Stephen Conroy (Victoria, Australian Labor Party, Deputy 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 saying in question time on 11 May 2005:

… there have been no further interest rate increases, because of the tremendous record of economic management of this government …

Can the minister advise the Senate whether this is the same economic management that has now delivered nine interest rate rises in a row to working families? Is it the same economic management that has caused today’s interest rate rise, which will mean that working families will now pay an extra $50 in monthly repayments on a $300,000 mortgage and an extra $433 a month in repayments since interest rates started going up in 2002? Can the minister explain to working families why he thinks nine interest rate rises in a row is an example of a tremendous record of economic management?

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

The government’s record on economic management is remarkable, and that is why the Australian people say by a majority of two to one that they would prefer to have the economy run by the coalition than by the Labor Party. They remember better than anybody the disastrous economic management of the Labor Party when it was last in office and the time before that. They are also experiencing the disastrous management of the state economies by the Labor Party. Extraordinarily—given the revenue flows the states have had and the strength of the economy—the state budgets are all going into deficit. It is quite extraordinary. The Australian people have empirical evidence of the fact that the coalition is much better than the Labor Party at managing money and managing economies.

As a result of that great economic management, we now have unemployment at a record low—the lowest for some 30-plus years. We have inflation at an average of 2½ per cent over 11 years, compared with 5.2 per cent under the previous government. We have the budget in surplus. We have debt paid off and we have $50 billion set aside in the Future Fund for future generations. It is a staggering record of economic management. It is recognised throughout the world as one of the best records of any Western government. We are proud of our delivery of good economic management for this country, which means an enormous amount to the people of Australia. As CommSec has demonstrated in its latest analysis of prices and wages, in the last five years from 2002 to 2007, average wages have increased by 25 per cent but the CPI has increased by only 14 per cent. By definition, that means Australians are better off after the last five years of our outstanding economic management.

As I have said, the Reserve Bank is independent as a result of our instruction to the Reserve Bank. Its charter is to keep inflation low. That is why it is critical that the Reserve Bank act independently, in its own judgement, to keep inflation in the band of two to three per cent—something the Labor Party could never achieve in office. If, in the Reserve Bank’s judgement, an interest rate rise is needed to ensure that Australian families are protected from the high inflation of the Labor years, then that interest rate rise needs to occur. Australian families understand that their greatest enemy is inflation, and we are ensuring they are protected from it.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Why is it that the government is happy to claim responsibility for interest rates when they are low but runs a million miles from any responsibility when they go up? When will the government take some responsibility for the financial hardship now confronting working families due to huge mortgage repayments and rising prices for child care, petrol and groceries? Or does the government still think working families have never been better off?

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

We are happy to take responsibility for the fact that interest rates, even today, are lower than they ever were under the previous Labor government. Home mortgage interest rates are lower today than they ever were under the last Labor government. Housing mortgage interest rates under our government, on average, are four percentage points lower than the average under the previous Labor government. We are very proud to take responsibility for that outcome.