It’s big, but not beautiful.
After 27 hours of non-stop voting and debate the American Senate passed Donald Trump’s One Big Beautiful Bill Act with cuts to tax and Medicaid.
Welcome to Talking Business, a podcast produced in Melbourne Australia. The podcast is available on the Acast site, my own website, the Apple Podcast store or wherever you go to get your podcasts. Or you can get it at the Business Acumen website at www.businessacumen.biz
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com.
I am Leon Gettler. My job is to review and monitor the week’s news in business, finance and economics. I bring it all to you, every week.
This is episode number 21 in our series for 2025 and today’s date is Friday July 4.
First, I’ll be talking to Jarrod McGrath, CEO of Smart WFM. Jarrod and I will examine the question of what CEOs need to do to cope in this era of constant change, like AI, and what strategies they need to manage things in these uncertain times.
And I’ll be talking to Rabobank economist Teeuwe Mevissen about how China, Australia’s biggest trading partner, is dealing with the tariffs, about the negotiations with the US which he says have reached a truce, and how China is changing its economy.
But first, let’s talk to Jarrod McGrath.
So what’s happening in the news?
New estimates from the Congressional Budget Office show that Republicans’ marquee domestic policy bill that made its way through the Senate would result in deeper cuts and more Americans losing health insurance coverage than the original measure that passed the House last month. According to a report, the legislation would mean 11.8 million more Americans would become uninsured by 2034. .Federal spending on Medicaid, Medicar e and Obamacare would be reduced by more than $1.1 trillion over that period — with more than $1 trillion of those cuts coming from Medicaid alone. The fresh estimates make official what many analysts had already predicted and some Republican lawmakers had feared. The size and scope of the health care cuts in the bill, particularly from Medicaid, have been hotly debated, with fiscal hawks pressing for bigger reductions and other Republicans resisting them as they consider the impact on their constituents and health providers in their districts and states. Donald Trump’s “big, beautiful bill”, which would extend Trump’s 2017 tax cuts, cut Medicaid deeply, add $3.33 trillion to US debt and increase borrowing passed the Senate with vice-President Vance casting tie breaking vote after three Republicans broke ranks and joined the Democrats in Opposition. The impact on health care is also at odds with President Trump’s vow not to touch Medicaid except to do away with waste and fraud. Then again, Trump is a politician and politicians lie. The scale of the proposed reductions in Medicaid is unprecedented in the history of the program, which has tended to expand coverage over time since its creation in 1965.
The Bank for International Settlements, one of the world’s most important financial institutions has warned that Donald Trump’s tariffs are as big a risk of higher inflation than the supply chain disruptions that drove up prices during COVID. This comes amid signs Australian businesses are already paying the price of the US president’s economic plan. The Bank for International Settlements has used its closely watched annual report to argue interest rates may have to be pushed up if Trump’s tariff agenda leads to an inflation outbreak. While the huge tariffs promised by the president in his “liberation day” announcement in early April have subsided, many American tariffs are due to rise sharply from July 9. The BIS, the central bank to the world’s central banks, said the soft global economic landing hoped for at the start of the year now seemed “more elusive” as long-established trade relationships had begun to fray. It said economic fragmentation and protectionism would exacerbate a decades-long slowdown in economic and productivity growth as tariffs pose a risk of repeating the price pressures endured by most countries out of the pandemic “As the pandemic-era inflation experience made clear, disrupting supply chains could once more lead to upside surprises in inflation. Such a jolt to inflation could rekindle inflation expectations that remain sensitive after the COVID-19-related inflation experience.” BIS general manager Agustin Carstens said the global economic landscape was being reshaped in part by the uncertainty and unpredictability caused by the trade disruptions unleashed by the United States. There are already signs overseas of the financial hit caused by Trump’s tariff agenda. Canada’s economy contracted in April as its close trade links to the US were disrupted while data released last week revealed American GDP fell by 0.5% through the first three months of 2025. While the Australian economy grew through the March quarter, this pre-dated Trump’s liberation day announcements. But there are signs a rise in American tariffs is already starting to affect local firms. A survey by MYOB to be released this week shows Trump’s tariffs have been felt by 17% of small and mid-sized businesses. About 41% of those surveyed said they believed the tariffs would destabilise the global economy, with more than a third expecting the imposts to both lift business costs and inflation.
