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Tuesday, 16 June 2009
Page: 6074

Mr HOCKEY (2:06 PM) —My question is to the Treasurer. I refer the Treasurer to the fact that the yields on 10-year government debt have increased from around 3.7 per cent in March to around 5.4 per cent today. Is the Treasurer prepared to claim that there is no relationship at all between the record level of projected borrowings by governments and the dramatic increase in interest rates on long-term bonds in the last three months?

Mr SWAN (Treasurer) —I thank the shadow Treasurer for his question. It is pure baloney for the shadow Treasurer to assert that levels of borrowing that the government has not even engaged in are somehow having an impact on the 10-year bond rate. It is pure baloney, and that is what all of the economic commentators have said. It just demonstrates how opportunistic and how desperate this opposition has become, because their alibi has now left the room. The member for Higgins is leaving and now the weight is on them to come up with an alternative economic policy which demonstrates what they would do in an environment where government revenues have been hit by $210 billion over the forward estimates.

The member knows very well that we are dealing with long-term bond rates. They are affected predominantly by what is going on in international financial markets, and borrowings in this country are a tiny percentage of that. The long-term bond rate is also affected by what the Reserve Bank does with short-term rates. Those are the two factors, and that just demonstrates how out of depth this shadow Treasurer is.