TEITR 406 (Alan Oster)
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[00:00:00] Veronica: In this episode, we ask what if the economic signals we've all been watching are no longer enough to make sense of a market? Under stress, investors are bombarded with [00:00:10] commentary, yet business surveys, household spending patterns, and even unemployment data can tell different stories.
[00:00:15] Veronica: When property decisions hinge on the future of interest rates, growth and demand, how [00:00:20] do we know which signals matter the most? To help us unpack this today, we are joined by Alan ota, who for 33 years was Chief Economist at nab. and one of Australia's most trusted [00:00:30] voices in economic forecasting,
[00:00:31]
[00:01:10] Veronica: amongst other things, Alan built NAB's monthly business survey and pioneered the use of real-time banking data to reveal shifts in household and business behavior. Insights now shared [00:01:20] with the R-B-A-A-B.
[00:01:21] Veronica: And treasury with decades of experience shaping policy and guiding investors through cycles. Alan brings a unique lens on how economic data really translates into [00:01:30] the property market, and that's what we wanna talk about today. Thanks for joining us today, Alan.
[00:01:34] Alan: Okay. Thank you. Pleasure.
[00:01:36] Chris: Alan,
[00:01:36] Chris: I absolutely love when we get, people like yourself. Come on. and it just [00:01:40] gives an opportunity to, basically delve into your mind. It's one of our, biggest things that we love on this podcast, and thanks so much for your time. The economy is just so you know, you can start micro, you can go Australia, you can [00:01:50] go global.
[00:01:50] Chris: and there's always things that are happening. I mean, now that you're retired, you've got more time to think. I mean, how are you thinking about the way the world's going right now and how the, the global [00:02:00] economies are coming together?
[00:02:01] Alan: Look, I think globally it's tricky. Basically that's coming out of the us. think the US actually last [00:02:10] year did much better than everybody thought it was gonna do, much better than what, Trump was telling people. Doing now you've got tariffs and you've got [00:02:20] uncertainty. you've got a problem. I think that's really important where Trump is trying to, well basically when he got data he didn't like in the labor market, he fired [00:02:30] the, essentially the statistician responsible and now he's trying to get into the fed.
[00:02:34] Alan: He's got one person who's legit come in, and then the other one there fighting in the courts. But, [00:02:40] I worry. That basically at some stage, he may get. More influence and that will basically trash the reputation of the US and it's not [00:02:50] good. the issue, I think not so much purely on the US but what it does to our trading partners, what it does to China, Japan, Indonesia.
[00:02:59] Alan: [00:03:00] so that, that's tricky. And, I've built models for a long time. aren't rational. Therefore what it No, it's true.
[00:03:08] Alan: I can remember many years ago [00:03:10] when I was actually in the bank building, not only economic models, but pricing models. And so what we found out was people basically didn't care about a [00:03:20] monthly they do now, but at the time they didn't care about a monthly transaction fee, but they'd crossed banks for a hundred dollars, establishment fee.
[00:03:27] Alan: Yeah.
[00:03:27] Chris: so just do the arithmetic. you charge 'em eight bucks a [00:03:30] month for 30 years, and that's more negative. Well, they don't care about that, but they worry about a hundred dollars upfront as a fee. So it's not rational. and so how do, how will people respond? Will [00:03:40] the equity market suddenly die?
[00:03:42] Alan: will people. Nervous and will they be irrational and just say, it's all garbage and I'm not gonna do anything and. [00:03:50] I always think of economics as applied psychology. You've gotta have a bit of a baseline and a sort of a system that says, okay, you've got a lot of investment, a lot of 'em be imported, et cetera, et cetera.
[00:03:59] Alan: [00:04:00] So you build your models, but you've also gotta say, well, I was wrong in the past, and what sort of data do I look at to say that I might be wrong now? And the one thing that I think is [00:04:10] really different, is. Essentially bank data, this essentially real time. So in nab, the data that we built was by Wednesday.
[00:04:18] Alan: We would have every [00:04:20] electronic transaction as of the previous Saturday, anywhere, and we'd have real time. we could also see what business, now business, when they take a business loan have to. [00:04:30] fill in their, profit numbers and they probably lie all the time, but as long as they lie consistently, you get a good view.
[00:04:35] Alan: and then the last thing is the monthly business survey. whereas back in the days [00:04:40] when I was in Treasury, they had a quarterly business survey, but not monthly. you just need to be a little bit careful because things like, Chinese New Year School [00:04:50] holidays, they all change. So you probably.
[00:04:52] Alan: Better off looking at it monthly rather than weekly. But I mean, for example, I was the head of forecasting modeling in treasury in the [00:05:00] early nineties, and honestly, I didn't know we had a recession for six months and I was advising the government.
[00:05:07] Veronica: Wow. That's fascinating.
[00:05:08] Alan: that, that, so [00:05:10] that's real, real, yeah.
[00:05:11] Alan: Real time.
[00:05:12] Alan: then we had COVID and you know, we can do this, oh, sorry.
[00:05:15] Alan: NAB can do the data and I'm sure all the other banks can do it by postcode. So you [00:05:20] know, we look at some of the postcodes in some of the Chinese suburbs and we were seeing 40% falls within a month in essentially restaurant. so Box Hill in Melbourne, [00:05:30] et cetera, and you, you could see that. And so we knew what was actually happening.
[00:05:35] Alan: that's the difference we've got now. I don't think it's any easier or harder to forecast [00:05:40] than it used to be. The one thing I would say to people, and it really annoys me when the government and. a lot of politicians on both sides say, oh, in 10 years time there'll be [00:05:50] X. And my sort of response is, I've got no idea what's gonna happen in three years time.
[00:05:55] Alan: Maybe two, maybe three. You can get by 10. I mean, my [00:06:00] simple answer to anyone would be, okay. So what was your forecast for the next 10 years in 2019? I had no idea
[00:06:07] Veronica: How's it going?
[00:06:08] Alan: if all
[00:06:09] Alan: other things[00:06:10] work. Okay. you can see where some economies are running into serious stuff.
[00:06:15] Alan: and I think that's what's gonna happen in America. It's gonna slow a lot. I think they'll [00:06:20] cut rates again, a couple of times. and maybe not so much after that, but they'll sort of, by 2028, they'll be down to about 3%. what that then means for [00:06:30] Australia? I think Australia's actually in a pretty good spot, but don't tell me there isn't a hell of a lot of, stress out there.
