The latest Intergenerational Report, the triennial roadmap of the Australian economy’s next 40 years, contains a stack of numbers.

But one number came in for greater scrutiny than the others: 1.2 per cent.

That’s Treasury’s assumption for how fast productivity will grow each year on average over the next four decades, on which almost every other economic figure in the report was based.

While 1.2 per cent is not particularly strong compared to previous decades and the artificial intelligence boom is expected to provide an uplift, productivity growth has only averaged 0.3 per cent over the past decade.

Especially compared to the Reserve Bank’s productivity assumption of 0.7 per cent over the medium term, Treasury’s estimate was criticised by a chorus of economists for being overly ambitious.

“It certainly seems to us like an unrealistically optimistic assumption,” HSBC chief economist Paul Bloxham told News24 on Thursday.

“We are not building enough housing. We haven’t got enough cheap energy. We haven’t got enough infrastructure.

“How is AI going to solve all those problems?”

But Westpac’s Luci Ellis, a former chief economist at the central bank, said the RBA’s forecasts might be overly gloomy.

“The RBA’s assumptions implicitly require a repeat of the factors that dragged recent productivity outcomes down, despite strong global investment, policy changes domestically and the possible benefits of AI,” she wrote in a research note.

The RBA also diverges from Treasury in its assumptions for workforce participation and full employment, which is the same as saying the lowest unemployment rate the economy can sustain without pushing up inflation.

“Together, the three RBA assumptions imply weaker growth in supply capacity and thus more inflationary pressure for any given level of demand,” Dr Elllis said.

“If every one of your assumptions seems individually plausible, but all skew in the one direction, it starts to look like a pattern.

“The thumb on the scale is unlikely to be intentional, but it does suggest the likely direction of future surprises in the medium term.”

The Intergenerational Report estimated the stable-inflation unemployment rate sits at about 4.25 per cent.

But RBA governor Michele Bullock told a Committee for Economic Development of Australia on Tuesday that she thinks the jobless rate needs to be somewhere between 4.5 and 5 per cent to ease pressure on inflation.

The unemployment rate edged up to 4.6 per cent in August, the Australian Bureau of Statistics revealed on Thursday.

While some tightness was coming out of the labour market, it was not enough to deter the RBA from hiking interest rates next week, Mr Bloxham said.

“With inflation still above target and the risks now tilted to the upside on inflation – partly due to global developments – we expect that the RBA is now more focused on seeking to get inflation back to target soon, than on its full employment mandate,” he said.

Talks to secure a funding lifeline for a major property developer have fallen through, as administrators lay off more than 100 workers.

Insolvency advisory Teneo announced on Wednesday property developer Bathla Group had run out of cash after securing $4.7 million in short-term funding.

It left the administrators little choice but to halt work at 13 construction sites, after discussions with lenders for longer-term funding failed to yield results.

It is understood about 125 workers have been stood down, with only 67 employees retained to help continue the administration.

Administrators were given a 12-month reprieve by the NSW Supreme Court on Friday to complete unfinished projects by September 13, 2027.

Without funding, however, the focus will now switch to working with lenders for an orderly sale of Bathla Group’s subdivision and land bank sites.

The company, one of Sydney’s largest residential developers, entered voluntary administration in late August after the NSW government declined to bail it out.

It stood down more than 200 staff and halted a number of construction projects earlier in September after it entered voluntary administration on August 25.

Bathla owes $3.4 billion to creditors, including $3.08 billion to secured lenders, $130 million to unsecured lenders, $145 million to the tax office and $4 million to employees.

According to Bathla’s website, the group has 20,000 apartments and 7000 dwellings in its delivery pipeline, comprising a significant share of the NSW government’s target of 75,400 new homes a year for five years until 2029.

The Australian share market has dropped sharply, falling back into the red once again for 2026 as bond yields spiked to their highest levels in decades.

The benchmark S&P/ASX200 index on Thursday lost 63.3 points, or 0.72 per cent, to a week-and-a-half low of 8,702, while the broader All Ordinaries fell 59.2 points, or 0.66 per cent, to 8,897.

US Treasury yields overnight hit their highest level since 2007, as investors continued to demand a higher return for buying government debt. 

