Anxiety ahead of possible rate hike

0:00ABC Listen, podcasts, radio, news, music, and more. Good morning. Welcome to AM. It's Tuesday, the 17th of March. I'm Melissa Clark in Canberra, coming to you from None of All Country and acknowledging other custodians. U.S. President Donald Trump has criticized allies who have rebuffed his requests for assistance to secure the Strait of Hormuz. There's been no direct request for Australia's assistance. Donald Trump says he's asked the UK and others to send warships to the Middle East to help escort oil tankers through the Persian Gulf. Summer very enthusiastic and summer less than enthusiastic and I assume some will not do it. I think we have one or two that will not do it, that we've been protecting for about 40 years. Why are we protecting countries that don't protect us? And I've always felt that was a weakness of data. We were going to protect them, but I always said when in need they will protect us.

1:00Here in Australia, the rising oil prices could prompt the Reserve Bank to hike interest rates when it meets today. The conflict in the Middle East combined with rising inflation and a tight jobs market will be key factors in making a decision on whether to raise rates for a second time this year or keep them at 3.85% and he gets to reports. Rising costs are creating anxiety and frustration amongst these shoppers in the Northwest Brisbane suburb of Capaira. I'm not happy with the high interest rates, especially with it going up constantly because yeah, with added bills and everything else. Like the petrol's gone up, how can people live? I spent $200 on groceries. It's like basically I mix out my credit cards all the time each week. I pay it, then max it out because I just can't get ahead.

2:00Our kids and a mortgage to see at less expandable income. And with this being against the backdrop of the war in the Middle East, does that add an extra element of concern for you? Of course it does. We're all relying on fuel and oil. I work for an airline. What happens when we run out of jet fuel? I don't have a job. Like COVID all over again. Today's meeting of the Reserve Bank Board to decide interest rates comes amid energy, military and geopolitical uncertainty. Joe Masters is the chief economist at Baronjoy Capital. This is a very live meeting and I think it's a close call. On balance here at Baronjoy, we think that the RBA will actually hold the cash rate steady today in favor of waiting for the next meeting, which is only six weeks away. That will give them probably more certainty on how the war in the Middle East is evolving. That will give them more confidence about the impact on Australia and the global economy. And while the unprecedented closure of the Persian Gulf is a major factor, concerns

3:03about inflation in Australia haven't gone away. So globally, we're still watching, you know, thematics like AI, for example, that are impacting you as equity markets and also private credit markets. The chief economist at EY Oceania, Sherel Murphy, agrees with these points but has a different view about today's interest rate decision. I think the Reserve Bank is going to decide to increase the cash rate by 25 basis points and that will take it up to 4.1%. That is mainly because they've got a domestic economy at the moment. So inflationary pressure, there's a tight labour market, we've got some supply shortages. And then we've added in the new global elements to the inflation problem. And that goes beyond the potential for an oil shortage to push petrol prices up higher to the potential impact on worldwide transport. And Sherel Murphy points out a shortage of oil to make fertilizer could drive up food prices.

4:08And that might sort of be enough to convince the Reserve Bank that, you know, really, this is not a good outlook and so they have to act to try and pull it all in. Sherel Murphy from EY Oceania ending any guests report. Energy Minister Chris Bowen says it will take some time for the release of additional fuel from reserves to have an impact at the Bowser. Fuel suppliers and distributors can now release up to 20% of their reserves. So long as they can show the additional petrol and diesel is getting to areas of shortage in the regions. And today the A-Triple C is meeting with major fuel suppliers, retailers and automotive groups to discuss fuel pricing. The leader of the opposition spoke to me earlier from Aubrey. Angus Taylor, thanks for joining AM this morning. Great to be with you, Mel. Now, you've been critical of the federal government's handling of fuel supply issues. Do you think the minister should be taking more actions, additional actions?

5:08Well, he absolutely should have. He's had one of our refineries, one of our two refineries exporting all of their fuel. And as a result of his emissions requirements and they should be selling it locally, he should also be on top of the issue. Last week on Tuesday, there was no problem at all. By Thursday, it was a national crisis. He simply hasn't been on top of it. And the result is out here in regional areas, we've got farmers and truckies and others deeply concerned. We've got sowing just starting now for the planning season, for our food. And that's a massive issue to be concerned about or not able to access fuel at this time. Chris Bowen points to the biggest impact on petrol prices being the global oil price. Unvariable commodity prices, part and parcel of global trade based on market principles. Sure, of course, but shortages are not part of that. And there's a role for the government to play in dealing with shortages. When I was minister, we had real concerns about ad blue, you might remember,

6:10which is necessary to keep our trucks going across Australia. And we dealt with those shortages and prevented them from becoming a crisis. And Chris Bowen has been asleep at the wheel as energy minister. When it comes to dealing with shortages, there's supply and demand, right? There is still supply coming into the country. There's more being released from the minimum stock holding obligation that you agree. Do you think then there needs to be the issue of demand being addressed? Well, Chris Bowen has to be across where the fuel is and how to ensure it gets to customers. And to have one of our affionaries selling all of its fuel overseas at a time like this, not selling to domestic customers, I think was an egregious era. And that was requirements put in place by him. So if that distribution of where it's being sold is an issue, do you think the government should be doing more to intervene in who distributors and sellers making business with? Well, it should be across where they're assured.

