Australia's roads are becoming clogged with giant cars: here's how it's affecting statistics (and how you drive)

You may have noticed — there’s a car-size inflation on Australian roads that some have nicknamed car “mobesity”.

Most SUVs and utes from a decade or two ago look small next to today’s models.

As we head for a fifth consecutive year of rising road deaths and what could be the worst year for pedestrian fatalities in nearly two decades, it’s time to look more closely at what this means.

We already know bigger cars cause greater impacts in collisions.

But what’s less discussed is whether driving one also changes how we drive – if larger vehicles make us feel safer inside them, do they also make us take more risks behind the wheel?

What’s driving this trend?

Four in five new cars sold in Australia are SUVs or utes – more than double the share of 20 years ago.

This isn’t purely consumer-driven.

With no domestic car manufacturing, Australia imports vehicles shaped by global production trends, many of which trickle down from United States policies that reward larger vehicles.

Two subtle US policy features explain why.

First, the “SUV loophole”: under US law, most SUVs are classified as light trucks, meaning they’re subject to less stringent fuel-efficiency and crash-safety standards than passenger cars.

Second, under US fuel economy rules, fuel-efficiency targets are adjusted based on the size of the vehicle’s “footprint” — the area between its wheels. In practice, this means larger vehicles are allowed to consume more fuel while still meeting the target.

Together, these rules have encouraged American manufacturers to build and sell heavier SUVs and utes.

Large vehicles can deliver significantly higher profit margins than small cars.

These trends have resulted in more bigger cars being driven on Australian roads.

The combination of high car ownership, years without fuel efficiency rules, and the luxury-car-tax exemption that many utes qualify for has made Australia a highly lucrative market for large, high-emission models.

Marketing has played a significant role too: in 2023, car makers invested about A$125 million in SUV and 4×4 advertising in Australia – a 29% increase from the previous year.

The dangers of bigger vehicles

There’s a physical mismatch between large and small vehicles that usually transfers the danger from the occupants of the bigger car to everyone else.

While the risks of being hit by a large SUV or ute might seem self-evident, the question is how much greater those risks are.

Research provides a clear answer.

Car-to-car collisions:

Collisions between large SUVs and smaller cars show occupants of a smaller vehicle face about 30% higher risk of dying or sustaining serious injury.
A 500kg increase in vehicle weight is linked to a 70% higher fatality risk for occupants of the lighter car.
For every fatal accident avoided inside a large vehicle, there are around 4.3 additional deaths among other road users.

Car-to-pedestrian and cyclist collisions:

Pedestrians struck by SUVs are about 25% more likely to sustain serious injuries and 40–45% more likely to die than those hit by smaller cars.
For children, the outcomes are far worse: they are up to eight times more likely to die when hit by an SUV than by a small car.
Each 10cm increase in front-end height raises the fatality risk for pedestrians by roughly 20%.
Tall and blunt fronts (vertical or nearly upright front design) are associated with more than a 40% increase in pedestrian death when compared with low and sloped front ends.

These differences help explain why US pedestrian deaths — once on a steady decline — have climbed back to their highest level since the early 1980s.

This is while most countries have reduced pedestrian fatalities.

Bigger cars, more risk-taking?

Evidence from multiple countries suggests driving larger vehicles may lead to more confident or risk-prone behaviour:

India: SUV owners recorded 20–25% higher risk-taking scores than sedan or hatchback drivers
Israel: an analysis of 1.5 million speeding citations found drivers received about a quarter more speeding tickets when vehicle mass was 10% heavier
Austria: roadside observations of 48,000 vehicles showed SUV drivers more frequently drove without seatbelts, used phones and ran red lights. Women SUV drivers showed violation rates similar to men, breaking the usual pattern of higher female caution in traffic studies
New Zealand: field data found SUV drivers 1.5 times more likely to drive one-handed, a behaviour linked to lower perceived risk and reduced vigilance
Germany: large-car drivers reported higher rates of traffic violations and risky driving.

Policy can make a difference

Taxes and size-dependant registration fees could potentially offset some of the extra costs of heavier vehicles on roads surfaces, congestion and emissions, or regulate demand.

Two measures would make a tangible difference:

Licence testing by vehicle class

Many drivers obtain their licence in a small sedan but can legally drive a two-tonne ute the next day. Yet, larger vehicles demand different manoeuvring skills, longer braking distances and greater spatial awareness.

Requiring a practical test in a vehicle of comparable size to what the driver intends to drive (or a streamlined license upgrade for an experienced driver when upsizing) would acknowledge that added responsibility.

The reform would also carry a symbolic message: driving a heavier vehicle comes with greater responsibility.

Penalties scaled to impact potential

A ute or SUV travelling 10kmh over the limit carries greater kinetic energy and longer stopping distance than a small sedan.

A tiered approach – where fines or demerit points scale with vehicle mass – would better reflect the disproportionate risk that bigger cars pose.

If Australia is serious about reducing road trauma, these are the kinds of targeted, evidence-based adjustments that should be considered.

Milad Haghani, Associate Professor and Principal Fellow in Urban Risk and Resilience, The University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Will the Australian dollar keep rising in 2026? 3 factors to watch in the new year

Isaac Gross, Monash University

After several years of steadily declining, the Australian dollar staged a meaningful recovery in 2025, culminating in a two-cent rally over the past month.

Since the start of the year, the value of the Australian dollar has risen by more than 6% against the US dollar, reversing a sizeable chunk of the falls that occurred through 2022–24.

But is the most recent jump the start of a new trend for 2026? Or just another blip?

Why US rate cuts move the Australian dollar

Last week the US central bank, the Federal Reserve, cut interest rates for the third time in a row – down by 0.25 percentage points to around 3.6%, its lowest level in nearly three years.

That decision came just after the Reserve Bank of Australia (RBA) kept rates on hold at 3.6%. The RBA governor, Michele Bullock, also signalled more rate cuts here are unlikely for “the foreseeable future”.

In the days immediately after the US Fed’s decision, the Australian dollar did what textbook economics would predict: it rose, briefly hitting a three-month high of around US$0.667.

The link between US monetary policy and the Australian dollar is often misunderstood.

A US rate cut does not directly make Australia richer or poorer. Instead, it alters global financial conditions in ways that matter for currencies.

The most straightforward way US decisions affect us here in Australia is with interest-rate differentials. That means when US interest rates fall relative to Australian rates, holding US dollar assets (such as US bonds) becomes slightly less attractive. That can reduce demand for the US dollar and support overseas currencies like ours.

There is also a broader “risk appetite” effect. When the Fed lowers its key interest rate, markets often interpret that as being supportive of global growth and financial conditions, at least initially. That can boost demand for riskier assets – including shares in Australian companies and the Australian dollar itself.

Finally, markets react not just to what the Fed does in a given meeting, but to what it signals about the future.

Last week’s rate cut came with a relatively cautious message about further rate reductions. That limited the downside for the US dollar and helps explain why the Australian dollar’s rally faded fairly quickly, rather than accelerating.

Pressure on the US Fed for more cuts

However, this outlook may change quickly after US President Donald Trump said he was close to appointing a new Federal Reserve chair. This looks likely to be announced unusually early in the new year.

Trump has been outspoken in calling on the Federal Reserve to cut rates more aggressively.

While presidents have occasionally expressed views about monetary policy, explicit pressure can affect market perceptions of central bank independence – and perceptions matter in currency markets.

If the next chair is less willing or able to resist political pressure and cuts rates further in the face of still-high inflation, that could weaken the US dollar further.

