Libs ‘are washing hands of rate rise’
LABOR says the government is trying to “wash their hands” of the challenge posed by rising interest rates but Treasurer Josh Frydenberg said Australia was better placed than other countries.
The Reserve Bank of Australia defied predictions by raising the cash rate to 0.35 per cent on Tuesday in a move that will increase mortgage repayments. The big four banks all said they would pass on the increase to borrowers.
With inflation tipped to hit 6 per cent by the end of the year amid stagnant wage growth, cost of living is at the front of Australians’ minds ahead of the May 21 election.
But Mr Frydenberg said the rate rise and an unemployment rate of just 4 per cent were indicative of an economy going from “strength to strength”.
“It’s appropriate now for monetary policy to normalise as the main impacts of Covid start to subside and just as fiscal policy has started to normalise,” Mr Frydenberg said.
He denied claims that the cash handouts and fuel excise cut announced by the government during the budget to aid with cost of living had further added to inflationary pressures, instead putting the blame on global pressures.
“The main drivers of the higher inflation are global developments. That is both the war in Ukraine and the Covid pandemic which has disrupted supply chains, and it’s affecting the whole world, not just Australia,” he said.
“The Federal Reserve in the United States has lifted the cash rate by 25 points. In the UK … 65 basis points. In Canada by 75 basis points and in New Zealand, by 125 basis points.
“We’re very conscious of the cost-of-living pressures that Australians are under, and that’s why we’ve made the announcements in the budget.”
Labor’s Treasury spokesman Jim Chalmers said his party was the better economic manager and the Coalition didn’t understand the pressure people were under.
“We think the difference between Labor and the government is the government is trying to wash their hands of this challenge,” Mr Chalmers said. “They don’t understand the pressure that people are under, under Scott Morrison’s cost-of-living crisis, and we do.
“Growing the economy without adding to inflation, getting real wages moving again, trying to have something to show from this budget which is heaving with a trillion dollars in debt.”
Mr Frydenberg however said the cost-of-living pressures were a key reason to vote for the Coalition, saying the country needs “a steady hand at the helm”.
Prime Minister Scott Morrison meanwhile pledged a twoyear freeze of the pension deeming rate, which will ensure about 900,000 retirees and other welfare payment recipients won’t suffer a drop in their payments should the Coalition be re-elected.