Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Hansard source

I thank the honourable member for Deakin for his question. I can inform him that this morning the Reserve Bank announced that it would make a move in the market to increase interest rates by 0.25 of one per cent, from 6¼ per cent to 6½ per cent. The bank issued a statement of the reasons why it had decided to do this. The principal reason which it cited was that domestic economic data in recent months had signalled a pick-up in the pace of growth, demand and activity. In other words, the economy is strengthening, demand is therefore strengthening and activity is therefore strengthening. As a result of that, the board decided to move to increase the official interest rate.

Whilst an increase of 0.25 of one per cent will obviously affect mortgage holders and will mean that people will have to pay more for their mortgages and therefore place a heavier burden on those who are paying mortgages, the standard variable rate of 8.3 per cent, which will result from this decision—and of course many homebuyers do not pay 8.3 per cent; that is the reference rate—is still more than two per cent lower than it was when this government was elected—it was then 10½ per cent—and lower than at any time during the previous Labor government, when mortgage interest rates averaged 12¾ per cent.

To think that the mortgage interest rate would be lower today than it was in 1996, notwithstanding 11 years of economic growth in the interim and the creation of 2.1 million new jobs, shows how far we have come in Australia since 1996. A big part of the story has been 10 surplus budgets which this government has delivered. We did not have surplus budgets before this government was elected; we had deficit budgets. We had $96 billion of cumulated deficit budgets before this government was elected, culminating in the ripper in 1993 of a deficit of four per cent of GDP—the equivalent of a $40 billion deficit in one year.

I was very keen to watch what the Leader of the Opposition and the member for Lilley had to say today about their economic policy. The member for Lilley was asked: ‘Why is Labor promising to keep the budget in surplus on average rather than just point blank in surplus each and every year?’ The member for Lilley said, ‘Because that is prudent fiscal policy’. He went on to say:

We would most certainly not be running deficit budgets in the sort of circumstances we have at the moment. We need strong surpluses at the moment.

The journalist asked: ‘Why are you leaving yourself wriggle room?’ We know why he is leaving himself wriggle room: because the Labor Party reserve the right to take the budget back into deficit. That is what they are doing. Why did he go to great lengths to say budget surpluses ‘at the moment’? Because, as the journalist pointed out, he wants wriggle room. And why would he want wriggle room? Let me put it this way: if it is important that there be surpluses at the moment, in the current economic conditions, wouldn’t each and every government be running a surplus at the moment, in the current economic conditions? But, Mr Speaker, I regret to inform you that there is only one government which is running a surplus at the moment, in the current economic conditions, because between them the states and the territories, whilst surpluses are required ‘at the moment’—even by the admission by the member for Lilley—are not running surpluses at all but have taken their budgets into deficit. If you want to see what Labor is doing at the moment, rather than what Labor says it would do at the moment, look at the Labor states and territories. We have it that at the moment there is no excuse for not running a surplus and yet at the moment the Labor Party in government at the state and territory level is doing precisely that.

Obviously, this was a faux pas from the member for Lilley because twice he had to be cut across by the Leader of the Opposition, who said, firstly, ‘Our position is a mirror position to the government,’ and then had to cut across and say, ‘Our budget position is identical to the government’s.’ So let me get this straight: their position is identical to the government’s. So they obviously endorse totally what the government has done in fiscal policy. It makes me wonder how they could actually criticise the government in relation to monetary policy when their position is identical. But this is what you get from the Labor Party—you get walking both sides of the street. The suggestion is that somehow the government is responsible but, when they are pinned, the answer is that they have an identical position. We have a Leader of the Opposition whose dearest wish is to be a Liberal, to be a mirror of the Liberal Party, to be identical to the Liberal Party. He would like to hold out that a vote for Rudd is a vote for another Liberal government at the next election. If Kevin Rudd wants to be a Liberal prime minister, there are no grounds whatsoever to try to sheet responsibility home to this government, because there is a big difference between Mr Rudd wanting to be a Liberal and this government. This government does not just want Liberal policies; this government delivers Liberal policies.

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