The RBA keeps rates on hold at 3.85% leaving economists who predicted a rate cut with egg on their face.
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 22 in our series for 2025 and today’s date is Friday July 11
First, 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. He’ll talk about the issue of remote work, cyber security and how we are heading to systems that won’t require passwords.
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?
But first, let’s talk to Denis O’Shea
So what’s happening in the news?
Elon Musk’s announcement that he plans to start a new political party went down like a brick parachute with investors. Tesla shares fell almost 8% after he announced on X: “Today, the America Party is formed to give you back your freedom. By a factor of 2 to 1, you want a new political party and you shall have it! When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy.” The chief of investment firm Azoria James Fishback said: “I encourage the Board to meet immediately and ask Elon to clarify his political ambitions and evaluate whether they are compatible with his full-time obligations to Tesla as CEO.” Fishback said that the move “creates a conflict with his full-time responsibilities as CEO of Tesla,” as it diverts his focus and energy away from Tesla’s employees and shareholders.
US Treasury Secretary Scott Bessent has warned that countries that fail to hit a deal with the US on tariffs before this week’s deadline will see their tariffs “boomerang” back to where they were on April 2. He said that the administration would begin informing countries about the tariff rates they could face if they did not quickly reach trade agreements with the United States. Bessent and commerce secretary Howard Lutnick said that sweeping tariffs probably won’t kick in until Aug. 1 for countries that hadn’t yet forged a deal. That’s a bit later than the July 9 deadline that Trump had previously threatened. This ultimately may be just a three-week extension, but it could be enough time for companies to import more tariff-free shipments. “That means that, allowing for some stockpiling ahead of Christmas, consumers may not experience the inflation spike from these taxes until January next year — assuming that Trump does not retreat again,” Paul Donovan, the chief economist for UBS Global Wealth Management, wrote in a research note. US President Donald Trump announced tariffs of 25% on goods from Japan and South Korea beginning on August 1, as he moved to impose unilateral rates on countries that have not yet secured trade deals with his administration. In his note to leaders of more than a dozen countries, any of the new tariffs are similar to the so-called “liberation day” rates the US president announced on April 2, before he paused them three days later. The first round of new rates, outlined in letters posted to Mr Trump’s Truth Social platform, includes:
• Laos: 40% (down from 48%)
• Myanmar: 40% (was 44%)
• Cambodia: 36% (was 49%)
• Bangladesh: 35% (was 37%)
• Serbia: 35%(was 36%)
• Indonesia: 32% (unchanged)
• Bosnia and Herzegovina: 30% (was 36%)
• South Africa: 30% (unchanged)
• Tunisia: 25% (was 28%)
• Kazakhstan: 25% (was 27%)
• Japan: 25% (was 24%)
• Malaysia: 25%(was 24%)
• South Korea: 25% (unchanged)
They have joined the UK and Vietnam so far as the only countries with new tariff arrangements. Donald Trump has also warned that countries which side with the policies of the Brics alliance that go against US interests will be hit with an extra 10% tariff. “Any country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% tariff. There will be no exceptions to this policy,” Trump wrote on social media. Trump has long criticised Brics, an organisation whose members include China, Russia and India.
The Reserve Bank of Australia has shocked the market by deciding to keep the cash rate at 3.85%. The RBA revealed for the first time the number of votes for and against the decision – six members voted in favour and three against. In its decision statement, the RBA board said that after two rate reductions in five months, “and wider economic conditions evolving broadly as expected … it could wait for a little more information to confirm that inflation remains on track to reach 2.5% on a sustainable basis”. “The Board continues to judge that the risks to inflation have become more balanced and the labour market remains strong. Nevertheless it remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and supply,” it said. Traders had also anticipated that a July cut would be followed by a third consecutive cut in August. Money market traders had also expected at least one more cut at the end of the year to bring the cash rate to 3.1%. Following the decision, RBA governor Michele Bullock said said the global economy was still in a worse state than prior to Trump’s ‘Liberation Day’ “Everyone’s saying, ‘oh, things aren’t as bad anymore’. They’re still much, much worse than they were prior to April 2,” she said. “Trade barriers, tariffs are going to be much, much higher. World Trade is going to be impacted. Our judgement, though, because we are not as directly impacted by the US itself, (is) we’re not going to be anywhere near as badly impacted as some countries, because we’re not as directly linked to the United States, and our fortunes are much more linked to China. And so that’s why a lot depends on what happens there.” She said RBA board members were looking towards the next quarterly consumer price index, due out on July 30, to inform its decision at its August meeting. Ms Bullock said she expected that data to “validate” the central bank’s easing path. The central bank had previously cut interest rates at its February and May board meetings. Before that, the RBA’s cash rate had sat at 4.35% since November 2023, after a series of 13 rate hikes, beginning in May 2022.
