RBA going ‘rogue’ on interest rate hikes, Greens senator claims

McKim is now appearing on the ABC and said this of the RBA’s rate hike:

The Labor Party and the Labor governor, Mr Chalmers, Mr Albanese, they have to wear their fair share of the responsibility for this. The RBA act gives the Government of the day the power to intervene and override the RBA on interest decisions and that is what they should be doing in this case because frankly, the RBA has gone rogue.

But secondly, what the Government should be doing is putting in place things like a corporate super profits tax, attacks on the super wealthy in this country and use the revenues generated from those taxes to fund genuine cost relief for Australians. Wiping student debt, putting dental in Medicare, increasing income support, things that would make a meaningful material difference in people’s day-to-day lives.

Key events

What we learned today, Tuesday 6 June

That’s where we’ll leave the blog for today – thanks so much for joining us. Here is a wrap of the day’s biggest stories:

  • The Reserve Bank of Australia lifted interest rates for a 12th time in just over a year by 25 basis points, bringing the cash rate to 4.1%, its highest in 11 years.

  • The RBA governor, Philip Lowe, justified his decision by saying inflation, although past its peak, was still too high at 7%, and warned of further increases to come.

  • The treasurer, Jim Chalmers, sought to distance the federal government from the decision, saying “the war against inflation is far from won”.

  • In response the Greens urged the government to intervene, and the Coalition blamed Labor’s budget for adding to the “inflationary fire”.

  • Kathleen Folbigg enjoyed her first night out of prison after 20 years, mesmerised by new technology and spending time with close friends. In a video statement, she said she would always grieve for her children and that her pardon was a victory for science and truth.

  • Western Australia’s acting premier, Roger Cook, announced he had been endorsed as premier, and Rita Saffioti as deputy premier.

  • The NSW government signalled it would not withdraw any additional Covid fines, despite a supreme court decision finding a huge volume of pandemic-related infringements were unlawful.

  • The Bureau of Meteorology placed Australia on “El Niño alert”, warning there was a 70% chance of the climate system developing before the end of this year.

The federal Labor MP for Perth, Patrick Gorman, has congratulated Roger Cook on being endorsed as the new Western Australian premier:

Congratulations to WA’s 31st Premier – Roger Cook.

He will lead with compassion, purpose and with the interests of Western Australians in his heart.

I have known Roger for decades. WA and Labor are fortunate to have his experience and his passion leading our state. pic.twitter.com/PYtmNZjnxa

— Patrick Gorman MP (@PatrickGormanMP) June 6, 2023

[continued from previous post]

From AAP:

Spit hoods were banned in NT youth detention facilities five years ago and in October were the subject of an operational ban by territory police.

While there had been no evidence of their use since, police confirmed they had been employed 27 times in the period between 2018 and the 2022 decision, including once on a 12-year-old child.

In its paper, the office of the Children’s Commissioner said a range of other measures could be used, including de-escalation techniques, and called for frequent and mandatory training in such methods.

The paper acknowledged that police officers had a right to be safe in their workplace, but said there was overwhelming evidence that spit hoods were not effective in preventing the spread of any communicable diseases.

Ultimately, these restraints are ineffective and inhumane.

Spit hoods do not meet the asserted needs of police or increase the safety of the community. Our children deserve better.

Responding to the paper, the minister for territory families, Kate Worden, said the government was satisfied that spit hoods were no longer in use in detention centres and police cells. She told reporters:

We’ve already got that in place. That won’t be changing.

The Northern Territory’s minister for territory families Kate Worden
Kate Worden says the NT government is satisfied that spit hoods are no longer in use in detention centres and police cells. Photograph: Aaron Bunch/AAP

Call to outlaw ‘inhumane’ use of spit hoods on children

The use of spit hoods on children should be banned through legislation in the Northern Territory with the region’s youth commissioner describing the devices as dangerous and dehumanising, AAP reports.

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The Children’s Commissioner’s office on Tuesday released a position paper on the use of spit hoods, calling for the bans currently imposed by police and corrections to be enshrined in law.

The paper said the devices were not safe under any circumstances and were highly likely to harm the child.

