Tuesday, 3 November 2026

Topics: interest rates; inflation; spending; MYEFO; unemployment; small business.

E&OE……………………..

Jamie Burnett: The RBA raising the cash rate for the fifth time this year. We're sitting at 18-year highs. Plenty of uncertainty locally, across the world as well. A warning inflation won't hit the target range until the end of next year. We heard that from the RBA today. Potentially a risk of recession, government spending in the spotlight. December's budget update looming large. Absolutely. Let's go to Tim Wilson, who is the Shadow Treasurer. Good afternoon.

Tim Wilson: Thanks, Jamie. Good to be with you.

Jamie Burnett: Can Australia avoid recession?

Tim Wilson: Well, if the government keeps going on its current trajectory of spending, it's going to be hard. The reality is the RBA's forecasts have only outlined an interest rate hike today. They said that interest rates will remain roughly where they are to the end of next year. It's projected unemployment at 5.1%, which is going to be a further uplift of about another 0.4% towards the end of next year. So that's going to be tens of thousands of Australians put out of work while they're paying higher costs on their mortgages and going to the supermarket and paying more and getting less.

Jamie Burnett: As savage as it sounds, do we need the unemployment rate to rise? Do we need more Australians out of work to fix the inflation problem?

Tim Wilson: No, not necessarily. If you actually focus on growing the private economy faster than government spending, you will actually change the conversation and you will actually get inflation pressure down. The problem is the government keeps spending. It's addicted, and because it doesn't have any answers to grow the economy, as a consequence, we continue to have an inflation problem, which means people are paying more on their mortgages and of course going to the supermarket and paying more and getting less.

Jamie Burnett: Budget update in December is going to be significant. Do you have any confidence that the federal government can change approach and will cut?

Tim Wilson: Well, I hope they do, but I have very little confidence because they talk about their savings, but for every two bucks they save, they go on and spend another three bucks. And that's the problem. The government likes to talk about saves, and they've talked about it already in the MYEFO, so the report at the end of the year looking at government expenditure. But we know that every time they’ve said in years past, they're going to cut spending, they've gone on and cut $2 and spent $3.

Jamie Burnett: It was a split vote today from the RBA Board, 6 to 3, but do you think there was any choice, any other choice but to raise rates given the situation we see?

Tim Wilson: Well, because there continues to be pressure on government spending and they continue to spend without understanding the connection it has to inflation, they force the hand of the Reserve Bank. Now, the challenge is not just the decision that was made today, which is to lift rates a quarter of a percent to 4.85. The problem is they've also forecast that it's going to keep staying that way all of next year. So, while a lot of Australians will be sitting around the kitchen table tonight and going, "Well, I don't know what there's left to cut," you know, "What are we going to cut? School excursions? Kids' sport? Or even just a basic holiday?" The problem they're now facing is this pressure is going to keep going all next year.

Jamie Burnett: 133 882. What do you make of what you're hearing from the Shadow Treasurer, Tim Wilson, this afternoon off the back of an increase in rates from the RBA? It was tipped and it did happen. 133 882. Tim, what do you reckon the next 6 to 12 months looks like? What do you reckon it looks like for people driving in their car now, maybe on their way home from work, around the dinner table, all of that? What's life going to be like?

Tim Wilson: Well, I think it's going to be really challenging, to be frank. If you look at the Reserve Bank's forecasts today, it said 50,000 or more Australians are going to face the problem of being out of work. We know that they're going to be paying higher prices for basic goods as well as just to keep a roof over their head. And there's no clear guidance from this government about how they're going to get the economy moving, get the investment we need to make sure that we get an uplift in the overall economy and give people hope. The only chance we have for economic hope to get through this difficult time is a change of government, and because the next election won't be until probably March or May 2028, we're going to continue to live with really serious economic pressure on households. So, we desperately need change, but an election isn't coming anytime soon.

Jamie Burnett: It's not, but I mean, you don't want anyone to be doing it hard, but do you look at this situation and how it's playing out with the economy and think, "You know what? That doesn't hurt us politically."

Tim Wilson: No, that's not how I look at it at all. I actually look at it with sadness because I know sitting behind all of these big numbers is actually households that are breaking. I know people who are being forced to sell homes at prices less than they have their debts on them, and they're financially drowning. And the worst thing is that the government won't even accept their responsibility. They're turning around to the Australian community now and saying, "You pull your belt in, but we're not going to do that, we're going to keep spending." And so actually it really worries me about what potentially we might inherit and, more importantly, how much Australians are losing hope of their future. We need confidence and for Australians to look to the future with hope, particularly small business people who are the engine room of the economy.

Jamie Burnett: Tim, really good to speak to you today. Appreciate it.

Tim Wilson: Thanks, Jamie.

[ENDS]