[00:06:36] Alan: There still is, and you know a lot of people, for example, and there's [00:06:40] some technical issues you need to know about. one, you can see what's happening in the. Monthly business survey one. You can look at the real time data,and generally look at the labor market. I can [00:06:50] remember, a reserve bank governor was asked one time, if he only had two pieces of data, what would he use? this is Glen Steven, so I've been told this I wasn't there. First thing he'd look at would be the monthly, labor [00:07:00] market numbers. And the second thing he'd look at would be the NAB business server. And the reason for that was, they sort of look at it as like a type of national accounts, except you got it monthly [00:07:10] and you can correlate it to what's happening in the real economy.
[00:07:13] Veronica: couple of things there, Alan. you said that you didn't know, like back in the early nineties, you didn't know [00:07:20] there was a recession for six months, if that was exactly happening today, given the access to data that you have in real time today,
[00:07:28] Veronica: would you have noticed any quicker [00:07:30] or would it still be a, have a lag?
[00:07:32] Alan: we've got data that we didn't
[00:07:34] Alan: have
[00:07:35] Veronica: Yeah.
[00:07:35] Alan: in the early nineties, they say, beware of fast food. It's not good for your health. [00:07:40] Same thing. Fast data is not good for your health
[00:07:42] Veronica: Yeah,
[00:07:43] Alan: but it will tell you if there's a really big change. Can
[00:07:46] Veronica: Yeah. So that leads to my next, next question [00:07:50] because, sooner you can react quicker. is that quicker. reaction time good or bad, or, good at times? Bad at times. I mean, for example, [00:08:00] we saw the equity markets plummet, around April when the, all the terrorist stuff started coming out.
[00:08:04] Veronica: And then we've had record highs in, you know, recent weeks. so that, that's all. Quite[00:08:10]
[00:08:10] Veronica: quick turnaround, if you
[00:08:11] Veronica: like.
[00:08:12] Alan: But be careful. I mean, economists typically say the equity markets has forecast 10 of the last two recessions,
[00:08:19] Alan: [00:08:20] so they're very unreliable as a mechanism
[00:08:23] Veronica: it. But it's reactive though, isn't
[00:08:25] Alan: it.
[00:08:25] Veronica: Because they've got a lot more data on hand, say, than the property
[00:08:28] Alan: don't think, I don't think they have. [00:08:30] In terms of the equity market, no, because, I mean, the banks will report quarterly, but they actually physically, as in audited, et cetera, [00:08:40] is six monthly. and if you wanted to, you can hide a lot of things and you hear all the time. I mean, one of the lessons for me was. I won't say who, but let's say big [00:08:50] retailers lie all the time about their Christmas sales. because if they didn't lie about it, they'd get trashed. in the equity market, so you gotta [00:09:00] remember, what has caused recessions in the past. and one of the big issues is long and variable lags in monetary policy because it really depends on what. [00:09:10] Businesses or, and what consumers decide to do. And this time what they did is they shoved all their spare cash into offset accounts. And so you can see that, and you can also need to know a few things [00:09:20] for example, and I'm sure nabs, is similar to all the big four banks, everyone says, right? There's no bad debts or not many. But what people don't know is, In a big bank, [00:09:30] I think you'd find that 70% of a bank's mortgage book is owned by the top 20% of the income distribution.
[00:09:36] Alan: So the real damage is actually in the non-financial system. [00:09:40] It's where you're not regulated. As much. And so you gotta be a little bit careful about that. and ultimately, you can say, well, people could just get scared [00:09:50] and you know what we saw at the start of COVID scared the hell out of us.
[00:09:53] Alan: 'cause the other thing we can see is we can see the number of bank customers who are paid the doll on the [00:10:00] Saturday, and we're getting numbers on the Wednesday. That gives you a good feel of how the labor market is and the labor market's still. Okay. And then if I'm looking at anything in Australia, the thing that makes me [00:10:10] really pleased is the fact that the unemployment rate's 4.2.
[00:10:13] Veronica:
[00:10:13] Alan: what's actually happening, and I think it's still happening, is people are struggling. They're basically, [00:10:20] buying down market rather than up market. They're trying to put their stuff away, as I said, into the offset accounts, and provided they've got a job they can struggle through until interest rates start to come down.
[00:10:29] Alan: And they've [00:10:30] started, and now I think they'll still keep going. The market gets thingy about inflation, but the monthly data that came out yesterday was essentially. Affected a lot by the [00:10:40] ending of electricity bills. And so if you looked at the trim mean, which is the one the Rrb A looked at, it went from two seven to two six.
[00:10:47] Alan: So I think a lot of the sort of reaction [00:10:50] today, et cetera, that you know is overblown, and you just need to be careful about that.
[00:10:56] Chris: you said there's a lot of stress, a lot of people are struggling, you know, they're putting money into the offset accounts. the [00:11:00] unemployment rate still stayed pretty low. if America sneezes, we all might catch a cold depending on what sort of Trump happens.
[00:11:06] Chris: and it's same, I guess, with China, but. How do you sort of see this [00:11:10] world playing out? I mean, you, you said you had this, you can't focus 10, 10 years, but if you think about just the next few, there's a lot of people that say, we're gonna get to this, another inflation spike, right? [00:11:20] or there's this world that maybe we're in a bit of a lower growth world and they're gonna have to support the economies.
[00:11:24] Chris: Like you said, people are struggling. So how do you of see it playing out?
[00:11:27] Chris: I think the world will be different in the [00:11:30] sense that some of these big economies, like Europe, Japan, et cetera, will struggle. That probably won't get growth of more than 1%. the US will [00:11:40] come down a fair bit. So it was doing like 3% last year and now it's probably gonna do one and a half this year.
[00:11:46] Alan: but do remember on tariffs, unless you [00:11:50] respond, the effect on inflation is just in the US
[00:11:53] Veronica: Yeah.
[00:11:53] Alan: So, we're not gonna necessarily,
[00:11:55] Alan: now we may get supply chain effects. That, increase our prices. [00:12:00] But on the other hand, someone in Japan may decide, well, it's too hard to sell stuff into the us.
[00:12:05] Alan: I'll basically buy some more stuff in Australia or trade better with Australia. And [00:12:10] so there are lots of options out there that are still important. you just need to be careful and I'd watch the data. So I watched the unemployment rate. the other thing that I think is [00:12:20] different this time.
[00:12:21] Alan: It's normally when you get inflation or when you get in, big interest rate hit third of the economy rents, so they're not really affected. A third of the economy [00:12:30] doesn't have a mortgage, so it's the third of the economy that has trouble. This time is different in the sense that the course of the immigration levels and some of the state government policies, [00:12:40] which have been Pretty awful. land taxes and things like that, it means that two thirds of the economy's in trouble. one of the things we used to see is we used to look at [00:12:50] the charities when I was in nab, where you bank the charities and you'd see new customers. people living in their cars charities paying the registration.
