Big-name Labor MPs are moving to distance the federal government from 2026’s punishing uptick in the cash rate, with a further rise expected today.
Labor frontbencher Tanya Plibersek denied claims federal spending was driving inflation and said high employment was a sign “the fundamentals of the Australian economy are very strong”.
The RBA is widely tipped to hike the cash rate today in its ongoing battle with inflation, which has failed to return to its desired target band.
There is mounting criticism aimed at the spending of federal and state governments, with more and more cash-strapped Australians left wondering how much the public is actually contributing to the problem.
But Plibersek downplayed Labor’s role in Australia’s inflation struggle and said the country was in a strong position.
“The basics of the Australian economy are very strong,” she told Sunrise on Monday, noting that Australia was “one of only nine countries that have a triple-A credit rating from all three major ratings agencies”.
Finance Minister Katy Gallagher said Labor was well aware of the pressures facing Australians right now and that the inflation issue was one impacting countries right around the world.
With Budget deficits projected for another decade, Senator Gallagher was forced onto the back foot to defend the role of government spending on inflation.
“We’ve found savings, including savings in an ongoing sense, to make sure that where government investment is happening, that it’s not adding to the inflation challenge in our economy,” she told ABC Radio National.
“But there is a war in the Middle East, and that war is having impacts not just at the petrol bowser, but across the board. The sooner that war ends, the better.”
Addressing reporters on Monday, Treasurer Jim Chalmers said Labor has managed the Budget “responsibly”, particularly with cost-of-living relief offered to Australians.
With wires