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ESSENTIALS

— Greens leadership gets hard reset, Waters out sick

— Reserve Bank expected to announce another interest rate hike at 2:30 p.m.

— Coalition and One Nation ramp up pressure on backpacker visa crackdown

DRIVING THE DAY

INTEREST RATES WILL RATCHET UP PRESSURE ON LABOR

Most mortgages will be well into the 6% range by this evening, signaling a world of political pain for the government — HSBC is putting recession odds in early 2027 as a coin toss.

CATCH-22: Economist Chris Richardson warns the factors behind yesterday’s $6 billion budget revision — the rise in AI, war in the Middle East, and inflation — will also cause today’s interest rate rise. “They deliver extra money to the taxman, but they deliver extra headaches to the Reserve Bank and its ability to juggle inflation down in Australia,” he told Playbook.

Hammer time: As RBA Governor Michele Bullock wields her interest rate “hammer,” Jim Chalmers’ argument that boosting productivity as Australia’s ticket out of the inflation cycle will be forgotten. There’s not much productivity growth in sight, but the average monthly mortgage payment will have gone up by more than $400 in 2026.

“There is no painless way out of this inflation, you can just change who feels the pain,” Richardson said. “We get to pick the poison, but it’s still poison.”

WHAT’S NEXT?

Bullock thinks that unemployment might need to rise from 4.5% to 5%, but Chalmers told POLITICO: “We have seen it’s possible in this country to have lower unemployment … at the same time as inflation comes off,” he blamed the “inflation problem” on petrol rather than low unemployment or excessive government spending.

Just imagine an extra 55,000 people out of work, or as Opposition Leader Angus Taylor noted — a typical family entering a new mortgage will be paying 45% of their after-tax pay in repayments.

The government can also return some of that extra $6 billion to taxpayers — but the more the government spends, the more it will be blamed for contributing to inflation, which in turn, increases the likelihood of the RBA raising rates… again. Plus, the more the government spends, the more it will pay for it. With borrowing costs rising globally, it’s leaving less money to play with.

“To stop a recession we need our inflation junkie Treasurer to go cold turkey, kick the spending addiction, and stop attacking small business and households so the private sector can grow,” Shadow Treasurer Tim Wilson told Playbook.

All eyes on Wednesday’s inflation numbers: Why are inflation numbers coming out the day after the Reserve Bank makes its inflation-anchored interest rates decision? Is it because they already have the ABS numbers? We hope so, otherwise that’s not very clever, is it?

BY THE NUMBERS

$112: How much today’s expected rate hike would add to monthly repayments on the average new mortgage of 731,000, according to the ABS.

$433: How much rate hikes will have been added to monthly payments since February.

1.6%: How much the International Monetary Fund’s September assessments expects Australia’s GDP growth to slow to in 2027.

GREENS SEEK NEW LEADER

Queensland Sen. Larissa Waters has stepped down as federal Greens leader citing ill health after just over 500 days in the job.

What we know: A preexisting kidney disease has declined significantly. Despite a positive prognosis for recovery, Waters pulled the pin to prioritize her health over the demands of party leadership.

“It has been a tremendous honor to be leader of the Greens, fighting for people and the planet … but our movement needs a leader in good health,” Waters said. Her main achievements as leader were beefing up Labor’s November 2025 environmental law reforms and helping pass gun restrictions after the antisemitic terror attack at Bondi Beach.

What now? A party room (virtual or in-person) meeting will likely occur this week. Waters will take sick leave, but stay in parliament. Her term ends in 2031.

Waters’ departure does provide a circuit-breaker for the party to seek more cut-through rather than muddling along. The Greens remain stuck at around 12% — the 2025 election result — in opinion polls, as right-wing populists surge and Labor’s primary vote declines.

Likely candidates: The three most likely options are Deputy Greens Leader Mehreen Faruqi, who is considering running, Sens. Sarah Hanson-Young, and David Shoebridge.

Faruqi is associated with the party’s pro-immigration policies and her advocacy against Israel’s military action in Gaza, which the Greens label “genocide.” Hanson-Young is frequently on the front foot over media and internet regulation. Shoebridge leads on hot-button issues such as AUKUS and AI.

Party schism: The resignation comes the month the party split on a vote over legislation for environmental offsets earlier, coming under criticism from some of their own supporters, such as former staffer Richard Denniss, for failing to capitalize on the unpopularity of the Labor government.