[00:12:59] Alan: Of [00:13:00] people living in their cars because if you don't pay the registration, cups come and get your car and
[00:13:05] Veronica: Oh wow.
[00:13:05] Alan: you see those sort of things and you just say, Hey, there's a lot of stress out [00:13:10] there, and people are now starting to get a bit nervous, because electricity price is going up again you know you need to.
[00:13:17] Alan: Understand some of the dynamics. So one of the things that people [00:13:20] talked about a lot, it was the last national account. They said, oh, consumption went up so that, you know, the consumers now starting to spend, that's wrong. 'cause what [00:13:30] happened is when you pay the subsidies, it doesn't count as consumer spending.
[00:13:35] Alan: It counts as public sector spending. And when you stop paying the [00:13:40] subsidies, consumption goes up.
[00:13:41] Veronica: Of course,
[00:13:41] Chris: Yep.
[00:13:42] Alan: the public spending goes down, you know, you need to look at the bigger picture. Now, I think the worst is probably past. but one of the [00:13:50] issues I have is a lot of the growth, and this feeds you into productivity as well, is basically coming out essentially with health education and the provision of public services, [00:14:00] which from productivity point of view, is all pretty low productivity stuff And so you, you have this issue that, the private sector is still not growing very much at all, [00:14:10] and the public sector's still contributing all the growth and they're contributing in areas where there's no productivity or very hard to measure it. then I look at the government and the government says, well, [00:14:20] what we're gonna do is we'll understand where productivity is.
[00:14:23] Alan: But they're not saying, I'm gonna cut back any spending. They're just gonna say, I'm gonna raise the extra revenue somehow smarter. That has [00:14:30] less impact and that is dumb. So one, one thing I would say to you on productivity, everyone out there normally says, oh, that's just means productivity is when you [00:14:40] sack people and get the same amount of output.
[00:14:42] Alan: Wrong. Productivity is the output you get out of three things, labor. Capital and technology.
[00:14:49] Alan: And [00:14:50] what you've gotta do is whatever amounts of those inputs you use, you want to get more out. So if I could be guaranteed that, adding more labor means I get better [00:15:00] use of capital and better technology, that's fine. there's a lot of sort of holes in what people talk about productivity. And the other thing is. Tell me any structural [00:15:10] change that's been really important in the last 10 years, and the answer is, I can't find any. And so why would productivity improve?
[00:15:16] Veronica: Yeah. Although a couple things though there, I'm curious [00:15:20] about. One is, a lot of our. Immigration has been these so-called students that aren't really students. They end up in, delivering Uber Eats and stuff like [00:15:30] that. And
[00:15:30] Veronica: that's pretty damaging for our productivity, isn't it? so that's one aspect.
[00:15:35] Veronica: But the other side of things, AI obviously, and, CBA, didn't they fame, they, [00:15:40] well, famously, a couple of weeks ago, psyched a whole bunch of people then un sacked them, didn't they? Because it's not good for the optics. But the reality is that, you know, there's gonna be a reshaping [00:15:50] around the use of AI and that's gonna make us more productive in some ways.
[00:15:54] Veronica: One of the, so sort of a bit of a long question. It's got a couple of tentacles. This one, one of the things I'm thinking about, there was [00:16:00] an article in the A FRA few weeks ago about the, basically we're gonna have a decimated. middle class because AI is gonna take all of the knowledge workers, jobs and whatever, and it's like, [00:16:10] is it really a good idea for big business to cut so many heads when if those people don't have jobs, they're not gonna be able to afford to buy the products and services that these big businesses offer?
[00:16:19] Veronica: And therefore we're [00:16:20] gonna have a, a real problem with being more efficient because we're gonna have tiny, a tiny customer base. So fundamentally, we've gotta keep people employed so that they can keep [00:16:30] buying stuff, right.
[00:16:30] Alan: Yep, that's right. Okay. A couple of comments. I really agree very much about the students and a lot of 'em are not coming here to get an education. They're coming here to [00:16:40] get a passport. And so if you want a really simple solution, oh, sorry. Wanna really simple illustration of that impact the number [00:16:50] three source.
[00:16:51] Alan: Of students into Australia is from, you'll never guess it.
[00:16:55] Veronica: Nepal.
[00:16:56] Alan: So I think it's 8% of all Nepalese students [00:17:00] are living in Australia.
[00:17:01] Alan: and, you know, they, they've gotta be old enough. so I have no problems with the idea of a faster growth of population provided [00:17:10] it's skilled,
[00:17:10] Veronica:
[00:17:10] Alan: not unskilled. then, the second thing you were talking about, sorry, remind me again in, in terms of.
[00:17:18] Veronica: really around the, the [00:17:20] erosion of the middle
[00:17:20] Alan: Oh, the erosion,ai.
[00:17:22] Veronica: And what will that do to at the, fundamental
[00:17:24] Alan: okay, so my
[00:17:25] Alan: problem, and maybe I'm just a certain age that I'm a skeptic. I think AI [00:17:30] has some really interesting things and you can see the AI being used to design new ads for the banks, et cetera, and [00:17:40] to sell to customers So that's fine. But it doesn't, this idea that AI will give you something. so you don't need [00:17:50] as many people to get that, but it will generate new jobs. In a different sort of thing. So if I go back to Cole Marx, industrial Revolutionary Army was basically [00:18:00] everybody got unemployed because technology was gonna basically, wipe out the middle class.
[00:18:05] Alan: And that's what they're saying. AI is, so I'm, I don't see [00:18:10] AI as necessarily being very helpful for an economist POS position. I see it being helpful for advertising and maybe [00:18:20] getting big institutions to. Focus better on their customers and figuring out what their customers are doing. Although, the banks have done that for ages and I think telcos and,frequent flyers and [00:18:30] all that sort of stuff have huge databases.
[00:18:32] Alan: so I think there will be some people who will never work again, won't be happy, but there'll [00:18:40] be other people that will have new jobs that we never heard of before.
[00:18:43] Veronica: How long will that take though?
[00:18:45] Alan: I don't think
[00:18:45] Alan: it's gonna take
[00:18:46] Alan: a lot. I don't think
[00:18:47] Veronica: be pretty quick?
[00:18:49] Alan: I, [00:18:50] well, I think there's a lot of change already happened, and I'm still seeing a labor market with four in front of it.
[00:18:56] Veronica: yeah. Fair enough.
