Episode Transcript
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Speaker 1 (00:03):
Hello, I'm Rebecca Jones and welcome to the Bloomberg austra
Elia Podcast, broadcasting live from Bloomberg's headquarters in Sydney, in
front of a group of my favorite people, our subscribers.
And I want to ask you first, how is his
Saturday get up too much? Anthony Albinizi? He's back and
the Polster's got it right? Which is history as any guide,
(00:25):
it isn't always a guarantee. Scott Morrison, I'm looking at you.
In twenty twenty two, Albow road in on a horse
named Climate with a mandate for referendum to give Australia's
first nations people more say in government policy. But in
twenty twenty five it has been a remarkably different campaign.
(00:47):
In any case, what he did worked and he's going
to spend the next three years winching the nation out
of a cost of living and housing crisis that has
dominated much of his first term. Albanizi also takes on
the role at arguably one of the most contentious times
in geopolitics. If you were experiencing over the weekend a
(01:10):
sense of deja vu when we had the result on
Saturday night, that is because we've had similar results in Canada,
with both ruling parties both here and they're experiencing what
can only be described as a stunning turnaround in the
last couple of months that eventually led to wins for
both incumbents. It's no secret that the US President Donald
(01:33):
Trump has loomed large over both polls. So today we
ask what challenges face a newly emboldened Anthony Albanesi and
how will he tackle those at home and also abroad.
I'm delighted to introduce my panel today of experts. Yenping
Lee is Bloomberg's Beijing bureau chief. James McIntyre is a
(01:56):
Bloomberg economist covering Australia and New Zealand. Swarti Pandy is
an Asia Pacific economics correspondent for Bloomberg and if you've
ever been anywhere near an RBA press conference in the
last ten years, you would know her well. Finally, we
have Derek Wallbank. Derek is a veteran Washington correspondent who's
(02:17):
covered Trump closely ever since he descended his Golden Escalator
back in twenty fifteen to announce his presidential run. Welcome
to my panel team. We are now firmly in the
era of Alberanzi. And it hasn't been since John Howard
back in the nineties that we've had in a leader
that's owned the country quite like ALBERANIZI let's set the scene.
(02:41):
I'll start with you, James. If you were going to
make a movie about the twenty twenty five Australian election,
who would you have play Anthony Albanzi and why?
Speaker 2 (02:51):
Okay, all right, I think I'm going to go with
Christian Bale. Now, no, no, not American psycho. And although
the machinist, yeah, the machinist, although he is very keen
on hunting down Tories, I'm not thinking Batman the Cape Crusader. Instead,
I'm thinking of vice where Christian Bell transformed himself into
(03:14):
Dick Cheney, the vice president to George W.
Speaker 3 (03:17):
Bush.
Speaker 2 (03:18):
Because of Albow's transformations over time. Now, you know, we've
seen Albanezi for a long time in public life. He
started out in student politics very very you know, left
wing activism, came into the parliament. We saw him through
the Gillard administration, very timid and perhaps disappointing for some
(03:38):
of those people during his first term for some of
those people expecting some of you know that real might
and fight coming through. But this time around, I think
we might be in for another evolution. With a majority
in Parliament, we might be able to see albow unleashed.
And so I think Christian Bale might be able to
spread that full range of albow. And the next iteration
(03:58):
you always over deliver.
Speaker 1 (04:00):
I asked for a movie actor and you've given me
his album title, Elbow Unleashed. I love it, Saty Patty
sad question to you, Beck.
Speaker 4 (04:07):
I'm Indian Australian, so I'm entitled to two answers. One
is Indian Bollywood star who is Punkers three Party. He
comes from a very modest background like alban Ezi and
has made it big like Albinizi, and he's played some
(04:29):
really wonderful characters, So that would be my first pick.
My Australian pick would be Hugo Weavings. He has shown,
like James just mentioned, chameleon like adaptability in his various
movies that he's done, and Albinizi has shown similar adaptability
(04:54):
during his political career. So that's my second pick.
Speaker 1 (04:58):
Yen Pingley on me with your knowledge of Hollywood actors.
