One bold, fiscal move would ease our economic anxiety. Does the PM have the nerve?

August 1, 2026 — 3:00am

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Australians live anxiously under a volcano of economic disruption. We tremble at every rumble.

Are the cost-of-living gods angry? Is the volcano about to erupt again? Are interest rates about to go up again? What about the price of petrol?

Our anxiety is measured in the consumer confidence surveys and expressed in the political polls.

It’s no coincidence that only 6 per cent of Australians expect “good times” in the year ahead at the very moment when despair is leading us to Pauline Hanson’s siren call to self-destruction in record numbers.

The Albanese government, and the states too, offer us baubles and charms which are supposed to appease the volcano gods. They call them “cost-of-living support”.

We accept them, but we all know that they are voodoo. They do nothing to change the pressures building inside the volcano. Worse, we know that the cost of these trinkets goes directly onto the national debt. And that only fuels the problem further.

This week, Australia breathed a sigh of relief when the rate of inflation slackened a little, so interest rates are less likely to go up next month. At the same time, we brace ourselves for the end of the petrol price subsidy this weekend.

Nothing has been solved. Inflation is well above the Reserve Bank target. With every passing week, our money is worth less as inflation eats away at our purchasing power and living standards.

Treasurer Jim Chalmers pointed out the two-part problem. “We already had an inflation challenge in our economy before the war, but the war in the Middle East is making inflation higher than it would otherwise be,” he says.

The federal government can’t do anything about Donald Trump’s Operation Epic Fail and the oil price. But what about the homemade bit, the persistent inflation that was already under way and continues to this day?

The government’s only solution so far is to stay on the hunt for more trinkets to offer us while we cower in fear of the next convulsion. Is there another option?

Ken Henry thinks so. The former Treasury secretary says: “The government has an opportunity to grab this problem by the throat by putting the budget on a more sustainable trajectory that would........

© WA Today