With yet another interest rate rise hitting mortgage holders this month, households all over Tasmania are being hit from every angle by rising cost of living pressures.
Nine successive interest rate rises in the last twelve months have added hundreds of dollars onto the monthly cost of repaying mortgages, while rental prices remain sky high. Tasmanians are noticing price hikes on everyday grocery items each time we go to the supermarket, and energy bills are forecast to rise sharply.
There’s a variety of causes behind the skyrocketing cost of living, and some of them are beyond our control in Australia. But what is controllable is a strong commitment to budget discipline by the federal government of the day.
When inflation is running high as it has been for the last twelve months, the Reserve Bank has one tool at its disposal to try and rein it in, and that’s the blunt instrument of forcing mortgage holders to pay more so that households have less to spend in other areas.
The last thing that households bearing the brunt of this pain need is a federal government splashing cash in an undisciplined manner. Not only does this risk exacerbating inflation and forcing more interest rate rises, but as the government’s debt increases, so too does the cost to taxpayers of paying the interest on what the government has borrowed.
We all know that the federal budget is under huge strain following several years of Covid-19 support and stimulus. And we know that the federal budget will have to attribute billions of dollars in new spending on defence and national security, aged care, and the NDIS. Health, housing, education and preventing violence against women are other areas we all agree more expenditure is needed.
Additional debt and higher interest repayments incurred through any wasteful or non-essential spending will cut down the amount that is available to spend on these priority areas in the years ahead. That’s why paying down debt must be a priority for the government.
It’s hard to reconcile these realities with the demands of the AFL CEO that taxpayers borrow $750 million for a new stadium, while threatening to continue to neglect Tasmanian football until he gets what he wants from the public purse.
If the Albanese Government bows to such demands, it will be a surefire signal that balancing the budget and paying down debt is being kicked down the road for our children and grandchildren to worry about.
*This opinion article appeared in the Examiner newspaper on 1 March 2023
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