INTEREST RATES REACTION
The fallout from the Reserve Bank of Australia’s decision to once again hold interest rates at 4.35% has been leading the way overnight.
The Australian reckons RBA governor Michele Bullock and Prime Minister Anthony Albanese are “on a collision course over preelection rate cuts” as the latest consumer price index released by the Australian Bureau of Statistics later today is expected to show a drop in headline inflation. The paper highlights Bullock’s claim yesterday that despite the predicted fall, the bank is more interested in underlying inflation, which it believes is still too high. “We really need to see underlying inflation coming back down toward the target,” she said.
Guardian Australia is also reporting on Bullock’s dismissal of predicted inflation figures today, quoting the bank as saying: “Headline inflation is expected to fall further temporarily, as a result of federal and state cost of living relief. However, our current forecasts do not see inflation returning sustainably to target until 2026.”
That sombre statement and Bullock’s continuing claim that she does not see a cut in the near term will no doubt be put to government ministers for the foreseeable future. Yesterday Treasurer Jim Chalmers was quick to declare on X: “There hasn’t been a rate hike for almost a year. This reflects the good progress we’ve made on inflation.”
The AAP reports this morning the treasurer believes the monthly data out later will show inflation has halved since the Albanese government came to office. The government may also try to take some comfort from the fact Bullock said the bank had not explicitly considered a rate rise at this week’s meeting. The Sydney Morning Herald said it represented the first time, since the bank moved away from monthly meetings at the start of the year, that it had not discussed a rate rise.
As all sides prepare their spin on yesterday’s update from the RBA (The Australian has been leading overnight on its belief “Labor will be cooked if there’s no preelection cut”), the ABC noted Bullock expressing a desire to “stay out of the politics of it” after months of back-and-forth over who was responsible for the state of the economy. That might be slightly wishful thinking.
LABOR VS NEGATIVE GEARING?
The Sydney Morning Herald reports this morning the Albanese government has asked Treasury for advice on options to scale back negative gearing and capital gains tax concessions. The paper says any such move “could define the federal election”.
Labor officials cited said the government was considering its options on negative gearing and the reported modelling showed it was prepared to take an ambitious agenda to the next election. The officials also caveated the claims with the fact the government could still walk away from any policy changes.
The SMH highlights the alleged modelling comes after the recent war of words between the prime minister and the Greens regarding the latter’s demands in negotiations over the government’s stalled housing agenda, which include reforms to negative gearing. Anthony Albanese notably told ABC Radio National last week “I don’t answer those sorts of questions” when he was asked about the Greens’ demands, having spent days accusing the opposition and Greens of blocking the government’s legislation (see Friday’s Worm).
The paper said the options modelled by Treasury would give Labor a “middle path” by “advocating careful changes”, such as a cap on the number of properties a taxpayer could negatively gear, rather than the Greens’ more radical changes or the status quo supported by the Coalition.
With the next federal election clearly in everyone’s sights these days, Guardian Australia reports on another of the government’s stalled agendas: the reforms to gambling advertising. As Labor continues to face pressure to announce a blanket ban, the site says the gambling lobby is instead pushing the government to consider using age verification to block minors from sports betting content. Apparently, gambling sources have claimed the same age verification technology that’s part of the government’s proposed ban on children using social media could be used.
ON A LIGHTER NOTE…
Memorabilia from the set of US sitcom Friends has been sold in an auction marking the 30th anniversary of the show first airing.
The Press Association said the top-selling item was a studio-made reproduction of the famous Central Perk orange sofa, which sold for US$29,250 (A$42,500).
Other items that sold included a jumper worn by the late Matthew Perry’s character Chandler Bing (US$6,500, A$9,500), outfits worn by guest stars Winona Ryder and Bruce Willis and a reproduction of the Geller Cup trophy prop, from the episode “The One With The Football”.
David Goodman, chief executive of Julien’s Auctions, said: “Thirty years since its debut in 1994, people from all over the world are still falling in love with Friends as evidenced by the success of today’s 30th-anniversary auction.
“Television’s nostalgic journey of Friends that culminated with all of the show’s iconic items being sold beyond their pre-sale estimates.”
Say What?
The message clearly from the board is that in the near term it does not see interest rate cuts.
Michele Bullock
The governor of the RBA said in a press conference on Tuesday the central bank did not see any rate cuts happening in the near future following the decision to once again hold them at 4.35%.