For the Australian dollar, this could cut both ways.

A weaker or more volatile US dollar could led to more support for the Australian dollar. But heightened global uncertainty can also trigger bouts of risk aversion that tend to hurt cyclical currencies such as Australia’s.

What will the RBA do if inflation persists?

Domestic monetary policy will also matter. The Reserve Bank influences the exchange rate primarily through expectations about future interest rates.

If inflation remains high and the RBA is forced to consider a rate increase, the interest rate differential would move in Australia’s favour. That would provide underlying support for the currency.

On the other hand, if growth slows and interest rates are lowered here, the support for the Australian dollar would erode, making it cheaper – especially if global economic conditions are also deteriorating.

Importantly, currency markets move on expectations, not decisions. Even small changes in how markets price the RBA’s likely path can have noticeable effects on the dollar.

Iron ore is still king

Finally, there is the price of iron ore. Despite the growing sophistication of Australia’s economy, iron ore prices remain a central driver of the country’s terms of trade – the prices we receive for exports relative to what we pay for imports.

When iron ore prices rise, export income increases, national income improves, and the Australian dollar tends to strengthen.

When prices fall, the reverse occurs, and a weaker exchange rate helps cushion the economy by making other exports more competitive.

If iron ore prices remain strong in 2026, they would reinforce the forces supporting the currency. If they decline sharply – for example, due to weaker Chinese demand – that would put downward pressure on the dollar, regardless of what central banks are doing.

The Australian dollar’s 2025 rebound reflects a confluence of factors: a softer US dollar, resilient domestic conditions, and relatively supportive commodity prices. Whether that recovery extends into 2026 will depend on how those forces evolve.

So keep an eye on US monetary policy, the RBA’s inflation challenge, and iron ore prices. Together, those three factors will determine the value of the Aussie dollar in the year ahead.

Isaac Gross, Lecturer in Economics, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Australia's national accounts get a boost thanks to big tax takings

The federal government’s mid-year budget update shows a modest improvement in the deficit forecast in 2025–26, but much of this comes from a larger-than-forecast tax take.

The update, known as the Mid-Year Economic and Fiscal Outlook (MYEFO), estimates a deficit for 2025–26 at A$37 billion, or 1.3% of gross domestic product (GDP). This is down from the $42 billion forecast in the March 2025 federal budget and the Pre-election Economic and Fiscal Outlook (PEFO) issued before the May election.

The drivers of the $5 billion improvement in the bottom line are largely outside government control – higher global commodity prices, and a higher income tax take. That’s due to a stronger jobs market and higher wages growth than previously forecast.

The Australian government’s gross debt is projected to exceed $1 trillion for the first time by mid-2027.

Treasurer Jim Chalmers described the update as being “all about delivery, responsibility and restraint”.

MYEFO is required by the Charter of Budget Honesty Act 1998 to be tabled in parliament by the end of January. In recent years it has mostly been released in mid-December.

The document can be merely a technical update of the estimates for economic changes, or an opportunity for policy announcements to reset the government’s budget plans.

The 2025 MYEFO is a mix of both. It includes numerous policy measures, though most confirm announcements already made at or soon after the election. Parameter changes, such as increases in tax revenue, are nevertheless far bigger than all of the policy changes combined.

Spending pressures increasing

Restraint in some areas is needed, given what Finance Minister Katy Gallagher referred to as “significant spending pressures”. These include:

Natural Disaster Relief – an additional $6.3 billion over the four years of forward estimates
Higher than expected uptake of the Cheaper Home Batteries Program has increased
payments by $4.9 billion
The Age Pension, up $3 billion over four years, reflecting increased numbers of pensions. This revision is puzzling, because numbers should have been predictable at budget time
Defence Force superannuation benefits, up $2.1 billion, largely reflecting a revised valuation of the government’s superannuation liability
a range of other increases over the four years of forward estimates, including in veterans’ entitlements, childcare subsidies, non-government schools, and carers.

Not included, but sure to come, is additional spending in response to the Bondi terrorism shooting incident and its tragic loss of life.

Spending pressures outlined in the last budget, in health, the NDIS, public debt interest and defence, continue.

The CSIRO is set to receive an additional $233 million, which will be directed to priorities such as AI, quantum sensing, robotics, critical minerals, climate change adaptation and resilience, agricultural productivity and biosecurity. Tight budgets have led to serious concerns about cuts to CSIRO staff. This additional funding will to an extent help offset those concerns.

Investments in areas such as climate resilience may take time to pay off, but as shown by the massive increase in disaster payments in this budget update, are very much needed.

Cuts in use of contractors

Chalmers has confirmed the government will not be extending electricity bill rebates. They will end in December, as planned. This is a bold measure given opinion polls showed 65% of people surveyed supported extending them.

There have been further cuts in public-service use of contractors and in areas such as travel and hospitality. There are some specific cuts, for example in climate change, but no sign of reported but unconfirmed 5% savings for public service departments.

Shifting spending from one bucket to another

Chalmers claimed the federal government’s $20 billion in savings in the mid-year update meant it “has now delivered $114 billion in savings and reprioritisations since coming to office”.

Although this is technically true, reprioritisation does not help the budget balance. It shifts spending from one bucket to another – a good thing if new purposes meet Australia’s needs more effectively – but does not deliver net savings.

The Australian Financial Review is highly critical of Chalmers’ claims. After more than three-and-a-half years, comparisons with the previous Coalition government’s fiscal record are wearing thin.

Chalmers said the government had “kept average real spending growth to around half the 30-year average”. But that average includes the large amount of spending during the COVID years.

Updated economic forecasts

Treasury has also updated the economic forecasts from the budget.

Treasury has lifted its forecast for inflation during 2025–26 from 3% in the budget to 3.75% in the mid-year update. This is a very similar inflation forecast as the Reserve Bank. But it is 0.5% higher than the forecast growth in wages, so the cost of living will remain an issue.

Inflation is forecast to drop back to 2.75% in 2026–27, back within the Reserve Bank’s 2–3% target band, and less than the expected increase in wages that year.

Real GDP is forecast to grow by 2.25% in 2025–26 and 2026–27. This is just above the rate the Reserve Bank believes the economy can sustain without putting upward pressure on inflation.

Unemployment is forecast to be around 4.5% in mid-2026 and mid-2027.

In short, this update contains no big surprises but also no significant changes to improve the budget bottom line or significant tax reform to make the economy more efficient and more equitable for future generations.

Stephen Bartos, Professor of Economics, University of Canberra and John Hawkins, Head, Canberra School of Government, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Coal or renewables? CSIRO lands on cheapest electricity option as costs drive inflation

What’s the cheapest way to power Australia? Every year, CSIRO researchers and modellers seek to answer this very large question in their GenCost report.

On one level, the answer in the <a href="https://www.csiro.au/en/research/technology-space/energy/electricity-transition/gencost">draft 2025–26 report</a> is unsurprising: solar and wind are the cheapest form of generation.

However, this report has gone further by modelling the cheapest cost across the grid, including different power generation options, energy storage, transmission lines and gas backup. Here, solar and wind still come out on top for generation, with batteries to play a larger role than previously estimated, given <a href="https://ember-energy.org/latest-insights/how-cheap-is-battery-storage/">plunging prices</a>.

