Stubborn high inflation is set to impact the upcoming federal budget, with the treasurer warning belt-tightening of the nation’s finances is coming.

Data has revealed underlying inflation rose to 3.4 per cent in January, giving the Reserve Bank more reason to lift interest rates.

While headline inflation remained steady at 3.8 per cent to start the year, the central bank looks more closely at the underlying figure when it sets rates.

Treasurer Jim Chalmers said the federal budget would be handed down in May amid higher-than-expected inflation, which would lead to clawed-back spending.

“There’ll be belt tightening in the budget, we’ve made that really clear, and there has been belt tightening in the first four budgets,” Dr Chalmers told ABC News.

“Every budget is delivered in the context of the economic conditions. 

“And the economic conditions right now are defined by inflation, which is higher than we’d like, for longer than we would like.”

While the Reserve Bank is expected to keep rates on hold after hiking them to 3.85 per cent in February, the inflation figures reinforce a further rise is on the cards.

Capital expenditure data for the final quarter of 2025 will be released on Thursday, offering more insight into the economy.

Economists have tipped a drop in the rate for the December quarter as a previous spike in data centre equipment eases.

Westpac chief economist Luci Ellis said a fall of 0.5 per cent was predicted for the quarter.

“Weaker capital goods imports through the quarter, alongside a slowdown in short‑term expected capex growth, point to a decline in capex growth,” she said.

“We will be closely monitoring whether the investment pipeline is sustained across key sectors.”

The most recent figures showed capital expenditure growing 6.4 per cent in the September quarter, driven by data centre growth and investment in air transport.

It was the largest quarterly increase since March 2021.

Young women consider owning a house less of a priority than men their age, with many citing affordability and not being able to qualify for a mortgage as major barriers.

Women in both the millennial and generation Z age groups consider property ownership less important than men, according to data firm Cotality’s sixth annual Women and Property Report. 

Fewer than 40 per cent of gen Z women – those born between 1997 and 2012 – consider property ownership highly important, compared with almost half of gen Z men. 

There was a similar divide among millennials – those born between 1981 and 1996 – with 58 per cent of women rating property ownership as highly important, compared with 67 per cent of men. 

The data suggests affordability pressures could be reshaping long-held aspirations, particularly among younger women who face greater difficulty building the savings needed to enter the property market, Cotality Australia head of research Gerard Burg said.

“These findings raise important questions for policymakers, industry leaders and financial institutions about how to better support young Australians – especially women – in achieving property ownership if it remains a national goal,” he said.

“Women’s property aspirations are also constrained as the gender pay gap builds over the course of their careers.” 

It comes as separate research shows just how steep the barriers to entry for first-home buyers have become, with affordability worsening nationwide in 2025 despite three rounds of interest rate cuts.

Entry-level house prices rose 68 per cent nationwide, more than tripling the 21 per cent growth in wages across the year, according to Domain’s First Home Buyer Report 2026.

“We’re creating whole waves of generations that are just not going to be able to purchase a home,” Domain’s chief of research and economics Nicola Powell told AAP.

“For some, it’s a dream that they don’t ever think will become a reality.”

Across the combined capitals, repayments on entry-level houses consume almost half a typical young couple’s income, up by almost 24 per cent in five years and well above the 30 per cent mortgage stress benchmark.

Crucially, those figures are based on dual-income households.

For women attempting to enter the market on a single income, the deposit hurdle and serviceability burden are often significantly greater.

The gender pay gap accelerates across a woman’s working life, peaking in her late-50s and leaving female workers millions of dollars short of men over their careers, a 2025 report by the Workplace Gender Equality Agency found. 

Between 20 and 24 years, the gender pay gap becomes 1.1 per cent in favour of men and then rises significantly to a peak of 31.4 per cent between the ages of 55 and 59.

This equates to a difference of almost $53,000 in the average total remuneration of women and men.

Up-front and ongoing costs including deposits, stamp duty and transaction fees are the main obstacles for would-be buyers, with the challenges disproportionately affecting women.

Despite the changing attitudes of younger generations, property ownership still underpins financial security, wellbeing and long-term opportunity, Cotality chief commercial officer Lisa Jennings said.

