The global ratings agency Fitch has reaffirmed Australia’s triple-A credit rating – if you were wondering what those sounds were it was the whoop of joy from the Treasurer’s office and the stomping of tantruming feet from Super Ted, the shadow treasurer’s office.
Now ratings agencies don’t count for much – it basically means that Australia can borrow money at cheaper interest rates, because we have been judged as a good bet for returns/paying it back by ratings agencies. Think of it as a credit score, but one that gets you a press release and some crowing rights.
Jim Chalmers is pretty happy. From the release:
It shows that under the Albanese Government, Australia has one of the best budgets in the G20.
In its latest report, Fitch acknowledged the government’s efforts in paying down Liberal debt, praised the government’s focus on boosting productivity and outlined the private sector recovery that was under way in Australia’s economy.
“Consumption will continue driving the recovery on the back of a still strong labour market and a steady improvement in real household incomes resulting from lower inflation, tax cuts, and declining debt service payments,” Fitch said.
“The government appears focused on productivity reforms after its re-election in May 2025…
“Australia is likely to benefit from a larger role in critical mineral global supply chains, as signalled by its recent rare earths agreement with the US…”
Who is to blame? In energy, the answer is most likely always gas
Greg Jericho
Chief Economist
A report out today in the AFR suggests that “Australia’s biggest aluminium smelter, Tomago, has started a consultation process with employees on the plant’s potential closure”
The reason for the possible closure? Energy prices and especially that “its current electricity supply contract with AGL Energy expires at the end of 2028”.
Electricity is a massive cost of producing aluminium – it makes about 40% of the costs. It’s also part of the reason why aluminium smelting is a very big greenhouse gas emitting process.
But when it comes to the cost of electricity and all energy, the culprit is very much gas.
In Australia, as readers will no doubt know, we export about 80% of our gas. So, despite being roughly tied with the USA and Qatar as the biggest exporter of LNG we constantly have stories about a possible “gas shortage”. That in itself is bad enough, but since the opening of the Gladstone LNG terminal, the price of gas, and electricity, has been tied to the world price for gas. And the picture is clear – as Australia’s exports have gone up, so too has the cost of gas and electricity for manufacturers.
If we were to tax Australia’s gas exports – say at 25% – and also had a reservation policy, that would not only deliver greater revenue to the government it would provide Australia’s manufacturing industry (and households) with lower cost energy.
But instead, we are told we can’t restrict gas exports and that we need to get more gas (for export).
Serious piss taking by the gas industry, and unfortunately the government is letting them do it.
The terrible stories that continue to come out about childcare have a common thread. Abuse is more likely to occur in for-profit centres.
Long ago we worked out that education and profit shouldn’t mix. There is no profit motive driving school education in Australia. Private schools in Australia are not-for-profit. They are run by school boards that are supposed to be focused on providing the best education for their students.
How does the government keep the for-profit sector out of school education? A for-profit school is ineligible for government funding. We need to do the same for childcare.
Childcare has become big business. The biggest for-profit providers are worth hundreds of millions of dollars who pay their CEOs millions of dollars a year.
We need to take profit out of childcare.
The solution is for more state and not-for-profit centres.
We should look to the model we already have for primary schools. In almost every suburb there is a local government run primary school. The same could be true of childcare centres. Where practical, these childcare centres could be built at primary schools.
Parents should expect that when they send their kids to childcare that they are safe and receiving top quality education and care. This is not consistent with the profit motive.
The government is already spending billions of dollars on childcare. Let’s use that money to give them the best start in life.
You can read more on this in my Point article here.
Just before question time, Holly Rankin (who performs under the name Jack River), Kate Ceberano, Neralda Jacobs and Sam Hales will speak at a press conference with the co-chairs of the Parliamentary Friends of Aussie Music, Dr Sophie Scamps, Tom French and Melissa Price over what needs to happen now that the government has decided against AI companies being able to train their models on Australian content for free.
Catherine King is very excited – today the first jet will land at the Western Sydney (also known as the Nancy-Bird Walton) international airport, with the NSW Rural Fire Service 737 marking the milestone.
There will also be a multiagency emergency exercise held as part of the airport’s final tick off for public use.
Does the Labor–Liberal deal to change electoral laws really make things fairer?
Bill Browne
The Albanese Government has come in for criticism today as a Centre for Public Integrity report card marks them as failing on six of seven transparency measures. When asked about it on ABC Breakfast, Special Minister of State Don Farrell pointed to the changes he and the Liberals negotiated earlier this year:
“At the next election, all donations that are going to be made to any political must be fully disclosed. Previously, the amount was $17,000. So, we have significantly dropped that money. More importantly, those donations have to be disclosed before the election. So, every single donation above $5,000 has to be disclosed before the next election.”
The improvements to donation disclosures are the one bright spot in the electoral changes, which otherwise make it much harder for independents and new parties to challenge the incumbents.
It was all very comfy with the audience full of suits who know that they will never have to be one of those who will lose their job due to the RBA believing we need 4.5% or more of the labour force without a job so we have inflation below 3%.
She was asked about the current state of the economy, specifically the unemployment rate hitting 4.5%, which was above the RBA’s forecast peak for the next 2 years of 4.3%. She told the room
“Monthly numbers can be volatile. The jump up in the unemployment rate was a bit of a surprise. But monthly numbers can be volatile, and we do know sometimes that they jump up and then they jump back down again.”
She is right, it can be volatile, but it is clear the path the unemployment rate is on, so suggesting the 4.5% is just a blip is a bit off:
But after telling the audience that she and many central bankers around the world were confused why the markets were so “sanguine” given everything going on (which was code for Donald Trump) she then wheeled out her own sanguine views on unemployment.