AI BLOWBACK — FORUM SHOPPING

GRANDSTAND AND GROWNUPS: OpenAI’s unauthorized Medicare data access gave Greens Sen. Sarah Hanson-Young a platform to demand that OpenAI and Anthropic attend her AI and data center inquiry on Thursday. Both claim they’re open to appearing … but not this week.

It’s not their preferred forum. OpenAI and Anthropic will attend a separate Joint Select Committee on Artificial Intelligence, chaired by Labor’s Jo Briskey. It begins on Oct. 6 in Sydney, with up to four hearings next week across Sydney and Melbourne. Both will send Australian and international representatives. But not Dario Amodei, the chief executive who sparked calls for more regulation of AI. Sam Altman, head of OpenAI, won’t front either.

By Monday evening, OpenAI’s statement on how it would handle the fallout materialized: OpenAI’s chief strategy officer, Jason Kwon, will fly in from the U.S. “We have lodged a submission to that inquiry,” the company said.

The Australian tech and cybersecurity sector is now riding to OpenAI’s defense.

“TOO SILLY FOR WORDS”: How Liberal frontbencher James Paterson describes calls to prosecute OpenAI for the hack.

“If a teenager replicated this exact data access, there’s no way that we would charge them with anything,” Paterson told the ABC, saying the breach could have been done “on a basic laptop without an AI agent.” The Coalition supports Amodei’s call for independent embedded evaluators to oversee the company’s work.

Permanent watch: The Services Australia email address OpenAI alerted has been moved to a 24/7 cybersecurity center. It took a day to check the inbox after OpenAI’s alert. Public service minister Katy Gallagher said the Medicare statistics portal “will not be reactivated” and its contents have been shifted to data.gov.au.

Maybe they should have migrated when they boasted about data.gov.au two years ago.

The second tranche of the Australian Cyber Security Strategy, which kicked in this year and runs to the end of 2028, has a goal to “position Australia as a world-leading manager of cyber security risks associated with emerging technologies”.

The audit office has been eyeing APS preparedness. The new Public Accounts and Audit inquiry we mentioned on Monday followed briefings from the audit office about four separate reports, each outlining gaps in cybersecurity.

More apocalyptic warnings:

— AI is powerful enough to cause a billion deaths, Bill Gates told “Meet The Press.”

— AI is a fundamental risk to public interest journalism, per Communications Department.

BUDGET DEMANDS INCOMING: Gallagher said in the last budget Services Australia got $160 million to improve cybersecurity, “recognizing we have to continue to bolster those systems of government significance.”

Chalmers said “it’s not like we waited for this event before we put a lot of time and effort and investment into safety in the AI world.”

Well, we’d bet the demands will be greater now.

Should make for a good read: The Australian Signals Directorate’s annual cyber threat report for 2026, which usually drops by November.

THE PLAYBOOK INTERVIEW

DAN REPACHOLI — “BLOKES ARE IMPORTANT”

Labor MP Dan Repacholi retained Hunter with a 4.3% swing last year, but an old challenge is getting harder. One Nation has always performed strongly in the NSW seat and is now surging nationally.

Now special envoy for men’s health, Repacholi was interviewed by Finn McHugh in his Parliament office.

This interview has been edited for clarity and length.

You pushed for this role — why was it so important?

Blokes’ health is important. Blokes are important. Women are important. If we have good, healthy women and good, healthy men then we’ll have good, healthy communities.

Us blokes are not as good at having conversations as our female friends. We die just under four and a half years younger than women in the cities. In regional Australia, it’s up to 13 years. That’s the only statistic anybody needs to know before thinking: “Holy shit, there’s a difference.”

Blokes often put everything else ahead of their health, because our whole lives we’ve been told: “Have a teaspoon of concrete and harden the fuck up.”

I had my own health battles — I got to 152 kilos, so a massive unit — and I’m down 35 kilos. I was very open about that because if I can’t talk about it, how can you expect Chris from Cessnock to?

Did you work with Communications Minister Anika Wells when on the social media ban, the porn ban?

A lot. The opposition saying the social media ban isn’t working upsets me. It was always going to be challenging in this first part. You’ve just taken people off that have been able to have access to it. That group is going to find a way around this — we have got age restrictions for alcohol, but that doesn’t stop you from underage drinking. I know I did it. I would imagine you did it, too.

We also know that young people shouldn’t be out gambling, so we have age restrictions. When seat belts became compulsory, my pop said: “I’m not bloody wearing one.” It came in, and now everybody wears a seatbelt. That takes time.

