 Let's talk French politics. Mark Bailey from Fixed Securities joins me now live. Mark, great to have you on board this morning. 39 years old, never been elected to office before, started his own party less than a year ago. What a victory. Yeah, good morning, James. I mean, I think it's going to certainly calm the the market's nerves. I mean, even though it's widely expected, I guess, you know, there's been a few nerves given the Brexit and Trump results as well. So, you know, I think you have seen a bit of a rally in the Euro, although that was largely priced in and you've seen a bit of a pullback since then. But I think, you know, in terms of Euro, that will certainly calm the nerves for the broader European Union organisation and also for the currency. There's also good election results as well in Germany for Merkel in some of the state elections there. So again, Tim's to be solidifying her position ahead of elections in Germany, state national elections later this year, and then probably all eyes that will then fall on Italy as well. So, you know, there's still a lot of political uncertainty that continues around the Eurozone. And I think the most of the focus will be on those elections, which don't have to be called in Italy until May 2018. You've seen Matteo Renzi being re-elected as leader of his Democratic Party, but he still trails marginally to the five star party in the polls there in Italy. And so he's got a bit of work to do there. But, you know, I think that's going to be the biggest concern given the amount of debt that the government has in Italy and whether it can kind of generate the growth that's needed to continue to make that debt sustainable. We went into calendar 2017 with a lot of concern over Europe, in particular politics and this big anti-Euro movement that we're seeing from many of the parties, the gaining in the opinion polls. Do markets take much heart from this French election, from those early sort of German local elections that perhaps there is a prevailing pro-Europe win sweeping through? Look, I think it's at this stage, I think it certainly is going to be taken as a positive longer term. I think you're still going to see those anti-establishment parties, the anti-Euro parties still continuing to do well. You know, I don't think Greece is particularly solved, you know, there's still that debate between the IMF and the European Union, how to solve Greece's debt problem and how to make that debt sustainable. So I think you're still going to see those types of parties, you know, gain ground in elections and people are just kind of generally globally fed up with the established political parties and the fact that nothing ever seems to get done. Yeah, in terms of things not getting done, let's talk about the French economy because it's been crying out for reform for absolutely decades now. Suggestions certainly from the early reports that Macron says he's going to take his time. Well, you know, do they have much time, France? One of the big issues that has led to this anti-establishment is the broken structure of their economy, particularly the, you know, we talk about a welfare state here in Australia, goodness me, go dip your toe in France, it's shocking. Yeah, and there's all the labour laws as well and, you know, the unions are still very strong. So, you know, I think, you know, part of the danger with Macron is that you'll get the euphoria. Yes, it's not the National Front, it's not Le Pen and, you know, will mean that France will be still very central to the European Union. Having said that, a bit like Trump, we don't really know what policies, if he has got any policies, I look, the indications are that it's going to be a lot more measured and a lot more mainstream and central than Trump's rhetoric in terms of the campaign that Macron ran. But in terms of the actual specifics, I think, you know, in terms of trying to, you know, turn over some of the established labour laws, it's going to be a hard push for Macron's party to get that through. But, you know, I think it's going to be in the right path. And I agree that, you know, France does need to kind of almost reinvigorate itself and try and drive growth through the economy. But again, we've got to remember that it is between a rock and a hard place in terms of, you know, the government debt. They're not able just to go out spending because they've got that cap from the Maastricht Treaty of 3%. And, you know, if it was that simple, then it would have been tried before. So, you know, again, you know, there's going to be euphoria and then, you know, there's going to be the realisation of the tough path ahead. And then probably some disillusionment as well along the way, because, you know, probably won't have achieved everything that people had hoped. It's just finally on the state of the economy. It's a funny old thing. Everybody over there for generations had known that there needs to be reform, but no one wants to be that generation that misses out on some of the extraordinary benefits that they receive. Yeah, it's a difficult situation. As we've seen, you know, across Europe and, you know, Greece in