DEEPSEEK WARNINGS FOR AUS GOVERNMENT
The Australian and AFR are leading this morning on the impact of the Chinese AI chatbot DeepSeek, which put Wall Street into a spin on Monday.
The AFR says shares in the tech sector rebounded on Tuesday following falls the day before as the emergence of DeepSeek — plus its capabilities and low cost — were suddenly appreciated. In a separate report, the paper says security analysts have urged the Albanese government to impose stringent controls on the use of Chinese-developed AI “after start-up DeepSeek challenged Silicon Valley’s dominance of the technology arms race” (one of those analysts happens to be Mike Pezzullo).
Industry Minister Ed Husic said yesterday it was too soon to know if national security controls would be required on Chinese-controlled AI, the paper reports.
“It is too early to make that call. We’ll obviously remain open-minded. We’ll clearly be informed by the advice of the national intelligence community in relation to threats, as they might present at different points in time,” Husic said.
He added: “I think there’ll be parallels to what you’ve seen [in] the discussion around TikTok that emerge around DeepSeek as well. But let’s see how that plays out.”
Talking of TikTok, US President Donald Trump has suggested that Microsoft is in talks to acquire the app, Reuters reports. The newswire recalls the 78-year-old said last week that he was talking to multiple people about buying TikTok and he would probably have a decision on the app’s future in 30 days.
The AFR says Microsoft shares rose on Tuesday following Trump’s comments.
The US president’s various comments and actions are leading a lot of news sites around the world this morning. The Guardian highlights how Trump has repeated his suggestion that large numbers of Palestinians should leave Gaza for Egypt or Jordan.
“When you look at the Gaza Strip, it’s been hell for so many years,” Trump told reporters. “There have been various civilisations on that strip. It didn’t start here. It started thousands of years before, and there’s always been violence associated with it. You could get people living in areas that are a lot safer and maybe a lot better and maybe a lot more comfortable.”
Axios has reported Israeli Prime Minister Benjamin Netanyahu is planning on visiting Trump in Washington next week. If he does, he will be the first foreign leader to meet with Trump at the White House (in this second Trump presidency).
Elsewhere, NBC News reports President Trump signed four executive orders relating to the US military on Monday, “including one barring transgender people from enlisting and serving openly and another cracking down on diversity, equity and inclusion initiatives in the armed services”.
The New York Times reports Democrats have expressed outrage after the White House budget office ordered a pause in grants, loans and other federal financial assistance, in what the paper called “a sweeping move it said was necessary to bring a vast number of programs in line with President Trump’s priorities”. The paper quotes one Democrat as remarking: “This is what a king does.” Several states are now expected to sue to block the order, which is due to come into effect in the next few hours.
Meanwhile, the BBC highlights that White House press secretary Karoline Leavitt has just finished her first-ever press briefing. The broadcaster reports she said there would be no more funding for “illegal DEI programmes”, also citing “transgenderism” and “wokeness” across federal agencies.
WILL THERE EVER BE A RATE CUT?
Depending on who you read, today’s inflation data from the Australian Bureau of Statistics will either make an interest rate cut next month more likely or have no impact at all.
The ABS will release the December quarter inflation rate at 11.30am AEDT and, as The Age’s headline puts it; “It’s the number everyone is waiting for, including the PM”.
The paper states the figures are expected to show “inflation over the past 12 months at about 2.5% as prices for goods and services, particularly in the housing construction sector, ease”. It also says the expected lowest rate of inflation in almost three years still may not be enough to convince the Reserve Bank of Australia (RBA) to cut interest rates on February 18 and therefore could force Prime Minister Anthony Albanese to push back the federal election to May.
The AAP says today’s data is “widely tipped to show core inflation for the December quarter was substantially lower than the RBA’s forecasts”.
The newswire quotes Deloitte Access Economics partner Stephen Smith in saying that with underlying inflation moving back to target and the economy growing at its slowest rate since the 1990s (outside of the COVID pandemic), an interest rate cut in February should be a possibility. On the other hand, working against an interest rate cut is tightness in the labour market, elevated government spending, and a falling Australian dollar, AAP reports.
Deloitte has also predicted real GDP growth will accelerate from 1% last year to 1.6% in 2025 and 2.3% in 2026. That prediction has been leapt on by Treasurer Jim Chalmers, who said: “Inflation is down, wages are up, unemployment is low, we’ve overseen the creation of more than 1.1 million jobs and as a result Deloitte expects growth in Australia to pick up this year.”
However, as The Australian Financial Review and others have pointed out, Deloitte has also said living standards in Australia will not recover to pre-pandemic levels until 2030.
