INFLATION DIPS; RELIEF FOR STUDENT DEBT

Electricity rebates drive lower inflation

Annual inflation in Australia eased in the September quarter to a headline rate of 2.8 per cent, thanks to the effects of government electricity rebates and the lower cost of automotive fuel. The Australian Bureau of Statistics’ (ABS) Consumer Price Index showed that the annual rate of inflation had fallen significantly from the 3.8 per cent in the June quarter. Underlying inflation, however, was 3.5 per cent in the September quarter – a ‘trimmed mean’ figure that excluded the effects of recent energy rebates and other large rises and falls. The Reserve Bank of Australia’s target inflation range is 2-3 per cent. Notably, while annual goods inflation was just 1.4 per cent in the September quarter, the ABS said annual services inflation was 4.6 per cent, driven by higher prices for rents, insurance, education, and medical services. Across Australia, annual headline inflation rates varied significantly in the September quarter, from 0.7 per cent in Hobart to 3.8 per cent in Perth.

Student loan reforms to shave $20 billion off debts

Prime Minister Anthony Albanese has unveiled major reforms to the student loan system, cutting a further 20 per cent off all student loan debts and amending income thresholds for repayments. By June 1 next year, around $16 billion will be wiped off Higher Education Loan Program (HELP) and VET Student Loan debt, plus other student loans. Mr Albanese said that for someone with the average HELP debt of $27,600, around $5,520 would be wiped from their outstanding HELP loans next year. Coupled with announced changes to the indexation rate for repayment, almost $20 billion would be cut from student loans for more than three million Australians. The Federal Government has also raised the minimum payment threshold from around $54,000 this year to $67,000 in 2025-26.

New domestic production site for guided rocket systems

Defence Industry Minister Pat Conroy has announced that the Federal Government will establish a new Australian Weapons Manufacturing Complex, as it steps up its guided missile program. The facility, to be built in either New South Wales or Victoria, will produce up to 4,000 Guided Multiple Launch Rocket Systems (GMLRS) a year from later this decade. Mr Conroy said the site would be the first facility outside the US to produce GMLRS, with capacity of more than a quarter of current global GMLRS production and 10 times current Australian Defence Force demand. He said the Government would invest an initial $316 million in the new complex. The announcement was included in the Government’s release of the Australian Guided Weapons and Explosive Ordnance Enterprise.

Defence drops single-orbit satellite plan

Meanwhile, the Department of Defence has abandoned plans to install a single-orbit Geostationary Earth Orbit (GEO) satellite communications system. Defence said that a single-orbit GEO-based system would not meet strategic priorities, given an acceleration in space technologies and evolving threats in space since the project’s commencement. Instead of a single-orbit solution, Defence said it would prioritise a multi-orbit capability to increase the resilience for the Australian Defence Force. Earlier this year, the Integrated Investment Program stated that the Government would invest $9-12 billion on enhanced space capabilities. This would include the delivery of sovereign-controlled Australian Defence Satellite Communications (SATCOM) system capability over the Indo-Pacific.

Resources sector heads corporate tax payments

Large corporations paid around $100 billion in income tax in Australia in 2022-23, led by major contributions from the oil and gas sector, according to latest figures. The Australian Taxation Office (ATO) said it received almost $98 billion in income tax from large corporates, plus additional tax revenue raised by its tax avoidance taskforce. In its annual corporate tax transparency report, the ATO said tax paid by the oil and gas sector increased to $11.6 billion, with some oil and gas companies among the largest taxpayers in Australia. For the second year in a year, the mining sector paid more tax than all other sectors combined. The ATO’s corporate tax transparency report covers almost 4,000 entities, including almost 1,650 foreign-owned. According to the ATO, the income tax take from large corporates was up 16.7 per cent on the previous year.

Export prices sagging under weaker demand for iron ore, coal

Australian export prices have continued their downward trend, falling by 4.3 per cent in the September quarter and by 6.8 per cent through the year. Weaker demand in the Chinese property sector drove falling demand for iron ore and coal; however, rising Asian demand for LNG drove higher prices for gas exports, according to international trade price indices. The ABS said import prices fell by just 1.4 per cent in the September quarter, and by 1.1 per cent during the year, with falling petroleum prices a major contributor. Export prices have fallen for each of the last three quarters; by contrast, export industries enjoyed a seven-quarter run of rising prices between late 2020 and mid-2022.