It found there was no evidence spit hoods had a calming or therapeutic effect. The paper said:

Hooding of any child can be panic-inducing.

A child who is in a situation where police find it necessary to use a spit hood are also likely to have experienced trauma in their childhood or have a physical and mental impairment.

To use a spit hood on a child in this context is dehumanising and dangerous. There is no safe way to use a spit hood on a child.

Westpac the first big bank to announce interest rate rises

In response to the RBA’s decision to increase the cash rate by 0.25%, Westpac has become the first major bank to announce interest rate changes.

In a statement, Westpac announced:

  • Home loan variable interest rates will increase by 0.25% per annum for new and existing customers, effective 20 June.

  • Customers will be able to access a new special term deposit offer of 4.50% pa for 12 to 23 months, effective 9 June. Savings rates are under review.

Westpac’s chief executive of consumer and business banking, Chris de Bruin, said:

We understand interest rate increases put more pressure on household budgets.

The majority of our customers are managing OK, but we know with each rate change it’s getting more challenging.

A pedestrian passes below a sign for a Westpac bank ATM
Westpac has become the first major bank to announce interest rate changes. Photograph: Will Burgess/Reuters

Catch up on the day’s biggest headlines so far with this wrap from my colleague Antoun Issa:

Daniel Hurst

Daniel Hurst

Government in talks with Ukraine on providing support to Kyiv

The Australian government says it is continuing to hold talks with Ukraine and allies and partners on ways to provide “meaningful support” to Kyiv.

The comments follow a report in the Australian Financial Review today that Australia, the US and Ukraine were discussing the option of sending retired Royal Australian air force F/A-18 Hornets to Ukraine.

One obstacle to this idea is the length of time required to train pilots to operate the aircraft.

Defence has since issued what is known in the business as “holding lines” – comments that are careful not to say anything specific.

A defence spokesperson said:

Defence continues to retain possession of former Royal Australian air force (RAAF) F/A-18A/B Hornets.

The Australian government remains committed to delivering on its current contribution to Ukraine.

Australia continues to engage with the government of Ukraine and our allies and partners to ensure meaningful support continues to be provided to Ukraine in its ongoing battle against Russian aggression.

Daniel Hurst

Daniel Hurst

Vanuatu hopes to sign security agreement with Australia by end of year

Vanuatu says it hopes to ratify a security agreement with Australia by the end of this year.

The foreign affairs minister, Penny Wong, announced the signing of a bilateral security agreement during a bipartisan visit to Vanuatu in December – but the ABC last month reported of concerns that domestic political fallout could delay the deal.

The deputy prime minister and defence minister, Richard Marles, is in Vanuatu today. The status of the proposed bilateral security arrangement was raised during a press conference.

The prime minister of Vanuatu, Alatoi Ishmael Kalsakau Ma’aukora, said:

Well, I can answer that where it concerns Vanuatu. We are just near, it is at the national security council at the moment, just going through the text and it’ll go towards the council of ministers. And it will be presented for ratification before the end of this year in parliament.

Marles added that he was “really happy with the discourse that we’ve had with both the prime minister and the deputy prime minister today”.

He said it would be “a really important agreement between our two countries” and Australia was “very happy with the progress”.

A very productive meeting with Vanuatu’s Prime Minister the Hon Alatoi Ishmael Kalsakau Maakoro to discuss our shared priorities.

Our partnership with Vanuatu is strong and enduring 🇦🇺🇻🇺 pic.twitter.com/HjmyVjVb7S

— Richard Marles (@RichardMarlesMP) June 6, 2023

Australia deserves ‘a world-class rail system,’ says shadow transport minister

Shadow transport minister Bridget McKenzie just appeared on the ABC and is asked about the inland rail:

… Australia does deserve a world-class rail system. What we don’t need is more delays and what the government has done in 12 months since coming to power is cancel the faster rail authority and replaced it with the high-speed rail authority, put a half $1bn on the table to set this up and have consultations and land acquisition but do not actually get on with laying the track.

We know that congestion is increasing, we know that people are moving outside capital cities and doing that long commute and so we need to get on with it rather than pipe dreams and more delays.

