Earlier today, Iranian officials urged the country’s citizens to remove the messaging platform WhatsApp from their smartphones. Without providing any supporting evidence, they alleged the app gathers user information to send to Israel.

WhatsApp has rejected the allegations. In a statement to Associated Press, the Meta-owned messaging platform said it was concerned “these false reports will be an excuse for our services to be blocked at a time when people need them most”. It added that it does not track users’ location nor the personal messages people are sending one another.

It is impossible to independently assess the allegations, given Iran provided no publicly accessible supporting evidence.

But we do know that even though WhatsApp has strong privacy and security features, it isn’t impenetrable. And there is at least one country that has previously been able to penetrate it: Israel.

3 billion users

WhatsApp is a free messaging app owned by Meta. With around 3 billion users worldwide and growing fast, it can send text messages, calls and media over the internet.

It uses strong end-to-end encryption meaning only the sender and recipient can read messages; not even WhatsApp can access their content. This ensures strong privacy and security.

Advanced cyber capability

The United States is the world leader in cyber capability. This term describes the skills, technologies and resources that enable nations to defend, attack, or exploit digital systems and networks as a powerful instrument of national power.

But Israel also has advanced cyber capability, ranking alongside the United Kingdom, China, Russia, France and Canada.

Israel has a documented history of conducting sophisticated cyber operations. This includes the widely cited Stuxnet attack that targeted Iran’s nuclear program more than 15 years ago. Israeli cyber units, such as Unit 8200, are renowned for their technical expertise and innovation in both offensive and defensive operations.

Seven of the top 10 global cybersecurity firms maintain R&D centers in Israel, and Israeli startups frequently lead in developing novel offensive and defensive cyber tools.

A historical precedent

Israeli firms have repeatedly been linked to hacking WhatsApp accounts, most notably through the Pegasus spyware developed by Israeli-based cyber intelligence company NSO Group. In 2019, it exploited WhatsApp vulnerabilities to compromise 1,400 users, including journalists, activists and politicians.

Last month, a US federal court ordered the NSO Group to pay WhatsApp and Meta nearly US$170 million in damages for the hack.

Another Israeli company, Paragon Solutions, also recently targeted nearly 100 WhatsApp accounts. The company used advanced spyware to access private communications after they had been de-encrypted.

These kinds of attacks often use “spearphishing”. This is distinct from regular phishing attacks, which generally involve an attacker sending malicious links to thousands of people.

Instead, spearphishing involves sending targeted, deceptive messages or files to trick specific individuals into installing spyware. This grants attackers full access to their devices – including de-encrypted WhatsApp messages.

A spearphishing email might appear to come from a trusted colleague or organisation. It might ask the recipient to urgently review a document or reset a password, leading them to a fake login page or triggering a malware download.

How to protect yourself from ‘spearphishing’

To avoid spearphishing, people should scrutinise unexpected emails or messages, especially those conveying a sense of urgency, and never click suspicious links or download unknown attachments.

Hovering the mouse cursor over a link will reveal the name of the destination. Suspicious links are those with strange domain names and garbled text that has nothing to do with the purported sender. Simply hovering without clicking is not dangerous.

Enable two-factor authentication, keep your software updated, and verify requests coming through trusted channels. Regular cybersecurity training also helps users spot and resist these targeted attacks.

David Tuffley, Senior Lecturer in Applied Ethics & CyberSecurity, Griffith University

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

The first term of the Albanese government was defined by its fight against inflation, but the second looks like it will be defined by a need to kick start Australia’s sluggish productivity growth.

Productivity is essentially the art of earning more while working less and is critical for driving our standard of living higher.

The Productivity Commission, tasked with figuring out how to get Australia’s sluggish productivity back on track, is pushing hard for corporate tax cuts as a key part of their plan for building a “dynamic and resilient economy”.

The idea? Lower taxes will attract more foreign investment, get businesses spending again and eventually boost workers’ productivity.

Commission chair, Danielle Wood, said last week while the commission wanted to create more investment opportunities, it was aware this would hit the budget bottom line:

So we’re looking at ways to spur investment while finding other ways we might be able to pick up revenue in the system.

