Business investment is booming in Australia despite stubborn inflation and a stagnant economy, according to Treasurer Jim Chalmers, as global investors rush to park their money in what they see as "an island of opportunity and stability" in troubled times.
Speaking to a gathering of investors in Sydney on Friday, the treasurer will boast of the warm reception he received in a string of international visits last week and reveal that business investment is growing more than twice as fast as was previously expected.
The optimism comes in the midst of a difficult period for Mr Chalmers, who has been weighed down by gloomy domestic conditions and backlash to his tax hikes on wealth, which have angered business lobbies and unsettled some Labor MPs.
Though acknowledging what he calls Australia's "fair share of challenges" and revealing that Treasury will forecast higher unemployment and lower growth, Mr Chalmers will frame the investment boom as a bright spot.
"I [have] heard the same message over and over: in a world of ratcheting risk, Australia is more and more reliable," he will tell investors at the Citi A50 Economic Forum, according to an excerpt of his remarks seen by the ABC.
"You wouldn't be here with your $25 trillion of capital if you disagreed."
Investment $50 billion better than expected
Mr Chalmers will reveal Treasury now expects business investment to grow faster than 5 per cent this financial year, doubling the May forecast.
That forecast will be formally updated in December's mid-year budget update, and while acknowledging that "potential surprises" could change this early figure, Mr Chalmers will say it would amount to an extra $50 billion in extra investment.
Earlier this year, Australia's peak business lobby the BCA declared Australia was in the middle of the pack as a global investment destination, more favourable than China, South Korea and France, but less than the United States, the UK and New Zealand.
Among the BCA's recommendations was for Australia to streamline the application process for foreign investors, something the government was already progressing.
Mr Chalmers will argue it is working, with $278 billion approved so far this year and more than half of all applications now processed within a month by the Foreign Investment Review Board.
Investment in data centres for artificial intelligence has been a big factor. The ABC reported in September that Australian data centre investment had reached $35 billion for the calendar year, more than one-10th of the total $278 billion investment.
Reserve Bank burnishes inflation concern
While this investment will boost Australia's growth figures, it is also one of a handful of factors concerning the Reserve Bank as it grapples with inflation.
The bank raised the cash rate to 4.60 per cent last month, above the previous 2024 peak. Markets believe another rate hike in early November is possible.
RBA Deputy Governor Andrew Hauser sounded pessimistic in public remarks on Wednesday, saying the inflation outlook was "materially worse" than forecast.
The unemployment rate hit a five-year high of 4.7 per cent in September. Mr Hauser said it was "a little weaker" than had been expected but did not suggest that this would deter a rate hike, adding: "I stress the 'little' … we need to see some easing in the economy."
The economic conditions have added to political pressure on the Albanese government, with usually placid backbenchers increasingly willing to bemoan the government's handling of economic conditions in private commentary.
For some, the tax hikes on capital gains and discretionary trusts and the clumsy handling of the issue of credit card surcharges, described by one backbencher as "compounding attacks on small business", have fuelled a sense of mid-term malaise.
Shadow Treasurer Tim Wilson has seized on the prospect of a rate hike, which he attributes to the government's "spending addiction".
"I think a lot of households are looking at it right now and saying, 'We cannot bear any more'… It's quite worrying," he said in an interview on 2GB on Wednesday.
But those within government ranks who are defensive of the treasurer's performance believe that the domestic debate over economic conditions does not give enough recognition of the contribution of wars in Ukraine and the Middle East.
This was a regular feature in Mr Chalmers's international meetings, which included a G20 Finance Ministers' meeting in Bangkok, an APEC Finance Ministers' meeting in Hong Kong, and a bilateral meeting with China's Finance Minister.
The two wars [are] impacting almost every economy in one way or another, posing risks to global growth, pushing up global inflation, and pushing up borrowing costs," he will say on Friday.
"In this sea of uncertainty and risk … Australia's strengths and stability are clear and they are compelling."