Speaker 5 (05:02):
Thanks Peck, it's great to be in Syney. I will
go with a Hollywood pick, Paul Geomatty. I think he's
good at acting for complex characters.
Speaker 1 (05:15):
For the if we.
Speaker 5 (05:17):
Are talking about mister Aberesi's with political shrewdness and how
he developed his career, as our colleagues mentioned here, but
also he has played a political figure before, notably John Adams,
one of the founding fathers for America that led the
country through turbulent times. We are now not at the
(05:37):
war right now, but we are facing a trade war
between the world's two biggest economies, so really global tumult
that Australian and Albanesi is facing.
Speaker 1 (05:48):
Derek Paulbank, you were with us the Sydney Bureau on
Saturday night when Albanizi seized his second term. Who's your
pick to play in the movie?
Speaker 3 (05:59):
Okay, so I'm not going to stretch this analogy too far,
but I would say Robert Downey Jr. And I don't
think that Albo will mind me comparing him to alp
to Iron Man, but they both have a bit of
a started from the bottom now we're here kind of effect.
Eighteen months ago, Albinizi is reeling from a referendum he
(06:19):
called that could not have gone politically worse for him
where he stands now with a historic win after that,
it really sort of there is an arc to this,
to this sort of comeback that he has made, and
it puts him in this rare air position going forward
(06:40):
that I think a lot of people in the world
are going to be looking to him to sort of
chart their own paths forward.
Speaker 1 (06:48):
Very thoughtful and look, I'm not sure if your answers
revealed more about your Netflix clues than albanize In Albanizie's
actual public image, but look, it's fascinating all the same.
Let's get into it. Swati, I will start with you.
Albanesi has faced increased pressures to deliver policies that are
able to revive Australia's flagging growth engines. We know in
(07:10):
the last couple of years Australia has fared worse than
our global peers. What are the big challenges he's facing
right out of the gate here at home?
Speaker 4 (07:19):
In many ways, it looks like Albanizi's second term is
going to be more challenging when he started his first term.
The biggest challenges for him, the biggest challenge for him
was inflation, fighting inflation, cost of living crisis and everything
else that ensued as a result of that. Inflation has cooled,
(07:40):
so that's the rate of increase in prices, but prices
are still up, so you're still paying very high rents,
You're still paying a lot of money to buy a house.
Public transport is expensive, and there are those living pressures
in the economy at the same time have not increased
(08:01):
at the same pace, so people feel like they have
gone backwards, and that is the number one challenge that
Albanese needs to address. The number two challenge is a
corollary of that, which is housing. We have not built
enough housing to meet the growing demand the growing population,
(08:22):
and most of the policies so far have addressed the
demand side of problems, so boosted demand further rather than
addressing the supply side of the problem. So policies are
further fueling prices rather than addressing supply. So these are
the two major domestic issues that he needs to address,
(08:43):
and this is in the backdrop of a worsening budget
position where we are seeing structural deficits and there is
no solution that the government has offered on that front
so far.
Speaker 1 (08:58):
I'll bring you in now, James mcint How likely is
it that this expanded majority that Albaneze has gathered on
Saturday is going to translate into immediate or soon to
happen economic reform And when reforms do come, what is
he likely to prioritize first?
Speaker 2 (09:17):
Yeah, well, I think if we look the swing in
the Parliament towards that majority, it means that there's less
attention that the Government needs to pay in the House,
at least to some of those stronger voices of reform.
Whether you like them or not, the Tills, those independents
backed by the Climate Group ended up being a very
powerful force for arguing for a lot of different reforms
(09:39):
through the course of the last parliament. You know, they
will still be there, but whether the government needs to
listen to them as closely this time around, there's a
little bit less of a pressure there. I think we
also need to kind of think about what is reform.
What are we calling reform? Because the government's policies to
provide extra health funding to boost or change the economic
(10:02):
incentives for GPS, to make free healthcare GP visits free
under Medicare, you could call that a reform or the
small changes to tax rates, they will boost productivity, and
taking that sixteen percent tax rate down to fourteen percent
over a couple of years, that sorry, they will boost participation.
