{"id":908767,"date":"2026-09-28T16:52:24","date_gmt":"2026-09-28T16:52:24","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/908767\/"},"modified":"2026-09-28T16:52:24","modified_gmt":"2026-09-28T16:52:24","slug":"jim-chalmers-and-the-rba-treasurer-blames-global-conflict-for-inflation-as-interest-rate-hike-looms","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/908767\/","title":{"rendered":"Jim Chalmers and the RBA: Treasurer blames global conflict for inflation as interest rate hike looms"},"content":{"rendered":"

September 28, 2026 \u2014 7:30pm<\/p>\n

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A near-record tax haul under Labor has added to scrutiny of its fiscal management ahead of a widely expected rate hike on Tuesday as Treasurer Jim Chalmers pins the blame on Donald Trump\u2019s war in the Middle East rather than wage earners fuelling inflation.<\/p>\n

As economists and a think tank called for targeted tax rises to cool demand rather than hiking rates for mortgage holders, Chalmers tried to get ahead of the bank\u2019s decision, declaring: \u201cThe fact that we have a war in the Middle East [is] pushing up global oil prices and pushing up prices at the petrol bowser.\u201d<\/p>\n

\"TreasurerTreasurer Jim Chalmers says he won\u2019t blame low unemployment for any rate rise.Alex Ellinghausen<\/p>\n

\u201cWe have an inflation challenge in our economy not because unemployment is too low but because the price of petrol is too high and we\u2019ve got other inflationary pressures. I\u2019m reluctant to blame the workers of this country for our inflation challenge,\u201d he said, adding that Australians would be \u201capprehensive\u201d about the bank\u2019s deliberations.<\/p>\n

The comments from the treasurer, who is under growing pressure from Labor MPs<\/a> to address inflation and productivity, re-opened a political fight with the opposition over who is to blame for high prices, two years after Chalmers created tension with the RBA by accusing it of \u201csmashing the economy\u201d.<\/p>\n

Chalmers\u2019 argument that unemployment was not too high was prompted by bank governor Michele Bullock\u2019s blunt assessment last week that the jobless rate may need to rise as high as 5 per cent, up from 4.6 per cent, to take heat out of the economy.<\/p>\n

\u201cInflation junkie Jim is always looking for someone else to blame when he\u2019s asked about his spending addiction \u2013 Iran, international events, AI \u2013 and now he\u2019s trying to bully the RBA because they\u2019re telling him he needs to go cold turkey,\u201d shadow treasurer Tim Wilson said.<\/p>\n

The reserve bank\u2019s next rise will take Australia\u2019s rates to a 15-year high, giving the nation the second highest cash rate in the developed world after Iceland.<\/p>\n

Labor released fresh budget figures on <\/a>Monday showing a $6 billion improvement in the deficit, $4.6 billion of which came from higher tax receipts from personal investments and superannuation funds that have benefited from the AI boom and a stock market that has proved resilient amid war.<\/p>\n

Chalmers noted the impact of the government\u2019s policy decisions over the past two budget updates were to improve the bottom line, which he said was \u201cactually quite rare\u201d.<\/p>\n

Related Article\"Michele<\/a><\/p>\n

The final budget figures released on Monday showed tax receipts as a proportion of GDP rising to 24.1 per cent, up from the forecast of 23.6 per cent when the budget was released in May. The Howard-era record 20 years ago was only slightly higher at 24.2 per cent when Australia was flush with revenue from the China-induced mining boom.<\/p>\n

The previous Coalition government had a 23.9 per cent cap on the tax share. Chalmers last week indicated the government would cut taxes before the next election to stop the tax-to-GDP ratio soaring above the Howard-era record off the back of ever-rising income taxes.<\/p>\n

While Chalmers repeatedly insists Labor had improved the budget, veteran budget analyst Chris Richardson said a key metric of the budget\u2019s structural health had deteriorated from a thin surplus when Labor came to power to a deficit of 1.6 per cent of GDP.<\/p>\n

\u201cWe\u2019ve shifted the budget to a substantially worse position and we\u2019ve papered over it with a revenue rainbow,\u201d Richardson said.<\/p>\n

Richardson said the war in Iran had made matters worse but noted that years of elevated spending from federal and state governments \u201cmade the ongoing inflation problem worse\u201d.<\/p>\n

Richardson said the revenue upgrades came from higher-than-expected migration, commodity prices elevated by the war in Ukraine, and unemployment that had been kept low because the Reserve Bank had gone out of its way to keep as many people in jobs rather than hiking rates as swiftly as other central banks.<\/p>\n

The RBA\u2019s approach had spared job losses but created prolonged pain for mortgage holders and taxpayers, the budget watcher argued.<\/p>\n

On Monday afternoon, bond futures traded on financial markets had priced in a 90 per cent chance that the RBA would lift interest rates by 0.25 of a percentage point on Tuesday.<\/p>\n

The Centre for Policy Development, a think tank, says lifting interest rates to reduce inflation disproportionately hit households with a mortgage, mostly younger workers with children.<\/p>\n

The centre argues that a temporary increase to superannuation contributions paid by all workers would be a fairer way to reduce demand across the economy during high-inflation periods. This would take extra money out of circulation to slow spending, but would \u201ckeep it in workers\u2019 retirement savings instead of handing it to banks in interest\u201d.<\/p>\n

\" Photo: Matt Golding<\/p>\n

Economist Saul Eslake, who also says super contributions could be used to fight inflation, believes the strategy could be used in tandem with monetary policy.<\/p>\n

\u201cThe first reaction to a period of high inflation should be through higher interest rates but if it is feared inflation will be persistent, as it is now, varying super contributions might be a useful complement or supplement,\u201d he said.<\/p>\n

Another option proposed by the Centre for Policy Development is for temporary increases to personal income tax to reduce spending and put downward pressure on inflation. This would also distribute the burden of controlling price growth more fairly across society, but government would be unlikely to back such an unpopular legislative change.<\/p>\n

Related Article\"Coastal<\/a><\/p>\n

Eslake says it was once common for federal governments to impose short-term tax increases to reduce inflation.<\/p>\n

One example was during an inflationary spike in the early 1950s when the Menzies Coalition government imposed a significant income tax surcharge and a large increase in sales tax to stabilise prices.<\/p>\n

But the strategy of using the federal budget to reduce inflation has now \u201cfallen out of fashion\u201d, says Eslake.<\/p>\n

Warwick Smith, the Centre for Policy Development\u2019s research director, said Australia needed to stop relying on the single \u201cblunt\u201d instrument of interest rates to properly address inflation.<\/p>\n

\u201cWe need more tools in the toolkit to tackle the actual causes of inflation,\u201d he said.<\/p>\n

Get federal politics news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter<\/a>.<\/p>\n

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\"PaulPaul Sakkal<\/a> is Chief Political Correspondent. He previously covered Victorian politics and won a Walkley award and the 2025 Press Gallery Journalist of the Year. Contact him securely on Signal @paulsakkal.14.Connect via X<\/a> or email<\/a>.\"MattMatt Wade<\/a> is a senior economics writer at The Sydney Morning Herald.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"September 28, 2026 \u2014 7:30pm Save You have reached your maximum number of saved items. Remove items from…\n","protected":false},"author":2,"featured_media":908768,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-908767","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/908767","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=908767"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/908767\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/908768"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=908767"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=908767"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=908767"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}