r/AusEcon

A lot of the discussion around ARM today centers on its ~18% China revenue exposure (mostly royalty revenue through licensees like Samsung and SK Hynix). Ran the EPS sensitivity instead of just looking at the headline percentage: a 10% cut to that China revenue only moves EPS by about $0.01. The royalty/licensing model has enough operating leverage that revenue shocks don't translate 1:1 into earnings hits.

HPE was up almost identically (+10.0%) the same session, which points more toward broad tech/infra rotation than an ARM-specific catalyst. The AI infrastructure and custom silicon design-win narrative ("physical AI buildout" robotics, edge, data centers) is getting cited as the underlying driver.

Full writeup: https://metricshour.com/briefs/2026-07-10/

Curious if others are seeing the same EPS math or reading the exposure risk differently.

Summary:

• Australia used to have a strong economy
  • GDP grew consistently from 1991–2020.
  • Strong exports + domestic economy made Australia resilient.
  • Major industries included mining, education, technology and finance.
• The economy has struggled since COVID
  • GDP growth is mostly driven by population growth.
  • GDP per person has barely grown.
  • Productivity has been weak.
  • Real wages have fallen by about 5%.
• China and geopolitics are also problems
  • Australia relies heavily on China for exports.
  • China's economy has slowed.
  • US tariffs are adding pressure.
• Main problem: low investment
  • Business investment has fallen since 2013.
  • Investment outside mining has fallen especially sharply.
  • Australia invests less than many developed countries.
• Banks focus heavily on housing
  • Banks lend a lot of money to property.
  • This leaves less money for businesses.
  • Banks also prefer property as collateral.
• High house prices hurt the wider economy
  • Money flows into property instead of businesses.
  • Businesses have less money for technology and expansion.
  • This contributes to weak productivity.
• Low productivity contributes to inflation
  • Workers aren't becoming much more productive.
  • Low productivity can push prices higher.
  • This helps explain persistent inflation.
• Overall conclusion
  • The main problem is not just China or global events.
  • Years of weak business investment are the bigger issue.
  • Australia's focus on property may be holding back economic growth.

PAYWALL:

What also needs to be done is to directly address the overarching structural problems with a program that is supporting people it was never supposed to cater for.

The E61 Institute’s number-crunching to show what difference a means test would make to the cost of the National Disability Insurance Scheme is a case of the glass being half full.

The centrist think tank, which is run by former Productivity Commission chairman Michael Brenan, says that applying the same income and assets test that determines eligibility for pension and unemployment payments to the NDIS would “generate modest fiscal savings”. This is an understatement.

Means testing the nation’s fastest-growing social program – forecast to cost $56 billion this financial year – would have saved $4.5 billion, E61 estimates, on the $44.3 billion cost of the scheme in 2023-24. That is hardly an insignificant sum. It’s roughly half the cost of building an AUKUS submarine every year.

E61’s analysis of the scheme’s administrative data suggests that a very high 87 per cent of adult participants would still qualify for the NDIS because they already receive the means-tested Disability Support Pension.

The paradox is that when the means test includes the wealthier parents of children on the scheme, 40 per cent of the NDIS’s three-quarters of a million participants would be removed. But the savings generated would be proportionately less, in the vicinity of reining in costs by about 12 per cent, because most of those who would be denied access receive only relatively low-cost support.

Nevertheless, there is an important principle involved in targeting government assistance and requiring those who have the financial capacity to do so to support themselves.

Requiring those who can afford to pay for their own disability services to do so might also help restore the integrity of the scheme.

The NDIS has lost social licence among Australians due to exploding costs, widespread rorts and fraud, and the well-known reality that the program is not only supporting the relatively well-off but also those with relatively less severe problems.

The core problem has been the rules of the scheme, which were originally supposed to provide life-changing support for the relatively small number of Australians with severe and permanent disabilities.

Instead, scope and eligibility creep has significantly increased the number of people receiving support, especially adults and children diagnosed with mild autism who have been the major driver of the explosion in the size and cost of the NDIS.

The Albanese government acknowledged this when it announced in August last year that children with mild autism would be diverted from the NDIS to the new Thriving Kids support program jointly funded with the states.

Labor’s Thriving Kids program, jointly funded by the states and designed to divert children with mild autism and development delay away from the NDIS, got tangled up in the usual federal-state financial argy-bargy.

It took a fiscal bribe in the form of additional federal funding for public hospitals – thereby undermining NDIS reform’s overall contribution to budget repair – for most state and territory governments to agree to fund and operate Thriving Kids services. The remaining holdout is the Crisafulli LNP government in Queensland, thereby living up to the Sunshine State’s long history of Canberra bashing.

E61’s analysis suggests that the savings generated by a means test would be split between $1 billion from adults and $3.5 billion from children based on parental income. Those savings would be reduced in proportion to the extent Thriving Kids succeeds in getting children off the NDIS.

A means test may be no silver bullet for NDIS sustainability. But the substantive point is the number of people based on their lower level of need who are on the scheme but shouldn’t be. What needs to be done is to directly address the overarching structural problems with a program that is supporting people it was never supposed to cater for. This underscores the importance of the Albanese government’s belated reforms to fix the fundamental design problems at the heart of the NDIS’s unaffordable trajectory.

Labor’s plan to limit future growth in the cost of the runaway scheme to just 2 per cent and cut a forecast 900,000 participants by one-third over the next four years hinges on the legislation currently before parliament.

The most important changes include revised eligibility rules based on standardised evidence-based functional assessment of people’s needs, and the independent reassessment participants need to determine whether they continue to receive support when their plans expire. Both those changes appear designed to keep those with less severe disability, especially children and adults with mild autism, off the NDIS.

As part of the horse-trading over the passage of Labor’s changes to investment tax concessions announced in the May budget, the Greens secured an eight-week delay while the NDIS bill was referred to a parliamentary inquiry due to report this Friday. Every day it has been delayed has cost the budget $11.5 million, according to the government.

Despite the objective being to return the NDIS closer to its founding purpose of supporting those who are permanently and profoundly disabled, disability groups are mounting a rear guard action to water down the proposed changes.

Labor appears determined to hold the line on NDIS reform. But the political pressure will build as the legislation returns to parliament next week.

Thankfully, the Coalition appears set to give bipartisan support for the overhaul in the Senate. This is an opportunity to help govern the country and set a more responsible fiscal course that the opposition should seize, as it seeks to rebuild its credibility on budget and economic management under Angus Taylor.