New year, Same old problem

by Senator Dean Smith – originally published in The West Australian on 30 December 2025

Western Australians may have embraced Christmas with cheer, but there is now an ever-growing sense of New Year fear.

It stems from a repeated warnings made this year from the Governor of the Reserve Bank.

Michele Bullock has made it clear: if Australia’s inflation problem persists, interest rates may need to begin to rise again in 2026.

Following the RBA rate decision earlier this month, Governor Bullock observed, “If it does look like inflation is not coming sustainably back to the band, and it’s going the other direction then the board will have to take action, and it will.”

The RBA is signalling this caution because the Albanese Labor Government’s financial mismanagement during 2025 has kept inflation higher for longer – leaving families, seniors and first home buyers, among others, badly exposed.

Cost of living has now been the country’s top concern for four consecutive years.

In the latest JW Research True Issues survey, 77 per cent of Australians listed it among their leading worries in 2025, well ahead of health, housing or climate.

Inflation has climbed back to 3.8 per cent over the year.

Economist Chris Richardson captured the underlying problem when he succinctly stated, “The cause of cost-of-living pain is inflation… It’s too much money chasing too little stuff.”

There is no mystery here – that money is coming from Canberra.

Under the Albanese Government, Federal expenditure has surged to levels not seen since the 1980s, outside of outliers like recession and the pandemic.

Since Labor took office in 2022, Government spending has jumped from 24 to 27 per cent of GDP.

Last financial year, it grew at four times the rate the Australian economy did.

Rather than cooling inflation, Labor’s Budgets have inflamed it – an effect now accurately being referring to as “Jim-flation”.

For WA households already absorbing higher bills amid shrinking real wages, 2025 has been a difficult year.

And the West is uniquely affected.

Perth continues to experience some of the highest cost of living pressures in the country, recording 4.5 per cent inflation in the September quarter.

That is the second highest of any Australian capital city.

Price rises for education, recreation and culture, clothing and housing – which includes power bills, gas, housing and building costs – were all above 5 per cent for the past 12 months.