Treasurer Jim Chalmers insists inflation is being driven by “private demand”, a claim delivered with a straight face shortly after another round of quiet coffees, discreet lunches, and totally normal catch-ups with the same private sector now being blamed. According to the RBA, the economy is overheating thanks to private activity — despite public demand sitting near record highs relative to GDP and government-funded sectors delivering almost 70% of all new jobs since 2023.
Reality, inconveniently, refuses to cooperate. Until very recently, private demand was weak, growth was being propped up by fiscal spending, and administered prices — electricity, water, council rates and public transport — jumped more than 7.5% last year. Energy policy, population policy, and government-created demand continue to push up housing costs, but somehow inflation remains a private-sector problem.
The RBA responded by hiking rates again, bravely ignoring economists who note that when governments spend, regulate, subsidise, and stimulate, the resulting inflation is unlikely to be solved by punishing mortgage holders. In Australia’s current model, governments write the cheques, deny responsibility, and outsource accountability to the RBA — while the “private sector” takes the blame for an economy increasingly run by the state.