The Productivity Commission has warned the Albanese government that billions of dollars in taxpayer subsidies for manufacturing and green energy could be deemed trade protectionism. In frank advice, it warned of the risks from subsidies under the guise of economic resilience, security and the green energy transition through its Future Made in Australia banner and the $15 billion National Reconstruction Fund. “Poorly designed industry policy can be costly for governments, act as a form of trade protection and distort the allocation of Australia’s resources towards activities that Australia is not best placed to undertake,” the commission said. This underscores the critical need for transparency and ongoing evaluation and review of these and other industry policies, as well as the need for exit strategies to be incorporated into policy frameworks.” The best way to contend with Trump’s trade taxes was for Australia to continue not to retaliate against the US and to unilaterally abolish so-called nuisance tariffs, the commission said. These duties cost local businesses up to $4 billion in paperwork and administration expenses, while generating only $2 billion in government revenue, the commission said in its annual 108-page trade and assistance review. The commission also advised the government to lower prices for consumers and compliance costs for business by extending cuts to so-called nuisance tariffs on more than 300 imported goods, including steel, appliances and plastics. US President Donald Trump’s wide-ranging tariffs could, surprisingly, have a slight positive direct impact on Australia’s economy, the commission found, although this could be negated by the uncertainty from the tariffs deterring business investment around the world. The findings came on the same day Trump announced he would start sending letters outlining the tariff rates and trade deals to apply to about a dozen countries. The Albanese government expects the 10% baseline tariff on Australia to continue. Labor is holding out on offering further concessions to Trump beyond US access to critical minerals because it is not obvious that any country will be able to escape the minimum tariff. But the government’s push for free trade may be undermined by its subsidies for domestic industry, such as the $2.4 billion rescue package for the Whyalla steelworks, tax breaks for green hydrogen and payments for domestic-made solar panels and batteries. The Rio Tinto-owned Tomago aluminium smelter, the nation’s largest electricity user, has been in talks to try to secure billion of dollars in support from the NSW and federal governments to save it from collapse due to crippling energy costs. The government spent $16.1 billion on industry handouts and tax breaks in 2023-24, with the lion’s share going to farmers, filmmakers and manufacturers.
China plans to capitalise on Australia’s fraying ties with the United States by enlisting Anthony Albanese in its tech and trade war with Donald Trump via an expansion of an existing free trade agreement to include artificial intelligence and the digital economy. As the prime minister prepares to travel to China later this week, Beijing’s top local diplomat, ambassador Xiao Qian, has also seized on the Albanese government’s domestic political pledge to boost productivity, championing deepening economic ties between the two nations as a way to end the growth slump. While Labor has successfully pursued a policy of “stabilisation” after acrimony between 2020 and 2022, when the communist regime imposed trade sanctions on $20 billion of Australian exports and froze high-level dialogue, Xiao has signalled Beijing’s impatience with the steady approach. Albanese’s visit to China is his second as prime minister. As well as meetings with President Xi Jinping in Beijing, Albanese’s near week-long visit will also have a heavy trade and investment focus, with a delegation of top Australian business executives joining the PM for part of the trip. The likely red carpet reception from Australia’s largest trading partner stands in contrast to an element of fragility being injected into the relationship with the nation’s main security ally, the US. While China and the US have struck a fragile truce over tariffs, the two countries remain locked in a technology “Cold War”, striving for superiority in fields such as critical minerals, electric vehicles, semiconductors and artificial intelligence.
Tech workers and scientists are taking big pay cuts to flee Trump’s America. Recent data from global human resources platform Deel shows an early-stage brain drain occurring in America, as engineers and tech professionals look abroad for roles. According to Deel, the growth has accelerated in the past six months, although remains at a modest 13% year-on-year increase in Australia compared with other countries such as Canada and the UK, which so far are experiencing much higher rates of global hiring from the US. Ellis Taylor, the founder of Real Time Australia recruitment, which places candidates in roles at all the big tech companies locally, including Google, Atlassian and Canva, said the number of US applicants applying to job ads and reaching out on LinkedIn was “unlike anything we’ve seen in our 35-year history”. Attributing it to a perfect storm of US President Donald Trump’s funding cuts to the sciences, his imposed trade tariffs, and controversial immigration crackdown, Taylor said he was witnessing “a mix of residents repatriating and non-Australian citizens looking to live and work in Australia – mostly software engineering, data and product candidates. “In 2024, we had approximately 4500 US candidates apply to our positions or reach out directly to us. Since January, our active applications from the US have risen more than 350%.” Among those were engineers working for prominent US tech companies earning about $US1 million ($A1.5 million) and willing to accept pay cuts of up to $600,000 for a similar role in Australia. The rise of artificial intelligence and plans by tech giants such as Meta to spend “hundreds of billions” on AI projects and research in coming years is adding to the exodus, according to one head of engineering actively looking for roles and planning to move to Australia by the end of the year.
