Faced with his $57 billion budget blow out over the next decade, the Treasurer’s on the hunt to collect more tax and his eye has spied the capital gains tax discount. How risky is this move for Jim and all investors?

After being blamed for being too soft and blowing out the budget deficit by $57 billion over the next 10 years, Treasurer Jim Chalmers could be taking ‘tough guy’ therapy, with the news he could reduce the capital gains tax (CGT) discount when investors sell assets that have grown in value.

Apart from being a financial kick-in-the-pants as well as the hip pocket of property and share players, potentially it could be a Bill Shorten-style election loser. And you can bet the Coalition would at long last have a policy they could get unified around, which would be to reverse any policy change linked to this tax discount.

For those not up with taxes, while the family home doesn’t attract a capital gains tax, all other assets that grow in value are taxed at the seller’s personal income tax rate on any gain made. However, if the asset (mainly property and stocks) is kept for over a year, then a discount of 50% applies.

Right now, the Treasurer hasn’t ruled it out for the May Budget and the Greens have been big fans of reducing the discount.

The ALP went to both the 2016 and 2019 elections promising to halve the rate to 25% for all assets. These ideas weren’t well-received by voters and it showed in the related election losses.

In the 2025 poll, the Greens took a policy of allowing the discount for one investment property and killing it for shares. And they were smashed in the poll as the Albanese Government won 94 of the 150 seats in the Federal Parliament’s House of Representatives.

On Wednesday, when asked about the discount being reduced, the Treasurer said the issue should be discussed because of intergenerational issues.

The Daily Telegraph’s John Rolfe tells us: “The CGT discount is expected to cost the budget $21.8 billion this financial year, Treasury estimates show [and] about 830,000 people used it in 2022-23, which is the most recent data”.

And 80% of these taxpayers were in the top 10% of income earners.

The Parliamentary Budget Office calculates that the discount on residential properties will cost $6 billion this financial year and $78 billion over the next decade.

That’s the saving. But what would be the effect of this change? Try these:

1. Some people would sell their investment properties before the discount was reduced or taken away.
2. This would increase the supply of houses for sale and home prices would fall, which current homeowners wouldn’t like.
3. Some banks could close out loans on investments properties that are no longer as valuable and would sell for less if the borrower was in financial trouble.
4. Some investors would simply never sell or hang on to their investment property to earn income and avoid the bigger capital gains tax.
5. This wouldn’t be good for the long-term supply of housing. And homes built for investors would fall.
6. The Federal Government’s budget deficit would improve.
7. If the discount was taken off stocks as well, the share market would slump as sellers would rush for the exit to get the discount before it ends.
8. Super funds would be negatively affected if shares lost the discount and their returns to their members would be reduced.
9. If stocks were spared from a reduced discount, then it would make stocks more attractive and push share prices up, but when a crash comes more Australians would suffer losses.
10. This would mean a stock market crash would have a greater likelihood of leading to a recession.

Property prices in Australia tend to rise and this helps consumer confidence but if more households are more exposed to stocks, then a big fall in share prices would undermine confidence and spending during those times. This could lead to more and deeper recessions.

And by the way, recessions play havoc with budget deficits as they kill businesses and jobs, which leads to less tax collections and more outlays for those on the dole queue.

The economy is a complicated beast and investments that drive the economy and the creation of jobs have been helped by the CGT discount.

Note to Jim: take this one away at your peril. A bigger GST with income tax cuts might be a smarter play.

While being the country’s Treasurer is a tough job, the buck stops with the politician in charge of keeping this country’s books in good order.

Being the country’s Treasurer or keeper of the books is a tough job. And if the nation’s central bank raises rates because inflation is too high, the buck stops with the politician we listen to on the second Tuesday in May called Budget night.

That guy is Jim Chalmers, despised by conservative voters because they’re often distrusting of Labor for whole host of reasons, and many business owners who find the current economy better suited to being an employee than employer.

Those business owners should blame former Minister for Employment and Workplace Relations Tony Burke, who oversaw changes that pleased his union colleagues and lots of workers. While pay and conditions improved because of Burke, costs to business spiked and productivity didn’t follow upwards. And that also hurts the cost of doing business.

And let’s not praise the work-from-home trend as a productivity creator until credible tests are performed to pass judgement. There are lot of bosses who think their businesses would be better if their workers turned up for work.

I could go on with other developments that hit productivity, such as employees falsely using mental stress to avoid being sacked and the fear of bosses being accused of harassment if they make suggestions to improve an employee’s performance.

