Jim Chalmers:
Inflation ticked up today in unwelcome but unsurprising ways. Inflation is very substantially lower than when we came to office but still higher than we would like. Today’s inflation data reflects a combination of temporary factors and some more persistent pressures as well. You can see the temporary factors like the unwinding of particularly the state‑based energy rebates. You can see some more persistent pressures in areas like market services and housing as well.
Now, we’re seeing this in other countries as well, but we know that that doesn’t make it easier for Australians who are confronting these cost‑of‑living pressures. If you look at the data and consider some of the commentary that is around even in the course of today, what’s very clear from this data is that it reflects a resurgence in the private sector and not an increase in public sector spending. This is about a strong recovery in the private sector, a strong recovery in private spending, not a reflection on public spending.
Public final demand growth went down, not up, over the past year when it comes to contribution made to our economy. So this data is from the end of 2025. Really the story of 2025 was a big resurgence in the private sector as some of that public final demand growth – the measure of public spending – took a back seat to a recovery in the private sector.
So I think the conclusion that we draw from these numbers today is that even though we’ve made a lot of progress together in our economy as Australians, getting inflation down very substantially from when we came to office, we do know that people are still under pressure. And that’s why our responsible cost‑of‑living help is so important. We’ve got the tax cuts on the way in the middle of the year. We’re rolling out cheaper medicines, more bulk billing, student debt relief and the like. And that’s because we understand and we recognise that Australians are still under pressure. We can see that in these numbers today despite all of the progress that we’ve made in recent years.
We also know that housing is part of the story in today’s inflation data. And that’s why we have a big, broad and ambitious policy backed up by substantial investment in building more homes in our community.
So today’s numbers are a really important reminder that there is always more to do when it comes to tackling the big challenges in our economy. We’ve been saying for a little while now that the big challenges that will shape the year ahead are these persistent price pressures, the decades‑long standing challenge we have with productivity and also this global economic uncertainty. You can see that uncertainty in things like the gold price and in other ways as well.
So inflation ticked up today. It is higher than we’d like. We expected it to tick up, but we know that doesn’t make it any easier for people. What does take some of the edge off some of these cost‑of‑living pressures is the government’s responsible cost‑of‑living relief which we have been rolling out in the context of a budget which we’ve been getting in better nick at the same time.
Happy to take a couple of questions.
Journalist:
Treasurer, AMP Chief Economist Shane Oliver says inflation is primarily being driven by public service spending and urged the government to rein in expenditure to keep inflation in check. Are you spending too much?
Chalmers:
No, I don’t believe so. And I don’t think that the input by Shane – and in fairness to Shane, by some others – stands up against the evidence. I mean, if our Budget was the problem, if public spending was the problem, then we wouldn’t have seen 3 interest rate cuts last year and the big moderation that we saw in inflation. Governor Bullock said at Senate Estimates she rejected the assertion that a different approach to fiscal policy would have meant a different approach on monetary policy. The Reserve Bank hasn’t been highlighting public spending as a factor in their decisions – not in their public statements, not privately as well. In fact, the Reserve Bank downgraded their outlook for public demand twice – in August and again in November last year. The IMF has said not that long ago that our budget position is neutral. The OECD in its report 2 reports ago towards the end of last year referred to a modest tightening in the budget position.
Then you get to these questions of private demand versus public demand, which I touched on briefly in my introduction, which I think Shane and others for some reason are ignoring. The big story is the recovery in the private sector. It’s contributed more to growth than public demand for the last 4 quarters. In the year to September annual private demand growth lifted more than five‑fold and contributed to all of the growth in our economy at the same time annual public demand growth was less than a third of what it was in the prior year. Since we came to office we’ve got public spending down from around a third of the economy to closer to a quarter of the economy. We’ve found $114 billion in savings, delivered 2 surpluses, got the debt down by a couple of hundred billion dollars as well.
So if you look at our record on the budget, what you can see is we’ve been able to get the budget in substantially better nick than what we inherited from our predecessors. The story of the economy in the period covered by these inflation figures is a private sector story, not a public spending story.
Journalist:
What responsibility do you take for inflation increasing?
Chalmers:
Well, first of all, I really couldn’t have been clearer or more comprehensive in dealing with some of the commentary that you see, including the commentary that you cite. But I’ve made it clear when the numbers are good or when the numbers are difficult we take our job seriously, we take our responsibilities seriously. I’ve been focused on my part of this, which is to get the budget in much better condition than what we inherited. We’ve made very substantial progress there. But there’s always more to do in every budget and every budget update.
