A win for Labor as the RBA cuts rates

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Hey, folks, PK's on her way, but I'm Erin Park, host of the new podcast series, Expance, Nowhere Man.

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What a difference a month can make.

People with mortgages around the country may ask.

Well, the answer has been delivered by the RBA board unanimously voting to cut the cash rate by 25 basis points to 3.6%.

And the country and the world has been reacting to Australia's historic move to recognise Palestinian statehood in September.

Welcome to Politics Now.

Hi, I'm Patricia Carvelis.

And I'm Brett Worthington.

And Brett, the rate cut has been finally delivered.

And I say finally because it was only a month ago where everyone thought there was going to be a rate cut and it wasn't delivered and it was highly controversial.

Well, this time, what was widely predicted did happen.

And there's a bit more to that in terms of the detail.

We know that it was unanimous.

So now there is new detail where we can find out how, not who, but the numbers and how they voted.

This was unanimous by the board.

They all decided that Australia needed an interest rate cut.

We knew it was coming, but clearly it's going to be a happy moment for people, yes, with big mortgages or any mortgages, but also I think for the government, Brett, who have been waiting for this moment.

Yeah, I think that's right, PK.

The treasurer will be standing up any minute now, and he'll be doing that thing where he has to fight the smile because it's inevitably good news.

Money in the pockets of people who are under pressure.

It means $109

a month for every $700,000 owed.

And the three cuts this year together are about $330 a month or almost $4,000.

But still recognising the fact that a lot of people are still doing it really tough out there.

And while this is welcome news and it does push towards the direction and in many ways overdue news from what people really felt after that last rates decision, that 6-3 decision we saw last time really buries it right at the bottom of the statement.

The decision was unanimous.

You can imagine the looks of the three who voted to cut last time when they got into that meeting yesterday and again today, keen for this cut to be there.

But as much as our broader discourse in the last few weeks and months in particular has very much been focused on international affairs, the events of the Middle East, the Donald Trump administration, this is the forefront issue that still remains in households.

It was the key debate point going into the last election.

And this is the thing that households will be continually looking to the government to see.

And they will ultimately hold them responsible, even though it's a decision that's independent of them.

The public still ultimately holds the government of the day accountable.

Is that what you make of it as well?

Yeah, I think it's a couple of points I want to make in a historical context, which give, I think, our listeners a bit of a hot take as to why this matters so much for Labor.

Labor historically, and this is absolutely always in the mind.

He would agree if you put him on a lie detector test, the treasurer, Labor has for years been trying to

really get rid of its reputation that I think a lot of baby boomers and Gen X would have, that it is the party of higher interest rates, right?

So much so that when Mark Latham, who I know is absolutely discredited now, even by the Labour Party that's going to add a little thing to his plaque, this picture in the

caucus room, right?

He signed this ginormous thing saying interest rates will be, you know, lower under us

when he ran in 2004, trying to get rid of the legacy of the Keating Hawk years where interest rates got really high.

That's important historically.

Why it's important is that for Jim Chalmers, when all of those interest rate

increases happened under the Labor Party's watch after the first one happened under the previous government,

they were annoyed because then they carried the sort of can for a higher interest rate period.

So I've just read the treasurer's press release and he will no doubt repeat these comments when he stands up and is on camera.

He says, this is the first time in almost two decades we've seen rates come down three times at a calendar year.

At the same time, the unemployment rate is below 5%.

This is very important for Labor politically to send the message they are not the party of higher interest rates.

Yes, we all know that governments don't set interest rates in our system, but that political legacy is an important one for the Treasurer to to say, now we have a consistent trend where they're going down under us while unemployment has not spiked.

This is the happy landing they were going for.

Long period, though, of discomfort for many people with this narrow path.

Brett, do you think that context is sort of the vibe that they're trying to?

I think that's right, Piquette.

I think it's both the Treasurer has been doing this element of communicating with the public and communicating with the RBA.

