Australian households are the most persistently pessimistic they have been since the early-1990s recession, after a fourth Reserve Bank rate rise.

Following the RBA’s decision to lift interest rates to the highest level since 2011, confidence among Australian consumers plunged about 20 per cent, according to the Westpac–Melbourne Institute consumer sentiment index on Tuesday.

The overall survey, conducted between September 28 and October 1, showed the index dropped by 4.7 per cent to 80.4 in October – the worst level since the outbreak of the Middle East conflict in early April.

But for respondents surveyed after the RBA call on September 29, the index dropped to 67.2 – the lowest level since the late 1990s.

That was broadly in line with the weekly ANZ-Roy Morgan consumer survey, which fell about five per cent to 67.1 points.

Sentiment has been extremely weak for the longest period since the “disastrous” recession of the early 1990s, Westpac’s head of Australian macro-forecasting, Matthew Hassan, said.

“Australian consumers remain stuck in a cost-of-living nightmare that seems to have no end in sight,” Mr Hassan said.

“The latest RBA move looks to have badly rattled consumers. Responses over the course of the survey week show a very sharp deterioration after the decision was announced.”

Assessments of family finances and buyer sentiment were the biggest categories impacted.

Expectations about the economic outlook fell less sharply, but assessments about the economy in the next five years were back to lows not seen since August 2020, shortly following Melbourne’s second lockdown and before JobKeeper subsidies were expanded.

AMP economist My Bui said the the decline was unsurprising following the September rate hike and amid rising fuel prices.

“On our calculation the weekly petrol bill for a typical Australian household has gone up by $20 versus the beginning of the year,” she said.

“The worry with declining confidence is that it tends to correlate with household spending on a per capita basis: the downtrend in confidence over the past twelve months suggests consumption per person will likely fall further into contraction this year.”

Given rising borrowing costs, mortgage holders were the most pessimistic home ownership sub-group, at 77 index points.

Those who own their home outright experienced the largest decline in sentiment in the month, as the housing market downturn extended for a sixth month.

Renters were the most optimistic, unchanged at 84.8 points.

Fears of job losses are rising as well, with unemployment expectations ticking up 1.9 per cent higher, Mr Hassan said.

But there are still signs the labour market is holding strong.

“The one positive for households is that job vacancies have increased to a two year high of 122 points, which accords with business sentiment expectations of positive employment growth,” said Citi analysts Josh Williamson and Faraz Syed.

Home buyers are holding off to see where the falling Australian housing market lands as high interest rates, stubborn living costs and federal tax changes weigh on valuations.

After a strong financial year of loan growth at People First Bank – Australia’s largest customer-owned bank – demand has begun to soften, chief executive Steve Laidlaw says.

“I think absolutely people are holding back in terms of potential purchases just to see where the market lands, and of course, it’s creating some hesitancy potentially on the sell side as well,” he told AAP.

“Potentially, you’re talking about a 10 per cent reduction in housing prices, and I’ve read others are saying potentially 15 per cent.

“I suspect it won’t be as pronounced as that.”

House prices have fallen 6.4 per cent in 2026, according to property data firm Cotality, dividing aspiring first home buyers, property investors and some new owners with loans worth more than their houses.

The Reserve Bank of Australia last week increased the official cash rate to 4.6 per cent, its highest level in 15 years.

Bigger banks have passed the rise on to customers in the form of higher mortgage rates.

“For many borrowers, I think this is the first time they’ve experienced rates at this level with the potential for another rate rise, and some are saying potentially two,” Mr Laidlaw said.

“I would expect there to be some pressure around credit, and people in some sort of repayment distress, but the bank is very well prepared to support customers experiencing some of those challenges.”

While shrinking home loan demand and limited growth were weighing on major bank valuations, Mr Laidlaw said People First’s challenger status left it well-positioned to weather the current market headwinds.

“We can often perform better than the general market off of a smaller base, so if there is some moderation in terms of lending growth, we can certainly manage that,” he said.

