And there we go – 25 points down (a quarter of a per cent)

That brings the cash rate down to 3.85%

Last week we put out a report showing that News Corp and Nine can’t sway elections anymore, because people just don’t read their stuff.

This means, the Albanese Gov can do things that Australians want (reduce emissions, tax the gas industry, etc) without worrying about what The Australian or the AFR might say.

The Australian’s Dennis Shanahan wrote a column saying we were wrong.

As if to make our point, The Aus has tweeted Dennis’ column and a day later, at time of writing, it has just 1 retweet, 4 likes and 8 comments (including spam and abuse).

And who do the Liberals represent now?

So in the LNP there are already a split between the Liberals and the Nationals (they sit in separate party rooms and then come together for joint party room – although not anymore!)

The current crop are:

Nats:

David Littleproud

Michelle Landry

Andrew Willcox

Colin Boyce

David Batt

Llew O’Brien

Matt Canavan

Susan McDonald

And the Liberals:

Ted O’Brien

Henry Pike

Andrew Wallace

Garth Hamilton

Phil Thompson

Terry Young

Leon Rebello

Angie Bell

Scott Buchholz

James McGrath

Paul Scarr

Littleproud has released a statement:

After careful consideration, The Nationals have agreed that now is not the right time to
enter a federal Coalition Agreement with the Liberal Party.

During the last term of Parliament, The Nationals fought hard for a package of sensible and important policies that will benefit regional Australia and the future of our nation. These were adopted as Coalition policies and were strongly supported by local communities.

Following discussions with the Leader of the Liberal Party, we do not have the assurance we need that these policies will be honoured in a future Coalition Agreement.

The Nationals cannot in good conscience walk away from our commitments to regional
Australia. We will not walk away from the $20 billion Regional Australia Future Fund, which would provide up to $1 billion extra funding every year for regional projects, from improving access
to better health, child and aged care, through to fixing local roads and building new sporting facilities.

We will not walk away from ‘big stick’ divestiture competition laws that keep the big supermarkets honest and deliver fairer prices for farmers at the farmgate and families at the checkout.

We will not walk away from an improved Universal Service Obligation for communications, forcing a better minimum standard for regional mobile and internet access.

We will not walk away from the potential of nuclear power as a necessary element of a balanced energy mix that secures Australia’s energy security.
The Nationals’ Party Room does not take this decision lightly.

It is made without malice. When the Liberal Party is ready, our door will be open. We will always stand up for regional Australians and the policies that will take our nation forward.

The Queensland LNP president Lawrence Springborg has released a statement:

Under existing parliamentary arrangements, the National and Liberal Party rooms retain the discretion and autonomy to negotiate their own policy positions and working arrangements.

This is not a matter that is determined by the organisational wing of the Liberal National Party, or the federal equivalent of either the Nationals or Liberal Party.

The current discussions between the respective federal party rooms have no bearing or impact on the organisational arrangements within the Queensland LNP, which has recently won the Brisbane City Council Election, State Election and was the only state or territory to secure the majority of seats and the majority of votes in the recent Federal Election.

If the former Liberal National Coalition had achieved the same proportion of seats in other states and territories as the LNP in Queensland at the Federal Election, Peter Dutton and David Littleproud would be Prime Minister and Deputy Prime Minister respectively, with a four-seat working majority.

The LNP remains optimistic that the federal party rooms will continue discussions around negotiating a future Coalition agreement.

The positive benefit that comes from the single united LNP in Queensland is there will be no Nationals, or Liberals contesting against each other in a futile waste of critical resources.

We hope that as a part of the ongoing federal discussions this can also be avoided in other places around our nation.

Ongoing positive, pragmatic and outcomes-focused discussions aimed at achieving a new Coalition are crucial going forward.

Millions of LNP supporters nationwide expect this of us.

In the meantime, Queensland’s singular LNP organisation will remain focused on servicing the needs of its united membership and supporters.

So we have had a few chats and this is what we have learned.

Some in the Nationals have been on this for some time – the marriage has not been happy since the Turnbull days (and earlier, but that is the main split).

