CMAX Advisory

A fractured opposition and unresolved leadership tensions inside the Liberal Party mean this week’s resumption of parliament will be anything but routine. Throw in a widely watched interest rate call by the central bank, and it will be a testing week for both sides of politics.

The House sits from Tuesday with a new-look chamber after the breakdown of the Coalition agreement. With the Nationals shunted to the crossbench, parliamentary conventions — such as seating arrangements, Question Time allocations, and committee roles — are being reworked. However, the government has avoided locking in permanent changes in the event of a reconciliation.

For Opposition Leader Sussan Ley, it will create a delicate balancing act. She will want to project authority and stability at the same time as her leadership remains under active internal scrutiny. For the Nationals, the immediate consequences are more concrete: loss of frontbench status, reduced staffing and diminished visibility.

That political turbulence will collide almost immediately with the Reserve Bank of Australia’s (RBA) interest rate decision on Tuesday. Financial markets are leaning towards a rate rise following stubborn inflation and strong employment data, although a minority still expects the board to hold steady. Either way, the language accompanying the decision will be closely interpreted. If rates rise, the focus will turn to whether the move is framed as a corrective adjustment or the start of a renewed tightening cycle. If the bank holds, questions will be asked about how much tolerance remains for elevated inflation.

The decision will land amid Question Time, injecting cost-of-living pressure directly into the parliamentary theatre. For the opposition, it presents a chance to prosecute a clear economic argument about fiscal responsibility and lay the blame at Labor’s feet. For the government, it sharpens the need for arguments about budget repair and responsible spending.