RBA deputy governor warns that the Middle East war is set to push inflation higher than forecast.
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 6 in our series for 2026 and today’s date is Friday March 13
First, I’ll be talking to Daniel Lazarus, the co-founder of solar management and maintenance company, Industrias. We’ll talk about his mission to wake the industry up to the costs and risks that come with poor maintenance of solar systems. Maintenance doesn’t sound sexy but it’s a critical part of the solar industry.
And I’ll be talking to independent economist Saul Eslake about the outlook for the Australian economy which is growing at an annual rate of 2.6%. It is the fastest rate of growth in almost three years. It’s much stronger than expected. But is it sustainable in light of Australia’s inflation rate?
But first, let’s talk to Daniel Lazarus
So what’s happening in the news?
We start today with a global energy market that is rapidly approaching a breaking point. The war in Iran has triggered what analysts are calling “unprecedented disruption.” The numbers are staggering. The Strait of Hormuz—the world’s most vital oil artery—is effectively closed to most traffic. Consequently, major producers like Kuwait and the UAE are actually cutting production because their land storage is full and there are no empty tankers available to take the crude away. Iraq’s output has already plummeted by about 60%. While Saudi Arabia is trying to bypass the chaos by diverting crude to the Red Sea, it’s not enough to stop the price surge. Last week, Brent crude jumped 30%—the biggest weekly spike in six years. While it’s hovering just under $100, regional markers like Abu Dhabi’s Murban and Oman crude have already smashed through that ceiling, trading as high as $109. Washington is attempting to intervene with maritime insurance and by tapping strategic reserves, but the rhetoric is only heating up. President Trump warned over the weekend that the U.S. may target new areas in Iran, stating the attacks will continue until a “complete collapse.” Analysts at ING warn that if this disruption lasts three months, we are looking at record-breaking oil and LNG prices through the second quarter.
Back home, that global chaos is hitting Australian households where it hurts most: the petrol bowser. Oil is currently sitting around $91 USD a barrel, up from $67 before the conflict. AMP’s Shane Oliver notes that for every dollar oil rises, we see a cent-per-litre jump at the pump. For the average family, this war is already set to cost at least $14 a week—or $700 a year—in extra fuel costs alone. This creates a massive headache for the Reserve Bank. Their previous inflation forecasts were based on oil staying around $64. With prices now 40% higher than that, inflation could spike toward 4.6%. The RBA is now stuck in a classic “stagflation” trap: do they hike interest rates to stop runaway prices, or hold steady to protect an economy already weakened by falling consumer spending? It isn’t just about commuting. We’re seeing early signs of a supply chain squeeze. Former Nationals leader David Littleproud reports that some farmers in Queensland are already struggling to get bulk fuel deliveries for autumn planting. If the wholesale market doesn’t unlock soon, this energy crisis quickly becomes a food security crisis.
The Reserve Bank is sounding a very loud warning. Deputy Governor Andrew Hauser says we are looking at a “toxic” mix of rising oil prices and surging inflation expectations. He’s warned that if the RBA doesn’t act decisively, inflation could blow right past their 4.2% forecast. Why? Because the conflict in the Middle East has sent oil prices on a rollercoaster—hitting as high as $120 a barrel before a slight cooling off. The problem isn’t just petrol. Hauser points out that even before the latest geopolitical spikes, our economy was running above its “speed limit.” We’ve got:
- Unemployment at a low 4.1%.
- Economic growth at 2.6%.
- And inflation that’s been stubborn for a long time.
Governor Michele Bullock is worried about a “self-fulfilling prophecy.” When people see petrol hitting $2.24 a litre, they expect everything to get more expensive. When that happens, they ask for higher wages, businesses hike prices, and inflation gets locked in. In fact, consumer inflation expectations just saw their biggest weekly jump since 2010—hitting 6.1%. The RBA meets next Tuesday, March 17. While longer-term expectations are still “anchored” for now, the markets are getting nervous. There is currently a one-in-three chance of a rate hike next week, and the markets are betting on a definite rise by May. As Hauser put it: they don’t want a repeat of the 8% inflation we saw in 2022. To avoid that, they might have to move the needle on interest rates sooner rather than later.
