Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

I will get to your record and the Labor Party’s record in a second, Senator Vanstone. And we have had four interest rate increases since the last election—since the Prime Minister, Mr Howard, pledged on behalf of the Liberal Party that they would keep interest rates at record lows. Senator Vanstone has challenged me and I will respond, because I was going to refer to history.

The Liberal Party is fond of comparing the current percentage level of household interest rates, which will be 8.05 per cent, to the peak reached under Labor of between 17 and 18 per cent. If we want to make percentage comparisons, why don’t we go back a little further in history to when housing interest rates reached 22 per cent—when the current Prime Minister was Treasurer of Australia? Why don’t we do that if we want to make percentage comparisons? If we want to make percentage comparisons, compare 8.05 per cent to the 17 to 18 per cent under Labor and to the 22 per cent when the current Prime Minister was Treasurer of this country.

But the more valid comparison is the money comparison—the actual dollar payments of Australians who are making mortgage repayments. The fact is that the level of household debt in terms of mortgage repayments has trebled in the last 10 years. That is the more valid comparison. That is the reason—and we have seen numerous examples today in the media and we have had numerous people contact us—for the difficulties that Australians and Australian families face as a consequence of the eight increases in interest rates, four since the last election.

Of course the Prime Minister, Mr Howard, and various other frontbenchers for the Liberal government are fond of laying blame. Everyone else is to blame. It is the states, it is foreign oil prices, it is inflation, it is bananas. We get all sorts of excuses as to why the promise made by Mr Howard at the last election has been broken. I thought one of the most extraordinary attempts to lay blame elsewhere was made by the Prime Minister himself yesterday. Yesterday at his doorstop interview Mr Howard claimed that, under Labor, as a consequence of our fairer industrial relations policies:

Wages will go up across the board and that will push up inflation which in turn will push up interest rates.

That was the claim by the Prime Minister yesterday: wages will go up across the board as a consequence of Labor’s fairer industrial relations policy. But only three months ago—and this is another clear example of the dissembling and misleading we get from this Prime Minister—in his address to the New South Wales Liberal Party conference on 22 July, the Prime Minister said that Labor’s fairer industrial relations policy would result in lower wages:

… we will be putting at risk the higher living standards, the higher wages, the better conditions …

He said that wages would be put at risk; they would be lowered. So three months ago the Prime Minister was claiming that Labor’s industrial relations policy would lower wages and yesterday, attempting to find another excuse and lay blame elsewhere, he claimed that Labor’s industrial relations policy would push wages up across the board—a totally contradictory position. Yesterday the Prime Minister was being held to account for his failure to deliver on his election promise, and he was looking around for any sort of excuse to spread the blame. Three months ago Mr Howard was claiming that Labor’s fair industrial relations policy would lower wages; yesterday he was claiming that they would lead to higher wages, leading to an increase in inflation, leading to a further increase in interest rates—quite extraordinary contradictions and contortions from the Prime Minister, Mr Howard.

What we do know from real-life experiences is that a consequence of the continuous increases in interest rates is hurt for many Australian families. My colleague Senator Sterle today in question time referred to the example of the truckie Wayne Phillips, who lives in Penrith, in Western Sydney. Mr Phillips had borrowed money in order to provide a $50,000 loan to his daughter so she could buy a house. Mr Phillips was totally correct in his analysis of the promise given by the Prime Minister when he said:

This is not the first hike in interest rates, it’s the fourth since the election—so much for the Howard Government’s promises.

It is not Labor saying this; it is Mr Phillips, the average Joe Blow out there in the street, the struggling battler. Of course, Mr Phillips is not the only example. This increase in interest rates will have a very significant impact across all sectors of the community.

There has been a reference to a two-speed Australian economy. It is actually a three-speed Australian economy: we have Western Australia, and Queensland to a lesser extent, with strong economic growth; we have the other states with lesser economic growth; and the third area of the economy that we should give considerable thought and concern to is the rural and regional economy because, there, average broadacre farm debt is approximately $230,000 to $240,000. That is a considerable amount of debt for farmers in this country to carry at the same time as interest rates are going up. It has a very major impact on issues relating to the funding of cash flow and the general debt levels of farmers in this country, and at the same time they are experiencing a major drought. So the farmers of this country are really going to battle as a consequence of this interest rate hike.

We heard from Senator Boswell earlier, complaining of misrepresentation on his eight mobile phones. Since interest rates went up we have not heard one word from National Party senators—not one question and not one statement of concern on behalf of the battling farmers in this country and the people living in rural and regional Australia. We have heard not one word from the National Party. All we could get was Senator Boswell coming in here complaining about the press coverage of his eight mobile phones. If the situation were not so serious it would be funny. But it is a very serious situation when the representatives of the National Party in this place cannot utter a word of defence, a word of concern, for the battling people of rural and regional Australia, who will be really hurt by this latest interest rate increase at a time of significant drought.

That does not surprise me. I have long regarded the National Party as the doormats of the government. I refer to a Liberal government; I do not refer to a Liberal-National government. The National Party have long since failed to represent effectively the interests of rural and regional Australia. Let’s get Senator Boswell in here to contribute to this debate on behalf of the National Party. He is their so-called leader in this place; he should be in here explaining why the Prime Minister, Mr Howard, broke his election promise to keep interest rates at record lows. But he is not here; all he could do was front up and talk about eight mobile phones. That says it all for the relevance of the National Party in this country today.

Interest rate increases do have a devastating impact in the community. The last four interest rate increases since the election have increased the cost of the average Australian household mortgage by $260 a month. We have had four increases in interest rates since the last election. How can that be keeping interest rates at record lows, when the level of repayments has increased, on average, by $260 a month since the last election? I want to refer to further comment on interest rates, particularly insensitive comments by a state Liberal Party shadow minister which have been drawn to my attention. The Liberal Party opposition finance spokesman from my home state of Tasmania, Mr Brett Whiteley, has made some truly appalling comments. He said today:

‘The interest rate increase should serve as a reminder to home buyers to be more realistic about what they can afford to borrow.’ Mr Whiteley, a former bank manager, said that if people were worried about a modest interest rate rise it was a sign they were overstretched. ‘Both individuals and banks need to be far more responsible when contemplating what sort of house to buy and the loan that comes with that.’

‘Younger couples today seem to have the unreasonable expectation that they can enter the housing market at a place where their parents are after 30 years of marriage.’

This is the Liberal Party shadow minister in my home state of Tasmania saying:

‘Younger couples today seem to have the unreasonable expectation they can enter the housing market at a place where their parents are after 30 years of marriage.’

He further said:

‘Home buyers should be budgeting and keeping a buffer zone to be able to absorb such unexpected increases.’

These are truly appalling and insensitive comments from the Liberal shadow minister—