Remembering my friend Peter Thompson, the legend who hosted AM, and did so much more

Peter died on 11 September 11, 2026. He was only 73. 

 Wikipedia: 

Peter Thompson began his career as a sports broadcaster on radio at 2LF in Young in 1970. He moved to Tasmania in 1972 and worked as a presenter on various commercial stations, including 7EX, 7LA and TNT9. He also presented the ABC TV current affairs program This Day Tonight in 1978 Thompson presented ABC Radio Sydney’s Drivetime in 1987 and then the ABC morning current affairs program AM from 1988 to 1993. He was presenter of Radio National Breakfast from 1994 to 1999 and again from 2003 to 2004. He also hosted a series of 35 “Wisdom Interviews” for Radio National from 2002 to 2004. Thompson was the presenter of the Australian Broadcasting Corporation’s Talking Heads, a weekly biographical television program about the lives of prominent Australians, which began on ABC1 in 2005 and ended in 2010 after 238 episodes.

All this is true, but it doesn't describe the person I was blessed to know, nor his absolutely pivotal role in saving the Frankin River.

At his memorial service on October 6, Bob Brown said the Franklin would not be flowing free today were it not for Peter. I spoke about Peter the person, and that time, back when we was fab.

 Peter Xavier Thompson

Peter loved his colleagues, and he loved people more broadly.

I know he loved me because he told me about two years ago, using those words, “I love you” – after Johnny Bwin’s funeral, and then every time we met and spoke on the phone after that.

He said it because … I think because he really did love me, and he wanted to make that clear while he could. 

And also because of that time… the 1980s and 1990s…. what it meant to us… those of us unbelievably privileged to work in ABC Radio Current Affairs when it was… all there was, really.

It’s hard to believe now… there’s news everywhere, but in the 1970s, 1980s and 1990s AM and PM were the leading current affairs programs… the leading political forums in Australia… 

And the people who put them together in the Olivetti building in William Street and later on the first floor of ABC Ultimo… most of us were in our 20s and 30s… 

We were given enormous responsibility, although I don’t think any of us thought that was anything other than normal…

We had a head of department, an executive producer, and that was it… There was no massive news bureaucracy… (we weren’t even part of news at first)… there was no need to coordinate… with anyone.

And so we took our roles seriously…

If you had asked any of us what we thought about the situation we were in, 

we would have said we had arrived.

          

That’s how Peter acted.

                                                             

I arrived in radio current affairs in 1985 at the age of 27. Peter had arrived probably a year before, aged probably 31.

He had done an awful lot before; he had been a radio and TV presenter in Tasmania, getting near the top of his game….

And (as we’ve heard) he had helped save the Franklin… On his shelf in Radio Current Affairs was the book he had written, Power in Tasmania.

Because he knew just a bit more than most of the rest of us, he was able to be helpful, reassuring, welcoming, supportive… 

And he always seemed to know more than he let on... 

John Highfield has reminded me of the slight curl to his lips… the joke he quite got around to sharing…

As a broadcaster, even back then, he meant it.

What I mean is that there was no gap between him and the listener… he wasn’t presenting to the listener; he wasn’t lecturing to the listener; he was with the listener, helping the listener out.

Paul Murphy, the PM presenter, used to just love him… having someone with that warm, quiet authority and that voice in the studio with him for live Q and As... and if Thompson had joined him towards the end of the show, Thompson would say in the studio, and Murphy would sign off with something like: “and thanks for joining me here with Peter Thompson on PM”. 

Which is why in mid-1985, ABC News executive Ian Wolfe made an unusual decision.

The Hawke and Keating Tax Summit was being held in July. PM would broadcast from the event every night, of course, and at the very end of the day, around 9 or 10 pm, there would be a special extra program, 15 or so minutes, to wrap up the day and preview the day ahead.

Wolfe’s unusual decision was that Peter Thompson, rather than Paul Murphy, would present it.

He told me that he wanted Peter Thompson rather than Paul Murphy because Peter was a reporter, PM’s business and finance reporter, and listeners would trust what they heard more if it came from Peter, their person on the inside, than from

“a presenter”.

A few years later, after Peter had been away at Harvard gaining a Master in Public Administration, away at Steve Cosser’s company Broadcom, helping start Business Sunday, and away at 2BL presenting drive, Wolfe appointed him Presenter of AM.

The reassuring, supportive presence that we had felt on the Radio Caff floor spread to the AM office…  and spread out through the airwaves to become the reassuring presence of AM on air.

Peter usually knew more than the listeners, and he usually knew more than us… he was always soaking up information and synthesising ideas so he could use what he knew as soon as he needed a lead or a question... but he never made the listeners or any of us feel as if he knew much more than us.

Trevor Watson was his first executive producer. He says they set up desks facing each other and tried to create something new, something surprising, every morning. Trevor would come up with an idea (say for a new type of opening) and Peter would chime in, or the other way round. But he says they never disagreed. “Peter never questioned any of my decisions. What he did do was dip in and guide me”.

And Peter if he was stressed, he didn’t show it. If something wasn’t going well on air, he would smile at the control room through the glass. If there were mere seconds to go before airtime, he would calmly type.

For those of you who don’t know how the caff control room worked in the days when we used physical tape, I’ll briefly describe it to you. Johnnie Bwin and others recorded tapes in the lines room, then raced them round or poked them through a hole we had cut in the wall to the control room. At show time, Bwin would lace each tape up on a bank of machines along a wall, rewinding tapes that had been played and adding new ones as they came in. 

Another operator (Therese Malek was one) would do the switching. Tony Chilton, then later Leonie Highfield, had a role akin to a director, keeping time and giving cues. Johnnie would walk from machine to machine, starting each on cue and whipping down the volume with tremendous force if we needed an early out.

Therese Malek says that after every show Peter came and thanked her. He always made time for a chat with the people who had put the show together.

And then it was breakfast on William Street, and quiet (amused) listening over croissants.

When one of the production team had a birthday, he took her and colleagues to the Regent for breakfast. He genuinely loved all of us. And, much as how he knew a lot, he seemed to never get enough of learning from us.

