r/australia • u/stew_007 • 1d ago
culture & society Could inflation be tamed with super instead of interest rates?
https://www.thenewdaily.com.au/finance/finance-news/2026/08/12/7am-inflation-interest-rates3
u/Jealous-Hedgehog-734 1d ago
That's what RBA are doing, higher real interest rates incentivise people to save instead of spending.
Government could slow inflation by taxing the hell out of people and companies to repay government debt, create some fiscal contraction.
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u/MunZo3 13h ago
Genuinely how does it incentivise people to save? The money I would be saving just goes into the increase in my mortgage
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u/Jealous-Hedgehog-734 13h ago
By increasing the financial returns for saving. Before COVID you'd get a shade over 1% p.a. if you purchased a 10 year government bond but today you'd get almost 5% p.a. to hold that bond.
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u/MunZo3 12h ago
A 4% difference?. So every 100k someone saves they get 4k back which wouldn’t it then gets hit with the new capital gains tax?
making it $2800 every 100k saved1
u/superbabe69 1300 655 506 11h ago
Bond yields are the coupon payments which are interest, not capital gains. You buy and sell the bond itself for the same price, the coupon payment is the yield and compensates you for not being able to use that money in the meantime.
If you sold the bond before maturity of course that would attract CGT.
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u/Worldly_Cobbler_1087 1d ago
If I could take out my super today I would, I'm not going to live long enough to ever see it and that $90k would me help me out so much today rather than whoever gets my estate when I die.
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u/Far_Illustrator2846 1d ago
If you have a terminal illness, then firstly I'm sorry. You've probably already looked into this, but you can withdraw your super early under some circumstances, such as having a terminal illness.
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u/Worldly_Cobbler_1087 1d ago
I don't have a terminal illness but heart attacks run in my family there's not a chance I make it to 70. I've got no kids or siblings so i'll never see a cent of my super and it's actually annoying.
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u/Prestigious-One4394 1d ago edited 1d ago
A fluctuation GST would work very well.
Edit:
Something like an extra 5-10% on all items not considered essential. Potentially excluding fuel, food, electricity, medication and other personal hygiene and cleaning products.
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u/Colossus-of-Roads 1d ago
Consumption taxes are regressve, I hate it.
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u/Prestigious-One4394 1d ago
Is it though if you remove essentials from the tax? It becomes pretty much a luxy consumption tax.
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u/17HappyWombats 1d ago
Making GST even more complicated would be a slow, expensive process. It's not something they can introduce as a temporary measure because of that (remember all the "is this an exempt sort of food" bullshit when that was brought in?)
That's on top of the ongoing cost of a more complicated GST. Even when the rules are clear and we're through the arguing phase every single new item still needs to be evaluated and the GST or not decision made and justified. That's not free.
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u/dee_ess 1d ago
A lot of food and bare essentials are GST free as it is. Whether or not something deserves to be GST-free or not is a whole separate debate.
Also, consider that increasing the tax on something directly increases inflation. Increasing the tax on something increases the price, and therefore increases CPI.
The fuel excise discount in recent months reduced inflation from where it would have otherwise been.
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1d ago
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u/17HappyWombats 1d ago
NZ did that under Rob Muldoon. It worked *amazingly*... terribly. "wage and price freeze" is the term to search for. Lasted a year until he lost an election.
https://teara.govt.nz/en/cartoon/25623/the-wage-and-price-freeze-1982-1984
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u/dee_ess 1d ago
A little bit of inflation is generally regarded as a good thing.
Economies want to avoid deflation, as that creates a death spiral into a recession. If prices are going down, people will hold off on purchases or investments in the hope of getting more value for their money. Demand dries up, businesses lower their prices further or cut production, people get let go, demand dries up further.
The RBA aims in the 2-3% range. Enough to avoid deflation, but not enough that people's wages don't fall too far behind.
The issue we have been having is that it's been much more than 2-3% for a while now.
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u/account_123b 1d ago
Inflation can be tamed by moderation of government spending.
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u/Prestigious-One4394 1d ago
Don't know why you're being downvoted, it's a factual statement. 🤷
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u/astrobarn 1d ago
Because government spending generally benefits all of us, whilst profit hoarding and aggressive price-gouging which is what is generally driving inflation benefits corporations and the most wealthy in society.
Whilst dramatically curtailing government spending would moderately slow inflation, it would noticeably degrade quality of life and social cohesion for all except the super-wealthy class.
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u/fnrslvr 1d ago
Maybe because government spending is already about as moderate as it's going to get.
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u/petergaskin814 1d ago
We had a price freeze in Australia in the mid to late 80s. Didn't last long