RBA MEETS, EU WANTS DEFENCE PACT
The Reserve Bank of Australia’s (RBA) interest rate-setting board is meeting today, with a cut widely expected to be announced tomorrow afternoon.
As the AAP bluntly puts it, the board is meeting “for the first time since [US President] Donald Trump blew up the global free trade establishment”, or as Capital Brief writes, for the “first time since the ‘Liberation Day’ tariffs announcement”.
The newswire highlights the RBA has the fortune of having two data releases from the Australian Bureau of Statistics last week to look at, which show the “labour market still going strong”, and it has been able to observe how Trump’s great tariff plan has played out since its last rate decision.
Economists speaking to AAP say Trump backing down on his 145% tariff on China shows trade deals are there to be made, but the global economic uncertainty remains given the US president’s predisposition to erratic decision-making.
Despite that uncertainty, the vast majority of economists and the markets expect a 25 basis point rate cut on Tuesday afternoon, Capital Brief says. The Australian Financial Review says the financial markets “are almost certain the RBA board will reduce the cash rate to 3.85% from 4.1%”, which it says would be the second move lower in what is predicted to be a shallow easing cycle.
As Treasurer Jim Chalmers was keen to highlight during the election campaign, the markets reckon the RBA will cut rates at least a couple of times this year. Over the weekend, AMP deputy chief economist Diana Mousina said she believed monetary policy would remain restrictive despite the expected cut tomorrow. “While employment growth has been solid, unemployment is still above its lows. And of course, GDP growth is still anaemic. So, the low inflation environment gives the RBA room to remove some policy restrictiveness,” she told the AFR.
Gareth Aird, the head of Australian economics at Commonwealth Bank, is quoted by Guardian Australia as saying a strong jobs market and rising wages, plus the aforementioned easing of tariffs between Washington and Beijing, will prevent the RBA from rushing to cut hard and fast.
The AFR flags that the RBA board could also decide this week whether to publish the unattributed votes of its members on interest rates. In a separate piece, the paper quotes economists in suggesting a house price boom may be coming down the track if the central bank does indeed cut rates numerous times this year.
As the treasurer (and everyone else) awaits the RBA’s decision, his boss has spent the weekend in Rome for Pope Leo XIV’s inaugural mass in St Peter’s Square. Afterwards, Anthony Albanese sat down with world leaders, including European Commission President Ursula von der Leyen and Ukraine’s President Volodymyr Zelenskyy.
The Nine papers report this morning that Sunday’s meetings involved the European Union “seeking a defence pact with Australia to deepen military cooperation”. Speaking ahead of the private talks, Von der Leyen said to Albanese: “The geopolitical tensions have massively increased. The good thing is, Australia and Europe are reliable partners. We’re predictable. We share the same values. And this is the reason also that we do not only see you as a trading partner, but we see you as a strategic partner, and we would very much like to broaden this strategic partnership.”
Von der Leyen said the EU had signed new security and defence agreements with South Korea and Japan, and will shortly with the UK, adding: “We would be very pleased if we could develop such a security and defence partnership too, just to broaden the strategic partnership.”
Talking to reporters after the meeting, Albanese declared: “We said that we were certainly interested in any further engagement of support, but it’s very early stages at this point.” He added: “I wouldn’t over-read what Ursula von der Leyen’s statements were. It was a suggestion by the president that the relationship was based upon not just economic relations, but based upon our values.”
The Nine papers’ report adds Zelenskyy told Albanese that Ukraine wanted more sanctions put on Russia, while his office said the Australian PM had assured them tanks pledged last year, but reportedly not yet delivered, were “already on their way”.
Zelenskyy also met with US Vice President JD Vance in Rome over the weekend, the first time the pair has met since the infamous Oval Office exchange earlier this year. The BBC reports Trump has said he will speak with Russian President Vladimir Putin on Monday about “stopping the bloodbath” and ending the war in Ukraine.
Axios has reported in the last few hours that White House envoy Steve Witkoff “has given Israel and Hamas an updated proposal for a Gaza hostage and ceasefire deal and is pressing the parties to accept it”. The reported proposal comes after Israel’s military said it had launched “extensive ground operations” in Gaza.
Gaza’s health ministry has said three public hospitals in the North Gaza governorate are now “out of action” and at least 67 people have died and 361 have been injured in the last 24 hours, the BBC reports. On Sunday evening local time, Israel said it was allowing a “basic amount of food” to enter Gaza “to ensure a famine crisis does not develop”.
