There is no doubt that the Reserve Bank's multiple interest rake hikes are having a severe impact on ordinary Australian families and small businesses. The ABC this week aired an interview with the Rev. Bill Crews of the Bill Crews Foundation, highlighting the soaring demand for food and shelter form an increasing number of families and young people under intense financial stress. The AiG has responded to the latest RBA rate increase.

AIG logo The Ai Group comment says: “The RBA’s decision to raise the cash rate further and to continue to flag its expectations of further increases, is sobering,” Innes Willox, Chief Executive of the national employer association Ai Group says.

“There are strong signs the desired slowdown in activity is beginning to take effect and as we get further along the path of monetary tightening, the risk of overdoing the rate rises clearly intensifies.

“It is critical now that businesses, governments and employees exercise moderation in price setting and wages negotiations and avoid fuelling the inflation and inflation expectations that will only increase the likelihood of further increases in interest rates,” notes Mr Willox.

Commentary

It is of interest to note that Mr Willox sees that the rate increases are beginning to achieve the desired effect - stabilise and bring down inflation - which was 7.6% in calender 2022. Inflation is a measure of rises in prices of goods and services, notably essentials such as food, healthcare and housing. A government's monetary policies can help reduce inflation to acceptable levels - say 2% - but they alone are not in charge of inflation. Banks, food chain providers, freight logistics, energy companies and manufacturers all play important roles.

Banks, for example, are very fast to pass on rate rises, but sluggardly in reducing them as inflation eases. Supermarkets can be slow in reducing prices after a period of several increases and make huge 'windfall' extra profits. In other words, the reasons for inflation can be re-fuelled by the same profit-hungry institutions that caused it in the first place. When it spirals out of control, you have a recession, with its attendant homelessness, inability to provide sufficient food for families. This is happening now in Australia of all places. People can't afford spiralling rents and previously stable families and individuals are being forced out of their homes and are living in cars and tents, like these people reported by the ABC.

The Rev. Bill Crews of the Foundation named after him has said that demand for emergency food and shelter has never been higher and that the Foundation is in need of tonnes more food to prepare and distribute to those in genuine need.

Inflation must come down, that is not in question - otherwise we risk becoming basket-case inflation countries like Zimbabwe (259%), Venezuela (159%) or Argentina (88%) - where the cost of a loaf of bread can double from one day to the next. However, the Government must demand effort from all sectors, not just families 'tightening the belt' and reduced consumerism.

It is inconceivable that 'Fair' Australia could descend into such an inflationary abyss. We have a strong underlying economy and are quick to accuse others of human rights abuses, but is it not a human right to have a roof over your head and food on the table right here at home?

Footnote:

Macrobusiness has reported that Private Equity funds, such as Blackstone, are buying up properties with the sole purpose of renting them out at inflated prices, in order to provide high returns to their  already 'high net worth' investors. Students in particular are targetted. This is disgraceful, corrosive at all levels of decent society and un-Australian. It should be made illegal, NOW!

https://www.macrobusiness.com.au/2023/02/blackstone-vampire-to-bleed-aussie-renters-dry/

 

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