Dana Wortley (SA, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Conroy. Can the minister update the Senate on the implications of yesterday’s interest rate announcement for families and outline the ongoing economic challenges faced by Australia, given the current global circumstances?

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

I thank Senator Wortley for that question. The Reserve Bank’s decision yesterday to cut interest rates by 25 basis points, to seven per cent, is a decision working families deserve. We understand that many families have been feeling the full weight of the 10 successive interest rate rises that occurred under the previous government. For the average mortgage, the interest rate cut will put more than $40 per week back into the family budget. This is the first time families have had a rate cut in seven years. For 740,000 first-time buyers, this will be the first time they have experienced any mortgage relief at all. From the government’s point of view, we know there is much more to be done. There will be more tough times ahead as we continue to battle global economic difficulties, which are affecting every country in the world. Australia is not immune to these global economic difficulties, but we are better placed than most to weather the fallout.

Today’s national accounts show that, despite the global financial crisis and slowing global economy, the Australian economy continues to grow solidly. Real GDP rose by 0.3 per cent in the June quarter and by 2.7 per cent over the year. The non-farm economy rose by 0.5 per cent in that quarter. These are solid numbers, especially considering the global challenges we are facing and what is happening to other developed economies. To put these figures into perspective, five of the world’s seven largest developed economies recorded zero or negative growth in the June quarter. While growth in the world’s largest developed economies has stalled or gone backwards, Australia has continued to grow. In fact, over the past year our economy has grown stronger than the economies in the US, the UK, Japan, Germany, France, Italy and Canada and stronger than the whole of the G7, the G3 and the Euro area economies.

Although these are solid numbers, today’s national accounts confirm just how hard family budgets have been hit by the 10 straight rate rises under the Liberals and rising global oil prices. They underline the importance of the tax cuts we delivered for working families, the extra assistance for child care and seniors and yesterday’s cut to official interest rates. The Rudd government are focused on delivering responsible economic management so we can have strong growth with low inflation well into the future. We have delivered a strong, $22 billion surplus to buffer against global turmoil and give us the flexibility to meet today’s challenges. We have made room in the budget for a $55 billion—(Time expired)