Albert Einstein once quoted “insanity is doing the same thing over and over and expecting different results”, and I couldn’t think of a better way to explain the Australian economy and its inflation rates. With the exception of the current month and despite all of the Reserve Bank of Australia’s (RBA) “thoughts and prayers”, Australian mortgage holders are continuously hit with interest rate hikes and increased cost of living expenses. But only now are we seeing inflation starting to stave. So I pose the question, after almost a year of ongoing price increases for the every day Australian, and wage increases not coming close to matching these increases, is interest rate hikes the only answer to curb inflation?

I’m no economist and I fall into the everyday Australian description (husband, kids, dual income household and a big fat mortgage), so I may be bias in my opinion, but it appears that interest rate hikes are primarily hitting the Australians who cannot sustain these increases. Savings have been dipped into, previous luxuries have been sacrificed (bye bye morning skim cappuccino, extra shot, one sugar), households have genuinely been doing it tough. And the answer we are given by the RBA is, “spend less and then inflation will slow down.” But has a thought been given that retail inflation is also driven by price increases rather than higher volumes? Because I can assure you, I’m not spending less, and that’s purely because my groceries have gone up at least $70 per week AND I no longer get my morning coffee to wrap my head around that fact!

So while I understand that some interest rate hikes are necessary to curb inflation, it cannot be the only answer. Can government spending be wound back somehow? How about taxing super profits and unearned wealth? Could changing the tax thresholds help? Perhaps they could increase income tax and use the revenue to reduce cost of services? Or lastly, maybe we could keep a portion of Australian gas and other commodities for domestic use.

As a ‘glass is half full’ kind of person, I do recognise and appreciate that inflation rise has resulted in Australia’s current low unemployment rate. I also recognise that inflationary pressure in oil prices are out of the Australian Government’s influence. Some even suggest that the current inflation we are seeing is only short-term and doing too much too soon to correct it could be unnecessary. In my view, the RBA is taking that point far too seriously.

A stable economy underpins a civilised society, but each entity in that society needs to play a part that they are capable of playing. The interest rate hikes are starting to feel like the ‘everyday Australian’ is carrying a burden that the wealthy and uber successful should be playing a bigger part in, as they have the means to do so, and I don’t see stability in that. And whilst they don’t, we are continuing to see cost of living increase and the low to middle income earners are the ones that bear the brunt of inflationary pressure.

My conclusion, yes, interest rate hikes play their part, but don’t leave that responsibility to the David’s of the world when the Goliath’s could be contributing far more.

Written for you by Keira Borg