We’re keen to understand how the cost of living is being felt across Australia. What are your biggest expenses? Are you making cutbacks? Do you afford yourself luxuries?<\/p>\n
If you split the economy into public sector and private sector, households are on the private side of the ledger.<\/p>\n
Which helps to explain why private sector spending is growing faster than public spending. A year ago, the opposite was true. But Chalmers says the reversal shows this recent inflation pressure is not his fault.<\/p>\n
But of course, the government can influence household budgets and has in fact been making a concerted effort to do exactly that by handing out cost-of-living relief.\u00a0<\/p>\n
The government argued that relief was needed to help households struggling to cope with higher prices. And maybe it was. At a minimum, it was probably politically necessary given how angry voters were about their cost of living.<\/p>\n
But any dollar put into the pocket of households is extra money they can spend. And this is plainly a hindrance, not a help, for the Reserve Bank when it is trying to bust inflation by curbing spending.<\/p>\n
The cost of the cost of living<\/p>\n
That doesn’t mean cost-of-living spending can’t be justified. As both Chalmers and Bullock often say, the government’s fiscal policy and the bank’s monetary policy have similar but not identical objectives when confronted with inflation.<\/p>\n
It is the RBA’s job to use the interest rate \u2014 the one, blunt instrument it has \u2014 to ratchet down economic activity when it bubbles to unsustainable levels, recognising the profoundly destabilising effect that runaway inflation can have on any society.<\/p>\n
![\"Michele](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/02\/cea779e60386e84fa0639978a7525f06.jpeg\")
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Michele Bullock avoided comment on whether government spending was contributing to elevated inflation. (AAP Image\/Bianca De Marchi)<\/p>\n
It is the government’s job to walk and chew gum \u2014 to help those it believes are unable to cope with inflation, but to remain mindful of how much it is spending overall, given that its enormous budget can easily fuel inflation if it does not show restraint.<\/p>\n
Ever since his first budget, Chalmers has been criticised by the opposition and much of the economic commentariat, who have accused him of getting that balance wrong.<\/p>\n
They do not necessarily think there should have been no cost-of-living relief, but have disapproved of Labor’s tendency to default to universal spending \u2014 such as energy bill relief for every household, which ended last month \u2014 or to subsidise the well off, such as with an EV tax discount.<\/p>\n
This has always bridled with Chalmers, who has never missed an opportunity to stick it to those critics when falling inflation has seemed to vindicate his approach.<\/p>\n
And for as long as inflation was gliding smoothly towards the RBA’s goal of 2.5 per cent, he could reasonably feel happy with the balance he had struck.<\/p>\n