particular, which has shown the light on some of the welfare issues and the handouts that retirees do get, for example, and it is difficult to change that mentality. And as you rightly say, no political party wants to put their hand up and say, yeah, we're going to reform that, even though it is probably for the generic good of the country because it's politically unpopular. And we've seen that time and time again in various countries on very key issues. I mean, look no further than our own shores and the GST debate. You know, anybody from offshore would say that is the simplest solution to trying to solve our issues in Australia, increase GST, lower corporate tax, lower business tax, but no political party is willing to make the difficult decisions. And that is unfortunately, it seems to be the state of politics globally at the moment. Well, let's let's talk about tomorrow's budget and I suppose expectations around it. I suppose from the viewpoint of the market, but in particular mark the viewpoint of the ratings agency. What do you think they're going to need to see? I mean, we talk about this this credible plan to surplus mean what does that mean in their eyes to maintain the AAA for Australia? Yeah, well, I think in terms of the rating agencies and what they see and where they see Australia's AAA rating being maintained. So they've essentially signed off on the previous budget that had a deficit, I think of around about 29 billion Aussie and this this one that looks like it's going to be put forward is going to be around a deficit of 25 billion. So there's going to be a slight improvement there. So you would naturally assume that Australia would maintain its AAA rating. My view is that I think it's it's not necessary to maintain the AAA rating. And if we get downgraded to double A plus, you know, it's not a big deal. Yes, it'll create headlines. But in terms of the actual funding of the nation and funding of the banks, it would be such a marginal increase that I don't think it would be material and certainly wouldn't be able to be held up as a real big issue. But Scott Morrison, for whatever reason, seems to have tied his budget to Australia maintaining the AAA rating. I think the budget that he will deliver will allow them to do so. I mean, obviously it's been boosted by higher commodity prices, which as we've seen in iron ore and other commodity complexes over the last couple of months have sold off fairly significantly. But I think in terms of the budget that he's going to propose, I think that's certainly going to be sufficient for the rating agencies to kind of come out and reaffirm that AAA outlook on Australia. And I mean, what do you think they want to see? And what does the market want to see? We've heard in the past that we have a spending problem, you know, the idea of not spending more than you're making. But we've continued to see debt as a proportionate GDP increase, those spending levels increase. They talk about savings, but there's still banking savings that have yet to actually get through Parliament, in particular the Senate. So it's one thing to say. It's certainly another thing to actually demonstrate it in practice. Yeah. And again, you know, that's the kind of the problem with the system that we have, you know, it's very difficult for the elected government to get it through the elected Senate, given that they don't control that. So, you know, the policies that they want to push through just don't get implemented. So in terms of Australia and its spending and revenue targets, you know, I think that they are obviously going to be still pretty tough to achieve. You know, the states are obviously still arguing over the split of the GST. And there's a lot of banks. I just got back from Perth last week. And, you know, all the conversations revolve around the GST and the lack of GST that actually finds its way back into Western Australia. So that's going to be a political hot point for the government, you know, when it delivers the budget and see whether they can address that issue. But I think, you know, the simplest solution is to increase GST and reduce personal and corporate taxes. That seems to be the solution that's proposed broadly. But whether it's not even on the, seems to be on the table in terms of Scott Morrison's budget. And I think that's the easiest solution. If you look at all the other countries in the world and most of all the countries in the world, they've got higher GST or value added tax or sales tax or whatever you want to call it and lower personal tax. And I think that's the simplest way to try and stimulate entrepreneurialism in terms of individuals and companies because they're getting more, you know, dollars into their into their wallets at the end of the day. And also it does reduce that black market economy. You know, that GST does capture all the all the cash that goes into into people's hands. Yeah, absolutely. The budget, of course, will release tomorrow. I won't be holding my breath for that tax reform. Mark, appreciate your time this morning. Thanks, James. Have a good day. Mark Bailey there from Fixed Security. It's just some breaking news