Moving to our fourth story—and this one is a growing concern for the Australian supply chain. We’re starting to see the real-world fallout from the conflict in the Middle East hitting our regional industries. With the Strait of Hormuz effectively closed to major shipping, the ripples are reaching the farm gate. Global carriers have suspended transit through the waterway due to ongoing drone and missile attacks, and that’s causing a massive bottleneck. Locally, we’re already seeing rationing. Wholesalers like United Petroleum have begun halting supplies to some regional distributors, and for our farmers, that is a massive problem. You can’t exactly drive a massive harvester down to the local Shell to fill up. These operations rely on bulk on-farm deliveries, and right now, those tanks are running dry. We’ve heard from some distributors whose daily supply has plummeted from 450,000 litres down to just 45,000—a 90% drop. Naturally, the price is reacting too. Some producers are reporting a 50-cent jump in a single week, paying upwards of $2.30 for premium diesel. It’s a similar story for commercial fishers and the seafood industry. Now, Energy Minister Chris Bowen is trying to calm the waters. He says our strategic reserves—about 32 days of diesel and 36 of petrol—put us in a better position than previous crises. He’s chalking up the current shortages to a ‘spike in demand’ and panic buying rather than a total lack of inventory. But the industry warning is clear: if farmers can’t get the fuel to move produce to market or feed cattle, those costs are going to land squarely on our grocery bills in the coming months. The ‘lucky country’ might be facing a very expensive winter.
Commonwealth Bank has just referred two mortgage brokers and a group of accountants to the police as it tries to untangle a massive loan fraud that could reach one billion dollars. The country’s largest lender uncovered a cluster of loans that were built on a foundation of lies—specifically, fake income statements created using Artificial Intelligence, draft tax returns, and shell companies. It’s a sophisticated operation that has CBA working closely with the NSW Police, ASIC, and the financial crimes agency, AUSTRAC. The red flags went up when a credit bureau noticed that the clients involved didn’t just have one mortgage; they averaged seven different credit products each, spread across multiple banks. The racket apparently exploited two main channels: the bank’s own “referrer program”—which pays commissions to accountants and lawyers for sending customers to CBA—and third-party mortgage brokers. This raises a massive “gatekeeper” issue. Unlike banks, accountants and real estate agents haven’t been subject to the same strict anti-money laundering regulations—though that actually changes next month. CBA’s CEO Matt Comyn says the bank is spending 900 million dollars a year to fight financial crime, but he admits the “risk vectors” are shifting at a rapid rate. AUSTRAC is also sounding the alarm, noting that while AI helps identify fraud, it’s also making it easier than ever for criminals to manufacture “perfect” fake documents. While the loans are currently being paid down and the bank isn’t at immediate risk of losing the funds, the real concern is the motive: it looks like a coordinated effort to park criminal money in Australia’s lucrative real estate market.
If you feel like the economic pie is getting harder to slice, new data proves you’re not imagining it. We’re looking at a massive generational wealth shift that’s putting Treasurer Jim Chalmers in a very tight spot ahead of the federal budget. Exclusive analysis from the Bankwest Curtin Economics Centre shows that Baby Boomers are now sitting on $6 trillion in wealth. That is a staggering ninefold increase since 2002. Back then, Boomers held about a quarter of Australia’s wealth; today, they control a third of the entire national pie, while every other generation has seen their share shrink.
So, how did we get here? It’s a perfect storm of soaring property prices and zero debt.
- The Boomers: They hold $3 trillion in property with a leverage ratio of just 4.5%. They basically own their homes outright.
- Gen X: By comparison, Gen X has a similar amount of property but is drowning in $900 billion of housing debt.
- The Rest: For Millennials and Gen Z, the share of wealth in shares and trusts hasn’t just dipped—it’s collapsed by half.
This puts ‘intergenerational fairness’ at the heart of the upcoming budget. Treasurer Chalmers is staring down a concentration of wealth that is tied up in assets predominantly held by those over 65. We’re talking about potential reforms to:
- Capital gains tax
- Negative gearing
- Family trusts
As Professor Alan Duncan points out, the problem isn’t that Australia lacks wealth; it’s that it’s locked up in housing and concentrated at the end of the life cycle.” “But don’t assume every Boomer is on easy street. There’s a massive divide within that generation: if you own your home, you’re asset-rich; if you’re a low-wealth renter over 65, you’re at a high risk of poverty. Meanwhile, urban planners are warning that if we don’t fix this, young workers will simply be priced out of our cities, taking their talent and the future of the economy with them.”
