Australia politics live: Labor caucus endorses Payman suspension; RBA warns of ‘elevated upside risk’ on inflation | Australian politics

Peter Hannam

What are consumers up to? RBA concedes there is a lot it doesn’t know

One other point of note from the RBA minutes, which we highlighted when the cash rate was left on hold on 18 June. That is, the governor, Michele Bullock, conceded there was a lot she didn’t know.

The minutes reinforce that view, detailing some of the challenges in interpreting the data, particularly about what consumers (the greater part of the economy) are doing and why.

Specifically, the level of consumer spending had been revised upwards over the past 18 months with spending on overseas travel contributing “much of the upside surprise”, the RBA’s board minutes stated.

One interpretation was that, on average, households were not being as cautious in their spending as previously thought.

Another was that the fall in the saving rate would leave households even more financially squeezed than previously assessed.

So which was it … were households being less cautious or more squeezed than the RBA models assumed?

[A]ny conclusion could only be tentative, given that estimates of savings are prone to significant revision.

Further, the latest estimates portrayed a different picture than that derived from data on mortgage-holders’ offset accounts, which showed that households were making larger extra payments than prior to the pandemic.

Another “watch this space” area is how the bank will interpret the effect federal and state budgets will have on inflation. Energy rebates, for instance, would lower headline inflation this year but raise it in 2025 (assuming the rebates aren’t renewed), the RBA said.

RBA staff will provide an assessment of the impact of the budgets on the output and inflation outlook ahead of the 5-6 August board meeting. Perhaps they will also do some probing to understand better what consumers are really up to.

The last of the party room briefings – the Coalition’s – will be held in the next 10 minutes or so, and we will bring you the updates from that.

The parliament session has begun.

Peter Hannam

Reserve bank releases notes on latest rates decision

As flagged in our recent post about the Reserve Bank minutes, the board indeed noted “it was difficult either to rule in or rule out future changes in the cash rate target”.

There’s not a lot for the inflation hawks to get too excited by in the minutes, and so the market reaction so far has been muted. (The Australian dollar continues to hover just below 66.5 US cents, and stocks are maintaining their modest 0.1% loss for the day.)

Members agreed that the collective data received since the May meeting had not been sufficient to change their assessment that inflation would return to target by 2026, despite some elevated upside risk around the forecast.

That’s a reminder the board are prepared to be patient about when inflation will finally retreat to 2.5% (the midpoint of their 2%-3% band).

[Board] members also affirmed their assessment that it was still possible to achieve the board’s strategy of returning inflation to target in a reasonable timeframe without moving away significantly from full employment, even though this ‘narrow path’ was becoming narrower.

Still, the board noted in “finalising” its statement, it was important to let everyone know information since the March meeting “had reinforced the need to be vigilant to upside risks to inflation”.

Apart from being “vigilant” about so-called upside risks, the board was particularly watching to ensure inflation expectations “were still anchored”.

Expectations, of course, can be influenced by a lot of things, such as what you see happening to your grocery or electricity bills – and what you hear from the media about inflation picking up in recent months.

On that score, the weekly inflation expectation readings from the ANZ and Roy Morgan aren’t really what the RBA wants to see sustained.

Benita Kolovos

Victorian premier says health incident over cocain proves need for drug checking service

Victoria’s acting premier, Ben Caroll, says the discovery of a synthetic opioid in cocaine proves the need for a drug checking service in the state.

The Department of Health on Tuesday morning issued a public alert about the threat of cocaine containing protonitazene – a synthetic drug 100 times more potent than heroin – that is currently being sold in Melbourne.

The health department said there had been a string of recent incidents in Melbourne where people purchased the powder thinking it was cocaine, resulting in “serious harm”.

“The product appears to produce strong adverse effects such as loss of consciousness, respiratory depression, and life-threatening hypoxia (insufficient oxygen for normal functioning),” the health alert reads.

They said respiratory depression “appears more quickly with novel synthetic opioids (NSOs)“, increasing the risk of life-threatening overdose.

The warning comes a week after the Allan government announced it would introduce drug checking from later this year, following 46 overdose deaths due to NSOs since 2022. Speaking in Footscray on Tuesday, Caroll said the latest incident was “concerning”:

This is one of the reasons that has led us to doing what we need to do in terms of harm minimisation … as the premier announced just recently we are doing a trial of pill testing and one of the reasons is that, unfortunately, and sadly, drugs are laced with chemicals that young people don’t know they’re laced with. So that is concerning.

Josh Taylor

Telstra and Optus made deal with Google to set it as default search on Android devices

Telstra and Optus accepted a share of advertising revenue from Google in exchange for making Google search the default option on Android devices the two companies sold in the past seven years, the Australian Competition and Consumer Commission has said.

Since at least 2017, the two companies had agreements in place to limit the ability for rival search engines to be preinstalled and promoted on Android devices in return for a share of the revenue, the ACCC said. The agreements expired on 30 June 2024, and Telstra and Optus have given three-year enforceable undertakings to the ACCC to not enter into new agreements with Google.

The ACCC’s commissioner, Liz Carver, said:

We are grateful for the cooperation of Telstra and Optus in responding to the ACCC’s competition concerns. The undertakings will allow alternative search engines to be able to compete to be a default search engine on the Android devices these companies supply.