[00:18:57] Alan: So when, when I see the labor market with a six or [00:19:00] eight in front of it,
[00:19:00] Alan: that's a different issue.
[00:19:01] Veronica:
[00:19:01] Alan: But
[00:19:02] Chris: a gradual
[00:19:02] Alan: think AA AI has really good things for some areas of the population, but I don't think it's gonna [00:19:10] change the labor market that radically. So I don't believe in the industrial, army that Mark's talked about, it hasn't ever happened,
[00:19:17] Chris: Yep. I mean, you have had the access [00:19:20] to amazing data. I mean, I think about. Like you said, um, you know, Glen Stevens Yeah. That business service. But you know, you didn't have to just have two, you have lots of data in your [00:19:30] role and you know when it's real time and you've got access to, you know, millions of customers, millions of Australians, income expenses, billions.
[00:19:38] Chris: What are some of the things that, [00:19:40] you know, your competitive advantage if you put yourself in a room of the top 10 economists Right? around the country. What were some of the things that your data That you were having access to that a lot of other people [00:19:50] didn't, and it gave you a different view, than a lot of the other people in the room because they just
[00:19:54] Alan: Yeah. Because we,we could see what consumers were doing. we could see real life what they were doing. [00:20:00] And so if you're saying, oh, the world's about to end, inflation's gonna go through the roof. You've gotta increase rates by huge amounts, as in a few people dead. you sit there and you say, [00:20:10] well, that's not the date what the data's telling us. And sure it may be next month and you'll need to look at it again. But each time you look at it, you see something [00:20:20] that says, nah, this is not killing the economy. and so therefore you reposition and you know, some economists unfortunately like to get a headline. [00:20:30] And so if you can be counter, if you are in a big institution, it's a bit more tricky ' cause what tends to happen. You have dealing rooms, but in particular you have [00:20:40] essentially where the bank puts it money and you can't be swinging it around each month according to a different number because you'll generate huge losses for the bank or huge gains for the bank. so what [00:20:50] we sort of do is we get information like, here's pe.
[00:20:53] Alan: We see people going to cash converters and that sort of stuff, cashing their stuff in and we [00:21:00] see, From some of our, or some of the sentiment surveys, people saying, life is not worth living. And, I've got mental health issues and all [00:21:10] that sort of stuff. And it's tough. But you know, I look back and I say, okay, if I'm looking at it, I'm seeing a consumer that's still struggling, but maybe the worst is beyond I'm [00:21:20] seeing an unemployment that's still pretty good. and. I can see nothing in business investment, but I can see a lot of public sector investments, so we'll probably [00:21:30] keep seeing inflation under control. so I would not be surprised to see a trim mean when they get the full quarterly numbers like 0.7, 0.8 and two and a half, [00:21:40] 2.6, 2.7, that sort of story.
[00:21:42] Alan: And so I think you'll still get a couple more rate cuts, and that will help. I look at Australia and I sort of say, well, [00:21:50] we didn't get damaged anywhere near as much as other countries with COVID. Okay. We all got locked up, but particularly in Melbourne. which is a different story, but we are still [00:22:00] in what Ken Henry used to talk about the Asian century. We have, believe it or not, quite a good education system. We don't count at [00:22:10] all in the corruption sort of things of politics. We have a legal system that's really good and we're focused on Asia, and we're coming out with a low. Unemployment [00:22:20] rate financial institutions in a touch wood, pretty good position.
[00:22:24] Alan: if you could get productivity up, that'd be even better, but generally I would say that, let's assume that [00:22:30] my sort of forecast and the government's general forecast, they're saying, maybe 2%. Increase in GDP next year, maybe four and a half for unemployment inflation back in the target [00:22:40] range.
[00:22:40] Alan: Our debt, despite what everyone thinks, is relatively low as a percent of GDP, so they talk about, oh, a trillion dollars debt coming up, and this is awful. Well, the economy [00:22:50] generates a trillion dollars, actually nearly 2 trillion each year. it is, in the old days they used to say someone's got a million dollars on their credit card, but yeah, but they've got $10 [00:23:00] million of assets
[00:23:01] Veronica: Yep. Yep.
[00:23:02] Alan: and that's roughly where the Australian consumer is.
[00:23:04] Alan: you look at that if you are outside. That's a pretty good environment. Not many [00:23:10] countries around the world are gonna be like that. it'd be good if we could have the politicians do something that would help the economy run better and not spend huge amounts of money on health education [00:23:20] and in public services, but.
[00:23:22] Alan: That's a choice. But even with that choice, I'd still say, we will have good fiscal policy. We've got inflation back in the [00:23:30] target. We're gonna grow it around trend, and our unemployment rate's really low and we're cash to Asia.
[00:23:34] Veronica: It's interesting
[00:23:36] Alan: really good.
[00:23:36] Veronica: I'm on a personal mission to help more people make better property [00:23:40] decisions. You know, most people don't realize that they can cost themselves hundreds of thousands of dollars over the medium to long term when they make property decisions without all of the information that [00:23:50] they need. And what I do is help people with tricky real estate problems, which offer masqueraders simple questions like, should I sell my investment property because the interest re payments are hurting, [00:24:00] or should I buy before I sell?
[00:24:02] Speaker 2: Or the other way around. You could connect with me and access all of the tools that I've created to help you make better property decisions at Veronica Morgan [00:24:10] dot com au. And there you'll find resources for first home buyers, details about my buyer's agent mentoring program. You could connect with my Sydney based property management and buyer's agency [00:24:20] teams, Australia wide vendor advocacy.
[00:24:22] Speaker 2: Or ask me for introduction to the small group of buyer agents that I would personally recommend across the country. That's Veronica Morgan [00:24:30] dot com au. If you're considering a property move, which is buying your first time, upgrading, renovating, or investing, the team here at Alcove would love to help you think through your decision and get the [00:24:40] finance right.
[00:24:41] Speaker 3: Please go to cove.com au to reach out.
[00:24:44] Veronica: you are pitching it in context to say, actually we're not in bad shape, and
[00:24:48] Veronica: yet the [00:24:50] headlines are not that way. And people talk about all these doom and gloom and the cost of living crisis. It's, it, this is something that's interesting. I was having a chat with some friends the other night.
[00:24:59] Veronica: We, [00:25:00] and the question was, are we really in a cost of living crisis or have our expectations just continue to rise and we're just struggling to afford all the things that we got used to [00:25:10] buying?
[00:25:10] Alan: to me it's the
[00:25:11] Alan: latter
[00:25:11] Alan: and it is a problem in the
[00:25:12] Alan: sense that, in some areas construction costs, for example, they used to go, well, they used to go two or three and then they [00:25:20] went to seven or eight. They haven't gone backwards. They're now going at two or three
[00:25:23] Veronica:
[00:25:23] Alan: on top of that, seven or eight.