I should say that could be argued to be a
(10:22):
reform as well, but they're not any of the big reforms.
It's not like that the government is going to and
we saw the opposition walk away from this in the campaign,
going to do things like index tax scales for bracket creep,
or do things like look to a broadened base of
the GST and take some pressure off income and company taxes,
or touch resource rent taxes. So I think that we're
(10:44):
really going to see the government focusing in on those
bread and but a cost of living things, talking about
how they are small reforms, but some of those bigger
ones might be still left on the side of the road.
Speaker 4 (10:54):
So I want to add just one more point to
what James just mentioned. We heard in during Albanesi's victory
speech he mentioned climate transition, and I think there is
an opportunity there as well. We have not done a
lot on climate transition energy transition so far, and that's
(11:17):
probably because the focus of the first term Albanesi government
was inflation. And cost of living. So that is one
area as well where we can boost productivity.
Speaker 1 (11:31):
That's what's happening at home. Let's go further afield to you,
Derek Warbank, what readout do you take of the Trump
effect in Saturday's election and also more recently in Singapore.
In Singapore and in Canada.
Speaker 3 (11:46):
Well, so I think you have three elections over the
last week, right, and three kind of makes a trend,
and across all of those on the winning side, I
think you saw a flight to safety. I think whenever
you're talking about in investing or politics, it works the
same way. In times of turbulence, you look for havens
(12:06):
and the three parties that one we're seen as a
safer place, a safer place to be, a safer person
to be with, a safer team to lead. That certainly
was the case in Canada. That certainly was the case
in Singapore. I think it was the case here as well,
although here there would have been a lot of other
(12:27):
things at play. Let's flip the card a little bit, though,
because if you really want to see a lot of
that Trump effect, you have to look on the back
side of it as well. Twenty twenty four in November,
A lot of conservative leaning parties around the world are
looking at Donald Trump, looking at the campaign he ran,
and taking lessons.
Speaker 5 (12:47):
Right.
Speaker 3 (12:47):
Some of that is on policy, a lot of it
is on politics, and I make a distinction between those
two things. And on the politics side, you're talking presentation,
you're talking messaging, you're talking like the very basics of
how you communicate, right, And there's a lot of lessons
being taken there. But a sort of funny thing happened
(13:08):
on the way to these elections, which was when Trump
came in, and particularly with the tariff effect and extra
particularly when you're talking about some of those events like
the Oval Office showdown with Zelenski, when you're talking about
the quote unquote Liberation Day, tariffs, things like that, there
really was a backlash to that, and you saw here
(13:33):
with Peter Dutton having to fend off claims that essentially
he was the coke zero of Donald Trump for the
entire campaign. You had the exact same thing in Canada
where Pierre Polievra adopted literally a slogan that was called
Canada First. No points for guessing where he got that from,
and then really struggled to distance himself from Trump. Going forward,
(13:55):
and so that really did have an effect. And when
they sort of met the voters, it was under a
different circumstance than maybe when they were initially starting that framing,
And so those would be two places where I'd really
look for a specific political Trump effect.
Speaker 1 (14:12):
Let's have a look at the other side of that coin.
And waiting very patiently after taking a red eye to
be here today for this life taping yenpin Ye. What
does Beijing make of Albanesi's win on Saturday.
Speaker 5 (14:26):
Beck, I think this election result is a welcoming US
for China because it means consistency in terms of policy
and approach dealing with China. If let's take a step back,
if you're looking at China and US, where the relationship
is mired at the moment, the biggest complaints coming from
(14:47):
the Chinese side is inconsistency and flip flopping by President
Trump and the lack of mutual understanding between the two sides.
