Tuesday, 3 November 2026

Topics: interest rates; inflation; spending; the Coalition’s Charter of Budget Honesty; Victorian politics

E&OE……………………..

Tom Elliott: Our guest is the Federal Shadow Treasurer, Tim Wilson. Good morning.

Tim Wilson: Good morning, Tom.

Tom Elliott: Well, if you had to try and put the blame on who's responsible for inflation, how much is it the high oil prices from Iran and how much is it Federal Government spending?

Tim Wilson: Well, it comes down to what you're looking at. If you're looking at headline inflation, which is prices rising across the economy, that's obviously being influenced by international factors. But when you look at what's driving up interest rates, what the Reserve Bank looks at is underlying inflation, which is the centre of the economy, and that's being stoked by government spending. So, the government's trying to distract because it helps their political argument. The problem is that the underlying inflation problem started in July 2025, so last year. That's why we've had five interest rate rises this year while the rest of the world, off the back of Iran, has only had one.

Tom Elliott: Right, so you're saying the Reserve Bank sort of gets that high oil prices are hopefully a temporary phenomenon, but it is worried about ongoing high government expenditure?

Tim Wilson: Yes, so the Reserve Bank looks past the temporary factors, like international events. It looks at the core problem. The core problem is government spending, and when you run deficit budgets, you're borrowing from the future to spend today. That's too much money chasing too few goods. That means that prices go up and that's the problem of our inflation crisis. That's why interest rates are going to go up, concerningly, five times this year. It's all linked back to government spending.

Tom Elliott: So, you think interest rates will go up this afternoon at 2:30?

Tim Wilson: Well, I hope not, but the reality is that the RBA's hand looks like it's going to be forced by the government's spending addiction. The more they continue to spend, the more the RBA has no choice but to follow suit, and what's even worse is the government doesn't even acknowledge that it's the source of the problem, so people have even assumed that there may be further rate rises early next year.

Tom Elliott: So the thing about higher rates is, if I'm the average consumer with a mortgage and I'm living pay check to pay check, when rates go up I've got even less money in my pocket and I say, "Righto, we've got to spend less on other things," and the idea is that takes the heat out of the economy. But does the Federal Government react that way? I mean, does Jim Chalmers particularly care when rates go up?

Tim Wilson: Well, I think he does because it creates a political problem, and particularly when the overwhelming majority of Australians believe he's responsible for it. But the responsible thing a Treasurer should do is be pulling his belt in. This morning he's gone out and once again been non-committal about cutting back government expenditure. The Finance Minister on Sunday refused to commit to cutting back expenditure. So, all they're doing is setting Australians up for higher rates into the future because they're not prepared to tame inflation and accept their part and responsibility.

Tom Elliott: Well, do you think politically that people do blame the Federal Government?

Tim Wilson: Well, polling says they do and they accept that government spending is the key driver. That's why we've had four interest rate hikes this year and possibly a fifth, in comparison to the rest of the developed world that's only had around one, and if we don't get government spending under control, it's going to continue to be a problem for Australian households.

Tom Elliott: Okay, let’s say in about 18 months or whenever the next federal election is due, this unpopularity with the current government reigns and suddenly you’re elected government and you are the Treasurer, what would you do differently?

Tim Wilson: We've already outlined $31.3 billion of savings, looking at ending climate bureaucracies that don't cut emissions, housing bureaucracies that don't build homes, corporate welfare that doesn't seem to be building the future of the Australian economy, ending welfare for future non-citizens, and also crushing the tobacco black market, which is leading to less government revenue and incentivising organised crime.

Tom Elliott: So just on that last one, that's where you actually cut the excise on legitimate tobacco, but you retake control of the tobacco market and you do make cigarettes cheaper, but at least the government gets some money from them?

Tim Wilson: Yeah, well, we've seen a collapse in government revenue because organised crime doesn't report its earnings to the ATO and doesn't pay excise. If we cut tobacco excise by about 80%, government revenue actually goes up because tobacco sales move from organised crime back to the real economy, which means people pay tax again. And we've had that analysed by the Parliamentary Budget Office.

Tom Elliott: A few years ago there was a push, it might have been under Morrison or Turnbull, I can't remember, but the idea was that you would limit the size of the Federal Government to no more than I think it was 23.9 or 24% of the economy. It's now running at I think 27 or 28%. Do you think that there should be a maximum size of the government as a percentage of GDP? Should we just say the government should be no bigger than X?

Tim Wilson: Well, we're looking precisely at that right now through our Charter of Budget Honesty. We don't believe that the government should continue to grow, because what we're seeing is people becoming more dependent on government. It's bad for productivity, it's bad for economic growth, and it's stoking inflation, which means Australians are paying more in interest rates and going to the supermarket and paying more and getting less.

Tom Elliott: Given how bad the current environment is, they're talking about unemployment going up above 5% and economic growth going down to 1% and, as you said, interest rates going up this afternoon. Do you think if you were in charge you could manage those things and get the budget back into surplus?

Tim Wilson: We've committed to doing it in the medium term because we know that it's not going to be done overnight. The big question is going to be where the economy is going to be in 18 months' time under this, frankly, taxaholic Treasurer who's basically going through a process of undermining and kneecapping small business, undermining employment growth, particularly in the private sector, our big concern is what we're going to be left with and what of these we're going to have to repair should we come to government.

Tom Elliott: But finally, isn't the big problem you're going to have is everybody agrees in the abstract, "Oh, we should spend less money, we should only spend what we can afford," but no one wants their area of expenditure being cut? Isn't that the problem you'll face?

Tim Wilson: Well, that's precisely why we've started to outline, there are bureaucracies that don't deliver their outcomes, we're not interested in supporting those. We're going to go step-by-step on how to do this, but we've got to win a bigger argument. We need a nation of people who want to stand on their own two feet, be strong and independent, because the strength of this country comes from strong families, strong communities, and strong small business as the foundation of our nation's success.

Tom Elliott: Oh, and just finally, finally, we've got a state election here, as I'm sure you'd be aware, in three and a half weeks. Do you think Jess Wilson and the Liberals or the Coalition will win?

Tim Wilson: I'm very confident that Victoria will vote for a fresh start, particularly for Jess Wilson, who's done an outstanding job leading the team, and I'm hoping and confident she'll win majority government, because it's only when you have clarity in a majority government that you can actually get on and save the state of Victoria.

Tom Elliott: All right Tim, thank you for your time.

[ENDS]