Patrick Secker (Barker, Liberal Party) Share this | Hansard source

I am not quite sure what operations of the parliament occurred just then, but I am sure all is well. I find it very interesting that we have had the Australian Labor Party trying to get Australians to believe that because of the government’s so-called poor management and interest rates rises there has been a mortgage stress crisis. But what I find even more interesting is that when we set up an inquiry to look into home lending practices and whether there is any mortgage stress, only one Labor member attended that committee meeting. Here we are in the Main Committee, and both the Labor Party members who were listed to speak have pulled out. That shows the interest of the Labor Party on this whole matter. I think there is no better saying for the Labor Party than: ‘Hypocrisy, Labor is thy name.’

In reality, leading Australian industry stakeholders, banking experts, finance brokers, and government and consumer agencies did not list either as the cause for home loan defaults or mortgage stress. Interest rates were not the cause. That was very clear. Not one of the experts in the area said that there was any sort of problem as a result of interest rates. In fact, when it came to home loan defaults, the four main reasons highlighted at the House of Representatives Standing Committee on Economics, Finance and Public Administration roundtable meeting were: marriage break-up, loss of job, gambling problems and, in 50 per cent of cases, incorrect information supplied by the person taking out the loan—and here we mean income or existing debt levels. So in actual fact half of them are caused by the applicants themselves.

The level of home loan defaults is now 10 times less than when Labor was last in government. So, if we have a crisis now, it must have been one hell of a crisis when Labor was last in government. Even though interest rates have risen—and nobody likes that when they have borrowed for a home or a business—they still remain lower than they were at any time during the 13 years of the Hawke-Keating Labor government. So Labor’s suggestion that we have a crisis is not borne out by the facts.

Labor has dishonestly redefined the term ‘mortgage stress’ to mean those paying more than 30 per cent of gross income in loan repayments. But, as the Reserve Bank pointed out at this hearing, that definition has only ever been applied to income earners in the lowest 40 per cent bracket—not to everyone. In fact, the lending institutions take that into account; they use that formula for those on lower incomes. That is the only time that there is an actual need to use that definition. Instead, Labor applied that definition to 100 per cent of income levels, and that provided a grossly inaccurate end figure.

Labor has also tried to use figures of indebtedness from the high-priced Sydney market and apply them to the rest of Australia, where loans are much lower and are not affected by falling home values. Unfortunately, some people in west Sydney have been affected by that problem. In my electorate assets are still continuing to rise in value and the loans are nowhere near the size of the loans in the high-priced market of Sydney or in some parts of Perth, which is now, it seems, the high-priced house capital of Australia. We must be doing something right over there.

There is no home loan crisis. In fact, the rate of forced sales or repossessions is at near-record lows. The facts show us that less than one in 7,000 home loans default. If that is a crisis, it is a very interesting definition of ‘crisis’. Labor have failed to show any evidence of a crisis and their spin has been proven to be a fraud. Of course, no home loan borrower wants to see interest rates increase, as we saw just recently this year, but a 0.25 per cent rate rise is nothing compared to the increases under Labor, where they actually increased by one or two per cent overnight—not over two or three years. That is the difference between Labor and this coalition government.

I also take this opportunity to note with interest the results from the home loan inquiry that showed that generation Y—and we read about this in the papers—were more prepared to have higher debts for their homes. The reason for that is that generation Y’s life experience under a coalition government has been one of relatively benign and consistent interest rates, lower inflation and much higher employment security, with the lowest unemployment rate in 33 years. So, because things are pretty good under this government, they are more prepared to take a risk than someone who grew up in the Depression years or during World War II, for example, when things were a bit tougher, and who obviously has a much more conservative view when it comes to borrowing.

It is not that generation Y are wrong—which is proved by the fact that fewer than one in 7,000 home loans default—it just shows that generation Y are much more interested and prepared to take that risk because they have had this consistency. They did not have to go through the Whitlam years from 1972 to 1975 in this country and they did not have to go through the 13 years of Labor when interest rates went up to 17 per cent and unemployment went up to 11 per cent. They were really shocking times. They did not have to go through that; generation Y have had a very consistent economy with lots of jobs.

It is interesting to note that Econtech, a highly respected group of economists, often quoted by Labor, I might add, has predicted that after three years of a Labor government—which reminds me a bit of the Gough Whitlam three years—inflation would rise to five per cent and unemployment would increase by 319,000 people, which is about three per cent. So, we would go from 4.3 per cent to something like 7.5 per cent. We certainly would not have any skills shortages then because they would all be unemployed and they would be fighting for a job. GDP would drop by 2.4 per cent, and that is in terms of every Australian. That would mean a decrease of $2,700 for every Australian. Of course, home loan interest rates would increase to double figures for the first time since Labor was last in government, in 1996. This is what Econtech, a group that Labor often quotes, is saying about Labor’s plan. This is because Labor has promised a return to an industrial relations system controlled by unions that even former Labor Prime Minister Paul Keating said, on 9 June this year, was stupid.

It is the committee’s recommendation that the Australian Bureau of Statistics begin collecting and publishing data on housing repossessions. There is a need for better information in this area, which would also lead to a better informed public debate on housing lending and put an end to ridiculous rumour-mongering like we see sprouting from the opposition. Further to that, it is the committee’s firm belief that there is a need for a new approach to credit regulation. The key driver of this is the aim to reduce the practices of predatory lenders and brokers, even though it is actually a reasonably small amount in the whole scheme of things. The committee recommends that the Commonwealth government regulate credit products and advice, and this includes the regulation of mortgage brokers and non-bank lenders.

Finally, the committee recommends that the board of the Banking and Financial Services Ombudsman increase its jurisdictional limit to $500,000, and other external dispute resolution schemes consider the appropriateness of their limits. All in all, I think a very good day was spent by the committee and I support its recommendations.

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