Australia’s economic growth misses estimates rising just 2.1% in the third quarter.
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.
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 to Talking Business from my website leongettler.com or whatever your favourite podcast platform is.
This is episode number 43 in our series for 2025 and today’s date is Friday December 5.
First, I’ll be talking I’ll be talking to PMI’s Head of Australia and New Zealand David Trott. We’ll talk about PMI’s extensive work developing project management professionals across the Asia-Pacific. How his work involves working, among other things, with universities and tech companies.
And I’ll be talking to RMIT economist Sinclair Davidson about how Australia can boost its productivity and lift it from the doldrums..
But first let’s talk to David Trott.
So what’s happening in the news?
Let’s start in the UK, where the British government has launched an investigation into its contracts with Australian group Corporate Travel Management. Now, this is a company that’s been heavily involved in managing accommodation for thousands of asylum seekers — work that’s always politically sensitive and often controversial. The drama kicked off when the company stunned investors by admitting it had overstated sales by $156 million. That revelation triggered a trading halt, the sudden removal of its UK chief, and a promise to restate the accounts. British officials didn’t mince words either — they warned of an “appalling” overspend on these asylum-seeker contracts. Corporate Travel Management, led by its high-profile founder Jamie Pherous, once boasted that its UK asylum contracts could be worth $3 billion over several years. Now it’s scrambling to reassure the market and its government clients. And this is all happening against the backdrop of major scrutiny over how asylum seekers have been housed — famously, in some cases, in hotels across the UK, and in one case on the Bibby Stockholm, a barge docked in Dorset that became a lightning rod for protests. Labour stopped using the barge when it came into office, but it’s still signing other contracts with the company. As recently as June, the government outlined a new deal worth £161 million over four years for accommodation, meals, and basic services. Corporate Travel Management’s chairman, Ewen Crouch, has now apologised to shareholders — and to the UK government — saying a full review of the company’s UK operations and governance is underway. Plenty more to come on that story.
Australia’s economy is ticking up, but not quite as much as the market was hoping for. New numbers from the Bureau of Statistics show GDP grew by 0.4% in the September quarter. Over the year, that puts economic growth at 2.1% — a solid lift from just 0.6% in the year to June. Now, when you break that down per person, GDP per capita was basically flat. That’s because the overall growth matched the pace of population growth. Still, it’s sitting 0.4% higher than a year ago. Interestingly, the annual growth rate came in slightly above what the Reserve Bank was expecting — they were forecasting around 2%. But it fell just short of what markets were looking for, which was closer to 2.2%. The GDP figures land just under a week before the RBA’s final policy decision of the year, when rates are widely expected to stay unchanged at 3.6% after three cuts this year. The RBA expects the economy to grow around its “potential” rate of 2% in 2026. At the same time, inflation remains uncomfortably elevated and the RBA assesses the labor market as still a bit tight, underscoring the delicate policy balance the rate-setting board must navigate. The RBA is uncertain about the restrictiveness of monetary policy and whether the economy is running beyond its speed limit.
Australia’s defence setup is getting its biggest shake-up in 50 years. Defence Minister Richard Marles is carving out a brand-new, independent Defence Delivery Agency to run the country’s major military projects. The aim? Stop the massive cost blowouts that have plagued everything from frigates to weapons systems. About a quarter of Defence’s civilian workforce and 40% of its budget will shift to this new agency, which will take over once Defence decides what capability it actually needs. It’ll be fully independent by 2027 and led by a National Armaments Director – potentially someone from the private sector who’s used to overseeing huge, complex projects. Experts say it’s a smart move that fixes a long-standing problem: Defence has been both the customer and the delivery agency, and that muddle has helped push projects years behind schedule and billions over budget. Importantly, the government says this isn’t about cutting jobs – it’s about moving people into a structure that actually works.
The Commonwealth spends about $780 billion a year, and Finance Minister Katy Gallagher has confirmed that every minister has been told to examine the lowest-priority 5% of spending in their portfolios. That includes everything: defence, social welfare, major programs — you name it. This push comes as new numbers show government spending is actually growing at its fastest pace this year. And that’s got economists worried. They say public spending is helping push the economy past what the Reserve Bank would see as its “speed limit,” which is feeding into the latest burst of inflation and putting the prospect of more rate hikes back on the table. According to the ABS, public sector demand jumped sharply after two quarters of going backwards. Economists say that’s delaying the moment when the private sector can take over again as the main driver of growth. And it’s happening just as annual inflation ticked up to 3.8% in October — uncomfortably close to the point the RBA says the economy can grow without sparking more inflation. So, economists are calling on the government to rein in spending — not just to help tame inflation, but also to deal with a decade of forecast budget deficits. At a Senate hearing this week, Gallagher and Finance Department officials revealed that back in October, Acting Prime Minister Richard Marles wrote to ministers asking them to identify that bottom 5% of spending in their portfolios as part of the pre-budget process. They stressed these aren’t automatic cuts — the idea is to “reprioritise” money rather than slash services. But Gallagher refused to release the correspondence when asked, saying it’s all confidential until the May budget. Worth noting: Labor’s March budget already had government spending climbing to 27% of GDP — the highest since the 1980s outside the pandemic years. And the cost of running the public service has grown 38% under Labor. Treasurer Jim Chalmers has insisted government spending isn’t the cause of the inflation bump, but that argument is looking harder to sustain as new data keeps rolling in.
