NATALIE BARR: Homeowners are waking up this morning to more mortgage pain following the 12th interest rate hike in 13 months. The RBA lifted the official rate by another 0.25% yesterday to 4.1%. Economists are warning this isn’t the end, with the potential for at least two more hikes by the end of the year. For more I'm joined by Home Affairs Minister Clare O'Neil and Shadow Finance Minister Jane Hume. Good morning to both of you. Clare, did the Government force the Reserve’s hand after it backed that decision to an increase in the minimum wage?
CLARE O’NEIL: That's absolutely not the case and the Reserve Bank Governor has made that really clear in his comments. What I would say is that this is an absolute kick in the guts to families right across my community who were already doing it really tough. I'm sure your viewers understand it's not a government decision but what I want them to know is that the Albanese Government is doing everything within our power to make sure we can provide as much cost-of-living relief as we can. That's why we just had a budget where six million Australians got cheaper prescriptions, we had a massive change to childcare subsidies as of 1 July, we had the biggest increase the bulk billing support that we've seen in the history of Medicare, increases to rent assistance, to Jobseeker, so I want your viewers to know that the first, second and third priority of our government is trying to help families manage what is a really difficult time regarding the cost of living.
NATALIE BARR: Clare, I don't think the Reserve Governor actually said that, I think his exact words were "recent data shows the upside risks to inflation have increased and the Board has responded to this." I think that's code for the fact that wages are up and they are responding because inflation is going up.
CLARE O’NEIL: Not quite right, Nat. The Reserve Bank governor has specifically said that the things the government has done, including that budget that gave so much cost-of-living support for families is not driving up inflation.
NATALIE BARR: He said the budget wasn't but I don't think he's talking about the wage rise that just happened, was he? He did say the Budget didn’t.
CLARE O’NEIL: Yeah well it’s generally not the government that is driving wage rises, but i would tell you that we are really in favour of trying to help wages go up in this country. We had a decade with a standard of living for Australians went backwards because of decreased wage rises. What is going on here is principally driven by a war in Ukraine and that's why we have high interest rates right across the developed world. The most important thing for us is that our government is doing everything we can to manage this problem for households. Our communities are hurting, we completely get that and that is why there was that $14.6 billion of cost-of-living relief support provided in the budget.
JANE HUME: Jane, you are shaking your head this morning. You have business groups saying this is the wage rise brought to you by the ACTU but you have people out there this morning struggling to live, so what do you do?
JANE HUME: That’s absolutely right. In fact, there’s an awful lot of Australians waking up to some serious financial pain this morning. They are having to make serious decisions about their own family budget. It's just a shame that Anthony Albanese and Jim Chalmers didn't do the same. What would you expect if you have a high spending budget? It in fact is an indication, it's an indicator to the Reserve Bank that you have got one foot on the accelerator with your budget and one foot on the break with the RBA and interest rates. Of course they will be forced to raise rates again. The RBA Governor said that this budget was neutral but you don't want a neutral budget when you've got a contractual monetary policy. You want to have a contractionary fiscal policy as well. Not only that, but that Government was advocating for higher minimum wage rises than the ones that were delivered by the Fair Work Commission and the RBA Governor said that without corresponding productivity gains those wage rises will simply be more inflationary and we can expect further interest rate rises. We want to see the Government do everything it can to lower inflation. Not just turn over responsibility to the RBA, who only have one tool in the shed. They've only got interest rates so what is it that the government can do to low inflation, to actively low inflation, to actively low inflation? They've simply failed to do so.
NATALIE BARR: Final say to you, Clare, because what else have you got?
CLARE O’NEIL: Is a lot of clever language there from Jane and of course the Opposition will be doing everything they can to play politics with that and I think it's really disappointing. The government has got one single focus here and that is households and families across this country who are doing it tough and us making sure that the budget that delivered so much cost of being relief support is implemented and in saying, what more can we do? And we would love the Opposition to come with us on tha constructive conversation to help.
JANE HUME: If you want to lower inflation, Clare, we're right behind you.