1 00:00:00,240 --> 00:00:02,840 Speaker 1: Now, as we know, the Reserve Bank has increased interest 2 00:00:02,920 --> 00:00:05,120 Speaker 1: rates for the first time in more than eleven years 3 00:00:05,600 --> 00:00:08,240 Speaker 1: with that twenty five basis point hike, taking the cash 4 00:00:08,280 --> 00:00:11,920 Speaker 1: rate target to zero point thirty five percent. So if 5 00:00:11,960 --> 00:00:13,880 Speaker 1: it is passed on by banks in full, as I've 6 00:00:13,920 --> 00:00:15,880 Speaker 1: been saying, and pretty much all of them have said 7 00:00:15,920 --> 00:00:18,440 Speaker 1: that they are going to will certainly A and Z, Westpac, 8 00:00:18,920 --> 00:00:22,239 Speaker 1: NAB they've all said, and Commonwealth Bank that they'll be 9 00:00:22,280 --> 00:00:25,000 Speaker 1: passing it on, it does mean that your mortgage will 10 00:00:25,000 --> 00:00:27,600 Speaker 1: go up about sixty five dollars a month on repayments 11 00:00:27,600 --> 00:00:31,479 Speaker 1: of around five hundred thousand. That's what's been calculated. But 12 00:00:31,720 --> 00:00:33,960 Speaker 1: I guess a lot of people wondering what it means 13 00:00:34,000 --> 00:00:37,159 Speaker 1: for everyday Territorians like you and I and joining me 14 00:00:37,200 --> 00:00:40,520 Speaker 1: on the line right now is Charles Dawen University economist 15 00:00:40,800 --> 00:00:42,680 Speaker 1: Rolf Gerretson. Good morning to you're Rolf. 16 00:00:44,360 --> 00:00:45,720 Speaker 2: How are you very well? 17 00:00:45,760 --> 00:00:49,199 Speaker 1: Thank you? Now what does this rate rise mean for 18 00:00:49,280 --> 00:00:51,520 Speaker 1: everyday Territorians. 19 00:00:52,440 --> 00:00:56,040 Speaker 2: Well, initially, as you pointed out, the mortgage costs are 20 00:00:56,040 --> 00:00:59,360 Speaker 2: going to go up, So anybody who bought a house 21 00:00:59,400 --> 00:01:01,560 Speaker 2: in the housing boom in the last two years is 22 00:01:01,600 --> 00:01:05,039 Speaker 2: going to suddenly be saddled with the full implications of 23 00:01:05,080 --> 00:01:05,720 Speaker 2: that decision. 24 00:01:06,920 --> 00:01:09,280 Speaker 1: And so for some people, as I've said, from what 25 00:01:09,360 --> 00:01:11,320 Speaker 1: I can gather, if you've got a mortgage around five 26 00:01:11,400 --> 00:01:13,920 Speaker 1: hundred thousand, it means it'll go up about sixty five 27 00:01:13,959 --> 00:01:16,319 Speaker 1: dollars a month. For some people that may not have 28 00:01:16,400 --> 00:01:18,640 Speaker 1: a huge impact. But the cost of living is really 29 00:01:18,720 --> 00:01:21,040 Speaker 1: quite high at the moment in the territory as well, 30 00:01:21,080 --> 00:01:21,520 Speaker 1: isn't it. 31 00:01:22,520 --> 00:01:26,000 Speaker 2: Well, I mean that's partly why the Reserve Bank raised 32 00:01:26,000 --> 00:01:30,440 Speaker 2: the rates is because we've got inflationary pressures, some of them, 33 00:01:30,560 --> 00:01:34,560 Speaker 2: as the government has pointed out, we can't do anything about, 34 00:01:34,680 --> 00:01:37,560 Speaker 2: I mean, supply mix all over the world as we 35 00:01:37,640 --> 00:01:40,040 Speaker 2: come out of COVID and that kind of stuff. But 36 00:01:40,400 --> 00:01:43,080 Speaker 2: there's also I think the Reserve Bank is firing a 37 00:01:43,160 --> 00:01:48,240 Speaker 2: warning shot across the government's bows by saying, you've budgeted 38 00:01:48,280 --> 00:01:50,560 Speaker 2: in the forward estimates the next four or five years 39 00:01:50,560 --> 00:01:55,280 Speaker 2: for large deficits, so you're feeding inflation. 40 00:01:56,520 --> 00:01:59,280 Speaker 1: Yeah right, And so what do you think I mean 41 00:01:59,360 --> 00:02:01,760 Speaker 1: you said that that warning to the government. What do 42 00:02:01,800 --> 00:02:04,480 Speaker 1: you think they're hoping that the rate rise will do rolph? 