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Monday, 23 February 1987
Page: 498

Mr WEBSTER —My question is directed, with respect, to the Prime Minister, and I hope it serves to reinforce the matters already mentioned by the honourable member for Fisher. I ask: Is the Prime Minister aware that one Australian bank is charging interest of 17.5 per cent for some new home loans? Is the Prime Minister also aware that since his re-election at the end of 1984 some new bank home loan rates have risen from 11.5 per cent to 17.5 per cent? Finally, does the Prime Minister regard this increase in housing interest rates of a massive 52 per cent as being a reflection of successful housing policies? If not, what is his excuse?

Mr HAWKE —Let me just make two points very briefly. Firstly, as I have said before in this House, even under the exigencies imposed upon the Australian economy in the conduct of economic policy by external circumstances, interest rates under this Government have not reached the peak that they reached under the previous Government.

Mr Spender —In real terms.

Mr HAWKE —Madam Speaker, the economic genius from North Sydney says: `In real terms'. I suppose he understands that what determines the real term interest rate is the level of inflation. He should go back to his own office and work out why there are differences in real interest rates in terms of inflation under this Government and under his own. If he does the work-if he is capable of doing it-he will find out the answer. The simple fact is that interest rates under this Government have not reached the peak that they reached under the previous Government.

I repeat, Madam Speaker, as briefly as I can, that this Government will not shrink from making those economic policy decisions, including those in the area of monetary policy, which are necessary to deal with the economic problems confronting this country. Of course, if we could get interest rates down tomorrow, we would love to do so. But we are not going to become, like honourable members opposite, snake oil merchants. If their policies were applied, it is certain that we would lose the exchange rate and that interest rates would go through the roof. They are regarded by all economic commentators in this country in the same way as they are regarded by their own member for Boothby-as snake oil merchants. They should get it into their heads that, while they may peddle snake oil policies, this Government is not going to.