Question Time in Federal Parliament can be as much about theatre as anything else.
On Tuesday there was both tragedy and humour on display. For those on the Opposition benches it was mostly tragedy. They had just been handed a political weapon by the Reserve Bank of Australia, which announced it was increasing interest rates.
But many of the Opposition attempts to embarrass the Government were like watching them flog Prime Minister Anthony Albanese and Treasurer Jim Chalmers with a wet lettuce.
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The Opposition barbs about the interest rate rise and the responsibility the Government must take due to its excessive spending pumping too much heat into the economy were whacked back.
And the Coalition disarray and leadership struggles provided plenty of laughs on the Government side of the chamber.
But out in the mortgage belts across the nation, nobody was laughing after the Reserve Bank raised interest rates for the first time in more than two years, conservatively adding $100 to monthly repayments on an average new mortgage and warned of another possible hike with inflation expected to remain a challenge into late 2028.
Governor Michele Bullock and the central bank’s monetary policy board increased the cash rate by 25 basis points to 3.85 per cent, reversing a cut last August that was welcomed at the time as the start of a period of falling interest rates.
“The board now thinks it will take longer for inflation to return to target and this is not an acceptable outcome,” Ms Bullock told reporters. “I know this is not the news that Australians with mortgages want to hear but it is the right thing for the economy.
“We cannot allow inflation to get away from us again. It’s not just one thing. The pick-up is due to a combination of factors across a broad range of components and sectors. We don’t want this higher level of inflation entrenched.”
The hike will add $111 to monthly repayments on an average, new loan of $694,000.
“Growth in private demand has strengthened substantially more than expected, driven by both household spending and investment. Activity and prices in the housing market are also continuing to pick up,” the RBA said.
Ms Bullock declined to say if excessive government spending was a problem. But others did comment. KPMG chief economist Brendan Rynne said high government spending had pushed up inflation.
“Importantly the RBA cannot be the only dog in this inflation fight,” he said. “Government spending, which has been adding to aggregate demand at the margin, needs to also be reined in.”
But if Dr Chalmers continues to refuse to face up to the Government’s contribution to the problem through its spending, it will be left to Ms Bullock to take on the inflation dragon.
There remains a disturbing lack of clarity about where the Government is taking this country. The Treasurer may be happy to deny and deflect. But the Australian people, facing a new round of financial pain, desperately need answers.