43 00:02:06,400 --> 00:02:12,240 Speaker 2: Well, well, you know, I mean the Reserve Bank is 44 00:02:12,639 --> 00:02:17,120 Speaker 2: that doesn't take note of politics. So that's why its 45 00:02:17,120 --> 00:02:19,440 Speaker 2: issue to a rate rise in the middle of an 46 00:02:19,440 --> 00:02:20,399 Speaker 2: election campaign. 47 00:02:21,480 --> 00:02:25,840 Speaker 1: Yeah, it was, you go, sorry to say. 48 00:02:25,840 --> 00:02:27,920 Speaker 2: The Reserve Bank is saying, in effect that over the 49 00:02:27,960 --> 00:02:32,280 Speaker 2: next year it'll lift the basis rate to about two 50 00:02:32,320 --> 00:02:35,919 Speaker 2: point five percent. Right at the moment it's about a 51 00:02:36,000 --> 00:02:40,240 Speaker 2: third percent point three five percent, So that's a massive increase. 52 00:02:40,280 --> 00:02:43,760 Speaker 2: So they're going to really put the fiscal screws on 53 00:02:43,840 --> 00:02:48,040 Speaker 2: the economy because they can see the economy is growing 54 00:02:48,120 --> 00:02:53,480 Speaker 2: reasonably strongly, and they anticipate wage increases. I'm a little 55 00:02:53,600 --> 00:02:57,399 Speaker 2: less optimistic about that than they are. But we look 56 00:02:57,480 --> 00:03:01,120 Speaker 2: like we have a labor bottlenecks because we haven't been 57 00:03:01,160 --> 00:03:06,920 Speaker 2: importing lots of migrants, and the success of governments have 58 00:03:07,120 --> 00:03:09,680 Speaker 2: run down the tape system, so we're not supplying our 59 00:03:09,720 --> 00:03:14,480 Speaker 2: own skilled manpower. And we have bottlenecks in terms of 60 00:03:14,560 --> 00:03:20,120 Speaker 2: women's participation because of the lack of childcare. But so 61 00:03:20,320 --> 00:03:23,000 Speaker 2: all of those structural factors aside, I mean, the reserve 62 00:03:23,080 --> 00:03:27,400 Speaker 2: banks in effect saying, well, we've we've seen it. This morning. 63 00:03:27,440 --> 00:03:29,600 Speaker 2: The banks have put their rates up to get under 64 00:03:29,639 --> 00:03:33,040 Speaker 2: five percent, between four point sixty five and four point 65 00:03:33,080 --> 00:03:36,480 Speaker 2: eight five percent. On my home mortgages, and if the 66 00:03:36,560 --> 00:03:39,840 Speaker 2: rate goes up with the underlying cash rate goes up 67 00:03:39,880 --> 00:03:43,160 Speaker 2: to two point five percent, then you can expect to 68 00:03:43,240 --> 00:03:45,800 Speaker 2: be paying the mortgages in the range of eight to 69 00:03:45,880 --> 00:03:49,040 Speaker 2: nine percent, and that really will hit people, and that 70 00:03:49,080 --> 00:03:51,520 Speaker 2: will hit people even who bought houses five years ago. 71 00:03:51,880 --> 00:03:56,240 Speaker 1: Yeah, well and ross, particularly here in the Northern Territory, 72 00:03:56,240 --> 00:03:59,160 Speaker 1: I would imagine, because to put it into that context 73 00:03:59,200 --> 00:04:02,240 Speaker 1: for the NT, we know that we've got a situation 74 00:04:02,320 --> 00:04:05,119 Speaker 1: at the moment where on Monday we had public servants 75 00:04:05,640 --> 00:04:09,240 Speaker 1: who were protesting against the wage freeze that the Gunner 76 00:04:09,280 --> 00:04:12,880 Speaker 1: government is implementing. And something like that, I've no doubt 77 00:04:13,000 --> 00:04:15,800 Speaker 1: is now going to have quite a big, quite a 78 00:04:15,840 --> 00:04:18,040 Speaker 1: big impact for those people who are affected. 