge.

Because the economy gosh, I'm blown away by artificial intelligence and technology and all these sort of things.

I love them.

I think they're fantastic.

But we've got to ensure that our workforce has the knowledge, the agility.

It's Malcolm terribly is to talk about the agility to adapt to a changing economy.

So you know, I used to be a brick layer.

I'd lay bricks like this.

Well, if there's a machine that can come along lays and double the speed, and great, if there's a way of doing business banking and finance, you know remember checks and eighty m's pulling cash out.

Now it's tap tap tap tap.

How efficient is that?

So that's what we need to embrace and make sure that people can understand how it works.

And I think that's part of this you know, bigger picture productivity thing.

But again, think about getting the workforce educated.

It takes a long time, and immigration to train them, yes, and the immigration, and we're getting the right the right people in terms of our skill set.

Just put it, if we focus on the skills of the immigrants, are we getting the skills that we need in the three hundred thousand people that are coming in each year?

So that's stuff.

If given that we've got we've still got record levels of immigration.

Still very high.

Yes, correct, What would you say instead of saying, you know, maybe it's just a narrative change, but we're going to keep the immigration levels as is, but we're going to make sure that the people who are coming in three hundred thousand people for example, who have skills into the ten categories we need them.

In building and building in construction, so Sparky's and carpenters, and you know that we need it to build all these houses that we need to build, for example, and then all the infrastructure that we need more.

The government would say, the government say they're doing that to a point.

The reality is that it's not quite as clear cut as that.

So again I don't know quite what the criteria is that if you apply to come to live in Australia.

So yes, I'm a trade or I'm a doctor or a nurse or a teacher or whatever.

I don't know how they check that and they say, oh yeah, your teacher, come on in, and then they realize that the certificate that that person might have had from country X y Z isn't compatible with our education system.

So there's that matching the skills.

So we think that they've got the skills.

But the harsh reality is that when the new immigrants get here, some of them And this is the discussion that's going on with the business counsel and others who are sort of there at the coal face of I need skilled work because I can't find them at the coal face of this immigration discussion.

So what's interesting You start off talking about the markets priced in they were pricing in three reductions, they're now pricing or three or four.

Actually they're now pricing in two two.

I think what our audience needs to understand, or maybe we could just touch on this, but maybe already understand.

But you know how many times you and I have talked about the markets saying he's going to be re rate reduction or a series of rate reductions.

I mean, I remember two years ago we're talking about seven rate reductions at one stage, and we've got none that in that period that they talk about and I don't really think the RBA cares too much about what the market says.

And to some extent, given what we just talked about, do you reckon that we really need to consider what the market says anymore or should we just look at it because the rb A position is they're not pre emptive anymore.

They are data response.

You give me the data.

The data says, we're here, we'll make it.

We'll make a move one way the other off the back of that.

That is spot on.

By the way, that is exactly ten years ago.

It might have been a little bit different.

It definitely was different from now.

They need to see the data before they pulled the trigger.

And when they were premative, they were looking at money markets, and it was rare that.

It was rare that the RBA went against the money market, Like if the money mark was intensely saying there's a ninety nine percent chances we need to tax it a a rate reduction, it was rare that the RBO would go against it.

Now, the RB it couldn't get two meetings ago.

It was that was a dry meeting gily meaning yes, I was tracking the dates.

Yes, that was one of those ones.

Where I think the new operational standards, if we call that.

Of the Monetary Policy Board of the RBA says, well, yeah, we glanced at the markets.

They look at the marks, they look at the Aussie dollar, they look at everything.

But because just because the market's got a ninety something percent probability of a rate cut, and they look at that and say, well, hang up, no, we don't think it's justified.

So I'll say no.

And then of course the governor does her press conference so she can articulate why.

And I do recall that she got grilled on that and fair enough to and she she justified the case pretty well.

She said, well, look, we it's.

Not we're not ready yet.

We're not ready yet.

It's not the direction of the timing I think said it was still that we need to cut.

Yeah, she wanted to wait for the July numbers to come out, correct, you got it.

So it was I think the meeting was on the eighth of July or something like that.

But the July numbers for the June period and for the previous years been coming out to the twenty eighth of July July something, and she and when she did meet the next month on the whatever it was.

She did reduce because she got the right numbers, But she pushed against this process of understanding or knowing what money markers are saying.

So money markers are saying, So we might just go back to the money marks for a second.

Maybe we can sort of sort of sem me explain, because I don't think I know, and I don't know if you have that knowledge of the money markets sort of feed a whole out of data in daily not hourly, you know, and they're you know, there's the data sets are being fed into some sort of probably AI these days, but some sort of machine that is learning and making deductions as to what it thinks the market is going to do with that particular day in terms of pricing their own money.

Yes, so the money markets pricing their own money relative to transactions are being made between parties in the money market.

It's not necessarily saying you the audience who have a mortgage with you know, Westpac, your interstrate's going to get reduced in three months.

Maybe you could explain that a bit.

There are a couple of that is spot on the banks, let's get back to the function of banking.

They receive deposits.

They're the intermediary between money and money out You know, we all use a bank.

Here we are talking about tapping.

You know that that tap is money being transferred from my inn a B account to Woolworth's when I buy my groceries, or to Shell when I fill up my car with petrol or whatever.