So I take responsibility for doing my job to address this inflation challenge in our economy, to address the productivity challenge in our economy, and also to do what we can to make our economy more resilient in the face of all of this global economic uncertainty.
Journalist:
Do you feel any pressure to rein in spending commitments more aggressively given today’s results?
Chalmers:
Well, we will factor in all of the economic conditions at the time that we put the budgets together. We’ve done that in our first 7 or so budgets and budget updates, and that will continue to be our approach. We come to the most responsible set of decisions that we can taking into consideration the prevailing economic conditions that Australians confront at the time.
And so this Budget will take a similar approach. That’s the approach that has delivered 2 surpluses, $233 billion dollar‑odd improvement to the budget, returning most of the upgrades to revenue when our predecessors didn’t do that. Those savings, that spending restraint, is all about getting the budget in the best condition that we can to fund our priorities and also to make sure that we can align our economic strategy with the economic conditions, including the sorts of data that we got today.
Journalist:
Treasurer, today’s inflation data is likely to trigger an interest rate rise next week and cause even more pain for households. Is this proof the government’s approach to inflation is not working?
Chalmers:
Well, first of all, I don’t make predictions or pre‑empt decisions taken independently by the Reserve Bank. Of course they’ll weigh up the data that they’ve received today and they’ll weigh up the other data that’s been released since the last time that the board met. There are good reasons why treasurers don’t make those kinds of predictions.
But more broadly, if the government’s spending position was the key determinant of interest rate movements, we’ve had 3 interest rate cuts last year. The Reserve Bank Governor has herself said that this is not about wanting a different approach to fiscal policy. The Governor has mentioned our 2 surpluses being helpful. She’s mentioned on other occasions the fact that our budget is stronger than many of our peers.
And if you look through recent statements from the Reserve Bank they haven’t identified public spending or government policy as the source of these persistent price pressures. Now, we acknowledge that the price pressures are hanging around longer than we’d like and that today’s numbers are higher than we’d like, even though they’re much lower than what we inherited. My job is to focus on this inflation challenge, the productivity challenge and this global uncertainty. Those will be the 3 key influences on the Budget that Katy Gallagher and I release in May. But the Reserve Bank has made it clear in recent times that public spending is not the issue.
Journalist:
The cost‑of‑living crisis, Treasurer, is there more you can do for targeted relief? You talked about the energy bill rebates disappearing. Can they be reintroduced? What can you say to people who are really struggling at this point?
Chalmers:
We understand that a lot of Australians are still doing it tough, even though we’ve made all of this progress in the economy together for which the Australian people deserve a lot of credit. We know that there’s still a lot of pressures on people right now. And that’s why we are rolling out cheaper medicines, more bulk billing, student debt relief. That’s why we’ve got 2 more rounds of tax cuts coming as well, because we understand that these cost‑of‑living pressures are hanging around. So we understand that, and more than understanding and acknowledging that, we’re doing something about it in the most responsible way.
Journalist:
What about the energy rebates, though? Is there something you can do in that space?
Chalmers:
Well, we’ve made it clear that those energy rebates were an important part of our budget but not a permanent part of our budget, so they ended at the end of 2025. What you’re seeing in the data today – a big part of what you’re seeing in the data today – is the timing of these payments combined with the ending of the state rebates at the same time. It’s driving some of the temporary part of this inflation challenge.
And, again, in case I wasn’t clear at the outset, this is a mix of very temporary factors, like the end of the energy bill rebates, combined with some more persistent pressures in areas like housing and market services. And what the Reserve Bank has said on other occasions and I’ve said on other occasions as well is it remains to be seen how much is temporary and how much is lingering, but you can see elements of both in today’s data.
Journalist:
If you don’t change your spending, do you think that inflation will still be able to return to where the RBA wants it to be?
Chalmers:
Well, we still expect this inflation to return to the target band. In our forecasts and in the Reserve Bank’s forecasts it’s been clear that we will see inflation moderate over time. What we got in today’s data was not especially surprising. I mean, it’s difficult and it’s unwelcome, but it’s not surprising. We expected this because of a combination of those temporary factors and some of those persistent pressures. And so we still expect inflation to moderate over time. That’s been clear in our forecasts and in other forecasts for some time.
