Monetary policy is cleaning up a fiscal mess it did not create.

Here is the blunt truth that Canberra does not want to own.

While families are sending kids back to school, opening December credit card statements and quietly panicking at kitchen tables across the country, our political class is congratulating itself on “managing the economy”.

Australians did not blow out household spending by fifty seven billion dollars. Jim Chalmers did.

Mum and dad households did not run a spending spree that pushed demand beyond capacity. Governments did. Federal, state and local. All of them.

And now, right on cue, the bill has arrived.

A fresh interest rate hike on top of swollen December credit card balances, school fees, insurance renewals and grocery bills that never came back down. This is the new year gift from Canberra. Higher repayments, tighter belts and less money flowing through local economies.

Restaurants feel it first. Cafes, pubs, bars and small retailers follow. When households pull back, discretionary spending disappears. That is how policy mistakes turn into job losses, not because people are lazy, but because confidence gets crushed.

And spare us the excuse that this is all global.

It is not.

Petrol got cheaper. Gas got cheaper. The Australian dollar rose strongly. Imports, outside of jewellery, did not drive this inflation. Global wars and trade tensions make good headlines, but the data does not support them as the cause of Australia’s inflation problem.

This inflation is homegrown. Bred, fed and ignored right here.

Government spending now sits above twenty eight per cent of GDP, near a post war high, and it is still climbing. Sixty six billion dollars of extra spending was quietly added in December alone. That is not nation building in an overheated economy. That is crowding out the private sector, bidding up labour and materials and choking supply.

The same workers needed to build homes are being pulled into government projects. The same materials needed for apartments are being swallowed by public works. Then politicians act surprised when rents rise, housing shortages worsen and inflation refuses to behave.

This is what happens when demand is pumped while supply is strangled.

And the supply side has been neglected for years. Planning and zoning restrictions that block housing density. A tax system that punishes productivity and rewards stagnation. A clean energy transition sold as cheap and easy, now revealing its real cost. Job market re regulation that lifts costs without lifting output. Ever growing compliance burdens that smother small business.

We are becoming a high cost, low growth economy by design.

The Reserve Bank is now left holding the grenade. After promising rate cuts, it is forced into reversing course to protect what little credibility remains. Mortgage holders are rightly asking where their relief went, but the uncomfortable answer is this. Monetary policy is cleaning up a fiscal mess it did not create.

Rates are rising because governments would not show discipline.

And while politicians point fingers, real wages are going nowhere. Australia sits in the bottom quartile of the OECD for real wage growth since before the pandemic. Living standards are falling, not because people are not working hard enough, but because inflation has eaten five years of progress.

The most galling part is the denial.

Independent budget numbers show around two thirds of the deficit blowout comes from higher spending, not weak tax receipts. Yet the Treasurer goes on television and says otherwise, without producing the data to back it up. That is not transparency. That is spin.

Australians are not stupid. They know when the story does not add up.

We were told this was economic exceptionalism. That Australia had cracked the code. Inflation down without pain. Jobs up forever. Rates down soon. Instead we have above target inflation, rising rates, weak productivity and a budget that will not return to surplus for a decade.

Exceptional would require exceptional policy. What we have is mediocrity wrapped in arrogance.

And the cost is not borne in Parliament House. It is borne in living rooms, lunch boxes and late night conversations about whether families can keep up.

This did not need to happen. Domestic inflation can be fixed domestically. But that requires discipline, reform and honesty. Constraining unnecessary spending. Fixing housing supply. Reforming tax. Lifting productivity. Telling voters the truth instead of feeding them sugar highs and hoping the tantrum comes later.

The tantrum is here.

And once again, Australians are the ones paying for it.