By comparison, I think mister Albanesi has in his first
term has managed to amend relationship with China and bring
back to China some of Australian's key products like wine
(15:07):
and lobster and Bali. So for that matter, to China,
this diplomacy is working and China would like to see
that continue going forward, especially at the time when China
wants to gain more support from non US major trading
partners to rally support against US pressure and what it
(15:28):
called a unilateral bullying against the world. The second point
I want to mention here is also this is a
win for in terms of public opinion, exactly for what
Derek just mentioned for China. I want to mention A
good example of that is shortly after the election result
was announced on Sunday on Saturday Sunday morning, who seeing
(15:52):
the former editor in chief for Global Times, one of
Chinese state media that's been very vocal during the First War,
came out with a quick commentary that's dubbed again Trump
has lost Australia. So I think that is a reflection
of the public sentiments in China in terms of people
around the world is getting increasingly worry of President Trump's
(16:15):
policy agendas.
Speaker 1 (16:17):
As you mentioned the relationship between Australia and China. You know,
it hasn't been all beer and skittles in the last
couple of years, but it is fair to say that
you know both Albanesi and his Foreign Minister Pennywong have
taken these steps in recent times to repair that relationship.
I'll bring you in here now, James McIntire. From an
economic view, given what's happened with this tariff war that
(16:41):
is still it's going on right now, has this changed
the way Australia needs China? Okay?
Speaker 2 (16:50):
Thanks Meg?
Speaker 5 (16:51):
So.
Speaker 2 (16:52):
I think if we think about the trade war with
China that happened through the COVID era, there were some
casualties for sure, in for the wine sector, for the
lobbys in particular, but otherwise it looks like a spectacular
win for Australia in terms of exporting more and getting
paid more for it, including increasing our exports to China
through that period. So you know, we didn't really need it,
(17:14):
didn't really matter what China did in that little trade
spat with us. But I think what it matters more
what China does now. It also matters what Tokyo in
Japan do now as well. Both are under the gun.
China obviously more for the Trump administration, and there will
be significant impacts on their economy from the trade war
(17:34):
from those tariffs, whether that spills over to us our modeling.
We've got an excellent trade modeling team that's done across
the world analysis and when we look at the results
for Australia, we find that the biggest impact on Australia
from the trade war. It's a small impact, but the
biggest impact is not direct. It's not about our tariffs
with the US. It's the indirect. It's about the US
(17:56):
the effect of the US's tariffs on everyone. So it
matters more for US what Beijing does in terms of
stimulating and supporting and pivoting its own economy as it
responds to the damage from the Trump administration.
Speaker 1 (18:08):
I want to stick with tariffs here now to you,
Derek Lebank, Donald Trump, he talks a lot, but he
doesn't always do what he's threatening to do. There has
been a question around Trump about whether people should take
him seriously or indeed literally. How do you approach then.
Speaker 3 (18:27):
I start by saying yes to that question, right. I
think you do have to take Trump at his word initially,
but you also have to recognize that there's a bit
of an arbitrage between what he will issue as his
most maximal threat and what winds up actually happening at
the same time recognize that it's very rarely nothing at all. Right,
(18:51):
so he tends to land somewhere in the middle. Now,
how do you sort of approach that? There's a lot
of volatility in there? And one thing I would find
with Trump is that And you can go back to
reading his book The Art of the Deal, which he
put out when in the nineteen eighties, and you'll see
references to this. But Scott's Best sent the Treasury Secretary
(19:13):
made a reference to it the other day. Trump is
very comfortable with uncertainty. He is much more comfortable with
uncertainty than you are. He's certainly much more uncomfortable with
uncertainty than most major governments are, most businesses are. So
that's point the first point. The second I would say
is that I always look at the paperwork. So the
(19:35):
White House puts out how it's going to do what
it says it's going to do. They have a big
section on the website about executive actions and all of
that other stuff. I go there and I read the
plain text, and some of the stuff that he says
he's going to do is I'm going to do this
it starts tomorrow. And there we go and some of
it is I'm going to do this, But what it's
(19:56):
actual execution is is this official over here has two
hundred and seventy days to give me a report, and
once I receive that report, we'll figure out and go
on from there. And all of that. Whenever you see
the word delay, all of that read that as negotiating window. Right,
all of that is window for negotiation. We've seen this
with the.
Speaker 5 (20:16):
With the.
Speaker 3 (20:19):
Liberation Day tariffs, right, those got put in. There was
a big reaction from markets, but particularly particularly the bond market.
