Zoe McKenzie MP
Shadow Cabinet Secretary
Shadow Assistant Minister for Education and Early Learning
Member for Flinders
TRANSCRIPT
SKY NEWS NEWSDAY WITH KIERAN GILBERT AND ANDREW CHARLTON
Thursday, 29 January 2026
Topics: Inflation & interest rates; Liberal Party; National Party
KIERAN GILBERT: Now let’s get back to politics. Joining me is my regular Thursday panel and it’s a happy new year. In fact, we haven’t seen them yet for 2026. It’s great to have Shadow Cabinet Secretary Zoe McKenzie and the Cabinet Secretary Andrew Charlton. Thank you both for being there. Andrew, first to you, the inflation number, the CPI number this week leads to most economists saying there will be a rate hike next week. Does the government need to accept responsibility here given the rampant inflation being really driven in large part by the highest government spending in four decades outside of COVID?
ANDREW CHARLTON: Well, great to be back on the program, Kieran. Happy New Year. Look, the inflation number that has been released this week was higher than the government would have liked. And the Treasurer has been very clear that he takes responsibility for those numbers. But he takes responsibility for the whole performance of the government. And that is a record of getting inflation down very substantially from where the Liberals left it, bringing it down over the course of the last three and a half years to much lower than it was previously.
KIERAN GILBERT: Was it premature to say the battle was won essentially when it comes to inflation?
ANDREW CHARLTON: Well, inflation rarely goes down in a straight line. It always goes down two steps forward, one step back. And I think in this case, what we’ve seen is inflation coming down a lot. You’ve seen significant budget consolidation from where the Liberals left the budget. The budget is now in much better condition than it was when we inherited it. And government spending is much lower than it was when we inherited it. And the government has delivered two budget surpluses since we were elected. So this is a story of fiscal consolidation. It is a story of inflation coming down substantially from where it was. But it’s also a story of more progress, and we acknowledge that we do need to make more progress and the government is focused on that.
KIERAN GILBERT: Zoe, what’s your take on this, particularly off the back of our friend Warren Hogan from Judo Bank, a well-known economist? He thinks that the RBA is not only going to have to reverse the cuts of last year, but go further in terms of rate hikes.
ZOE MCKENZIE: Indeed. My dear friend Andrew is paddling hard here. And I’d like to say, Andrew, you’re too smart for that. You know this is a terrible outcome because of a poorly managed economy. I am so tired of hearing Jim Chalmers talk Liberal-lite narrative economic management while implementing Gough Whitlam policies and stoking inflation over the years. 3.8% yesterday, not a good figure for the country. All four banks are predicting an interest rate rise on Tuesday. Now, if you’re one of those young Australians that believed this government, that they could afford a 5% deposit mortgage, they will be living in very uncomfortable terms by the end of next week. But that’s not all. Yesterday we put out a press release saying that childcare costs are up by 11.2%. I was in a childcare centre yesterday and they said to me, we had all this terrible confusion at the start of the year when parents came thinking they were getting 72 hours free childcare. So not fully understanding, possibly because it wasn’t explained very well, the government’s policy. So a nasty surprise on many fronts for Australian families doing it tough.
KIERAN GILBERT: Andrew, most economists, you know, say that government spending is contributing to where inflation is at. Is driving inflation, not leaving enough capacity for the private sector. You’re an economist. Do you concede that government, the level of government spending, is too high and it is driving part of this inflation story?
ANDREW CHARLTON: Well the ABS was very clear this week, Kieran, as they described the factors that are driving these inflation numbers. And one of the primary factors was the tailing off of many of the energy subsidy programs that have been implemented by governments around Australia. That contributed to a significant rise in the recorded energy price. There were also contributions from domestic travel and a range of other costs across the board. These are costs that we know are being caused by, in many cases, temporary factors. So it’s a bit of a stretch for Zoe and the opposition to claim that these numbers in this quarter are driven by government spending. And it’s a particular stretch given that government spending has been coming down substantially from where they left it.
KIERAN GILBERT: But overall… you’re talking about this quarter. So… I get it. Overall inflation number, is government spending fuelling inflation?
ANDREW CHARLTON: Well, inflation is caused by a range of factors. And what we have done in the last three and a half years is bring government spending down substantially from where it was. In MYEFO, $20 billion of savings. Over the course of this term, the largest turnaround in the budget position of any government at any time in Australian history. So the Liberal Party can complain as much as they like about government spending…
KIERAN GILBERT: …But it’s going the wrong way now.
ANDREW CHARLTON: …But, Kieran, I will say this. Now, the job of Zoe and her colleagues – their constituents do not send them to Canberra just to complain. They send them to Canberra to put forward an alternative of what they would do differently. And the record is this. When they were in government, they spent more, more as a percentage of GDP. When we got to the election last year, they were offering to spend more. And since that election, they have not opposed a single meaningful spending measure. So it’s terrific for Zoe to come on your program and show a wealth of empathy. But what Australians really require is an alternative. And unfortunately, as we’ve seen, that alternative from the Liberal side does not exist.
KIERAN GILBERT: Zoe McKenzie, your response to that?
