Victorian premier says interest rates are ‘smashing families’ despite 2020 advice to national cabinet
The Victorian premier has blamed advice provided to national cabinet by the Reserve Bank governor, Phillip Lowe, for the huge borrowings undertaken by the government during the pandemic.criticised the bank’s decision to raise interest rates for the 11th time in a year as “smashing families” and “causing real pain”.
“I remember at national cabinet being told, ‘Go and borrow. If you don’t borrow, then we’re going to have 25% unemployment, we’re not going to get through this, we will not survive this. And by the way – interest rates won’t be going up’,” he said of the advice on Wednesday. “I’m not sure that 11 interest rate rises in 12 months is smashing inflation. I’m certain it’s smashing families.”The Victorian government borrowed $24.5bn to deal with the economic fallout of the coronavirus pandemic. This was in addition doubling its debt ceiling from $30bn to $60bn from 2018 to 2022 to fund major transport infrastructure projects.
“The government of Victoria made decisions, but the advice that informed those decisions were very simple – you’ve got to borrow to get through,” he said.“But, I just want people to know just as families are feeling the pinch really profoundly with moving from fixed mortgages to variable rates … 11 hikes in a year, the government feels that pain too.”
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