- See more Daily Mail on Google - save us as a Preferred Source
Former Sunrise host David 'Kochie' Koch has challenged the Reserve Bank to name the Albanese government's role in driving Australia's inflation problem, as millions of mortgage holders face the prospect of another rate rise for a bill they 'did not run up'.
asserted
they → see → bill
Commonwealth Bank, Westpac and ANZ have all warned mortgage holders to brace for another interest rate hike next week.
asserted
Bank → warn → hike
Financial markets are pricing in an increase in the cash rate to 4.6 per cent on September 29.
asserted
markets → price → September
Another rise to 4.85 per cent is expected early next year, while traders also see a strong chance of a further increase later in 2027.
asserted
traders → expect → 2027
In an open letter to RBA governor Michele Bullock, Koch urged her to explain, in the board's decision, why households should pay the price for inflation.
'There's an increasing likelihood a great many Australians are likely to be handed a bill they did not run up,' he said.
asserted
he → urge → bill
The June quarter national accounts came in hotter than expected: growth of 0.4 per cent against a forecast of 0.3, and 2.1 per cent over the year against forecast 1.8.
asserted
accounts → come → forecast
Before the board votes, I'd ask it to look closely at who generated that worryingly high level of growth.
asserted
who → ask → growth
Instead, Koch argues growth has been fuelled by federal government spending, state and territory government spending, public sector hiring and wage growth.
asserted
growth → argue → spending
David Koch argues inflation has been fuelled by public sector hiring, wage growth and government spending
Koch said policymakers should carefully consider where recent economic growth has come from before asking mortgage holders to absorb even higher repayments, claiming another rate rise may punish the wrong part of the economy.
He argued households were already behaving cautiously, noting spending rose just 0.4 per cent in the June quarter while the household saving ratio climbed to 6.5 per cent.
The financial expert also noted unemployment had risen to 4.5 per cent while consumer sentiment was falling and business conditions had turned negative.
'
uncertain
conditions → argue → cent
So who did the growing?
asserted
who → do → growing
,' Koch said.
asserted
Koch → say → ?
'Commonwealth government spending has climbed to 26.8 per cent of GDP… the highest level outside the pandemic since 1986.
asserted
spending → climb → 1986
State government spending isn't helping either.
asserted
spending → help → ?
Koch quoted figures from the Australian Bureau of Statistics which, he said, suggest government-influenced prices have risen much faster than market-driven prices.
asserted
prices → quote → prices
He said this covered childcare, education, healthcare, utilities and insurance.
asserted
this → say → childcare
In an open letter to RBA governor Michele Bullock, Koch challenged her to explain why Australians may face another interest rate increase as a result of inflation pressures
'
uncertain
Australians → challenge → pressures
In other words, some of the stickiest price pressure isn't coming from shoppers splurging… it's coming from prices governments set, subsidise, regulate or index,' Koch said.
asserted
Koch → come → prices
'Governor, that last point deserves emphasis.
asserted
point → deserve → emphasis
A meaningful slice of the inflation your board is trying to contain is not being generated in a shopping centre.
asserted
board → try → centre
It is being set in a cabinet room.
asserted
It → set → room
Koch added that petrol price shocks are already a 'tax on every household', and a rate rise won't fix the situation but only harm ordinary Australians.
asserted
rise → add → Australians
'A meaningful slice of the inflation your board is trying to contain is not being generated in a shopping centre.
asserted
board → try → centre
It is being set in a cabinet room,' he said.
asserted
he → set → room
Australians have absorbed three rate rises this year, taking the cash rate to 4.35 per cent.
asserted
Australians → absorb → cent
Interest payments now consume 5.8 per cent of household gross income... higher than the 5.7 per cent peak of 1990, when mortgage rates were near 17 per cent.
asserted
rates → consume → cent
Today's borrowers are carrying a heavier interest burden than the generation we all cite as the horror story.
asserted
we → carry → story
Households complied.
asserted
Households → comply → ?
Governments didn't seem to.
asserted
Governments → seem → ?
Yet only one of those two gets the higher interest rate bill.'
asserted
one → get → bill
Koch asked that the RBA governor follow through on four steps, starting with publishing an estimate of how much of the cash rate is attributable to government spending fuelling demand within every Statement of Monetary Policy.
asserted
spending → ask → Policy
He called on Bullock to show where the rate would be if government spending had grown in line with GDP rather than ahead of it.
asserted
spending → call → it
He added there should be a fiscal statement signed by federal and state treasurers committing to a public spending path consistent with the RBA's inflation target.
asserted
He → add → target
He also said Bullock should explain the impact of any rate rise in terms of mortgage repayments.
asserted
Bullock → say → repayments
Expectations of another increase intensified after stronger-than-expected inflation data and Bullock's recent comments to parliament.
asserted
Expectations → intensify → parliament
AMP deputy chief economist Diana Mousina said Bullock's appearance before the House of Representatives provided a fresh insight into the RBA's thinking on the economic outlook.
asserted
appearance → say → outlook
'I thought she sounded a little more overt in her discussion around inflation, noting that "developments since [the August board meeting] suggest that although growth in the Australian economy is slowing, some of these upside risks to inflation appear to be materialising",' she said.
asserted
she → think → inflation
'That sounds like a central bank preparing to raise rates at its next meeting.'
asserted
That → sound → meeting
Koch said if another increase proves necessary, Australians deserve a clear explanation of what is forcing the decision.
asserted
what → say → decision
'If the board must move on September 29, please do Australians the courtesy of naming who forced your hand,' he said.
asserted
he → move → hand
'A rate rise won't pump a single extra barrel, or fix a thing in the Middle East.
asserted
rise → pump → East
…and 2 more, not listed.
The Aporia
