Rates hike hurts those who can least afford it

It is clear that there is no nexus between the government and the RBA when it comes to running the economy (“RBA raises rates to 15-year high”, September 30). For a start, the government is running a deficit budget (and has been for some years), which is expansionary. On the other hand, the RBA is raising interest rates, which in economic terms is contractionary. The running of the RBA as an independent organisation to the government is something I have never been able to work my head around. It’s almost like the RBA is increasing rates to make a point because the board would be well aware that raising rates only affects a minority – those with mortgages. At the same time, Australia is running an immigration program that is adding about 300,000 extra citizens a year. We also have hundreds of thousands of extra people on any number of other visas who are all spending and keeping prices up. They are unaffected by interest rate rises. Michele Bullock has stated that the RBA board is considering raising rates to the point of creating a recession. It can’t happen. We have too many people spending who are outside the interest rate regime. Stewart Copper, Maroubra Photo: Megan HerbertThe latest interest rate rise to counteract the Trump-fuelled inflation is both unfair and ineffective. It is unfair to punish young mortgage holders. These people are already having to rein in spending to keep their households afloat. At the same time, people with savings and investments will see their incomes increase, making a rate rise ineffective. Those driving spending will have more to spend. Perhaps the government and Reserve Bank economists need to get together and establish strategies that target those driving aggregate demand, not those suffering from Trump’s war. Peter Hull, KatoombaRoughly one-third of Australians have a mortgage, one-third rent, and one-third own their own homes, but again the Reserve Bank feels that our inflation problem can be solved by making the first third poorer and the third group richer. It’s about time we recognised that the tools the Reserve Bank has are no longer appropriate, and stop inflicting pain on young families who can least afford it. Lee Featherby, North WilloughbyIf the reason for inflation is domestic spending, as Michele Bullock states, then there is a remedy. The only people who have any discretionary spending are high-income earners. Why doesn’t the government raise the tax rates for those earning over $135,000 from its current 37¢ to 40¢ in the dollar for a couple of years until inflation comes down? Can you imagine the reaction from the Coalition? Unfortunately, our governments are too soft to make hard decisions. John Rome, Mount LawleyDoes the RBA take into consideration the fact that our supposed low unemployment rate is based on figures that classify people who have worked for one hour in a week as being employed? Many of those people would be looking for more working hours. Officially they are “employed”, but they are actually underemployed. Bronwyn Bryceson, MangertonIn raising the interest rate yet again, the RBA is punishing mainly young mortgage holders and workers for the actions of the USA in Iran and profit-taking by business. Interest rates are a blunt instrument. More Australians will become unemployed through no fault of their own. Retirees earning income from company profits and interest will become better off. Where is the fair go or intergenerational fairness in this? John Hardgrove, GlebeIt is dishonest for the government to suggest that inflation is only being driven by outside influences when there are domestic contributors, including state and federal government spending. It is also questionable for the opposition to claim that federal spending is the principal driver of current inflation. No wonder primary votes for the major parties are dropping. Graeme Finn, CampsieRBA governor Michele Bullock.Louise KennerleyBrian Barrett is correct – superannuation is a tax on employers (Letters, September 30). To cool the economy, the RBA should be allowed to raise only employee super contributions. It would remove more money from across the economy while keeping interest rates low and predictable. Raising interest rates are just another impost on businesses and the poor. David Neilson, UrallaI have been in business all my life, but I cannot understand why an interest rate mechanism designed to reduce demand and contain inflation falls only on mortgage holders and other borrowers, and not on the remainder of the population, who can go about spending regardless. It does not pass the critical economic principle of fairness. Can modern economic theorists explain this, please? John Laird, MosmanIt