Danica De Giorgio:
Joining me now is Institute of Public Affairs chief economist Adam Creighton. Adam, good to catch up. Thanks for joining me. Lowe isn’t wrong here, is he?
Adam Creighton:
No, he’s certainly not. It’s great to see him really come out swinging finally in his new post-RBA role. I mean, he’s right to be very critical. We’ve had a declining GDP per capita for 9 of the last 12 quarters. I mean, traditionally economists say that a recession is a decline of two successive quarters in GDP growth, but of course we’re not going to get that because we are flooding the country with immigrants. So we should be looking at GDP per capita and on that score, we have a serious recession, I would say in Australia, the biggest fall in living standards, probably since the early 1990s, since the last major recession. So he’s right to be critical, and the government unfortunately doesn’t seem to be responding the right way to what I would say is a living standards crisis in Australia.
Danica De Giorgio:
Well, and you make a good point. I mean, immigration is out of control in this country, and it is the only thing that’s really propping up what is a Ponzi scheme economy. So you’ve got labour handing out as well as subsidies. Well, once those energy subsidies started petering out, the effect was, it was always going to have a flow-on effect when it comes to inflation. You’ve got Jim Chalmers coming out today, denial, denial, denial. I just wonder how many more warnings does Jim Chalmers need?
Adam Creighton:
Yeah, look, he was really right to call out those cash handouts, something like 3 to $5 billion the government put on the national credit card simply to hide from consumers, to hide from voters the real costs of their energy policies. And they’ve changed that now. They have withdrawn that policy, because they realised they can’t keep doing it every single quarter. I think it’s roughly $3 billion a quarter, but it was extremely reckless policy. They should be honest with voters that this is the cost of their policies and people are seeing it in their bills. And just on the immigration score, look, of course productivity is going to be weak if you’re flooding the economy with low skilled labour. So that’s a huge increase in hours work, but your output is not going to increase by the same amount. Productivity is obviously going to go down, and that’s what we are seeing and that’s what he called out.
Danica De Giorgio:
Yeah, absolutely. I think good on Philip Lowe for dropping some home truths today. Let’s talk about energy. New South Wales power bills are about to take yet another hit. Households and small businesses are going to be slugging nearly $600 million next year to fund the state’s renewable energy zones. The energy regulator is calling this a contribution determination. I mean, I’ve got to say, Adam, here we go again. Our bills are meant to go down by $275.
Adam Creighton:
Exactly.
Danica De Giorgio:
They keep going up and up. And now on top of that, it’s now a contribution to fund five energy zones in New South Wales. How much longer can it go on?
Adam Creighton:
Well, look, I think a few years probably is the answer, but then I think people are going to be very, very angry because we’re not going to meet any of these reductions targets, emissions reductions targets, and people are paying a fortune to not meet the targets. The coal-fired power station in New South Wales, our [inaudible 00:02:55] has already been extended twice to 2027 and now to 2029. So these zones are not even working. And yet, as you say, $600 billion slug just for next year. And extraordinarily $100 million of that is just administration costs. So just public servants, just bureaucracies. It’s really staggering and it really goes to the economic problems of this country. The only jobs growth, the only salaries growth you have is in the public sector, people on very high wages, and it’s all basically made up jobs to achieve targets that will never be met.
Danica De Giorgio:
Already there’s such a bloated public service under labour, and that’s one of the biggest problems in this government. And now it’s administration, as you said, for made up jobs to fund all these ridiculous projects. But we’re never going to meet any of these net-zero targets. Let’s talk about wages. So today, real wages, they’re now going backwards for the first time since September 2023, as the wage price index rose 0.1% to 3.4% in the December quarter. What does this say about the state of the economy?
Adam Creighton:
Well, the state of the economy, the state of real wages actually is far worse than that because of course, the CPI that is used to calculate real wages does not include dwelling prices. So it doesn’t include the cost of housing that of course most Australians I think would like to engage in, would like to buy. It doesn’t include the cost of government. It doesn’t include the fact that superannuation guarantee has gone up to 12%. So people are much, much, much poorer, I would say, than that small decline in official real wages would actually suggest. So the figure is interesting, but I did laugh at the headline first time in two years. I would say real living standards have been falling by a lot more than that for a lot longer. And it’s a crisis. The government has to do something. It has to shrink the size of government, so there’s a chance for people to actually use their own wages and to feel a little bit more prosperous.
Danica De Giorgio:
Well, that’s it. And I mean the problem is that our wages are just not keeping up with the pace of inflation. And I mean, again, Jim Chalmers was asked about this-
Adam Creighton:
Public sector wages are.
Danica De Giorgio:
Well public sector, they’re on a whole different trajectory, aren’t they? But Jim Chalmers was asked about this today and he just kept saying, “Oh, the Reserve Bank’s made these forecasts.” Earth to Jim Chalmers. Have a look at what you are doing to the economy.
Adam Creighton:
Yeah, well, firstly, the forecast of the Reserve Bank, I have to say, we have to take with a grain of salt. I mean, all the major economic changes in the last 5 years, 10 years, they’ve got wrong. And that’s not something against the RBA. I think central banks all around the world have just been very bad at forecasting inflation, at forecasting real wages. The best guide to the future is what is happening now, and we have the data now. Real wages are going backwards, and the government needs to do something about that and not wave its hand and talk about so-called forecasts from the Reserve Bank in the future. That will obviously show a rosy picture because that’s what government agencies do.
Danica De Giorgio: Yeah, look, it’s extraordinary and we just keep going broke and backwards under this government. Adam Creighton, nice to see you as always. Thanks very much for joining me.
This transcript of Adam Creighton on Sharri Sky News Australia from 18 February 2026 has been edited for clarity
