Former Reserve Bank of Australia governor Philip Lowe is back in the spotlight, and he’s not mincing words, warning that the federal government may be making Australia’s inflation problem worse.
Welcome to Talking Business, a podcast produced in Melbourne, Australia. You can find the podcast on Acast, my website, the Apple Podcasts store, or wherever you get your podcasts. You can also access it via the Business Acumen website at www.businessacumen.biz. I’m Leon Gettler. Each week I review and monitor the latest news in business, finance and economics, and bring it to you. For exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business at leongettler.com or on your favourite podcast platform.
This is episode number 3 for 2026 and today’s date is Friday, February 20. First, I’ll be speaking with Andrew Binns, CEO of the Australian Communities Foundation, about new research showing why only one in four not-for-profits feels financially stable.
Then I’ll talk to RMIT economist Sinclair Davidson about Australia’s economic outlook and the Budget challenges ahead for Treasurer Jim Chalmers. But first, let’s talk to Andrew Binns.
So what’s happening in the news?
Let’s start with a big shift coming out of Washington — and it’s one that’s surprising just about everyone watching U.S. trade policy. President Trump, who has proudly worn the “Tariff Man” badge for years, is now preparing to scale back some of his signature steel and aluminium tariffs. Yes, you heard that right. The administration that built its economic identity around aggressive protectionism is now quietly stepping back from it. Why the sudden rethink? Well, the political winds are changing. With the November midterms approaching and approval ratings under pressure, the White House is staring down a very unhappy electorate. More than 70% of Americans say they’re dissatisfied with the economy. And the message they’re sending is pretty simple: tariffs aren’t abstract policy tools — they’re pushing up the price of everyday goods. We’re talking washing machines, ovens, construction materials, even the aluminium in soda cans. When voters start noticing that their weekly shop and household appliances cost more, the political calculus changes fast. Behind the scenes, officials are admitting something they’ve never said publicly: the tariff system has become an enforcement nightmare. Companies have been lobbying to classify everything from bicycle parts to cake tins as national security risks just to get tariff protection. One European executive even reported receiving four different tariff rates for four identical containers of machinery. That’s how inconsistent the system has become. And it’s not just voters pushing back. The Republican Party itself is getting nervous. This week, the House voted to overturn tariffs on Canada — and several Republicans crossed the floor to join Democrats. A presidential veto is almost guaranteed, but the symbolism is powerful. The GOP is worried about small businesses, manufacturers, and swing‑state voters who are feeling the pain. So what’s the likely outcome? Expect more exemptions, a halt to expanding the tariff “hit list,” and a shift toward targeted investigations rather than broad‑brush duties. The big question now is whether this is a temporary tactical retreat ahead of the election — or the beginning of the end of the trade war.
Back home, we’re seeing movement on another long‑running trade story. After six years of negotiations — and several moments where the whole thing looked doomed — Australia and the European Union appear close to finalising a major free trade agreement. Trade Minister Don Farrell has just returned from Brussels, and while the fine print is still being worked through, the two biggest sticking points — beef quotas and the use of the name “Prosecco” — seem to have been resolved. That alone is remarkable, given how entrenched both sides were. This deal matters. The EU is Australia’s third‑largest trading partner, and the agreement would open access to a market of 450 million consumers. Treasury modelling suggests it could deliver a meaningful long‑term boost to GDP, particularly for exporters looking to diversify beyond China. For Australian producers — especially in agriculture, wine, and advanced manufacturing — this could be one of the most significant trade developments in years.
Former Reserve Bank governor Philip Lowe is back in the spotlight, and he’s not mincing words. Now in his new role at the ASX, Lowe has warned that the federal government may be making Australia’s inflation problem worse. His argument is straightforward: cost‑of‑living handouts might be politically popular, but they also boost demand at a time when productivity growth is weak. And without stronger productivity, Australia risks a future of higher interest rates, weaker wage growth, and stagnant living standards. The RBA expects inflation to remain above target until 2028 — a long way off — and it has downgraded medium‑term growth to just 1.6%, the weakest forecast on record. Even more concerning, the bank says more goods and services are rising in price faster than the inflation target, suggesting demand is still running ahead of supply. Lowe’s message is clear: unless productivity improves, Australia will be stuck in a cycle of high prices and sluggish growth.