People First handed down its 2025/26 financial results on Tuesday, which showed its bottom-line profit rose by roughly a 10th to $48.7 million in the year ended June 30.

Total loans and advances grew eight per cent to $22.8 billion, while total assets expanded seven per cent to $27.1 billion as the bank added 36,000 new members, taking its ranks to 750,000.

“We’ve only got the one stakeholder, so we don’t have that tension between shareholder expectations regarding profits and dividends,” Mr Laidlaw said.

“We can put our entire focus into our customers with good rates and strong levels of service, but also do the right thing by the communities in which we live and work.”

Formed when Heritage Bank and People’s Choice Credit Union merged in 2023, People First Bank now has joint headquarters in Adelaide and Toowoomba.

Concerns over France’s fiscal position has pushed the euro to a 17-month ‌low and weighed on French assets, though easing bets of a Fed rate hike have supported broader markets.

The pan-European STOXX 600 index rose 0.3 per cent on Monday morning, though Paris’s benchmark index fell ‌0.9 per cent to a fresh six-month low.

Spanish Prime Minister Pedro Sanchez called an early election in November, in a bid to strengthen his mandate following the rejection of the government’s key housing decrees.

Initial market reaction, however, was ‌subdued as the decision was not unexpected.

Shares in Asia gained and US futures were steady.

In Brazil, stocks were expected to jump after it became clear that right-wing Senator Flavio Bolsonaro will face leftist President Luiz Inacio Lula da Silva in a presidential run-off after outperforming expectations in the first round of voting.

A Brazilian exchange-traded-fund in Frankfurt jumped 15 per cent.

The euro fell 0.8 per cent to a 17-month low of $US1.1160 overnight before recovering some ground to trade at $US1.1208.

The single currency, down about 2.5 per cent in September, has come under pressure as investors fret over France’s rising debt and political gridlock ahead of ‌2027’s presidential election.

The premium ‌investors demand to hold French ⁠10-year bonds over safer Germany shot above 150 basis points on Friday, stoking concerns of a broader spillover across European markets.

“France is ​the real deal in terms of risk premia for the euro,” said Saxo strategist Neil Wilson, noting the government’s plans to reduce the budget deficit still face a parliamentary process and could be watered down.

“The move in French bond yields and spreads shows the market does not have faith the government will carry out the required fiscal reform.”

On Monday, French 10-year OAT yields added 6 bps to 4.9196 per cent, while the equivalent German yields fell about 1 bps to 3.4466 per cent.

The euro’s slide gave the dollar an extra lift, adding to support from elevated US Treasury yields and pushing the greenback up 0.3 per cent to 102.194.

Sterling slipped about 0.1 per cent to $US1.3233, ⁠while the yen was broadly steady at 157.91 per dollar.

Benchmark 10-year US Treasury ​yields retreated by around ‌1 bps to 5.2686 per cent while two-year yields stood at 4.7975 per cent, down 1.5 bps.

Still, yields across major economies remain near multi-year highs as bond prices come under pressure from deteriorating government finances, a ​glut of debt issuance and elevated energy costs.

Trading was thin in Asia with holidays in China, South Korea and parts of Australia, though equity markets in the region took their cue from Wall Street’s gains on Friday.

Data last week showed US job growth slowed more than expected in September and the non-farm payrolls count for the prior ​two ​months was revised sharply lower, leading investors to all but rule out another Fed rate ​increase in October.

That helped Japan’s Nikkei rise 2.4 per cent, while MSCI’s broadest index of Asia-Pacific shares outside Japan ‌gained 1.2 per cent.

Nasdaq futures and S&P 500 futures were both down less than 0.1 per cent.

Traders still ​expect a hike in December.

Oil prices edged lower as rising Middle East crude exports and a release of oil stocks by Group of Seven nations boosted supplies, offsetting concerns about further damage ​to Gulf oil infrastructure amid the US-Israeli war on Iran.

Brent ⁠crude futures were down 0.8 per cent at $US101.39 per barrel while US crude slid 1.4 per cent to $US89.84 a barrel.

Spot gold rose 0.5 per cent to $US4,162.9 an ounce.