is all well and good for Angus Taylor to say the government should reduce spending, but until he details in which areas spending should be reduced, details by how much and specifies what services will be lost, his comments are not worth a pinch of the proverbial (“Why Angus Taylor might be ready to seize his last chance”, September 29). Ted Hemmens, CromerTrump fuels inflationI well remember Pauline Hanson toasting Donald Trump’s victory in the 2016 US presidential election. No doubt she was equally gleeful when he won again in 2024. But does she, or the “economic experts” in her party, realise the costs that millions of Australians are paying at the fuel pumps because Trump attacked Iran? Many are also paying more than they can afford on their home mortgages because higher fuel prices result in higher inflation, leading to higher interest rates. More importantly, do the people planning to vote for One Nation know this? Don Firth, WooliBorderless profitsThe responses to Donald Trump’s offer to sell weapons to China (Letters, September 30) reminds me of a story my late husband used to tell about doing electrical repairs on aircraft at Townsville RAAF base at the age of 18 during World War II. While replacing a component he remarked to his senior officer: “Oh, but this is a Bosch part!” “Ah, young man,” the officer replied, “capitalism knows no boundaries.” It was my husband’s first lesson in economics. Sonnie Hopkins, TascottDonald Trump is not the first person to refer to AI as superintelligence. Twenty-three years ago, philosopher Nick Bostrom published his paper Ethical Issues in Advanced Artificial Intelligence, in which he wrote “superintelligence would not be just another technological development, it would be the most important invention ever made.” Alan Slade, Dover HeightsDonald Trump wants to change AI to SI. Given his sycophantic attitude to the president of China, I’m surprised he hasn’t suggested changing it to XI. Bob Doepel, Greenway (ACT)Inadequate apologySam Altman’s apology to Australians is duly noted, yet the silence is deafening in relation to Open AI’s brazen theft of the work of Australian creatives (“OpenAI apologises for Medicare hack”, September 29). Innumerable iconic works of music, literature, painting, design and film have already been scraped by OpenAI to train datasets, without permission or compensation. Many of these are protected by the Australian Copyright Act, whereby creative work can be licensed and remunerated appropriately, providing artists with the resources to sustain a career. Australia’s copyright laws, however, appear to have been nothing more than an inconvenience to be ignored by the insatiable tech behemoths. The sheer contempt with which this theft has been perpetrated has left the arts sector reeling. As a composer, I believe there has never been a more important time for the government to stand up for the rights of the artistic community. Until this situation is resolved, OpenAI shall remain an unwelcome presence upon these shores by the many dispossessed creatives it leaves in its wake. Nigel Westlake, UltimoOpenAI chief Sam Altman.BloombergHighly infectious microorganisms are grown and studied, and treatments are tested, in hyper-quarantined facilities. When there is a rare breach it raises international alarm and is treated and investigated with appropriate gravity. We have had hundreds of similar “outbreaks” from AI, the potential new pandemic risk, with delayed, opaque and trivialised responses – more like a reaction to the high jinks of a naughty schoolboy than a potential existential threat. This potential pandemic has the capability to spread into every corner of the world in seconds. No number of lockdowns would save humanity from it. Guard-rails must be urgently put in place and greater transparency and independent governance introduced to AI development. This will require a multinational consensus and oversight as it won’t be coming from the US or China and, I fear, would be vetoed in the UN Security Council. Considering the huge investment required by AI, and the delayed and tepid international response to climate change, I am very concerned. Rowan Godwin, RozelleRoses for Rosny reportingHaving read every word about Operation Rosny, I’d like to thank the entire team at The Sydney Morning Herald for its comprehensive and entertaining reporting. The ICAC team deserves praise, too, for persisting despite multiple hurdles, undaunted by the amnesia infecting so many witnesses, and the aggression displayed by fugitive developer Jean Nassif. The widespread coverage of such inquiries might serve as a deterrent to those contemplating any similar “shenanigans”. It might even encourage more people to report such bad behaviour