House debates

Tuesday, 7 February 2023

Questions without Notice

Interest Rates

2:30 pm

Photo of Daniel MulinoDaniel Mulino (Fraser, Australian Labor Party) Share this | | Hansard source

My question is to the Treasurer. What does the independent Reserve Bank's decision on interest rates mean for Australians?

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

I thank you the member for Fraser for his question and for his work in this place, particularly when it comes to the economy and economic policy, which I personally appreciate a great deal. As expected, the independent Reserve Bank has just announced its decision to increase interest rates by another 25 basis points. That brings the cash rate to 3.35 per cent. Each of these interest rate rises, which began before the election, has put extra pressure on Australians and put extra pressure on the Australian economy as well.

I think we understand in this place, certainly the Australian community understands, that the Reserve Bank makes these decisions independently, and it's not our job in this place to interfere, second-guess their decision-making or pressure them in any way. It's our job to focus on the broader pressures that are coming at us from around the world and being felt around the kitchen tables of this country.

Our plan to address this high inflation, which is causing these rising interest rates, has three main parts to it. The first is to deliver responsible cost-of-living relief in a way that doesn't add to inflation and which has an economic dividend—think cheaper early childhood education, cheaper medicines and taking some of the sting out of these electricity price rises that we expect to see in our economy. The second part of our plan is obviously to deal with the issues in our supply chains and in our workforce. I commend the Minister for Industry and Science, the Minister for Skills and Training and other ministers, who are working diligently to deal with these supply chain issues, which have been pushing up inflation in our economy in conjunction with the pressures coming at us from around the world.

The third part of our plan is to show spending restraint, which would be unrecognisable to those opposite. We saw that in the October budget, banking 99 per cent of the upward revenue surge over the next two years. You see that in payments falling in real terms over the next two years. You see that in real spending being, essentially, flat over the forward estimates. That approach was endorsed by the IMF just last week. They said our approach is supportive of the approach being taken by the Reserve Bank. In reaffirming Australia's AAA credit rating recently, agencies such as Standard & Poor's, Fitch and Morningstar have all pointed to the government's spending restraint and broadly neutral fiscal stance.

Inflation is unacceptably high; there's no use pretending otherwise. It will hang around for longer than we would like, but there is growing evidence that inflation is expected to have peaked in our economy and is now beginning to moderate. Our job, the responsibility that we take, is to do what we can to address these inflationary pressures in our economy and to take the pressure off Australians where we responsibly can.