Labor’s spending left the RBA with no option

In 2025, the Treasurer said rising private sector demand would see a reduction in public sector demand.

Since Labor took office in 2022, federal spending has grown faster than the economy. The 2025 budget projected a $42.1 billion deficit, with gross debt approaching $1 trillion and spending as a share of GDP heading toward 26.9 per cent. Both the Parliamentary Budget Office and Treasury have identified Labor’s policy decisions as the main driver of a significant deterioration in the medium-term budget position. When government pumps extra demand into the economy without corresponding supply-side gains, inflation becomes harder to tame.

My latest in The Spectator Australia, Labor’s spending left the RBA with no option.

Australia’s inflation problem is back, and the RBA has responded with three interest-rate hikes in 2026 alone, lifting the cash rate to 4.35 per cent today.

The deeper issue lies in Labor’s consistent philosophical preference for redistribution, public spending, and expanded… pic.twitter.com/GFur5zMRUP

— The Spectator Australia (@SpectatorOz) May 5, 2026