Arch Bevis (Brisbane, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. What has been the outcome of today’s meeting of the Reserve Bank of Australia board?

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

I thank the member for Brisbane for his question. Today’s Reserve Bank board meeting left the official cash rate unchanged at 4.5 per cent. This news will be welcome relief for many Australian families and businesses around the country who are of course doing it tough. Today’s decision means a family with a $300,000 mortgage is still paying around $450 less a month than they were prior to the onset of the global financial crisis. That is around $5,400 less a year.

When interest rates rise certainly everybody on this side of the House understands the impacts that that has on families, on businesses and on budgets. That is why our budget is so firmly focused on responsible economic management, bringing the budget back into surplus three years early. That is why we are concentrating so much on building the economic capacity in our economy. That is why we are focusing so much on investing in infrastructure, investing in skills and making sure that our economy is that much more competitive. That is why we are modernising our tax system to make our economy more competitive, to make our economy one in which we build our economic capacity so we can take the pressure off inflation—so we can have sustainable growth with lower inflation. That is the whole point of the budget that we have brought down. That is the whole point of this government from the very beginning: investing in capacity. That is why our modernisation of the tax system is so important. We have got to continue with that reform. This is something that those opposite simply do not understand, because we all recall their failure to heed the warnings from the Reserve Bank about all of the capacity constraints in the economy. They still do not understand the importance of economic reform to building capacity and to making growth sustainable. They simply do not understand why we must move forward to make our economy much more competitive.

Tomorrow we do have the national accounts, and I have every confidence that with the right policies in place our economy can continue to be one of the best in the world over coming years. But to continue to do that we have to keep this momentum for reform; we certainly need to do that. I can see the disappointment on the faces of those opposite that rates did not go up today. They certainly would never admit that the official interest rate is still 2.25 percentage points lower today than when the Liberals were last in office. But, from our perspective on this side of the House, we will do everything to reform our economy to build economic capacity and to keep the pressure off inflation so we can grow sustainably.