The Reserve Bank boss finally said it. She spoke truth to power. But is the one person who could stop inflation in Australia listening?

By PETER VAN ONSELEN, POLITICAL EDITOR, AUSTRALIA Published: 02:24, 6 May 2026 | Updated: 02:24, 6 May 2026 The most damaging critique of Jim Chalmers’ economic management didn’t come from the Coalition this week. It came from the Governor of the Reserve Bank.  Michele Bullock has now been prepared to say what Chalmers simply won’t: demand is still too strong, government spending is part of the problem, and someone has to do the unpleasant work of squeezing inflation out of the system. The only someone who can help get spending down is Chalmers, unless the PM overrides him. But don’t hold your breath for that to happen. On Tuesday, the RBA lifted the cash rate again, with more increases to come later this year if nothing else changes.  Bullock has exposed the embarrassing fraud in Chalmers’ fiscal positioning. He talks endlessly about restraint while presiding over rising spending. The Treasurer never seems to run out of excuses for why spending can’t be adequately cut. It just keeps going up and up. There’s always global uncertainty, inflation caused by factors outside of his control, cost of living pressures requiring new spending, inherited budget damage to whinge about, new social spending Labor is proud of, you name it.  The Treasurer never seems to run out of excuses for why spending can’t be adequately cut. It just keeps going up and up Perhaps with the RBA Governor having to clean up the mess via the blunt instrument of monetary policy - putting interest rates up when other nations aren’t having to. Spending addicted politicians can’t keep feeding demand while the RBA is trying to restrain it.  Chalmers likes to misleadingly refer to what he calls budget ‘savings’. These often include tax increases, carefully termed as cutting ‘tax concessions’.  What that really means, is increasing capital gains taxes on investment profits, for example.  Other so-called savings include minor trims here and there, or delaying programs to take the cost out of the current budget.  But the spending still sits in the pipeline of the government's forward estimates. The government says it’s delivered $94.1 billion in savings since the 2022 pre-election fiscal outlook.  But even on the Treasurer’s own numbers, policy decisions since the last mid-year update increased the underlying cash deficit by $34.9 billion over the five years to 2029. That is the difference between announcing savings and actually restraining the size of government. No wonder Bullock is speaking truth to power. Michele Bullock has now been prepared to say what Chalmers simply won’t: demand is still too strong, government spending is part of the problem, and someone has to do the unpleasant work of squeezing inflation out of the system Chalmers’ great political skill is to sound fiscally sober while governing like someone who believes every pressure point deserves more money.  Reports he’ll offer more voter cash handouts in next week’s budget are almost unfathomable in the context of rising rates predicted on too much government spending.  Meanwhile, total federal government payments (aka spending) are forecast to rise from $731.5 billion in 2025 to $877.7 billion in 2029.  Interest payments alone are forecast to rise from $27.9 billion in 2026 to $38.2 billion in 2029. That’s the annual price of our ever rising national debt, without even trying to pay it back. It goes up when rates go up. The Treasurer wants credit for ‘savings’ without delivering actual spending restraint. Bullock’s rate rise is the reality check on his tongue twisting rhetoric.  Bullock has now made the Treasurer’s posturing harder to sustain. She isn’t fooled by budget word games.  Inflation isn’t beaten by calling tax hikes savings, or by pretending spending growth is discipline because it could have been even higher. And don’t forget forecasts usually blow out, so don’t trust what they say spending is projected to be, trust what it actually is, which is invariably higher most of the time. Last year’s budget forecasts an underlying cash deficit of $42.1 billion, with further deficits across the forward estimates.  The likelihood is that those numbers are even worse when Chalmers hands down this year’s budget. And it will land in the shadow of another rate rise. Chalmers refuses to do the politically difficult work of cutting spending, so the RBA does the economically painful work of lifting rates.  The pain is then shifted onto mortgage holders, renters, small businesses and anyone trying to finance an investment.  Chalmers avoids the hard decision and ordinary Australians get the hard landing. No comments have so far been submitted. Why not be the first to send us your thoughts, or debate this issue live on our message boards. By posting your comment you agree to our house rules. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual We will automatically post your comment and a link to the news story to your Facebook timeline at the same time it is posted on MailOnline. 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