Labor plans government-wide spending cuts to tackle inflation

Summarised from 2 outlets · Updated 1 Nov, 01:20 · Archive

Finance Minister Katy Gallagher says no area of government spending will be exempt from cuts as Labor seeks to rein in spending.

Finance Minister Katy Gallagher has announced that no area of government spending will be exempt as Labor searches for savings to tackle inflation. Speaking on ABC's Insiders programme on Sunday, she acknowledged 'robust discussions' within government over where cuts should fall.

Inflation came in hotter than expected for the year to September. Headline annual inflation reached 4.3 per cent, slightly above consensus, while the Reserve Bank's preferred inflation measure—quarterly trimmed mean—hit one per cent against a central bank forecast of 0.8 per cent. Both figures sit well outside the Reserve Bank's 2–3 per cent target band.

Federal government spending as a percentage of GDP reached 26.9 per cent in the 2025/26 financial year, the highest proportion in four decades outside the COVID-19 pandemic. The higher-than-expected inflation has increased expectations that the Reserve Bank will raise the cash rate to its highest level in 18 years, putting further pressure on borrowers. Labor is expected to seek spending reductions in December's mid-year budget update.

How it is being reported

• 'No area exempt': budget-wide cuts to fight inflationThe finance minister has admitted to "robust discussions" within government as Labor comes under pressure to rein in spending.The West Australian · 1 Nov, 00:57
• 'No area exempt': budget-wide cuts to fight inflationThe finance minister has admitted to "robust discussions" within government as Labor comes under pressure to rein in spending.Perth Now · 1 Nov, 00:57

In this story: Katy Gallagher · Labor · Reserve Bank · Australia

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