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Wednesday, 18 February 1987
Page: 265


Mr CONQUEST(3.35) —Honourable members may have seen in the correspondence and in media releases some passing reference to the fact that this nation will be 200 years old next year, our bicentenary year. We will spend another $10m in June to remind the people of Australia of how much money we will spend on the great party for Australia. I put it to the House: Do we, in our present situation, deserve to be given a holiday and a great party on our 200th birthday? What is the situation? We were once a wealthy nation. We were called the lucky country and people who came out here as migrants were able to invest with their blood, sweat and money. They built up this country to be great.


Mr Cunningham —It is still a good country.


Mr CONQUEST —What happened to it? Generations of people, like wayward children, began to spend and spend. They squandered their inheritance and borrowed against the future at escalating interest rates. What is the position today that has influenced interest rates and is having such a dire effect on business and people? The situation is that we have a massive loss of our economic life-blood through the current account deficit and massive tax on the productive part of the economy, which is growing daily and crushing incentive. We have inflation of four or five times that of comparable countries, pricing us out of world markets. We have a steady increase in already massive government spending with no real respite in sight. We have a growing national debt which has almost quadrupled during the term of this Government. We have high interest rates which are stifling investment, crushing those who are in debt and creating a nightmare, rather than a great Australian dream, for so many young people who desire to own their own homes.

What has been the Government's response to this concern? Its response has been to compare its performance against that of the previous coalition Government. Day after day for two years members of the Government have got up in this House and replied to questions at Question Time and spoken in debates by comparing the record of their Government with that of the previous Government. Well, I do not give a fiddle about comparisons between governments. I have a concern for Australia today and I am worried about the future of Australia. We want action and we want to know how it will be taken. The problem is that the Prime Minister (Mr Hawke) comes into the House and treats with scorn the questions on economic matters and acts like a clown, holding up newspapers at Question Time. The Treasurer (Mr Keating), who just spoke in this debate, also had to try to bring some humour into a very serious situation.

The small businessmen and farmers are being crippled by interest rates. While the farmers are faced with falling land values, they are losing equity in the loans they have taken out. Their problem has been made much harder because of this situation. I do not criticise people who have borrowed-farmers and businessmen-because they have had the incentive, initiative and faith in Australia to go out there, put their money in and try to make something of their lives. They had faith, but unfortunately it has been a misplaced faith in the Hawke Government they elected.

The honourable member for Mackellar (Mr Carlton) mentioned prime interest rates. Between November 1984 and February 1987 the prime interest rate increased by 4.75 percentage points, from 13.5 per cent to 18.25 per cent. In that period overdraft rates have risen by 6 percentage points, from 14.5 per cent to 20.5 per cent. Those farmers who have a problem with cash flow-they have to place their businesses at the vagaries of the market, the weather and the Government, which does not seem to care-have to use overdrafts so that they can buy their stock, get seed in, nurture, tend, sow, reap, harvest and sell on the market. They do not know what the price will be at the end, yet they are the ones using overdrafts at those rates of interest. I say to honourable members that that is too much for them to bear.

The Government comes in here and says that the problems with our markets are caused by the European Community and the export enhancement program of the United States of America and we have no control over them. The Government has control over the internal costs and it can help those people to produce more at a cheaper cost so that they may be able to compete on overseas markets. Why should any businessman invest in plant and machinery when he can put his money into purchasing bank bills and get a return of some 16.9 per cent? How many small businesses in Australia today-we know there are very few farmers-are getting a return on their businesses of 16.9 per cent? I am in small business and I know what my return is. I certainly wish I could get rid of my business and invest the money with this sort of return; I would be much better off. Many business people are thinking that way, but they cannot divest themselves so they are not increasing their plant, they are not investing and, therefore, they are not producing jobs. That is the trouble with Australia. We have taken away the initiative for people to invest. We have put imposts on them that are too high for them to bear.

What about our young people who still believe in the great Australian dream, who still believe in owning their own home? It is something to which we all aspired. Everybody in Australia wishes to own their own home. Whilst there are current borrowers, with the threat of losing their home, paying 13.5 per cent, people who borrowed from April last year are paying 15.5 per cent and they have no real guarantee that that will not increase. We have seen a newspaper report of the Housing Loans Insurance Corporation report for 1986 which states that the number of home loans in arrears for over four months rose 50 per cent during the 12 months to 30 June 1986. In view of the indications we have, when that report comes out this year we will find that the number will have increased. The same Corporation had total claims of $7.2m made against it; an all-time record. That is the situation we have at present. We have high interest rates; we have young people trying to buy a home; we have businessmen hoping to hold on to their businesses, and they are certainly not looking to putting in new plant and machinery because they have also lost the hedge of a capital gains. They have nothing really to fall back on.

The Government's main housing advisory group, the Indicative Planning Council, stated that continued high interest rates for the rest of 1986-87 and the slowdown in the economy will mean a drop in housing starts from 136,000 in 1985-86 to 122,000 in 1986-87.


Mr Beale —It will be close to 180,000 jobs lost.


Mr CONQUEST —Yes. There will be a reduction of jobs also. The executive director of the Australian Association of Permanent Building Societies, Mr Jim Larkey, also warned that interest falls were essential. Everybody in this House-certainly everybody on this side of the House-believes that interest rates must fall so that our young people can realise that dream of owning their own home. At the same time, new homes mean new jobs. New jobs give incentive. We have to put initiative back into business. We have to help farmers and businessmen to have lower costs so they can compete on the international markets with their produce and commodities. We need to get our export products going in order to compete in the overseas markets. If we do not do this Australia will go down the gurgler. We on this side realise that there is a problem in our economy that can be helped substantially by lowering interest rates. I have pointed out a range of matters that have to be addressed in order to do that.


Mr DEPUTY SPEAKER —Order! The honourable member's time has expired.