We are continuing our investigation into Google’s conduct in entering into such agreements more broadly, as we consider this raises potential competition concerns. Accordingly, no further comment about the investigation will be made at this time.

Carver said such agreements can limit consumer choice and deter innovation.

Peter Hannam

Reserve bank minutes on latest meeting to be released today

Expect a renewed bout of interest rate rise speculation later this morning after the Reserve Bank releases the minutes to last month’s two-day board meeting.

Between the central bank’s decision on 18 June to leave its cash rate on hold at 4.35% for a fifth meeting in a row, we had the unexpectedly high May inflation reading of 4%.

Despite the caveats on that number (it’s partial, and compares with a low base a year earlier), some economists and commentators have assumed the RBA must raise the interest rate again after its 5-6 August meeting.

We’ll get a bit more information about the RBA’s thinking shortly when it releases minutes on its June meeting. Expect them not to rule anything in or out, as the now standard mantra goes, and that they’ll be watching the data (especially the June quarter CPI numbers out on 31 July).

For what it’s worth, expectations have subsided a bit about the chance of a rate rise next month. They’re now about one in three, compared with 50:50 in the wake of the May inflation news.

For those holding out for a rate cut, investors don’t price one in fully until December 2025 – a year and a half away – according to the ASX rate tracker updated yesterday.

The NSW’s coalition between the Liberals and the Nationals holds – for now.

AAP reports that the Nationals have accepted the sacking of one of their MPs from the Coalition’s shadow front bench:

The Liberal party met on Tuesday morning after their junior coalition partner initially dismissed the removal of upper-house MP Wes Fang from the shadow ministry for publicly lambasting the state’s opposition leader, Mark Speakman.

Fang accused Speakman of “slinking” into his home town of Wagga Wagga and “pretending” to care about the Riverina in a social media post.

The Nationals hit back at the MP’s removal, claiming Liberals did not have the power to sack their members.

But a joint statement from Speakman and NSW Nationals leader Dugald Saunders said both parties had reaffirmed their commitment to the coalition and confirming Fang’s sacking from his posts.

We remain focused on working together to hold the Minns Labor government to account after it handed down the highest-taxing budget in NSW history with no extra cost-of-living relief for families.

Our job and our common objective are to hold this bad government to account and to offer a strong alternative.

Labor caucus unanimously endorses Payman’s suspension

Daniel Hurst

Federal Labor MPs and senators have endorsed the suspension of ALP senator Fatima Payman from the party’s parliamentary caucus, official sources have said.

Sources said that Anthony Albanese spoke to the Labor caucus meeting this morning about unity and cohesion. Albanese referred to the previous meeting of caucus last week where Penny Wong’s position was agreed to unanimously. Referring to Israel and Palestine, Albanese said there was a need for “a long-term solution in a peace process”.

Albanese told today’s meeting that he had received some criticism for showing restraint in relation to Payman crossing the floor. Sources said Albanese said showing restraint and some compassion was “a strength and not a weakness”

Albanese said he was only the prime minister because he had Labor next to his name. He argued that “this is the most united caucus I have been part of”.

Albanese then put to the meeting the position the leadership group had announced on Sunday, that Payman had placed herself outside the privilege of being in caucus due to her own actions and statements and that she was suspended until she decided to respect the collective obligations.

According to official sources, that position was put and agreed to by caucus. Official sources said this was carried “on the voices” unanimously.

Apparently there was no further discussion of the matter.

As we reported yesterday, the Senate was asked to vote on Labor’s bill ending live sheep exports (in a phase-out that will see the industry stopped by mid-2025), which meant Labor had the votes.

It did, and the bill was passed last night. The agriculture minister, Murray Watt, is pretty happy:

I‘m very pleased that last night, the Senate did pass the legislation that the government had introduced to ban live sheep exports by sea from the first of May 2028.

This was obviously an election commitment that our government took, not just to one election, but to two. So, what we’ve done last night is deliver an election commitment that was voted for by the Australian people and is still supported by the majority of Australians, including in Western Australia.

From here, we now want to work very closely with the industry and all in the community who have an interest in this issue to make this transition work. We’ve put $107m of taxpayers’ funds on the table to support a transition package.

I met again yesterday with representatives of sheep farmers and sheep farmers themselves, and again, made the point that we are keen to work with them as closely as possible to make sure that this transition works, and that we welcome their ideas on how that money can be spent to support this transition as well as we possibly can.

(He says “including in WA” there because the industry only exists in WA now, with every other jurisdiction moving on to something else.)

ANZ breached banking code after charging fees and interest to deceased estates

Jonathan Barrett

ANZ charged fees and interest to thousands of deceased estates in a breach of the sector’s own banking code designed to clean up such practices.

ANZ will pay just over $3.25m in remediation costs to 18,852 estates as a result of its charging practices, according to the Banking Code Compliance Committee (BCCC), a watchdog created by the financial sector in the aftermath of a scathing royal commission.

The BCCC chair, Ian Govey, said the bank’s practices represented serious code breaches.

The significance of the deficiencies in ANZ’s compliance frameworks was deeply concerning. Naming a bank is a sanction that we reserve for the most serious and systemic breaches.

The practice of charging fees to dead customer accounts was one of the most scathing findings unveiled by the royal commission that released its final report in early 2019.

The BCCC noted that ANZ has taken actions to address the issue, which includes the use of an automated tool to waive fees after the bank receives notification of a customer’s death.