It is my automatic debit for my electricity bill, whatever.

That is still money.

It's still even though it's not notes and coins like back in the day, it is still a transfer.

And what the banks do when they have a surplus of cash, for example, to say, in this particular day, there was more cash going in.

More money.

By cash, I mean transactions, not the cold hard stuff.

If they've got a surplus of money, they don't want to hold it earning no interest, check account, earning no money overnight, so they'll probably go to the counterpart X y Z Bank and ABC Bank.

Who might need something.

Oh gee, we're a bit short today because we had more outflows.

People sort of took more out of our accounts and we wrote, you know, a whole lot of mortgage today.

So the money went out of our accounts.

We need to borrow the money.

And this is where the official cash eight works to an extent, So that's how the market clears when the banks settle their daily accounts at the end of the day with normal, regular, plain vanilla transactions.

Now there's also this issue that the banks when they because they can forecast some of their they can they do forecast some of their ins and outs.

They know when we've got all these mortgagey payments during the tenth and the twentieth of the month, and they've got a whole lot coming through, and there's a three year fixed deposit that's coming to an end, or a three year loan that's coming to an end.

They look at this stuff that all the time.

The treasuries in the banks do that every day of the week, in fact more than that, and they can sort of see what's going on.

And then plus the what do we call it, that data flow in, so it's a combination of their own internal balance sheet functioning cash in, cash out, future cash in, future cash out.

Plus you know, they might talk to their economics team and say, the economy is our data is showing the economy is really So, for example, they monitor their credit card data, there's been a pick up in our foss transactions over the last two weeks or something.

There's something going on here.

They'll feed that all into their positioning of managing their multi billion dollar balance sheet, and that can cause these future prices to go up or down to price in as you alluded to, two more rate cuts by March next year, or we're taking them out because you know, we've got to change in our cash flows.

So it's a combination of it's not just you and me or you know, good old Chris Joy speculating its going to be a rate cut or not.

That's fine, and that's part of it, but it's also real money flows.

It's actually the this is actually the economy sort of telling the central bank and being priced into the market what's happening in the economy as well.

So that's a really really important point to think about too.

Yeah, but therefore, but it doesn't necessarily follow that they get it right, because this can change.

Yes, it's an our eating it's changes by the moment.

And this is the beauty of the unpredictability of a lot of these cash flows.

So I mentioned before that the price of a ton of iron all went from ninety five years dollars to one hundred and five years dollars.

If you're one of the banks that is the banker for the big iron ore companies, you know they buy and sell currencies and put deposits, you know, the big bhps and Rios and Fortescu and all these others.

Know their businesses have cash flowing in and out.

When they sell million tons of this stuff, that has big implications for the for the bank's balance sheets as well.

Oh we didn't.

We thought it was only going to be ninety five.

Now it's one hundred and five dollars a ton.

That's a ten percent increase.

So on many billions of dollars of exports, that's many billions of dollars extra that can be coming into the economy, into the system.

So it's not only the banks that are trying to you know, massage and manage these expectations.

It's US economists looking at the economy.

But this is where the bank treasury departments within each of the big and the small banks monitor cash flows to work out what their funding requirement's going to be.

But it doesn't necessarily follow that because it might be a we might have a month of a lot of inflows.

For argument's sake cash, you know, whether it's coming from overseas or it's coming for people spending morning in the credit cards, whatever the case, may be running down their savings because they want to spend, spend, spend.

It doesn't necessarily follow.

That the Reserve Bank's going to say, because the Reserve Bank, by the way, has access to the same data.

But it doesn't necessarily follow the Reserving's going to say, well, wait a minute.

Where flush and there's an inflation.

Problem potential because the Reserve Bank has made it pretty clear we're actually going to measure inflation, and we're only we don't necessarily want to measure it monthly either, we rather have it looks like they want to have the quarterly information correct, and the quarterly information doesn't come until the end of the month after the quarter finishes, so September quarter, it's July or September comes out for the September quarter comes out at the end of October correct the next month, so they like to see that data.

The Resilient's made pretty clear that these days she wants to see the whole board.

I guess they want to see the actual effect on inflation, not what the money market is predicting.

Correct, and it's fun not funny.

It's interesting you mention that too, because we and for fifty years we've had monthly employment data.

This is just me sort of learning how the new operation of the board is working as well.

A lot of us can get very excited about one monthly employment number or went up to four point three.

Oh g.

Employment was down six thousand in the month.

The RBA wouldn't give two I'll be general, they wouldn't give two hoots about that.

They and it's not that you know, we don't get quarterly labor force numbers, but you can turn monthly numbers into quarterly numbers, and you put rolling averages through.

You can analyze these numbers one hundred different ways.

And so when you listen to the RBA governor and the senior RBA officials talk about the labor force numbers, very rarely do they say, oh, the month of August, the unemployment rate was this, and therefore that forces to hold rates, cut rates, whatever the case may be.

They will say that over the course of the last twelve months, employment growth has slowed, the unemployment rates trended.

So putting a moving average type measure through these seasonally adjusted monthly numbers has trended from three point nine to four point two.

Therefore, that's why we cut interest rates last time.

