Joe Ludwig (Queensland, Australian Labor Party, Manager of Opposition Business 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 by  Opposition senators today.

What we face today is a simple question: do Australians have a government that is run on sound economic principles and rigorous policy development processes, working for the benefit of all Australian working families, or do we have a government with only one guiding principle that is defined by the marketing spin of research agency Crosby Textor? We have a government that will do anything and say anything to win office at the forthcoming election. That is what we have; we do not have the former at all. Let us look at the evidence that underpins that. It is clear that, in the face of continuing challenging polls, the Prime Minister, over recent weeks, flicked the switch to portray himself as a strong man aggressively attacking the states, as a proxy for the federal Labor Party, rather than taking on the federal Labor Party itself. Suddenly, we have a Prime Minister announcing major national policy initiatives via the internet—one of them on emissions trading. We have a government that is reaching out to cherry-pick opportunities for government largesse. That is what the government is now forcing itself to do. In another era—and the National Party would obviously recognise this—it would quite rightly have been seen as blatant pork-barrelling, all wrapped up in an attempt to redefine federalism.

But the commentators see through this. Indeed, some have called the Howard government’s approach ‘porkofederalism’. Here is what one senior commentator, Paul Kelly, had to say in the Australian yesterday:

… Howard will play a brand of federalism politics that is neither likely to work nor to endure as a template for governance.

The government is well and truly caught out by its agenda being set by its marketing strategy. But let us go back to Crosby Textor. Rather than having a long-running agenda for the nation that takes account of the needs and interests of Australian working families, we have total short-termism. It is a pity, it is a shame, but that is the corner this government has painted itself into. It is designed for only one reason: purely to get the PM across the line at the forthcoming poll. That is the only reason. Otherwise we would not have Crosby Textor out there, and we would not have the Prime Minister following those lines, one by one, to see how he can ensure his success at the next election.

But isn’t it ironic that, in the very week when Australian working families suffered their fifth successive interest rate increase since the PM promised to keep interest rates at record lows, they will also read on the front page of their newspapers the details of the Crosby Textor marketing strategy that underpins the Howard government approach? This is how it stands: working Australians are now juggling their family and work commitments, increased consumer prices, increased uncertainty over their working conditions and an increased realisation that their children and future generations will face major challenges from lack of adequate educational and other critical infrastructure—whether it be access to broadband, skills shortages, being able to access affordable skills and training, healthcare services or a market-driven insecure job market under Work Choices. Working families now face all those challenges under the Howard government.

What does the Prime Minister have to say about this? Let us listen to his words: ‘They’ve never been better off.’ It rings very hollow if you are in the western suburbs, the outer suburbs, of Brisbane, Cairns or Townsville—all of those places. ‘Never been better off’, when the press this week reported that people are forgoing payments on health insurance to have the money to pay their mortgage. ‘Never been better off’, when families have to give up some of the little luxuries they may enjoy when they want to go out, when they might want to go to the pictures or take their kids down to the local eatery—all of those things. This is a government that has grown out of touch over its 11 years. It has become arrogant. (Time expired)

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

It is interesting to listen to Senator Ludwig talk about economic management and the benefits for families. Like many people in this place, I can recall when the only outing a family could really have under a Labor government was a trip down to the social security office to collect their unemployment cheque. There were not too many restaurants thriving under that circumstance. It was when unemployment in this country was virtually the highest it has been, certainly in recent history. We had interest rates averaging 12½ per cent under the former Labor government. And what do we have now? We have a circumstance where they are playing ‘me too’ politics: ‘We’re just the same on economic and fiscal policy as the Liberal Party, but we’re a little bit better.’ It is simply not going to wash with the Australian people. The Australian people understand that going to Labor in pursuit of economic policy is like having a decaf cappuccino in an attempt to stay awake: it is froth and chocolate, but there is no stimulus at all. Nothing in any of the policies that have been put forward by the Labor Party is going to create a better country or a more prosperous nation.

There are the working families of this country—and I note ‘working families’ because they are working, unlike they were under the Labor administration, when unemployment was so high. They were not working; people were going broke; they could not afford to pay for their homes. In fact, homeownership was terrible under the Labor administration. But today’s working families are awake to the master illusionists on the other side of the chamber. They are the David Copperfields of economic management. They have no policies; they only have smoke and mirrors to say, ‘We’re just like the others, but, trust us, we’re going to be a little bit better.’ How can we trust them when they have objected to every economic reform in this country that has delivered prosperity to so many Australian families? Unemployment is at record lows: 4.3 per cent. Owning a home, going on outings and enjoying the good things that this country offers start with having a job. Jobs mean a lot to families. People have flexibility in their workplace, so they can divide their time between their work and their family commitments. It allows flexibility so that people can enjoy everything that this country has to offer.

