WEBVTT - Can the government claim a win from the RBA cut? 0:00:01.520 --> 0:00:05.560 This is very welcome news for millions of Australians. This 0:00:05.720 --> 0:00:09.280 is the rate relief that Australians need and deserve. 0:00:09.600 --> 0:00:12.760 When the Reserve Bank finally delivered a rate cut yesterday, 0:00:13.200 --> 0:00:16.040 Treasurer Jim Chalmers was quick to claim credit. 0:00:15.960 --> 0:00:20.119 Under this labor government. Inflation is down, wages are up, 0:00:20.440 --> 0:00:24.920 unemployment is low, and now interest rates are falling as well. 0:00:25.720 --> 0:00:27.000 This is the soft landing. 0:00:27.400 --> 0:00:30.360 It's happy timing for a government with an election looming, 0:00:30.880 --> 0:00:34.040 but for mortgage holders relief may be modest and with 0:00:34.080 --> 0:00:37.200 the RBA warning they don't expect to cut rates again soon, 0:00:37.840 --> 0:00:40.160 how much mileage the government will get out of this 0:00:40.440 --> 0:00:41.440 remains to be seen. 0:00:45.360 --> 0:00:48.960 From Schwartz Media, I'm Ruby Jones. This is seven. 0:00:48.720 --> 0:00:53.440 Am today, Managing editor of the Saturday Paper, Emily Barrett 0:00:54.000 --> 0:00:56.400 on the impact of the Reserve Bank's cut and what 0:00:56.480 --> 0:01:02.760 it tells us about the state of the economy. 0:01:02.920 --> 0:01:04.760 It's Wednesday, February nineteen. 0:01:10.000 --> 0:01:13.440 So, Emily, we've just heard perhaps the most talked about 0:01:13.560 --> 0:01:17.399 cash rate announcement in recent memory. There was so much speculation, 0:01:17.640 --> 0:01:20.840 so much weighing on this moment for many people. So 0:01:21.319 --> 0:01:24.039 to begin with, just tell me what the Governor of 0:01:24.040 --> 0:01:27.480 the Reserve Bank. What Michelle Bullock said, Yeah. 0:01:27.319 --> 0:01:30.319 So, I mean this is the first cut in four years, 0:01:30.880 --> 0:01:33.720 and it follows thirteen hikes that went from May twenty 0:01:33.720 --> 0:01:36.840 twenty two to November tweeny twenty three. Now, the aim 0:01:36.880 --> 0:01:40.280 of those hikes was to bring down inflation, which peaked 0:01:40.640 --> 0:01:43.839 at seven point eight percent, and that was well above 0:01:43.880 --> 0:01:46.840 the banks two to three percent target range. So what 0:01:46.920 --> 0:01:50.000 Michelle Bullock was delivering was good news, Good. 0:01:49.840 --> 0:01:53.280 Afternoon, Thank you all for coming. As you know, the 0:01:53.320 --> 0:01:56.000 board decided today to cut the cash rate by twenty 0:01:56.040 --> 0:01:59.960 five basis points to four point one percent the cash 0:02:00.000 --> 0:02:02.320 This rate has been at four point three five percent 0:02:02.440 --> 0:02:04.240 since November twenty twenty three. 0:02:04.560 --> 0:02:07.680 She said, you know that they had determined that inflation 0:02:07.760 --> 0:02:09.880 had come down enough for them to actually make the cut. 0:02:10.160 --> 0:02:12.360 But it's what's known as a hookish cut, which means 0:02:12.639 --> 0:02:13.760 don't expect too much more. 0:02:14.000 --> 0:02:17.000 I want to be very clear that today's decision does 0:02:17.040 --> 0:02:20.200 not imply that further rate cuts along the lines suggested 0:02:20.240 --> 0:02:24.040 by the market are coming. As I noted, we've removed 0:02:24.080 --> 0:02:27.919 the cautionary increase that we did in November twenty three 0:02:28.240 --> 0:02:31.480 to a level that we still see as restrictive but 0:02:31.560 --> 0:02:34.320 the Board needs more data and evidence that inflation is 0:02:34.400 --> 0:02:38.560 continuing to decline before making decisions about the future path 0:02:38.600 --> 0:02:39.440 of interest rates. 0:02:39.880 --> 0:02:44.000 Okay, and the most obvious immediate effect of this will 0:02:44.040 --> 0:02:47.520 be felt by people who own property. So what do 0:02:47.560 --> 0:02:50.200 we know about whether the banks intend to pass on 0:02:50.240 --> 0:02:53.040 this cut and if so, what does that mean in 0:02:53.080 --> 0:02:55.799 practical terms for people who have a mortgage. 