Interest rate cuts and tax cuts

Prime Minister Julia Gillard on the recent RBA decision

We believe that the banks should pass on this interest rate cut in full to mortgage holders. I don’t believe there is any excuse for the banks to do anything other than pass it on in full

Of course I’ll be waiting a long time before the Government passes back the extra taxes it receives due to fiscal drag.

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13 Responses to Interest rate cuts and tax cuts

  1. John Doe

    Very poor argument.
    Now if you had have talked about the Bank’s funding costs you would have been on stronger territory.

    Not having a great day are you.

  2. .

    No, he has no flaw in his argument, more to the point, you have not actually attacked his argument at all.

    “Not having a great day are you.”

    LOL

  3. Infidel Tiger

    Does she believe that the 500 big polluters should pass on the carbon tax in full or should they absorb the costs out of the goodness of their hearts?

  4. ar

    Clearly banks think they own the money they earn by charging interest.

  5. JohnA

    The only way they can logically and responsibly do that is if their entire mortgage portfolio was funded by their RBA borrowings on which the RBA paid the now reduced cash rate.

    But “logic” and “responsibility” are words missing from this government’s lexicon.

  6. val majkus

    John A totally agree and I would add the words ‘credibility in respect to economic decisions’

  7. Cato the Elder

    Cheap shot John Doe. I don’t see an argument, just a factual observation. The gubbermint will always “jawbone” the banks and will never be so consistent as to give up a dollar in revenue in similar circumstances. The hypocrisy is palpable but since none of us are surprised by government hypocrisy, what’s more to be said?

    Oh and never forget that “Factio Viridis delenda est”

  8. Token

    Clearly banks think they own the money they earn by charging interest.

    As a shareholder of banks, and a person who has bank stock in my superannuation, I want those banks to grow, grow, grow as they need to work hard to offset the ever increasing costs and regulation past by the nuff-nuffs in Canberra.

  9. Rodney

    If Wayne and co had their way there would be a full scale credit squeeze in Australia. As it is the withdrawal of European and British banks from wholesale and development finance has been a major factor in the recent collapses of builders and developers.
    Aust banks borrowing overseas can hardly be helped by having a government that obviously hates Australian Banks.

  10. Samuel J

    I’m having a great day thank you John Doe.

  11. grputland

    Of course I’ll be waiting a long time before the Government passes back the extra taxes it receives due to fiscal drag.

    When was the last time a conservative government did that? — other than by way of compensation for its own great big new indirect tax??

    Labor or Liberal, they’re all politicians.

  12. Poor Old Rafe

    Fraser should have indexed taxation to correct for the inflation of the 1970s but that was one of his crimes of ommission. But of course he was the kind of conservative that Hayek roasted in his essay “Why I am not a conservative”.

  13. John A

    No, Rodney, I have to disagree.

    Wayne & Co (specialists in bankruptcy, never mind law) would much rather let the printing presses roar at full speed, and inflate us out of our troubles.

    But their gross ignorance of banking is shown in their call for lower interest rates, whilst at the same time decrying the banks making larger profits.

    With an average spread still around 100 basis points, the bankers are laughing all the way to the bank… err I mean …to work. A low interest rate climate means larger gross profits and less turnover of funds required to generate those profits.

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