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

I move:

That the Senate take note of the answers given by ministers to questions without notice asked today.

Let us be clear about what has happened today to Australian families, because while this government tries to blame everybody else for its own failings the Australian public, working families, have been slugged by this government. They have been slugged by the impostor of a Minister for Finance and Administration, Senator Minchin, who is incapable of saying no to the Prime Minister. He is a doormat to the Prime Minister. As Alan Mitchell said in an article yesterday:

The Prime Minister’s claim that his government is in the clear because it is running a budget surplus and that it is all the fault of the states and their budget deficits is nonsense.

He went on to say:

After adjusting for Treasurer Peter Costello’s accounting fiddles, the federal government’s cash surplus is budgeted to fall by almost 1 per cent of gross domestic product this financial year. However, even that does not fully capture the extent to which the Howard government’s budget decisions will add to the pressures on the economy.

Let us be clear: yesterday the Financial Review exposed the impostor of a minister for finance. Jim Cairns did a better job than you are doing; you look profligate next to Jim Cairns, Senator Minchin. You cannot say no to a Prime Minister.

Let us go through the list of the $7 billion of expenditure since the budget—not included in the budget but since the budget: for the Northern Territory Indigenous community intervention, $2 billion; for Commonwealth Disability Assistance, $1.4 billion; for broadband access, $358 million; for school solar tank revamps, $336 million; for the RAAF Amberley redevelopment, $331 million; for the C-17 facilities, $268 million. And it goes on and on, totalling nearly $8 billion. There has been $8 billion of new expenditure since the budget, which was already out of control. Is it any wonder that the Australian public thinks, according to Mark Textor, that this is a deceitful government and that the Prime Minister is untruthful? Is it any wonder that the Prime Minister’s own pollster is telling him that?

You just have to go to the recent biography of the Prime Minister, where Mr Costello was talking about the lavish expenditure engaged in by the Prime Minister during the election campaign three years ago. What did Mr Costello have to say about Mr Howard’s promises during that election? He said:

I have to foot the bill and that worries me. And then I start thinking about not just footing the bill today but if we keep building in all these things, footing the bill in five, and 10 and 15 years and you know I do worry about the sustainability of all these things.

The Australian public are worried about it. The financial markets are worried about it. And, most importantly, today the Reserve Bank showed it is worried about it. The Reserve Bank showed that it is so concerned that it put up interest rates for the ninth time in a row. And you just have to listen to the economists in the market passing their judgement on this government, on Senator Minchin—the man who is in charge in this country of saying no.

What do the economists say? They had warned that a pre-election spending binge coming on top of the additional $36 billion of tax cuts and higher benefits in May’s budget could feed inflation by fuelling demand at a time when the economy is already stretched. What did Ken Henry, the Secretary to the Treasury, say to his own troops this year? He said that expansionary fiscal policy in such an environment would tend to ‘crowd out private sector activity putting upward pressure on prices and interest rates’. Because this finance minister is a failure, because he makes Jim Cairns look like a good Treasurer of this country, because he cannot say ‘no’—

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

I am not that bad!

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

You are that bad, Senator Minchin! You have put upward pressure on interest rates because you cannot say ‘no’ to the Prime Minister. No wonder the Reserve Bank had to put a missile across the bows of this government today. (Time expired)

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

What a very silly speech from someone who I think should have known better. It is interesting that the only people who are actually concerned about the interest rate rise today, delivered by an independent Reserve Bank, are those on this side of the House because we are aware of the pain that will cause. Quite frankly, I have seen nothing but crocodile tears from the other side. You are actually pleased about the interest rate rise today because you can talk about it for political reasons. You are shedding crocodile tears, your hands are over your mouth, but underneath you are smirking about the fact that there was an interest rate rise.

The RBA made it quite clear today that this interest rate rise is due to the strength of the economy. It strongly reinforces the message that even with a strong economy there are challenges and pressures, and they have to be very carefully managed. It does require the commitment of senior government financial managers. It requires experience, dedication and commitment from the Prime Minister, the Treasurer and the finance minister. It is not the sort of management that you would trust to inexperience. It reinforces the point that even a strong economy needs safe hands to make sure that the levers are pulled properly. What you need is a Prime Minister and a Treasurer who are working together for short-, medium- and long-term gains. You do not need a Prime Minister without policies and you do not need a Treasurer without any ideas.

