Australian Finance Minister Katy Gallagher has stated that the Albanese government should receive recognition for its economic management, even as borrowers face the latest in a series of interest rate increases. The Reserve Bank recently raised the cash rate to 4.85 percent, the highest in 18 years, marking the 17th such rise since the Labor government took office.
Appearing on ABC News Breakfast, Gallagher acknowledged the current economic conditions are "very difficult" and "very challenging," impacting households and businesses significantly. However, she asserted that the government is taking appropriate measures and has already made savings that should be acknowledged in the economic data. "There has to be also an acknowledgement that the hard work we have done over the last four years is actually being seen in the economic data," Gallagher said. She also stated that government spending is not the sole driver of current prices.
Prime Minister Anthony Albanese, speaking from the Commonwealth Heads of Government Meeting, echoed this sentiment, emphasizing the government's commitment to fiscal responsibility. "We won't rip money out of health or schools. What we will do is take responsible action and take hard decisions," Albanese stated.
The recent 0.25 percentage point increase in the cash rate is expected to add approximately $584 per month to the average mortgage repayment, amounting to nearly $7,000 annually for a typical home loan of $731,000. Real estate expert Tom Panos noted that this could push more homeowners to their financial breaking point, with some families reportedly cutting back on holidays, private school plans, and taking on second jobs to manage rising mortgage costs.
David Koch, former host of "Sunrise" and economic director at Compare the Market, commented on the burden faced by homeowners, urging governments at all levels to help combat inflation. He observed that homeowners are bearing the brunt of rate hikes, while governments continue to fuel demand through spending. "That's why I think governments have got to get on board and start helping us fight inflation," Koch said.