A $7.3 million program to accelerate renewable energy generation in the Pacific has been launched by the federal government in response to criticism of its climate credentials. 

Energy Minister Chris Bowen announced the deal with Vanuatu at the pre-COP31 in Fiji on Monday, alongside a memorandum of understanding designed to boost the nation’s renewable energy workforce and development. 

But the deal comes as Australia faces renewed scrutiny over its fossil fuel exports and as the government considers the approval of a major coal-mine expansion. 

Ministers and participants from more than 50 nations are expected to attend the four-day climate summit in the Pacific before the headline United Nations’ Conference of the Parties meeting in Turkey in November.

Australia’s first funding commitment at the event was designed to help Vanuatu expand renewable energy resources, Mr Bowen said, including grid modelling and more early career engineers. 

“This is the sort of practical action that Australia takes to help the Pacific transition away from fossil fuels,” he said. 

“Some Pacific countries spend 25 per cent of their (gross domestic product) on diesel … that’s terrible for emissions, it’s terrible for respiratory health, and it’s terrible for the economy.”

The funding could help Vanuatu electrify all of its government buildings by 2030, including schools and hospitals, Energy Efficiency Council chief executive Luke Menzel said.

“If Vanuatu can do it, Australia can do it, and so can the world,” he said.

But the announcement came as other nations questioned Australia’s climate record, pointing to its ongoing expansion of fossil fuel exports as their nations face rising sea levels. 

The Hunter Valley Operations project, which would extend coal mining in NSW until 2045, is waiting for federal approval after the NSW Independent Planning Commission gave its go-ahead on Wednesday.

The Australia Institute and Australian Conservation Foundation placed a full-page advertisement in the Fiji Times as pre-COP31 began, apologising to Pacific islands for the coal mine expansion and calling it a “betrayal”. 

Australia had a track record of acknowledging climate change without addressing fossil fuels as a key cause, Greenpeace Australia Pacific’s COP31 lead Simon Bradshaw said.

An exceptionally hot European summer and fears of the impact from a powerful El Nino weather cycle, which is characterised by warm ocean temperatures, could add to the sense of urgency at the climate meetings.

Countries such as Fiji and Tuvalu contribute a fraction of global greenhouse gas emissions but face some of the most severe consequences of climate change, including rising seas, extreme heat, droughts and saltwater intrusion.

Amnesty International secretary-general Agnes Callamard said world leaders must listen to Pacific communities at the pre-COP event and act.

“Concern without action will not hold back the tide,” she said.

The billionaire owner of the NBL is leasing Tasmania’s largest indoor arena from its government for less than it would cost to rent a typical home in the area, according to figures from a parliamentary report. 

A parliamentary committee on Monday published a report that probed the Tasmanian government’s lease arrangement for MyState Bank Arena with basketball executive Larry Kestelman. 

It found his firm LK Group was effectively leasing the arena, formerly known as the Derwent Entertainment Centre, for less than $30,000 a year.

Shadow treasurer Dean Winter argued this was less than it would cost to rent a typical home in the surrounding Glenorchy area, north of Hobart’s city centre. 

“(Premier) Jeremy Rockliff appears hell-bent on giving Larry Kestelman a good deal, but not at all interested in the interests of Tasmanians,” he said on Monday.

The arena is home to the JackJumpers NBL team, which Mr Kestelman owned until 2025.

Under the lease agreement, LK Group pays a base rent of $200,000 a year, but the government provides a $175,000 hiring fee contribution to support community access to the venue.

The Standing Committee of Public Accounts report also reviewed engagements between the state government and Mr Kestelman’s firm for the sale of a parcel of prime waterfront land along the Derwent River. 

Mr Kestelman was first floated as a potential buyer for a Wilkinsons Point site worth an estimated $6 million in 2019, before Mr Rockliff announced in February 2025 the government had agreed to a broader sale for $500 million.

The committee found “serious and long-standing failures” in the government’s approach to the sale, which would allow LK Group to redevelop the site to include a multi-use retail precinct, family resort and hotel complex.

