Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

As I said to the honourable member yesterday, no government, including the previous government, made future projections on interest rates. That lies entirely within the preserve of the Reserve Bank, and that should be the case into the future as well. Secondly, we believe that the economic strategy that we are proceeding with is a good strategy for the nation. I would note that fiscal strategy on the part of the government is also being complemented by monetary policy strategy on the part of the Reserve Bank. In the period that the government has been in office we have seen a reduction in official interest rates of 4.25 per cent. I would contrast that to the 10 interest rate rises in a row which happened under the member for Higgins when he was Treasurer, and I am advised that the impact of that on an average family on about a $300,000 mortgage is in the vicinity of $700 and, spread across a 12-month period, something in the vicinity of $9,000. This is a very large amount of money.

I say to those opposite, therefore, that when it comes to the impact of interest rates policy we believe that in the period in which we are engaged, confronting the reality of a global economic recession, it follows that we must therefore have monetary policy and fiscal policy marching in the same direction. We are doing so responsibly in order to provide additional stimulus to the economy. Those opposite have neglected the impact which monetary policy has had on the activity within the economy at present. Plainly, what we have seen in housing sector activity has also been underpinned by the decisions taken by the Reserve Bank. We have sought to complement those measures by others, such as the trebling of the first home owner boost, in order to provide an additional incentive for first home owners to enter the marketplace. Yesterday I read out a letter from one such first home buyer from South Australia who indicated that for the first time because of the bonus they were able to enter the housing market and—from memory—to purchase a house which they had spent the previous nine years renting. That is a practical measure.

So whether it is on interest rates policy, monetary policy or fiscal policy we believe we are taking the right course of action for the country. It is called stepping up to the plate. It is called doing the right thing. As those opposite continue to talk about debt, again I would remind them of what Mr Costello, the member for Higgins, said when he was Treasurer back in October 1995:

Foreign debt is a terrible thing. It is now the equivalent of $10,000 per head for every Australian.

Since then, foreign debt has trebled at $589 billion or $29,450 per Australian. Based on the measure adopted by the member for Higgins, who said it was a terrible thing back then, it must be a really, really terrible thing now because it is now three times as much as occurred under him. But it is not just foreign debt. There was a 460 per cent increase in credit card debt under those opposite, a 340 per cent increase in household debt while those opposite were in office and a 450 per cent increase in corporate debt while those opposite were in office, quite in addition to what happened with foreign debt. Those opposite are engaged in a dishonest, negative scare campaign on debt and deficit. They know it to be dishonest. They still prosecute it because their political objective is to talk the Australian economy down.

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