And this soft landing that we've been hearing so much about has been defying a lot of what people expected to happen.

And you've got to offer confidence to the board that bringing down inflation at not coming at the expense of jobs like you might have expected previously is something that the government's going to be able to sustain.

And I think the treasurer really points to that unemployment number in particular as a way of saying, look, we have shown you that we have been able to do this of both bringing down that pain ever so slightly, keeping people in jobs.

The trouble where it's a lovely blessing, but it's a curse, is that when someone doesn't lose their job, they don't thank you for not losing your job.

If you were to lose your job, you can clearly blame who is responsible.

But staying in your job is a point of pride for the government, while also now having to begin that conversation of how the workforce is changing.

And over the course of this term and potential future terms, the nature of our workforce will change as the government tackles all these other problems.

But there is a clear point of pride for government for the government, and they really like to rub it in the coalition's nose: the fact that rates are coming down and people are not out of work as a result of it.

So we will see how the coalition responds, but I do think it's going to be hard for them to land too many very

painful lines on the government.

They'll say interest rates have stayed too high too long because Labor has borrowed too much, they haven't got the budget under control.

Like some of those lines will come out.

But I think the public will kind of broadly think, yeah, we're going in the right direction.

You know, give them some credit broadly.

I mean, I think the public are pretty smart.

They're experts on things like interest rates can i say

but they know the reserve bank makes the judgment ultimately and the reserve bank governor under the new system will answer questions at her press conference which will happen a bit later after we record um and and that pressure will be on her and you get a sense that the coalition is desperate for a debate about the economy and this is not the news that they want to be seeing at the moment and that point you make about latham it was a really powerful message that we saw julia gillard who had one of the safest seats in the country she goes on to become the prime minister after this point but at that election, she saw double-digit swings against her in Labor heartland because of that message cut through that Labor is the party of higher interest rates.

And those people moved against Labor in the heartland.

They knew going into this last election that that mortgage belt areas, they are the people that have traditionally been with Labor, that they had to keep on side.

And in some ways, Labor has been able to stick with them.

And then messages like this, which, like you say, independent.

as they might be

from the government is a way in which the government will think that it's giving back to the heartland that stuck with it at that last election.

So now the big thing will be everyone watching to see if all of the banks pass it on.

That's always the dance after the interest rate cut is delivered.

Will they pass it on?

Will they pass it on in full?

All of those questions are really key.

The other key question being

what does the RBA governor say about future rate cuts, the future trajectory?

Just reading the statement which gives you a good indication.

They still talk about the kind of concerns they have, and this is key about...

Elevated uncertainty, I think is one of the top lines, isn't it?

They love that line, don't they?

They say, uncertainty in the world economy remains elevated.

There is a little more clarity on the scope and the scale of U.S.

tariffs and policy responses in other countries.

So let's just put that in context.

Well, we kind of know where we've landed with the tariff, for instance, for our own country, that 10%

tariff.

Of course, that can change at any point, let's be honest, because it's Donald Trump.

He might have another sort of mood swing or something.

Might have a sip of Diet Coke and suddenly he's going in a completely different direction.

But there are other things beyond just about us, like the deal with China, I think, has been key since.

So we know more than they did a month ago.

I think that is fair.

Although she will

just assume that this press conference is going to get a bit testy if the journalists know how to do their job, and I think most of them do, because

you know erring from last month is still I think an issue.

They also say I want to add this sorry if you just just give me a sec the unemployment rate rose to 4.3% in the month of June and averaged to 4.2% of the June quarter as a whole in line with May forecast.

Measures of labor underutilization nevertheless remain at low rates and business surveys and liaison suggests the availability of labor is still a constraint for a range of employers.

Looking through quarterly volatility, wages growth has eased from its peak, but productivity growth has not picked up and growth in unit labour costs remains high.

The key one I want to pick up there is productivity growth.

We've got the roundtable next week.

