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I'm Jacqueline Maley and you're listening to Inside Politics from the Age and the Sydney Morning Herald. Today we are joined by podcast favourite Shane Reich, who's going to talk about the economy and how the rubber really is hitting the road in terms of the Government's economic narrative. And later we're going to talk about the security threat to the Prime Minister at the lodge in Canberra and what that tells us about social cohesion. So welcome chief economics correspondent Shane Reich, who joins us from Canberra, and of course, as ever, our chief political correspondent, Paul Sakal. And for those of you who can't see them and who are listening, they're sort of snuggled together very sweetly in the Canberra studio.
A
I just want to point out, Paul, that I got called podcast favourite. You didn't. So we'll just keep that in mind for the rest of the show.
B
Way too close for comfort in this little studio we're in.
C
Paul is sort of furniture. I take him completely for granted.
B
That's right.
A
I'm the special guest.
C
Just remember that, Shane, on this podcast, if it bleeds, it leads. So let's start with the bad news about the economy. This week we had some not so great inflation figures out and there's also reports, which struck doom into my heart, that there might be an interest rate rise right before the government hands down its federal budget in May. What is happening in the economy, if it's possible to summarise, and how is Treasurer Jim Chalmers spinning the situation?
A
We can start with the spin first, which is it's not my fault, it's what's going on. The private sector has certainly lifted and certainly lifted in the second half of last year. We can see that. From AI to household consumption, yes, our listeners out there are contributing to inflation, despite what some people might say. They are spending. They have money and they are spending. You can actually see that. Like this week we saw Qantas recorded another one point, I think about $1.5 billion profit. People are spending money flying around, for instance. You can see it in consumption stuff. So Chalmers argument is, look, it's really what's going on in the private sector. However, there is a fair whack of government spending because the government is running a deficit. So there's extra money coming in from the government side. There's also the extra spending by the States. In Sydney, for instance, the metro continues on. You've still got a lot of work going on in Brisbane and in Perth and in Melbourne, plus just as general assistance. So that is what's going on. Reserve Bank. We'll look at the inflation figures we got this week. They are monthly, so this is still new. There's a lot of noise still in them. And the Reserve bank has said repeatedly we don't really trust the monthly figures quite yet. So the monthly figure shows. Right. There was a big. There was a lift in prices in January. Whether it's seasonal or not, that's one of the problems. Whether this is just what happens at the start of the year, but over the year.
C
Sorry to interrupt. But over the course of the year, the figure is unchanged at 3.8%. But it's just that month to month, it ticked up a little bit.
A
Yeah, that's right. But there was also some revisions back through the last 12 months. So it always makes it problematic. Clearly there's like, for instance, the price of kids shoes went through the roof in January, which seems a bit weird. And you go, kids shoes? Is that kids shoes went up. It's not a significant item, but it's part of it. And like the price of red meat, red meat, beef prices are running at around 10, 11%. That is not because you, me and Paul are racing out for a steak every second night. It's because of Donald Trump. The pull from the US for red meat is so strong at the moment and anyone who's driven into the hinterlands, like anyone who's driven between Sydney and Melbourne over the last three, four months, will have gone, my goodness, it's a bit dry out there.
C
Yeah.
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You can see there's some drought conditions developing and drought conditions are bad news in terms of inflation. So that's what's going on.
C
Maybe we need to have a beef reserve, like there's a gas reserve to keep some Australian beef in Australia. But that's.
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I think you should. You should put some cows out the back of your place in Sydney. I think they'd love it there.
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One nation's next policy drawing in Gina Rinehart's new cattle farm.
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I'm all for it, Paul. I'm sort of interested. There's the statistics which show a sort of mixed picture, and then there's what people actually feel. And there's so many things that feed into the perception people have about how expensive their lives, how difficult it is to manage a family budget. What is this sort of, you know, the line that the government's sort of walking here? Because on some assessments, wages have actually sort of gone up since the pandemic. The RBA Governor Michelle Bullock, told us that in estimates recently. But it'd be a silly politician who'd actually sort of say to Australian householders like, you've actually got a pretty good. Stop complaining.
