Australian Treasurer Jim Chalmers is trying to hold his budget together amid global chaos. He says it’s “hostage to decisions” coming out of Washington, Tehran, and Tel Aviv
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 https://www.businessacumen.biz/.
I am Leon Gettler. My job is review and monitor the week’s news in business finance and economics. I bring it all to you every week.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com or whatever your favourite podcast platform is.
This is episode number 12 in our series for 2026 and today’s date is Friday April 24
First, I’ll be talking to Jun Lee, Executive Director of Gami Chicken, the chain of Korean restaurants operating in Victoria, NSW, ACT, South Australia and Western Australia. He set it up as a restaurant in Victoria and has now franchised it out. He’s planning to have Gami restaurants operating in every state and territory, bringing Korean culture to Australia.
And I’ll be talking to AMP Capital chief economist Shane Oliver about the market response to what’s happening in the Middle East and oil prices, the risk of recession and stagflation and how the RBA will be responding to all this.
But first, let’s talk to Jun Lee
So what’s happening in the news?
First up — the Iran situation, and it is a mess. Six weeks into the U.S.-Iran war, peace talks are stuck. Iran is refusing to send its team to Islamabad for the next round of negotiations until the U.S. lifts its blockade of the Strait of Hormuz. Trump says the blockade stays until a deal is done. Classic standoff. And it’s not being helped by the mixed messages coming out of Washington. In the same breath this week, Trump predicted “great success” with Iran — and said “I expect to be bombing.” He told reporters on Monday that talks were starting in hours and a final deal would be signed by evening. None of that happened. One Middle East official summed it up bluntly: “There are better ways to send messages, but Donald Trump is Donald Trump.” The concern now is oil prices. Markets briefly dipped on Trump’s social posts, but crude is up around 6% on the week and keeps climbing. One energy analyst put it simply — since the war began, all the volatility aside, the trend line on oil is steadily upward. Which means prices at the pump are heading in the wrong direction — and that’s a real political problem for Trump and the Republicans.
The Strait of Hormuz crisis is hitting travellers hard. Jet fuel has nearly doubled in price to around $200 a barrel, and airlines around the world are responding by cutting flights and hiking fares. In Europe, the IEA is warning there’s only about six weeks of jet fuel supply left if the strait stays closed. Ryanair is eyeing route cuts. KLM has already axed 80 return flights from Amsterdam. Lufthansa is retiring planes early. In Asia, AirAsia has cut 10% of its flights and raised ticket prices by 30 to 40%. United Airlines in the US says sustained prices at this level would cost them an extra $11 billion a year — more than double their best-ever profit. The bottom line for listeners: if you’re planning to fly anywhere in the next few months, expect to pay more — and check your booking.
Back home, Treasurer Jim Chalmers is trying to hold his budget together amid global chaos. He’s just back from the G20 in Washington, and he’s been pretty blunt — the May 12 budget is being held, in his words, “hostage to decisions” coming out of Washington, Tehran, and Tel Aviv. The big pressures are fuel security and supply chain resilience. Australia currently holds just 30 days of jet fuel and 31 days of diesel — well short of the international 90-day standard. The government has already committed to halving the fuel excise temporarily and subsidising refineries. A billion dollars in zero-interest loans for businesses hit by the crisis opens for applications on Monday. Chalmers insists the reform agenda — tax, productivity, savings — is still on the table. But with oil potentially spiking again when markets open Monday, the numbers he’s working with today may look very different by budget night.
Following on from that, there’s a separate but related push happening outside of government. Former NSW Premier Mike Baird and former Queensland Premier Anna Bligh — one Liberal, one Labor — are teaming up to try to break Australia’s long tax reform deadlock. A new report from the McKinnon Institute argues that Australia hasn’t had any meaningful tax reform since the GST was introduced back in 2000 — that’s a quarter century of false starts. The report says that’s been dragging on economic growth, productivity and living standards ever since. Baird is convening a broad coalition this Friday — business groups, welfare organisations, economists, former politicians — to try to agree on some core principles for how serious reform could actually happen. The idea is to build a wider base of support so that tax reform isn’t left to sink or swim on one political moment. Both Baird and Bligh point to the same old culprits for why reform keeps failing — short-termism, scare campaigns, and political instability. Bligh notes that Australia has churned through prime ministers for most of the past 25 years, which makes tackling anything difficult. But she’s cautiously optimistic right now, saying Labor’s strong majority in parliament might open a window for harder conversations. The ambition here is big — they’re talking about reform on the scale of what Hawke and Keating did in the 80s, or Howard and Costello with the GST. Whether the political will exists to match that ambition is, of course, another question entirely.
