The world is changing rapidly. Albanese needs to follow suit

October 3, 2026 — 5:00am

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The world has changed in the last few months. The Albanese government needs to change accordingly. It will find it extremely hard. But it’s not impossible.

The federal government was running on the assumption that Australia was suffering a temporary problem with the “cost of living”. So it resorted to temporary solutions. It offered “help with the cost of living”. This involved empathetic rhetoric and cash handouts.

The state governments did exactly the same. “We’re from the government and we’re here to help.” It worked politically. And it was manageable fiscally. The Albanese government was re-elected. Mission accomplished. Even Donald Trump’s absurdly quixotic war on Iran didn’t disturb the scenario. Initially.

Trump’s “little excursion” with Bibi Netanyahu drove the oil price higher; the Albanese government responded by cutting the fuel excise because “Australians are doing it tough”. It was an expensive subsidy, but it was temporary. The government got no real thanks for it politically but got away with it fiscally.

But the world has changed since, and changed dramatically. Inflation is high and now entrenched. So interest rates are going higher. High interest rates, too, are now entrenched. And that means that interest payments on the national debt are also increasing.

So handouts are not only useless in this new reality; they are worse than useless. They only add to inflation in the economy, aggravating the problem.

This means that the “cost-of-living crisis” is entrenched. It’s no longer temporary. And it’s entrenched at levels driving Australian voters to despair, a despair otherwise known as Pauline Hanson. Treasurer Jim Chalmers has a silver tongue. But it’s stretched as far as it can usefully reach in the face of this new reality. He knows it; that’s why he’s looking unhappy.

Yet the next election isn’t due for a year and a half. What to do? Don Russell, one-time right-hand man to Paul Keating and now chair of Australian Super, famously divided political leaders into two categories: “pleasers” and “doers”.

“Pleasers will try not to upset people; will seek approval from as many groups as possible; and will try to shield the electorate and........

© The Age