GAS BACKED IN ENERGY SHIFT; CPI REBOUNDS

Gas generation needed in energy transition, says regulator

Higher gas fuel costs and relatively warmer winters were contributing to a sharp fall in gas-powered generation, according to the nation’s energy regulator. In its State of the Energy Market 2025 report, the Australian Energy Regulator said the use of domestic gas demand in the national electricity market had fallen from 29 per cent in 2017 to around 19 per cent last year. The AER said, however, that gas would remain a vital fuel for power generation during the energy transition, as gas plants had the advantage of being able to start up and switch off quickly. In particular, they provided fast dispatchability when cheaper plants were constrained by a lack of sunshine or wind, and outages. According to the AER report, industrial customers consumed 46 per cent of gas sold to the domestic market in 2024. Households and small commercial customers accounted for 36 per cent of domestic demand, but this share was as high as 60 per cent in Victoria, where gas was widely used for heating and cooking.

Inflation rebounds as electricity prices jump

Latest figures have shown a rebound in inflation, with the monthly Consumer Price Index Indicator leaping from 1.9 per cent to 2.8 per cent in the 12 months to July. The Australian Bureau of Statistics attributed the sharp rise to a 13 per cent spike in electricity prices to July, as Federal and State energy rebates were exhausted. Core annual inflation – the so-called trimmed mean that excludes major temporary changes – was 2.7 per cent to July, after falling to 2.1 per cent to June. Price rises in housing and gas were also well above the headline inflation rate.

PM still pushing for US tariff relief

Prime Minister Anthony Albanese says the United States’ newly-imposed tariff regime is not hurting Australia’s comparative advantage with other trading partners. The PM told a radio interview that the US tariffs were imposed across the board, and some countries had been hit with higher tariffs than the 10 per cent baseline tariff imposed on Australia. For example, competitors in aluminium exports, such as Canada and Brazil, had been hit harder than Australia. Mr Albanese said Australia would continue to press for tariff relief, advocating the nation’s stance when he met with the Chair of the Ways and Means Committee of the US Congress, Jason Smith. The PM said the “reciprocal tariff” on Australian exports to the US, as defined by President Donald Trump, should be zero, given that no tariffs were imposed on US goods exported to Australia.

Treasurer says tariff removal to save $157 million in compliance costs

Meanwhile, Treasurer Jim Chalmers says the Federal Government’s removal of almost 1,000 tariffs on imported goods will save Australian businesses more than $157 million in annual compliance costs. Confirming the government’s plan to abolish 500 so-called nuisance tariffs, on top of 457 tariffs removed last year, Dr Chalmers said around $23 billion worth of annual trade would be streamlined. He said many of the nuisance tariffs collected far less than the cost of complying with them, declaring that the Albanese Government had slashed more tariffs than any government in 20 years. Federal Treasury will consult on the list of tariffs to be removed. The Treasurer also announced that the Anti-Dumping Commission would be given oversight over sudden surges in imports; responsibility for safeguard actions presently rested with the Productivity Commission.

Lift in private capital investment

In a positive sign for economic growth, private new capital investment rose by 1.7 per cent over the 12 months to June in Australia, led by the building and construction sector. Figures on private new capital expenditure for the June quarter show that private investment on building and structures rose 4.3 per cent over the year. While private investment on equipment, plant and machinery fell by 1.1 per cent in the 12-month period, investment in the sector rose 0.3 per cent in the June quarter, with higher spending on information media and telecommunications, including on data centres. The ABS forecast private capital investment to hit almost $175 billion in 2025-26, revised up 12 per cent on previous estimates.

Tax Office steps up surveillance on profit-shifting

Large businesses with international operations have been warned by Australian tax authorities that they will face increased scrutiny on profit-shifting to minimise tax obligations. The Australian Taxation Office (ATO) says profit-shifting disputes comprise around 70 per cent of its audit program, with an increased sophistication and ability to detect evolving business models. ATO Deputy Commissioner Rebecca Saint told a tax forum that “mischaracterisation of arrangements, business models and global value chains” had the end result of limiting the profit attributable – and the tax paid to – Australia. She also cited the incidence of multinational companies exploiting internal restructuring rules to enable Australian groups with foreign shareholders to divest of an Australian investment tax-free. These exploitation arrangements had generated an average capital gain of more than $300 million, meaning that foreign shareholders were avoiding potentially hundreds of millions of dollars in tax.