John Williams (NSW, National Party) Share this | Hansard source

I would like to contribute to this debate on interest rates and say how extremely disappointed I am about what has happened since September 2008, when we have seen a 2.4 per cent reduction in official rates by the Reserve Bank. We know that times are tough, especially in rural and regional areas of Australia. We know that drought has been around in many areas since January 2002. I find it very alarming that we now see upward pressure on interest rates and I believe, from a good source of knowledge, that tomorrow Westpac will announce a rise in their home loan interest rates, following on from the Commonwealth Bank today. But the most disappointing thing I have seen is that, no doubt, the government has put a lot of pressure on the banks to lower interest rates for home loan borrowers. I was privileged to talk to David Bell, who represents the Australian Bankers Association, and we discussed this very issue. He made it quite clear that the government has put a lot of pressure on the banks to pass on those reductions in interest rates over those months—as I said, from last September being the big falls.

The question is: what pressure did the government put on the banks to reduce interest rates for small business and farmers? The answer to that is none. I talk to farmers who are paying 11.5 per cent on overdrafts totally secured with real assets, as in land. How can these people recover from the tough times that they are going through, from the drought to the high input cost to many farmers and the way that those reductions in moneys affect the regional communities, where the small businesses suffer as their sales are down? Yet they are paying high interest rates because the government has failed to put the same pressure on our banks to pass those rates onto small business and farmers. This is a very alarming situation, when we see official rates of three per cent and we see people in business trying to survive, many of them competing on world markets—such as our agricultural producers, our farmers, do—and relying on exports of food. They are paying 10, 11 and 12 per cent interest rates. I think that is just an utter disgrace.

The government are great at beating their chests about how they are doing this, that and everything else to stimulate the economy, but the real stimulation should be directed at those in the private sector. As I have said before, it is the private sector that drives the nation’s wealth. It is small business, including the farm sector, that is paying through the nose on interest rates today. The government have failed dismally to put any pressure on the banks to forward those reductions—in other words, the banks are surviving on the high interest rates to the people they lend to.

I touch on the underwriting of the bank investments that Senator Hurley referred to a minute ago. It has been very obvious that the credit unions are now calling for the removal of the bank guarantee. Those small institutions are paying more for their premiums to have that guarantee. Here is a problem in itself where the competition simply cannot be put in place. It is unfair because we have smaller competitors such as our credit unions, which are out there in many rural and regional areas, doing the best they can but failing to compete against the big banks, who are obviously paying smaller premiums for the underwriting of their investments. This again is a huge problem, because we see the big boy at the big end of town with an advantage over the small one at the small end of town. As a National I am very proud to represent and bat for the small business people—the people who battled through all sorts of tight conditions and tough times, the people who worked long hours, often for low wages, no superannuation and very few holidays. They are the people who are battling now and they are the people whom this government has failed to look after.

As I said, they have not put any downward pressure on interest rates for the banks to do that for small businesses and farmers. It is a disgrace. It is holding the economy back. The more these small businesses and farmers have to pay in interest, the less money they have to keep people employed. The government wonders why unemployment is on the rise. We are looking at more than a million Australians unemployed next year. That is in the budget forecast of the government. They should do something positive and pass on a strong message that those interest rate reductions should be passed on to small business and farmers, not just to home borrowers. But brace yourself: the government is swamped in debt and there is more bad news to come.