Ursula Stephens (NSW, Australian Labor Party, Shadow Parliamentary Secretary for Science and Water) Share this | Link to this | Hansard source

My question is to Senator Minchin, the Minister representing the Treasurer. I refer the minister again to the view of the Prime Minister that the best thing that the Reserve Bank can do to curb inflation is to raise interest rates again this week. Aren’t families with an average mortgage already paying an extra $248 a month compared to what they were paying before interest rates started going up in May 2002? Won’t a further interest rates rise this week add another $37 a month to those payments? Why does the Prime Minister believe that making families pay an extra $285 a month is the best thing to do to get inflation under control?

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

There is a concerted attempt by the Labor Party today to verbal the Prime Minister on his remarks on interest rates. The Prime Minister was quite properly pointing to the responsibility of the Reserve Bank to conduct monetary policy in an independent fashion that will ensure that inflation never gets out of control in the way that it did under the former Labor government, when Paul Keating proudly boasted that he had the Reserve Bank in his pocket and which resulted in interest rates of 17 per cent. It is quite proper for the Prime Minister to make the point that the last inflation figure was 3.9 per cent. That was heavily influenced, as we all know, by the increase in food prices that has resulted from the drought and Cyclone Larry and also heavily influenced by the price of transport fuel. Again, that is something beyond the government’s control entirely.

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

Blame bananas!

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

Senator Carr, come to order!

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

It is the responsibility of the Reserve Bank to ensure that inflation remains under control. We know that if the Labor Party ever gets into government we will see inflation get out of control once more. The recentralisation of wage fixing would be devastating to inflation in this country. It would ensure that, if there was a wages increase in the resources area, it would flow right through the economy, as it did under the former Labor government, threatening every Australian family in the way that it did when Mr Beazley was the Minister for Finance of this country. His budget was out of control and interest rates were out of control. We do not want to see a return to that and we will ensure that inflation and interest rates remain at the record lows that they have been under our government.

Chris Evans (WA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Record lows? Seven increases—

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

Order! When you stop talking, Senator Evans, I will call your colleague.

Ursula Stephens (NSW, Australian Labor Party, Shadow Parliamentary Secretary for Science and Water) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Isn’t the new interest rates reality crushing the aspirations of Australians who are desperately trying to buy a house? Where does the minister expect a low- or middle-income family to find the extra $285 a month they now need to pay off their home? How can the government have breached the trust of Australian families so badly?

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

The only crushing that has occurred in the last 15 to 20 years in this country was when the Labor Party was in office and inflicted 17 per cent mortgage rates on Australian families, put a million people out of work and created one of the worst recessions we have ever had. Under our government, the reduction in mortgage interest rates since 1996 has saved a typical family $495 per month in interest payments on an average $220,000 home loan. Australians understand the difference between 7.17 per cent under us and 12.75 per cent under Labor.