That effectively is what Senator Conroy is acknowledging today—their alternative is a Prime Minister with no policy and a Treasurer with no ideas. The cat was let out of the bag today—the inexperience of this alternative team. The shadow Treasurer, the would-be Treasurer, and his leader, who will be required to work together to manage this economy, cannot even get their lines right. The shadow Treasurer indicated today that he would, as Treasurer, maintain balanced budgets but only at the moment and in the current economic circumstances. When pressed by a journalist as to what his response would be in different circumstances he had no idea. His leader needed to step in over the top of him and say, ‘Our policies mirror the government’s policies.’ I can tell you quite clearly that this government’s policy does not under any circumstances countenance non-balanced budgets—deficit budgets. We have made that quite clear and we have stuck to that. That indeed has delivered to this country the sorts of outcomes that the Labor Party can only dream about. It has delivered low inflation and unemployment rates which are their lowest in 33 years. Already the shadow Treasurer, the would-be Treasurer of this country, has acknowledged that he may well deliver deficit budgets.

I am sure there is no-one listening to this today who would, under any circumstances, countenance the delivery of deficit budgets. This government has been able to maintain strong economic growth, low inflation, low employment and low interest rates on the back of surplus budgets. But three or four months out from an election we have an acknowledgement from the would-be Treasurer of this country that he will potentially run deficit budgets. I do not need to tell you what the outcome of that would be. It would be higher inflation and higher interest rates. (Time expired)

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

On a number of occasions today in question time we put to Senator Minchin, the Leader of the Government in the Senate, the Minister representing the Prime Minister, that famous promise that this coalition government—the Liberal Party and the National Party—made to the Australian people: they would keep interest rates at record lows. That was the promise; that was the advertisement. ‘We will keep interest rates at record lows.’ How hollow does that sound now as Australian families struggle with the fifth consecutive interest rate increase since that promise was made and the ninth interest rate increase under the Howard government? Keep interest rates at record lows. How does that promise sound today? What we see in response from the Howard government is just more of the same, more ducking and weaving, more blame shifting—let us blame anyone but ourselves; let us not take responsibility.

One of the things that the Australian people will be very clear about as they deal with the impact of this interest rate increase on their mortgage repayments and the increasing financial pressure of rising childcare costs, rising grocery costs, the rising cost of living and an increase in their mortgage repayments due to the ninth consecutive interest rate increase is that this Prime Minister cannot take credit fast enough if interest rates go down. Do not get between John Howard and a microphone if interest rates go down. He cannot take credit quickly enough. But, as soon as interest rates go up, what do you see? You see this government yet again ducking and weaving and trying to blame everyone but themselves because they do not want to take responsibility. The contrast could not be starker: the government want to take all the credit when interest rates are low and then, when interest rates go up, all of a sudden the government are missing in action and trying to blame everybody else.

We have had nine consecutive interest rate increases under this government and five since that famous promise of, ‘We’ll keep interest rates at record lows.’ What we now see from the government, and the Prime Minister confirmed this yesterday, is that suddenly that is no longer the line. Yesterday, the Prime Minister said:

What I promised, and what I repeat here today ... was that in Australia interest rates will always be lower under a coalition government than under a Labor government.

Suddenly’ it is no longer, ‘We’ll keep interest rates at record lows,’ because the Australian people know that that is simply not true after nine consecutive increases. All of a sudden it is a sneaky, probably poll driven, line where the government try to get out of the fact that interest rates have risen five times since the last election.

Let us talk about record interest rates. Let us talk about who really holds the record on interest rates. Let us be clear about who really is the record high interest rate holder over the last few decades. The highest interest rate in the last 30 years was 22 per cent. And who was that under? It was under the then Treasurer, John Howard. So much for the history lesson that we get from the Howard government and their claim that interest rates will always be at record lows. What we know is that when John Howard was Treasurer interest rates were 22 per cent. We know that he promised to keep interest rates at record lows and we know that since he made that promise we have had five consecutive increases. When they made that promise the Liberal Party were either lying or simply wrong.

Today in question time I asked Senator Minchin what his advice was to working families like those of Mrs Spooner, who appeared in the Daily Telegraph today talking about the impact of interest rate increases. What was his advice to her and families like hers who are going to be hit with an increase in their repayments on top of rising fuel, childcare and grocery costs? I might have misheard Senator Abetz’s interjection, but what I heard him to say was very simply, ‘Vote Liberal.’ That’s it—vote Liberal! This government is extraordinary. They say, ‘Vote Liberal,’ and ‘Working families will never be better off.’ That’s what Australian families will understand. They will understand you made a promise you have not kept and they will understand that you arrogantly stand there and say, ‘Working families have never been better off.’ It simply shows how out of touch this Prime Minister has become and how out of touch this government has become if it honestly thinks that working families who are struggling with interest rate increases, and with the blow-out in the percentage of families who are suffering  from housing stress, have never been better off. (Time expired)

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

Senator Minchin, the greatest Minister for Finance and Administration that Australia has ever seen, is sitting at the desk at the moment. I would like to put on the record that the outrageous claim by Senator Conroy that Senator Minchin is the equivalent to Jim Cairns simply highlights what many of the public still have in their minds—that is, Labor cannot manage the economy. The comparison that Senator Conroy made was that the finance minister of Mr Gough Whitlam, the great icon from his own side, was a fool and that he wrecked the economy. That is the sort of comparison that those on the other side wish to make. Many Australians still remember how the economy was run by Labor governments.

