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.

In the Unfiltered newsletter, Alexandra Marshall wrote:

It’s hard to imagine an election where a Treasurer like Jim Chalmers walks away with his seat, let alone his appointment, intact. Is he the worst Treasurer this country has ever seen? There’s a debate about that online. One thing is for sure, as Michael de Percy writes of the latest rate hike, he’ll be unable to side-step the criticism. Everyone is hurting. People are being tipped over the edge of financial ruin. This is not the Australia of people’s dreams.

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