Episode 20

With Paul Scanlon and Domenique Sherab

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Inflation has turned upward again, and this month’s news brings a shift that economists and households alike will feel. In What’s in the News, we start with the first official monthly CPI release from the ABS, which shows headline inflation rising to 3.8 percent. We walk through what’s driving the move including housing costs, food prices, and the sharp jump in electricity bills. We also look at why the RBA is expected to hold rates despite the reversal in trend.

In The Hand, the conversation shifts to the real pressure point behind the scenes: structurally higher energy costs that rebates have been masking for more than a year. We examine how years of policy instability have stalled long-term investment in baseload generation, why emerging technologies like hydrogen remain far from cost-effective, and how the rollback of subsidies is exposing the true cost of the system Australians rely on every day.

Then in The Invisible, we turn to the widening housing shortfall, where record population growth is colliding with weak construction activity. Domenique outlines the gap between migration and dwelling supply, and Paul breaks down why the Housing Australia Future Fund has fallen dramatically behind its targets. Together, we connect these trends to the structural forces shaping inflation, affordability, and opportunity across the economy.

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Podcast Transcript

[00:06] We open with a look at the first official monthly CPI print released by the ABS.

[01:01] Listener encounters at a securitisation conference spark a conversation about academic roots and shared backgrounds.

[02:09] Interest grows around the idea of a live event as the two of us gauge audience enthusiasm.

[03:36] The What’s in the News segment begins with a deep dive into the October CPI reading, which shows inflation rising to 3.8 percent.

[04:20] Discussion turns to why Australia shifted from quarterly to monthly CPI reporting and how the ABS constructs the new series.

[06:36] Key inflation drivers include housing, electricity, and food come into focus as we unpack the pressures behind the latest numbers.

[08:16] The conversation revisits the RBA’s rapid tightening cycle, from the 0.1 percent cash rate to the 4.35 percent peak.

[10:09] Temporary electricity rebates are examined for how they distorted inflation on the way down and again on the way up.

[11:09] Rising food and beverage costs are added to the broader cost-of-living picture.

[12:44] Record government expenditure, now sitting at 26.5 percent of GDP, is identified as the largest underlying driver of inflation.

[14:15] Health, defence, and the NDIS emerge as the categories fueling sustained fiscal pressure across government budgets.

[16:30] Connections are drawn between government spending, tax receipts, and Australia’s dependence on resource exports.

[18:40] The question of an RBA hold or hike prompts a discussion shaped by timing, data trends, and the approaching holiday period.

[19:23] This month’s CPI print is framed as a turning point that signals a new phase in the economic cycle.

[21:31] The Hand segment begins with an exploration of energy bill rebates and the sharp increases appearing as those supports roll off.

[23:22] The political timing of the rebates is questioned, along with the broader economic logic behind them.

[25:46] A recent visit to a hydrogen facility highlights the steep technological and financial challenges of emerging energy solutions.

[27:35] Long-term energy planning hurdles are traced back to more than 15 years of policy instability and shifting priorities.

[28:59] The realities of baseload replacement are discussed, noting why renewables still struggle to compete with ageing coal assets on cost.

[30:35] Government trade-offs come into focus as electricity costs, health spending, defence needs, and tax policy collide.

[32:13] The Invisible segment begins by contrasting record migration levels with Australia’s slow construction output.

[34:16] The scale of the housing shortage becomes clear through vacancy rates, construction gaps, and CBRE’s projected 75,000-unit apartment deficit.

[35:00] Attention turns to the Housing Australia Future Fund and its promise to deliver 55,000 homes for $10 billion.

[37:19] Reality falls far short of the target, with just over 4,000 dwellings counted so far and fewer than 400 actually built.

[38:41] Dwelling costs under the program are unpacked, showing average figures between $800,000 and more than $1 million per home.

[40:15] Migration trends, construction slowdowns, and rising costs are connected to Australia’s widening housing imbalance.

[40:44] Structural challenges in energy, housing, and inflation are reframed as areas of opportunity for households and businesses able to adapt.

[42:51] The episode wraps with a preview of next month’s annual Predictions episode and a look at the political and economic forces ahead.