Chris Smith:
Adam Creighton is the senior fellow and chief economist with the Institute of Public Affairs, columnist too with the Australian newspaper. Adam, good morning to you.
Adam Creighton:
Good morning, Chris.
Chris Smith:
What a day to have you on-
Adam Creighton:
Oh, thank you.
Chris Smith:
… considering how much coverage there is on economics, budgets, fuel, you name it, national cabinet on today over fuel and the selection of a fuel tsar. Now, that to me means Alba has heard the criticism of Chris Bowen and he’s basically been stood down, plus we’ve been talking here for three days about forming National Cabinet.
Adam Creighton:
Yes.
Chris Smith:
On these two counts, I think Albanese has got this right.
Adam Creighton:
Yeah, look, I think that’s right. It is very embarrassing for Chris Bowen but it’s also just a terrible indictment of the government and, frankly, both sides for many years that have just not kept sufficient stocks of fuel in Australia. As I’m sure your listeners know, we have something like 35 days. I noticed yesterday the airlines said they have 26 days or 27 days left of aviation fuel and there’s a real risk of panic buying right now. And the reason for that is perfectly rational on behalf of people who are doing it is because they see the figure 35 days and everyone wants to get in first. If they had have kept the 90 days like almost all countries have, there wouldn’t be anywhere near as much panic buying.
So, look, I think he’s probably made the right decision in the short term. I did laugh a bit about a fuel tsar, the last thing we need is another $500,000 bureaucrat but that’s probably what we’re going to get.
Chris Smith:
Yeah, we’ll get one of those, yes.
Adam Creighton:
Yes. So, look, they probably need a point person because it’s becoming a crisis and, in the worst case scenario in the next four weeks, if the war gets much worse and of course you’ve probably heard overnight the gas fields have been struck down just off Iran, if it gets worse, we could have real shortages in parts of Australia.
Chris Smith:
Yeah. I just can see Bowen being set aside which I think is a smart thing and any dummy could work out that he is a walking, talking disaster area and he has been from the get go so I’m glad of this. Now, has the penny finally dropped for the treasurer, do you think, Adam? He’s now talking about cutting programmes and spending, not using those words, but cutting programmes and spending but he has used the word reform. Is he fair to income?
Adam Creighton:
Well, the word reform is always a bit risky with the Labour Party and savings tends to mean tax increases in the labour vernacular. But look, it’s a promising sign, he has said these things or I think he will say in the next few hours or so in a speech. It’s very important that they cut spending, it’s currently 27% of GDP, pretty much the highest ever in our history outside the pandemic and it’s growing rapidly. It’s worth … People talk in GDP often and I think it obscures the reality for people who are trying to understand this. The total value of federal spending has been growing at about 9% every year for the last few years, 9%. So, you think nothing else is growing at 9%, not population, not output but spending, 9%. So that just gives you an indication of how …
And of course, NDIS, about 12%, 13% growing, shortly to overtake Medicare and the military, it’s a crisis. And I think the criticism via inflation which is very embarrassing is basically the worst in the OECD pretty much, except for Turkey. I think the government’s starting to get worried and it is facing a possibility of a serious economic crisis on the fuel front.
Chris Smith:
And when you look at government spending at between eight and 9%, you can’t get on a public forum like the treasurer has on several occasions this week and start talking about the impact of war on inflation, it’s a distraction.
Adam Creighton:
Oh, it certainly is. In that sense, the war is very convenient for the government because now they’re going to blame everything on that just like they blamed it on the Ukraine situation a few years ago. The rate of inflation, as I’m sure your listeners know, was 3.8% before the war started and that is basically the worst in the OECD except for Turkey and Estonia, that’s extremely embarrassing. And also, unlike Turkey and Estonia, their inflation rates are going down, ours have been going up so it’s a bad situation. As we discussed before, if you’re reducing people’s purchasing power by almost 4% a year and, of course, remember, that doesn’t include house prices, doesn’t include interest rates, by the way, that’s not in the CPI, interest rates have gone up again second time this year, it’s all basically pointing to huge economic mismanagement on the government’s behalf.
Chris Smith:
How far do you think inflation will go? Five?