Or hanging out with with us. He took some of us to his property at Kangaroo Valley.

Mark Llewellyn from the 1980s says the thing that he remembers most about Peter is his regular weekend game of doubles. He says the way Peter played tennis was the way he played life: effervescent, always laughing, the occasional duff shot, the occasional brilliant one, lots of hilarious commentary, and at the end you left with a big grin, feeling better than when you arrived! 

All through this time Peter Thompson was developing his own business, teaching communication.. He put some of his insights into a book, The Secrets of the Great Communicators, which I was thrilled to discover that my wife owned when we got married and put together our book collections.

By then he was at Radio National Breakfast, which he helped create with Mick O’Regan… developing a format that can still be heard in the program that goes to air today. And he was at ABC TV, making six seasons of “Talking Heads”, where staff say he was a dream to work with. 

Here’s a colleague, who posted online a letter he sent to Peter after the final season ended.

No doubt the good people in attendance this evening will be making or have already made flattering speeches about how no one could ever wish to work with a more professional, gentlemanly, warm and affable person. 

How your skilful and subtle, but probing line of questioning, manages to draw out the deeper, more private and genuine human being beneath the public mask of your guests. 

How you are charming and cool in a crisis, with never a bad word to say about anyone, and so confident in your own skin that no amount of executive direction, followed by the inevitable re-direction, can phase you. 

You may just have heard how much people have learned from working with you — things that will stand them in good stead — your sage advice resonating for many years to come.

And then the letter goes into specific reminiscences.

Those Talking Heads programs look great on YouTube, even today. Peter looks good. He did a similar thing on Radio National with the Wisdom Interviews. 

It turned out that what he did with us at breakfast and in the office, listening to us, appreciating us, digging up, turns out to be about the best tool there is for interviews.  

I don’t know how he did so much. I couldn’t have. But at Caff we saw clues.

A calming a presence as he was at AM, he knew full well that he was presenting perhaps the world’s greatest radio program, following in the footsteps of Robert Peach, Hamish Robertson, Steve Cosser and Red Harrison.  

He brought those of us listening, and those of us at work with him in the morning, live Q and As as the Berlin Wall fell, as China massacred its own citizens, as Nelson Mandela was set free, as Margaret Thatcher left office, as Australia Day dawned in 1988. 

To keep doing so much, and so well, he put more effort than the rest of us into looking after himself.  He ate a grapefruit at his desk every morning. 

Before other people had arrived, he sat quietly at another desk on another part of the floor reading the papers alone and in silence.

The only way to get into the Olivetti building after hours was through an emergency door that smelled of urine and let off a piercing alarm.  Only Peter put his fingers in his ears to protect his hearing.

He explained to Geraldine Doogue (while working on Radio National Breakfast) that a key part of his job, their job, was to deliver.

“Geraldine, they pay us to be in good health,” he told her.

Part of the job was to be healthy. And mentally healthy.

Kay Nankervis remembers him filling in as AM presenter over Christmas, probably Christmas 1985.

She said it was the most relaxed, collaborative, fun time. Then a new radio manager dropped in to watch the show. Afterwards, he asked to speak to the staff and started giving pointers – He said “your intros could have been better” and so on.

While he was still talking, Peter stood up and declared that it was time to go to breakfast — “Who is that guy?” he said as they left. “He’s got absolutely no authority over us”.

I was involved in another such incident some years later a few months after we moved into our new studios in Ultimo.

The much-hyped new technology didn’t work. Radio Current Affairs had had a proud history of never putting mistakes to air. 

Suddenly, like the other users of the new technology, we were helplessly putting many mistakes to air.. microphones wouldn’t turn on, and sometimes they turned off all by themselves. Audio wouldn’t play. It was demoralising.

One morning, all of the audio stopped playing with minutes to go still on air.

John Bruce, the executive producer, said Peter… you go in that booth… it’s microphone works, and talk to Peter Thompson about anything. We bashed out a one-sentence lead.

Peter Thompson introduced me.. Peter Martin joins me now for more details.. Peter what does this mean?

Nothing. The line to the booth wouldn’t work either.

Then Peter calmly said, “Thanks for joining me on AM, it’s 29 past 8”, and walked out of the studio.

The difference between 29 past eight, and half past eight is massive.

At least 40 ABC radio stations, maybe as many as 60 – I don’t know how many local stations we had at the time – had to scramble to fill completely unexpected dead air.

A manager raced round and said we shouldn’t have done that.. Peter replied using words to the effect of “we should be provided with equipment that works”.

We went to breakfast. (We came back later to repair the show for Western Australia).

The bonds formed through those experiences, that special time, are stronger than almost all of the bonds we have formed since. 

That’s why Peter and I played chess over an app until his condition made that impossible, and that’s why we played chess in person whenever I visited Sydney until his condition made that impossible. That’s why we talked about politics and economics and the future of the world over the phone,  right through until the other week.

We spoke for 10 minutes a few days before he died.

I’ve talked about his genuine curiosity about people and his love for people.  I want to close with a quote from an ABC colleague about his love for all of us, whoever we are… for people listening.

It’s an observation made by Ian Hensche, who presented the mid-morning show in Adelaide and prepared it early each morning as Peter went to air.

He said Peter had a great voice, a beautiful, rounded, rich voice, but by itself that would have meant little.  Many people have great voices.

Here’s what did matter, what made all the difference, and I’ll quote Ian Hensche – using his emphasis to get across what he meant.

“The warmth that came though in his voice / wasn’t / fake."

I am privileged to have known Peter. I reckon we all are.

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The Coalition wants to dump our 2030 emissions target, yet somehow hit 2050’s. Behavioural economics has a name for that

If you are anything like me, the nearer you get to a deadline, the more desperately you want to postpone it, no matter how much harder that makes things down the track.

It’s what the Coalition wants Australia to do about its 2030 emissions reduction target – the one signed into law in 2022 and registered with the United Nations Framework Convention on Climate Change.

The Coalition says it remains “fully committed” to the more challenging target of net zero by 2050, but it wants to postpone some of the work needed to achieve it until later, nearer 2050.

