{"id":856441,"date":"2026-09-22T09:30:24","date_gmt":"2026-09-22T09:30:24","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/856441\/"},"modified":"2026-09-22T09:30:24","modified_gmt":"2026-09-22T09:30:24","slug":"david-koch-says-government-driving-inflation-in-open-letter-to-rba","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/856441\/","title":{"rendered":"David Koch says government driving inflation in open letter to RBA"},"content":{"rendered":"

Australians are paying<\/a> for an inflation bill they haven\u2019t run up, and mortgage<\/a> spending has outpaced the \u201chorror story\u201d generation of 1990, Compare The Market\u2019s economic<\/a> director David Koch has warned in a searing open letter to the Reserve Bank<\/a>.<\/p>\n

Koch said another interest rate<\/a> hike by the RBA board appeared increasingly likely on September 29, but he called on Governor Michele Bullock to explain why households will foot the bill when, he claimed, it was government spending driving inflation.<\/p>\n

\"\"<\/p>\n

David Koch has written an open letter to the RBA, urging them not to punish Aussie households.\u00a0Facebook\/Compare the Market<\/p>\n

\"Two<\/p>\n

The RBA is set to increase interest rates again.\u00a0iStock<\/p>\n

\u201cThere\u2019s an increasing likelihood a great many Australians are likely to be handed a bill they did not run up,\u201d Koch said.<\/p>\n

\u201cBefore the board votes, I\u2019d ask it to look closely at who generated that worryingly high level of growth. It wasn\u2019t households.\u201d<\/p>\n

Koch said household spending had increased just 0.4 per cent, almost half of which was due to families switching to electric and hybrid vehicles to cut their petrol<\/a> bills.<\/p>\n

\u201cThat is hardly an exuberance. That is a family at a kitchen table with a calculator,\u201d he said.<\/p>\n

Savings rose 6.5 per cent and business investment went backwards, while unemployment<\/a> rose to 4.5 per cent in July, the highest level since the COVID-19 pandemic<\/a>.<\/p>\n

\u201cBusiness conditions have turned negative for the first time in six years. Consumer sentiment has dropped more than 5 per cent,\u201d he said.<\/p>\n

\u201cThat is not an economy running hot.\u201d<\/p>\n

Instead, Koch claimed, the biggest driver of spending were federal and state governments.<\/p>\n

Commonwealth government spending had climbed to 26.8 per cent of the GDP, he claimed, the highest level since 1986 – excluding the pandemic years.<\/p>\n

Public sector wages also grew faster than the private sector, and Koch cited ABS CPI data to suggest \u201cgovernment-influenced\u201d prices, such as for childcare, education, healthcare, utilities, and insurance, were surging higher than \u201cmarket-driven\u201d prices.<\/p>\n

\u201cA meaningful slice of the inflation your board is trying to contain is not being generated in a shopping centre. It is being set in a cabinet room,\u201d Koch wrote.<\/p>\n

After three consecutive interest rate rises from the RBA earlier this year, Koch said interest payments now constituted 5.8 per cent of household gross income – higher than the 5.7 per cent peak of 1990, when mortgage rates were at nearly 17 per cent – compared to 4.35 per cent currently.<\/p>\n

Koch acknowledged the difficulty of the economic conditions the RBA faced, and its mandate to reduce inflation.<\/p>\n

\u201cI\u2019m not asking you to breach your independence, and I\u2019m certainly not asking you to lecture elected governments on what they should fund,\u201d he said.<\/p>\n

\u201cDefence, health, aged care, housing and the NDIS are not luxuries.\u201d<\/p>\n

But he urged Bullock to acknowledge in her post-meeting speech how much government spending had contributed to inflation, where the cash rate would otherwise sit, whether a fiscal statement should be signed by the federal and state treasurers, and the likely impact on Australian households.<\/p>\n

\u201cHouseholds complied. Governments seemingly have not. Yet only one of those two gets the higher interest rate bill,\u201d Koch said.<\/p>\n

\"\"<\/p>\n

Koch urged Michele Bullock to address government spending as an inflation factor.\u00a0Louie Douvis<\/p>\n

\u201cIf the board must move on 29 September, please do Australians the courtesy of naming who forced your hand.\u201d<\/p>\n

In the meantime, Koch said, Australian mortgage-holders should prepare for another rate rise.<\/p>\n

A lift of 0.25 per cent could add about $93 a month to repayments on a $600,000 loan.<\/p>\n

Koch urged borrowers to call their lender and negotiate, as well as compare their home loans and utility bills against competing offers to ensure they were getting the best possible deals.<\/p>\n","protected":false},"excerpt":{"rendered":"Australians are paying for an inflation bill they haven\u2019t run up, and mortgage spending has outpaced the \u201chorror…\n","protected":false},"author":2,"featured_media":856442,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,101],"class_list":["post-856441","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/856441","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=856441"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/856441\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/856442"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=856441"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=856441"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=856441"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}