Michael Keenan (Stirling, Liberal Party) Share this | Link to this | Hansard source

To be the last speaker in this adjournment debate today is an unexpected pleasure and a wonderful opportunity for me to return to the theme of my earlier speech, which was housing affordability and where responsibility lies for the current crisis facing people in Australia who are trying to enter the housing market.

Attempts have been made by the Labor Party this week in the House to pin the blame for this crisis on the upward trend in interest rates. But, Mr Speaker, if you examine the situation, that is clearly a furphy. The current housing crisis is occurring for a number of reasons, but the primary reason is the planning policies that are being followed by the state Labor governments. They have failed to grasp the fact that, if they will not release adequate amounts of land, the subsequent price of land will skyrocket. They have also failed to grasp the fact that running transfer taxes at ridiculous record levels—particularly as has happened in my home state of Western Australia, where the Carpenter government and the previous Gallop government jacked up stamp duty three times in a row—will link into housing affordability.

I am glad that the ALP has discovered there is a problem with housing affordability in this country, but I think we need to be honest about the reasons for that. If we are not honest about it, we will not be able to find solutions—and, if we are honest about it, we will know that the responsibility lies with the state Labor governments.

On the theme of interest rates, I think we also need to look at where the upward pressure on interest rates is coming from in Australia at the moment. We all know that the Hawke and Keating governments ran record interest rates of up to 17 per cent for homeowners and, at the same time, they ran a net government debt of about $96 billion. Obviously, a government borrowing money at such a level is in direct competition with other people who would like to borrow that money. That creates extraordinary upward pressure on interest rates; hence the record levels that we saw under those governments.

The coalition government, by contrast, has paid off that debt and is now running a substantial and healthy surplus. Unfortunately, that cannot be said of all governments in Australia. Indeed, state Labor governments are currently running deficits. The combined deficits of state Labor governments for this financial year will be almost $5 billion. The Reserve Bank governor, when highlighting reasons for upward pressure being placed on interest rates, has specifically commented on these irresponsible fiscal policies that are being followed by the state governments. I quoted him earlier and I will repeat that quote now. He said:

I have been lucky—for most of my time—

that was his time as the Reserve Bank governor—

fiscal policy has consisted of small surpluses—

which has been the case through the Commonwealth and state levels. He went on:

So the movement in the government account has not been big enough to be important in the consideration of monetary policy. It might become an issue because the states are now part of the equation.

The Reserve Bank governor is saying that he has been blessed during his period that the Commonwealth government has run a responsible fiscal policy, thereby placing downward pressure on interest rates. But, sadly, the states have not heeded that lesson and they are starting to run deficit budgets, which will of course place upward pressure on interest rates.

As well as running a $5 billion deficit for this financial year, state governments are budgeting for a significant increase in borrowings. State government debt is forecast to rise by around $43 billion between 2005-10. This is in stark contrast to what the Commonwealth government plans to do, which is to continue to run healthy budget surpluses. Obviously, running a healthy budget surplus puts downward pressure on interest rates while the borrowing of the state governments puts upward pressure on them.

I think it is time that members opposite, particularly the Leader of the Opposition, put pressure on their state government counterparts to start managing their economies in a responsible way. If state Labor governments’ deficits are placing upward pressure on interest rates now, just imagine what would happen if we got a Beazley Labor government. We would have an Australia that would go back to— (Time expired)