No-one, as the finance minister said, welcomes a rise in interest rates, least of all those with mortgages. But many people have mixed mortgages, with both fixed and variable rates, and those who have savings, particularly those on a pension, have another view about interest rate rises. We agree that no government, particularly in the political cycle that we are in, seeks an interest rate rise. But what the other side fail to understand, as they always have, is that what we have is the integrity of the Reserve Bank making a decision for the good of the whole economy. The independence of the Reserve Bank was one of the first reforms that this government introduced when it first came into office. The Reserve Bank makes decisions with no fear, favour or political influence at all for the good of the whole economy. Its objective is to maintain inflation within the two to three per cent band and it is carrying out its objective.

As mortgage holders and Australian householders know, nothing eats into their savings, wages and business profits like runaway inflation. But the other side come in here and try to say that the government has jacked up interest rates with some voodoo economics when in fact we have an independent, non-political Reserve Bank making that decision on the grounds of strong demand and a strong economy. There is no feel in the marketplace of a boom-bust cycle. We have had 10-plus years of record growth, we have strong demand and we have a strong economy in which the Reserve Bank has independently undertaken its objective to maintain inflation. That is the basis of its decision. The Reserve Bank bases its decision on a strong economy. The fundamentals are that interest rates are—in comparison to those under the previous government—low, inflation is within the two to three per cent band, employment is at its lowest rate, growth is expected to continue at record levels and this government has zero debt and runs surplus budgets. They are the fundamentals of any economy and the Reserve Bank makes its decisions based on those fundamentals—fundamentals that are good. The economy is in a strong state.

Naturally, households, governments and businesses understand that there are fluctuations in interest rates, but these have not been the 1.5 per cent interest rate hikes made by the previous government and visited upon Australian households and businesses. The decisions to lift interest rates by that 1.5 per cent level were made by the previous government. They were made by the Treasurer of the time. What a disgraceful way to run the economy! The current government brought in reforms such as industrial relations reform and the independence of the Reserve Bank so as not to get the boom-bust cycle that we had in the past. The greatest danger to interest rates is not a surplus budget and zero debt, about which those on the other side are trying to mount some crazy economic case; the greatest threat to interest rates is debt raising by the states. This is acknowledged by the former Reserve Bank governor himself. Time does not allow me to develop the case relating to the states, but rest assured that others on this side of the House will. The states are the greatest danger when it comes to further and higher interest rates.

Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

It is breathtaking arrogance that the government decry the Labor Party for politicking on interest rates when it was they who set the agenda at the last election campaign which led them to make foolish promises that they have been unable fulfil. The background to this is that the interest rate rise in August this year appears not to have slowed consumption but there is some evidence to show that the tax cuts that came into effect at the beginning of July are boosting household spending. On top of that, and after repeated warnings against just this occurrence, the Howard government have gone on an election year spending spree. As the Australian Financial Review pointed out, they have outspent the Labor Party something like three to one in populistic political spending. That is what is creating pressure on interest rates and that is what has resulted in the increase that we have seen today.

In his press conference today, the Prime Minister was noticeably tetchy when asked about political spending this year because he does not like being held to account. He likes to blame others, and preferably the Labor Party. The best evidence of this, of course, is the pre-emptive strike—the Liberal Party’s ads which blamed state spending on infrastructure for interest rate rises. I notice that Senator McGauran parrots this without supplying any evidence of it. The ANZ Chief Economist, Saul Eslake, had it right when he said that there was little connection between state government borrowing and interest rates. He said:

It’s true state governments will be borrowing money over the next four years but there’s very little historical evidence between government borrowing and the cash rate. It’s political propaganda. It’s not economic analysis.

I think that encapsulates my response exactly. The Liberal Party and Senator McGauran know that that kind of argument is complete nonsense.