In Australia, large-scale battery prices fell 20% over 2024–25 and a further 15% is anticipated over 2025–26. Surging electricity demand to support electrification and to power AI data centres means <a href="https://www.bloomberg.com/features/2025-bottlenecks-gas-turbines/">costs have spiked</a> for anything to do with turbines – coal, gas and nuclear – and delays are long.

If renewables reach 82% of grid generation by 2030 as the government plans, the report suggests this would result in wholesale power costs of A$91 per megawatt hour – about a third lower than today’s $129/MWh. Both figures are in current dollars. By 2050, prices would head back to levels a bit higher than present day ($135–148/MWh) to cover the cost of retiring coal plants, building new transmission lines and energy storage.

The 2050 figures should be viewed as current best estimates based on prudent assumptions, rather than committed forecasts. Modelling power prices a quarter of a century in the future depends on many variables.

CSIRO’s report concludes natural gas generation is the best form of backup, even though it produces emissions. This is because other forms of backup would be more expensive than cutting the same volume of emissions elsewhere in the economy.

<h2>What changed this year?</h2>

One of the most interesting things about this report is what it rules out. On price alone, CSIRO concludes three things are unlikely to feature in Australia’s future grid.

1. Offshore wind

The plight of offshore wind may be surprising, given offshore wind farms dot the North Sea and off the coast of China. Costs had begun rising due to pandemic-era supply chain issues. But the major change this year has been political. United States President Donald Trump has <a href="https://www.whitehouse.gov/presidential-actions/2025/01/temporary-withdrawal-of-all-areas-on-the-outer-continental-shelf-from-offshore-wind-leasing-and-review-of-the-federal-governments-leasing-and-permitting-practices-for-wind-projects/">moved to scrap</a> many huge offshore wind projects, <a href="https://e360.yale.edu/features/east-coast-offshore-wind">even when half-built</a>. Meanwhile <a href="https://www.canarymedia.com/articles/offshore-wind/man-behind-the-fall-of-offshore-wind">prominent activists</a> have run effective misinformation campaigns.

To date, Australia has no offshore wind farms. Developers have <a href="https://www.theguardian.com/environment/2025/sep/12/offshore-wind-australia-energy-transition-so-why-mass-exodus-from-investors">pulled out</a> of many projects amid the uncertainty, though the giant Star of the Sea project in Victoria is <a href="https://www.afr.com/policy/energy-and-climate/offshore-wind-frontrunner-spends-big-despite-policy-limbo-20251215-p5nnne">still in progress</a>.

<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/709310/original/file-20251217-56-mm7r74.jpg?ixlib=rb-4.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="offshore wind turbines." src="https://images.theconversation.com/files/709310/original/file-20251217-56-mm7r74.jpg?ixlib=rb-4.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/709310/original/file-20251217-56-mm7r74.jpg?ixlib=rb-4.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/709310/original/file-20251217-56-mm7r74.jpg?ixlib=rb-4.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/709310/original/file-20251217-56-mm7r74.jpg?ixlib=rb-4.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/709310/original/file-20251217-56-mm7r74.jpg?ixlib=rb-4.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/709310/original/file-20251217-56-mm7r74.jpg?ixlib=rb-4.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/709310/original/file-20251217-56-mm7r74.jpg?ixlib=rb-4.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
Developers of many offshore wind projects have pulled out in Australia amid uncertainty overseas.
<a class="source" href="https://unsplash.com/photos/a-row-of-wind-turbines-in-the-middle-of-the-ocean-Rq7Ka3MUws0">Woody Yan/Unsplash</a>
</figcaption>
</figure>

2. Carbon capture and storage

Earlier this century, governments and coal and gas power plant owners were exploring ways of using carbon capture and storage to separate carbon dioxide from exhaust plumes and <a href="https://djsir.vic.gov.au/carbonnet">bury it</a>. In Australia, most coal plants are instead <a href="https://theconversation.com/coal-will-be-all-but-gone-by-2034-under-australias-latest-energy-roadmap-219714">heading for the exit</a>. By contrast, China is <a href="https://knowledge.energyinst.org/new-energy-world/article?id=139906">expanding use</a> of the technology as it will need to rely on coal for longer.

Instead, carbon capture and storage is likely to be <a href="https://www.dcceew.gov.au/climate-change/emissions-reduction/carbon-management-technologies%20in%20Australia%20to%20store%20emissions%20from%20industry%20and%20manufacturing">most useful</a> in Australia to store emissions from industry and manufacturing.

3. Nuclear

Ahead of the last federal election, the Coalition pitched a <a href="https://theconversation.com/peter-dutton-has-promised-to-solve-our-energy-problems-but-his-nuclear-policy-still-leaves-australians-in-the-dark-232816">nuclear-powered vision</a> of the future. Last year’s GenCost report <a href="https://www.abc.net.au/news/2024-12-09/nuclear-power-plant-twice-as-costly-as-renewables/104691114">poured cold water</a> on this idea on cost grounds, finding nuclear would be double the cost of renewables.

This year, there’s been <a href="https://theconversation.com/what-are-small-modular-reactors-a-new-type-of-nuclear-power-plant-sought-to-feed-ais-energy-demand-268628">renewed international interest</a> in small modular reactors as a <a href="https://www.nytimes.com/2024/10/16/business/energy-environment/amazon-google-microsoft-nuclear-energy.html">way to meet</a> AI data centre energy demand. But most reactor designs are years away from reality. The GenCost report suggests nuclear remains much too expensive an option for Australia.

<h2>Building backup</h2>

This year’s GenCost report suggests wholesale electricity costs will fall substantially by 2030 if the government meets its 82% renewable target, before rising again by 2050.

It’s very optimistic to give 2050 estimates with any certainty. But <a href="https://grattan.edu.au/report/bills-down-emissions-down-a-practical-path-to-net-zero-electricity/">our research</a> at the Grattan Institute does match CSIRO’s early estimates of falling costs.

We would also expect power system costs to rise again, given most of the new transmission lines needed to connect renewables to the grid haven’t been built yet and much more energy storage will be needed. These costs will be passed on to consumers, which is why GenCost modelling suggests 2050 power prices are likely to be similar to prices today.

One of the challenges with greening the grid is how much backup to build for <a href="https://www.energynetworks.com.au/news/energy-insider/2021-energy-insider/its-dark-its-still-its-dunkelflaute/">rare periods</a> of low wind and sun spanning large areas. This month, Australia’s energy market operator updated its grid planning, which envisages 14 gigawatts of gas capacity by 2050, slightly up from current capacity. These plants would only fire up as a backup.

New transmission lines must also be built to ensure renewables can funnel power across the grid, though CSIRO estimates these costs at just 7% of consumer bills. In its latest draft plan for the integrated system, Australia’s energy market operator has <a href="https://theenergy.co/article/isp-flags-less-transmission-more-solar-batteries">dialled back</a> transmission ambition, due to factors such as higher costs, <a href="https://www.abc.net.au/news/rural/2025-07-30/farmers-face-jail-transmission-access/105580880">rural pushback</a> and <a href="https://reneweconomy.com.au/crisafulli-lnp-governments-first-year-devastates-new-renewable-energy-and-storage-investment-in-queensland">backsliding in Queensland</a>.

The future role of natural gas generation is still in question. Some gas plants are ageing and will have to be replaced. When <a href="https://en.wikipedia.org/wiki/Peaking_power_plant">gas peaking plants</a> fire up at present, they command a very high price for their power. But in a grid with a very high level of renewables, they may be required less often, be even more valuable, and demand a higher price. It’s unclear how these backup plants can be financed as insurance against rare but challenging events.