It used to be called training or mentoring but now many bosses are gun shy about doing what used to be seen as leadership in the workplace.

Remember productivity boosts production and reduces costs and is great for profits and helping to reduce the need for a business to increase prices.

While productivity sounds boring, it is the business magic pudding, as it can deliver profit to the employer and better wages for the employee.

While Chalmers isn’t directly responsible for all the causes of lower productivity and rising inflation, it could be argued he has a ‘charming’ approach that has come back to bite him. Treasurers like Paul Keating and Peter Costello were tough nuts at times and would take on a colleague whose agenda undermined what they were trying to achieve. Often sparks would fly when the Budget loomed and ministers wanted money for their pet projects, which to be fair, could have been important for the welfare of the population and future election outcomes.

A Treasurer has two big jobs to do: make sure the economy is growing nicely and contain inflation. The Reserve Bank is a partner in this dual goal. That’s why the likes of Paul Keating at time blasted the central bank for being late to the party, in say cutting rates or raising them.

However, the fact that there is a ‘party’ going on in the economy that needs to be checked, quietened or shut down is often because the Treasurer mismanaged the whole show from the beginning.

And this is where the charming Mr Chalmers is in the frame for the predicament that those with big mortgages and business debt find themselves in as interest rates rise.

Even though the RBA Governor chickened out when asked if big government spending was at the heart of this inflation problem by sidestepping the issue, economists know that if Jim had been a bastard-like Treasurer like the ones of yesteryear, rates wouldn’t have gone up yesterday.

Sure, while unemployment would be higher and the economy would be growing slowly with some businesses in trouble, that’s what Treasurers and central banks do when inflation is seen as persistent and undermining the future of the economy.

Shane Wright in the SMH agrees with me in his piece headlined: “More rate hikes are on the way unless Chalmers finds savings in May.” And no one with economics training would disagree with that headline.

Here are Wright’s main points:

• Raising interest rates after the RBA cut rates six months ago says we have long-term budgetary problems.
• The RBA says a lack of productivity is at the heart of the problem.
• While Government support for the economy via wage increases, tax cuts, energy rebates, infrastructure spending and other social welfare programs have helped consumers and businesses to spend, this has created inflation.
• The RBA doesn’t see inflation getting back into the 2-3% band until mid-2027, which is 17 months away.

So, what’s my take on all this?

Well, Chalmers has allowed the economy to grow and has got one part of his job right: he has created jobs and economic growth but has failed on inflation and is the prime cause of rising interest rates.

Next, the RBA’s forecasters have failed to understand our economy and have arguably cut rates too early in February last year and gave too many cuts. It also could be argued that it was too soft on us when they were raising rates because the Kiwis did go harder on rate rises. They got a recession and now inflation there is 3.1%, where we are at 3.8% and set to go to 4.2% this year.

I expect unemployment will rise this year with rates set to rise.

Wright does say productivity isn’t easily boosted and “former treasurers Wayne Swan, Joe Hockey, Scott Morrison and Josh Frydenberg” aren’t famous for turning productivity around but they weren’t famous or infamous for being too generous to create inflation and a big interest rate problem.

Chalmers bowed to his political masters and helped create a great election win last year. But the price has been inflation and now rising rates.

Paul Keating was a Treasurer who tackled the unions and got concessions to boost productivity. The likes of Peter Reith took on the wharfies. And Costello and John Howard improved the tax system that helped our economy grow without worrying inflation for nearly two decades.

The May Budget needs to be tough to reduce the need for the RBA to keep raising rates. The remedy is in the hands of Dr Chalmers. I hope this toughness will be about not raising taxes. The Treasurer has to cut spending and give up his charming ways with his colleagues. It gets down to “no guts no glory!” Jim.

Let’s check out how many ‘experts’ think that the RBA will raise the interest rate curtain.

What follows is guesswork about something that will happen eight times this year. Guess what it is? Yep, it’s the Reserve Bank board’s interest rate meeting. And today, the money market experts have the chance of an increase at 72%.

While all four big bank economics teams think a 0.25% rate rise is on the cards, these highly trained number crunchers have been wrong before. AMP chief economist Shane Oliver and his colleagues are backing no change. This is what Shane wrote on the weekend: “We think the RBA will probably hold. On balance we think that, given the cross currents and in particular the downtrend in trimmed mean inflation, the RBA should and probably will leave rates on hold and wait for more information. But it’s a close call and not one we have a lot of confidence in. We would put the probability of a hike as being around 49% versus 51% for a hold. If there is a 0.25% hike, given the above considerations, we would see it as a case of being one and done. In this context, money market pricing for a 66% chance of a hike on Tuesday is too high – 51% would be more reasonable! – and the pricing in of more than two rate hikes is a bit too much.”

