Annette Hurley (SA, Australian Labor Party) Share this | Hansard source

It is breathtaking arrogance that the government decry the Labor Party for politicking on interest rates when it was they who set the agenda at the last election campaign which led them to make foolish promises that they have been unable fulfil. The background to this is that the interest rate rise in August this year appears not to have slowed consumption but there is some evidence to show that the tax cuts that came into effect at the beginning of July are boosting household spending. On top of that, and after repeated warnings against just this occurrence, the Howard government have gone on an election year spending spree. As the Australian Financial Review pointed out, they have outspent the Labor Party something like three to one in populistic political spending. That is what is creating pressure on interest rates and that is what has resulted in the increase that we have seen today.

In his press conference today, the Prime Minister was noticeably tetchy when asked about political spending this year because he does not like being held to account. He likes to blame others, and preferably the Labor Party. The best evidence of this, of course, is the pre-emptive strike—the Liberal Party’s ads which blamed state spending on infrastructure for interest rate rises. I notice that Senator McGauran parrots this without supplying any evidence of it. The ANZ Chief Economist, Saul Eslake, had it right when he said that there was little connection between state government borrowing and interest rates. He said:

It’s true state governments will be borrowing money over the next four years but there’s very little historical evidence between government borrowing and the cash rate. It’s political propaganda. It’s not economic analysis.

I think that encapsulates my response exactly. The Liberal Party and Senator McGauran know that that kind of argument is complete nonsense.

The Prime Minister does not seek to explain economic matters to the Australian public; he tries to hoodwink them with confusions and half-truths. That is what he is about, in the last election and currently in dealing with the latest interest rate rises. But it is crystal clear to Australian families that they are finding it increasingly difficult to manage their household finances. They may not understand the economic background of why they are finding it difficult to manage, but they know that they are. They know that this interest rate rise will make it far more difficult for them to manage those finances—not only with regard to housing costs, whether they be mortgage or rental, but also with regard to their credit card debt. Households are paying much more on a range of costs, like education, private health, child care and petrol. Unfortunately, for many families credit cards have become part of their income stream. That debt has now reached something like $40 billion in Australia and that has to be repaid at higher interest rates.

Where is the government on this? Mr Howard says that Australians have never had it better. Mr Howard and the Liberal government have ridden on the back of an unprecedented period of excellent terms of trade and the productivity gains initiated by a former Labor government. Mr Howard has never had it better, but too many Australian families have been left behind, and they know it. Despite the Liberal government’s great good fortune in being in power during a world upturn, after this term of government they will leave behind much to be done in attracting investment to Australia, increasing productivity and improving the quality of life for working families. Working families are now faced with the double jeopardy of steadily rising prices and the government’s Work Choices system eroding their wages and conditions. All the while, the Prime Minister refuses to acknowledge that there might be a problem with his management of the economy.