Sam Rae (Hawke, Australian Labor Party) Share this | Link to this | Hansard source

The independent Reserve Bank Board—I stress 'independent'; I know some opposite have perhaps chosen to forget that this is a long-term independence and an institution of that particular organisation—are set to meet again. I know that there are many in my community, in my electorate of Hawke, who will be waiting anxiously for that decision. We don't pre-empt the independence of that board and the decision that they'll make. However, it is clear that the markets are expecting another increase to interest rates, which will be the tenth in a row. We know that much of the inflationary pressure guiding these decisions is driven, in a large part, by Russia's illegal war in Ukraine. This, combined with the COVID-19 pandemic, has placed immense pressure on global supply chains, preventing business from servicing demand both here in Australia and abroad. In fact, the RBA noted in the most recent statement on monetary policy that supply-side factors likely account for between 50 and 75 per cent of the inflationary pressure on our economy.

Although the RBA recognise these supply-side drivers, monetary policy changes are entirely unable to address them. Instead, increasing interest rates primarily tighten the household budgets of mortgage holders. According to the RBA, this represents less than a third of the population nationally. However, it is almost half of the households in my electorate of Hawke. Furthermore, these rate rises are disproportionately affecting lower income earners with less financial headroom in their household budgets. This was confirmed by RBA Governor Philip Lowe in a recent hearing of the House Standing Committee on Economics, in which he said:

… if you've got lower income and a smaller buffer and a mortgage, the tighter interest rates are affecting you more …

While this is not a difficult economic concept, it is nevertheless a very important one to highlight. It is communities like mine that are doing it very tough as a result of these interest rate rises. They are the families not taking their annual camping trip, and they are the people cutting back on their weekly supermarket shop. As a result of these rising interest rates, they are the ones making the most significant sacrifices. In the same hearing, Governor Lowe went on to say that low-income people with mortgages are bearing a disproportionate share of the burden here. This is something that all economic fiscal and monetary policymakers must keep in mind.

Interest rate increases are not the single tool to tackle the inflationary pressures affecting our economy. That's why the Albanese Labor government is focusing on what we can do to address the inflation challenge. Our three-part strategy is about repair of our broken supply chains, relief for people doing it tough and restraint in our budget process.

The previous Liberal government oversaw a decade of wasted opportunities and warped priorities that left Australia with falling real wages, broken supply chains—which make inflation worse—and $1 trillion of debt without an economic dividend to show for it.

After years of neglect under the Liberal government, the Albanese Labor government is getting on with revitalising Australian manufacturing and strengthening our supply chain resilience. The National Reconstruction Fund will provide finance, including loans, guarantees and equity, to drive investments in seven priority areas of the Australian economy. These leverage Australia's natural and competitive strengths, support the development of strategically important industries, and shore up supply chains.

The Albanese Labor government has also introduced legislation that will drive investment in cleaner and cheaper energy, putting downward pressure on power prices, as well as investing in more affordable housing through the Housing Australia Future Fund. Unfortunately, the structural challenges that came from the decade of neglect cannot be repaired overnight, and that's why our government is also providing responsible and direct cost-of-living relief that delivers an economic dividend and does not add to inflation. Almost 7,000 families in Hawke will receive cheaper child care as the maximum subsidy is lifted to 90 per cent. Commonwealth Paid Parental Leave is being expanded to provide a full 26 weeks of leave, and the cost of medicines at our local pharmacies has come down, slashed by $12.50 a script.

These are a handful of measures amongst others that the Albanese Labor government is taking to ease the cost of living for people in my electorate of Hawke who are bearing a disproportionate share of the burden as we address the inflation challenge.