CLEAN ENERGY BUDGET LIFT; DEBT WARNING
Clean energy aid heads lift in industry assistance, says PC report
Australian industry received a total of $16.8 billion in Federal Government budgetary assistance in 2024-25, up by 6.4 per cent on the previous year, according to the Productivity Commission (PC). The PC’s Trade and Assistance Review revealed that tax concessions made up 51.6 per cent of all assistance, with budgetary outlays the remaining 48.4 per cent. In addition, Australian Government entities provided between $69 million and $173 million to industry through concessional interest rate loans. The PC said almost $570 million of the increase in budgetary assistance was estimated to be attributable to the Future Made in Australia program, particularly for the clean energy sector. More than 60 per cent of allocatable budgetary assistance went to services, which encompassed a wide range of activities, including construction, retail trade, the arts and professional services. The PC noted, however, that the services share of assistance was less than for its share of the overall economy.
Warning for States as Commonwealth gross debt hits $1 trillion
A major Parliamentary report has sounded a warning on rising debt levels being racked up by Federal and State governments – and their capacity to repay debt liabilities. The Parliamentary Budget Office’s (PBO) National Fiscal Outlook said that in 2026-27, State gross debt was forecast to rise to around $650 billion, or 21 per cent of gross domestic product (GDP). Commonwealth gross debt was expected to hit around $1 trillion (34 per cent of GDP). The PBO report said the State share of national gross debt was forecast to rise materially, from around 20 per cent before the Covid-19 pandemic, in 2018-19, to around 38 per cent by 2029-30. It also identified a range of potential fiscal risks for the States’ ability to meet debt commitments, including persistent inflation, higher interest rates, and cost over-runs in infrastructure delivery. The PBO also warned of revenue volatility for the States – particularly in a housing slowdown – dependence on Federal funding, and service demand pressures.
PM stands firm on WA’s share of GST revenue
Prime Minister Anthony Albanese has moved to reassure Western Australia that there would be no change to the state’s goods and services tax revenue arrangements, despite calls for reforms from other states. A recent Productivity Commission interim report canvassed major changes to a 2018 arrangement that eventually guaranteed a 75-cent floor in each dollar of GST contributed, with top-up, ‘no worse off’ arrangements for other states. But visiting WA, Mr Albanese affirmed his earlier view that the state deserved its “fair share” of GST revenue. The PC report said the 2018 arrangement had cost the Federal Government an additional $23 billion, of which most had flowed to WA during a mining boom.
Australia facing soaring AI import bill, says Charlton
Australia’s annual bill for artificial intelligence could reach between $20 billion and $40 billion within a decade, a Federal Government frontbencher has warned. Assistant Minister for Science, Technology and the Digital Economy, Andrew Charlton, said around 15 to 20 per cent of Australians were appearing to pay for an AI subscription. Total household and business AI expenditure was estimated to be between five and eight billion dollars a year, with an overwhelming majority of payments flowing offshore. In a speech to a university forum, Dr Charlton said available evidence suggested that Australian AI spending was effectively doubling each year. If it became embedded across most knowledge work, AI could potentially be one of Australia’s largest imports, outranking what Australia currently exported in wheat, he said.
Unemployment rate edges up in mixed jobs market
Australia’s unemployment rate edged up to 4.5 per cent, seasonally adjusted, in July, but the state of the jobs market varied widely across the nation. The Australian Bureau of Statistics revealed that the jobless rate crept back to the level recorded in April, while the level of underemployment (for those wishing to work more hours) remained at 6.4 per cent. Victoria and Tasmania recorded the highest rate of unemployment, at 5.1 per cent, while the Australian Capital Territory (four per cent) and South Australia (4.1 per cent) registered the lowest. Underemployment rates also varied sharply, ranging from Victoria (7.1 per cent) to Northern Territory (4.8 per cent).
Public sector leads annual wage rises
Meanwhile, wages rose by 3.2 per cent over the 2025-26 year and by 0.8 per cent over the June quarter, according to the ABS. Private sector wages rose by 3.1 per cent annually, while public sector wages rose 3.4 per cent, according to the ABS Wage Price Index. Annual wage rises have moderated since hitting a peak of 4.3 per cent in December 2023. The latest rate of wage growth remains below the annual level of headline inflation, which measured 3.8 per cent in June.