And just to round out the picture, the OECD has weighed in with its own warning: Australia needs fiscal consolidation if we’re going to stabilise debt levels. That message lands at a time when the latest numbers show government spending and investment still rising. In the September quarter, spending was up 0.8%, government investment jumped 2.4%, and total government borrowing hit $42 billion — a 40% jump on the same quarter last year. For context, that’s borrowing levels we haven’t seen since the pandemic. It works out to about $1900 for every working-age Australian. The OECD says both federal and state governments will need sustained fiscal discipline — potentially well into the 2030s — to deal with pressures from an ageing population, rising defence costs, and the transition to net zero. OECD secretary-general Mathias Cormann has been blunt: governments need to control spending growth, improve efficiency, target benefits better, and shift money into areas that actually support long-term growth.
Meanwhile, over in the disability sector, there’s another financial headache brewing. One of the industry’s biggest voices, Mark Woodland — he runs one of the major plan managers — says the NDIS is in urgent need of an overhaul. How bad is it? He says he still receives invoices scribbled on serviettes. Literally. He’s calling for proper electronic invoicing, clearer rules, and a fix to incentive problems that let some participants spend lump-sum funds on things like horse-riding lessons — often not because it’s a need, but because “if they don’t use it, they lose it.” The NDIS is heading toward $50 billion a year, and while the government has slowed growth from 22% to 10%, it wants that down to 8%. Cracking down on rorts is part of it, but experts say the deeper issue is structural — the system itself may need rebuilding if it’s going to stay sustainable.
So, between inflation, deficits, the NDIS, and now renewed warnings on debt, the message is clear: Australia’s public finances are entering a crunch period, and the next federal budget is shaping up to be one of the most closely watched in years.
The Albanese government has given business the green light to turbocharge artificial intelligence, unveiling a national AI plan that leans into opportunity rather than heavy-handed regulation—though it keeps the threat of tough action on the table if employers misuse the tech. Industry Minister Tim Ayres released the blueprint this week. Business groups were quick to applaud it for avoiding strict rules and instead taking an “opportunity-first” approach. And there’s plenty at stake: the Tech Council reckons that with the right investment, around 200,000 Australians could be working in AI by 2030. The plan also hints at big upcoming partnerships with major players like OpenAI and Google to boost Australia’s AI capability. And with data centres booming—Australia pulled in $10 billion in investment in 2024 alone—the government is pushing to streamline approvals and deal with the strain on the energy grid. New national data centre principles are on the way to help guide planning and investment. There’s also a new AI accelerator funding round coming, designed to help turn AI research into commercial reality. One of the biggest signals in the plan is what won’t be happening: Labor is effectively shelving earlier plans for new AI-specific laws. Unions had pushed for stronger protections to guard against job losses, but business warned that too much red tape would push investment elsewhere. Instead, the government will review workplace laws to make sure they can handle AI-related risks, and it wants to work directly with employers to manage any job disruption. Ayres says the plan is all about capturing the economic upside of AI, sharing the benefits widely, and keeping people safe as the technology evolves. Business groups agree—arguing that the right balance is critical so Australia doesn’t slip behind global competitors. The government is also moving ahead inside the public service: by 2026, every federal bureaucrat will get access to a ChatGPT-style tool. And $30 million has been set aside for a new AI Safety Institute, which will monitor risks like bias, privacy breaches, disinformation and cyber threats. It won’t regulate directly, but it will work with other agencies—and the government makes it clear that if bad actors emerge, tougher regulation could follow.
