Albanese seeks Senate-proof spending cuts after RBA rate rise

The prime minister will chair two meetings of the expenditure review committee on Monday when he returns from a Commonwealth summit, with Labor under pressure to find savings amid increasingly hostile Coalition and Greens blocs. The Reserve Bank raised rates for the fifth time this year to their highest level in 18 years, and governor Michele Bullock said many Australians would start to feel like they were experiencing a recession.

Several people involved in preparing the half-year budget update told The Age that Labor did not want spending cuts that would create protracted brawls only to be torpedoed in the Senate anyway. That edict opens the door to internal department cuts, scaling back existing programs and savings bills tailored to win either Coalition or Greens support.

Speaking about the rate rise in Antigua, Albanese said the decision confirmed the government needed to find savings in the December update. "It makes our decision, that we were looking for savings, it confirms it," he said. He challenged Opposition Leader Angus Taylor to agree to reforms that would improve the nation's finances, pointing out that a range of government savings had been rejected by the Coalition.

Labor has already had to walk back several budget measures, creating an approximately $11 billion hole in its budget. The Greens under David Shoebridge joined the Coalition to protect a Howard-era private health sweetener that would have saved $3 billion, and a $750 million measure to introduce a $5,000 cap for health services for veterans was walked back after a public campaign.

A Deloitte Access Economics report shows the scale of the economic pressure. The firm estimates a record $1.39 trillion pipeline of infrastructure projects, with data centre projects worth $141 billion alone, up 36 per cent over the past year. “This boom is happening close to our major cities, so data centres are competing directly with housing and infrastructure for workers and materials,” said Deloitte partner Sheraan Underwood. “There's also less room to absorb it than during the mining boom.”

Opposition Leader Angus Taylor told ABC TV that Australia's rate rises were an outlier. "We've had five interest rate increases in Australia, and that has not been true of any other advanced country in the world," he said.

Barnaby Joyce, treasury spokesman for his party, said the RBA's forecast for below-trend growth meant people were more receptive to ideas from his party. “In the established parties, it's very hard for them to make changes,” he said, arguing that gloomier forecasts made people more open to radical solutions such as gutting the climate change department.

At the Commonwealth summit, Albanese also raised changes to backpacker work rules with UK Prime Minister Andy Burnham, who was, Albanese said, "very constructive" about the issue.