LAURA JAYES: Homeowners are breathing a sigh relief after the RBA kept interest rates on hold at 4.1%. The Governor Phillip Lowe flagged that more rate rises could be on the cards between now and Christmas if it needed. Around 150,000 households are expected to come on fixed rate loans in the coming weeks, which could see borrowers negotiated potential mortgage cliff. Joining me live now is the Shadow Finance Minister Jane Hume. Jane, good to see you. We've got a fiscal and monetary policy apparently working together, is that how you see it?
JANE HUME: No, quite the opposite. In fact, that's the budget that was delivered by the Albanese government in May, was clearly expansionary and economists have said as much. That's one of the reasons why the RBA has had to do all the heavy lifting to try and bring inflation back down. And even though it has come down, which of course is good news, it's still twice what the RBA target band would like it to be. So of course, unless the government does a little bit more with its fiscal firepower, or does a little bit more of the heavy lifting with fiscal policy it means that the RBA is going to have to continue its work and of course that has enormous implications. We've already seen 11 interest rate rises just since Labor came to government last month. Finder said that it did a survey that found that 40% of Australians with a mortgage found it difficult to make its mortgage and mortgage repayments in June. 40%, that's quite extraordinary. So yes, Australians with a mortgage are breathing a sigh of relief that there wasn't another interest rate rise yesterday. But that is absolutely no guarantee that there won't be more to come. Particularly if there is additional taxes imposed by the government on things like farmers, on things like truckies which will push up the cost of groceries, for instance, unless there is action to reduce the cost of energy rather than what interventions in a system that reduce supply and push energy prices up. These are all things that are adding to inflation not detracting from it, meaning that inflation is higher for longer. Interest rates have to stay higher for longer.
LAURA JAYES: Okay, so what more do you want the government to do because the government and Jim Chalmers is being called upon to spend some of this budget surplus on helping out those at the lower end struggling with these cost of living crisis. What would you do?
JANE HUME: Well, in fact spending the budget surplus may not necessarily be the right solution, fueling further expenditure and further aggregate demand in the economy may in fact, make inflation worse. Certainly we would not add to the inflationary pressures by doing things like taxing farmers with the biosecurity levy that means that they have to increase the price of produce that you put them paid for at the supermarket. That's compounded by road user charge levy on truckies. That means the cost of transporting goods to the supermarket is higher. We certainly wouldn't see the level of intervention in the energy markets that we know are now pushing up energy prices, particularly the price of gas, and those things are all adding to inflation. That's why in Australia, even if inflation is coming down that core inflation, that inflation that is removed, the seasonal adjustments removes things like fuel that is still very sticky and remaining intractable. That's why the RBA keeps having to do all of the heavy lifting.
LAURA JAYES: What about this housing bill is going to be reintroduced into Parliament today. In fact, that's happening right now in the other place, in the House. I mean, the Government's forced to negotiate with the Greens because the Coalition won't, why not?
JANE HUME: Well, I'll be honest with you, Laura, this is a dog of a bill. It's a really bad piece of policy and let me explain to you why. This $10 billion is being borrowed on behalf of the Australian taxpayer. The government is borrowing $10 billion, which then has to service with interest repayments, which will be around $400 million a year. And then gives it to the Future Fund to manage and there's a management fee associated with that. Let's assume it's around 1%. So that's around half a billion dollars per year, just in servicing costs before you even make a return. Then the Future Fund has to invest it to make a return and then only the return will be invested in social housing. That could potentially mean because the Future Fund has gone backwards in some ways. There is no guarantee that a single house will be built from the housing Australia Future Fund in at least in the first year and maybe even in future years.
LAURA JAYES: But isn’t that up to voters then. Isn't that something that the Albanese government would be tested on and marked poorly on at the next election, if that was to be the case?
JANE HUME: Well, in fact, other people have already marked it poorly. In fact, the IMF said that these kinds of off balance sheet funds, which makes it sound much more attractive than it in fact is these off balance sheet funds are in fact a risk to the budget and can be inflationary as well, because of the increased debt because of the increased interest repayments. interest repayments are one of the fastest growing areas of the budget. Jim Chalmers has said so himself, why would he be adding to it with a policy that may not actually deliver on what it's promising to do?
LAURA JAYES: Okay, we will see what happens in the House today. Jane Hume, good to talk to you. Thanks so much.