David Koch tells RBA government spending, not shoppers, is fueling inflation
Koch argues a fourth 2026 rate rise will harm households twice without fixing inflation rooted in government spending.
David Koch, economic director of Compare the Market, has written an open letter to RBA governor Michele Bullock ahead of a rate decision next Tuesday. Koch argues that government spending, not household shopping, is the real source of inflation.
Federal government spending has climbed to 26.8 per cent of GDP, much of it in areas like childcare, education and utilities where prices are set by government. Koch points out that household spending has barely risen, unemployment has spiked and consumer confidence has fallen.
Yet rate rises keep climbing into household mortgage bills. Australians with an average loan of $735,000 have seen monthly repayments jump by $351 since the latest rate hike cycle began.
A rate rise will not affect global oil prices or geopolitical tensions, Koch says. It simply hits the same kitchen table twice.
- 26.8% of GDP
- Government spending share
- $735,000
- Average mortgage
- $351 per household
- Monthly payment rise
- Fourth in 2026
- Rate hikes expected
Why it mattersInterest rates are rising to fight inflation driven by government spending. This will make borrowing more expensive for Australians without solving the root cause of rising prices.
AustraliaAustralian households facing a fourth rate rise next week will see mortgage costs climb further, while Koch argues the RBA's levers cannot fix inflation rooted in federal government spending decisions.
✓ Claims checked against the source and corrected before publish. checked 2 d ago
