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ESSENTIALS

— Opposition leader Angus Taylor turns 60 today; the latest interest rate rise is the best political gift he could get.

— Surprise ticket joins Hanson-Young and Faruqi in Greens leadership race.

— 104 agencies were warned in May what they needed to do to avoid and OpenAI-style data breach.

DRIVING THE DAY

HAPPY BIRTHDAY, ANGUS! ABC’s national political lead David Speers says Angus Taylor has three months, maximum, before questions start being asked about his leadership. “If they can’t turn this moment into some momentum for the Coalition, I think by the end of the year there will be some difficult decisions for the Liberals to make,” Speers said on 730 last night.

RATE HIKES COMING ‘ON MELBOURNE CUP, NEW YEAR’

The Reserve Bank’s Tuesday decision to increase the official cash rate by 0.25% to 4.6% will not be its last, economists believe, citing the bank’s hawkish statement to “continue to do what it considers necessary to bring inflation sustainably back to target.” The rate rise is the fourth in the tightening cycle that began in February.

“The attitude seems to be — ‘let’s forget about everything except inflation, get that down, and worry about the rest later,’” Stephen Koukoulas, managing director at Market Economics, told POLITICO.

Losers: The quarter of the population paying off a mortgage.

Winners: The 75% without a mortgage, who Koukoulas says get off “scot-free.” That’s the blunt instrument of interest rates, a burden falling on a minority.

University of NSW economics professor Richard Holden thinks the bank is “clearly signaling a pivot to taking inflation a lot more seriously … we could easily see one on Melbourne Cup day [Nov. 3] and another early in the new year.”

According to Treasurer Jim Chalmers, Wednesday’s inflation statistics will show the Middle East war, the return of petrol excise to the full rate and phasing out of electricity bill relief are causing inflation.

“BIG SHOCK THAT MADE US ALL POORER”: How RBA Governor Michele Bullock described the war.

Yes, but: Bullock says it’s not the only cause of inflation, which was already too high when the war started. The RBA statement also blames AI-related demand pushing up the cost of tech goods.

Holden disagrees with the government bid to wash its hands of the mess. “Government spending has gone up from 24.3% GDP to nearly 27% on [Labor’s] watch, the idea that that isn’t the main driver, along with zero productivity growth, of inflationary pressures in the economy beggars belief.”

Cherelle Murphy, EY regional chief economist of Oceania, notes to the extent international factors and capacity constraints are to blame these are “not things you can fix quickly.”

The Australian Council of Trade Unions Secretary Melissa Donnelly accused the RBA of “abandon[ing] its dual mandate” to fight inflation and preserve jobs, making workers “take the fall for factors beyond our control.”

Economists at least give the government credit for not cutting excise again. “Do not cut it! I’d be screaming that: you don’t want to stimulate activity,” Koukoulas said. “A bit of tough love is what’s needed now.”

PLAYBOOK FEEDBACK

Our unscientific reader poll of 407 people on what to do with Jim Chalmers’ surprise $6 billion windfall found just 15% wanted a fuel excise cut, compared with 46% for paying down debt, and 14% for cyber defenses. Fully 25% think we’re screwed no matter what.

AGENCIES WARNED OF FRONTIER AI THREAT TO LEGACY SYSTEMS IN MAY

SCOOP: Home Affairs put out whole-of-government advice May 27 warning agencies of an oncoming “vulnerability storm” as frontier AI hit “known vulnerabilities, legacy systems and weak cyber hygiene.”

Chief Security Officers at more than 100 agencies were told that “frontier AI is collapsing exploit timelines from days to hours. Lock down the fundamentals now.”

Three weeks later an OpenAI agent infiltrated a legacy Services Australia site.

Yes, but: As cyber security expert Alastair MacGibbon explained to Playbook, it takes years if not months (and certainly not weeks) to adapt to the current AI environment. The timing of the advice shows the federal government was alive to the risks — though it wasn’t necessarily prepared to address them.

Still not prepared: Department Secretary Stephanie Foster issued new advice Tuesday, escalating matters. Foster has told the 104 federal government agencies to conduct a rapid stocktake of their legacy systems, implement targets to reduce legacy technology and report back on their progress.

Read the full story by Miriam Webber.

BE BEST — OPENAI’S ROAD TO CONTRITION

OpenAI apologized to Australia for unauthorized access to Medicare statistical data and its handling of the incident. In addition to fronting a parliamentary inquiry OpenAI will offer credits through a $1 billion Daybreak for Frontline Defenders fund the company announced Sept. 3, and technical assistance to strengthen cyber defenses across critical infrastructure in Australia.

The Australian government released the OpenAI email of Sept. 10 alerting Services Australia to a “vulnerability.” There’s no smoking gun (on either side), but imagine you are the junior Services Australia staffer reading this email to triage it: you could easily fail to see the urgency of the matter.

The email is practical and avoids tech jargon, but it is also not flagged as urgent, does not offer a number to call, and is not signed by a person let alone an executive.

OpenAI notification on Sept. 10 of vulnerability in Services Australia Medicare statistics site. | Australian government

Paul Karp has the full story here.

