Tuesday, 29 September 2026

Topics: inflation; interest rates.

E&OE……………………..

Tom Connell: Joining me now live is Shadow Treasurer Tim Wilson for reaction on all of this. Thank you very much for your time. So, your reaction in particular to what the RBA Governor has said, because she said, yes, there is domestic inflation, but also pointing to the Middle East and AI rollout as well.

Tim Wilson: Well, obviously it's a very difficult day for Australian households, particularly those that have got a mortgage and for the small businesses that rely on their custom. A lot of Australians right now will be looking at their household budgets and saying, "I don't know where I can make ends meet." Now, the reality is that the Reserve Bank Governor has called out the fibs of the Treasurer, who has been constantly addicted to further spending by saying this is primarily driven by domestic demand. That's the challenge, and until the government controls its spending and inflation addiction, Australian households will continue to do it tough.

Tom Connell: We heard today from the Treasurer that this is not all the Middle East, but that's definitely a factor. The RBA Governor also pointed out the Middle East. So, there's plenty they agree on, isn't there?

Tim Wilson: Well, of course there's international effects, but that doesn't explain the three increases in interest rates earlier this year when the rest of the world wasn't moving. It doesn't explain the interest rate rise on the 3rd of February of this year before a single bomb had been dropped on Tehran. What we know is that the primary problem we have, and the Reserve Bank Governor has outlined this, is domestic spending pressure, and particularly government spending that has gone on to put pressure on interest rates, and until the government kicks that addiction, until it is prepared to pull its belt in, not just turn around to the Australian community and tell them to pull their belt in, we're not going to see a change. And in fact, economists are now projecting possibly another one, if not two, increases in interest rates and that they might stabilise there for the foreseeable future.

Tom Connell: The RBA Governor though looking at the statement and what she's had to say, she hasn't said this is primarily government policy, has she?

Tim Wilson: She said domestic demand, and of course, what we know is households have been pulling their belts in. We haven't seen the same restraint from government, and we know that has a material impact because government spending has continued to outstrip growth in the private economy, and this is the fundamental problem with the Albanese economic model. It's imbalanced, where it's growing the government, but it's not seeing investment that grows the future of the Australian economy. It's not seeing productivity growth, which is growing the number of jobs and sustainable industries, and it's not building a better future for young Australians to be able to go on and live a successful life.

Tom Connell: Most of that inflationary pressure though has actually come from private demand, and particularly in recent months, hasn't it? That's something we have heard a lot from the Treasurer. Points to this four out of those five dollars. Do you agree with that, or are you saying he's wrong?

Tim Wilson: Well, what we know is that the government is using taxpayers' money to stoke private demand. We've seen this in Victoria. I wrote an article today about it in the Daily Telegraph. In Victoria, because they've continued to increase taxes on industry, we have not seen private investment, so the only way they cover for it is borrowing more from tomorrow to spend today to prop up employment numbers. That creates private demand, but it's financed by taxpayers' money and government spending, and this is where you get the government outgrowing the size of the private economy. That's why we've got inflation, that's why we've got interest rate rises, and the worst thing is that the Albanese government has turned around to the Victorian model and said, "Let's take this to Canberra and screw the whole nation."

Tom Connell: There were plenty of economists raising their eyebrows, particularly during the third rate cut from the RBA. We had the change made by Labor for a dual mandate, so to equally weight unemployment or full employment with inflation. Does the dual mandate need to be looked at? Does it need to become a primary mandate again on inflation?

Tim Wilson: The primary mandate needs to be the government pulling in its belt and controlling its spending addiction. The RBA's hand is being forced in this situation because we continue to have pressure in the domestic economy. The government has continued to deny it's domestically driven. They want to blame artificial intelligence, Iran, just about everything under the sun. I mean, a lot of Australians must be looking at it right now and saying, "I wish I could pay my mortgage with Jim Chalmers' excuses," because sure as hell, they're finding it harder and harder to make ends meet, and they're certainly not going to get ahead so long as this government continues to engage in an economic model that stokes inflation and dares the Reserve Bank to increase interest rates.

Tom Connell: You've spoken at length about government spending, that's fair enough. Wouldn't expect anything else. But to the question I asked, do you believe the dual mandate needs to be looked at all?

