Harry Triguboff: Interest Rate Hikes Not the Answer to Bringing Inflation Down

Meriton Founder and Managing Director Harry Triguboff says the government should focus on “the obvious” to combat inflation, such as solving labour and housing shortage, instead of interest rate hikes.

“When interest rates are raised, workers ask for and achieve pay rises to compensate for the rising living costs, which in turn fuel demand and inflation even more.”

“We have been raising interest rates but the inflation rate has yet to come down, so obviously it is not the answer.”

According to the latest figures released by the Australian Bureau of Statistics (ABS), there are close to 500,000 job vacancies in Australia, a 111.1% increase since February 2020.

“It is evident that there are not enough workers and this has been the case for some time, but we are still not bringing migrants and workers back. If we don’t have enough workers of course the costs will rise. ”  Mr. Triguboff says.

More housing supply is also crucial. ABS data shows apartment commencements in Sydney in 2021 are down 70% compared to 2016, and there has been a low volume of apartment completions over the past 2 years according to Charter Keck Cramer.

“We are afraid of prices going up and yet there are not enough approvals to build new apartments. A lack of new supply has now resulted in rents rising at a rapid rate. And for the developers, because construction costs are so high, bureaucrats can no longer force them to give in to all the demands, because they wouldn’t want to build to lose money, so there is very little production.”

“Politicians may do anything that helps their electoral chances, so they think going against the developers makes them popular. But the truth is those who bring benefits to the community are often proved to be the popular ones. Politicians must do what is good for the community.”