[00:25:25] Alan: So it's bloody expensive to buy a property.
[00:25:27] Veronica: Yep.
[00:25:28] Alan: and people struggle even with [00:25:30] low interest rates, they
[00:25:31] Alan: struggle.
[00:25:31] Alan: and you see the stress, as I say, at the bottom end of the income distribution and the top end will, we're still going overseas.
[00:25:38] Veronica: I mean, we've always seen stress at the [00:25:40] bottom end of the distribution though, haven't we? I mean that, that's normal. It may not be great, but it's normal and
[00:25:46] Alan: Not as bad
[00:25:47] Chris: as what we've had at the bottom end of the income [00:25:50] distribution, in the last five years. Is that due to the, the rental crisis and the,
[00:25:55] Alan: I think the rental crisis is really important and,
[00:25:57] Alan: state governments, or I'll use the one [00:26:00] that I'm, I live in, right? State governments are saying right during COVID, I'm, you gotta go to vcat.
[00:26:06] Alan: And so if you own a house, and you've got a bad tenant, you can't [00:26:10] get 'em out. you return, they, they put a. a land tax on that basically means in some places you're not making any return. So why would you bother trying to rent? So you [00:26:20] sell to get out,
[00:26:21] Alan: and when you, you don't care whether someone gets A new rental or whether someone's coming, living here and in some areas where the land tax, so let's say you're down in [00:26:30] Portsea, places like that in Melbourne. So that's like the, I suppose in, in Sydney it's like the Northern
[00:26:35] Chris: know it.
[00:26:35] Veronica: Beaches. Yeah.
[00:26:36] Alan: Northern beaches. Okay. So what happens is that people [00:26:40] die, kids get the house, which is worth, a couple of million.
[00:26:42] Alan: but they get a $60,000 a year land tax. So you go down to Portsea at present and the Northern Beaches, I'm not sure, but [00:26:50] certainly in Portsea where I know, half the places are for sale
[00:26:53] Chris: Yeah.
[00:26:53] Alan: all that does is just cause stress
[00:26:56] Alan: it actually lowers the amount of supply of rental [00:27:00] properties, which is the complete reverse of what people want.
[00:27:02] Chris: at a
[00:27:02] Veronica: what it actually does as well. Right. So that's,
[00:27:05] Alan: Yeah. Migration is
[00:27:06] Chris: and the migration plus the pent up of the lack of building due to the [00:27:10] cost to build and the lack of investors buying new stock because they're buying regional houses rather than in the cities.
[00:27:16] Chris: And so it's just Perfect storm where you've, and then you've seen rents have gone up [00:27:20] dramatically, and then if you can't afford it and you can't get a place, then it pushes it all down to the people who have, at the bottom 20%. Unfortunately,
[00:27:26] Alan: They're, and they're, they're, they're in a disastrous situation. And you see that [00:27:30] in terms of the way charities are talking.
[00:27:32] Chris: And if you're banking a few of the charities, that helps as well, because then they tell you the truth.
[00:27:36] Veronica: There is a shift though. I mean, certainly when you look at [00:27:40] Victorians, I've spoken to a number of Melburnians who have been selling up their properties because of all of that. Interestingly enough, they, there's a lot of, invest new, a new generation, if you wanna call it [00:27:50] investors who's swarming in there from Sydney,
[00:27:52] Alan: Yeah, they're saying they, they're coming to Sydney now,
[00:27:55] Veronica: But they're buying, but they're buying different properties. They're not necessarily [00:28:00] buying the stock that was sold by an investor. they're not gonna buy the house in Portsea, they're not gonna buy a family home. Even they're gonna buy something,relatively cheap. so therefore the, [00:28:10] distribution, if you like, of available properties for rent does significantly change.
[00:28:14] Alan: Yes, that's right. That's right.
[00:28:16] Veronica: what you take on the economy in Victoria too. I mean, you know, look, as
[00:28:19] Alan: it,[00:28:20]
[00:28:20] Veronica: burners are pretty negative about it. So what's your thoughts?
[00:28:22] Alan: When you look at, okay, so I, I won't say my take our business survey and the unemployment rates [00:28:30] and house prices, Victoria's been for the couple of years, the worst.
[00:28:33] Alan: It's getting slightly better now, but it's still, it or Adelaide are the two [00:28:40] worst. new South Wales is Better. The best is, certainly Queensland. And the one that no one talks about is it used to be Western Australia, but that's come down [00:28:50] a long way because of mining. So it's mixed. And Victoria's still not good, if I can put it that way.
[00:28:57] Chris: Alan, the, uh, I think you're retired now, but you've probably got [00:29:00] friends at the banks and you've probably got, uh. Still conflicts of interest, but I, it's a bit selfish this question. I mean, How do the banks think about residential property and mortgages? Like obviously we've [00:29:10] got a huge portion of our wealth as a country is in the property market, a huge portion of the bank's assets and their, profits and their future profits come through lending growth.
[00:29:19] Alan: the banking system's such [00:29:20] a big part of our economy. how does this property Ponzi sort of mindset within the bank, how do they view,We don't think it is a Ponzi screen, I'll tell you.
[00:29:29] Chris: [00:29:30] Yeah.
[00:29:30] Alan: let me start then by giving you a few statistics, which you probably won't believe. you're looking at a balance sheet of the average consumer, and so average you have to be really [00:29:40] careful because it sort of distorted at the top, at the bottom. Debts in the mortgage area, are around about [00:29:50] about 2 trillion.
[00:29:51] Alan: Anyone have like to have a guess at what the actual assets
[00:29:55] Chris: Yeah. 11.
[00:29:57] Veronica: Point right. Nearly 12 I think it
[00:29:59] Chris: Yeah. [00:30:00] 12. Yeah. It's jumped heaps in the last couple of years. yeah. been going up a billion a month for about the last 18 And, and so it's a balance sheet that as long as you
[00:30:08] Alan: can. [00:30:10] temporarily as long as you've got a job,
[00:30:12] Veronica:
[00:30:12] Alan: then it's not gonna fall over.
[00:30:13] Veronica: I used to go to New York all the
[00:30:14] Alan: time and they say, oh, they'll give you the keys back and blah, blah, blah.
[00:30:18] Alan: And my answer is, yeah, but [00:30:20] unlike the US where that's all you can get back in Australia, we, the banks will come and get everything you got.
[00:30:26] Alan: And so they don't want a default.
[00:30:28] Chris: No, no wife.
