Prime Minister Anthony Albanese struggled through an uncomfortable interview in which he was told traditional Labor voters are losing confidence in his government.
Sunrise presenter Nat Barr introduced the interview with a conversation she had with the taxi driver who took her to the Channel Seven studios on Thursday morning.
“He (the driver) said, ‘I’ve voted Labour all my life, but for the first time I think I’m going to vote differently at the next election,'” Barr said.
The taxi driver told Barr that everything had become too expensive and that he had to work two jobs to make ends meet, but he didn’t think the government was doing anything about it.
Barr then introduced an uncomfortable-looking Mr Albanese by stating: ‘This is your biggest problem: people like this taxi driver are losing their trust. How do you respond to that?’
“The pressure on the cost of living is real, but that is why we are pursuing responsible economic policies to reduce inflation and at the same time reduce the cost of living,” the prime minister replied.
‘Yesterday’s figures show that headline inflation has fallen from 3.5 percent to 2.7 percent. That is a good outcome.
‘There is still a lot of work to be done, but we have managed to achieve this and at the same time achieve a tax reduction for the taxi driver, who would have received nothing at all under the previous scheme.’
Prime Minister Anthony Albanese (pictured right) had to endure an awkward interview with Nat Barr (pictured left) on Thursday
Albanese continued to list his government’s actions, saying inflation was coming down, “although it was not smooth.”
Barr seemed unimpressed and tried to correct Mr. Albanese.
“OK, but some people think government spending is out of whack, and the RBA has said progress on reducing underlying inflation has slowed,” she said.
‘So it’s not all going in one direction like we need. Let’s go to negative gearing…’
Mr Albanese interrupted him.
“With all due respect, Nat, those statements predate these latest numbers,” Albanese said with a laugh.
“A day earlier,” Barr replied sternly, then broke into a grin.
“These numbers came out yesterday,” Albanese tried to continue.
“She (Ms Bullock) literally said that the day before,” Mr Barr insisted, before Mr Albanese appeared to concede his point by saying “that’s correct”.
Reserve Bank Governor Michele Bullock made clear on Tuesday that when the central bank decided to keep the official cash rate at 4.35 percent, the bank’s board was sticking strictly to its targeted underlying inflation band of two to three percent.
She said the bank would look for “sustainable” declines in prices before cutting rates.
Ms. Bullock also indicated that government spending at the federal and state levels is fueling inflation.
“Compared to three months ago, GDP growth for the year has been revised upwards to mid-2025,” the report said.
‘The stronger outlook for public demand reflects continued spending and recent announcements by federal and state governments.’
This appears to contradict Finance Minister Jim Chalmers’ claim earlier this year that his budget was flawed. ‘help reduce inflation in the short term, not increase it’.
“The Reserve Bank’s new forecast is that near-term inflation expectations are better, not worse,” Dr Chalmers told the ABC.
‘ And that’s because of the design of our cost-of-living policy. In addition to our cost-of-living policy, the governor has said before that our surpluses help, too.
‘And all of that means that inflation would be higher without our fiscal efforts.
Reserve Bank Governor Michele Bullock has made it clear that interest rates will not be cut until “sustainable” measures are taken to curb inflation.
‘Budget spending is not the primary determinant of prices in the economy, but we can be helpful, and we are, in designing our cost-of-living policies that help us get back to target more quickly.’
Meanwhile, Stephen Smith, partner at Deloitte Access Economics, also warned that government spending was keeping inflation high for longer.
“High government spending and migration are creating more demand in the economy, which means the RBA has no power. The labour market is still too robust to follow the US Federal Reserve’s lead and cut rates at this time,” he said.
In other signs of tension with the Labor government, Ms Bullock has previously suggested the $300 energy rebates would do little to tackle underlying inflation and raised concerns about high immigration.
Following reports that the Albanian government has asked the Treasury to model aspects of removing or limiting negative gearing, Barr questioned why the government was reconsidering a policy that helped Bill Shorten lose the “unlosable” 2018 election.
However, Mr Albanese dodged the question without answering yes or no.
He said reforming negative gearing “will not address the supply problem, which is the real problem” and expressed his continued frustration that Labor’s plan to build more housing was blocked in the Senate.
Barr questioned whether curbing negative gearing was a way to gain more support from the Greens, who joined the coalition to block Labor’s housing measures.
“No, I am not interested in the Greens’ approach. They are blockers, not builders. They have no plan to actually achieve anything,” Mr Albanese said.
“Maybe you should work with them. What if you’re stuck in a minority government?” Barr pressed.
“There will be no coalition with the Greens,” said Mr Albanese.
‘I am determined to govern on behalf of the Labor Party.’
A negative gearing policy allows property investors to claim tax relief when the costs of owning and maintaining their investment properties, such as interest on loans and maintenance costs, exceed the rental income they earn from them.
This tax benefit can reduce the taxable income of real estate investors and investors use this to reduce their tax bill.