The Reserve Bank of Australia’s decision to lift the cash rate again, from 3.85 per cent to 4.10 per cent, marks the 14th interest rate rise under the Albanese government.

For economists this may be another move in the long cycle of monetary policy.

For Australian families it means something far more immediate. Another increase in mortgage repayments, more pressure on rents and higher costs across the household budget.

Behind every rate rise are families recalculating what they can afford, and behind this latest decision sits a deeper problem that cannot be ignored. Inflation in Australia is being driven as much by decisions made in Canberra as by events overseas.

As Opposition Leader, my priority is clear. We will protect Australians’ way of life and restore their standard of living. But restoring living standards begins with an honest assessment of why they have deteriorated so sharply.

The government will argue that global events are responsible for inflation and interest rates. But the reality is that Australia’s inflation problem was already well entrenched long before the latest conflict in the Middle East. Inflation was running at 3.8 per cent in January while domestic inflation is even higher at 4.9 per cent.

More strikingly, inflation in Australia has been running hotter than in every major advanced economy including the US, Britain, Canada, Germany, France, Italy and Japan.

That should prompt an obvious question: If the pressures are purely global, why is Australia performing worse than comparable economies?

The answer lies in fiscal policy. Government spending in Australia is now at its highest level outside a recession in 40 years. Public sector demand accounts for about 29 per cent of the entire economy, the highest share ever recorded.

The most recent national accounts revealed that public sector demand grew more than twice as fast as private sector demand for the second consecutive quarter.

In other words, while households and businesses are tightening their belts, government spending continues to surge.

Economists have been clear about the consequences.

AMP chief economist Shane Oliver has pointed out that the most effective step governments can take to bring inflation down is to return spending to more normal levels.

IFM Investors chief economist Alex Joiner has warned that the fiscal guardrails have effectively disappeared. Yet spending continues to expand.

In the current financial year alone, the government has added more than $50bn in new spending decisions. At the same time Labor is locking Australia into a decade of deficits and pushing debt towards the $1 trillion mark.

Australians already are paying about $50,000 every minute simply to service that debt. This is not just a balance sheet problem, it has real economic consequences.

When government spending injects additional demand into the economy, it pushes inflation higher, and when inflation stays higher the Reserve Bank is forced to respond with higher interest rates.

That is the cycle Australian households are now trapped in.

The average mortgage holder is paying more than $27,000 a year extra in interest compared with when Labor came to office. For many families that is the equivalent of another mortgage payment every month.

At the same time, costs across the economy continue to climb. Electricity prices have risen sharply by almost 40 per cent, insurance premiums are up 39 per cent, rents have increased by 22 per cent and food prices are up 16 per cent.

Living standards have fallen sharply, productivity has declined and families feel the pressure every day.

This is why the Reserve Bank’s decision should be understood in its proper context. It is not simply the result of global uncertainty, it reflects persistent inflationary pressure at home.

The central bank is trying to slow the economy to bring prices under control. Yet fiscal policy is pushing in the opposite direction. That is not sustainable.

Australia needs disciplined economic management again and a government that lives within its means so Australians can live within theirs.

This is ultimately a choice about the kind of economy we want. Anthony Albanese and Jim Chalmers are turning Australia into a government-directed economy.

The Coalition will tip the scales back towards a free-enterprise economy, with a freedom agenda at its core. We want workers to keep more of what they earn through lower taxes.

We want businesses freed from excessive regulation that stifles initiative. We want industries unshackled so we make more here, not offshore. And we want Australians to have more choice, with less interference from government. Because when government gets out of the way, it drives aspiration, investment and growth.

That is how you bring inflation down, take pressure off interest rates and rebuild confidence.

Economic policy should be judged by a simple test. Does it improve the lives of Australian families? Right now too many Australians are going backwards. That must change. We will protect Australians’ way of life and restore their standard of living.

Angus Taylor is the federal Opposition Leader.