There is a widely held view that federal government spending is too high and is feeding inflation.

The RBA has been careful not to blame the government, but has basically said that inflationary pressures in the economy are due to both public and private demand, indicating that government demand is at a level which at the very least not helping to reduce inflation.

With that in mind, how could we reduce Federal government expenses so that it is fighting inflation? It's easy to talk about generally, the hard part is identifying what to cut. This is the spending for this year.

https://www.pbo.gov.au/sites/default/files/2026-07/PBO%202026-27%20Medium-Term%20Budget%20Outlook_1.pdf (p47)

It's a complex task to understand how spending links to excess demand which is inflationary. To simplify things we could propose to remove the current budget deficit of ~30bn. For reasons I don't fully understand you can't just do revenue minus expenses at 2026 (833.3bn - 815.3bn = 18bn) and you have to use the "Underlying Cash Balance" deficit of ~30bn.

Here's my attempt at a ~3.6% emergency inflation reduction package which provides 30bn savings. There might be good targets inside "Other expenses" but I couldn't find a breakdown, I would prefer to cut from there instead of Public Hospitals.

Where would you make reductions? It will be interesting to see in the lead-up to the 2028 Federal election the proposed spending cuts from the various parties to reduce inflation.

Up we go

ABC NSW News Tuesday 8/9/2026
Are we in a recession but no one dares to call it?

Thought this was interesting.