Interest Rates are Rising — But We’re Attacking the Wrong Problem
- Future Accounting
- 10 minutes ago
- 3 min read
Written by: Chris Mulcahy
Interest Rates Aren’t the Root Cause of Inflation
Australia has just increased interest rates.
What’s not being talked about enough is this: we are now one of the only developed countries hiking rates, while others are on hold or easing.
That should concern every business owner.
Interest rates aren’t driving inflation; they’re reacting to it. And the real issue sitting underneath almost everything we buy is energy.
Every product, every service, every supply chain has energy baked into it. When energy prices go through the roof, costs follow. From the supermarket to manufacturing to farming.
If we’re serious about getting inflation under control, we need to stop pretending energy policy is separate from economic policy.
We need reliable, cheap energy. That means gas and coal (and later on renewables and nuclear).
Not forever, but until alternatives can genuinely match reliability, scale and productivity.
Without that certainty:
manufacturers won’t invest
farmers face volatile input costs
businesses pass costs on
and households pay more
This matters even more in Australia because of who employs our workforce.
According to the Family Business Association:
~70% of Australian businesses are family-owned
~50% of Australians work in a family business
These are long-term operators. They don’t flick a switch and move offshore. They employ locally, invest locally, and think in decades, not election cycles.
Which brings me to the second issue: we’ve hollowed out our own supply chains.
We import fertiliser.
We import refined fuel.
We rely on overseas markets for critical inputs.
That’s madness for a country that produces energy and food.
If we want lower costs and more resilience, we should be:
producing fertiliser locally
refining our own fuel
rebuilding strategic manufacturing
All of that requires one thing first: cheap, reliable energy - again, gas and coal.
On tax, let’s also be honest.
Australia already has a GST. It’s 10% and it hasn’t changed since 1 July 2000.
If governments need revenue, the conversation should be about consumption, not continually taxing effort, work and productivity, especially for family businesses that create jobs.
There is a place for inheritance-style taxes, but not on businesses or farms moving between generations. Productive assets should be protected, not punished.
The risk right now isn’t just higher interest rates.
The real risk is drifting into the same kind of economic malaise we saw in the early 90s,. without a clear vision, without confidence, and without the foundations in place for growth.
People don’t want band-aids.
They want leadership that says: this is where we’re going, this is how we’ll power it, and this is how we’ll grow.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
