Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Hansard source

I do not particularly recall that question, but I take Senator Sherry’s word for it that I asked that brilliant question back in 1994. The thing I do remember from 1994 very clearly was what Mr Beazley, the then finance minister, said when interest rates went up by no less than three-quarters of a per cent in one hit, in September 1994, to 9.5 per cent. Mr Beazley said:

... I point out that this is still a very low interest rate regime in Australian historical standards.

According to Mr Beazley in 1994, 9.5 per cent was a very low interest rate. I wonder what Mr Beazley thinks of an interest rate of 8.05 per cent. Of course, when he was in government, under Mr Keating and Mr Hawke, he never saw an interest rate as low as 8.05 per cent because interest rates never got that low under Labor, so Mr Beazley thought 9.5 per cent was a low interest rate. We are very proud of our record on managing fiscal policy in this country in order to endeavour to ensure that interest rates and therefore inflation remain low in this country.

In relation to Senator Sherry’s question on comparisons with the OECD, I take his word for it. I am prepared to accept his evidence without having checked it myself. On the face of it I will accept his evidence. What I would point out is that this country, almost uniquely, has had now some 15 years of continuous economic growth. The most remarkable thing is that in any other period in the history of this country, if we had had 15 years of continuous economic growth, we would now be at the point that we reached in 1989 when the Labor Party clearly said: ‘We’ve got to have a recession because the economy is growing too strongly. We’re going to have a recession and we’re going to have 17 per cent interest rates to crush the economy.’ That is what Labor did in government. They engineered a recession because they had lost control of the economy after that period of growth.

What is remarkable is that after 15 years of economic growth we still only have inflation at three per cent; we still only have a cash rate of 6.25 per cent. When you compare us to other OECD countries, you must always bear in mind that our economic growth rates have been much better than theirs over the last 10 years. We have grown much faster than the OECD countries. The OECD countries, by and large, have had to use low interest rate policies to stimulate their dying economies. The economies of Europe need massive stimulation because of their sclerotic approach to things like industrial relations. The countries of the OECD have industrial relations policies like the Labor Party’s, and that is why they have growth rates so low that they have to reduce interest rates to give the economy some stimulus. We are in a position where, after 15 years of growth, the cash rate is still only 6.25 per cent. In any other period in the history of this country, the Reserve Bank would have had to move to the sorts of rates we saw under the Labor Party which engineered a recession.