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Key events
Meanwhile, Ted O’Brien is also making moves across the Parliamentary press gallery, and lands in the RN Breakfast studio.
He says he doesn’t buy the government’s argument that private spending is driving inflation.
I accept what the RBA governor said in the press conference yesterday that she did, which is you see both private and public spending increasing and hitting up against basically the speed limit of the economy. Both are having an enormous impact. But mostly, I believe it’s government spending because government spending has been running about four times the pace of the economy itself in the last financial year, running about twice the pace of the economy in this financial year.
So what would the opposition do? O’Brien says there need to be tighter “fiscal rules” around spending. On specific areas to cut, he says the opposition would cut the electric vehicle fringe benefits tax and net zero authority which would save around $5bn.
Government’s job to minimise pressure on households, Gallagher
Katy Gallagher moves from one end of the ABC office to the other, now appearing on ABC News Breakfast off the back of her RN interview.
Host, James Glenday, says Gallagher got the “short straw” in having to front up to the media on the difficult news.
The finance minister says she understands yesterday’s rates decision will hit families hard:
The government understands the decision taken yesterday by the independent Reserve Bank will hit those homes … they’re under pressure, we understand that. So, the job for the government really is to, in the upcoming budget, continue to roll out some of the cost of living help that we’ve already rolling out. And to continue to manage, the budget in a responsible way, to minimise some of those pressures on households.
So where is the inflation coming from?
Gallagher says private sector demand is contributing to the heat in the economy:
If you go and have a look at governor’s statement and the statement on monetary policy, I mean, the surprise element if you like in the some of the pressure on inflation, the bank does put down to increase in private demand. And so, that is the issue really they’ve been grappling with in their decision.
Will the government announce some bold economic reforms in the budget?
RN Breakfast host, Sally Sara, asks Katy Gallagher whether there will be some big, meaty economic reform come May (which is when the budget will be released).
The question gets a small, dry chuckle from Gallagher, but she sidesteps the question.
That’s why we held an economic reform roundtable as one of the first things we did on coming back to government, there was another range of ideas that came through that. And as you would expect, and I’ve heard the treasurer and the PM say this in recent days around reform, that is part of our thinking in the budget process as well.
Labor ‘mindful’ of government role in spending
Finance minister Katy Gallagher is in the hot seat, taking on the morning media interviews today, and pressed on the government’s spending which is now above 27% of Australia’s GDP.
Speaking to RN Breakfast, she says there are big pressures on the budget including defence, health, aged care and NDIS.
She also defends the budget, saying the government has already found billions of dollars in savings, and last year asked the public service to find the 5% of lowest priority spending (which came with some controversy).
We are mindful of the role of government of public spending in the economy. We’ve been responsible about the decisions we’ve taken. We’ve found $114 billion in savings.
If you take NDIS alone, it was growing at 22% when we came to government. We’re getting it down to 8% … I think it’s part of what we need to do is manage those big programs where they’re growing too fast, and we’re doing that. So, NDIS, aged care, but there’s other areas where as finance minister, I look at all these programs and think what’s happening there and how do we get some of the growth or the increasing pressure down.
Cait Kelly
Around 40,000 15-24 year-olds have nowhere to live in Australia each year, with only 3.1% accessing long-term housing, according to a new report from the Home Time Youth coalition.
With only 23.6% young people accessing medium term housing each year, the majority remain homeless, and a large proportion are turned away with no help.
The key driver of youth homelessness is domestic violence (83%), with early experiences of homelessness dramatically increasing the risk of long‑term or chronic homelessness.
The report found that Youth Homelessness costs the government $626 million each year in avoidable health and justice system costs, and every dollar invested in youth housing returns $2.60 in community benefit.
Cait Kelly
The number of Australians in prison has jumped to an eight-year high, while the number of prisoners who died from unnatural causes jumped to 26, with almost half of those Aboriginal and Torres Strait Islander people, new data from the Productivity Commission has revealed.
The national average daily prison population increased by 5.9% in 2024-25 to reach an eight-year high of 45,526, with real net operating expenditure hitting $5.43 billion in 2024-25, an increase of 4.3% since 2023-24 and 49.3% over the last 10 years.
Across the country, 22 people died in police custody, six of whom were Aboriginal and Torres Strait Islander people. This is lower than 2022-23, when the total number of deaths in police custody was at an 18-year high of 41.
However, 26 people died from ‘unnatural causes’, including suicide, drug overdose, accidental injury or homicide, in prisons in 2024-25, the highest number in five years, 10 of whom were Aboriginal and Torres Strait Islander people.
Government spending too high, says independent MP
Independent MP Zali Steggall is also piling pressure on the government to reduce its spending, and calling for the government to take responsibility for it driving up inflation.
Speaking to the Today Show earlier this morning, Steggall says the government needs to think about where it should “readdress its spending priorities”. She says:
We need to look at the factors that are driving inflation. Of course, the RBA have identified private sector spending being too high, but we have to be clear, government spending has now risen to 28% of GDP … What do we spend on, what is helpful and supporting Australian people? And I think that’s where we really have to ask questions of the government.
Steggall is joined by Nationals senator Matt Canavan, who says it is a “bad day for Australian homeowners who are facing a big, big increase in their mortgage payments thanks to this mismanagement of our economy”.
