Weekly Wrap Up – 12 December 2025

This week in Canberra, the political stage was set for a fierce showdown – but you’d be forgiven for thinking the main act was missing. 

Following last week’s decision to raise interest rates by 25 basis points, we saw a rare and blunt admission from RBA Governor Michele Bullock. Facing scrutiny at Senate Estimates, Bullock attributed the rise in inflation to stronger private demand, while noting that increased government spending also contributed to the decision. It was a watershed moment, underlining that Australia’s stubborn cost‑of‑living pressures aren’t just about households spending too much – a hefty $135 billion expansion in Federal government spending is reshaping the economy and fuelling price rises.  

While the RBA has long signalled private demand as the primary culprit, Bullock’s remarks were a subtle nod to the Albanese Government’s own role in fuelling cost-of-living pressures. Under the looming cloud of fiscal pressure ahead of Jim Chalmers’ 2026‑27 Federal Budget, this ought to have been the Opposition’s moment to seize the political high ground – calling the government to account on economic mismanagement.

Instead, the Coalition has been consumed by itself. Yes, the Liberal and National parties have formally reunited to restore the Coalition, agreeing that neither party can override shadow cabinet decisions – a nod to past fractures. But this truce began to look more cosmetic than potent as leadership tensions bubbled beneath the surface.

Behind the scenes, Angus Taylor began working the room to mount a challenge against Ley. Moves to engineer the spill – including mass resignations – eventuated, with senior conservatives in James Paterson, Jonno Duniam, Dan Tehan, and Michaelia Cash moving swiftly to resign from the frontbench. This cleared the path for a leadership contest that had been building for months. The result: the Liberal Party decisively dumped its first female parliamentary leader, electing Taylor in her place.

On paper, it’s a decisive move. Oxford-educated, former Rhodes Scholar, businessman, fiscal conservative – Taylor ticks all the traditional boxes. But credentials alone won’t solve the party’s problems. With the Liberals trailing heavily in the polls and haemorrhaging support to One Nation and other minor parties, Taylor must do more than steady the ship. He needs to reconnect with suburban and metropolitan voters who have drifted away, while holding together a party room that has just demonstrated its willingness to destabilise its own leadership.

Being “better than your predecessor” isn’t enough because the longer the Liberal Party dithers, the longer the Albanese Government faces no credible, cohesive Opposition. With inflation still stubborn, spending still high, and voters hurting, the government is missing sustained pressure on its economic stewardship. The lesson this week? When the Opposition fights itself, the government gets a free pass.