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Wednesday, 3 December 2003
Page: 23618

Mr McMULLAN (2:22 PM) —My question is to the Treasurer, and I refer to the further rise in interest rates delivered by the Reserve Bank today. I ask: can the Treasurer confirm that average monthly mortgage repayments for a standard mortgage are today around $1,340 per month compared with $922 per month in 1996—an increase of over $400 per month? Can he also confirm that mortgage interest payments are chewing up more of the household budget than ever before? Isn't this the reason, Treasurer, why the Reserve Bank has already concluded that it has become:

... increasingly difficult over recent years for first-home buyers to achieve home ownership?

Mr COSTELLO (Treasurer) —Today the Reserve Bank board increased official interest rates by 25 basis points, taking the official interest rate to 5 per cent. If that is passed on to standard variable mortgages, it would be a rate of 7.05 per cent. Compared to the 10.5 per cent that applied when this government was elected, that means that on the standard Australian mortgage of $190,000 people are saving—on today's interest rates—$545 per month compared to the rate that applied when the Australian Labor Party thankfully left office. Not only was the rate 10½ per cent when the Australian Labor Party left office, but over the course of the 13 years of Labor government, interest rates averaged 12 per cent and peaked at 17 per cent. Today's interest rate, if the official rate is passed on, will be 7.05 per cent.

What that illustrates is that interest rates, which have been at historic lows, are now moving back to more neutral rates, as the Reserve Bank said in its statement today. It named four reasons why it had taken that particular decision. The first was that the world economy was picking up; the second was that the Australian economy was strengthening; the third was that the inflation rate, whilst low, had exchange rate effects in it; and the fourth was that there was no need for monetary policy to continue to have a stimulatory effect on the economy.

I will conclude by adding one last thing. Unemployment in this country is now at a 22-year low. We have been working to keep employment growth going in this country so that people who want to work can find a job. There is no reason why Australia should be afraid of low unemployment. The object of economic policy is to so grow the economy that people can find work—and jobs is the end result of good economic policy. Over the last two years, whilst the American economy lost two million jobs, 500,000 new jobs were created in Australia. That did not happen by accident; it happened because this government had the courage to put in place the decisions that were required to keep Australia strong. We were fought every step of the way by the Australian Labour Party, including the member for Werriwa, who was there on the battlements opposing good economic policy. There have been four shadow treasurers in my time as the Treasurer of this country, and one stands out as worse than all the others during that period.

Government members interjecting

Mr COSTELLO —No, there was one that was worse than Gareth. There was one that was worse than that one—and blow me down if the Australian Labor Party did not promote him for his efforts. He was hardly a distinguished occupant of that office, and the best thing that could be said about him was the manner in which he left it.

Mr Tanner —You're just jealous you won't get your promotion!

The SPEAKER —If the member for Melbourne and the member for McMillan have quite finished.

The SPEAKER —The member for McMillan is warned! I had already indicated to the member for McMillan that I expected better from him and he promptly interjected again.