Bond yields have been moving rapidly higher in recent weeks, which has been having broad impacts on share markets and government budgets.

A defiant speech from Iranian officials at the UN General Assembly also served to push up the price of Brent crude, said Pepperstone head of research Chris Weston. 

Brent was changing hands at $US103 a barrel after falling below $US99 earlier in the week.

Domestically, the Australian Bureau of Statistics released figures showing employment rebounded in August, which Betashares chief economist David Bassanese said was the final nail in the coffin for the Reserve Bank to raise interest rates next week.

Six of the ASX’s 11 sectors finished higher and five closed lower.

Property was the biggest mover, dropping 2.0 per cent as Goodman Group fell 2.1 per cent, Stockland retreated 2.4 per cent and Charter Hall subtracted 3.5 per cent.

The materials sector was down 1.5 per cent, giving up most of Wednesday’s gains.

BHP fell 1.7 per cent to $61.02, Rio Tinto dropped 0.7 per cent to $166.46 and Fortescue slid 0.6 per cent to $16.75.

Goldminers were down as well, as the yellow metal changed hands at $US4,312 an ounce.

Northern Star retreated 2.3 per cent, Evolution slipped 1.7 per cent and Regis dropped 2.9 per cent.

In the heavyweight financial sector, all of the big four banks finished in the red.

Westpac lost 1.8 per cent to $34.13, ANZ dropped 1.1 per cent to $37.43, NAB fell 1.3 per cent to $38.15 and CBA retreated 0.7 per cent to $149.98.

Buy now, pay later company Zip Co was the worst performer in the ASX200, falling 11.4 per cent to a five-month low of $1.9850.

Premier Investments was the best performer, climbing 7.1 per cent to a one-month high of $11.95 after its Peter Alexander sleepwear chain posted record sales for 2025/26.

Washington H. Soul Pattinson climbed 6.2 per cent to an all-time high of $48.33 after the diversified financial house announced a dividend nearly seven per cent higher than last year.

In industrials, Amaero plunged 34.5 per cent to 18 cents after the US metals powder manufacturer postponed its US initial public offering, citing adverse market conditions. 

Since the start of the year to Thursday’s close, the ASX200 is down 12.3 points, or 0.14 per cent.

Thursday’s losses are about the 10th time in 2026 that the index has given up its gains for the year.

In currencies, the Australian dollar was changing hands for 70.35 US cents, from 70.98 US cents at 5pm on Wednesday.

ON THE ASX:

* The S&P/ASX200 dropped 63.3 points, or 0.72 per cent, to 8,702.

* The broader All Ordinaries fell 59.2 points, or 0.66 per cent, to 8,897.

One Australian dollar trades for:

* 70.35 US cents, from 70.98 US cents at 5pm AEST on Wednesday

* 111.45 Japanese yen, from 111.88 Japanese yen

* 61.78 euro cents, from 62.11 euro cents

* 53.12 British pence, from 53.28 pence

* 123.97 NZ cents, from 124.31 NZ cents

A rogue bot’s hacking of an Australian government website will go under the microscope as Canberra deplores a tech giant leaving it in the dark on the security breach for weeks. 

The OpenAI agent’s break-in on June 18 to the Medicare Statistics Reporting Service, an online database, will be examined by a warp-speed review into how to fortify public software, the law and the government’s relationship with AI firms.

It’s the first known incident of an AI model hacking a government website without human instruction.

The agent went off the rails after OpenAI staff directed it to research public medicine funding on the internet.

The model interacted normally with three federal and state government sites, but scaled a digital “fence” to breach the Medicare platform, accessing public and non-public information.

No personal information was compromised.

Former federal police high-tech crime chief Nigel Phair told AAP the incident exposed a problem at the heart of AI’s business, warning governments should expect more like it.

“OpenAI, those big models the world over are training their models to seek sensitive and other data from us,” Mr Phair said.

“They have to have a value proposition. If it’s just general information, we can go to Google.

“But this is a deeper dive … people do pay handsomely for that and that’s how they get their valuation.”

OpenAI discovered the hack in August during a broader review of its out-of-control agents, but did not tell the government until September 10 when it emailed a public social services department inbox.