But the committee called for the government to pause negotiations while it resolved “deficiencies” with its approach to the sale. 

The proposed sale has been in the works for more than six years, but the committee found no binding sale or agreement had been reached.

This is despite Mr Rockliff announcing the sale had been agreed to in February 2025, at which point, the committee said, only a non-binding term sheet was in place. 

It also found the sale was never put to an open-market process to establish its value and that major questions about how infrastructure costs would be shared between taxpayers and the developer remained unsolved. 

Under the proposal, the state government would foot the bill for enabling infrastructure at the site, which Mr Rockliff said in 2025 would cost $12 million.

But departmental assessments put infrastructure costs as high as $100 million, roughly double the estimates calculated by LK Group.

“Despite years of negotiation, there is still no agreement on how these costs would be shared between the state and the proponent,” the report reads.

Mr Winters said the findings exposed a “staggering pattern of secret deals, governance failures and a disregard for taxpayer money”. 

The parliamentary committee held hearings into the arrangements in April, while negotiations over the sale of the site were on hold.

Its report made nine recommendations, including that the state government table a report on the sale of the site by November and review its lease with LK Group over the arena “as soon as practicable”. 

Liberal MP Marcus Vermey authored a dissenting report, claiming the findings overlooked the complexities of ongoing commercial negotiations.

Despite the findings, the government remained committed to selling the Wilkinsons Point site, a spokesperson said. 

“The Tasmanian government will review the report’s findings and recommendations, including the dissenting report,” they told AAP. 

“The government remains committed to the project, which will drive economic growth and create good, well-paid jobs for Tasmanians.”

Australian shares have traded flat after a stronger US dollar weighed on commodity prices, scuppering an early rally.

The S&P/ASX200 ended Monday 3.5 points higher, up 0.04 per cent to 8,685.6, as the broader All Ordinaries gained 3.8 points, or 0.04 per cent, to 8,858.5.

Interest in the local market waned as investors weighed a potential fiscal crisis in France, prompting them to sell Euros for US dollars, bolstering the greenback and reversing an early lift in commodity prices.

Seven of 11 local sectors ended the session lower, led by consumer cyclicals, IT and communications stocks. 

The Australian dollar is buying 69.37 US cents, down from 69.69 on Friday at 10pm.

One Nation will move into a Gina Rinehart-owned office and shuffle staffing in some of its biggest roles as it seeks to grow its presence across Australia.

The party will soon move into new digs at 160 Wharf St in inner Brisbane to expand its national and Queensland offices, a spokesperson confirmed.

The building was recently bought by a company owned by Mrs Rinehart, Australia’s richest person and a financial backer of One Nation.

The party says its national head office will pay Hancock Prospecting the market rate to rent the space, described in a listing as a “striking three-storey freehold”.

“Hancock Prospecting holds a range of commercial property and this building is one of them,” a spokesperson for the mining company said.

“Hancock is not providing free or discounted space to any outside tenant, political or otherwise.”

The deal was entirely above board, One Nation MP Barnaby Joyce told News24, defending the mining magnate’s long list of investments in the party.

She previously gifted the Pauline Hanson-led party a Cirrus G7 private plane valued at more than $1.3 million.

“It’s her building; it’s her lease. We’re leasing an offer at commercial rates,” Mr Joyce said.

“If we’ve got an individual who has got money, they should be allowed to spend it as they see fit. If they want to support One Nation, knock yourself out.”

One Nation has made no secret of its plans to dominate state elections, recently appointing its most senior media advisor, Richard Henderson, to oversee the South Australian branch led by former senator Cory Bernardi, AAP can reveal.

“Richard has been a tremendous asset to Senator Hanson and her federal colleagues since June 2021, however we can’t ignore how much he loves his home state of South Australia,” a One Nation spokesperson said.

The 55-year-old ran for the seat of South Brisbane at the last Queensland state election while working for Senator Hanson.

He made headlines in May over an exchange, captured by television cameras, with a Guardian Australia reporter in which he told her to “shut up” when she asked a question at an Adelaide press conference.

