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Monday, 6 December 2004
Page: 31

Senator LUNDY (2:47 PM) —My question is to Senator Minchin, the Minister for Finance and Administration. I draw the minister's attention to the release of the latest Reserve Bank of Australia figures, which show Australians owe a massive $112 billion in personal debt, $608.5 billion in mortgages and $27.9 billion in credit and charge card debts. Can the minister confirm that these figures represent an increase of 15 per cent on last year's figures? Minister, what does the government plan to do in order to control the ever-increasing levels of household debt in Australia? Is the release of these ever-increasing figures over the past fortnight enough to spring the government into action to pursue a solution to curbing this rise after more than four years of ignoring the growing debt crisis?

Senator MINCHIN (Minister for Finance and Administration) —This really is Groundhog Day. I think this is the third or fourth time that the same question has been asked in the last three weeks. The Labor Party seems to fail to understand that when the economy is showing extraordinary strength, with low inflation, low interest rates and low unemployment, along with the low taxation environment we have produced, as well as jobs growth and productivity growth, Australians have the confidence to go out and borrow funds to purchase the houses and motor vehicles et cetera which are a reflection of the confidence that Australian consumers and Australian businesses have in probably the world's best-performing economy. It is not surprising at all that Australians have the confidence to take out some debt in order to fund the purchases of products such as houses and cars et cetera, which are critical.

The worst thing that can occur, and this occurred under the Labor Party, is when consumer confidence plummets and Australians are not prepared to take risks at all on borrowing against their future incomes, and the economy grinds to halt. Those are results of the sorts of policies we have seen under the Labor Party. We should take some comfort from the fact that Australians do have the requisite levels of confidence in the state of the economy, and the state of the management that we have brought to this economy, to engage in a reasonable level of borrowing. We as a government have constantly said that Australians are of course free to manage their own affairs; it seems that Big Brother Labor want to manage everybody's household accounts for them. You can imagine what would occur. They ruined the accounts of the nation when they were last in charge of the economy—God forbid that they should get close to household accounts. I would much prefer that households manage their own accounts than let this lot loose on them.

Australians have the confidence to borrow those funds. The Labor Party continues to ignore the fact that all the evidence suggests that Australians' capacity to service their debts is not a cause for concern. The Reserve Bank itself has made that point. Many other authorities and expert commentators have made the point that they are not concerned about the capacity of households to manage or service their debt levels and that those debt levels are backed by a substantial increase in the level of assets which back the borrowings that the households are making. So on the score of the productivity improvements, the low inflation, the low interest rates, the asset backing—

Opposition senators interjecting—

Senator MINCHIN —The opposition do not want to hear the answers because they know that it is a function of the very good economic management this government has brought, and the fact that they have acknowledged their lousy record on economic management and that they cannot convince the Australian people that they should be allowed to have any control over the economy, that has kept them out of office. So Australians are expressing their confidence in our economic management by the level of borrowings they have undertaken and which they can adequately service, and the Reserve Bank board has acknowledged that.

Senator LUNDY —Mr President, I ask a supplementary question. The minister says that it is `not a cause for concern'. Doesn't that just reinforce the hypocrisy of Treasurer Costello telling Australians to `give love not gifts this Christmas', especially considering that his government spent $66 billion on gifts during a pre-election spending spree? When will the Howard government offer any useful assistance to Australians accumulating debt and ensure that, in particular, credit card providers are required to fully inform consumers about the impact their spending habits are likely to have on their family budgets?

Senator MINCHIN (Minister for Finance and Administration) —How dare the Labor Party attack the government for the spending commitments which we made in the last election after this lot left us with a $96 billion debt, which we have struggled to pay off despite their opposition throughout the last eight years. Whenever we brought measures into this chamber to reduce the level of debt, they opposed them. They promised to spend a lot more money than we did—something like twice the level of spending which was proposed by the Labor Party in the last campaign. How dare they have the gall to attack us for our commitments in the election.