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Sky News AU
9 hours ago
- Business
- Sky News AU
GSFM's Stephen Miller calls on the RBA to 'press the accelerator' on rate cuts as unemployment rate rise looms
The Reserve Bank of Australia will have to 'press the accelerator' on interest rate cuts as an upcoming slump in public spending could cause the unemployment rate to rise, a leading economist has predicted. Some state and federal governments have signalled a slowdown in public spending which soared during and after the pandemic and kept many Australians in work. About four in five jobs created over the past two years have been in the non-market sector, which are industries influenced by government spending and regulation such as health, public services and education. Unemployment is forecast to pick up as government spending slows, putting pressure on the central bank's governor Michele Bullock to put more money back into Australians' pockets, GSFM's Stephen Miller said. 'Bullock will have to contend with a weakening labour market,' Mr Miller said on Business Now. 'Private sector spending here has been quite weak. What's held up the labour market has been growth and employment in the non-market sector, public administration, health, government related services. 'The market sector employment growth has been pretty tepid.' He said that public spending was going on a 'hiatus', putting pressure on the market sector to pick up the slack for Australia's jobs growth. This comes as inflation continued to fall in the June quarter, boosting hopes of a rate cut when the RBA meets in August. 'Now that inflation looks as though it's headed toward the centre of the (RBA's 2-3 per cent target) band, I think Michelle Bullock now has to maybe sort of press the accelerator a little on rate cuts,' Mr Miller said. 'She might have to pay more attention to the employment side of her mandate now that the inflation side looks to be under some control and that's not the circumstance.' The RBA controversially held rates in July, however, it is widely tipped to deliver a cut in August. Miller's comments come as Australia's unemployment rate continues to hover near historic lows, but it jumped 0.2 per cent above market expectations in June to 4.3 per cent. Recent research from the Centre for Independent Studies said that more than half of Australian voters rely on government for most of their income - through wages, benefits or subsidies. CIS economist Robert Carling warned that federal spending alone has reached 27.6 per cent of GDP. This was up from 24-25 per cent of GDP in 2012-13 and has been fuelled by a 'program expansion in social services, defence and debt interest'. While large government spending has driven the economy in recent years, Labor is now looking to boost Australia's productivity which has stalled over the past decade. Leaders across business, politics and unions will gather at the upcoming Economic Reform Roundtable where leading minds will attempt to conjure up a solution to the nation's lagging growth.
Sky News AU
a day ago
- Business
- Sky News AU
'Out of whack': Treasurer Jim Chalmers' inflation brag torn apart by independent economist Warren Hogan after fresh data
A leading economist has torn apart Treasurer Jim Chalmers' remarks after fresh inflation data, with the Treasurer's boast being decried as inappropriate while Australia remains 'out of whack' on inflation. After the Australian Bureau of Statistics revealed inflation had fallen to 2.1 per cent in the year to June and trimmed mean inflation was 2.7 per cent, the Treasurer praised the result during Question Time. 'At the same time that inflation is going up in the US, the UK, Canada, New Zealand, it's coming down here in Australia,' Mr Chalmers said on Wednesday. Independent economist Warren Hogan said Australia's inflation is currently falling as it was slower to take action on the crippling post-pandemic price rises than its counterparts. 'We are generally lagging the rest of the world in this inflation cycle. We did on the way up and on the way down,' Mr Hogan said on Business Now. 'If we're seeing the start of a turnaround in inflation overseas, I'd expect that to show up here in the next three to six months or so. 'There's nothing in today's data that says that's not going to be the case.' He noted that business cost pressures and the relatively low level of unemployment would put upward pressure on inflation in the future. 'I think it's more that we're a little bit out of whack from a timing point of view with the rest of the world rather than anything to do with our policy settings,' Mr Hogan said. 'The standout policy setting for Australia is a massive increase in government spending. 'That is going to help employment and keep unemployment down, but we know it's also come at quite a severe cost in terms of higher taxes and lower productivity, which is hurting real incomes or people's standards of living.' Fresh ABS data revealed that inflation for the 12 months to June is the lowest level since March 2021. Meanwhile, trimmed mean inflation - the RBA's preferred measure which analyses the middle 70 per cent of price changes - was 2.7 per cent as it continues to fall within the central bank's 2-3 per cent target band. The latest inflation data will be a major factor in whether the RBA cuts rates next month. Money markets on Wednesday said there is a 92 per cent chance the central bank will cut rates at its next meeting in August.
