Rise in Household Spending Indicates Low Interest Rates are Ineffective

By JEFFREY GIBBS

The recent release by the Australian Bureau of Statistics (ABS) fgures showing a massive 17.8% increase in household spending over the past year is a stark reminder that the current policy of relying on higher interest rates to tame infation is not working. of skills if they are to take advantage of the opportunities offered by AI. “As the AI landscape continues to evolve, we may move closer to having AI providers that can provide endto-end solutions,” Ms Solar said. “But for now, businesses should be comfortable with the idea of working alongside several providers to ensure they get complete solutions that deliver business outcomes.

“Before they start thinking about working with external partners for their projects, business leaders should take the time to understand where AI can deliver benefts across their business. “AI project exploration should start with identifying priority business outcomes, before moving to assess whether this is a unique challenge that will require a bespoke solution or if the solution already exists in a preconfgured or packaged form,” she said. The report also highlights the importance of taking a ‘Responsible AI’ approach, as AI can have far-reaching ethical implications for customers, society, and the world at large. Business leaders must take accountability to build and deploy AI systems which create responsible outcomes. This includes ensuring that AI solutions are transparent and accountable, as well as considering the potential risks and harms that could arise from their use. AI is becoming an increasingly important part of the business landscape in Australia, and it is essential that businesses take the time to understand the opportunities and challenges that come with its implementation. Working with a team of AI providers is often the best way to ensure that businesses get the most out of their AI investments, and that they are taking a responsible approach to their use of AI. By taking the time to understand the potential benefts and risks of AI, businesses can ensure that they are getting the most out of their AI investments and that they are creating responsible outcomes for their customers, society, and the world at large.

Kevin Young, President of Property Club, Australia’s

largest property investment group, believes that this huge jump in household spending will only encourage the Reserve Bank of Australia (RBA) to increase interest rates even further, which could have disastrous consequences for the already struggling property sector. “Higher interest rates are simply not working in Australia. Instead, the Federal Government should urgently introduce a package of measures that reduces the total reliance on rising interest rates to tame infation with a number of innovative fscal measures to ensure the housing crisis in Australia does not worsen,” said Mr Young. He believes that relying solely on interest rates to curb infation would make tens of thousands of Australians homeless by worsening our housing crisis. “This policy of rising interest rates will only put an additional $10 billion of additional profts in the pockets of the big banks over the next three years and cause immense pain to fnancially struggling Australians, especially renters. “Rising interest rates have already resulted in a reduction in lending to private property investors by over 30 per cent – billions of dollars that should be invested in providing rental homes for ordinary Australians,” he said. Property Club wants to lead the national debate on how we can move away from the blunt instrument of interest rate rises which will be economically and socially counterproductive and replace it with fairer antiinfation policy settings.

Mr Young believes that only 35 per cent of private dwellings in Australia have a mortgage, and the owners of these properties are now carrying the full fnancial burden of rising interest rates. “The worst hit fnancially are frst home buyers and property investors – the very people we need to solve the current housing crisis,” he said. Property Club believes that Australia should emulate the approach in the USA, which recently passed an Infation Reduction Act that is designed to reduce infation through a variety of fscal measures. “Australia does not need to replicate these precise measures, but we can introduce policy settings that are most suited to our own circumstances,” said Mr Young. He suggests that Australia could increase the rate of GST by 1 per cent, which would be a fairer way of sharing the burden of reducing infation.

The billions of dollars collected by this additional tax could be used to reduce the budget defcit and as an investment in the future of Australia. “By slowing the economy through a broader tax, interest rates could be slashed to encourage property investors back into the housing market.

“In addition, we could restore negative gearing to second-hand properties and immediately provide thousands of additional, more affordable rental properties for renters throughout Australia. “Rather than making the big banks richer through higher interest rates, these measures would help solve the housing crisis in Australia and deliver a positive social outcome for millions of Australians,” he said. Mr Young believes that unless we apply new thinking on how to curtail infation, Australia is once again poised to fall into a major recession as happened in 2009 following similar large increases in interest rates during 2008 – an outcome that was predicted by Property Club. “It is time for the Federal Government to take action and introduce a package of measures that will reduce the reliance on higher interest rates to curb infation and provide a fairer way of sharing the burden of reducing infation,” he said.