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Wednesday, 1 April 1987
Page: 1861

Mr HOWARD —My question is addressed to the Prime Minister. I remind the honourable gentleman of his promise in November 1984 that interest rates would fall in 1985. I remind him that since he made that promise savings bank home loan rates have risen from 11 1/2 per cent to 15 1/2 per cent; Bankcard rates have risen from 18 per cent to 22 1/2 per cent; and overdraft rates have risen to a record 20 1/2 per cent. Will the Prime Minister now explain to the Australian people what he meant in November 1984 when he said that his Government had `ploughed the field and sown the seeds and would soon harvest the crop on interest rates'?

Mr HAWKE —I thank the Leader of the Opposition for his question. I will not repeat what I said yesterday about the facts of record interest rates being the product of the Leader of the Opposition's stewardship when he was Treasurer. Those facts are on the record. I simply remind the Leader of the Opposition of a couple of relevant considerations when it comes to this question of interest rates. Firstly, I pick up the analogy he referred to of sowing the seeds and reaping the harvest. The unfortunate fact is that we have had to have a tight monetary policy in this country, despite the enormous efforts of our farmers-I pay them full tribute-and miners. They have sown the field and have harvested, but the prices they have received for the products which they have so effectively produced have been massively reduced.

This Opposition one day will understand and accept the fundamental economic fact confronting this country; that is, that we have had more than $6 billion slashed off our national income. That is of the order of $1,500 per Australian family. That unavoidable and unpalatable fact has been faced by this Government, and as part of the appropriate mix of macroeconomic policies we have had to have a tight monetary policy which has produced high interest rates. No government in its right mind would want to have interest rates at a higher level than is necessary for one day longer than is necessary. It is not good politics to have interest rates higher than they need to be.

This leads me to the second point I would like to make. I remind the Leader of the Opposition of his record in regard to what is an appropriate interest rates policy. He took the position before the State election in South Australia that of course the ceiling on mortgage rates should be removed. He said quite clearly that the ceiling on housing interest rates should be abolished. I am not quite sure for what reason-perhaps he has read a different economic text book, or someone has recently got to him-but he now says that we should not do that, that we should keep the 13 1/2 per cent ceiling on interest rates. If the Leader of the Opposition is going to talk about consistency in regard to interest rates, he should examine his own policy and explain to the people, even if he cannot explain to himself, why he has jumped the position in regard to housing interest rates.

Mr Howard —Ha, ha!

Mr HAWKE —The giggleometer will not help the Leader of the Opposition. The position simply is that this Government had in 1986, as it has in 1987, the monetary policy which is appropriate to protect the real interests of this country.