MARLES FLAGS SPEND LIFT; NZ AUKUS ‘NO’

Marles flags spending lift for longer distance defence posture

Deputy Prime Minister Richard Marles has flagged that the current Defence Strategic Review would address the ability of Australia to project its power against increased threats. The Defence Minister said Australia needed to be able to hold any potential adversary at risk at a greater distance from its shores. Mr Marles told a media interview that the nation’s future defence posture would require an increase in defence spending, presently around two per cent of gross domestic product. In a separate address to Parliament, the Deputy PM defended leveraging defence expertise from the US and UK, saying that an enhanced defence capability dramatically enhanced sovereignty.

New NZ PM quashes AUKUS move

New Zealand would not be following Australia, the US and the UK in joining the AUKUS defence partnership, according to its new Prime Minister, Chris Hipkins. After meeting Australian PM Anthony Albanese last week, Mr Hipkins said that while the three allies were important security partners for NZ, the country’s nuclear-free policy was unchanged. Anthony Albanese said Australia’s defence co-operation with New Zealand was strong, outside the AUKUS partnership. The Australian PM said AUKUS was not just about nuclear submarines, but also covered the interoperability of forces and co-operation on technology and other issues.

RBA head signals further interest rate rises to cut inflation

Reserve Bank Governor Philip Lowe has flagged ongoing interest rate rises in a bid to drag Australia’s inflation rate back to the 2-3 per cent range. Dr Lowe said the central forecast was for annual inflation to decline to 4.75 per cent this year, down from the 7.8 per cent recorded in December, as economic growth slowed. After the RBA last week lifted the cash rate to 3.35 per cent, Dr Lowe said the recovery in spending on services after the lifting of Covid-19 restrictions had largely run its course, and he expected the rate of unemployment to rise again. He said that given the importance of avoiding a price-wages spiral, the RBA board would continue to pay close attention to the evolution of labour costs and the price-setting behaviour of firms.

Farrell hopeful on China trade breakthrough, EU free trade deal

Trade Minister Don Farrell remains quietly confident of China relaxing import restrictions on a range of Australian products, first imposed during 2020. Senator Farrell told a media interview that the trade bans cost Australia about $20 billion of business a year, though China easily remained the nation’s largest trading partner, with about $300 billion of annual two-way trade. He said Australia was now seeking to diversify its export markets, including through a free trade agreement with the European Union. With a combined population of 450 million people and “trillions of dollars of trade”, Europe offered scope for expansion and diversification; a final round of negotiations over the agreement between Australia and the EU would be held in a few weeks, Senator Farrell said.

No budget surplus on horizon, says Treasurer

Treasurer Jim Chalmers has cooled speculation over a Federal Budget surplus in the next four years, as rising commodity prices drive a lift in government revenue. Dr Chalmers said that while commodity prices, wages growth and low unemployment were contributing to a better than forecast budget outlook, an appreciation in the Australian dollar “cuts across things too.” He said that the Government would put a premium on spending restraint, and bank most of the temporary revenue upgrade from rising commodity prices. The Treasurer said the Budget would focus on cost-of-living relief, growing the economy, and fixing supply chains.

Biden on the front foot on China threats

President Joe Biden has delivered an upbeat State of the Union address, claiming that the United States was now in the strongest position in decades to compete with China or any other nation in the world. The US President said that while he was committed to work with China to advance American interests and benefit the world, he would act if China threatened US sovereignty. Mr Biden said his administration was investing in American innovation and industries that would define the future that China intended to dominate. That included investing in the US alliances and working with allies to protect advanced technologies so they would not be used against the US. President Biden also championed legislation that would force “billion-dollar” companies in the US to pay a minimum 15 per cent tax rate.