It’s a human impulse that until the 1980s had economists baffled. That’s when they came up with a new name for it: “hyperbolic discounting”.

Most of us put things off

Before then, economists had no problem explaining people putting things off. We’d long had the concept of a “discount rate” to explain why we do it.

If I offered you a choice of finishing an unpleasant task this month in return for $100, or finishing it a year later for 5% less, you are pretty likely to opt for finishing it a year later in return for 5% less.

Economists would say that meant your “discount rate” (the rate at which you discount what happens in the future) was greater than 5% per year.

It’s an incredibly useful concept, and one of the reasons we want to be paid interest when we lend money or deposit money in a fixed-term account.

Yes, it will be nice to get our money back – but getting it back when the loan ends won’t feel as good as having it now. If our discount rate is 5% per year, getting the full amount back then will be worth 5% less to us per year, so we will want interest of 5% per year.

Voters and politicians discount the future

It’s also how governments and businesses decide whether to fund major projects. If their discount rates are 5% (they are usually higher) and the eventual payoff from the project works out at less than 5% per year, it isn’t worth it. As a species, we are more concerned about what happens now than what happens in the future.

At least that’s what was taught at universities in 1970s: everyone has their own personal discount rate. For patient people it is low, and for impatient people it is higher. If you can find out what it is, you can find out what they should do.

Except that many of us don’t behave like that at all. We appear to have a discount rate, but it changes – dramatically – the closer we get to a deadline.

Near deadlines, our behaviour becomes extreme

Remember when I asked about finishing an unpleasant task this month or a year later? You might well have given an answer that implied a discount rate near 5%.

You would have probably given a similar answer if I asked about finishing the task a year after that, in 2027 instead of 2026. Your discount rate would be near 5%.

Except for the week before the task is due. In that week, you might well be prepared to sacrifice almost anything – an awful lot – to put it off for another week or another month, or two months or a year. Your discount rate would be off the charts.

On a chart, it wouldn’t look like a straight line – 5% or so per year – it would like a hyperbola, a line that had suddenly climbed enormously high. That has also been used to describe the concept of hyperbolic discounting.

Acting like a hyperbolic discounter – pushing out a deadline as it becomes imminent, even if it costs more to meet it later – as the Coalition now says it will do the 2030 emissions reduction target, is a way to never meet a deadline.

Of course, the Coalition says it won’t cost more to meet the final deadline of net-zero by 2050 because by then we will have nuclear power.

It’s a familiar argument to those of us who want to put things off. Something will come along that will make them easier to do later. If it doesn’t, maybe we will behave like a hyperbolic discounter again. Not that we expect to.

Nuclear power mightn’t make future choices easier

Except that the unexpected happens. Cost overruns are notorious in building nuclear power plants, even in countries that have lots of them and they are often delivered late.

And electricity is responsible for only one-third of Australia’s greenhouse gas emissions. Cutting electricity emissions to zero (a road we are already on, they’ve been falling since 2015) will leave another two-thirds of emissions untouched.

That’s unless we rapidly electrify other sources of emissions such as cars and trucks and the use of gas for heating, a transition the Coalition remains reluctant to embrace.

It’s hard to meet deadlines. Right now the government is on track to miss its 2030 emissions target of 43% below 2005 levels, although its officials say it is on track for 42% and it thinks it can make up the difference.

It’s tempting to put things off. If the Coalition persuades us, it’s because we are highly persuadable. Most of us don’t like hard choices now. We like them later.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Spare us the talk about a wages explosion. There’s nothing wrong with lifting Australia’s lowest wages in line with inflation

What is it with the Coalition and wages?

When, in the final days of the 2022 election campaign, the then opposition leader Anthony Albanese backed an increase in award wages to keep pace with inflation, his opposite number in the Coalition, Prime Minister Scott Morrison called him a “loose unit”.

“He just runs off at the mouth, it’s like he just unzips his head and lets everything fall on the table,” Morrison said.

Allowing the wages of low-paid Australians to climb with inflation would

make interest rates rise even higher, it would threaten the strong growth we have had in employment, and ultimately it would force small businesses, potentially, out of business altogether.

Now, two years on, after yet another Fair Work Commission decision that lifted award wages in line with inflation, the Coalition has returned to the fray.

On Monday, Shadow Finance minister Jane Hume asked Treasury Secretary Steven Kennedy at a Senate hearing how he could support a wage increase linked to inflation at a time when productivity growth was uncertain.

She was, she said, just asking for treasury’s position.

The Fair Work Commission had just given Australia’s lowest-paid workers 3.75%.

The approach goes back some time. In 2014 the Coalition’s recently-installed industrial relations minister Eric Abetz warned of something akin to the “wages explosions” of the 1970s and early 1980s unless “weak-kneed” employers stood up to unions.

At the time, only 17% of Australian workers were members of unions, down from more than half in the early 1980s. It’s now just 12%.

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Far from setting off a wages explosion, increases in award wages (those awarded by the Fair Work Commission to predominately low-paid workers) appear to barely move the dial at all.

Last year the Commission awarded low-paid workers 5.75%. In the year that followed, overall wages climbed 4.1%. The previous year the Commission awarded 5.2%. In the year that followed, overall wages climbed 3.7%.

Overall wages – those received by the three quarters of workers who aren’t paid by awards – have been climbing by less than awards, and for most of the past three years, by less than the rate of inflation.

Conditions were ripe for pay rises

It isn’t because the conditions haven’t been right. For the past two years, unemployment has been lower than it has been in the previous four decades.

From 1974 right through until 2022 unemployment never fell below 4%, and rarely fell below 5%. Yet the past two years haven’t sparked a wages explosion.

It should have been one of the easiest times in our lives to walk into a new higher-paying job, yet the share of us doing that has dived from almost 20% per year at the start of the 1990s to less than 10% today.

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At the peak of what was then the biggest mining boom in a century in 2012, only 6,200 Australians were crossing the Nullarbor to live in Western Australia. Five times as many new arrivals were pouring into Western Australia from overseas.

In the past year, in the midst of a new and bigger mining boom, only a net 11,200 Australians have moved west for a better life.

