Inflation is back above the Reserve Bank's target band, mortgage holders are bracing for impact, and the predictable hunt for a scapegoat has begun. Once again, the blame is on government spending.

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The argument is familiar: public spending is growing faster than the broader economy, and critics claim it is pouring fuel on the inflationary fire. Billions funnelled into childcare subsidies, health, and wage supports are being framed as demand drivers that fail to lift productivity. Childcare, in particular, has become the whipping boy of this economic critique. Julian Leeser and other critics argue that the government's attempt to patch up the affordability crisis with more childcare spending has backfired. Instead of lowering the barrier to entry for families, the opposition claims the influx of cash has just driven prices higher.

But this framing is too neat, too convenient, and ultimately misleading. The majority of people in our nation want universal healthcare and cheaper childcare. But successive governments have not been brave enough to ask everyone to pay for it.

Independent economist Saul Eslake rightly points out that while the external shocks of COVID-19 and the war in Ukraine have faded, which were factors in our inflation, our current inflation is a domestic beast.........

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