Banks must give retirees “a fair chance” to stay loyal during pandemic, PM says.
The Reserve Bank of Australia raised the official cash rate from a record low of 0.1 percent to 0.35 percent, the first increase since 2010.
The Big Four banks have surged past borrowers, and the cost of living is already a key issue in the May 21 election campaign.
Announcing a consideration rate freeze for nearly 900,000 Social Security recipients, Scott Morrison said self-funded retirees had been “doing it hard” over the past two years.
“My message to banks is to give (deposit holders) a fair chance,” the prime minister told reporters at Boothby’s headquarters in Adelaide on Wednesday.
“I would be encouraging the banks, obviously it is their decision and there is no way to force them to do so, to be fair to the deposit holders who have held their savings.
“They deserve recognition for that, ensuring that those (interest) benefits are transferred directly to them.”
Morrison’s government is on the defensive after the central bank raised interest rates for the first time in more than a decade.
The estimate rate freeze will apply to 885,000 people, with the lower estimate rate set at 0.25 percent, while the upper estimate rate will remain at 2.25 percent.
Social Services Minister Anne Ruston said the freeze would bring greater financial security to older Australians.
“We know that older Australians in particular have felt the uncertainty of the last two years very, very deeply and today’s decision to freeze consideration rates for the next few years gives them two years of certainty,” he said.
Anthony Albanese, who campaigned at Chisholm’s Victorian headquarters on Wednesday, noted that the prime minister had been “dragged kicking and screaming into making any change in estimate rates”.
Albanese said the government ignored cost-of-living pressures on working families.
“The combination of low wage growth, rising inflation and rising interest rates is putting real pressure on working families in Australia’s suburbs and regional cities,” he said.
“Scott Morrison has an excuse for everything and a plan for nothing. He always wants to take credit when things go well, but he never accepts any responsibility when things go wrong.”
Treasurer Josh Frydenberg, who debated his Labor counterpart Jim Chalmers at the National Press Club on Wednesday, said the COVID-19 pandemic and the war in Ukraine were “the main drivers” of inflation.
But the government was doing everything it could to ease cost-of-living pressures, including halving the tax on fuel, lowering the cost of medicines and handing out cash payments.
“Australians are making it tough right now and just as we stood with them at the height of the pandemic, we stand with them now,” Frydenberg said.
Dr. Chalmers said the cost-of-living crisis began long before the pandemic and the Ukraine war, with wages falling short of inflation and the government presiding over a “wasted decade of missed opportunity.”
“My heroes are the essential workers and shift workers who have done so much to keep the wheels of the Australian national economy turning during the course of this pandemic,” he said.
“And the reward for their efforts can’t be another three years of hard work, but still going backwards in this economy.”
Australian Associated Press