Our remarkable passivity when it comes to moving to earn more and our lack of interest in joining unions has collided with a wage-setting system that for those of us not on awards makes it easy for employers to resist paying more.

Workers are finding it hard to bargain

Individual contracts are usually offered on a take-it-or-leave-it basis. Those of us not interested in leaving (most of us) take them.

Enterprise bargains typically last three years. When they expire there is nothing to stop employers stringing negotiations out or simply not commencing them, leaving their workers on so-called “zombie agreements”.

The Business Council says they can “act like a wage freeze”.

Australia’s total wage bill has been climbing much more slowly than prices. In part this is because decisions on awards, like the ones handed down this week, apply only to awards.

Awards, applying mainly to low-wage jobs, make up only 11% of the total wage bill.

Services inflation is high for other reasons

It is true, as several senators said on Monday, that inflation in the price of services is now greater than inflation in the price of goods. But Treasury Secretary Kennedy doesn’t think that’s because of excessive wage growth.

He said inflation took off as economies ran short of goods when they restarted after closing down in the first wave of COVID. Then Russia invaded Ukraine, pushing up the prices of oil and food.

Inflation in the prices of those goods has receded, but goods are an input to services. Kennedy says what’s happening to the price of services is an echo of what happened earlier to the price of goods.

It will take a while for that to flow through, and for services inflation to follow goods inflation down.

As unthreatening as the latest 3.75% increase in award wages is to inflation, it’ll be welcome to those who receive it.

The national accounts released on Wednesday are likely to show living standards as measured by GDP per person have gone backwards for four consecutive quarters, the first time that’s happened in 40 years. The extra pay will help.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Stand by for a pay rise on top of a tax cut. Here’s why things will feel better from July

At the moment, things look awful.

The latest Bureau of Statistics count of retail spending (spending online and in shops) released Tuesday shows we spent less in April than in February.

The Westpac card tracker, which tracks spending by Westpac customers, shows spending on essentials has fallen 1.6% since April. Spending on non-essentials (what Westpac calls discretionary spending) has fallen 2.2%.

Each month for decades now the Melbourne Institute has asked Australians whether “now is the right time to buy a major household item”.

This month, in a survey conducted just before and just after the federal budget, only 15.2% said it was. That’s the second-lowest percentage in the three decades I have been keeping results.

Go back a few years to the time before COVID (and even during COVID in the lockdowns) and the proportion was typically double – 30-40% of Australians said now was a good time to buy a major household item.

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The economic growth figures due for release next week might well show living standards, as measured by GDP per person, going backward for the fourth consecutive quarter – for an entire year.

It’s something that hasn’t happened since the early 1980s, in more than 40 years.

The good news (and there is good news) is things are about to get a little better, beginning very soon, in July.

Reasons to be (more) cheerful

Already well publicised (probably over-publicised given its size) is the $300 per household electricity rebate, which will work out at $75 per quarter, or 82 cents per day.

In some states there will be more. The West Australian government is offering an extra $400, and the Queensland government an extra $1,000.

Added to this will be lower electricity prices for most customers not already on a good deal. The Australian Energy Regulator has announced cuts in the maximum that can be charged of 2% to 4% beginning in July.

Tax cuts hit pay packets in July

Much more important will be the long-awaited (and revamped) Stage 3 tax cuts due finally to hit pay packets in July.

For a middle-earning Australian (half earn more than this, half earn less) on $67,600 it’ll mean a tax cut of $1,369, or $52.60 every fortnight.

And there’s something likely to make an even bigger difference to the one in five Australian workers whose pay is set by an award rather than an enterprise agreement or an individual contract.

For many, wage increases will be bigger

Next Monday the Fair Work Commission will announce the increase in award wages due to take effect four weeks later on July 1.

In headline terms (and there’s more to it than the headline this time, as I’ll outline shortly) the Australian Council of Trades Unions is asking for 5%.

One of the employer groups, the Australian Chamber of Commerce and Industry, is asking for much less, and much less than the rate of inflation – just 2%.

Its chief executive Andrew McKellar says employers’ legislated superannuation contributions are set to climb by 0.5% of most wages in July, meaning the cost to employers of a 2% increase would be 2.5%.

Another employers body, the Australian Industry Group, is suggesting 2.8%, which is also less than the rate of inflation.

The government itself wants at least the rate of inflation for workers on low pay. It has asked the commission to ensure the “real wages of Australia’s low-paid workers do not go backwards”.

It’s a fair bet the commission will award at least the rate of inflation.

On only two occasions in the past decade has the commission awarded less than the published annual rate of inflation at the time. One was when businesses were in danger of going under as COVID hit in 2020 and the other was last year, when inflation was an unusually high 7%.

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The most recent quarterly inflation figures point to an annual rate of 3.6%. (There will be an update on the more experimental monthly figure on Wednesday, but the commission is unlikely to pay too much attention to that).

That’ll mean an increase of 3.6% to 4% from July highly likely, which for an Australian on an award wage of $67,600 will mean an after-tax increase of at least $1,703, which is $65.50 per fortnight, on top of the fortnightly tax cut of $52.60.

There was a bizarre moment at last week’s hearing when the Australian Industry Group tried to argue that whatever increase the commission thought was fair should be cut to take account of the benefit workers would get from the tax cut.

Fair Work Commission President Adam Hatcher pointed out the commission had never boosted pay to compensate for the higher tax payments that flowed from bracket creep, and asked rhetorically: “why should we go in the other direction now?”

Wage decision unlikely to feed inflation

History suggests that if the wage rise the commission hands to Australians on awards is substantial, it won’t spark broader wage inflation. Only about 20% of workers are on awards. Many of them have low rates of pay, and many of them work in retail and hospitality.

Last year the commission awarded them 5.75%. Overall wages didn’t jump in response, climbing just 4.1%.

And there might be something else for low-paid workers. By law, the commission is now required to redress the undervaluation of work in industries traditionally dominated by women.

The Australian Council of Trades Unions has asked that, as an interim measure, workers in industries that require “emotional labour” be given an extra 4%.