Prime Minister Anthony Albanese expressed his “extreme concern” about the incident and the lacklustre notification to OpenAI boss Sam Altman during a phone call on the sidelines of the UN General Assembly on Wednesday, New York time. 

It took five days for public servants to verify OpenAI’s message and escalate it to the Australian Signals Directorate, Australia’s cybersecurity agency, on September 15.

But on September 14, the company’s global policy head Ann O’Leary was in Canberra for a conference on AI attended by Labor frontbenchers. 

She did not mention the breach publicly or make extra efforts to inform the government, instead touting allyship with Australia on training AI, prudence around erecting guardrails and granting access to its most advanced models.

“It was made very clear by both ASD and Services Australia that this should not have gone to an email address, it should have been escalated,” Finance Minister Katy Gallagher said on Thursday on OpenAI’s disclosure.

Whether OpenAI broke Australian law and should be penalised will be up to a review into reporting requirements, incident response, sharing information of AI, legislation and beefing up cybersecurity announced on Thursday.

That will also inform Australia’s fledgling AI framework, announced by the prime minister in July and expected to be legislated in the coming 12 months. 

The disclosure of the incident came at a convenient time for the government, with Mr Albanese using his appearance at the UN to urge foreign leaders to follow Australia’s lead in regulating AI safeguards.

“It is so important that this technology, which represents such an enormous opportunity for humanity, is nevertheless being developed in a way where the guardrails, the safeguards, are well ahead of the capability itself,” Defence Minister Richard Marles told reporters in Sydney.

Mr Phair agreed with the defence minister’s claim Australia was armed with a first-class cybersecurity agency, adding Canberra could call on plenty of onshore talent to innovate more secure systems.

The government had handled the breach well, Mr Phair said, but he doubted the capacity of legislation to lasso the globally surging technology.  

An OpenAI spokesperson said on Thursday it was supporting the government’s probes and committed to transparency as it reviews wayward AI agents.

A chain of designer sleepwear stores has delivered its best sales ever despite the cost-of-living crunch, as its owner continues to reposition its sister business of back-to-school stores.

Parent company Premier Investments, chaired by retail sector stalwart Solomon Lew, reported annual sales of $795.5 million for fiscal 2026, down two per cent from the previous year.

But most of that came from Peter Alexander, where sales rose 3.2 per cent to a record $565.3 million, while Smiggle sales fell 12.9 per cent to $230.2 million after 13 per cent of the kids’ stationery and school supply stores were closed.

“We’ve had a record 12 months at Peter Alexander, and we can’t do much more than produce a record in very difficult times,” Mr Lew told reporters during an earnings call on Thursday.

Conditions in the discretionary retail sector were very challenging, particularly in the latter months of the second half, the company noted.

Overall, the group made a net profit after tax of $129.2 million in the year ended July 25, down 10.3 per cent year-on-year.

It maintained a strong earnings margin of 22.1 per cent, with a gross margin of 65.2 per cent. 

The group closed 29 Smiggle stores during the period and opened just one, taking its store network to 268, with 141 located in Australia and New Zealand.

Premier is attempting to reset the Smiggle brand and refocus on children aged six to 12, after drifting towards even younger children under its previous management.

“We’ve repositioned the business, we’re restocking the stores, we’ve done some cosmetic changes to shelving and bays and the way we’ve done zoning for the various ages,” Mr Lew said.

Premier plans to open a large new flagship Peter Alexander store in the Sydney CBD in October, and to relaunch at 24 Myer stores from August 2027.

RBC Capital Markets analyst Michael Toner said Premier’s results were in line with expectations and it was demonstrating solid cost control, with employee expenses, rent and advertising costs falling. 

Premier will pay a final dividend of 36 cents per share, taking its full-year payout to 81 cents.

In the first seven weeks of the current financial year, Premier’s sales and gross profit were very close to what they were in fiscal 2025.

“Obviously we’re primed for Black Friday, Christmas and back-to-school,” Mr Lew said.

“We are in stock, and our products are here. Or if not here, a couple of days away.”

Promotional windows would be installed shortly.

Premier shares were up 8.7 per cent to $12.11 in afternoon trading on Thursday.

Australia’s unemployment rate has climbed to its highest level in almost five years, as the nation’s labour market continues to ease gradually.

