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Peter Hannam

Earlier this week we had ANZ’s weekly snapshot of consumer sentiment showing a modest drop. The Westpac-Melbourne Institute’s monthly survey, though, is revealing a sharper dive in shoppers’ moods.

The latter survey collected the views of 1200 respondents over five days that took in the RBA’s first rate rise (a surprisingly big one) in 11 years, and also the shock annual 5.1% CPI rise during the March quarter.

The WMI index slumped 5.6% to 90.4 for the month, and is at the lowest level since August 2020. Excluding the Covid distortions – which seem to have evaporated – the dive is the most since June 2015. That coincided with global market turmoil, which seems to be creeping back in now too.

Westpac blamed the recent drop on the combination of rising cost of living pressures and the prospect of rising interest rates. Still, actual spending is much more buoyant over 2022 to date, as households respond to the reopening of the economy.

While headline inflation pressures may ease from this point, consumers are aware that the Reserve Bank plans to continue increasing the cash rate for some time.

Our May survey found 77% of respondents expect mortgage interest rates to rise over the next 12 months, up from 70% last month. But it is even more significant that 52% expect rates to rise by more than 1%, up from just 34% only one month ago.

Updated at 21.19 EDT

Labor’s candidate for Reid, Sally Sitou, has asked for an apology from the Liberal member for Reid, Dr Fiona Martin, over an assertion Martin made during a radio debate between the pair:

Earlier today in a candidates’ debate, my opponent Fiona Martin accused me of having previously contested preselection in Fowler.
 
I have never sought to run for Fowler. I live in Reid, my son goes to school in Reid, and I am excited by the opportunity to represent my community.

— Sally Sitou 陈莎莉 – Labor for Reid (@SallySitou) May 11, 2022

My opponent either has me confused for a different Asian-Australian, or she is deliberately misleading people.

Either way, she should apologise.

— Sally Sitou 陈莎莉 – Labor for Reid (@SallySitou) May 11, 2022

Updated at 21.16 EDT

Scott Morrison has spent most of this campaign poo-pooing Anthony Albanese’s “increase wages” line by saying he “doesn’t have a magic pen/wand” to raise wages, and is making a promise he has no influence over.

Since the RBA lifted the official cash rate, Morrison has made it clear he does not believe the government has any impact on interest rate rises.

Governments make submissions to the Fair Work Commission as part of the process, about what it believes needs to happen with the minimum wage. Last year, the government submitted the FWC should “take a cautious approach” to raising the minimum wage.

According to Morrison this week, not only does Albanese’s opinion have the power to influence things Albanese writing a letter as prime minister apparently didn’t have any influence over, it will also lead to higher interest rates.

But at the same time, Morrison does not have an opinion on an independent process. Except his opinion on what Albanese’s opinion could do.

The PM is prepared to say a 5% wage rise is too high (ie: an increase that keeps pace with inflation) but he’s not prepared to specify what his preferred number is #auspol

— Katharine Murphy (@murpharoo) May 11, 2022

The PM says there’s an independent FWC process to respect. Well .. if you respect an independent process, best not to have a view on any number, right?

— Katharine Murphy (@murpharoo) May 11, 2022

Updated at 21.04 EDT

The press conference ends.

Q: Why haven’t you disendorsed your candidate for Lilley?

Scott Morrison:

Those matters are – sorry, did you say the candidate for Labor? Sorry, I thought you said the candidate for Labor. I was going to say that has nothing to do with me.

Those matters are working their way through with the relevant authorities there and people are cooperating fully with those matters and I would expect them to do that.

But ultimately – and I will leave you on this – this is a choice, as I say every single day. And it’s the responsible choice, the responsible choice at a time of great upheaval globally, with our economy, with international security, the responsible choice is for the Liberals and the Nationals – I’m just finishing up – The Liberals and Nationals is the responsible choice when it comes to the economy, and national security.

With Labor you just don’t know what’s going to pop into Anthony Albanese’s head any day and what he will blurt out and what that will mean for your interest rates, for your cost of living, and indeed Australia’s national security. Thanks very much everyone.

Updated at 20.49 EDT

Q: If you win government but Josh Frydenberg loses his seat, who will be the next treasurer?

Scott Morrison:

That’s not something I’m speculating on because I know Josh will be returned.

Q: Isn’t it hypocritical you attack Labor for not confirming who the defence minister will be but, if the polls are accurate, Josh Frydenberg will not be treasurer [after the election]?

Morrison:

You know my view about the polls. Josh Frydenberg will the treasurer. I still don’t know who Anthony Albanese’s defence minister is going to be, I don’t know who his home affairs minister is going to be.

[Do you know who will be your treasurer?]

Morrison:

Yes, it is Josh Frydenberg.

Updated at 20.49 EDT

Q: What personal would you be comfortable with then given all of the fact that you have just mentioned, or is it just no dice on a real wage rise.

Scott Morrison:

The figure I have always been comfortable with, and that is what is calmly determined, sensibly, by the independent process that looks at all of these factors.

That’s – that’s what discipline is. That’s what financial discipline works. Now, as you know, we have…

Q: [ The government makes a submission to FWC, so how can ou say it is wrong for any politician to suggest any increase when you go to fair work.]

Morrison:

As you know that’s never been our government’s policy and nor was it the previous government’s policy as you recall.

Because what…

Q: If Fair Work come up with 5.1% are they wrong?

