Labor MPs Sound Alarm Over 'Bad' Spending Habits Amid Inflation Fears

Concerns are growing within the Australian Labor Party about the government's spending habits and their potential impact on inflation. Federal Labor MPs, including Rob Mitchell and Tim Wilson, have expressed worries that the Albanese Government's 'bad' spending could exacerbate inflationary pressures.

Mitchell, who holds the federal seat of McEwen in outer Melbourne, has cautioned against cash handouts to cope with the cost-of-living crisis unless they are linked to future productivity gains. He believes that such spending would not address the underlying issues and would only serve to increase inflationary pressures.

Wilson, the Shadow Treasurer, echoed Mitchell's concerns, stating that Labor should be delivering surplus Budgets instead of deficits. He criticized the government for having 'no real sense of constraint' and for seeing itself as the answer to most problems.

The Reserve Bank of Australia has also cited government spending as a factor adding to inflation, with Governor Michele Bullock blaming persistently weak productivity for contributing to price pressures. The RBA has raised interest rates four times this year, taking the cash rate to a 15-year high of 4.6%.

The Australian Bureau of Statistics reported that inflation in August soared to a three-month high pace of 4%, with non-tradables inflation surging by 4.5%. Westpac has forecasted another interest rate hike on November 3, which would take the RBA cash rate to an 18-year high of 4.85%.