[00:30:29] Alan: back in the [00:30:30] days, not in nab,
[00:30:30] Alan: one of the sort of things was the philosophy that people just don't understand in the states, and this is a bit crude and awful, but they say as typical [00:30:40] Australian will starve their kids before they default on their mortgage. And so they all do everything they possibly can.
[00:30:45] Chris: prices over the long period of time as being a good investment. So they [00:30:50] don't want to basically sell out cheaply to the banks. so to me, the mortgage industry is such that margins are very fine. and so everybody now wants to [00:31:00] come and get nab, which has got business bank.
[00:31:02] Alan: bigger margins
[00:31:03] Chris: yeah. Yeah.
[00:31:05] Alan: and you know that's what you do.
[00:31:07] Chris: Yes.
[00:31:07] Alan: You don't have to be Einstein to figure out [00:31:10] that sort of issue that you can't get your return on capital in the mortgage book, and you can easily get it in the business book. You go and do more business banking.
[00:31:18] Chris: as an economist, I mean, [00:31:20] it's one of the arguments around, anti property and putting a, rather than a bank view, right? Like a, an independent view. Looking at the Australian economy, have we, pigeonholed ourselves as an economy, right? Like. [00:31:30] We've put people into, property.
[00:31:32] Chris: It's such a huge part of their wealth and it's tied up. And then they're also taking out big mortgages, which stops innovation and [00:31:40] entrepreneurism and, how do you sort of think about the system we've built is that one of the reason we're not as productivity as we should be
[00:31:45] Alan: No, no, the productivity issue in Australia is something that's occurred in the last 10[00:31:50]
[00:31:50] Chris: Okay.
[00:31:50] Alan: or hasn't occurred. Okay. So in the 80 or the nineties and the two thousands, when you had Keating and Hawke, then you had technology. The [00:32:00] average productivity in Australia was two to 3%.
[00:32:02] Alan: Today it's 1%, and today it's below the OECD average, and I haven't seen that for 40 years.
[00:32:09] Alan: Okay, so this [00:32:10] is very different. This is not a mortgage thing, so if there was a big problem with mortgages hurting our productivity, it should have done it for the last 40 years, and it did [00:32:20] not.
[00:32:20] Chris: is it us? Are we lazy? Or
[00:32:22] Alan: I think one of the problems is that you've switched into the public sector, so most of your growth is coming out of areas where you [00:32:30] can't probably measure productivity very well, and so you typically don't get, so, you know, what's the services that's coming out of it?
[00:32:37] Alan: How do you,
[00:32:38] Veronica:
[00:32:38] Alan: in DIS [00:32:40] really difficult? All you can do is you count the number of people so that the best productivity you can get is one. And if that's all your growth, then you've got a problem. And you know the real problem in [00:32:50] some ways is think okay, let's say wages grow at 4% and you've got productivity of one.
[00:32:54] Alan: That means inflation's gonna be three in the long run. If it was one and a half, inflation's, two and a [00:33:00] half. So therefore you can push interest rates a little bit lower, grow the economy a bit faster, and still be okay. So that's why you need productivity and you go back to productivity. [00:33:10] If I go on, I have to do a 10 year forecast.
[00:33:13] Alan: For some silly reason, I tell everybody it's always three. But there's three things that matter. [00:33:20] Population growth, participation rate, and productivity.
[00:33:23] Chris: And if, the three things that matter.
[00:33:24] Veronica: measurements
[00:33:25] Alan: growth is probably gonna come down the power
[00:33:27] Alan: rates at the top. So unless you get [00:33:30] productivity going up, your growth rate's gonna be slower and slower as you go forward.
[00:33:34] Alan: Otherwise, it'll blow up in inflation. that's the way you should think about it.
[00:33:37] Chris: So if we were,
[00:33:38] Alan: few people do.
[00:33:39] Chris: if the [00:33:40] goal is to get this productivity upright, you know, and I think you're not the only one who says that, right? Like in terms of the, it's a major issue. if Albo called you up and said, look, you know, take over, and you had
[00:33:49] Alan: [00:33:50] won't, but that's all
[00:33:50] Chris: Yeah, yeah. No, that's all right.
[00:33:51] Chris: Um, I I'm sure, sure he likes his position, but, um,
[00:33:53] Alan: so what, what are the three things? I would, I would do, number one, I would try and get the, uh, growth [00:34:00] in,
[00:34:00] Chris: expenditure to a limit. I would then look at things like, how do I fund that more effectively? Well, I like the idea of him going off to do some. [00:34:10] Cutting red tape, although you never see any sort of response, I really
[00:34:13] Alan: would like to see an increase in.
[00:34:16] Alan: Yeah, I'll get into trouble. GST and you offset it [00:34:20] by what Howard did is you basically lower the income tax,
[00:34:24] Chris: particularly at the bottom end. And then the other thing that I think is really important, well, a couple of other things, but one of the [00:34:30] things that I think is very important is to index the tax scales.
[00:34:34] Veronica: Okay. And so that'll get you into, that you won't get bracket creep. And then the [00:34:40] politicians make themselves on either side, a hero just before the election, where they'll give you back what you've already given them And also, when you get into negative gearing, I don't have a problem with [00:34:50] negative gearing because that's right through the system. And so if, if a businessman invests in a new piece of plant equipment, he can write that off. But the issue was that, they couldn't figure [00:35:00] out how to index for the capital
[00:35:02] Veronica: gains.
[00:35:02] Veronica: Yeah.
[00:35:03] Alan: Okay. So they did the 50% building, you. Houses, which helps the sort of housing [00:35:10] shortage.
[00:35:10] Alan: You should maybe do 70, at the existing you do 30.
[00:35:13] Veronica:
[00:35:13] Alan: average it doesn't hurt.
[00:35:14] Chris: Yeah. 'cause yeah, I can see that.
[00:35:16] Alan: one that I think is important is, what [00:35:20] they call, investing to rent. So basically what happens is, As a developer, you basically go away and you, build all the apartments, but you don't actually sell [00:35:30] 'em
[00:35:30] Veronica: A build to
[00:35:30] Alan: sell 'em to the, to rent and you get an income
[00:35:33] Alan: stream out of it. And to give you some rough ideas. I've seen numbers that said in Australia that's five or 10% of the [00:35:40] supply. in America it's like 30, so that would help a little bit as well,
[00:35:44] Chris: So massively fund the build to rent sector, cut income taxes, put a indexation on, income [00:35:50] tax, particularly cut income taxes for the younger or no, the, lower, incomes. 'cause they're more likely to spend it rather than bank it and put in their offset account. which will encourage the economy to [00:36:00] get moving.
