INFLATION BOGY ON THE RISE; ENERGY DELAYS

Annual inflation jumps to four per cent

Annual inflation has taken another sharp rise, hitting four per cent in the 12 months to May, according to latest Australian Bureau of Statistics price data. The Consumer Price Index indicator for May revealed that automotive fuel, rents, insurance and electricity prices contributed to a jump in annual inflation. Insurance prices leapt by 14 per cent over the 12-month period, while electricity prices (even with government-funded rebates) rose by 6.5 per cent. Monthly CPI data for April showed that annual inflation was 3.6 per cent.

Energy regulator highlights risks to electricity transition

Australia’s energy market operator has warned that the transition to a net zero economy is at risk because of delays to renewable infrastructure projects and insufficient investment. In its ‘A roadmap to the energy transition’ paper, the Australian Energy Market Operator underlined a series of threats to the national electricity market during the energy transition to 2050. AEMO said the early retirement of coal generators remained a risk to electricity supply, with the possibility that replacement generation may not be available. It also said that planned projects were not progressing as expected, due to the time needed for approval processes and because of investment uncertainty. Cost pressures, social licence issues (for example, with transmission projects in regional areas), supply chain issues and workforce shortages also posed problems, AEMO’s report said.

King sets record straight on gas exports

Resources Minister Madeleine King has defended the right of Japan to on-sell liquefied natural gas (LNG) exported from Australia to other nations. Ms King said Japan had entered long-contracts around its gas supply, and that it on-sold gas when Japanese demand changed, such as during fluctuations in weather. In a media interview, Ms King said “gas does have to keep moving”, and the on-selling of gas supported regional energy security. The Minister said gas to Japan was exported out of Darwin and Western Australia, whereas gas extracted in Queensland was directed through gas transmission networks to the East Coast domestic market.

AUKUS legislation to slash red tape on exports – Conroy

Defence Industry Minister Pat Conroy said the introduction of a licence-free environment within the AUKUS partnership would remove barriers on around 900 defence export permits valued at $5 billion a year. Addressing a defence industry forum, Mr Conroy said the Defence Trade Controls Amendment Act supported the establishment of a licence-free environment for Australian industry, higher education and research sectors. He said the removal of export controls to the US and the UK would fast-track the delivery of defence capabilities and protect military technologies. In addition, the Safeguarding Australia’s Military Secrets Act would safeguard sensitive Defence information, including military techniques, tactics and procedures.

NDIS projected to rival Defence in annual Budget spending

Annual expenditure on the National Disability Insurance Scheme is projected to grow by 55 per cent to almost $105 billion over the next 10 years, according to a parliamentary report. A report by the Parliamentary Budget Office says that on current projections, the NDIS will cost almost the same as Defence ($105.3 billion) and more than the age pension ($100.2 billion) by 2034-35. The report says that interest payments on debt would rise from $25 billion in 2024-25 to $61.7 billion in 10 years, or 1.4 per cent of the economy (GDP). Expenditure on defence is projected to increase by almost 50 per cent from this financial year to 2034-35.

Finance releases stronger budget outlook

Monthly statements released by the Department of Finance confirm that the Federal Government remained on course to deliver a budget surplus in 2023-24. To the end of May, the government’s underlying cash balance was $18.2 billion, with receipts up by $2.8 billion and payments $1.5 lower on the revised Budget profile. In May, the Government estimated that the Federal Budget would finish in surplus by $9.3 billion for the full 2023-24 financial year.