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I explained on Monday why Australia’s inflation problem is primarily domestically driven, in response to Treasurer Jim Chalmers’ claims that the war in the Middle East, not excessive government spending, was driving inflation.
Former RBA governor Phil Lowe and other economists last week debunked Chalmers’ claims, insisting that excessive federal government spending is driving up Australia’s inflation and that the federal government needs to cut spending to ease the pressure.
Government spending is tracking at record pandemic levels (28% of GDP), even though the pandemic ended five years ago.
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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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