“Saving for a home deposit has become significantly harder for many young Australian women, particularly as they navigate lower average earnings, career breaks and rising living costs,” she said.

“If we want property ownership to remain an achievable goal, it’s critical that governments, industry and employers work together to remove barriers and provide targeted support that helps women build savings and enter the market with confidence.”

Optus is set to unveil changes in culture and operations in the aftermath of a deadly triple-zero outage.

The September 18 outage, which lasted almost 14 hours, affected hundreds of triple-zero calls in four states and territories and has been linked to two deaths due to emergency calls failing.

A parliamentary inquiry into the incident will hold a public hearing in Canberra on Thursday.

Kerry Schott, who completed an independent review into the outage, will be the first person to give evidence.

The veteran executive handed down 21 recommendations after finding gaps in the telco’s process, accountability, and escalation and information protocols.

The Optus board accepted all of the recommendations, agreeing to “move swiftly” to implement them.

Optus bosses, including chief executive Stephen Rue, are expected to outline what the telco has changed following the outage.

This includes technical work to ensure devices can access emergency services and an overhaul of personnel and culture.

Optus is a wholly owned subsidiary of the Singapore-based telecommunications group Singtel, which will also have a representative appearing at the inquiry.

The Telecommunications Industry Ombudsman says the number of mobile phone complaints about being cut off from triple zero has grown following the Optus outage.

Complaints to the ombudsman rose 3.6 per cent between October and December to more than 14,000.

More than 6000 of those involved mobile services.

Apple Australia and Google Australia will appear at the hearing, along with NSW Ambulance and the National Emergency Management Agency.

In a submission to the inquiry in November, Optus said it accepted accountability for its failures.

“As one of Australia’s major telecommunications providers, we understand that maintaining uninterrupted access to emergency calls is fundamental to public safety and community confidence,” the submission said.

The telco extended its “deepest sympathies” to the families and friends of the people who died.

“Optus apologises to them and to all those who sought help that day but could not access it,” it said.

A supermarket giant has pushed back on allegations it misled shoppers with a catchy slogan, telling a court underlying inflation and other factors were to blame for pushing up prices.

The Australian Competition and Consumer Commission has accused Coles of intentionally duping customers with its “down down” campaign, first launched in 2010.

In his closing submission to the Federal Court, Garry Rich SC argued the campaign was a tactic to deceive consumers that prices on thousands of products were falling, when in fact they were going up overall.

In one example cited by Mr Rich, the price of a jar of Coles-brand quince paste was raised to $4.50 from $3 for four weeks before being reduced to $3.15.

Mr Rich argued that four weeks was not a genuine establishment period for $4.50 – “price two” – to be legitimately considered the regular price of the product.

Justice Michael O’Bryan said he had to consider whether the “down down” price amounted to a genuine discount.

John Sheahan KC, for Coles, said the ACCC’s case was flawed in that it relied on the amount of time a product was set at “price two” as the substantive issue.

“They treat what is an indicia, namely the period of time, as the substantive issue, when it is just an indicia,” Mr Sheahan said.

“They have not advanced in their evidence a case that price two was not, in fact, a genuine price, except in the sense of it being relatively short in duration.”

The retail giant has argued its “down down” prices were genuine discounts for shoppers after an increase in wholesale costs during a post-COVID inflation surge.

“Rising inflation is a matter of public commentary, it’s a matter of political controversy and more to the point it’s a matter of daily concern for shoppers,” Mr Sheahan said.

Earlier, Mr Rich had told the court “down down” was not just a meaningless phrase.

“(Consumers) think it means something and what they think it means is that the price of this product has gone down,” he said.

“They see a big red and white ticket and read that the price is ‘down down’ … many of them will have no idea that the price was actually lower four weeks ago.”

Justice O’Bryan queried whether time-poor consumers might take the meaning of “down down” to be simply a generic statement for prices as a whole.

But Mr Rich countered by saying “down down” immediately implied there used to be a higher price.

The commission alleges the supermarket giant deliberately raised prices on thousands of everyday items before offering discounts at prices higher or equal to the original shelf price throughout a period of 15 months.

The case continues.

A major rewrite of Australia’s tax rules is needed to make them fairer and more efficient, one of the nation’s top economists has warned.

