Is it time to raise the GST?

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Australia is hurtling into a new political era, and the Victorian election will be where the change happens. I'm Raph Epstein, and every Friday, I'm taking over the Politics Now podcast to explore the forces changing Australian politics. Can One Nation turn its popular support into political power? Are voters sick of the Labor Party? And can the Liberal Party finally win in Victoria?

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Carrington Clarke (0:38)

The price of Brent Crude has taken another leg up, flirting with 110 US dollars a barrel over the weekend, pulling even greater focus onto how high energy costs are affecting the global economy. Meanwhile, with Australia's increasingly expensive public debt putting pressure on government budgets, it's now the time for major tax reform. And would any major party be willing to increase the GST?

Welcome to ABC Business Daily.

Michael Janda (1:09)

And I'm ABC News Business Editor Michael Janda.

Carrington Clarke (1:12)

Michael, let's start by looking at what's happening with energy prices. It does feel like we've again had a step change when it comes to Brent Crude. It was kind of hovering around 105 dollars for a couple of weeks there.

It now seems to have taken another step up, flirting with 110 US dollars a barrel. I know there's always a danger in being too obsessed with kind of round numbers, but they are psychologically important.

Michael Janda (1:36)

There's sort of resistance levels. I mean, it's interesting that it didn't quite get to 110 So maybe there is a little bit of a resistance, but that kind of tells you, you know, the charters out there would say, well, if it does break through that, then there'll be another leg higher.

Carrington Clarke (1:51)

Yeah, it is starting to get kind of dangerously high, particularly when we look at kind of some of the forecasts that are built into central banks around the world, including the RBA. So the main factors at play seem to be, well, it was the energy ceasefire that wasn't. We're now seeing...

Michael Janda (2:10)

But did anyone actually believe that?

Carrington Clarke (2:12)

I think there was some, I remember when the Trump announcement first came, there was, I think, some optimism that perhaps there could have been some sort of move on both sides, but obviously that is not the case. Russia repeatedly has struck Ukrainian energy infrastructure.

Ukraine now sending what seems to be about a thousand drones penetrating deep into Russia and hitting key oil depots, energy infrastructure, et cetera.

Michael Janda (2:42)

A big facility in St. Petersburg, for instance, I think.

Carrington Clarke (2:45)

Yeah, I mean, they are really striking, right? Not only the industrial heart, but also the civilian heart of... They're not targeting civilians, it appears, but they... This is close to where people live.

Michael Janda (2:54)

Yeah, these are refineries that the big population centers in Moscow and St. Petersburg can actually see the flames and the smoke.

Carrington Clarke (3:00)

So yeah, definitely taking the war directly to them. On the other hand, so the kind of two major spheres of conflict when it comes to energy infrastructure, the energy wars, the Middle East, it does appear that we've seen an increase in the amount of oil getting out of the Middle East, but at much higher costs because of the very costly system of either shuttling oil from ship to ship, smaller ship to bigger ships to get it kind of around the danger of going past Iran without approval.

That's coming with associated costs on the end product. So even if they're getting out more oil than they were before, it's at much higher cost base than it was before, and that's part of the reason we're seeing higher prices.

Michael Janda (3:42)

We've seen a ramp up in attacks too. So towards the end of last week, we saw the Iranians hit more ships than they have in a long time, and that is again raising the costs and the risks, and also looks like from a recent peak where quite a lot of oil was getting out through this ship-to-ship transfer method, that's actually dipped off again. And then I think US inventory's also had a surprise fall. So there's just been, it's not one big bang factor that's seen oil prices shoot up towards 110, but it looks like lots of little things that are reminding people, perhaps they shouldn't have forgotten in the first place, that these conflicts aren't going away, and if anything, they're getting worse rather than better.

Carrington Clarke (4:25)

Well, they're getting worse in the sense that just by this taking longer, we are not seeing the replenishment of the strategic reserves that have been tapped during this conflict. And so the longer this goes on, the greater the realisation that, well, it's going to be more expensive for longer.