Weekly Wrap Up - GRACosway

17 March 2023

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Highlights

Unemployment fell to 3.5 per cent in February, according to latest labour force data from the Australian Bureau of Statistics.
Treasurer Jim Chalmers delivered a speech to the Committee for Economic Development of Australia in Brisbane yesterday, where he spoke of low productivity in Australia.
This morning, the Productivity Commission released the final report Treasurer Chalmers spoke on relating to its five‑year inquiry into productivity, finding that increased investment in services industries is necessary for economic growth.
During his speech yesterday, Treasurer Chalmers also confirmed that he convened a meeting with the Australian Prudential Regulation Authority, Australian Securities and Investments Commission, the Reserve Bank of Australia, the Treasury and relevant ministers in order to understand the potential implications for Australia from the collapse of Silicon Valley Bank in the US.
Australian and American University researchers published an analysis on Australians’ early withdrawal of superannuation during the pandemic, showing that one in six working-age people withdrew a total of $38 billion.
Prime Minister Anthony Albanese met with Fijian Prime Minister Sitiveni Rabuka for the first time in Nadi and discussed Australia and Fiji’s Vuvale Partnership regarding economic recovery, climate resilience and regional security.
Minister for Indigenous Australians Linda Burney confirmed that by the end of the next parliamentary sitting fortnight, the Government will introduce legislation to enable the referendum on establishing a Voice to Parliament, which will include the final wording of the referendum question.
Early voting for the NSW State Election, due to be held on Saturday 25 March, opens tomorrow.

AUKUS submarine agreement

The outcome of the submarine agreement under the AUKUS partnership between Australia, the UK and the US has dominated political headlines this week. First unveiled in September 2021 by former Australian Prime Minister Scott Morrison, former UK Prime Minister Boris Johnson and current US President Joe Biden, the trilateral partnership aims to increase security and defence cooperation and capabilities in the Indo-Pacific region. When AUKUS was first announced, the development of a fleet of conventionally armed, nuclear-powered submarines for Australia was flagged as the partnership’s first major initiative and the three countries agreed to spend 18 months jointly examining the requirements for this initiative. At the conclusion of this examination, the approach to the development of these submarines was confirmed earlier this week.

Together with his UK and US counterparts, Prime Minister Albanese announced that Australia will assist in the build of a trilaterally-developed submarine, the SSN-AUKUS, which will use the UK’s design and incorporate US technologies. The first SSN-AUKUS is expected to be delivered to the UK’s Royal Navy in the late 2030s, with the first Australian-built SSN-AUKUS due for delivery to the Royal Australian Navy in the early 2040s. Prior to the development of these SSN-AUKUS submarines, Australia will purchase three Virginia class submarines from the US in the early 2030s to fill the interim gap in capability. In its entirety, the program is expected to cost Australia between $268 to $368 billion, equating to approximately 0.15 per cent of Gross Domestic Product.

It was also confirmed that the SSN-AUKUS vessels for Australia will be built in Adelaide, South Australia, at a future Submarine Construction Yard that will be developed in the city’s LeFevre Peninsula. Following this announcement, the State and Federal governments signed a submarine Cooperation Agreement outlining a commitment to jointly invest in the upskilling and infrastructure required to accommodate the development of these submarines.

Elsewhere, former Labor Prime Minister Paul Keating gave an address to the National Press Club where he was highly critical of the AUKUS partnership. When asked about Mr Keating’s remarks, Deputy Prime Minister and Minister for Defence Richard Marles chose not to comment. After welcoming the Government’s update on the submarine program, Opposition Leader Peter Dutton also gave his support for the AUKUS arrangements when asked about Mr Keating’s criticisms.

Energy pricing and supply

The topic of energy pricing has also been a focus this week after the Australian Energy Regulator (AER) released its draft determination of the Default market offer prices (DMO) for 2023–24. The draft determination outlines the AER’s intended approach to determine the final DMO price, which will be released in May. The AER has estimated that households in SA, NSW and south-east Queensland could face energy price increases of between 19.5 per cent and 23.7 per cent from July 2023, while small business may face increases of up to 25.4 per cent.

In response, Minister for Climate Change and Energy Chris Bowen stated that projected price increases are up to 29 per cent lower than the AER originally projected in late 2022, prior to the Federal Government’s intervention in the market.

Meanwhile, the Australian Energy Market Operator published the 2023 Gas Statement of Opportunities report, indicating that existing and anticipated natural gas production will meet customer demand until 2027 in central and eastern Australia, at which time the eastern market is expected to face shortages.

Looking ahead

Federal Parliament is sitting next week. Parliament will also sit in Victoria, Tasmania, SA, WA, the ACT, and the NT.

FINANCE

Federal Developments

The Australian Securities and Investment Commission confirmed it will continue its financial reporting surveillance program, which has led to six listed entities disclosing material business risks and 16 listed entities making additional risk disclosures.

The Council of Financial Regulators released its Quarterly Statement for March 2023. Matters discussed included the impact of high inflation and rising interest rates, measures to strengthen the resilience of the financial sector to cyber risks, and regulatory developments in financial market infrastructure and the payments system.

State Developments

The Victorian Government published its Mid-Year Financial Report^[PDF], revealing government sector net debt has reached $104.2 billion, representing 18.2 per cent of Gross State Product. The report also indicated that Victoria is operating on a deficit of $4.2 billion.