Adam Creighton:
Well, look, it could, it all depends on that oil price. I know this morning it’s about 109 US dollars now, the Brent Crude price, that’s very high, 60% or so higher than it was just a few months ago. If that’s sustained for the next six months, then I think 5% is entirely reasonable. And it’s not just that, of course, much higher petrol price shaves economic growth as well considerably. So, you’re going to have higher inflation, higher interest rates and the possibility of even perhaps a technical recession although I did joke this morning on social media that, with 300,000 people coming in the country every year, it’s almost impossible to get a decline in GDP.
Chris Smith:
Which brings me to the latest figures on exactly that issue. The IPA survey material on immigration was out today, not only have we had another half a million people arrive here in a single year, Adam, we’ve had 57,000 arrive in January alone.
Adam Creighton:
Yeah, look, it’s just extraordinary and that was a fantastic survey of the IPA if I might say so, 79% of Australia. And that it was a big survey, 1,900 people and it was conducted in late February, 79% want migration below 100,000, 100,000. So, we’re currently about 300, as you say, we’ve gone up to 500 and neither of the major parties are talking anything about that-
Chris Smith:
No.
Adam Creighton:
… and yet 79% want less than 100,000, it’s pretty breathtaking that the major parties are ignoring it. So, it’s only one nation that’s got a policy, I believe, 120,000, I think, is their policy which is about 100. But the striking thing about that survey too was that first generation migrants, 75% of them, so basically the same share, they want the same, less than 100,000 too. So, this idea that it’s racist or mean in some way is just ridiculous because first generation migrants want it too.
Chris Smith:
Correct. And this is why the major parties don’t want to talk about it because they think it turns off migrants who can vote for them but that survey tells us that almost 80% are worried about the number of migrants coming into the country.
Adam Creighton:
Yeah. No, look, I think that’s because the migrants see, they see, like everyone else, they’ve got eyes, they see the crowding in Sydney and Melbourne, the crazy crowding. I must say, I live in Melbourne and the trams in peak hour are just not fit for purpose anymore, they can barely arrive and leave, People almost have to be crushed into the doors to get on them. It’s not a city that’s meant to deal with that extraordinary growth of 60,000 people a year or whatever, it’s very sad.
Chris Smith:
Mate of mine was telling me that one of the apartments next to him was up for rental the other day and it was an afternoon and he looked outside the window and there are almost 100 people in a queue to rent an apartment with so many of them prepared to double the rental price to get it.
Adam Creighton:
Yeah. No, it is pretty extraordinary the rents. I’m just grateful that I own my place because the psychological cost of that too, of just facing that. When your rents are going up five, 6% or more in certain cases and people’s wages and purchasing power are going down every year, it’s a scary situation. Just briefly, I’m doing some research at the IPA that puts house prices in the CPI and, if you do that with a reasonable weighting, then our real wages are lower than they were in 1998.
Chris Smith:
Wow,
Adam Creighton:
So, no wonder people don’t believe the official statistics.
Chris Smith:
Yeah, yeah. Can I just tell you, looking at the stock exchange board, the market is down 1.64%.
Adam Creighton:
Well, that’s probably the best news of all so far because it could go down much, much more. I’ve been a bit surprised at the resilience of the stock market compared to everything else but share prices are very volatile and it’ll just take one shock in the US or Europe and Australia’s market will fall very considerably as it did during COVID and another time. So, I feel sorry for those people who’ve been looking at their super balances approaching retirement and they’d be very worried a lot of them.
Chris Smith:
I said to a caller yesterday, and you tell me whether I’m on the mark here, I said to him this is what happens when you get to an election, you are emphatic about retaining power and you give away as many lollies as you possibly can without worrying about what you’re spending. Because then, over the next 12 months, you’ve got to deliver on those lollies and that’s where government spending blows out to hell.
Adam Creighton:
Yeah, there’ve been far too many lollies and, frankly, this is the last budget that federal government has, really, the chance to do anything tough because our electoral cycle is short and, by this time next year, they’ll be thinking about the next election. So, if Chalmers doesn’t give a really tough budget, then he’s pathetic in my view.
Chris Smith:
Adam Creighton, great to have you on the show. Thank you.
Adam Creighton:
Thanks. Thanks, Chris.
Chris Smith:
Good on you. Senior fellow at the IPA and chief economist Adam-
This transcript with Adam Creighton talking on 2SM Mornings with Chris Smith from 19 March 2026 has been edited for clarity.