The general company tax rate is currently 30% for large firms, and there’s a reduced rate of 25% for smaller companies with an overall turnover of less than A$50 million.

What the textbooks and other countries tell us

The Productivity Commission’s theory makes sense: if you make capital cheaper and you should get more of it flowing in.

A larger stock of capital means there is more to invest in Australian workers. This should make us more productive and help boost workers’ wages. And looking overseas, the evidence mostly backs this up.

A meta-analysis of 25 studies covering the US, UK, Japan, France, Germany, Canada, Netherlands, Sweden, Italy, Switzerland,
Denmark, Portugal and Finland found every percentage point you slice off the corporate tax rate brings in about 3.3% more foreign direct investment.

Other research shows multinational companies really do move their operations to places with lower tax rates. This explains why we’re seeing this race to the bottom across Europe and North America, with countries constantly trying to undercut each other.

Research on location decisions shows how multinationals reshuffle their operations based on effective average tax rates.

Even within the United States, a US study found increases in corporate tax rates lead to big reductions in employment and wage income. However, corporate tax cuts can boost economic activity – though typically only if they are implemented during recessions.

Australia’s limited track record

Here in Australia we don’t have much local evidence to go on, and what we do have is pretty puzzling.

This matters because Australia’s corporate tax system has some unique features that may make overseas evidence less relevant. We have dividend imputation (franking credits), different treatment of capital gains, access to immediate reimbursement for some small business expenses and complex capitalisation rules that limit debt deductions for multinationals.

The Federal Government is focussed on improving productivity. In this five-part series, we’ve asked leading experts what that means for the economy, what’s holding us back and their best ideas for reform.

A study by a group of Australian National University economists looked at how the tax system affects business investment. They examined the [2015 and 2016 corporate tax cuts] for small businesses using data on business investment from the Australian Bureau of Statistics combined with tax data from the Australian Tax Office.

The findings were mixed. After the 2015 cut, firms already investing in buildings and equipment spent more — that is, the policy boosted investment only at the intensive margin.

By contrast, there was no evidence it enticed firms that had not been investing to start doing so. The follow-up cut in 2016 had even less bite. Its estimated effect on investment was so small it is statistically indistinguishable from zero.

It remains unclear why the previous corporate tax reductions largely failed to produce a measurable increase in investment. Perhaps the tax cut itself was simply too modest. Or the available data was too volatile to capture its effects.

But it runs contrary to what economic theory tells us to expect. This should give us pause for thought.

The big questions nobody can answer yet

For politicians thinking about another round of corporate tax cuts, this creates an uncomfortable situation. We’ve got solid evidence from overseas it works, but only one weak data point from Australia, plus a lot of head-scratching about why the second cut didn’t move the dial.

Fortunately, the Productivity Commission has the in-house expertise to further investigate this question.

Before we make further cuts to the company tax rate, we should have an in-depth study of these two tax cuts replicating and extending the previous work to see what effect – if any – they had on investment, employment, productivity and Australian living standards.

Until we can solve these puzzles, Australia’s debate over corporate tax rates will keep spinning its wheels. Much like our national productivity itself.

Isaac Gross, Lecturer in Economics, Monash University

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

To many Australians, the NRL’s State of Origin (SOO) is just a game. To die-hard rugby league fans, the three encounters are more important than test matches against other countries and actually rival grand final day, because it’s not exclusive to two fanatical groups of followers, whose teams luckily have made it to the last game of the season.

The encounters don’t only generate interstate rivalry between New South Wales and Queensland, as other states line up to historically support the team from the north over the ‘big dog’ state that pioneered the Australian story after 1788. But these games don’t just generate interstate sporting rivalry, they create economic growth and lead to a spike in sickies by over-involved supporters.

This won’t surprise you, but ING has looked past the state-v-state, mate-v-mate rivalry that has driven national interest in these games. With Game Two set to be played in Perth tonight, ING has taken a look at the money that gets spent over these three games played over May to July. This research has come at a time when the economy needs a boost, with the March quarter economic growth number coming in at a weak 0.2%. The Australian Bureau of Statistics has shown we’re in a per capita recession.