So the one So your point, which is spot on about the quarterly inflation numbers, can apply to the noise, if we can call it that, in the monthly employment numbers inflation numbers.

You know, they want to get the trend, not get excited about all one month's up and then oh lo and behold next month, I went back down.

So the trend is flat, and so they don't get they tend not to get carried away on that.

And as seems like they want to look at the tree and for your top three, So they're looking at the trends for both for all of dutyp inflation and labor market or unemployment, which we'll.

Look at at the moment.

Now, just before we go to the board, though, I just want to raise this two things.

They want to park property prices just we'll come back to that.

We'll park it from the moment.

But in terms of.

Monthly numbers, maybe you just can remind us what do we get monthly numbers on and what do we what do we get quarterly numbers on?

And what do we where which which are the which do you think the reserve means taken the most notice of in relation to let's say the top three categories g top inflation, and unemployment.

Bearing in mind, I just want to remind everybody that unemployment is now a measure of full employment or you know, start again.

Yeah, well that's right.

I mean they use unemployment as a measure of their success that their new mandate about full employment whatever that means.

And so that's a much more overriding thing than it has been.

In the past, since this time last year, I think, right.

So maybe, so just with that background, what are they looking at it?

Because we're going to get some monthly numbers today on inflation, we're you know, we're going to we're.

Going to LaForce numbers in a couple of weeks time.

And then the quarterly GDP figures came out two or three weeks ago, and I think how I would categorize it.

And again when we get to the board in a minute or two, there are basically, if you were to say to the RBA, there are only three indicators that you could have to make your monetary policy decisions.

Of course, there are well all three though, but you need all three.

GDP doesn't tell you everything, yep.

Unemployment doesn't tell you everything.

Inflation doesn't tell you everything.

Particularly again, as you touched on that, the Reserve Bank mandate with that revision to what the Reserve Bank Board does nowadays is both inflation two and three percent.

That's something that we've grown up with over the last thirty something years.

Whatever it is, it's now also full in So I think that up until a year or two or two or three ago, inflation probably had a waiting of seventy five percent.

That was the thing that drove them, and twenty five percent was a bit on the economy, a bit on GDP, a bit on global, a bit on other bits and pieces in the economy to sway them or convince them to move rates up down or keep them steady.

Nowadays, I reckon it's gone.

Probably inflation still still a critical one.

So it's probably dropped to forty percent, labor markets up to thirty five percent, and it's still twenty five percent.

Other bits and pieces, you know, retail sales and building approvals and global.

So I think the importance of those labor force numbers is much much greater today than it was a couple of years ago.

But this is this is the dilemma.

Anybody who's tried to juggle three sometimes conflicting things realizes it's bloody hard to do.

And this is what's happening in the US just by the way, because they've got higher inflation and higher unemployment.

Do your cut rates because of unemployment or do you hold them steady because inflation is picking up?

And that's what the problem of the Jerome.

Power that the change they deal with trump.

Yes, indeed, and that's a dilemma that the US has at the moment that's filtering into Australia a little bit like I say.

It's a dilemma here too, for the other reasons, because I think what we shouldn't explain to our audience is where GDP, inflation and labor market why they matter from a policy point of view, And I might just have a little crack at it.

And then you at least please correct me if I'm wrong.

So the mandate, the actual mandate for the r b A, is the prosperity and welfare.

Of all Australians.

That's that's it.

They're they're the words prosperity, and welfare.

So if I am, you know, looking at how well I do as the chairman of the board of the r b A in relation to my mandate, our mandate as an RBA, how do I measure, for argument's sake, welfare.

Well, one way I can measure welfare of all Australians.

In other words, that tends to indicate looking after people who have a problem.

We're not looking after the rich.

People are going to look after after the welfare of Australians to make sure they're okay, okay.

So one way I might be able to.

Measure that objectively, let's call it is inflation, because inflation really affects the welfare of some socioeconomic bands in this economy.

So one way I can measure the welfare of all Australians is inflation.

In other words, if it's too I there's a lot of people who I just can't keep up with the cost of living and they're going to go backwards the stain living and go backwards.

The other one for welfare is also labor market.

Unemployment is a great measure of welfare, and I feel as though they've been given a lot of weight, probably.

Under the labor Party in Australia.

Now GDP, though tends to when you dps strong and depends what strong means, but let's call it two and a half.

That tends to be a measure of prosperity, of national prosper national prosperity, not individual prosperity, but national prosperity.

Now, this is the game that they're playing.

They're playing this game.

They're trying to saying, well, one hound, we want all the strains to be prosperous.

But on the other hand, we don't want anyone category not being prosperous through you know, and therefore we need to try to look after their welfare.

And then government comes and overlays their own let's call it their own ideology in relationship, whichever the government laybor liberal, whatever, their only ideology.

Which is sort of my explainer for why Trump is building the hell out of Jerome Powell, because Jerome Powell is more like our current reserve bank looking at unemployment and inflation, whereas whereas Trump's sort of saying, well, I'm interested in prosperity.

To grow, and that's my measure.

I'm more interested in the prosperity of America, of America the nation as opposed to market.

I want I want everything to go up, and I want us to go everything lift most what is the rising time?

That's full ships?

Most ships anyway, whatever, most of them.

