Western Australians are grappling with a severe cost of living crisis, and according to commentator Paul Murray, the blame lies squarely at the feet of government spending. In a scathing critique, Murray argues that both the state Labor government under Premier Roger Cook and the federal Albanese government are pouring fuel on the inflationary fire through excessive expenditure.
The Core Argument: Turning Off the Taps
Murray's central thesis is straightforward: if governments genuinely want to ease financial pressure on households, they must stop spending so much public money. He contends that the massive injection of funds into the economy from concurrent state and federal budgets is a primary driver keeping inflation and interest rates stubbornly high.
The recent federal budget forecast a deficit of $28.3 billion for the 2023-24 financial year, while the WA state budget, delivered by Treasurer Rita Saffioti, boasted a whopping $3.2 billion surplus, largely funded by iron ore royalties. Murray argues that these surpluses are not being used responsibly to reduce pressure but are instead being spent, adding to economic heat.
Specific Spending Criticisms
Murray points to several examples of what he deems questionable spending by the WA government. He highlights the $1.1 billion allocated for a new museum in Perth's CBD and the $400 million investment in a new basketball stadium as emblematic of misplaced priorities during a crisis. Furthermore, he criticises the federal government's future spending commitments, including the Made in Australia policy and the $22.7 billion Future Made in Australia innovation fund, questioning their timing and economic impact.
The columnist also takes aim at the $300 energy rebate for all households, arguing it is a blunt instrument that provides no long-term solution and merely masks the underlying problem of high power prices. He suggests that such broad-based handouts contribute to demand without addressing supply-side issues.
The Political and Economic Consequences
The political fallout is already becoming apparent. Murray notes that Premier Roger Cook's approval ratings have plummeted, with a recent poll showing a significant drop. The state by-election in the seat of Darling Range, triggered by the resignation of Barry Urban, is seen as a critical test of public sentiment towards the government's handling of economic pressures.
Economically, the consequence of continued high spending, according to Murray's analysis, is that the Reserve Bank of Australia (RBA) has less room to cut interest rates. With governments stimulating the economy through fiscal policy, the RBA may be forced to maintain a tighter monetary policy for longer to combat inflation, directly impacting mortgage holders and businesses.
Murray concludes that the only meaningful way to provide cost of living relief is through fiscal restraint. He calls for both tiers of government to 'turn off the taps' on new spending, manage existing projects more efficiently, and use budget surpluses to pay down debt rather than fund new initiatives. Until this happens, he warns, the financial pain for WA families will persist, regardless of short-term rebates and subsidies.
