Australia is experiencing a data centre investment boom — centred in Sydney and Melbourne — that’s eclipsing even the mining boom of the early 2010s
Welcome to Talking Business, a podcast produced in Melbourne Australia, built on the traditional lands of the Kulin Nation. 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 19 in our series for 2026 and today’s date is Friday June 12
First, I’ll be talking to Toby Ellis, the managing director of Citro. We’ll look at a Citro study showing how Gen X is a critical but overlooked cohort in their peak working and caring years, quietly buckling under cost-of-living pressures and family responsibilities.
And I’ll be talking to Rabobank economist Teeuwe Mevissen about the latest meeting between Donald Trump and Xi Jinping.
But first, let’s talk to Toby Ellis.
So what’s happening in the news?
Global airlines are facing a tough 2026. The industry body IATA is forecasting operating profits to drop 37% to $48 billion, despite revenues climbing past $1 trillion for the first time. The culprit is fuel — costs are up 39% to $350 billion. Airlines are splitting the pain, passing half onto passengers through higher fares, and swallowing the rest. Traffic growth has also slowed sharply, to just 2.1% this year. Middle Eastern carriers are hurting most due to war-related airspace closures, while Asian and European airlines are picking up the slack — though higher fuel costs are eating into those gains too.
Dairy prices are heading up, and the Iran conflict is a big reason why. Since fighting broke out in late February, Iran’s blockade of the Strait of Hormuz has disrupted roughly a fifth of the world’s oil supply and a third of global fertiliser trade. That’s pushed oil and urea prices up around 40%— and for dairy farmers, that double hit of higher fuel and fertiliser costs is now filtering through to your grocery bill. Take Phil Ryan, who runs a dairy farm in NSW’s Bega region. He says his costs have jumped more than 20% since the war started — but the price processors are paying him for milk next financial year? Pretty much the same as this year. A 5-cent-a-litre support payment from Bega Cheese helps, but he reckons he needs another 10 to 15 cents per kilo of milk solids just to break even. June is actually a critical month here in Australia — it’s when processors have to lock in the minimum prices they’ll pay farmers for the year ahead, so there’s real pressure on right now. Analysts say the pain won’t hit the dairy aisle evenly. Cheese and butter have some buffer from global commodity markets, but fresh milk and yoghurt — sold domestically — are first in the firing line. Rabobank’s Michael Harvey says a spike in supplier price requests back in April is a leading indicator: dairy inflation is coming, and white milk leads the way. On top of all this, farmers are also dealing with a minimum wage rise, higher interest rates, and soaring packaging and freight costs. It’s a lot hitting at once.
Treasurer Jim Chalmers is working on a fix to Labor’s controversial tax package — and it looks like a few significant concessions are coming. The big one: innovative businesses could keep the full 50% capital gains tax discount. There’s also talk of extending CGT exemptions to larger businesses beyond the current $2 million turnover threshold, and a likely backdown on the “death tax” trust changes the Coalition has been hammering. Albanese wants all this locked in before parliament sits later this month. Labor’s betting the Greens will ultimately fall into line — possibly in exchange for a longer look at NDIS cuts. Now, the politics here are messy. Polls have this budget as one of the least popular in recent memory, and the opposition says the fallout is dragging down both major parties while One Nation rises. Some Labor MPs are frustrated too — because wrapping businesses into the CGT changes has muddied the housing affordability message they actually want to sell. On the ground though, a few government MPs in marginal seats are reporting a more positive read than the polls suggest — first home buyers showing up at auctions, parents of younger couples saying “it’s about time.” The government’s core argument is about fairness — equalising how we tax labour versus capital income. But that message got complicated when the Treasury Secretary essentially said the quiet part out loud: “revenue needs to be raised from somewhere.” So — a budget in damage control, concessions on the way, and a parliamentary crunch coming fast.