He later said Senator Hanson had reprimanded him for the incident.

Mr Henderson finished in Senator Hanson’s office on Friday and will begin as head of media in Adelaide in three weeks.

The role within the federal office is yet to be filled.

Mr Bernardi, a Liberal until 2017, led One Nation to its most successful SA election result this year.

The party won four seats in the upper house, beating the Liberals, and three in the lower house.

It is also eyeing off seats in the Victorian election this November, as support for Labor, which has governed 33 for the last 44 years, wanes.

One Nation could end up holding the balance of power as the Liberals and Nationals need to gain 16 seats to form a majority government.

Convenience store owners across Australia are being threatened, attacked and losing billions in revenue if they do not bend to the illegal tobacco trade.

Owners have lost $3 billion in legal cigarette sales in the past five years, Australian Association of Convenience Stores chief executive Theo Foukkare says.

“Some of our members are being stood over, threatened and asked to pay protection money. They have been ramraided, they have been held up at gunpoint,” he told AAP.

“The safety of the 80,000 frontline staff that our members employ around the country has gone backwards.”

Mr Foukkare is among dozens of industry experts and economists calling on the federal government to slash the tobacco excise, as Labor insists the tax is a good thing and urges states to crack down on illegal trade.

Assistant Customs Minister Julian Hill has pointed to data out of Queensland to bolster the arguments.

The state’s legal tobacco sales rose 55 per cent in the first month after new enforcement laws took effect in November and remained at least 40 per cent above previous levels for the next six months, data supplied by major retailers to the Illicit Tobacco and E-cigarette Commissioner shows.

Nationally, the market remained almost flat across the same time period.

“We cannot overstate the emphasis on shutting down retail premises that are blatantly selling illegal products in high streets,” Mr Hill told AAP.

Mr Foukkare said a roaring underground trade meant sales of legal cigarettes in Queensland were still well below what they were five years ago.

In other states, the picture was even bleaker.

Victorian Premier Ben Carroll said his state had successfully begun closing shops selling tobacco without a licence, yet crime was moving to the streets.

“We’re actually seeing them now trying to change their business model. So this is why we do need to be one step ahead,” he told reporters on Monday.

Mr Foukkare said Queensland’s success was likely because it had shut down illegal stores in blitz suburbs and beyond, meaning people needed to drive large distances for illegal products.

However, people were now using WhatsApp and meet-ups to sell cigarettes.

Modelling from Tulipwood Economics, commissioned by the association, showed freezing the excise and legalising but regulating smoking cessation tools like nicotine pouches would generate $6.2 billion in GST over four years.

“It’s time for you (the government) to change your position on tobacco control policy because you have absolutely failed everybody in Australia on this,” Mr Foukkare said.

“Stop being so pig-headed and stuck in ideology.”

The coalition has vowed to slash the tobacco excise by 80 per cent if elected, dropping the average price of cigarettes from between $50 and $40 to roughly $16-$26.

Opposition Leader Angus Taylor said the cut would take the oxygen out of the thriving black market, which he called “economic terrorism”.

“Our strong plan will attack the gangs where it hurts by taking away their massive price advantage, taking away their customers, and taking away their profits,” he said.

One Nation wants to slash the tax by 75 per cent and freeze indexation for five years.

NSW Labor Premier Chris Minns has long advocated for an excise cut.

Mr Hill waved away the criticism, accusing the coalition of being in “some crazy bidding war” with One Nation.

Queensland-based calls to Quitline, a national hotline for smokers trying to quit, more than doubled in the days following large enforcement operations, which he said indicated the crackdown was causing some smokers to quit.

“This is a really positive by-product of strong enforcement at the retail level,” Mr Hill said.

The number of homes selling at auction has dropped to a three-month low as rising interest rates hit would-be buyers’ budgets.

The national preliminary clearance rate on Saturday was 48.2 per cent, compared with 67.4 per cent at the same time in 2025, according to housing data firm Cotality.

It was the second-lowest clearance rate of the year, better only than a weekend in June.