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Yeah, that would be a very unwise thing for any government to say. And you're right, this government has a strong argument to say that they've been the first government in a while that's got real wages going a little bit. They've had two straight years before last week's figures, which had real wages growth rising, not by a huge amount, but rising, which is an objectively good thing, and bucking the trend of a lot of similar nations. But overall, the story really, of the last of recent history, really since the gfc, is that living standards overall have been pretty flat and people have not got much richer. The middle class is finding it difficult to get by. There is a growing kind of working poor people are still getting richer at the top end, but there is a sense of dissatisfaction across the economy. And the productivity problem means that the country's not able to grow at the same rate as it used to without inflation running hot. That's why we've seen persistent inflation and grocery prices and other things remaining higher for longer than we expected, because just when the private sector got going, as Shane mentioned, inflation ticked up again, which meant that the rate cuts we saw last year, which we thought would persist, are now being reversed by one cut last month and maybe another one before the budget. So, yes, the government has a decent argument to say that through, potentially through some of their IR changes, they got real wages growing. But the other element of their fiscal strategy has been to pump a fair bit of money in the economy and to stimulate private sector demand through rebates and other things, which keeps prices higher for longer.
C
Yeah. Shane, I'm interested in your opinion that the Liberal Party has obviously changed its leadership in recent times and Tim Wilson is now the treasury spokesman who's replaced Ted o', Brien, who, I guess, I mean, I would say probably didn't get a lot of cut through in his communication. Tim Wilson has freshened things up a little bit, I would say, and he's got some strong attack lines on the government. What. What are those attack lines?
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He's the real Energizer Bunny of in that space. And Ted was a much more reserved and focused. Whereas Tim will go. Tim Wilson will go hard and go wild and go wide. Yeah, so. So, yeah, like labelling Jim, Jim Chalmers as pyro Jim. We've had pyro Gym Chalmers out there pouring debt fuel debt petrol on the inflation fire. And it's catching up with the government as their excuses no longer, like, you can see the MAGA connection there, trying to come up with a pithy couple of words to belittle your opposition. I don't like Ted o'. Brien. Kept going about Jim Flation, never took off.
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Sadly for him, never really made it.
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Never made it. I'm not convinced by pyrotechnic.
C
He's broadening that fire metaphor because he's talking about, like, we've got to see what kind of bonfire we inherit from the government, you know, when they next win government in terms of the budget,
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the inflation fire, which he says Jim Chalmers is pouring debt fuel onto.
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Yes, there's a lot of metaphor going on.
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There is a lot of metaphor going on and it's interesting because we are two months out from a budget and ultimately, as a government, budgets are such a pivotal political event because you can control and change the narrative, you can do it badly. AKA 2014, for instance.
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Great to be here and congratulations on your first budget.
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We need to say that too. Well, thank you. Now, you've just delivered that budget.
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It's a budget with a new tax, with levies, with CO payments. Is it liberating for a politician to decide election promises don't matter?
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Well, I don't accept that question. The biggest, most significant promise we made was to fix the budget and strengthen the Australian economy and we will touch. And this budget does that.
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Or you can do it, say the Howard budgets, the Keating budgets, where you're able to get a real change in the direction of the general public debate. So Tim Wilson, you can see, is trying to get ahead of that. He doesn't have a policy position, although he has, like, he has gone lent really heavily into the top marginal rate at 47 cents. 45% is too high. So you can see he's setting some markers for where he wants to go.
C
That's an interesting one because, I mean, he's on a unity ticket there with some unlikely candidates. Cause Bill Kelty, who is a Labour and Union legend, saying that income taxes are too high and that young people are missing out. We've got Paul Keating saying that. I think we've got Ken Henry, the former treasury head, saying that now too, that incomes are taxed too highly and perhaps wealth not enough. But then Tim Wilson was on radio this morning and he sort of dodged the question a little bit and said, you know, we'll always work towards tax
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cuts at the start of this term they said that all their spending, pouring all that debt petrol on the inflation fire wouldn't be inflationary. It clearly has been. So we're going to obviously have a plan to lead up to the next election, but if I can achieve income tax cuts, I'll always work towards it.