If you feel like it’s getting harder and more expensive to do business in Australia, you aren’t alone. The Productivity Commission is out with a blunt warning: Australia’s obsession with “zero risk” is killing our productivity. Commission chairwoman Danielle Wood just released a new essay called The Red Tape Impulse, and she is calling on Treasurer Jim Chalmers to be way more ambitious about slashing red tape. Wood’s main argument is that we’ve become “predictably irrational” about risk. No politician wants to look heartless when something goes wrong, so the default reaction to any crisis is to write a new rule. The problem? It’s creating a mountain of compliance that’s hurting everyday Australians. Take housing. Wood points out that a mix of federal, state, and local regulations now adds an estimated $204,000 to the cost of building a new house, and $90,000 for a new apartment. That’s pushing building projects into the “doesn’t stack up” column at a time when we desperately need supply. It’s not just housing. Look at big business:
- Macquarie Group saw its global compliance costs skyrocket from about $400 million in 2017 to a staggering $1.2 billion last year.
- AGL expects to spend $28 million this year just keeping up with changing rules, juggling around 250 regulatory consultations annually.
And Wood warns this triggers a trickle-down effect of what she calls “white tape”. Big companies facing massive reporting burdens on climate emissions or modern slavery end up forcing their small-business suppliers to fill out endless paperwork just to survive. As former ASIC chair Joe Longo once put it: all these well-intended rules woven together don’t look like an elegant tapestry—they look like a messy Jackson Pollock painting. So, how do we fix it? Jim Chalmers did announce a plan in the May budget to cut regulatory costs by $10 billion a year. Part of that includes a $900 million National Productivity Fund to bribe the states into fixing things like zoning laws. But Danielle Wood says that’s chump change. To put it in perspective, it’s only about one-tenth of what the government put on the table for the massive economic reforms back in the late 90s. Wood wants that fund expanded significantly. Meanwhile, the Business Council of Australia is going even further, calling for a $10 billion fund to cut unnecessary red tape by 25% by 2030. Wood is also proposing a “one-in, one-out” rule: if a government department wants to introduce a new regulation, they have to scrap an old one to offset it.
Australia’s KPMG crisis is accelerating. The federal government has put $270 million in contracts under review, and Westpac is now considering pulling its $32 million annual audit contract from the firm. The corporate regulator ASIC is investigating three registered auditors, including former COO Eileen Hoggett. The scandal centres on allegations that KPMG partners used confidential client data to win audit contracts. Twelve current and former partners have been summoned to a parliamentary inquiry later this month, and there are growing calls for chairman Martin Sheppard to resign. The fallout has now gone global, implicating KPMG International’s leadership as well.
Global bosses at KPMG International have stepped in to freeze further partner exits from the Australian firm. The reason? They don’t want a mass walkout disrupting clients right in the middle of the busiest audit season of the year. But here’s the kicker — by stepping in now, KPMG International has basically contradicted its own earlier defence, where it claimed it had no power to intervene. That’s going to be a very awkward thing to explain when executives get called before a parliamentary committee. So how did we get here? A former audit director blew the whistle back in May 2024, alleging that KPMG partners used confidential client information — including Lendlease board papers — to poach audit contracts from Westpac, Dexus, and Macquarie. The firm sat on the allegations for nearly two years without properly investigating, and the global body wasn’t much help either. The fallout has already taken out the CEO and the head of audit. There’s now pressure on the chairman, the deputy chair, general counsel, and head of HR to follow. And dozens of partners — especially in Canberra, where government contracts are now under the microscope — are already looking for the exit. A parliamentary hearing is set for June 19, where up to a dozen current and former KPMG staff could give evidence. And the firm has now commissioned a fourth internal inquiry — run by the same law firm that largely dismissed the allegations the first time around. It’s a deepening crisis, and right now, there’s no clear end in sight.
For the first time, more Australians expect to be driving an EV in ten years than a petrol or hybrid car — 35% versus 22%. That’s a dramatic flip from just six months ago, driven largely by surging petrol prices following the Israel-Iran conflict. EV consideration has jumped from 36% to 54% since November. The biggest remaining barrier is no longer cost — it’s a shortage of public chargers. Australia has 45 EVs per public charger, compared to under 2 in South Korea. Chinese brand BYD now leads consumer consideration at 37%, while Tesla has slipped to fifth. And once people go electric, they rarely go back — nine in ten EV owners say their next car will be electric too.
