The federal government had no control over the Iran war. As the Prime Minister remarked in reference to Trump's decision to invade: "Australia was not consulted".

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But this does not mean we have to be passive victims of its economic impact. There are practical things we could do to ease the shock, and there are plenty of things we shouldn't be doing, too.

To state the obvious: the economic impact of the Iran oil shock will be bad.

Our modelling reckons that economic growth will be halved. Inflation will start with a five or a six instead of a four. Unemployment will exceed 5 per cent.

These are conservative estimates and, to be honest, they are pretty unreliable. They are unreliable because we simply don't know what will happen.

Our estimates developed two weeks ago assumed oil prices will be 75 per cent above their price at the start of 2026 (they are already higher).

We assumed the shock lasts two years (the destruction of refineries suggests this is optimistic).

We assumed other countries would increase supply (many of which have now also been attacked).

We assumed households would stop hoarding and even start reducing their fuel use (which is yet to happen).

That's a lot of assumptions. The key point is this: it will be bad, possibly very bad. So, what should we be doing, and what shouldn't we be doing?

Start with the positive things.

The government should withdraw its own demand for liquid fuels.

Defence is one of the biggest consumers. It should be limiting its fuel use unless urgent.

Public servants ideally should not be on planes and should be working from home wherever possible.

The government should instruct all agencies to slash their consumption of liquid fuels and, if they don't, explain........

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