We will find out on Monday.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Top economists give budget modest rating and doubt inflation will fall as planned

Wes Mountain/The Conversation

Asked to grade Treasurer Jim Chalmers’ third budget on his own criteria of delivering on “inflation in the near term and then growth in the medium term”, most of the 49 leading economists surveyed by the Economic Society of Australia and The Conversation have failed to give it top marks.

On a grading scale of A to F, 17 of the 49 economists – about one-third – give the budget an A or a B. Two have declined to offer a grade.

The result is a sharp comedown from Chalmers’ second budget in 2023. Two-thirds of the economists surveyed conferred an A or a B on that budget.

The economists chosen to take part in the post-budget Economic Society surveys are recognised by their peers as leaders in fields including macroeconomics, economic modelling, housing and budget policy.

Among them are a former head of the Department of Finance, a former Reserve Bank board member and former Treasury, International Monetary Fund and Organisation for Economic Co-operation and Development officials.

Thirteen of those surveyed – more than a quarter – give the budget a low mark of D or an E. None have given it the lowest possible mark of F.

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Asked whether the budget was likely to achieve its aim of getting inflation back within the Reserve Bank’s 2-3% target band by the end of this year, and back to 2.75% by mid next year, 17 thought it would not. Only ten thought it would.

A greater number – 21 – were not sure.

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In his budget speech, Chalmers predicted inflation would come back to the Reserve Bank’s target band sooner than the 2025 expected by the Reserve Bank itself, “perhaps even by the end of this year”.

The budget papers forecast an inflation rate of 2.75% by mid-2025, well within the target band and a half a percentage point lower than the bank’s forecast.

The papers say two measures in the budget, not known to the Reserve Bank when it produced its forecasts in early May, explain why the budget forecast is half a percentage point lower.

They are an extra year of energy bill relief of $300 per household and $325 for eligible small businesses and a further 10% increase in the maximum rate of Commonwealth Rent Assistance.

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If the lower budget forecast is correct, and if the Reserve Bank sticks to the letter of its agreement with the treasurer that requires it to aim for consumer price inflation between 2% and 3%, the bank is likely to cut interest rates late this year or early next year as inflation approaches its target zone.

But economists including Flavio Menezes from The University of Queensland say while the budget measures might “mechanically” suppress measured inflation, they are:

unlikely to alleviate underlying inflationary pressures and may even exacerbate them; for households not experiencing financial strain, lower energy bills could simply lead to increased spending in other areas.

Former Reserve Bank board member Warwick Mckibbin says the bank is likely to “see through” (ignore) the largely temporary mechanical price reductions and “raise interest rates to where they should be”.

Others surveyed, a minority, argue the economy is too weak for the extra spending in the budget to boost inflation through consumer spending. Former Finance Department Secretary Michael Keating says any stimulus is “likely to be swamped by the economic slowing well under way”.

Independent economist Saul Eslake said the subsidies for energy and rent would inject only $3 billion into the economy in 2024-25. This meant any boost they would give to underlying inflation would be hardly “material”.

Tax cuts matter more than energy rebates

More important for boosting the economy would be previously budgeted Stage 3 tax cuts. These are set to inject $23.3 billion per year from June, climbing to $107.2 billion over four years.

Eslake said the decision to reskew the tax cuts toward middle and lower earners had saved the government from the need to direct extra specific support to these people. Politically, the government could not have got away with doing nothing.

But Eslake was appalled to discover that the cost of the single biggest spending item in the budget, the untied grants to the states, had blown out even more than expected. The special top-up for Western Australia is now set to cost $53 billion over 11 years instead of the $8.9 billion over eight years expected in 2018.

How the national government could justify gifting $53 billion to the government of Australia’s richest state was beyond his comprehension.

Big issues unaddressed

A repeated theme among the economists was that the budget did very little to boost productivity or address persistent problems.

Several described it as an election budget, others a budget driven by polling.

Macquarie University’s Lisa Magnani said the lack of attention to home prices, the funding of public schools and the poor performance of Australian firms was concerning, given Chalmers’ claim it was a budget for “decades to come”.

Former Department of Foreign Affairs chief economist Jenny Gordon said the budget had failed to tackle the distortions in the housing market and the financial sustainability of needed services including health care, aged care and childcare.

Independent economist Nicki Hutley said crunch time for tax reform was coming, given the large baked-in increases in spending on defence, health and disability insurance and Australia’s over-reliance on income tax and company tax.

Warwick McKibbin said Australia’s main economic problems were its lack of productivity growth, the big changes needed to bring about the energy transition, the surge in artificial intelligence, the risk of much lower export prices and geopolitical uncertainty.

The government should have tried to build a bipartisan consensus about how to fix these.

Private investors were hanging back knowing that whatever the government did could be reversed at the next election.

Although many of those surveyed welcomed the Future Made in Australia Act, some criticised its approach of “picking winners” and “wasting precious resources” by putting money into activities such as the manufacture of solar panels, which could be done more cheaply elsewhere.

Bigger government

Former Industry Department chief economist Mark Cully said it was in some ways one of the most consequential budgets in years.

It locked in a clear shift towards higher spending and revenue, which, at around 26% of GDP, was higher than any other time Australia had been near full employment.

Future Made in Australia was the most marked intervention by a government in shaping the future direction of the economy for decades.

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Peter Dutton makes Labor’s case. Tax breaks for landlords should be restricted to those who build homes

Opposition Leader Peter Dutton might have done us a favour.

As part of his budget reply speech on Thursday night he promised to stop foreigners buying existing Australian homes.

He didn’t only want to stop foreigners buying existing homes to live in, something they are able to do while here temporarily, as long as they they sell within three months of moving out.

He also wanted to stop them buying existing Australian homes to let to renters. He wanted to stop them being landlords. Not because landlords deprive us of homes to live in (they don’t) but because they deprive us of homes to own.

Every existing home that is owned by a landlord is a home that isn’t owned by an owner-occupier. It’s maths.

Foreign investors outbid residents

It was, Dutton said, pretty unfair to be at an auction “bidding against somebody who has very deep pockets and somebody who’s not an Australian citizen”.

Stopping foreign investors would help restore the “dream of home ownership”.

