While the nation watched the Cup, the RBA hiked rates to their highest level in 1 years. Not everyone on the board agreed. Canberra is now arguing about who to blame.
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 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 40 in our series for 2026 and today’s date is Friday November 6.
First, I’ll be talking to Eric Allgood, Managing Director of SBAAS. With 20+ years of experience, Eric’s a specialist in helping large organisations tackle complex challenges, especially in strategy, governance, and crisis leadership. Eric also specialises in teaching businesses how to use AI.
And I’ll be talking to AMP Capital Chief Economist Shane Oliver about the latest CPI figures and why the RBA has to raise rates for now.
But first, let’s talk to Eric Allgood,
So what’s happening in the news?
First up: the RBA has hiked again, and the governor says a lot of Australians will feel like they’re in a recession. On Tuesday, the Reserve Bank lifted the cash rate by a quarter of a point to 4.85%. That’s an 18-year high, and it’s the fifth rise this year. Average variable mortgage rates now sit around 6.75%, and repayments for a typical ho usehold will eat up about 37.4% of income, just shy of the record set back in 1989. Governor Michele Bullock was blunt about the pain. She said the RBA doesn’t want a recession if it can avoid it, but people will feel like they’re in one because their incomes aren’t growing and they feel poorer. She put that down to weak productivity growth and what she called a massive supply shock. She was also keen to clear up some confusion: this isn’t about oil prices. The RBA can’t influence those. The hikes are about domestic capacity pressures, meaning the economy is simply overstretched. Now, it wasn’t unanimous. Six board members backed the hike, three voted against, and the RBA dropped its explicit hint about more rises. Markets took that as a sign we may be near the peak, with the odds of another hike by February falling from about 50% to 30. The pressure’s now on Treasurer Jim Chalmers, with the RBA forecasting government spending to grow more than double the pace of the economy. Chalmers says the December mid-year update will include savings, but he won’t say if they’ll outweigh new spending. Shadow Treasurer Tim Wilson says it’s a spending addiction. And the outlook? Inflation is forecast to hit 4.5% by year’s end, and unemployment is tipped to climb from 4.7 to 5.1% by late 2028.
Treasury’s top actuary, Guy Thorburn, has said the government hasn’t given him enough detail to judge whether the NDIS can really cut $38.2 billion in costs over four years. In a letter dated September 22, he said he couldn’t tell whether the post-reform cost projection was a “best estimate.” That’s awkward for the government, which is under pressure to deliver net savings in the December mid-year budget update.
Why the actuary is uneasy
- He flagged five risks that could push costs above projections, including an assumed slowdown in autistic children joining the scheme, possible understated aged care costs, and a lack of allowance for high inflation and wage rises.
- He also wants to see the actual implementation plans, including how much extra it will cost to run the changes.
- This is only an interim opinion. A final view is due in the scheme’s Annual Financial Sustainability Report later this year.
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The NDIS itself
- It’s forecast to cost $56 billion in 2026-27, rising to $73 billion by 2029-30, which is growth of nearly 10% a year.
- It was meant to help up to 410,000 people but now supports 760,000.
- Health Minister Mark Butler’s April overhaul aims to cut participants by 160,000 before 2030, bringing annual costs down to $55 billion and saving $38 billion over four years.
- Spending on social and community activities has tripled in five years, from $4 billion to $12 billion. Restricting it is meant to save $13.2 billion, though that measure has been slightly delayed.
Butler’s response
His office says the government is on track and that the actuary’s comments simply show the reform is “a work in progress.”
Who gets affected
Everyone on the scheme and new applicants will be reassessed under a much tougher functional capacity test. Children under nine with mild to moderate conditions will move to state-run “Thriving Kids” supports, due to be fully operating by January 1, 2028. All states and territories are notionally on board except Queensland, though several have reservations. Butler has promised no one will be pushed off the NDIS until those supports are in place.
Big tech wants to train its most advanced AI models in Australia, but companies like OpenAI and Anthropic say they won’t unless our copyright laws are relaxed. They’re framing it as a national security issue. A new report from Strategic Analysis Australia, commissioned by the recording industry body ARIA, says that’s a smokescreen. Its author, Michael Shoebridge, is a former senior defence and intelligence official. His argument is that cyber defence depends on specialised code, encryption and classified intelligence, not Powderfinger’s back catalogue. He also says our agencies can already get advanced AI through commercial deals, and that hosting American-owned models here wouldn’t give us ownership or control. He even warns that weaker copyright rules could make Australia attractive to hackers and organised crime. The other side disagrees. The head of the Australian Signals Directorate told a parliamentary inquiry that local training would bring significant national security benefits. And David Wroe from Good Ancestors argues that helping build these models gives us leverage to get access to them. He does think creators should be compensated.
