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

I thank the number for Fraser for his question. Today's decision is a win for Australian families with mortgages and it is a win for small businesses, whichever horse they back today. Those opposite have been asking questions about whether the banks should pass this interest rate cut through in full. Well, they should pass this through in full. Indeed, there is no excuse for not passing this through in full. Westpac has today announced a full pass-through of 25 basis points. This is a welcome decision in households with very large mortgages and it is certainly welcomed by small businesses.

The government, for its part, has done its bit. As the Prime Minister was saying before, we have put in place the fastest fiscal consolidation in history, and that has been recognised by both the International Monetary Fund and the Reserve Bank as being very important in terms of their deliberations. We are playing our part with fiscal policy.

Some points were made about the statement from the Reserve Bank. The Reserve Bank clearly points to the fact that inflation is moderating, that underlying inflation is back within the target band. They also make the point that there are adverse international conditions. These two factors, along with the government's fiscal policy, were what led them to take rates back to what they describe as neutral. Fiscal policy is very important in this. The government has put in place its fiscal policy because we do not want to add to inflationary pressures in our economy. That is why we have the fastest fiscal consolidation—that is, return to surplus—in our history.

Over and above that, the banks have a part to play as well. All banks should pass on this 25-point cut in full. One of the reasons why we have put in place a comprehensive package of competition reforms is that, if people are unhappy with their bank, they can walk down the road and get a better deal. That is why we have been steadily implementing fundamental reforms such as the abolition of mortgage exit fees, reforms to credit cards and so on—so the market is more competitive. So if somebody is unhappy with their bank, they can walk down the road and get a better deal.

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