+34
But economists say state governments are guilty – if not more guilty – than the federal government for driving inflation.
Treasurer David Janetzki washed his hands of any responsibility for rising inflation fuelling interest rate rises, despite economists saying state government spending is a major driving factor.
Janetzki lay blame for the ‘domestic capacity pressures’ pushing inflation higher entirely on the federal government, after theand warned of further rises.
“Jim Chalmers and the federal government must take responsibility,” the state treasurer told the first National Press Club held in Queensland. “They have a role to play, and the Reserve Bank governor proved it yesterday. “When the governor said ‘domestic capacity pressures’, she’s talking about the federal government.
” He rebuffed suggestions the LNP government’s infrastructure spending ahead of the 2032 Olympic Games and the cost-of-living support package in its last budget – which locked in 50-cent public transport fares and a $100 Back to School Boost for every student without any tax increases – were contributing factors.
“We’ve been fiscally disciplined and we have improved the position of the budget, and that’s undeniable in terms of returning the budget to surplus at the end of the out years ,” Janetzki said. But independent economist Saul Eslake said state governments were guilty – if not more guilty – than the federal government for driving up the Consumer Price Index and heaping pressure on the RBA to lift interest rates.
“In general, the states are as guilty of that as the feds,” he said. “Not only spending on their own account, but also giving cash to households who then spend it – and particularly because that spending isn’t well targeted. ” Eslake said Queensland government spending, including capital expenditure, rose by 7.3 per cent in 2025-26 after an 8.5 per cent increase in 2024-25.
Economist Saul Eslake says state governments are just as guilty as the federal government for driving up inflation.
“That comes after three years of double-digit spending under the previous government. The problem wasn’t created by the current government – they inherited it – but they haven’t done anything about it,” he said. Former federal treasury official and Brisbane-based director of Adept Economics Gene Tunny said the states were “obviously” adding to the total amount of demand in the economy.
“Queensland on its own is one state, so it’s the states collectively that are most relevant to the overall national inflation and, in aggregate, they do pack a punch. ”from more than $142 billion to almost $216.5 billion by mid-2030. , citing heightened deficits driven by Olympic infrastructure spending, and economic headwinds.
“The fact that states are running significant deficits, largely to finance new infrastructure spending, is going to contribute to total demand,” Tunny said. “And it’s going to contribute to that situation Michele Bullock has talked about, how the total amount of demand – the desired spending in the economy – is outpacing the ability of the economy to deliver the productive capacity of the economy.
” Janetzki said productivity in Queensland had improved by 1.37 per cent.
“If you talk to any builders, and I was talking to one just recently, they’re talking about productivity on work sites improving from 2.5 to 3.8 days a week,” he said. “In Queensland, we are coming off a very low base of productivity. So we are driving productivity hard in Queensland, and that’s where we can lead the nation. ” On infrastructure spending, Janetzki was confident the government could keep a lid on the $7.1 billion budget for Olympic venues.
“We’re going to drive price competition, competitiveness in procurement ... we’re not going to set prices and then let everybody bid against it, we’re going to drive competitive price tension through the system, through the procurement process. ” Asked if the prospect of an Olympic budget blowout keeps him up at night, Janetzki replied: “I sleep well – very little, but I sleep well.
”Start the day with a summary of the day’s most important and interesting stories, analysis and insights.
Australia Latest News, Australia Headlines
Similar News: You can also read news stories similar to this one that we have collected from other news sources.
Manchester City awaits punishment as Khaldoon al-Mubarak disputes Premier League chargesManchester City face sanctions after a finding of guilt on more than 100 Premier League charges, while chairman Khaldoon al-Mubarak insists the club is confident and disputes the verdict.
Read more »
Six babies die in Qld in three years after contracting syphilis in the wombNew Queensland Health data shows 55 pregnant women have been diagnosed with the sexually transmitted disease so far this year.
Read more »
Qld treasurer calls for GST overhaul at National Press ClubQueensland Treasurer David Janetzki has criticised the federal government's GST distribution system in a historic address to the National Press Club in Queensland.
Read more »