RBA cuts interest rates for the third time in 6 months with a warning on productivity.
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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.
For the most exclusive access to leading economists and business leaders from around the world, subscribe or whatever your favourite podcast platform is to Talking Business from my website leongettler.com or whatever your favourite podcast platform is.
This is episode number 27 in our series for 2025 and today’s date is Friday August 15
First, I’ll be talking to Bob Huber, Chief Security Officer and Head of Research at Tenable about the prevalence of Ransomware, how it’s grown with all the remote work that’s going on, how Ransomware has now become a business and how organisations can protect themselves.
And I’ll be talking to EY economist Cherelle Murphy about the Reserve Bank of Australia’s scope for interest rate cuts.
But first, let’s talk to Bob Huber.
So what’s happening in the news?
Australia’s central bank trimmed its key interest rate for a third time this year, while signalling future policy decisions will hinge on incoming data. The Reserve Bank of Australia on Tuesday lowered its key rate to 3.6% — a level not seen since April 2023 — and in line with expectations. The RBA has now eased by 75 basis points in its current campaign and focus is now shifting to the likely scope of further cuts given a still-tight labor market and poor productivity growth. “The board will be attentive to the data and the evolving assessment of risks to guide its decisions,” the monetary policy board said in a statement after a unanimous decision. “In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labor market.” Tuesday’s rate cut comes five weeks after the central bank stunned investors by standing pat in defiance of widespread expectations for a cut. Data since then has shown the RBA’s preferred quarterly trimmed mean gauge of inflation cooled to 2.7%, edging closer to the midpoint of its 2-3% target, an outcome Deputy Governor Andrew Hauser described as “very welcome.” At the same time, economic growth looks to have picked up in the three months through June led by household consumption and trade. Gross domestic product data for the second quarter will be released on Sept. 3. The state of Australia’s labour market is less clear, however, with unemployment ticking up to a four-year high of 4.3% in June in a tentative sign of cooling. Further clouding the outlook is the Trump administration’s protectionist policies, heightened global tension and a slowdown in Chinese demand. In its quarterly Statement on Monetary Policy released alongside its decision, the RBA nudged down its estimate for Australia’s gross domestic product growth – partly due to the lower assumption for productivity growth which was taken down to 0.7% per annum from 1% previously while core inflation is seen near the midpoint of its 2-3% target through most of the forecast horizon. The RBA’s cut comes as global policymakers grapple with the implications of higher US tariffs on inflation and economic growth.
More on the trade war between the US and China. US President Donald Trump has signed an executive order extending a tariff truce with China by another 90 days, a White House official says with only hours to go before US tariffs on Chinese goods were due to snap back to triple-digit rates. The order followed a non-committal answer by Trump to reporters as to whether he would extend the lower tariff rates a day after he urged Beijing to quadruple its purchases of US soybeans. A tariff truce between Beijing and Washington was set to expire on Tuesday August 12. The order prevents US tariffs on Chinese goods from shooting up to 145% with Chinese tariffs on US goods set to hit 125%, rates that would have resulted in a virtual trade embargo. Imports from China are currently subject to 30% tariffs, including a 10% base rate and 20% in fentanyl-related tariffs imposed by Washington in February and March. China had matched the de-escalation, lowering its rate on US imports to 10%. The two sides in May announced a truce in their trade dispute after talks in Geneva, Switzerland, agreeing to a 90-day period to allow further talks.
The Albanese government faces billions of dollars in public sector funding cuts, which bureaucrats warn threaten service delivery, key government initiatives and thousands of jobs. Key government departments including Health, Climate and Energy, Social Services and Attorney-Generals sounded the alarm in their incoming briefs to ministers, warning of budget cuts as large as 50% in coming years and asking where they should plan to cut workers. The worst of the looming budget shortfalls take effect from 2026-27 when at least 100 programs, and likely dozens more, will have their funding expire. The bottom line: the cabinet’s expenditure review committee had only extended funds for many non-ongoing programs until 2025-26, which kept costs lower over the four-year forward estimates ahead of the May 3 federal election. It is not uncommon for budgets to fall over the four-year forward estimates, particularly ahead of federal elections as treasurers try to portray the books in the most positive light The Health Department warned of looming “funding cliffs” with its budget forecast to decline from $1.69 billion in 2024-25 to $893 million by 2027-28. The biggest annual fall – $575 million – was forecast for 2026-27. “Over forward estimates portfolio level departmental funding down by 38% by 2028-29 driven by terminating measures for reforms,” the brief to Health Minister Mark Butler said, adding that it had 100 measures due to expire by June 30 next year, “the majority of which include service delivery and will require consideration”. Energy Minister Chris Bowen’s department forecast its funding would halve from $357 million in 2025-26 to $180 million by 2028-29. This would come over the same timeframe that Labor seeks to ramp up efforts to hit 82% renewables electricity generation by 2030, a policy that underpins its bid to reduce emissions by 43% on 2005 levels by the same date. The fall “mainly reflects the impact of terminating measures,” the incoming government brief prepared for Bowen and his office said.
