First up, there’s good news on unemployment. But this could lead to the bad news of rate rises in February.

It was great news for job seekers with the unemployment rate unexpectedly falling from 4.3% to 4.1% and 65,000 new jobs were created in December. However, this has increased the likelihood that the Reserve Bank could raise the cash rate by 0.25% on February 3.
This is crushing news for households with big mortgages and businesses with expensive loans. It’s also a negative for those businesses that supply goods and services to the Australians in the so-called mortgage belt. Potentially, these customers are not only going to be faced with bigger home loan repayments, they’ll also be spending less on lifestyle goods and services.
The only thing that can rescue those with big mortgages will be a surprisingly good Consumer Price Index (CPI) number next Wednesday, which will hose down the prospects of a rate rise on Tuesday week.
Oh yes, there is one other way a rate rise might be delayed and that would be if the RBA thinks the ABS statistician’s numbers are unreliable or seasonally known to be dodgy. Afterall, most economists expected the jobless rate to go from 4.3% to 4.4%, not down to 4.1%!
Either our economists need to go back to school, the ABS has a problematic calculator, or our economy is changing so much that once reliable models to guess things like unemployment, job creation, inflation and so on are now unreliable.
What would make economies change? Try these reasons: the hangovers from the Covid lockdowns, the work-from-home trend, the arrival of AI and big spending governments federally and at the state-level.
Treasurer Jim Chalmers welcomed the fall in unemployment. And while I can understand that, will he accept that he and his government are arguably the biggest cause of persistently higher inflation that’s making a rate cut on Tuesday week distinctly possible?
In reality, he should be holding back his crowing until that inflation figure is out on Wednesday. If it’s lower than expected, we should give him praise. But if it’s a shocker, then he should cop a right bollicking!
Why? Try these revelations in yesterday’s AFR:
1. There was a record $47.8 billion budget error!
2. Treasury public servants miscalculated how many Australians would take up budget nice guy “social support programs, such as home battery subsidies, as well as the impact of the student debt relief scheme.”
3. The AFR’s Luke Kinsella reported: “The revisions figure is the highest in the 25 years of budget history tracked by the Parliamentary Budget Office.”
4. Kinsella also pointed out that “Government spending reached 26.9 per cent of gross domestic product in 2025-26, the highest level outside the pandemic and $58 billion more than what was forecast in the Albanese government’s first budget in 2022.”
While Chalmer’s economics/public servant team have screwed up, he and his party design the policies, and his government workers try to ‘guess’ the impact on the economy and nation’s finances.
The collective stuff up adds to demand in the economy, which then adds to inflation, helps job creation and then leads to rate rises not rate cuts!
In a sense, the RBA would have relied on these ‘crap’ figures from Treasury, when it cut interest rates and so, in a sense, were misled. Thank you, Jim.
The Australian’s Matt Cranston and Noah Yim tell us that financial markets think there’s a 50% chance of a cash rate rise from 3.6% to 3.85% on Tuesday week following the drop in unemployment. Before those numbers, the betting was only 30% for a rate rise at the next RBA meeting.
Economists like Betashares chief economist David Bassanese said the lower unemployment rate wouldn’t necessarily lock in a rate hike next month, pointing to the inflation figure as more the ‘make it or break it’ issue for interest rates.
While other economists are telling us a rate rise is coming in February, they are ‘guessing’, in an economy that’s becoming harder to guess than ever before, such that public servant ‘expert’ economists (whose job it is to know our economy) have totally mis-guessed the economy! This has led to Dr Jim overspending, which might have created jobs, but it might have sustained inflation, which means higher rather than lower interest rates.

Just look at all our politicians and how they’re handling our country. Our leadership problems start with the old saying that great leaders understand: “No guts, no glory.”

Despite a pre-election commitment to solving this country’s housing supply problem that has driven house prices so high that young people are giving up on owning a home, this is another case of politicians over-promising and under-delivering.

When you look at the Prime Minister’s stumbling efforts to deal with the Bondi massacre and the simmering anti-Semitism that ran before it. And then you see the Coalition disintegrate as a team — with the Nationals refusing to support Susan Ley over her agreement with the Government to ‘shut up’ racist people most of us think are loonies. Given all this, you know our leadership problems start with the old saying great leaders understand, which is “no guts, no glory.”

That said, while Susan Ley has been mistreated by her side, she too hasn’t demonstrated the leadership qualities that would’ve have nipped in the bud the disloyalty we’re seeing from her Coalition.

John Howard and Bob Hawke would have stared their in-house enemies down and made sure they were isolated from the main team. Tough politicians like Donald Trump and Margaret Thatcher do kick arse. They’re often seen unlikeable and unreasonable, but they successfully lead the sheep-like and potential enemies within their party.

Of course, PM Anthony Albanese suffers from a similar leadership inadequacy problem. But even though he has too many anti-business zealots in his team, it’s a stronger team than the Coalition. Lots of Australians might not like many Federal Labor Ministers but they are strong on the messages they support, even if the messages aren’t helping the economy with inflation, interest rates and other problems, such as the supply of new housing.

While the failure of lots of politicians is down to a guts problem, this housing festering sore never gets solved properly and remains with us because of a genuine lack of commitment. The words that carried the promise of 1.2 million homes over a decade haven’t been backed up by a commitment to make that happen. It takes guts to remain committed.

Ask anyone who has already broken the New Year Day promise of self-improvement already! They know how a lack of real commitment explains their failure. Thankfully, in our new short-cut tech-solving world, Ozempic has come to rescue diet-breakers. However, our politicians don’t have what looks like an easy solution to our housing supply challenge.

Be clear on this: too low housing supply with its high price and rent effects are a big part of our inflation and interest rate problems that cruels lots of Australians lives.

Here’s a question for you: Who’s our Federal Housing Minister? Most Aussies wouldn’t know that it’s Clare O’Neill. While O’Neill is regarded as a pretty good politician, she hasn’t been forceful and pushy enough to make Albo’s promise on housing happen.

Someone has to take the blame for failure.

So, what does that failure look like? Nathan Schmidt of The Daily Telegraph did the homework on this subject. Here’s the guts of the matter:

1. The Government is 80,000 homes short of being a quarter way through its five-year timeframe.
2. The Australian Bureau of Statistics says 218,974 new homes have been built in 15 months. But the target was 300,000!
3. While building commencements are up 11% in the year to September 2025, experts say it’s still too slow.
4. While NSW should have got 94,000 homes over those 15 months, the number was only 55,557.

Treasurer Jim Chalmers admits that “housing-related infrastructure and taxation

reform” is needed but concedes Canberra needs to do more on the infrastructure front.

Housing Industry Association (HIA) senior economist Maurice Tapang explained to The Daily Telegraph what’s needed: “Demand is not the challenge. Delivery is. Land supply, infrastructure

timing, planning bottlenecks and workforce capacity will shape the 2026 experience more than interest rates”.

O’Neill needs to get state premiers and key local council leaders together to get a national commitment to make approvals easier and kill barriers to building homes for young Australians.

This isn’t going to happen unless someone like O’Neill shows guts, names the names of those frustrating the housing supply goals and, ultimately, delivers on her leader’s promise.

Given the threat of inflation and rising interest rates to both the material lives of those with mortgages and the overall economy, this goal of more housing ASAP looks like an aspirational target that a courageous politician should publicly fight for.

Margaret Thatcher once said: “If you want something said, ask a man If you want something done, ask a woman.”

I suggest Ley and O’Neill go for it and remember Thatcher’s words!