The International Monetary Fund has also weighed in, and its warning is just as sharp. It’s worried that some states — particularly Victoria and the Northern Territory — are overspending to the point where the federal government may eventually need to step in. Because Canberra is effectively seen as the guarantor of state debt, this could push up borrowing costs nationally. The IMF is calling for sweeping tax reform: a higher GST, replacing stamp duty with land tax, and rethinking capital gains tax concessions.
It also criticised the government’s 5% home deposit scheme, warning it could push house prices even higher by bringing demand forward. Its advice? Limit the scheme to new builds to encourage construction. Economists are again urging zoning reform and a shift from stamp duty to land tax to improve housing affordability and workforce mobility. It’s a familiar debate, but the pressure is building.
Meanwhile, the ACCC is taking Coles to the Federal Court, accusing the supermarket giant of misleading shoppers with its “Down Down” campaign. The allegation is that Coles raised prices before promoting discounts — essentially giving the impression of savings that weren’t really there. Internal emails suggest staff were worried competitors were “pushing the line,” and this case could become one of the biggest tests yet of price‑gouging claims in the supermarket sector.
Childcare is shaping up as a major election issue. The Coalition is proposing a voucher model where funding follows the child, allowing families to use subsidies for nannies or in‑home care rather than just regulated centres. It sets up a clear ideological clash: a market‑driven model versus Labor’s universal childcare approach. Expect this debate to heat up quickly.
Private health insurance premiums will rise by an average of 4.41% in April — the biggest increase since 2017. Insurers say rising medical costs and an ageing population are driving the jump. For households already dealing with higher rents, mortgages and grocery bills, this is another hit to the budget.
New data shows Baby Boomers and older Gen X Australians are now driving discretionary spending — especially on travel, dining and major purchases. Younger households, meanwhile, remain squeezed by housing costs and rising rents. It’s a generational divide that’s becoming more pronounced.
And the profit reporting season continues.
BHP lifted first‑half profit 28% to US$5.64 billion. National Australia Bank’s quarterly net profit jumped 30% to $2.21 billion. Netwealth swung to a $2.2 million loss after regulatory settlements, while Healius posted EBIT of $7.9 million after a prior loss. GPT returned to a $981 million profit. Ansell lifted EBIT 15.3%, and BlueScope profit jumped 118% to $391 million. A2 Milk lifted revenue 18.8% and EBITDA 18.4%. Treasury Wine Estates reported a $649 million loss, and Australian Clinical Labs profit fell 51.7%. Stockland profit rose to $292 million, JB Hi‑Fi lifted profit 7.1% to $305.8 million, and OohMedia profit fell to $16.9 million. Aurizon EBITDA rose 9% to $891 million, while Bendigo Bank profit fell 3.3%. Audinate widened its loss. Abacus Storage King profit rose to $71.1 million, Challenger profit rose to $339 million, and Reliance Worldwide profit fell 34.9%. Macmahon profit rose to $48.2 million, Baby Bunting profit rose 4.1%, and Judo profit climbed 32%. Sims swung to a $29.9 million loss, Seek reported a $178 million loss, Iluka reported a $288 million loss, and Suncorp profit fell sharply to $263 million. Fletcher Building narrowed losses, Mirvac profit rose 5% to $248 million, Spark NZ profit rose 82.9%, Hansen EBITDA rose 46%, Dexus returned to a $348.5 million profit, Lottery Corp profit slipped 1.4%, and Vicinity profit rose to $805.6 million.
And that’s it for this week.
And next week, I’ll be talking with Chris Petzoldt, CEO of consultancy firm Pretian Squared, about what a higher‑for‑longer interest rate environment means for businesses. Many companies — from manufacturers to service providers and retailers — are struggling to juggle rising operational costs while facing customer resistance driven by cost‑of‑living pressures.
And I’ll be talking to Indeed economist Callam Pickering about the latest jobs figures.
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Looking forward to the next episode of Talking Business next week.