Oliver is at odds with the majority on what the RBA does today and here’s why:

1. The monthly trimmed mean inflation number has progressively trended lower from 0.47% month-on-month in July to 0.23% in December.
2. The quarterly trimmed mean fell from 1% in the September quarter to 0.9% in the December quarter.
3. He expects this trend to continue and thinks RBA modelling will be saying the same thing.
4. Business surveys show output price indicators running around levels consistent with the inflation target.
5. Consumer spending is likely to take a hit if we go so quickly from rate cuts to hikes, as mortgage stress likely remains high.
6. The rise in the Australian dollar is a de facto monetary tightening that will help lower imported inflation.

These are pretty compelling reasons why the RBA board should think long and hard about a cash rate hike today. But what’s the other side of the argument?

Shane looked at these and came up with:

1. All key measures of inflation are now well above the target of 2%-3%.
2. The December quarter trimmed mean is above what the RBA was forecasting last November.
3. Services inflation edged up in the December quarter.
4. Goods price inflation is well up from its lows.
5. The gap between the proportion of items seeing price rises above 3% year-on-year and those seeing less than 2% year-on-year widened further.
6. Unemployment has fallen from 4.4% in September to 4.1% in December meaning the economy looks like it’s getting stronger, not weaker, which would have been a reason for no rate rise.

While this does suggest the RBA could err on the side of caution and wait another month or two, most economists are leaning towards a rise. This was a survey of prominent economists from abc.net.au:

• Nicki Hutley: Rise

• UNSW’s Richard Holden: Rise

• CEDA’s Cassandra Winzar: Rise

• William Buck’s Besa Deda: Rise

• Monash University’s Robert Brooks: Hold

If unemployment hadn’t fallen to 4.1% and the December quarter inflation numbers generally were steady rather than higher, I think the RBA would have been keener to hold. But the case to scare spending Australians and to stop price-setting businesses from raising prices will be an important argument at the board meeting today.

Shane Oliver makes a number of good points. I hope the RBA does continue a wait-and-see approach, because like me, they might not trust those ABS job numbers. But my gut feeling is that the big bank will raise today.

Undoubtedly, the mortgage belt has been feeling the pinch but older Australians with either no mortgage or a small one on valuable properties and ballooning super may well be the greatest contributors to inflation. They’re neither in debt nor are they feeling the RBA’s squeeze on their bottom lines via interest rates.

In fact, a rate rise will increase term deposit rates, which will be a plus for those very same people, who enjoy higher interest rates on their investments.

What follows is an economic assessment that says Treasurer Chalmers ha been ‘gilding the lily’ when it comes to his role in the huge blow out in the budget deficit over the next decade.

This isn’t a political take on Treasurer Jim Chalmers. What follows is an economic assessment that says he’ s been ‘gilding the lily’ when it comes to his role in the huge blow out in the budget deficit over the next decade. The AFR’s Economics Editor John Kehoe has accessed calculations by the Parliament Budget Office, Treasury, economists Chris Richardson and Steve Anthony (who were ex-Treasury number crunchers) and they’ve found two-thirds of this $57 billion budget blow out is because of “future spending” linked to Labor-created policies.

Many of these ‘promised’ policies must have had a big impact on the sensational election win by the Albanese Government in May last year.

Last week, the AFR made the point that it was too much committed spending that had rocked the budget’s expected spending figures but on Sky News Treasurer Chalmers refuted this saying it was because of lower tax receipts.

Kehoe kept hounding the Treasurer for proof that it was taxes rather than too much spending causing the ballooning budget down the track, but nothing was delivered.

This has left Kehoe to conclude the following: “Analysis of new figures provided by the PBO using Treasury’s 10-year budget data confirm the cumulative budget deterioration was between 60 per cent and 70 per cent due to higher spending. About 30 per cent to 40 per cent was due to weaker projected tax revenue over the final seven years to the middle of next decade.”

On this information, we can forget about budget surpluses for the next 10 years, unless something like a resources super boom comes along to bankroll promises made by the current Government.

What are the implications for this over-spending?

