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As it happened: RBA lifts interest rates to 3.85 per cent; Disposable vapes to be banned in Australia in major shift; Voice debate continues

Caroline Schelle and Megan Gorrey
Updated ,first published
Pinned post from 2.32pm on May 2, 2023
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Reserve Bank lifts cash rate to 3.85 per cent

By Rachel Clun

The Reserve Bank board has lifted the official cash rate from 3.6 per cent to 3.85 per cent in a surprise move just a week out from the federal budget, amid signs households are continuing to feel cost-of-living pressures.

Financial markets had said there was a 100 per cent chance of the RBA holding the cash rate steady, and most economists also believed the bank would pause.

The increase in the cash rate – now at its highest level in 11 years – comes a year after the central bank started raising it from the historic low of 0.1 per cent in a bid to tackle inflation.

Reserve Bank governor Philip Lowe said inflation, at 7 per cent, was still too high and would take some time to come back down to the bank’s target range of 2-3 per cent.

“The board’s priority remains to return inflation to target. High inflation makes life difficult for people and damages the functioning of the economy,” he said.

“Given the importance of returning inflation to target within a reasonable timeframe, the Board judged that a further increase in interest rates was warranted today.”

The move will add almost $100 a month to the repayments on a $600,000 mortgage. The cumulative increase on repayments since the bank started lifting rates would then be more than $1300 a month.

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That’s a wrap: Today’s headlines at a glance

By Megan Gorrey

That’s where we’ll leave our live updates for today, thank you for joining us. We’ll back bright and early tomorrow. If you’re just tuning in, here’s a quick recap of what you might have missed:

  • The Reserve Bank board has lifted the official cash rate from 3.6 per cent to 3.85 per cent in a surprise move a week before the federal budget. Treasurer Jim Chalmers acknowledged it was a difficult decision for Australians struggling with cost-of-living pressures, but signalled there would be some relief in next week’s budget. Opposition Treasury spokesman Angus Taylor said the rate hike showed the government had failed to devise a clear plan to fight inflation.
Treasurer Jim Chalmers says next week’s federal budget will provide relief for people struggling with cost of living measures.Alex Ellinghausen
  • Disposable vapes will be banned in Australia under a major crackdown on vaping that aims to rid convenience store shelves of thousands of products. Health Minister Mark Butler has also announced the tobacco tax will be increased by 5 per cent per year over the next three years. Federal Liberal leader Peter Dutton says the opposition will support “sensible” measures on vapes and wants to see more details on the changes.
  • Qantas’s chief executive officer Alan Joyce will step down from the carrier in November after 15 years at the helm. He will be replaced by chief financial officer Vanessa Hudson in November.

Australians urged to respect overseas laws after Indonesian arrests

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Tourists have been urged to respect local laws and customs when travelling overseas following the recent arrests of two Australian men who are facing prison time for alleged crimes in Indonesia.

In advice issued today, the Department of Foreign Affairs and Trade pleaded with Australians not to leave their manners and common sense at home when they hopped on a plane headed overseas.

Bodhi Mani Risby-Jones was on a four-day visit to Simeulue as part of a three-week trip to Indonesia.Facebook

“Don’t dismiss or mock local [cultural] practices because they’re unfamiliar, or you disagree with them,” the department’s Smart Traveller website warns.

“Many countries will cancel your visa if your behaviour is considered offensive or disruptive to the locals.”

‘We have to try’: Labor to work with states on vape ban

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Assistant Health Minister Ged Kearney believes the federal government’s ban on disposable vapes used by more than one million Australians will have a “profound impact” on young people’s health.

Health Minister Mark Butler today announced the major crackdown on vaping products in a bid to rid convenience store shelves of thousands of products. He also said the tobacco tax would go up 5 per cent per year over three years.

Federal Labor MP Ged Kearney.Paul Jeffers

Speaking on ABC’s Afternoon Briefing, Kearney said Labor was “really going out on the front foot” with the policy, which she felt would have a “profound impact on the health of our young people”.

“Predominantly it is young people who are taking up vaping. We don’t want that generation to be addicted to nicotine, so we have a really great opportunity to start afresh,” Kearney said.

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Popular NSW children’s sport voucher program faces budget axe

By Lucy Cormack

NSW Premier Chris Minns has foreshadowed an end to the popular Active Kids voucher program in July if the government cannot find the $130 million needed to fund the program for another year.

The premier said the stimulus program, launched by the former Coalition government to help parents fund sports activities, had not been fully funded by his predecessors and could be cut under a pre-budget review.

The popular Active Kids voucher scheme could be cut under a pre-budget review.Vince Caligiuri

“It’s not current to the existing budget, we have to find the funds to ensure that the program can continue,” he said.

