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Tuesday, 3 February 2009
Page: 39

Ms JULIE BISHOP (4:47 PM) —My question is to the Prime Minister. I refer the Prime Minister to the 3.75 percentage point difference between the official interest rate today and that of June last year, when the Prime Minister was warning Australians of the inflation monster that he said was wreaking havoc in the economy. What does the Prime Minister have to say to the borrowers who followed his advice and locked in fixed interest rate loans and, as a result, are paying up to $760 per month more in interest on their loans?

Mr RUDD (Prime Minister) —I refer to yet another extraordinary question from the member for Curtin. The Deputy Leader of the Opposition, the member for Curtin, would be aware that the government last year, acting in concert with the Reserve Bank and reflecting global economic circumstances at the time, moved both fiscal and monetary policy in the same direction, given the challenges which existed at the time. I say to those opposite that one of the challenges we face—and I would suggest to those opposite that they be mindful of this—is that, as we respond to the global financial crisis and embrace the series of fiscal measures which are contained in this package, the packages last year and whatever further action we may take, it is equally important that we have a clear-cut strategy to exit from deficits and a clear-cut strategy to avoid problems at the other end of the economic cycle in terms of what then happens with inflation long term. The problem with previous responses by governments around the world is that they have not been appropriately sensitised to where they are in the economic cycle and therefore how to respond appropriately over time. We have seen that reflected most recently.

I would suggest to the Deputy Leader of the Opposition that, again consistent with the position taken by the government today on fiscal policy, she peruse the formal statement by the Governor of the Reserve Bank, which says:

In making its decision, the Board—

of the Reserve Bank—

took into account the package of measures announced by the Government earlier today. The combination of expansionary monetary and fiscal policies now in place—

Mr Hockey —Mr Speaker, I raise a point of order. The Prime Minister was asked a question about the thousands of Australians who locked in interest rates 3.75 per cent higher than those of today as a result of the encouragement of the Prime Minister. What does he say to those people?

The SPEAKER —The Prime Minister will respond to the question.

Mr RUDD —The intervention by the member for North Sydney is about as ridiculous as the question asked by the member for Curtin.

The combination of expansionary monetary and fiscal policies now in place will help to cushion the Australian economy from the contractionary forces coming from abroad.

This is a serious debate for the nation—how we respond to a global economic crisis beyond the control of a single national economy, deploying all instruments of policy to rise to the challenge which now confronts us. The government have embarked on that strategy, we will not be deterred from it and we believe that we have charted a strategy which will see Australia through. Again, I would say to those opposite: will they support the strategy that we have advanced—will they support the package of measures contained in the policy put forward today—or will they not? That is the simple question around which they are twisting and turning in this debate. The answer will be delivered soon, when these matters are voted on. I would suggest to those opposite: stop sitting on the fence, start exercising appropriate judgement and support a course of action which will help see Australia through rather than take your traditional course of action over the last 12 months plus, which was to sit on the fence and carp from the sidelines.