Trump is very sensitive to markets. He watches them. If
he says that he's watching them, if he's not, he's
watching them. He's very aware of what's happening there. This
is a guy throughout his first term who would constantly say,
(20:40):
you may like what I'm doing, you may not like
what I'm doing, but watch your four oh one K
your American retirement plan. Watch your retirement plan, and you
should be happy. He can't really say that right now
in his second term, so you're seeing an adjustment there.
This is a White House that has said short term
(21:02):
pain for long term gain. And the last point I'll
make really quickly is time wise, you are in a
point where Trump can make some of those short term
pain things. The next election is November twenty twenty six.
As we are starting to move toward that election, you
(21:22):
may see a little bit more in the way of
market sensitivity and really wanting to make sure that the
US economy and the views of how everything is going
are on that upswing. So you are in that period
where you can offer that sort of pain now gain later.
Speaker 1 (21:44):
Finally, to you, Swatty, what does Albinezi's trek recode tell
us about how he'll handle this unpredictable drumbeat coming out
of the White House? Is he is comfortable riding a
roller coaster blindfolders as if you would believe Derek Wallbank,
Donald Trump's very comfortable in that situation.
Speaker 4 (22:03):
What we have seen of Albinizi so far is that
his style seems to be of a strategic alignment, quiet pragmatism.
His uh, he's very diplomatic. We are seeing some sort
of romance happening with Donald Trump as well. Their relationship
(22:25):
is pretty strong. In Donald Trump's own words, we have
seen that phone call that has happened. Donald Trump has
earned the praise. Sorry Albinizi has earned the praise of
Donald Trump, which is a rare feat in the global order.
So whatever Albinizi is doing is working, and he should
(22:46):
probably continue that and make sure that we are on
the winning side of tariffs.
Speaker 1 (22:53):
I'll we'll get back to the entire panel now quickly.
Just three words. I'll start with you, James McIntyre. Three
words of advice for Anthony Alberanizi as he approaches his
second term.
Speaker 5 (23:04):
Go.
Speaker 2 (23:04):
I'm going to steal three words from former Treasury Secretary
Ken Henry. Go early, go hard, Go households he needs.
I think Alba needs to go early, use those negotiating
windows with Trump, go hard, push it to the US.
They need us as much as we need them, and
go housing. Housing is a big challenge. It's going to
take a while to turn it around, especially when you
(23:26):
need to get unlock housing supply.
Speaker 1 (23:27):
Swattypandy, same question.
Speaker 4 (23:29):
Albin EASi is a swifty and so am I. So
I'm going to say shake it off.
Speaker 1 (23:37):
Derek Wallbank three words to describe how we think he
should be approaching Donald Trump in the next one hundred days.
Speaker 3 (23:44):
A wait, I would say, keep it up, all right,
He's just run a contrast campaign against as I said,
somebody who was standing in as a proxy for Trump
in the campaign and came out of it with Trump
saying that they have a great relationship and go forward.
So I think on that he's playing Trump reasonably well.
At the same time, he's going to get asked by
a lot of people to become a global example of
(24:06):
how to deal with Trump and there be dragons.
Speaker 1 (24:11):
Yen Pingley, your three words of advice for Anthony Albineasi,
It's my sounds.
Speaker 5 (24:16):
A bit cliche as compared to all the key words
that my colleagues, but I would say stay composed, constructive,
and communicative exactly for all the noises that we're hearing
around almost every morning we wake up, and that China
might come out again with strong but opaque languages. So
I think these three words hopefully will help like leaders
(24:36):
like aurb and Easy to navigate that situation and clear
air with the key trading partners.
Speaker 1 (24:44):
I'm afraid that's all we've got. Time for a huge
thank you to my esteemed panel, James McIntire, Swashy Pantay
and Pingying and Derek Wallbank. Let's give them a round
of applause. And I continue that, thanks to all of you,
there is genuinely nothing more than a bunch of journalists
(25:05):
enjoy an economist enjoy than talking to people about news.
I'd also like to thank you for subscribing to the
Bloomberg Australian podcast, and if you haven't already done so,
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and we'll see you all again next week.