As it happened: RBA hikes interest rates to 11-year high of 4.1 per cent; Ben Roberts-Smith labelled ‘not an honest and reliable witness’

Thanks for joining us today. Here are some of our major headlines.

• The Reserve Bank has inflicted more pain on the nation’s army of mortgage holders, lifting interest rates by another 0.25 percentage point to an 11-year high of 4.1 per cent. This will add almost $100 to monthly repayments on a $600,000 mortgage.

• Reserve Bank governor Philip Lowe warned more rate rises could be necessary after lifting the official cash rate to 4.1 per cent on Tuesday, saying inflation is “still too high”.

• Asked about Lowe’s future, Treasurer Jim Chalmers said a decision will be made around a middle of the year before Lowe’s seven-year term is due to end in September. Chalmers said the appointment would not depend “on any one decision or any set of decisions”. “Our goal there is to find the best person to take the Reserve Bank into the future,” Chalmers said.

• Pardoned woman Kathleen Folbigg has spoken for the first time since her release from prison yesterday, thanking her supporters.
• Liberal MP Michaelia Cash denied a $2 billion Morrison government health and hospitals funding program was pork barrelling. A report found the scheme was “ineffective and fell short of ethical requirements.”
• Australians are being urged to remain vigilant for “sinister scammers” at tax time.
• Workplace Relations Minister Tony Burke says the government will negotiate with early educators over the workforce’s push for a 25 per cent pay rise.
• In state news, WA will swear in new Premier Roger Cook, and he is set to unveil his new cabinet tomorrow.
• In Victoria, Premier Daniel Andrews said interest rates rises were “smashing families” but not inflation.
• A new support package for Ukraine is imminent, with Australia set to give the country the missile-capable, four-wheel drive armoured cars it has been requesting for months.

Workplace Relations Minister Tony Burke has refused to join the union movement in its attack on Qantas over the airline’s use of labour-hire workers, saying the national carrier was acting legally.

ACTU secretary Sally McManus accused Qantas of “gaming the system” for contracting parts of its workforce out under various entities, claiming it did so to drive down wages and working conditions.

Minister for Employment and Workplace Relations Tony Burke.Credit: Alex Ellinghausen

The government is proposing workplace reforms that will ensure companies cannot circumvent enterprise agreements by contracting separate workforces on different rates of pay.

Burke said anyone using such a loophole currently was acting legally.

“I’m not going to say, “how dare they” – they are acting legally. But it’s a loophole that the government doesn’t believe should be there,” he said.

Singapore/Denpasar: An Australian man is facing more than two years in prison if he is convicted of assaulting his Indonesian girlfriend in Bali and allegedly resisting detention by police, who found a cache of air guns and knives in his hotel room.

Drew Donal Ireland, 28, was paraded by police in Denpasar on Tuesday, two days after being arrested over an incident at the Kadin Inn in Kuta in which he is alleged to have pushed the 33-year-old complainant to the ground and punched her in the head.

Drew Donal Ireland is led into a press conference in Bali on Tuesday.Credit: Amilia Rosa

According to investigators, he was captured 500 metres away after fleeing the scene and then caused damage to the police station after violently contesting being detained.

Police allege Ireland had been intoxicated and lashed out at the woman – and threatened her with death – after demanding she repay 1.5 million rupiah ($150) he claimed she owed him.

After arriving in Bali in April, he had allegedly told the woman that he was an Australian special forces soldier there to train Indonesian military snipers. However, police inquiries found he was not in the Australian Defence Force at all.

Police discovered three long-barrelled air rifles and two air rifle pistols, as well as two knives and two iron sticks, in Ireland’s hotel room, but were unable to say why he had them in his possession as he has refused to be interrogated without officials from the Australian consulate-general in Bali being present.

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Philip Lowe’s seven-year term as Reserve Bank governor is due to end in September, and following the release of the RBA review it’s been widely expected that the government will select someone new to helm the bank.

Asked about Lowe’s future, Treasurer Jim Chalmers said a decision will be made around a middle of the year.

“The appointment or reappointment of Phil Lowe or otherwise does not depend on any one decision or any set of decisions,” he said.

“Our goal there is to find the best person to take the Reserve Bank into the future along the path that has been proposed by the RBA review team. That remains our view. And when I’ve got something to say about all of that I’ll make sure I’ll let you know.”

Treasurer Jim Chalmers said productivity was central to the government’s May budget after the Reserve Bank warned wage growth would be sustainable only if productivity lifts as well.

