Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

My question is to Senator Minchin, the Minister representing the Treasurer. I again refer to the recent inflation figures, which rose to 3.9 per cent for the year ending September. Is the minister aware that the Prime Minister, in response to this increase, said:

What you have to consider is that if you don’t have an interest rate rise ... there will be a further boost in inflation ...

Can the minister explain why the Prime Minister has given the green light to the Reserve Bank to increase interest rates? Haven’t there already been seven increases since May 2002, including three since October 2004, when Mr Howard said that interest rates would not increase under his government?

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

I refute the assertion that the Prime Minister has given the green light to the Reserve Bank. The Reserve Bank is fundamentally independent in its policy settings. That is absolutely clear in the charter that the government has with the Reserve Bank. The Reserve Bank is entirely independent in its monetary policy settings. That is not to say that no Prime Minister or Treasurer should ever say anything about interest rates.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

Senator Sherry interjecting—

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

Senator Carr interjecting—

Paul Calvert (President) Share this | Link to this | Hansard source

Senator Sherry and Senator Carr, come to order!

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

Of course, as those responsible for fiscal policy and the responsible managers of this economy—one of the best-performing economies of the Western world—we are going to comment on all issues that pertain to people’s welfare and the state of the economy. Interest rates cannot be immune from comment by the Prime Minister and the Treasurer, but that does not go to say that the Reserve Bank is not independent. Of course it is independent.

The Labor Party seem keen on going back over the entrails of the last election. I would have thought they would not wish to do so, given the embarrassment of that election to them and given what a thrashing they got at that election. At the last election we made the proper, reasonable and sensible claim—and one that I see is still supported by the Australian people—that interest rates would be lower under our government than they would be under a Labor government, and history establishes that fact. As I said in my answer to a previous question, home mortgage interest rates averaged 12.75 per cent under the previous Labor government, peaking at 17 per cent. Home mortgage interest rates under our government have averaged 7.17 per cent. When we came into office at the end of Labor’s period in office, home mortgage interest rates were 10.5 per cent. Today they are 7.8 per cent. The Australian people understand that coalition policies are always more likely to produce lower interest rates than the policies of the Labor Party.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. I again refer Senator Minchin to the Prime Minister’s comments. Can Senator Minchin explain to Australian families who are struggling with rising costs just why the Prime Minister has given the green light to an increase in interest rates? Isn’t the government’s failure to keep inflation under control directly responsible for the seven successive hikes in interest rates that have been suffered by Australian families?

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

The supplementary question is not a supplementary at all: it just asks the first question again. The government has not given any green light. The Reserve Bank is entirely independent.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

Answer it this time.

Paul Calvert (President) Share this | Link to this | Hansard source

Senator Sherry, come to order.

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

The Reserve Bank will properly observe its charter, which is to keep inflation under control, and we are not going to let the inflation genie out of the bottle the way the Labor Party did, putting a million people out of work and destroying businesses right across this country in one of the worse recessions this country has ever had.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

Senator Sherry interjecting—

Paul Calvert (President) Share this | Link to this | Hansard source

Senator Sherry. I have continually asked you to cease interjecting. If I have to call you again, I will warn you.