Hunter is the only seat where it was Labor versus One Nation on a two-party preferred basis. Does that give particular insights?

The biggest thing is standing up for your community to make sure they don’t get left behind.

Has the tone changed on the streets since 2025?

What has changed is the social media landscape — it’s utterly disgusting. Pauline Hanson has all these bots from Southeast Asia. That’s not democracy, that’s grubby.

I heard her talking about parliamentarians in their ivory towers — she’s been a parliamentarian for 30 years! She’s been on the gravy train — giving hate, giving division. Getting a plane from Gina Rinehart to bunny hop from electorate to electorate — how does the everyday Aussie resonate with that?

What are One Nation’s strengths and vulnerabilities?

They vote against all our cost of living measures — “Same Job, Same Pay,” Medicare Urgent Care Clinics, cheaper medicines. Who votes no to that stuff? It blows my mind.

And what nurses, aged care workers, vineyard workers and agriculture workers are they going to sack from the Hunter? Our abattoirs are screaming out for workers — if we could find them 100, they’d have 100 now. It’s just crazy.

But people are struggling. That’s why we’ve done those cost of living measures. People see us with 94 seats and think: “Maybe Labor’s got too many.”

They see an opposition that couldn’t organize a pissup in a bar. They’re struggling to hold anybody to account, even themselves. They’re just saying “No” to be pricks.

Then One Nation’s saying things and voters think: “Maybe this isn’t working.”

Read the full interview with Dan Repacholi.

STATE OF THE NATION

NOT SO STRATEGIC, AFTER ALL: Labor’s main lever to require APS agencies to slash outsourcing lacks transparency and is not practical to implement, the audit office has found. The Strategic Commissioning Framework has been in place since the 2024-25 financial year and requires public service bosses to bring “core work” back in-house.

Core or non-core promise: Everyone gets to define what is “core” themselves. Agencies could meet their goals but still spend more year-on-year on their external workforce — as more than half of a sample of 22 did in 2024-25. The targets weren’t effective so they were scrapped for 2026-27, but now there’s no mechanism to hold agencies to account.

The solution: There should be a standard way that entities report external workforce expenses.

The response: Strategically noncommittal. The Finance Department says it doesn’t have the power to implement new reporting requirements. Katy Gallagher says she’ll “have a look” at what can be done.

CANBERRA MEETS WORLD

WAIT, WHAT?: The New York Times reports that U.S. President Donald Trump offered to sell weapons to China during a meeting with President Xi Jinping.

Will our American-made nuclear-powered submarines now be bombed by China’s American-made missiles?

ANTARCTICA — CHINA TO BUILD SIXTH BASE: China will soon have the most bases on the continent, outranking Russia, the U.S. and Australia. Critics see more dual-use investments.

EMBASSY ROW

KANGAROO CUP AT OUR DC EMBASSY

It’s an El Niño storm season between the Trump administration and the press, and the weather matched the mood at the Australian ambassador’s 3rd annual Kangaroo Cup grass court tennis competition, which took place Monday, Canberra time, between the Trump administration and media teams.

Ambassador Greg Moriarty threw a Tim Tams and Lamington spread, as well as mini meat pies that POLITICO’s resident D.C. Aussie reporter Josh Gerstein thought “looked more like empanadas than Four’N Twenty or Mrs Mac’s.”

White House officials and journalists face off on a grass tennis court. — White House officials and journalists face-off on the grass tennis court at the Australian ambassador's residence in Washington. D.C. | Josh Gerstein/POLITICO

“I always think it is a good thing when representatives of a free and independent press can get on the other side of the court of administration officials and work out their differences,” said CNN Washington Bureau Chief David Chalian, the event sponsor. As for the tennis, the administration players trounced the media entries, even with former pro player Shelby Talcott, now at Semafor, competing.

SPOTTED: On the court: Reuters’ Kevin Lamarque, SMH correspondent Michael Koziol, New York Times’ Erik Wemple, Axios’ Hans Nichols, White House assistant press secretary Olivia Wales. Spotted off the court: Sara Moriarty, Ian Gerard, CNN’s Manu Raju, Washington Post’s Susannah George, Enda Curran, FT’s Ed Luce, Marek Wałkuski. POLITICO’s Jessica Meyers, Daniella Cheslow, Daniel Desrochers, Stefanie Bolzen, Josh Gerstein, Sabine Bayer.

