Australians have had one of the steepest drops in consumer confidence in the developed world over the past year.
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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 38 in our series for 2026 and today’s date is Friday October 23.
First, I’ll be talking to Rob Cawthorne, CEO of the Carbon Reduction Institute, about whether Australian businesses are ready for a new era of climate reporting and why so few of them can match the government target of net zero.
And I’ll be talking to independent economist Saul Eslake about the state of the Australian economy, the high inflation rate, the RBA and the likelihood of at least one more rate rise.
But first, let’s talk to Rob Cawthorne
So what’s happening in the news?
National Australia Bank just announced it’s cutting 2500 jobs. And here’s what’s interesting: the announcement never mentions artificial intelligence. CEO Andrew Irvine insists there’s no link. But look at the backdrop. The economy is softening, house prices are falling, and at the same time, the big banks are spending hundreds of millions of dollars a year on AI. Now, banks don’t like to blame AI for job cuts. They prefer words like “simplification” and “productivity.” Macquarie’s analysts say this is just the usual playbook. When revenue slows, banks restructure. But Macquarie also estimates that 56% of banking roles are highly exposed to automation, and that the major banks could shrink their headcount by 10 to 30% over the next five to ten years. If that’s right, NAB’s cuts could be the tip of the iceberg. And NAB’s own language is telling. It talked about “rapid technological change” and shrinking corporate functions. Irvine himself said last September that people using AI will take the jobs of people who aren’t. And NAB’s tech chief told a parliamentary inquiry that so far there haven’t been AI-driven cuts, but that eventually, every workforce in Australia will change in size and shape. There’s a twist, too. The big four banks hit record headcount at the end of 2025, topping 171,000 people. NAB alone added more than 2,700 staff in a single year, which is more than this round of redundancies. ANZ has cut 3,500 roles, and Westpac and CBA have made smaller cuts. Analysts expect more reductions through natural attrition and hiring freezes. Some people are worried about the knock-on effects. Former Westpac CEO Brian Hartzer says the knowledge workers being automated are an engine of the economy. They fill the restaurants, hire the tradies, and pay the Pilates instructor. His line: the factory town this time is the CBD. And a Swinburne researcher who advises ASIC says companies like NAB need to be upfront about how much of this is technology-driven. So the question is: if it’s not about AI, why does it look so much like it?
Two big stories this week, and they’re really two sides of the same coin: how do we get Australians ahead again?
First, Labor MP Ed Husic is calling for a new growth agenda to “unshackle the economy.” Husic, who was dropped from cabinet last year and has become a critic of the government, wants much bigger tax cuts for low and middle income earners, a shake-up of corporate tax, and a proper debate inside Labor about how to rebuild real wages, which have taken a 5% hit since the pandemic. He also floated a bigger idea: that rank-and-file members should get a vote on Labor’s next leader whenever Anthony Albanese steps down. And he’s not alone. Paul Keating, Bill Kelty and Albanese’s own former economics adviser have all been pushing Labor to rethink its economic approach. Husic’s warning is that if neither major party offers people a way forward, voters will keep drifting to One Nation, who are now polling around 25%.
Second, the chief economist at the Commonwealth Bank, Luke Yeaman, has warned that the Reserve Bank could crash the economy if it lifts rates much further. The cash rate is already at a 15-year high of 4.6% after four hikes this year, and Yeaman says the full impact of those hikes is yet to be felt. Growth is slowing, households are stretched, and the housing market is soft. Meanwhile oil is the wild card, with Brent crude nearly touching US$110 a barrel on the weekend. Westpac says it could stay above US$100 through Christmas, and if the conflict in the Middle East escalates, prices could climb a lot higher. That’s the RBA’s dilemma: stubborn inflation on one side, and the risk of tipping the economy over the edge on the other. Next week’s September quarter inflation figures could decide which way it jumps.
And let’s look at the Reserve Bank, because it’s in a tough spot. The war against Iran is keeping oil prices high, around US$106 a barrel, and there’s no sign of relief as the conflict spreads to Saudi Arabia and the Gulf of Aden. The RBA’s own forecasts assumed oil up to twenty dollars cheaper. Diesel is the real worry because it feeds into transport, manufacturing and food costs. And it’s not just oil: LNG has more than doubled, wheat is up 37% this year, sugar’s up 42, and cocoa has more than doubled. Meanwhile, unemployment hit a five-year high of 4.7% in September, so markets have wound back bets on another rate rise. The chance of a move to 4.85% in November has dropped from about one in three to about one in five. Governor Michele Bullock and researcher Anthony Brassil put it bluntly: with a supply shock, monetary policy can’t erase the economic loss, it can only decide how that loss is spread over time. Rates are already at a 15-year high of 4.6%, though most borrowers are still ahead on repayments. The people doing it toughest are low-income renters, who’ve copped years of rising rents.
On the policy front, there’s a growing push for tax reform. The Grattan Institute wants the GST lifted from 10 to 15% and expanded to cover all food, raising about $76 billion a year. Of that, $33 billion would fund income tax cuts for lower and middle earners, and $25 billion would go to JobSeeker, pensions and rent assistance. Grattan says a low-income single-parent renting family would end up about $150 a week better off, while a higher-income working family would pay around $162 more in tax. Independent MP Allegra Spender backs putting the GST on the table and wants tougher fiscal rules at the federal level. Treasurer Jim Chalmers has resisted arbitrary spending caps. Add the credit card surcharge stumble, where the ATO stopped accepting cards and ministers knew it was possible back in July, and it’s been a rough few weeks for the government.