And so we now have a sort of like an ideological issue between let's say Australia and let's say America in relation to the role because you know, there is a Reserve Bank and the Federal Reserve.

They're independent bodies, but at the same time it's individuals made the decisions in relation that are on those bodies, and governments influence that.

You know, whoever's in government can influence that league.

In America, Trump will just fire league doesn't really matter.

It's probably not gonna happen here.

But but nonetheless it's maybe.

You could just sort of give us a bit of.

Cultor Look, I think that's a great summary.

And when as you were talking through that, you made me think of a couple of different things.

Your high inflation is bad, and we saw that a couple of For everybody, it's a cost of living problem.

I can't afford to buy my grocery is my insurance most people, but yes, for many people, rich person doesn't give a damn, but the most people.

And that's where that welfare of all Australians comes into play.

So the RBA is not going to adjust interest rates for the call the BRW rich list or whatever.

You know what I mean, Afi, Yes, yeah, they'll be fine.

They want to adjust interest rates and economic policy for the masses who are fitting.

Is it an Adam Smith?

Are we talking about an Adam Smith style?

Who is fitting into the category?

How big the category of all those Australians and we need to look after.

And it comes back to this other commentary.

We need to grow the pie the size of GDP and make sure that the extra growth is reasonably well distributed so that some of the poor people get a few of the bucks.

Good.

You know, that's good for the society.

A given in prosperity everybody.

Good luck to the rich people getting richly far absolutely fine, as long as they're not getting rich at the expense of the poor.

And I think that's yeah, gosh, that self sounded like bloody motherhood statement, but it's true.

You know, I must confess I get very upset when I see homeless people, and you hear the stories occasionally in the media some poor buggers they have sleeping in cars and geez, that's that's not good for a country like Australia.

I think we need to look after people like that, and generally we do.

You know, we've got a pretty good system in Australia, not perfect, but pretty good.

When you can't pass it anyway.

And so therefore the other thing that you know you're you're touching on.

If you want to get inflation really really low, you hike interst rates.

If you want to get unemployment really low, so give everybody your job so they're earning money.

You cut into strains.

That's as you were talking.

That's that's a simple thing that I thought about.

So do you cut interstrates to create full employment or do you hike them to keep inflation low?

Because both of them are good things.

Low inflation is good, Low unemployment's good.

But there and this is the old Philip geez, I'm going to talk about the Phillips curve, which is trade off between inflation and unemployed.

We're going to be careful about Phillips curve and economic it's not that genuinely accepted.

It's not anymore.

I did.

Maybe more.

I can't remember.

She's not kidding, but there is still something.

Maybe the traditional Phillips curve is obsolete, but there is still a trade off between some trade off between full employment and inflation.

And if you want full employment, you want everybody who wants a job to have a job, which is sort of a decent definition of full employment.

Well, your cu't rate, you can't rates your cat rates.

But then, as we're saying before, it's like pumping money into the economy.

Inflation goes up and up and up, and that hurts everybody else.

So this is what the Reserve Bank Board do every We've got to wrestle with this stuff, correct And that's why we've got this checklist.

And that's why we talk about GDP, labor market issues, inflation, because sometimes they are conflicting, and you get high inflation with high unemployment.

That's stagflation.

That's the worst of all worlds because what do you do do your high interest rates to make unemployment even worse.

Well, that's pretty bad, but you get inflation down or the cut rates to get unemployment down, and inflation gets even.

Higher, which is why stay flation is such a problem.

Which is such a problem, why it should be avoided at all.

Costs.

It cuts right across the world for issue, and it smashes everybody.

It's a horrible thing.

So so yeah, and this is where you can come back, and if I can just take a step back, because the RBA will not update their forecasts next week.

It's the meeting after that on Melbourne Cup Day early November that they update their forecast.

But the most recent conversation about forecasts, and again, all my mates and the money markets, you know, all the bank economists, whatever.

If I glance through their forecasts, they're similar.

And if I can take a step back, because this is something that occasionally we should be happy about.

Based on the assumption of two more rate cuts this time next year, second half of twenty twenty six, without pinpointing a quarter or a month or anything, GDP growth will be two and a half percent, the unemployment rate will be a little above four, and inflation will be two and a half.

So got GDP two and a half, inflation, two and a half, unemployment, you know, four and a bit.

That's actually pretty good with two more rate cuts.

So if we can achieve that, and again this is this magic wand of economics that we occasionally talk about.

So if you're the economic dictator of Australia and you said, well, not necessarily how you would achieve it?

But what would you You're right on the board here, what's your target?

I'd say, yeah, well what I'd say two and a half GDP?

Maybe two and three quarters yep, but you know, so decent GDP growth.

I'd want unemployment below four percent.

I'd want inflation to be two and a half.

If I could achieve that, I think you'd get the thumbs up.

And this is the discussion to just by the way, well, the RBA, despite my criticisms of them in the recent past, might have actually got it right.

I might be the one that's sort of going to be wiping the egg off my face.

And the RBA can sort of say that if we do get two and a half GDP, two and a half inflation, four percent unemployment, you know that's pretty.

Good and a bit as you know as well as I do, it won't last last years because.

And sustaining it.

Mark your spot on it's how how do you get it for one quarter?