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Paul, what's going on here? Are they going to promise tax cuts? And if not, then how would they justify that? And if they do, how would they pay for it?
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Well, we're so far away from the next election and Tim Wilson has just got in and has put nothing to shadow cabinet. So something for all the upside of the Wilson experiment that Shane's just outlined, the risk for him is that because he's so full of ideas and zeal that he goes out ahead of Angus Taylor, who will want to have a lot of control on the economic policy making side, given his interest in economics and his time as Shadow treasurer, which was not hugely successful. But Wilson needs to guard against the sense, particularly among his colleagues, that because he believes he is the sharpest both policy mind and political campaigner, that he's just not making his own waves and he's actually going through a consultative process that brings his colleagues along. So he's signalling on income tax cuts, aligning himself with a lot of economists, plus Kelty and Paul Keating, who thinks that the top marginal rate is too high and cuts in to a lowered income level, which is by OACD standards quite a low rate of income tax for the top marginal rate to kick in. Tim Wilson is someone who understands that we're in a period of politics where grabbing attention matters. Ted o', Brien, his predecessor, and Angus Taylor as well, made some admirable speeches about debt and deficits. But we don't live in a time where the Liberal Party can rest on its laurels and assume the community shares its views on debt and deficits. Those arguments don't have as much cut through as they used to. They are behind in most surveys on economic management, which is a huge reversal. Wilson understands that you need to be in people's faces, you need to be able to pin blame on the government, you need to saturate the media market. So he might make some mistakes and arguably he did in one of his first days in an interview with us on the dual mandate, which he disagrees with our interpretation of what he said,
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but we were right.
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Yeah, you tell him that, but what he will do, he might make some stumbles along the way and who knows, Chalmers is also incredibly wily politician, but what Wilson will do is elevate his arguments, make them in every place possible and as Shane says, act like an energiser bunny.
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He's interesting because like having somebody who, like he has written like when he was the member for Goldstein, before he lost his seat and before he won it back, he wrote around housing and because he could recognise that housing and housing affordability was a problem. The policy solutions in that space gets you to where we are, for instance on capital gains tax and the concession that's affecting. Which we're about to talk about.
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Yeah.
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Where so you've mentioned like Bill Kelty and Ken Henry talking about, yes, we have to reduce the top marginal rate, but you do have to pay for it somehow. And that means changing the tax mix since the Ken Henry tax report. So that's 16 years ago now. The options in that space that have come out have not been changing the tax mix. They've only just been about, oh, we've got to reduce or change a tax, Henry. And we go back to GST reform under Howard and Costello and we go back to where Keating really kicked it off, where he changed the tax system in 1985. They were big tax mix changes and that's what delivers you reform, that's what helps the economy, not just one off things. And you can see the Liberal Party is in danger of already getting caught saying, right, we will cherry pick a little bit. It's holistic. That's the problem.
B
Well, Ted o' Brien last term went out. I was talking to a liberal about this just yesterday actually. He boxed in Susan Lee because in one of his first weeks as Shadow treasurer. I didn't know this at the time until yesterday, he made a declaration that the Liberal Party would not support any tax rises no matter what, in any context. Which meant that the leader had to back him in and say, yep, no tax can be contemplated, even if it's part of a broader package. So that kind of boxed them in and didn't even allow them to explore
C
any tax rates, which it boxes you into making budget cuts, basically, if you're going to pay for anything.
A
Yeah. And if it. And Tim Wilson's got to this line saying, right, we'll just like catching up, say with the reporting by Nick McKenzie about how much has gone through to the CFMEU and he says, oh, we'll save 15 billion, doll. I'm sorry, that $15 billion has gone.
C
It's gone. It's in the pockets of various corrupt union officials.
A
That's right. So you can't save the money that's
B
a good talking point, not a good policy.
C
They're all out there buying flat screen TVs. Shane, you said the three magic words. Capital gains tax. We love capital gains tax.
A
I could see your excitement when I mentioned those three things.
