Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

My question is addressed to Senator Minchin, the Minister representing the Prime Minister. I refer the minister to the Prime Minister’s 2004 promise that he would keep interest rates at record lows. Is the minister aware of comments by truckie Wayne Phillips from Penrith in Western Sydney in the Australian newspaper today? He said:

“This is not the first hike in interest rates, it’s the fourth since the election—so much for the Howard Government’s promises.”

Aren’t battlers from Penrith, like Mr Phillips, in the seat of Lindsay, right to blame the Prime Minister for the fact that they are now paying an extra $260 a month on their mortgages, since they were told that interest rates would stay at record lows? Minister, what do you have to say to battlers who borrowed on the basis of your promise?

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

I did notice the article in the Australian with that particular family. As I said before and as the Prime Minister has said before, we do understand that for a number of families in Australia an interest rate rise means that they could well be paying more on their mortgage. We would encourage all such households or families, where paying more on their mortgage is an issue for them, to talk to their financial advisers and their lending institutions to endeavour to ensure that they can renegotiate their loan in such a fashion that their household finances are not unduly affected.

As to the question of the Prime Minister’s statements at the last election, I can only repeat that again the Labor Party is verballing the Prime Minister. What the Prime Minister said to the people of Australia at the last federal election—which I know irks the Labor Party; we know that they cannot get over losing their fourth election in a row; they know they made a huge mistake going to the last election with Mr Mark Latham as their leader; they know that and they cannot get over that—was, ‘Who do you trust to produce lower interest rates: the Labor Party or the Liberal Party?’

Our assertion to the Australian people was that interest rates would always be lower under a coalition government than under a Labor government. We adduced as evidence for that assertion the record of the Labor Party in government with respect to interest rates. Again we would assert that that record underpins the assertion we made in 2004—that under our government interest rates have averaged, I think, 7.18 per cent and under the Labor government they averaged 12.75 per cent. There is about a five-percentage-point difference between the average under the Labor government and the average under our government.

We also asserted at that time that the policies of the federal Labor Party would put upward pressure on inflation and therefore on interest rates. We drew attention to the fact that the Labor Party had some $40 billion of additional spending promises at the last election which would have put pressure on interest rates by threatening to take the federal budget from surplus into deficit; and that they wanted to reregulate the industrial relations arrangements of this country, which would again go back to the bad old days where a wage rise in one sector would flow right through the economy and therefore affect wage inflation, general inflation and interest rates. We stand by the assertions that we made in 2004. We will endeavour to ensure that, from our point of view, we do our utmost to keep pressure off inflation and off interest rates.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Why does the Prime Minister continue to mislead Australians by saying that interest rates are still low, when debt and borrowing levels are three times higher today than they were 10 years ago? How is the Prime Minister’s false claim any help to battlers like Mr Phillips, who borrowed $50,000 to help his daughter buy a house and who may now have to cancel her wedding?

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

With great respect to Senator Sterle, as I said Mr Beazley thinks that an interest rate of 9.5 per cent is low. Therefore, an interest rate of 8.05 per cent is particularly low by Australian standards and by the standards set by the Labor Party. While we do not like interest rates going up, 8.05 per cent is relatively low compared to the standard that the Labor Party set.

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

Order! Before I call Senator Payne, I remind senators asking questions and ministers replying to questions that their remarks should be addressed through the chair.