Shipping and logistics companies are now warning that Donald Trump’s erratic tariff policies combined with low river levels are causing Europe’s worst supply chain congestion since the coronavirus pandemic. The result of the tariffs: barges left waiting days to pick up goods and container ships facing long waits. The problems — worst at the ports of Rotterdam, Antwerp and Hamburg — expected to persist for at least several months. “All the large hubs are overflowing,” said Caesar Luikenaar, managing director of WEC Lines, a Netherlands-based shipping company. A number of important ports across Europe were operating at their maximum capacity, Luikenaar said. Albert van Ommen, chief executive of the Netherlands-based logistics company Euro-Rijn Group, said he thought the congestion was the worst since the pandemic, when cargo flows remained unexpectedly resilient and overwhelmed ports that were struggling with staffing. The problems are the latest blow to a worldwide logistics system that had until recently allowed many companies to maintain minimal stock inventories, secure in the knowledge that scheduled shipping services would replenish stock regularly, to a fixed timetable. One German logistics company, Contargo, has warned customers that barges are waiting an average of 66 hours to load containers at Antwerp and 77 hours at Rotterdam.
Gold is expected to become Australia’s third-highest value export in the next year, overtaking metallurgical coal, a key ingredient in steelmaking, according to a federal government report. The precious metal’s price rocketed to records in the June quarter, above $US3400 ($A5208) an ounce, as investors sought safe haven in gold amid global sharemarket volatility caused by conflicts in the Middle East and Ukraine, and uncertainty around the US Trump administration’s trade war. Global central banks have also been diversifying their reserves away from US dollars and into gold, fuelling demand for the metal. Australia’s export earnings from gold are expected to hit $56 billion in the next year, compared with metallurgical coal exports that are likely to remain steady around $40 billion. The forecasts were contained in the federal government’s Department of Industry, Science and Resources June quarterly resources and energy report. It said the outlook for the nation’s overall resource and energy export earnings was for a decline of 4% to $369 billion in the year ahead. The fall in earnings has been blamed on growing global trade barriers, weak international economic growth and declining bulk commodity prices. Earnings from iron ore, which accounts for a quarter of Australia’s resource and energy exports, will fall by $11 billion to $105 billion in the next 12 months. Australia is the world’s largest exporter of iron ore, with annual output of about 900 million tonnes, the bulk of which is bought by China. The price of iron ore, the nation’s top export, recently dropped below $US100 a tonne to about $US93, after data out of China revealed a fall in its steel production. Iron ore is a key ingredient in steel making. The federal government report also said Australia’s export earnings from liquefied natural gas would decline because of excess global supply, dropping at least $6 billion to $60 billion in the next financial year. The weaker revenues for iron ore and LNG are offsetting a rise in gold exports, according to the report.
OpenAI, the maker of ChatGPT, is urging the Albanese government to introduce tax breaks for businesses that adopt artificial intelligence, as it launched a report claiming the new technology could make the economy $115 billion bigger. OpenAI chief economist Ronnie Chatterji conducted a whirlwind set of meetings in Parliament House on Monday, as the San Francisco-based company prepared to launch an AI blueprint for Australia, co-authored with economic consultancy Mandala. Chatterji met with Industry and Innovation Minister Tim Ayres, Skills Minister Andrew Giles, and Assistant Minister for Productivity Andrew Leigh. On Tuesday he will meet Assistant Minister for Science, Technology and the Digital Economy, Andrew Charlton, at an AI policy forum at the University of Technology in Sydney. The meetings come just months before the Albanese government’s economic reform roundtable being held from August 19 to 21, where one of the major topics of debate will be how stringently AI should be regulated. Treasurer Jim Chalmers has backed light-touch regulation, saying the government’s focus is on how the technology can boost productivity, rather than establishing guardrails for its use. But unions have said they will push at the summit for the government to regulate the use of AI in the workplace. They also want to ensure that the economic benefits and productivity gains of AI flow to workers, and don’t just boost corporate profits. Chatterji said history showed people were anxious about new technologies, comparing AI to the advent of electricity. But evidence showed AI was being used to make workers more productive rather than to replace them. “A lot of these technologies have created complements to workers, not substitutes,” Chatterji said. “If you look at the studies that are being put out right now – some of it’s been peer-reviewed, some of it’s under review and they are working papers – a lot of them are finding that AI so far is a complement to workers, increasing their productivity [and] aligning with someone’s existing skills to allow them to do more.” The company’s executives have put a focus on growing in the Asia Pacific region, with its chief strategy officer Jason Kwon also visiting Australia in June. He announced the opening of its third Asian office in Korea – following Tokyo and Singapore. It’s believed that the company is considering opening an Australian subsidiary with a local boss. Its report claims the financial benefit of AI will be achieved in three main areas: $80 billion annually from productivity improvements, $25 billion from improved output quality, $6 billion from new businesses and $4 billion from new jobs.
Paul Keating, the man who came up with the 12% superannuation guarantee that will flow to millions of workers from July 1, has likened the pension system to a binding force between all Australians. The super guarantee levy has increased half a percentage point every year since 2022, reaching 12% with the 2025-26 financial year. Keating was instrumental in the first step towards universal superannuation, when in 1985 the ACTU sought to have 3% of industrial workers’ wages go into retirement savings funds run jointly by union and employer groups. Keating on Monday said the superannuation system had matured with per the 12% guarantee, delivering Australia the fourth-largest retirement accumulation in the world at $4.1 trillion, which is 150% of GDP. The Reserve Bank has estimated super will reach $8 trillion by 2035, when Australia will have the second-largest retirement base in the world, behind only the United States. Keating said super had been a revolution in national and personal savings, unlike any other nation. It had also become instrumental to the nation’s economic story. “Superannuation, like Medicare, is now an Australian community standard, binding the whole population as a national economic family, with each person having a place,” Keating said.