79 00:04:19,839 --> 00:04:22,720 Speaker 2: Yes, I think the pressure to get rid of that 80 00:04:22,839 --> 00:04:28,039 Speaker 2: four year wage freeze will become irresistible and so the 81 00:04:28,120 --> 00:04:31,400 Speaker 2: charity go will add more to its deficit, add more 82 00:04:31,440 --> 00:04:32,039 Speaker 2: to our debt. 83 00:04:33,320 --> 00:04:35,280 Speaker 1: And that's the hard part, isn't it. 84 00:04:36,760 --> 00:04:38,599 Speaker 2: Well, we're just going to believe it to someone else's 85 00:04:38,600 --> 00:04:39,800 Speaker 2: grandchildren to sort out. 86 00:04:41,080 --> 00:04:43,640 Speaker 1: Well, And you know, it does make it so difficult 87 00:04:43,640 --> 00:04:45,760 Speaker 1: because you sort of think to yourself at the time 88 00:04:45,760 --> 00:04:47,760 Speaker 1: that they said that wage freeze was happening. I think 89 00:04:47,760 --> 00:04:50,120 Speaker 1: a lot of people went along with it or thought, oh, yeah, 90 00:04:50,160 --> 00:04:52,840 Speaker 1: fair enough. I haven't had a wage freeze through the 91 00:04:52,920 --> 00:04:55,520 Speaker 1: through the global pandemic, or I haven't had a wage 92 00:04:55,520 --> 00:04:59,159 Speaker 1: increase I should say, throughout the COVID pandemic. But now 93 00:04:59,279 --> 00:05:03,080 Speaker 1: when you looking at these interest rates, they've gone up 94 00:05:03,120 --> 00:05:05,400 Speaker 1: for the first time in eleven years. From what you're saying, 95 00:05:05,440 --> 00:05:07,560 Speaker 1: we can expect them to you know, we can expect 96 00:05:07,600 --> 00:05:10,520 Speaker 1: them to go up further. So it will have a 97 00:05:10,520 --> 00:05:12,799 Speaker 1: big impact on people in the territory. 98 00:05:14,120 --> 00:05:16,800 Speaker 2: Yeah, well, because the cost of living is rising, I 99 00:05:16,839 --> 00:05:19,000 Speaker 2: mean the cost of food. If you go to wools 100 00:05:19,120 --> 00:05:21,440 Speaker 2: or Coals to buy your weekly shopping, you will have 101 00:05:21,480 --> 00:05:25,000 Speaker 2: discovered that instead of spending two hundred, now probably spending 102 00:05:25,000 --> 00:05:27,760 Speaker 2: two hundred and thirty. And every time you go to 103 00:05:27,800 --> 00:05:30,920 Speaker 2: the bowser to get fuel the price has gone up. 104 00:05:30,960 --> 00:05:35,720 Speaker 2: So there are strong cost of living pressures that are 105 00:05:36,320 --> 00:05:39,960 Speaker 2: to a degree important, but to a degree a response 106 00:05:40,080 --> 00:05:43,440 Speaker 2: to fairly strong demand in the economy, which which the 107 00:05:43,440 --> 00:05:48,440 Speaker 2: federal government is driving through its deficit policy. Might even 108 00:05:48,480 --> 00:05:49,880 Speaker 2: say they like a labor government. 109 00:05:51,880 --> 00:05:55,320 Speaker 1: Well, this is always the argument, isn't it that you know 110 00:05:55,360 --> 00:05:58,919 Speaker 1: they always say that that the coalition or more conservative 111 00:05:58,920 --> 00:06:02,920 Speaker 1: government is better with the finances then a labor government. 112 00:06:02,960 --> 00:06:04,880 Speaker 1: I guess you know, depending on which way you vote, 113 00:06:04,880 --> 00:06:10,560 Speaker 1: you'll have varying, varying, varying opinions on that. But Ralph, 114 00:06:10,600 --> 00:06:13,679 Speaker 1: I am keen to you know, to know you touched 115 00:06:13,720 --> 00:06:16,040 Speaker 1: on this just a moment ago when you spoke about 116 00:06:16,040 --> 00:06:19,919 Speaker 1: the Northern Territory and spoke about whether this you know, 117 00:06:19,960 --> 00:06:22,320 Speaker 1: whether this increase is going to be sort of too 118 00:06:22,400 --> 00:06:25,240 Speaker 1: much for the government and they are going to backflip 119 00:06:25,279 --> 00:06:28,240 Speaker 1: on that, on that wage freeze that's been proposed for 120 00:06:28,640 --> 00:06:32,160 