Tuesday, 2 August 2022
Questions without Notice
My question is to the Minister representing the Treasurer, Senator Gallagher. Minister, in just a minute or two, the RBA will announce a further increase in interest rates. Last week, the Treasurer said that these interest rate increases will result in higher unemployment and further cuts to real wages. Workers, renters and recent homebuyers are being smashed to try and bring down inflation, which is being driven by supply shocks and corporate profiteering. Is the government seriously suggesting that there is no alternative? In 2022, is there really no better way for government bodies to respond to the current bout of inflation—a way that would cause less pain for Australians?
I thank Senator McKim for the question and the two that will follow. The government supports the independence of the Reserve Bank and its responsibility around setting monetary policy. We are in a highly inflationary environment, and that is placing pressure on interest rates, which are rising. We have seen those rises over the last few months. The decision will be made public probably right now while I'm on my feet.
In terms of our approach to that, accepting that the RBA has responsibility for monetary policy and targeting inflation within that two to three per cent band while the government has responsibility for fiscal policy and—
Thank you, Senator Rennick! If you're so smart, why are you sitting over there on the backbench? The government's view is that it's even more important that we are implementing the policies we took to the election, which include accepting that there are some parts of the inflation problem that are being driven by international effects and that there are things that we should be doing here to make those sensible investments into the productive side of the economy to deal with some of those supply constraints. Over the longer term, that will grow the economy and put downward pressure on the cost of living. That is the plan we took to the election. That is the plan we are going to implement.
We accept that these interest rate rises are difficult on households. We constantly look at ways that we can manage some of those impacts on households in the future, including, as we approach the budget process in October, accepting that we are going through the budget, line by line, to make sure that every dollar spent is quality—
I note the announcement is that interest rates are up by 50 basis points. Profits are at record highs, and wages' share of national income is at record lows. The European Central Bank has identified that corporate profits are surging on the back of the recent increase in inflation. Will you finally accept that corporate profiteering is contributing to inflation in Australia?
I understand that this is the strong view of the Greens political party, and it's one that they have been arguing. I have said—and I said last week—that our priority when it comes to tax reform, which is what Senator McKim alludes to, is to focus on multinational tax reform and ensuring that multinationals pay their fair share of tax, and that will contribute to budget repair. We do want to get wages moving. We do think there's a social licence attached to some of the companies that have been doing pretty well in the last few months. But our focus is on repairing the budget, making those sensible investments into the economy, dealing with some of those supply constraints, getting wages moving and investing for the long-term productive side of the economy. That is what we said we'd do before the election. That's what we're doing after.
Two weeks ago, the Prime Minister warned the RBA against overreaching. Corporate superprofit taxes would help rein in inflation and lessen the likelihood of the RBA overreaching. Why won't the government introduce corporate superprofits taxes to rein in inflation and help fund cost-of-living relief, such as free childcare and dental and mental health into Medicare?
My first point is that the Prime Minister didn't warn the Reserve Bank. I think the Prime Minister referred to the difficult balance that the Reserve Bank has to navigate in this inflationary environment and the decisions they take about increasing interest rates that were occurring—and this environment, I would like to say, was occurring—before the election. While these interest rates are hard on households, when you've got inflation at the level we've got it you will see rising interest rates.
In respect of the second part of Senator McKim's question, this is asking: will the Labor government implement the Greens political party's commitments that they took to the election or made after that? The answer to that, as I said last week, is: we are implementing the policies that we took to the election. That's what we said we'd do before and it's what we're doing after.
I thank Senator Bilyk for the question. It's an important question that affects all of us—many Australians, particularly those with mortgages but also those with savings accounts.
The independent Reserve Bank has made its decision today to increase interest rates by another 50 basis points, bringing the cash rate to 1.85 per cent. Australians knew that this was coming but it doesn't make it any easier to handle. The cycle of rate rises commenced before the election, in response to the inflationary pressures that emerged before the election. Average homeowners owing $330,000 will have to find about $90 a month more for repayments on top of the $220 extra in repayments since early May. For Australians with a typical $500,000 mortgage, it's an extra $140 a month in addition to the extra $335 they've had to find since early May. This won't come as a surprise to many but it will still be a shock to many households. Families will have to make more hard decisions about how to balance the household budget in the face of pressures like higher grocery prices and higher power prices, which the member for Hume kept hidden from them prior to the election.
As a government, we are focusing on the economic plan we took to the election campaign. It makes sensible investments in child care, in skills and in digital services, using the National Reconstruction Fund, making child care cheaper and lowering the price of energy through the Powering Australia plan. These are the commitments that we made in the election; these are the commitments we will do. We will monitor all of these in the lead-up to the October budget and the decisions we take there, which will be primarily about fixing the waste and rorts of the previous government and implementing the election commitments that we made.
I thank Senator Bilyk for the supplementary. Obviously, higher interest rates primarily affect mortgage holders, but there's an impact on savers as well. As the Treasurer pointed out earlier today, he's found it disappointing that higher interest rates weren't necessarily being passed on to savers and he will raise this directly with the banks, and I'm sure that those opposite would support that approach. The Treasurer has said that savers have been the principal victims of interest rates when they've been incredibly low and that they should be the beneficiaries of rising interest rates. He said they've been doing it tough for some time now and it's time they got a bit of relief, and the government certainly supports that approach.
I thank Senator Bilyk for the supplementary. Australians know that problems like high and rising inflation have been made worse by a decade of wasted opportunities and the wrong priorities of those opposite. The Albanese government's economic plan is a direct response to the economic challenges that we face right now: responsible cost-of-living relief; cheaper child care; cheaper medicines; addressing the supply-side inflationary challenges and taking the speed limit off the economy by investing in skills and productivity; cleaner and cheaper energy—get that one, Senator Henderson; getting wages moving again; and beginning the very difficult work of budget repair so that the trillion dollars of Liberal debt doesn't grow bigger and bigger for generations to come.