Politicians seek debate on alternatives to interest-rate rises

Some federal politicians are calling for a wider debate about controlling inflation without relying mainly on higher interest rates. A proposed Senate inquiry would examine other policy tools, but parliament has not yet agreed to establish it.

Suggestions include targeted tax changes, spending restraint, higher compulsory retirement savings and limits on resource-intensive construction. Advocates argue that rate rises are a blunt response when fuel disruptions and pressure from large data-centre projects contribute to rising prices.

Economists quoted in the debate caution that alternatives have limits. Tax or savings measures may reduce household cash flow without affecting exchange rates and asset prices in the same way as monetary policy. Changes to consumption taxes would also face political and implementation hurdles.

The proposals are options being discussed, not an announced replacement for the central bank's framework. Higher rates cannot directly reopen a disrupted shipping route, but that does not settle how policymakers should manage resulting price pressures. The debate concerns the distribution and effectiveness of policy costs, rather than a confirmed decision to abandon interest rates as an inflation tool.