Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Foreign Affairs and Trade) Share this | Hansard source

Yesterday the Reserve Bank of Australia delivered the verdict that Australians had feared and that the Albanese Labor government pretended would not come. The Reserve Bank lifted the cash rate by 25 basis point, to 3.85 per cent, in a unanimous decision of the board. To the average household, that decision will mean around $100 more every month in mortgage repayments. This is the first rate rise since 2023, and it comes for one reason only: inflation remains out of control, stubbornly above the Reserve Bank's target band.

The rate rise did not come out of nowhere; it did not fall from the sky. It was a predictable consequence of Labor's economic mismanagement and reckless spending, and it is interconnected with another major policy failure: energy. Energy is not a side issue; energy is not symbolic. Energy is the economy. It flows through every household bill, every business cost, every inflation point. Yesterday's decision confirms what Australians already knew: the Albanese Labor government has lost control of the economy, in large part because it has lost control of energy prices.

If energy policy were judged on speeches, symbolism and international travel, the energy minister's 2025 performance must be declared a triumph. He has announced, promised and travelled and he has basked in international admiration. But, for Australian families, manufacturers and workers, it's outcomes that matter—affordability, reliability, confidence and economic security. On every one of those measures, Labor's energy plan is failing. Minister Bowen is the architect of an extraordinarily ambitious transition—a 62 to 70 per cent emissions cut by 2035; 90 per cent renewables; a sixfold increase in storage; and the wholesale restructuring of industry, transport and the grid. While he may want history to crown him the author of Australia's climate future, 2025 revealed a very different reality. That was of a minister driven by ego and ambition, increasingly detached from economic realities and unable to deliver on the commitments he has made on behalf of the Albanese government. Australians were promised cheaper, more secure energy. Instead, power prices have surged, volatility persists and Labor's $275 power bill reduction promise hangs around its neck as a symbol of broken trust.

The Australian Bureau of Statistics confirms that electricity prices surged 19.7 per cent in the year to November 2025, including almost seven per cent in one single month. This is not a smooth transition; this is a price shock. The ACCC's inquiry into the national energy market similarly confirms that electricity costs rose throughout 2024 and 2025. The consequences are now being felt not just in power bills but in household debt. The Australian Energy Regulator reports that average residential energy debt on the east coast now sits at $1,367—up a staggering 38.6 per cent since Labor took office. Small businesses are carrying average energy debts of $2,516. More than 205,000 Australian households are now on official electricity hardship programs, with hardship debts rising sharply year on year.

The minister insists, with increasing theatrical confidence, that decarbonisation now can be accelerated at more than double the current pace. Yet emissions progress has stalled at around 28 per cent—well short of the government's own pathway. If Labor can't deliver on near-term commitments, why should Australians trust even grander promises? This government is racing ideologically ahead without regard for cost, without regard for reliability, without regard for delivery capacity and without regard for investor certainty.

Business leaders warn that Labor's ambition requires hundreds of billions of dollars in capital as well as unprecedented coordination. The former chief scientist, Alan Finkel, has described this transition as the 'most difficult economic transition' in human history. The minister talks about this in routine terms, but it is now economically treacherous. When coal exits faster than reliable replacement enters, Australians pay the price in higher bills, higher inflation and higher interest rates. Renewables without adequate firming are not a transition; they are a gamble. That gamble is costing Australians every month through their mortgages.

Labor fails not just on policy but also on transparency. When the incoming government brief for the Department of Climate Change, Energy, the Environment and Water was finally released—after months of Senate pressure from my colleagues and me—we discovered that 97 per cent of that document was redacted. But what did remain was a telling truth. The brief warned of further significant increases in retail electricity prices this financial year. It conceded that emissions reductions needed to accelerate rapidly for targets to be met. In other words: higher prices, slower progress, deeper failure.

And, while Australians struggle, Labor's priorities remain misplaced. At Senate estimates, officials confirmed that $1.6 million was approved to send 43 bureaucrats to COP30 in Brazil—nearly $40,000 per bureaucrat. A further $1.36 million was allocated for a pavilion to 'tell Australia's climate story'. These climate theatrics occurred while households were pushed closer to hardship and, from yesterday, closer to default by another interest rate rise.

As I noted earlier, this energy crisis is part of the inflation crisis. Yesterday's Reserve Bank decision makes that crystal clear. In December 2025, the consumer price index showed inflation at 3.8 per cent—well above the Reserve Bank's band of two to three per cent. That CPR result ended all talk of rate cuts in 2026. Markets immediately priced a 70 to 75 per cent chance of a rate rise because energy driven inflation has proven structural and stubborn under Labor.

Yesterday, the Reserve Bank confirmed what everyone was fearing. Australians have now endured 13 interest rate increases under the Albanese government and only three reductions. That is not global bad luck; that is domestic policy failure. The Reserve Bank has made it clear that inflation—not wages, not productivity—is the core problem. Experts have been warning Labor for months. Some of the nation's leading economists had questioned the Albanese government's fiscal settings ahead of yesterday's RBA rate decision. Government spending as a share of GDP averaged around 22 per cent for decades. Under Labor, that figure had ballooned to around 28 per cent, a level not seen since the Second World War.

The Chief Economist of AMP, Shane Oliver, put it bluntly yesterday. He said that the best thing the government can do to bring down inflation is to cut spending. He noted that government spending had boomed over the past six or seven years and never properly retreated after the pandemic. The Chief Economist at IFM Investors, Alex Joiner, has warned that the government's 'fiscal guardrails have come off', and EQ Economics's Warren Hogan said that the government needs to tighten fiscal policy, even modestly, to stop inflation becoming entrenched. But Labor refuses to listen. Instead, it fuels inflation through reckless spending and then forces the RBA to take the responsible path.

The result is an additional $1,200 a year for the average mortgage holder on top of power bills that are already hundreds of dollars higher than promised. This comes after the very Christmas when Labor failed to deliver its promised power bill relief. Australians are now being squeezed from both sides with higher power bills and higher interest rates. The consequences of Labor's failure now extend beyond mortgages and power bills. New national data shows that Australians are being forced back into the workforce at record levels to cover their cost-of-living expenses. (Time expired)