C
I actually do find this stuff really interesting. So the government is edging closer to basically admitting that it's going to do something on the CGT discount of 50% which is a tax lurk for investors in the federal budget. And it seems like they're going to do that perhaps in conjunction with some sort of income tax cut. So they're like, okay, we'll take from this area and we will give it back to more people and you know, in a more judicious fashion or maybe that's how they'll spin it. You wrote a really interesting piece this week about the CGT tax and the discount as well. And I think what we lose sight of is that the discount was introduced for very good, sound economic reasons. Can you just tell us why the discount was introduced and by whom?
A
Right, so 1985 you're, we're down at the old Parliament House in Canberra and Paul Keating is, he's been boxed off. He can't introduce a consumption tax but he says we've got to change the tax system so the company tax rate is cut. The top marginal rate at the time was 60 cents in the dollar and he got it under, he got it to 49 in that move. But he said we've got to pay for it. So we're going to tax fringe benefits, AKA you and I going out for a liquid lunch. Sorry, we're gonna have to pay some tax on that and capital gains. Cause at the time higher income earners who owned assets, they were largely shares be they property, they were making big capital gains, not paying effective any tax on it. So they said that's how we pay for it. The Liberal party opposed the FBT and the CGT for the next 10 years. But at the time Keating said right, we understand if the value of your asset, your house, your shares goes up, it has to go up more than just inflation. We want to tax the extra real income that you're the extra profit that you're getting, the extra asset, not the inflation. We really don't want to do that. So it was convoluted but it understood like we are going to take into account what inflation is. Every year we get to 1999 the Ralph Review of Business Taxation drops in this recommendation which, and it was unusual because this wasn't business Taxation, it was. Right, let's simplify that system. We'll just give it a straight 50% discount as opposed to whatever the inflation rate is. And that was introduced with the idea that this will encourage everyone. You, me and Paul, we'll race down, we'll phone our local stockbroker and we'll buy some shares.
C
Yeah, so that's what I'm talking about. That was the idea that it would bring capital into markets and it was sort of democratised that, like we would, you know, ordinary people would go, be able to go out and buy shares and there would be an influx of investment into the share market.
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Margaret Thatcher's shareholder Democracy. That's the thought.
C
Yeah.
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But. But acos and a couple of other community organisations said, australians aren't going to do that, you silly billies, they're going to go buy property. Which is exactly what they did. And you can see it. And it's a way it interacts with negative gearing. As Saul Islake, the premier economist, noted this, a majority of people were positively geared. They made a profit from their rental properties. After the CGT concession, the 50% is introduced. Their accountants say, hey, if you lose some money on your rental property, you're gonna make it back far more because the capital gain, the tax advantage, capital gain you're going to get. So that's what.
C
That's exactly what happened. Yeah. I mean, broadly, I think there's agreement that the interaction of those two investment perks have pushed up property prices or certainly correlated with an uptick in property prices.
A
Property prices is one side. I just want to make this important point. It hurts first home buyers. They are the ones who are competing against the investors. This is where the evidence from Ken Henry this week saying, here I am going up to Sydney with my kids, we're standing there at an auction and we're competing against investors. My kids could not buy their own home. The investor bought it. That's really where the rubber hits the road on this.
C
I literally have been there and I think a lot of people will have had that experience or their kids will have had that experience. Paul, most economists say even if they make these CGT changes in the federal budget, it won't make a huge difference to property prices, but it will make a difference to property prices. Do you think this is something that the government's going to be able to take over the line and argue if Jim Chalmers, who is a good communicator, sort of makes the argument?
B
Well, I think it's totally open to Jim Chalmers to make A compelling case for why this change is needed. There is really strong consensus, Shane, don't you agree, in the economist community, across the business community, I mean, Jeff Wilson, the cousin of Tim Wilson who led the franking credits campaign, is open to change here.
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Matt Coman.