Economists suggest the following:

1. Too much Government spending fuels inflation.
2. This could lead to the RBA raising the cash rate from the current 3.6% to 3.85%.
3. A lot of this spending increase was front-loaded, which makes it look to be politically-driven, given cost of living pressures was a big pre-election issue, and still is.
4. Kehow tells us: “The higher spending and bigger deficits were not included in the PEFO, which was independently signed off by the then heads of Treasury and the Department of Finance, Steven Kennedy and Jenny Wilkinson, during the election campaign in April.”

Both Kennedy and Wilkinson are bound to be grilled over this revelation.

This whole affair indicates the Treasurer has a case to answer. And so do his top public servants.

As a government, while the Albanese team can decide to spend money, they can’t try and cover up any blow out in the Budget by saying it was a tax collection problem.

These guys are always telling us we must pay higher power bills to reduce our reliance on fossil fuels and that it’s only fair for future generations. Well, it looks like promises made today to win an election will be paid by future taxpayers over the next 10 years and even beyond.

US-based business speaker, Simon Sinek has said that “trust is built on telling the truth, not telling people what they want to hear.” Perhaps our Federal Treasurer needs to think about this.

Inflation news yesterday wasn’t good for mortgage rate worriers and here’s why.

The inflation news was in yesterday and it wasn’t good for mortgage rate worriers. The key measure the Reserve Bank monitors to assess if a cut or rise is necessary was on the high side, so the expectations of a 0.25% rate rise next Tuesday have heightened among economists.

The statistic in question is the CPI’s trimmed mean, which gives the central bank an insight into the persistent price movements of the core or underlying inflation that the RBA wants around the mid-point of the 2-3% band. It actually eliminates too big and too low price changes that could over-influence the inflation reading.

This number came in for the December quarter at 0.9% taking the annual rise to 3.3%, which is outside the 2-3% band. Worse still, the previous reading was 3.2%, so there’s a rising trend.

While I’d argue if the trimmed mean came in at 3.1%, the RBA board might have given the mortgage belt a “stay of execution”, instead I won’t be surprised if the cash rate is lifted from the current 3.6% to 3.85% next Tuesday.

By the way, the more volatile headline inflation rate for the year to the end of December was 3.8%, up from 3.4%, which will be another reason the RBA might want to hose down the buying of ‘stuff’ that’s clearly making price-setting businesses raise what they charge us. This chart graphically shows the U-turn that our inflation has taken since the middle of the year after we received three rate cuts.

This has led to critics of Governor Bullock and her board for cutting too early and too much.

Interestingly, the Government-commitment to saving the planet continues to push up energy bills. These bigger-than-expected inflation readings haven’t been helped by the end of energy rebates. This is bad news, especially as we’re being told that our power bills look set to rise by 20% this year!

The second most important driver of higher inflation was insurance costs. Zyft consumer finance expert Joel Gibson told news.com.au that “all of these increases combined would mean an average Australian household should stand to shell out an additional $2,192 over the course of this year.”

Betashares chief economist David Basanese looks on the money when he said: “All up, it appears to be game, set, match for a rate rise at the February policy meeting.”

And Basanese doesn’t rule out another rise in May. The only way he could be wrong would be if unemployment starts to rise and the CPI readings monthly and quarterly show that they’re on the slide.

Before these CPI revelations yesterday ANZ and While Westpac wasn’t in the ‘rate rise in February’ camp, they are now, joining the CBA and NAB economics teams who are all arguing Tuesday will bring a 0.25% rate rise, which makes it easier for Bullock to jack up rates.

The combined effects of a stronger-than-expected economy with falling unemployment and rising inflation means rate increases are to be expected. In the US overnight, Jerome Powell (who heads up the US central bank that’s known as the Federal Reserve) resisted Donald Trump’s call for another rate cut, arguing the economy is on the improve and doesn’t need one now.

The Fed’s statement said: “Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated.”

Like here, inflation is the maker or breaker for rate cuts. Until it falls, we and the Yanks won’t see any more cuts. By the way, rate rises aren’t good news for stock prices and our super, though the outlook for our resources stocks is positive and that should provide some support for our overall market, which feeds into our super balances.

Recent economic data hasn’t been great for convincing the central bank that inflation is on the way down. If the CPI comes in high this morning, watch out because rate rises might be next.

This is the last chance saloon shot for anyone out there hoping for no raising of rates by the Reserve Bank next Tuesday. The recent run of economic data hasn’t been great for convincing the central bank that inflation is on the way down. So, the Consumer Price Index out at 11.30am is a big deal.

While business and consumer confidence readings say the RBA shouldn’t be raising the cash rate from 3.6% to 3.85%, these numbers aren’t as important as the unemployment and inflation data drops.

