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The Guardian
a day ago
- Business
- The Guardian
Take a deep dive into the inflation numbers and the RBA's decision not to cut rates seems inexplicable
The latest inflation figures confirm that the Reserve Bank wrongly kept interest rates steady at its meeting earlier this month as the official measure of inflation fell to 2.1%, while the monthly indicator dropped outside the RBA target band at 1.9%. The one thing you won't hear from the Reserve Bank after the release of the June quarter inflation figures is an apology. Because, to give credit to the RBA, in its May statement on monetary policy, it predicted inflation of 2.1%. That it did predict this inflation and yet still kept interest rates steady tells you something about how punishingly timid it has been. In June, not only was the official CPI at 2.1%, meaning it has now been below 3% for a year, but the core measure of inflation (the trimmed mean) fell from 2.9% to 2.7%: If the graph does not display click here Even more astonishing is that in a majority of capital cities, inflation is now below 2% – yep, below the Reserve Bank's target range: If the graph does not display click here And if you want even more confirmation of just how low inflation is at the moment, the monthly measure of inflation – which in November will take over as the official measure once a few more items are added – rose just 1.9%: If the graph does not display click here All of this is very good news for those who were struggling with rising prices in 2022 and 2023. Sign up: AU Breaking News email It is less good news for the opposition. The shadow treasurer, Ted O'Brien took to the parliament on Monday and told the treasurer that 'inflation remains too high'. If that is the case then we need to change the English language as well as economics to redefine 'high'. Even when you compare our core inflation with those in other major economies, Australia is doing well. If the graph does not display click here Core inflation is the measure that the RBA mainly focuses on because it gives a less erratic view of what is happening. What it does is top and tail (or 'trim') the 15% biggest price rises and falls. This time around, that means, for example, the trimmed inflation measure does not include fuel or lamb prices which fell the most, and at the other end of the scale it mostly ignores the jump in secondary education cost and also electricity prices which jumped 8.1% this quarter. The reason electricity jumped was the end of state-based subsidies – especially in Western Australia and Queensland. If the graph does not display click here The Bureau of Statistics notes that without these subsidies electricity prices across Australia would have risen just 0.4% in the June quarter. But even still, electricity costs on average 14% less than it would without the subsidies. So you can bet the government will be very happy it extended its scheme: If the graph does not display click here That the RBA did not cut rates earlier this month is even more inexplicable when you dig deeper into the figures. The RBA always looks at the price increase of services rather than goods, because services are more closely linked with wages (because you need workers to do the services). In the year to June service prices rose just 3.3% – that is back at the level they rose in 2011 to 2014 – a period when the RBA cut interest rates eight times: If the graph does not display click here And the level of inflation is also very broad. The prices of about two-thirds of all items counted in the CPI basket rose less than 3% – that's a very solid level: If the graph does not display click here This of course does not mean all things are hunky dory and life is a sweet basket of chocolates and strawberries. Pleasingly the prices of non-discretionary items – those things we have to buy, such as food, petrol or insurance – are now rising the slowest, but there is still a lot of catching up to do after the past four years. Since June 2022, which was about the same time the RBA began lifting rates, wages have risen 14% – well behind the 22% increase in the price of those necessities. That makes for a lot of people still feeling worse off than they were then: If the graph does not display click here But overall, the story is very good. Inflation should no longer be such a concern that the RBA holds off on cutting rates until it gets more information. But unemployment is now rising above 4%; when you combine that with inflation falling close to 2% that equals an interest cut. And even though they won't, when they do cut in August, the RBA also should apologise for making everyone wait six weeks longer than they needed to. Greg Jericho is a Guardian columnist and policy director at the Centre for Future Work
ABC News
20-07-2025
- Business
- ABC News
Coalition willing to discuss further savings to NDIS
