New South Wales Premier Chris Minns delivered an attention-grabbing prediction this week. “By any poll, by any measure, [One Nation leader] Mike Newman will either be the premier or the opposition leader after the 13th of March,” Minns said on Sydney radio.While the immediate focus is on One Nation’s performance at the Victorian election in late November, next year’s NSW contest will be a more important test for the insurgent party.On present indications, the best One Nation could do in Victoria would be to prop up a Coalition minority government – although there seems a fair prospect Opposition Leader Jess Wilson could get to a majority. There’s no chance of One Nation Victorian leader Warren Pickering becoming opposition leader. A good performance in Victoria obviously would be a fillip for One Nation, but the NSW election will be the big pointer for the future. The latest Resolve Political Monitor NSW poll, published in September, has Labor on 29%, One Nation on 25% and the Coalition on 24%. The Minns government, although in minority, should be in a strong position to win a second term. Minns, a pragmatist from Labor’s right, and a leader with a relatable style, has distanced himself from the Albanese government, which is still bogged in the problems from its controversial budget, with a now deeply unpopular prime minister. The NSW opposition is weak. On current assessments, the Liberals are considered likely to lose metropolitan seats to Labor. The Nationals could face a near wipeout, with One Nation well placed to grab regional seats. Newman, formerly a trade bureaucrat who spent many years working in Japan, is a more credible figure than Pickering. If One Nation did become the official opposition in NSW, the most populous state, that would be a serious shock to, and realignment of, the political system in this country. It would have sweeping implications federally, notably diminishing both the Liberals and Nationals. It would surely shake the leadership of Angus Taylor, who is from NSW.One question, as NSW moves towards its election, is whether voters – who usually distinguish between state and federal issues – might, if the Albanese government is still in the doldrums, use the opportunity to give the feds a kick over the cost of living.This week’s high inflation figures, with the headline figure at 4.3% in the year to September (up from 4% in the year to August) and the underlying rate at 3.7%, have homebuyers bracing, given the high market expectations of another interest rate rise on Tuesday. The government is feeling ever more sharply the blow back from a disgruntled electorate to which it can’t afford to give relief. While it continues to reject the argument that its own spending has contributed significantly to the high inflation, it is also responding to that argument. Treasurer Jim Chalmers this week was at pains to emphasise that the mid-year budget update due in December would contain a savings package. But both he and Prime Minister Anthony Albanese refused to commit to these amounting to net savings. “We’ll continue to have those discussions […] in the cabinet, in the ERC [expenditure review committee]. That’s what we do,” Albanese said.Reserve Bank officials, who have been out and about in recent days including at Senate estimates hearings, have been walking a delicate line. They are trying to get across the message that spending needs to be contained, while keeping within their own line, which requires they are not seen to be telling the government how it should act. Of course, government spending (which also includes state spending) is not entirely responsible for the inflationary problem. Although there was an issue before the Middle East conflict, the war is a major factor in accelerating inflation. The biggest increase in Wednesday’s inflation figures was in the cost of fuel. More generally, a surge in private sector investment from the AI boom, combined with supply constraints, adds to inflation.But spending is part of the problem. And for the government, it is the present actual and political pinch point. In the latest Essential poll, released this week, when people were asked (from a list) what was most responsible for the rising cost of living, 32% said government spending while 24% opted for global events, and 19% for supermarket price gouging. A frustrated Chalmers said early this week, in a podcast with Nine, “So for people who think we should cut much harder, they should nominate, I think, those areas that should be cut more substantially. But we have been finding savings, many more savings than our predecessors, and that’s because we take the hard yards of budget sustainability seriously.” Meanwhile, responding to calls of “what would the Coalition do?” the opposition this week listed $31 billion worth of cuts and other savings, focused on the climate bureaucracy, “corporate welfare”, the housing bureaucracy, and changes to the tobacco excise. It said these cuts would more than fund its promise to index income tax brackets. The Essential poll showed the disquiet among voters continues to grow. More than six in ten voters (61%) said they thought the country was on the wrong track, compared with 54% in January and 46% in October 2025. Despite this unease, the government was still ahead on economic management, with 32% of voters selecting Labor when asked which party they would trust to “ensure the economy works in the interests of everyday Australians”. But One Nation followed, on 29%, with the Coalition, which sees the economy as its favoured ground, on just 18%.Albanese won’t be on hand when the Reserve Bank delivers its decision on rates on Tuesday. He’ll be at the Commonwealth Heads of Government Meeting (CHOGM) in Antigua and Barbuda. It had been thought the PM might skip it, given how many international meetings he has to attend during summit season. But King Charles made it clear he hoped to see him there. On Thursday, Albanese was asked if he could give people “a sense of when their lives are going to get easier and not harder.” “These challenges won’t be solved overnight,” he said. It was a grim message.Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.