The Albanese government is warning that if states don’t sign up to its new “Thriving Kids” program, they’ll be hit with billions in extra costs. The message is simple: get on board, or pay more. Here’s the backdrop. The NDIS is costing $52 billion this year, and it’s heading toward $62 billion by 2029. That’s not sustainable, and Treasurer Jim Chalmers says reining it in will be the single biggest savings measure in the May budget. The core problem? Kids with mild autism and low-level developmental conditions flooded the scheme — even though it was never designed to cover them. Thriving Kids would shift responsibility for those children back to the states. Now, the states already agreed to this back in 2023 — in exchange for $25 billion in extra hospital and GST funding. Then they walked away from the deal. So the feds went ahead anyway, handed over another $8 billion, and are now essentially saying: this is happening, get in line. Queensland is the main holdout. And the federal government is making the math crystal clear — refuse to sign up, and you’ll pay more through escalating NDIS cost-sharing, not less. Meanwhile, Chalmers is also flagging that the budget will include a “downside scenario” because of the war in the Middle East — higher oil prices, slower growth, rising unemployment. Westpac thinks unemployment could hit 5% by early 2027. HSBC’s chief economist Paul Bloxham is even predicting the economy contracts this quarter. And there’s one more piece — the government looks set to wind back the 50% capital gains tax discount for property investors. The Opposition says it’ll probably support the NDIS measures. So on that at least, there’s rare common ground in Canberra.
The Albanese government is scrambling to shore up Australia’s supplies of diesel, fertiliser, and jet fuel — and it’s a race against time. Here’s the backstory. The Strait of Hormuz — that narrow shipping lane between Iran and Oman — has been mostly closed since the US and Israel struck Iran back in February. Normally, 20% of the world’s oil and nearly a third of its fertiliser flows through there. When it shut down, cargo prices jumped from $100 million to $150 million a pop. Now, petrol supplies look okay for now — people cut back when prices spike, they catch the bus, ride a bike. But diesel and fertiliser? Farmers and truckers can’t just switch. They have to buy it, whatever the price. So what’s the government doing? Agriculture Minister Julie Collins is announcing new deals with Wesfarmers and Incitec Pivot to underwrite fertiliser purchases on the global market. Energy Minister Chris Bowen is expected to follow with more moves on diesel. And Albanese is calling a National Cabinet meeting later this week to loop in the states and territories. The real warning though comes from Drew Morland, who runs diesel wholesaler iOR. He says right now, other countries are running down their existing stockpiles rather than buying on the spot market — which is keeping some availability. But once those reserves run dry? Australia will be competing with the world for supplies, and we tend to feel those squeezes harder than most. There’s also a ticking clock — a two-week ceasefire expires on April 23rd, and even if talks progress, supply disruptions are expected to last months. Watch this space.
The Australian Office of Financial Management — the federal agency that manages over a trillion dollars in government debt — has been subjected to an independent review after serious concerns were raised directly with the Treasury Secretary and the Treasurer himself. The AOFM, which last year issued around $100 billion in new Commonwealth bonds, has been struggling with high staff turnover — peaking at 36% post-pandemic — declining employee engagement, and fallout from an internal restructure that cut about seven of its fifty staff. The agency’s CEO, Anna Hughes, initiated that restructure in September under a program called “Future AOFM.” Treasury Secretary Jenny Wilkinson called a high-level meeting with Hughes last November and followed up with a list of 14 specific questions about operations, leadership, and staff wellbeing. Wilkinson initially told the Treasurer she was satisfied the restructure was sound — but a month later, something changed. The specifics are redacted in the documents. It was actually Hughes herself who then wrote to Wilkinson requesting the independent review, saying “some concerns have been raised regarding our ongoing capability.” Former Reserve Bank deputy governor Guy Debelle is heading the probe, which was due to wrap up this month — just as the federal budget looms and the AOFM’s fundraising task is set to grow.
The Albanese government wants up to $15 billion in private investment — including from superannuation funds — to help bankroll a $53 billion defence spending boost. But the idea is running into some serious headwinds. Superannuation giants are pushing back. Colonial First State and UniSuper both made clear that fund trustees have a legal obligation to act in members’ best financial interests — not national strategic ones. UniSuper’s CIO John Pearce pointed to a specific structural problem: APRA’s annual performance test, which benchmarks funds against peers each year. If a fund parks money in a defence project with a ten-year payoff horizon, it could look like an underperformer for the entire decade leading up to it. Pearce said the performance test needs an overhaul before super funds will seriously engage. Defence companies are raising a different concern. Gilmour Space Technologies CEO Adam Gilmour said the fundamental problem is that the Australian government simply isn’t a reliable customer of Australian defence businesses — and without steady government contracts, those companies aren’t attractive to investors, including super funds. His view: signals from Canberra are fine, but contracts are what matter. The government has pointed to one successful model — a joint operations facility at Bungendore built and managed privately through IFM Investors — but has yet to spell out exactly where it wants private capital to go across the broader defence build-up.
