Sky-high mortgages, 7.1% inflation, and a 20% chance of recession. How the Conversation’s panel sees the year ahead

Homeowners will face mortgage rates near 5.5% in a little over a year, according to a survey of 22 leading Australian economists. The Conversation’s 2022-23 forecasting survey predicts an increase in the Reserve Bank’s cash rate from its present 0.85% to a peak of 3.1% by next August. If fully passed on, the series of rate hikes would...

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Australians are more millennial, multilingual and less religious: what the census reveals

Census data to be released Tuesday shows Australia changing rapidly before COVID, gaining an extra one million residents from overseas in the past five years, almost all of them in the three years before borders were closed. For the first time since the question has been asked in the census, more than half of Australia’s residents (51.5%)...

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Australia already has a UK-style windfall profits tax on gas – but we’ll give away tens of billions of dollars unless we fix it soon

The really bizarre thing about calls for a UK-style windfall profits tax on gas is that Australia’s already got one. Gas prices have soared to levels never envisioned in the lead-up to 2015, when three resource giants spent A$80 billion building terminals in Queensland with the potential to export three times the east coast gas Australia...

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Expect the RBA to go easy on interest rate hikes from now on – we can’t afford rates to climb as steeply as the market expects

By lifting its cash rate by 0.5 points, from 0.35% to 0.85%, the Reserve Bank has added about another $120 per month in payments for a A$500,000 mortgage. If financial markets are to be believed, by the end of this year it will have added a total of $800 per month – and, by the end of next year, a total approaching $1,000 per month. Those...

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Australia’s biggest economic threat isn’t home-grown. It’s a recession, originating in the United States

A recession in the US usually brings on a recession in the rest of the world, although not always in Australia. Australia has escaped such a recession twice in the past 50 years. We avoided the early-2000s so-called tech-wreck recession, and we avoided the so-called “great recession” during the global financial crisis. Amid ominous talk...

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Lifting the minimum wage isn’t reckless – it’s what low earners need

Stand by for something “reckless and dangerous”. That’s what former prime minister Scott Morrison said Prime Minister Anthony Albanese would be if he asked the Fair Work Commission to grant a wage rise big enough to cover inflation. It would make Albanese a “loose unit” on the economy. Yet Albanese and his industrial relations spokesman...

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Elections used to be about costings. Here’s what changed

The last week of campaigns used to be frantic, behind the scenes. In public, right up until the final week, the leaders would make all sorts of promises, many of them expensive, with nary a mention of the spending cuts or tax increases that would be needed to pay for them. Then, in a ritual as Australian as the stump jump plough, days...

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Stand by for the oddly designed Stage 3 tax cut that will send middle earners backwards and give high earners thousands

The Reserve Bank is pushing up interest rates to take money out of our hands. The first increase in the current round will add about A$65 a month to the cost of paying off a $500,000 mortgage. The second will add a bit more. If, as the bank’s forecasts assume, there are another four such increases this year, that’s a further $275 a month, and so on. The point, in the words of the Reserve Bank Governor Philip Lowe, is to...

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Why the RBA should go easy on interest rate hikes: inflation may already be retreating and going too hard risks a recession

One of the stranger things about the Reserve Bank’s announcement of why it’s lifting interest rates by 0.25 percentage points is that it suggests inflation will come down by itself. “A further rise in inflation is expected in the near term,” the RBA says, “but as supply-side disruptions are resolved, inflation is expected to decline back towards the target range of 2-3%. So why raise rates now, for the first time in more than...

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The 4 economic wildcards between now and election day

There are four economic wildcards between now and the election, and we know exactly when each will be played. The first is this Wednesday at 11.30am eastern time, when we get the official update on inflation. We’re likely to see a figure so large it will take many of us back to the 1990s, to a time before anyone under 30...

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This model tipped the last 2 elections. It’s pointing to a Coalition win

This election will be won by the Coalition and Prime Minister Scott Morrison if the economic models perform as expected – and they usually do. A model refined in 2000 by then Melbourne University economists Lisa Cameron and Mark Crosby found that most federal election results in records going back to 1901 can be predicted...

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