The midterm message to Trump and Albanese: Fix the economy to keep your job

November 11, 2026 — 4:00am

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The message from voters to governments in US and Australia is clear: fix the cost of living if you want to keep your job. But what can our government do about the cost of living?

Short answer: nothing that’s quick or painless. And get this: turns out that to make it better, you must first make it worse.

For a start, there’s little the government can do directly to reduce prices. In a capitalist economy the government can’t cut the prices businesses charge, nor even set limits on by how much they may be raised.

So anything it does to reduce the rate at which the cost of living is rising must be done indirectly. In the old days the government would use its budget to try to slow the rate at which prices are rising. But since the 1980s we – and all the rich economies – have left it to their central banks, which act independently of the elected government.

Like all the other central banks, our Reserve Bank sees ensuring only modest rises in the cost of living – economists would say, in the rate of inflation – as its most important duty. So what does it do when it sees prices rising too quickly? It does the only thing it can do: put up interest rates and keeps putting ’em up until it’s satisfied that prices will eventually be rising at a much slower rate.

If the RBA gets its job wrong, the PM will pay with........

© Brisbane Times