In WA, State Government-owned Perth Mint will be subject to an Incident Review Process following allegations it sold upwards of 100 tonnes of diluted gold to the Shanghai Gold Exchange, valued at around $8.7 billion.

FOREIGN AFFAIRS, DEFENCE AND TRADE

Federal Developments

Assistant Minister for Defence Matt Thistlethwaite invited public feedback on proposed reforms to The Defence Act 1903, which aim to modernise the legal framework within which the Australian Defence Force operates to support Australia’s growing strategic capability and needs. Submissions are open until 21 April 2023.

Australian Minister for Trade and Tourism Don Farrell and Indian Minister of Information and Broadcasting Shri Anurag Singh Thakur signed a bilateral Audiovisual Co-production Agreement, which aims to promote more collaborative cultural projects between the two nations. Minister Farrell also met with India’s Minister for Commerce and Industry, Shri Piyush Goyal, at the 18^th India-Australia Joint Ministerial Commission Meeting to discuss bilateral economic ties.

Continuing Australia’s support to Vanuatu in the wake of Tropical Cyclones Judy and Kevin, Minister for Foreign Affairs Penny Wong confirmed an additional $4.35 million in recovery assistance through the Australian Humanitarian Partnership and Australian Red Cross.

State Developments

SA Minister for Trade and Investment Nick Champion visited Singapore and Japan to promote investment opportunities for the State’s green hydrogen, food, and wine industries across Asian markets. In Singapore, the Minister confirmed a partnership to support exports of SA wine products and hosted a Hydrogen and Renewable Energy Roundtable. During his visit to Tokyo, Minister Champion promoted SA’s green energy sector at the Fuel Cell Expo and the State’s defence industry at DSEI Japan.

ENVIRONMENT, RESOURCES AND ENERGY

Federal Developments

Minister for Resources and Northern Australia Madeleine King with the Indian Minister for Parliamentary Affairs, Coal and Mines Shri Pralhad Joshi and announced an extension of the Australia-India Critical Minerals Investment Partnership. Under the partnership, investments will seek to build new supply chains by targeting projects in the lithium and cobalt industries.

State Developments

In Victoria, Minister for Energy and Resources Lily D’Ambrosio released the Victorian Offshore Wind Energy Implementation Statement 2. The statement includes confirmation that Port Hasting will be the location of the Victorian Renewable Energy Terminal.

WA Minister for Mines and Petroleum Bill Johnston will travel to Canada, the US, Japan and South Korea to seek investment in and promotion of the State’s battery, critical minerals and energy sectors. As part of this trip, he will attend discussions and conferences including the InterBattery Conference in South Korea.

SA Minister for Trade and Investment Nick Champion met with metals and energy trading company Trafigura to discuss a proposed project generating green hydrogen in Port Pirie. This project would see Trafigura work with its subsidiary Nyrstar and the SA Government to create a commercial-scale green hydrogen manufacturing facility.

INFRASTRUCTURE, TRANSPORT AND WATER

State Developments

The WA Government’s Water Corporation signed a 15-year water supply agreement with Frontier Energy to deliver a low-cost renewable hydrogen project. Stage 1 of the project, entitled the Bristol Springs Green Hydrogen Project, is expected commence near Waroona in 2025.

The Queensland Government released the Central and Western Queensland Infrastructure Plan, outlining 20 years of infrastructure priorities for the region. The plan, which focuses on communities stretching from Rockhampton, Gladstone and Yeppoon remote outback communities along Queensland’s western border, will be reviewed every two years.

The SA Government opened applications for its Combustible Aluminium Composite Panel Cladding Limited Loan Scheme, which enables eligible community and strata corporations to apply for low-interest loans to replace cladding on buildings with an extreme or high South Australian Life Safety Assessment risk rating.

Development Victoria’s Chief Executive, Angela Skandarajah, advised the State Government she will step down from her position after five years in role. She will remain in the role until the end of the year. Development Victoria has begun exploring possible candidates to fill the role.

HEALTH

Federal Developments

Minister for Health and Aged Care Mark Butler pledged $382 million in grants to 200 medical research projects through the Medical Research Future Fund. The most significant amount of funding was $15 million allocated to the mitochondrial donation pilot program, mitoHOPE, at Monash University. The research will investigate the safety, efficacy and feasibility of using mitochondrial donation reproductive technology in clinical practice in Australia..

Assistant Minister for Health and Aged Care Ged Kearney and Assistant Minister for Climate Change and Energy Jenny McAllister held a roundtable discussion to launch consultation on the development of a National Health and Climate Strategy. Consultation will focus on how the health system can adapt to a changing climate, as well steps the system can take to reduce emissions.

Assistant Minister for Mental Health and Suicide Prevention Emma McBride announced the establishment of the National Emergency Workers Support Service through a $4 million collaboration with the Black Dog Institute. The service provides online mental health self-assessment and triaging as well as access to a clinical psychologist for emergency services workers.

State Developments

The WA Government released its response to the Independent Review of the Western Australian Health System Governance, which examined the operational and practical effectiveness of the governance structures introduced by the Health Services Act 2016. The Government supported in-principle 49 of the review’s 55 recommendations.