Do you remember having teachers who would punish the whole class for the actions of one or two? Maybe they’d even ask an offender to own up to some transgression, but when they didn’t, the whole class would be kept in after school or during a lunch break. Do remember how bad detention feels when you haven’t done anything to deserve it?
I remember feeling like a real injustice had occurred. Not only had I not committed the crime, I wasn’t the one withholding evidence. Someone else had done something wrong then compounded the situation by staying quiet when they were given the opportunity to confess. That person or persons would cause the entire class to suffer.
It was wrong then and it’s still wrong today … but that’s life.
I’m feeling a little of that sense of injustice today. I’m not the person who caused our economy to heat up but I feel that I’m being punished with today’s rise in official interest rates. I’m going to have to dig deeper into my pockets for our weekly mortgage payments but I didn’t do anything to cause the rate rise.
Australia’s economy is growing, fuelled by a mining boom, which means there’s the threat of inflation rising higher than the Reserve Bank thinks is sustainable. Essentially, as I read it, and I’m certainly no economist, times are good and there’s a fear that the economy will heat up too much. Increasing interest rates will help cut down on spending, keeping the economy on an even keel. I understand that much and I see that the Reserve Bank is simply trying to follow good economic practices. I get that. What I don’t get is how people like me get ahead in such times.
I’m not raking in lots of dollars and spending too much. I’m not the one causing inflation to rise. I’m simply the guy who is already struggling to pay the bills and keep his family fed. I’m the guy who just wants to pay the mortgage, buy food, pay for the essentials and occasionally have enough left over for a treat or two, maybe even a family holiday. Instead, I’m just getting by and wondering when I’ll get to experience the ‘good times’ I hear about. There have already been huge hikes in the cost of essentials like electricity and water in recent times. My fear is that the latest interest rate rise will punish some people so much that they’ll lose their homes.
I’m thankful that we only have a modest mortgage. To rent a home like ours we’d be paying a landlord more than double what we’re now paying on our home loan. That’s not the case for everyone. A quarter of a percent rate rise has the potential to drive people with bigger mortgages to the wall. These are not people with bigger mortgages because they have massive homes; they’re people who have had to borrow heavily to invest in modest homes at today’s house prices. We had the advantage of entering the housing market quite some years ago so we were able to increase equity as house prices boomed some years back.
I don’t know what the answer is. I don’t even know if there is an answer. As I said, I understand that the Reserve Bank is simply following sound economic processes but when the stick they use to keep inflation manageable is a stick that will deeply bruise many at the lower end of Australia’s economy, I just wonder if there isn’t another way to keep control of the country’s finances.
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