0:02:56.360 --> 0:02:59.480 So the big four banks, they've apparently already given their 0:02:59.480 --> 0:03:01.600 commitment pass it on quickly, and that's something that Jim 0:03:01.680 --> 0:03:06.799 Chandler's the Treasurer, announced almost immediately afterwards, and with all 0:03:06.919 --> 0:03:09.120 the competition in the mortgage market at the moment, it's 0:03:09.120 --> 0:03:11.560 certainly in their interests to follow up. So we'd expect 0:03:11.560 --> 0:03:14.320 that this month and this will flow to most Australians 0:03:14.320 --> 0:03:17.440 with mortgages because they hold variable loans. So if we 0:03:17.480 --> 0:03:20.480 look at one third of Australian households have meltgages, another 0:03:20.560 --> 0:03:23.600 one third are paid off and another third are renters. 0:03:24.080 --> 0:03:27.160 So according to the RBA, the minimum payments for most 0:03:27.200 --> 0:03:30.280 mortgages jumped sort of between thirty and sixty percent since 0:03:30.320 --> 0:03:33.400 the first rate hike in May twenty twenty two. So 0:03:33.680 --> 0:03:36.680 if you had a five hundred thousand dollars loan, your 0:03:36.720 --> 0:03:40.600 monthly repayments would have increased by about twelve hundred a 0:03:40.600 --> 0:03:44.320 month over that time. So today's cut is modest in 0:03:44.360 --> 0:03:46.240 the sense that mortgage holders can look at a round 0:03:46.320 --> 0:03:48.400 sort of one hundred dollars a month maybe in savings 0:03:49.160 --> 0:03:53.160 from this cut. So an extra one hundred dollars a 0:03:53.200 --> 0:03:57.120 month for these mortgage holders, you know, anyone who's looking 0:03:57.160 --> 0:03:59.240 for that extra bit is going to be helpful. But 0:03:59.280 --> 0:04:02.360 I think, as one porter actually said in the press conference, 0:04:02.720 --> 0:04:05.040 it will barely touch the sides for some people. 0:04:06.080 --> 0:04:09.040 And as you say, Governor Michelle Bullock spoke about this 0:04:09.240 --> 0:04:13.320 being a one off, not to expect further consecutive cuts. 0:04:13.400 --> 0:04:15.920 So can you tell me more about why that is. 0:04:16.480 --> 0:04:19.440 Yeah, So, as they've pointed out, the key measures of 0:04:19.520 --> 0:04:23.000 inflation show that it's returned back to the RBA's two 0:04:23.000 --> 0:04:25.640 to three percent target range, and that's quicker than expected, 0:04:26.120 --> 0:04:29.600 but there's still a little bit further to go. Part 0:04:29.640 --> 0:04:33.000 of the reason that they have cut rates is that 0:04:33.000 --> 0:04:36.440 they're concerned about growth in the economy, but they're also 0:04:36.520 --> 0:04:39.240 concerned on the flip side, the productivity, that is, how 0:04:39.320 --> 0:04:43.039 much stuff we're actually making is really low, and so 0:04:43.880 --> 0:04:46.080 the output of this economy isn't as strong as it 0:04:46.120 --> 0:04:47.880 needs to be for supply to meet demand. 0:04:48.480 --> 0:04:51.880 But we all know that productivity hasn't been as strong 0:04:52.040 --> 0:04:54.800 as we would have hoped, and that's the way we 0:04:54.839 --> 0:04:57.320 grow the economy. That's the way that we can have 0:04:57.440 --> 0:05:03.520 trained growth high because if but demand increases and supply doesn't, 0:05:03.560 --> 0:05:05.480 then that's when you get inflationary pressures. 0:05:05.560 --> 0:05:08.560 So also there's the point that house prices are still high, 0:05:09.120 --> 0:05:13.280 so a series of cuts would kind of risk reigniting 0:05:13.320 --> 0:05:15.560 that demand in the market that probably hasn't called as 0:05:15.600 --> 0:05:17.640 much as it could have. And there's also just a 0:05:17.640 --> 0:05:19.320 lot of uncertainty out there. I mean, if we look 0:05:19.400 --> 0:05:23.200 it's where in an election campaign shortly, so domestically, you know, 0:05:23.240 --> 0:05:26.799 election campaigns tend to mean more government spending, more promises 0:05:27.200 --> 0:05:31.720 around spending, which is in itself often inflationary. The global outlook, 0:05:31.720 --> 0:05:35.080 if we look out beyond this country, we've got highly 0:05:35.120 --> 0:05:37.960 unpredictable situation. I mean, you colonomists always say, you know, 0:05:38.000 --> 0:05:41.719 there's uncertainty out there, it gets very boring, but it's 0:05:41.720 --> 0:05:44.359 fair to say that this is an extraordinarily unpredictable outlook. 