CSIRO’s GenCost report is widely recognised as the key reference for future costs of power generation. These reports are frequently weaponised by politicians, and the agency itself can <a href="https://www.abc.net.au/news/2024-03-15/csiro-rebukes-dutton-nuclear-cost-criticism/103591780">suffer blowback</a>. But the solid analysis and modelling in these reports should withstand such buffeting.<img src="https://counter.theconversation.com/content/272249/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important" referrerpolicy="no-referrer-when-downgrade" />

<a href="https://theconversation.com/profiles/tony-wood-2993">Tony Wood</a>, Program Director, Energy, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a>

This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/solar-onshore-wind-and-gas-backup-is-still-the-cheapest-way-to-power-australia-new-report-272249">original article</a>.
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How to talk to your kids and grandkids about Bondi

As the community begins to grapple with the horror and tragedy of the <a href="https://theconversation.com/an-act-of-evil-antisemitism-at-least-16-dead-in-terrorist-attack-on-bondi-beach-272031">Bondi shootings</a> on Sunday, children will likely have questions. Parents may also be wondering how to talk to their little kids and teenagers about what happened.

I am a clinical psychologist and researcher with a focus on children, anxiety and post-traumatic stress. Here are some things to keep in mind when talking to children about the tragedy in Bondi (though many of these apply to any bad thing happening in the world).

<h2>Answer truthfully</h2>

When your child asks you a question, it’s better to be honest, even if the answer is hard to give or you’re worried about their reaction.

There is a lot of information and misinformation swirling around. Kids need to feel like they can trust what parents are saying to them.

It’s also possible kids will have ideas in their heads about what happened that are even worse than the reality. So, it’s important to find out what they think they already know (perhaps from things they have heard from friends or seen online) and gently correct any misinformation.

<h2>Give kids your full attention</h2>

If kids want to ask questions, give them your full attention.

In a situation like this, we are all distressed. Unless you are listening carefully, you might miss the bit your child is actually worried about.

<h2>Avoid providing unnecessary information</h2>

The information you know or might be interested in knowing is going to be different to the information your child wants to know. Follow <a href="https://pubmed.ncbi.nlm.nih.gov/27086314/">their lead</a>.

You will need to use your expert knowledge of your own child to know how to best “pitch” the information you provide. Here are examples of the sort of words you might use.

For preschool and very early school-aged children, you could say:

<blockquote>
some bad men used guns to shoot some people near the beach in Sydney. The police and doctors are helping the people who were hurt and the men who did the shooting have been taken away so they can’t hurt anyone else. 
</blockquote>

For primary school children, you could say:

<blockquote>
two men went to Bondi beach in Sydney and shot at people who were celebrating a religious festival. One of the shooters was killed and the other is under police guard. Some people were killed and some more were badly hurt. They are in hospital where medical staff are working as hard as they can to make sure they are OK. The police are also working really hard to understand why and how this happened and to try and make sure it doesn’t happen again. 
</blockquote>

For high school children, you can add more detail:

<blockquote>
two men went to a Jewish religious celebration at Bondi beach in Sydney and shot guns at the crowds of people there. At least 15 people have been killed and more people have been injured and are in hospital. One of the shooters has been killed and the other one is under police guard. The police and security agencies are investigating why and how this happened. There’s also a political debate now about gun control in Australia. 
</blockquote>

At the moment, while we are still waiting for a lot of information, it’s OK to say, “I don’t know, but as we learn more, I can get back to you on that”.

<h2>Validate their feelings</h2>

Validating kids’ feelings is <a href="https://link.springer.com/article/10.1007/s10566-024-09807-7?">always really important</a>, but especially at a time like this. For example, “Yes, I understand you’re scared. What happened is really scary”.

While you don’t want to frighten kids, something horrendous has happened – we don’t want to dismiss it. If it is on kids’ minds, it’s important they have the chance to talk about and make sense of what has happened.

<h2>Start the conversation if needs be</h2>

Unless your kids are very small and you’re very confident they won’t have heard about the shootings at daycare or preschool, it may be worth asking your child what they know: “Have you heard anything about what happened in Sydney?”

Then kids can ask what they need and parents can figure out what their child or young person thinks they know. A good alternative to talking, especially for young kids, might be drawing.

If they don’t need to talk though, that’s OK. It’s possible they might need to next week. It’s also possible it’s not really on their radar. Again, follow their lead.

<h2>Focus on the good and brave people</h2>

Encourage your kids to think about the many helpful and brave things people did and continue to do around this tragedy. Police, paramedics, doctors, nurses and bystanders all stepped in and did incredible things to help.

We don’t want kids to come away thinking all people are bad and want to hurt each other. The truth is, most people would not chose to hurt each other and instead would chose to help.

This tragedy is devastating – even if you haven’t been directly impacted. It’s absolutely OK for parents to <a href="https://pubmed.ncbi.nlm.nih.gov/27086314/">show they are distressed</a> by what has happened – as long as kids are also seeing their parents manage their distress constructively. For example, going for a walk or talking to friends.

<h2>Put it in context</h2>

We know, tragically, at least one child has died. So it is quite reasonable for kids to be worried about their own safety. Could this happen to me? Or near me?

You can point out, “the world is a place where sometimes dangerous things happen. But the world is not always a dangerous place”.

You could also say, “part of the reason we are all so devastated is it’s an incredibly unusual event. This is not something that happens every week or even every year.”

And you can come back to how the community is uniting against these shootings. Our emergency responders are helping and police are trying to make sure it does not happen again.

Some families may find it helpful to watch the news together. That way you can ask questions and discuss things.

But its also important <a href="https://pmc.ncbi.nlm.nih.gov/articles/PMC4803729/?">to take a break</a> and not consume large amounts of media on an endless loop, as this is not good for wellbeing.

Keep in mind, <a href="https://files.eric.ed.gov/fulltext/ED490449.pdf">for younger children</a>, if they keep seeing the footage, they may think this is happening in real time and happening repeatedly. Make sure younger children understand that the shooting is over, and – where appropriate – where it happened in relation to where they live.

<h2>Is there anything we can do?</h2>

Consider is there anything you can usefully do, either individually or as a family. Do you have Jewish friends you can check in with? Can you show your support and your care in some other way? If you are eligible to donate blood, this is one of the most useful things you could do, and it’s a great example to your kids.

This is a moment to provide our kids with a model of unity. We are all devastated in the face of an horrific act of divisiveness and hatred – this is not the country we want to be. Australia is united in supporting the Jewish community.

<hr>

If this article has raised issues for you, or if you’re concerned about someone you know, call <a href="https://www.lifeline.org.au/">Lifeline</a> on 13 11 14 or <a href="https://kidshelpline.com.au/">Kids Helpline</a> on 1800 55 1800.<img src="https://counter.theconversation.com/content/272056/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important" referrerpolicy="no-referrer-when-downgrade" />

<a href="https://theconversation.com/profiles/vanessa-cobham-1410269">Vanessa Cobham</a>, Professor of Clinical Psychology, <a href="https://theconversation.com/institutions/the-university-of-queensland-805">The University of Queensland</a>

This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/how-can-parents-talk-to-their-kids-about-the-bondi-terror-attack-272056">original article</a>.
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How illegal tobacco is messing up Australian economic data

Most Australians have probably noticed the proliferation of tobacconists and “convenience stores” in the last few years. These stores aren’t making much from the limited offerings on public display. Rather, their profitability comes from under-the-counter sales of untaxed tobacco and illegal vapes.

