Labor’s policies, backed by the Greens, are not the cause of the inflation crisis
- Written by Times Media
They have made Australia’s inflation higher, stickier, and longer-lasting than it needed to be.
Australia’s cost-of-living crisis has become the defining political and economic issue of the mid-2020s. With inflation remaining stubbornly higher than many comparable economies and households feeling a squeeze unlike anything in decades, the debate over why this has happened — and who is responsible — has intensified.
As the Albanese Labor Government enters the latter part of its term, critics increasingly argue that its policies, supported in the Senate by the Greens, have played a direct role in fuelling inflation and worsening the cost-of-living pressures. Labor and the Greens reject this outright, pointing to global factors and inherited structural problems.
So where does the truth lie? The answer, as always in economics, is layered — but the policy choices in Canberra have influenced inflation, even if they are not the only contributors.
1. The Global Inflationary Storm: How Much Is Beyond Canberra’s Control?
Before assessing Labor and the Greens, it is important to acknowledge the global context.
Across the developed world, inflation surged in the aftermath of COVID-19. Shutdowns, supply chain breakdowns, shipping bottlenecks, and labour shortages caused prices to spike. Russia’s invasion of Ukraine supercharged energy and food inflation.
Australia is not alone:
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The UK, US and most of Europe experienced even higher inflation peaks.
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Energy markets globally experienced volatility that fed directly into household bills.
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Central banks everywhere tightened aggressively.
But here is the crucial point: while global forces triggered the inflation shock, domestic policy choices determine how long inflation lingers and how much pain households feel.
Australia’s inflation has lasted longer than that of many comparable economies — and that is where the debate intensifies.
2. Did Labor’s Spending Policies Add Fuel to the Inflation Fire?
When Labor came to power in 2022, inflation was already rising. However, economists remain divided on whether the government’s decisions in 2022–2024 made the situation worse.
A. Big Spending Budgets
Labor delivered budgets with billions in new spending commitments across:
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childcare subsidies
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energy bill relief
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health and aged care
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NDIS cost expansions
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fee-free TAFE and education programs
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Medicare strengthening policies
Individually, these programs had strong social justifications. But collectively, they injected significant new demand into an already overheated economy.
Even Treasury admitted some measures were “marginally inflationary,” although the government maintained they were carefully designed not to worsen inflation.
B. Energy Policies: The Greens’ Influence
The Greens’ support in the Senate has pushed Labor further on:
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emissions reductions
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restrictions on gas exploration
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environmental approvals
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renewable energy build-outs
Critics argue these policies have reduced supply in critical energy markets, leading to higher wholesale and retail prices.
Supporters counter that renewables lower prices over the long term and that global energy volatility was the real culprit.
C. Increased Migration and Housing Demand
Labor’s record-high migration intake — supported by Greens advocacy for higher humanitarian and student numbers — has dramatically increased demand for housing, rentals, transport and services.
In 2023–24, Australia added more than half a million people through net migration.
This occurred while:
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housing construction lagged
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rental vacancies hit historic lows
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infrastructure remained overstretched
Economists now widely agree that migration settings have significantly contributed to inflation, particularly housing inflation — one of the biggest components of the CPI.
3. The Greens’ Agenda: Ideological Purity vs. Cost-of-Living Reality
The Greens have long advocated for ambitious climate action, strong renters’ rights, and high social spending. In the current Parliament, they hold the balance of power in the Senate — giving them leverage to shape Labor’s agenda.
The Greens’ Influence Has Driven:
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Tougher restrictions on new gas projects
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Increased environmental approvals
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Stronger tenancy protections
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Higher social housing investment demands
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Pressure to wind back fossil fuel subsidies
Economic Impact
While popular with younger Australians and climate-focused voters, these policies do raise cost questions:
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Restricting new gas supply during a global energy crunch increases domestic prices.
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Stricter environmental approvals add delays and costs to infrastructure and housing projects.
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Pushes for higher social spending increase pressure on the budget and long-term structural deficits.
In short, the Greens' influence tends to push policies that have inflationary effects in the short term, even if they aim for long-term structural and environmental improvements.
4. Housing: The Crisis That Has Become Inflation’s Engine
Housing has become the single largest driver of Australia’s inflation rate.
Labor’s and the Greens’ positions have intersected here — sometimes in ways that worsen inflation.
A. High Migration + Slow Construction
Labor’s migration policy injected unprecedented demand.
But construction:
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has been crippled by labour shortages
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faces higher material prices
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is slowed by planning and environmental restrictions (areas where Greens influence is strong)
B. Rental Pressures
The Greens advocate for national rent caps — a policy economists warn would reduce rental supply.
Labor has rejected this but relies on Greens support for broader housing bills.
The Result
Demand has surged while supply has stagnated.
Prices rose sharply.
Rents soared 20–30% in many cities.
Inflation got locked in.
5. Are Labor and the Greens Solely Responsible? No. But Are They Partly Responsible? Yes.
A balanced assessment looks like this:
Not Responsible For:
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Global inflation shocks
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Higher energy prices following Russia’s Ukraine invasion
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A decade of infrastructure underspending
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Long-term structural issues inherited from previous governments
Partly Responsible For:
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Large-scale spending that maintained high demand
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Migration settings that overheated the housing market
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Energy and environmental settings that tightened supply
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Delays in boosting housing construction
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Policies shaped by Greens pressure that tend to raise near-term costs
In other words:
Labor and the Greens didn’t cause inflation — but their combined policies contributed to its persistence and intensified the cost-of-living pain.
6. The Political Consequences: A Government on the Defensive
As households grapple with:
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rising rents
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higher electricity bills
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more expensive food
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mortgage pain
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stagnant real wages
the political narrative has shifted dramatically.
Labor now faces accusations of being out of touch with working Australians — the very group it claims to represent. The Greens increasingly face criticism for ideological purity at the expense of affordability.
If inflation remains sticky heading into the next election, this issue alone could reshape the political landscape.
Conclusion: A Mixed Story but a Clear Verdict
The rise in inflation and the cost of living is not the result of a single policy or a single political party. But domestic political decisions matter — and in Australia’s case, Labor’s high spending, migration settings, and energy policies (influenced heavily by the Greens) have undeniably played a role in entrenching and prolonging inflation.
A fair conclusion:
Labor’s policies, backed by the Greens, are not the cause of the inflation crisis — but they have made Australia’s inflation higher, stickier, and longer-lasting than it needed to be.
Households have felt the consequences every time they shop for groceries, pay rent, or cover their energy bills. And as the debate intensifies, the government faces growing pressure to shift its approach or risk a voter backlash.