Former Treasury secretary Ken Henry, who led a 2010 review of taxes, said the current system could be streamlined by imposing a blanket 25 per cent tax on all income from investments.

“I would like to see a complete overhaul of the taxation arrangements applying to capital income in all forms, interest, rent, dividends, capital gains, trust distributions,” he told a parliamentary inquiry on Wednesday.

The federal government is mooted to be considering reducing the capital gains tax discount for investment properties, which could be announced in the May budget.

Senior Labor figures have been tight-lipped on the change in recent weeks, refusing to rule it out but instead pointing to already announced income tax changes as their priority.

The discount was introduced in 1999 by the Howard government, allowing for a 50 per cent reduction in the tax bill on the sale of investment properties if they were owned for at least a year.

Dr Henry said it was a fundamentally flawed measure because it failed to create incentives for investment and innovation.

“The 50 per cent discount on capital gains is the dumbest of all options to pursue that laudable policy objective,” he said.

“It provides … benefit to purely speculative investments in assets that generate nothing special by being in the hands of the investor rather than, say, an owner-occupier.”

A Nordic-style tax system, in which income from investments was taxed at a flat rate, could be a better idea, Dr Henry said, urging the government not to grandfather any reforms for fear of making the tax system even more complex.

“I hate it,” he said when asked whether a transition period was needed.

“(It causes) terrible distortions that put you on a bit of a slippery slope when it comes to policymaking.”

Fellow economist Saul Eslake supported that view, warning grandfathering could risk exacerbating inequality.

“That privileges people, in essence, on the basis of when they were born or when they took particular decisions,” he told the inquiry.

“But if grandfathering were necessary in order to get any changes at all to the (capital gains tax) regime, then I never want to let the perfect be the enemy of the good.”

The second-biggest pipeline of data centre investment in the world should be viewed as a vote of confidence in Australia’s energy system, says the federal climate change minister.

Energy and Climate Change Minister Chris Bowen says Australia has the renewables resources to host energy-hungry data centres but it is important they interact flexibly with the grid to prevent outages.

“We’ve got to ensure that those data centres, as they are built, are building extra capacity, redundancy, so it can become a flexible shock absorber,” he told a Nature Conservation Council business breakfast on Wednesday.

“Our biggest energy user in NSW is an aluminium smelter, but it’s also a shock absorber.

“When we need it to turn down, it does.”

The world’s fleet of data centres is growing rapidly to accommodate the rise of artificial intelligence tools and Australia has become a favoured destination for new facilities. 

Data centres are big consumers of energy and water however, raising questions about their suitability in Australia as it struggles to roll out renewables fast enough to replace ageing coal power stations and meet its climate goals.

Frameworks around the energy and water usage associated with AI infrastructure were promised in a national plan released last year. 

Mr Bowen was also spruiking a 1.9 per cent reductions in domestic greenhouse gas emissions in the year to September 2025, based on quarterly figures.

Renewables squeezing out coal was part of the story as were more electric cars on the road, fuelling the first fall in transport emissions since the COVID-19 pandemic. 

New Vehicle Efficiency Standards brought in early last year were driving a “massive” increase in the availability of electric cars for consumers, the minister said.

To reach Australia’s emissions-reduction target of 62-70 per cent by 2035, the Climate Change Authority says nearly 80 per cent of all new vehicle sales will need to be electric by the middle of next decade.

The Australian Conservation Foundation’s climate program manager Gavan McFadzean said the nation was making progress but emissions cuts were off the pace needed to achieve climate targets.

“The latest figures show Australia’s emissions are being cut at half the pace needed to reach our 2030 target and at just 35-40 per cent of the annual pace needed to reach the 2035 target range,” Mr McFadzean said.

Australia’s largest travel agent is off to a solid start as it takes off towards its year-end after seeing a shift to cheaper destinations before Christmas.

Flight Centre’s first-half interim net profit came in at $60.5 million, flat from a year ago, while its underlying pre-tax profit rose four per cent to $125 million for the six months ending in December, which was better than expected.

Managing director Graham Turner said the group faced a challenging global trading climate, but still managed to handle a record $12.5 billion in travel bookings.

