UCB Conference: Peter Costello discusses adapting to changing times

Peter Costello, former Australian Treasurer, was the keynote speaker at the 2022 UCB National Member Conference and Trade Show.

Costello discussed his experiences in retiring from Government, the impact of Covid, and how he and Australia responded to those changes.

“There are some days that change the world forever. Everyone would remember where they were on 9/11. And if you watched those two aircrafts going into the World Trade Center, you knew your life was going to change. Things were going to be different after.

“I’d say the same about March 2020. Once that virus had escaped in Wuhan, China and Australia had closed its borders, you knew something was going to be different for the rest of your lifetime. Now, the trick, of course, is to know what’s going to be different and what’s going to be the same.”

Peter Costello engaging with Trade Partners at the 2022 UCB Member Conference and Trade Show prior to his keynote address

While Covid negatively impacted a lot of businesses, it also provided opportunity for many others and increased the uptake of new and current technologies.  

“The lockdown and Covid was great for some businesses. It was great for internet commerce. It was great for delivery trucks. We had all of this before. But during the lockdown, we had to learn how to use it. And my view is that digitisation was coming and was always coming. But what Covid and the lockdowns have done is it’s fast tracked it about five years.”

Costello said that while lockdowns were difficult, Australians coped with it very well.

“Economically, the spring back was very strong. We’re now back to where we were before the pandemic, although we have lost two years of growth. But we’re back to where we were two years ago, our unemployment rate is lower.

“We have an official cash rate of 0.1 per cent, mortgage rates are two and a bit. Australia’s commodities have boomed. Our biggest export, iron ore, is $150 a tonne, it’s unbelievable stuff. Coal is $400 a tonne. Money has been pouring into the country through the sale of our commodities.”

Despite this impressive bounce back, Costello said that the current inflation rate of 5.1 per cent is well above the RBA’s February prediction of 3.5 per cent and warned that it will continue to rise.

“The problem here is that the RBA has consistently underestimated inflation. Now inflation has crept up on us. This means one thing, and one thing only, interest rates are rising. The next meeting of the RBA is next week, and they know that interest rates will rise, the only question is whether they do it before or after the election.”

Costello predicts interest rates to rise two or three percent, and that people should bake in this rise in their business loans and home mortgage loans. He said the current government debt, which sits at $1 trillion this year, is carried very differently at one or two per cent interest rates than it is at three or four.

“The government’s going to have to tighten its belt. We went through the party phase, now the punchbowl is being taken away. It’s being taken away on interest rates, being taken away on credit creation, and it’s going to have to be taken away in relation to the budget. We’re readjusting to the way things were.”

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