Kim Carr (Victoria, Australian Labor Party, Shadow Minister for Housing and Urban Development) Share this | Link to this | Hansard source

My question is addressed to Senator Minchin, the Minister representing the Treasurer. Is the minister aware that the Victorian Supreme Court figures on mortgage repossessions show a massive 58 per cent increase in writs between 2004-05 and 2005-06? Is the minister further aware that the South Australian Supreme Court figures show that the number of repossession summonses lodged increased by more than one-third between 2004-05 and 2005-06? Is the minister aware that these figures come on top of the New South Wales Supreme Court mortgage repossession statistics showing an incredible 59 per cent increase in judgements between 2004 and 2005—the fastest rise in 16 years? What does the minister have to say to those Victorian, South Australian and New South Wales families who are now at risk of losing their mortgages because of the government’s failure to keep its election promise to keep interest rates at record low levels?

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

In relation to the specific question, I have some advice here that applications to the Victorian and New South Wales supreme courts to foreclose on mortgage loans have increased over 2005 and in the first half of 2006. But while these trends are important in their own right, an application to foreclose does not necessarily translate to a writ for repossession, and applications for dispossessions make up a very small proportion of overall households with a mortgage.

APRA noted in June that in the last year arrears rates, loans where payments have passed due date but not considered impaired due to the quality of collateral, have risen somewhat according to data reported to APRA as well as industry data on securitised loans. So there may be some pick-up in impaired loans—that observation is correct—but I think that one has to see this in the context of the most extraordinary period in Australian history of sustained low inflation and sustained low interest rates as a result. Much of it has been the result of this government’s very careful stewardship of the economy, which has been reflected by the public’s confidence in our government at the last four elections, where economic management has been the critical issue and where the Australian people have judged the Labor Party to be seriously failing in their capacity to present any sort of credible alternative to the Australian people.

As a result of the 15 years of consecutive economic growth in this country, 10 of those under us, and, as I say, the prevailing very tight job market, the low inflation, the low interest rates and the deregulation of the financial markets, which has brought to bear much greater competition for the provision of housing funds and the greater availability of housing funds, I think it is fair to say—and some of that, at least, was begun under the alternative government, the Labor Party—that there is, as must be expected in a deregulated environment, a greater and potential propensity for risk.

We have repeatedly said throughout our 10 years in office that potential home buyers should always be very conscious of their capacity to service their loan, they should be conscious of the fact that interest rates can vary and they should take clear and careful advice before they enter into a loan. There is no doubt that the great bulk of Australian families have benefited enormously from our stewardship of the economy, which has provided them with job opportunities, rising real wages, relatively low interest rates, job security and housing affordability rates that by and large have been very good relative to wages. Obviously, we are disappointed, as anyone would be, if families get into financial difficulty and cannot continue to service their loans. It is a reminder to everybody to be extremely careful before entering into these sorts of arrangements and that they should, in a less regulated environment, be conscious of those risks.

Kim Carr (Victoria, Australian Labor Party, Shadow Minister for Housing and Urban Development) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. I thank the minister for his answer. Given his reference to the increase in the number of impaired loans, I would ask him if he is aware that Standard and Poor’s mortgage arrears statistics for 30 June 2006 show an increase in serious arrears over the last year? Is the minister further aware that Standard and Poor’s attribute this trend to the increase in low doc loans and the fact that borrowers are generally finding it more difficult to meet their commitments once they start falling behind in payments? Can the minister explain how much of the increase in arrears and repossessions is due to the government’s failure to properly regulate shonky home loan providers and how much is due to the broken promise to keep interest rates at record lows?

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

The senator may wish he had directed his question with regard to regulation to the Minister representing the Assistant Treasurer, but I note that Standard and Poor’s mortgage performance index—apparently called SPIN—noted that, while delinquency rates have been edging up in the past 12 months, the rise was based on an arrears rate that was still extremely low. That is consistent with observations by APRA in its APRA Insight report in June that:

Australia appears to be at a cyclical high point in terms of credit quality.

It was noted that some borrowers who had missed repayments and were therefore considered in arrears still remained ahead of their repayment schedule. While it is appropriate for the opposition to be drawing attention to these matters, it is their propensity to see the glass as half empty rather than half full. Australian families are benefiting from an extraordinary period of strong economic growth, relatively low interest rates, a very strong job market and rising real wages. The mob over on the other side of the chamber have been rejected four times because of their failure in economic policy. (Time expired)