source : the age
Look away if you have a mortgage.
Westpac’s chief economist Luci Ellis, a former assistant governor at the Reserve Bank, reckons interest rates are going to get even higher.
Ellis said she expects the RBA to follow up its February and March rate hikes with increases at its May, June and August meetings.
That would push official interest rates to 4.85 per cent, the highest since late 2008 when the RBA was slashing rates to deal with the global financial crisis.
The states will consult businesses and government agencies to determine which industries to focus on if fuel rationing is required, NSW Premier Chris Minns says.
Speaking after today’s national cabinet meeting, Minns said fuel rationing wasn’t needed yet, but identifying important services like emergency departments, utilities and critical industries in the economy would be part of planning at stages three and four of the national fuel security plan.
“We need to do a deep consultation with industry about what industries in particular we will focus on in the event that the states, the territories and the Commonwealth need to look at demand management, rationing in particular, but we’ll open those conversations with industry in the weeks ahead,” Minns said.
The state government is particularly concerned about the ability for key sectors to secure diesel, and rationing would likely focus on the bulk supply of diesel in the first instance.
Prime Minister Anthony Albanese has once again been described as “the last to lead”, as the opposition attempts to paint him as slow to respond to the fuel supply crisis.
Nationals MP Andrew Willcox told the prime minister that volunteer drivers for the Kidney Support Network in Mackay were unable to get fuel, which was putting patients at risk.
He ended his statement by asking: “Why is this Prime Minister always last to lead in a national crisis?”
Those words were said earlier by Opposition Leader Angus Taylor, and in a subsequent question by deputy Nationals leader Darren Chester.
Albanese said he understood the distress people were going through in finding or affording fuel, and said his government was acting responsibly to meet the crisis.
“We are not immune from the impact of this war in the Middle East, which is why we will continue to take strong action, as we have,” Albanese said.
Opposition Leader Angus Taylor is happy to take credit for today’s price measures after calling for a cut to fuel excise last Friday.
“Australian families and small businesses will pay less for fuel because the Coalition led and the government followed,” he said in a statement released during question time. “This is overdue relief that will take pressure off the cost of living and help keep supply chains moving ahead of Easter.”
But, he says, there’s still no clear plan “to get fuel to the servos that have run dry”, and he says the prime minister has still not ruled out “heavy-handed mandates Australians do not want”.
Under the National Fuel Security Plan, there is no hint of mandated actions – such as rationing – until level four when “stronger demand measures” could be rolled out to guarantee supply to critical users, such as hospitals or emergency services.
State governments will have a second national phone hook-up this afternoon to finalise how a proposed GST discount on fuel will work.
The Victorian government, which is currently holding a state cabinet meeting, is modelling different scenarios to reduce the amount of sales tax paid by motorists at the pump.
Today’s national cabinet proposal is for states to forgo the windfall gain they have enjoyed from additional GST revenue on fuel and further reduce the bowser price of petrol.
The states have agreed in principle, but are working through the details of how the GST discount will work.
At the start of the crisis, the national average cost of unleaded petrol was $1.69 a litre, which included 15¢ a litre on GST.
If the states agree to charge motorists 15¢ a litre GST from April 1, it would represent a saving at the bowser of about 6¢ a litre.
Treasurer Jim Chalmers has written to the consumer watchdog to ensure that savings from a halving of the fuel excise are passed on to consumers.
“I’ve just actually signed a letter in the last hour or so to make sure that the ACCC is particularly attentive to the change that we announced this afternoon,” Chalmers told the House of Representatives.
Chalmers said he wrote to the watchdog “to make sure that the benefits of the change to the fuel excise are passed on to Australia truckies to make sure that they’re doing the right thing there as well”.
Unsurprisingly, it has not taken long for the opposition to point out the government moved to halve the fuel excise just days after the Coalition called for the same move on Friday.
Shadow treasurer Tim Wilson asked: “Can the treasurer confirm that, unlike the Coalition’s plan, there are no inflationary offsets to the government’s excise cut?”
Chalmers rose and briefly insinuated that the question was poorly formed, before arguing that the government was offering a better plan because of a cut to the heavy vehicle road user charge.
“What this is really about is this is about providing temporary and timely and responsible cost-of-living relief to people who are doing it tough,” Chalmers said.
“This war in the Middle East is having extreme consequences for the global economy, and Australians are paying a hefty price for that at the bowser. And we’re doing what this government always does, which is to try and help where we can, to try and provide cost-of-living relief in the most responsible way that we can.”
Question time has begun this afternoon with Opposition Leader Angus Taylor attacking the government for the timeline of its response to the national fuel crisis.
This was Taylor’s question:
My question is to the prime minister on fuel. First, the prime minister said there was no problem. Just days later, there was a crisis. Last week, the prime minister refused to cut the fuel excise in response to our call to slash the tax. Then just one hour ago, the prime minister finally announced a fuel excise cap. Why is the prime minister always the last to lead in a national crisis?”
Albanese rose and immediately sledged Taylor, saying he thanked “the latest leader of the opposition” for the question.
The prime minister defended the government’s “coherent, orderly” response, saying his party had demonstrated what “good government looks like”.
One of the nation’s top economists is tipping the economy will contract over the next three months due to the war against Iran – with a chance the country will slip into recession through the second half of the year.
HSBC Australia chief economist Paul Bloxham this afternoon said the combination of the war and high interest rates through the June quarter would knock household disposable income by 1.8 percentage points.
That is expected to slash household spending, which accounts for more than half of all economic activity.
Bloxham said there was a real chance a downturn in the June quarter could be followed by a further contraction in the September quarter, which would mean Australia was in a recession.
“Despite the high uncertainty, we think enough has happened both locally and globally that it is more likely than not that Australia’s GDP will fall in Q2,” he said.
“Whether it falls again in Q3 – and thus Australia has a technical recession – depends heavily on how soon events in the Middle East de-escalate and oil prices fall, amongst other factors.”
Question time is due to return to the House of Representatives any minute now.
Watch live below.