The growth of illegal tobacco sales has reached the point where the national accounts produced by the Australian Bureau of Statistics (ABS) have been significantly distorted. The ABS has announced it is taking steps to measure the consumption of illicit nicotine-related products to supplement existing measurement.

The extent of illicit consumption, and the associated loss of revenue is, by its nature, hard to measure. The Australian Taxation Office estimated a net loss of over A$3 billion in 2023-24, but this amount has almost certainly risen since then.

Where the - illegal - profits are

Before looking at how this decision will affect the national accounts, it’s worth asking how we got here. The short answer is that, over the past decade or so, the tobacco excise has been steadily increased to the point where there are big profits to be made from dodging the tax.

But that’s not the whole story. Taxes on spirits have also been raised substantially. At the current rate of $106/litre of alcohol plus GST, tax makes up around two-thirds of the price of a typical bottle of spirits, similar to the case with tobacco.

Yet we haven’t seen a return of the “sly grog” shops that were common in Australia until the 1960s, when the 6pm closing of pubs was abolished. And despite heavy taxes on gambling, illegal casinos seem to be a thing of the past.

What explains this difference? The sale of alcohol and gambling services is subject to licensing restrictions, managed by state authorities and enforced by police.

By contrast, until very recently, nicotine products have been treated as normal grocery items. Enforcement was limited until state governments started tightening up the law with changes that have just come into effect.

The states have begun shutting down tobacconists found to be breaching it, and even threatened jail for landlords.

The Australian Taxation Office, along with the Australian Border Force, makes serious efforts to prevent illegal importation of tobacco products, as well as seizing tobacco crops grown here. But it appears unable or unwilling to do much against retailers who sell cigarettes under the counter.

State police forces have been slow to enforce the law.

Their reluctance here contrasts with the reasonably effective licensing enforcement of alcohol and with the stringent measures taken against suspected users of drugs like ecstasy.

But the imbalance between the incentive to dodge the tax and the risks of being caught remains. Until it is resolved, the federal government would do well to defer planned further increases in taxation.

A question that remains open is whether the growth of illegal tobacco has led to an increase in smoking. Evidence here is mixed. A government survey in 2022-23 showed a continued decline in smoking, alongside an increase in vaping.

However, a more recent Roy Morgan survey suggests an increase of smoking among young people as a result of the vaping ban.

How to account for the shadow economy

Now, back to the ABS. The objective in producing national accounts statistics such as gross domestic product (GDP) is to measure economic activity, giving a guide as to whether the economy is operating at full capacity. That’s important for the Reserve Bank in setting interest rates, but it isn’t a measure of wellbeing.

As critics have often pointed out, GDP pays no attention to whether the production being measured is socially desirable, neutral or harmful. Similarly, the ABS has always been aware that not all economic activity is legally recorded.

The solution, in the past, has been to add a 1.5% adjustment to GDP to take account of unrecorded (shadow economy) activity. There hasn’t been a perceived need for anything more detailed.

But with illicit tobacco estimated to be about 25% of sales in 2023-24 and higher now, this adjustment is no longer sufficient.

Both major supermarkets have said their tobacco sales have halved just in the past 12 months, the sharpest fall on record.

The ABS estimates growth in final household consumption expenditure has been underestimated by more than 0.5 percentage points over the past year, which is a big deal given the typical annual increase in consumption spending is around 5%.

Keeping pace with a changing economy

Finally, it’s worth noting this isn’t the only issue the ABS is looking at in response to an ever-changing economy.

As more and more households meet their electricity needs through rooftop solar, the ABS has faced a conceptual issue. This might be thought of as household production, like growing your own vegetables or cooking your own meals, which isn’t counted in GDP.

But the ABS has decided it’s better to regard solar rooftops as a home-based small business, whether the electricity is self-consumed or fed back into the grid.

As distinctions between home and work, and between licit and illicit production become increasingly blurred, statisticians will need to make more and more judgements like this.

John Quiggin, Professor, School of Economics, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Here are the candidates for Trump's next Fed Chair pick (and what's at stake)

US President Donald Trump has signalled in an interview with the Wall Street Journal he is close to announcing his pick for the next chair of the US Federal Reserve.

With inflation again increasing amid widespread focus on the crisis of affordability, Trump’s appointment will be closely watched by financial markets and consumers alike.

The central bank has become a battleground as Trump seeks to extend his influence over Federal Reserve policy.

But the last time a US president attempted to interfere with the independence of the Federal Reserve provides a strong cautionary tale of the dangers of presidential interference.

Trump’s tumultuous relationship with the Fed

Trump has a tumultuous relationship with the Federal Reserve and its current Chair Jerome Powell. Powell was first appointed chair by Trump in 2018, but the relationship quickly turned sour, with Trump repeatedly threatening to fire Powell for not cutting interest rates quickly enough.

Just last month, Trump called Powell a “clown” with “some real mental problems”, adding “I’d love to fire his ass”.

Existing protections mean Trump cannot fire Powell “without cause”, which the US Supreme Court has interpreted to mean corruption or misconduct. Trump has been forced then to wait for the end of Powell’s second term to replace him.

In the meantime, Trump has attempted to fire Lisa Cook, one of the seven Fed governors, by having his Justice Department investigate claims of mortgage fraud against her. The charges however appear to be baseless, and Cook continues to serve as a Fed governor.

At the heart of the dispute with the Federal Reserve is Trump’s view that as president, he should be consulted on the setting of interest rates. With Americans facing a deepening affordability crisis, and Trump taking the blame, he is feeling the pressure to cut interest rates to boost growth.

Accordingly, Trump has insisted that the next chair of the Fed must be someone who is prepared to immediately and significantly cut interest rates, and listen to Trump’s views on monetary policy going forward.

Central bank independence

Reduced interest rates might provide short-term juice to spur spending. However, in the long-term artificially low interest rates cause inflation, only worsening any cost-of-living crisis. For this reason, most developed countries maintain strictly independent central banks.

Central bank independence ensures short-term political considerations like elections and polling numbers do not interfere with long-term planning of monetary policy.

Back to the 70s?

In 1970, during a growing inflation crisis, President Richard Nixon appointed economist Arthur Burns as chairman of the Federal Reserve. Like Trump, Nixon demanded that Burns reduce interest rates and listen to the president’s advice in crafting monetary policy. At Burns’ swearing in, Nixon said he would meet with Burns regularly, adding:

You see, Dr Burns, that is a standing vote of appreciation in advance for lower interest rates and more money […] I respect his independence. However, I hope that independently he will conclude that my views are the ones that should be followed.

Under pressure from the president, who threatened to pass legislation diluting Fed independence if Burns did not comply, Burns repeatedly cut interest rates. However, prematurely low interest rates and the perception that the president was influencing monetary policy only deepened the economic crisis facing the US in the 1970s.

The result was stagflation, the dismal economic situation in which both inflation and unemployment increase simultaneously. Under Burns’ watch, annual inflation peaked at 11% and unemployment at 8.5%.

A protest march in 1970s New York against surging inflation.
H. Armstrong Roberts/Getty

The “Great Inflation” of the 1970s was eventually ended by another Fed chief, Paul Volcker. Recognising that Burns had created a spiral of inflationary expectations, in 1980 Volcker drastically increased interest rates to 19%. Volcker then kept interest rates in double digits until inflation permanently fell.

The so-called “Volcker shock” did eventually tame inflation, but at the cost of cripplingly high interest rates and surging unemployment.

