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Federal government ministers have acknowledged an increase in distress calls to crisis support hotlines over cost of living, but say the fight to rein in inflation must continue.
Key points:
- The federal government has acknowledged a spike in financial distress calls to crisis hotlines
- Reserve Bank governor Phillip Lowe says mental health concerns of Australians weighs heavily on him
- The Treasurer says he is optimistic the worst inflationary period has passed
Finance Minister Katy Gallagher said the government knew rates rises were causing pain, but allowing inflation to run longer would be worse.
"We absolutely acknowledge the pressure on households, we get it, but we also acknowledge that not dealing with inflation, letting inflation run, get worse or stay around for too long is much worse," Senator Gallagher said.
"It's devastating, I think we've forgotten what high inflation for long periods of time does to living standards."
Interest rates were raised by the Reserve Bank yesterday for the 10th consecutive month, to 3.6 per cent.
Earlier this week, Lifeline revealed record activity through its website for help and support, and a 49 per cent jump in referral searches by Lifeline counsellors specifically related to financial distress and homelessness.
Its CEO said on Monday people who had never experienced financial issues before were coming to Lifeline for help.
A Suicide Prevention Australia survey of 1,024 Australians found almost half were reporting elevated distress from cost of living pressures, and that the top three rated suicide risks were cost of living and debt, housing access and job security — overtaking social and relationship concerns.
The group has asked the government to provide millions more to frontline crisis services in the coming budget.
'It weighs heavily on my heart': RBA governor
Reserve Bank governor Phillip Lowe has also agreed to meet with Suicide Prevention Australia, who said the governor must be cognisant of human wellbeing as well as economic wellbeing as the RBA considers further interest rate rises.
Treasurer Jim Chalmers told ABC Radio he knew the latest rate rise would add more pressure on people, and that the governor would also be aware of those concerns.
"Yesterday's decision will really tighten the screws on household budgets, a lot of people are already doing it very tough, and it will make life a bit harder," Mr Chalmers said.
"When people are under extreme financial pressure that has implications for their wellbeing more broadly, I think that is understood, and I am sure the governor in accepting that meeting understands that too."
Mr Lowe this morning said the Reserve Bank board began its meeting yesterday by reading letters it had received from families who were struggling.
"It weighs heavily on my heart and the hearts of the board members," Mr Lowe said.
"It's a difficult message but it's the truth: if inflation stays high it will lead to higher interest rates, people losing jobs and more pain."
Mr Chalmers said the government was providing relief where it could do so "responsibly" without adding to inflation, repairing international supply chains that had slowed productivity, and showing restraint in the budget to interrupt further inflation.
Optimism for end of rate rises
Mr Chalmers said there were "encouraging signs" inflation had peaked at Christmas, and the latest language from the Reserve Bank was more promising.
"I think there was a softening in the language of the Reserve Bank statement," he said.
Mr Lowe said this morning Australia was "closer" to a point where interest rate increases could be paused.
Mr Chalmers was challenged on whether the government should still be proceeding with massive tax cuts due to come into effect from the middle of next year, given it may have an inflationary effect.
The Treasurer acknowledged current forecasts still expected inflation not to have settled by that date, but he said the stage three tax cuts would have to be assessed in the context of the economy in mid-2024, and not now.
"Those forecasts will evolve as we learn more about the economy and get closer to that period," Mr Chalmers said.
"Inflation will moderate over the next 12 to 18 months, we would like it to moderate as quickly as possible … it has been stubborn.
"When it comes to decisions around future budgets, we haven't changed our view on those tax cuts, we'll make decisions as we go."
Speaking at the Australian Financial Review's business summit this morning, Opposition Leader Peter Dutton said it would be a test for Labor to fully implement the tax cuts.
"To backflip on that pledge would be an absolute betrayal of Australians' trust," Mr Dutton said.
"The critical test for the government in its forthcoming budget is to deliver stage three of the Coalition’s legislated tax plan in full."