Turning this economy around to get economic growth closer to 1% a quarter rather than the 0% that it is now, will rely on consumers and businesses spending more, and the global economy not being trumped by the crazy tariffs of the US President.

For the record, exports contribute over 20% to our overall growth of goods and services. The NRL is actually an exporter, earning money from overseas with its tours/games played with other countries, including the annual kick-off game in Las Vegas.

However, the main game is at home. And this is what ING’s Matt Bowen has identified gets spent over the State of Origin period:

1. $1.1 billion is expected to be spent because of the State of Origin.
2. Stadium watchers will fork out $408 per person and $612 million in total.
3. Queenslanders are tipped to increase spending on State of Origin related matters by $30 million this year.
4. New South Wales supporters will cut spending by $16 million.
5. Unbelievably, one third of Aussies will ‘chuck a sickie’ if their team wins the series, with Queensland fans 14% more likely than NSW fans to pull this work-dodging stunt.
6. Home watchers spend $43 on average.
7. While Pub/club watchers in NSW spend about $100, Queenslanders fork out only $80. However, the former is a more expensive state for real estate, wages and many goods and services, reflecting the price of properties and the size of the capital cities.

While these numbers might surprise you, all this is nothing more than a snapshot of a bigger spending picture that’s very important to our overall economy.

ING’s research reveals that we spend $19 billion a year on sporting fandom, which tells footy-haters that our passion for the players on the field each weekend isn’t a waste of time, though it might have a regrettable side effect. At a time when even the galah at the local pet shop is crying out for greater productivity (which is more goods and services from Aussie workers), the research shows that 1.3 million workers admitted they have taken ‘a sickie’ to watch a major match.

That said, it seems like elevating sport over work commitments has an historically famous moment that indicates that even one of our Prime Ministers i.e., Bob Hawke endorsed sickies after we won the America’s Cup in 1983. Hawke told the country: “Any boss who sacks anyone for not turning up today is a bum!”

Finally, for those who see the value in a post-match sickie, there’s proof that a happy worker is actually more productive! In collaboration with British multinational telecoms firm BT, research by Oxford University’s Saïd Business School has found a conclusive link between happiness and productivity.

An extensive study into happiness and productivity has found that workers are 13% more productive when happy. The research was conducted in the contact centres of British telecoms firm BT over a six month period by Jan-Emmanuel De Neve (Saïd Business School, University of Oxford) George Ward (MIT) and Clement Bellet (Erasmus University Rotterdam). ‘We found that when workers are happier, they work faster by making more calls per hour worked and, importantly, convert more calls to sales,’ said Professor De Neve.

I guess if watching the State of Origin and sickies make a worker happier, there might be a payoff that ‘bum’ bosses don’t comprehend!

As Prime Minister Anthony Albanese and Treasurer Jim Chalmers turn their attention to improving productivity growth across the economy, it will be interesting to see what the business community brings to a planned summit in August.

Labour productivity (output per hour worked) has barely grown this decade.

Much of the focus in the current debate has been on the role of workers (labour) and industrial relations. Less discussed has been low business investment (capital).

Labour will be more productive if each worker can use more capital: machinery, equipment and technology. Over the medium term, providing workers with more capital – “capital deepening”, in the jargon – tends to be the main contributor to labour productivity growth.

But business investment as a share of gross domestic product (GDP) is currently at its lowest level since the mid-1990s.

Investment is low in both the mining and non-mining sectors. In the latest national accounts report for the March quarter, business investment in machinery and equipment fell 1.7%.

The average worker now uses less capital equipment – machines and computers – than a decade ago. Investment just hasn’t kept pace with growth in employment.

Why is investment so weak?

One possible reason was put forward by then Reserve Bank governor Philip Lowe in 2023. He suggested that, during the COVID pandemic, firms concentrated on surviving. Seeking out more efficient ways to produce was a lower priority. But post-pandemic, firms seem to have been slow to pivot back to an efficiency focus.

