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

My question is to Senator Minchin, the Minister representing the Prime Minister. I refer to the Prime Minister’s statement in the House of Representatives on 30 October when, comparing records on mortgage affordability, he said:

... the proper comparison is the proportion of income on a new mortgage, and it is lower now than it was when you had interest rates at 17 per cent.

Isn’t it the case, using the Prime Minister’s preferred measure, that the proportion of family income devoted to meeting home loan payments has actually been higher on average under the Howard government than under Labor? Is the minister aware that the Real Estate Institute of Australia has calculated that this year’s interest rate rises will add another $33,000 to interest payments over the life of an average home loan? How can the Howard government expect middle Australia to trust it on home ownership when its record on mortgage affordability is actually the worst ever?

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

Again, Senator Hutchins and Senator Carr ought to talk if they want to get their lines together on housing affordability. We have Senator Carr complaining because housing is too expensive and Senator Hutchins complaining because house prices are going down. This is just typical of the incompetence of the Labor Party: one arm does not talk to the other arm. It is a completely hopeless approach to economic policy. As I have said repeatedly in this place, the fact is that when we came into office interest rates were 10.5 per cent on the average variable home loan. They are now, even after this increase of 25 basis points, 8.05 per cent, saving Australians hundreds of dollars a month on the average mortgage of $220,000.

Australians do understand that, under the coalition, interest rates are lower than they were under the Labor government or would be if that mob over there were ever elected to office, with their proposals to recentralise wage fixation in this country and to spend all the earnings of the Future Fund, to let go of the fiscal restraint that this government has exercised and to follow the path of the state Labor governments, which are now moving into deficit and putting pressure on interest rates, in their own way, by going into the markets to borrow funds. I have said to Senator Carr before that he ought to talk to his own state Labor governments if he is concerned about affordability.

I point out to Senator Carr that the land release policies and stamp duties policies of state Labor governments have a very big impact on the cost of housing. In 1973 land represented 33 per cent of the price of a typical house and land package. In 2006 it represents 78 per cent of a typical house and land package. Stamp duties on land transfer in Australia represent 1.6 per cent of GDP compared to an OECD average of 0.7 per cent. Senator Carr’s concern for the affordability of housing is admirable. If he is concerned about it, he ought to talk to his own state Labor governments.

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 have a very simple proposition for the minister: won’t the latest interest rate rise actually increase the proportion of income needed to pay for a new mortgage? Doesn’t this mean that, using the Prime Minister’s preferred measure, the Howard government’s record on mortgage affordability—already the worst ever—is going to get worse?

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

By that measure, the worst ever was under the Labor Party in 1989, when it was 30.4 per cent. That is the highest it has ever been in this country, and the Labor Party was in government at that time.