Here’s the favour. Dutton has pointed out something that’s true for all investors. By bidding against people who want to buy existing homes to live in, they are pushing up the price of those homes. When they succeed in buying an extra home, they ensure an owner-occupier does not.

Dutton has spelled out the maths.

He has acknowledged that, for foreign investors, the numbers aren’t big. It’s already hard for them to buy existing properties. In 2021-22, the most recent year for which we have figures, only 1,339 foreign investors bought existing properties.

But he told 3AW’s Tom Elliott that if there was anything that could be done, no matter how little, he would “jump at it”.

Local investors also outbid residents

There is something much bigger that could be done, which is to extend his idea to all would-be investors – every one of them who turns up at an auction for an existing property and bids against someone who wants to buy it to live in.

It’s hard to think of reasons why investors should be supported to bid against intending homebuyers. In the quarter century since the headline rate of capital gains tax was halved in 1999, investors have been supported by a particularly effective blend of negative gearing and capital gains tax concessions.

An extraordinary 2.2 million Australians now own investment properties – one in every six taxpayers. Thirty percent of them own two investment properties or more.

In the census before the change, 25.5% of households headed by someone aged 35-54 rented. In the most recent census it was 33.7%.

This isn’t because of a shortage of supply. It’s because a bigger chunk of the supply has been grabbed by landlords at the expense of Australians who in earlier years would have owned.

Had that bigger chunk not been grabbed, hundreds of thousands more Australians would own the homes they live in.

No one objects to investors who build new homes, increasing supply – certainly not Dutton. The two-year ban he put forward in his budget reply speech would have only stopped foreign investors buying existing properties. There would be nothing to stop them building and letting out new ones.

That’s how you would design a grander Dutton-style plan that applied to all investors. Labor put one forward at the 2016 and 2019 elections.

Labor had a plan like Dutton’s

Under Labor’s 2019 plan, negative gearing – the tax break that allows investors to write off losses they make from renters against their wage income – would no longer be available to new investors, except those who actually provided new homes.

Labor planned to

put negative gearing to work by limiting it to new investment properties to help boost housing supply and jobs

Negative gearing isn’t being put to work right now.

In March, the most recent month for which we have statistics, only 2,048 of Australia’s 16,948 property investment loans were for building new homes. Most of the rest went to investors who were going to compete against would-be residents to buy existing properties.

Labor says restricting negative gearing is no longer its plan.

On ABC Q&A on Monday Treasurer Jim Chalmers said he “wasn’t attracted” to the idea of changing negative gearing, yet he repeatedly said there was “no substitute for building new homes”

What Labor proposed in 2016 and 2019 would have directed investors towards building new homes.

It’s worth doing both because it would help create new homes and because it would reduce the number of would-be landlords going up against would-be homeowners at auctions.

Q&A. ABC

One of those intending homebuyers, Jessica Whitby, who was outbid at an auction in Chalmers’ electorate, asked him on Monday to “disincentivise people who are purchasing multiple investment properties to assist first home buyers to get into the market sooner”.

Chalmers replied the thing that mattered most was supply, but he didn’t mention that what Whitby was proposing used to be Labor Party policy, didn’t acknowledge that it would encourage supply, and didn’t acknowledge that (in theory at least) Dutton appears to agree.

Support from many quarters

And not only Dutton. Scott Morrison expressed concern about the “excesses” of negative gearing as treasurer in 2016. His predecessor, Joe Hockey, said on leaving parliament that negative gearing should be skewed toward new housing so there was “an incentive to add to the housing stock”.

It’s as if almost everyone can see the sort of thing that needs to be done.

Australia’s negative gearing and capital gains tax concessions are incredibly expensive. The treasury costs negative gearing alone at $2.7 billion per year.

At least in principle, there’s agreement about how to make it work for us.

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If the RBA’s right, interest rates may not fall for another year. Here’s why – and what it means for next week’s budget

The Reserve Bank is now assuming Australians will see no interest rate cuts this year – and quite possibly none before the next federal election, due next May.

That’s a big change compared to just three months ago. Back in February, the Reserve Bank assumed three rate cuts before the middle of the next year.

Its newly-updated assumptions have interest rates remaining high for the rest of this year, then declining only slowly, with a cut by May 2025 about as unlikely as it is likely.

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The assumptions are based on financial market pricing, which the bank says is “the best predictor of the future cash rate path”.

What changed the market pricing and the bank’s forecasts? Inflation.

That’s posing a big challenge for the Albanese government as it prepares for next week’s federal budget.

Rates on hold amid rising inflation

In its statement on Tuesday explaining why it was leaving its cash rate on hold at 4.35%, the Reserve Bank board sharpened its language about inflation.

It’s now forecasting an increase in inflation later this year and warning that getting it down is proving harder “than previously expected”.

The updated forecasts have the annual rate of inflation climbing from its present 3.6% to 3.8% in June and staying there for the rest of the year, before falling back in line with the bank’s previous forecast released in February.

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Both forecasts have inflation remaining above the bank’s 2-3% target band until late 2025, and both have it not returning to the centre of the band until mid-2026.

US rate cuts are also on hold

It’s a similar story in the United States, with the expected date of rate cuts blowing out there as well.

There, as here, the monthly measure of annual inflation rate remains stuck at 3.5%. In both countries, it’s no lower than it was late last year.

The chair of the US Federal Reserve Jerome Powell now says he won’t cut rates until he is more confident inflation is heading back down towards his target, adding it is likely to take longer than expected to get that confidence.

The budget will focus on more than inflation

So what’s Treasurer Jim Chalmers planning to do on budget night next week to give the Reserve Bank more confidence inflation is clearly heading down?

Not that much – and certainly not nearly as much as in previous budgets.

Chalmers’ opposite number, Coalition Treasury spokesman Angus Taylor, says the treasurer should “stop the spend-a-thon”, by which he means containing growth in government spending to take pressure off inflation.

It’s advice Chalmers and Finance Minister Katy Gallagher won’t be following this time. And not because they don’t understand the thinking behind it.

