Homeowners and renters worse off after increased interest rates

Workers to lose jobs

More unemployment is the vision of the latest interest rate hikes from the Reserve Bank of Australia (RBA).

Yep, you understood that right. RBA governor Philip Lowe is aiming for the unemployment rate to rise to 4.5 per cent by 2024.

Lowe says that the point is to lower inflation (i.e. cost-of-living). But not only is he relying on dodgy logic, he is also strangely silent on the main driver of cost-of-living: mega corporate profits.

The real cause of inflation

The economic experts have spoken.

“It is rising profits, not rising costs, that are driving Australia’s inflation,” says Richard Denniss, Executive Director of the Australia Institute.

“While workers are being asked to make sacrifices in the name of controlling inflation, the data makes clear that it is the corporate sector that needs to tighten its belt.”

And the data? This graph sums it up.

For the past ten years, corporate profits have gone up and up and up. But wages have merely inched forwards.

While you are handing over more dollars for basics like food, petrol and energy bills, the major corporations selling you those goods are making billions.

Putting the burden of interest rates onto working people doesn’t solve anything. Instead of sending homeowners over the edge, the RBA should focus on achieving full employment.

Interest rates bad news for renters too

Already many house owners have been left with no choice but to sell their home thanks to interest rate increases. But a horrifying rental market awaits them.

Workers on middle to lower incomes have been almost completely priced out of Australian capital cities. The latest update from the Rental Affordability Index (RAI) shows affordable areas are way out on urban fringes.

Renters are beyond breaking point:

• Tasmanians are debating the introduction of a levy on vacant houses in Hobart
• South Australia is considering a ban on rental bidding
• People with assistance dogs are being turned away from Queensland rentals
• Canberra rents are unaffordable for an average worker ($70k/year) according to the RAI.
• The NT Government is facing a class action for charging high rents on unsafe housing in remote Aboriginal communities.

The RBA’s decision to bump up interest rates has made the appalling rental situation even worse. Landlords passing on the cost of higher mortgage payments means big rent increases for tenants.

But if the RBA keeps on this path, what then?

How to win a pay rise

In the face of excruciating housing costs, workers need wage increases even more.

If you’re already a union member, get those conversations happening. Talk to your colleagues: how are they coping with housing prices? What kind of pay rise do you need to keep your head above water? Make sure you keep your delegate in the loop too.

If you’re not yet a union member, it can be tricky to figure out where to start. Check out our Ultimate Guide to Getting a Pay Rise to get started with the basics.

It’s no coincidence: union members have been the big drivers of massive minimum wage increases and the best enterprise agreements are union-backed ones.

It doesn’t matter whether you’re a homeowner, renter or living at your parent’s place: Australian unions have the interests of all workers in mind.

Many unions will custom fees to fit your position, including if things change down the track, so don’t hesitate to give your union a call.

Cover photo credit: Benny Samuel on Unsplash