Fine?

We want it for five The question becomes you correct, I mean once we're there, then it's just started that that's the game that started.

I mean, like if we get there, but like and I, you know, you and I talked at one stage about.

Three and a half three enough, three and a half I think, and three and a half wage growth too, So like you know, it was all sort of because that that wage growth percent wage growth percentage keeping up with inflation or maybe just say a little bit ahead of it's very important relative to the welfare question and also the prosperity question, because people more prosperous if they can stay ahead.

Of wages is a bit above inflation, even by a little bit, even by one percent a year, that's good.

And in fact, prior to just by the way, prior to that inflation COVID pandemic disaster that we had from the period from the early nineties recession through to twenty twenty, so just prior to the pandemic.

I think of those you know, twenty six years approximately.

I did check this the other day because I thought, I like celebrating the Australian economy sometimes I think of those twenty six yearly observations.

Wages growth exceeded the inflation rate in twenty three of those twenty six years, and that the total cumulative increase in real wages over that twenty six year period from ninety three to twenty nineteen.

I think it was I've just double checked my numbers, was an increase of about twenty five percent.

So that's real wages just standardly correct.

And that's why you know, in some years it was a bit down, some years it went really strong, and you know, and again there's swings and roundabouts that happened in a cyclical sense.

But if on balance you're getting more pluses, you're getting twenty three out of twenty six with a plus sign real wages increasing.

That's how you build wealth, get rich slowly.

This sort of thing is what the sort of mantra is and that's why that inflation target's important.

That's why you know, full employment's important.

So let's have a look at the board.

I mean, I do say, though, could you like, I think it's important, But that's why I wanted to just quit with touch on stuff.

I think it's important for people to get a sense of why the Reserve Bank is doing what it's doing.

And I could probably even go one step further.

When they drafted the legislation around prosperity and welfare.

I think probably what was going through the politician's minds of the time was what is the best way we can establish a standard of living that doesn't go backwards.

And in order to do that, we want.

It the standard to increase, but at the same time, we don't want it to increase at the expense of other people, some part of society, So we'll have this prosperity welfare checks and balancing always there.

That's really important, and you might recall that Jim Chalmers did talk about it.

Must confess I haven't followed up on where the progress is on measuring the economy not by GDP but by well being, and that includes things like life expectancy, our health, our educational tainment, these sorts of things.

And again it sounds a bit pie in the sky, but in a way, what's the point of having a really rich economy if it's one not sustainable.

I'll go back to another example from my economics one O one day, as many years ago.

An economy can become really rich if we chop down all our forests and export them.

When you chop down the last tree, you've got nothing left.

So again I'm not a radical greeny or anything like it.

But again, it just goes to show that economic growth's got to be sustainable, it's got to be able to be continued, not just for one year or two years where we're all making truck generation and intergeneration, because what are we left for our kids?

And Mark, thank you for raising that, because that is the other sixty four trillion dollar question.

I don't know billion dollar question that at the moment, I'll put us in the slightly older category.

We've been I've been lucky.

I've been really lucky.

I bought a house for sixty thousand dollars all those years ago, and kids say, what did you buy ten of them?

Dad?

It's all like, but I've still got one.

Yeah, that's important.

Indeed, I've still got one.

And you been lucky with life and the kids now sort of saying, oh, I can't even afford to buy a little shoe box for you know, more than half a million bucks, you know, and and that intergenerational things very very important that we look after our young folk again, and that's not for the RBA to just by the way because they only got interest rates.

That's actually for the government of the day again, labor liberal, I were not even going to get there.

But how do we make sure that there's a bit of fairness for young folk and not too much benefit I suppose to old folk.

And that's sort of a really thorny question.

Well, I'm going to interview John Howard, and it's interesting I will be asking him about that sort of stuff because his government was quite instrumental in a lot of superannuation concessions.

In fact, it was his last term that where I think they agreed to a million dollar traditions or.

Right at the end of his term.

But and it's interesting, you know, to something except that has contributed to the mismatch between let's call it the bank of mom and dad and kids today.

I mean, to some extent, maybe has gone too far, maybe went too far.

Maybe did go too far.

And again I'm a massive fan of superannuation, by the way, and to get people to put money into super you do need a few little tax breaks, you.

Do, and you know you've got to encourage you.

Tax policy theory disclose that every single time.

So if I get a little bit of a tax break by pumping in an extra few bucks every year into my super, great, that's that's a price worth paying.

For the government.

However, like all policies, you can overshoot and you can make it a little too generous, and I think, yeah, in hindsight, maybe it is a little too generous, and that sort of souper annuation that people have got now is at the expense of young folks.

And that's one of the things I'm going to be talking to him about.

Tomorrow, looking forward to hearing that when it comes on.

Yeah, it'll probably come in about it three weeks, but yeah, fantastic.

It's telling us a.

While to get John, but it's going to be great to have a chat to him about it.

Right.

Let's you're board, mate, board the Monetary policy checklist.

Yeah, okay, let's have a look now the inch.

I was actually thinking about this yesterday when I was sort of preparing for today, and I think a couple of things have just sort of come back more towards neutral rather than the easing side, because, as I said at the very beginning, some of the economic news is a little bit better today than it was three months ago.