Big moves could be coming in the May budget. Treasurer Jim Chalmers is officially looking at the “twin pillars” of property investment: Negative Gearing and the Capital Gains Tax (CGT) discount. For 25 years, savvy investors have been playing a high-stakes game of “tax arbitrage.” They claim a 47% deduction on mortgage interest every year (that’s the negative gearing part), and then only pay 23.5% tax when they sell (thanks to the 50% CGT discount). It’s a win-win on both sides of the ledger. Economists, including former RBA Governor Bernie Fraser, say if you want to cool the market, you start with the CGT discount. Robert Breunig from ANU puts it simply: if the profit at the end is smaller, the incentive to lose money on rent every month—just to get that tax break—suddenly vanishes.
There are a few “fixes” on the table:
- The Henry Plan: Drop the CGT discount to 40% but apply it to all investment returns, like rent and interest.
- Ring-fencing: Only let landlords deduct rental losses against other property income, rather than their high salaries.
- The “Two-Property” Limit: Treasury is reportedly eyeing a cap on negative gearing to just two properties. However, experts warn this could backfire by pushing investors toward expensive mansions instead of affordable apartments.
The Bottom Line Expect this May budget to be the most “reform-focused” yet. The goal isn’t just to tinker with the rules, but to stop the “speculative debt” that’s been driving the market. If Chalmers moves on CGT, the “gold rush” of negative gearing might finally lose its lustre.
We are officially entering ‘expensive future’ territory. Between the conflict in the Middle East and a looming $1 trillion debt ceiling, Treasurer Jim Chalmers is staring down a massive budget headache. Global markets are spooked. With Brent crude hitting nearly $US120 a barrel, there’s a real fear that the Strait of Hormuz could be choked off. That’s pushing inflation expectations through the roof. In response, the yield on our 10-year Australian bond just touched 4%—the highest we’ve seen since 2011. Market experts like Charlie Jamieson are warning that if we cross that 5% psychological threshold, the RBA might have no choice but to hike rates again to fight this ‘sticky’ inflation.” So, what does this cost us? Economist Chris Richardson puts it bluntly: every half-percentage point rise in bond yields adds roughly $4 billion to $5 billion to our annual interest bill. We’re already paying over $20 billion a year just to service the debt we have. And then there’s the big number: $1 trillion. Federal gross debt is sitting at about $998 billion right now—literally a whisker away from that trillion-dollar mark. While we’re in better shape than the US or UK relative to our GDP, we’re currently paying higher borrowing rates than almost all our peers. The interesting part? There is some clever ‘debt tetris’ happening behind the scenes. With billions in debt set to mature over the next few weeks, the government’s debt agency might actually be able to keep us under that $1 trillion headline until after the May budget.” As strategist Stephen Miller puts it, we’re facing ‘stagflation light.’ Growth is waning, but inflation won’t quit. The era of ‘cheap money’ from the post-GFC years is officially dead, and the bill has finally arrived.
We’re talking about potentially scrapping the 50% discount on investment properties entirely—something we haven’t seen since the Howard era back in ’99. The Albanese government is looking at replacing that discount with a flat tax and indexation. Why? Because spending is climbing, and they need to lift productivity while raising revenue. Treasurer Jim Chalmers has been pretty clear: the upcoming May budget is going to focus on three buckets—tax reform, savings, and productivity. This comes as former RBA chief economist Luci Ellis points out a tough reality for households. Her analysis shows that rising taxes through 2025 have effectively wiped out almost all the gains from the Stage 3 tax cuts. Right now, government spending is outstripping the private sector, growing at more than twice the speed. There are a few versions on the table. One is a smaller cut to the discount—dropping it from 50% to 33%. But experts like Ken Henry and Michael Brennan are pushing for deeper structural changes. The goal is to stop incentivizing people to chase capital gains over actual income-producing investments, which would also take the wind out of the sails for negative gearing. The Parliamentary Budget Office estimates the current discount will cost the budget $247 billion in lost revenue over the next decade. Chalmers is keeping the door open, framing any changes as a way to fix intergenerational inequity. It’s a massive policy shift that could fundamentally change how Australians invest.
And that’s it for this week.
And next week, I’ll be talking to Tereza Murray from TM Plus. She’s a leading Franchise and Business Consultant with over 27 years of experience in the franchising industry as both a consultant and franchisor, along with a track record of success running some of Australia and New Zealand’s most well-known brands (franchised and independent).
And I’ll be talking to James Gruber Equity Markets Strategist at CommSec about the market response to oil prices, inflation and central banks lifting rates.
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