The Daily Mail highlights that the Deloitte report reads: “Dwelling construction activity is unlikely to get any worse, but Australia’s housing crisis is likely to last at least another decade. And while business investment was a key feature of the economic recovery after the pandemic, it has since faded.” It adds: “Real wages are now grinding higher, but it is likely to be 2030 before Australian workers recover their pre-pandemic purchasing power.”
Capital Brief has also covered the report and quotes Deloitte partner Cathryn Lee as saying: “‘Better-than-expected’ is not the same as ‘good’, as has been revealed by escalating business insolvencies, considerable mortgage stress and a deep per capita recession. Indeed, nobody should get overly excited or complacent. The reality is that the Australian economy remains beset by challenges.”
The site also highlights the “expectations for 75 basis points worth of rate cuts from the Reserve Bank in 2025 and a subsequent 75 basis points of cuts in 2026, returning about $8,000 to an average mortgage holder on a variable rate loan”.
The Age reports government MPs believe if the RBA does cut rates next month the prime minister will use the decision to call an election for early April.
Opposition Leader Peter Dutton has been true to form with his cheery and positive analysis of it all, claiming “wasteful” government spending has kept inflation and interest rates high.
“It’s been bad enough for Australians over the last two-and-a-half years. Another three years of Labor … would wreck the economy,” the AAP quotes Dutton as saying.
The newswire also draws attention to yet more polling (as I state every time, polling should always come with a healthy dose of scepticism) that puts the Coalition on 52% to Labor’s 48% on a two-party-preferred basis.
AAP said the Roy Morgan poll showed similar results to the Newspoll on Monday and the YouGov poll earlier this month. Roy Morgan CEO Michele Levine is quoted by the newswire as saying its polling shows the Greens registering their lowest level of support since late 2023.
Elsewhere in domestic news, the Sydney Morning Herald reports Labor backbenchers are calling for “the urgent passage” of the green laws which Albanese intervened and halted while Environment Minister Tanya Plibersek and the Greens were attempting to reach a compromise at the end of last year.
And The Australian reports University of Canberra chancellor Lisa Paul said yesterday that former Labor leader Bill Shorten will be paid $860,000 this year, including superannuation and fringe benefits as vice-chancellor.
“When finalising Mr Bill Shorten’s pay conditions we mutually agreed following his initiative that his total remuneration package including superannuation, accommodation and fringe benefits tax will be $860,000, down by approximately 15% of the former vice-chancellor’s pay in 2022,’’ Paul said.
ON A LIGHTER NOTE…
In 1998 Donovan Shears got his first mobile phone as an 18th birthday present.
While at work in a pub in Coventry, England, the teenager made up a series of random phone numbers and sent off text messages saying “hello”.
Of the messages he sent to unknown numbers that evening, one actually resulted in a reply, the BBC reports.
Kirsty in Cleethorpes replied to the random message thinking it was someone she knew but didn’t have their number. “Hi,” she wrote back.
That reply led to a series of back-and-forth messages until the pair decided to ring each other and, six months after the endless texts and calls, meet up.
And well, you can guess the rest. Four years later they were married and now over 20 years after their big day they are set to renew their vows at Coventry Cathedral on Valentine’s Day this year. Ah, a time when technology was actually a force for good — who remembers that?
(While we’re here, please feel free to keep sending me feedback, things you’d like to see more/less of in the Worm and any tips you may have to worm@crikey.com.au.)
Say What?
Deepseek’s R1 is an impressive model, particularly around what they’re able to deliver for the price. We will obviously deliver much better models and also it’s legit invigorating to have a new competitor!
Sam Altman
The CEO of OpenAI tried to put on a brave face following the emergence of the Chinese AI chatbot that caused shockwaves in the tech industry and financial markets.
CRIKEY RECAP
China already leads the world in electric vehicles — cheaper and as good, or better than, Western vehicles — and dominates solar photovoltaic production. But those have been delivered courtesy of massive government subsidies for those industries and the achievement of scale that other economies can’t match. This is different, and it has been achieved in the face of American sanctions that were supposed to preserve America’s tech dominance.
It also illustrates — if only by sheer dollar value — how the end of the US empire and the rise of China is one of the defining narratives of our age. Much of the current state of US politics can be seen as a reaction against the steady decline of America and the resentment of, and lashing out at, a competitor that refuses to be cowed — and which, unlike Russia, has the sheer size to challenge the US.
Entire business empires are being built on a belief that American exceptionalism will always prevail and that the US just has to want it badly enough, and pull enough policy levers, to stay on top. There are a trillion reasons to be sceptical of that.
