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 Prime Minister. Has the minister seen the report in today’s Daily Telegraph headed ‘Don’t promise what you can’t deliver’, where Mrs Lyndal Spooner of Northmead in Western Sydney says that she wants the Prime Minister to stop promising to keep interest rates low? Isn’t Mrs Spooner, like so many other working Australians, sick of the government’s broken promises—promises like its claim that it would ‘keep interest rates at record lows’? Aren’t working families like that of Mrs Spooner already paying an additional $400 a month compared to what they were paying before the first of the nine consecutive interest rate increases under the Howard government? Could the minister tell us what his advice is to working families—families like that of Mrs Spooner—who will now be hit with another increase in mortgage repayments on top of rising fuel costs, rising childcare costs and rising grocery costs?

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

We acknowledge that an increase in interest rates is never welcomed by anyone borrowing money. Those with investments earning interest obviously would welcome increases in interest rates, but those who borrow—and some 32 per cent of families do borrow money to pay for their homes—obviously do not welcome at all an increase in interest rates. However, the critical thing in an economy like ours is to keep inflation under control. We must not ever allow a return to the bad old days of high inflation, which is so crippling to the working families that the Labor Party purports to represent.

In the eighties and nineties we had inflation out of control in this country. The most extraordinary thing about our record in office, which I would have thought even the Labor Party might be prepared to concede, is the very low level of inflation in this economy. Inflation has averaged 2½ per cent in the 11 years that we have been in office. This is quite an extraordinary outcome, given the amazing growth in the economy, the low unemployment—the lowest unemployment we have had for 30-something years—and the strong growth which we have experienced. The inflation rate averaged 5.2 per cent under the Hawke-Keating government—more than double the rate of inflation that has occurred in our 11 years in office.

The best thing we can do for working families in this country is to keep inflation low, and every lever under our control is set at low inflation. We have run surplus budgets, we have paid off the debt that we were left, we are not borrowing like the states to pay for capital expenditure and we have reformed industrial relations to take away the inflationary pressures from the old industrial relations system. So every single lever under our control is set at low inflation. Nevertheless, because we have told the Reserve Bank that it is their job to keep inflation between two and three per cent, they have deemed another interest rate rise necessary.

Of course, if you are not interested in keeping inflation between two and three per cent and you are happy to have it back at five or six per cent, as was the average under the Labor Party, you may not need to increase interest rates. But we all know the real evil in an economy like ours is inflation. It eats away at people’s savings and makes people worse off. So we are determined to ensure and to preserve the independence of the Reserve Bank and to do everything we possibly can to keep inflation low so that we protect working families. And if working families of this country want any advice from us, it would be to think very carefully about the choice they face in the next few months, because we believe that the extreme strength of this Australian economy, and the pressures that that brings, means that economic management is more important than ever. It is much more important than ever to have an experienced set of hands on the wheels of this economy and not take the risk of the neophytes of Rudd and Swan running a trillion-dollar economy.

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. Does the minister say to Mrs Spooner and families like hers that the Howard government has kept interest rates at record lows, after five consecutive increases since that promise was made and nine consecutive increases overall? Isn’t this broken promise yet another example of why Crosby Textor concluded that there is significant disillusionment with the Liberals because of their broken promises and dishonesty? Given that people with mortgages now pay an extra $433 a month on average as a result of nine interest rate increases in a row, does the minister still agree with the Prime Minister that working families have never been better off?

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

As I said to Senator Evans, what we asserted at the last federal election—and which was endorsed by the Australian people at that election—is that under a coalition government interest rates will always be lower than under the Labor Party. We continue to assert that to be true and we will again assert that to be true at this federal election. The record proves this. Interest rates have averaged four percentage points lower under our government than they were under the last Labor government, and interest rates today are lower than they ever were under the party that Senator Wong represents.