But the unexpected rise in the jobless rate to 4.6 per cent in August is unlikely to dissuade the Reserve Bank from raising interest rates for a fourth time at its upcoming board meeting.

An extra 39,500 people were in a job in August while 28,200 more Australians were unemployed, the Australian Bureau of Statistics reported on Thursday.

Forecasters were off to the upside and the downside.

Consensus expectations were for the unemployment rate to hold steady at 4.5 per cent, while a more modest employment gain of 20,000 jobs was pencilled in, following a fall of 15,000 jobs in July.

The mixed result was due to growth in the size of the labour force, which pushed up participation 0.2 percentage points to a near-record high 67.1 per cent, ABS head of labour statistics Sean Crick said.

“This August we recorded a higher proportion of people who were previously not in the labour force moving to being unemployed, compared to recent years,” he said.

While joblessness remains relatively low, the rise in Australians entering the labour market showed households were feeling the pinch as the Middle East conflict continued to drive up prices.

“This suggests households are scrambling to find more income to help cover their rising day-to-day expenses and future increases in mortgage payments,” said KPMG chief economist Brendan Rynne.

The labour market has softened since the start of the year, when the unemployment rate was 4.1 per cent.

The last time the jobless rate was above 4.5 per cent was in November 2021.

But RBA governor Michele Bullock told a Committee for Economic Development of Australia event on Tuesday the labour market was still “a bit tight” and an unemployment rate between 4.5 per cent and 5 per cent would be needed to ease pressure on inflation.

Her comments further cemented market expectations that the RBA board would hike interest rates next week.

Money markets were all-but fully priced in for a September 29 rate hike ahead of the labour force release, but traders pulled back their expectations slightly in its wake.

“With unemployment still at the bottom of the band Bullock outlined, we expect the RBA to hike rates at its meeting next week,” said Oscar Guth, an economist at Oxford Economics Australia.

The rise in employment was entirely driven by part-time jobs, which grew by about 46,000.

“For two months now we’ve seen employment growth come exclusively from part-time work. Full-time work fell by 6,300 in August,” Mr Guth said.

“However, hours worked rose by 0.7 per cent and underemployment edged down to 6.2 per cent, suggesting that the shift to part-time work does not signal a broad weakening in labour demand.”

Dr Rynne cautioned that the rise in part-time jobs will also incorporate some 30,000 part-time workers hired by the ABS to conduct the 2026 census, which is likely to correct in September.

While the result won’t derail a September hike, it could stave off more rate rises down the track, said AMP economist My Bui.

“The current uptrend in unemployment shows that rate hikes are working, albeit very slowly, and thus a November rate hike is not locked in given data will likely deteriorate in the next few months, despite markets pricing in almost three more hikes from here,” she said.

Employment Minister Amanda Rishworth said the labour market remained resilient, despite global economic uncertainty, with the participation rate near a record high.

“This shows more Australians are working or looking for work,” she said in a statement.

“We know some Australians are still doing it tough, and we’re focused on supporting them.”

McDonald’s says it will spend $US8.5 billion over the next decade to modernise its restaurants globally.

Fast-food traffic in many markets, including the US, is flat, so for McDonald’s to continue to grow it has to grab share from competitors and improve restaurant productivity, CEO Chris Kempczinski said at a meeting with investors at the company’s Chicago headquarters.

McDonald’s wants to automate more tasks, like inventory and scheduling, and improve kitchen operations.

“The winners will be the companies that create more demand and deliver it more efficiently,” Kempczinski said.

On the product side, McDonald’s said hand-breaded chicken, which has rolled out at 10,000 restaurants in Asia and a handful of restaurants near Chicago, has boosted sales and quality ratings. The company plans to expand its testing to more markets in the US and Ireland next year.

McDonald’s also plans to introduce grilled chicken sandwiches and wraps in the US and other markets and experiment with products like egg bites and bowls to meet the needs of customers who are seeking more protein and varied portion sizes.

Skye Anderson, the president of McDonald’s USA, said approximately 30 million Americans are now using GLP-1 weight loss drugs, and they’re seeking smaller, more protein-packed meals as a result. But the company’s research indicates that 60 million Americans are actively seeking more protein in their diet.

