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Monday, 11 May 1987
Page: 2910

Mr RUDDOCK(3.44) —It is very interesting that the closer we get to an election, the more Ministers seem to be prepared to indulge themselves in making forecasts. The reason for that is clear. They have no expectation that they will be held to their forecasts and, therefore, in the timeframe that is left they will be in no way accountable. I would not encourage anybody to rely on the forecasts given by the Minister for Housing and Construction (Mr West) in the run-up to an election.

We are discussing this matter of public importance today because two reputable bodies, the Real Estate Institute of Australia and a firm that deals in mortgage insurance, have produced a quarterly survey in which they consider the whole question of home loan affordability in Australia. That paper makes a number of very simple and clear points, which even the Minister ought to be able to understand, which all Australians clearly understand. The first point is that home loan repayments for the average family have increased or, in the words of the writer in the Sydney Morning Herald, `soared', by $124 a month during the past year. In the same time, average weekly income has increased by only 6.5 per cent. That $124 a month increase means that, over the same period, home loan repayments have gone up by 24 per cent. That is easy for people to understand when they have to pay such amounts.

We heard two defences on this matter by the Government in Question Time today. The first was by the Prime Minister (Mr Hawke). His approach was one of confession and avoidance. He said that interest rates had been kept high because of the level of the deficit. He acknowledged that interest rates are high to all Australians, and the high levels have been maintained, because the Government, as an instrument of economic policy, has determined that all Australians must pay higher interest rates. It is not for me to try to demonstrate this. Any number of organisations can do so. From the Organisation for Economic Co-operation and Development, in its annual report, to the Government's own reports from its Economic Planning Advisory Council, which it set up, and the Minister's own Indicative Planning Council-all have made it very clear that interest rates are a question of economic policy. They are determined by government. Government has a choice as to whether it keeps interest rates high or reduces interest rates and uses other instruments of economic policy to deal with the problems which we face. I shall quote briefly from a report by the Economic Planning Advisory Council, because it makes the point more clearly than I can. The report says:

Interest rates are determined by the supply of and demand for funds. These depend on real economic trends, overall monetary conditions and expectations about inflation and the exchange rate.

It continues:

. . . in the last few years interest rates in Australia (especially at the short end) have risen above those in most other countries, both in real and nominal terms. There have been three principal reasons for this:

Market expectations of continued higher inflation rates in Australia-

I add, under this Government-

Market perceptions of the risk of further real depreciation of the Australian dollar . . . associated with uncertainty about Australia's external payments situation; and

The resolve of the authorities to maintain an appropriately high monetary stance . . .

That is the answer-the resolve of authorities, of this Government, to maintain an appropriately high monetary stance. The Government is responsible for it. Interest rates have had to be kept high because the Prime Minister and his Government have determined that that is the approach which must be taken. The Minister's Indicative Planning Council said exactly the same thing. Let me turn to the second approach, the other argument put forward by the Minister. The Minister says that if one gets some figures which one does not like, one queries the statistics. This is the approach which he wanted to take. He suggested that the figures produced by the Real Estate Institute create an exaggerated picture and that, if we looked at the Government's new housing package which it introduced in March, we would see a different approach. He argued that this would result in the community not having to use cocktail loans in the future; they will be able to go to an institution and get one loan at one interest rate and they will be far better off. I have had produced from the Parliamentary Library a summary which the Minister might like to see. I was unable to approach him earlier, because he was speaking at a time I decided to use the material. The document, which was authored by Mike Lawlor, deals with mortgage repayments. His document produced one simple statement; that is, if one considers the cocktail arrangements vis-a-vis the single loan arrangements, one sees that there are different results depending on whether one has a higher or lower income. The fact is that the abolition, effectively, of cocktail loans has had an impact on those with higher than average incomes by reducing the amount of interest paid. But according to Mr Lawlor's study, in the past cocktail loans for the people at the cheaper end of the market, in other words, people on average weekly earnings or lower, were cheaper.

Anybody can produce statistics on these matters. I have a whole lot more. Other people have spoken on these matters besides the Minister and those who have seen fit to try to defend him. A recent statement reported in the Age by the chief economist for National Mutual Royal Bank, Dr John Marsden, dealt with the same questions. He said that home mortgages are now harder to afford than they have been for the last 17 years and possibly since World War II. He has produced a mortgage affordability index which shows a steady slide since the peak in the 1970s to the possible post-war low of the present. He said that the difficulty in affording mortgages has resulted in falling household disposable income over the past two years combined with higher real interest rates. So the problems are there for all Australian people to feel and for people such as the Minister to know and understand. I am quite surprised at the way in which he has sought in the House today to defend the situation.

I do not have time to deal with the other aspects I would like to deal with in this debate, but it is important to understand that not only have interest rates gone through the roof, which has had the dreadful consequence of people not being able to afford a home but also they cannot get into public housing. In June 1983, 124,000 people were on the waiting lists and 157,000 people are on those lists now. It does not matter what the Minister says. Those are the statistics. The Government might have provided more money but that is not dealing with the problem. Interest rates have gone up further. Private dwelling rents have gone up by over 10.2 per cent. What prospect does one have of renting a house when rents have gone up by that amount?

In the short time I had to prepare my speech on this matter I thought it might be illuminating to consider the Minister's own electorate. A recent headline of the Illawarra Mercury, a newspaper which circulates in the Minister's electorate and which deals with the problems of Wollongong, an industrial city in New South Wales, was: `So you thought you were doing it tough . . . car is the home for a destitute family'. The Salvation Army made it very clear in the article that in this case a husband had walked out on his wife and, no longer able to afford the rent that was being charged for the unit in which it was living, the family had had to move out. It was reported that the mother and her two young children had been living in a small car in the central Wollongong carpark for two weeks because they could not find suitable low cost accommodation in Wollongong-a city in the Minister's own electorate.

Mr McGauran —Why didn't they go to their local member?

Mr DEPUTY SPEAKER (Mr Leo McLeay) —Order! I ask the honourable member for Gippsland to desist from interjecting from all sorts of strange places in the House. I have drawn his attention to this on a number of occasions. I have not been advised by the Clerk that he has changed his seat. I formally warn the honourable member that if he continues to interject from other places in the House he will be removed from the House.

Mr RUDDOCK —The problem, as evidenced in the Minister's electorate, is clear. I could take honourable members through any number of studies. An article appeared in the Bulletin on 2 December 1986 which dealt with the Murray family, not Ms Murray but Jacqueline Murray and her husband, who are having problems in making ends meet. The article gives details of the family's budget. It sets out the position of average families in our community, the difficulties they have and the disposable income they have left after interest payments and taxes. The Murray family had just $113.60 for food, clothing, holidays-I could go through the full list-petrol, entertainment, education, pharmacy bills and pre-school costs after they had paid interest and taxes. That is the nature of the problem we are talking about today.

Mr DEPUTY SPEAKER —Order! The honourable member's time has expired.