Of course, we have heard a lot today about interest rates. As I said, interest rates are lower under this government, and, since we took office, the official cash rate is still a full 100 basis points—that is, a full percentage point—lower than when we took office. This is after 11 years of sustained economic growth, where net household wealth has increased, the percentage of debt on housing assets has decreased, more people than ever before in this country have work, and people recognise that this legacy of prosperity can set us up for another decade of wealth accumulation in Australia. But only a coalition government can actually deliver on those sorts of reforms. Only the coalition has an agenda that is going to set up this country for another decade of sustained economic growth.

So, rather than the ‘me too’ politics, the Kevin-come-lately politics of Kevin07, there is now a clear choice for the Australian people. They can go with the unreliable Labor people who have objected to every significant economic reform. I think it was Senator Ludwig’s father who described it as the worst caucus he had ever seen—or was that last year’s caucus? I cannot remember; there have been so many. Nonetheless, the same faces are there. They keep trotting them out because of their union mandated quotas. It is very sad that the Labor Party have not managed to evolve over the time, but the Liberal Party and the coalition government have. We are still setting a sustainable agenda. Our approach is not simply about housing affordability; it is about ensuring that people have well-paying jobs, lifting real wages and keeping interest rates lower than they would ever be under a Labor government.

What about the Labor Party’s response to housing affordability: ‘Let’s spend some more money and create another central housing commission.’ Nineteen-fifties central planning went out of the window in the 1950s. I know it is alive and well on the front bench of the Labor Party, but, really, the economic debate has moved on. Today is about giving people choice and opportunity, and only a coalition government is equipped to do that and deliver. (Time expired)

Linda Kirk (SA, Australian Labor Party) Share this | Link to this | Hansard source

I rise to take note of answers given to questions asked by the Labor opposition today in relation to the economy. This week we have had the ninth interest rate rise since Prime Minister Howard has been at the helm of this nation, and it is the fifth since he promised to keep rates at ‘record lows’ at the last election. This interest rate rise is going to hit working families hard. With the cost of living pressures already straining many household budgets, yesterday’s decision by the Reserve Bank to lift interest rates will only add to already high levels of mortgage stress.

It is the case that yesterday’s rate rise has seriously damaged the Prime Minister’s economic credentials. It is going to make it very difficult for Australian families to believe anything that the Prime Minister says in the lead-up to this year’s election. Rather than making excuses and pointing fingers—which is what we saw today during question time, particularly from Senator Scullion, who, in answers to questions that I asked him, simply said that it is the fault of the states—this government needs to actually accept responsibility for its broken interest rate promises, get down to work and put downward pressure on inflation and interest rates.

All we see from the ministers of the Howard government, whether it be the Prime Minister himself, the Treasurer or the Minister for Finance and Administration, Senator Minchin, as we saw today, is their simply pinning the blame on the state governments. But it is pretty clear, and a number of commentators have pointed out, that there is very little direct linkage between borrowing by the government and interest rates. The Chief Economist of the ANZ Bank, Saul Eslake, in the Australian on 7 August said that very thing. A number of other commentators have pointed out the fallacy in the government’s argument. For example, in the Financial Review it was reported:

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.

Federal Labor, when we are elected to government, have committed ourselves to economically conservative policies that will be directed towards keeping interest rates as low as possible. We have committed ourselves to keeping a tight rein on the economy and disciplined spending, and we have said that we will run budget surpluses, on average, over the economic cycle. Labor is committed to the independence of the Reserve Bank and its inflation targeting regime. The Leader of the Opposition, Mr Rudd, in his press conference earlier this week emphasised that we very much believe in the independence of the Reserve Bank and we do not intend to depart from that in any way when we are in government. What we have emphasised is that we will implement policies to fight inflation by tackling skills and labour shortages and infrastructure bottlenecks that push up business costs.

As I said at the beginning, this interest rate rise that we have seen this week is a very concerning development for Australia’s working families. And it seems from the comments that we heard here today in the Senate that the government is out of touch with the reality of working families and the pressures that are upon them. In the 11 years that the government has been in office, what we see is that whenever interest rates go down, Mr Howard and Mr Costello take credit for them, but whenever they go up, they refuse to take responsibility. It is certainly the case that Australian families expect a better response than the response that we receive from the Prime Minister and the Treasurer when it comes to changes that could be made to economic policy settings.

When it comes to fiscal policy, Labor has made it clear that it will maintain a doctrine of budget surplus. This does not mean increasing taxation as a proportion of GDP. (Time expired)

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

I rise to take note of answers. I think the first thing I should be doing is acknowledging that the government does recognise that yesterday’s interest rate rise will cause disadvantage for some homeowners, but I think this is something that we definitely need to get into perspective. If you look at the most recent Reserve Bank Financial Stability Review you find that, in fact, the household debt is concentrated among higher income households. The top 30 per cent of high-income households have more than 60 per cent of the household debt. Those at the bottom 40 per cent of the income distribution scheme have just 10 per cent of that household debt. In fact, the median debt-servicing ratio for low-income households actually fell between 2002 and 2006. It is right now that those with the best ability to service their debt have the household debt.

