Australian news and politics live: Chalmers grilled over inflation, Ley’s fresh offer to Nationals

Liberal leader Sussan Ley told David Littleproud she would accept three renegade Nationals senators back onto the frontbench but only after they spent six months in time out.

The two party leaders and their offsiders held talks on Monday night about reuniting the Coalition but didn’t reach any conclusion.

Ms Ley put on the table an offer that both parties would reaffirm shadow cabinet solidarity and agree that neither part room could overturn any decision endorsed by the joint frontbench.

She also made it a condition that Bridget McKenzie, Susan McDonald and Ross Cadell, who resigned after crossing the floor to oppose laws banning hate groups, couldn’t rejoin the frontbench until July 2026 at the earliest.

“We are both parties on the non-Labor side of politics and we both have a lot in common when it comes to the people we represent and the way we know we have to hold this Labor government to account,” Ms Ley said on Tuesday morning.

“So we agreed that we would keep talking. The conversations were friendly, constructive and will continue.”

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Liberal Leader Sussan Ley has declared she is “very confident” of surviving in the job until the May Budget, but has dodged questions about last week’s meeting of frontbenchers, which discussed her leadership.

Ahead of Parliament’s return on Tuesday, the Opposition Leader fronted reporters supported by deputy Ted O’Brien and frontbencher Melissa McIntosh as she stares down a potential challenge from leadership rival Angus Taylor.

Following a church service to mark the start of the Parliamentary year, Ms Ley was asked whether she was confident of still being Opposition Leader in May to deliver the Budget reply.

“Very confident of delivering a strong Budget in reply speech in May. There is lots of work between now and May because we have a big agenda to prosecute,” she told reporters.

When pressed on whether she would seek explanations from colleagues who held a covert meeting in Melbourne last week to discuss a Liberal leadership challenge, Ms Ley declined to answer.

“Every single one of my team is focused on the mission that I have outlined, that Ted O’Brien has outlined, and that all of my team is behind. Focused 100 per cent on Australians.”

“I know that whenever we come together in whatever format that the media chooses to remark upon, we are talking about Australians and how important it is for them that we come to Canberra to fight for what they believe in”.

Treasurer Jim Chalmers has been accused of mismanaging the economy, with Nationals senator Matt Canavan demanding he “resign in disgrace”, as mortgage holders brace for the first interest rate rise in more than two years.

Last week, the headline annual inflation rate was 3.8 per cent, up by 0.4 per cent, in the 12 months until December, according to the Australian Bureau of Statistics.

Referencing the Albanese Government’s battery subsidy scheme, which is plagued by claims its $2.3bn budget has been spent in six months, Senator Canavan asked on Tuesday: “How has (Mr Chalmers) possibly allowed a situation to emerge where things like a battery scheme can blow out more than $10bn in six months?”

“They costed a billion dollars. It’s now approaching $12bn in cost in just six months,” he told Sky News.

“How can Jim get his maths so wrong and still hold the position of treasurer?

“I mean, he should resign in disgrace because we’ve never seen anything like this.”

In response, Mr Chalmers declared he could not “care less” about Senator Canavan’s opinion.

“I listen to a lot of different voices, but (Senator Canavan’s) not a sort of a respected contributor to these sorts of things,” he told Sky News.

Former Victorian Premier Daniel Andrews is reportedly recovering from a significant health incident.

The Labor faithful, who led Victoria from 2014 to 2023, is reportedly in a “bad way” after a neurological episode.

Details around the reported health issue are scarce, however, the Herald Sun reported that he was left “debilitated”, with sources claiming he had issues with speech and movement.

Suspicions were raised in late 2025 when Mr Andrews did not attend the funeral for late Labour adviser Tim Picton, or even publicly acknowledge his death.

Mr Andrews reportedly was admitted to a Melbourne hospital in late 2025, just before Christmas.

The outlet reported that Mr Andrews was “improving” after “intensive” rehabilitation.

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It’s shaping up as a big day in politics.

Liberal MPs have just started meeting in a gathering that is – barring surprise events – expected to finish with Sussan Ley still the Opposition Leader, for now.

She and Nationals Leader David Littleproud held talks last night about getting the Coalition back together in a discussion that Nationals deputy Kevin Hogan described as “civil, cooperative and friendly”, but ultimately just a “preliminary chat” that didn’t end with any agreement.

The Nationals will also hold a separate party room meeting today, where colleagues are expecting an update from Mr Littleproud about those talks, as well as discussions of policy matters.

The ongoing split will be starkly laid out in Question Time at 2pm AEDT, when the Nationals will be sitting on the crossbench, no longer part of the formal Opposition.

Of course, outside of political games, all eyes are on the Reserve Bank decision at 2.30pm on interest rates, widely tipped to go up.

Treasurer Jim Chalmers has insisted that the worst inflation challenge is behind us, defending the Albanese Government and his fiscal policy after inflation soared as Aussies brace for a rate hike.

“The numbers which came last week came in not that much higher than we expected,” Dr Chalmers told Sunrise.

“We are managing the Budget and the economy in a responsible way.

“We know that this inflation challenge is more persistent than anyone would like, and that’s why it is our focus.”

Dr Chalmers doubled down on his comments from 2025, where he said the worst of the inflation challenge was behind us.

“The worst inflation that we have had in recent years was in 2022. We came to office, inflation had a six in front of it and was absolutely galloping. It peaked at 7.8 that year,” Dr Chalmers said.

“This year, inflation is higher than we want it to be, it has a three in front of it.”

The RBA will hand down the first rate decision of 2026 at 2.30pm AEDT/ 11.30am AWST.