Interview with Laura Jayes, AM Agenda
8 March 2023
LAURA JAYES: Back to Canberra now and the Shadow Finance Minister Jane Hume joins us. I want to start on perhaps an unusual point. It's off the back of that question that I just asked it there, Jane. That was Governor Lowe meeting with a suicide prevention group. They are very concerned obviously about the rate rises. The impact that pressure on finance has on people's mental health. Is this something that the RBA should be taking into account though, or is that something that should be done by the government?
JANE HUME: Well, I think it's interesting that Philip Lowe has taken such an interest in this. We, you know, we heard from Lifeline this week, that the number of people that have gone online seeking their services because of financial stress has increased by 50% and indeed the Cost of Living Committee that I chair heard last week, that there was similar statistics that were coming out of things like volunteer services were actually finding more and more people seeking their services, things like Foodbank and CareNet that provide food services, because of the cost of living. You know, we know they're not just primary effects to cost of living prices and inflation, but secondary effects as well like mental health, like relationship breakdowns and so that's a really important way that the cost of living becomes more than a catchphrase, but it actually hits home to people. You know, we know that those 10 interest rate rises now have seen somebody with a mortgage like a family with a mortgage of around $750,000 facing increases in their repayments of around $1,700 a month that equates to $20,000 a year. The average family finding an extra $20,000 after tax to repay their mortgage, that can put an awful lot of strain on families, an awful lot of strain on relationships and on mental health. And that's where the cost of living and installation really hits home.
LAURA JAYES: I'm not impervious to what kind of financial stress families might be under, and how damaging that would be to mental health and day to day living. I mean, we know that 10% of people just simply can't pay their mortgage anymore. But is that something that the RBA should be taking into account? Should it be given a lot of weight in these monthly meetings? Or is it something that the government needs to look at and balance up with their budget?
JANE HUME: Well, the RBA has a very specific task to do, which is to bring inflation down within that 2 to 3% band, but they're not automatons. They're real people and they know that the decisions that they make have far reaching impacts, and it's important for them to understand that and I think that's why you heard today from Philip Lowe, that he thinks that inflation can come back down to that 2 to 3% band, but probably not for a considerable period of time. So while it's good news today that you know he's saying that there is a chance that the rate of interest rate rises is going to slow, it doesn't necessarily mean they're going to come back down for a while.
LAURA JAYES: Did you read that as - I think we're near the peak?
JANE HUME: Well, I think he gave himself some wiggle room. Whether we were near the peak or not. Obviously there's an awful lot of factors at play. We know the pressures that the international situation and supply chains are putting on inflation and interest rates and subsequently interest rates. So there's you know, there's always very many moving parts in these decisions. I actually think that Philip Lowe and the board of the RBA are taking a very human approach to the decisions that they make, is encouraging. That said they're on a mission they have to do a mission and the Government now has to step up and play its part as well, because at the moment the Government has its foot on the pedal, while the RBA has its foot on the brake and that means the RBA has to do all the heavy lifting and keep raising interest rates to slow inflation down and it's so important to slow inflation down because it is that thief in the night, it takes away the purchasing power for people on fixed incomes. It forces up interest rates for those that are mortgage holders, as Philip Lowe said when it came to estimates, you know, interest rates and the RBA’s powers are very nimble, but they're also a very blunt instrument and they don't affect all people and all parts of the economy evenly.
LAURA JAYES: The Budget is just around the corner. Bill Evans just this week, who is the Chief Economist at Westpac said with LMITO coming off, ending at the end of June, It's essentially a tax hike for the lowest income earners. Should that be replaced with a direct payment to the most vulnerable? Is that something the Liberal opposition, the Coalition would support in the budget, direct payments to those doing it really tough?
JANE HUME: Well I think that that's something that we would consider, if the Labor Government put it on the table, but we haven't seen any economic plan to deal with inflation or to deal with the cost of living coming out of this Government. They seem to be talking about anything else other than what is important to ordinary Australians right now and instead of addressing that issue of inflation and how people are suffering and struggling under the cost of living, they're talking about industrial relations, or they're talking about taxes on superannuation, rather than what's important. So we will be looking for an economic plan from this Government that will deal with the cost of living, that will deal with inflation, that will not be making the problem worse, by a large spending wish list. You know, we heard from Cherelle Murphy from EY just this week, saying that if Governments delayed some of their spending wish list, well, that would certainly remove that pressure for the RBA to keep lifting interest rates. So that would be something that we would be looking for.
LAURA JAYES: Jane Hume, always good to talk to you. Thanks so much.
JANE HUME: Great to be with you Laura.