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Matt Coman, the head of Commonwealth bank last on Wednesday night on 7:30. I mean I think the Liberal Party's reflex here to at a low point fight this change is telling on where they're at. Tim Wilson is someone who for years, as you mentioned Shane, has been writing about the need to regenerate the dream of home ownership to create a voting constituency for the Liberal Party. Because the idea has always been, since Menzies, that if you have a stake in the society, you become more conservative, you feel attached to place and you vote Liberal. If that cohort dies off because home ownership is so difficult, the Liberal Party may not receive those votes in future. So if there was a. If there was a more kind of. If there was a Liberal Party that was able to sit back and analyse this with a more rational mindset, I think you could get bipartisanship, but that's unlikely. And yes, it may not reduce house prices to an extent that radically makes home ownership easier, but it will tilt the balance in favour of first home buyers rather than investors, which is an objectively good thing. And Australia's wealth stored in investment properties is the highest in the OECD outside of Luxembourg, a tiny country.
C
Yeah. Even when you put sort of all the ins and outs of the economic arguments aside and most people won't be listening or paying much attention to the detail of that, my sense is that the vibe will be that the government is at least trying to do something, change some of the settings, you know, or a bunch of settings. I think Clara Neal said this week that they were going to pull all the leaders they could to address the home ownership equity disparity.
A
Jack, I was gonna say it goes to the intergenerational equity argument that Chalmers and Albanese have been really, really leaning into. And I'm going like, if you look at polls and you can see younger people being interested in one nation, for instance, and Dan, you've got a policy, even though it may not have a huge impact, you say, right, we're gonna target, we're going to change CGT. There's no one under 35 who's heavily invested in the Australian property market. As an investor, let's be absolutely blunt, like the politics of this is right, this is going to help you get into a home versus the older cohort. And the majority of people with big asset holdings who are affected by CGT are over the age of 65. Talk about intergenerational equity. This is an intergenerational fight as well.
B
Having said, I agree, Shane. Having said what I just did about the Liberals reflex to oppose this policy, you can understand their scepticism on a Labor tax change because this government hasn't shown much appetite to date to do much on the supply side. So a Liberal party wants to. They might be more open to capital gains if they can see a package which also does something on income tax cuts that also does something on supply in housing that also includes spending restraint. And Jim Chalmers has a huge opportunity here to take on the Liberal Party in its low moment and say we're going to cut back on the NDIS further. We're going to do actual restraint in this budget. We're going to do CGT big stuff on housing supply. Imagine how toss in an income tax cut. Toss in an income tax cut. Imagine how powerful that would be in taking on Angus Taylor's new message on budget management and in saying to voters open to one nation, hey, these guys are putting grievance. We are radically reshaping the economy, housing and budget management to help working class and younger Australians and Gen X Australians who are feeling the pinch too. It's not just young Australians.
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Well, thanks. He's just managed to get us into the discussion there.
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Gen X, the younger Gen X millennial.
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Well, not wealthy older journalists who are still benefiting from the rivers of gold of the golden days in this industry.
C
Guys, just on another matter this week there was a security threat at the lodge and the Prime Minister had to be evacuated on Tuesday night. Paul, can you tell us what happened exactly?
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Yes. At about 6pm on Tuesday night, the Federal Police received a notification from a performing arts group called the Shen Yun Group, which is associated with the Falun Gong grouping out of China which was established in the 90s. It's turned into a kind of transnational spiritual movement that includes a lot of Chinese dissidents. The Chinese government is highly suspicious of it. It tries to crack down on its operations in Western countries, including in a court case in Canberra where there are Chinese nationals who are accused of spying on this group group in the national capital. So this group, Shen Yun, is holding a bunch of different dance shows in Canberra and Brisbane. And they received a message on Tuesday from an unknown party saying that the Prime Minister's residence at the lodge, all around it was surrounded by explosive devices and if this event was to take place, they would be exploded and the Prime Minister would be harmed. So this was sent to the afp. The Prime Minister was at the lodge. He left the lodge for a few hours and went to his parliamentary office. He returned at about 9, 30 or 10, when it was determined by the AFP that there were no explosive devices around.
C
Thankfully, the threat ended up being an empty threat, from what we can tell. They said. But they did. I mean, it was pretty violent language. They said. The people who made the threat said that blood will flow and the building would be blown into ruins. And there were large quantities of nitroglycerin planted around the official residence. Prime Minister Anthony Albanese said afterwards, you know, this is one of the. Why we need to take the temperature down, why we need to sort of not run so hot with our political debate.