The Great Inflation of the 1970s, and the price paid to end it, stands as a strong warning against the short-term sugar hit of reducing interest rates in response to political pressure.

Will Trump learn the lessons of history?

With some economists warning signs of stagflation are once more emerging, Trump must now pick the next chair of the Federal Reserve.

Prediction markets suggest the most likely candidate is Kevin Hassett, an economist appointed last year by Trump as director of the National Economic Council.

Like Trump, Hassett believes interest rates should be much lower. Having served in both Trump administrations, Hassett also appears likely to offer loyalty and compliance with Trump’s demands.

The second candidate under consideration by Trump is economist Kevin Warsh, a former Fed governor and bank executive. Warsh brings a reputation as an inflation hawk from his time at Federal Reserve during the Global Financial Crisis.

However, a recent interview with the president appears to have assured Trump that Warsh shares his goals, and he is now “at the top of the list” of candidates.

Regardless of who Trump appoints, the crucial question remains whether the next Fed chair will pursue an independent monetary policy free from political interference.

With the president continuing to concentrate power in the hands of the executive, the Federal Reserve remains an important site for the exercise of independent power.

The stagflation crisis of the 1970s stands as a clear warning of what might happen if that independence is compromised.

The spectre of stagflation means financial markets, consumers, and the rest of the world remain unwilling participants in the political drama continuing to play out between the Federal Reserve and the White House.

Henry Maher, Lecturer in Politics, Department of Government and International Relations, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Budget update: Australia's deficit set to drop by over $5 billion

Today's budget update will project a deficit of $36.8 billion for this financial year, which is $5.4 billion better than forecast in the Pre-election Economic and Fiscal Outlook (PEFO) issued before the May election.

The update projects deficits that are slightly better in every year over the forward estimates than forecast at the election. Cumulatively, the deficit is $8.4 billion better than over the four years to 2028-29 than PEFO.

The government earlier revealed the update will contain $20 billion in savings.

Despite critics attacking the level of federal spending, the government says it is exercising spending restraint, ensuring net policy decisions are positive for the first time in eight years, with net decisions improving the bottom line by $2.2 billion.

Treasurer Jim Chalmers says the update will be “all about responsible economic management”.

“We’re not only improving the bottom line but also ensuring that essential services, like support for veterans, disaster recovery, and the aged pension, remain robust and responsive to community needs,” Chalmers said.

At the weekend Chalmers stressed the update was not a mini budget. “There’s not a lot of new stuff in there, But there’s a lot of hard yards to make room for our commitments and the big pressures on the budget which are intensifying rather than easing,” he told Sky News.

The government has avoided some extra spending by announcing it won’t extend the energy rebate that has been easing household power bills. That expires at end of this month.

But it revealed at the weekend a massive blowout in the cost of its subsidy for installing batteries. The subsidy was earlier estimated to cost $2.3 billion up to 2030. But the projected cost was headed to $14 billion, because people were disproportionately buying large batteries. The government responded with extra funding and changes to the scheme, which is now set to cost $7.2 billion over four years.

Independent economist Chris Richardson said the budget update will have some “revenue rainbows”.

Richardson said revenues were up because of higher than expected inflation, key export prices holding up (and gold prices soaring), and AI-fuelled sharemarkets boosting the tax take on super and on capital gains.

Deloitte Access Economics Partner Stephen Smith said: “Escalating spending pressures and an outdated tax system are expected to mean budget deficits as far as the eye can see.

"It is imperative that greater attention be paid to government expenditure, particularly through the systematic adoption of program and policy evaluation to amend, continue, or discard programs based on their efficacy. In addition, a careful root and branch review of expenditure responsibilities between the Commonwealth and the states and territories is long overdue.

"Critically, a focus on well-considered tax reform that turns deficits into surpluses, boosts productivity and growth, and enhances equity in our tax system is needed.”

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

How not to close the gender pay gap: cutting the salaries of the men working for you

Australia is still looking for ways to close the gender pay gap between men and women. Progress has been slow, and the problem is well documented. But one Queensland not-for-profit decided to try something novel. It cut the pay of the men working for it, in the name of fairness.

That decision has now landed the organisation before the Fair Work Commission, with the Commissioner delivering a sharp rebuke.

The gender pay gap laid bare

The gender pay gap remains a stubborn feature of the Australian workforce. According to the Workplace Gender Equality Agency, women earn on average 21.1 per cent less than men. Put simply, for every dollar earned by a man, a woman earns about 79 cents.

There has been progress, but it has been incremental. The national gender pay gap has narrowed slightly over the past decade, driven by transparency laws, reporting requirements and stronger enforcement. Even so, at the current rate of change, pay equity in Australia is still decades away. Estimates from WGEA suggest gender pay parity will not be achieved until around the middle of this century.

What happened?

The case before the Fair Work Commission involved Youturn Limited, a community services organisation operating in child safety, homelessness, mental health and suicide prevention. Two long-serving male case managers had been classified and paid at Level 5 under the Social, Community, Home Care and Disability Services Award for many years. Newer employees doing similar work were engaged at Level 4, and those employees were overwhelmingly women.

Rather than lifting the lower-paid roles, Youturn sought to reclassify the two men down to Level 4 in mid-2025.

Their duties did not change, but their pay did.

Each were offered new roles at Level 4 at an annual reduction of between $7,000 and $10,000 in remuneration. At the same time, the organisation paid one-off bonuses of $10,000 to $12,000 to female employees at Level 4, explicitly to address concerns about pay equity.

The men objected, refused to sign contract variations, and continued working under protest. They argued their higher classification had been “grandfathered” years earlier, a position the Commissioner ultimately accepted.

‘One does not break the glass ceiling by amputating the men above’

Commissioner Jennifer Hunt was unsparing in her assessment of Youturn’s approach. While acknowledging the legitimacy of addressing gender pay inequity, she rejected the idea that fairness could be achieved by tearing down existing contractual arrangements.

“The Respondent’s desire to ensure an equitable pay grade and remuneration among its employees… has resulted in the Respondent tearing the applicants down instead of honouring the common law contract it had with them,” she wrote.

Her most pointed line cut to the heart of the case. “One does not break the proverbial glass ceiling by amputating the legs of the men above.”

The Commission found that Youturn had effectively demoted the men, with a significant reduction in remuneration, without consultation or consent. That amounted to a dismissal under the Fair Work Act, even though the men technically remained employed.

The case has now been referred to conciliation, with Youturn ordered to meet and mediate with the employees in an attempt to resolve the dispute.

Why NVIDIA is now allowed to send its second-best AI chips to China

US President Donald Trump recently approved previously banned exports of Nvidia’s powerful H200 artificial intelligence (AI) chips to China.

In return, the US government will receive 25% of the sales revenue, in what has become a hallmark of this administration to take a sales cut of a private company’s revenues.

The H200 is Nvidia’s second-most powerful AI processor. It’s roughly six times more capable than the H20 chips previously available to buyers in China.

These aren’t consumer gadgets powering the latest cat meme generator or helping you with the weekly pub quiz. They’re the computational engines behind advanced AI systems that increasingly drive autonomous weapons. This includes drone navigation systems, automatic gun emplacements and targeting algorithms in modern warfare.

Think less the futuristic world of the Terminator movies, more the very real AI-powered targeting systems already being deployed, including in Ukraine and Gaza.

At the end of a year that has seen the US and China locked in a bitter trade war in which Trump lifted tariffs on China as high as 145% at one point, the decision to allow these sensitive exports is stunning.

