The Shadow Treasurer, who you would think would have an easy day given the RBA decided not to cut interest rates, unfortunately keeps finding a rake to step on.
Tue 4 Nov 2025 15.30
Photo: AAP Image/Lukas Coch
Ted O’Brien asked the PM (who flicked the question to the Treasurer, Jim Chalmers) that:
“RBA’s forecast for headline inflation to peak at 3.7%. In the middle of next year, well above the target band and not to return to the band until 2027. My question to the Prime Minister is, given the government’s spending is running four times faster than the economy, isn’t it time to rein the Treasure inner to stop his spending spree?”
Fair enough I guess, except Chalmers had actually read the RBA’s statement on monetary policy which contains those forecasts, and alas for O’Brien, a few others.
While the CPI is not expected to get below 3% until June 2027, the RBA notes that
Year-ended headline inflation is expected to remain above 3 per cent for much of 2026, before returning to be a little above the midpoint of the target range by late 2027.
You can see this here:
So you might think case closed, O’Brien wins.
Problem is the RBA also noted that:
Changes in the timing of electricity rebates will cause additional volatility in headline inflation over the next couple of years.
So it is really due to a lot of erratic stuff, not underlying inflation. And while it did slightly revise up the underlying inflation measure – which the RBA actually targets, the revision was small, and we’ll be back under 3% soon – not in 2027 but next year:
And then we get to O’Brien’s point about “the government’s spending is running four times faster than the economy”
Firstly, that is a rather dopey point – if the economy is running slowly, the government should be assisting to stop the economy going into a recession. The RBA estimates that GDP will only grow around 2%. That is well below the long-term average of 2.75%-3%. Given public demand on average grows at around 3.3%, anything below that is actually below what the government probably should be spending.
As it is the RBA has revised down how much the public sector is contributing to the economy. The government is not only contributing less to the economy than usual, but probably less than it should be given rising unemployment.
But when you only care is attacking government spending, as is the case for Ted O’Brien, that logic does not register.
Independent Senator for the ACT, David Pocock, has added his voice to calls for a 25 per cent tax on gas exports.
Far from fixing the problem of low PRRT revenues, PRRT revenue is expected to fall further over coming years, while beer excise just keeps on rising.
In some excellent news, the Bureau of Statistics estimates that Australia’s unemployment rate remained at 4.1% in January. Before we go any further let’s just enjoy the current state of Australia’s labour market.
When banks make big profits media organisations love to cheer them on as though there are no losers form some of the biggest corporations in Australia making ever more money. But profits don’t come from thin air, they come from customers, they come from you.