[00:36:00] Chris: first two points are around their cutting, their spending and maybe expand on that
[00:36:04] Alan: one of the problems is the indirect effects that so on for, so example, when you talk [00:36:10] privately to big building firms, they say, well, the cost of cement and the cost of all these inputs hasn't come down. in Melbourne, I can get tradies now, which I haven't been able to get. I [00:36:20] still can't get 'em in Brisbane and in Sydney it's iffy, but I can't make any money because I'm paying the price of the cement and the input.
[00:36:27] Alan: And so therefore I ain't gonna [00:36:30] build them 'cause I won't make any money. and it's also part of the reasons why, the government's got a, I think, a good idea to try and build more houses, but they need the private sector to help 'em, and the private sector's not gonna go [00:36:40] in there and not, and make a loss out of that.
[00:36:42] Alan: They're just not gonna do it.
[00:36:44] Veronica: Well, the New South Wales government is just come out, the Mins government has come out with a, an
[00:36:48] Veronica: initiative, well, it's a [00:36:50] guarantee. It's basically if they don't get their pre-sales, they're gonna guarantee the pre-sales and, supposedly help funding,
[00:36:55] Alan: How are they gonna fund that?
[00:36:56] Veronica: to get these out of the
[00:36:57] Alan: gonna fund that?
[00:36:59] Veronica: [00:37:00] Well,
[00:37:00] Veronica: I think what. I think what's quite interesting too, that if you look at statistics, the proportion of resales of brand new apartments sell at a loss is very high, particularly in [00:37:10] Melbourne. and so it always interests me that governments are gonna, guarantee those. and even with the 5% guarantee and the government's paying the LMI or effectively being the lender's mortgage insurer, [00:37:20] and I'm like, have they not aware that they're now gonna be,
[00:37:23] Veronica: Potentially,
[00:37:24] Alan: that, that's,
[00:37:25] Alan: well that just means their debt goes up
[00:37:27] Alan: even more.
[00:37:28] Veronica: oh, that's it. It's a very risky [00:37:30] investment.
[00:37:30] Alan: you know that.
[00:37:30] Veronica: helping buildings get
[00:37:31] Veronica: out the ground supposedly.
[00:37:32] Chris: Alan.
[00:37:33] Alan: there's a lot of those issues.
[00:37:34] Chris: I don't wanna bring up a, haven't give you any reactivated PTSD or anything, but when you're back in the, the COVID [00:37:40] days and the banks all came out, United on now 20, 30%. I don't dunno whether you're part of those articles, by the way, and there's predictions, but you know, that obviously you got very [00:37:50] concerned.
[00:37:50] Chris: You said it scared the health. yeah.
[00:37:53] Alan: I think the government, or certainly privately, the treasury and those guys, we all thought unemployment would get to 12 [00:38:00] to 15%.
[00:38:00] Veronica: Yeah.
[00:38:01] Alan: not only that, We will have huge amounts of bad debts. one of the things we learned in the 1990s is, as a bank, don't go and try and get your [00:38:10] money back first before everybody else gets theirs.
[00:38:12] Alan: 'cause all you do is it all just escalates down. so one of the, the, you know, if I feel I, I know Phil Low pretty [00:38:20] well,what he was really trying to say is, look, interest rates are really low. You can go out and borrow it. 'cause I'm gonna keep him really low for a really bloody long time.
[00:38:27] Veronica:
[00:38:27] Alan: That's what he was trying to say. He [00:38:30] stuffed it up. didn't come down well. to me, I look at that and I think, well, that's what they tried to do. and these days they won't do that again. [00:38:40] And so you can see Michelle Bullock never says anything. I, it's always difficult and I dunno what's gonna happen.
[00:38:45] Veronica:
[00:38:45] Alan: so she'll get away with it that way, But anyway, so I, I, still think Australia's not in a bad place, to be [00:38:50] honest. It is tough, I look at Canada. I really like Canada. A couple of years ago, went over to Western Canada. It was great, 80% of their exports go to the us.
[00:38:59] Chris: Yep.[00:39:00]
[00:39:00] Alan: That
[00:39:00] Veronica: They've also got, a real issue in the housing market. and I've only just dabbled on the edges of this and you probably are a lot more aware of it than I am, but
[00:39:07] Veronica: I've heard that they've got real issues with [00:39:10] affordability and
[00:39:11] Alan: Oh, so
[00:39:12] Veronica: similar issues
[00:39:13] Alan: I, one thing I should have said about the house
[00:39:14] Alan: price thing and people say, oh, it's, abnormal in Australia, if you actually look at the [00:39:20] coastal region right around the Pacific, any country, any city on the coast is bloody miles more expensive than the cities in the middle.
[00:39:28] Veronica:
[00:39:28] Alan: And so we look a [00:39:30] lot like Vancouver,
[00:39:32] Alan: or la or any of the sort of countries or cities that are on the, on the coast. So it's [00:39:40] Australia's not that unusual in terms of that.
[00:39:42] Veronica: So we don't have inland cities.
[00:39:44] Chris: Yeah.
[00:39:45] Veronica: Yeah.
[00:39:46] Veronica: that thing is quite fascinating though. I hadn't thought of that.
Start here again
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[00:39:48] Chris: Yeah. No, it's, and that's [00:39:50] something you can look at and,
[00:39:51] Alan: our debt levels, I'll give you another statistic that no one talks about and no one knows because none of the newspapers are interested.
[00:39:58] Alan: If I said to you the second [00:40:00] best country in terms of net debt, terms of the consumer
[00:40:04] Veronica: Mm.
[00:40:04] Alan: Australia after Japan,
[00:40:07] Alan: yep.
[00:40:07] Chris: Right.
[00:40:09] Veronica: You definitely [00:40:10] don't hear
[00:40:10] Alan: that two versus 12
[00:40:13] Chris: Yeah.
[00:40:14] Alan: before in terms of their assets. So that's net. Now just look at the gross,
[00:40:19] Chris: Yeah. Yeah.[00:40:20]
[00:40:20] Alan: the debt.
[00:40:20] Chris: there has been clients that, have struggled with the mortgage. They've gone to their families, their parents have helped, they're
[00:40:25] Alan: Oh, yeah, yeah, yeah,
[00:40:26] Chris: got.
[00:40:27] Chris: They've even sold down and downsized and got [00:40:30] outta markets. They've sold the investment property. People just haven't gone into the, the three months or late on their mortgage. 'cause like you said, they'll starve the kids before they'll do that. I think you made a great point [00:40:40] before,trying to predict 10 years ahead, just impossible.
