INFLATION DIPS; US GETS TOUGH ON TAX, TRADE
Inflation eases to near four-year low
Australian consumer price rises eased in the December quarter, with lower food prices and electricity subsidies contributing to a headline annual inflation rate of 2.4 per cent – the lowest rate since early 2021. Headline inflation fell from 2.8 per cent in the September quarter, with the rate of goods inflation the lowest since 2016, according to the Australian Bureau of Statistics. But the level of annual core inflation – which ignores one-off changes – remained outside the Reserve Bank’s 2-3 per cent band, falling from 3.6 per cent to 3.2 per cent in the December quarter. Services costs rose by 4.3 per cent over the 12-month period, led by rises in rents, health services and insurance. Of the metropolitan cities, Hobart recorded the lowest rate of annual headline inflation, at 1.5 per cent, almost half that of Perth, at 2.9 per cent.
Trump dumps support for global tax deal
Returned US President Donald Trump has moved swiftly to withdraw American support for a deal struck by the Organisation for Economic Cooperation and Development on global minimum corporate tax rates. President Trump’s executive order said the OECD global tax deal allowed extraterritorial jurisdiction over American income, and limited the ability of the US to enact tax policies that served the interests of domestic businesses and workers. He said that under the tax deal, American companies may face retaliatory international tax regimes if the US did not comply with foreign tax policy objectives. Under the OECD global minimum tax agreement, multinational enterprises pay a minimum level of tax on their income in each jurisdiction where they operate, to avoid a “race to the bottom” on corporate tax rates. Federal Treasurer Jim Chalmers has affirmed his support for the OECD global tax deal, last month releasing rules on how Australia would abide by the agreement.
US targets trade policies with China, Mexico, Canada
On his first day back in office, President Trump has made good on his threats to review trade policy with nations that post persistent annual trade surpluses in goods at the expense of the US. The Trump administration will recommend “appropriate measures”, such as a global supplemental tariff or other policies, to remedy the US trade deficits. Under the America First Trade Policy, the US Trade Representative will review economic and trade agreements with China, as well as those between the US and Mexico, and between the US and Canada. A new ‘External Revenue Service’ will be considered to collect tariffs, duties and other foreign trade-related revenues.
AUKUS safe under new US administration, says Conroy
Defence Industry Minister Pat Conroy says the AUKUS defence partnership will “continue at full speed” under the Trump administration, without additional financial contributions from Australia. During a media conference in Adelaide, Mr Conroy said the Trump administration had been “very positive” about AUKUS. According to the Minister, new US Secretary of State Marco Rubio had remarked in his Senate confirmation hearings that AUKUS was a model he’d like replicated. Mr Conroy said reports that President Trump wanted defence alliances to contribute more financially had referred to funding by NATO partners, not to AUKUS. The Minister said Australia’s defence spending would rise to 2.3 per cent of Gross Domestic Product over the next 10 years.
Foreign interference under public scrutiny
Home Affairs Minister Tony Burke has released for the first time an analysis of the foreign interference and espionage threats facing Australia. The publication on Countering Foreign Interference outlines who is at risk of foreign interference, what government agencies are doing to combat it, and what individuals and organisations can do to protect themselves. Mr Burke said Australia was the target of sophisticated and persistent foreign interference activities from a range of countries. Members of diaspora communities were often at greater risk from foreign governments seeking to restrict or direct their participation in community or political affairs. Mr Burke said foreign interference was a crime under Australian law and was punishable by up to 20 years in prison. The Home Affairs publication addresses the incidence of foreign interference in higher education, democratic institutions, media, and industry.
New Minister for NDIS
Social Services Minister Amanda Rishworth will take on additional responsibility for the National Disability Insurance Scheme, under ministerial changes announced by Prime Minister Anthony Albanese. Ms Rishworth replaces retiring MP Bill Shorten as NDIS Minister, while Finance Minister Katy Gallagher will also serve as Minister for Government Services. Perth MP Anne Aly will add new responsibilities as the Minister Assisting the NDIS Minister.