Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Wong. Can the minister inform the Senate of the outcome of today's Reserve Bank board meeting and what this decision will mean for Australian families?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am pleased to advise the chamber that a short time ago the Reserve Bank of Australia announced a 25 basis point drop in the cash rate from 4.75 per cent to 4.50 per cent. I can hear already—the only people in Australia who are not pleased about that are those opposite. I do not hear any 'Hear! hear!' from those opposite, just like the only people in Australia who are not pleased that—

Honourable Senators:

Honourable senators interjecting—

John Hogg (President) Share this | Link to this | Hansard source

Senator Wong, resume your seat. Order! If you want to sit here and scream at each other that is what you can do.

Honourable senators interjecting—

Order! The minister is endeavouring to answer a question. The behaviour on both sides is completely disorderly. The minister is entitled to be heard.

Senator Conroy interjecting—

Senator Conroy! The minister is entitled to be heard in silence.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Those on this side, and I am sure all Australian families with a mortgage and all small businesses, will welcome this decision. This decision is a win for families with mortgages and every small business on Cup day—a win on Cup day. What this means is that a family with a $300,000 mortgage will now pay $50 less a month in interest repayments, a saving of $590 a year. We welcome this decision and, unlike those opposite, we are very pleased that the government's ongoing fiscal credibility and ongoing sound fiscal management have ensured that the RBA has had room to move, as it has spoken about on previous occasions.

Those opposite like to trumpet their credentials. It is worth recalling that in November 2007 the standard variable interest rate was 8.57 per cent. At the conclusion of the Howard government the standard variable rate was 8.57 per cent, significantly higher than today. In fact, a family with a $300,000 mortgage are over $2,400 better off than when we came to government. (Time expired)

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. It is very good news indeed, Minister. How does the government's approach to fiscal strategy support the Reserve Bank—

Honourable Senators:

Honourable senators interjecting—

John Hogg (President) Share this | Link to this | Hansard source

Senator Carol Brown, please resume your seat. Because of the interjections around, I did not hear any part of that question whatsoever. You are entitled to be heard in silence. Senator Brown.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

How does the government's approach to fiscal strategy support the Reserve Bank's approach? What is the government doing to increase productivity and capacity?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

A sound fiscal strategy is important to managing the economy in the interests of working families, which is what this Labor government does. It works to manage the economy in the interests of working families. That is why we are engaging in the largest fiscal consolidation in the nation's history. We understand how important it is for government to create space as the economy grows without adding to price pressures. We understand the importance of investing in the capacity of the economy: the $3 billion investments in skills and training in the budget; the investment in infrastructure, including the NBN—all investments in the capacity of the economy. But the reality is that those opposite have no interest in fiscal discipline. They have a $70 billion black hole— (Time expired)

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Can the minister inform the Senate what steps the government has taken to promote competitive pressures in the banking sector and increase the likelihood of the reductions in the cash rate being passed on to consumers? What alternative approaches to the government's approach are there?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I say this very clearly: there is no excuse whatsoever for any bank not to pass on any rate cut to Australian families in full. I would hope that we could actually have a unity ticket on this point from the opposition, but I doubt that we will. We know that it is this government that has introduced reforms to increase competition in the banking sector, with major banks moving to take customers from their competitors through offering a better deal to customers. These are important reforms in which the government has engaged.

But I again return to the issue of fiscal discipline. We know from my counterpart, Mr Robb, that those opposite have a $70 billion black hole. Unless and until the opposition detail to the Australian people how they will fill it, Australians will know that the opposition is quite prepared to put upward pressure on interest rates. (Time expired)