So here’s something that might surprise you — Australia is in the middle of an investment explosion that’s actually bigger than the mining boom of the early 2010s. And it’s not happening in Western Australia or Queensland this time. It’s happening in Sydney and Melbourne, and it’s being driven almost entirely by data centres. Over the past year, private investment in NSW and Victoria has hit close to $300 billion — that’s more than the $250 billion peak we saw during the mining boom in 2012-13. In just the first three months of this year, NSW set a national record for spending on equipment and machinery — $12 billion in one quarter — with Victoria not far behind at $9.1 billion. The federal government is pretty bullish about it. Assistant Minister Andrew Charlton has called this the single biggest economic lift since the railroad boom of the 1880s. He’s comparing it to the electrification era and the postwar highway construction — that kind of scale. Australia now has around 278 data centres, putting us in the top 10 globally, with more than 100 in Sydney alone. But — and there’s always a but — not everyone’s convinced this is a straightforward win. For starters, a lot of the equipment being installed is imported, which actually drags on our GDP rather than boosting it. And unlike the mining boom, which generated massive company tax revenues, there are real questions about whether data centres will deliver the same “rivers of gold” to government coffers. There are also concerns about private credit financing much of the construction — we’re talking roughly $800 billion in private funding globally by 2028 — which sits largely outside the banking system. Westpac’s chief economist Luci Ellis makes an interesting comparison: she says this looks a lot like the mining boom, and that’s not entirely a compliment. The mining investment unwind was a serious drag on the economy even while investment was still technically high. And because data centres go up much faster than a mine or gas project, the boom — and the bust — could be steeper and shorter. On the upside, the government says it’s getting the “social licence” piece right — making sure data centres come with renewable energy commitments so locals aren’t hit with higher power or water bills. That’s been a flashpoint in the US, so worth watching here too. The Reserve Bank has also been caught off guard by all of this — the AI boom in the US effectively reversed what looked like a global economic slowdown almost overnight. Bottom line: this is a genuine, once-in-a-generation investment wave. The question is whether Australia captures the long-term productivity gains — or just ends up hosting the world’s servers with not much to show for it once the dust settles.
The Albanese government is caught in a bit of a bind this week. On one hand, it wants to protect Australian steel makers. On the other, it’s trying to fast-track the renewable energy rollout. And a new trade decision is putting those two goals on a collision course. Here’s what happened. Industry Minister Tim Ayres has just slapped a 48% anti-dumping duty on specialised steel imports from China, South Korea, Malaysia and Taiwan. We’re talking about a specific product called torque tubes — the metal components that hold solar panels in place at large-scale solar farms. The push came from BlueScope’s subsidiary Orrcon, which argued cheap Chinese imports were undercutting them and hurting local industry. Fair enough in isolation. But renewable energy developers are furious. They say there simply isn’t enough Australian manufacturing capacity to replace those imports, so all this duty does is drive up their costs — and potentially kill off projects altogether. US solar company Nextpower, which operates across Australia’s national electricity market, has been pretty blunt about it — warning the duty could lead to project cancellations and job losses at exactly the wrong time. And the timing really is awkward. Labor is already behind on its pledge to get 82% of Australia’s electricity from renewables by 2030. Investment reaching financial close has just hit a decade low. The government needs six to seven gigawatts of new capacity signed off every year to have any chance of hitting that target. So the question is — can you protect local steel workers and keep the clean energy transition on track? Right now, those two things are pulling in opposite directions.
And that’s it for this week.
And next week, I’ll be talking to John Hanna, strategic advisor of est Financial about why most people sabotage their own wealth, the psychology behind property success, the biggest financial myths holding Australians back and how to move from fear to financial confidence
And I’ll be talking to Independent economist Nicholas Gruen about how much the AFL stadium in Hobart will cost Tasmanian taxpayers.
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