In keeping with this, the National Disability Insurance Agency faces a funding shortfall of hundreds of millions of dollars and has warned the government attempts to rein in the $52 billion scheme will not work without further investment. Labor in December announced $280 million for the NDIA to employ 1000 new “support needs assessors” in the 2025-26 financial year as part of efforts to overhaul administration of the scheme. The government has said it will reduce the annual growth rate of the NDIS from 20% to 8%, saving almost $20 billion over four years to June 30, 2028. Yet funding for the 1000 jobs runs only until June 30, 2026.
The NDIA is the latest example of Labor’s expenditure review committee of cabinet creating “funding cliffs” that made the budget look rosier ahead of the federal election. Now that voters have cast their ballots, bureaucrats are warning the budget shortfalls need to be addressed. In its incoming government brief to the minister for NDIS, Jenny McAllister, said the agency faced “significant budget challenges” such as “insufficient future funding for service delivery and enabling operations”. It said the frontline workforce needed additional investment. “Continued investment is required to enable the NDIA to implement and operationalise recent reforms to continue to the current trajectory to meet the 8% annual growth target from July 1, 2026,” it warned. “Without sustained funding, current efficiencies and savings will be lost and directly impact the NDIA’s ability to achieve the target.” Underlining the unrealistic forecasts in the budget, a spokesman for McAllister indicated funding for the 1000 new jobs would continue beyond June 30. “The government will continue to make sure that frontline workers at the NDIA continue to be supported,” the spokesman said. “Their work is critically important … There will continue to be opportunities across the budgetary cycle to ensure that the NDIA has the resources it requires.”
Seven Group chief executive Ryan Stokes is calling for a carbon levy on imports to help create a level playing field for local industry. Mr Stokes argues a border carbon adjustment (BCA), similar to a levy the European Union applies, is justified to equalise costs between Australian producers and competitors overseas with lower emissions standards. The introduction of a BCA is one of a series of policy initiatives and changes pushed by Seven Group (now known as SGH) in a submission to the Government’s economic round table which will start on August 19. “As Australia continues to lift standards it becomes harder to compete against countries with lower standards. This is directly relevant to carbon emissions. The safeguard mechanism ensures Australian companies reduce their emissions,” Stokes said. “Imports of goods not subject to a similar mechanism and associated investment to deliver on this objective will undermine our industrial base’s competitive position and the environmental improvements underpinning these policies.”
Labor is poised to dump proposed new laws to regulate artificial intelligence as Prime Minister Anthony Albanese’s caucus splits on whether to clamp down on the sprawling technology. Underlining a growing appetite in the cabinet to seize what the Productivity Commission says could be a $200 billion boon assistant minister Andrew Charlton will lead a delegation to the US this week to meet executives from powerhouse firms OpenAI, Nvidia and Amazon Web Services. But Labor is confronting union calls to protect workers from replacement as it tries to deal Australia into the AI race. Backbencher Ed Husic is also urging Labor to push ahead with a new AI regulatory act he first proposed when he was a minister in Labor’s first term in office. Instead, Minister for Industry and Innovation Tim Ayres is working on a lighter touch model that will mostly adopt existing regulations in areas including privacy and copyright, avoiding new red tape that might undermine Treasurer Jim Chalmers second-term focus on productivity. But Labor senator Michelle Ananda-Rajah, a leading researcher on using AI to diagnose disease before she entered parliament, has been lobbying colleagues to embrace the new technology. She said she was “trenchantly opposed” to Husic’s model, which she claimed would stymie a local AI industry and deprive the nation of wealth.