Sky News AU
2 days ago
- Business
- Sky News AU
InTouch Capital's Sean Callow forecasts ‘most likely' scenario for Aussie dollar as Donald Trump eyes higher tariffs
A leading economist has outlined the 'most likely' scenario for the Australian dollar as Donald Trump continues to wage his trade war. Australians were rattled after the US President revealed his baseline tariffs would be either 15 or 20 per cent – higher than the initial 10 per cent he announced on 'Liberation Day' in April. Despite Trump's claim, Trade Minister Don Farrell said the Albanese government is still assuming 10 per cent tariffs until otherwise advised by the Trump Administration. InTouch Capital foreign exchange analyst Sean Callow said it was 'very difficult to pin down' how the looming tariff decision would play out. 'How does China respond? Can they produce the stimulus that would offset some of the impact of these higher tariffs that are still in place with the U.S?' Mr Callow said on Business Now. He remained upbeat about the future of the Australian dollar despite the uncertainty from Trump's tariffs. 'It's certainly a more positive mood," Mr Callow said. 'Those rallies in global equities are usually supportive for the Aussie dollar, it does tend to correlate positively with that. 'So the uptrend in the Aussie (dollar) is still probably the most likely path over the next few months.' The Aussie dollar dipped from 63 US cents to about 60 US cents after Trump revealed his sweeping tariffs in April. It quickly recovered its losses and has added another two cents in recent months. Mr Callow forecasted the dollar to surge later in the year after it nudged up on Tuesday. 'It might continue to struggle a little bit around that 66 cent area,' he said. 'I do see the case for it to rally later in the year, but it poked its head above 66 cents and then the U.S dollar has just found a little bit of support in recent days. 'It's on a firmer footing in the past few weeks than it has been for a while.' Trump on Monday (US time) told reporters he could hike the baseline tariff from 10 per cent to either 15 or 20 per cent. 'We're going to be setting a tariff for, essentially, the rest of the world,' the US President said. 'That's what they're going to pay if they want to do business in the United States, because you can't sit down and make 200 deals.' Asked how steep the new tariff could be, Mr Trump replied: 'I would say it'll be somewhere in the 15 to 20 per cent range. I just want to be nice,' he added.
Sky News AU
3 days ago
- Business
- Sky News AU
Major overhaul underway that means the Reserve Bank of Australia could deliver rate cuts sooner
Aussies could be delivered quicker rate cuts as detailed data critical for the Reserve Bank of Australia will be published at a higher frequency. The Australian Bureau of Statistics from November 26 will begin publishing a full monthly consumer price index – which measures household inflation. Currently, the ABS only publishes a monthly CPI indicator which examines about two thirds of the goods and services in the quarterly inflation figures. A frequent full CPI would allow the RBA to make more informed cash rate calls - which was a sticking point for the central bank when it controversially held rates earlier this month. RBA governor Michele Bullock said the decision mainly came down to timing as the central bank awaited more details about how inflation was continuing to ease. "By our next meeting in five weeks, we will have the June quarter consumer price index, another labour market reading, further information about international developments and an updated set of forecasts," Ms Bullock said. "So the Board decided to wait a few weeks to confirm that we're still on track to meet our inflation and employment objectives." ABS statistician David Gruen said the bureau began publishing the monthly CPI indicator in 2022 when inflation was rapidly accelerating. 'We thought that there was benefit in providing more up-to-date information,' Mr Gruen said on Business Now. 'At the time, we were only in a position to produce this indicator which updates about two-thirds of the basket of goods and services every month. 'After we'd been producing that for some time, we pitched to the government the idea that we could create a full monthly CPI, that means updating the full basket.' All other G20 countries publish a full monthly CPI and the change will make it easier to compare Australia's inflation to nations with similar economies. Both trimmed mean inflation – the middle 70 per cent of price changes core to the RBA's call – and headline inflation now sit within the central bank's target band. The ABS will release a full CPI for the June quarter on Wednesday where it is expected that trimmed mean inflation will fall from 2.9 per cent to 2.7 per cent. Every major bank predicts the RBA will cut rates when it next meets in August.