0:05:44.400 --> 0:05:48.280 We've got we're looking at potential trade wars. That's inflationary. 0:05:48.720 --> 0:05:51.279 And to compound that, the Australian dollar is pretty weak 0:05:51.400 --> 0:05:53.960 right now and so further reate cuts way on the 0:05:54.000 --> 0:05:57.360 Australian dollar and that increases the cost of imports. That's 0:05:57.400 --> 0:06:00.600 also an inflation driver. But the main thing they pointed 0:06:00.640 --> 0:06:03.000 out as a risk is that the jobs market is 0:06:03.040 --> 0:06:04.680 still really strong, right. 0:06:04.760 --> 0:06:07.560 Can you tell me more about that, because economists are 0:06:07.600 --> 0:06:11.240 often saying that to get inflation under control, we need 0:06:11.360 --> 0:06:14.920 unemployment to rise, but that has not happened here. 0:06:15.520 --> 0:06:18.680 Yeah, So central bankers have been obsessed for a long 0:06:18.720 --> 0:06:22.239 time with the links between unemployment and inflation and interest rates, 0:06:22.560 --> 0:06:25.960 but this time around we haven't had unemployment go as 0:06:26.080 --> 0:06:28.920 high at all. People to suffer in terms of their 0:06:29.000 --> 0:06:32.039 jobs as much in the sort of task of lowering inflation. 0:06:32.200 --> 0:06:35.800 So there are a few reasons for that. You sort 0:06:35.839 --> 0:06:38.039 of need to take into account how the economy is 0:06:38.120 --> 0:06:39.680 changing a lot. You know, structurally, there are a lot 0:06:39.720 --> 0:06:42.520 of differences. There, more people working gig economy jobs, there's 0:06:42.600 --> 0:06:45.520 part time work, and measures of underemployment that kind of 0:06:45.520 --> 0:06:50.599 aren't really captured in that headline rate and Importantly, we 0:06:50.720 --> 0:06:53.720 know that wage growth, at least in this case, wasn't 0:06:53.720 --> 0:06:56.680 fueling inflation at all to the extent that you know 0:06:56.720 --> 0:07:00.960 it has in the past. We know that because wage inflation, 0:07:01.160 --> 0:07:03.200 like how much your pay was going up each year, 0:07:03.800 --> 0:07:07.120 was actually being outpaced by inflation, So your pay wasn't 0:07:07.160 --> 0:07:09.200 keeping up with inflation, so it can't have been driving it. 0:07:10.080 --> 0:07:14.600 I mean, it's certainly clear that, you know, while the 0:07:14.680 --> 0:07:17.480 jobs market is held up, that still doesn't kind of 0:07:17.480 --> 0:07:20.360 offset the fact that we've seen people having to pay 0:07:20.520 --> 0:07:24.600 extraordinary amounts more each month for their mortgages and make 0:07:24.640 --> 0:07:26.960 really painful decisions about you know, are they going to 0:07:27.000 --> 0:07:28.600 pay their bills, are they going to pay their mortgage, 0:07:28.640 --> 0:07:29.880 or are they going to buy enough food to put 0:07:29.960 --> 0:07:30.200 on the. 0:07:30.160 --> 0:07:34.200 Table after the break? 0:07:34.600 --> 0:07:47.040 How much credit should the government get for the rate cut? Emily, 0:07:47.240 --> 0:07:51.480 the RBA was able to do this because inflation has 0:07:51.520 --> 0:07:54.240 come back within their target range between that two to 0:07:54.240 --> 0:07:57.560 three percent. And there was a lot of criticism of 0:07:57.600 --> 0:08:01.880 the Reserve Bank for these constant hikes, these thirteen consecutive 0:08:01.960 --> 0:08:05.000 hikes over the past four years. People saw it as 0:08:05.000 --> 0:08:08.920 this blunt instrument to curb inflation. But does the fact 0:08:08.960 --> 0:08:11.880 that inflation is now slowing and we are now seeing 0:08:11.880 --> 0:08:16.280 a cut, proof that despite perhaps being unpopular, the RBA 0:08:16.360 --> 0:08:18.160 strategy did work here. 0:08:18.880 --> 0:08:21.640 You can't say that RBA policy hasn't worked, because inflation 0:08:21.680 --> 0:08:24.240 has definitely come down, right, But the question is always 0:08:24.240 --> 0:08:26.400 at what cost? And as you're saying, you know, the 0:08:26.400 --> 0:08:31.160 blund instrument is really it's absolutely the case that raising 0:08:31.160 --> 0:08:34.880 interest rates to this extent hurt a tremendous number of people. 