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Shadow Treasurer discusses mortgage stress; and census data.

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WAYNE SWAN MP Federal Labor Shadow Treasurer




Interviewer: Well mortgages are emerging as a growing election issue with more evidence of the rising pressure of home loan repayments. Surveys reported today show about a third of borrowers are now spending more that 30 percent of their gross income on mortgage repayments and the Treasurer, Peter Costello put his views on interest rates last night saying he saw no reason for a rate rise and that he thinks the next official figures will show a fall in the inflation rate.

For the Opposition’s view on that we’re joined by the Shadow Treasurer, Wayne Swan and he’s talking to Marius Benson.

Interviewer: Wayne Swan, Peter Costello last night says inflation’s coming down, there’s no need for an interest rate rise - good news there for borrowers.

SWAN: Well unfortunately it’s not Peter Costello’s decision. It’s a decision for the Reserve Bank.

I certainly hope interest rates don’t go up because what these latest figures show is just how hard Australian households with mortgages have been hit by eight interest rate rises under Peter Costello.

Interviewer: Do you think he’s right though now, that the Reserve Bank is not under pressure to put up interest rates when it next meets or indeed over the next few months.

SWAN: Well that’s entirely a matter for the Reserve Bank. What they’ve said is that they expect inflationary pressures to grow particularly into next year and so have many other reputable authorities. So there’s no doubt that there will be pressure on interest rates in the next 12 months, but precisely when they go up is entirely a matter for the Reserve Bank.

Interviewer: Now mortgages are hurting. There are new surveys indicating about a third of people are spending over 30 percent or more of their gross income on home

repayments but at one level that shows a lot of confidence - that people are confident. They’ve got jobs, they’re earning, they can get into debt.

SWAN: Well I think a lot of people are under financial stress. I think that’s what these figures show. No doubt some people on high incomes may be reasonably comfortable but many people I think are under considerable financial stress and what these figures show is the stunning increase in the number of households paying 30 percent or more of their income in mortgage interest repayments.

I think what that means is there are a lot of people out there who are really doing it tough and having difficulty meeting their mortgage repayments.

Interviewer: But a lot of people also, apparently, according to surveys look at Labor and don’t think housing will be cheaper or interest rates lower under Labor.

SWAN: Well I think these figures are the final nail in the coffin of John Howard’s claim that working families have never been better off. John Howard simply doesn’t understand the new interest rate reality. There’s no such thing as a cheap house. There’s no such thing as a small loan. There’s no such thing as a small interest rate rise so that when Peter Costello and John Howard say that Australian families have never been better off, or when Peter Costello says that interest rates are low, he doesn’t understand the reality around the kitchen table, whether it’s mortgage interest repayments, whether it’s the grocery bills or whether it’s the child care fees. He simply doesn’t get it.

Interviewer: But when you look at surveys, when you look at opinion polls, the economy remains the Government’s greatest strength. People still have a lot of confidence in the Government as an economic manager that delivers, less confidence in Labor.

SWAN: I think a lot of people out there have had their confidence shaken that this Government understands what we need to do to put downward pressure on inflation, downward pressure on interest rates, what we need to do to lift our productivity growth to protect prosperity beyond the mining boom.

I think a lot of people now think that this Government simply doesn’t get it when it comes to the price pressures around the kitchen table.

Interviewer: But when you just look specifically at those people who are under pressure with mortgage repayments, you can’t promise that interest rates will be lower under Labor or can you?

SWAN: No I can’t and I wouldn’t and it would be silly and irresponsible of anyone to do that but John Howard and Peter Costello did precisely that at the last election - said they would keep interest rates at record lows. Since that time there has been four interest rate rises and the stunning thing about these figures is they don’t take into account two of those interest rate rises.

There’s been eight interest rate rises on the trot under John Howard and Peter Costello but despite that, in the last election they promised to keep them at record lows and since that time they’ve not done the maximum amount they should be doing to put downward pressure on inflation and downward pressure on interest rates.

Interviewer: Wayne Swan, I’ll leave it there. Thank you very much.