TARIFFS THREAT TO ECONOMY; USA SUPER TILT

Treasury head warns of tariff harm to economy

Federal Treasury Head Dr Steven Kennedy has warned of the economic damage to Australia that would be caused by the extended imposition of tariffs. In his address to the Senate Economics Legislation Committee, Dr Kennedy reinforced that in a medium-sized economy like Australia, tariffs directly increased the prices that businesses and consumers paid for imported goods. The Treasury Secretary said the prospect of US tariffs on Chinese exports had exacerbated existing concerns about weak Chinese domestic demand. He said that if Australia were to impose tariffs, Australians would bear nearly all the cost, given the nation’s size and inability to affect the world prices of the goods imported into the country. Dr Kennedy warned that an Australia response to tariffs or trade restrictions with similar measures would only worsen matters.

Chalmers talks up US investments for Australian superannuation

Federal Treasurer Jim Chalmers has spruiked the investment potential of American assets to Australia’s US$2.6 trillion (A$4.1 trillion) superannuation sector, in a visit to the US. Speaking at a superannuation summit in Washington DC, Dr Chalmers said the current value of superannuation investments in the US, now around $400 billion, would rise to $1 trillion within the next decade. He said Australia was one of America’s top 10 foreign investors, with the Australian superannuation sector managing the fourth biggest pool of pension funds in the world. The Treasurer nominated US equity markets as a key target for Australian superannuation funds, as well as US infrastructure, such as data centres, toll roads and container terminals. Dr Chalmers noted that Australia was an essential contributor to US prosperity, with the US enjoying an uninterrupted trade surplus with Australia since 1952; in addition, Australia imposed zero tariffs on US imports.

ADF recruitment picking up, says Defence chief

Australian Defence Force (ADF) Chief David Johnston says there are “promising indicators” in the campaign to lift military recruitment and stem the level of departures. Appearing before the Senate Foreign Affairs, Defence and Trade Legislation Committee, Admiral Johnston said that in the past 12 months more than 69,000 people had applied to join the ADF, up more than 18 per cent on the previous year. He said Defence had not recruited more full-time personnel since the early 2000s. In addition, the ADF had received more than 650 active applications from citizens of Canada, the UK, New Zealand, and the US, since Defence launched the non-citizen recruitment initiative for permanent residents. Admiral Johnston said the annual separation rate from the permanent ADF had eased from 10 per cent to nine per cent, below the 10-year average rate of 9.7 per cent.

Inflation steady in latest ABS figures

Australia’s annual inflation rate remained unchanged at 2.5 per cent in January, in the latest Consumer Price Index indicator released by the Australian Bureau of Statistics. A reduction in electricity costs has contributed to the steady rate, offset by higher costs for insurance (5.3 per cent), gas (six per cent), and education (6.5 per cent). The Reserve Bank of Australia’s (RBA) preferred measure of annual inflation – trimmed mean, or core inflation – rose slightly from 2.7 per cent in December to 2.8 per cent, within the RBA’s 2-3 per cent target range.

Year-to-date budget deficit within projections

Meanwhile, Australia’s budgetary position remains slightly ahead of mid-year projections, with the Federal Government poised to post a lower budget deficit than forecast. In financial statements to the end of January, released by Finance Minister Katy Gallagher, the Federal Government’s progressive budget deficit was $37.1 billion, with receipts $1.9 billion higher than projections, and payments $1.8 billion lower. The Mid-Year Economic and Fiscal Outlook (MYEFO) in December projected a budget deficit of $40.7 billion to the end of January, and a full-year budget deficit of $26.9 billion.

Record renewables component in electricity grid, says Bowen

Climate Change and Energy Minister Chris Bowen has acclaimed latest figures that show record generation of renewable energy in Australia. Mr Bowen said a series of government reports had shown that in 2024, the level of renewable energy going into electricity grids had increased by more than 30 per cent since 2021; renewable energy accounted for a record 46 per cent of electricity in the grid in the last quarter of 2024. Daily records for renewable generation were also set during November, when on separate days it comprised 75 per cent of electricity in the national energy market, and 85 per cent of electricity in Western Australia. Mr Bowen said Australia’s total emissions were at 29 per cent below the baseline 2005 levels, as the Federal Government sought to reach the goal of 43 per cent reduction by 2030.