0:08:35.120 --> 0:08:38.160 And we've definitely looked, we've definitely seen some criticism of 0:08:38.160 --> 0:08:40.760 what the RBA has been doing. That's come from a 0:08:40.760 --> 0:08:43.840 lot of different places, including from the treasurer from Jim Chalmers, 0:08:44.200 --> 0:08:47.880 you know, who's normally very circumspect about reinforcing the central 0:08:47.920 --> 0:08:51.240 banks independence. He said fairly recently that the RBA was 0:08:51.280 --> 0:08:54.000 slamming the economy. That's just to show the level of 0:08:54.040 --> 0:08:56.920 frustration that has been building about the fact that in 0:08:57.520 --> 0:09:00.280 rates have stayed this high for this long. You know, 0:09:00.320 --> 0:09:03.319 what michell Brook was saying today is that inflation is bad. 0:09:03.880 --> 0:09:06.120 Wraith hikes are bad, but you really don't need for 0:09:06.120 --> 0:09:08.080 inflation to get further out of control because then there's 0:09:08.080 --> 0:09:08.880 just more rate hikes. 0:09:09.280 --> 0:09:12.280 Emily, this rate cut it's obviously good news for the 0:09:12.280 --> 0:09:15.400 Abenezy government, who can now use it to talk about 0:09:15.400 --> 0:09:17.760 their handling of the economy and paint a good news 0:09:17.840 --> 0:09:21.880 story about successfully battling inflation and addressing the cost of living. 0:09:22.600 --> 0:09:25.280 How much momentum do you think they can get out 0:09:25.280 --> 0:09:25.480 of this. 0:09:26.080 --> 0:09:28.120 They'd certainly want to capitalize on this moment, and we're 0:09:28.240 --> 0:09:30.560 already seeing it with Jim Chalmer's out very quickly after 0:09:30.600 --> 0:09:34.000 the announcement, But in terms of how much momentum they 0:09:34.040 --> 0:09:36.680 can get out of it going ahead, it's not exactly 0:09:36.760 --> 0:09:40.240 a massive boon for people's budgets to be seeing this 0:09:40.320 --> 0:09:42.160 extra money in their pockets each month. It's not a 0:09:42.200 --> 0:09:46.120 large amount, so there's perhaps that sense that, you know, 0:09:46.120 --> 0:09:47.600 if they're trying to make too much of it, then 0:09:47.640 --> 0:09:49.280 people will sort of be looking at their bank accounts 0:09:49.320 --> 0:09:51.880 and thinking, well, actually, I haven't seen that much back 0:09:52.320 --> 0:09:55.000 from this. It's very delicate. As we're heading up to 0:09:55.040 --> 0:09:57.199 the election, Labor knows exactly how much trouble they could 0:09:57.240 --> 0:10:00.839 potentially be in here in the ABC's ass has shown 0:10:00.920 --> 0:10:04.080 us that there are some of the Labour's marginal seats 0:10:04.080 --> 0:10:06.880 of feeling really have taken the brunt of the higher 0:10:06.920 --> 0:10:09.800 mortgage costs, and we look at seats like McEwen and 0:10:09.880 --> 0:10:13.880 Holt in Victoria PSNWA, they have the highest proportions of 0:10:13.960 --> 0:10:16.840 mortgage holders in the country, abound fifty percent of people 0:10:16.840 --> 0:10:20.000 living there. So, you know, I think that it's quite 0:10:20.080 --> 0:10:21.920 likely that the government is going to want to be 0:10:21.960 --> 0:10:25.280 talking about how their economic management has made this possible, 0:10:25.360 --> 0:10:28.679 and certainly in light of how much inflation has come down, 0:10:28.720 --> 0:10:29.840 they have something to claim there. 