Reserve Bank governor Philip Lowe noted the pickup in wages in his interest rate announcement. On Friday, the minimum wage was lifted by 8.6 per cent and minimum award wages by 5.75 per cent.

“Growth in public sector wages is expected to pick up further and the annual increase in award wages was higher than it was last year,” Lowe said.

“At the aggregate level, wages growth is still consistent with the inflation target, provided that productivity growth picks up.”

RBA Governor Philip Lowe.Credit: Alex Ellinghausen

Asked what the government was doing to increase productivity, Chalmers said the government has “a productivity agenda”.

“Well, obviously the productivity challenge has been building for some time, and you can’t click your fingers and make it turn around overnight. I think that’s self-evident,” the treasurer said. “I think that the way forward is relatively clear.

“You invest in technology, invest in energy, and you invest in people. And that gives us the best chance to turn things around.”

Treasurer Jim Chalmers acknowledged it would be difficult for the Reserve Bank to bring inflation down without crashing the economy into a recession.

Reserve Bank governor Philip Lowe.Credit: Bloomberg

On Wednesday, the government will release the national accounts figures for the first three months of the year, and Chalmers said he expects it will show a “substantial slowing” of the economy in the next 12-18 months.

“That is the inevitable consequence I think of higher interest rates biting at the same time as the global economy is a precarious place,” he said.

“The job that the independent Reserve Bank has is to try and get on top of this inflation challenge in our economy without crashing our economy, and we’ve known for some time that that is a difficult path to tread.”

When asked directly about the risk of a recession, in light of the most aggressive rate hiking cycle since the 1980s, Chalmers said it was not in any Treasury or Reserve Bank forecasts.

“That’s not our expectation,” he said. “When it comes to the independent Reserve Bank, I would rather focus on my part of my job, which is a budget which is designed to address these inflationary pressures that are pushing up interest rates.

“And I take responsibility for that, others can apportion blame where they like.”

The treasurer says last month’s budget was not a factor in the RBA’s decision to lift interest rates on Tuesday.

“The [RBA] governor has made it really clear, even in the last week that this rate rise is not because of the budget. He’s been incredibly clear about this,” Jim Chalmers said.

“He said, and I quote, ‘I don’t think that the budget is adding to inflation. It’s actually reducing inflation’, That’s what Governor Lowe said in this building last week.

Treasurer Jim Chalmers.Credit: Rhett Wyman

Chalmers said the Reserve Bank and the Treasury secretary have also made clear they do not see any looming danger of a wage price spiral – where wages chase inflation, and inflation remains higher for longer.

“So this rate rise today is not because of the budget, and it’s not because people on the minimum wage are being paid too much,” the treasurer said.

Treasurer Jim Chalmers said the Reserve Bank’s decision to lift the official cash rate by 0.25 percentage points to 4.1 per cent will be difficult news for many Australians.

“This will make life much harder for people with a mortgage. The Reserve Bank takes these decisions independently and as you know, I do my best not to second guess them,” he said.

“I do expect that there will be a lot of Australians who will find this decision difficult to understand and difficult to cop.”

Treasurer Jim Chalmers.Credit: Alex Ellinghausen

Chalmers said the bank’s job was to bring inflation down “without crashing the economy”.

“They will have lots of opportunities of course to explain and defend the decision that they’ve taken today,” he said.

“My job is different. I take responsibility for my part of managing the economy and that’s why the budget and our economic plan takes as its central focus, taking some of the edge off these cost of living pressures without adding to inflation.”

Treasurer Jim Chalmers is holding a press conference after the RBA lifted official interest rates.

A lift in the interest rate has sent the Australian sharemarket on a dive during a day when it was already trading softer.

Credit: Wayne Taylor

The S&P/ASX 200 was down 75.8 points, or 1.1 per cent, at 7140.5 just after the announcement. Consumer discretionary stocks (down 2.1 per cent) took the hardest hit as the prospect of consumers pulling back their spending amid the rate rise dragging down the sector.

Majors Wesfarmers (down 2.1 per cent) and Aristocrat Leisure (down 2.6 per cent) led the decline. Healthcare stocks (down 1.5 per cent) which also tend to benefit from lower interest rates, dropped, with ProMedicus (down 2.8 per cent) among the biggest large-cap decliners.

Utilities (up 0.5 per cent) was the only sector in the green following the announcement, as investors sought safety in their annuity-style earnings. Electricity generator Mercury NZ (up 0.8 per cent) and AGL (up 1 per cent) climbed on the news.