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I think it's just a reminder. Take every opportunity to tell people, turn the heat down, for goodness sake. Like, you know, we can't take these things for granted.
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Turn it down.
C
The AFP investigated 950 politically motivated threats in the financial year ending July 2025, which is a 63% increase on the combined total of the previous four years. So, I mean, what are sort of, what's ASIO and the AF Commission are saying about these kinds of threats and how, you know, how we can counter them or what they tell us about social cohesion?
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Well, there was a. You'll recall the very often repeated comments from Mike Burgess, the ASIO head, just after the October 7th massacres in 2023, where he said in a warning to our politicians that words matter and that rhetoric often leads to real world violence. And you're seeing this trend around the world.
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Every one of us has a role
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to play protecting our social cohesion. Our words matter, our decisions matter, our actions matter. In an age of unprecedented, or an age with unprecedented avenues for communication, I fear we are losing our ability to converse and just. On the politics surrounding this threat. The Prime Minister in the days afterwards and his own ministers repeated the comments that he's been making for years now to take the temperature down. He uses this in relation to the Greens and pro Palestinian protesters who use the term globalise, the intifada. He equally uses it when he talks about one nation and some of the rhetoric, particularly from the Dutton Opposition. And it's an admirable attempt by the Prime Minister to say we need to maintain the centre ground, the radical fringes need to watch their language. But I do question his use of that term in this context, because this threat doesn't appear to have come from an Australian based actor or anyone channeling those views. But there is a really heightened sense in our politics at the moment that it is becoming more caustic. Even this week we're seeing mainstream politicians like or political figures like Josh Frynberg and others at a conference in Sydney talk about a discriminatory migration program. Julian Hill, a laboratory left minister, this week talked about some of the problems with multiculturalism and quite a thoughtful critique. So that new conversation around race and migration is leading to some pretty sharp remarks, which is what is leading the Prime Minister and others to take threats like this much more seriously and to react to them as if they could be real because there is worry that they will become real.
C
Fellas, sorry to end on that rather grim note, but thank you both very much for joining us and Shane in particular because as you know, you are a favourite. Paul, you're also a favour. Different. Different.
A
Okay, don't pander to him. Don't pander to him. I'm the special guest star.
C
Equally, equally adored, but just in a different way. Right.
B
I'm not insecure. I actually really am.
C
All good journalists are insecure. Okay, see you guys.
A
Cheers. Bye.
C
You can read all of our political news on our websites, theage.com au or smh.com au Today's episode was produced by Chi Wong with help from Debbie Harrington. Our executive producer is Tammy Mills and our podcasts are overseen by Lisa Muxworthy and Tom McKendrick. Before you go, follow Inside Politics and leave us a review on Apple or Spotify. I'm Jacqueline Maley. Thank you for listening.
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Tim Wilson accused the treasurer of pouring fuel on the inflation flames – is he right?
Date: February 26, 2026
Host: Jacqueline Maley (C)
Guests: Shane Wright (A), Chief Economics Correspondent; Paul Sakkal (B), Chief Political Correspondent
This episode unpacks recent claims by Tim Wilson, the new Liberal treasury spokesperson, who accuses Treasurer Jim Chalmers of stoking inflation with government spending. The discussion features a thorough analysis of current inflation data, political spin, wage stagnation, tax policy debates, home ownership, and recent threats to the Prime Minister’s security that highlight issues of social cohesion in Australia.
[01:04–04:10]
[04:10–06:38]
[06:38–10:11]
[09:24–15:40]
[14:50–21:24]
[21:24–23:16]
[23:31–27:57]
This episode is both a lively and forensic look at the economic and political challenges facing Australia in 2026, particularly how inflation, tax reform, and the housing crisis are intersecting with political partisanship and shifting voter demographics. The hosts and guests balance detailed economic analysis with sharp observations on political branding, party strategy, and broader social trends, making the episode essential listening for anyone following Australian politics and policy.
All timestamps refer to segment start times; quoted speakers indicated with (A), (B), and (C) per the transcript.