After twelve increases to the interest rate since May 2022, Australia’s cost-of-living crisis is reaching a boiling point. According to the Reserve Bank of Australia (RBA), whose board sets the rate, these increases are to tackle inflation. However, thanks to landlords and banks who have passed on higher interest rates in the form of rent and mortgage repayment increases, renters and mortgage holders are feeling the impact most.

Much of the media — not to mention the RBA — justify this, by arguing that rising wages are a key driver of inflation. But this is contradicted by the RBA’s own research, which forecasts a considerable decline in real wages over the coming years. Indeed, while addressing the impact of the rate rises on living standards, RBA governor Philip Lowe may have conceded that their real rationale has less to do with wages or incomes than the bank would like us to believe. As he explained, “If people can cut back spending, or in some cases find additional hours of work, that would put them back into a positive cash flow position.” Ostensibly, the point of increased interest rates is to cut consumer spending. But if the Reserve Bank’s move encourages workers to work longer hours or find a second job, the implication is that the bank’s more genuine concern is to make workers foot the bill for bringing down inflation.

Either way, the situation poses an urgent question for the Left: How can we alleviate the cost-of-living crisis and deal with inflation, without forcing workers and the poor to shoulder the burden?