The Coalition says it stands ready to revisit NDIS spending for a second time, after the prime minister flagged further savings may be needed. Earlier this month, Prime Minister Anthony Albanese said his government "[would] always look for spending to produce better value", after he was asked whether he would revisit NDIS spending, which is projected to cost $64 billion a year by 2029. "We need to make sure that it is made more sustainable … the vision of the NDIS wasn't that those sort of numbers that you just quoted go on the system," he said. "But you've got to be responsible about how you do it and work through with the sector because it's very easy for vulnerable people to feel like their support is threatened. We don't want that." Asked this morning whether the Coalition was prepared to have a conversation with the government on further reforms to cut costs, Shadow Treasurer Ted O'Brien responded: "Yes, we would". "Let's see what the government brings forward. But it is absolutely key that they have to stop their spending spree," Mr O'Brien told Sky News. Last term, the government and opposition acknowledged that the cost of the NDIS was rising so quickly that it would rapidly become "unsustainable" without change. The major parties agreed to a suite of reforms designed to slow its growing expense from 13.8 per cent a year to 8 per cent by 2026. Those changes set stricter rules for what supports were available, how plans were managed, and laid the groundwork for a new scheme to be run by the states that could support some people with milder disability, who were joining the NDIS in the absence of more appropriate supports. The reforms are projected to save the budget $19.3 billion over four years. But while costs are falling, the latest data from the NDIS shows the scheme's expense is growing at a rate of 10.6 per cent a year — on track to reach the government's target, but still well above it. The federal budget is forecasted to remain in deficit for the next decade. Leaked Treasury advice to Treasurer Jim Chalmers, revealed by the ABC last week, warned that the budget cannot be fixed without raising taxes and cutting spending. And after securing a dominant majority in the parliament, Labor is turning its mind to how to restructure the budget and put it on a more sustainable trajectory. The treasurer has said he is prepared to lose some political skin to do so. "I am personally willing to grasp the nettle … I am prepared to do my bit," Mr Chalmers said in an address to the National Press Club last month. Speaking on Sky News, Mr O'Brien said all options should remain on the table for the coming productivity roundtable, where the issues of tax reform and fixing the budget will feature. Mr Albanese said the government was not considering a proposal to lift the goods and services tax in exchange for lowering income taxes — a move that would flatten how much tax individuals pay. Mr O'Brien warned the government against dismissing ideas out of hand. "The prime minister and the treasurer claimed to be open-minded on everything, but since then, we find out actually: 'We're open-minded, but we don't want to talk about industrial relations. We're open-minded on tax, but we don't want to talk about the GST.' And so my fear here is Labor might actually have an agenda already, and that this is nothing but a talk fest," he said. "[We support tax reform] if it's done holistically, if it's looking at more efficient taxation, if you're looking at fixing up what is currently a mess with Labor being overly reliant on income taxes."
Yahoo
20-07-2025
- Politics
- Yahoo
'Message of inspiration': state election buoys Liberals
Federal Liberals should take heart from Tasmania's election result, its deputy leader says, despite another hung parliament in the state looming. Liberal Premier Jeremy Rockcliff claimed victory at the election on Saturday, with his party securing 14 seats compared to Labor's nine. But both major parties have fallen short of the 18 needed for a majority, with negotiations set to begin on forming a minority government. Party members should be hopeful about the future of the federal division, despite its election wipeout in May, Deputy Liberal leader Ted O'Brien said. "There's clearly a difference between federal and state elections, but those who think the Liberal Party is on its knees and nearly dead, I think you can only just look at the Tasmanian election," he told Sky News on Sunday. "We are rebuilding, and so, if anything, it really should be a message of inspiration to Liberals right across the country. "Hopefully sanity will prevail. I don't think Tasmania deserves yet more uncertainty over the weeks ahead." Saturday's election was the fourth time in seven years voters in the state have headed to the polls. Former federal Liberal MPs who were defeated at May's federal election have been voted into the state's lower house, including Bridget Archer and Gavin Pearce. Tasmanian Liberal senator Jonathon Duniam said there were many reasons why the party did not perform at the federal election but had the largest vote share at the state poll just two months later. "We ran a bad (federal) campaign. We didn't run a campaign relevant to Tasmania. We weren't speaking to their issues," he told ABC's Insiders program. "Politics is local, and never has that been more true than in a place like Tasmania. They own their politicians, they own their issues. They want Tasmanian solutions." While Liberal and Labor parties in Tasmania were in negotiations with the crossbench to form minority government, Senator Duniam said there was not a conceivable path for Labor to get into power. "It would be an unimaginable disaster for there to be a Labor party that's gone backward in the polls to join up with the Greens and a range of crossbenchers who have all very disparate views about the future of our state," he said. "It would send us backward, and we'd be back at the polls in no time." Labor experienced its worst-ever result at a state election, receiving just 26 per cent of the primary vote. Labor frontbencher Michelle Rowland said time was needed to work out the results in the state. She said the result was likely Tasmanians backing the status quo. "There is something to be said about the desire for stability, I think, by all voters," she told Sky News. "This has a bit of a way to go in terms of the count and in terms of who may be in a position to form what looks like minority government."
