Speaking on Tuesday following the RBA’s announcement, Mr Taylor acknowledged the news was likely a “relief for hardworking Australian families” but was quick to point out the country still had a long way to go in the fight against inflation.
“The battle against inflation is far from over,” he told reporters.
“We know that there’s more pain in the pipeline, with almost half a million Australians who are going to see a shift from lower fixed rate mortgages to higher flexible rate mortgages in the second half of this year.
“We also know from what the Reserve Bank said today that further tightening might be necessary.
“There’s an expectation now that interest rates will stay higher for longer, and that expectation has heightened since the last Budget.”
He then turned his attention to the government, who he said were not doing enough to take pressure off inflation and support Australians struggling with higher cost of living.
The shadow treasurer pointed out that interest rates are a “very blunt” tool, which meant the RBA needed support to address the problem and spread any pain more evenly across the economy.
Mr Taylor said that support had not been forthcoming, claiming the government had instead added “$185 billion of spending” which was hindering efforts to bring inflation under control.
“The government is showing at best indifference and at worst incompetence,” he said.
“The government needs to pull every policy lever at its disposal to take pressure of inflation, not adding $185 billion of spending which is what it’s added since it came to power last year.
“It needs to focus on industrial relations policy which is not going to make the situation worse, it needs to focus on its energy price reduction promises that it made so many times prior to the last election.
“The truth of the matter is that this government needs to fight inflation as its first, second and third priority.”
The shadow treasurer’s comments came after Finance Minister Katy Gallagher had defended the government’s record on cost of living in her own response to the RBA’s decision.
At a press conference earlier on Tuesday, the Finance Minister said the government was “working alongside the Reserve Bank, not against it” as they attempted to balance the need for spending restraint and cost of living relief.
“Our Budget, in particular, was aimed at getting on top of this inflation challenge and providing cost of living relief where we could,” she said.
“We’re working alongside the Reserve Bank, not against it.
“Our improved fiscal position is making sure we’re not adding to inflation, in fact our policies are directly reducing inflation.”
She added that cost of living relief had also been “carefully calibrated” to prevent from adding to inflationary pressure and that Australians would begin to see the effects soon after some policies came into effect at the start of the month.
Senator Gallagher also flagged rising wages as something the government viewed as a positive, in spite of concerns from some experts, and even RBA Governor Philip Lowe, that higher pay could make fighting inflation more difficult.
Following the Fair Work Commission’s decision to boost the wages of low-income workers by about 5.7 per cent, Governor Lowe said there was a risk others piggybacking on the increase could spell “trouble” for the economy.
“It is perfectly understandable for the lowest paid workers in the country to be compensated for inflation, it is tough and we know it is tough,” he said.
“The concern would arise if the five-and-three-quarter per cent increase became a benchmark or a quasi-benchmark for outcomes in private sector wages more broadly. I’m really hopeful that doesn’t happen.
“We will get ourselves into trouble if we accept the premise that all workers need to be compensated for inflation. If we accept that premise, inflation at seven per cent and wage rises match that, what do you think inflation will be next year? It will be higher again.”
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