Economic news better not for borrowers, though it means less or fewer rate cuts, better for the economy.

So I'm talking about the economy.

We want a good economy.

Yeah, but it means fewer rate cuts.

So GDP, I'm putting that into the neutral category.

I think last time we were here, I had it erring towards easing.

But as I said, GDP's picking up good news inflation.

I'm putting that towards easing.

We do have inflation pretty much in the two to three percent.

Again, the monthly volatility, the quarterly numbers.

Look, I'm pretty confident that inflation is in the band.

And that is a reason why the RBA still and again this is Michelle Bullock and Sarah A hundred and others from the RBA have been saying, yeah, we're going to cut, but not just.

Yet, because they're saying right now the interest rate is not neutral, it's.

A little above neutral.

So they want to get it towards neutral so that the economy can be in this what do we call it GOLDMA or gold locks scene labor market.

I'm putting that slightly towards easing.

You know, our unemployment rate's gone from three point four percent a couple of years ago to four point two percent.

Employments slowing down, job vacancy's, job ads are slowing down, so again not bad, but just for what the RBA is thinking about to maintain that we need to sort of give a bit more monetary policy stimulus.

And just on that, I think somewhere I've read the neighbor has been revised down.

I don't know if it's official, but that I think when in the House of Reps helps US Representatives testimony on last Monday, the governor and her senior people who are at that meeting, at that quizzing from the politicians, alluded to that.

Yes, I don't think she actually sort of said a numbers specifically, it's getting they're saying, we think it's lower than we were assuming or estimating.

Previous was I think four and a half.

It was four and a half, and it's probably are coming back for a quarter.

Yeah, well there, well, and we're there now, which again goes towards the rate cutting and proof of that beautiful segue into wages, which I'm putting in neutral wages growth three point four.

That is the Goldilock's number.

It's that number, and that employers are happy to pay their staff if profits are good, the economy is doing okay, I'll pay three and a half workers with inflations two and a half, I'll get three and a half.

It's sort of that number.

That's not thumping employers wages costs are too high, or workers saying, oh, wages are too low.

I can't afford to buy anything.

So I think wages are sort of goldilocks.

So that's a good news story.

International economy, I'm putting in neutral, maybe slightly towards easy, because we have had the FED cut and they did signal there are more rate cuts to come back of Canabi's.

Cut, but they're much higher than us anyway, they are higher.

Correct Canada cut.

Bank of England's got to do.

The poor UK economy that's for another day.

They're they're probably going to cut New Zealand economy is week.

So comparable economies to US are still cutting.

Some of them are a bit below us, some are a little bit higher than US.

China we mentioned, doing a little bit better, but still got very low inflation.

So that's you wouldn't you certainly wouldn't hike.

Because of the world economy, it's earring towards easing house prices, going to put that slightly towards tightening.

You know, we didn't really talk about house prices.

But there's no doubt that in the last what three four five months, there's been an acceleration in house prices, even in Melbourne which had been really poor for several years.

And the boom cities are Perth, Adelaide and Brisbane which had a bit of a cooling off late last year earlier this year, are now on the way up again.

Prices there going gang buses.

But I think one of the things we probably should just point out to our listeners is that house prices are more functional definitely a function.

Of supplying demand correct indeed.

And it's less a function of how good the economy is going or inflation and dudyplaid markets because and the other thing everyone's got to bear in mind is that is much more affordable now because we've had.

To rate reduction, free rate cuts, three rate and just just by the bye on that the house price story that you know, it is a the does.

Not target house prices.

They only look at them from a well, they only they tend to look at them from a wealth effect that I'm feeling wealthy, so there I'm going to spend more and I'm not gonna say that kind of high rates because of house prices, not not at all, but in their function of you know, their their well checklist of things that they look at, they'll be saying, oh, they don't want house prices to go up by ten percent.

Put it that way, they'd prefurther to be five percent, yea, rather than ten.

So house prices are going by the more modest number.

They are at the moment.

But yeah, so maybe I've been a bit hawkish on that one.

But but if house prices will be right though, but aloth.

Going up twenty percent.

Yeah, we don't want that.

Yeah, no one wants that.

Yeah.

We It's like getting shots at two o'clock in the morning at the bar.

You know you don't need it.

You know you've already had a fun night.

You need on that one of koogie.

I probably put house prices in neutral because I think, yeah, look, because I think they're going out a model up much not as fast, but a faster rate.

And they were weak at the start of the year.

Yeah, we had a few months where prices actually fell according to the Totality price series, which call logic numbers cap retail sales.

I'm putting that towards neutral because we have had to pick up in consumers better than it was, not great, better than it was.

Certainly again, you certainly wouldn't hike.

They might even be earring towards easing.

It's this is where this dilemma and the judgment comes in from the Reserve Bank Board consumer sentiment putting that towards similar to retail sales was down lifted and just started dipping the last couple of months, a couple of weeks.

That A and Z measure is just a bit weaker building approvals.

I'm going to keep that at neutral.

Our longer way to pick up in house and construction has had its green shoots.

Heaven knows, we need to build a heat more buildings over the next five years, you know.

And recall the government has a target of one point two million dwellings for the next five years.

I think they should revise it to be it's too high.

Yeah, it's too ambitious.