“As we enter this peak trading period, the second half, we believe we’re pretty well placed for the full financial year,” he told an earnings briefing on Wednesday.

January delivered record profit for its leisure business, he said.

The first-half result was notable for a shift to more affordable international destinations, with cruising continuing to be especially popular.

The consumer-oriented leisure division also had a solid year, with transaction value growing 10 per cent to $6 billion over the year.

The average customer age for this segment was 56 years for in-store and 45 years online.

For the corporate market, total transaction value was tracking about 150 per cent ahead of pre-COVID levels in 2019.

The division is on the way to beating $5 billion in value for the year.

Flight Centre restated its guidance for a higher full-year underlying pre-tax profit of $315 million to $350 million.

“Demand remains resilient,” Mr Turner said, particularly in the corporate and leisure travel segments.

Flight Centre noted that its profit tended to skew 38 per cent in the first and 62 per cent in the second.

Flight Centre is also ramping up the rollout of artificial intelligence across its business, using capabilities it claims its “competitors cannot replicate”.

In the leisure business, for example, it has launched an AI-powered consulting tool to streamline research and quote preparation.

This saves consultants up to 30 minutes per traveller itinerary as it can instantly surface appropriate hotels, activities, flights and guides.

RBC Capital Markets analyst Wei-Weng Chen said Flight Centre’s first-half revenue and pre-tax profit both exceeded expectations and it was “off to a good start” for the second half.

Flight Centre shares on the ASX were down 3.5 per cent to $12.82 late Wednesday afternoon.

Global logistics software company WiseTech Global will slash about 2000 jobs as it leans into artificial intelligence, as fears around AI disruption loom over local technology stocks.

The cuts, which amount to more than a quarter of the group’s 7000 headcount spread across 40 countries, will be focused on engineers writing code, chief executive Zubin Appoo said.

“I am prepared to say this clearly, the era of manually writing code as the core act of engineering is over,” Mr Appoo told an earnings briefing on Wednesday.

The announcement came as WiseTech grew its first-half revenue by 76 per cent to $US672 million ($A951 million).

The outcome supported a bottom-line net profit of $US106.4 million ($A150.3 million), down 36 per cent on the equivalent half, which was impacted by the acquisition of supply chain software e2Open.

Operating cash flow in the six months to December grew 31 per cent to $US192.3 million ($A272.4 million), and underlying net profit grew two per cent to $US112.1 million ($A158.8 million).

“We executed with discipline and delivered results in line with our expectations, and we are confident in our outlook,” Mr Appoo said.

WiseTech has been building toward its AI transformation for some time.

Last year, it built a number of AI agents into its Cargowise platformm which is used by more than 17,000 freight forwarders and logistics providers to manage shipments around the world.

The CEO acknowledged the impact of the ongoing AI transition on outgoing staff.

“This decision was not taken lightly, but it is necessary to ensure we remain disciplined, nimble, competitive and future ready,” Mr Appoo said.

WiseTech chose not to directly address former karaoke machine company Algorhythm Holdings, whose SemiCab platform claimed to be able to scale customers’ volumes by up to 400 per cent without reducing headcount.

That announcement sent global tech stocks into a tailspin and shifted the AI narrative from one of efficiency to one of disruption, elevating the importance of investors avoiding losers over backing winners from the technological revolution.

Investors welcomed WiseTech’s results and the update, with its shares rebounding more than four per cent to $45 in morning trade, after tumbling by more than 60 per cent since July 2025.

WiseTech had made headlines for all the wrong reasons in the second half, including an corporate regulator and federal police raid of company offices, a shareholder strike on executive pay and a superannuation giant unloading its $580 million stake in the company over ongoing governance concerns.

Co-founder, executive chair and chief innovation officer Richard White, who stepped down as chief executive in October 2024 amid allegations of bullying and undisclosed workplace relationships, which were denied, told Wednesday’s briefings he was in the right position.

“These days, my role and focus as chief innovation officer, supported by our CEO, Zubin, and a highly motivated senior leadership team, allows me to spend the majority of my time on product design, product expansion and the commercial models of our products,” he said. 

“This has always been my strength, and I now have far greater capacity and capability to drive and accelerate these outcomes.”

