James Stevens (Sturt, Liberal Party) Share this | Hansard source

It's a tough day for the people in my electorate of Sturt and the people of Australia, with the Reserve Bank announcing their decision to again increase interest rates by 50 basis points. Power prices are going up, fuel prices are about to go up, real wages are going down and mortgages continue to increase. Today's announcement of a 50 basis point increase is the fourth in a row of 50 basis points, and, of course, there was another increase before that. We are now at 2.35 per cent of the cash rate. Unfortunately the pain of this doesn't seem to be coming to an end anytime soon, because the most recent inflation rate, as has been pointed out in this debate, increased again to 6.1 per cent. The 5.2 per cent increase to the minimum wage, unfortunately, is still going to see the lowest-paid workers under this Labor government go backwards, because inflation is higher than that increase and wage inflation generally is still under half the inflation rate. The predictions from no less than the Reserve Bank governor and others are that 6.1 per cent is by no means the peak of inflation. So things are very tough for the people of this country.

Today's decision by the Reserve Bank goes to show that, unfortunately, they have to keep using the monetary policy levers available to them to try and get inflation under control. Of course, monetary policy is not the only way that governments have at their disposal to address inflation. We have an independent Reserve Bank which everyone in this chamber, hopefully, supports. Those decisions are independent and they are made from a monetary policy point of view, the cost of money in our economy, based on all the information available to them to achieve their target inflation rate. One of the things they have to contend with is what the Commonwealth budget is doing, what the situation is with the budget deficit, and whether or not the fiscal policy settings of the federal government are contributing to inflation or helping the Reserve Bank with their task of bringing it under control.

We have a budget being delivered in this place in about six weeks time, and that will really be the only tangible example of whether or not this government and this Treasurer have a plan to assist in that task of getting inflation under control. All the other things that have been mused about in this debate are completely irrelevant when it comes to the cost of living and the families of Australia compared with the situation of inflation not just at such a record high, of 6.1 per cent at the moment, but predicted to continue to increase.

We all understand and accept there are global forces that are part of the pressures on the cost of living. They're also helping with the terms of trade. Many of our commodities are in a boom cycle at the moment, which is helping to support our economy through these tough times. But, ultimately, no matter what forces are coming to bear, we within this economy, and as a Commonwealth government and as a Commonwealth parliament, have to have a plan to address it. As I say, the Reserve Bank will keep increasing interest rates—possibly more than they need to if they're not getting support from a fiscal point of view from this government. That will be the enormous challenge that befalls the budget coming up in late October.

Labor have got a lot of plans for more spending. I'm sorry to tell you that if you're only spending more money and increasing the deficit, that is only going to increase interest rates and that is going to put the Reserve Bank in an impossible position as the only people fighting inflation in our economy. In fact, if you increase the deficit, let alone not reduce it, then all the result you'll get is having an unnecessary and enormous burden—a form of tax increase by increasing people's mortgages. And that is going to disproportionally, in particular, hurt some of the people who are struggling in our economy the most at the moment.

Real wages are going backwards, and they will continue to go backwards, no matter what decisions are made by the Fair Work Commission, unless we get inflation under control. No-one can predict what is going to happen with inflation if we continue to operate in an environment where we're not taking it seriously, particularly in the upcoming federal budget. So I urge the Labor Party to do something against their muscle memory and against their form when it comes to Commonwealth budgets—to use that as an opportunity to properly help the Reserve Bank to reduce pressure on inflation in our economy, to share the burden, to share the load and to cut expenditure. They should help them with that and stop putting this pressure on the poor mortgage-payers of this country.

See this speech in context