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Monday, 26 May 1997
Page: 3536

Senator KNOWLES —My question is to the Leader of the Government in the Senate. Last week marked the fourth reduction in interest rates since the coalition came to office; a further vindication of the government's economic strategy, I might add. How will the environment of low interest rates, low inflation and strong business investment assist Australian families and small business?

Senator HILL —More good news as a result of coalition government policy; a further dividend to the Australian people resulting from good, sound economic management. It was interesting that practically everyone within our country applauded it, except the Australian Labor Party—perhaps because of the contrast with their record in relation to interest rates. Yes, it is good news for Australian families and it is good news for small business as well. It vindicates what was a sound budget, a budget of consolidation to build on the difficulties of the previous year when we had to address the inherited deficit of $10.3 billion. I am very pleased that we have been able to rein in that deficit, reduce expenditure—and, therefore, keep pressure off interest rates—continue an even lower inflationary environment and encourage expanded economic growth.

Senator Sherry —Did you see Roy and HG on Saturday night?

Senator HILL —That is something that you should applaud, Senator Sherry. It is good news for all Australians, particularly for those seeking jobs. It is, as Senator Knowles said, the fourth reduction in interest rates since the coalition was elected just over a year ago and already we have been able to see four reductions in interest rates with a sum total of two per cent. Interest rates are now at their lowest level in 24 years: 7.2 per cent on variable home loans. Under the coalition government we have the lowest interest rates in 24 years. Small business, as I said, is also the winner, with business variable loan rates falling to 9.25 per cent.

The reduction in interest rates is consistent with the government's strategy which is to produce a growth, low inflation and low interest rate environment. It indicates the benefits that can flow from the decisions that this government has been prepared to take. It is a reward for the battlers—never let that be forgotten. It is a reward for those who have been prepared to practice wage restraint despite what they are encouraged to do by the Australian Labor Party. It would be even better if the Australian banks would pass on the full benefit. I take the opportunity to welcome Aussie Home Loans' example, which has dropped its home loan variable interest rate to 6.99 per cent by passing on the interest rate reduction in full.

Let us briefly compare the coalition record with that of Labor. Home loan interest rates under Labor were 17 per cent in 1989-90 and under the coalition they are 7.2 per cent. For small business they were over 20 per cent in 1989-90 and under the coalition they are just over nine per cent. Credit card rates under Labor were over 25 per cent and under the coalition they are 16 per cent. This continues the environment of low interest rates, low inflation and strong business investment. Profits are rising—and that is more good news.

It was interesting to see organisations such as the Housing Industry Association and the Real Estate Institute applauding the government's decision. What did they say? They said that this creates the environment for more jobs. That is good news for Australia and adds to the other benefits that have flowed from coalition decisions: the $1 billion family tax initiative, $600 million being put back into private health insurance, the savings rebate and the decision to reduce the provisional tax uplift factor. That is sound economic management, with benefits for all Australians.

Senator KNOWLES —Madam President, I ask a supplementary question. Could the Leader of the Government in the Senate tell the Senate whether this environment of low interest rates, low inflation and strong business investment will be assisted by any other reforms the government has in place?

Senator HILL —I could talk about the industrial relations reforms, for example. Really what we did in the first year was to tackle all the big decisions: cut back expenditure, IR reform, reduce red tape for small business, give business a chance to grow and to improve. I do welcome the supplementary question because it reminds me that economic growth is now accelerating: 3.25 was the projected figure, now it is 3.75. There is improved housing affordability—the best figures for years and years—and a strong outlook for investment growth with 16 per cent in 1996-97, up from eight per cent. Retail sales are rising. There is lots of good news as a result of sound coalition policy.