Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

You don’t get it. The explosion of household debt has changed the interest rate equation in this country forever. It has changed forever, because the percentage of household income required to service a mortgage is at a record high. People are paying more in monetary terms and more as a percentage of income than ever before. But, of course, John Howard and Peter Costello still think they are low. This is what Peter Costello said on the Sunday program: ‘If you see a single digit in front of your interest rate, that’s low.’ This has now been airbrushed from the Treasurer’s website; you cannot find it on the Treasurer’s website. We know why: he is so embarrassed. Do you know why? Because the data has been there in the Reserve Bank report on monetary policy from last Friday. Data from the Reserve Bank shows that mortgage interest paid as a share of household disposable income was 6.1 per cent in September 1989. What was it in March 2006? It was 8.7 per cent. That is the figure they do not get: people are paying an increasing percentage of their incomes.

We have had two more interest rate rises since these figures were collected. These three interest rate increases have cost the average new mortgage holder $108 a month. And that doesn’t matter? We had the Prime Minister out there suggesting that it was not very much; it was only a little bit. We had the Treasurer out there suggesting the same. But let me tell you what those last three increases are worth: in the electorate of Greenway, they have cost $241 a month; in the electorate of Aston, $169 a month; in the electorate of Dickson, $210 a month. So what was the PM’s response in here today? He suggested that somehow households can pay their mortgage by selling their equity—that, if you are having problems paying your mortgage, you front up to the bank manager and say, ‘Look, I can’t pay the mortgage, but my house is worth a lot more.’

The point I am making is that this government does not understand the financial pressures that families are under. Somehow, through the commentary of the Prime Minister last week, was this notion that Australians had overextended themselves by borrowing more. Why had they done that? Because he encouraged them to. As Mrs Bridgman said in the Sydney Morning Herald, she went out and borrowed more—she felt she could do so because the Prime Minister told her. Now the Prime Minister says, ‘You’ve probably been out there borrowing more to go on a holiday, buy champagne, buy caviar.’ The truth is, Minister, that may be okay for some, but for most people it is the necessities of life that they actually have to put together to make sure they can get by. They are not out there borrowing for any reason other than to have a roof over their head and to provide the necessities of life.

In the middle of all this comes Malcolm in the Middle. Malcolm blunders in and says: ‘There’s nothing dramatic about this; it’s okay. I don’t have a problem with my $10 million, $20 million mortgage’—or whatever he has, if he has one at all. No problem for Malcolm at all. The backdrop to this is both the Treasurer and the Prime Minister saying interest rates are low. It is a pity the payments are so high. I do not think that we will hear a lot more from this government with their drumbeat of saying how high they were 10, 13 or 14 years ago, because now they are the highest ever.

So, why are we having this debate today? And why did question time begin as it did today? Why did it begin by discussing electoral advertising? As I said before, with that advertising the Prime Minister took personal responsibility for interest rates. This was a sleazy path to win the last election—nothing more, nothing less. It was absolutely sleazy. The Prime Minister’s desperate opportunism has been now compounded by his failure to listen to six alarm bells, which have been rung by the Reserve Bank since the last election—his refusal to heed their warnings about the need to invest in skills, to do something about training skilled workers, to do something about training doctors, to do something about training skilled workers in the traditional trades and so on, to do something about our infrastructure. In two budgets he has ignored those six warnings and he has sold the country short. The result has been rising core inflation and rising interest rates. When he gets confronted with rising core inflation, who does he blame?

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