S&P Global says state governments cannot keep blaming the COVID-19 pandemic for mounting debts, with borrowing increasing rapidly over the next four years due to infrastructure spending and household handouts. The high-profile credit ratings agency said that, by 2029, debt will rise to more than 44% of Tasmania’s annual economic output. Debt as a share of gross state product, a widely used measure that shows the size of a government’s liabilities relative to the size of its local economy, will reach 35.2% in Victoria and 32.2% in Queensland in that time. Martin Foo, an analyst at S&P Global Ratings, said some state governments continued to blame their bulging debt piles on the pandemic. “While it is true that the pandemic necessitated a strong fiscal response, it is noteworthy that the projected surge in debt over 2024-2029 is almost just as large as the increase that occurred over 2019-2024,” Foo said, adding while stronger-than-expected job and property markets had created stronger revenues, those windfalls had been used on subsidies and concessions. Victoria has most explicitly linked its debt burden to the pandemic, introducing a “COVID debt repayment plan” in 2023 that included higher taxes on businesses and investors. The Queensland government last week blamed Victoria and NSW’s spending during the pandemic for an $800 million reduction in its estimated GST revenue next financial year
Taxpayers would save $12.1 billion over the next decade if 10% of National Disability Insurance Scheme (NDIS) payments were set aside for people not currently on the scheme – including children needing temporary support – and the current model of individual support plans was reserved for Australians with life-long disabilities, a Grattan Institute report says. It can take years of waiting and one-on-one specialist appointments to gain support under current NDIS procedures. Removing some of that red tape and allowing children with autism and developmental difficulties – and their parents – to receive support directly at childcare and primary schools would be more effective and cheaper, according to the Grattan Institute report. This new era of the disability scheme, known as “foundational supports”, could be funded using the existing NDIS envelope, the think tank’s report says, and should be brought in over the next five years if the new-look system is to pile the least amount of pressure on federal and state budgets. Governments could save an additional $34 billion over 10 years by not needing to find extra money for the new disability system. Foundational supports were meant to roll out on Tuesday under the original deadline set by previous NDIS minister Bill Shorten. However, that start date has been pushed back to at least December as the states and federal government negotiate details.
A recent discovery of a 55 billion metric ton iron ore reserve in Western Australia’s Hamersley region, valued at US $6 trillion, is expected to significantly impact global iron ore markets and prices. A new joint venture mine between China Baowu Steel Group (46%) and Rio Tinto (54%) has opened in the Paraburdoo mining hub, adding to Australia’s iron ore production capacity. Experts believe it could operate for the next two decades. These new discoveries and investments are predicted to shift global supply chains, potentially lowering iron ore prices and solidifying Australia’s role as a leading supplier, while China is likely to remain a key partner despite efforts for self-reliance. As a result of these new discoveries and ongoing investments, analysts now predict a shift in global supply chains. Countries seeking to diversify may lean more on Australia, moving away from Brazil or African sources. Increased exports from Western Australia could also drive down global iron ore prices. This will benefit sectors like construction and automotive, while cementing Australia’s role as a global leader.
The prudential regulator has warned the Albanese government that cyberattacks on large superannuation funds will increase in size and frequency, and that future shocks to the $4.1 trillion super sector could threaten the stability of the banking system. The Australian Prudential Regulation Authority said it would conduct its first system-wide stress test this year to identify potential cross-sector links between the banking industry and the superannuation sector. The stress test will focus on liquidity shocks that hit both industries at the same time. “APRA continues to look forward to think about future vulnerabilities, particularly as the [superannuation] sector grows in size, complexity, and interconnection,” the regulator said. “Cyberattacks at large superannuation funds, that look likely to increase in scope and frequency, highlight that capability in the management of cyber and operational risks must improve.”
And that’s it for this week.
And next week, And that’s it for this week. And next week, I’ll be talking to Denis O’Shea who founded Mobile Mentor in New Zealand in 2004. Since then, the company has helped millions of people unlock the full potential of their technology. Mobile Mentor is a global leader in the endpoint ecosystem, helping clients to navigate the right balance between security and employee experience. The company was named Microsoft’s 2021 Global Partner of the year for Modern Endpoint Management primarily for their work helping Alive Hospice safely treat patients during COVID 19.
And I’ll be talking to RMIT economist Sinclair Davidson about the Australian government’s summit on productivity and tax reform. What do they have to do?
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com
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Looking forward to the next episode of Talking Business.
