RBA Cuts Rates – But Are Mortgage Holders Doing All the Heavy Lifting?

RBA Cuts Rates – But Are Mortgage Holders Doing All the Heavy Lifting?

The Reserve Bank of Australia (RBA) has finally delivered a 0.25% rate cut, offering some relief to mortgage holders and businesses struggling under high borrowing costs. This move was expected, given that inflation has been falling faster than anticipated and the economy has been running out of steam.

For mortgage holders, this cut means real savings:

  • $500,000 mortgage → $104 per month saved

  • $750,000 mortgage → $156 per month saved

  • $1,000,000 mortgage → $208 per month saved

But while the RBA has done its part, where has the government been?

Have We Been Fighting Inflation the Wrong Way?

As Mark Bouris recently pointed out, high interest rates aren’t the only way to kill inflation. Australians have been tightening their belts, paying more on their mortgages, cutting back on spending, and feeling the pain—while fiscal policy has been missing in action.

“Everybody assumes that the only way to kill inflation is high interest rates. It’s just not true.” – Mark Bouris

Bouris highlights several areas where government action could drive inflation down without crushing households and businesses:

  • Gas prices: Australia is one of the world's largest gas producers, yet businesses and families are paying absurdly high prices because most of our gas is exported. The U.S. prioritises domestic supply first, keeping prices low. We should be doing the same. A 20% domestic gas reservation policy would immediately cut energy costs, reducing inflation at its source.

  • Government waste: One in five Australian workers is now employed by the government, and four out of five new jobs are tied to government spending. More bureaucrats mean more red tape, making it harder and more expensive to do business.

  • Mass migration & housing pressures: With hundreds of thousands of new arrivals each year, the housing market is overheating. Builders can’t keep up, and skyrocketing rents are adding to inflation. A pause on migration until infrastructure catches up would help stabilise costs.

  • Silly taxes:

    • Payroll tax—why are businesses penalised for employing people?

    • Fuel excise tax—cutting it would immediately lower transport costs, easing inflation pressures across the economy.

The Real Problem: Fiscal Policy is Absent

For too long, the RBA has been forced to do all the heavy lifting through interest rates, while politicians have failed to implement real solutions.

“This is all common sense stuff. All these things can be done with just a few pieces of legislation. It’s time for Canberra to step up and do their jobs.” – Mark Bouris

This rate cut is welcome news for homeowners, but it shouldn’t be the only lever Australia pulls to fight inflation. Instead of leaving it all to monetary policy, it’s time for strong fiscal leadership to cut waste, reduce unnecessary costs, and create real economic stability.

Matthew McCabe