to the ICAC. Whatever the outcome, this inquiry has exposed the rot that lies within some systems and institutions that are actually meant to deliver good governance. Bevan Shields, in his compelling article (“For ICAC’s targets, the worst may be yet to come”, September 30), points out that convictions may or may not follow. Whatever the case, the fact that their behaviour is now public knowledge will serve as some sort of punishment for the wrongdoers. Aparna Banerjee, BalgowlahUnwelcome actionsIt is disappointing that Strathfield councillors passed a motion to cover and alter the suburb’s six expensive new welcome signs, covering the acknowledgment of Wangal Country and the First Nations people. These councillors had the opportunity at the council meeting on September 29 to acknowledge and respond to the groundswell of public opinion in favour of the signage, and reverse the motion. Recently, 855 people signed a petition in favour of overturning the decision to alter the signage. In 1992 the High Court of Australia struck down the legal principle of terra nullius. Unfortunately, some people seem to be unaware of this. In a time of so much political divisiveness in our multicultural society, it is sad to see politicians reinforcing this rhetoric. Ruth Carter, StrathfieldDental as anythingThanks to Millie Muroi for highlighting the terrible lack of affordable dental care in Australia (“Asking for free dental care is like pulling teeth. But we still need to do it”, September 30). We should all be pushing for dental care to be included in Medicare. So many people delay a visit to the dentist because of the cost, which can vary hugely between dentists. Missing or decayed teeth have a huge impact on people’s health and lives and are an obvious sign of poverty. It’s time the major political parties take this issue seriously. Amanda Brian, BexleyDental treatment is too expensive for many people nowadays.AFRI totally agree that we need more benefits for dental care. Sadly, even with top health-fund cover, the gap payments are far too big. Despite the high level of care I have, it is difficult to pay the costs when the gap payment is more than two-thirds of the total bill. It must be dreadful for people who simply do not have any health cover and cannot afford to pay the hundreds and often thousands of dollars in treatment costs, even for the most basic of care. Each dentist sets their own price so we are at their mercy. Yes, equipment and materials are costly, but dental care is essential for everyone so they are pain-free, can eat properly and their general health does not suffer. Dental care should definitely be covered by Medicare. Augusta Monro, DuralNature callsWhile walking the dog during the day I have noticed some bees around, but so few it seems that they can afford to be choosy, feeding only off lavender blossoms. In the evenings I have recently seen swarms of what I guess must be bogong moths landing on the street-side bottlebrushes. They are so small, though, offering only tiny snacks for any of Sydney’s microbats. I can remember much larger moths in the past, with the same markings but with wings so big they would cover a child’s hand. As councils replace year-round flowering natives like the bottlebrushes with northern hemisphere deciduous trees (bare in winter), what hope remains for these and other nocturnal nectar feeders and pollinators (“After a catastrophic decline bogong moths are back, and naturalists are celebrating”, September 29)? Garry Dalrymple, EarlwoodCost of neglectYour correspondent’s call to reopen major psychiatric institutions (Letters, September 30) would be impossible without enormously expensive restoration projects, as these once magnificent heritage-listed institutions are decaying due to neglect, no doubt a consequence of government “savings”. A prime example is Kenmore Hospital near Goulburn. After being decommissioned as a psychiatric hospital in the early 2000s, this late 19th-century estate was sold most recently in 2015 to a Chinese-owned company, which reportedly had plans to develop it into retirement living spaces and educational facilities. Alas, none of those plans came to fruition and the once-elegant buildings lie empty and vandalised, with some partly destroyed by a fire in 2021. Repair work undertaken by Heritage NSW has been painfully slow. Kate Lumley, Hurlstone ParkTowering snackI thought we had the Big Chiko Roll already in the form of Packer’s Crown Sydney tower (Letters, September 30). Judith Fleming, SawtellTo submit a letter to the Sydney Morning Herald, email letters@smh.com.au. Click here for tips on how to submit letters.The Opinion newsletter is a weekly wrap of views that will challenge, champion and inform. Sign up here.