Let’s look at the federal budget, because Treasurer Jim Chalmers has a problem. He’s got roughly $11 billion in savings to find, just to stop the budget blowing out. So what’s gone wrong? Well, first up, borrowing’s getting more expensive. The ten-year bond yield has jumped from 4.8 to 5.3% this year, thanks to a global sell-off driven by worries about public spending, particularly in the US, and fears that the Middle East conflict will keep inflation high. That could add around six billion dollars in interest costs over the next four years, on top of a deficit that Treasury already had at sixty-four billion this financial year. And none of that was baked into the budget. Then there are the backflips. Keeping the refugee intake at twenty thousand a year instead of cutting it to 13,750 means more than a billion dollars in extra savings needed. Walking away from the cap on allied health funding for veterans leaves a seven hundred and forty-eight million dollar hole. Delays to the NDIS reforms will cost a few hundred million. And the plan to scrap the private health insurance rebate for over-65s, which was meant to save three billion, is stuck in the Senate. If the Greens get their way and pensioners are exempted, that could cost up to one point six billion in lost savings. Economists are saying the mid-year update in December needs to deliver real cuts. HSBC’s Paul Bloxham says fiscal policy has been expansionary, and if the government doesn’t rein in spending, the Reserve Bank will be left to do the hard work on inflation, which could mean a bigger downturn. He also pointed to off-budget spending, forecast at thirty-two and a half billion dollars, as something to look at. Commonwealth Bank’s Luke Yeaman says the government’s talking the right talk, but delivering a contractionary update will be tough with households already under pressure. And he warns that if governments try to shield voters from higher rates, the RBA will simply push harder on the brakes. The Coalition’s Tim Wilson, naturally, says it’s a spending addiction. Chalmers has promised a “savings package” in December, but whether it’s big enough to cover the new costs is the big question.
Australians have had one of the steepest drops in consumer confidence in the developed world over the past year. Only Chile and Belgium fell further, according to the OECD. Our index sits at 98.4, which is in line with the OECD average, but anything below 100 signals pessimism. Challenger’s Jonathan Kearns says people remember inflation news well, and the politics around tax and the budget hasn’t helped. Chalmers says he’d be surprised if confidence improved soon, though he points to forecasts that inflation returns to the 2 to 3% band by the end of 2027. The IMF is a little less optimistic, seeing inflation at 3.1% next year.
Then to media. Less than two years after buying Foxtel for a headline $3.4 billion, Dazn is already weighing its options. Peter O’Connell, a dealmaker who founded Amaysim, was just named Foxtel CEO, and one source described him as an M&A man rather than a long-term operator. Dazn and Tabcorp have had early talks about some kind of deal, though no price has been discussed. Dazn reportedly found Foxtel far more complex than expected, and Dazn itself posted a £772 million loss last year. Whether Tabcorp can make wagering and broadcasting work together is the open question, since similar partnerships have had mixed results.
Microsoft and NextDC told NSW officials in private meetings (back in April) that they could take their data centre projects elsewhere, like Victoria, Malaysia or Indonesia, if NSW can’t guarantee power supply and speed up its planning process. Microsoft’s land director said speed to market matters most, since they can put AI data centres anywhere in the world. NextDC said it can absorb a $30 million cost blowout, but not delays. The NSW response: Four months after those meetings, the government announced guidelines to fast-track approvals to 75 days for projects that meet environmental standards and contribute to local water, energy and community infrastructure. Data Centres Australia says it hasn’t changed much, since approved projects had been stuck in the system a long time and more projects are flowing to Victoria. The NSW Planning Minister disagrees, calling NSW “a premium destination” and pointing to former mining land with existing water and power connections. Developers are also eyeing a renewable energy zone near Dubbo, retiring coal power stations and rehabilitated Hunter Valley mines. Victoria isn’t smooth sailing either: NextDC’s shares were paused on Monday because it’s struggling to secure power for its M3 expansion in West Footscray. Residents have complained about noise, emissions and 22-metre concrete power poles outside their homes. The delay could cost around $25 million in earnings this year. Victoria has since introduced rules requiring developers to bring their own renewable energy, use recycled water, and build at least 150 metres from homes. Investors are getting nervous: Firmus Technologies pulled its planned ASX listing, which would have valued it at nearly $44 billion. UniSuper’s chief investment officer said the real limit on the AI build-out might turn out to be funding rather than power or community opposition, and that “flaky” business models should get wiped out. Community backlash is also biting elsewhere: Firmus is in disputes with residents at three Tasmanian sites, and Goodman cancelled a $1.2 billion Sydney data centre after criticism from politicians and locals. Bottom line: Data centres are a huge economic driver, but developers want speed and secure power, communities are pushing back, and investors are starting to question whether the numbers add up.
And that’s it for this week.
And next week, I’ll be talking to Sam Riley, CEO and Founder of Drova. Sam has spent more than two decades building businesses in enterprise software and technology and is now focused on helping businesses understand and manage the risks emerging as AI becomes increasingly embedded into everyday operations.
And I’ll be talking to CommSec economist James Gruber about the state of the markets.
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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