Speaker 1: territory public servants. We know that the territory budget's obviously 121 00:06:32,200 --> 00:06:35,640 Speaker 1: being handed down next Tuesday. Do you think that this 122 00:06:35,720 --> 00:06:38,159 Speaker 1: rate rise is going to have much of an impact 123 00:06:38,160 --> 00:06:40,640 Speaker 1: and in what way? 124 00:06:42,920 --> 00:06:46,440 Speaker 2: It's very hard to say, because I mean, in practice, 125 00:06:46,480 --> 00:06:50,080 Speaker 2: the budget should already have been set and so I 126 00:06:50,160 --> 00:06:53,000 Speaker 2: don't know until the budget comes out whether they factor 127 00:06:53,120 --> 00:06:58,000 Speaker 2: in an increase in the cost of purchasing money. I mean, 128 00:06:58,040 --> 00:07:01,040 Speaker 2: at the moment it's costing about one hundred and fifty 129 00:07:01,120 --> 00:07:05,479 Speaker 2: million dollars a year to borrow money to upset the 130 00:07:05,560 --> 00:07:10,640 Speaker 2: deficits that we're running or the deaths that we're accumulating, 131 00:07:12,120 --> 00:07:16,320 Speaker 2: so that inevitably means that that cost will go up. 132 00:07:17,000 --> 00:07:19,040 Speaker 2: But you know, we'd have to wait for Tuesday to 133 00:07:19,080 --> 00:07:22,160 Speaker 2: see whether or I'm the government's factor that's in on anything. 134 00:07:23,120 --> 00:07:26,360 Speaker 2: When Treasury is a competent department, and I would think 135 00:07:26,360 --> 00:07:29,520 Speaker 2: that they would have anticipated this raid rose by the 136 00:07:29,600 --> 00:07:33,680 Speaker 2: Reserve Bank and the increase in the cost of buying money. 137 00:07:34,840 --> 00:07:37,080 Speaker 1: It's certainly going to be an interesting couple of weeks. 138 00:07:37,080 --> 00:07:38,880 Speaker 1: I reckon roll for what do you reckon it means though? 139 00:07:39,520 --> 00:07:41,640 Speaker 1: Or what kind of impact do you think that this 140 00:07:41,760 --> 00:07:43,480 Speaker 1: rate rise is going to have them when it comes 141 00:07:43,480 --> 00:07:46,480 Speaker 1: to the federal election. I know, I think the last 142 00:07:46,480 --> 00:07:48,680 Speaker 1: time that they put the rates up during a federal 143 00:07:48,720 --> 00:07:51,120 Speaker 1: election was when John Howard was still in power. 144 00:07:52,960 --> 00:07:56,920 Speaker 2: Yeah, it's well, you know, there's been unusual circumstances obviously 145 00:07:56,960 --> 00:08:01,320 Speaker 2: in the last two years. But well, I don't know. 146 00:08:01,400 --> 00:08:04,640 Speaker 2: I mean, if I can put my political hat on, 147 00:08:06,400 --> 00:08:10,080 Speaker 2: I think, I mean, the Solomon's situation sort of blew 148 00:08:11,560 --> 00:08:14,400 Speaker 2: the government's defense credentials out of the water, and I 149 00:08:14,400 --> 00:08:17,600 Speaker 2: think this rate rise will blow its economic manager credentials 150 00:08:17,600 --> 00:08:21,800 Speaker 2: out of the water. So I think it spells a 151 00:08:21,920 --> 00:08:23,760 Speaker 2: labor victory in the next federal election. 152 00:08:24,480 --> 00:08:26,640 Speaker 1: Well, it's going to be, like I said, an interesting 153 00:08:26,680 --> 00:08:28,520 Speaker 1: couple of weeks off. We might try and catch up 154 00:08:28,520 --> 00:08:31,640 Speaker 1: with you again after the territory budget's handed down next 155 00:08:31,640 --> 00:08:32,800 Speaker 1: week if that suits. 156 00:08:32,559 --> 00:08:34,640 Speaker 2: You, Oh why not. 157 00:08:34,760 --> 00:08:41,240 Speaker 1: I mean, well, we appreciate your time this morning. Thank 158 00:08:41,280 --> 00:08:43,040 Speaker 1: you very much for having a chat with us. 159 00:08:43,920 --> 00:08:45,560 Speaker 2: That's all right, having the data you too.