Tim Wilson: They would have to be considered in a measured way, but the problem is it doesn't matter what the mandate is until you address the root cause of the problem of what is stoking inflation. As we're seeing with public spending, you're not going to see a change in the outcome. That's why there's been persistent pressure for a prolonged period now. March 2024, the Treasurer said we'd turned the inflation corner. Of course, that hasn't been a reality. We now know that we've seen a change in the inflation trajectory and the interest rate trajectory, and it's been upward, not downward. This is inflation the government owns and its interest rate rises that they own.

Tom Connell: When you say their hands are tied because of government spending, they've also been given a dual mandate. So, for example, if they're considering when to have a rate cut rather than say, "No, let's make sure inflation is tamed beyond all else," the RBA also has to say, "Well, maybe the jobless rate will go a bit too high." So do you think that is something that the Coalition is looking at or would be open to looking at, the dual mandate?

Tim Wilson: Well, that's not our focus at the moment. The focus is on how we make sure that we get a sustainable budget position because it doesn't matter how you structure the dual mandate, if the government keeps stoking inflation through public spending, you'll still end up in the same outcome, which is that interest rates will rise, Australian households will struggle, and it'll all be off the back of inflation stoked by government spending.

Tom Connell: So, on the government spending message, is it time for you to get more specific? For many years, the Coalition has had this tax-to-GDP limit, you call it ,very specific, 23.9%. Do you need something just as specific on spending-to-GDP?

Tim Wilson: We're working through all that at the moment, but we need to be very cautious because the government has potentially two budgets before the next federal election, and we know that their consistent pattern has been to overspend in comparison to what they projected. We know that there's fraud and corruption in a large number of government programs. We want to see that cut out because it's not just that the honest taxpayers' money is going towards dishonest ends, it's that when it goes to dishonest ends, it's also an inflationary impact, which is undermining confidence in the economy and, of course, putting upward pressure on interest rates.

Tom Connell: Well, I mean the latest budget position, the final budgetary outcome was actually better than expected. So shouldn't you have the confidence if all that's holding you back from setting some sort of spending-to-GDP limit is what's happening in the budget, shouldn't you have the confidence to do that?

Tim Wilson: Well, you're giving Jim Chalmers' talking points. It was because of increased tax revenue that they saw this improved situation, not because they found a way to reduce spending…

Tom Connell: Yes, but my point is that the spending side didn't blow out massively, did it? So, if that's your concern that the real spending amount is way higher, there's not evidence of that from the recent budgetary outcome, is there?

Tim Wilson: Well, I'm very concerned about the persistent inflation being driven by government spending, and just because the government hasn't had a massive blowout in comparison to their budget projections, doesn't mean that they've got this problem under control. This government continues to increase its expenditure faster than the growth of the overall economy. That's why we have an inflation problem, that's why we're seeing interest rates go up, that's why small businesses are being punished today, that's why households are struggling and wondering how it is they're not just going to make ends meet, but when they look at their budgets, they're looking and saying there's no more fat to give, and the only response from the Treasurer is to increase taxes and spend more, which is further driving the cycle of inflation.

Tom Connell: Your current policy is to not have spending go beyond natural growth essentially, so it feels like a tweak, but is the major surgery of spending-to-GDP limit, a specific one I alluded to earlier, is that something you're weighing up or you will announce before the next election? You're just waiting till you can be more sure about it? What are you saying exactly?

Tim Wilson: What we're weighing up is how we get the economy moving and we get private investment back in so that we can grow the overall size of the economy, so the private sector actually grows faster than the public sector. And that's where we want to get the balance right. One of the challenges we have right now is that the Treasurer is basically breaking households and small businesses under the weight of his inflation pressure and his spending addiction, and the problem, and the challenge we're going to face is how we're going to turn this complete mess around. He's been a complete denial as the Prime Minister was in his press conference this morning, saying there's no connection between their spending addiction and inflation. What we want to see is a private economy growing because people can get sustainable jobs, they can build out a future economy that gives Australians hope for the next generation where they can go and get well-paid jobs, buy a home and retire with confidence. That is literally the exact opposite of what we are getting now under the Albanese economic model.

Tom Connell: Tim Wilson, thanks for your time.

Tim Wilson: Thanks, Tom.

[ENDS]