Another reason may be that, until recently, wage growth has been slower than the growth in prices of goods and services produced. This may have reduced the incentives for firms to invest in the equipment needed to boost labour productivity.

A key driver of investment is profitability. Firms are more likely to fund investment from retained earnings than by borrowing or raising capital. But the share of corporate profits in the economy has been quite high in recent years. So this does not explain low investment.

The ‘animal spirits’ are lacking

Business confidence – what economist John Maynard Keynes famously called “animal spirits” – is another important driver.

Share prices, both in Australia and the rest of the world, have grown strongly in recent years. The S&P/ASX 200 index of Australian share prices is close to its all-time high. This would suggest financial markets are very optimistic about the prospects of Australian companies.

Direct surveys of Australian businesses from National Australia Bank suggest conditions (the current situation) and confidence (about the future) are around their long-term average level. So this also does not explain the low investment.

One contributor to low investment may be that firms are applying inappropriately high “hurdle rates”. These refer to the minimum return firms expect from an investment before they will undertake it.

Hurdle rates tend to be “sticky” over time, meaning they do not move much. Many companies still apply hurdle rates of over 12%. These were appropriate back when interest rates and inflation were much higher, but seem too high now as borrowing costs have fallen with interest rate cuts.

The Productivity Commission has suggested one contributor to low investment could be a higher risk premium. Since the global financial crisis in 2007-08, companies and investors may have become more cautious about taking on risk.

Another factor could be growing market power of Australian companies that dominate a sector, making them complacent rather than striving to improve their performance.

The high degree of uncertainty

The Reserve Bank recently compiled two measures of uncertainty. One is derived from stock markets. The other is based on the number of news articles about policy uncertainty.

Both show the current environment is as uncertain now as it was during the early stages of the global financial crisis in 2007–08 and the COVID pandemic.

A common response to uncertainty is to defer decisions on both investment and hiring new workers until the outlook is clearer. A study by the Reserve Bank found that greater uncertainty did indeed reduce investment. But the size of the impact was – you guessed it – uncertain.

What can be done?

Business lobbies often attribute low rates of investment (and anything else they think people may not like) to “excessively high” corporate tax rates. But at 30% for large companies and 25% for small, the company tax rate is low by historical standards.

Some multinational firms may be deterred from entering the Australian market as our company tax rate is above that in some other jurisdictions. It is hard to tell how important this effect is. Company tax is only one of many factors that affect the comparative risk and return of Australia as an investment destination.

The Productivity Commission is investigating whether the corporate taxation system could be made more efficient rather than just lowering rates.

In the meantime, however, firms may be encouraged to invest more by a more stable domestic economic outlook. Inflation is back within the central bank’s 2-3% target range. Employment is around an all-time high proportion of the working age population. The election has removed some political uncertainty with a government holding a clear majority.

Businesses should stop whingeing and start providing workers with the tools they need to become more productive.

This article is part of The Conversation’s series, The Productivity Puzzle. To read other articles in the series, click here.

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.

For the first time in its 124-year history, Treasury will be led by a woman.

Jenny Wilkinson’s appointment is historic in its own right. Even more remarkable is the fact she joins Michele Bullock at the Reserve Bank and Danielle Wood at the Productivity Commission.

Australia’s three most powerful economic institutions are now led by women economists. In economics, this is not normal. But it certainly does matter.

Stubbornly male

Imagine if only 17% of economics professors were men. It would feel unusual; people would ask why the field was so heavily skewed. But the reality is the opposite: 83% of economics professors in Australia are male.

And yet, this imbalance is almost invisible. Women make up just about one-third of secondary pupils studying economics and 40% of students enrolled in economics courses at university.

In the private sector, women economists are roughly one in three.

So while the appointments of Wilkinson, Bullock and Wood feels groundbreaking, the profession as a whole remains stubbornly male. Still, the leadership story is worth celebrating. When young women see leaders who look like them, they’re more likely to imagine themselves in those roles too.