Coalition won’t support capital gains tax reforms
The Financial Review is this morning reporting that the government could be considering winding back the generous 50% capital gains tax deduction for property investors.
The Greens are currently conducting a federal inquiry into the tax deduction, with calls from NSW government that the policy should be reconsidered.
Staying with Ted O’Brien on Sky, he’s asked whether the opposition would support any changes to CGT. No is the short answer:
It’s what happens when you have a Labor government that’s running out of money and they just want to come after more. What do they do? They tax people … We are not going to be joining with Jim Chalmers on trying to ping Australians for more money, because he can’t stop his spending.
Ted O’Brien is trying to make ‘Jimflation’ happen
Having coined the term late last year, shadow treasurer and shadow assistant treasurer, Ted O’Brien is still trying to make “Jimflation” happen.
The government is feeling the heat over yesterday’s rate rise, which the Coalition says is a result of record high government spending.
So what would the Coalition cut and where would they find the savings? O’Brien, speaking to Sky News, won’t list anything as yet:
Cuts aren’t the priority here. Offsets are, and they’re very different things, and so the government has every right to determine what the spending priorities are, but with those rights come commensurate responsibilities, and that means finding room in the budget to pay for them.
Again, host Peter Stefanovic tries to push O’Brien to list where those savings would come from, but the shadow treasurer keeps it broad.
Basic principles. It [tax] needs to be lower, it needs to be fairer.
Coalition can reform this week, under conditions: Ley
Ley is facing two challenges, the other of course is the Coalition split. Yesterday we reported that the Liberal leader had offered the Nats a deal that would see the three former frontbenchers who crossed the floor, remain off the frontbench for six months.
She says she expects to meet again with David Littleproud today.
The Coalition can reform this week but under certain conditions, and those conditions are overwhelmingly supported by the majority of my party room. And they are that shadow cabinet solidarity is mandatory. That shadow cabinet and the party room have primacy of over any individual party room, and the three senators do need to face ongoing suspensions.
Leadership rumours are ‘ridiculous suggestions’ says Ley
Sussan Ley has swat away questions on her leadership, as the prospect of a spill by Angus Taylor lurks behind her.
Speaking to ABC News Breakfast this morning, Ley is asked whether she’s spoken to Taylor about that not-so-secret meeting from key senior members of the right faction on Thursday before former Liberal MP Katie Allen’s funeral.
She says Taylor is in her leadership group, “we’ve had discussions about interest [rates], about the circumstances Australians face.”
So is she concerned Taylor is plotting to replace her next week? Ley says:
These are ridiculous suggestions and they’re made by people in the media, not the conversations that I’m having with colleagues, and they’re not the focus of my team.
She tries to pivot the conversation again to focus on interest rates and inflation.
Liberal party can go it alone, says deputy leader
Daisy Dumas
The shadow treasurer, Ted O’Brien, says that, should the impasse between the Liberals and the Nationals not be resolved, the Liberal party has the talent on its own to take on the Albanese government.
Speaking on the ABC’s 7.30 program last night, the deputy leader of the opposition said “there’s no doubt the voters want to ensure that we have a stable opposition, an effective opposition. There’s just no doubt about that and I can’t pretend otherwise.”
Whether that opposition is ultimately from the Liberal party holding the government to account or a reunited Liberal-National party, well, let’s wait and see.
Australia I think is best served by a Coalition but, if at the end of the day that’s not to be, then I have enormous confidence in the depth of talent within the Liberal party and, yes, I do believe we can absolutely hold what is a very poor government to account.
Battery installs increase four-fold off the back of federal subsidy, report says
Petra Stock
Solar battery installations in Australia increased four-fold in the second half of 2025, compared with the same period in 2024.
The Clean Energy Council’s rooftop solar and storage report, released today, found more than 450,000 home batteries had been installed across Australia, by the end of last year.
Australians continued to embrace solar, with more than 139,000 systems installed in the latter half of 2025. That brought the number of households with solar to 4.3 million.
As a result, Australia’s share of rooftop solar continued to increase, making up 14.2% of the energy supplied to the grid in 2025, almost doubling since 2020, when it was 7.2%.
CEC CEO, Jackie Trad, said that the figures were a testament to incentives such as the federal government’s Cheaper Home Batteries program, launched in July, in tandem with other state-based programs in New South Wales and Western Australia, which had expanded Australia’s longstanding love of rooftop solar.
Our biggest power station now resides on the rooftops of more than 4.3 million households, which is helping to drive downward pressure on power bills for consumers and businesses, with less reliance on expensive gas or unreliable coal to power our grid.
On Tuesday, the climate and energy minister, Chris Bowen, told parliament that more than 218,000 home batteries had been installed under the federal government’s subsidy scheme. That number was expected to climb to 2m by 2030, under an expansion of the program announced in December.
Good morning
Krishani Dhanji
Krishani Dhanji here with you for another busy day in parliament.
The government will be on the defence over the Reserve Bank’s decision to increase interest rates yesterday, having previously said publicly that the economy had “turned a corner” on inflation. There’ll be plenty of reaction to that decision today.
There’s some new data on the record number of solar batteries installed in Australian households – more on that in a moment.
And the Liberals and Nationals are still on the outs (Beckham family style, says Labor), but “constructive” talks continue – we’ll keep a close eye on any movements there.
I’ve got my coffee, I hope you’ve got yours – let’s get cracking!