Morrison:

I’m not speculating about what Fair Work is going to say. Anthony Albanese is the one who was recklessly making comments in this area, and he doesn’t seem to understand. So you know, when you’ve been a Treasurer for three years and a prime Minister for four years, you understand that careless speculation can lead to real world impacts in the economy. You don’t get – you don’t get the latitude to be loose like Mr Albanese was yesterday.

And that shows that he’s not up to the job, the job is bigger than him, he doesn’t understand the economy and if that’s not true he is seeking to take you for a ride.

Q: The RBA has said that real wages won’t increase until the end of 2023, with unemployment reaching almost full employment in that time and businesses only just starting to offer wage rises, what are Australians supposed to do in the next 18 months when the RBA is saying that real wages won’t increase in that time, how do they pay for things?

Scott Morrison:

They won’t be able to pay for things if inflation goes even higher and interest rates go even higher. That is why what Anthony Albanese is speculating on and running off at the mouth on, would only make that situation worse. It would only make it worse.

Labor would make the very issues you’re highlighting worse under what they are proposing.

(A journalist repeats the question.)

Q: Is it correct to say then that you – any workers will not see a real wage increase until that inflation number comes down? And would your government do anything to … look at trying to ease those global factors that you keep saying are causing Australia’s higher inflation level, particularly around supply chains?

If you say there’s an independent wage setting process, and you want to respect that, perhaps you are a loose unit if you nominate any particular number as being too high. Almost like you might be seeking to influence an independent process #auspol

— Katharine Murphy (@murpharoo) May 11, 2022

Morrison:

… There are two things driving those inflation numbers at the moment. One is, of course, what’s happening with the – there’s a range of immediate factors. Let’s call them that. There is the war in the Ukraine, there is the shutdown in China because of Covid, and also we will continue to see, particularly this quarter, and perhaps the next quarter, the impact of the floods in Australia and what that means for fruit and veg prices and we have seen that when there is cyclones and other disasters in parts of the country in the past.

That will put pressure on prices. And they are things that occur well outside Australia’s control. The structural factors that are driving inflation are about those supply chain pressures that we are seeing which is a lag and a direct consequence of the pandemic.

And that’s why what we are talking about here, advanced manufacturing, linking up supply chain in Australia, critical supply chain work, whether it be in the critical rare earth minerals and so on – that’s what helps moving the supply chain efficiently.

On top of that, it’s ensuring that we keep getting people into jobs, keep that pressure in the system, which leads to sustainable wage rises, supported by businesses that stay in business.

I mean, this is one of the most difficult times with the pressures that are on the global economy and hence the Australian economy, that we have seen in a very long time.

And how we manage that must be sensitive, must be responsible, must be disciplined.

Now, what we saw yesterday from Mr Anthony Albanese, what we saw yesterday from Mr Albanese was loose. It was ill-considered.

It showed a lack of understanding of the relationship between wages and inflation, and interest rates. If you want your interest rates to be skyrocketing, as a result of what Anthony Albanese is suggesting, well, he’s your guy.

But what I’m saying, is Anthony Albanese will make it worse.

Updated at 20.47 EDT

Q: Prime Minister, today you are quoted as saying that it is economic vandalism …

Scott Morrison:

I didn’t say that.

Q: I want to confirm that, do you think it is vandalism …

Morrison:

I didn’t say that.

Q: You are not calling him a vandal?

Morrison:

I didn’t. That is a misquote in the paper. They were not my words.

Q: What is wrong with asking for a pay rise?

Morrison:

There is nothing wrong with asking for a pay rise but, obviously, it – and the Reserve Bank governor has said very clearly, that is what we are seeing in our economy, and the reason we are seeing that is because unemployment is coming down and businesses are growing and becoming stronger. That is where pay rises come from.

They come from businesses doing well*, not being shut down by reckless policy, by a Labor party that would see not only your interest rates go up more than they might otherwise do, or your cost of living go up even more, getting into a vicious spiral, going up and up and up.

What is he next proposing, if it goes to 6% they have to go by that and when that pushes it up to 7%, they go by that? That is how we ended up with 18% interest rates in this country under Labor.

That is what causes the worst of all outcomes, which is a crash in the economy. That is not responsible.

*Wage growth was stagnant before the pandemic in Australia.

Updated at 20.36 EDT

Q: If you say that 5.1% for the minimum wage is a crazy pay rise and you think is a terrible idea – given the government has said it wants to see people earn more, what would be a more sensible minimum pay rise? And please don’t say the Fair Work Commission decides this or businesses determine wages. We have heard that from you before.

You are attacking Albanese for what he is saying, what is your alternative, sensible solution and that you propose is 5.1% is too high?

Scott Morrison:

An independent process that carefully calibrates and considers all the things in the economy that is sustainable.

Q: You are attacking Anthony Albanese

Morrison:

I am attacking him for being thoughtless and not having a clue about the economy and not understanding how the economy works and not respecting the process of an independent setting of minimum wage conditions in this country and I will tell you why that is important, small businesses, businesses around the country have to make decisions about how they invest, how many people they employ.

They don’t want these things set by some erratic statement of a politician. They want this stuff to be carefully considered. Mr Albanese showed yesterday that he is a complete loose unit on this stuff.

He just runs off at the mouth. It is like he just unzips his head and lets everything fall on the table. That is no way to run an economy because that only leads, if you vote Labor, to having a leader who can make interest rates worse, who can make inflation worse.

Updated at 20.35 EDT