Kochie on government spending: Name, shame and share the pain
Amid rocketing living costs and the prospect of further home loan rate rises, one of Australia’s most trusted business observers calls on authorities to look at their spending to help ease the burden on all of us.
FORMER 7 Network Sunrise host and respected finance journalist David Koch has urged the RBA to identify what he says is the real cause of inflation: government spending.
With another interest rate hike tipped for September 29, Koch penned an open letter to RBA Governor Michele Bullock.
“A meaningful slice of the inflation your board is trying to contain is not being generated in a shopping centre… it is being set in a cabinet room,” he wrote.
The cash rate is currently 4.35 per cent after three increases this year that have cost average mortgage payers over $4000 extra.
“Millions of Australians are crying out,” Koch wrote, “because on 29 September a great many of them are likely to be handed a bill they did little to run up.”
He pointed out that annual growth was tipped at 2.1 per cent against a forecast 1.8 per cent. Underlying inflation was 3.6 per cent.
“I don’t envy the situation you face,” Koch added. “But before your board votes, I’d ask you to look closely at who generated that worryingly high level of growth. It wasn’t households.”
Household spending crept up just 0.4 per cent, almost half as families switched to EVs to escape high fuel prices.
“That is hardly an exuberance,” Koch said. “That is a family at a kitchen table with a calculator.
“And it has only got tougher since. Unemployment rose to 4.5 per cent in July, the highest since the pandemic, with 15,800 jobs gone in a month.
“Business conditions have turned negative for the first time in six years. Consumer sentiment has dropped more than 5 per cent. That is not an economy running hot.
“So, who did the growing? Government, and not by a little. Commonwealth government spending has climbed to 26.8 per cent of GDP… State government spending isn’t helping either.”
Now Economic Director of Compare The Market, Kochie returned to Sunrise on Wednesday to hammer home his message.
He said Aussies were being told to tighten their belts… but many have reached the last notch.
“I’m not being political,” he told host Matt Shirvington. “It’s not one party or another. It’s all levels of government.
“States are probably the biggest to blame. Michele Bullock wants to call it: governments are making it hotter… and we’re paying for it.”
Koch said someone with an average mortgage of $735,000 has seen repayments increase $4212 over the course of a year.
“If your board must move on 29 September,” his letter concluded, “please do them the courtesy of naming who forced your hand.”
David Koch will be a key speaker at Australian Conveyancer’s major event, “What’s Next” to be held at Sydney’s W Hotel on Tuesday, November 17, where 14 experts will chart the industry’s course through 2027.
Details and tickets at:
