A reporter grilling federal treasurer Jim Chalmers let loose a four-letter word after his cost-of-living frustration boiled over during an interview.
Tom Steinfort interviewed Dr Chalmers for a 60-minute broadcast on Sunday night, when he asked if Australia was in a similar position as it was in the early 1990s, when the country entered a recession.
“There is absolutely no chance that interest rates will return to the levels of the early 1990s,” Dr Chalmers said.
The comment sparked a fiery response from Steinfort, who declared, “We’re all f***ed if they do that.”
“Will that be on the show?” asked a stunned Dr. Chalmers.
The interest rate reached a record high of 17.5 percent in January 1990 – more than five times the current interest rate of 3.35 percent, which is already squeezing borrowers.
60 Minutes reporter Tom Steinfort (pictured) said even he felt the pain when he looked at his own mortgage bill amid a series of rate hikes
Borrowers with a $700,000 mortgage are paying, on average, more than $1,000 more per month than a year ago (file image)
Dr. Chalmers assured Steinfort that there would be no repeat of the economic meltdown of the 1990s that his predecessor, Paul Keating, described as “the recession we had to have.”
“We don’t expect a recession in the Australian economy,” said Dr Chalmers.
“The forecasters from the Treasury, the Reserve Bank and others don’t expect a recession…But I have to be honest with your viewers and say that we expect our economy to slow significantly.”
Mortgage holders are likely to be hit with another hike in their monthly payments when the Reserve Bank marks its 10th straight rate hike this week, as widely expected.
The central bank is being tipped to raise another 25 basis points after comments last month suggested the bank was growing impatient with inflation now at 7.8 percent.
This would bring the cash rate from 3.35 percent to 3.6 percent when the board meets on Tuesday.
Annual repayments are now typically $12,000 higher than they were in May 2022 after nine consecutive rate hikes.
Steinfort asked Dr. Chalmers about the third stage tax cuts that will be introduced next year.
The move will ensure that the wealthiest Australians who don’t need a mortgage get a big windfall.
“How do you marry that?” said the reporter.
‘That people who are well off are not currently suffering from inflation and that you are going to give them a tax benefit on top of that.
“They are literally smiling all the way to the bank and to Mykonos and wherever they want to go at the moment with all their money.
“How does that make sense?”
Treasurer Jim Chalmers said he does not believe Australia will slip into recession
Another rate hike is expected from the Reserve Bank this week (file image)
Dr. Chalmers said the government’s priority when it comes to easing the cost of living is people on lower incomes.
“That’s been our priority for a while and that’s our priority in the May budget.”
The third stage tax cuts expected in July 2024 will remove the 37 percent tax bracket and lower the 32.5 percent tax bracket to 30 percent. The higher tax threshold will also rise from $180,000 to $200,000.
It would provide tax relief for those with higher incomes, as anyone earning between $45,001 and $200,000 would now pay the same 30 percent rate.
The tax cuts were passed into law in 2018 and 2019, and the country’s interest rate is set independently by the RBA, which also prevents the treasurer from exerting influence.
“Certainly, the prime minister understands and the government understands that people are really under pressure,” he said.
‘We do what we can to solve it within the limits of a responsible budget.’
However, he added that he believes inflation has peaked, meaning rate hikes should ease.
“Most likely inflation peaked at Christmas time and started to moderate, but we won’t know until we have that next set of data.”
Quarterly inflation figures will be released on April 26.
The hope is that the measures already taken have reduced or at least stopped Australia’s current inflation rate of 7.8 percent.
“Even if (inflation) moderates, we can’t be complacent about it because it’s still going to be challenging in 23, as it was in 22,” Dr Chalmers said.