“We’re having a line by line audit of the budget to ensure that taxpayers are getting value for money and that we can have a sustainable program going forward.“

Business groups warn against clamp down on student work hours

By Angus Thompson

Business Council of Australia chief Jennifer Westacott has joined several industry leaders to warn the federal government its clamp down on international students’ work hours could leave large parts of the economy exposed.

Labor has decided to cap the currently unlimited work hours for international students to 48 hours a fortnight to mitigate against temporary migrants being exploited as cheap labour, and ensuring entrants on student visas are primarily in Australia to study.

Business Council of Australia chief executive Jennifer Westacott. Michael Quelch

Westacott said that, while she acknowledged this priority, Australia was experiencing an “incredibly tight” jobs market, with the rate of unemployment at a 50-year low.

“This change will need to be very carefully considered because a lack of workers doesn’t just hold back our productivity, it makes it harder for Australians to get the services they want and need,” she said.

Angus Taylor says Labor has ‘no clear plan’ to fight inflation

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Shadow treasurer Angus Taylor has seized the Reserve Bank’s decision to lift interest rates to 3.85 per cent to accuse the federal government of failing to have a plan to fight inflation.

Speaking in Sydney this afternoon, Taylor said the central bank’s decision last month to pause the cash rate at 3.6 per cent “gave an opportunity to the government to demonstrate its inflation fighting credentials, and it has failed”.

Opposition Treasury spokesman Angus Taylor.Alex Ellinghausen

“It is clear that we haven’t seen a clear plan from the government to deal with the inflationary pressures Australians in our country is facing,” Taylor said.

“We are leading the world and in exactly the wrong way with a core inflation rate of 6.6 per cent.

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Mortgage calculator: How much extra will your repayments cost?

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The Reserve Bank of Australia has dropped an interest rate surprise, taking it to an 11-year high.

On Tuesday, the RBA board lifted the cash rate by another 25 basis points to 3.85 per cent.

Use our mortgage repayment calculator below to see what Tuesday’s increase of 25 points (the left toggle button) means for your repayments.

Enter your loan amount, the length of your loan, your existing interest rate, then click the +0.25 per cent rise for the latest hike to get your extra monthly repayment.

Calculations are based on monthly fixed interest rate increases on principal loan amount excluding requisite monthly repayments, adjustments to repayment amounts, or additional repayment instalments.

Lenders make individual choices on what is passed on from the RBA so check with your lender.

Nick Kyrgios helps police catch man who allegedly stole his Tesla

By Sarah Keoghan

A man who allegedly held Nick Kyrgios’ mother at gunpoint before stealing the tennis star’s car was denied bail in court in Canberra on Tuesday.

ACT Policing was called to a home in Watson about 8.30am on Monday after being told a man dressed in dark clothing allegedly threatened Kyrgios’ mother, Norlaila, with a gun before demanding she hand over the keys to the Tesla parked in the driveway.

The car has since been returned to Kyrgios.Instagram/Nick Kyrgios

Police said the man drove away in the car, however, Kyrgios was able to track the car’s movements via GPS tracking on his phone.

Police pursued the car for a short time before arresting the man at a home in Ainslie. The car was returned to Kyrgios.

Chalmers ‘very conscious’ of budget pressures facing young people

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Treasurer Jim Chalmers said the Labor government was “very conscious” of the cost-of-living pressures facing young people, but stopped short of detailing relief measures in the federal budget.

Speaking after the Reserve Bank board’s surprise decision to lift the official cash rate by 25 basis points to 3.85 per cent – one week before the federal budget on May 6 – Chalmers said:

Treasurer Jim Chalmers speaks in Canberra after the RBA’s shock decision lift interest rates on Tuesday. Alex Ellinghausen

“We know that Australians, particularly vulnerable Australians, are doing it tough across the board … We understand that particularly people on payments [are] doing it tough and that’s why the energy bill relief is directed towards people on pensions.

“We understand that there are pressures coming from a range of sources on Australians, young and old, we’re cognisant of that, and we’ll respond to that in the budget.

Pressed on specific measures, Chalmers said: “Wait for the budget and see what’s in there.

“Am I particularly concerned about women over 55 finding it harder to get into the workforce? I am … [and] will there be cost of living relief which is broader than that that’s been speculated on? And the answer that is yes.”

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Interest rate hike a ‘difficult decision’: Chalmers

By Megan Gorrey

Federal Treasurer Jim Chalmers says today’s interest rate hike is a difficult decision for Australians who are feeling the pain of cost-of-living pressures.

The Reserve Bank board has lifted the official cash rate from 3.6 per cent to 3.85 per cent in a surprise move just a week out from the federal budget. The increase is the 11th rate rise in a year.

Treasurer Jim Chalmers.Pete Wallis

Speaking in Canberra just now, Chalmers said: “This is a really difficult decision for a lot of Australians who are already under the pump.

“This is a reminder that inflation remains the primary challenge in our economy.

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