Economist Phin Ziebell has built a reputation at VicWater conferences for blending sharp analysis with wry humour. His 2025 presentation was no exception, mixing sobering warnings about the global economy with some optimism about Australia’s prospects.
Ziebell began with what worried him most: the United States. Recent revisions have shown US job growth stalling, even turning negative for the first time since 2020. Inflation remains stubbornly above the Federal Reserve’s target, and new tariffs risk pushing it higher. Yet, despite these signals, US equity markets remain buoyant, driven by a handful of tech giants riding the wave of AI optimism.
“It makes me nervous that nobody seems perturbed,” he said.
The hype around AI, he argued, may not match its productivity promise. Drawing on history, Ziebell reminded delegates that even the personal computing revolution of the 1990s only delivered modest productivity gains. Today’s generative AI boom, while capital- and energy-intensive, may prove similarly limited and even risk making people less productive. He was blunt: “I think AI is largely a scam. And if I’m wrong, you can put me in the stocks in a few years and throw things at me”.
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China’s crossroads
Turning to China, Ziebell noted that the country remains a critical factor in Australia’s economic resilience. During the global financial crisis, China’s infrastructure stimulus helped underpin Australia’s mining boom and prevented the nation from falling into recession. But today, he warned, China’s growth model faces serious structural challenges.
The population has peaked, housing supply is oversaturated, and domestic consumption is subdued. While China leads the world in clean energy manufacturing and automation, with “dark factories” running at high levels of productivity, its transition from infrastructure-led growth to consumer-led growth remains uncertain. Exports still dominate, leaving China exposed to US tariffs.
“It’s not clear to me that China is immune from a US slowdown or crisis,” Ziebell said. For Australia, this means a more fragile safety net than it has had in the past.
Local resilience
Closer to home, Ziebell struck a more positive note. Inflation is easing, unemployment remains low at around 4.2 per cent, and GDP growth is picking up. Australia has achieved a “soft landing” after the sharpest inflationary spike since the 1980s—a major policy success compared to past recessions. Housing remains a challenge, but Victoria’s relatively high housing completions have kept price growth more contained than in other states.
Debt, another hot topic, was put into context. Victoria’s debt-to-GSP ratio is higher than in the past, but at 24–25 per cent it remains low by global standards. Compared to jurisdictions like Japan or even Canada’s provinces, Victoria is far from crisis territory. For water authorities, the message was that while funding challenges are real, the broader state context is manageable.
As always, Ziebell left the audience with both caution and humour. His presentations are a highlight not because they offer easy answers, but because they strip away hype and frame the real risks and opportunities facing Victoria’s water sector in a volatile world.