Meanwhile, former US president Joe Biden has been diagnosed with an aggressive form of prostate cancer, The New York Times reports. A spokesman for the 82-year-old said on Sunday (local time): “While this represents a more aggressive form of the disease, the cancer appears to be hormone-sensitive which allows for effective management.”
LEY: OUR POLICIES ARE UP FOR REVIEW
The Australian leads this morning on the continuing division within the Coalition over net zero.
The paper says new Liberal leader Sussan Ley is coming under pressure from her own MPs not to support a net-zero policy that involves a “blank cheque”, while camps in both the Libs and Nationals remain divided over the policy. Despite the very vocal opposition, the report indicates “a small combined majority of Liberal and Nationals MPs want to stick with net zero”.
Over the weekend, Liberal defector Jacinta Nampijinpa Price told the newspaper it would be impossible to achieve net-zero emissions without atomic energy and said net zero had “definitely created the cost of living crisis” by driving up energy bills.
The Liberals’ deputy Senate leader Anne Ruston told ABC’s Insiders yesterday: “There’s no secret there is a divergence of views in our partyroom about how we achieve that. But right now, I absolutely think the thing we need to concentrate on is making sure that people can afford their power bills.”
Ley has written in The Australian this morning and declared: “Our policies are up for review. But our values are not.”
“We have lost the trust of women and we have not convinced younger Australians that we have a plan to provide a fair go for their generation. We need to focus on renewing the compact we have had with Australians who live in cities, helping them deal with a rapidly changing economy and rising prices.
“We have work to do. The reality is in recent elections we have failed to meet the expectations of the Australian community. We have to show the nurses, small business owners, tradies, teachers, farmers, parents and retirees, who ask for little but contribute a lot, that we understand their aspirations. Australians sent a clear message at the election. We must listen, change and develop a fresh approach,” Ley writes.
Just days after succeeding Peter Dutton as leader of the Liberal Party, Ley’s mother passed away at the weekend, the ABC reports. “My family and I feel this loss deeply,” Ley said in a statement. “I have taken inspiration from her every single day of my life and I always will.”
Ley’s deputy Ted O’Brien said on Sky News yesterday “there’s no doubt” that the Liberal Party and the National Party were strongest when in a coalition. Rushton also told Insiders: “I make no secret of the fact I am a Coalitionist, I think that we are strongest when we are in Coalition with the National Party.”
If the parties do indeed remain in a coalition, then the make-up of the shadow cabinet needs to be worked out (it’s worth having a read of my colleague Bernard Keane’s piece on this below). O’Brien refused to confirm whether he would become shadow treasurer when pressed yesterday, Sky News said.
“We haven’t finalised [the positions]. And until they are finalised, I won’t be preempting any shadow ministerial positions,” he said. “We are having these discussions at the moment, Sussan and David [Littleproud] are talking about the Coalition agreement. There’s further discussions to be had as decisions are made about the shadow ministry.”
Meanwhile, counting gets back underway today in those seats still not declared following the May 3 election.
The ABC has Liberal Gisele Kapterian 43 votes ahead of Independent Nicolette Boele. The Nine papers reckon “a full recount for the seat is likely given the wafer-thin margin; if that happens, an official declaration of the result in Bradfield may not happen until next month”.
At the end of last week, Goldstein’s Tim Wilson told Guardian Australia he was “very relaxed about the result” as his lead over independent Zoe Daniel dipped to 206 votes.
ON A LIGHTER NOTE…
Thanks to a crowdfunding effort, scientists have discovered why ginger cats have their distinctive colour.
The BBC reports researchers across two continents revealed last week “that ginger cats are missing a section of their genetic code, which means the cells responsible for their skin, eye and fur tone produce lighter colours”.
It is hoped the discovery will now be able to show whether orange-coloured cats are at increased risk of certain health conditions.
The broadcaster says the study into ginger cats started as a passion project for Professor Hiroyuki Sasaki, a geneticist at Kyushu University.
After retiring from his university post, Professor Sasaki wanted to keep working on the gene and, with his team, raised 10.6 million yen (A$114,110) via crowdfunding from cat lovers around the world.
Say What?
In our time, we still see too much discord, too many wounds caused by hatred, violence, prejudice, the fear of difference, and an economic paradigm that exploits the Earth’s resources and marginalises the poorest.