Good news for Woolworths and Coles shareholders — the two supermarket giants are set for a serious profit bump, and ironically, it’s the cost of living crunch driving it. UBS analysts have lifted their profit forecasts for both retailers, tipping a combined $125 million boost over the next financial year. The logic? When times get tough, people stop eating out and start cooking at home — and that means more trolleys rolling through supermarket aisles. Woolworths is expected to post profits of $1.86 billion for the year ending June 2026, up from $1.39 billion last year. Coles is forecast to hit $1.25 billion this year, rising to $1.43 billion the year after. A key driver is the closure of the Strait of Hormuz, which has pushed fuel and materials costs sharply higher. That flows through to higher shelf prices — and higher prices mean bigger revenues, even if shoppers are buying a little less. UBS analyst Shaun Cousins says shoppers will increasingly trade down to home-brand products, promotions, and discount stores like Aldi. And here’s the twist — that shift to private labels actually helps supermarket margins. But it’s not all smooth sailing. Both chains are under serious political and regulatory heat over pricing. On Tuesday, Woolworths faces the Federal Court over allegations it faked discounts on dozens of products — a similar case against Coles was already heard in February. Meanwhile, suppliers are pushing for price increases, starting with fuel surcharges from logistics companies. Woolworths and Coles are resisting, saying they want to protect customers at the checkout — but UBS warns that position won’t be sustainable if inflation keeps climbing. And one fund manager we heard from struck a cautious note — Hugh Dive from Atlas Funds Management says both stocks are a little too expensive given their limited growth, and there’s a real risk Aldi quietly picks up market share if shoppers keep looking for a cheaper basket.
Fresh food prices are heading up, and the war in the Middle East is a big reason why. It’s squeezing Australia’s fuel and fertiliser supplies, and that pain is flowing right through the food chain — from the farm gate to your shopping trolley. Dairy is expected to take the biggest hit. One south-west Victorian farmer told us fertiliser costs have more than doubled in just six weeks — from $800 to $1,800 a tonne. Ben Bennett, who’s also president of Australian Dairy Farmers, says milk needs to go up by 30 cents a litre to keep farmers and freight operators viable. That would take home brand milk from around $1.65 to under $2. He’s also calling for a 20% rise across cheese, butter and yoghurt. Bread prices are also expected to rise within the next four to six weeks, according to Ritchies IGA chief executive Fred Harrison. For most city shoppers, analysts are forecasting a 2 to 3% increase across the board. But if you’re in a regional or remote area, brace yourself — it could be closer to 10%, simply because of how far goods have to travel. And here’s the thing — even if the conflict ended tomorrow, prices would still spike for at least another month due to supply chain delays. The broader concern? If food inflation keeps climbing, the Reserve Bank may feel pressure to lift interest rates again. One market analyst says we could be looking at six months of price pain.
Here’s something that might surprise you — Australians are actually using more cash than they were a few years ago. And that’s a first in nearly twenty years. New research from the Reserve Bank shows that after decades of decline, cash is making a small but genuine comeback. Between 2007 and 2022, cash use absolutely collapsed — from nearly 70% of all transactions down to just 13%. But since then, it’s ticked back up to 15%. Doesn’t sound like much, but it’s the first time that needle has moved in the right direction since electronic payments took over. So what’s driving it? A couple of things. Those public campaigns pushing merchants to keep accepting cash have had an effect. But so have the very practical moments when the electronic system has simply gone down — Westpac customers found that out the hard way just last December. And when floods or fires knock out power and connectivity, suddenly cash isn’t old-fashioned, it’s essential. The RBA researchers found that about half of Australians use cash in a typical week, and one-third would face real hardship if cash became hard to access. Three-quarters of us are carrying some in our wallets right now — basically as a backup plan. Around 1.5 million Australians are what the researchers call “high cash users” — meaning at least 80% of their transactions are in notes. That’s about 7% of the population, and it hasn’t changed since 2022. Older Australians, people in regional areas, and lower-income earners make up the bulk of that group. The generational split is pretty striking though. Nearly two-thirds of 18 to 29-year-olds don’t use cash at all. But flip to the over-65s, and 70% of them are still reaching for their wallet. One thing that is getting harder — actually getting cash out. With fewer people using it, the cost of moving cash around the country has gone up, and the RBA admits that accessing cash has become less convenient than it was three years ago. That’s a problem worth watching.
And that’s it for this week.
And next week, I’ll be talking to Doug Hawkins, CEO of Pancare, an an organisation which raises awareness, supports families and funds research for upper gastrointestinal (GI) cancers.
And I’ll be talking to independent economist Saul Eslake about the risks of recession and stagflation.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com or whatever your favourite podcast platform is.
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