Jim Chalmers (Rankin, Australian Labor Party, Treasurer) Share this | Hansard source

Thank you to the member for Adelaide for his question today. As expected, the independent Reserve Bank has increased the cash rate by 25 basis points. This will be difficult news for millions of Australians with a mortgage, and we understand the pressure that this puts on Australian families and businesses. Now while today's decision was widely expected, obviously, that doesn't make it any easier. We know that many Australians are doing it tough, which is why we continue to roll out responsible cost-of-living relief, including a further tax cut this year and another one next year—both of them opposed by those opposite. At the same time, we're doing what we can to strengthen the budget and to address our longstanding productivity challenge. Our mid-year budget update showed the budget is more than $233 billion better than we inherited from those opposite, and part of the reason for that is $114 billion in savings since we came to office, including $20 billion in the mid-year update.

I want to make it really clear to the House and to people watching from home that the statement released by the independent Reserve Bank explaining the decision that they have taken today does not mention 'government spending' at all. It doesn't mention 'government spending' at all. In fact, it makes it very clear that the pressure on inflation is coming from private demand. Let me make this really clear. This is the Reserve Bank board in their statement just released: 'Growth in private demand has strengthened substantially more than expected …' This is the point that the Reserve Bank has made today. Pressure on inflation, the big contribution to growth in our economy, is coming from private demand and not public demand, and that is clear. And the statement on monetary policy, which the Bank has also released today, said that the upgrade to the near-term outlook was due to stronger private demand. They said the near-term upward revision is driven by private demand and that the contribution of public demand to year-end GDP growth has continued to ease in recent quarters, as expected.

So what we've seen in our economy is public demand in retreat over the course of the last year, private demand growing strongly, and that explains the additional pressure on inflation.

Now, I want to make it clear that, even though inflation has moderated substantially since those opposite were in office, it is higher than we would like. We've acknowledged that since the data came out. Some of that is temporary pressures. Some of that is more persistent pressures. All of that is adding to the pressures that people are feeling around the country. That's why our cost-of-living relief is so important and that's why it's so important that we've got the budget in better nick than what those opposite left us.

See this speech in context