New research shows the Albanese government’s ban on using credit cards for online gambling hasn’t made much of a dent — especially among Australia’s heaviest bettors. According to the e61 Institute, most credit-card gamblers simply switched to their everyday bank accounts. Their credit-card spend dropped to zero, but they still bet about $150 a fortnight from their own money. The reform made gambling a bit less convenient, but it didn’t reduce overall betting for serious gamblers. And the loopholes are still wide. Heavy gamblers didn’t even need those workarounds — they had enough cash to keep going. The only group that really cut back were casual punters who quit because it was too much hassle. The ban did stop gamblers from building up big credit-card debts, but it doesn’t touch debit spending, lotteries, or indirect credit use on poker machines — which research shows cause the most harm. This comes as other key reforms are also under question. The BetStop self-exclusion system has only 30,000 active users, despite an estimated 400,000 high-risk gamblers nationwide. Awareness is low, and betting companies aren’t promoting it. Meanwhile, Sportsbet was recently fined for failing to send mandatory monthly activity statements to thousands of customers. Gambling advocate Lauren Levin says these issues show the government still has a long way to go: the current reforms are “just first steps.”
Now, let’s talk about something a little more refreshing — and surprisingly lucrative: seaweed. Forget AI for a minute — in Australia, seaweed is turning into one of venture capital’s hottest investment destinations. This comes just days after celebrity-backed Sea Forest launched its ASX float. Now a smaller rival, Fremantle Seaweed, has closed its first major funding round at an $11 million valuation. Both companies are part of a fast-growing group of climate-tech start-ups farming Asparagopsis, a red seaweed that can cut methane emissions from cattle by more than 80%. That’s a huge potential lever for agriculture and for climate targets. Fremantle Seaweed has raised $2.3 million through crowdfunding, on top of a $4 million WA government grant. The plan? To scale up to a massive 3000-hectare seaweed operation in Cockburn Sound and run commercial feedlot trials — including supplying Asparagopsis for a 400-day Wagyu cattle trial in the Pilbara. Co-founder Chris De Cuyper says the company started with an idea that seaweed might help solve climate and food security problems — but the real challenge was scaling up production while driving costs down. He now describes the company as “as much a technology company as a seaweed producer.” It’s still early days, but the industry is rapidly commercialising — and while it’s nowhere near the scale of AI investment, the momentum is real. Seaweed could become a genuine climate-tech export story for Australia.
And finally, let’s talk retail — specifically Black Friday, which has now morphed from a single sales day into a full-month discounting showdown in Australia. Consumers love it. Retailers? Not so much — especially small ones. Around six million Australians were expected to spend nearly $7 billion between Black Friday and Cyber Monday this year. And across the entire month of November? Up to $39 billion. Shoppers have changed their habits accordingly — almost half now start Christmas shopping more than a month early, and 59% say they actively plan purchases around Black Friday deals. But for small businesses, it’s becoming a “bloodbath.” Many are already financially stretched — 60% of small-business owners say they can’t always pay themselves, and a quarter are dipping into personal savings to stay afloat. That makes heavy discounting almost impossible. Some operators are now boycotting Black Friday entirely. One of them is Sarah James from The Sensory Specialist, which makes and sells toys and equipment for customers with sensory needs. She says the discounting pressure is relentless — especially now that big retailers kick off promotions in late October. That creates “sales fatigue,” both for shoppers and for small businesses trying to keep up. It’s a classic tension: customers expect big bargains, but small operators simply can’t maintain those margins. And as Black Friday becomes more entrenched, that gap is only widening.
So to summarise: Corporate Travel Management is under investigation in the UK after overstating sales by $156 million, with its UK chief removed and a full review underway. Australia’s economy grew 0.4% in the quarter and 2.1% over the year — steady but soft — and the RBA is expected to hold rates as inflation stays sticky. Defence is getting its biggest overhaul in decades, with a new independent agency to stop project blowouts. Government spending is now a major concern, with ministers told to identify the lowest-priority 5% of their budgets as costs surge. And the OECD has issued a blunt warning: Australia needs sustained fiscal consolidation well into the 2030s as borrowing jumps back toward pandemic levels and pressures rise from ageing, defence and the energy transition. The NDIS is heading toward $50 billion a year and still plagued by messy billing and weak incentives, with deeper structural reform looking unavoidable. The government’s new AI plan focuses on opportunity over regulation, aiming for 200,000 AI jobs, new partnerships with global tech players, and a public-sector ChatGPT-style tool by 2026. Gambling reforms are underperforming, with heavy gamblers simply switching from credit cards to debit and other workarounds. Seaweed is emerging as a surprise climate-tech boom, with big investment in methane-cutting Asparagopsis. And Black Friday has turned into a month-long discounting blitz — good for shoppers, but increasingly brutal for small businesses.
And next week, I’ll be talking to week Clinuvel CEO Philippe Wolgen. Clinuvel has developed the only treatment for people who suffer light sensitivity diseases – in other words, without the clinuvel 3-monthly implant they would literally have to live in darkness their entire lives.
And I’ll be talking to independent economist Saul Eslake about the economic outlook for Australia and the world in 2026.
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.