CRIKEY RECAP
You have to wonder how some of the most powerful consumer goods companies in the world feel about their products being used in the alleged schemes of the two retailers.
Price discounts are usually financed by the manufacturer, supplier or distributor, with a little support from the retailer. They can be used to move slow-selling products, accelerate the sale of fast-selling goods, start new brands, keep volumes ticking over, and match price discounting by rivals.
What will be very interesting in this case is if the ACCC has investigated whether the suppliers of the products helped Woolies and Coles in their discounts.
This side of the ACCC’s allegations has the potential to take the story global.
Kelly said gambling companies had approached him multiple times both in his capacity as a sports podcaster and as part of comedy group Aunty Donna. He said the companies are among the few that consistently advertise on podcasts made by creatives.
“There’s been points where gambling has come to us … the truth of it is, there have been points where that conversation has been really, really hard, because if you want to do anything in Australia, it’s becoming increasingly harder and harder to do that without the support of ad revenue,” Kelly told Crikey.
“And one of the only major ad revenue sources is wagering in Australia, which is the unfortunate truth of it.”
Peter Barry writes: The Greens appear increasingly intransigent and appear to be doing internal somersaults over contentious progressive issues. Nevertheless, most of their economic policies have a strong rational basis and aim for valid long-term solutions.
Labor knows that negative gearing is unfair and counterproductive, as is the capital gains discount. They know that carbon credit offsets are largely spurious and counterproductive. They know that the rollout of renewable energy has slowed to a trickle and that even the feeble target for 2030 will not be reached. They are a dismal shadow of what voters expected, cowed by big business and fossil fuel interests.
They should use the Greens as a cover to do what they know should actually be doing.
READ ALL ABOUT IT
Biden’s final UN speech seeks hope amid grim wars in the Middle East, Ukraine, Sudan (CNBC)
As Lebanon reels from Israeli attacks, the future is murky for a wounded Hezbollah (The New York Times) ($)
Zelenskyy says Ukraine’s war with Russia is ‘closer to the end’ as he appeals for more help (ABC News)
Swiss police make arrests over suspected death in ‘suicide capsule’ (The Guardian)
Cats have more freedom than Afghan women — Meryl Streep (BBC)
Starmer warns ‘unpopular’ decisions needed to ‘fix’ broken Britain (Financial Times) ($)
THE COMMENTARIAT
If Albanese wants this fight, he’ll need to gear up for a big one — David Crowe (The Sydney Morning Herald): Albanese and Chalmers have no reason to fear a bigger debate about negative gearing. They trekked through months of dark speculation about the “stage three” tax cuts before arriving at a mountain peak in full sunshine — with a fairer tax policy that was popular with voters. They stood for Labor values on personal tax and could do it again on negative gearing.
In doing so, they might answer one of the questions about this government. Is Labor legend Bill Kelty right to call it “mired in mediocrity”? How bold is Labor prepared to be in a tight election?
Whatever the outcome, Greens leader Adam Bandt will accuse Labor of being too timid while Opposition Leader Peter Dutton will run a scare campaign about a war on aspiration. A key point is that nobody says the government wants to scrap negative gearing or the capital gains tax concession — the atomic bomb of reform that would raise $176 billion in tax revenue over a decade.
The government is right to examine the options. Treasury tracks the cost of negative gearing each year and should model potential changes. It is up to Albanese and Chalmers to decide how far to go, how much money to raise, and how many votes to risk.
There is a simple question Starmer’s government is yet to answer: ‘Why are you doing that?’ — Steve Richards (The Guardian): When a government’s overall purpose is unclear, stories about sleaze and internal tensions become more prominent. They fill a gap. I can see why Starmer and others accepted the offer of free smart clothes in advance of the election. Other leaders have made similar arrangements in the past. But the obvious temptation makes it even more necessary to ask constantly how any act will be perceived, not least by rightwing papers that influence the stance taken by some at the BBC. The media landscape will not change.
As ever, a politician will be judged on how they handle these challenges. The briefings against Sue Gray are in effect stories against Starmer. He appointed her. He needs to address this assault on his judgment, or the self-indulgent indiscipline of angry advisers and civil servants will feed on itself and get much worse.
Starmer is fortunate. He has the rare commodity of political space. The Tories have left the political stage and could be away for some time. In order to make the most of the space, he needs to be wholly sure of the answers to the “why” questions himself, before explaining them to the rest of us.