The Prime Minister does not seek to explain economic matters to the Australian public; he tries to hoodwink them with confusions and half-truths. That is what he is about, in the last election and currently in dealing with the latest interest rate rises. But it is crystal clear to Australian families that they are finding it increasingly difficult to manage their household finances. They may not understand the economic background of why they are finding it difficult to manage, but they know that they are. They know that this interest rate rise will make it far more difficult for them to manage those finances—not only with regard to housing costs, whether they be mortgage or rental, but also with regard to their credit card debt. Households are paying much more on a range of costs, like education, private health, child care and petrol. Unfortunately, for many families credit cards have become part of their income stream. That debt has now reached something like $40 billion in Australia and that has to be repaid at higher interest rates.

Where is the government on this? Mr Howard says that Australians have never had it better. Mr Howard and the Liberal government have ridden on the back of an unprecedented period of excellent terms of trade and the productivity gains initiated by a former Labor government. Mr Howard has never had it better, but too many Australian families have been left behind, and they know it. Despite the Liberal government’s great good fortune in being in power during a world upturn, after this term of government they will leave behind much to be done in attracting investment to Australia, increasing productivity and improving the quality of life for working families. Working families are now faced with the double jeopardy of steadily rising prices and the government’s Work Choices system eroding their wages and conditions. All the while, the Prime Minister refuses to acknowledge that there might be a problem with his management of the economy.

Andrew Bartlett (Queensland, Australian Democrats) Share this | Link to this | Hansard source

For the last half-hour or so we have heard backwards and forwards sledging about whether Labor is better on the economy or the Liberals are better on the economy, and who is best on interest rates, inflation and all those sorts of things. People can make their judgement on that, but my feeling is that the great majority of Australians who are battling more and more with the impacts of these interest rate rises frankly could not care less about that sledging backwards and forwards. They are interested in how they are going to deal with the severe financial consequences many of them are facing because of not just interest rate rises but a whole range of factors that have created a massive housing affordability crisis in Australia. That is what we should be dealing with.

The core question that I asked Senator Minchin today was: what is the government now going to do to help people, in particular people in the private rental market, many of whom in recent times have suffered very severe increases in the price they have to pay for their rental and many of whom have had to shift cities because they can no longer afford to pay private rental on flats and houses they have lived in for decades? And that is where our debate should be.

I am really sick of people going back to what the average was under the Hawke-Keating government, what the average was under the Fraser-Howard government, what the average was in different eras and what the situation was with inflation figures. There are a whole lot of big economic figures around the place that people throw backwards and forwards as some sort of statistical justification. I am sure there is some value in assessing that in a general, intellectual sense but it obscures the immediate reality that many Australians are suffering enormous hardship as a result of financial stress caused by the housing affordability crisis. Frankly, we hear very little from either of the major parties about what they are going to do about that. I do acknowledge that the Labor Party in recent times has at least accepted that housing affordability is a national crisis and has made some moves towards proposing to adopt a national strategy in this area. That is a partial step forward from where the coalition has been at—which is basically, ‘We’ll do our bit over here. All the rest is the state’s fault. We’ll just tinker around where we can with some general economic management and leave it up to the market to fix it.’ That approach has clearly failed. It has been failing for many years. Frankly, that is a clear legacy and a very sad legacy of the Treasurer, Mr Costello’s, mismanagement and lack of interest in this serious area. We saw that years ago with the cynical action by the Treasurer in responding to the housing affordability crisis, which is much worse now than it was then, by initiating an inquiry by the Productivity Commission into first-home ownership. He then totally ignored all of the recommendations from the Productivity Commission which applied to the federal government and simply blamed the states for not dealing with those recommendations that related to them. That was his approach three years ago: blame the states, ignore the evidence from the inquiry that he called himself and continue to fiddle while the housing affordability situation burned.

Now we have a far worse crisis three years later with a massively increased gap between those who own their own home, those who have significant and huge mortgage burdens, and those who cannot even manage that and are in the private rental market. That was usually the broad safety net between those who could afford their own home and those who were in public and community housing. The private rental market has now itself become unaffordable for many people. We need to do something about that now. The simple question that was asked of the Leader of the Government in the Senate was: what is the government going to do now to help those people who are suffering enormously? There was no answer. That is the most serious non-response out of everything that was said today in question time from all sides about this issue. This is impacting cities and towns across Australia. In my own state of Queensland—in towns like Mackay, Townsville, Cairns, Maryborough and Hervey Bay—it is different in different areas but the common thread is a dramatic increase in private rental and people being forced out of homes they have rented for decades. People are being forced to move away from communities which they had been part of for decades. Worst of all, there is no sign of any relief down the track—there are no signs other than that it is likely to get worse. (Time expired)

Question agreed to.