Rate increase to push more Australians into hardship and despair this Christmas

The decision by the Reserve Bank of Australia to increase interest rates by 25 basis points to 3.1 per cent will push more Australians into hardship and despair this Christmas.

‘yesterday’s increase—the eighth in as many months—is another blow for low-income Australians and income support recipients already struggling to survive,’ said National President Claire Victory.

‘Christmas should be a time of joy and hope for the future, but a growing number of Australians will enter the holiday period uncertain if they will be able to keep a roof over their heads or feed their families,’ Ms Victory said.

The Society is experiencing a sharp increase in the number of people seeking support and a significant jump in people asking for help for the first time amid the current cost-of-living crisis.

‘Our members are reporting a spike in demand as higher interest rates and surging inflation push life’s essentials out of reach for a growing number of Australians, particularly income support recipients and low-income Australians,’ Ms Victory said.

‘The extent of the cost-of-living crisis is made clear by the significant increase in people asking for assistance for the first time – many are working but are still slipping further into hardship and despair,’ Ms Victory said.

The Society was heartened by the Albanese Government’s agreement with Independent Senator David Pocock to establish an Economic Advisory Panel to review and publish advice to the government on ways to increase economic inclusion and the adequacy of income support payments.

‘The incorporation of independent advice on economic inclusion and income support payments into the budgetary process is a significant step forward and will give hope to many of those on Australia’s brutally low-income support rates that entrench poverty and disadvantage almost a million Australians,’ Ms Victory said.

‘But these reforms will not have an impact until next year—at best—and emergency support is needed now to ensure vulnerable Australians can survive the Christmas and New Year period and do not fall further into poverty and disadvantage,’ Ms Victory said.

JobSeeker, at $48 a day, consigns around 830,000 Australians to live below the poverty line and should be unacceptable in Australia which prides itself on being the country of the ‘fair go.

‘Working age payments have not kept up with the cost of living and Australians’ unemployment payment rates are among the lowest out of 37 members of the OECD,’ Ms Victory said.

‘This situation is getting worse every day the Government fails to act, as inflation, interest rates and the cost-of-living surge higher,’ Ms Victory said.

The Government’s failure to lift Commonwealth Rent Assistance is another brutal blow to disadvantaged Australians hoping to find a safe, secure home for themselves and their families.

‘Housing is simply unaffordable for many Australians and rental costs have skyrocketed, particularly in regional Australia where they have risen 12.5 per cent in the last year,’ Ms Victory said.

‘Commonwealth Rent Assistance (CRA) has not kept up with these rental increases and must be urgently increased in order to help vulnerable Australians secure housing,’ Ms Victory said.

Meanwhile, Australia Treasurer Jim Chalmers said, Our economic plan is all about making our Budget more responsible, our economy more resilient when global uncertainty threatens and fighting inflation which is pushing up interest rates here and around the world.

Chalmers said households were already suffering but the full impact of the interest rate hikes would not be felt immediately.

Below is Treasurer Chalmers audio during a press conference after the RBA OCR Hike

Shadow treasurer Angus Taylor said the government was failing to tackle inflationary pressures at the source. 

The RBA has been lifting interest rates since May, to tackle rising inflation by increasing the cost of borrowing money in order to cool demand for goods and services.

In a statement, RBA Governor Philip Lowe, Inflation in Australia is too high, at 6.9 per cent over the year to October. Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role. Returning inflation to target requires a more sustainable balance between demand and supply.

He said the Board expects to increase interest rates further over the period ahead, but it is not on a pre-set course. It is closely monitoring the global economy, household spending and wage and price-setting behaviour.

This was also confirmed by Professor Jakob Madsen, professor of economics at the University of Western Australia in an interview with from the newswires podcast.

According to Professor Madsen, could reach up to 5 per cent of the official cash rate just to slow down inflation.