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Monday, 23 March 1987
Page: 1275


Mr HOWARD —I refer the Prime Minister to reported statements last Friday by the Treasurer that there would be a reduction in interest rates following the May economic statement and the August Budget. Bearing in mind the assertion by the Chairman of the Indicative Planning Council for the Housing Industry, Professor Fred Gruen, that market rates would have to fall by at least 3 per cent to reduce the current 15 1/2 per cent housing rate-and presumably by at least 5 per cent to reduce existing borrower rates to below 13 1/2 per cent-does the Treasurer's forecast therefore encompass a reduction in housing interest rates by the end of this year?


Mr HAWKE —Let me make two points in answer to the question from the Leader of the Opposition. My friend and colleague the Treasurer indicated in his statement that there would be scope for a fall in interest rates. That statement is consistent with everything that I have said and that has been said by other commentators. Both the Treasurer and I have made it clear that it would be irresponsible to be precise as to actual timing. All we have said is that, as far as this Government is concerned, it has in place fundamental macroeconomic policies that will create the environment for a declining interest rate regime, but, of course, there are external factors outside of our control that will dictate the timing of such falls in interest rates generally and, following on from a fall in interest rates generally, a fall in mortgage rates. Secondly, I make this point: While the policies of this Government are clearly calculated to and will produce that environment for a falling interest rate regime, that is in stark contrast with the totally irresponsible statements of the Leader of the Opposition. He remains saddled with a $16 billion credibility gap.


Mr Carlton —Rubbish!


Mr HAWKE —That is a very precise description of his policies-rubbish! Of course, the fact, as is well known by every commentator, is that, if the Opposition were ever to be in a position-which fortunately it will not be-to bring in those sorts of policies, this country would see an explosion in interest rates the like of which it has never seen before.