[00:40:42] Chris: ' 'cause I got kind of taught a lesson in early days in financial advice back in 20 2007. I became an advisor in 2008, happened in 2009 Then, then [00:40:50] there was this European debt crisis. Trump and Greeks going, Greece is going out. And I was just like, oh my God. Like every year you just get like knocked around.
[00:40:58] Chris: But pre COVID, we did [00:41:00] get stuck in a bit of a, period of just declining interest rates and very low growth and, that then got shot up with all the overti, you know, stimulus [00:41:10] in COVID. do you think we're gonna head back to that world, Or do you think that that was.
[00:41:14] Chris: That structural imbalance that we had before was just this lower, you know, or we're gonna go back there.
[00:41:19] Alan: [00:41:20] I think one of the things that people also don't talk about is that after, 2007 and 2008 financial crisis, the banking [00:41:30] systems have become much more robust, and so there's not that big driver. I would go back to my three Ps. So I look at productivity, I [00:41:40] look at population, and then I look at,power rates.
[00:41:42] Alan: I can't see Australia growing much more than two, two and a half percent going forward. So we would once would've said, [00:41:50] that's garbage. but I think most people would say two max. and in Europe, the growth rate's normally one and a half
[00:41:58] Chris: so that leads to low, low [00:42:00] interest rates, right? To try to keep,
[00:42:01] Alan: Yeah. so you know, Trump can look around and say, oh, look at the ECB, their interest rate's 2%.
[00:42:07] Alan: Ours is five, or, you know, four [00:42:10] and a half, or whatever it is. I think I prefer to live in a country where my kids have got a job.
[00:42:16] Veronica:
[00:42:16] Alan: It's basically the bottom. So I lived in France for four years. when I [00:42:20] worked at the OECD, it was depressing. I arrived in 87, which was running into a recession, right?
[00:42:27] Alan: And it was Miran and [00:42:30] Shara, 10% unemployment. it did not get mentioned in during the election campaign.
[00:42:35] Alan: I don't want to live a country like that.
[00:42:37] Chris: yeah, I mean, I just, not, not to say personal story, but I think that's, [00:42:40] 2007 happened. I moved to London and then 2008, 2009, and that was like, there was a proper recession over there. I think unemployment went for like two or so million, people in the UK to [00:42:50] three, you know, like, it was a huge jump.
[00:42:52] Chris: Businesses were all shutting down and it was, coming
[00:42:55] Alan: Australia missed that?
[00:42:56] Chris: yeah. Missed it. Yeah, exactly. Everyone was like, very positive and I was like, oh. [00:43:00] That was not nice, what I saw over there.
[00:43:01] Alan: One thing to think about is that's where they had a lot of bank problems. And one of the lessons on history is if you have a recession that's [00:43:10] financial association, it's much deeper. So it, it sort of goes like a u it doesn't have a v. and if you want an example of that also, [00:43:20] and it works in Australia too, is when I was working at the OECD in Paris, I come back and I was the head of forecasting and modeling and they said, right, well, you can write [00:43:30] what went wrong. Obvious one was interest rates, but the question that we couldn't really answer at those times, why did Melbourne and particularly Adelaide have [00:43:40] such a bad recession and it hardly had a recession in Sydney, in, Queensland. Why, We had a couple of financial institutions that all fell over state [00:43:50] banks pyramid, which was a big building society, et cetera.
[00:43:54] Alan: and the state bank in South Australia fell over, et cetera, and it didn't happen. So in Australia, the reason we missed [00:44:00] 2007 was nobody thought one of our big banks were gonna fall over.
[00:44:03] Chris: Yeah.
[00:44:03] Veronica: Right. Interesting, isn't it?
[00:44:04] Chris: Alan, we do a segment, which you wouldn't be aware of. It's called A Property Dumbo. So it's just a [00:44:10] lighthearted and with a bit of a property story. It doesn't have to be, you a little story about a property, ideally property transaction or something.
[00:44:17] Chris: Just something we can laugh about and have a
[00:44:18] Veronica: a listen. We can learn [00:44:20] from.
[00:44:20] Chris: Yeah.
[00:44:20] Alan: Well, the one thing is probably not financial is I've just sold a house, tried to downsize, and I've had what they call [00:44:30] decluttering. as part of that process, we had a sort of an attic room in the roof, and we found boxes that we, packed up and had not unpacked in [00:44:40] 15 years.
[00:44:40] Veronica: That's fantastic.
[00:44:41] Alan: we are now moved from a six bedroom to a four bedroom, and
[00:44:45] Veronica: you have to unpack the boxes and
[00:44:47] Veronica: chuck the, chuck everything out.
[00:44:48] Alan: Yeah.
[00:44:49] Alan: we're just [00:44:50] throwing the boxes out.
[00:44:50] Alan: We didn't even look.
[00:44:51] Veronica: Didn't even look good on you. That is a very common, thing that we hear, particularly with people upgrading and they just don't actually upsizing and they don't
[00:44:58] Veronica: cull. I've done it [00:45:00] myself, had that same problem. then you downsize and, oops.
[00:45:04] Alan:
[00:45:04] Veronica: I love that. I love that. And so you downsize, you're saying off air that you downsize from a six bedroom to a four bedroom, so that's a
[00:45:09] Veronica: [00:45:10] very interesting downsize.
[00:45:11] Veronica: You think there's another downsize in you, Alan, in the
[00:45:13] Alan: not. I,
[00:45:14] Alan: I can't declutter anymore. We've gone through about four or five.
[00:45:17] Alan: of decluttering and then we got [00:45:20] quote the stylist in and the first thing they did is throw out about half of the other stuff
[00:45:25] Veronica: That's
[00:45:25] Alan: we'd had.
[00:45:26] Veronica: That's very helpful. That's
[00:45:28] Veronica: fantastic.
[00:45:28] Veronica: this has been a [00:45:30] great chat. We really appreciated your time. Um, you know, your experience and, and some of those insights and the things that aren't normally talked about is perfect
[00:45:38] Veronica: 'cause that's exactly what the elephant in the room is all about.
[00:45:39] Veronica: So [00:45:40] thank you so
[00:45:40] Veronica: much for your time,
[00:45:41] Veronica: Alan.
[00:45:41] Alan: Thank you. It was a pleasure.
[00:45:42] Speaker 7: If you have a question that you'd like us to answer in an upcoming q and a episode, you can send us a voicemail or written question via the [00:45:50] website. The elephant in the room.com au. Or you can email us directly at questions at the elephant in the room.com
[00:45:58] Speaker 7: au.
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