Banks Warn Rates Stay High as Spending Crowds Out
NAB and CBA chiefs told a parliamentary hearing that government spending and state payroll taxes are weighing on the economy.
Updated on Nov. 13, 2026 in Economic Policy
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Should Australian governments cut spending to ease inflation and interest rates?
NAB chief executive Andrew Irvine called state payroll taxes 'the most atrocious, abominable tax' at a parliamentary hearing into the banking sector. CBA chief executive Matt Comyn warned that interest rates will remain higher than they have been in the past decade.
Why it matters
Irvine argued that regulation, especially in construction, is too high and that government spending across federal, state and local levels is crowding out private sector activity. The comments add to the debate over how Australia's fiscal settings and the Reserve Bank's rate path will shape household and business conditions.
Government spending has risen from 23 per cent of the economy in the early 2000s to around 29 per cent now, and federal government debt fell below $1 trillion on Friday. The Reserve Bank has lifted the cash rate five times this year, from a pre-pandemic low of 0.75 per cent, and it remains unclear how far the tightening cycle will extend.
The players
Andrew Irvine
Andrew Irvine is the chief executive of National Australia Bank, one of Australia's major banks, who took over the role in 2024.
Matt Comyn
Matt Comyn is the chief executive of the Commonwealth Bank of Australia, the country's biggest home lender.
The details
NAB chief executive Andrew Irvine, who took over as head of the bank in 2024, gave evidence at a parliamentary hearing into the banking sector on Friday alongside CBA chief executive Matt Comyn. Accent Group told the ASX that its store sales had fallen 5 per cent since August compared with the preceding two months, citing fuel prices, interest rate rises and weaker consumer confidence.
Timeline
2024: Andrew Irvine takes over as head of NAB.
Early 2000s: Government spending is about 23 per cent of the economy.
Pre-pandemic: The cash rate falls to 0.75 per cent.
Last year: The Reserve Bank cuts interest rates.
Since August: Accent Group store sales fall 5 per cent.
Economic Policy Context
The warnings from bank chiefs sit against the Reserve Bank's 2-3 per cent inflation target, which the five rate rises this year are designed to restore. Comyn's view that rates will remain above the past decade's levels suggests the central bank is unlikely to reverse course soon.
Households with variable-rate mortgages face the prospect of rates staying higher for longer, and businesses facing softer sales may see pressure on staffing and investment. Spending cuts flagged in the mid-year budget could also affect services that households rely on.
The takeaway
Higher-for-longer rates and cuts to government spending would shape household budgets and business plans through the coming year. Readers should watch the mid-year budget update and the Reserve Bank's next decisions for clearer signals.
What happens next
Treasurer Jim Chalmers will include lower spending in his mid-year budget update next month.
Further reading
For more on the policy settings behind this debate, see Economic Policy coverage.
Source note: This article includes information reported by WAtoday.
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Should Australian governments cut spending to ease inflation and interest rates?