So this segues to that because that's one of the big messages out of this.

Productivity is still a huge problem for this country.

The RBA didn't get the message that we're not using the word productivity anymore, did they, PK?

The rebranding hasn't made its way back.

I think they're going to be using that for long my friend they're not worried about using it they they love they love um using a word that um doesn't inspire the rest of us but it is an important word in terms of its outcome i think it's absolutely and i think the other bit that just right at the end of that statement where they say they're talking about rates cuts more decision that you know this idea of continuing to to moderate in terms of inflation and that rates then would be assumed to follow the gradual easing pathway which is code for continue this expectation that there still is there amongst economists and the banks that there will be future cuts throughout this year.

No big half a percent cut, none of that kind of talk.

That's not the Michelle Bullock way, but the sign that Jim Charmer's putting up his three, he might well get a chance to put up a fourth one before the year's out.

Before the year's out, yeah.

So this is the thing.

This is the vibe.

You know, we're labor.

Interest rate cuts can happen under us.

Look how many you've had.

Hint, hint.

Aren't you feeling better, workers?

Aren't you feeling better?

People with big whopping mortgages.

Housing is the biggest issue.

Of course, this doesn't actually make housing prices better for people trying to get into the market.

Can I say?

Not that I'm suggesting that's the reason that you know interest rates decisions should be made.

There are so many other reasons for the macroeconomy that interest rate decisions are made, but that is still a persistent issue that they've also trying to tackle.

So, you know, a bit more, a bit more complicated than I think we would

like.

And so, yeah, okay, watch this space in terms of all the politicking because I want to beautifully

sort sort of seamlessly I can't I can't I think I can get you there PK can you yeah so today it was not at all a surprise that the Prime Minister was keen to be at a housing estate I think he had the hard hat on he had the high viz on this is a man who is that man acutely aware of public perception And I don't say that as a deriding way.

No.

He is attuned to, and you used to see it with Scott Morrison.

When Scott Morrison would go overseas, he would come back and he'd very quickly find himself out in a different part of the country to show people, I'm focused on you.

Today, we have seen the Prime Minister out in Melbourne talking housing.

Housing is going to be a key issue of this whole term and likely the next term after that.

The Prime Minister is all too aware that a lot of the discussion has been about issues beyond the Australian border.

And I think in making that momentous decision that we saw yesterday and I'm sure we'll get to, I think it's a way in which he's trying to signal to the public, I understand though, you are concerned about what is happening in the Middle East, but you are also concerned what is happening close at home in terms of housing, the cost of living, and that your children might be able to get a house.

And even though he stood there and took all those questions about recognition of Palestine in a high-viz and a hard hat, I think it just telegraphs very slightly that there is a bigger government agenda than what necessarily is making the headlines at the moment.

All right.

Brett's the perfect person to host this podcast for a month while I live my best Greek life

because that is a beautiful segue to the other theme.

Yeah, I think the way you framed it is actually genuinely, Brett not being a smart ass, like perfect.

He does want to be sending all of the right domestic messages.

My view actually is in terms of the Palestinian statehood decision, they did want to go soon.

There was an acceleration based on what's happening on the ground in Gaza and the kind of almost provocative stuff coming out of the Netanyahu government and the way that Benjamin Netanyahu even talked about Australia the other day, right?

But

they also wanted clear air for this.

They want to get back on the economy because they know that's where the main game is.

People can be concerned and are about what's happening overseas, but they always are politics 101, interested in their, you know, feeding their family.

I don't think it's unreasonable that people care about their everyday.

And so let's go to the statehood decision and the way it's

sort of filtering through internationally, domestically, in the conversations we're having.

It was a long time coming, of course, but yesterday it did happen formally.

There's a whole podcast that Jacob and I did about the way that

it

was framed by the government.

But since, in terms of the reaction, we sort of speculated about what would happen, what the coalition would say.

The coalition has been pretty hardcore, though.