ASIC is warning super funds to lift their game on complaints, or it’ll see them in court. After reviewing two years of complaints data, it found funds weren’t spotting systemic problems. About a quarter of the 45 funds studied didn’t analyse complaints often enough, and Aware Super, our third-largest fund, identified just one systemic issue. In a closer look at ten major funds, they blamed customer error or expectations about 60% of the time. One fund left 250,000 members unable to access their statements for years, and only fixed it when a staff member hit the same problem. Another failed to pay 500 members their retirement bonuses, worth $1.3 million, and still hadn’t finished working out who was owed what by May this year. ASIC says that points to an immature complaints culture, and it’s threatening to claw back executive bonuses if things don’t improve. Industry groups have broadly accepted the findings, and some are urging the government to speed up its promised mandatory service standards.
KPMG Australia is reportedly cutting up to 400 more jobs by the end of November, which would take total redundancies to around 800, or 9%of its workforce. The cuts, called “the reset” internally, will mostly hit consulting and business services. This is all fallout from the document misuse scandal that broke in March. Consulting revenue is down by at least a third since July, and the defence business has roughly halved. The government has extended its ban on KPMG bidding for new federal work to at least the end of February, telling the firm it needs to prove it’s trustworthy rather than just promise change. Add in audit clients walking away, including Lendlease, ANZ and IAG, plus a reported plan to sublease much of its Canberra office, and it’s a rough stretch. KPMG International is also expected to provide financial support by December, though the details are unclear.
Home values have now fallen seven months in a row, and Cotality says it’s the fastest decline in 40 years. October was down 1.2%, and prices are now 6.7% below the March peak. That’s about $63,000 off the median home, which now sits at roughly $885,000. Capital city values are down 8.1%, and the previous record fall, in 2017 to 2019, was 8.2%, so that record looks set to go. It’s a demand-led downturn. Higher interest rates have cut borrowing power and pushed up repayments, and investors are pulling back after the budget’s changes to property tax breaks. Sales are down 23% on a year ago, auction clearance rates are under 50%, and homes are taking longer to sell with bigger discounts. Economists don’t expect relief until the Reserve Bank signals a change of direction, probably in the second half of 2027. Domain’s Nicola Powell says a 10% total fall is quite possible. Some agents see an upside for first-home buyers and upsizers, though, and Melbourne’s median is close to dipping below $1 million on Domain’s numbers.
Staying with the housing story, Westpac’s boss Anthony Miller says Australia is only about halfway through its house price fall. Westpac’s economists expect prices to drop 11% from the peak, and so far they’re down 6.7%. Miller says that’s not as painful as it sounds, because prices ran up so quickly when rates were cut last year. In his words, people aren’t losing value they actually spent money on. He also thinks rates will stay higher for longer, because spending from both consumers and government is still strong. And on the government’s tax changes, including dumping negative gearing, he says the impact on borrowing demand has been small. What matters more, he says, is the four rate rises and the cost-of-living squeeze. Keep in mind, the September 30 Reserve Bank hike takes about 90 days to flow through, so borrowers won’t feel it until after Christmas. Now, this came as Westpac posted a full-year profit of $6.96 billion, and there’s a silver lining for savers. Deposits earning more than 4% jumped from $252 billion last year to over $395 billion. UBS analyst John Storey says that shows banks are still competing hard for your cash, and it shaved five basis points off Westpac’s lending margins. On bad debts, things look better than you’d expect. Just 1.17% of the loan book is exposed, even with unemployment creeping up. On housing supply, Miller says building more homes is the single most important fix. He praised the New South Wales planning changes but wants faster approvals. He also asked whether we need cheaper, less onerous building standards, so homes can be built at a better price. Construction is a tale of two worlds. Costs are up 17%, and big builders can pass that on through contract variations, but smaller players can’t, so they’re the ones feeling the stress. That follows the collapse of Bathla Group this year, which wiped out $3.4 billion. And finally, data centres. Miller is wary of the hype. Westpac hasn’t seen significant loan growth there yet, and he says developers need to bring communities along, with at least three projects defeated by local opposition this year.
And that’s it for this week.
And next week, I’ll be talking to Errol Amerasekera. Drawing on experience spanning conflict mediation, organisational psychology and leadership development, Errol has built Bluestone Edge into a trusted adviser to businesses, government agencies and elite sporting organisations seeking to improve performance through stronger leadership and healthier workplace cultures.
And I’ll be talking to RMIT economist Sinclair Davidson about the RBA’s decision to raise rates for the fifth time 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 or whatever your favourite podcast platform is.
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