Earlier, my colleague Paul Karp reported that McKenzie and her Nationals colleague Mark Coulton were being criticised by the construction union for a visit to the inland rail without permission.

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Asked about this on the ABC, McKenzie said:

We are on public land at a crossing …

Prime Minister Anthony Albanese has congratulated Roger Cook on his endorsement as the new Premier of Western Australia:

RBA going ‘rogue’ on interest rate hikes, Greens senator claims

McKim is now appearing on the ABC and said this of the RBA’s rate hike:

The Labor Party and the Labor governor, Mr Chalmers, Mr Albanese, they have to wear their fair share of the responsibility for this. The RBA act gives the Government of the day the power to intervene and override the RBA on interest decisions and that is what they should be doing in this case because frankly, the RBA has gone rogue.

But secondly, what the Government should be doing is putting in place things like a corporate super profits tax, attacks on the super wealthy in this country and use the revenues generated from those taxes to fund genuine cost relief for Australians. Wiping student debt, putting dental in Medicare, increasing income support, things that would make a meaningful material difference in people’s day-to-day lives.

Greens senator calls out Labor for ‘refusing to intervene’ on RBA decision

Greens Senator Nick McKim has described today’s RBA decision as an “absolute shocker” that will see renters and mortgage holders “getting smashed yet again”.

He said on social media:

The RBA has gone rogue and Labor is culpable because of its refusal to intervene.

The RBA admits that inflation is predominately supply side driven yet stubbornly insists on a demand side response. Labor has completely succumbed to central bank orthodoxy and is sitting back and refusing to intervene.

The interest rate rises will disproportionately hurt young people, who are more likely to rent or have large mortgages, and who are more likely to feel the brunt of the coming job losses. The RBA and Labor Party are waging an intergenerational war.

— Nick McKim (@NickMcKim) June 6, 2023

The Parenthood calls for government support for struggling families amid interest rate hike

CEO of The Parenthood, Georgie Dent said that the RBA’s rate hike will increase financial difficulties for many families across Australia who are already struggling with the surging costs of living.

In a statement, The Parenthood said although the childcare subsidy is set to rise on 1 July, the assistance has been eroded by rising costs of living, including interest rates, while other families are missing out altogether on assistance.

Dent said:

Without bold and urgent support from the Government, these families will often be forced to make incredibly unfair choices, with young children potentially having to miss out on the many benefits of high-quality early learning and care.

Universally accessible, affordable and quality early childhood education and care is a vital way of providing cost of living relief that’s effective and non-inflationary.

Supporting families in this critical time will not only ensure their wellbeing and prosperity but will also help secure the future of Australia’s children.

She pointed to measures such as universal three-year-old preschool across all states and territories, and abolishing the childcare subsidy Activity Test, as ways the government can allow greater access to early childhood education while alleviating financial pressure on families.

Australian stocks suffer hammer hit after rate hike

Jonathan Barrett

Jonathan Barrett

Australian shares recorded a sharp selldown after the Reserve Bank lifted the official cash rate on Tuesday, as investors weigh up the prospect of further hikes.

The benchmark S&P/ASX200 dropped 1% almost immediately after the RBA lifted borrowing rates by another 25 basis points. The market failed to rebound after the central bank indicated it may raise rates further to bring inflation down.

Trading platform IG described the rate rise as “another RBA hammer hit” to the market. IG said:

Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve.

A tightening of monetary policy refers to higher rates.

The cash rate is now at 4.1%, its highest level in 11 years.

File photo of a board displaying stock prices
ASX share prices have plunged after the latest RBA rate rise. Photograph: David Gray/Reuters

While many Australian companies, including the big banks, have benefited from rising interest rates, at some point, increased borrowing costs could trigger enough bad debts and a pullback in spending that will weigh on their profitability.

Australia’s consumer discretionary sector, headed by Bunnings-owner Wesfarmers, suffered some of the steepest falls on Tuesday, given their sensitivity to household budgets.

The Australian dollar spiked against the US on the rate decision, given higher interest rates are generally enticing to investors.




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