Ms Catherine King (Ballarat, Australian Labor Party, Shadow Parliamentary Secretary for Treasury) Share this | Link to this | Hansard source

My question is to the Prime Minister. Is the Prime Minister aware that, according to data from the Supreme Court of Victoria, in the first half of this year there were 1,474 mortgage repossessions—more than 2½ times the 563 in the first half of 2003? What does the Prime Minister have to say to Victorian families facing repossession after the seven back-to-back interest rate rises since 2002?

John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I am broadly aware of those figures. As I indicated in response to a similar question asked yesterday, I would want to know, in relation to the debate on housing affordability, what proportion of those represented the repossessions of houses under mortgage defaults, because you can have a mortgage on a commercial property just as easily as you can have a mortgage on a housing property.

Opposition Members:

Opposition members interjecting—

John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I will be interested to know whether it is the policy of the Australian Labor Party, if it wins office, to abolish any business bankruptcies. The reality is that from time to time firms do get into difficulty; it is also the case that, sadly, from time to time, individual households do. I take the opportunity of counselling people against taking on obligations beyond their capacity to repay.

But the truth is overwhelmingly that the problem of housing affordability is not a problem of interest rates; it is a problem related to the disproportionately large increase in the price of housing over recent years. We all know that. The Governor of the Reserve Bank knows that and any sensible analysis will tell you that. People are borrowing more because interest rates are low. When interest rates go high, people will borrow less. It is axiomatic that if interest rates are low people will borrow more and take on greater obligation; that is happening and, as a consequence, some of them, sadly, will get into difficulties.