“This is an opportunity. We need to keep giving them more reasons to make McDonald’s their first choice,” Anderson said.

McDonald’s said the restaurant modernisations include lockers to handle delivery orders, more visible coffee preparation areas to enhance quality perceptions, bigger play areas and improved kitchen layouts.

Scales to help ensure order accuracy – which are already in use at 10,000 restaurants globally – will be in 20,000 restaurants by 2028, McDonald’s said.

The company is deploying its ArchIQ system, developed with Google, that improves order accuracy with artificial intelligence and automates tasks like inventory management and scheduling.

Archy could eventually reduce at least 50 labour hours per week in a typical McDonald’s, Chief Financial Officer Ian Borden said, adding the intention was not to reduce staffing.

Kempczinski said customers have responded positively to Archy in testing because it helps make their orders more accurate. 

“It’s not AI is bad or AI is good. We try to be really thoughtful about how we use it,” he said.

McDonald’s is also rolling out new employee training that will focus on hospitality and food quality, said Tiffanie Boyd, McDonald’s chief people officer.

At the same time, McDonald’s is still focused on value. Kempczinski said low income consumers, defined as US households making $US45,000 or less, continue to go out for fast food but not as often as they used to.

“This is the environment that we’re in right now. You have to be on your game and deliver that value,” he said. “The pressure around cost of living isn’t going away.”

The world order established after World War II is no longer fit for purpose, the prime minister claims.

In a major foreign policy speech to the Atlantic Council in New York on Thursday, Australian time, Anthony Albanese said many of the institutions that were necessary post-1945 were not enough to meet present-day challenges.

The prime minister used the speech on the sidelines of the United Nations General Assembly to argue partnerships with alliances remained crucial in a rapidly changing global environment.

“Since the end of the Cold War, the prevailing assumptions of international affairs were clear: openness was security, efficiency mattered more than resilience and international rules would be observed,” he said.

“Those assumptions rested on the expectation that the influence of the major democratic powers would remain largely unchallenged.

“The post-1945 world order is no longer fit for purpose. Universal institutions that remain necessary are now not always sufficient for the challenges we face.”

The prime minister said Australia needed to shape a world order that would replace the old one, while preserving diplomatic rules.

Mr Albanese pointed to the strategic competition between the US and China in the Indo-Pacific as being the most consequential issue facing the region.

While Australia had ties with the US and China as its key security and trading partners respectively, Mr Albanese told the Atlantic Council the competition between the two powers should not be the only lens the Pacific should be dealt through.

“The Indo-Pacific is not a chessboard on which superpowers move the pieces,” he said.

“Its countries are not spectators, they are shaping its future and writing their own script.

“How Washington and Beijing manage their relationship matters profoundly.”

The prime minister made the speech after receiving the Atlantic Council’s Global Citizen award, where he was recognised for his role in deepening alliances and promoting security and stability in the Indo-Pacific.

He was among four award recipients at the event, including Formula One boss Stefano Domenicali, Finnish President Alexander Stubb and actress Cynthia Erivo.

He was introduced by Papua New Guinea Prime Minister James Marape, who said Australia’s leader was a close friend and trusted ally.

Mr Albanese understood that leadership was “ultimately not about power but about people”, Mr Marape said.

“It is really the greatest honour of my life and a privilege to introduce my friend,” he told the event.

The speech came a day after Mr Albanese met briefly with US President Donald Trump at a gala dinner hosted by the American leader.

The prime minister and Mr Trump have issued divergent calls on how to approach AI following safety fears.

Relations with Pacific nations such as Papua New Guinea were highlighted by Mr Albanese in the speech.

“The Pacific has been a priority for my government since day one,” he said.

“Our approach to the Pacific is characterised by respect. Respect for Pacific priorities, for their incredible culture and for their sovereignty.

“Our partnerships in the Pacific are building the security, prosperity and resilience of all our countries, so they can advance together, shaped by Pacific priorities.”

Mr Albanese pointed to ASEAN alliances in Southeast Asia as crucial to regional order.

The new global order has forced countries to place a bigger emphasis on building resilience through critical minerals and energy measures, the prime minister said.

That focus has been heightened by the impact of the COVID-19 pandemic and the war in Iran, which has led to supply chains coming under pressure and fuel prices surging.