This policy reversal fundamentally challenges how export controls work. It also raises urgent questions for US allies such as Australia, caught between economic dependence on China and deepening defence alignment with an increasingly unpredictable United States.

How we got here

Having access to advanced semiconductor chips is crucial in the global race toward advanced artificial intelligence. In October 2022, the Biden administration put strict semiconductor export controls in place. These rules targeted advanced AI chips and chip-making equipment destined for China.

This was dubbed the “small yard, high fence” approach. The aim was to restrict (build a “high fence” around) a narrow range of sensitive technologies, while still allowing broader trade with China.

The Biden administration placed 140 Chinese entities on export blacklists. It also restricted 24 types of manufacturing equipment and banned US engineers from supporting advanced Chinese chip facilities.

These measures had real impact. Between 2022 and 2024, Chinese AI companies struggled to access needed computing power, forcing them to innovate with older hardware.

A different strategy

Trump’s approach is fundamentally different. In July, his administration allowed Nvidia to sell H20 chips to China in exchange for 15% of revenues. This was widely seen as a concession to China linked to negotiations over US access to rare earth minerals.

Trump’s latest move to approve the far more powerful H200 chips for export to China reflects his abandoning the rulebook on trade.

Strategic security decisions are being transformed into transactional “deals” where everything has a price.

AI warfare is already here

AI chips now power targeting systems, guide munitions and make split-second decisions on battlefields worldwide.

Ukraine’s forces use AI-equipped drones that autonomously navigate the final approach to targets, even in heavily jammed environments, reportedly improving strike accuracy from 30–50% to around 80%.

According to a Guardian report, Israel’s “Lavender” AI system identified 37,000 potential Hamas-linked targets, accelerating airstrikes but reportedly contributing to significant civilian casualties.

China’s People’s Liberation Army is reportedly deploying AI for drone swarm coordination, autonomous target recognition, and real-time battlefield decision-making.

The Pentagon’s Project Maven synthesises satellite and sensor data to suggest targets that US forces may subsequently destroy.

This isn’t science fiction; it is today’s battlefield reality.

A new kind of laundering

Modern semiconductors are “dual-use” technologies. The same chips training AI chatbots can guide cruise missiles. The same microcontrollers regulating washing machines can navigate attack drones.

British researchers have found a significant number of foreign components in Russian drones used in Ukraine have come from the US and Europe.

Some were literally harvested from household appliances. Russian procurement networks reportedly bought chips intended for repairing washing machines, erased the manufacturer’s name with acetone and inserted them into kamikaze drones.

These components travelled through third countries such as India and Kazakhstan before finding their way to Russian manufacturers.

You can’t ban washing machines without crippling consumer economies. But washing machines contain microcontrollers perfect for military drones. Export controls can become an elaborate game of whack-a-mole, where each restriction spawns new workarounds.

Australia’s dilemma

As a consequence of joining the AUKUS security partnership, Australia has restructured its export control regime to align with US priorities.

But Australia is in something of a bind. China accounts for about 30% of Australia’s total merchandise trade. Meanwhile, the US increasingly demands policy alignment as the price for accessing its defence technology.

What does US relaxation of export controls on advanced AI chips mean for Australia? Are we obligated to follow? Australia’s alignment with AUKUS was grounded on partners sharing similar views about threats, and adopting a consistent response.

However, the US’ recently released National Security Strategy identifies migration to Europe as a bigger “civilisational” threat than Russia’s military threat. Clearly, Australians see this very differently.

When security becomes a bargaining chip

Export controls work when they’re consistent, predictable, and clearly tied to national security. They fail when they become bargaining chips or revenue generators.

Trump’s H200 deal transforms the “high fence” around sensitive technologies into a turnstile for the right price.

There are pressing questions for Australia. Do US-aligned export controls serve Australian interests? Or are we outsourcing sovereignty to a partner whose decisions are increasingly arbitrary and transactional?

Peter Draper, Professor, and Executive Director: Institute for International Trade, and Director of the Jean Monnet Centre of Trade and Environment, University of Adelaide and Nathan Howard Gray, Senior Research Fellow, Institute for International Trade, University of Adelaide

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Passing on a family business in Australia is harder than you think - here's why

Earlier this year, the world watched with interest as the Murdoch family’s real-life Succession drama came to a close.

Media mogul Rupert Murdoch’s children – eyeing an empire estimated to be worth more than US$20 billion (A$30 billion) and control of the Fox Corporation and News Corporation – had disputed a change to their trust that would put control squarely in the hands of only one of his heirs, Lachlan.

A settlement was reached in September, giving Lachlan control and paying three of his siblings to exit.

But the very public and bitter battle was a classic example of the factors at play in succession planning for any family business. In addition to the business implications, it’s often fraught with emotion and power struggles.

For a country such as Australia, which is heavily reliant on family firms, these tensions matter far beyond the headlines. Understanding why succession is difficult – and how to get it right – is essential.

Powerhouse of the economy

Family-owned businesses are a crucial part of Australia’s economy. Small and medium-sized firms account for about 99% of all businesses, with about 70% being family-owned.

Surviving over time can be challenging. The “30-13-3” statistic (30% of firms transition to the second generation, 13% to the third, and 3% beyond that) is well known, despite some researchers now calling it into question.

Global evidence indicates only a minority of family firms successfully transition across multiple generations.

Emotional ties

A major part of what sets family businesses apart from other types of firms relates to what I and other family business scholars call “socioemotional wealth”.

This describes the emotional value families place on their business: legacy, identity, reputation, continuity and the comfort of keeping decision-making “in the family”.

These emotional bonds can be a source of strength. Research has shown family firms can be remarkably steady during moments of upheaval, including mergers and acquisitions and periods of financial distress because they prioritise long-term stability and trust.

But they also explain why successions can become so fraught. When leadership transitions threaten a family’s legacy, identity or long-standing traditions, emotions intensify.

Parents and earlier generations can feel they’re not just losing a role, they’re also losing a part of themselves. They may also make strategic decisions driven only by emotions, leading to conflicts, financial disruption and potential failure.

Kendall, second-eldest son of the fictional Roy family tries negotiating with father Logan in the HBO series Succession.

Openness to change

A recent study of mine adds another important layer, suggesting families adopt one of two mindsets.

One sees reality as relatively fixed, with families cautious of risks that might destabilise their legacy. The other views the business as flexible and adaptable.

These contrasting mindsets may help explain why some successions unfold smoothly – and others erupt into conflict. Families with the latter mindset tend to be more willing to let the next generation reshape the business.

The next generation

Australia is heading for a A$3.5 trillion generational wealth transfer, one of the biggest shifts of assets in its history. This will include many family businesses.

At the same time, digital transformation is reshaping every industry – from agriculture to construction to retail.

Younger successors tend to be digital natives. They often arrive fluent in data analytics, automation and artificial intelligence (AI). Many grew up in environments where constant change was the norm, meaning they naturally lean towards adaptability and flexibility.

Older leaders, particularly founders, often lean the other way. Deeply connected to the business they built, they are shaped by decades of experience and success.

The same socioemotional wealth that sustained the firm can make them reluctant to hand over control or adopt untested digital tools.

Soon-to-be-published research of mine with Nidthida Lin at Macquarie University Innovation, Strategy and Entrepreneurship (ISE) Research Centre has explored the way in Australian family firms, founder influence and long periods of stability often reinforce a mindset that favours tradition and caution. In contrast, family control and a strong desire for dynastic succession, together with the involvement of later generations, tend to encourage change and the adoption of AI technologies.