Susan Lee, who was a friend of Palestine, was very much a passionate proponent of Palestinian rights.

Has been pretty hardline, wouldn't you say, about her opposition to Palestinian statehood happening now?

The coalition is still in favor of a two-state solution, but at the end of a peace process, they have not shifted from that.

Yeah, the destination is the same for both of them.

It's how you get there and whether peace comes as a way of leading to recognition or recognition leads to peace.

And there is this clear divergence, though, that our major political parties have found themselves in in a way that they haven't been.

So, yes, ultimately, support the same thing in terms of the ultimate outcome, but getting there, the paths could not be more different today, and even more so as a result of this shadow cabinet meeting that we've seen play out, in which the cabinet has said not just that they don't support this, that they would wind it back if they were to find themselves into government.

Wind it back is the key one.

So, that's a big deal.

Because,

my

view,

if you look, unless some miraculous stuff happens, and everyone wants miraculous stuff to happen, by the the way like i i would i would love all of the extremes to kind of realize that that bloodshed gets you nowhere all of that to happen

i still believe though that if you look at the evidence it's unlikely to happen so that means that we're talking about pretty long periods potentially of time

where

We have a position, but it's not realized.

Palestinian statehood, a two-state solution, U.S.

moving because they're key, of course, with the vote on the UN Security Council,

Netanyahu being defeated, a more moderate version of a government being elected in Israel.

These are all the things that need to happen.

The Palestinian Authority reforming, pushing Hamas right out, there being public and popular support for that kind of approach.

All of these things, so many things, which, by the way, dare to dream.

Absolutely.

How can we be human and not want those things to happen?

But given they all take some time, the divergence is significant because we are talking about something pretty significant.

If there were to be a coalition government, now, you know, could happen in three years, highly unlikely looking at the numbers, but three years, okay, let's say it can't happen in three years, even six years.

I still think seeing Palestinian statehood in six years is

taking a leap of faith, right?

Six years.

Are they really going to flip our position?

Think about how developed that might be by then.

In terms of our infrastructure, passports, embassies, delegations, all of the way that the government relations, the mechanics of how it works, and then stripping it back.

That is a big divergence.

That is not a little thing.

And so it is actually significant that we've got our two major parties believing in such different frameworks for going forward.

And if you listen to the the detail of what some of them have been saying, I had Jane Hume on a panel yesterday with Jed Carney.

Jed Carney is, you know, probably one of the people who was internally pushing very much for this kind of position, given her electorate and the views in that electorate about Palestine and these issues.

She was saying to me,

you know, that the Palestinian Authority doesn't have any evidence of change and

really pouring cold water on the Palestinian Authority's role in the future.

Now, if you're saying the Palestinian Palestinian Authority can't be involved, obviously Hamas shouldn't be involved.

They are a listed terror organisation.

But the Palestinian Authority too,

that's kind of the Netanyahu government's line, isn't it?

Yeah, and this idea that

you've got the Palestinian Authority and questions the ability with which it has been competent in its ability to govern, whether or not Mahmoud Abbas is able to pull together a coalition that could work to an election and then have authority within parts of Gaza, I think, is very much an open question.

The Western and Australian hope is that you could telegraph through recognition to the people of a Palestinian state that you can say, you no longer need Hamas to be there to achieve outcomes for you here.

And there are no small tasks of the amount of things that the Palestinian Authority would have to do.

Overhauling the school curriculum is one of the ones that is being put there.

The demilitarizing and recognizing that Israel has a right to exist within solid borders.

Now,

there is an open question, and the coalition will say that Labor is just recognizing without any of those caveats, and none of that can be, none of that's going to be made sure that that's adhered to.

Well, it's just more complicated than any of that, the simplicity of a statement like that.

So, come September, Australia will recognise a Palestinian state at the United Nations.

Now, if there is push for there to be recognition of statehood and become a member country, then it is very likely that the United States would veto that at the secretary, at the UN Security Council level.

