Topics: RBA interest rate rise; Labor need to provide cost of living relief in budget;
Leon Byner: First of all, two things. What does this mean for SA and how the hell do you get around this? Or is that something that’s just an impossible task? Let’s talk to the Federal Opposition Leader in the Senate, Senator Simon Birmingham. Simon, good morning. Any way to get around this?
Simon Birmingham: Thanks Leon, good to be with you.
Leon Byner: Any way to get around this?
Simon Birmingham: Well Leon, every business, every homeowner should speak with their bank and with other banks. This is a time where banks will need to be as competitive as possible, and people shouldn’t be afraid to change circumstances if they can get a better deal. But obviously on the whole rate rises will affect everybody who’s borrowed money. There are understandable international reasons why the Reserve Bank has been doing this. It’s a circumstance where Australia remains, thanks to years of good economic management, in a far stronger position than the US or the UK or the like. But the bank is still responding to these inflationary pressures we’re seeing across the economy, and the test for the new government is to make sure that when they hand down their budget, they complement these actions of the Reserve Bank rather than make a difficult situation worse.
Leon Byner: Tell me, do you subscribe to the idea that people should shop around when realistically everybody’s going to charge about the same through necessity? Is that not the case?
Simon Birmingham: There are different deals that people can get and that’s why it is worth people taking the effort to have a look around the place. Now, that’s for each individual’s financial circumstances, but certainly in my household, we have at least at times, put the pressure back on the bank to see whether we can secure a better mortgage rate and have managed to get small reductions here and there. And those small reductions add up as most homeowners know. So it’s important people do that for their own circumstances, but it’s equally important that a government level for this new government who inherited lower inflation compared with places like the US or the UK, stronger economy and lower debt compared with those places to make sure they maintain those fundamentals so that we can avoid the worst of these rate rises that are occurring elsewhere in the world and ensure that our economy remains as strong as possible.
Leon Byner: As a South Australian Opposition Senator, is there anything you’d have the feds do that they’re not doing to make the situation a little brighter for people?
Simon Birmingham: Look, we’ll see what this budget that they’re handing down in a few weeks’ time actually delivers. It should really look carefully at how it provides cost of living support for households. But it’s got to do it in a way that doesn’t add to any inflationary pressures. So that is a very sensitive balance and appreciate they need to be careful about that. I worry about some of the things they are doing in terms of some of the proposed industrial relations reforms that will potentially put extra inflationary pressures in the building sector, in home building and commercial buildings as well, extra inflationary pressures in enterprise bargaining systems. And so those things are a real concern in terms of some of the indications from this new Labor Government. But for the Budget, we’ll see whether it does live up to the promises of providing cost of living support for Australian households who are feeling a pinch thanks to these rate rises.
Leon Byner: If there was one thing that you’d have them do for this next budget, what would it be in terms of most important?
Simon Birmingham: Overall, most important is that they make sure that they keep spending sufficiently in check so as not to be adding to inflationary pressures. A lot of different promises and expectations that the Labor Party built up in the last election campaign. They were going to solve all manner of people’s woes without really providing a lot of detail in their election promises. And they have to make sure that as they have every union and other around the country beating their door down right now, asking for them to spend more, that they show restraint in that regard because that would only risk them breaking their tax promises. And certainly there’s nothing in it for Australians for them to unwind their promises in relation to not imposing new or higher taxes and not winding back the tax cuts that are already legislated for Australians.
Leon Byner: So, if there was one thing you’d have the Government do at the top of the totem pole, what would it be?
Simon Birmingham: For them to keep that promise in relation to the tax cuts. Because that provides hope for Australians that although it’s going to be tough dealing with these interest rate increases, they need to know and have confidence that if they’re going to keep working and working hard, people on incomes of $45,000 and above that there is some tax relief in sight down the track to deal with bracket creep and the like [inaudible] make that incentive strong.
Leon Byner: Simon Birmingham, thank you for coming on.