Mineral Resources says it is reviewing its plans for managing director Chris Ellison to leave, despite having told shareholders he would depart next year after admitting to involvement in a tax evasion scheme that enriched the businessman at the expense of the company. Ellison is the high-profile West Australian entrepreneur who founded MinRes in 1992, growing the sprawling company into an ASX-listed diversified miner and mining services business worth almost $5 billion. A board investigation said Ellison had used company resources for personal reasons. It found Ellison had deleted emails relating to the scheme in “an attempt to avoid information … becoming public”. On Tuesday, however, MinRes chairman Malcolm Bundey said he would “review” the leadership transition plan, which was put in place after the board review. The company told investors that Bundey’s review of the plan would take into consideration “the best interests of shareholders”.
Australia’s former intelligence chief Duncan Lewis says defence innovation would get a spectacular boost if Australia finally signed up to the $163 billion Horizon Europe collaborative research fund. “It seems like a no-brainer to me,” said Lewis, the former head of the Australian Security Intelligence Organisation who now chairs defence company Thales Australia and the European Australian Business Council. “I mean, there are only so many levers we can pull in productivity. There are a few, but one of the very big levers – and, to my mind, one of the very attractive levers – to pull is the research and innovation area. My own company, Thales, a French company, is deeply in research, innovation and development here in Europe, so we should be at this time pushing really hard to get into what the tail end of Horizon Europe and whatever comes along next.” Australia has refused over many years to sign on to the Horizon Europe fund, despite nations as diverse as Israel, Turkey, New Zealand and the Faroe Islands all being members and research leaders saying it would unleash a cycle of innovation through long-term relationships between European and Australian researchers and high-tech companies. The Albanese government has been under increasing pressure to join the research fund following the Trump administration’s attempts to influence what is researched and by whom, and a possible collapse in funding. In 2024, the US government contributed $386 million in funding to collaborative projects with Australian researchers – equivalent to nearly half the entire budget of the Australian Research Council. With that funding now in question, pressure is building to find viable alternatives.
Qantas says it has been contacted by “a potential cybercriminal” less than a week after revealing a “significant” breach and theft of data on up to 6 million of its customers from its records during a cyber attack. Qantas is warning a “significant” amount of customer data has likely been stolen from its records during a cyber attack against the airline on Monday. The airline said in a statement on Monday that it is working to verify the legitimacy of the contact and have contacted the Australian Federal Police (AFP). It has not confirmed the nature of the contact or whether a ransom was sought. Qantas said last week that it was investigating the proportion of the data that had been stolen, though it expected it would be “significant”. The airline says that it is continuing to work with “specialist cybersecurity experts to forensically analyse the impacted system”. That investigation has determined that the system is now secure and no credit card details, personal financial information or passport details were accessed in the breach.
The law firm Arnold Thomas & Becker says it is filing a claim against national childcare giant G8 Education – the operator of several centres where accused Melbourne paedophile Joshua Dale Brown worked – on behalf of a parent, while more than 100 families had contacted the firm for legal advice. They are seeking damages against G8. Brown, 26, is in custody and will be brought to court in September to face more than 70 charges, including sexually penetrating a child under 12, attempting to sexually penetrate a child under 12, sexually assaulting a child under 16 and producing child abuse material. Any civil cases will not affect the charges against Brown, which must be proven beyond reasonable doubt. Principal lawyer Jodie Harris said families felt confused and alone as they faced three-hour waits for hotlines about the crisis before being provided with generic information. “There’s a lot of misinformation, parents are reeling with where do they turn to for answers,” she said. Harris said the firm had been contacted by families whose children were alleged victims as well as parents who had been told to get their child tested for STIs. “Those parents are traumatised, a lot of them. One parent is ringing me, the other one can’t get out of bed; ‘We’ve taken [the child] for testing, had to hold our children down screaming for blood tests’. Some of them have had more intimate examinations than that. It’s difficult to explain to [the children] why.” Harris said some parents were now worried whether their child’s nappy rash or recurrent urinary tract infections might be related to the scandal.
And that’s it for this week. And next week, I’ll be talking to Steve Plarre, the CEO of Plarre Foods who has helped rebuild the family brand to become an award-winning, sustainable business that currently boasts more than 80 stores across Victoria with a strong focus on profitability and growth.
And I’ll be talking to AMP Capital chief economist Shane Oliver who will explain why the RBA’s kept rates on hold, what impact this will have on markets and whether we can expect more rate cuts this year.
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.
