Tense second Jim Chalmers erupts at ‘dishonest’ political opponents and clashes with ABC host as he defends authorities spending after rate of interest hike
Treasurer Jim Chalmers has accused political opponents of being ‘deliberate and dishonest’ in efforts to blame government spending for the latest interest rate rise.
Appearing on ABC’s Insiders on Sunday, Chalmers faced repeated questioning about whether public demand, effectively government spending, continued to rise in the second half of last year.
The Reserve Bank on Tuesday lifted the cash rate by 0.25 basis points to 3.85 per cent, marking the first rise since 2023 and reversing months of earlier cuts as inflation picked up sharply in late 2025.
Several experts, including EY chief economist Cherelle Murphy, warned that elevated government spending could fuel further interest rate hikes later this year.
Chalmers was pressed on the matter by Insiders host David Speers, with the Treasurer defending the government’s fiscal record.
‘Our political opponents and their acolytes are deliberately and dishonestly trying to conflate two different things,’ he said.
‘The question isn’t whether public demand can create inflationary pressures. The question is whether it did towards the end of last year and caused the independent Reserve Bank to hike interest rates.’
Chalmers insisted the Reserve Bank had made it clear that stronger-than-expected private demand, not government spending, was behind the surprise rate hike.
Jim Chalmers (pictured) criticised those who claimed public spending was impacting inflation
‘The Reserve Bank Governor actually pointed out that public demand retreated quicker than they were anticipating… private demand accelerated faster than they thought,’ he said.
‘For some reason, this has not been mentioned… in the stories we’ve been reading in recent days.’
Speers asked Chalmers whether public spending was still climbing.
‘Public demand growth last year was slowing,’ Chalmers replied. ‘It was less than a third of what it was the year before.’
But when Speers pointed out that slower growth is still growth, Chalmers conceded.
‘Public demand growth might have been slowing but public demand itself was growing. Public spending was increasing,’ he said.
‘What matters is the contribution that public demand growth is making… Public demand was retreating, private demand was accelerating.’
Chalmers accused Opposition critics of hypocrisy, arguing the same people said nothing about public spending when inflation declined and the RBA cut rates.
Speers repeatedly sought clarity over whether public demand itself was rising in the relevant period.
Jim Chalmers (pictured) said that those who were criticising the government were ‘dishonest’
Chalmers was also pressed on possible changes to the capital gains tax discount, after the government refused to rule it out, even as figures from the Parliamentary Budget Office showed about 60 per cent of the benefits flow to the top one per cent of earners.
He responded by reiterating the government’s priorities.
‘We have got a tax policy already… and a major part of that is cutting income taxes three times. That is the primary focus of our efforts when it comes to tax,’ Chalmers said.
He acknowledged wider intergenerational challenges in both housing and tax, but said the government is addressing them through reforms to housing policy and superannuation.
On whether he is concerned about the majority of the CGT discount benefit going to high-income earners, Chalmers stressed the issue of fairness would be central to any future reform.
‘When we consider next steps in tax reform, obviously, issues around intergenerational equity are front and centre,’ he said.
Asked whether he could guarantee any changes would not be retrospective, Chalmers declined to make that promise.
‘I’m not going to get into hypotheticals… Any governments that consider these type of steps would work through any transitional arrangements,’ he said.
‘We haven’t changed our policy.’
The budget is set to be handed down later this year in May.