Sky News AU
5 days ago
- Business
- Sky News AU
South Australia Premier Peter Malinauskas unveils bold vision for economic growth amid global shifts
Premier Peter Malinauskas says South Australia is positioning itself at the forefront of global copper and uranium demand, while also actively reshaping its economic landscape to become a magnet for private investment and industrial innovation. Speaking on Business Now, the Premier identified copper as one of the most critical minerals of the future and declared that the state is preparing to capitalise on a global supply shortfall. 'Seventy per cent is the figure that we expect copper demand to grow over the course of the next 25 years and even if all of the copper mining projects globally were to reach FID, we still don't get to that number,' he said. 'So Olympic Dam has a major opportunity before it, provided we can make sure that the economics stack up and certainly my government's working closely with BHP in that regard.' Malinauskas acknowledged the risks posed by global economic disruption and protectionist policies - including recent US tariff moves - but remained confident that South Australia's approach will unlock long-term opportunities. 'Having said all that, we don't believe it represents a major material risk to this expansion simply because BHP, in conjunction with my government, are actively exploring it on the basis of massive growth in demand of copper globally but also uranium as the world continues to produce more nuclear power which is an important resource as well at Olympic Dam.' Central to the copper and uranium play is government-backed infrastructure investment. The Premier highlighted the strategic importance of a proposed desalination plant and water pipeline, which could benefit Olympic Dam and unlock broader economic potential across the region. 'We can't take a hands-off attitude, and we're very conscious of the fact that the provision of water to Olympic Dam is absolutely critical to unlock this opportunity,' he said. 'There might be other opportunities that emerge as a result of a desal plant and a pipeline of the nature that we're working on.' In an environment of fierce global competition for capital, Malinauskas emphasised the role of fast approvals, low taxation, and regulatory stability in making South Australia a standout destination for investment. 'To the extent that the approvals are reliant upon state government, and there are a lot of them that are, we have established an expedited process. We're working really hard in South Australia, not just in respect of the speed of approvals, but making sure that our taxing regime is low and it is the lowest in the country," he said. 'The Business Council of Australia have listed South Australia as the number one jurisdiction in the nation to do business and we've worked hard to achieve that.' But the Premier's ambitions stretch beyond mining and minerals. As part of a broader strategy to reboot South Australia's industrial base, the Whyalla steelworks - long viewed as an economic challenge - is receiving renewed focus, with a combined $275 million injection from state and federal governments. 'That's the challenge before us, and I don't think it's going to be an easy task. But the opportunity is before us by virtue of where the steel works is located.' Malinauskas said the combination of magnetite ore, gas reserves, and port access created a compelling case for sustainable steelmaking. 'MacIntyre lends itself to a decarbonised version of steel making, which may make it, or even green iron, which of course is an export industry that a number of steel producing countries would be very interested in. 'We see that a decarbonisation path requires an increase in supply of natural gas at an economic price. I think that is a unique opportunity if we can get the right owner of the steel works.' With four consecutive budget surpluses under his belt, Malinauskas also pointed to South Australia's financial stewardship as a foundation for economic expansion. 'We've just recently delivered our fourth budget, and it contains our fourth surplus. What we've been able to do is grow our state's economy at a pace that we were not really accustomed to in the past. And that growth has negated our need to actually make changes to the tax base,' he admitted. The Premier also called for a national rethink on research and development, warning that without investment in intellectual property and innovation, Australia risks falling behind globally. 'Our R&D base in Australia is very low in comparison to other OECD countries,' he said. 'In order to move up the value chain and become increasingly competitive, we need to be deploying technologies and intellectual property that we generate here in Australia.'