Yahoo
20-07-2025
- Business
- Yahoo
More results needed from PM's China trip: Liberals
Voters should have expected more tangible outcomes from the prime minister's trip to China, the opposition says. But a senior government minister said the six-day visit by Anthony Albanese had helped to stabilise the relationship with Australia's largest trading partner. The prime minister landed in Australia on Friday after visiting Shanghai, Beijing and Chengdu during the official visit, which included a one-on-one meeting with Chinese President Xi Jinping. While Mr Albanese said the visit would strengthen ties between the two countries, deputy opposition leader Ted O'Brien said the trip should have been complemented with visits to nearby Asian allies. "When you have six days in a country, I think it is fair for the Australian people to expect more from it," he told Sky News on Sunday. "By spending six days there, not going to Japan, not going to South Korea, I think it has accentuated the problem we have with an imbalanced foreign policy." But Attorney-General Michelle Rowland said criticism of the prime ministerial visit was "extraordinary", given work was needed to be done to repair ties with China after trade sanctions on Australian exports were lifted. "China is our single biggest trading partner. Our resources sector relies on that relationship," she told Sky News. "We will always act in the national interest, and often we will disagree, but this is important from the perspective of our trade and of stabilising that relationship, which, quite frankly, had broken down." China imposed an estimated $20 billion worth of trade impediments against Australian products such as wine, lobster and beef following a breakdown in ties between the two countries at the start of the COVID pandemic. Access to the Chinese market has recently opened up to large numbers of exports. "This is about creating jobs and extra trade opportunities for Australia, and it's important that we maintain this vital relationship," Ms Rowland said. Mr O'Brien said while he was not criticising the prime minister for going overseas on the foreign visit, the outcomes did not meet expectations. "We are supportive of economic diplomacy. It's absolutely key, but Australia deserves nothing less than tangible outcomes, especially when you spend a week in country," he said.
Daily Mail
09-07-2025
- Business
- Daily Mail
EXCLUSIVE Uproar over Liberal Party figure's explosive tweets about mass immigration to Australia - as he suddenly DELETES them: 'Infinity'
An economist appointed to a key Liberal Party role has come under fire over old tweets saying the best level of mass immigration to Australia is 'infinity'. Author and academic Steven Hamilton was appointed as the new chief of staff and economic adviser to deputy Liberal leader and shadow treasurer Ted O'Brien this week. Insiders hoped Mr Hamilton - an assistant professor at George Washington University - would help the party rebuild its economic agenda following its historic defeat in May. But his suitability for the role has been called into question after a series of old tweets resurfaced in which he called for a radical boost to Australia's migrant intake. 'The optimal level of immigration is infinity', he wrote in 2023, in a tweet that has this week caught the ire of conservative activists. Migration Watch founder Jordan Knight said Mr Hamilton's appointment was a 'concerning choice'. 'Why would somebody want infinity immigration when Australians are suffering with record-high rent and house prices, clogged roads, and a standard of living in free-fall?' he told Daily Mail Australia. 'Is the Liberal Party switching back into a mass immigration party?' In a separate resurfaced tweet, Hamilton described immigration as a 'genius' concept, adding it could allow Australia to 'get fully functional people without that annoying child phase'. Another read: 'Fertility is a distraction. The key to a better Australia is a bigger Australia, and the key to that is migration. 'And because we disproportionately take working-age people, that's a convenient solution to population ageing, too. 'I'd love to see our government champion that.' Hamilton has also penned articles defending Australia's comparatively high migration rates as the answer to its shrinking population. 'Suffice it to say that migration-fuelled population growth raises GDP per capita, and with it our standard of living,' he wrote for the Sydney Morning Herald in 2023. 'Is it without cost? Of course not. 'But rather than pointing to these costs to justify yanking the handbrake, perhaps we should instead advocate for better policies to mitigate the negatives.' Hamilton, who has written columns for the Australian Financial Review, has been outspoken in his criticism of Labor Treasurer Jim Chalmers. In recent columns, Hamilton criticised Labor for what he sees as inflationary spending and a misguided disdain for the GST. He advocated strongly for income and company tax cuts, cuts to the National Disability Insurance Scheme, and putting an end to bracket creep. But Hamilton also slammed Coalition policy, including the nuclear policy his new boss spearheaded ahead of the last election. Mr Knight, who serves as a political adviser to Independent NSW MP Rod Roberts, said Mr Hamilton's beliefs contradicted those of mainstay Liberal party voters. 'The Liberal Party needs to make a choice: Are they on the side of Australians, the majority of whom want far less immigration, or will they listen to its advisers who want continued mass immigration?' The appointment comes as O'Brien said the Coalition would look to recruit policy talent as opposed to Labor's focus on political operatives. 'In contrast, the Coalition is focused on attracting the best policy brains and we'll be actively engaging with the business sector, which has been ignored by Labor over recent years,' he told the Financial Review. 'The agenda we take to the next election will be values-led, future-focused and economically driven. 'We'll be working hard every day to hold the government to account while formulating policies to build a future Australia that is prosperous, strong and fiercely independent.' Mr Hamilton said he was looking forward to returning home from the US for the role. 'I look forward to serving the Australian people by supporting an effective opposition,' he said.