Restraining spending (and pushing up tax) would indeed take pressure off prices. Chalmers and Gallagher could say they’ve cut $50 billion off spending over the past two years. But a further big cut might push the economy into free fall.

We’re buying and dining out less

The Australian economy is alarmingly weak. As the Reserve Bank board met on Tuesday, the Bureau of Statistics released its latest estimates of the volumes of goods and services bought from online and physical stores.

The estimates are price-adjusted, which in this case means that while what we spent climbed (a tiny) 0.8% over the year to March, what we bought fell 1.3%.

The amount of food we bought fell 1.5%. The amount of household goods we bought fell 1.8%. And the amount we bought from cafes and restaurants fell 2.5%.

The only category in which buying has climbed over the past year was clothing and footwear, and only by 0.3%.

All this has happened in a year in which the Australian population grew by more than 2% – which means the reduced amount of things we have bought has had to feed, clothe and service about an extra 600,000 of us.

Chalmers knows this. It’s consistent with the national accounts, which show the amount we’ve spent and earned per person has shrunk over the past year, in a so-called per capita recession.

The Australian National University’s latest ANUPoll finds us more financially stressed than during the depths of the COVID lockdowns.

Twenty per cent of us say we have borrowed money from friends or relatives over the past year, up from 16% during the lockdowns. Meanwhile, 21% have fallen behind on our bills, up from 17%; and 62% of us have cut our spending on groceries and essential items, up from 43%.

A ‘scorched earth’ budget risks recession

It means that a further big cut in government spending – right now – could push us from a per capita recession into an actual recession.

It’s why Chalmers said on Monday now was “not the time for scorched earth austerity”. He won’t slash and burn while the economy is weak.

After three budget updates in which he has spent less than previously forecast, in next Tuesday’s budget he will spend more – at least for some of the years for which he will produce projections.

Gallagher added this week she’s been as good as forced to spend more in some areas. Several programs introduced, but not properly funded, by the previous government are set to end abruptly. One is the leaving violence payment, which began as a trial.

Don’t expect rates to change soon

In fairness to the Reserve Bank, it too knows the economy is weak. Its updated forecasts released on Tuesday have downgraded expected economic growth to just 1.2% for the year to June and 1.6% for the year to December.

And it knows its 13 interest rate rises to date are yet to have their full effect.

Speaking at a press conference after the board’s decision to keep rates on hold, Governor Michele Bullock gave the impression that lifting rates further was still one of the furthest things from her mind.

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Australians lose $5,200 a minute to scammers. There’s a simple thing the government could do to reduce this. Why won’t they?

What if the government was doing everything it could to stop thieves making off with our money, except the one thing that could really work?

That’s how it looks when it comes to scams, which are attempts to trick us out of our funds, usually by getting us to hand over our identities or bank details or transfer funds.

Last year we lost an astonishing A$2.74 billion to scammers. That’s more than $5,200 per minute – and that’s only the scams we know about from the 601,000 Australians who made reports. Many more would have kept quiet.

If the theft of $5,200 per minute seems over the odds for a country Australia’s size, a comparison with the United Kingdom suggests you are right. In 2022, people in the UK lost £2,300 per minute, which is about A$4,400. The UK has two and a half times Australia’s population.

It’s as if international scammers, using SMS, phone calls, fake invoices and fake web addresses are targeting Australia, because in other places it’s harder.

If we want to cut Australians’ losses, it’s time to look at rules about to come into force in the UK.

Scams up 320% since 2020

The current federal government is doing a lot – almost everything it could. Within a year of taking office, it set up the National Anti-Scam Centre, which coordinates intelligence. Just this week, the centre reported that figure of $2.74 billion, which is down 13% on 2022, but up 50% on 2021 and 320% on 2020.

It’s planning “mandatory industry codes” for banks, telecommunication providers and digital platforms.

But the code it is proposing for banks, set out in a consultation paper late last year, is weak when compared to overseas.

Banks are the gatekeepers

Banks matter, because they are nearly always the means by which the money is transferred. Cryptocurrency is now much less used after the banks agreed to limit payments to high risk exchanges.

Here’s an example of the role played by banks. A woman the Consumer Action Law Centre is calling Amelia tried to sell a breast pump on Gumtree.

The buyer asked for her bank card number and a one-time PIN and used the code to whisk out $9,100, which was sent overseas. The bank wouldn’t help because she had provided the one-time PIN.

Here’s another. A woman the Competition and Consumer Commission is calling Niamh was contacted by someone using the National Australia Bank’s SMS ID. Niamh was told her account was compromised and talked through how to transfer $300,000 to a “secure” account.

After she had done it, the scammer told her it was a scam, laughed and said “we are in Brisbane, come find me”.

How bank rules protect scammers

And one more example. Former University of Melbourne academic Kim Sawyer (that’s his real name, he is prepared to go public) clicked on an ad for “St George Capital” displaying the dragon logo of St. George Bank.

He was called back by a man using the name of a real St. George employee, who persuaded him to transfer funds from accounts at the AMP, Citibank and Macquarie to accounts he was told would be in his and his wife’s name at Westpac, ANZ, the Commonwealth and Bendigo Banks.

They lost $2.5 million. Sawyer says none of the banks – those that sent the funds or those that received them – would help him. Some cited “privacy” reasons.

The Consumer Action Law Centre says the banks that transfer the scammed funds routinely tell their customers “it’s nothing to do with us, you transferred the money, we can’t help you”. The banks receiving the funds routinely say “you’re not our customer, we can’t help you”.

That’s here. Not in the UK.

UK bank customers get a better deal

In Australia in 2022, only 13% of attempted scam payments were stopped by banks before they took place. Once scammed, only 2% to 5% of losses (depending on the bank) were reimbursed or compensated.

In the UK, the top four banks pay out 49% to 73%.

And they are about to pay out much more. From October 2024, reimbursement will be compulsory. Where authorised fast payments are made “because of deception by fraudsters”, the banks will have to reimburse the lot.

Normally the bills will be split 50:50 between the bank transferring the funds and the bank receiving them. Unless there’s a need for further investigations, the payments must be made within five days.

The only exceptions are where the consumer seeking reimbursement has acted fraudulently or with gross negligence.

