This week, the RBA reduced the cash rate by 25 basis points to 3.6 per cent, offering households modest cost of living relief and signalling a broader shift in monetary policy. But if that moment brought a breath of optimism, it didn’t last long.
RBA Governor Michele Bullock followed her announcement with a sobering reality check: Australia’s productivity forecast is too anaemic to sustain real wage growth or national prosperity. The message was clear – unless something changes, Australia’s long-term economic outlook will worsen. Bullock’s statement comes a week ahead of Treasurer Jim Chalmers’ Economic Reform Roundtable, which will gather business, union, and policymakers for what’s billed as a national reset on economic priorities.
Last week, both Chalmers and Albanese played down expectations, stressing that the Roundtable will be a conversation, not a deal-making summit. But this week, Albanese dropped the caution, declaring that he is “up for big reform”. Chalmers is reportedly pushing for bolder structural reform, while Albanese’s instincts remain more calibrated toward political pragmatism. The stage is set for a showdown – not just between ideas, but between two different styles of leadership in Canberra.
Watch this space.
Top talking points
Cash Rate Decision: The RBA reduced the cash rate from 3.85 per cent to 3.6 per cent.
Pacific Islands Forum: Senior Government Ministers attended the Pacific Islands Forum, reaffirming Australia’s commitment to regional unity and shared priorities.
Australia–NZ Leaders’ Meeting: The Prime Minister travelled to New Zealand, reaffirming the alliance, economic harmonisation, and regional security cooperation.
Quad Summit Push: The Prime Minister and Treasurer pushed for Brisbane to host the 2026 Quad summit.
Productivity Commission: The Productivity Commission released the fourth and fifth interim reports ahead of the Economic Reform Roundtable (ERR).
Making headlines this week
Recognition of Palestine
Universal Childcare Developments
Deloitte Access Economics is reportedly leading a two-year Early Education Service Delivery Prices Project, aimed at shaping a universal early childhood education and care (ECEC) system in Australia. The study will analyse the cost of delivering quality ECEC – including wages, property expenses, and operational factors – and will consult with providers, governments, families, and sector stakeholders. Findings, due in early 2027, will inform broader reforms such as the government’s $1 billion Building Early Education Fund and the 3-Day Guarantee policy. The project builds on previous work by the ACCC and Productivity Commission.
Things to watch
18 August: Productivity Commission Chair Danielle Wood will address the National Press Club.
19 August: Treasurer Chalmers will convene the Economic Reform Roundtable.
19 August: The AFR will host the Higher Education Summit 2025.
19 August: COSBOA will host the 2025 National Small Business Summit.
20 August: Minister for Health and Ageing Mark Butler will address the National Press Club.
20 August: The Economic Society of Australia will discuss the Future of Money.
22 August: APRA and AFSA will discuss the role of regulators during times of market and geopolitical uncertainty at CEDA.
RBA Research, Leaked Treasury Advice, Wages and Employment Rise
RBA research shows[PDF] that weak competition has constrained productivity, with output estimated to be 1-3 per cent lower due to resource misallocation, leading to industry concentration and entrenched market leaders in various sectors.
Treasury advice leaked ahead of the ERR reveals recommendations to pause changes to the National Construction Code and reforms to accelerate housing approvals. Prime Minister Albanese rebuked claims that Treasury’s ‘recommendations’ indicate that the ERR policy outcomes have been pre-determined.
Wages rose by 0.8 per cent in June and 3.4 per cent annually, while average weekly earnings grew by 1.7 per cent in the six months to May. Elsewhere, unemployment fell by 0.1 per cent to 4.2 per cent in July.
Trade and Investment Council, Defence Roundtable and Contracts
Federal, State, and Territory Ministers met in Darwin for the fifth meeting of the Ministerial Council on Trade and Investment. Ministers reaffirmed their commitment to the rules-based multilateral trading system with the World Trade Organisation, acknowledging the harm tariffs have on domestic economic competitiveness.
Pat Conroy and Tim Ayres convened the bi-annual Tri-Partite Defence Industry Council to discuss productivity in the defence sector. The ministers reaffirmed the government’s commitment to increase defence funding, with the Australian Defence Force Budget projected to reach $100 billion per year by 2033-34.
Kongsberg Defence Australia secured two major export deals worth a combined $80 million, exporting missile launchers and command and control consoles to Europe. These exports are part of the Australian Government’s investment in the Guided Weapons and Explosive Ordnance enterprise.
Agriculture Roundtable, Salmon Farms, Energy and Hydrogen Updates
Julie Collins held an agricultural roundtable ahead of the ERR, discussing policy measures to unlock on-farm productivity and support the sector’s global competitiveness. The agriculture sector will be represented at the ERR by the National Farmers’ Federation, which is calling for the implementation of the ACCC supermarket inquiry, a right to repair agricultural machinery, and the advancement of free trade agreements
Salmon farming will continue in Macquarie Harbour despite requests to reconsider the expansion of the salmon farms. $18.3 million will be provided to address oxygen levels in the harbour to support the recovery of the Maugean skate.
Queensland state-owned energy company Stanwell has acquired the Lockyer Energy Project. The gas peaking project will add 120MW of additional energy supply in Stage 1, with the potential for up to an additional 850MW of capacity upon the completion of Stage 2.
The New South Wales Government commissioned the University of Wollongong to study hydrogen pipe failures and develop risk assessments and tools to support Australia’s hydrogen industry.
EV Road User Charge, Sydney Metro and Housing Updates
The Federal Government is reportedly developing[paywall] a road user charge for EVs, reflecting a shift in how road funding is raised as EV ownership increases.
The Western Sydney Airport Metro Station project reached[paywall] a key milestone, advancing plans to improve transport connections and support Western Sydney’s growing population corridor.
Key State housing initiatives have also progressed. The New South Wales Government rezoned Burwood North, aiming to deliver around 15,000 new homes near the future Sydney Metro station. Elsewhere, the Queensland Government announced funding for 1,300 new homes as part of the $2 billion Residential Activation Fund.
PBS, Urgent Care Clinic Tenders and Health Infrastructure Updates
The Federal Government updated the Pharmaceutical Benefits Scheme, adding and expanding listings for Australians with Parkinson’s disease, neuroblastoma, endometrial cancer, cystic fibrosis, and melanoma.
Tenders opened for the construction of additional Medicare Urgent Care Clinics, which will provide free, extended-hours walk-in care. The government has committed to opening 50 new sites nationwide.
Stage One construction has been completed at Sydney Children’s Hospital and Minderoo Cancer Centre within the Randwick Health and Innovation Precinct.
In case you missed it...
📺 A Future Made in Australia or Bailouts?