WHAT HAPPENS WHEN YOU TELL AI TO ACT DRUNK? Find out with the ABC’s Cam Wilson here.

PARTY ROOM

SURPRISE TICKET ENTERS THE GREENS RACE

SCOOP: Greens Sen. David Shoebridge and first-termer Sen. Steph Hodgins-May are a joint ticket to replace outgoing leader Larissa Waters. Playbook spies tell us the pair have discussed an unusual arrangement — a co-leadership model.

But both versions of the ticket — Hodgins-May as leader and Shoebridge as deputy, or vice versa — remain live options.

They join Sen. Sarah Hanson-Young and Sen. Mehreen Faruqi in the race. Sen. Nick McKim is running on a ticket with Faruqi, for deputy.

Shoebridge, who was previously in the NSW upper house, might feel comfortable with a co-leadership arrangement: the NSW Greens never have a single leader, but run on the principle of collective leadership.

How convenient: If the joint ticket wins, many of Waters’ Melbourne-based staff (themselves carry overs from Adam Bandt’s time as leader) will get to stay in the same city as one of their bosses. The Queensland to Victoria logistics can be tough!

By the numbers: More than half the Greens caucus are running or retiring.

A comprehensive list of the Greens not running, running away, or on sick leave:

— Penny Allman-Payne

— Vanessa Bleyer (been here five minutes)

— Jordon Steele-John

— Elizabeth Watson-Brown

As Playbook’s Finn McHugh reports in yesterday’s recap, who they decide will help to answer a dilemma for the party: should it emphasize populism or pragmatism?

THE PLAYBOOK INTERVIEW

BARBARA POCOCK — OVERRIDE THE RBA AND SUPPORT RENTERS

Pocock will release a report into intergenerational housing inequity this afternoon. The Greens Senator spoke to Miriam Webber about the findings, the future of her party and her own legacy, after announcing she won’t recontest the next federal election.

This transcript has been edited for length and clarity.

The Greens are upfront that the purpose of inquiries is to build momentum — what are you trying to build political support for here?

There is really a very broad recognition that underinvestment in public housing is a big problem, and the Housing Australia Future Fund has not been able to meet the challenge.

The HAFF has enlarged supply by 1,432 homes in its first few years. It’s nearly halfway through: It’s just not meeting the challenges, it’s too slow, too small and too complex.

Momentum is building for a greater role for the Commonwealth in leading the states to a much greater investment in public and community housing.

The Greens have previously supported the idea of the Treasurer overriding RBA rates decisions — do you want to see Jim Chalmers doing that?

The RBA’s recent words about favoring an increase in unemployment to discipline inflation is actually a discipline with heartless and severe consequences for home buyers and renters.

[The RBA’s latest rate rise] is punitive. It’s incredibly unfair on some of the most disadvantaged households in our country, and the Labor government should be doing much more to help those in rental stress.

Should that support be in the form of overriding the RBA or additional cost of living relief?

There is a good argument for both.

You’re still here until 2028, but you’ve announced you won’t recontest the next federal election. Do you have ideas about what you want your legacy as a Greens Senator to be?

Oh, that sounds like a very pompous project to me. I want my party to have influence.

I went into the parliament because of the climate and environment crisis, and I’ve got to say, I’m a complete failure on that front. I feel more alarmed now than I did when I went into parliament on the climate crisis and I’m saying that as someone who has had two grandchildren come into the world since I joined.

I’m proud that we [helped] introduce the right to disconnect, that we’re fighting for young people’s access to super and I’m also proud that as a party — and certainly my office — has worked really hard across the parliament to rein in the greed and dishonesty of some of the biggest consulting firms, who have really caused great damage in our economy in the last several decades, and whose personal practices at the leadership level are disgusting. They disgust me.

Larissa Waters is stepping down, what kind of leadership do the Greens need?

I think the challenge is to stand up against the economic regression that is part of One Nation’s policies and its racism. We need a party that is aggressively calling out Labor’s failures around Gaza, around the U.S. alliance — the quiescence in relation to the U.S. is deeply concerning, given the madness of Donald Trump.

We need to pull in and constrain the massive widening of inequality, the massive profits that are now held at the top by some very large corporations who don’t face genuine competition.

CANBERRA MEETS WORLD

TRADE TALKS IN LEAST FAVORED NATION

Is Don, is good: Trade Minister Don Farrell is attending the G20 trade ministers’ meeting in Milwaukee, Wisconsin. The action-packed agenda, according to the Office of the U.S. Trade Representative hosts, is “eliminating forced labor in global supply chains, updating the most-favored nation principle, denouncing the weaponization of trade in food, and addressing structural excess capacity and production.”

Updating the most-favored nation principle is Trump-speak for wanting to bake into global rules the ability to charge some countries higher tariffs than others. They’re often branded retaliatory tariffs, but in Australia — which copped a 12.5% tariff despite the U.S. having a trade surplus with its ally down under — they look more arbitrary.

Keep the diesel flowing! Prime Minister Anthony Albanese said Australia is urging the U.S. not to stop diesel exports. Chalmers said this “would be a concerning development.” Domestic politics may win: President Donald Trump is facing midterm fires everywhere. And when in trouble, no policy gamble is off-the-table.

