MATTERS OF PUBLIC IMPORTANCE: Economy

Before the election, the Prime Minister promised Australians the bright, shining uplands. He promised that they would have cheaper mortgages. He promised: 'You will be better off under me.' He promised that power bills would fall by $275. So Australians might well have expected, in light of those promises, that more than a year into the tenure of this government they would be enjoying cheaper mortgages, they would be enjoying lower interest rates and they would be enjoying a cost of living that was improved and more addressable and was easier to deal with. But the simple fact is that, despite these claims from the Prime Minister and from the Labor Party, there has been a complete failure to take action and deliver on what Australians are crying out for, which is relief from the relentless increase in prices that all of us are facing every day—power prices and grocery prices—a relentless increase in what those Australians with a mortgage are paying on their mortgage and a continued increase in what Australians who are renting are paying for rent. Across the economy, we are seeing prices rise, area after area after area, and the bad news just keeps coming.

Last week we saw the Reserve Bank lift the official rate by another quarter of a per cent, raising the official cash rate from 3.85 per cent to 4.1 per cent—the 11th rise under this Prime Minister—and the Reserve Bank governor has warned that it may need to lift rates again, in coming months, if the Reserve Bank is to get inflation back down to its target of two to three per cent. I say 'if the Reserve Bank is to get inflation down to the target rate' because the fact is, right now, the Reserve Bank is out there on its own.

It is getting no help from this government, no help from the Treasurer, no help from the Prime Minister and no help from the budget that was brought down recently, which went in precisely the opposite direction. Surely, the first objective of any government with pretensions to responsible economic management must be to get inflation down, because inflation insidiously and remorselessly affects every Australian, from the highest earning to the lowest earning.

That is the urgency of the challenge that we face as a nation, a challenge that the Governor of the Reserve Bank is fully seized of, but there is no evidence at all that this government is fully seized of it. Indeed, we saw a troubling breakout of 'shoot the messenger' from the Prime Minister just last week, because the Governor of the Reserve Bank expressed some home truths about how difficult the challenge is that we face as a nation in reducing the insidious threat that inflation presents. For his troubles, you certainly couldn't say that the Prime Minister backed him in. On the contrary, the Prime Minister seemed very keen to white ant and undermine the Governor of the Reserve Bank.

It is not just the opposition making these observations about the dire situation we face as a nation. Many economists are making similar forecasts. Westpac, one of our biggest banks, has indicated that they now expect a further two rises in interest rates as the Reserve Bank struggles to get inflation under control. We've seen economists and we've seen the markets react. What that now means, amongst other things, is that the budget—only a month or so old—is already out of date. It assumed a peak cash rate of 3.85 per cent, because the Treasurer was going to wash his hands of that. He had other things to do. He was going to renovate capitalism. Remember that? Bold aspirations—all to be done within calendar year 2023, by the way, which makes you wonder why he thought it was a good idea to write that remarkably pretentious essay.

The simple fact is that already, a month or so in, the budget that was brought down by the Treasurer is already exposed as being hopelessly out of date, out of touch and not producing the policy remedies that we desperately need as a nation. The simple fact is, if you have a $500,000 mortgage—and many Australians have mortgages of that size or higher—this decision adds another $75 a month to your repayments. Your monthly instalments, compared to May 2022, compared to the change of government, now are $1,130 higher. If your mortgage is $750,000—and many Australians have mortgages of that magnitude—you'll now be paying $1,856 more each month. That's more than $22,000 a year, in addition, that needs to be found.

Is it any surprise that the data, therefore, says that a record number of Australians are struggling to pay their mortgage? According to new research by Finder, 40 per cent of Australian mortgage-holding households admitted that they struggled to pay their home loan in May. That is the highest number recorded since tracking began in 2019. We've just recently had the former governor of the Reserve Bank, Dr Glenn Stevens, say that inflation was 'way too high' and that interest rates could remain elevated for some time yet. We face an inflation crisis, we face an interest rate crisis, and of course we face a cost-of-living crisis. A recent report from the Commonwealth Bank describes the scale of the challenge we now face under this indolent and hopeless government in very stark terms. The report's author, Wade Tubman, said:

The cost of living pressure … has started to rapidly pick up since Christmas and certainly the trends are that financial pressure will continue to rise.

What have we seen as to the social impact of this economic managerial incompetence from those on the other side of the chamber? According to the Queensland Council of Social Services, demand for free food and meal vouchers has skyrocketed this year, in their words. Neighbourhood Centres Queensland have reported that food relief need has nearly quadrupled between 2019 and 2022. According to the Australian Automobile Association, for the first time, weekly transport costs have exceeded $500 in Sydney, Melbourne and Brisbane. As the association accurately said, that is a heavy burden for Australian families to bear in this cost-of-living crisis. Neighbourhood Centres Queensland have revealed that demand for their food relief packages has gone up and up and up. We also know that the economy has been shown to be growing at the slowest rate since September 2021. At the same time, according to the Australian Bureau of Statistics, the cost of food and groceries has gone up by 7.9 per cent in the past year.

What is this government doing in response to these extraordinary challenges we face as a nation? One thing they're out there doing is busily encouraging, cheering on, the award of markedly higher wages. The Reserve Bank governor has rightly warned that this risks a wage price spiral. He was quoted as saying that the recent 5.75 per cent wage increase was 'higher than we'd factored into our forecast'. We hear claims from the other side that wages are increasing and it's all great. It's a cruel con, because real wages are falling. We heard them talk about this repeatedly in opposition. They're in government. They've got their hands on the levers. What is the disastrous outcome that millions of Australian households are now experiencing? Real wages are dropping.

Apparently this is one of their highest priorities, and what's the genius outcome they've delivered? They've delivered the very opposite of what it is that they claim to be concerned about, the objective they claim to be delivering—just as they have delivered the complete opposite of the cheaper mortgages that the current Prime Minister promised when he was Leader of the Opposition; just as they have delivered the complete opposite of the $275 reduction in power prices that they have claimed; just as they have delivered the complete opposite of making Australians better off, which the current Prime Minister claimed that he would do. This government has no plan to deal with the pressing economic challenges that our nation faces, and they need to admit that reality.