That tension, between preserving the legacy and the desire to reinvent it, is now one of the biggest challenges Australian family firms face in ensuring “the show goes on”.

Getting it right

Succession planning is not just a financial or legal process. Families need to acknowledge the emotions and feelings involved, including love, fear, grief, pride and ambition.

Avoiding these conversations only increases the risk of misunderstanding and resentment.

Other important steps for success include:

creating a governance structure – a clear set of rules and roles that guide how the family and the business make decisions
empowering the next generation to lead the digital transformation, and
testing the succession plan before a crisis.

Preparing early

The good news is businesses can prepare for this change well in advance. A good example of succession planning comes from family-owned Australian office supplies company, COS. COS has an annual revenue of A$300 million and more than 600 employees, as well as warehouses in every state.

When founder Dominique Lyone died suddenly in 2024, his two daughters, Amie and Belinda, had already stepped into positions as co-chief executive officers, thanks to a smooth succession plan he had initiated many years earlier.

Getting succession right is not just about choosing the next leader. It is about understanding the emotional foundations of the family, recognising the mindsets driving decisions and creating a path that makes room for the future.

Francesco Chirico, Professor of Strategy and Family Business, Macquarie University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Why my vote is for the Legalise Cannabis Party

What has the legend of Australian electoral analysis, Malcolm McKerras, been smoking, when he’s aligning with Legalise Cannabis politicians in the Victorian Upper House?

When I was a schoolboy, I was taught a maxim of ethical behaviour: “Honesty is the best policy”. To that was sometimes added: “Honesty is the only policy”. However, as an adult watching our democracy I sometimes wonder whether our politicians believe in that.

Having studied the nine Australian parliaments for over sixty years, I have come to give the benefit of the doubt to all the state legislatures and the two territory parliaments. By contrast, the federal parliament in my view has (metaphorically speaking) erected a second flag to accompany the magnificent Australian flag the flying of which I admire when I drive along Adelaide Avenue in Canberra. This lower flag has written on it a motto: “Dishonesty is the best policy” but the federal parliament can redeem itself in my eyes quite simply. All it needs to do is reform the Senate electoral system along lines I have long advocated. That can be done by a simple act of parliament.

Systems of proportional representation (PR) apply to the election of two Australian lower houses and five upper houses. The system applying to the two lower houses, in my view, is by far the best. That system is known as Hare-Clark and it is candidate-based. The five upper house systems are party-based and in my view that applying to the Legislative Council of Western Australia is by far the best while the Senate system is by far the worst. Though a hard marker in this area I give WA a credit mark of 65 per cent. The Senate system, by contrast, gets a fail mark of, say, 30 per cent. It is wholly without merit or virtue of any kind.

Members of the Legislative Council of New South Wales, South Australia and Western Australia are elected from the state voting as one electorate. I give WA the highest mark because 37 are elected, NSW the second highest with 21 elected and SA comes third because only 11 are elected.

Victoria is unique in two respects. First, its members of the Legislative Council are elected by regions. There are eight with each electing five members, so its total membership is 40. Second, it retains the institution known as the Group Voting Ticket (GVT).

South Australia and Western Australia once had regions and the GVT. Both have been abolished. My contention is that Victoria should follow WA in scrapping the GVT and the regions simultaneously. Quite simply it should COPY the new WA system, including all its features, and elect 37 members from Victoria as a whole voting as one electorate.

What I want, however, is not wanted by the machines of Victoria’s big political parties: Labor, Liberal, Nationals and Greens. They want to cherry-pick between the two characteristics of the present system. They hate the fact that in November 2022 seven cross bench members were elected representing minor parties, two for Legalise Cannabis and one each for the Animal Justice Party, the Democratic Labour Party, the Liberal Democrats, Pauline Hanson’s One Nation Party and the Shooters, Fishers and Farmers Party.

The Animal Justice Party best illustrates the problem for the machines of big political parties. There is a female AJP member of the Legislative Council in each of NSW, Victoria and WA. The big party machines would dearly love to get rid of her, but they can’t in two cases because the number elected in NSW is 21 while in WA it is 37. They can’t rig those systems to get rid of her because she will, almost certainly, get re-elected on the low quotas of the system.

But in Victoria’s case they can get rid of Georgie Purcell, the AJP member for the Northern Victoria Region. And as a bonus they can also get rid of Rikkie-Lee Tyrrell, the PHON member for the Northern Victoria Region. These two women can be ridden of by the simple act of cherry-picking. The machines of big political parties love the situation whereby only five members are elected. Of course, that must be kept! But it is easy to denounce both Purcell and Tyrrell. Each is a wicked woman who gained election courtesy of employing a “preference whisperer”, that most evil of political consultants who knows how to “game the system” through the GVT.

All this brings me to the report of the Electoral Matters Committee of the Victorian Parliament published very recently. Its title is “Inquiry into Victoria’s Upper House electoral system”. To me it is a dishonest document. However, I can see why those who think like I have described above, and who love the machines of big political parties, would read this report differently. They would say it is very learned, is full of useful information and reflects the submissions of the great majority of submitters.

Having searched high and low to find merit in this report I have found two good parts. The first is on page 34 which shows the results of the WA election in March 2025. The second is the dissents of David Ettershank, the Legalise Cannabis member of the Committee. They appear on pages 89, 90 and 91. The problem is that Table 3.1 on page 34 is under cut by lengthy quibbles under the heading “concerns about a state-wide structure” (pages 35-42) and “problems with large ballot-papers” (pages 55-59). Consequently, the Labor, Liberal, National and Greens members of the Committee were able to vote in favour of the very cherry-picking exercise to which I refer above – and quote “respected independent electoral analysts” to support them!

I am not a Victorian but if I were I would live in the Western Metropolitan Region and I would vote for David Ettershank as a way of commending him for his dissents, the summary of which is: “Should the Government choose to adopt these recommendations, it will be a dark day for political diversity and democracy in Victoria.”

Premier Jacinta Allan will make the decision. To me it is a simple call: choose honesty and reject dishonesty. That may, however, not be good enough for her so let me try a pragmatic argument based on my belief that her Labor government will be defeated at the general election fixed for Saturday 28 November 2026. If she implements this report, she will be handing incoming Liberal Party premier Jess Wilson majorities in both the Legislative Assembly and the Legislative Council.

Of course, I cannot expect Jacinta Allan to accept my predictions which are so pessimistic for her. So, let me try another tack. If Allan wins, her decision to choose honesty would give her a Legislative Council in which the cross bench consists of Greens and other minor parties. Her alternative choice would give her a Legislative Council in which the Greens are the sole holders of the balance of power. The reason for that is simple. The Legislative Council would be like the Legislative Assembly – composed only of members from the big parties – Labor, Liberal, Nationals and Greens.

I have made clear what I think should be done. The 2026 Victorian election should be conducted under the present system. Then, as a matter of the highest priority, a royal commission should be established in 2027 headed by a respected former High Court or Supreme Court justice. In WA the equivalent enquiry was headed by a respected former WA governor. Perhaps Victoria’s royal commission should be headed by a former governor of Victoria or any other state.

I am completely confident that such a royal commission would recommend that Victoria should simply COPY Western Australia’s new system in all its details. Then a referendum could be held that would receive an overwhelming affirmative vote. Then in November 2030 the result in Victoria would look very similar to the recent result in Western Australia – for which reason I advise my readers to have a look at page 34 of this report!