She suggested “We always thought it would drift up a bit. Maybe it’s drifted up a bit further than we thought. But it’s not a huge amount out. So, I think we just have to wait for a bit more data.”
And then she tried to gee up the room by arguing “but let’s be positive, inflation is back in the band – it’s not down at the midpoint where we’re supposed to be aiming but it’s still in the band – and the unemployment rate is still pretty low compared to where it was pre-COVID so still think we’re in a pretty good position.”
And sure, compared to 2019 we’re are doing well. But in 2019 the RBA was cut rate 3 times down to 0.75% because all the talk was about a recession (people really do forget just how crap the economy was before the pandemic).
Later when asked by a journalist about unemployment she calmly replied that “there are still jobs being created, just not as many” Again, this is what happens when unemployment rises, so not sure why she thinks this is great, given the only time jobs actually fall is during a recession.
She then suggested that this rise in unemployment “is bringing the labour back more to balance” and that the RBA wants to “keep the unemployment rates as low as we can without fuelling inflation. How close are we to that? We think we’re close-ish but it’s very uncertain and so we have to be prepared to consider different possibilities and if we’re wrong on that we have to be prepared to change our mind and we would.”
Just what this means though is unlcear. Does she think the RBA is wrong that unemployment is too high or too low?
My gut feeling is that she thinks we could do with a bit more unemployment (even though she said the RBA “are not aiming for an unemployment rate”) because she kept saying that “our judgement is there is still a little bit of tightness in the labour market”. What does that mean? It means they think too many people are employed and it is causing wages to rise faster than the RBA wants.
She also suggested that she thinks the current cash rate is “still a little bit restrictive” which means that it is still slowing the economy and causing unemployment to rise.
All of which suggests the RBA is comfortable with unemployment continuing to rise and truly has no worries that we are well above 4% unemployment now.
The RBA never wanted unemployment of 4% or lower. It never considered that “full employment”. It has devoted all its might to ensuring the hope of establishing 4% as a ceiling of unemployment was absolutely dashed.
And they are very comfortable telling a room full of people comfortably employed that.
‘Don’t just chase the new shiny thing’ industry group warns business over AI
Australia’s largest accounting body, CPA Australia has taken the step of warning the finance and accounting sectors of not jumping to AI to replace junior staff, warning of the long term effects of over reliance on technology.
CPA Australia’s Business Investment and International Lead, Gavan Ord, said businesses should strike “an appropriate balance between technology and talent to maximise the value they get from their investments, without losing equally valuable human skills”.
It’s the latest warning as the unregulated sector of AI continues to change how we live and work.
Ord said there was a “clear link between AI adoption and successful business performance, but an overreliance on new technology could ultimately backfire”.
CPA Australia has released its 2025 Business Technology Report, which found 19 per cent of businesses across the Asia-Pacific say they have reduced or ceased filling junior or entry-level accounting roles because of the introduction of AI tools. In mainland China, this rises to 32 per cent.
Which is not exactly re-assuring for long term viability of jobs.
Ord:
Businesses must not underestimate the importance of keeping people in the loop. Specialist human oversight remains essential. Turning over finance functions that require accuracy, assurance and verification to technology leads to elevated risks.
We are now seeing many high-profile examples of businesses and organisations suffering financial and reputational damage because they have swung the balance too far in favour of poorly verified AI.
Again, Ord was pushing for balance:
The key to technology is understanding the problem you want it to solve – not chasing the latest shiny thing. Some businesses seem to be experiencing FOMO when it comes to AI – and they are the ones who risk being behind the eight ball if they don’t invest wisely in their people and fail to follow appropriate processes to identify the right AI solutions for their needs.”
However many others are urging governments to step in and regulate AI usage, before its too late.
It is easier to get into Heaven than it is to get into ASEAN”: Timor-Leste joins South-East Asian regional group
Bill Browne
Director, Accountability & Democracy Program
Last night I had the privilege of attending a ceremony celebrating Timor-Leste (East Timor) becoming the 11th member of ASEAN (the Association of South-East Asian Nations). It’s been a long journey for the small island nation, which applied in 2011.
Foreign Minister Penny Wong was among the speakers who emphasised Australia’s long and warm ties with both ASEAN (of which we were an early supporter) and Timor-Leste.
Australia led the military force that protected the Timorese from Indonesian retaliation after they voted for independence in 1999, and has long provided Timor-Leste with financial assistance (including to prepare for its ASEAN admission).
My pride in Australia’s contribution to Timor-Leste’s continued independence was tempered by the outrageous way that Australia has sometimes treated its near neighbour. It wasn’t mentioned last night, but while John Howard was prime minister, Australia spied on the Timor-Leste government to gain an advantage in negotiations over how to carve up oil and gas resources.
Last year the Australia Institute hosted President José Ramos-Horta to discuss the lessons from Timor-Leste’s path to freedom. You can watch the speech online.
Meanwhile, Don Farrell has disagreed with the Centre for Public Integrity’s assessment the Albanese government is less transparent than the Morrison government. He told ABC Breakfast TV:
I just don’t agree with that assessment, Can I go to my area of electoral reform? At the next election, all donations that are going to be made to any political must be fully disclosed. Previously, the amount was $17,000. So, we have significantly dropped that money. More importantly, those donations have to be disclosed before the election. So, every single makes a donation above $5,000 have to be disclosed before the next election. Now, I’d say that was very significant transparency issue and, for the first time, when you in to vote at the next election, you’ll know exactly who is contemplating voting for. just one example, I think, of where this government has been transparent, and will continue very transparent.
Hmmm, OK – but that area of electoral reform Farrell is referring to is about to make it a lot harder for anyone who isn’t in a major party and already in the parliament to get an even playing field to get elected. As director of the Accountability and Democracy program Bill Browne has repeatedly said, it makes elections less fair.