Sheer force of rightwing will kept it together under Scott Morrison and Peter Dutton. But with the 2025 election result, the Nationals have had a head full of steam.

There wasn’t a lot of togetherness during the election campaign, as you may have noticed. David Littleproud pretty much decided that if the election went pearshaped, this is what would happen.

The more sensible Nats saw the writing on the wall and decided not to fight it – because it would be like fighting a gust of smoke. So they just figured the Liberals are “a shitshow” and at least this way there would be a “bit of fun” with no chance of any actual results at the end of it.

Some of the more sensible Nats hope this will also bring renewal for themselves – that they will finally manage to bring an end to some of the more batshit ideas in the party now that the party is in charge of its own destiny.

So Sussan Ley never really had a chance of making an agreement here – Littleproud walked into the meeting set on divorcing the Nationals from the Coalition and walked out 30 minutes later. That included the sit down pleasantries.

So 102 years wham, bam, shang-a-lang over in less time than it takes to cook a lamb roast.

So with 28 Liberals in the house, there is going to be quite a bit of double up in shadow ministries. Maybe Scott Morrison was just ahead of his time.

And the Nats will now only have electoral staff. They will have ‘spokespeople’ like the Greens, but they won’t have the opposition staffing allocation.

So good times all round!

Why? Well mostly because they misread the economy, and they were also possibly afraid of doing anything that might be classed as “political”.

In its statement the board noted that

“Household consumption growth had started to recover in the December quarter, underpinned by the ongoing pick-up in real household incomes. While some of this recovery in consumption appeared to reflect price-sensitive consumers concentrating spending in promotional periods during the December quarter, the pick-up in spending growth among components not affected by sales events suggested there had been a genuine improvement in underlying momentum. More recent indicators signalled that some of this pick-up had been sustained.” [our emphasis]

Essentially the RBA thought people going out shopping in October, November and December during the Black Friday and Christmas sales was not a sign that people were looking for bargains but that we were all doing well and just wanted to buy a lot of stuff. Seriously.

Shockingly when the retail figures for the March quarter of this year came out, it showed what anyone who lives in the real world knew – that people were actually chasing bargains at the end of the year. Because in the March quarter, retail trade was flat – it didn’t increase at all in volume terms. ie we didn’t buy more stuff in January, February and March than we did in the last three months of 2024.  That is not only unusual it is a very bad sign for the economy. It revealed that there was no “genuine improvement”, and the RBA instead should have cut rates in April because (breaking news) households were still struggling!

One way we can show this is to look at the total amount of stuff we buy in shops.

Because of population growth and rises in real wages we should buy more than we used to, and the amount we buy should increase at a nice rate.

But right now it is not rising, and worse the total amount of stuff we are buying is much less than is expected given the pre-pandemic trend.

We came out of the lockdowns of the pandemic, and not surprisingly we went shopping. And you can understand the RBA raising interest rates because the amount we were buying was pretty big.

The problem though is the RBA kept raising rates even as we all stopped shopping in a big way. It kept raising rates even when we were buying less stuff than was expected.

Not cutting rates in April was a massive misread of the economy by the RBA.

The answer to this is an emphatic yes. Not only should they cut, but if they were doing their job, they would have already cut multiple times.

The main reason they haven’t is because of their weird obsession with the idea that low unemployment might set off a spike in wages that could drive more inflation.

The RBA believes that Australia’s unemployment rate of 4.1% means we might be experiencing a shortage of workers. Any increase in demand (caused by a decrease in interest rates) could mean that in order to get workers, businesses might be forced to pay them more. The rise in wages would then ‘force’ businesses increasing prices.

To be clear there is zero real world evidence that this is even a remote chance of happening. Unemployment has not been higher than 4.2% for over 3 years and there has been no wages outbreak.

In fact, unemployment has been as low as 3.5% with no massive increase in wages.

The reality is that workers lack the bargaining power to demand higher wages. But this weird obsession the RBA has is why people with mortgages are paying more than they really need to.