A landmark national ‘welfare’ report has been labeled pointless after using outdated data to suggest things had ‘improved’ for Australian home borrowers – even after 12 interest rate hikes.
Treasurer Jim Chalmers’ inaugural ‘Measuring What Matters Australia’s First Wellbeing Framework’ report, released on Friday, contained a range of findings based on legacy information.
A section entitled ‘Financial Security and Access to Housing’ compared housing usability in 2002-2003 with 2019-2020.
The situation for mortgage holders was described as ‘improved’, even though interest rates have risen 12 times in 13 months and more rate hikes are expected in 2023.
Treasurer Jim Chalmers has come under fire after his landmark health report suggested things had ‘improved’ for Australian home borrowers – even after 12 rate hikes
When asked about the outdated information, Dr Chalmers told ABC Radio National broadcaster Patricia Karvelas that the government had more recent data it could rely on.
“Well, a few things about that,” he said.
“We have more regular, more frequent data that helps us understand the pressures people are under from higher interest rates and in the aftermath of the pandemic.”
But Dr. Chalmers denied that the report was wrong.
‘I’m not saying that. I’m saying we haven’t had a national welfare framework before, this is the first attempt at that,” he said.
Shadow Treasurer Angus Taylor said Friday that the report was “outdated and unreachable.”
“We don’t need a half-baked report on Australia’s welfare,” he said.
“The treasurer needs a reality check, and the truth is Australians have seen 11 rate hikes since Labor took office.”
The information in the Welling report on “home maintainability” was so out of date that it cited data from the 2019-20 financial year, when the Reserve Bank of Australia cut cash rates four times – from 1.25 percent in July 2019 to 0.25 percent on March 20, 2020 at the start of the pandemic.
But since May 2022, just before the election, the RBA has hiked interest rates 12 times, from a record low of 0.1 percent to an 11-year high of 4.1 percent, with pauses only in April and July.
Far from being easier, a borrower with an average $600,000 mortgage has seen their monthly repayments increase by 64 percent to $3,789, up from $2,306.
Annual repayments are up $17,796.
This happened when the variable interest rate on a Commonwealth Bank loan, for a borrower with a 20 percent down payment, rose from 2.29 percent to 6.49 percent.
Australia’s Labor government has copied New Zealand’s former Labor Prime Minister Jacinda Ardern who delivered a ‘welfare’ budget in 2019
The situation for mortgage holders was described as ‘improved’, even though interest rates have risen 12 times in 13 months and more rate hikes are expected in 2023
Interest rates have risen at their fastest pace since 1989 in just over a year, and the RBA expects it to remain above the two to three percent target through mid-2025.
The report also focused on the cost of housing before the pandemic, but said nothing about the rise in home prices between late 2020 and early 2022, which reduced housing affordability when interest rates were still at a record low of 0.1 percent.
“These cost-to-income ratios have generally remained stable in recent years leading up to the Covid-19 pandemic,” it said.
Dr. Chalmers said in a statement that the welling framework is designed “to help tell us how we’re tracking over time, where we’re doing well and where we need to do better.”
“Measuring What Matters is part of a conscious effort to put people and progress, fairness and opportunity at the center of our thinking about our economy and society, now and in the future,” he said.
The Australian Labor government has copied New Zealand’s former Labor prime minister, Jacinda Ardern, who submitted a ‘welfare budget’ in 2019.
Australia has a habit of copying Kiwi ideas and adopting the inflation target in 1993, three years after New Zealand did.