Albanese rules out cuts while conceding savings

Anthony Albanese has conceded that savings must be found ahead of December's mid-year budget update, but has drawn a firm line against cutting hospitals, schools and essential services, arguing households are already stretched thin.

"We will continue to meet over coming weeks as well, as we do consistently, looking for, making sure that appropriate savings are made," the prime minister said.

"What we won't do is rip tens of billions of dollars out of health and education. That's what happened last time" the Coalition took office, he said, adding: "We're not looking at cutting funding for hospitals and schools and essential services because we're a Labor government that understand that people are under pressure."

Internal pressure: rate rise looms and Husic wants price caps

Inside Labor, the political strain of the cost-of-living crisis Australia is experiencing is plain. MPs privately accept that the strong likelihood of a fifth interest rate increase from the Reserve Bank next week will compound the government's problem on living costs.

• •Ed Husic, the former industry minister, said this week that price controls on essential grocery items were needed.
• •His call covers caps on the cost of bread, milk, meat and fresh produce.

The rebate plan with no friends in parliament

Albanese has accused the Coalition of hypocrisy for refusing to back savings measures the government has already put forward. Among them is a plan to reduce the private health insurance rebate for people aged 65, which would save about $3bn over four years, with the money earmarked for aged care services.

That rebate windback appears friendless in parliament, with the Coalition opposed - leaving the government with a savings proposal it cannot pass and an opposition it can accuse of blocking cuts it once demanded.

The inflation backdrop and Coalition attacks

New inflation figures sharpened the scene. Headline inflation Australia recorded rose to 4.3% on Wednesday, sharply lifting expectations of a rate rise on Melbourne Cup day. The cash rate already sits at 4.6%, its highest level in 15 years after four hikes this year; a move to 4.85% would take rates to their highest in 18 years and put further pressure on household budgets.

• •Transport costs rose 8.7% over the past 12 months, largely on escalating fuel prices stemming from the US and Israel conflict with Iran.
• •Food prices jumped 3.2% in a year, and housing costs were up 5.2%.

Treasurer Jim Chalmers on Thursday accused the Coalition of being consumed by "weird post-truth stuff" for refusing to acknowledge the global fuel shock as inflation's biggest contributor. In parliament he pointed to "the escalation in fuel prices that came from the biggest oil shock in the history of the world."

Coalition MPs believe Labor is cornered over the budget and rising rates, with the update also expected to absorb higher costs for government debt from global bond market conditions. Shadow treasurer Tim Wilson said Labor's settings were "forcing Australian families to pay more for everything".

Meetings over coming weeks will seek appropriate savings before the mid-year budget update due in December.