Pope Leo XIV
The 69-year-old held his inaugural mass in St Peter’s Square on Sunday.
CRIKEY RECAP
One does not have to cast around the Australian social media space for long to encounter the conspiracy theories about rigged systems that have poisoned the well in the United States.
It can also be taken as read that conservative media commentators will become ever more vocal in their calls for “reform” as their distinctly minority viewpoints are repeatedly repudiated at the ballot box.
There may be times when pipe dreams about re-engineered electoral systems alien to Australia’s political culture can be harmlessly indulged, but now isn’t one of them.
Another downside is complexity. Voting in New Zealand requires one piece of paper and ticking two boxes (only one of which usually matters). Australia requires two pieces of paper (one of them comically large) and a lot of numbering, which in combination with compulsory voting and language difficulties, leads to large numbers of invalid votes, particularly in areas with high language diversity. Then there’s the matter of compulsory voting for older people, even for those with conditions like dementia (who still have a responsibility to vote if they “understand the electoral process”).
The real story of this election was that the actual preferences of the electorate changed very little. The primary vote had ALP up 2%, Coalition down 3.5%, Greens unchanged. But the narratives were a massive ALP landslide, a Coalition rout, and the Greens punished for their radicalism — narratives driven by quirks of single-member electorates far more than any underlying voter sentiment.
The Coalition looks unlikely to be back in power until the 2030s (although “remember 1998” should be the Labor war cry from here). What value does being linked to the Liberals have for the Nationals, given the one thing the Liberals are good for — getting them into power — is off the agenda for the time being?
From this point of view, there’s real value in the Nationals going their own way, at least for a while, unshackled by the free marketeers of the Liberals. They can expand their interventionist instincts on competition policy. They can make their case for the fantasy of nuclear power. They can push agricultural interests — to the extent the Nationals are any longer about farmers, rather than fossil fuels — in trade policy. And they can make their own deals with Labor in the Senate, potentially giving them more legislative influence. They can demonstrate to their constituents that they can deliver even without being linked to the Liberals.
And if, as some Liberal doomsayers say, the Liberals now face a kind of existential crisis that means the very future of the party in the 21st century — a century the Liberal Party’s aggrieved, affluent baby boomer base fiercely hates living in — is in question, it might be a practice run for the future. What role do the Nationals, as a deliberately sectional party that will forever be confined to minor status, play if they can’t reliably access power via the Liberals anymore?
READ ALL ABOUT IT
‘Fiscal discipline’: Can Jacinta Allan and her treasurer hold the line in Victoria’s budget? (Guardian Australia)
WA to push Labor on mining ties (AFR)
News Corp introduces mandatory AI ‘bootcamps’ for journalists (Capital Brief)
‘Conflict of interest’ claim over new double ministry of sport, communication (The Sydney Morning Herald)
Lambie’s anti-salmon stance may cost her political career (The Australian) ($)
Two dead as Mexican Navy ship crashes into Brooklyn Bridge (BBC)
THE COMMENTARIAT
‘We lost the flag, but we’re ready for a new season’ — Sussan Ley (The Australian): We need to ensure our response to this recent defeat is equally comprehensive and consultative. But as we work out why we failed to win the flag at this election, and decide the path forward, there are things I can make clear are not going to change.
Our policies are up for review. But our values are not.
The Liberal Party I lead will not be altering our enduring commitment to what is best for Australia’s national interest. We will always stand for lower, simpler and fairer taxes — not as an economic ideology, but because we trust people to spend their own money more than we do the government.
Sussan Ley can learn from the best, and worst, Liberal leaders — George Brandis (The Sydney Morning Herald): Peter Dutton was not the worst leader the Liberal Party has ever had — I can think of at least three other candidates for that sorry distinction — but he was certainly the most unsuccessful. You don’t suffer a defeat of that magnitude without getting a lot of things wrong. Just as Campbell Newman stands as a negative role model for Queensland Premier David Crisafulli of what not to do, there is much that Ley can learn from her predecessor’s mistakes.
One striking deficiency was the failure to develop a clear, compelling vision of what the Liberal Party stands for. Missing was the overarching philosophy that links individual policies into a coherent whole, providing both underlying unity to specific policy narratives, and distinguishing the Liberal world view from that of Labor. The “vision thing” is sometimes derided by members of the party’s populist right, who wear their anti-intellectualism with pride. Now the electoral cost of failing to offer a clear explanation of the party’s values is plain to see.