Tax windfall cuts Labor’s budget shortfall by close to two-thirds

Good morning. Here's what happened overnight and what you need to know today.

---

1.

Budged budget: Treasurer Jim Chalmers and Finance Minister Katy Gallagher will release the Final Budget Outcome (FBO) on Monday, showing the budget deficit for 2024-25 coming in at $10 billion, an improvement on $27.9 billion originally forecast. The FBO will show an underlying cash deficit of just under $10 billion (0.4% of GDP), lower than the forecast deficit of $27.9 billion in the 2025 Pre-election Economic and Fiscal Outlook (PEFO) and $47.1 billion in the 2022 PEFO. Australia has “one of the strongest budgets in the G20,” Chalmers said in a statement. “In dollar terms, we’ve made more progress on the Budget in three years than any government in history,” Chalmers continued. The improved deficit was likely achieved on greater-than-expected tax collection from workers and businesses, rather than reduced spending. The figures don’t include so-called “off-budget spending” and loss-making assets which could cost an average of about $25 billion per year over the next four years. (Capital Brief)(AFR)(The Australian)

2.

Pro-protections: Canva declared itself in favour of IP protections in Australia, highlighting a policy rift between Tech Council of Australia chair Scott Farquhar and Cliff Obrecht, who serves as a board director at the industry body. Weeks before Farquhar called for Australia to weaken copyright laws to stoke foreign AI investment, Obrecht advocated for the opposite during an appearance on the Rapid Response podcast. "I definitely believe in intellectual property protection," Obrecht said. "If you have created a piece of work, you own the rights to that work. And if people are training on that work, for example, then you should be compensated." When Capital Brief asked Canva if the company stood by Obrecht's comments, it said innovation needs to be balanced with fair reward for creativity. "We strongly believe in protecting intellectual property," a Canva spokesperson said. (Capital Brief)

3.

IPO moves: Firmus Technologies, a data centre company valued at $1.9 billion, recruited Xero’s former chief financial officer and named retired TPG executive Grant Dempsey as its chairman to help the company prepare for a run at the ASX boards next year, The Australian Financial Review reported. The company, led by co-chief executives Oliver Curtis and Tim Rosenfield, is developing a large data centre campus in Tasmania to power, train and run AI systems using its software and cooling technology. Earlier this month, Firmus raised $330 million from investors including Nvidia and Ellerston Capital. The IPO hopeful has applied to the corporate regulator to become a public company. Dempsey replaces Ted Petty, who will remain on the board as a non-executive director, alongside David Leslie, Rosenfield and Curtis. “Firmus is scaling rapidly and building the capabilities across leadership, operations, and governance to support that momentum,” Dempsey told the AFR. Firmus also appointed Kirsty Godfrey-Billy, who left Xero in March after six years as chief financial officer, to the same role. (AFR)

4.

Big deals: Occidental Petroleum is in talks to sell its OxyChem division in a deal expected to be worth about USD10 billion ($15.3 billion), the Financial Times reported citing unnamed sources. The divestment would be the Houston-based company’s biggest to date and would carve out one of the world’s largest standalone petrochemicals units. A deal is reportedly likely to be announced in the coming weeks, provided it does not hit any last-minute hurdles. The identity of the buyer could not immediately be established and the sale could still fall apart, the FT said. Occidental, backed by Warren Buffett, has been steadily divesting assets to reduce its USD24 billion debt load. Separately, The Wall Street Journal reported Electronic Arts is in advanced talks to go private in a roughly USD 50 billion deal that would likely be the largest leveraged buyout of all time. The investor group reportedly includes private equity firm Silver Lake, Saudi Arabia’s PIF and Jared Kushner’s Affinity Partners, with a deal possibly being announced as soon as next week. EA shares closed nearly 15% higher on Friday, giving the company a market value of around USD48 billion. (WSJ)(Reuters)(FT)(Bloomberg)

5.

Russia-Ukraine war: Four people were killed in a large-scale attack on Kyiv on Saturday night as Russia bombarded the Ukrainian city for over 12 hours. Ukrainian President Volodymyr Zelensky said via X that the “savage” and “deliberate, targeted terror against ordinary cities” saw Russia fire nearly 500 attack drones and more than 40 missiles, including ballistic missiles. NATO member Poland briefly closed part of its airspace near to two of its southeastern cities and scrambled jets during the attack. After Ukraine confirmed that it had received a US-made Patriot system from Israel on Saturday, Russia warned that any aggression shown toward the country by NATO members will be met with a “decisive response” and will “regret” downing any objects in Russian airspace. Danish authorities reported a new wave of drone sightings near defence facilities on Saturday night, which PM Mette Frederiksen has linked to Russia’s efforts to destabilise Europe. (FT)(Zelensky X)(Reuters)(Bloomberg)(ABC)(Capital Brief)

6.

Snapback sanctions: Iran condemned as "unjustifiable" the reinstatement of United Nations sanctions over its nuclear program after talks with Western powers collapsed. "The reactivation of annulled resolutions is legally baseless and unjustifiable…all countries must refrain from recognising this illegal situation," the Iranian foreign ministry said. The UN sanctions were reinstated at 10am Sunday AEST after attempts to delay the return of all sanctions on Iran failed on the sidelines of the UN General Assembly last week. "We urge Iran and all states to abide fully by these resolutions," the foreign ministers of France, Britain and Germany said in a joint statement. Israel hailed the reimposition of sanctions on Iran as a "major development", citing what it called Tehran's ongoing violations over the nuclear program. "The goal is clear: prevent a nuclear-armed Iran. The world must use every tool to achieve this goal," the Israeli Foreign Ministry said. (CNN)(BBC)(Reuters)(FT)(Guardian)

7.

Adams exits: New York City Mayor Eric Adams ended his re-election bid just weeks before voters head to the polls, citing sagging poll numbers, the fallout from a dismissed federal indictment and the loss of millions in public matching funds. In a video posted Sunday, Adams blamed “constant media speculation” and the city’s Campaign Finance Board’s decision to withhold funds. His exit, five weeks before election day, reshapes the dynamics of the closely watched race. Adams had been polling fourth behind Zohran Mamdani, Andrew Cuomo and Curtis Sliwa. According to The New York Times, Adams explored a potential ambassadorship to Saudi Arabia during a Florida meeting with billionaire Trump adviser Steve Witkoff. The Times also reported that New York business executives discussed private sector roles to encourage him to drop out. “Thank you @ericadamsfornyc… for stepping aside when the time was right,” posted hedge fund manager Bill Ackman, adding that Curtis Sliwa should follow his lead. (Bloomberg)(NYT)(WSJ)

8.

Trump meetings: US President Trump will meet with the four top congressional leaders at the White House on Monday, the day before a deadline to avert a federal government shutdown. Republicans are pushing a temporary funding bill that Democrats had previously rejected, which keeps spending levels flat and includes USD88 million ($134.5 million) in emergency funding to bolster security for the executive branch, the Supreme Court and Congress. Democrats are demanding an extension of Affordable Care Act subsidies and the reversal of cuts to Medicaid and other health programs. Trump last week cancelled a meeting with Democrats, calling their demands “totally unreasonable,” but agreed to talks after pressure from his own party. On Tuesday, Trump is expected to attend an unusual gathering of hundreds of generals and admirals at a US military base in Virginia. The meeting, convened by Defence Secretary Pete Hegseth to promote a “warrior ethos,” has drawn criticism for its secrecy, scale and timing. (NYT)(Bloomberg)(WSJ)(CNN)