Jim Chalmers has acknowledged that this week’s RBA rate hike by half a percentage point will be challenging news for Australia’s reckoning with cost-of-living pressures.
In a statement, the treasurer said ‘rates were expected to rise, and they’re expected to bite’ but predictions of an RBA interest rate increase flagged before the May federal election also meant he could only be upfront about the challenges to come.
“[The] 50 basis point rate rise comes at a time when a significant number of Australians are confronted by yet another large-scale natural disaster, which will only add to these ongoing challenges,” Chalmers said.
“When it comes to inflation, we expect it to get worse before it gets better, and the Reserve Bank has flagged further rate rises,” he said.
The treasurer said he understood the impact of Tuesday’s RBA decision would mean mortgage repayment strain for millions of Australians.
He also noted how this news was compounded by natural disasters, the economic reality of ‘skyrocketing interest rates and falling real wages’, and the trillion-dollar debt Labor inherited from the previous government, which had since become ‘more expensive to service’.
“Because of this combination of challenges, the government is focused on building an economy and a budget as resilient as the Australian people have proven to be,” Chalmers said of the October budget.
“This is all part of our plan to build a stronger, broader, more sustainable economy with a better trained and more productive workforce.”
The federal government’s plan to boost the economic challenges and cost of living pressures includes investing in cleaner and cheaper energy, cheaper child care, skills, the digital economy and manufacturing, and progressing its ‘waste and rorts’ audit of government spending.
“Average homeowners owing $330,000 will now have to find another $90 a month at the same time as they try and keep up with the costs of petrol, electricity, groceries and other essentials.
“For Australians with a $500,000 mortgage, the extra repayments are more like $137 a month,” Chalmers said.
“Australians can benefit from a stronger economy and a better future if we work together to navigate the inflation we inherited and the higher interest rates that accompany it,” he added.