Peter Costello tells lotfeeders to “prepare for headwinds”

Eric Barker, 19/10/2022

Former Federal treasurer Peter Costello giving an in-depth analysis of the global economic outlook to the crowd at BeefEX.

FORMER Federal treasurer Peter Costello has told the Australian lotfeeding industry to prepare for inflation and interest rates to keep rising as governments and central banks continue struggling to contain the cost of doing business.

Few parts of the beef supply chain have seen the effects of inflation like lot feeders, with the rising cost of feedgrain, cattle, diesel and gas all having an impact on the bottom line.

Mr Costello addressed the issue in a well-crafted speech at the opening day of the BeefEx conference in Brisbane. He started by drawing an apt comparison between feedlots and the nation’s capital.

“I’ve been to many feedlots throughout Australia and all those beasts nestled closely in pens reminded me of parliament house in Canberra – where a lot of people are also nestled closely together waiting for executional blade to fall on their political careers,” he said.

But the topic of the speech was a much more serious, with Mr Costello addressing the forces of the global economy and how it may create challenges and opportunities for the industry.

“You have lived through the greatest investment conditions you will ever see in your lifetime – they were not normal,” he said.

Mr Costello was referring to the economic fallout of the COVID 19 pandemic – which he said were designed to create a “tailwind” for the economy.

“First of all, the government started borrowing and spending, with $1 billion in stimulus,” he said.

“Then on monetary policy the Reserve Bank cut the cash rate to 0.1 percent, which is the lowest on recorded since the pharaohs. Then our bank created money, the Reserve Bank of Australia created $400 billion in response to COVID. Globally, if you take the Americans, the Europeans, the British and the Japanese, $10 trillion was created.”

Inflation and interest rates to keep rising

Almost three years after the start of the pandemic, inflation has started rising which has put pressure on Australia’s trading conditions around the world. Mr Costello said he expected see inflation and interest rates to keep increasing in the short-term.

“Coming out of this period where we had enormous tailwinds, the inflation genie escaped the bottle and everything now has to go back a bit,” he said.

“Interest rates are going up and central banks have to take that money they created out of the economy, the government has to restrict its spending and try getting its budget back under control.

“We have had 14 years of deficit, which means we have $16,000 of debt per head of population. The problem is we are carrying this big debt in a period of rising interest rates, the government has to pay more on its debt just like you are going to have to pay more on your debt.”

China and Russia disrupting world order

While Mr Costello referred to the exceptional trading conditions the world has been experiencing, he said geopolitical issues in China and Europe were creating some uncertainty.

“I watched the Queen’s funeral recently and one of the commentators said it was one of the greatest assemblies of world leaders under one roof ever,” he said.

“But not quite everyone was there, because the president of China and the president of Russia weren’t there. Both Putin and Xi Jinping have their own ideas about how the world should be run, and they are very different to the rest of the world.”

Mr Costello said the moves of President Xi and Putin had the potential to keep disrupting global financial markets.

“The permanent interest of Xi Jing Ping is to maintain the power of the Chinese Communist Party,” he said

“That may involve bringing Taiwan back under the control of mainland China, certainly involves the militarisation of the South China Sea, it also involves potential military bases in the South Pacific – things that Australia can’t live with.

“We have seen what Russia’s invasion of Ukraine has done to world markets, imagine what will happen to markets if there is war over the Taiwan Straits.”

Potential benefits for Australia

While there were issues with the global economy, Mr Costello said Australia’s terms of trade was still some of the best it has ever been.

“We are not Britain and Europe, we do not have to import our energy and we don’t have to import food,” he said.

“If the wheat crop in Ukraine is affected by the war, Australia becomes a winner. I could have killed for terms like this when I was the treasurer.

“It’s not just iron ore and gas that benefits from this, rural commodities are the strongest they have been – what is going to squeeze you is input costs.”

Mr Costello said the outlook was good for the cattle industry, but it needed to prepare for some “headwinds” in the short-term.

“Now is the time to take a little bit of risk off the table and batten the hatches. We lived through the best of conditions, so we must live through the adjustment,” he said.

“But properly managed, this could be another boom for Australia – these could be the best of times rather than the worst of times.”


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  1. Michelle Finger, 20/10/2022

    How could Mr Costello (or perhaps the article author) not mention the goal-post shifting on regrowth management, & all the talk of meat taxes, methane & carbon “accounting” ??
    If politics keep on the current trajectory, the beef industry is in for a very bumpy ride.

    Hi Michelle, he didn’t bring it up in his presentation and didn’t have a whole lot to say when asked. To paraphrase, he said the economy and energy supply should not be set back for climate measures. Editor

    • Brad Bellinger, 20/10/2022

      Well said Michelle. Also Peter Costello increased inflation instantly by 10% we lobbied to make livestock sales exempt from GST but the NFF were in favor of it.
      John Howard and Sen Robert Hill were responsible for the stealing our native vegetation when they signed up for Kyoto, they threatened the States with GST revenue if they did not legislate it.
      I did appreciate Peter as treasurer apart from the above misdemeanor’s . Paid off 91B in debt and saved another 40B and put it into the future fund. Unfortunately the Morrison era was the most fiscally irresponsible government we have ever had running deficit’s 3 times that of Whitlam. Can the Albanze government act like a conservative and Chalmers be another Costello. We live in hope.

  2. Stephen Holt, 20/10/2022

    Great editorial, a wealth of information, simply presented. It’s a shame Costello did not take on Howard when he had the chance. He would have won the election against Rudd. Imagine the money we poor old tax payers would have saved.

  3. Peter Dunn, 19/10/2022

    Peter Costello, with enviable runs on the board, a truckload of experience and a highly credible, success-based reputation, warns of ‘headwinds’, but at the same time essentially talks the economy up.
    Others, not remotely competitive but currently in a position to attract the media, talk the economy down. Why might that be???

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