TED O’BRIEN MP
DEPUTY LEADER OF THE OPPOSITION
SHADOW TREASURER
MEMBER FOR FAIRFAX
MEDIA STATEMENT
Millions of Australian mortgage holders were left wanting today, just the latest in a long line of disappointments throughout Labor’s cost-of-living crisis, now in its fourth year.
Rates have been kept higher for longer as a direct consequence of Labor’s spending spree, which has worked against the RBA in taming inflation and has lowered productivity by crowding out the more productive private sector.
This year, government spending is growing at four times the rate of the economy and is set to reach the highest level outside of recession since 1986. Under Labor, productivity has fallen more than 5%, which is the key reason living standards have been in freefall.
After 12 interest rate rises under Labor, there have been just 3 cuts. Under today’s 3.6% cash rate, the average mortgage holder is paying around $1,800 more in interest per month than when Labor took office. Just another Labor tax on hardworking Australians.
Meanwhile, a housing supply crunch continues to drive rents higher, leaving renters squeezed and mortgage holders stuck with higher rates for longer.
The most concerning thing for Australians doing it tough is that there appears to be very little additional relief on the way. The Albanese Government must answer for this.
In its statement, the RBA Monetary Policy Board cited last week’s inflation figures, which showed inflation at its highest level in a year. It stated a key reason for rates remaining on hold was “indications that inflation may be persistent in some areas”.
This persistence in inflation has pushed out the prospect of further rate relief; while markets had earlier predicted with certainty a rate cut in November, markets now expect the next cut in February next year.
And they now expect it may be “one and done”—that is, for rates to remain at around 3.25% indefinitely, little more than one rate cut lower than their current level.
It will no doubt come as a shock to millions of Australian mortgage holders that repayments on the average mortgage are set to remain $1,700 higher per month indefinitely under this government than under the Coalition.
And the disastrous economic management of Albanese and Chalmers is to blame.
There are two things this government must do to get us out of this economic rut.
The first is to stop the spending spree. The relentless expansion of government under Labor has put upward pressure on the cost of living; shrinking government as a share of the economy over time would do the opposite.
To do this, Labor must reintroduce the quantifiable fiscal rules that every recent government of either political persuasion has adopted—but this Treasurer deems himself too good to abide by.
It’s not just the Coalition that has been calling for this. Leading economists like former Treasury Secretary Ken Henry and former RBA Governor Phillip Lowe as well as leading international organisations like the IMF have urged the Albanese Government to do so.
Since Labor came to office, they have added $100 billion to the national debt, set to breach $1 trillion this financial year and $1.2 trillion by the time of the next election.
We are spending $50,000 on interest every minute, which is money that can’t be spent on essential services. And it is all going on the national credit card for our kids to repay.
The second is to start growing the pie. The RBA Governor has repeatedly stated that our poor productivity performance has prevented the RBA from delivering further rate relief. In today’s statement, the Board again called out our weak productivity growth.
This government must halt the introduction of destructive economic policies, such as its super tax on unrealised gains, and put an end to more than three years of complacency about Australia’s desperate need for economic reform.
It’s not for nothing that the RBA downgraded its productivity outlook by almost a third. Everyone seems to recognise the seriousness of the situation—except this government.
The Australian people don’t need another talkfest or review. What they need is action.
When Labor spends, you pay.