The idea behind the change – pushed through by the Conservative government now led by UK Prime Minister Rishi Sunak – is that if scams are the banks’ problem, if they are costing them millions at a time, they’ll stop them.

New Zealand is looking at doing the same thing, as is Singapore.

But here, the treasury’s discussion paper on its mandatory codes mentions reimbursement only once. That’s when it talks about what’s happening in the UK. Neither treasury nor the relevant federal minister is proposing it here.

Australia’s approach is softer

Assistant Treasurer Stephen Jones is in charge of Australia’s rules.

Asked why he wasn’t pushing for compulsory reimbursement here, Jones said on Monday prevention was better.

I think a simplistic approach of just saying, ‘Oh, well, if any loss, if anyone incurs a loss, then the bank always pay’, won’t work. It’ll just make Australia a honeypot for these international crime gangs, because they’ll say, well, ‘Let’s, you know, focus all of our activity on Australia because it’s a victimless crime if banks always pay’.

Telling banks to pay would certainly focus the minds of the banks, in the way they are about to be focused in the UK.

The Australian Banking Association hasn’t published its submission to the treasury review, but the Consumer Action Law Centre has.

It says if banks had to reimburse money lost, they’d have more of a reason to keep it safe.

In the UK, they are about to find out. If Jones is right, it might be about to become a honeypot for scammers. If he is wrong, his government will leave Australia even further behind when it comes to scams – leaving us thousands more dollars behind per day.

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Beyond the spin, beyond the handouts, here’s how to get a handle on what’s really happening on budget night

Three weeks from now, some of us will be presented with a mountain of budget papers, and just about all of us will get to hear about them on radio, TV or news websites on budget night.

The quickest way to find out what the budget is really doing will be to listen to the treasurer’s speech, or to peruse online the aptly-named “glossy” – a document that last year was titled “Stronger foundations for a better future”.

But they will tell you exactly what the government wants you to hear, exactly as it wants you to hear it.

If you are looking instead for the truth – what the government is actually trying to achieve and what it is holding itself and its officials to, I would suggest something else, tucked away on about page 87 of the main budget document.

It is required by the Charter of Budget Honesty Act introduced in 1998 by Peter Costello, the treasurer under Prime Minister John Howard.

On taking office in 1996, Costello set up a National Commission of Audit to examine the finances he had inherited from the Hawke and Keating governments, presumably with an eye to discovering they had been mismanaged.

But the members of the commission weren’t much interested in that. Instead, they decided to deal with something more fundamental.

Budget as you wish, but explain your strategy

Governments were perfectly entitled to manage money in whatever way they wanted, and they were perfectly entitled to spend more money than they raised (which they usually do, it’s called a budget deficit).

What the commission wanted was for governments to make clear what they were doing, and to spell out the strategy behind it.

Only part of it was about being upfront with the public. The commission also wanted governments to be upfront with themselves – to actually develop frameworks for what they were doing, rather than doing whatever they felt like.

The commission recommended a Charter of Budget Honesty, which among other things requires officials to prepare independent assessments of the finances before each election, requires budget updates six months after each budget, and requires tax expenditures (tax breaks) to be accounted for like other expenditures.

And it requires the publication and regular updating of a fiscal strategy statement.

Where treasurers hold themselves accountable

The fiscal strategy can be thought of as an exam question set by the student who is being examined – something along the lines of “this is what you say you want your budget to achieve, please set out the means by which you plan to achieve it”.

It turns out to have been exceptionally effective in getting governments to organise their thoughts, make budgets at least try to achieve something, and let the rest of us know what they are trying to achieve.

Every few years, treasurers change the strategy, as is their right. Treasurer Jim Chalmers says he’ll change it again this budget, to de-emphasise the fight against inflation and to more greatly emphasise the need to support economic growth.

His statement will tell us what’s behind his actions in a way the glossy words in his brochure and speech might not.

The strategy that has signposted 26 years

Previous statements have signposted all the important turns in what the budget is trying to do.

The first, in 1998, committed Costello and Howard to achieving a budget surplus on average over the economic cycle and whenever “growth prospects remain sound”.

Making that commitment more difficult was another “not to introduce new taxes or raise existing taxes over the term of this parliament”.

Two years later, after the government had won an election promising a new goods and services tax, that commitment was changed to “no increase in the overall tax burden from its 1996-97 level”, a condition met by calling the GST a state tax.

Hockey and Morrison wound back spending

The Labor budgets from 2008 loosened the tax target to the average share of GDP below the reference year, which they changed to the higher-tax year of 2007-08.

The first Coalition budget under Treasurer Joe Hockey in 2014 changed the target from tax to spending, pledging to bring down the ratio of payments to GDP, and pledging a surplus of 1% of GDP by 2023-24.

Any new spending would be more than offset by cuts elsewhere, and if the budget did receive a burst of unexpected revenue it would be “banked” rather than spent.

In 2018 Treasurer Scott Morrison reintroduced tax as a target, that he spelled out precisely. Tax was not to increase beyond 23.9% of GDP.

Then during COVID, Frydenberg spent big

In 2020, in the face of a COVID-induced recession and soaring unemployment, Finance Minister Mathias Cormann and Treasurer Josh Frydenberg pushed the old strategy to one side.

They would spend big now to keep the economy afloat so they wouldn’t have to spend more bailing it out later, and they wouldn’t return to their old concern about the deficit until the unemployment rate was “comfortably below 6%”.

So well did they succeed that in 2021 Frydenberg made the momentous decision to keep going, abandoning the promise to return to worrying about the deficit when unemployment fell below 6%.

Instead he promised to keep spending big until unemployment was “back to pre-crisis levels or lower”.

The decision propelled unemployment down to a 50-year low of 3.5%.

Along with high iron ore prices, that one change of strategy has probably helped deliver Chalmers two consecutive budget surpluses – the one he announced last year for 2022-23, and the one he is set to announce this year for 2023-24. More of us have been in jobs paying tax, and fewer have been out of jobs on benefits.

It’s a powerful demonstration of the real-world difference budget decisions can make, and the way in which the fiscal strategy tells the story.

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