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Tuesday, 8 August 2006
Page: 26


Mr SWAN (3:56 PM) —The Treasurer has dodged this debate. He has scurried off with his tail between his legs back to the chicken coop. It is just another repeat of what we had last week when he did not have the courage to take on the Prime Minister. Just as he did not have the courage to take on the Prime Minister, he does not have the courage to take on this debate. Of course, the Prime Minister has not had the courage to take on this debate. This is something which is so important to the living standards of average Australians: rising interest rates in an environment where Australians were promised record low interest rates by this Prime Minister. Adversity is a test of character and it is a test that this Treasurer has failed. He failed it last week and it is a test that he has failed again today. The hollow man in here in question time today had no answers on interest rates at all, yet it is his actions and the actions of the government that are putting Australian families under such tremendous financial pressure.

Now the Treasurer may not have any numbers in the party room—that is pretty clear—but he cannot be allowed to ignore the numbers presented in this House that demonstrate that the percentage of income being paid by people with housing mortgages is the highest in our history. It will no longer be sufficient for him to walk into this House and say, ‘Blame Keating.’ They can blame Howard and they can blame Costello because the percentage is now higher than it has ever been. Interest rates have been going up and up and up and up and up and up and up because we have had seven rises in a row, but we have had three rises since John Howard went to the Australian people at the last election and promised record low interest rates. What does that really mean? Think about it for a minute. What it actually means is that John Howard himself in his advertising was taking personal responsibility for interest rates. There was the ad: record low interest rates. What that advertising says is, ‘I, John Howard, take personal responsibility for what happens with interest rates over the next three years.’ As we well know, interest rates are going up—three times since he made that promise—and record interest repayments are putting Australian families under financial pressure.

But John Howard does not understand a word of that, because he has been living at Kirribilli for 10 years. He really does not have to pay the freight, and neither do many of the ministers in this government, or many of those sitting behind them, who live fairly privileged lifestyles. All MPs live privileged lifestyles but, when you are so out of touch that you do not understand the financial pressure on Australian families—


Mr Hockey interjecting


Mr SWAN —you should give it away, Minister. You should absolutely give it away, because you don’t get it. You absolutely don’t get it: a 7.8 per cent variable interest rate is not low.


Mr Hockey interjecting


Mr SWAN —You don’t get it. The explosion of household debt has changed the interest rate equation in this country forever. It has changed forever, because the percentage of household income required to service a mortgage is at a record high. People are paying more in monetary terms and more as a percentage of income than ever before. But, of course, John Howard and Peter Costello still think they are low. This is what Peter Costello said on the Sunday program: ‘If you see a single digit in front of your interest rate, that’s low.’ This has now been airbrushed from the Treasurer’s website; you cannot find it on the Treasurer’s website. We know why: he is so embarrassed. Do you know why? Because the data has been there in the Reserve Bank report on monetary policy from last Friday. Data from the Reserve Bank shows that mortgage interest paid as a share of household disposable income was 6.1 per cent in September 1989. What was it in March 2006? It was 8.7 per cent. That is the figure they do not get: people are paying an increasing percentage of their incomes.

We have had two more interest rate rises since these figures were collected. These three interest rate increases have cost the average new mortgage holder $108 a month. And that doesn’t matter? We had the Prime Minister out there suggesting that it was not very much; it was only a little bit. We had the Treasurer out there suggesting the same. But let me tell you what those last three increases are worth: in the electorate of Greenway, they have cost $241 a month; in the electorate of Aston, $169 a month; in the electorate of Dickson, $210 a month. So what was the PM’s response in here today? He suggested that somehow households can pay their mortgage by selling their equity—that, if you are having problems paying your mortgage, you front up to the bank manager and say, ‘Look, I can’t pay the mortgage, but my house is worth a lot more.’

The point I am making is that this government does not understand the financial pressures that families are under. Somehow, through the commentary of the Prime Minister last week, was this notion that Australians had overextended themselves by borrowing more. Why had they done that? Because he encouraged them to. As Mrs Bridgman said in the Sydney Morning Herald, she went out and borrowed more—she felt she could do so because the Prime Minister told her. Now the Prime Minister says, ‘You’ve probably been out there borrowing more to go on a holiday, buy champagne, buy caviar.’ The truth is, Minister, that may be okay for some, but for most people it is the necessities of life that they actually have to put together to make sure they can get by. They are not out there borrowing for any reason other than to have a roof over their head and to provide the necessities of life.

In the middle of all this comes Malcolm in the Middle. Malcolm blunders in and says: ‘There’s nothing dramatic about this; it’s okay. I don’t have a problem with my $10 million, $20 million mortgage’—or whatever he has, if he has one at all. No problem for Malcolm at all. The backdrop to this is both the Treasurer and the Prime Minister saying interest rates are low. It is a pity the payments are so high. I do not think that we will hear a lot more from this government with their drumbeat of saying how high they were 10, 13 or 14 years ago, because now they are the highest ever.

So, why are we having this debate today? And why did question time begin as it did today? Why did it begin by discussing electoral advertising? As I said before, with that advertising the Prime Minister took personal responsibility for interest rates. This was a sleazy path to win the last election—nothing more, nothing less. It was absolutely sleazy. The Prime Minister’s desperate opportunism has been now compounded by his failure to listen to six alarm bells, which have been rung by the Reserve Bank since the last election—his refusal to heed their warnings about the need to invest in skills, to do something about training skilled workers, to do something about training doctors, to do something about training skilled workers in the traditional trades and so on, to do something about our infrastructure. In two budgets he has ignored those six warnings and he has sold the country short. The result has been rising core inflation and rising interest rates. When he gets confronted with rising core inflation, who does he blame?


Ms Plibersek —Bananas!


Mr SWAN —Bananas! Do you know what? The Australian electorate picked that right away. They knew the Prime Minister and the Treasurer had gone bananas. It was a crooked defence, it was a shady defence and it was a sleazy defence—and it was an insult to the Australian electorate, who are being hit by rising prices across the full range of food items in the supermarket and across health and education, and they did not fall for it.

Then we had the Reserve Bank alibi. The week before last they were out there saying, ‘It’ll be the Reserve Bank’s responsibility; nothing to do with us.’ Pity about that advertising. Then of course we had the prosperity excuse. At one stage the Prime Minister and the Treasurer were out there saying, ‘They’re going up because we’re so good.’ And they expect the public to clap. They certainly were not clapping. Then we had to blame the homeowner, which of course was what he was doing to Mrs Bridgman. They picked his course there.

This government have to accept some responsibility. They were always out there claiming credit when the figures were good. They said it was their magnificent economic effort that produced a low inflation, low interest rate environment. Suddenly, when it turns into a high interest rate, high inflation environment, it has nothing to do with them at all. I think that says so much about this government. We have the worst Prime Minister in 60 years—that is what we have. And we have one of the worst Treasurers in our history. We have a Prime Minister who bequeathed to this country his record: 21 per cent interest rates. They cannot speak with any credibility on interest rates anymore. (Time expired)