ZOE MCKENZIE: Actually what Australians need, Andrew, is a better, they need a better government. They just need a better government, frankly. If you look at, like, the pump priming of the employment figures, it’s all 80% public employment. What people want to see is opportunity on the ground. And, frankly, not to be duped, not to be led into a situation where they think that interest rates are going to stay low. Because, frankly, that’s the impression Jim Chalmers has given them. Interest rates will stay low. It’s safe to jump into the housing market. 5% deposit, off you go. And now they’ll have to be redoing their maths. And that is going to be hard. And at the same time, you talk about the subsidies, the band-aid effect you had on energy bills. By the way, all those people are still waiting for their energy bills to be reset $275 lower than they were before. Each month, it still gets harder. And I know, Andrew, you know, you’re brilliant, mate. But the empathy needs to be real from your government in terms of what people are going through. They are doing it tough.
KIERAN GILBERT: Andrew, before we move on, and there’s a lot to talk about in terms of where the Coalition’s at and the politics of it, because that alternative is a key question at the moment. But can the Treasurer claim credit for the rate cuts last year, but not take responsibility for the rate rises this year?
ANDREW CHARLTON: Well, I think that the Treasurer has been really upfront. And he has taken credit and responsibility for the totality of the economic situation in Australia. And the totality of that situation is this. The macroeconomy has substantially improved from where we inherited it. Inflation is much lower. Employment is strong. Real wages have been growing. In addition to that, the budget is in a much better situation than it was when we inherited it. A huge turnaround.
KIERAN GILBERT: Government spending still too high, though?
ANDREW CHARLTON: Government spending is much lower than it otherwise was. And of course, we can always do more. And in the last MYEFO, we did do more, including $20 billion of savings. So this is an important, I think, objective for the Australian Government to continue the progress we’ve made, to continue to get inflation down, to continue to consolidate the budget. We’ve made good progress and we have more to do.
KIERAN GILBERT: Now, Zoe, in terms of next week, you’ve got the rate hike likely on Tuesday. At the same time, your party, the Coalition, more broadly, really, navel-gazing is a good way to put it. I think there are many other ways to put it. But how frustrated are you? I know you back Sussan Ley, but many of your colleagues don’t.
ZOE MCKENZIE: I don’t think we’ll be navel-gazing. The week will proceed as it normally does. I’m pulling together a Shadow Cabinet meeting, as I normally do for the start of the week. We will discuss the Government’s legislation and our approach to it, so frankly, I and my other colleagues who sit around that Shadow Cabinet table are focused on the business of government and holding them to account and, where appropriate, putting forward a better alternative because this government must be held to account. It will be a shameful day indeed when interest rates go up on Tuesday and we will be making the point that this government can and should be doing better.
KIERAN GILBERT: Hastie and Taylor met this morning in Melbourne. I don’t think they were just talking about interest rates though, Zoe?
ZOE MCKENZIE: Well, look, I know Angus is in town for a couple of days. He was with me yesterday and he’s with me at HMAS Cerberus tomorrow, the cradle of the Navy, where the Coalition invested $463 million to make it the pre-eminent training ground in the Southern Hemisphere for Navy cadets. So I’m glad that he’s here. He’s getting on with the job of being Shadow Defence Minister. I’m getting on with the job of being Shadow Cabinet Secretary and Shadow Assistant Minister for Education, as we should be. We have a big task ahead of us. We need to win 33 seats to form Government to spare the country from this terrible Albanese Government. That is a huge task. Two thirds of those seats sit in metropolitan Australia. We must focus on the policy, the narrative and the communication to make sure that all the people in those seats understand what the proposals are from the Liberal Party at the next election, while continuing to do the best possible job for our seats. So I look forward to joining with my colleagues next week, to be focused on that task, the policy we need to put forward to put a compelling proposition to the Australian people for the next federal election.
KIERAN GILBERT: Andrew Charlton, is it a risk for the Government that, given the internal shenanigans of the Coalition, that you don’t keep the eye on the ball? Because we know that issue that you and I were talking about and that Zoe was discussing – inflation, interest rates and costs – that’s going to be the number one issue when we get to the next election, not this hoo-ha.
ANDREW CHARLTON: Look, yes, it is. And the Government is completely focused on Australians and the issues of cost of living, health and education and other issues that matter to them. Just in the last month, we’ve introduced important new changes to Australian healthcare that will make it easier to see a doctor, enable people to get medicines more cheaply. But let me say this, Kieran. I do think that it is important for Australia that we have two strong parties of government. I think that the system of two strong parties in Australian politics, has served our country very well over the last century or more. And so I take absolutely no pleasure in the disarray that the Liberal Party is in right now. I hope that they can pull themselves together and be a strong alternative party of government. I think that is good for Australia. But let me say this. I don’t think it’s the fault of Sussan Ley in its entirety. I don’t think it’s the fault of David Littleproud. I think the reality is that on issue after issue, the Liberal Party is talking the talk but not walking the walk. They’re saying that we have to bring back Parliament early to pass all these laws, then they get to Parliament and they can’t agree to vote on them. They’re complaining about rising interest rates but have no real policies to do anything different. So, at its heart, I really feel it’s a policy issue that the Liberal Party needs to put their arms around. And I wish Zoe and her colleagues well in undertaking that task over the next few weeks and months.
KIERAN GILBERT: Andrew Charlton, Zoe, I’m sure you take that very convincing show of support to you, encouragement. I think it’s heartfelt.
ZOE MCKENZIE: Indeed, indeed. I thank Andrew for his encouragement. We both have a big task in wrangling policy.
KIERAN GILBERT: Yeah, I love that. It’s very sincere. Now, it’s great to see you both Andrew and Zoe. We’ll see you next week.
ENDS.