At the same time, however, a Productivity Commission report recommended that teachers should use AI to create lesson plans, mark homework and provide real-time feedback to students. In other words, the Productivity Commission report calls on the federal government to lead a push to turbocharge the uptake of technology in schools. In the PC’s fourth report in the lead-up to next week’s economic reform roundtable, the agency said AI could reduce the administrative burden preventing teachers from spending more time with their students. “As technology continues to shape the future of life and work, Australians are more likely to need to understand and work with digital technologies such as AI,” the PC said in its interim report into building a skilled and adaptable workforce. The PC has emerged as the key champion of AI in the lead-up to the roundtable, which will take place from August 19 to 21. The advocacy has put the government-run think tank at odds with the union movement, which is calling for strict regulation on the adoption of AI amid fears the technology could be used to replace workers. The PC said generative AI could be used to create class preparation aids by taking existing materials, adapting them for different contexts or learning abilities, and then generating new materials from scratch. “Provided that teachers know how to assess the quality of the output, these tools can reduce the time and compliance burden on teachers to create lesson plans for every class, covering multiple scenarios they might face,” the PC said. AI could also be used to provide assessment and feedback, including creating adaptive learning applications that quiz students and adjust the difficulty of questions based on a student’s knowledge. “Edtech tools can be used to mark or analyse student work in real time to identify learning gaps or areas of need. They can also lessen the gap between early career and experienced teachers in identifying and assisting students who are falling behind,” the PC said. It pointed to an AI trial at Brisbane Catholic Education that generated average time savings of 9.5 hours per week for teachers across both their planning time and administrative tasks. Grattan Institute education program director Dr Jordana Hunter said there was huge potential for AI to transform school education, and sophisticated programs could be very effective helping young people learn complex skills across areas like maths and science.
And the profit reporting season continues. Commonwealth Bank of Australia has delivered a cash profit of $10.25 billion for the full-year, up 4%. Insurance Australia Group has posted a 51.3% profit jump to $1.35bn. Australia’s largest winemaker, Treasury Wine Estates’ earnings before interest, tax and the SGARA agricultural accounting standard were 15.5% higher at $470.6 million. Arena REIT, the childcare and healthcare property landlord reported a net operating profit of $73 million for the past 12 months, up 17% on the prior year. Gold miner Evolution Mining posted a 119% jump in net statutory profit to $926 million in fiscal 2025. Major electricity and gas supplier AGL Energy has posted a 21.2% drop in full-year core profit with a loss of $98 million, down from the year-earlier of $711 million. Amotiv, which specialises in automotive products, booked a loss of $106.3 million from continuing operations. Computershare’s Management EBIT rose 17.4% to 411.9 million. CAR Group has reported a 10% increase in net profit after tax to $275 million in the 2025 financial year. JB Hi Fi’s underlying earnings rose 9.4% to $694.1m for the year ended June 30. Its net profit was up 5.4% to $462.4 million, which was dragged lower to due to a one off payment for the settlement of the ACCC case brought against The Good Guys in 2024. Dexus Convenience Retail REIT reported a net profit after tax of $39.4 million for FY25, up significantly from $3.4 million the previous year due to property valuation gains. Dexus Industria REIT posted a statutory net profit after tax of $84.2 million, reversing last year’s $11.8 million loss due to property valuation gains. Financial services software technology provider Iress reported an unchanged statutory net profit after tax of $17.3 million for the six months to June 30. Charter Hall Social Infrastructure REIT returned to profit in the 2025 financial year, booking a $71 million statutory profit compared to a loss of $19.6 million in the prior year. Seven West Media made just $17 million in profit. Seven’s revenue fell 5%, while profits were down 63%. The company once again did not declare a dividend. Seven Group Holdings, the industrials conglomerate controlled by the billionaire Stokes family, posted a 5% uplift in statutory profit of $486 million for the 2025 financial year, as its Boral and WesTrac units drove earnings growth. Coal miner Coronado Global Resources has crashed to a $US172.4 million ($A264.7 million) loss for the six months to June 30. NBN CO’s annual net loss has narrowed by 10% to $963 million. Accounting firm Kelly Partners posted a 3.2% fall in full-year profit to $3.41 million for the 2025 financial year. Leading family safety and connection app Life360 had an 85% increase in adjusted EBITDA to $20.3 million. Renewable energy and carbon abatement company LGI reported a 14% increase in EBITDA to $17.4 million.
And that’s it for this week.
And next week, I’ll be talking to Matt Masson, CEO of CT Partners, Australia’s most influential independently owned travel buying network, representing 33 of the country’s largest independent corporate travel management firms and premium leisure agencies. Together, they manage travel for more than 1.4 million Australian travellers annually. We’ll talk about what business leaders should review in their travel program this EOFY and emerging trends in corporate and premium travel in FY26
And I’ll be talking to independent economist Saul Eslake about what we can expect from the government’s productivity and tax summit.
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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Looking forward to the next episode of Talking Business next week.
