SWITCH ON US SUBS; TECH CAPEX SURGE

Marles confirms switch on US submarines deal

Deputy Prime Minister Richard Marles has confirmed that Australia will acquire three, not two, in-service Virginia-class submarines from the US, in the first instalment of the AUKUS defence partnership. Mr Marles said the acquisition of the three used vessels -bypassing one new submarine - was a “simpler pathway” ahead of the construction of the SSN-AUKUS submarines in Adelaide.  The Virginia-class submarines would be of the same type as the new submarines under development. The Defence Minister said it was an “incredibly complicated” endeavour for the US and the United Kingdom to provide nuclear-powered submarine capability to a third party. Mr Marles said the transfer of the three Virginia-class submarines would be more cost-effective; in the meantime, Australia was making a financial contribution to the US to assist in increasing its production rate of submarines. The Defence Minister met with his US and UK counterparts at the defence forum, the Shangri-La Dialogue in Singapore.

Lower fuel prices push down inflation rate

Annual inflation in Australia eased from 4.6 per cent to 4.2 per cent in April, thanks to a monthly seven per cent fall in automotive fuel prices. The Australian Bureau of Statistics attributed the fall to a reduction of the fuel excise from 52.6 cents per litre to 20.6 cents per litre on April 1. Consumer Price Index figures for the month recorded a slight rise - to 3.4 per cent in - the trimmed-mean, or underlying, rate of inflation. Lower fuel prices fed through to a lower rate of inflation for tradable goods; however, the ABS said that automotive fuel prices were still 23.5 per cent higher compared to February. Across Australia, the annual rate of headline inflation for the 12 months to April varied widely, from 3.9 per cent in Melbourne and Perth, to five per cent in Hobart.

US dominates inbound foreign investment

The United States has comfortably retained its position as the leading foreign investor in Australia, accounting for more than 26 per cent of total inbound foreign investment. Latest figures from the Department of Foreign Affairs and Trade show that the US economy invested A$1.36 trillion in Australia as at the end of 2025, up by 0.7 per cent on 2024. The United Kingdom was the second-largest foreign investor, at $840 billion, followed by Belgium (up by 13.5 per cent to $437 billion) and Japan ($286 billion). Most of Belgium’s investment was portfolio investment liabilities, in the form of debt securities. China was Australia’s 11th largest foreign investor in 2025. Foreign investment in Australia topped $5.1 trillion in total.

Data centres driving private capex investment

Rising investment in data centres in Australia is driving a surge in new private capital expenditure, with total private investment up by more than 14 per cent over the past 12 months. ABS figures for the March quarter revealed that information media and technology sector investment rose by 96 per cent, seasonally adjusted, over three months, or by 190 per cent over the full 12 months. New investment in data centres focused on server racks and processing equipment, according to the ABS. Total new capital expenditure rose by 6.5 per cent in the March quarter, with investment in equipment, plant and machinery up by 18 per cent; investment in buildings and structures, however, fell by 3.8 per cent. The ABS said private new capital expenditure topped more than $52 billion in the March quarter.

Workforce Australia faces overhaul to lift worker participation

Employment and Workplace Relations Minister Amanda Rishworth has announced a major overhaul of publicly-funded employment services, in a bid to provide a more tailored offering for job-seekers. Ms Rishworth said the Workforce Australia employment service model had a one-size-fits-all approach that did not adequately assess a job-seeker’s skills, experience, or barriers. She said a proposed three-tier model would comprise a digital service, a high-quality provider-led support stream, and intensive services for people facing complex barriers. Ms Rishworth said that despite historically low unemployment, around 20 per cent of Workforce Australia participants – or about 140,000 people – had been in the system for five years or more.

Gas reservation to be about 16 per cent of production, says King

Resources Minister Madeleine King says the proposed east coast gas reservation would account for around 16 per cent of overall national gas production, or the equivalent of 20 per cent of LNG exports. In a radio interview, Ms King said the proposed domestic reservation plan would aim to produce a “modest oversupply” of gas. She said Western Australia’s current gas reservation scheme provided for about 15 per cent of gas production being reserved for domestic use in WA. Ms King said that to obtain export approval, every LNG facility in Australia would be required to show and demonstrate their commitment to providing gas for domestic consumption.