Now, that doesn't mean that there's no point in doing this and standing with allies that the Prime Minister wants to stand with.

He wants to be there, seen to be standing alongside Keir Starmer, who he's building both a professional and a personal friendship with, Emmanuel Macron, Mark Carney, a new leader in Canada.

These are the people that Anthony Albanese wants to be standing with.

And that the coalition...

has taken this decision to not just not support it, but to walk it back, I think is interesting because you are essentially saying yes donald trump will still be the u.s president at the next election but if everyone if as everyone expects it will be a two terms to get back to government from here for the coalition given the scale of their loss you're talking now about a U.S.

president beyond Donald Trump.

The Democratic Party itself is having conversations about whether it needs to change the way in which it deals with and recognizes Israel.

And who knows what comes after Donald Trump on the Republican side.

It is a huge gamble and you just get the sense that it is so early that a decision like this is probably unlikely to be the one that sticks over the longer term for the coalition.

I think the point you make about the debates in the Democrats, which are shifting enormously, are really important.

Like we are now on, I think, a historical trajectory to pretty significant long-term change.

And these discussions are absolutely happening in the Democrats where there is such a big shift on these issues.

And, you know, lots of people in Israel have been making this point for a really long time that Joe Biden was probably the last Democratic president that was such a close friend to Israel.

To the point where it seemed that many, many Israelis believed

not enough love and

thanks were given by their prime minister for the relentlessness in his support

for Israel.

And now, you know, they're facing a very different future where the demographics alone, the push, the sort of

internal conversations they're having are going to shift that position.

That's not to say they'll, well, I suppose anything's possible, but I'm not saying they're going to necessarily oppose Israel.

But they're going to start being more conditional, I think, in the future about the kind of support they are willing to give to Israel.

So Israel is on notice, right?

And so I think that's a really interesting play for the future.

Again, this is very future talking, but these things do creep up, Brett.

And so, you know, the coalition can use really tough lines here, like Anthony Albanese has rewarded Hamas,

but whether that washes and that's the way the public sees it, I'm not sure about that.

I think that that remains to be seen, but I think that the public has really shifted on this issue because the bloodshed has been

so relentless, so long.

So

unkind of people can't process this level of death and destruction, I think.

That point that Ed Husick chalked, and we know that Penny Wong and Anthony Albanese pushed back against, his argument is that when he took part in that rally going over Sydney Harbour Bridge, it was Middle Australia, to use his term, that was there rallying, and that this is an issue that has gone into households right across this country.

And you just get the sense that the more we hear about why the government took the step now, that you've got a prime minister in Anthony Albanese, who is certainly not born on the world stage and is trying to find his feet and work out what his prime ministership looks like at an international level.

Now, we didn't find out that he and Benjamin Netanyahu spoke when they did, and we didn't get a readout like you typically get, you know, that oversight of what was the outlines of roughly what was talked about.

But, you know, the reporting suggests it was 30 minutes, 40-minute conversation.

It's a long one.

And it was clear in that call that the Prime Minister just felt that he was hearing the things that he heard.

a year ago and that it was no longer cutting it, that a military solution would be the solution to solving what is happening in Gaza and he wanted a political solution and we've seen that the further breaking down of that public relationship between Netanyahu and Anthony Albanese.

Albanese I think today with the strongest words that we've heard him say about another world leader of accusing Benjamin Netanyahu of being in denial.

He's not the kind of person that wants to...

He doesn't do this much.

No, it is like it is very against his

He's an institutionalist, Anthony Albanese.

He respects the office, which brings frustration then to parts of his own backbench that he's not doing enough or not pushing enough.

And we've seen the whole way through he's wanted to rebuild Australia's standing, you know, building that relationship with Emmanuel Macron because he felt that Scott Morrison abandoned it.

That treating world leaders with respect is right at the core.

Now, in denial is very much at the, you know, it's far from the extreme language we might see on the world stage.

