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

My question is to Senator Minchin, the Minister representing the Prime Minister. Does the minister recall the Liberal Party advertisement in the 2004 election campaign which said that the government would, and I quote: ‘keep interest rates at record lows’? Is the minister aware that, at the time of that claim, mortgage interest rates were at seven per cent? Is the minister further aware that as a result of today’s interest rate increase, the fifth since the election and that promise, rates will go up to 8.3 per cent? Doesn’t that mean that working families will pay on average an extra $200 per month on their mortgages compared to when the government promised it would keep interest rates at record lows? Minister, given that interest rates are now higher than at any time in the last 10 years, hasn’t the government broken its promise to the Australian people to keep interest rates at record lows?

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

Not unsurprisingly, I thought we might get a question or two today about interest rates, because the Reserve Bank announced today that at its meeting yesterday the board—the independent Reserve Bank board—did decide to increase the cash rate by 25 basis points to 6½ per cent. The Reserve Bank noted:

Domestic economic data in recent months have signalled a pick-up in the pace of growth in demand and activity. Capacity utilisation is high after a lengthy period of expansion, and unemployment over recent months has continued to decline. Business and household confidence are strong. The demand for finance has strengthened.

In other words, the Reserve Bank has said that, in relation to its charter to keep inflation in the band of two to three per cent, the Australian economy is extraordinarily strong. We have record low levels of unemployment and very high levels of business confidence—in other words, a very strong domestic economy. In those circumstances the bank has, on balance, in its independent fashion, come to the view that another one-quarter per cent rate rise is justified. The remarkable thing about that is that, even with this rate rise, mortgage interest rates under this government are still lower than they ever were at any time under the last Labor government. So in the 13 years of the last Labor government, interest rates on home loans were never as low as they currently are, even with this rate increase. That is quite a staggering statistic. The mortgage interest rate as a result of today’s decision will still be four percentage points lower than the average under the 13 years of the last Labor government.

The Leader of the Opposition points to the 2004 election campaign, the result of which the Labor Party has never gotten over—and we can understand that because it was a monumental disaster for the Labor Party. The consistent theme of the coalition throughout that campaign was that interest rates would be lower under a coalition government than they would be under a Labor government. That is a message which we reassert with great conviction—and even greater conviction today. We believe that the circumstances now are such—with an even stronger economy than in 2004 and with a much more damaging rollback of the industrial relations arrangements in this country proposed by the alternative government, the Labor Party—that our view that interest rates will always be lower under the coalition than under Labor is even more to the point. It is clear from all the economic analysis, all the data and all the evidence that, if you re-regulate the labour market—if you bring back pattern bargaining and abolish Australian workplace agreements—then you will introduce inflationary pressures into the Australian economy, which will, of course, feed through to interest rates. So we assert again, and we will do so until election day, that interest rates will always be lower under the coalition than under Labor.

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

Mr President, I ask a supplementary question. I note that this is the fourth interest rate rise since the government introduced its IR Work Choices system. I note that the minister failed to defend the claim of the last election campaign that he would keep interest rates at record lows. Can the minister confirm that nine consecutive rate rises under the Howard government have increased repayments on a $300,000 mortgage by $433 a month? Given that, does the minister seriously believe the Prime Minister when he says to Australian families that working families have never been better off? Don’t the government’s broken promises on interest rates confirm why their own pollsters, Crosby Textor, found that the Australian people are disillusioned with the government because of their fundamental dishonestly?

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

I would just point out to the Leader of the Opposition in the Senate that, under our government, the standard variable home loan rate has fallen from 10½ per cent in March 1996 when we came to office to around 8.3 per cent as of the latest interest rate increase. That interest rate reduction from 10½ per cent to 8.3 per cent would save around $449 a month in interest charges on an average new mortgage of $245,000. In other words, home borrowers are better off as a result of our government than they were under the last Labor government because of the interest rate reductions we have managed to achieve.