In Brisbane, only 25.6 per cent of auctions resulted in a sale.

Adelaide and Canberra fared better at 41.5 and 41.7 per cent, respectively. 

Melbourne and Sydney both recorded preliminary clearance rates of more than 50 per cent, although that level still points to continued falls in prices.

The overall number of auctions was low due to long weekends in multiple states and territories, and the NRL grand final taking place in Sydney.

Cotality research director Tim Lawless said broader market factors had also slowed activity, noting spring auction levels were down 31 per cent on 2025. 

The Reserve Bank raised interest rates to a 15-year high of 4.6 per cent at its September meeting while inflation came in at 4.0 per cent in August, up from 3.5 per cent in July.

“Last week’s rate hike has probably played a role in the weaker auction outcome, with prospective buyers facing reduced borrowing capacity and ongoing confidence woes,” Mr Lawless said.

Changes to the capital gains tax discount and negative gearing allowances announced in the May federal budget were designed to take some heat out of the market and champion first-home buyers over investors. 

The measures marked one of the largest shake-ups to housing policy in more than two decades and has also been credited with driving down demand.

Ray White performance chief executive Thomas McGlynn said there were many buyers in the market and strong listing numbers, but the parties were unable to agree on fair value.

“There are people on both sides who want to transact; they’re just not always meeting on price,” he said.

“Buyers are engaged and prepared to compete, but many are also prepared to hold their position when they don’t see the value.”

He expected younger buyers would hold out until prices better met their expectations.

House prices have plummeted in recent months, down 1.1 per cent nationally in the month to October, and 5.2 per cent from their pre-budget March peak, Cotality data shows.

The downturn was deeper than at the same stage of the 2022/23 price drop and was expected to last for longer, Mr Lawless previously told AAP.

Mr McGlynn said it would take time for buyers to be persuaded they were paying the right price given the backdrop of higher interest rates and falling values.

“We often talk about the importance of generating competition between buyers, but in the current market there is also competition between properties for the attention of those buyers,” he said.

The treasurer will meet with Japanese investors as he tries to sell Australia as an ideal economic partner for other middle-power countries amid increasing global uncertainty.

Jim Chalmers will spend time with some of Japan’s wealthiest and most influential individuals in the coming week to tout Australia as an artificial intelligence leader and market the country as a renewable energy hub. 

Australia’s superannuation system – worth $4.8 trillion – will also be promoted as a pool of capital to encourage foreign investment. 

Dr Chalmers’ trip comes just weeks after Prime Minister Anthony Albanese used a United Nations address to declare the post-World War II international order no longer fit for purpose.

Mr Albanese argued assumptions underpinning the global system since the end of the Cold War were being undermined, forcing Australia to forge new partnerships as competition between China and the US changed the Indo-Pacific. 

The treasurer pointed to the shared challenges for Australia and Japan, including high energy prices driving up inflation and bond yields putting pressure on government budgets.

“Whether it’s in critical minerals, energy, AI or industrial decarbonisation, Australia has a lot to offer and a lot to gain from more trade, more investment, and closer economic ties to Japan,” Dr Chalmers said.

The whirlwind trip, with more than 20 meetings in 48 hours, comes at a crucial time in Japan and Australia’s trade relationship. 

Japan, as the primary importer of Australian gas, has been shaken by Labor’s domestic gas reservation policy. 

The plan was modified to take effect from 2028 and will require liquefied natural gas shippers to reserve up to 20 per cent of their export volumes for domestic customers.

The treasurer’s trip also follows the so-called “melon-gate” incident – a faux pas on the prime minister’s part in which he referred to melons gifted by his Japanese counterpart Sanae Takaichi while gesturing with his hands in front of his chest.

While the opposition demanded Mr Albanese apologise for the gaffe, the Japanese government downplayed the incident and the two leaders posed for a photo together at the UN meeting in New York in September. 

Dr Chalmers will also travel to Thailand later in October to meet with G20 finance partners, and to Hong Kong, where he will hold talks with Asia-Pacific Economic Cooperation counterparts.