Sold a Lemon
Week of 26 June: the fourth rate hike comes knocking, ASIO's real numbers, and the teals form the party they swore they never would
There were economic numbers released this week that were a mixed bag. The sort of numbers that a used car salesman would likely steer you away from during an inspection, in hope he could sell you the lemon.
Here’s how it was spun. The treasurer set about telling anyone who would listen that our growth is running faster than almost every other advanced economy in the world, even as the bond market quietly went back to pricing in a fourth rate rise for the year.
The head of ASIO warned that the terror threat is getting harder to read, not easier. Then, after years of indignant denials, two teal MPs registered the political party they always swore they would never form. There’s a bit to unpack.
The Fourth Rate Hike Comes Knocking
On paper, this week’s jobs figures looked like good news. Unemployment edged down to 4.4% in May, off the 4.5% we saw in April. The economy added 40,000 jobs and the number of people out of work fell by 18,000. A tighter labour market means upward pressure on wages, and upward pressure on wages means the one thing the Reserve Bank cannot stand to see right now, which is more inflation.
The Australian Bureau of Statistics had headline inflation down from 4.2% in April to 4% in May. Trouble is, it’s not coming down in real terms. At least not by the bank’s preferred measure.
Pollies will always stick with the number that best suits their narrative in the moment, but trimmed mean inflation is the real number that matters. It strips out the wild swings at either end and leaves you with the underlying trend. That ticked up to 3.6% from 3.4%, drifting away from Bernie Fraser’s 2-3 per cent target band rather than back toward it.
The Reserve Bank has already lifted rates three times this year, taking the cash rate to 4.35%. Only weeks ago the market believed the tightening was over. The mood has since flipped hard. The bond market is now banking on a fourth hike before Christmas, which would drag the cash rate to its highest peak since 2011. Westpac is the sole big four bank openly tipping a rise as soon as the next meeting in August, with heavyweights like Goldman Sachs and Citi warning the next move is up, not down.
Throughout all of this, Jim Chalmers keeps up the happy talk of solid growth, low unemployment, rising wages and, bewilderingly, that he’s got debt under control. The problem he keeps skating past is productivity. As Reserve Bank governor Michele Bullock put it, productivity is critically important for growing the economy, and right now it’s going nowhere. With a medium-term productivity forecast of just 0.7% a year, the economy simply cannot grow much faster than 2%, and wages cannot rise by much either.
None of this is happening in a vacuum. The NAB business survey, which the Reserve Bank watches closely, found more than 45% of businesses now say federal government policies are denting their confidence. Former Reserve Bank governor Philip Lowe was blunter still, warning in The Australian yesterday that “we don’t have a growth agenda, we now have a redistribution agenda,” and that taxing the assets businesses build only works against the investment the country desperately needs.
So the message for anyone with a mortgage is not a cheery one. A fourth rate rise is on the table, not because households went on a spending spree, but because the economy cannot find a gear and sticky inflation will not budge.
The treasurer gets to spin the numbers. The mortgage belt gets to pay for them.
Eighteen Thousand, or Fewer Than One Hundred
The formidable boss of intel agency ASIO, Mike Burgess, sat down for a rare interview this week to discuss the terror threat that we must never be complacent about. The highest-priority caseload, the people the agency considers most dangerous, currently sits below 100. The total number of people that ASIO has examined or is examining runs to more than 10,000. Pressed on how many people are under active investigation, Burgess would only say that it’s “not tens of thousands.”
Those figures matter, because Pauline Hanson, ever reliable when citing numbers, had claimed there were 18,000 people on ASIO watch lists. Burgess refused to be dragged into a political stoush and cited his duty to stay apolitical, but the numbers tell their own story.
The sobering part really is what surrounds those numbers. This was Burgess’s first annual threat assessment since the Bondi massacre, when 15 people were senselessly murdered last December. The official threat level remains at Probable, but Burgess made clear he thinks that word now undersells the danger, and he is working with Home Affairs on a new classification system because he cannot lift it to Expected without intelligence of a specific attack.
Almost every terror plot disrupted in 2024 involved minors, all of them lone actors or small groups, and most were strangers to ASIO and the police until they surfaced. Burgess says the pattern only deepened through 2025. Sobering reading for any parent. These are kids radicalised online, moving alone, just about the hardest threat any security service can hope to see coming.
Burgess described the modern terrorist as anything from a Sunni extremist to a neo-Nazi to a far-left radical to an extreme Christian, warning that what all too often binds these otherwise warring groups together is a shared hatred of Jews. That is a large part of why antisemitism has surged here so fast and so viciously. The same antisemitism that has been unleashed on uni campuses across the country. The same antisemitism that has seen social licence granted to the return of tropes and slurs.
For all the talk of numbers, ASIO’s record is genuinely one of substance and success. The agency has foiled 31 major terror plots since 2014, and resolved 14 significant cases since Bondi alone. Burgess was characteristically frank about the limits, conceding the agency “cannot stop every terrorist.” That is an uncomfortable thing to hear, but it’s honest and candid.
However, the hard questions about Bondi haven’t gone away either. One of the alleged attackers had come to ASIO’s attention back in 2019 before being deemed no ongoing threat. The Royal Commission on Antisemitism and Social Cohesion is now examining how the agency is resourced, and it is worth remembering the government tried, and failed, to stop the commissioner from seeing cabinet documents about how much of the intelligence budget actually goes to counter-terrorism. When a government fights that hard to keep a number secret, you are entitled to wonder what the number is, and the simple enough question as to why. What exactly have they got to hide?
