Last week, the comments by RBA’s Philip Lowe caused widespread anger. The head of the Reserve Bank of Australia announced the twelfth interest rate rise in thirteen months before answering questions from the media.
One journalist asked how much further interest rates will rise before we see mortgage arrears or house sales. To this, Philip Lowe responded that people should “cut back spending” and “find additional hours of work.”
This comment was met with utter frustration and backlash. The public was outraged and rightly so.
Why Has There Been Such An Outpouring Of Anger?
Although the advice given by Lowe is not unreasonable in itself, it is hard to swallow. There are three key reasons for this:
1. His Income Is Extravagant.
Philip Lowe takes home in excess of 1 million dollars per year in wages and superannuation. This is eleven times what the average Australian full-time worker earns. It is twenty-two times the minimum wage and thirty-eight times the pension.
It’s a bit rich to be told to tighten your belt by someone who clearly doesn’t get it.
I have no doubt that Lowe has worked incredibly hard to get to the position that he is in today. He has put in the hours and worked his way up the ladder. This doesn’t happen by accident.
However, those in the highest income bracket have forgotten what it is like for the average person, or perhaps were never in a position to watch their money carefully.
They don’t know what it is like to have more money going out than is coming in.
They wouldn’t know what it is like to be without a car, relying on public transport to get to work and walking home with heavy grocery bags.
They wouldn’t be able to understand the stress of filling up a car when it is expensive because they had to wait until they got paid.
They don’t know the stress of finding available, let alone affordable, housing right now.
They couldn’t begin to comprehend the stress of buying groceries for a family, let alone those with allergies and dietary restrictions.
They wouldn’t understand the stress of shivering through winter, feeling too scared to put the heater on.
They simply wouldn’t know the stress of trying to afford the basics.
They wouldn’t understand the utter desperation that many are finding themselves in.
Money might not make you happy but it sure does take off stress. Money gives you options. It enables you to leave a bad relationship. It enables you to look after your health and fitness. It enables you to study and change career pathways.
When you don’t have enough money, life is so much harder. Daily decisions become a source of stress. It is a scary place to be. How could someone like Lowe on his million-dollar wage even pretend to understand?
2. He Is Out Of Touch.
The lack of compassion or empathy in Lowe’s response demonstrates just how out of touch some people really are. It the average person living from pay cheque to pay cheque.
Most people are trying their best but the cost of living is just going up so fast.
The sheer cost of housing is leaving people with little to no options. People have to pay far more than a house is worth, leaving barely enough to live on. The rise in interest rates along with the lack of housing is driving up rental prices. It’s causing immense stress and forcing people into homelessness.
I cannot begin to imagine the stress of looking for somewhere to live right now.
There may be some truth to what he is saying. Most of us can figure out more ways to save money to offset the cost of living. We can become more frugal and spend less. We can go back to basics and make every dollar count.
There are some people who can increase work hours, take on overtime or work shifts for a higher rate of pay. Some people can negotiate a higher salary. Some might apply for s second job. Others might opt for a side hustle that can fit in around their other commitments.
However it’s not as simple as that. Not everyone has access to childcare or it is simply not worth working more by the time you factor the cost of childcare in. Some people are caring for ageing parents, children with disabilities or have health issues themselves.
If you are working more, how are you meant to cook, clean and do all the household chores? When do you tackle the life admin? How will this impact the quality of family life?
In addition, people were enraged to discover that after announcing the interest rate rise in May, the RBA spent $25,000 of taxpayers’ money on an exclusive function. Just another example that Philip Lowe and others in his position are ridiculously out of touch.
3. It’s Not Just What He Said, But How He Said It.
I’m all for saving money and side hustling, but the arrogance in Lowe’s comment during times like this does not sit with me well. His lack of compassion at such a difficult time for many is quite unfathomable.
When one of my boys hurts their siblings, we try to put it right. Part of this is seeing if they are okay and saying sorry. I have been trying to teach them that when we apologise, our face needs to match what we are saying. Our facial expression and voice needs to show empathy.
If we say sorry while smirking, laughing, appearing distracted or having a blank expression, the other person can feel like we don’t mean it. It is not just what we say but how we say it.
I believe that those in leadership roles have a responsibility to show empathy in what they say. It helps us to trust what they are saying and take in recommendations. They become more likeable and human even.
When our then PM Scott Morrison took a holiday in Hawaii during the 2019 bushfires, he didn’t seem to get it. It wasn’t just his actions of taking a trip overseas but how he presented himself. His interviews showed a gap in understanding what so many were going through.
Although I have no doubt that Morrison was shocked and saddened by what was taking place, his face and body language didn’t demonstrate this.
At the crux of this backlash, I think this was the issue. A little bit of empathy goes a long way.
Let’s Not Forget What People Are Dealing With
We are coming out of a global pandemic that saw people lose their small businesses, lost income and their jobs. People were cruelly separated from loved ones. Birthdays, graduations and holidays were cancelled. Covid restrictions made the grieving process so much harder at funerals. Relationships were under strain like never before.
We were heavily restricted and at times, prevented from taking part in life as we know it. Whilst I realise that governments had very difficult choices to make, these rules deeply affected our lives.
The average Australian is struggling right now.
We are feeling the pressure.
We are worn down.
I Don’t Envy His Job
We are not disputing the difficult job that the RBA boss has. I don’t envy the pressure he is under. He is paid the big bucks for a reason.
He bears the brunt of these announcements. It wouldn’t be a great feeling.
I know there are no quick fixes or easy answers. I realise that tough decisions need to be made.
In all fairness, Lowe acknowledged that households were facing “significant stress”.
He Does Have A Point, But…
Should we look for ways to save money?
Should we be taking on extra hours or an extra extra job or side hustle?
Saving money and earning extra can certainly help to make a difference. There is no shortage of ways that we can do to help ease the pressure. This is what I write about over on Instagram and the budgeting app WeMoney and is what I’m so passionate about.
Lowe makes some worthwhile suggestions.
What bothers me is the assumption that people haven’t thought to try these things. That they haven’t been scrimping and saving just to make ends meet. That despite how hard they work and how much they save it doesn’t seem to make a difference.
These are tough times. When those on fixed loans come off onto variable rates, we might see the full extent of the impact these interest rates are having.
Perhaps it is a lesson for us all in the importance of showing empathy when responding to someone in need. You may be correct in your thinking however if it is not conveyed in the right way at the right time, it will fall on deaf ears.
Respectfully, Philip Lowe, you have no idea. Absolutely no idea. Please don’t pretend to understand what the average Australian is actually dealing with right now.
Reach Out For Help
If life is really hard right now and you’re not sure what you can do or who to turn to, here are some options.
Desperate? Call Lifeline on 13 11 14 or Beyond Blue on 1300 224 636.
Scott Pape from the Barefoot Investor recommends giving the National Debt Helpline a call on 1800 007 007. There you’ll find free, confidential counselling, to help you figure a way out.
There are many charities, organisations and churches equipped to help and would be more than happy to assist you. Foodbank can help provide groceries. You can find links to a Foodbank in your area here. Alternatively, comment or contact me directly and I’ll do my best to point you in the right direction.
What was your reaction to Philip Lowe’s remarks? Do you feel that people in his position are out of touch with the everyday Australian? Comment below or connect on Instagram or Facebook.
Melanie Wegener
