Columnist Peter van Onselen argues that Australia's public finances are deteriorating sharply, with governments spending, taxing and borrowing more all at once despite the Reserve Bank's efforts to curb inflation. He contends that this contradictory approach shifts the burden onto ordinary Australians through higher mortgage rates and falling property values, while eroding public confidence in the government's economic management.

He cites figures showing state and federal governments collected $241.3 billion in taxes in the June quarter, up 9.3 per cent, yet expenses rose faster to over $291 billion, pushing the combined budget from a small surplus into a $2.8 billion deficit, with borrowing more than doubling to $23.6 billion. Annual inflation sits at 3.5 per cent, 10-year bond yields have topped 5 per cent (a 15-year high), and the economy grew just 0.4 per cent last quarter, with government spending accounting for roughly a quarter of that growth. Federal gross debt has passed $1 trillion and is set to rise a further $50 billion by mid-2026, with interest payments forecast to climb from just under $30 billion this financial year to over $42 billion by decade's end; the Parliamentary Budget Office projects a return to budget balance only by 2034-35, contingent on rising personal income taxes.