An internal review by Herbert Smith Freehills and Seyfarth Shaw to examine the media allegations effectively cleared Mr White of any misappropriation of company funds.

An Australian Securities and Investments Commission probe into allegations of potential improper trading by Mr White and three employees is ongoing.

Lucky punters have put a ding in Tabcorp’s interim results, although the gambling giant is still seeing strong growth in the number of young people placing bets.

The so-called “customer-friendly results” happened in the last six months of 2025 during the NRL and AFL grand finals and the spring horse racing carnival period.

Domestic wagering revenue fell by 2.5 per cent, before Victorian licensing impacts, despite modest growth in turnover, due to below-average yields.

“The reduction in yield versus longer-term averages was due to a run of customer-friendly results,” chief financial officer Mark Howell told an earnings briefing on Wednesday.

“Some of this softer yield was recovered through the back end of November and December.”

Tabcorp estimates the yield impact cost it about $10 million in net revenue, compared to longer term averages, according to Mr Howell.

Tabcorp’s first-half bottom-line net profit fell 14 per cent to $21.7 million from the prior corresponding period as group revenue rose by one per cent to $1.3 billion.

Group underlying earnings – excluding interest, tax, depreciation and amortisation – rose about 14 per cent to $217.4 million, which was ahead of the market consensus.

Overall earnings from its wagering and media business rose almost 16 per cent to $181.4 million.

CEO Gillon McLachlan said he was proud Tabcorp could deliver double-digit earnings growth in a half-year when wagering operators were hit by a “run of low yields”.

“We have been able to absorb this through strong execution … particularly on the cost side and through the diversity of our business,” he said.

Mr McLachlan said Tabcorp’s gameplan was to deliver punters an unrivalled omnichannel experience.

“We continue to innovate with new products and a better look and feel to create a genuine racing and sports entertainment offering,” he added.

The former AFL boss said the TAB brand was becoming “more youthful, sports orientated and experiential”.

“Turnover among 18 to 24 year olds was up 14 per cent,” he said, adding that its attention to tentpole assets such as the Liv Golf and US Super Bowl sports were an example of how Tabcorp was reaching a new cohort.

“We know customers want life experiences and attention spans are getting shorter. Stories sell and brand connection is increasingly more important.”

Tabcorp, which expects wagering turnover in the second half of the year to be similar to the first, declared an interim dividend of 1.5 cents, up 50 per cent.

Its shares were up almost 16 per cent to 98.5 cents in morning trading.

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Woolworths’ first-half profit has been cut in half after a court ruling left the company owing around $710 million to workers in back pay.

The supermarket giant on Wednesday posted a net profit of $374 million for the 27 weeks to January 4, down 49.4 per cent from a year ago. However, sales were up 3.4 per cent to $37.1 billion.

Woolworths said that after the Federal Court ruling in September about award entitlements, it had set aside $710 million for employee remediation.

Excluding the provision, Woolworths’ net profit was up 16.4 per cent to $859 million. Earnings before interest, tax, depreciation and amortisation climbed 8.5 per cent to $3.2 billion.

Chief executive Amanda Bardwell said Woolworths was making progress on its strategy and had invested in value, on-demand convenience and in-store execution.

“All customer metrics have improved, trading momentum is stronger and we are seeing market share stabilise,” she said on Wednesday.

Sales at Woolworths’ supermarkets were up 3.6 per cent, while Big W sales rose 1.8 per cent.

Woolworths said that through a partnership with Google, it planned to transform its AI chatbot Olive into a “market-leading conversation shopping companion” sometime in the second half.

The court ruling in September covered 27,000 Coles and Woolworths in-store managers who received annual salaries with “set-off clauses” to meet award entitlements, like overtime and penalty rates.

The court said that such clauses were only valid within a single pay cycle and that higher pay in one pay period could not be used to offset a shortfall in another, a ruling which had major implications for Australian employers. 

Woolworths set aside $406 million in potential remediation for team leaders, plus another $304 million for interest, superannuation and payroll taxes.

Woolworths will pay an interim dividend of 45 cents per share, up 15.4 per cent from a year ago.

In early trading on Wednesday, Woolworths shares were up 7.9 per cent to $34.02.