Journalist:
Treasurer, the latest housing data is showing massive growth yet again for housing in Queensland, possibly 11 per cent for next year, blaming partly the 5 per cent scheme that helped first home buyers. Do you regret that, or was that scheme essential, or do you believe or agree it has put pressure on prices going upwards?
Chalmers:
That’s a really important program, which is about making it easier for first home buyers to get a toehold in the market. And it operates alongside a number of very substantial efforts that we’re making to build more homes as well so that there are more affordable options in the market for more people.
Unfortunately when it comes to housing we’re paying the price for a decade of neglect and we’re playing catch‑up. We’ve got an ambitious target. We’ve got very substantial Commonwealth investment. We’re work very closely with the states and local governments on planning and zoning. We’re trying to make the sector more productive. We’re doing a whole range of things at once because we recognise that we haven’t made sufficient progress as a country over the last decade or so when it comes to building new homes, and we’re doing our best to turn that around.
Now, in recent housing data we’ve seen some really encouraging news when it comes to approvals and when it comes to commencements. And that’s a very good thing. But we know that the housing market is still a source of very considerable cost‑of‑living pressure. You see that in today’s numbers as well. And that’s why dealing with housing and dealing with the cost of living are really high priorities for this government.
Journalist:
But do you disagree that that scheme has put pressure on prices?
Chalmers:
I haven’t read that whole story that was out there today but I’ve seen that kind of story before. The very, very modest difference that the modelling anticipates doesn’t take into account the more homes that we’re building at the same time. So you’ve got to look right across the board when it comes to our housing policy. Primarily it’s about building more homes. It’s also about helping first home buyers get a toehold in the market. Both parts of that policy are really important.
Journalist:
A number of opinion polls published this week have One Nation support now between 20 to 25 per cent. Are you concerned about this surge?
Chalmers:
Look, I’ve got more important numbers to focus on, like the numbers which have been released today. I mean, I understand that when we’re seeing the disintegration of the far right in Australian politics that that’s of interest to political junkies and politics watchers and commentators. I understand that. But my focus is really the inflation number, the housing data, the numbers in the budget.
What we’re seeing now in the former Coalition it’s really descending into farce when you look at the behaviour of Coalition members, including earlier today. You know, we’ve got one fella from north of here. He’s gone from telling everyone he wants to leave the National Party and now today he says he wants to lead it. So the National Party, the Liberal Party, the far right of Australian politics is really descending into a farce. It’s a kind of a bin fire of far right personality politics.
And I want to assure the Australian people that even with the disintegration of the Coalition, even with their kind of unedifying attempts to just try and be a paler shade of orange, the government’s very focused on the cost of living, on housing, on our economic challenges, and we won’t be distracted by the bin fire which is the former Coalition.
Journalist:
Treasurer, who’ll be to blame if the RBA raises the interest rate next week? Does the buck ultimately stop with you and your government?
Chalmers:
Well, I made it clear even in answering your earlier question, I take responsibility for my parts of dealing with the inflation challenge, the productivity challenge and this global economic uncertainty. And the Reserve Bank and the government have got similar objectives and different responsibilities. You know, my responsibility is to roll out the cost‑of‑living help in a responsible way, to get the budget in better nick, as we did in the Budget update that we released only a few weeks ago and to focus on where we can make a meaningful difference.
And so I take responsibility for doing my job. I understand and cherish the independence of the Reserve Bank. I understand how important that independence is, and that’s why I don’t make predictions or try and pre‑empt decisions that they will grapple with next week.
Journalist:
Treasurer, just one last one on another issue. Scott Morrison is urging Muslim leaders to accredit teachers and put their religious teachings into English to help combat terrorism in mosques and schools. Is there a response from you?
Chalmers:
Look, I haven’t seen those comments from Scott Morrison‑
Journalist:
Do you think it’s a good idea, though?
Chalmers:
Look, we’ve got our own suite of measures that we legislated through the parliament, and those measures are all about trying to unify the country, not divide the country. Typically Scott Morrison has a very different objective, he’s a pretty divisive figure. The government has got its own approach to this.
And the government’s approach has been to crack down on antisemitism, to crack down on hate speech, to strengthen our gun laws and to try and rebuild social cohesion in our country. That’s the government’s approach to this. That’s reflected in the legislation that passed the parliament last week. There will be all kind of other ideas from former prime ministers and others, but the government is confident that we’ve got the right suite of measures coming.
Thanks very much.