Insurrection. It’s a word I didn’t expect to hear at the campaign launch for Peter George, the independent candidate running in the Tasmanian seat of Franklin. But that’s how George characterised what he’s planning: “An insurrection, a rebellion of Tasmanians against the big parties who have misruled for as long as anyone can remember.”
It’s bold rhetoric for a not even remotely marginal seat (in 2022 Labor MP Julie Collins’ post-election margin was a very safe 13.7%). It drew enthusiastic cheering from the crowd of around a hundred cool, woke grandparents, ready to mobilise in an uprising — for the state, for the nation, and for their grandkids.
Ordinarily, Crikey might not have covered this political contest at all, but with George in the running (and my convenient Tasmanian relocation), a few factors make Franklin not only a compelling race to follow but also a study in the tensions and issues defining federal politics in the state.
Margaret Ludowyk writes: I’d like to ask Bernard Keane why, in tough economic times, is stable and orderly government not enough? It’s something we haven’t seen for more than 10 years.
The Albanese government has had no scandals, no rorting, no misusing taxpayers’ money, no bonking of staff, no sackings, no backstabbings. Just well-behaved and competent ministers doing their jobs well. It’s been a refreshing change from the nine years of chaos and instability, in which Dutton was a key player.
The alternative is back to the Abbott days of demonising the vulnerable, cutting government services and stirring up more anger and division.
READ ALL ABOUT IT
Work on Snowy 2.0 tunnels stopped after ‘refuge chambers’ concerns (ABC)
Virgin Australia ‘indefinitely suspends’ direct flights between Darwin and Adelaide (NT News) ($)
Violence erupts in mineral-rich DR Congo as rebels move into key city. Here’s what we know (CNN)
Google Maps will rename Gulf of Mexico to Gulf of America in US (BBC)
Doomsday Clock set closer than ever to midnight to stress global catastrophe risks (The Guardian)
The Mona Lisa to get her own room as the overcrowded Louvre expands (The New York Times) ($)
THE COMMENTARIAT
Tame Grace? Good luck with that. I delight in her brave belligerence — Jane Caro (The Sydney Morning Herald): Some of the criticism of Tame is about her pulling focus from this year’s winners. Actually, I think we’ve done that by being so incredibly easy to bait. If we’d all just shrugged, her activism would have failed. Indeed, a word to other winners, maybe take a leaf from Tame’s playbook. If you care about a cause and want to draw attention to it, be prepared to take flak.
That is the lesson courageous young women like Grace Tame continue to teach me. As a lifelong feminist — yes, I was one of those women lucky not to get shot — I delight in witnessing the refusal of younger women to pipe down, behave, and stifle their opinions and their rage. I am inspired by their rejection of shame about their age, their beauty, and their bodies. Flaunt them, cover them up, I don’t care. Women’s bodies belong to them to be used and accessorised as they see fit. My generation, with a few honourable and mouthy (bless them) exceptions, were more easily cowed.
And where did that get us? The good girls who behaved like ladies and put other people’s needs ahead of their own from dawn to dusk, from cradle to grave? A fast track to an old age of poverty and fear, including the very real possibility of living in our cars.
Speak up, girls. Don’t be tame. Be wild.
I’m sad young people aren’t getting to experience the horror and chaos of share houses — Patrick Lenton (Guardian Australia): Thanks to a wave of crises in Australia, including the dramatic rise in what’s dystopically known as “cost of living”, a housing and rental cost crisis, and a lack of adequately paid jobs, more and more young people are being forced to stay living at home with their parents. A national survey found almost half of young adults are living with parents and nearly one-third of those aged 26 to 29 are living at home. There are serious consequences to this — studies show that the mental health of young people forced into these situations is dramatically plummeting, which in turn feeds into the already horrific mental health crisis in young people.
Combined with having to inherit a world ravaged by the climate crisis, and the rise of fascism, there’s obviously extremely serious things to worry about for the next generations. But we’re doing young people a disservice if we only focus on these real issues of survival — what’s also being lost is quality of life, independence, discovering friendship and community and, dare I say it — having fun. Moving out of home into a god-awful scary share house full of broken couches and Becker DVDs can be all of those things.
I’m not sure exactly what skills from share house living I would put on my resume — perhaps a proficiency at cleaning a mix of blood and glitter off walls from the time I lived with a drag queen? But that’s perhaps my point. Some things you can’t be taught — sometimes you have to just work out how to handle the interpersonal conundrum of the housemate who began randomly playing jazz trumpet at 3am, or the social etiquette of how to politely ask the orgy happening in your bathroom to vacate so you can make your shift at Target. It’s learning social skills that are actually very helpful for adult things like navigating the murky politics of the office fridge.
