Anthony Albanese stands by cost-of-living support as new home loans plunge and recession fears rise

Anthony Albanese is adamant his government is sternly focused on tackling the cost-of-living crisis crippling households across the nation on the back of claims the US midterms should be a warning to the Prime Minister.

The Labor leader’s comments come after a horror week for families, headlined by the Reserve Bank of Australia’s decision to lift interest rates for the fifth time this year, which is set to add more than $100 to the average mortgage.

Property values have taken a dive, with figures released this week showing home loan commitments have plunged by 27 percent. Leading economists on Sunday tipped new data set to be unveiled in coming days will show another seven per cent decline in potential buyers.

Travellers were also warned the cost of airfares is also likely to increase soon, with Qantas stating at its annual general meeting on Friday price increases for seats were all but certain because of the rising fuel prices.

Despite steady improvements over the past fortnight, the cost of filling up a tank of petrol is still sitting at over $2, with unleaded at $2.14 per litre on Monday.

But as the surging rates, plummeting market and stubborn inflation threaten to tip the country into a recession, the Prime Minister defended his government’s record on cost-of-living relief and public spending on Sunday, stating it had reacted well to international pressures.

“My government will continue to focus on cost of living, continue to focus on getting inflation down,” Anthony Albanese said on Sunday, defending his Government’s spending and blaming global price pressures for the pain experienced at home.

“We know this is a global issue, everywhere, not just in the United States or Australia, or New Zealand for that matter, but in the UK.”

Mr Albanese pointed to the Bank of England and it’s decision late last week to increase the official cash rate as evidence that Australia wasn’t alone in the inflation fight.

He said his Government would continue to look for budget savings in an “orderly way.”

“It would be easy to just do what previous governments have done, which is just, you know, let it ride, and to do nothing,” Mr Albanese said.

“The program, for example, on cheaper home batteries has benefited 600,000 Australian households and small businesses.

“That represents over a million Australians, and importantly, it’s benefited every Australian because it’s taking pressure off the national power grid. It has made an enormous difference.”

The Prime Minister was responding to questions regarding whether he was concerned the demolition of the Republican party in the US midterms last week, which has been pinned on cost-of-living frustrations in the country.

Mr Albanese is expected to meet with President Donald Trump three times in the upcoming East Asia Summit, APEC and G20 global conferences and said he would continue to push his stance for de-escalation in the Middle East.

“My message has been, consistently, publicly and privately, has been that we want to see a de-escalation,” he told reporters.

“That is in the world’s interests. There is a significant economic impact from the ongoing conflict in the Middle East.

“Australia are not protagonists in that conflict, but Australians are impacted by it.”

Nationals leader Matt Canavan believed the latest rate hike by the RBA risked tipping the economy into a recession, and that the extra pain on mortgage could have been avoided if the Albanese Government brought spending under control.

“There’s a palpable sense that people are going backwards, people are struggling,” Mr Canavan said.

The Nationals Leader also slammed Mr Albanese’s recent “absurd statement” that living standards could not be increased in Australia until wars ended in eastern Europe and the Middle East.

“Yes, those wars are having an impact on us, but we’re a long way from those wars — we have enormous resources and potential in this country,” he said.

“The real growth in (domestic) spending has been 5.5 and 4.3 per cent, that’s extraordinary levels of growth, not seen outside of recession.

“I think the bigger risk here of a recession, the economic downturn, is the medicine that the RBA is having to deliver to the patient in the government, who can’t stop its addiction to spending.

“We have high inflation not because the Australian people are living well, we have high inflation because the Australian government is living too well.”

Recent Australian Bureau of Statistics data on the Commonwealth’s public service wages bill has put even further eyes on the Albanese Government’s spending in recent days, after the numbers showed a 7.2 per cent surge last financial year to $43.8 billion.

The growth in the public wages bill was almost double the 3.8 per cent inflation rate at the time.

Fresh ABS data due this week is also expected to show the decline in new home loan numbers accelerated in the September quarter, following a 5.4 per cent drop in the three months to June, in further proof of the property market’s decline.

Economists at ANZ bank have tipped a seven per cent drop in overall lending.

“Housing prices and sales volumes both declined in Q3, which will weigh on new housing lending,” ANZ economist Madeline Dunk said.

“The monthly credit data (which is a stock measure and is slower moving) suggests a sharp pullback in investor demand, which is likely to show up more clearly in the lending release.”

The most recent rate hike by the RBA is the fifth since February, adding $122 a month to repayments on an average new $731,000 mortgage.

It also pushes variable mortgage rates toward 7 per cent for the first time in almost two decades.

Once banks pass on the latest 25-basis-point increase, monthly repayments on an average mortgage will have surged by $597 in nine months or an extra $7164 a year.

In handing down the rates decision last week, RBA governor Michele Bullock admitted it would make people “feel like it’s a recession because they feel poorer”, but said Australia had a “domestic, homegrown inflation problem” driven by capacity pressures rather than global oil prices.

“We will need to raise interest rates to the extent that we need to to get inflation down, I don’t know how high that is,” Ms Bullock said.

“We’re not tightening monetary policy because of the direct impact of oil prices on inflation.”

With headline inflation reaching 4.3 per cent in September and forecast to hit 4.5 per cent by December, the RBA does not expect inflation to return to the top of its 2 to 3 per cent target band until December 2027.

Economic growth is forecast to slow from 2.1 per cent last financial year to 1.6 per cent by the end of 2026 and 1.3 per cent by late 2027, while unemployment is projected to climb to 5 per cent by June 2028.