Sue Boyce (Queensland, Liberal Party) Share this | Hansard source

I rise to take note of answers. I think the first thing I should be doing is acknowledging that the government does recognise that yesterday’s interest rate rise will cause disadvantage for some homeowners, but I think this is something that we definitely need to get into perspective. If you look at the most recent Reserve Bank Financial Stability Review you find that, in fact, the household debt is concentrated among higher income households. The top 30 per cent of high-income households have more than 60 per cent of the household debt. Those at the bottom 40 per cent of the income distribution scheme have just 10 per cent of that household debt. In fact, the median debt-servicing ratio for low-income households actually fell between 2002 and 2006. It is right now that those with the best ability to service their debt have the household debt.

As Senator Scullion, the Minister for Community Services, pointed out earlier, well over half of households that have mortgages are well ahead with their payments. In fact, around 25 per cent of people with mortgages are over a year ahead with their payments. And household debt to housing assets ratios fell between 2002 and 2005. This has been particularly pronounced in the low-income households, where gearing ratios fell around 10 percentage points in that period. Seventy-five per cent of indebted homeowners have a gearing ratio of less than 60 per cent. When these people have the ability to have jobs, as they do under our government, they can service that debt.

One of the most noticeable increases was in the owner-occupier mortgage group, and that has been in the 55 to 64 age group, an age group that was, effectively, cut out of the employment situation, out of income earning, under the previous Labor government. It has been particularly noticed that amongst the 55 to 64 age group they have a very low debt-servicing ratio—very low gearing ratios—compared to other homeowners. Therefore, the biggest increase in the number of households with property debt is coming from people who have strong balance sheets and a strong ability to service that debt.

I would also like to speak briefly about the situation with arrears. The ratio of non-performing loans to total housing loans in this market is, at the moment, 0.38 per cent with Australian banks, less than half of one per cent. These standards have remained low right through the nineties and are very low by international standards. There has been a slight increase in mortgage sales, but that too has remained low. The basic fact here is that, under our government, interest rates remain an average four per cent lower than they were under the Labor government. People actually have the jobs and therefore the income to satisfy the loans that they have.

I would also like to briefly mention the flip side of this coin, the self-funded retirees—people who have paid off their mortgages over many years—who actually benefit from this small increase in the interest rate and therefore are in a better position to help fund their own retirement and to move into the future.

The question was asked earlier about the government attacking the federal Labor Party. If there were a real and substantial entity to attack, certainly the government would. At the moment we are looking at a miasma of me-toos and agreements about the federal budget, about housing and about the future of the economy. We talk about developing the future of Australia on sound economic principles. From everything we are seeing, the federal opposition is agreeing with the federal government that what we are doing is developing the country on sound economic principles. In general, people in Australia have never been better off than they currently are, with low tax rates and close to full employment. The housing interest rates are harming a few, but let us also look— (Time expired)