Farrell will meet EU Trade Commissioner Maroš Šefčovič on implementing the EU-Australia free trade agreement, yet to be ratified by Australia’s parliament. Other bilaterals include with South Korea to discuss energy security, India to discuss new market access opportunities for Australian agriculture, and the U.S. to push for the removal of all tariffs and to advocate for Australian lamb producers.

The intergenerational report, released by Chalmers earlier in September, warned tariffs “[risk] lower growth and higher inflation.”

Farrell said “growing global tensions and protectionism have shaken the foundations of our global trading system, and I will press our partners to agree on practical cooperation to keep trade flowing.” Australia will work for a system that is “open, fair and fit for the future,” he said in a statement. Let’s hope Don kept a few cases of wine from his previous winemaking business to wash that message down.

After a reception Tuesday evening U.S. time, ministers will tour Rockwell Automation to meet blue collar workers Wednesday with a closing reception at the Harley-Davidson Museum on Thursday.

REALITY CHECK

YOUR CARD SURCHARGE ISN’T QUITE DISAPPEARING

So-called card surcharges are officially ending tomorrow, Oct. 1. The reality is more complicated, explains Ryan Heath.

The Reserve Bank is squeezing one of the costs sitting underneath the charges “interchange fees,” paid between banks when customers use debit and credit card networks.

Consumer credit-card interchange fees will be capped at 0.3%, matching the European Union and down from a maximum of 0.8%. Debit fees will be capped at 0.16%, compared with the EU’s 0.2%.

WHO WINS: The changes should reduce payment costs, particularly for people using cheaper debit cards. They also squeeze the economics of credit card rewards programs, which are partly funded by interchange revenue and disproportionately benefit higher-income consumers.

BUT WATCH THE TILL: Interchange is only one component of what retailers pay to accept cards. There are also scheme, processing and other merchant-service fees.

Retailers must now fold payment costs into their advertised prices rather than adding a surcharge at checkout. But unless competition (lol, this is Australia) or enforcement keeps a lid on those prices, there is nothing else stopping a business from raising its headline prices by more than the previous surcharge.

Bottom line: The visible fee disappears. The cost of accepting your card doesn’t.

AROUND THE PLAYBOOKS

WASHINGTON — INSIDE THE CAMPAIGN AGAINST CLIMATE RESEARCHERS

Conservative organizations are bombarding universities with open records requests in what allies say is an effort to undermine climate research, Chelsea Harvey, Lesley Clark and Corbin Hiar report.

AGENDA ASSISTANT

The Queensland Treasurer David Janetzki is addressing the National Press Club in Brisbane and will travel to Europe for meetings to drive private capital investment to Queensland.

COMMUNITY CORNER

WHAT IS HAPPENING TO JOURNALISM RESEARCH? AI may be a threat to some journalism — but it doesn’t explain this.

First we had News24 on the weekend reporting on a “bombshell” meeting between Richard Marles and OpenAI, a meeting POLITICO and ABC’s Clare Armstrong had reported three weeks earlier. Now, we have the Herald Sun and Daily Telegraph recycling an Aug. 10 story from SMH’s Paul Sakkal about multicultural grants (POLITICO later reported some minor additional details) — six weeks after the original.

How did that happen? They were fed the numbers by One Nation staffers, and none of the parties in the transaction bothered to check (or didn’t care) that it had been previously reported. The political office that deserves the credit for digging up the data is Ben Small’s, the Liberal member for Forrest.

MOVES AND APPOINTMENTS

DEPARTING: Kathy Leigh is retiring after 12 years as head of the ACT public service, and chief minister and treasury directorate director-general.

Angela Webster is now Defense’s assistant secretary of maintenance requirements.

Monique Carew has been promoted to be branch manager of portfolio assurance within the Digital Transformation Agency.

Nicole Strachan is the Digital Transformation Agency’s new strategy and prioritization branch manager.

Harini Haran has moved from Veterans’ Affairs to be general counsel at the Independent Parliamentary Expenses Authority.

Suzi Clark is now an assistant commissioner at the Aged Care Quality and Safety Commission.

Jade Stopar has been promoted to assistant commissioner at the Aged Care Quality and Safety Commission.

Melissa Caldow is now assistant secretary at the Department of Health.

Mark Beaumont has been promoted to general manager in the Department of Industry, Science and Resources.

Karma Abraham is now deputy chief consulting officer at the Department of Prime Minister and Cabinet, having moved from Defence.

Cassy Baker has been promoted to general manager of security and chief information security officer at the Bureau of Meteorology.

Four new appointees to the Cotton Research and Development Corporation Board: Nigel Burnett, Alexandra Lobb, Rebecca Thistlethwaite, Andrew Watson.

BIRTHDAYS

Opposition Leader Angus Taylor turns 60, his presumed leadership rival Andrew Hastie, journalist and author Stan Grant, human rights lawyer Geoffrey Robertson turns 80, former LNP MP Andrew Laming, former Israeli PM Ehud Olmert.

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Happy birthday, Angus: Rate hike hands Taylor his political moment