As Senator Scullion, the Minister for Community Services, pointed out earlier, well over half of households that have mortgages are well ahead with their payments. In fact, around 25 per cent of people with mortgages are over a year ahead with their payments. And household debt to housing assets ratios fell between 2002 and 2005. This has been particularly pronounced in the low-income households, where gearing ratios fell around 10 percentage points in that period. Seventy-five per cent of indebted homeowners have a gearing ratio of less than 60 per cent. When these people have the ability to have jobs, as they do under our government, they can service that debt.

One of the most noticeable increases was in the owner-occupier mortgage group, and that has been in the 55 to 64 age group, an age group that was, effectively, cut out of the employment situation, out of income earning, under the previous Labor government. It has been particularly noticed that amongst the 55 to 64 age group they have a very low debt-servicing ratio—very low gearing ratios—compared to other homeowners. Therefore, the biggest increase in the number of households with property debt is coming from people who have strong balance sheets and a strong ability to service that debt.

I would also like to speak briefly about the situation with arrears. The ratio of non-performing loans to total housing loans in this market is, at the moment, 0.38 per cent with Australian banks, less than half of one per cent. These standards have remained low right through the nineties and are very low by international standards. There has been a slight increase in mortgage sales, but that too has remained low. The basic fact here is that, under our government, interest rates remain an average four per cent lower than they were under the Labor government. People actually have the jobs and therefore the income to satisfy the loans that they have.

I would also like to briefly mention the flip side of this coin, the self-funded retirees—people who have paid off their mortgages over many years—who actually benefit from this small increase in the interest rate and therefore are in a better position to help fund their own retirement and to move into the future.

The question was asked earlier about the government attacking the federal Labor Party. If there were a real and substantial entity to attack, certainly the government would. At the moment we are looking at a miasma of me-toos and agreements about the federal budget, about housing and about the future of the economy. We talk about developing the future of Australia on sound economic principles. From everything we are seeing, the federal opposition is agreeing with the federal government that what we are doing is developing the country on sound economic principles. In general, people in Australia have never been better off than they currently are, with low tax rates and close to full employment. The housing interest rates are harming a few, but let us also look— (Time expired)

Steve Hutchins (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Listening to the contributions this afternoon from the coalition senators confirms in my mind and, of course, with my colleagues that there must be two Australias, because the Australia I know from living in the outer suburbs of Sydney is not the same as the one that Senator Bernardi and Senator Boyce are referring to. The overriding view coming from the coalition that people have never had it so good is pretty much a disgrace. The front page of today’s Daily Telegraph in Sydney says:

The Lindley family of Kellyville have tightened their grocery bill, the Jacksons of Glenmore Park now walk to the shop to save on petrol.

That is the result of these latest interest rate rises. Remember that during the election campaign in 2004 the Prime Minister said that he would keep interest rates at record lows. Since 2004, we have had five interest rate hikes. Since 2002, we have had nine. The latest interest rate hike means that if you have a debt of $300,000 you are going to pay an extra $12.50 per week. If it is $400,000 it will be $16.66 per week, and if it is $500,000 it will be $20.83 per week.

Senator Boyce said that this debt is all in the high end, but, as I said, my Australia is struggling. In Penrith, in the seat of Lindsay, mortgage defaults have increased by 25 per cent over the year. I understand that mortgage default insurance claims have increased by four times. We have a situation in those outer suburbs of Sydney, electorates all held by the coalition, where people are just walking away from their homes. And they are getting hit twice. The mortgage stress is currently there—the Australian Bureau of Statistics says that mortgage stress is measured by people having to contribute 30 per cent of their income to service their debt—but people are walking away from their homes in places like Penrith and south-west Sydney because to service that debt they are having to use not just 30 per cent of their income; it is now up to 37 per cent. With this latest rise I would not mind betting that it will go up to 40 per cent, 41 per cent or 42 per cent. People cannot live with that amount of income going to service that debt.

The other frightening thing that is occurring in western and south-western Sydney is that house prices are declining. People have borrowed $300,000, $350,000 or $400,000 to get a house in the west or south-west of Sydney, but that house is no longer worth what they borrowed for it. People who are in mortgage stress now are walking away from a house that they may have bought for $350,000, which is now worth probably $290,000, and for which they are still servicing a $350,000 debt. As I said, the people in western and south-western Sydney, in particular, are being doubly hit because of the current interest rate rises and what appears to be the callous and heartless approach of the government in failing to alleviate the difficulties people have as a result of this interest rate hike. As I said, there seem to be two Australias. The one I represent, where I live, is struggling. People like the family in Glenmore Park are walking to the shops. (Time expired)

Question agreed to.