Rate rise concerns continue 10-15 11th March 2008

Australian businesses remain concerned about increased interest rates, says the NSW Business Chamber.

“The Reserve Bank is now playing a game of chicken with the Australian economy. Given this is the 12th interest rate rise in a row and official rates are the highest they have been in almost 12 years, business is concerned about the impact of this decision on household budgets,” says Kevin MacDonald, CEO of NSW Business Chamber. “Business will particularly feel this increase through an increase in overdraft costs, a fall in disposable household expenditure and a loss of confidence throughout the economy.”

MacDonald believes the Federal Government needs to look beyond monetary policy to fight inflation. “We have seen good announcements in terms of increasing skilled migration, additional funding for skills development and a commitment to increase the budget surplus as a percentage of GDP. However the real issue before the Government relates to the impact of its proposed PAYE tax cuts in the May budget,” explains MacDonald. “Given these circumstances, the Federal Government has to demonstrate that the personal income tax cuts promised for the 2008/09 budget does not become a poison pill for the economy.”