It's too high.

Yes, yes, well mate, I want to play I want to play second rate for South Sitting next year.

But I don't think I am well maybe maybe, but I don't think they're going to build one point two million took one point two million houses either, they're not, so I've revised my expectations for South Sydney down I'll just watch it from the sideline.

You're quite right that that one point two million ain't going to happen.

Ain't going to happen.

Business investment, I'm putting that in an easy and we mentioned this before.

Business investment has been frankly disappointing, and it's not I'm not throwing stones at the business sector.

They're not invested for a whole lot of reasons.

One because interest rates were high recently, the economy was weak.

Why I invest all this money in new machinery and equipment if the economy is really weak.

But we that cap X to lift that productivity.

Business confidence similar It's picked up a bit, but not too bad.

Commodity prices edged up a bit, but they're only neutral.

Stock markets burning.

I'm scunny that a neutral the RBA doesn't target that.

Current interstrates, as you said, are restrictive, not as restrictive as they were six or eight months ago.

Erring fly across that far sort of towards an easing.

So we need a one or two more rate cuts to get to a neutral setting.

And the last conversation for the RBA was that interest rates are still restrictive.

They're not.

They haven't.

They haven't gone any other directions.

Still continue to use the word restrictive correct as opposed to stimulative.

Yep, which would be sort of like a two and a half Yeah, official as opposed to neutral.

They haven't said neutral or similar.

No.

No, No, they haven't said neutral yet.

No.

Three.

The three point six official cashepe, which is where we are today, is still restrictive.

Still restrictive out the final bit great, but the next Reserve Bank meeting is at the end of September, but it doesn't seem they're going to have much more data.

And therefore.

The next lot of data that's going to come out, as we said earlier, quarterly data comes out at the end of October, which sort of bleeds into the Melbourne Cup Day meeting that hold every year, which is the is still the second last or our last?

It's the second last, it's fourth of November Cup Day, and then I think it's the night of December is the last.

Last one year, so they still have it.

Next year, so and I don't know what the hell it is, but it's always seems to be something coming comes our way in November.

One way, the O they do something that it's got something to do with the end of the quarter data that comes out the September quarter.

So you reckon that right now.

You're respective of this.

There will be enough no change and they'll wait until the November meeting.

No change in September.

The just as we alluded to, the numbers that have come out since the last cut what's six or seven weeks ago from the ABA have been okay, you know, there's not if the numbers had deteriorated and that inflation rate was really really low and the unimployment rate was really really high.

Yep, you'd say September is a high probability of a cut.

But I think when we wait till that Melbourne Cup day, and as you said that at the end of October just check my dates.

End of October, we get the September quarter inflation numbers.

If they're showing that the trimmed mean the underlying inflation rates at zero point six or point seven quarter on quarter, the annual will drop to two and a half, slap bang in the target range, and we do get another unemployment number.

Of course, between now and then, if it shows a little bit of an uptick in the unemployment rate, they'll just go They'll be cautious.

Just twenty five points.

Again, we're not not talking more than that, and that'll make that for twenty twenty five.

We've had one hundred points of.

Brake cuts and that's, to me, sweet spot.

I think that's I think then we'll be at the sweet spot that again.

Fast forward into Decemberah gosh, let's see we get the next couple right.

They'll probably be on hold and then revisit everything at the start of twenty twenty six because they know they've got one hundred points of cuts in the pipeline.

They'll know that the economy is looking a little stronger, the rate cuts are working.

Do we need to do them anymore?

Well, let's revisit this in February twenty twenty six.

I think that's how the board will approach this next couple of meetings.

And if I'm if someone asked me the question, what would it because I think I'm hoping I should say, that's what happens when you just said we get another raycut in November off the back of good to mean inflation.

Numbers that come out at the end of October, and I'm hoping GDP and I laid markets are in the right spot as well.

My view is that the normal ratcuts and the reason after that one and one and one.

That's it and the reason I'm saying that, or I'll put around the other way.

The only way we're going to know the rate cut.

If something happens internationally that's going to affect our position in Australia of exports and.

Everything else we do in the world.

Because we are doing very well relatively speaking.

We've come through this period and as I alluded to there, I think I might have to have a bit of humble pie and say the Reserve Bank probably has managed it better than I gave them credit for.

And that's my era in terms of speed.

Yeah, well, you and I really reflected on speed.

Yes, And that's even allowing for the fact that the unemployed rate has kicked up, the inflation is low and falling.

But I think, well, we're getting really close to that point.

I can't disagree with you because maybe we do need those two cats.

Again, it's only maybe, Yeah, it's only maybe.

I think we need to do definitely the one more to get us back to neutral.

Yeah, I think so, and then the RBA might sit there.

And this is the other thing that we've learned looking at the RBA over decades.

Frankly, once they get rates where they want them, they hold them for a year.

So twenty twenty six might be the year where we see no more changes.

There might be one up, one down, whatever, but we might be in this period that there will be no change in rates.

We're getting close to that point now.

And to me that that's good, because that's good certainly.

Well, that puts us back to the old system that you and I were used to.

Five rates up, this flat period five six rates down, but more gentle.

So it's more.

Yeah, it might be a change, but that's where everybody wants to see us.

I like that.