AROUND THE PLAYBOOKS

NEW FUEL EXCISE CUTS AND RELIEF ARE TRENDING

Other governments in major economies are concluding that cost-of-living support in the waking of surging fuel prices is a political necessity.

POLITICO’s Jack Blanchard reports that center-right German lawmakers have approved a temporary fuel tax cut for the second time this year, costing around AUD$4 billion. The same day, Italy’s state-controlled energy group Eni announced it would cap pump prices for the next month. Populist-right Italian PM Giorgia Meloni has already cut diesel duty by about AUD$4.5 billion, and this month announced plans to scrap road tax for 14.5 million cars and motorbikes.

The same story is playing out everywhere. Spain’s socialist-led government just doubled the diesel tax cuts it introduced earlier in the summer. In France, centrist President Emmanuel Macron’s government is offering AUD$160 a head payments to help cover millions of commuters’ rising fuel costs.

Trump’s own response to the effects of his chosen war with Iran is to consider a 90-day export ban on U.S. diesel to drive up supply domestically, forcing prices down.

One of the effects would be a massive economic hit to Europe, whose Middle East supplies have dried up because of Trump’s war.

RUSSIAN TECH SURVEILLANCE FIRM INFILTRATED EU LAW ENFORCEMENT: A U.S.-based data-extraction firm accused of being secretly run from Russia has worked on EU-backed projects and sold its services to European law enforcement agencies, according to documents seen by POLITICO.

ANDY BURNHAM TO GO ‘FURTHER AND FASTER’ THAN STARMER ON BREXIT RESET: The U.K. prime minister will set out his vision for EU relations at his party conference speech today.

Playbook Feedback

You’re Treasurer Jim Chalmers and you have an extra $6 billion in your pocket do you?

Spend a chunk of it on bolstering cyber defenses
Reintroduce a fuel excise cut
Put it all towards paying down the national debt
It doesn’t matter, we’re screwed and the government is screwed no matter what

Vote here: X | Slido | X | or email us at canberraplaybook@politico.com

On a totally unscientific X poll of Paul Karp’s followers, after 275 votes here were the results: 46% for pay down the debt; 24% we’re screwed anyway; 16% fuel excise cut; and 13% for cyber defenses. Many noted the $6 billion wasn’t strictly spare cash as the budget is still in deficit. There were lots of write-ins, especially for raising the rate of JobSeeker unemployment payments.

AGENDA ASSISTANT

AI INQUIRY: An inquiry into the factors shaping the social license for critical minerals projects moves to Mackay today, after a hearing in Brisbane on Monday.

NATIONAL POLICE REMEMBRANCE DAY: Will be marked in Canberra with a march down Kings Avenue to the National Police Memorial at 4:20 p.m., followed by a service at the memorial from 5 p.m.

LOCAL CANBERRA

HAIL TO THE CHIEF! ACT Liberal Senate candidate Nick Tyrrell wants Canberrans to be able to directly elect the chief minister. He pitched his plan to Jasper Lindell.

COMMUNITY CORNER

MOVES AND APPOINTMENTS

RESIGNED: Former NSW Premier Mike Baird is out as Cricket Australia chair, after losing support over his push to privatize the Big Bash. Cricket legend David Boon is his interim replacement.

RETIRED: Chris Bourke is retiring from his role as director for Indigenous science and engagement at the CSIRO, with Louisa Warren stepping into the position for the next 12 months.

Kathy Leigh is retiring after 12 years as ACT head of service and chief minister and treasury director-general.

APPOINTED: Jordan Newnham has good timing as Accenture’s new government and public affairs lead — he joins from CyberCX.

Katie Prigg joins Teneo as a vice president for strategy and communications, from GRA Cosway.

PROMOTED: Samantha O’Connell is now a branch head of commercial at the Australian Submarine Agency, moving across from Defence.

Lauren White has been promoted to be the ACCC’s executive general manager of consumer and fair trading.

Vajira Samaranayake has been promoted to general manager in Services Australia.

BACK IN THE BUILDING: Welcome back to ABC defense and national security correspondent Olivia Caisley, who has returned from maternity leave.

BIRTHDAYS

Former PM Julia Gillard, Regional Development Minister Kristy McBain, Aged Care Minister Sam Rae, former Liberal MP and United Australia Party leader Craig Kelly, former Chilean President and U.N. High Commissioner for Human Rights Michelle Bachelet, ABC presenter Tony Armstrong.

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‘We get to pick the poison, but it’s still poison’