Dave Sharma (NSW, Liberal Party) Share this | Hansard source

I move:

That the Senate take note of the answers given by the Minister for Finance (Senator Gallagher) to questions without notice asked by Senator Bragg today relating to interest rates.

Senator Gallagher was asked by my colleague Senator Bragg about the level of mortgage stress seen in Australia. Findings in the last few weeks demonstrate just how acute this mortgage stress is. A Finder survey found that 13 per cent of mortgage holders have extended their home loans in the past 12 months in order to lower their repayments. That's 429,000 people across Australia who have extended the term of their home loan, which will lower their monthly repayments but increase the amount of interest they pay over time. Roy Morgan Research from the last quarter shows 1½ million mortgage holders are at risk of mortgage stress—that's some 30 per cent of mortgage holders altogether. Since May 2022, that figure is up by 707,000. It's no wonder. We have seen 12 consecutive interest rate rises under this Labor government. That's four percentage points in interest rate rises. That means that, if you have a mortgage of, say, $750,000, you're paying an extra $30,000 a year in interest alone, which is $2,500 per month.

On top of that, living expenses have gone up drastically. Last week, the inflation figure for the month of May came out and showed that prices are increasing at a four per cent annualised rate in Australia. We are the only advanced economy where inflation is growing at four per cent or above. We saw that the inflation figure has actually accelerated. In the month of April, it was 3.6 per cent. Earlier in the year, it was 3.2 per cent. In the United States inflation is at 3.4 per cent, in the Eurozone it's 2.4 per cent, in Canada it's 2.9 per cent and in the United Kingdom it's two per cent. Australia's inflation is at four per cent and getting higher. We've seen, for instance, over the past two years the prices of food, the stuff you buy at the supermarket to feed your family, go up by 11 per cent. We've seen housing prices go up by 14 per cent. We've seen rent go up by 14 per cent. And we've seen the price of electricity go up by almost 22 per cent. We've seen the price of gas go up by 22 per cent.

If you couple the increased cost of life's basics with increased mortgage repayments, it's little wonder that Australians are feeling worse off. And they're not wrong to feel that. If you look at the figures, real net disposable income per person—which is really the best measure of how well off you're feeling—has fallen by almost nine per cent over the past 18 months. Real living standards in Australia are effectively back to where they were in 2017. If you're an average full-time earner on $95,000 a year, you've seen your real disposable income fall by $8,000 per year, or about $150 per week.

Householders are being hit by a triple whammy. They're being hit by higher interest repayments. And, as we've seen, the Reserve Bank are now concerned that the next move in interest rates might be up. People are being hit by higher personal income taxes, because high inflation is pushing them into higher income tax brackets, meaning that they're paying more tax but their living standards have not improved. And they're paying more for life's basics.

This week we've heard a lot of crowing, really, from those opposite about how much better off Australians are going to be—indeed how thankful Australians should be—because of these tax cuts they're getting and because of electricity bill relief. Well, if you're on $95,000 a year, the tax cut you'll get from these amended stage 3 tax cuts is about $2,000 a year, or $40 per week. As an electricity rebate you'll get about $300 per household, spread over the course of a year. But, as I said before, we've seen real disposable income for an average full-time earner fall by $8,000, or $150 a week. So, the government is giving you back a very small amount of what they've taken from you in a higher tax take by pushing you up into a higher income tax bracket and what you're paying in terms of higher interest repayments and what you're paying out of your pocket for life's essentials.

The RBA's minutes from their last board meeting were released earlier today, and they said that if inflation expectations were to rise materially it would require significantly higher rates to bring inflation back to target. Well, since that Reserve Bank board meeting we have seen inflation expectations rise materially. We've seen a monthly inflation figure of four per cent, which is significantly higher than the markets expected, significantly higher than last month's figure and significantly higher than in advanced economies around the world. You would now have to think that government's fiscal policy is only making the Reserve Bank's job harder and making it more likely that they will have to raise interest rates.