And again the other thing that again we've learned and learning during the pandemic and the inflation surge a couple of years ago, aggressive and frequent rate adjustments, either up or down, are not good news.

You know, just a couple up, a couple downs, that's fine, we can all live with that.

It's when we saw those rates cut to next to nothing, effectively zero, that created a problem.

You know, again, we needed rates because of the pandemic.

Then they hiked them four hundred points in barely eighteen months.

That created a problem.

And now we're getting back into this even keel where you know, every three months we'll do tweak it down.

Twenty five to twenty five might hold.

And so the discussion of interistrates is really more about another twenty five or fifty or nothing.

You know, so we're not talking hundreds of points of rates.

We'll have nothing to talk about.

Oh we'll have to talk about because you know what we didn't.

Talk about out of business because we love the.

Budget and well how they are, how the government can influence there was a bank not not in terms of political pressure, but in terms of economic policy.

Now we've heard and you know, we've got the we've got the mid year budget update coming in.

I think that's m y e F comes in December.

And you know, with this productivity stuff, the Productivity round Table and a few other bits and pieces that are occurring, they have an impact on the economy.

You know, then be done bloody eighth big time.

And so this conversation going about whether the government and this relates to employment.

By the way, I'll shut up shortly.

But one of the reasons why the labor market was so strong in the last couple of years, and I think we touched on this last time, was that the Albow government, Albanezi government and some of the state governments hired heaps of people in the public sector or public sector related industries nursing, age care, teaching, ndis, all that sort of stuff, and there's nothing wrong with that, but it created a well, a superficially strong labor market.

My observation, I think I've heard this from Treasury and a few other people, is that all of that hiring is done, that all the nurses that we needed for the age care facility has done.

If anything, they're trimming back a bit on indis too or the growth in Indias, I should say.

So, if we get to this position late this year early twenty twenty six and government employment reverts back to almost zero and the private sector hasn't picked up the slack in terms of hiring, you know, these labor market wages might be an issue that just sort of a merge again.

So we can't talk about the budget and what they're going to do with employment, what they're going to do with that.

Do we need a surplus?

Do we need a deficit?

A lot of things there, mate.

Yeah, And by I should let you know that I've retained an actuary to revisit Paul Keating's structure of from nineteen ninety three when you introduced the super guarantee of the amount of super you need to put away from say the age of twenty to the age of say sixty assumptions and the subject enough assuming the average straight male le just in relation to the male obviously females well, but dies at eighty one point two years of age.

What about what happens if they lifted ninety one?

Ah?

So, how much more super would we need to put away to maintain that last ten years?

What are getting that?

I know I've only just retained this week.

I spoke to this week because and I'm actually going to share that with obviously you, but I'll share it in one of our episodes.

But I want to share it with the government.

I want to say, look, because they.

We're living longer.

Yeah, we're living longer.

And I do get it.

I sort of understand why someone today has gone more today today he's got more than three million dollars or the assets and they're seventy in their super.

I get it that maybe you've got to pay tax.

I get a bit of redistribution of wealth.

I get I get it.

But if you're twenty and you're saving now and you will have three million when you turn sixty five, you probably maybe need more than that because you're going to live another ten years.

I'm saying, maybe we're going to be encouraging those young people to have five million before this.

So this is an indexation question, so.

I have to think about that.

But I love the concept that you know, a seventy year old let's just say they've got three million today, a seventy year old in twenty seventy.

Five, fifty years time.

Yeah, three million, can't it?

No?

No, no, no, that's probably need.

This where the actor is going to do some fantastic that probably need to have six million.

I don't know whatever that number is.

So therefore we should encourage more money in there.

Have it stepped up?

Yeah?

Yeah, Because I said before, I'm a big fan of super I think it's a really important policy.

Not as expensive, but it's generally a good idea.

Super anuation the twelve percent contributions and all that sort of stuff.

Great, And I'm not saying employers should have to pay more.

I'm not suggesting that, but but what I am saying is that maybe there needs to be some other and seventy.

Four employees to put more money away.

Yeah, And I don't know what that looks like in terms of tax policy whatever.

That's for them to work out, but I just thought about time something to do that, because I just think that you know, Keating's hypothesis was back then was based on the average age of an Australian male female.

And that's changed.

It's changed by a loss a lot.

In fact, thirty years ago it was generous to assume someone's going to eighty one.

Yes, today it's not generous, it's extraordinary.

And if you take Keating's hypothesis, you might maybe we should be assuming the endlst of ninety one be generous again, because you might as well be that way, because otherwise, I can.

Tell you what's gonna happen.

They're going to turn anyone, they've got nothing left, They're going to lift to the ninety one and the government's gonna have to tip in again.

Yeah, and we're gonna have a liability.

One of the reasons for super anuation was to get people off the public attention, which.

Is which is why our system is globally recognized.

Talk well, I'm hoping that this actually what the outcome will be, and then I will ask Keating to.

Well, because that's his baby, supernation more than anything.

And what's interesting is if Paul Keating talks, the Treasury will.

Listen, people will listen.

We will mate.

I'll tell you what, But you know, for the obvious reason, and because I like Austray's super innovation system to remain the golden standard for the rest of the world forever, not just today.

Sea Mark