As women increasingly take the helm, the old stereotype of a suit-clad man with a briefcase gives way to a broader, more inclusive image of what an economist can be.

The public service is leading the charge. As of 2023, women held 53% of senior executive service positions in the Australian Public Service, up from 46% in 2019.

Merit and diversity

Thankfully, unlike other parts of the world, we live in a country where these appointments haven’t triggered claims of so-called “diversity hires”. To be clear: these female pioneers weren’t appointed because they are women.

Each has decades of experience, technical firepower, and deep policy credentials. Wilkinson has led the Department of Finance and the Parliamentary Budget Office. Bullock has held almost every senior role at the Reserve Bank. Wood has shaped public debates on intergenerational equity and tax reform with clarity and rigour.

The idea that diversity is somehow in tension with merit is a false binary. Diverse groups make better decisions and are more creative, especially in high-stakes settings.

Decades of economics and business research has shown that incorporating diverse perspectives into decision-making only strengthens the outcomes. Decisions made and executed by diverse teams delivered 60% better results than those by non-diverse teams.

Merit isn’t just what’s on paper, it’s shaped by how we judge it.

When men and women perform equally well, success is more often credited to skill for men and to luck for women. Swap a male name for a female one on a CV, teaching evaluation or reference letter, and perceptions of competence, leadership and hireability start to shift.

These unconscious biases don’t just affect who gets ahead; they shape how we define merit in the first place.

Will it make a difference?

Economics often prides itself on being objective and neutral. While the economic models may be technically gender-blind, the questions we ask and investigate rarely are.

This is where gender diversity matters – not just in who holds the top jobs, but in what gets researched and how decisions are made. There’s growing evidence male and female economists don’t just ask different questions, they also approach problems differently.

One study found female central bankers tend to act with greater independence and deliver lower inflation. A United States study and another in Europe showed striking gender differences in how economists think about a range of areas, including labour markets, taxation, health and the environment, and more broadly on public spending – everything from welfare to the military.

Having more diverse perspectives doesn’t dilute economics – it deepens it. It makes the discipline more responsive to the diversity of the real-world challenges it’s meant to address.

Economic policies impact the whole society. So does the composition of economists.

So, what’s next?

Of course, three women in top economic roles won’t create miracles overnight – they all operate within existing systems and structures.

So, what can we expect from Wilkinson’s leadership? Her time at the Department of Finance suggests a steady, pragmatic hand: consultative, strategic and deeply experienced.

Wilkinson brings bipartisan credibility, a sharp grasp of fiscal discipline, and the capacity to act decisively in a crisis, as we saw during COVID. She won’t remake Treasury overnight, but she’s well placed to lead it with rigour, integrity and a long-term view.

This moment matters for women in economics. It shows change is possible in the profession, and it could mark the start of economic policy that truly reflects the diversity of the people it serves.

Duygu Yengin, Associate Professor of Economics, University of Adelaide

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

Ahead of a meeting between Prime Minister Anthony Albanese and US President Donald Trump at the G7 Summit Canada, two key developments have bumped defence issues to the top of the alliance agenda.

First, in a meeting with Deputy Prime Minister Richard Marles late last month, US Secretary of Defence Pete Hegseth urged Australia to boost defence spending to 3.5% of gross domestic product (GDP).

This elicited a stern response from Albanese that “Australia should decide what we spend on Australia’s defence.”

Then, this week, news emerged the Pentagon is conducting a review of the AUKUS deal to ensure it aligns with Trump’s “America First” agenda.

Speculation is rife as to the reasons for the review. Some contend it’s a classic Trump “shakedown” to force Australia to pay more for its submarines, while others say it’s a normal move for any new US administration.

The reality is somewhere in between. Trump may well see an opportunity to “own” the AUKUS deal negotiated by his predecessor, Joe Biden, by seeking to extract a “better deal” from Australia.

But while support for AUKUS across the US system is strong, the review also reflects long-standing and bipartisan concerns in the US over the deal. These include, among other things, Australia’s functional and fiscal capacity to take charge of its own nuclear-powered submarines once they are built.

