‘You don’t have an economic plan’: Opposition slams government over inflation as Australians face rate hikes

As Australians stare down the barrel of another potential interest rate hike, the opposition has hit out at the government for not doing enough to get inflation under control.

Economists are forecasting the annual rate of inflation will stay at about 4 per cent for the year to June, with the underlying rate expected to edge up to about 3.8 per cent.

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As the Reserve Bank prepares to make a decision on interest rates on Tuesday, August 11, Australian Retirement Trust chief economist Brian Parker has told Sunrise inflation is “still too high”.

“We still have an inflation rate that’s been above where the Reserve Bank has been targeting now for about four years. So that’s certainly a problem for the RBA at this point,” he said.

Speaking to Sunrise on Thursday, Nationals Senate Leader Bridget McKenzie hit out at the government, accusing it of shirking responsibility off onto the RBA.

“Five budgets, no reduction in spending, a trillion-dollar worth of debt and inflation, which hurts the poorest the most, above the band that the Reserve Bank government needs to see it,” she said.

“You’re not cutting spending, you’re taxing Australians and small businesses are going under. You don’t have an economic plan to address this and that’s leaving it to the Reserve Bank to use a very blunt instrument for an interest rate rise.”

McKenzie accused the government of having no economic plan for Australians experiencing “the biggest drop in living standards in the developed world”.

Employment Minister Amanda Rishworth rejected the criticism, arguing the government is doing everything in its power to bring inflation down.

“We are doing what is in our power to support Australians when it comes to cost of living, when it comes to being responsible, when it comes to the budget and improved productivity,” she said.

She pointed to recent budget measures to boost productivity including permanent free TAFE and investment in skills.

“We recognise that productivity has been a challenge for a long time. That’s why we’re addressing it,” she said.

“We know there have been difficult global circumstances, we know that inflation is and was running higher than we’d like, and that’s why we are doing what we can as a government.”

Parker agreed global factors, including oil prices and the war in Iran, have contributed to inflationary pressures across the globe but said the fundamental issue is that demand in the economy is growing faster than supply.

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Parker explained that fighting inflation typically falls to the central bank rather than the government, describing it as a “very, very delicate balancing act”.

He acknowledged there could be scope to for the government to cut spending in some places but did say he is “not sure” they are a big part of the problem.

“I think (Reserve Bank of Australia Governor) Michelle Bullock made it pretty clear yesterday that when you think about what interest rate policy is trying to do, they’re trying to slow down the growth and demand to bring that better back into balance,” he said.

If rates do go up again in August, they will be at their highest level since 2011.