But this is strong language from Anthony Albanese, don't you think?

I think you've nailed it again.

Do you want me to leave?

Because you're just a little bit more.

I absolutely do not want you to leave me

guarantee you.

No, but it's true.

Like he doesn't.

You're right.

He uses,

he tempers his language.

He's very cautious.

Sometimes he speaks in this very slow, deliberate way that sometimes...

some people can find frustrating, but I always explain it this way.

He is thinking so carefully about the words because he thinks, you know, words, words are like very, very consequential.

And so he's careful.

So this is not a mistake, my friends.

He's trying to meet the moment, trying to meet the public public view.

And, you know, also, this is what he really thinks.

And he's telling us.

And he's a man of, he is a man, I think, Penny Wong, too.

They are people of history and they understand this moment in a bigger perspective.

And it's not surprising to me then that when the announcement came, it's done in the Prime Minister's courtyard at Parliament House in the nation's capital, standing there at podiums with the Australian coat of arms on the front of it.

The Prime Minister, the foreign minister, essentially his deputy in all but title.

Just don't tell Richard Miles that bit, but she's his Praetorian guard.

This is the point of having a podcast called Politics Now.

I don't know if everyone really understands the extent of what you just said, the Praetorian Guard line.

Like, they are

thick as thieves, right?

She was the one, so he convinces her to stay in politics when he gets to the leadership.

And then who was it that introduced Anthony Albanese on the stage of the elections in 2022 and 2025?

It's Penny Wong that is standing there and introducing him.

She runs from all reports.

Now we're not there.

We would love to be in the cabinet.

We would love to be in the ERC.

But from all reporting, she's the Praetorian Guard along with Katie Gallagher.

They run the protection reaction.

They push back.

They hold ministers to standards.

They run that ministerial wing when the Prime Minister is not there.

And this is why Anthony Albanese pushes back and doesn't think that Labor isn't doing enough to promote women within their ranks.

Because who does he see?

He sees Penny Wong and he sees Katie Gallagher.

He doesn't see all the other blokes that are sitting there in the broader front bench.

And that'll be an issue over the course of this term that people wonder how much longer Penny Wong wants to go for.

And she will insist that she's here all the way through.

She loves her job.

Yeah, but if you see Penny Wong go at some point, it does create this opportunity about who they're bringing through.

And Anthony Albanese's Prime Ministership has a lot of thanks to give to Penny Wong for the work that she does both within the government, but the love and standing that she has in that public discourse.

discourse that the power of having her there is also for the Labour true believers who really like any sign that they see a Penny Wong standing by the Prime Minister.

Yeah, although she's had a tough run with the Palestinian question, I think, from some members of the left.

So there has been

a tricky period for her.

But I'd take your broader point for the true believers.

Look, Brett, we are going to say goodbye, but just

the most economic and political thing that really is happening in the world

is

Taylor Swift has revealed the title of her new album, The Life of a Showgirl.

Now,

this, my friends, is genuine economy stuff, okay?

This is genuine politics stuff.

She ran a countdown.

Now we know there's a new album.

How are you feeling about this, Brett?

So

I am fairly agnostic about Taylor Swift.

You're not a Swifty.

I'm not a big Swifty.

I certainly don't despise Taylor Swift in a way in which she polarises her.

Well, thank you, because if you despised her, we'd have to revisit sort of this relationship.

But I appreciate her ability to move markets and and the impact that she's had on national economies as part of her world tour.

I think she is certainly an impressive figure within our generation.

Okay.

What a time to be alive.

I'm really happy about this decision,

the rate cut decision for the people with thumping mortgages and also for the Swifties out there.

Brett, love hanging out with you.

Thank you so much for coming in the pub.

Thank you for having me, Pika.

And tomorrow, I will be with David Spears talking all things

politics again.

And on Thursday, of course, Fran and I bringing you the party room at abc.net.au.

See you, Brett.

See you, PK.