0:10:30.360 --> 0:10:33.000 Can you tell me more about that, Emily? To what 0:10:33.120 --> 0:10:37.160 extent can the federal government claim this? Are there policies 0:10:37.200 --> 0:10:39.160 that you think have had a real impact or is 0:10:39.200 --> 0:10:42.640 this lowered inflation rate or just a consequence of what 0:10:42.679 --> 0:10:45.400 the Reserve Bank has done over the past four years. 0:10:46.400 --> 0:10:48.120 There's a really good question. So there's always a bit 0:10:48.160 --> 0:10:50.400 of push and pull, right, how much is fiscal policy 0:10:50.440 --> 0:10:52.840 that's the government actions to do with this, and how 0:10:52.960 --> 0:10:55.800 much of it is monetary policy, which is simpral Bank's input. 0:10:56.280 --> 0:10:58.640 They're always pointing things at each other when things are 0:10:58.640 --> 0:11:04.000 going wrong. Thement does deserve some credit, that's it's resisted 0:11:04.040 --> 0:11:07.040 the temptation to spend more in a cost of living crisis. 0:11:07.080 --> 0:11:09.160 You know, obviously the populist move would be to try 0:11:09.160 --> 0:11:11.880 and shovel more money out the door. It made some 0:11:11.960 --> 0:11:16.000 decent calls on balancing support for households. We remember that 0:11:16.160 --> 0:11:20.160 energy bill subsidies, which actually helped to bring headline inflation down. 0:11:20.800 --> 0:11:23.720 That obviously was you know, sort of kind of decried 0:11:23.720 --> 0:11:25.839 as a bit of trickery on the part of some 0:11:25.880 --> 0:11:29.320 people because it was sort of an artificial suppressing of inflation. 0:11:29.400 --> 0:11:31.480 But it's still you know, you have to say it 0:11:31.480 --> 0:11:33.200 was a deft way to give people some kind of 0:11:33.200 --> 0:11:36.000 cost of living relief, which we know that people needed, 0:11:36.440 --> 0:11:39.240 without sparing inflation. So and for its part, you know, 0:11:39.360 --> 0:11:42.360 the RBA can say, as blonde tall as it is, 0:11:42.880 --> 0:11:46.680 interest rates have done the job here to a certain extent. 0:11:47.200 --> 0:11:49.680 They could also say, as central banks often do, that, 0:11:49.720 --> 0:11:53.120 you know, heavy government spending doesn't help detame inflation. You know, 0:11:53.240 --> 0:11:56.560 government spending is pretty high historically, it's now around twenty 0:11:56.679 --> 0:12:00.240 nine percent of GDP and that's probably more than they 0:12:00.240 --> 0:12:02.080 would be comfortable if it's just that, how do you 0:12:02.200 --> 0:12:04.439 argue against that when people really need the help. 0:12:07.679 --> 0:12:10.600 Emily Thank you so much via Tank, Thank you so much. 0:12:10.679 --> 0:12:10.959 Ruby. 0:12:19.160 --> 0:12:22.400 Also in the news today, the National Anti Corruption Commission 0:12:22.400 --> 0:12:25.480 will investigate six individuals referred to the body by the 0:12:25.559 --> 0:12:30.080 Robodette Royal Commission. The announcement follows an independent review into 0:12:30.080 --> 0:12:34.000 the anti corruption watchdog's refusal to investigate the six individuals, 0:12:34.360 --> 0:12:37.880 five public servants and one public official in June of 0:12:37.920 --> 0:12:41.400 twenty twenty four. The names of the individuals have not 0:12:41.480 --> 0:12:45.320 been released. And New South Wales Police have charged a 0:12:45.400 --> 0:12:49.559 man with the alleged online harassment of journalist Antonettelatouf. The 0:12:49.640 --> 0:12:52.120 sixty one year old from Regional New South Wales has 0:12:52.160 --> 0:12:55.280 been charged with using a carriage service to menace, harass 0:12:55.360 --> 0:12:55.840 or offend. 0:12:56.200 --> 0:12:58.360 It is due to appear before court in March. 0:12:59.160 --> 0:13:02.160 Latouf says she received a number of hateful and racist 0:13:02.240 --> 0:13:04.720 messages since being taken off air from her fill in 0:13:04.760 --> 0:13:08.120 host role on ABC Radio Sydney after sharing a post 0:13:08.160 --> 0:13:10.920 on social media regarding the israeljimas War. 0:13:11.920 --> 0:13:14.840 I'm Ruby Jones. This is seven am. Let's see you tomorrow.