So, why have these issues come up now, just before Albanese’s first face-to-face meeting with Trump?

To understand this, it’s important to place both issues in a wider context. We need to consider the Trump administration’s overall approach to alliances, as well as whether Australia’s defence budget matches our strategy.

Trump, alliances and burden-sharing

Senior Pentagon figures noted months ago that defence spending was their “main concern” with Australia in an otherwise “excellent” relationship.

But such concerns are not exclusive to Australia. Rather, they speak to Trump’s broader approach to alliances worldwide – he wants US allies in Europe and Asia to share more of the burden, as well.

Trump’s team sees defence spending (calculated as a percentage of GDP) as a basic indicator of an ally’s seriousness about both their own national defence and collective security with Washington.

As Hegseth noted in testimony before Congress this week, “we can’t want [our allies’] security more than they do.”

Initially, the Trump administration’s burden-sharing grievances with NATO received the most attention. The government demanded European allies boost spending to 5% of GDP in the interests of what prominent MAGA figures have called “burden-owning”.

Several analysts interpreted these demands as indicative of what will be asked of Asian partners, including Australia.

In reality, what Washington wants from European and Indo-Pacific allies differs in small but important ways.

In Europe, the Trump administration wants allies to assume near-total responsibility for their own defence to enable the US to focus on bigger strategic priorities. These include border security at home and, importantly, Chinese military power in the Indo-Pacific.

By contrast, Trump’s early moves on defence policy in Asia have emphasised a degree of cooperation and mutual benefit.

The administration has explicitly linked its burden-sharing demands with a willingness to work with its allies – Japan, South Korea, Australia and others – in pursuit of a strategy of collective defence to deter Chinese aggression.

This reflects a long-standing recognition in Washington that America needs its allies and partners in the Indo-Pacific perhaps more than anywhere else in the world. The reason: to support US forces across the vast Pacific and Indian oceans and to counter China’s growing ability to disrupt US military operations across the region.

In other words, the US must balance its demands of Indo-Pacific allies with the knowledge that it also needs their help to succeed in Asia.

This means the Albanese government can and should engage the Trump administration with confidence on defence matters – including AUKUS.

It has a lot to offer America, not just a lot to lose.

Australian defence spending

But a discussion over Australia’s defence spending is not simply a matter of alliance management. It also speaks to the genuine challenges Australia faces in matching its strategy with its resources.

Albanese is right to say Australia will set its own defence policy based on its needs rather than an arbitrary percentage of GDP determined by Washington.

But it’s also true Australia’s defence budget must match the aspirations and requirements set out in its 2024 National Defence Strategy. This is necessary for our defence posture to be credible.

This document paints a sobering picture of the increasingly fraught strategic environment Australia finds itself in. And it outlines an ambitious capability development agenda to allow Australia to do its part to maintain the balance of power in the region, alongside the United States and other partners.

But there is growing concern in the Australian policy community that our defence budget is insufficient to meet these goals.

For instance, one of the lead authors of Australia’s 2023 Defence Strategic Review, Sir Angus Houston, mused last year that in order for AUKUS submarines to be a “net addition” to the nation’s military capability, Australia would need to increase its defence spending to more than 3% of GDP through the 2030s.

Otherwise, he warned, AUKUS would “cannibalise” investments in Australia’s surface fleet, long-range strike capabilities, air and missile defence, and other capabilities.

There’s evidence the Australian government understands this, too. Marles and the minister for defence industry, Pat Conroy, have both said the government is willing to “have a conversation” about increasing spending, if required to meet Australia’s strategic needs.

This is all to say that an additional push from Trump on defence spending and burden-sharing – however unpleasantly delivered – would not be out of the ordinary. And it may, in fact, be beneficial for Australia’s own deliberations on its defence spending needs.

Thomas Corben, Research Fellow, Foreign Policy and Defence, University of Sydney

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

The weekend attacks on Iran’s oil facilities – widely seen as part of escalating hostilities between Israel and Iran – represent a dangerous moment for global energy security.

