Interest Hikes Cause For Concern

When interest rates soar, it isn’t just home loans that are affected, businesses also feel the pressure.

Griffith Business Chamber President, Paul Pierotti said rising interest rates were devastating for local businesses.

“When businesses are under pressure to cut back, they cut jobs,” Mr Pierotti said.

“Wages are usually a business' biggest expense.

“Businesses aren’t set up to absorb such high-interest hikes.

“Increases to CPI should be small increments made annually.

“We need more people in the workforce.

“We’ve got significant workforce shortages.

“Raising interest rates is a powerful lever that governments can pull.”

Mr Pierotti said that, in his opinion, raising interest rates would result in extreme unemployment and would further impact the housing market collapse.

“We’re building 60 to 80 homes each year in Griffith,” Mr Pierotti said.

“In our heyday, we were building over 250 homes each year. “Western governments are preoccupied by using this economic lever to cool down the market.

“In my view, that’s the wrong lever.

“It affects business more than housing and that means job losses.

Mr Pierotti went on to say that banks had been culpable in the current crisis, allowing people to borrow and encouraging young people, in particular, to purchase houses with just 10 and 15 per cent deposits.

“I work directly in the housing industry and I am shocked at what people have as first homes,” he said.

“First homes today are what baby boomers or generation Xs have as third or fourth houses.

“They need to enforce a minimum deposit.

“I’d be pushing for a 40 per cent deposit.

“Two per cent of $10,000 is a lot different to two per cent of $100,000.

“Look at actual payments rather than percentages.”

Mr Pierotti said that there were 2750 homeless people in Griffith.

“People find that hard to believe, but they don’t understand it because they don’t see it,” he said.

“It’s not the people living in the street, they’re on someone’s couch.

“Look at social housing over decades.

“It’s 30 to 50 years of neglect.

“More houses have been burnt down than they have built in decades.

“There are people already feeling very upset.”

The Reserve Bank of Australia raised the cash rate by 50 bps to 1.35 per cent in July.

That increase followed June’s 50-bps hike and a 25-bps increase in May.

The interest rate on Exchange Settlement balances increased by 50 bps to 1.25 per cent.

Mr Pierotti is looking forward to The Bush Summit to be held at the Griffith Regional Theatre on August 26.

“This region is an economic powerhouse,” Mr Pierotti said. “We need real economic enablers.”

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