Joe Hildebrand: Albanese government needs to focus on cost-of-living crisis

The Albanese government is not responsible for the cost-of-living crisis but it is — by virtue of the fact that it is running the country — responsible for fixing it, writes Joe Hildebrand.

‘Why are they even talking about anything else?” This wasn’t an activist bleating about Gaza or a social media guru lamenting Donald Trump’s catalogue of past sins.

That was what a friend asked me in a carpark this week as she recounted — with something resembling PTSD — the size of her last grocery bill.

And that, she hurried to add, was just for someone living alone in an apartment. Imagine how much families were having to spend.

Fortunately for her and unfortunately for me, I didn’t have to imagine.

I did our supermarket shop during the mass cyber outage last Friday afternoon. My wallet nearly went the way of the computer.

My friend was talking just as a human being, but she also happens to run a strategic communications company, which made her question all the more pertinent.

And, it goes without saying, she was asking it of the government.

Feeding the family gets more expensive with every trip to the supermarket. Picture: iStock

The Albanese government is not responsible for the cost-of-living crisis but it is — by virtue of the fact that it is running the country — responsible for fixing it.

Indeed Labor, be it foolishly or just optimistically, promised to do just that during the 2022 federal election campaign.

There is a saying in politics that you campaign in poetry and govern in prose. The poetry of such declarations might be debatable but the prose we have been left with is undeniably turgid.

And so again, while this is not a problem of the government’s making — you can blame pent-up demand during Covid lockdowns and accompanying supply-chain disruptions for that — it is, nonetheless, the government’s problem.

The real question is: what does the government do about it — and it is here that every answer starts bouncing around like a pinball.

Bills are causing enormous amounts of stress for many Australians.

The response in the last federal budget — and almost certainly the last before Albo and Co go to the next election — was to provide relief to families doing it tough.

Tax cuts and power bill subsidies were the centrepiece, but it now appears those kind and noble offerings may have fuelled inflation and put the prospect of another interest rate rise on the cards as early as next month.

God willing that won’t happen, but God seems to have taken a conspicuous disinterest in Australian politics since delivering Scott Morrison victory in 2019.

The point being, the budget was directed towards those worst hit by the cost-of-living crisis rather than the actual cause of it.

This was both right and merciful, but it ran the risk of being inflationary and, indeed, that appears to be the result. The problem is the government could not do much else.

In fact, there are only two bodies with the power to bring down inflation: The Reserve Bank and the citizens of Australia.

Only one group of people is happy with current interest rates — Boomers who have paid off their mortgages and have savings in the bank. Picture: iStock

The RBA can increase rates once more, and crush all mortgagees like bugs, or the rest of us can stop spending.

Of course, this is easier said than done — people need to buy groceries, bills need to be paid.

But the greatest injustice of the blunt instrument of rate rises is that it punishes those who are still struggling to pay off their homes while rewarding those who have already done so and for whom the rest is all money in the bank.

Yes, we’re talking about Boomers.

Every time — 13 and counting — the RBA has raised rates recently, it has crippled younger and middle-aged homeowners while retirees, who are already in the clear, have got better returns on their savings.

No wonder that next Pacific cruise is looking pretty good.

Don’t get me wrong, I want them to be happy. I’d put my darling mother on the next boat myself — and we’d both be happier.

But we need to wait, by which I mean they need to wait. Or, dear reader, if you are in the autumnal phase of your life, you need to wait.

In other words, if you have money to spend, please don’t spend it. At least not yet.

Believe it or not, there is a plan — and that is for higher interest rates to crush demand until we have what is euphemistically called “a soft landing”.

The other option is what is literally called “a recession”.

Either way, one or the other is coming soon, and we will desperately need you to spend your money then. Rest assured, you will see Fiji.

In the meantime, the government needs to talk about nothing else.

Forget Gaza, Ukraine, Trump and Harris – no normal Australian cares about any of that more than they care about the roof over their family’s heads.

Listen to The Real Story with Joe Hildebrand wherever you get your podcasts