While the physical damage to Iran’s production facilities is still being assessed, the broader strategic implications are already rippling through global oil markets. There is widespread concern about supply security and the inflationary consequences for both advanced and emerging economies.

The global impact

Iran, which holds about 9% of the world’s proven oil reserves, currently exports between 1.5 and 2 million barrels per day, primarily to China, despite long-standing United States sanctions.

While its oil output is not as globally integrated as that of Saudi Arabia or the United Arab Emirates, any disruption to Iranian production or export routes – especially the Strait of Hormuz, through which about 20% of the world’s oil supply flows – poses a systemic risk.

Markets have already reacted. Brent crude prices rose more than US 6%, while West Texas Intermediate price increased by over US 5% immediately after the attacks.

These price movements reflect not only short-term supply concerns but also the addition of a geopolitical risk premium due to fears of broader regional conflict.

International oil prices may increase further as the conflict continues. Analysts expect that Australian petrol prices will increase in the next few weeks, as domestic fuel costs respond to international benchmarks with a lag.

Escalation and strategic intentions

There is growing concern this conflict could escalate further. In particular, Israel may intensify its targeting of Iranian oil facilities, as part of a broader strategy to weaken Iran’s economic capacity and deter further proxy activities.

Should this occur, it would put even more upward pressure on global oil prices. Unlike isolated sabotage events, a sustained campaign against Iranian energy infrastructure would likely lead to tighter global supply conditions. This would be a near certainty if Iranian retaliatory actions disrupt shipping routes or neighbouring producers.

Countries most affected

Countries reliant on oil imports – especially in Asia – are the most exposed to such shocks in the short term.

India, Pakistan, Indonesia and Bangladesh rely heavily on Middle Eastern oil and are particularly vulnerable to both supply interruptions and price increases. These economies typically have limited strategic petroleum reserves and face external balance pressures when oil prices rise.

China, despite being Iran’s largest oil customer, has greater insulation due to its diversified suppliers and substantial reserves.

However, sustained instability in the Persian Gulf would raise freight and insurance costs even for Chinese refiners, especially if the Strait of Hormuz becomes a contested zone. The strait, between the Persian Gulf and the Gulf of Oman, provides the only sea access from the Persian Gulf to the open ocean.

Australia’s exposure

Australia does not import oil directly from Iran. Most of its crude and refined products are sourced from countries including South Korea, Malaysia, the United Arab Emirates and Singapore.

However, because Australian fuel prices are pegged to international benchmarks such as Brent and Singapore Mogas, domestic prices will rise in response to the global increase in oil prices, regardless of whether Australian refineries process Iranian oil.

These price increases will have flow-on effects, raising transport and freight costs across the economy. Industries such as agriculture, logistics, aviation and construction will feel the pinch, and higher operating costs are likely to be passed on to consumers.

Broader economic impacts

The conflict could also disrupt global shipping routes, particularly if Iran retaliates through its proxies by targeting vessels in the Red Sea, Arabian Sea, or Hormuz Strait.

Any such disruption could drive up shipping insurance, delay delivery times, and compound existing global supply chain vulnerabilities. More broadly, this supply shock could rekindle inflationary pressures in many countries.

For Australia, it could delay monetary easing by the Reserve Bank of Australia and reduce consumer confidence if household fuel costs rise significantly. Globally, central banks may adopt a more cautious approach to rate cuts if oil-driven inflation proves persistent.

The attacks on Iran’s oil fields, and the likelihood of further escalation, present a renewed threat to global energy stability. Even though Australia does not import Iranian oil, it remains exposed through price transmission, supply chain effects and inflationary pressures.

A sustained campaign targeting Iran’s energy infrastructure by Israel could amplify these risks, leading to a broader energy shock that would affect oil-importing economies worldwide.

Strategic reserve management and diplomatic engagement will be essential to contain the fallout.

Joaquin Vespignani, Associate Professor of Economics and Finance, University of Tasmania

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

Whenever a high-profile company lists on the Australian stock market it attracts much excitement. Employees and founders enjoy some financial gains and investors get a chance to invest in a potentially exciting stock.