Last week, the unemployment rate dropped from 4.3% to 4.1%, with economists expecting it to rise to 4.4%. That was a shocker for anyone hoping RBA boss Michele Bullock would ‘cease and desist’ with rate rises.

This good news story for job seekers was even better, with 65,000 jobs created in December that followed a weak November number. And most of these jobs were full time, which adds to the story that the Aussie economy is stronger than expected and a strong economy often increases inflation, rather than reducing it.

Remember if today’s inflation number is on the slide, then the RBA could sit on its hands next Tuesday when they next decide what rate we pay for loans. However, if the December quarter CPI is 0.9% or greater, then we could be looking at a rate rise next week. While this would mean annual inflation would be 3.7%, the central bank wants this measure of price increases in the 2-3% band.

In fact, the bigger focus will be on the trimmed mean for the CPI. Here if the rise is 0.9%, the annual underlying inflation would be around 3.3%.

And this is the number economists, the RBA and yours truly will be watching closely.

If the trimmed mean comes in under 3.3% for the year, then rate worriers should breathe a sigh of a relief.

If it’s bigger than 3.3%, those with a mortgage will be tightening their belts after Tuesday because your lender will be notifying you about a rate rise.

Looking at who says what, the banking economists are largely expecting rates on hold. However, there’s a big number tipping rate rises this year. On the other hand, the likes of Westpac (led by Luci Ellis, who was passed over for the top RBA job that went to her colleague Michele Bullock) would love to show her rival banking chief economists that she knows more about the Aussie economy than them.

And for the sake of the economy and those in debt, I hope Ellis shows herself as the best forecaster in town. Go Luci!

Can the Albanese Government afford to protect us from mad gun men by this proposed gun buyback proposal?

The Albanese Government is in an economic bind trying to bankroll a guns buyback, like the one John Howard pulled off as Prime Minister in 1996 after the Port Arthur massacre.

You see, it’s going to cost a lot of money. The OECD (this is the Paris-based think tank that has 38 countries, including Australia, as members) says our bloating budget deficit is heading to $36.8 billion this financial year!

While the OECD recognises the aftermath effects of the pandemic, its lockdowns and how it made federal and state governments spend ‘big time’ to avoid a recession, it has implied that the Albanese Government has over-spent or failed to encourage productivity. That’s why our inflation is persistently high.

When home ownership was looked at, this is what the economic researchers in Paris concluded: “Home ownership is expensive, with the median mortgage burden as a share of disposable income higher than any other OECD members save France and Luxembourg”.

It also underlined the following problems with our economy that the Government needs to look at. And here they are:

1. Australian industries are less competitive than the US.
2. Federal and state Govts need to reduce their budget deficits.
3. We’ve had two decades of falling competition, with a small number of companies dominating too many sectors.
4. Compared to the US, entrepreneurial start up statistics aren’t good for Australia.
5. Productivity has turned negative over 2020 to 2024, which has been mostly on PM Albanese and Treasurer Chalmer’s watch.
6. We have high living costs and housing affordability.

Now add to all this the costs of a 2026 buyback!

The AFR reports that there are 800,000 guns in Australia more than the last buyback time in 1996 after the Port Arthur massacre. And while the Government says the potential cost is $1billion, the Shooting Industry Foundation of Australia thinks it could be as high as $15 billion. With our budget outlook, this would shock not just Australians but financial markets as well! The 1996 buyback cost $771 million in today’s dollars. Queensland Premier David Crisafulli estimates that the 2026 figure for administration alone would be $160 million, raising doubts about the amount put forward by the Shooting Industry Foundation. So, this could become a national blowout for budgets.

The PM wants a 50:50 bankrolling deal with state and territory governments to reimburse gun owners.

While the PM has ruled out a one-off levy, economists say a small income tax surcharge would help cover the cost.

Former Treasury economist Chris Richardson says a 0.06% increase in our Medicare levy of 2% would raise $850 million. Former ANZ chief economist Saul Eslake also supports a one-off levy.

Is saving lives an economically positive goal? Socially, of course, the answer is yes, but the AFR cites economists who calculate that the value of someone’s life for the economy at $1.18 million. So, if we save 200 people via the buyback, that’s worth $5.9 billion to the economy!

For those with guns, President of

the NSW Firearms Dealers Paul Britton informed the AFR that the average retail costs are $1,200 for a handgun and $900 for a shotgun. A rifle, the most commonly owned gun in Australia, sells for about

$1,600. The cheapness of guns seems to be a part of the problem!

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!