Beyond the headline-grabbing terror figures, Burgess painted a clear picture of a country under pressure on every front. He pointed to Iran, which ASIO has already linked to arson attacks on a Melbourne synagogue and a Sydney restaurant, and warned its activities here could one day stretch to assassinations. He spoke of an unnamed foreign state, which everyone understood to mean China, burrowing so deep into our critical infrastructure that it could cripple networks at any time of its choosing.
This is the security environment Australia now lives in, and it is not getting any friendlier.
Independent No More
Which brings us to the political farce of the week. After months of secret talks and flat denials, teal MPs Zali Steggall and Allegra Spender have set up their own political party. Its name is Community Strong Australia, and they would like you to know it’s a party built on integrity and evidence rather than ideology. But when you cut to the chase, it’s actually the very thing these two have spent years insisting they would never become.
Timing is everything. The major parties voted to pass the Electoral Legislation Amendment (Electoral Reform) Act last year that introduces donation caps that, from 2027, limit donations to a single candidate to $50,000 per annum. Little wonder One Nation is now banking cash while it can. Its extraordinary Fire the Liar fundraising blitz raised over $4 million in five days from over 65,000 individual donors, contributing handily to its war chest before the caps bite.
The caps fall hardest on independents, who lean on a handful of deep-pocketed donors channelled through groups like Climate 200. A registered political party can raise and pool money in ways a lone independent can’t. So the great crusaders against money in politics have built themselves a tidy vehicle to keep the river of cash flowing.
For a new party allegedly built on integrity, it’s already curiously shy about its own finances. Steggall and Spender insist Climate 200 and its founder Simon Holmes à Court are not involved, and they have ruled out support from the Atlassian billionaires Mike Cannon-Brookes and Scott Farquhar, perhaps because of their floundering share price, but that’s likely wishful thinking on my part. What they would not do is name a single donor who is backing them. Transparency, it seems, can be put off until tomorrow or the next day.
Because what pulls the whole independent mirage apart is the voting record. Voting on the floor is a binary choice after all, so it’s not inconceivable for an independent to land on the same side as the Greens on any single bill. Just not most of them.
Since 2022, Steggall has sided with the Greens around 72% of the time, Sophie Scamps around 75%, and Spender around 67%. So when these MPs tell their well-heeled electorates they are a sensible alternative to the major parties, the record says they line up with the Greens far more often than with anyone sensible. Independent in creed, perhaps. Not so much when it comes time to vote.
The structure is almost too good to be true, which is to say it probably is. This is a leaderless, rudderless party of two members, which falls short of even being recognised as a minor party in the parliament. There’s no leader until they reach ten members, at which point in time they will appoint a three-person leadership panel. There’s no binding policy platform either, and a free vote on everything save for supply and confidence.
They want every upside of being a political party, the fundraising and the Senate tilt. Just none of the downsides, the discipline, the trade-offs, the robust exchange of ideas, and certainly not the awkward business of actually having to agree on anything. The major parties aren’t always fit for purpose, but their structures are purpose-built. They exist because power brings with it hard choices, and this new outfit has not yet worked out what it will do when it reaches a fork in the road.
The rest of the crossbench has taken one look and seen it for the radioactive comedy of errors that it is. Monique Ryan, Helen Haines, Andrew Wilkie, Kate Chaney and ACT senator David Pocock have all said thanks, but no thanks. Nicolette Boele and Sophie Scamps are considering it, which in independent-speak means waiting to see how it plays at home. Even the gentler critics could not resist. Shadow treasurer and chronic foot-in-mouther Tim Wilson breezily dismissed the new party he couldn’t even remember the name of.
Spender, for her part, offered the line that may come to define the whole venture. “If I wasn’t in politics, I wouldn’t know who to vote for,” she said, pitching her new party at centrist voters who feel they have nowhere left to go in a facepalm moment for the rest of us. It’s a candid admission, though what does it say about a sitting member of parliament? Steggall, meanwhile, waved away the absence of a leader as nothing more than a “media construct,” a novel position for someone who has just filed party registration papers with the AEC.
Angus Taylor was blunter than his shadow treasurer. For voters who want this Labor government gone, he argued, there is no point supporting crossbenchers at all.
The real question, though, is one for the voters of Warringah and Wentworth. They were sold a teal and they kept the receipts that their local member was an independent. They are now represented by a bona fide political party. Whether that is what they signed up for is something only the next election will settle.
This isn’t the first time we’ve seen credibility thrown by the wayside in the shadow of broken promises. Something we are used to now from our 48th parliament. Albo has demonstrated that even 50 emphatic denials mean nothing if he changes his mind. Maybe these teals just followed the precedent set by the prime minister.
Weekly Wrap
Stitch the week together and you get a fair snapshot of the country in the middle of 2026. Lemon, indeed.
Jim Chalmers stands at the microphone insisting the economy has rarely looked better, even as the bond market quietly readies the mortgage belt for a fourth rate rise and productivity sits there flatlining behind the spin. The nation’s spy chief levels with us that the threat is climbing and that he cannot stop every attack, while the government does its best to keep the probity and funding questions buried. Two teals have gone and formed the party they swore they never would, while most of the crossbench have avoided it like the plague.
The thread running through the lot is the widening gulf between what we are told and what is actually going on. Inflation is beaten, except it’s not. ASIO has it under control, except no net is ever big enough. The teals are fiercely independent, except they may as well recolour themselves Green with how they vote.
Words and deeds in public life have consciously uncoupled, and promises expire the moment they stop being convenient.