“The rules that connect our nations remain essential, and they matter to Australia, to the Indo-Pacific and globally,” he said.

Anthony Albanese has praised Ukraine President Volodomyr Zelenskiy at the UN, while boosting Australian aid in a fresh security agreement.

The prime minister met with Mr ⁠Zelenskiy on the sidelines of the United Nations General Assembly in New York on Thursday, Australian time, pledging $60 million more in support for Ukraine’s fight against Russia’s invasion.

The 10-year bilateral security agreement, signed by both leaders, will lead to an extra $45 million in Australian Defence Force equipment for Ukraine.

A further $10 million will go to Ukraine’s energy support fund, while $5 million will be spent on humanitarian assistance.

The $60 million fund will bring Australia’s total contribution to Ukraine since Russia’s invasion in 2022 to $1.9 billion.

The prime minister became emotional as he paid tribute to his “friend” Mr Zelenskiy in his fight against Russian aggression.

“(Mr Zelenskiy’s) leadership has been … quite extraordinary, leading people in circumstances which are extraordinarily difficult,” he said.

Mr Albanese said the agreement was a proud day for Australians in seeking to uphold international laws.

“This is an issue not just for Europe, this is an issue for the world,” he told reporters in New York upon signing the agreement.

“If a large, more powerful country in Russia is allowed to profit from breaking the international rules of law with its illegal and immoral invasion of Ukraine, then that sets a bad precedent for the entire world.”

“Russia thought it could just steamroll through in a matter of weeks, and what we have found is that the people of Ukraine were underestimated.”

The two leaders hugged when they first met in-person at the summit, with Mr Zelenskiy thanking Australia for its support to Ukraine throughout the conflict.

“(The agreement is) the strongest document between our countries,” he told reporters.

“We really will increase our co-production and trade and, of course, security, which is really important.

“It’s all for our people, for the security.”

Mr Albanese said the bilateral agreement would be in place not only during the war in Ukraine, but during peacetime once the conflict concludes.

As part of the agreement, Australia will also step up training to help Ukrainian forces deter and repel any future Russian attacks.

It will also look to explore co-operation for training centres and jointly produce air-defence measures, missiles and drones.

Australia will join forces with the United Kingdom and Norway-led coalition to help support the development of Ukraine’s navy.

Work will be carried out to strengthen Ukraine’s maritime capability.

Australia and Ukraine will also work together to rebuilding infrastructure such as military healthcare facilities and training centres.

Extra sanctions have also been imposed on Russia, coinciding with the announcement of the agreement.

It brings the total sanctions placed on Russia and its supporters by the federal government to more than 1900.

The announcement of the security pact came on the same day it was revealed the US would invite Russian President Vladimir Putin to attend the G20 summit.

The summit will take place in Florida in December at the Trump National Golf Club.

While Russia remains a member of the G20, Mr Putin has not attended in person since its invasion of Ukraine in 2022.

Russia has often been represented by Foreign Minister Sergei Lavrov.

Russia has not responded to the invitation.

Mr Albanese said he had no plans of interacting with Mr Putin at the summit.

“I have no intention of having discussions with Mr Putin, I think that his actions have been reprehensible,” he said.

“What I’m responsible for is Australia’s view, and Australia’s view is very clear, which is Mr Putin would not be welcome in Australia.”

Operations at the ‌world’s largest copper mine, BHP’s Escondida mine in Chile, have been suspended after a worker was ‌killed in an accident, the firm says.

BHP said the worker had been killed while carrying out maintenance work.

The union representing the site ‌had previously told ‌Reuters ⁠that the accident involved a ​front-end loader frequently used by the industry.

“All operational activities at the mine have been suspended,” BHP said in a statement, without giving a timeline for ⁠when they may ‌restart.

Typically ​in Chile, mines may only kick off ​activities after a ‌fatal incident once inspectors verify that conditions ​are safe enough for a restart.

Escondida is located in Chile’s Atacama Desert.

BHP ​operates the ​mine while Rio ​Tinto holds a 30 per cent ‌stake and Japan-based JECO Corp 12.5 per cent.

BHP had estimated the site would produce up to 1.28 million metric tons of the red metal ​this year.