For these reasons, fast-food chain Guzman Y Gomez was one of the biggest financial events of 2024. It undertook an initial public offering which meant for the first time, its shares were available to the public and started being traded on the stock exchange.

However, such public offerings have become rare with many companies remaining private instead of listing on the market.

Indeed, the number of businesses in Australia listed on the stock exchange is declining. This has been described as the worst public offering drought “since the global financial crisis”.

The number of initial public offerings since 2000

In response, on Monday, the Australian Securities and Investment Commission (ASIC) announced measures to encourage more listings by streamlining the initial public offering process.

How do companies list on the stock exchange?

Firms undertake an initial public offering by filing documents with ASIC. These includes a “prospectus”, which details the information investors might need to evaluate whether to buy shares.

ASIC reviews the documentation and then decides if changes are necessary or whether to let the business list.

Typically, this requires the business to use an investment bank to manage the process and a law firm to prepare the documentation. The business will also engage an underwriter to evaluate the offering and ensure it raises enough capital. All these services cost money.

When they are trading, the business must comply with additional regulations imposed by ASIC and the Australian Securities Exchange. These include meeting corporate governance, continuous disclosure and other operating requirements.

Why should a business lists its shares?

There are many potential gains for a business and the public to list on the stock exchange.

Companies can encourage employees by paying them with shares in the business. This gives workers buy-in to the company they help to build. This is much easier when it is listed because employees can identify the value of that incentive and sell shares when they choose.

Being listed can also help raise capital. Having shares listed helps the business raise money to expand. In a direct sense, initial public offerings do this by enabling the firm to sell shares directly to the public rather than being restricted to the subset of investors who can invest in unlisted stocks.

In an indirect sense, being publicly listed forces businesses to comply with even more stringent disclosure rules. This can give lenders and investors more confidence in the firm.

Further, because the shares are now readily traded in the market, they can now be more easily used to acquire, or merge with, another company.

What does ASIC intend to do?

The commission believes one of the biggest barriers to listing on the market is the initial documentation and administrative requirements. They believe if they can slash red tape there will be more listings.

The goal is to help them get their documents in order from the beginning, to reduce the potential number of changes that may be needed. ASIC believes it will make the process cheaper and quicker, and enable firms to better time the initial public offerings for periods of strong demand.

The fast track process would only be open to businesses with a market capitalisation of at least A$100 million and firms that had no ASX escrow requirement.

An escrow is a financial and legal agreement designed to protect buyers and sellers in a transaction. An independent third party holds payment for a fee, until everyone fulfils their transaction responsibilities.

What else could ASIC do?

ASIC’s plan to reduce red tape will help but there are other barriers to businesses listing on the sharemarket. These include:

• share structures and control: founders are often psychologically invested in their companies and prefer to retain control over the business they built after listing.

This is part of the reason “dual-class” share structures exist in the United States. These give some shareholders supernormal voting rights, enabling them to retain control. Singapore and Hong Kong also offer dual class structures.

Australia doesn’t have a dual-class system, but enabling such structures could make the market more attractive

• disclosure and expense: the initial public offering process is expensive. ASIC’s plan does partly address this, but only for larger businesses, which ironically have greater financial resources to pay the service providers.
• governance requirements: the ASX imposes corporate governance requirements on businesses that publicly list on the market. These requirements take a one-size-fits-all to factors such as who should be on the board of directors. These requirements appear to cost extra with an unclear financial gain. And the ASX’s rules appear not to be evidence-backed.
• escrows: ASIC’s fast track process is only available if the firm does not have to satisfy an escrow requirement. An escrow requirement typically applies when an early investor, or a founder, is involved. This is to stop such people from opportunistically selling shares at an inflated process, which then nosedives. It is not clear why ASIC excluded such businesses from fast track review. Smaller companies are some of the most likely to be subject to escrow. So they are the most likely to benefit from reducing the cost-barriers to listing.

ASIC has tried to reduce red tape for larger businesses, but the changes don’t go far enough and more work is necessary to address the underlying factors that cause firms to stay private for longer.