7:11It just should be making sure that the distributors are getting fuel to those customers. I mean, it's pretty straightforward. That's how we dealt with that situation, the EBLU situation in 2021. And that's what the government and Bowen should be doing now. Now, he told us last Tuesday, there was no problem. And this is the real issue, Mel. He kept telling us there was no problem. Typical gas lighting from Chris Bowen. But by Thursday, it was a national crisis. He was not on top of the situation. And frankly, the Prime Minister needs to take control of the situation for him. The shortages, though, have largely been where there's been uncontracted markets for additional supply to large buyers. Do you want the government to have stronger intervention in where uncontracted fuel is sold? Look, there's all sorts of excuses Chris Bowen's been giving. But in the end, by Thursday, he said there was a national crisis. And the real issue was he wasn't on top of it, Mel. And if you're not on top of it, you can't solve the problem. So the issue for you more is the messaging and the timing, rather than

8:16what actions are actually outstanding. No, it's recognising that we had a problem. I mean, Tuesday last week in Parliament, we were laying out the problem. We were saying he's customers by knocking the fuel. Chris Bowen wasn't on top of it. And the result was that we had a crisis emerge. And by the end of the week, he declared it a crisis. I mean, the guy wasn't across it. Your job as a minister is to be across it. The Prime Minister needs to take control. And this is all part of a broader context. Where Australians are struggling under a cost of living crisis. We've got interest rates expected to go up today. Morgge Hull is paying $25,000 a year more in mortgage payments than they were when Labour came to power. It's no wonder Australians are getting frustrated. Just if I can summarise, your issue with fuel supplies is that the messaging hasn't been appropriate. Maybe you would have liked action a few days earlier. But ultimately, the amount of fuel that's been released

9:17from the minimum stock holding obligation is okay. It's just some level of export from refinery. You don't want to see. That's the main difference that you would do if you were in office right now. You get across it and he wasn't. It's that simple. He had no idea what was going on. You can't fix a problem if you're not across it. And that's where Chris Bowen files. Do you think there need to be new oil refineries established or old ones re-established in Australia? Well, I retained the final two put in place to the arrangements which have kept them. It's deeply unfortunate that we've had one that's had to sell its fuel overseas rather than to Australians. But those refineries should be part of our economic infrastructure. If you like, they are a critical part of our fuel security in this country. And the government needs to be working with them to make sure that they are supplying Australians with the fuel Australians need. So the two refineries is sufficient so long as they're supplying Australia

10:17and not exporting? Is that your position? Well, what I'm saying is we've got two refineries and they should be supplying Australians and we should be doing everything we can to keep them strong. Andrew Hastie seems to be suggesting that we need more refining capacity. Well, look, we'd all really love to have more refining capacity. I agree with that. But right now we've got a situation. We're trying to build anything in this country. He's not impossible because the economics are not working with the government that has lost control of the economy. And so, you know, this is a huge challenge. So right now, the fact that this has got to be let's keep our two refineries going hard, selling fuel to Australians and helping to alleviate a fuel security crisis that the energy minister did not see. You mentioned just before the expectations that the Reserve Bank will raise interest rates. Do you think that's necessary now, given the circumstances, the economy faces to rein in inflation? I'll leave that decision to the Reserve Bank, but what's very clear is the expectation

11:18is that inflation has got so far out of control that they're going to have to continue to raise interest rates. This is completely at odds with countries across the world, peer countries across the world that aren't seeing this. The inflation was raging before the war began in the Middle East. It's homegrown, and the fact of the matter is the government told us that we'd turn the corner on inflation in interest rates and yet inflation in interest rates have been going up. The government needs to take the appropriate measures to prevent that from happening. They haven't, and sadly, we expect an interest rate increase today. And if not today, very high expectation next time around. Angus Taylor, thanks very much for speaking to me this morning. Gradually with you now. That's Angus Taylor, the leader of the opposition there. A review of the state of research and development in Australia has found the country must do better in encouraging innovation or risk a decline in living standards.

