Economists have raised a “key concern” overlooked during Tuesday’s interest rate announcement, as a report from the Reserve Bank outlined a dire future for Australian taxpayers. 

The Reserve Bank of Australia’s latest string of forecasts included estimates real wages growth would not turn positive until mid-2027. 

Bran Black, Business Council of Australia Chief Executive, told Sky News real wages was of major concern for workers and the private sector. 

“The key concern that we’ve got, more than anything else, is real wages, that’s ultimately how we all get ahead,” he said on Thursday morning.  

“The challenge we have at the moment is that we do need to make sure we are putting more controls in place with respect to government spending, but at the same time and, as Reserve Bank Governor Michele Bullock has said, the key thing we’ve got to do here is drive productivity. 

“It’s productivity that ultimately lifts real wages and that means that you are putting less pressure on inflation, so in this budget we’re looking for initiatives and measures that will put downward pressure on that spending.” 

Earlier in the week, Deloitte Economics Partner Stephen Smith said the government’s focus should be on lifting the economy’s capacity.  

“The RBA has lowered its medium-term growth forecast for the economy to 1.6 per cent and is now assuming real wages decline for the next 12 months, while household disposal income is predicted to only grow by 1.3 per cent by 2028,” he said. 

“This is not ambition for Australia. If this is really as good as it gets for economic growth, then Australia has bigger problems than an interest rate rise. 

“Today’s decision will increase the pressure on the May Budget to deliver meaningful reform that boosts investment, drives productivity, and delivers an economy that can grow faster without inflationary pressures.” 

Speaking on the ABC’s 7.30, Jim Chalmers said Labor had “turned real wages around” during its time in office.  

“First of all, we’ve had 2 years of real wages growth. Real wages were plummeting when we came to office, we’ve turned that around,” he said. 

“But obviously when you’ve got inflation higher than you like, that has implications for real wages. We’re up front about that as well, but 2 years of relatively strong real wages growth. 

“I’d say to people who are thinking about the next year or two, they will get a tax cut from this Labor government that our political opponents didn’t want them to get.  

“Our record on wages, the gender pay gap and the like, has been much, much stronger than the record of the government that we replaced. And that’s because we know that decent wages are part of the solution to the cost-of-living pressures, not part of the problem.” 

It came as the RBA delivered news of a brutal interest rate rise for the first time in more than two years on Tuesday to address stubbornly high levels of inflation, capturing the attention of Australia’s homeowners.  

The Reserve Bank has not ruled out further rises in interest rates.  

Ms Bullock said “private demand has turned out to be much stronger” than the RBA was forecasting and was proving challenging. 

That factor has combined poorly with high government spending and low productivity.  

Many leading economists have raised concerns about public spending’s role in contributing to inflation. 

AMP’s chief economist Shane Oliver said the “best thing government can do to help alleviate” inflation and interest rate rises is “to lower the level of public spending”. 

Treasurer Jim Chalmers blamed a surge of private sector spending, a point mentioned in the RBA Board’s statement on Tuesday. 

The Consumer Price Index, inflation, is currently 3.8 per cent. That means it is higher than the RBA’s target.  

The official cash rate is 3.85 per cent.