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Economy

Yesterday

Financial markets are overstating the probability of a rate cut at next week’s RBA board meeting.

Inflation has smashed profits, so a rate cut is no sure bet

Businesses have absorbed some cost increases through lower profitability. But that may soon change and could stall further progress towards the RBA’s inflation target.

  • Paul Brennan
The balancing act isn’t getting any easier for Reserve Bank governor Michele Bullock.

Sticky US inflation just made the RBA’s cut call harder

Four months after the Fed cut rates, inflationary pressures appear to be building in the US. The lesson is unlikely to be lost on the Reserve Bank.

  • James Thomson

This Month

The CBA boss’ call was echoed by HECS architect Bruce Chapman, who said Jim Chalmers’ changes made sense, but fixing housing affordability required more supply.

CBA’s Comyn says student debt tweak helps but housing supply is key

The bank CEO was echoed by HECS architect Bruce Chapman, who said Jim Chalmers’ changes made sense but fixing home affordability required more residences.

  • Michael Read, Lucas Baird, James Eyers and Lucy Dean
With tobacco excise rates up 282 per cent since 2013, Treasury also admitted the high cost of legally purchased cigarettes was driving a fall in tax revenue.

Chalmers was told his plan would fuel black market ciggies. He did it anyway

Warnings from Treasury that soaring excise rates would force smokers to look for cheaper, illegal cigarettes have been borne out, raising crime and reducing revenue.

  • Michael Read
John Howard, Paul Keating and even Kevin Rudd knew how to make the case for policy reform.

As Rome burns, Australia fiddles with small-minded debate

Australia needs a revolution on tax, deregulation, energy supply and competition, not fiddling around the edges with small-minded economic debate.

  • John Kehoe
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Treasurer Jim Chalmers.

Chalmers instructs banks to loosen home loan rules for HECS debts

Treasurer Jim Chalmers has instructed the prudential regulator to relax how HECS is treated when banks conduct mortgage serviceability tests.

  • Michael Read
Robyn Denholm, chair of the review of Australia’s R&D system, says over the past 25 years Australia has “slid steeply backwards”.

Australia’s critical slide in R&D is now a national emergency

In a world reshaping through emerging technologies, the nation needs to put innovation at the centre of its competitive DNA to set up its fortunes for decades.

  • Robyn Denholm
Treasurer Jim Chalmers has branded Opposition Leader Peter Dutton’s promise to allow small businesses to deduct staff lunches a “complete farce”.

Dutton urges RBA to resist pressure to cut rates

The opposition leader says there is ‘a real concern’ that if the RBA cuts the cash rate too early, it will have to increase rates before long.

  • Michael Read and John Kehoe
The lack of any credible fiscal framework places a big burden on RBA governor Michele Bullock to withstand the pressure to go easy on interest rates.

Rate cut pile-on threatens RBA credibility

It’s premature to declare victory over inflation. But all hell will break loose if the central bank governor and her board defy the Black Caviar odds and hold next week.

  • Michael Stutchbury
State-sponsored regulatory and third-party workplace interference threatens to kill productivity and prosperity.

Bizarre new era of industrial relations must be unwound

State-sponsored and third-party interference threatens to kill workplace productivity and prosperity. Here are eight ways to fix the situation.

  • Steve Knott
Michele Bullock, governor of the Reserve Bank.

There is no way the Reserve Bank can cut interest rates next week

The central bank would be well advised not to misjudge the politics. An easing of monetary policy would put more jobs and more inflation into the economy. Is that what people really want?

  • Warren Hogan
The ACT government has a budget deficit of nearly $1 billion and is danger of joining Victoria as the country’s most financially struggling jurisdiction.

ACT risks Victoria-style downgrade as deficit blows out to $1b

S&P has told the ACT it must turn its finances around within a year or two, or else it will join Victoria as the lowest-rated Australian government.

  • Michael Read
Sydney Airport chief executive Scott Charlton runs what is effectively a monopoly.

Sydney Airport chief insulated from regulation woes

Readers’ letters on Sydney Airport chief executive Scott Charlton’s complaints over regulation, electric vehicle sales, Anthony Albanese’s superannuation tax plan and the appeal of the teal MPs.

Trump chaos | Business election fears | The new millionaires factory

James and Anthony consider what Trump means for markets, reveal what top business leaders are talking about ahead of the federal election and look ahead to the official opening of the ASX’s new millionaires factory.

Victoria, under Premier Jacinta Allan, is being urged to overhaul its payroll tax settings.

Australia’s looming debt crisis could be a real opportunity

Why not use the looming fiscal crisis of the states to tackle the buck-passing by seriously reforming which tier of government is responsible for spending?

  • Michael Stutchbury
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Member for Wentworth and Teal, Allegra Spender has previously called for meaningful tax reform.

Teal election pivot is a sign of taxing times

It says something about the dire state of the economic policy debate when the teal Independents have more sensible things to say about tax than either major party.

  • The AFR View

‘The world has shifted’: CEOs query penalty rates, right to disconnect

As executives ramp up pressure on Labor and the Coalition to do more to reverse a productivity slump, more flexible workplace laws have become a priority.

  • John Kehoe
Treasurer Jim Chalmers.

Chalmers claims the jobs boom is private-sector led

Treasurer Jim Chalmers has hit back at critics who argue many of the 1.1 million extra created during the Albanese government have been underwritten by taxpayers.

  • John Kehoe and Michael Read
“Agencies view the Australian governments, by world standards, as remaining a safe harbor for investors”: NSW Treasurer Daniel Mookhey.

States reject ratings warning on debt

NSW Treasurer Daniel Mookhey is returning from a US mission to keep debt costs down, but S&P warns Australian states’ credit ratings are at risk of downgrade.

  • Paul Karp, Gus McCubbing, Simon Evans and Tom Rabe
The RBA found company tax cuts are probably more effective than instant asset write-offs promoted by both Labor and the Coalition.

Business tax breaks don’t spur investment: RBA

The RBA found company tax cuts are probably more effective than instant asset write-offs promoted by both Labor and the Coalition.

  • Michael Read

How to stand up to the gas industry – and win votes

Readers’ letters on Donald Trump’s tariffs, Anthony Albanese’s Nature Positive legislation, and Gina Cass-Gottleib quitting the Qantas Chairman’s Lounge.

Former Treasury secretary Ken Henry, author of the 2010 tax reform report, says the inertia of the past 15 years is an intergenerational tragedy.

Treasury costing furore is as old as 1993 Fightback!

Jim Chalmers’ use of his Treasury to cost the Coalition’s tax breaks for business lunches is unfortunate – but the status quo, former Treasury bosses say.

  • John Kehoe and Ronald Mizen

Coalition MP’s food donation tax break could cost hundreds of millions

Treasury says the proposed deduction for charitable food donations could lead to companies pocketing millions for donations already being made.

  • Michael Read
Ross Gittins

Ross Gittins’ rebuke of economics today is wrong, silly and offensive

Ross Gittins is a legend of Australian journalism. But his column on Monday was a shocker. I guess even legends can be wrong.

  • Richard Holden
Michele Bullock will chair the RBA board meeting on February 17-18.

Even small RBA rate cuts will fuel election spending

Any monetary easing this month will embolden more cash-burning by politicians, and therefore have important political and economic ramifications.

  • John Kehoe

Original URL: https://www.afr.com/policy/economy