12:18A government commission panel has recommended bold reform, including an overhaul of how research grants are administered, a new body to oversee that funding, and more tax breaks to encourage private sector investment in innovation. Tim Heirs is the minister for industry innovation and science. Tim Heirs, thanks for joining us on AM. It's really good to be on the show. Before we get to the report, as we have an oil shock unfolding in the global economy, does Australia have the right industry settings when it comes to oil? Do we need more sovereign supply of crude? Do we need more oil refining capacity at home? Australia doesn't have its own crude oil reserves. We have plenty of coal, plenty of gas. We have enormous reserves of sunshine and wind and storage capacity in Hydra, capacity in Australia. But we don't have geological reserves that are cost-effective of oil ourselves. So the minimum stock holding obligation that the government imposed at the beginning of our turn

13:22that we effectively put into law by signing off in the regulation and implementing it is the strongest measure that has been in place for more than 15 years to secure as much fuel as possible and diesel, petrol, and jet fuel. And we're managing that reserve carefully in the national interest and working carefully with the industry to make sure that it gets to where it needs to go. So you're satisfied at the circumstances we face currently? It's enough. Well, not complacent. About these circumstances that we find ourselves in. That's why you have a minimum stock holding obligation. That's why we have a fuel reserve is to deal with challenges and shocks like the one that we're experiencing. So we're not complacent about it at all. It has been managed on a daily, hourly basis, principally by the energy minister, Chris Bowen. And we'll continue to work through that over the coming weeks and months. Now, when it comes to this report into research and development,

14:24it's given a wide range of recommendations. Is the government inclined to adopt them all? This is a very wide range of report. That offers a really strong menu of options for decadal reform for the research and development system. I guess we're just trying to get a sense of what the willingness of the government might be when it points to things like reforming the maze of grant schemes as it describes it. And the overall decline in funding. Can you reverse the decline in innovation without addressing that decline in funding and the administrative burden that comes with this maze of grant processes? I think one of the real strengths of this report is that it points to the scale of the Commonwealth's contribution around $15 billion, but spread across 160 programs. So there's certainly a case for consolidation and concentration of effort. And that's one of the recommendations, setting up a national innovation council sounds like you see a need for that. Well, making sure that our innovation system

15:24and our research and development system are working in the national interest with clear priorities and clear missions and objectives is central to us achieving a future mate and Australia objectives. This is all about, at the end, getting a research and development system that drives industrial growth and the re-industrialisation of our outer suburbs and industrial regions. To move from just exporting critical minerals to making critical metals and making advanced manufacturing products that produce good jobs for Australians. The report describes uncompetitive corporate tax settings. It's a government in a position to be more generous when it comes to tax breaks, given all the other pressures on the budget. We're not afraid of recommendations whether about the tax system or about the innovation system more broadly. That's the challenge that we want these kind of reports to set out for us. And we're going to take our time to work them through. There's obviously budget consequences. We spend, I think, in the last year, around $4.5 billion on the research and development tax incentive.

16:26Of course, we want to make sure that that's targeted for impact for industry and to produce good jobs. Tim Ers, thank you very much. Thanks very much. Tim Ers is the Minister for Industry Innovation and Science. A new report surveying employers has revealed 70% are excluding candidates based on characteristics, including their mental health and their age. National work reporter, Bromand Herbert. Tim Hillio thought he was doing the right thing by disclosing to his recruiter that he had taken time out of the workforce to deal with a mental health issue. So there was one time with a recruitment company that I disclosed and we had a little bit of a chat about it, but then I didn't get any follow-up or any job referrals. So I had that sort of negative experience where I really felt that that did affect my chances just by being honest. He's now working in a customer service as banking role in Melbourne where he has only recently been comfortable to disclose his mental health history. A lot of applications, they will ask,

17:27do you have a disability of some kind? Do you need adjustments? And I used to say yes, but I'll just say no now. An Australian Human Resources Institute survey has found a majority of employers are choosing not to hire people based on personal characteristics, including mental health. The results take in responses from 612 employers and HR decision makers. Sarah McCann Bartlett is the CEO. So our survey found that about 70% of employers report excluding some candidates who have certain characteristics during the recruitment process. Of course, if they know that they actually have those characteristics. A third of employers said they excluded people who revealed they had a history of mental illness while 29% didn't progress candidates who had indicated they had a long-term illness. Around one in five reported excluding applicants with a disability or if there are aged 55 and over.

18:28In a relatively tight labour market by restricting their willingness to recruit these candidates, employers are still limiting their potential labour pool and importantly, the diversity of their workforces. How do these decision makers know this during the recruitment process? For attributes like a history of mental illness that would require an employee or a potential candidate to disclose which they are not legally obliged to do so and the employer is not permitted by law to actually ask them. Career coach Leah Lambert says the findings from the survey are extremely disappointing. We haven't moved on from where we've been in the past that so many organisations are supposed to be inclusive of people with special needs, mental health issues. The Australian Human Rights Commission has called for changes in the Disability Discrimination Act

19:29to put the onus back on employers. Bronwyn Herbert there and that's AM for today. Thanks for your company. I'm Melissa Clark. Hi, it's Sam Hawley here, host of the ABC News Daily podcast. As the Around War enters its third week, the ripple effect is growing around the world as the global oil supply is crippled. Here, petrol and diesel prices are soaring. Today, David Leaning, an international supply chain expert from the ANU on how panic buying is driving prices higher and why the government should start restricting sales. Look for the ABC News Daily podcast on ABC Listen.